Transcript: Bill Browder Interview on TRIGGERnometry

How do we create a country of capitalists? Let’s give all the property away for free.” And so it didn’t work out that way in the end. 22 oligarchs ended up with 40% of the country. But little crumbs were falling off the table in terms of this privatization.

The Hermitage Fund: Russia’s Investment Boom

BILL BROWDER: Off the back of that, I left Salomon Brothers, I set up an investment fund called the Hermitage Fund, and I started investing in the privatization of Russia. And it was really a very spectacular time to be an investor in Russia. I was all of 30, 31 years old when I started this fund.

There’s this expression, “In the land of the blind, the one-eyed man is king.” And nobody knew more than me just because nobody knew more than anybody about anything back then. And I started investing and my fund was the best performing fund in the world in 1997. I went from $0 to $1 billion of assets under management, which these days doesn’t sound like a lot of money because there’s trillionaires running around. But back then that was an enormous amount of money.

KONSTANTIN KISIN: Back then a billion was real money.

The 1998 Crash and the Oligarchs’ Theft

BILL BROWDER: Yeah, exactly. And it was just the most glorious time ever. And I thought my billion was going to turn into $10 billion. Turned out that all the success coming so quickly in the hands of a 31-year-old was the biggest sell signal there ever was. Of course, I was 31 years old and I didn’t really understand that.

The Russian government in August of 1998 devalued their currency and defaulted on their bonds. And my portfolio went from a billion to $100 million. I lost $900 million of my clients’ money. I was ashamed. I was humiliated. And I was determined to try to get from $100 million back up to a billion and then some.

In theory, it shouldn’t have been all that hard an exercise. I owned oil companies. The oil companies sold their oil in dollars. They paid for their costs in rubles. The ruble had just gone down by 75%. And so if your revenues are staying the same or growing and your costs are going down by 75%, that means your profits should be exploding. In theory.

The reality was that all these companies were majority owned by these people known as the Russian oligarchs. And the Russian oligarchs said to themselves, well, before all this crash, they thought they could get money from Wall Street. They had all these bankers with fancy suits showing up in Moscow saying, “If you behave yourself, we can get you some money from Wall Street.”

And after the default and devaluation, they called up their bankers and said, “We could really use some of that money right now.” And the guys who picked up the phone said, “Vladimir who?” and put the phone down because nobody wanted to have any association with Russia after that. It was like toxic waste being connected to Russia.

And so the oligarchs said, well, there’s no incentive to behave. And in Russia, there’s never been any disincentive against misbehavior. They said to themselves, “Why don’t we just steal everything that’s not nailed down, and even stuff that is nailed down?” And so the oligarchs embarked on an orgy of stealing which has been unprecedented in the history of business. They were doing asset stripping, transfer pricing, embezzlements, dilution. They were doing it on an industrial scale.

And I was sitting there with my last 10 cents on the dollar hoping that I was somehow going to get from 10 cents up to a dollar, or $100 million back up to a billion. And they were going to try to steal the last 10 cents on the dollar that I had.

Fighting Back: Exposing Corruption

BILL BROWDER: Not as an investment strategy, but as a matter of desperation or survival, I said, I need to try to stop the stealing that’s going on in these companies. Well, how do you stop stealing in Russian companies? There was no class taught on that at Stanford Business School. And it’s not as if there’s any institutions in Russia that are going to be there to help out some foreign minority shareholder that’s unhappy about the stealing.

You can’t go to the police and say, “I’ve just discovered stealing at Gazprom.” Nor could I go to the courts. All the judges were bribed. The parliament was on the payroll. The government, the regulator — there was nothing, except for one thing, which is that I had a really good team of Russian people, analysts working for me who were really smart, who could research how the stealing was going on. And I would go to all the same bars and restaurants as the foreign correspondents.

So what we decided to do was to research who was doing the stealing, how they were stealing, where the money was going. And these guys were so brazen, they weren’t even covering it up. And in Russia, there’s no such thing as data protection. Every piece of data is available for a price. And so we would gather all the information, put it together, and then share it with these journalists that I was hanging out at the bars with. And they were loving me because I was saving them a lot of time and effort. And we would publish all the scams that were going on.

Putin and the Oligarchs: An Unlikely Alliance

BILL BROWDER: This was the moment that Vladimir Putin had just come to power. And Vladimir Putin back then — he might have been the same person, but he was faced with a whole different set of constraints back then. And the oligarchs were more powerful than him. And he wanted to take away the power from the oligarchs.

There’s an expression in the world that your enemy’s enemy is your friend. I’ve never met Vladimir Putin. I haven’t met him then and I haven’t met him since then, but I was busy exposing the oligarchs who were stealing money from me. And he was hating the oligarchs because they were stealing power from him.

And so what did he do? He stepped into the fights. So we exposed the corruption of the management of Gazprom and the state-owned 51%. They fired the management of Gazprom and the share price rose spectacularly. We went after Sberbank, we went after Surgutneftegaz. These are all big Russian companies. And he would step in on a regular basis and do stuff. And every time he would step in, the share price would go up.

And so I was feeling pretty good about him. I thought, “This is great. I was making money, making Russia a better place. This Putin guy was helping out. What could be better than that?”

The Khodorkovsky Moment: Everything Changes

BILL BROWDER: The problem was that he wasn’t helping out because he wanted to make Russia a better place or clean up Russian companies. He was helping out because he didn’t like these oligarchs. And one day he decided that he was going to win his war with the oligarchs.

How was he going to do that? He was going to arrest the richest oligarch in the country, a man named Mikhail Khodorkovsky. He was the owner of an oil company called Yukos. He arrests him off his private jet in Siberia. They bring him back to Moscow. They put him in a cage in a courtroom. In Russia, there’s a 99.7% conviction rate in criminal cases, and so they just keep you in the cage because that’s where you’re going to be afterwards. They allow the television cameras to come into the courtroom to film the richest man in Russia sitting in a cage. They eventually sentence him to 10 years in prison.

