Sergei Magnitsky, Bill Browder, Hermitage Capital Management and Wondrous Metamorphoses

Uncle Volodya says, “I went to buy a new toaster, and it came with a bank!”

Yet again, from his secret cell somewhere among the labyrinthine streets of a Russian city, kovane speaks. This is heartening, as it means Putin’s goons haven’t gotten him yet.

Actually, that’s kind of a joke between us, proceeding from the logic offered by the most virulent russophobes: that Putin kills everyone who opposes him. Since kovane has stipulated to the existence of corruption in Russia – although he’s not particularly proud of it – and written at length on the strengths and weaknesses of the various political forces at work in Russia, he has arguably made himself a target. Word from him means that he has once again eluded the goon squad.

I hope nobody gets the impression I’m making fun of the dissident bloggers who really do take serious risks by speaking out against the government, because I’m not. I admire their courage and the strength of their conviction, although I think the notion that Putin is having them roughed up or bumped off is nonsense; it’s far more likely to be someone closer who disagrees with them. We’ve seen that happen other places as well, recently, and I don’t think I need go into that any further.

Anyway, today’s offering discusses the dissolution of Hermitage Capital Management’s operation in Russia, once the biggest foreign investment fund there. The company came to grief, but exactly how depends on who tells the story. So far, about 90% of the publicity favours Bill Browder’s side, the former CEO of HCM. I say 90% purely as a guess; in fact, I had seen only one other source defend the Russian viewpoint before what follows. Bill Browder has an awesome PR machine – is it telling the truth? I don’t know. But if the story that follows makes you say to yourself, “the Russians could have easily done it, and fabricated all the evidence – but then, so could Hermitage Capital Management”, it will have been worth the effort. There’s no law I’ve ever heard of that says a man in a suit and tie can’t lie. Let’s take a look…

“Changes are an inevitable part of life; people are used to that. But within the constant turmoil of our lives, we prefer to have small islands of stability, places that we expect to find in the state we left them. All areas of human activity require a different approach to this matter. Some solely rely on complete trust and immutability, like the job of a notary public, others are less so. Probably the harshest occupations in that respect are crime and politics, where misguided or overextended loyalties can ruin careers overnight. Success there depends upon the ability to move nimbly and constantly reevaluate the disposition of forces. But even within the cruelest gangs, those who switch sides too easily are regarded with nothing but contempt.

The aftermath of Hermitage Capital Management’s exploits in Russia reached an international scale with the involvement of the European and Canadian Parliaments – who made a truly unprecedented decision to deny visas to allegedly involved Russian officials, whilst Canada took the issue a bit further, announcing the intent to freeze any of their assets. Similar measures are being considered by the US. The accusations, leveled at Russian law-enforcement authorities by Bill Browder, one of the two founders of HCM, are mind-boggling:  a seizure of the fund’s assets, a theft of 230$ million of tax rebate money, the murder of a lawyer and, basically, a cover-up of these crimes by the government. Despite the seeming gravity of the allegations, the decisions of the European and Canadian Parliaments can hardly be called prudent – such generally accepted norms as presumption of innocence, jurisdiction and the principle of considering opinions of all parties are clearly lost on their members. Meanwhile, the relationships with Russia, hardly cloudless earlier, eroded even further. Why is this not reason to look at the matter more closely? What fascinates in the story about HCM’s turbulent affair with Russia is the surreal pile-up of lies, media campaigns, strange deaths and about-turns taken by various participants. In order to get to the bottom of it, we should sweep away all the layers of half-truths and empty statements drifted by the media, and examine the subject matter in development.

