Red Notice


This book is an investor’s first-person account of his experiences in the Russian economy in the 1990s and the early aughts.  What began as a satisfying and profitable undertaking turned over time into a nightmare and a cautionary tale about the nature of Russia today.

Bill Browder arrived in Russia as a young management consultant. He speaks of one assignment in which he was sent to advise the new owners of a Russian fishing fleet who were considering whether to borrow $2.5 million in order to buy $10 billion worth of fishing boats. (The answer, of course, was YES.)

Experiences like this convinced him that there was money to be made as Russia’s economy was being privatized and where companies appeared to be drastically undervalued.

Browder founded Hermitage Capital Management, which invested early in Russian businesses and did very well as stock prices ratcheted sharply upward.  At one point, he mentions that Hermitage’s return on investment was 100 times, i.e., $100 for every dollar invested.  Hermitage was for a time the largest foreign investor in Russian markets.

Unfortunately, the rule of law did not keep pace with economic growth.  Ultimately, politically connected insiders used various means to enrich themselves at the expense of their countrymen.

Here’s a 2009 youtube video, made by Hermitage, that explains what happened when government agents and crooks set out to strip the fund of some of its holdings.

Later in 2009, Sergei Magnitsky, the Hermitage tax lawyer mentioned in the video, was beaten to death in the last of several hellhole prisons where he had been starved and tortured.  Magnitsky, an honest and brave man, refused to his death to lie and take responsibility for crimes he had not committed.  We all should wish to bring such strength if faced with such circumstances.

Hermitage used Magnitsky’s prison diaries to identify the authorities who punished and then killed him.  In a rare show of political accord, Congress voted in 2012 to deny U.S visas to those individuals and to ban them from participation in the American banking system.  (The Obama administration resisted for a time, fearing the bill would damage its Russian “reset,” but it relented in the face of adamant bipartisan support.)

The Putin Record

The Russian economy is not nearly as large or as transparent as the American one, and its uneven distribution of wealth is much more striking than ours.

In 2013, Credit Suisse reported that more than one-third of Russian wealth was held by about 100 individuals. The most wealthy of those was a man whose net worth was estimated at more than $11 billion.

Actually, the richest man in Russia is Vladimir Putin, the Russian president.  He began building his net worth after leaving the KGB (now FSB) and taking an administrative job in St. Petersburg.   When $100 million worth of raw materials were set aside to exchange for food for the then-hungry city, the sales were completed, but no food ever arrived.  A city council member, now deceased, said Putin pocketed the money as well as proceeds from other asset sales.

During his first presidential terms, Putin’s government imprisoned an insufficiently servile oligarch, Mikhail Khodorkovsky, then the CEO of Yukos Oil.  The action sent a message.  Afterward, according to Browder, other oligarchs cut Putin in for nice helpings of equity in exchange for personal protection.  (The New Yorker ran a 2015 profile of Mikhail Khodorkovsky, who was released and exiled after 10 years in prison.)

The lowest estimates of Putin’s wealth run to $40 billion, but Browder believes the real total is closer to $200 billion.  Who knows or cares, except him?

Unfortunately, Magnitsky is not the only Russian who has died on the wrong side of Putin’s regime.  The dead and disappeared include hundreds of journalists.  A non-cooperative former FSB agent was poisoned with polonium-laced tea in a 2009 meeting at a London hotel.  In late 2015, a prominent Russian politician was shot in the back and killed near the Kremlin; his most recent offense had been to oppose Russian adventurism in Ukraine.

Browder himself was convicted of false charges in a Russian show trial and could have been extradited to serve a prison sentence in Russia if western European companies had not intervened to prevent Interpol from acting on the order.

Our political system has wacky aspects, it is true, but we all are much more fortunate than the beleaguered citizens of Russia.

The Book

“Red Notice” is an interesting read because it has a good story to tell, but for a self-made billionaire its author is a bit full of himself.  (Does he mention that he graduated from Stanford Business School?  Why yes, yes he does, several times.) It’s a little surprising that so much of the book is devoted to his personal bio and family life when the details of his improbable career and unfortunate persecution are the real substance of what he has to share.  To his credit, he has devoted years to agitating for accountability in the Russian government and seeing to the upbringing of Sergei Magnitsky’s two fatherless sons.

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