And the other oligarchs in Russia are just going out of their minds. One by one, after Khodorkovsky was sentenced, they go to Putin and say, “Vladimir, what do we have to do so that doesn’t happen to us?” Putin said, “Real simple. 50%.” Not for the Russian government, not for the presidential administration of Russia — 50% for Vladimir Putin.

And that was the moment that Putin became the richest man in the world. And that was the moment that my life changed forever. And that was the moment that things really started turning bad for me.

FRANCIS FOSTER: Most businesses don’t have a communication problem, they have a visibility problem. Calls come in, texts come in, and nobody knows who’s handled what. That’s not a staffing issue, that’s a systems issue, and it’s fixable.

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How Putin’s Wealth Was Built

KONSTANTIN KISIN: Well, we’ll get to that part. I’ve heard you say before about the 50%, and I’m just curious — how do we know that that’s what happened between him and the oligarchs? I remember seeing him dressing down various oligarchs in a public meeting, but how do we know that he personally is taking that money from them, that kind of deal?

BILL BROWDER: Because they told me. Various people told me that that was the deal. And one could say, well, maybe they were not correct or exaggerating, but I think we’ve now seen enough anecdotal information to support what I was told that it becomes pretty— I mean, so for example, there’s Putin’s house on the Black Sea. I’m sure you know about that, or maybe — well, I don’t know if your readers or listeners know about that, but Alexei Navalny made a great video that’s been watched by 25 million people about Putin’s — it’s a billion-dollar house on the Black Sea.

FRANCIS FOSTER: Nice place?

BILL BROWDER: Not really. I mean, it’s really a crude place. They’ve got stripper poles and a bowling alley. I mean, I’m not sure that any of us would actually want to live there, but $1 billion for that. He’s got an $800 or maybe $900 million superyacht. And where does he get this stuff from? All the money trails lead back to the oligarchs. When his daughter got married, the son got a dowry, which was the gift of like 30% of a major multi-billion-dollar petrochemical firm. When he cheated on his daughter and they got divorced, the son-in-law gave it back to the oligarch. I mean, there’s a million of these stories.

KONSTANTIN KISIN: See, that is a testament to the power of the male libido. You marry Putin’s daughter and then cheat on her — that is not a well thought through move, is it?

BILL BROWDER: I guess he just couldn’t control himself.

FRANCIS FOSTER: Either that or he just backed himself.

KONSTANTIN KISIN: Yeah. I don’t think that’s a smart move. So he’s still alive though, as far as I’m aware.

BILL BROWDER: Really? Yeah. But he’s the son of one of Putin’s best friends. They’re not killing each other. I mean, you would think — anyways.

KONSTANTIN KISIN: It’s a dispute within the family sort of thing. We’re joking around, of course, but I was just very curious to hear that. So you had oligarchs who personally told you, “This is what Putin said to us.”

BILL BROWDER: That’s right. Yeah.

KONSTANTIN KISIN: And why did this begin to interfere with your business and what you were doing?

BILL BROWDER: Because I was busy carrying on with my naming and shaming campaigns. You’d think it’s pretty ridiculous for some guy from Chicago to be outing the oligarchs and doing all this kind of stuff. And the answer is it was ridiculous. I had kind of shaved off the risk sensors in my brain because you couldn’t go out there with a full set of risk-reward and do that. And so I was just plowing forward even after Khodorkovsky was imprisoned, exposing more malfeasance, but I wasn’t exposing the enemies of Putin anymore. I was exposing his 50% interest, but I wasn’t thinking about that.

Arriving in Russia in the 1990s

KONSTANTIN KISIN: I was going to ask you about that because I remember growing up in Russia in the 1990s — objectively, it was a wild and crazy time. What did you think when you arrived in Russia in the early ’90s? With your American background — I visit America all the time, the mindsets are so different — you must have found it a huge shock, but also probably a thrill, right?

BILL BROWDER: Well, I mean, first of all, I wasn’t in Russia. They really, over generations, had kind of destroyed initiative, idealism, public concern, philanthropy — they’ve just destroyed all of that. But in America, all that kind of stuff was in our DNA, brought up and pounded into you, and probably a can-do attitude, optimism — everything could be better in the future than it is today. That was my thinking.

So I show up in this country, which is completely chaos. When communism ended, they didn’t have a system. They called it capitalism, but nobody had created anything really — it was just total chaos. But I showed up there and I said to myself, my bet is that it’s going to go from chaos to something less chaotic, horrible to bad. I called it the Nigeria to Brazil trade. And so I showed up there and I thought, I wanted to be part of this process — and by the way, you’re going to make a lot of money if it goes from horrible to bad. That was my thinking.

And it started to go from horrible to bad. In Putin’s first few years, he wasn’t this monstrous guy that he is right now. He was kind of like a nameless, faceless technocrat — that’s how we thought of him in those first few years. He was reforming the tax system and doing all sorts of stuff that you could honestly say were economic reforms. So the thought was that we were going to be in this transition. It was kind of cool to be there when it was all total chaos and watching the little green sprouts of civil society start to form. I thought, this is great. I wanted to be part of it and I wanted to profit off of it as well.

The Turning Point

FRANCIS FOSTER: So, Bill, going back to the story — Putin is going around asking for 50% here, 50% there. How did that change, and how was your life completely different after those events?

Expelled from Russia

BILL BROWDER: Well, so I was now going after him— I mean, his interests— and I became very inconvenient. Here I was, I wasn’t talking to him. They were— I wasn’t giving him 50% of anything. I was not part of that thing. I was just running my fund, getting mad about different companies doing bad stuff, exposing them, working with the journalists, and they had to figure out what to do with me.