This story began in 1992, when a large-scale voucher privatization program was launched in Russia. Big enterprises of formerly one of the largest world economies were put up for sale at giveaway prices. The process itself was rife with manipulations, fraud and crime, but as a result, large joint-stock companies were created. Despite high political and operational risks, Russia opened up an enormous pool of opportunities for anyone who had got past the first 10 pages of an investment textbook. Our main protagonist, Bill Browder, certainly did a lot better than just that – he graduated from Stanford Business School and worked as an investment banker. Ties with Russia run deep in his family; his grandfather was General Secretary of the US Communist Party and, according to documents released in 1995, worked for the NKVD, running a spy ring. Bill himself specialized in Eastern European markets, and when he felt the time was right, he founded Hermitage Capital Management in 1996, along with the main investor, Edmond Safra.

Having to make their way through the muddy waters of the Russian law system, HCM hired Firestone Duncan, a Moscow-based provider of legal, tax and accounting services. Its founder and managing partner, Jameson Firestone, also plays an important role in subsequent events.  Browder’s first successes were truly tremendous – the fund grew by 40% in the first month, and they didn’t remain unnoticed. The New York Times profiled him in the business section, and droves of investors brought money to HCM – by the beginning of 1998 the fund was worth around $1 billion. The financial crisis of 1998 hit Browder pretty hard – whilst Russian assets depreciated by 88%, the fund shrank to just $120 million – but that didn’t take the wind out of his sails. Meanwhile, that wasn’t HCM’s only big problem – Russia was hardly the most hospitable place for minor shareholders, and heavy hitters routinely pulled off tricks that would have made Jay Gould blush; one can simply read about Kenneth Dart’s ordeals with Khodorkovsky. Browder’s first encounter with the realities of free-for-all capitalism happened in 1997, when one of the most powerful oligarchs (at the time), Potanin, tried to issue new shares in Sidanco, an oil company in which HCM held a 2% stake. The move was clearly aimed at diluting minority shareholders, as the possibilities for buying the additional share issue were limited to the main owner only. But Browder refused to back down without a fight and was determined to protect his investment. Using Safra’s numerous connections in the business world, they launched a media campaign, intending to draw attention to the scam. A flurry of publications in the Western media provided enough pressure, and the Russian securities commission suspended the share issue. As a result, the price of the stock went up, and HCM not only protected their investment, but profited as well.

These events probably defined HCM’s modus operandi for the future. Their primary strategy was to buy shares of a big undervalued company (preferably energy and/or state-affiliated) and then start digging up information about what they perceived as ineffectiveness in the governance of the company. Upon discovering any irregularities, Browder used a wide array of methods to draw attention to his cause: articles in The Financial Times, The Wall Street Journal and its Russia subsidiary Vedomosti; lawsuits, even political influence in the Western countries. More often than not such action compelled the company to correct its policy, the market positively appraised those changes, and the worth of HCM’s stake would increase. Browder himself proudly dubbed that process the “Hermitage Effect”. But this is only one side of the story, the one which HCM prefers to spin. To understand the other, a clear view of what the Russian financial market was is required. With only a handful of major players, not bounded by any real laws against insider trading, it was the ideal muddy water for the boldest manipulations. Given the immaturity of the Russian legal system at the time, the majority of corporations often operated in “grey” areas and was extremely vulnerable to legal pressure. In 1999 Safra died under mysterious circumstances, having shortly before sold the ownership of HCM to HSBC, one the largest banking and financial services groups in the world. Lobbying and legal options at Browder’s disposal only increased. Unfortunately, he didn’t hesitate to use it, often overstepping the boundary between shareholder activism and greenmail.

