Reg and Charlie’s dad recently participated in a local Ironman competition. Their mom had the harder job, tending to the two little boys. To bail her out, we volunteered to keep the baby while everyone else cheered dad on. As a measure of their gratitude, they sent us a copy of William Browder’s "Red Notice: A True Story of High Finance, Murder and One Man’s Fight for Justice."
Browder got an MBA from Stanford, but being a West Coast guy, among other failings, he didn’t fit the typical investment banker profile. After Communism collapsed no one else wanted to go to Eastern Europe, so he volunteered. His grandfather, a lifelong Communist, once lived in Russia and ran as a U.S presidential candidate. As an act of rebellion, Browder aspired to be the biggest capitalist in Russia.
Warren Buffett once likened his early investment style as picking up discarded cigars and getting a couple of puffs. In Russia, Browder instead found whole cigars laying around. Russian stocks, for a myriad of reasons, were incredibly undervalued. His company, Hermitage Capital Management, became the largest foreign investment company in Russia. He became fantastically wealthy, and his clients did well, too, uncommon for hedge fund investors.
In addition to finance, "Red Notice" provides a window into Russian society. In America, we follow the rule of law; Russia has no history like that. Russia remained a feudal society for centuries, rode communism for awhile and ended up in the 21st century. A crescent of prosperity extends from Genoa to Glasgow in Western Europe and across the Atlantic that depends, in part, on the rule of law. Russians do not share this tradition.
Browder didn’t set out as a shareholder activist but quickly realized his investments would be stolen unless he took strong actions. To Westerners, this situation seems Kafkaesque, but Russian oligarchs roll this way and can explain how Vladimir Putin became the world’s wealthiest man.
Exposing Russian corruption, Browder made many enemies. He legally spirited most of his money out of Russia. His top aides escaped, sometimes by sheer luck. His close friend and company attorney, Sergei Maginsky, refused even to try leaving his country because “I did nothing wrong.” Maginsky’s “crime” was exposing a $265 million tax theft by crooked cops; he was beaten to death in prison.
Maginsky’s death spurred Browder to lobby Congress and the Obama administration for banking and travel sanctions against all parties involved in Maginsky’s brutal murder. The Maginsky Act of 2012 received scant press at the time, but Browder knew Russians shipped wealth overseas. Financial penalties would bring justice for those responsible for Maginsky’s death. Our allies, Canada and the European Federation, followed suit, which helps explain today’s geopolitical machinations. Enjoy Independence Day!
You can’t always get what you want, but Buz Livingston, CFP can help figure out what you need. For specific recommendations, visit livingstonfinancial.net or come by the office in Redfish Village, 2050 Scenic 30A, M-1 Suite 230.