And if I’d been Russian, they would’ve killed me. But because I was a foreigner, and not just a foreigner, I was the largest foreign investor in the country at this point. I was managing $4.5 billion at the top of the market. And by the way, I’d be killed this minute if I was anywhere near Russia or anywhere within their grasp. So it’s not like Putin— I mean, he’s become more brazen. Back then he was a bit scared. He was still sort of feeling his way around the world. So they didn’t want to kill me.

But one day I was flying back— I had been living there for 10 years. I was flying from London. I was here in London for the weekend. I was flying back to Moscow, and I was at Sheremetyevo Airport at the VIP lounge, and I was sitting there waiting for my passport to be processed, and 4 heavily armed border guards burst into the lounge, grabbed me, and then took me down to the detention center of the airport.

And I stayed there overnight, not sure whether I was being— and there were 2 things that could have happened. They could have sent me to Siberia like Khodorkovsky, or they could have deported me. I didn’t know what was going to happen that night when I was sitting in that airport detention cell. And I had a lot of hard questions for myself about life choices and how I’d gotten here, and maybe I should have been a little bit more careful and all this kind of stuff.

And the next morning, I wasn’t sure what was going to happen. And then finally they come for me and they put me back onto an Aeroflot flight and deport me. And then when I land in London, I get a letter from the Foreign Ministry saying I’ve been expelled because I’m a threat to national security. So good news, I’m not dead, I’m not in a Russian prison, I’m just deported.

But when the Russians go after you, they don’t do it— that was a mild sanction. When they go after you, they usually do some really nasty stuff. And I said to myself, this is not the end of the story. This is the beginning of something really bad.

Evacuating the Team and Getting the Money Out

And so what did I do? I had a bunch of people working for me in Moscow. And so I say to myself, these people could be victimized. We need to get them out. And I evacuated my team and their family members. Once I got everyone out, I said, well, we have a lot of money over there. These guys are probably going to go after the money. We should get our money out. And we quickly and quietly sold every last share we held in Russia, got all of our money out.

So I kind of dusted off my hands. I said, phew, people safe, money’s safe, time to move on to other stuff. Set up a new investment fund investing in other places, start investing in other places.

The Raid and the $230 Million Fraud

I’m at a board meeting in Paris, June 4th, 2007. I get a frantic call from the last remaining person I have in Russia, which was a secretary sitting in our empty office. And she says, “There’s 25 police officers breaking down the door. What should I do?” I said, “I don’t know. Let me call up my lawyer.” I’ve got an American lawyer in Moscow. I say, “There’s 25 police officers breaking down my door.” And he said, “We got 25 police officers in our office looking for your documents.”

50 police officers doing simultaneous raids of my office and my law firm’s office looking for our official documents for our investment holding companies, all the stamps, seals, and certificates. They find them at the law firm’s office, they take those documents away, and the next thing we know, we no longer own our investment holding companies. They had been fraudulently re-registered into the name of a man who had been convicted of manslaughter and let out of jail early, presumably to put his name on these documents.

So I’m sitting there thinking, okay, so the police have raided my office, seized the documents, used the documents to steal my empty— the companies were empty now because, remember, we got everything out— to steal these empty investment holding companies. I’m not worried about the money. The money is already safe. It’s offshore.

“But if the police are doing all this stuff working with killers, I’m going to be walking through Frankfurt Airport one day and someone’s going to arrest me on a Russian Interpol warrant.” And I say to myself, “We got to figure out how to stop whatever is happening here.”

And so I hire the smartest lawyer I know in Russia, a guy named Sergei Magnitsky. He worked for an American law firm. He was one of these people that could just literally run circles around everybody else with the law. He just knew exactly what he was doing. And I say to him, “Hey, why don’t you figure this out? Figure out who’s doing what, what are they doing, why are they doing it, how are they doing it? We need to stop it.”

And so he goes out, he researches everything, and he’s a super smart guy, and he figures it out. He said, “This is the most cynical thing I’ve ever seen.”

So when I was expelled and after I sold everything, we had $1 billion of profits on the securities that we sold. And off that $1 billion of profits, I paid $230 million of capital gains tax to the Russian government. What Sergei had figured out was that this group of crooks that stole our companies with the police documents— they stole our companies, and then they went to the tax authorities and they said there was a mistake made in the previous year’s tax filings. These companies didn’t earn a billion dollars, they earned zero. They came up with a complicated way of explaining it. Therefore, the $230 million that was paid in taxes in the previous year was paid in error, and we’d like that money back.

They applied for this illegal $230 million tax refund on the 23rd of December 2007 and it was approved and paid out the next day, Christmas Eve. It was the largest tax refund in the history of Russia, paid out in one day on a fraud. I mean, if I had genuinely overpaid $10,000 of taxes in 2007, I’d still be waiting for the tax refund today. But an illegal $230 million tax refund was refunded in one day on a fraud. On Christmas Eve.

They actually celebrate Christmas, whatever, 13 days later. But anyways.

KONSTANTIN KISIN: No one’s working at this time anyway. That’s the point. Yeah. Right. So people at the very highest level of government have clearly been involved in making this happen.

Sergei Magnitsky’s Arrest and Torture

BILL BROWDER: So Sergei and I looked at this and we said to ourselves, obviously this is a rogue operation, an inside job, corruption at the highest level. And we also said to ourselves that this couldn’t have been authorized by Putin because he’s a patriot and a nationalist, right? He’s off talking about how the greater good of Russia— this must be something, you know, he must be getting— because, and by the way, this wasn’t our money, this was the Russian government’s money that was being stolen.