During the fund’s operation in Russia, they filed more than 40 lawsuits, winning only 6 of them. Whilst some of them indeed contested obvious scams, as in Sidanko’s case, others were of a dubious nature at best. For example, in 2001 Sberbank, the biggest and state-owned bank in Russia, intended to issue additional shares by public subscription; HCM tried to block this decision. According to Russian law, the Central Bank must own no less than 50% plus one share of Sberbank. It was common knowledge that it would have to buy a part of the additional issue, in order to not violate this law. Immediately after the beginning of the offering, a group of minority shareholders led by Browder brought an action against Sberbank, demanding it be canceled. They claimed that: 1) since it was common knowledge that one of the owners had to participate in the subscription, therefore it was private, not public; and 2) that made the representatives of the Central Bank that were on the supervisory board an interested party, so the issue had to be approved by the general shareholders’ meeting. Browder lost this case, but it certainly negatively affected the offering. Another example: the fund filed a lawsuit against Surgutneftegas in 2003, demanding that the oil company buy shares owned by its subsidiary. While the law clearly forbids companies owning their own shares, it doesn’t say anything about subsidiaries. HCM argued that it’s basically the same thing, conveniently forgetting about the business entity convention.

By 2004, HCM became the biggest foreign investment fund in Russia; it was managing 3.5 billion dollars, representing more than 6000 investors. And it was very successful as well – the annual average return amounted to 34.5%, even factoring in the drop in 1998 (the Russian stock index RTS grew only half as fast). Browder himself earned more than $120 million by various estimates.  The fund also enjoyed enormous influence in Russia. HCM forced the change of energy giant RAO UES’s reform plans, participated in the ousting of Gazprom former all-powerful CEO Vyakhirev and even prevented Rosneft from consolidating the shares of its subsidiaries. Let’s recall that Rosneft is considered to be the realm of Igor Sechin, who – according to the Western media – destroyed YUKOS on a whim. So finally, every major player in Russia was running out of  toes that Browder hadn’t stomped yet. And it’s no wonder they decided to take a closer look at Hermitage’s activity as well.

Just in 2004, a case against HCM on tax evasion charges was opened 8 times in Kalmykia, but Browder’s lawyers managed to douse the fire. In November 2005, upon arriving at the airport, Browder learned that he was denied entry to Russia on the grounds of “national security”. Apparently, he was sure that he would manage to sort this problem out, because he kept the matter from the press for three months. Browder had been a staunch supporter of Russia throughout his stay in Russia – he was even called its cheerleader in the West – but that was simply part of his job, keeping investors’ confidence up.  And he probably decided that all the predicaments would go away if enough loyalty to Putin was demonstrated. In December, Browder gave a major interview on CNBC titled “Putin looks to the West”, where he once again expressed his confidence in Russia’s course and even broke what now seems to be the commandment “Thou shalt not speak ill of Khodorkovsky”. But to no avail.

To this day, it remains unknown who ordered Browder’s expulsion; he himself wouldn’t say, and Russian officials are understandably non-forthcoming. The usual suspects are Sechin and people affiliated with Surgutneftegaz, but those are just common journalistic hypotheses. In 2007, Browder met with Dmitry Medvedev at Davos, and asked him to look into the reason he wasn’t allowed to visit Russia. The fund already liquidated most of its assets in 2006, but Browder clearly intended to settle the issue amicably. Ironically enough, the Russian authorities did Hermitage a good turn, as Browder sold the fund’s portfolio before the 2008 crisis. By 2007, only a handful of employees remained at the Moscow office of HCM. And that’s where accounts of the story diverge sharply.

Given Browder’s aptitude for PR, It would probably be a great disservice to attempt presentation of his version here in detail – he himself did more than just a fine job. Here’s a couple of video clips, a neat website with a screaming name and a very detailed presentation in both Russian and English. In short, Hermitage claims that it became the victim of an organized crime group made up of high-ranking secret service agents. These supposedly opened a case against HCM on drummed-up tax evasion charges, raided HCM’s offices and got their hands on the seals of three subsidiary companies that paid a large amount in taxes the previous year. Using those seals, (according to HCM’s story) they re-registered the subsidiaries to figurehead criminals, and then filed false lawsuits against the companies in a Kazan court. Having lost the case, the subsidiaries became eligible for a large tax rebate, as they incurred substantial losses as a result of the court proceedings. Shortly after, the applications for the tax rebate were filed and, with a speed quite uncharacteristic of the Russian tax office, were approved. Thus, the organized crime group stole around $230 million of taxpayers’ money. Meanwhile, one of the Firestone Duncan lawyers who worked with HCM account, Sergey Magnitsky, found out about the scheme, did some research on his own and notified the police. But instead of investigating the fraud, the police threw Magnitsky in jail and accused him of the very crime he tried to expose. There, he was tortured and denied medical aid, but Magnitsky staunchly refused to sign the confession. As a result, he died in prison, but that didn’t stop the crime group, as they continued trying to frame Browder. Pretty startling story, and it doesn’t exactly evoke desire to invest in Russia, huh? Well, let’s take a closer look at the circumstances of these events.

