Browder unable to return to Russia

Posted by Nick Kochan

The Russian lawyers to Hermitage fund management company have been raided and key documents removed, Bill Browder, chairman of Hermitage Capital alleges. He claims that these documents have been used to steal the firm’s identity to perpetrate two frauds against it.


The first fraud, Hermitage alleges, involved obtaining court orders against the firm to perpetrate a massive theft. However, the alleged thieves found that the kitty was bare as Browder had sold out its Russian investments.

The thieves took another tack. Browder purports that they used the claims against the company in a book-keeping exercise to offset Hermitage profits. This allowed them to claim back the corporation tax Hermitage had paid in 2006. This amounted to $230 million. The Russian Tax Ministry believed the crooks’ tale, and paid it back, Hermitage claims.

Now Browder needs to protect his Russian companies and lawyers who he claims were raided and physically attacked.“They have raided and are trying to arrest the lawyers who are fighting the liquidation of the Russian companies. We filed a criminal complaint at the end of July,” he says.

Browder claims the Russian law enforcement and legal system has been incompetent at best. “We tipped off the law enforcement community in Russia. We filed [complaints] about the fraud and fake claims. It gave the police three weeks to freeze the companies’ accounts to make sure the tax crime never got committed. But they didn’t act.”

The alleged attack on Hermitage has persuaded Browder to revise his trenchant views on Russia’s Prime Minister and former President Vladimir Putin. “Between 2002 and 2004, Putin was fighting with the same guys who were stealing money from me. The oligarchs were stealing power from him and they were stealing money from me as a shareholder. When I complained to the government about the oligarchs stealing money, they responded favourably and cracked down on the stealing. How could I not think that was a good thing?”

Browder has equally revised his views of the oligarchs, whom he criticised for their mistreatment of shareholders. “I was critical of Mikhail Khodorkovsky (he was convicted for fraud and tax evasion and received an eight-year sentence) because he mistreated minority shareholders when he controlled Yukos and we were a shareholder in his subsidiaries. I now have huge sympathy for him. I think he has had a bum deal. He has paid any dues he could ever possibly pay for anything that he did to us as minority shareholders a long time ago.”

Browder has little hope of returning to Russia, where he is the subject of an arrest warrant. He now travels regularly to the Gulf region to manage an investment portfolio of some $2.8 billion. “It is an absolute delight to do business outside Russia. The UAE is my favourite location for doing business today,” he says.


End of part three

Hermitage cries foul in Russia

Posted by Nick Kochan

Bill Browder, the boss of Hermitage Capital had his visa to enter Russia refused. He claims Hermitage was persecuted as part of an alleged scam to defraud the Russian Tax Ministry of $230 million.

Browder claims that Hermitage’s lawyers were raided by police from the Russian Interior Ministry. He alleges that their computers, servers and files containing information were removed. The homes of other lawyers also working for Hermitage were raided at around the same time, he claims.

Browder alleged that one of the lawyers was seriously beaten and hospitalised for two weeks. “It wasn’t good to be a lawyer for us at that time,” he says. “All four of our law firms were raided again by the police. They invited all of the lawyers for questioning as witnesses.”

Hermitage alleges that these raids gave members of the Interior Ministry the means to steal its identity. So when a company unknown to Browder said that Hermitage had reneged on a sale of Gazprom shares and owed millions, Browder said he was helpless to resist it. Using the lawyers’ documents, Hermitage alleges that people from the Interior Ministry removed the legitimate managers and replaced them with their own cronies.

Hermitage alleges that liabilities were created by this scam to extract from the Russian Government $230 million worth of tax paid a year earlier by Hermitage. Browder claims that the scam’s perpetrators created “fake losses” exactly equal to that to create a new net profit of zero. “We paid $230 million of taxes and they filed amended tax returns and asked for the money back,” he said. Browder claims that the $230 million has been pocketed by the crooks.

The scam has yet to run its course. Browder says a package, packed with sensitive documents, was sent by DHL from London to the offices of Hermitage’s Moscow lawyers. The return address on the back of the envelope was given as Hermitage’s offices in Soho and the name attached to the address had been made up.

According to Browder, an investigation of the name found that it belonged to someone whose passport had been stolen. “We didn’t send the package,” he claims. “Two Eastern European-looking gentlemen paid cash to DHL at the Lambeth depot. We have them on close circuit television.”

Two hours after the package arrived at the lawyer’s office, Browder claims Russian police raided it and took away the package. Mere coincidence? Not so, alleges Browder, for whom this was merely another piece of evidence that he was targeted by a well-organised gang. “The obvious intention,” Browder claims, “is to create a trail from us to our lawyers. This stuff was going to be used to blame us and our lawyers.”

End of part two

Russian Mafia exposed - The Browder Story

Posted by Nick Kochan

This is the first in a three part series on Bill Browder, the multi-millionaire chairman of Hermitage Capital who quit Russia following allegations of fraud at the highest levels.


The deeds of the Russian mafia may be murky, but they rarely get exposure. The members of organised crime are often hidden behind political and judicial structures. However, those that have done business in Russia are no longer shocked. They have seen it all, they claim. One such man is Bill Browder, the multi-millionaire chairman of Hermitage Capital. His $4 billion portfolio of Russian stocks made him the largest foreign investor in the country.

Now that he has quit Russia, he presents a document which he alleges shows the involvement of “a group of criminals at a reasonably high level in the Russian government” in the theft of $230 million from the Russian Tax Ministry. The document is entitled, Persecution of Hermitage in Russia in order to steal $230 million from the Russian People.

Browder is on a mission to cleanse Russia of its criminal class. He speaks with a zeal rarely found among financiers. He cannot overstate the “dire state” of business practices and ethics in Russia. “It is bent at every turn,” he claims. The alleged scam confirms Browder’s view that business conditions in Russia have retreated to the state he found them in when he set up his firm in Russia in 1992, with the assistance of money from the banker, Edmund Safra.

The key to Browder’s success was attacking Russian companies with poor corporate governance and seeing their stock prices rise as they improved their management and ethics. According to Browder, this approach upset senior members of the country’s political and economic elite and in 2005, his entry visa was withdrawn.

He mounted a crusade at the highest levels to re-instate his visa, even approaching Dmitry Medvedev, the man destined to be the president of Russia, at Davos last year. “I saw him tucking in to his dessert,” said Browder. “He was sitting on his own. I saw this as an interesting opportunity to have a chat with him and so I went to talk to him. He stood up. We knew each other. I know him, we have worked with him because he was the chairman of Gazprom and we were always very active in Gazprom. I asked him if he could get my visa reinstated. He knew all about me. He said yes, he would help me. He asked me for a copy of the visa application, which I got my office to produce.”

A month after the Medvedev meeting, Browder claims that his office in London received a call from a lieutenant colonel of the Interior Ministry, which it construed as a request for a bribe. Hermitage have a recording of the conversation.

According to Hermitage’s report, the lieutenant colonel asked if he could meet Browder. Hermitage’s report alleges the lieutenant colonel said, ‘The sooner we meet and you provide what is necessary, the sooner your problems will disappear.’ Browder says that the company receives requests like this every day. “People try and shake you down in every different place in Russia. We ignored it. This was the one case out of a hundred when something happened.”

End of part one