So Sergei and I were convinced, wrongly, but we were convinced that this was a rogue operation, and we brought it to the attention at the highest levels in the Russian government. Then the good guys would get the bad guys. So we wrote criminal complaints to the head of all the different law enforcement agencies. I went on television, radio, newspapers explaining the whole scam and putting it out there. Sergei went to the Russian State Investigative Committee, which is their version of the FBI, testified against the police officers who were involved in the fraud. And then we sat back and waited for the good guys to get the bad guys.

Turns out in Putin’s Russia, there are no good guys.

5 weeks after Sergei testified against the police officers, the same police officers came to his home on the 24th of November 2008 and arrested Sergei. They put him in pre-trial detention, and they started to really put the screws to him. They put him in cells with 14 inmates and 8 beds, kept the lights on 24 hours a day to impose sleep deprivation. And they put him in cells with no heat and no window panes, December in Moscow. So he nearly froze to death. They’d move him from cell to cell to cell in the middle of the night. They had him in cells with no toilet, just a hole in the floor where the sewage would bubble up.

And they figured, here’s a guy who wears a blue suit and a red tie. He works in a fancy American law firm, buys Starbucks in the morning on his way into work. They figured they put the screws to him, he’ll do whatever they want him to do. They wanted him to withdraw his testimony, and they wanted him to sign a false confession to say that he stole the $230 million, and they wanted him to say that he did so on my instructions.

So here’s this guy that doesn’t look so powerful, but he had a will of steel. For him, the idea of perjuring himself and bearing false witness was more awful than whatever they were subjecting him to. He just refused. The pressure and the torture and the pain and the unpleasantness just got worse and worse and worse over a long period of time.

The Death of Sergei Magnitsky

He started getting pains in his stomach. He started losing weight. He lost 20 kilos. He went to the prison infirmary, and they diagnosed him as having pancreatitis and gallstones, and they said he needed to have an operation. The operation was scheduled for the 1st of August, 2009.

About a week before the operation, the same people who were torturing him before came to him and said, “Listen, if you sign this false confession, everything will be good.” He refused again. And in retaliation, they moved him from the prison that had a hospital where he was scheduled to have an operation to a maximum security prison called Butyrka, which is considered to be one of the most awful prisons in Russia. And at Butyrka, there were no medical facilities for his operation, and they refused him all subsequent medical treatment.

He went into a terrible downward spiral. He was in constant agonizing pain. He and his lawyers wrote desperate requests to every different branch of the criminal justice system begging for medical attention. Every one of their requests was either ignored or denied in writing.

On November 16, 2009, he went into critical condition. On that night, the Butyrka authorities didn’t want to have responsibility for him anymore, so they put him in an ambulance and sent him across town to a different prison that had a medical wing. They don’t put him in the emergency room, they put him in an isolation cell. They chain him to a bed, and 8 riot guards with rubber batons beat Sergei Magnitsky until he died.

This was November 16th, 2009. He was 37 years old. He left a wife and two children.

I got the news the next morning and it was the most horrifying, traumatizing, life-changing news I could have ever gotten. I assumed that the worst case scenario for him was like a long prison sentence on trumped up charges. I couldn’t have ever imagined that they would kill him.

And when I was finally able to kind of clear my head and think about what I was going to do with this, I made a decision. I made a vow, which is that I was going to put aside my life as a businessman, and I was going to devote all of my time, energy, and resources going after the people who killed him, make sure they face justice. And that’s what I’ve been doing for the last 17 years.

The Nature of Heroism

FRANCIS FOSTER: It’s such a powerful story, Bill, because it’s obviously about many things, but it’s also about the nature of heroism. And we think about heroes looking a particular way or sounding a particular way, but Sergei was a hero in the truest sense of the word.

BILL BROWDER: He really was. He really was. And the thing about it is that he was like an unexpected hero. I mean, in the sense that he was a tax lawyer. He was not a human rights lawyer. He was not a political activist. He’s not Alexei Navalny or a journalist. He was just a tax lawyer working for rich guys, helping them with their taxes.

But when he got thrown into this horrible situation, he did exactly the— I mean, I wish he hadn’t been a hero. I wish he had been a flawed individual and would’ve— he could have testified against me for anything and it would’ve been fine. He’d still be alive. But he was truly— he had principles. And when he was faced with this kind of duress, he did the most heroic thing.

And the one thing I’ve learned a lot over the last 20 years is that sometimes the people you expect to be heroic aren’t, and sometimes the people you had no idea are heroes turn out to be. And Sergei turned out to be an amazing hero.

The Idealism of Sergei Magnitsky

FRANCIS FOSTER: Because that is, I don’t think we can actually comprehend in the West what that’s like to experience, what that’s like to have the weight of a government come down on you and the knowledge that there is literally nothing that you can do. Yeah. And whatever path that you take, however you attempt to redress it fairly, by legal means, you know it’s not going to go anywhere.

BILL BROWDER: Well, this is the interesting thing about Sergei was that up until the very end, he was an idealist. He actually believed that if he filed the complaint or he made a legal application, that somewhere in the system that the law would protect him. I asked him before he was arrested, I asked him to leave. And he said, “Bill, this is not 1937. This is not Stalin’s Russia. The law will protect me.”

And he believed it. And he believed it so much, in a true lawyer’s lawyer way, in his 358 days in detention, he filed 450 complaints documenting all this mistreatment and abuse and all this terrible stuff, because he believed, until the end, probably until they were beating him, that somehow it was going to come out all right. So he was a hero and an idealist, and I guess a naive idealist. And if he had been more cynical like everybody else in Russia, he would’ve signed what they wanted him to sign, and then he’d still be alive.

FRANCIS FOSTER: But also the part of the story, the subsequent part of the story shows that, you say he was a naive idealist, but with your help, he did enact some change.