What really strikes the eye, when looking for material in the press, is the glaring disparity between Hermitage’s coverage of this story and that of the Russian Investigative Committee.  Browder and Firestone seem to have appeared on every TV-channel and every programme and were featured in articles in the most widely-read magazines, while in order to learn about the Investigative Committee’s version, one has to glean information only from Russian newspapers. A rather revealing example happened when popular Russian newspaper MK made a short tear-jerking video challenging Browder’s version and put in on Youtube. It was promptly taken down first from Youtube due to “violations of Hermitage Capital Management’s rights”, then from other hosting services, and now is accessible only on MK’s website, although with broken sound. Makes one wonder what HCM right was violated: perhaps the sacred right to one-sided coverage. Even in Russia, Firestone usually demanded publication of a disclaimer to the articles that he didn’t like, so the media war was won by a huge margin.

Hermitage worked in Russia through a network of around 20 companies that were scattered throughout Russia. The attention of the police was drawn to those registered in Kalmykia, a local offshore zone at the time. All foreign investors encountered the same problem in 1997, when they were forbidden from trading in Gazprom stock on the Russian stock exchange. They could still buy it legally, as Gazprom ADR were traded in London, but the difference between quotes was more than 333% when the ADR were initially issued. The ban was imposed in order to help the government consolidate ownership of the gas giant. Such a promising profit margin made foreign investors look for alternatives, and they were easily found. “Grey” schemes of cross-ownership were widely used, and Hermitage was no exception. They opened two companies, “Saturn Investments” and “Dalnaya Step”, in Kalmykia; Browder was appointed CEO of both the companies. In order to minimize taxes they hired 4 disabled persons as financial analysts, 2 for each company, which made the companies eligible for additional tax remissions. One of the analysts turned out to be mentally handicapped – apparently this is the secret to beat Wall Street, I’m just little surprised that Goldman Sachs and Bank of America don’t use this winning strategy. As a result, companies paid only a 5.5% tax rate, instead of a full 35%. Thus, Hermitage violated the following laws: 1) the ban on trading in Gazprom stocks; 2) the requirements of the special tax zone, as none of the profits were invested in Kalmykia; 3)the application of the tax remissions, as all the disabled persons were on the payroll nominally (here are their testimonies: 1,2,3,4). The whole scheme was developed by Magnitsky himself; all entries in disabled persons’ employment record books were made in his handwriting, and signed by Browder (1,2). Later, the description of the scheme was found in Magnitsky’s seized computer. Hermitage claims that they weren’t involved in tax evasion, providing as a proof the stamp of the local tax office on their tax declaration. But that doesn’t make the scheme they were using legal, it simply meant that taxes were calculated correctly, according to the rate chosen by the taxpayer.

Another case of tax evasion with which Hermitage was charged is linked to the “Kameya” company, owned by a Cyprus holding company affiliated with Hermitage. The company paid a 5% dividend tax rate, which is legal according to the (then) double taxation avoidance agreement between Russia and Cyprus only if a Cypriot business invests in Russia, having no representative office there. But since the Cyprus holding acted in Hermitage’s interests, which operated in Russia, the correct rate should have been 15%. Browder counters this charge with the Ministry of Finance’s letter that says the 5% tax rate was applied correctly. But once again, that is not much in the way of proof – taken out of the whole picture, the company indeed could use the lower rate. The Russian Investigative Committee estimates that HCM totally underpaid around $150 million in taxes.

