Red Notice

by Bill Browder

  I went straight for him. When he caught sight of me, he was clearly surprised, but he didn’t overreact. Instead he met me head-on with a meaty handshake. “Bill, how are ya?”

  I cut right to the chase. “Not great, Boris. What’s going on with Sidanco? If this dilutive share issue goes through, it’s going to be a real problem for me.”

  Boris was taken aback. He didn’t want a confrontation at his brother’s New Year’s party. He looked at the other guests, a toothy smile plastered to his face. “Bill, it’s all a big misunderstanding. Don’t worry about a thing.”

  He turned his attention to a silver tray of hors d’oeuvres and carefully picked one. Avoiding my gaze, he said, “Tell you what. Come over to Renaissance tomorrow at four-thirty and we’ll sort it out.” He popped the morsel into his mouth and spoke freely, food clinging to his gums and teeth. “Seriously, Bill. Everything’s going to be fine. Have a drink. It’s a New Year’s party!”

  And that was that. He was so convincing—and I so wanted to believe him—that I stayed at the party for a while and left with some measure of calm.

  I woke the next morning in the darkness (in January, the sun in Moscow doesn’t rise until around 10:00 a.m.) and went to work. By the time I headed to Boris’s office the sky was dark again. At 4:30 p.m. sharp I walked into Renaissance Capital, which was located in a modern glass office building close to Russia’s White House, the big white building where the government sits. I was unceremoniously shown to a windowless conference room. I was not offered anything to eat or drink, so I sat there and waited.

  And waited.

  And waited.

  After an hour my paranoia began to get the better of me. I felt like a fish in a tank and I started to peer around for hidden cameras, though I couldn’t see any. Regardless, I was starting to think that Boris had lied. Everything was not going to be fine.

  I was ready to leave when the door finally opened—only it wasn’t Boris. It was Leonid Rozhetskin, a thirty-one-year-old Russian-born, Ivy League–educated lawyer whom I’d met on a few occasions (and who would, a decade later, be murdered in Jurmula, Latvia, after a spectacular falling-out with various people he did business with).

  Leonid, who’d clearly watched the film Wall Street one too many times, had slicked-back, Gordon Gekko–styled hair and sported red suspenders over a custom, monogrammed, button-down shirt. He took the chair at the head of the table and laced his fingers over one knee. “I’m sorry Boris couldn’t make it,” he said in lightly accented English. “He’s busy.”

  “I am too.”

  “I’m sure you are. What brings you here today?”

  “You know what, Leonid. I’m here to talk about Sidanco.”

  “Yes. What about it?”

  “If this dilution goes forward, it’s going to cost me and my investors—including Edmond Safra—eighty-seven million dollars.”

  “Yes, we know. That’s the intention, Bill.”

  “What?”

  “That’s the intention,” he repeated matter-of-factly.

  “You’re deliberately trying to screw us?”

  He blinked. “Yes.”

  “But how can you do this? It’s illegal!”

  He recoiled slightly. “This is Russia. Do you think we worry about these types of things?”

  I thought of all my clients. I thought of Edmond. I couldn’t believe this. I shifted in my seat. “Leonid, you may be fucking me over, but some of the biggest names on Wall Street are invested with me. The pebble may drop here, but the ripples go everywhere!”

  “Bill, we’re not worried about that.”

  We sat in silence as I processed this.

  He looked at his watch and got up. “If that’s all, I have to go.”

  Shocked, I tried to think of something else to say and blurted, “Leonid, if you do this, I’m going to be forced to go to war with you.”

  He froze, and I did too. After a few seconds he began to laugh. What I’d said was preposterous and we both knew it. Still, while I didn’t exactly want to take the words back, I wondered what exactly I’d meant. Go to war? Against an oligarch? In Russia? Only a fool would do that.

  My nerves shuddered but I remained stock-still. When Leonid was finally able to contain himself, he said, “Is that so? Good luck with that, Bill.” Then he turned and left.

  I was so upset that for several seconds I couldn’t move, and when I finally could, I shook with humiliation, shock, and a ton of trepidation. I marched out of the Renaissance offices in a daze into the minus-fifteen-degree Moscow night. I climbed into my car, a secondhand Chevy Blazer that I’d recently bought, and Alexei put it in gear and started for my apartment.

  After a few minutes of silence I opened my cell phone and tried to reach Edmond in New York. My first few attempts failed, but eventually I got through. His secretary told me he was busy, but I insisted that we needed to speak. I was afraid to talk to him, but now that it was clear that we were about to get screwed out of $87 million, I had to explain the situation. He was calm, but clearly upset. Nobody likes to lose money—and Edmond was a notoriously bad loser. When I had finished, he asked, “What are we going to do, Bill?”

  “We’re going to fight these bastards, that’s what. We’re going to go to war.”

  The words were mine but they still felt foreign.

  There was a silence. The line crackled. “What are you talking about, Bill?” Edmond asked seriously. “You’re in Russia. You’ll be killed.”

  I gathered my wits. “Maybe I will, maybe I won’t. But I’m not going to let them get away with it.” I didn’t care if I was being brave or stupid, or if there was even a difference. I’d been backed into a corner and I meant what I said.