The Fight for Justice and the Magnitsky Act

BILL BROWDER: He did. He changed the world. His sacrifice. So for me, the idea that he would die and it would be a meaningless death, I just couldn’t live with that. I could not live with this thought that it’d be a meaningless death. And so I made it my life’s work to make sure that there was some meaning to this tragedy.

And the way that we got some meaning for this tragedy is that I wanted to, first of all, I wanted to get justice. I wanted to make sure that the people that did this to him just couldn’t laugh it off and enjoy their money. I mean, I guess me naively, at first we thought maybe we can get justice in Russia. It had become very well known, this whole story. It didn’t get swept under the carpet. I made sure of that. And because Sergei had written all these complaints, we had all this documentary evidence of what had happened to him. Not on the last night of his life, that we got later, but all these complaints.

And so I gave them to the newspapers. There was a Russian opposition newspaper called Novaya Gazeta. They published one of his letters, a long letter, in its entirety on the front page and like 8 pages in for everyone to read. And so it became a national cause célèbre. And I thought at first that we’d be able to get some kind of justice inside of Russia. And a lot of people were talking about it and a lot of people were upset about it.

But the authorities completely circled the wagons, completely and absolutely circled the wagons. And Putin got involved. Putin personally got involved. He got involved and he personally exonerated every single official who played any role, top to bottom, in this whole thing. Everybody. And so it became clear there was no chance of getting justice inside of Russia. So I said, how do we get justice outside of Russia?

And the answer is that these people killed Sergei because they stole $230 million. And the $230 million they stole they don’t keep in Russia because as easily as they stole it, it could be stolen from them. So what do they do with the money? They take it outside the country. And by the way, it’s not like a mystery that that’s what the Russians do. We see them everywhere, all over London and the south of France and Courchevel and Sardinia. I mean, they’re everywhere with their money. Russia is a poor country, but if you see Russians in Europe, you think it’s a rich country because they’re all spending all this stolen money.

And so I came up with this idea, which is that if they killed Sergei for this money and they’re traveling with this money and doing all this kind of stuff, why not take away their ability to travel to the West? And why not take away their ability to use their money in the West? And I took this idea to Washington and I shared it with a Democratic senator named Benjamin Cardin and Republican Senator John McCain. And I told them the same story that I’ve just shared with you and your audience today. And I said, can we freeze their assets and ban their travel? And these two senators said yes. And that became known as the Magnitsky Act.

And it really took off in Washington. And by the time it came for a vote, it passed the Senate 92 to 4. It passed the House of Representatives with 89%. And it became a federal law on December 14th, 2012. And Putin went out of his mind. This was probably the first time that anyone pushed back. I mean, we were living in a world of total appeasement of Putin. Everybody just wanted to appease him. People wanted Russian money, they wanted Russian gas in Germany. And this is the first time that something happened to him that wasn’t to his liking. He couldn’t bluster his way out of this.

KONSTANTIN KISIN: Was he named in the act?

Putin’s Retaliation and the Global Spread of Magnitsky Acts

BILL BROWDER: He wasn’t named in the act, but this was like— so the act basically said Russia is such a corrupt country full of such nasty human rights abuse and dirty business among corrupt officials, and they have such impunity that we have to punish them because they can’t control themselves. They’re such a bunch of dirty barbarians that they can’t control their own country, so we need to impose. And so it was really the ultimate insult to Putin and the ultimate recognition of what’s going on in Russia.

And so as officials started getting sanctioned, he got so mad. He got so mad that he banned the adoption of Russian orphans by American families, in retaliation. And the orphans that are being adopted are the sick ones that are being brought back to the West for medical treatment. I mean, they’re adopted, they get medical treatment, they end up having normal lives. In Russia, they die in the orphanages. So he’s basically sentencing his own orphans to death as a political gesture.

He made repealing the Magnitsky Act his single largest foreign policy priority. And then he started going after me. Death threats, kidnapping threats, Interpol red notices. I’ve been on the Interpol red notice list 8 times.

KONSTANTIN KISIN: What does that mean, Bill?

BILL BROWDER: Interpol, International Police Organization. So if someone is a fugitive — let’s say someone burns your house down in Britain, everyone knows it. If they flee to another country, Britain can put them on the Interpol red notice system, and then France will pick them up and return them. So this is what Russia did to me. They said you’re a criminal, we want you arrested, we want you sent to Russia, so that they could do the same thing to me that they did to Sergei Magnitsky. They applied to the British government a dozen times to have me extradited. They were making movies about me. There were smear campaigns. There were lawsuits. There were probably 200 people working in the Russian government trying to ruin my life because they were so angry with me about the Magnitsky Act.

And they thought that with all this intensity and all this danger and all these threats that I would back down. And they thought that all these threats to America with the adoptions, that these senators would back down. But it had just the opposite effect. The senators decided to make a global Magnitsky Act, to sanction anybody who does this stuff anywhere, then name it Magnitsky, which was the ultimate insult to Putin.

And I started going to other countries and I started getting Magnitsky Acts in other countries. We got the Magnitsky Act in Canada in 2017, here in the UK in 2018, in the European Union in 2020, Australia 2021, and various others — Iceland, Norway, Montenegro, Kosovo. 35 countries now have Magnitsky Acts.

And coming back to Sergei’s legacy and how he’s changed the world — now if you’re a victim of human rights abuse anywhere in the world, you can go to the US or to UK or to Canada and get those people sanctioned. And it scares the hell out of bad guys if they can’t travel, if they can’t spend their money, if their money is not safe, if the money is going to be frozen. It scares them really profoundly.

I think — I don’t know for sure, but I think that there are probably people who are asked to do terrible things that don’t do terrible things because they don’t want their money frozen. They don’t want to become international pariahs. I think that Sergei’s death saves lives. It certainly gives victims some measure of justice.