In this unbelievably cheesy article in the Tatler magazine, Browder managed to throw in almost every imaginable stereotype about Russia: mafia, the now non-existent but always trendy KGB and secret agents, topped with an incorrect translation of Magnitsky’s words, a quote from The Godfather and general affectation of pathos. He also mentioned that in the beginning of 2007, a certain Artem Kuznetsov called Hermitage’s office and said “The sooner we meet and you provide what is necessary, the sooner your problem will disappear”. Browder assumed it was an attempt to extort a bribe, and just ignored the call. Having more than enough material on their hands, the group of investigators naturally wanted to get some explanation from Hermitage, and calling suspects up is a common practice. When they ignored the request, Kuznetsov (the operative who worked on Hermitage’s case) conducted a search in HCM’s and Firestone Duncan’s offices several months later – also a standard practice. During the search, heaps of documents were seized; among them, seals of another three fund entities: Makhaon, Rilend and Parphenion. These companies posted around $1 billion in profit a year before, and had no assets at the moment of the search. Having probably realized that the police’s actions smelled like trouble for him, Browder urgently recalled all key employees of Firestone Duncan and Hermitage to London. The only one who stayed behind in Moscow was Magnitsky – he had to finish some work. He had already made photos for a UK visa and booked tickets to Kiev, but the police were able to arrest him on 24^th of November 2008, before departure.

Browder and his entourage now try to window-dress Magnitsky as a lawyer or even attorney who struggled against corruption in Russia and fell victim to it. But that’s not true; he graduated with a degree in accounting and audit, and had worked all his life in that sphere. But the idea of a tortured activist attorney sells so much better! Arresting him was a tremendous success for the police – they got their hands on a trump ace. His testimony that all the tax evasion schemes he conceived were implemented by Browder’s direct order could have landed the gallant shareholder activist in prison for many years. Considering other accomplices’ flight to London and the daunting history of extraditing criminals from the UK, bail wasn’t an option. After physical examination, he was found healthy and placed into a pretrial detention center, and then transferred to Matrosskaya Tishina. Browder claims that he was subjected to tortures, but that’s a lie; Magnitsky wrote a diary, and never mentioned any physical duress; besides, he regularly met with his lawyers and never mentioned anything of the kind . He refused to testify, likely hoping that Hermitage’s expensive lawyers would get him out, and wrote a number of complaints, mostly about living conditions. While in prison, he was diagnosed with Cholecystitis and scheduled for an ultrasonic scan. But before the planned procedure, Magnitsky was transferred to another pretrial detention center, Butyrka. Conditions there were much harsher; the prison hospital was understaffed and without even essential equipment and medicine. Magnitsky’s health continued to deteriorate, and he was suffering from abdominal pain. Browder also claims that he was denied medical aid, but that’s a lie too. Prison doctors prescribed him medicine, consulted with him what his relatives should get him, and Magnitsky’s mother passed the missing medicine. The problem was that everything was done with terrible hold-ups, and he needed other medical procedures more than medicine. True, his treatment wasn’t adequate by any standards, but that’s the awful reality of Russian prisons – it’s the last place on earth to be ill. By November 2009, he got worse, and doctors decided to transfer him back to Matrosskya Tishina for a more qualified treatment. Magnitsky got to the ambulance on his feet, and was feeling fairly well. Upon arrival, he suddenly fell into a fit of paranoid delusion; his condition quickly deteriorated. After unsuccessful resuscitation attempts, he was declared dead at 21.50, 16^th November, 2009. Autopsy revealed that the cause of death was heart disease, Hypertrophic Cardiomyopathy, of which he had never complained or been diagnosed before, and may not have known.

