Bill Browder on “Red Notice” and his crusade to bring Sergei Magnitsky’s murderers to justice

March 11, 2015

“Russia is almost unique in history right now in that it has a totalitarian regime with no ideology. The only ideology is to steal money. Basically, if you’re a person in government, the only purpose you have in government is to steal money. It’s fully acknowledged from top to bottom. It’s not as if people in positions of power are abusing their power.  The whole purpose of their power is just to steal money. It’s acknowledged and effectively sanctioned by Putin.” – Bill Browder, billion dollar hedge fund manager and author of “Red Notice: The True Story of High Finance, Murder, and One Man’s Fight For Justice”

Red Notice: The True Story of High Finance, Murder, and One Man’s Fight For Justice tells the story of two men: the book’s author, Bill Browder, who ran the biggest foreign-owned private investment fund in Russia until his shareholder activism began to clash with the interests of Russia’s oligarchs and corrupt politicians; and his tax attorney Sergei Magnitsky.

Magnitsky was held in preventative detention for 358 days in some of Russia’s most notorious prisons. Suffering from pancreatitis, gallstones and cholecystitis, his repeated pleas for medical treatment were denied.  When prison officials could no longer ignore his rapidly deteriorating health and scheduled surgery, he was moved to another prison having no medical facilities. On 16 November 2009, Magnitsky was beaten to death while handcuffed in an isolation cell.

Magnitsky had uncovered a fraud perpetrated by Russian officials involving the single largest tax rebate in the history of Russia. Browder recounts how the very same Russian officials who perpetrated the fraud then conspired to pin it on Magnitsky and himself.  Magnitsky and Browder discovered that corporate seals and certificates confiscated by police during raids in 2007 on Hermitage and various law firms had been used to fraudulently transfer ownership of various Hermitage companies to “a man who had been convicted of murder and let out of jail early.”

We hired a young lawyer named Sergei Magnitsky to investigate. He concluded that there were two objectives of the criminals. One was to steal our assets, which they didn’t succeed in doing because our money had all been taken out of the country. But their second objective, which they succeeded in doing, was to steal all the taxes we paid in the previous year. We paid $230 million in taxes in 2006. In 2007 this group of police officers, tax officials and criminals using our stolen companies had applied for a $230 million tax refund. It was the largest tax refund in the history of Russia. They applied for it on the 23rd of December, 2007, and it was approved one day later and paid out. This was the crime that Sergei Magnitsky and I exposed. Sergei Magnitsky then testified against the officials involved, and this caused the officials involved to come and arrest Sergei Magnitsky, put him in pretrial detention, and tortured him to get him to withdraw his testimony.

A devout Christian, Magnitsky refused to bear false witness. A man of principle, he paid the ultimate price.

Magnitsky was an idealist who believed that torture and gulags were a thing of the past.  “He didn’t see Russia for what it was, he saw it for what he wanted it to be” explains Browder.  Tragically for him and his family, Sergei Magnitsky “didn’t realize that Russia had no rule of law, it had a rule of men, and those men were crooks” writes Browder.

Browder’s riveting account of his time in Russia from the mid-1990s until being blacklisted in 2006 as “a national threat to Russia” is a fascinating read for anyone interested in what the chaotic transition to a market economy in post-Soviet Russia actually looked like.  The vast mineral wealth owned by a few dozen state-owned companies controlled by powerful oligarchs turned Russia into a hotbed of corruption and cronyism.

Outraged by Magnitsky’s murder, Browder became the driving force behind the Magnitsky Act of 2012 banning anyone involved in the torture and death of Magnitsky from entering the United States or using the US banking system.  To this day a number of high-ranking Russian tax and law enforcement officials remain on that list.  Persuading the United States Congress to pass this law was no small accomplishment given the eagerness of the Obama administration to “reset” relations with Russia, and the fact that Browder had renounced his US citizenship in 1998.

Within Russia, Magnitsky’s death caused public outrage and sparked discussion of the need to improve prison healthcare and to reduce the number of inmates awaiting trial in detention prisons.

After devoting more than half a decade exposing the system responsible for the murder of Sergei Magnitsky, Browder himself has become Putin’s number one enemy.  The book’s title refers to an international warrant for Browder’s arrest issued by interpol at Russia’s behest on two separate occasions.