Attempts to Help Sergei During His Detention

KONSTANTIN KISIN: Bill, while Sergei was in pretrial detention, I imagine you were doing everything in your power to try and help him get him released. Did you ever have contact through intermediaries with the Russian government or other people who you thought, well, if I concede on something, if I pay them a bribe — the Russian way at the time would’ve been something like that. Did you ever have any attempts like that?

BILL BROWDER: We had a million people approaching us with a million different proposals, but you didn’t know who was real and who was not. And what became very clear very quickly was that there were all these sort of criminal justice entrepreneurs. They weren’t part of the system. They were all, “If you do this, you do that.” And none of it sounded credible. And everything that we were seeing was that there was no chance of anything happening. And of course, I would’ve done anything to get him out if there was anything that we could have done to get him out. I mean, and by the way, I didn’t know he was going to get killed. I was just feeling terrible because he was in prison and he was in prison because of me.

KONSTANTIN KISIN: Of course. No, I totally understand. I guess what I’m getting at is, did you ever have a message through the grapevine from the people who were actually doing this to him saying, “Do this and then we’ll leave him alone”?

BILL BROWDER: No, we never got a credible message. And the reason is because they wanted to blame us for stealing the $230 million. So the whole scam was to steal the $230 million, arrest Sergei, and blame me for stealing the $230 million. That was their scam. And they needed the end part so that they could wrap it up in a nice little bow and keep their money.

KONSTANTIN KISIN: That makes sense.

The West’s Failure to Understand Putin

KONSTANTIN KISIN: And do you think that in, you know, I don’t want to call it a mistake obviously, but do you think that the fact you mentioned Sergei was naive and you both thought this was corruption that was below the level of Vladimir Putin, he thought it’s not 1937, people, I’m not going to get put in a Gulag, I’m not going to get killed, et cetera. Do you think effectively that misunderstanding, let’s call it, of Vladimir Putin and his regime is what we have seen since from pretty much every government around the world when it came to understanding his intentions in relation to foreign policy, to Ukraine, to Georgia, et cetera.

Do you think, I mean, I remember I used to, before I did this, I used to work as a translator. And in the 2000s, Russian oligarchs were suing each other in British courts. There was hundreds of thousands and millions and millions of pounds sloshing around for British lawyers, British tax advisors, all kind. And the City of London was awash with Russian money. And because of that, people and the government seemed very reluctant. If you remember, people of both parties, you know, Boris Johnson playing tennis with the wife of some oligarch, Peter Mandelson on Oleg Deripaska’s yacht. There was just absolutely no willingness to recognize the Russian regime for what it was.

BILL BROWDER: You couldn’t be more right. It was absolutely, this country was bought and paid for by Russian oligarchs, and this country would do nothing. I mean, I could barely get a meeting in the Foreign and Commonwealth Office to complain about this or to fight for this or that. During most of this time because everybody was just so enjoying feeding at the trough. And same thing in Germany with the Russian gas and France. Nobody wanted to do anything. Nobody wanted to have anything against Russia.

And coming back to the naïveté that we experienced, it’s going on today. There are people that believe that Putin is ready to negotiate the end of this war. They think, you know, let’s give diplomacy a chance. It’s kind of like thinking that they’re going to let Sergei out of prison. There’s no diplomacy. Putin has no— they don’t do diplomacy in Russia. It’s all win-lose, zero-sum. There’s the dictator and the dictatee. That’s how it works. And there’s no compromise. No one ever compromises in Russia.

And so when I hear about all these ideas that, oh, let’s— right now the European Union, they’re fighting among themselves who should negotiate with Putin. Nobody should negotiate with Putin because the only way that Putin is going to stop is if he’s stopped. It’s not going to be by agreement that this happens. And by the way, the reason that he’s doing this war is that he stole so much money that he’s afraid of his own people. And so the best way to have your own people not get mad at you is to create somebody else for them to be mad at. It’s Machiavelli 101: create a foreign enemy, start a war.

Putin’s Evolution as a Leader

KONSTANTIN KISIN: Why do you think his leadership has changed as much as it has? Because when he first came in, as you mentioned, he was a kind of faceless technocrat. Then he cracked down on the oligarchs. And you know, there’ll be a lot of people who hate his regime who nonetheless will objectively say you couldn’t have a country run by what was called 7 bankers.

BILL BROWDER: You’re probably one of them. I was one of them. I was cheering when he took down Khodorkovsky. I thought, one down, 21 to go. And then he paid Roman Abramovich $13 billion for his oil company and made him the governor of Chukotka region, which is like some state of Russia. So on one hand you take down one oligarch, another one you give them $13 billion. How is that taking down the oligarchs?

KONSTANTIN KISIN: But what I was going to ask you, Bill, sorry, just to— I hear you about the oligarchs and in fact we know that now an oligarch in Russia has become a government-appointed position effectively, right?

BILL BROWDER: It always was. Yeah.

KONSTANTIN KISIN: Well, no, in the ’90s there was a period when they were self-made.

BILL BROWDER: When Putin came in, that was the moment that they became— There’s no such thing as independently wealthy oligarchs. They’re all dependently wealthy. And by the way, people say, how come they’re not rising up right now because the business is so bad and so on? These guys are the most cowardly beta cuck people ever when it comes to Putin. You should see them in his presence. They’re just like these little, you know, they’re all pounding their chests when they’re by themselves, but the moment they’re in Putin’s presence, they’re all just scared to death of him. Cowardly people.