Magnitsky’s death is certainly an awful tragedy, and an indictment of the Russian penal system. As a result of the subsequent investigation, 16 high-ranking officials of the penitentiary system were fired. But he wasn’t tortured or deliberately left without medical aid. Here’s a very detailed report of the public commission about the circumstances of Magnitsky’s death. He was certainly subjected to pressure – frequent transfers from cell to cell are a favourite tactic of prison operatives. But they are quasi-legal and usually arranged without any violations. For example, the transfer from Matrosskaya Tishina to Butyrka before the planned medical procedure was covered up as a maintenance requirement, although it was most likely veiled blackmail. Anyway, it’s clear that only HCM benefited from the death of Magnitsky. While investigators lost potentially the key witness, Browder turned the boring tax evasion case into an histoire noir about the Russian mafia, which is a hot commodity in the Western press. Well, Butyrka’s prisoners gained something too – tan booths and Skype are results of another fitful campaign.

But what about the stolen $230 million? Unfortunately, the money indeed was returned on false tax rebate claims. Browder blames some crime syndicate among law enforcement agencies, citing as incontrovertible evidence the slightly more extravagant lifestyles of the officers (1,2) who investigated the case against him than it is expected on a $850 monthly salary. Such facts certainly can impress law-abiding Westerners, but will only evoke a wry smile in Russia. A lieutenant-colonel of one of the most lucrative law enforcement agencies has ONLY a couple of flats in Moscow and three expensive cars? Someone should track him down and give him the “most incorruptible Russian policeman” medal right away! Of course he’s corrupt, but almost everyone is at this level. Does anyone expect an obviously well-connected – otherwise he wouldn’t have got such a prominent case – 32-year-old man to live on a salary less than the average for Moscow? But does that mean that he killed Kennedy, orchestrated Watergate or stole the 230 million? In my opinion, not necessarily. Besides, as the Investigative Committee shamefully admitted, all that property belongs to Kuznetsov relatives – there may be some ring to it. And the state clearly showed their support, both Kuznetsov and Karpov were promoted after the investigation.

Back in 2006, when HCM was liquidating their assets, for the first time they paid 24% in taxes rather than the usual 5%. It’s unclear why they did it – maybe in order to part on good terms with Russian authorities, or maybe it was difficult to come up with new schemes under the stare of the police. In 2007, it became evident that amicable separation was unlikely, and that aroused some regret about the overpaid money. Actually, the scheme that was used to get back $230 million of Hermitage’s taxes sprang into action at least a year before. Another large investment fund, Renaissance Capital, used it to return $106 million. Or more precisely, someone stole Renaissance’s entities and used them to cheat the budget out of that amount of money. Except that Renaissance raised absolutely no fuss about that. It is interesting that the applications for the tax rebate were filed through the same tax offices, the companies lost similar cases in court and even several of the same people appeared in the process. So representatives of HCM approached one Oktay Gasanov, whose acquaintance Semyon Korobeynikov specialized in that sort of tax scam. They created duplicates of seals (later, an expert examination showed that the stamps on the false tax rebate applications had NOT been made with the ones seized during the search of Hermitage’s office), and reregistered all three companies to Korobeynikov’s associates. One of them, Markelov, later testified that he had once met with Magnitsky, who prepared the false tax rebate applications and stamped them with the duplicate seal. HCM wanted some insurance and refused to open new accounts in Korobeynikov‘s bank, insisting on using old accounts, opened in HSBC Bank. The companies then went on with losing the bogus cases in court, creating losses. And that’s where Hermitage made an egregious blunder that ruined their entire ruse. The court fees were paid from the accounts in HSBC bank already AFTER Hermitage’s claim about the hijacking of Makhaon, Rilend and Parphenion. Everyone was in a bit of hurry – the tax rebate applications had to be filed before the end of the year, when suddenly in October 2007 Gasanov died of a heart attack. He was the single liaison between Hermitage and Korobeynikov, and the latter had everything he needed to organize the scam. So he decided it would be much merrier to go on without Hermitage. Such a turn of events couldn’t have made Browder happy, and HCM started ringing all the alarm bells. They quickly “investigated” the scam and wrote letters to the Investigative Committee, Prosecutor General’s Office and MVD on the 7^th of December, 2007, revealing all details. But it was too late – on the 24^th the tax rebate applications were filed, and on the 26^th all $230 million were transferred to the accounts opened in Korobeynikov’s bank beforehand. Later, Korobeynikov died in an accident – he fell from the balcony of his country house, tying the single loose end in this case. Browder tried to force Renaissance Capital to reveal the information about the circumstances of their entities’ involvement in the similar scam, but it seems without result. The Russian police investigation only revealed additional evidence that Hermitage had had something to do with the tax fraud – the constituent documents of allegedly hijacked companies were found in possession of one of Hermitage’s lawyers. And part of the money was recovered later: only $25 million of the whole $230 million, but that’s it.

