Book Cover

There’s a famous Russian proverb about this type of behavior. One day, a poor villager happens upon a magic talking fish that is ready to grant him a single wish. Overjoyed, the villager weighs his options: “Maybe a castle? Or even better—a thousand bars of gold? Why not a ship to sail the world?” As the villager is about to make his decision, the fish interrupts him to say that there is one important caveat: whatever the villager gets, his neighbor will receive two of the same. Without skipping a beat, the villager says, “In that case, please poke one of my eyes out.”

# Review

Bill Browder is the founder of Hermitage Capital Management, which used to be the largest foreign investor in Russia. Browder details his personal journey to Russia and also the events which eventually caused him to leave both Russia and the world of investing.

Browder initially made money with Hermitage by exposing the various oligarchs’ graft and was supported by the Russian authorities. After Putin broke the oligarchs and consolidated his power, Browder quickly found that he was no longer welcome in Russia. Even though Browder eventually moved his business away from Russia, it came to his attention that his fund’s old corporate structure in Russia has been used to commit tax fraud to the tune of hundreds of millions of dollars. In the process of uncovering the fraud, Sergei Magnitsky, a tax advisor working on behalf of Hermitage was arrested and forced to deal with the Kafkaesque Russian bureaucracy while being held in prison under inhumane conditions, eventually leading to his death. Browder then details his journey to seek accountability for Sergei’s death, culminating in the Magnitsky Act, which places sanctions on individuals who commit human rights offenses.

There were several takeaways for me:

• Having political predictability and stability is incredibly important for companies to thrive. Conducting business in a place where the rule of law is respected and upheld is worth a large premium.

• One thing that really stuck out to me is how long it took for the civic dissident within Russia to build up. I’ve chatted with some of my Russian friends about this. Social trust has been eroded over the years by communism and people tend to focus on their personal interests, which oftentimes does not include civic dissent.

• Unaccountable and opaque bureaucracies hurt the best interests of the citizenry. While the Russian bureaucracy (a carryover from Soviet times) is well known to be cold and corrupt. Even in the US, Browder describes an incredible lack of care about the situation and even when mainstream attention is on the case, there was still a staggering amount of self-dealing negotiations by US politicians before the act could be passed.

Browder is an excellent storyteller and I basically read the book in one sitting. It’s important to note that Browder tells one side of the story and there are reports from credible sources about inconsistencies in his narrative compared with other non-Russian sources. Browder was a hedge fund manager in what is basically the financial Wild West, so I can’t imagine that his past actions would be clean by Western standards. Despite this, there is fraud here and Sergei Magnitsky’s story deserves being told.

# Conclusion

Engaging story about fraud and the circumstances in which it was allowed to occur.

# Overall rating: 8.3

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