Why Putin Started the War

KONSTANTIN KISIN: And so why do you think his leadership evolved? Because my understanding is the reason that he was, I mean, objectively successful as Russian president for a long time and popular is that the price of oil went up massively from like $9 a barrel to over $100 at one point. And so Russia, which generates almost all of its revenues by exporting oil and gas, was very rich all of a sudden. And he could spend money on, you know, doing up Moscow, making it nice. All sorts of other things, public services, et cetera. Why would a leader of a country that’s flourishing in this way go and start a war that would get the country sanctioned, all of his people sanctioned, cause all sorts of economic turbulence, et cetera?

BILL BROWDER: Because he stole too much money. So he’s been a crook since before he started. He was in the mayor’s office in St. Petersburg, taking, skimming— he’s been, and by the way, nobody in Russia goes into public service to serve the public. If you’re a traffic cop, you stop cars and extract bribes. If you’re a regional planning person, you want to get a planning permission for a building, you extract a bribe. And the bribes get bigger and bigger as you go up.

And so Putin stole an absolute enormous amount of money. Like more money than you can imagine. And by the way, it wasn’t just him. All the people around him stole a lot of money. My guess, my estimate is that over the course of 22 years up until the start of the war, that 1,000 individuals, Putin and 999 individuals had stolen $1 trillion from the Russian government, $1 trillion. And by the way, that is the estimate of capital flight from Russia. And so that’s money that should have been spent on schools and hospitals and roads and public services. Instead, it was spent on private jets and yachts and houses in the south of France.

And you could probably do this on a smaller scale over a shorter period of time and get away with it, but they just stole too much money. I mean, there’s 141 million Russians living in destitute poverty. And 1,000 people living in the most lavish life you can ever imagine. And I believe that Putin saw that all it would take was someone lighting a match somewhere and the whole thing could come— there could be a million people storming the Kremlin. And nobody knows what that match would be. You know, like in Tunisia, a fruit seller set himself on fire and that led to the Tunisian government falling and that led to the Egyptian and Syria and so on and so forth. Nobody knows how these things work, but what Putin knew was that he didn’t want to be sitting in the Kremlin just waiting for the day that people came for him.

And he’s a very smart guy in terms of understanding all this. And so he said, I’m not going to wait for people to get mad at me, and so let’s manufacture an enemy. And the Ukrainians, by almost any definition, before all this stuff happened, weren’t enemies. There was no beef between them. It was completely manufactured. They started calling Ukrainians Nazis and fascists. It has some historical resonance because of the Second World War, and people still think about that in Russia. And they call them Nazis and fascists. They said that they were doing all these terrible things that they weren’t doing. They made up this whole thing in order to have an enemy. And then they went and took Crimea. And by the way, Crimea was a bloodless capture. There was a bunch of soldiers already there. Almost nobody died. His approval ratings went through the roof, and he was sitting there very pretty.

But he needed to keep that up there, and he needed to keep this enemy going. And so then they went into eastern Ukraine. In my estimation, why did they launch a full-scale invasion in February of 2022? This was right after COVID. A lot of leaders in different countries were losing their place because of COVID. People were pretty angry at everyone— everyone was angry at their governments. Putin understood the value of war. They already had a self-proclaimed enemy, which is the Ukrainians, based on this thing. And at this point, it was all about saving his own ass, saving his own skin, not wanting to have the Russian people turn on him after COVID. And I think that’s why he went in.

And I think that it used to be profit maximization when him and all these guys were stealing a trillion dollars. And then they stole too much money and then it was purely about survival. And by the way, if Putin ever loses power, what happens to him? He goes to jail, all his money gets taken away, and one day he’ll be hanging from the rafters.

Putin Cannot Afford to Lose Power

KONSTANTIN KISIN: Well, this is what I don’t actually understand about the rationale with doing this, because once he started this war, the possibility that he’s going to enjoy his billions outside of Russia goes to zero. He will not be able to do that objectively. But also, he knows, of course, that he might be able to do a deal like Yeltsin did, but it’s hard to imagine. And so, I guess what I’m saying is he’s ended any possibility of him surviving comfortably outside of Russia and inside of Russia, which I guess now that I’m saying it out loud means he will not leave power ever. There you go.

BILL BROWDER: He can’t leave power, and so he can never give up. And by the way, if he ends this war, he loses power. He won’t be in power anymore. And I think that’s the most important recognition that anyone can make, which is that all this talk about negotiation isn’t going to go anywhere because he needs the war to stay in power. He needs power. He needs to be in power to stay alive. And that’s what he’s going to do. And even if it’s going to cost another 5 million Russian young men, even if it’s going to cost another half a trillion dollars of resources, he will burn through everything in order to stay in power.

FRANCIS FOSTER: But Bill, he can’t do this indefinitely. There has to be an end at some point, surely. Well, I mean, look at North Korea.

Putin’s Mindset and the Path Forward in Ukraine

BILL BROWDER: North Korea’s been going on for a very long time. I mean, he can really, really take Russia down a terrible dark road. He already has, but it can get a lot darker. Because he doesn’t care about anything other than himself. He has no sense of responsibility, no sense of empathy, no sense of national interest whatsoever. It’s purely about himself. And I think that’s the big misunderstanding in the West is that we have a guy who, I mean, almost nobody else is like that. I mean, Hitler was like that, Stalin was like that, Pol Pot was like that, but it’s kind of hard for us to imagine in our own heads someone being like that in the modern day.

FRANCIS FOSTER: And I think that’s part of the problem, isn’t it? In that we look at Putin through a Western lens and we think, oh, he’s a leader of a country, he must think like us. And because he thinks like us, therefore we must be able to get around a table with him, have a negotiation and give him what he wants because it’s kind of what we would want.

