The Browder Affair and the Death of Russian Economic Reform 3/3

by Nomad

Part One
Part Two

In this final installment of the series, we examine how foreign investor Browder was about to find out that Russia could be a very dangerous place to do business. In many ways, it was, for opportunity hunters of the West, to be the end of the fantasy of Russian reform.

By November 2005, Russian official had just about had enough of William Browder's crusade to clean up corruption. Officials in Moscow decided to demonstrate to this upstart from the West, this shareholder activist, who held all of the cards.

End Game

Returning from a business trip, Browder was denied re-entry at the Moscow airport. He suddenly found himself in the ridiculous position of having to do business in Russia as an exile. It was the beginning of the end with his love affair with Russia and his admiration for Putin.

After a decade of successful investments in Russia, Browder was blacklisted by the government and was officially listed as a "threat to national security." The reason for this, The Economist wrote, was actually because Hermitage had interfered with the flow of cash to "corrupt bureaucrats and their businessmen accomplices".

Browder exiled himself to London and was forced to pay $230 million tax bill.

In June 2007, the endgame began. As the head of the law firm representing Hermitage, Jamison Firestone later told reporters, dozens of police officers "swooped down on the Moscow offices of Hermitage and its law firm.