A loop in the Russian law that made the fraud possible is the rather uncommon situation when companies that posted giant profits are liquidated the year after that. That largely limits its applicability to the financial industry only. Various scams with tax rebates on Russia’s VAT tax is very common, so every one has to be approved by a special commission. On the contrary, there were no special clauses, governing profit tax rebates, so the fraudsters pulled the scam by obtaining the signatures of a single tax office’s heads of department. Clearly, the mastermind behind this operation has enough influence in the Federal Tax Service, but identifying him is very difficult. The money was laundered through numerous proxies, and all interactions with other participant of the scam were conducted by Korobeynikov.

Certainly, all other versions can’t be ruled out. Falsifying of evidence by the police is not in any way uncommon in Russia, so some omnipotent crime syndicate could have indeed implicated innocent Browder. The main problem with Hermitage’s version of the event was accidently highlighted by Hero Journalist Yulia Latynina. In her trademark conspiratorial manner, she wondered that the syndicate must have been able to coordinate the efforts of the Investigative Committee, the Federal Tax Service, the Penal system and even conduct secret ops. What she forgot to mention was that they also obviously could pull the wool over Putin’s eyes, since it would otherwise mean he chose to side with them, sacrificing Russia’s reputation abroad in the process. And all that for a measly $230 million; seems kind of far-fetched to me. The other version, espoused by some ultra-patriots in Russia, that Hermitage both organized and was the ultimate benefactor of the scam is even more flawed. While Browder demonstrated more than enough ballsy behavior, warning the police about the crime you’re about to commit is just too brazen and not prudent. Although, given the slowness of bureaucracy, it would have been a relatively safe move anyway. But the only version that has a fighting chance to survive Occam’s razor is the above-mentioned one.

The grandson of the NKVD spy / US communist leader turning into an uber-capitalist, an accountant organizing tax evasion schemes turning into a corruption-fighting attorney, investigators turning into the embodiment of Al Capone – all that is just too many metamorphoses for my liking. The only undisputed winner that emerged after all the twists and turns is Browder. He earned himself a name, a heap of money and a lot of free advertising. After the EU Parliament’s decision, the possibility of Interpol issuing an international arrest warrant on him is zero. On top of everything, he keeps harming Russia’s reputation without even trying very hard, and there’s a chance that the Russian authorities will have to start negotiating with him. And he will ends up earning even more money. Congratulations, Bill; well played.

The saddest part of this story is the uncanny ability of the Russian government to shoot itself in the foot from any position.  I mean, how hard is to hire some callow student to put together a lucid presentation of the investigators’ stand in English? How many billions has Russia lost, just because some honest investor read Browder’s unchallenged blaring and vowed never to invest a single penny in Russia? How much longer will any Russian investigation be maligned by the fact that the policemen drive a car worth more than their 10-year salary? How come millions of dollars just disappear from the budget, never to be found, while some talented doctor is pulling a night shift for a respectable $300 a month? Those are the questions I don’t know the answer to. Does anyone?”