by Nomad
Part One of this series
In Part two, we pick up the story of the crusader investor, William Browder. As an activist shareholder whose business model was based on exposing corruption, Browder was about to meet his Waterloo with the Russian global energy giant, Gazprom.
The Payoff and the Payout
William Browder's mission to expose and clean up corruption within Russian corporations was not based on any altruistic motives. On the contrary, it was an application of basic capitalist principles. simply a way of increasing the value of the companies in which he owned stock.
A corporation cleared of corruption was bound to be more efficient and in practical terms, more accountable to its shareholders. Furthermore, it was bound to be more profitable.
However when it came to Gazprom, Russia's oil giant, that practical idea was to hit a snag. When Browder's investment fund Hermitage Capital Management (along with other minority shareholders) launched its anti-corruption campaign, it would turn out to be, in fact, an indictment against the whole Russian way of doing business.
A Washington Post article in December 2000 reports the growing concern by foreign shareholders. Accountability was, they discovered, an illusion.
The huge natural gas monopoly Gazprom, one of Russia's largest enterprises, has transferred hundreds of millions of dollars in assets outside the company in recent years while signing lucrative deals with a firm largely owned by Gazprom's current and former directors, executives and their relatives, documents show.
(The article- though predictably complex- lays out a pretty good case for widespread corporate abuse that would have made Enron executives blush.)
