browder in russia -- 5/30/23
Today's selection -- from Red Notice by Bill Browder. Wall Street entrepreneur Bill Browder ventured into Russia to seize opportunity just after the breakup of the Soviet Union. He made his fortune, though he barely escaped with his life.
"This whole exercise was teaching me that Russian business culture is closer to that of a prison yard than anything else. In prison, all you have is your reputation. Your position is hard-earned and it is not relinquished easily. When someone is crossing the yard coming for you, you cannot stand idly by. You have to kill him before he kills you. If you don't, and if you manage to survive the attack, you'll be deemed weak and before you know it, you will have lost your respect and become someone's bitch. This is the calculus that every oligarch and every Russian politician goes through every day.
"[Russian businessman Vladimir] Potanin's logical response to [journalist] Chrystia [Freeland]'s questions should have been, 'Ms. Freeland, this is all a big mistake. Mr. Browder saw some early drafts of the share issue that should never have gone to the financial regulators. The secretary who released it has been fired. Of course, every Sidanco [a major Russian oil company] shareholder will be treated fairly in the issue, including Mr. Browder's investors and [banker] Mr. [Edmond] Safra.'
"However, because we were in Russia, Potanin couldn't afford to be disrespected by some weak foreign investor, so he had no choice but to escalate. Therefore, his response was along the lines of 'Bill Browder is a terrible and irresponsible fund manager. If he had done his job properly, he would have known I was going to do this. His clients should sue him for every penny he's worth.'
"It was tantamount to an admission of his intent to screw us, and it was on the record.
"Chrystia filed a long story that same week. It was immediately picked up by Reuters, Bloomberg, the Wall Street Journal, and the local English-language daily, the Moscow Times. Over the next few weeks, Sidanco's dilutive share issue became the cause celebre that everyone who was interested in Russian financial markets talked about. The same people also talked about how long I was going to survive.
"It seemed to me that Potanin would now either have to retreat and cancel the issue or include us in it. Instead of folding, though, Potanin contrived to escalate. He and [Russian-American businessman] Boris Jordan held a series of press conferences and briefings in an attempt to justify their actions. But rather than convince people that he was right and I was wrong, all he did was keep the story alive.
"The major downside to what I was doing was that I was seriously disrespecting a Russian oligarch in public, and in Russia that had often led to lethal results in the past. The imagination is a horrible thing when it's preoccupied with exactly how someone might try to kill you. Car bomb? Sniper? Poison? The only time I felt truly safe was when I got off the plane at Heathrow during my visits to London.
"It also didn't help that there'd been a recent case just like mine.
"An American named Paul Tatum, who'd been in Moscow since 1985, ended up in a big fight over his ownership of Moscow's Radisson Slavyanskaya Hotel. During the dispute he published a full-page ad in a local paper accusing his partner of blackmail -- not unlike what I had done in accusing Potanin of attempting to steal from me. Shortly after the ad came out, on November 3, 1996, and despite wearing a bulletproof vest, Tatum was shot dead in an underpass near the hotel. To this day, nobody has been prosecuted for his murder.
"It wasn't a stretch for me to think that I could be the next Paul Tatum."