BILL BROWDER: And he’s created a narrative about things that he’s upset with. So he says, “I’m upset with NATO, NATO people joining, Eastern European countries joining NATO. I’m upset with these Nazis and fascists in Ukraine. I have a vision of a grander, of a bigger part of the map that I want it for my—” And he’s created these narratives. And so we in the West say, well, maybe if we give him this or do that or give him a little more of Ukraine, then he’ll calm down. But it has nothing to do with what he wants. All he wants is just to save his own skin. And to save his own skin, he needs to be in power. And to be in power, he needs this war.

And so it’s all this complete sort of— we’re almost negotiating with ourselves based on this fake stuff he puts out there. Why does he put out this NATO stuff and this Nazi stuff? He puts it out for public consumption because the Russian people need something to hang their hat on. They can’t just say we’re having a war for no reason. We need a reason for the war. But that’s not the reason why he’s at war. It’s just a reason for public consumption.

How the West Should Respond

KONSTANTIN KISIN: So how should the West deal with this situation?

BILL BROWDER: What we should do is just let the Ukrainians finish him off. I mean, if we gave them the resources that they need— and we’ve sort of drip-fed resources to them, we’ve given them enough so that they could not lose but not so much that they could win. If we gave them the resources to win, and by the way, they’d be doing us a great service getting rid of this guy who’s threatening us right now. Some Russian-sponsored guys tried to burn down the Prime Minister’s house. I mean, that just came out in court. It’s not like we’re sitting here all immune from this thing.

So how could we deal with this? There’s got to be— either one side is going to win and the other side lose, or vice versa. So either Ukraine is going to win and Russia is going to lose, or the other way around. And what we could do is give the Ukrainians the stuff so they shoot down the missiles coming into Ukraine. Give them the €220 billion sitting in Brussels that belongs to Russia, so they can buy weapons. Give them the means to cut off all Russian oil exports so that Russia has no more money. We could help them a lot. We could help them win this war, but we are all just sort of wanting this negotiation, not wanting to push things too far. And while we’re busy doing that, the Ukrainians are getting on with it as best they can and doing a pretty good job even without what we’re doing.

The Nuclear Threat Question

KONSTANTIN KISIN: I’m very sympathetic to what you’re saying. I have family in Ukraine. People watching the show will be familiar. I don’t want to repeat myself, but I’m also analyzing the logic of what you’re saying. And I don’t know that that works for me because if we give the Ukrainians what they need to win, whatever that means, surely Putin, in the desperate straits that he’s in, will only continue to escalate as much as he can, all the way up to using tactical nuclear weapons? Or like, where do we go?

BILL BROWDER: Well, that is the exact reason— that sort of logic flow that you’ve just laid out is the exact reason why Biden gave the Ukrainians all the weapons they wanted, but he said you can’t use them hitting targets in Russia, which is the worst thing in the world. Even though Trump has cut off Ukraine fully for reasons of his own making, that means that Americans can’t tell Ukraine not to hit Russia. And anyone who has been watching the news, the images of these oil refineries in Moscow and St. Petersburg blowing up are quite extraordinary.

So that was the logic. It’s all going to lead to nuclear holocaust. We don’t want to go there. Let’s not even consider this. But let’s just think about what happens if he uses a nuclear weapon. Does he win the war? So if, let’s say he hits Kyiv with a nuclear attack, what happens the next day? Do the Ukrainians give up? Are they completely discombobulated? I don’t think so. It’s a highly dispersed country. It’s a very big country. The main problem the Russians are having is they can’t get across the front line. Are all the guys operating the drones all dead? No, they’re all over the place.

And so all he’s done is then all of a sudden the Chinese are saying, “Well, we can’t give you any more money.” And to the extent that the Global South is supporting Putin, they all step away. And so Putin becomes an absolute fully defined war criminal having committed atrocities against civilians, and he hasn’t won the war. And so he understands that probably the launch of a nuclear weapon is the end of Putin. I mean, that’s probably the logic. He would have already done it if he thought that that was going to help him. I mean, five years into this war, longer than World War I, I don’t think so.

A Korean War-Style Ending?

And so the answer is that the way this could all find itself over is that if the Ukrainians continue at this pace and continue making life so difficult for the Russians, then I imagine it being like the Korean War. So my prediction is a Korean War type of thing where, by the way, the Korean War is still going on. Nobody ever ended it. You have a front line, you have a demilitarized zone, and they’re not lobbing stuff at each other anymore.

I imagine that at some point it’s going to become so painful for Putin— all these oil refinery attacks and all the attacks on his economy— that he’s not going to then attack Ukrainian civilians anymore, because that’s going to be the quid pro quo. And then you have a front line, and then it eventually just sort of calms down. Nobody declares, nobody negotiates anything, nobody declares peace, and it eventually just becomes reinforced on both sides. And that’s how this war ends. I think that’s the ultimate ending for this whole thing.

What Most People Don’t Understand About Putin

KONSTANTIN KISIN: Normally we finish by asking all our guests, what’s the one thing we’re not talking about that we should be? And you should feel free to answer that. But in addition to that, one of the things I always wanted to ask you was, what is it that you know about the Russian mindset and Vladimir Putin’s mindset that most people don’t understand?

BILL BROWDER: Well, I think the main thing I know about his mindset is that he is a total sociopath. We can’t negotiate with a sociopath. Everybody looks at him and says he looks like us. He’s a Christian. He’s Caucasian. He’s a European, they say. We must be able to talk to him. And there is no talking to him. There’s no similarity between him and us in any possible way. And as quickly as we can dispose of that notion that he’s like us, I think the easier it’ll be for us to come up with the policies we need to contain him.

FRANCIS FOSTER: So, Bill Browder, thank you so much for coming on the show.

KONSTANTIN KISIN: And of course, the story that you told us and Sergei’s story is told very beautifully and in much more detail in your book Red Notice. Bill, thank you so much for coming on the show.

BILL BROWDER: Thank you.

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