  “I can’t be part of this, Bill,” he said slowly, safe in New York, 4,650 miles away.

  I was not safe, though, and it filled me with adrenaline. I ran with it. “Edmond,” I said as Alexei pulled the car around onto Bolshaya Ordynka, the street I lived on, “you’re my partner, not my boss. I’m going to fight these guys whether you’re with me or not.”

  He didn’t have anything else to say and we hung up. Alexei parked in front of my building, the engine idling and the heat blasting. I got out and went upstairs. I did not sleep at all that night.

  The next morning I walked into my new office, a bigger space that we’d moved into a few months earlier, with my head down. Regret, along with a lot of uncertainty, had crept into me overnight. But when I reached the reception area, a commotion shook me from my thoughts. Packed into the room were more than a dozen heavily armed bodyguards. The one in charge came up to me, his hand outstretched, and in an Israeli accent pronounced, “I’m Ariel Bouzada, Mr. Browder. Mr. Safra sent us. We have four armored cars and fifteen men. We’ll be with you for as long as this situation lasts.”

  I shook Ariel’s hand. He was roughly my age and shorter than me, but everything about him was tougher, stronger, and more menacing than I could ever be. He walked with an air of authority coupled with the imminent threat of violence. Apparently, Edmond was going to join my fight after all.

  After meeting each of the senior bodyguards I retreated to my office and sat down at my desk. I put my head in my hands. How am I going to take on an oligarch? How am I going to take on an oligarch? How am I going to take on a goddamn oligarch?

  By meeting him head-on, that’s how.

  I gathered my team in our small conference room. I then went to the stationery cabinet and got a ream of white paper and some tape. I dropped the paper on the table and held out the tape, telling everyone to cover the walls and make the whole room into a whiteboard. “Get out your markers,” I announced. “We need to come up with ideas that will cause Vladimir Potanin economic pain that is greater than the benefit he’ll get from screwing us. All ideas are good ideas. Let’s get to work.”

  13

  Lawyers, Guns, and Money

  We hatched a three-part plan that would sequentially ratchet up the pressure on Potanin.

/>   The first part was to expose the dilutive share issue to Potanin’s Western business contacts. As a billionaire oligarch, he had a lot of business interests that weren’t directly related to Sidanco. These included joint investments with men such as George Soros, and entities such as the Harvard University endowment and the Weyerhaeuser pension fund.

  Edmond and I split up the list and called each personally. After our discussions, we sent them a PowerPoint presentation detailing the dilutive share issue. Our message was simple: this is how Potanin is screwing us. If you don’t stop him, you could be next.

  Most of these people then contacted Potanin and complained. I wasn’t privy to their conversations, but I imagined them saying that this dilutive share issue would compromise the value of the investments they had together and that he should stop what he was doing to us out of self-interest.

  We waited for Potanin’s response, thinking he might back off. But unfortunately, he didn’t. All he did was escalate. He probably thought, Who is this little shit from Chicago? I’ve spent a lot of time and effort cultivating these relationships, and now this guy wants to ruin my good name! How can this be happening?

  It was a good question. Every other time a foreigner got ripped off in Russia, they would engage in heated brainstorming sessions behind closed doors, attempting to figure out how to resist (just as we had done). But then their lawyers and advisers would point out that retaliation was infeasible and dangerous (just as Edmond had done initially), and after all the tough talk, they would slink away like wounded animals.

  But this wasn’t every other time. I wasn’t an employee of a big investment bank or Fortune 500 company. I was a principal in my own hedge fund business. What Potanin didn’t understand was that I was never going to let him get away with this without a fight.

  Another person who didn’t understand this was Sabrina. She was fully aware of my intentions, and from the outset she was not happy about them. I’d spoken to her the same night that I told Edmond, and she was hysterical. “Bill, how can you do this to us?” she shouted over the phone.

  “Sweetheart, I have to do this. I can’t let these guys get away with it.”

  “How can you say that? How can you be so selfish? You’re a father and a husband. These people will kill you!”

  “I hope not, but I have a responsibility to the people who trusted me with their money. I got them into this mess, I have to get them out.”

  “But who cares about them? You have a family. I don’t understand why you can’t just have a normal job in London like everyone else we know!”

  She was right about having a family, but I was so angry and indignant with Potanin that I couldn’t hear her.

  We hung up at a complete impasse, but for better or worse I couldn’t dwell on Sabrina. I was just starting this fight and had to carry on.

  Unfortunately, stage one failed. Still, it had caught Potanin’s attention. I’d sliced open a vein and let the blood drain into the water, and by the end of the week Potanin’s shark, Boris Jordan, showed up.

  Potanin must have given him a real earful, because when Boris called he was irate and rattled. “B-Bill,” he spluttered, “what the hell are you doing calling our investors?”

  I tried to sound as calm as possible as I said, “Didn’t Leonid tell you about our meeting?”

  “Yes, but I thought you understood the score.”

  I continued to play along, praying that my voice wouldn’t crack. “What score?”

  “Bill, you don’t seem to understand—you’re not playing by the rules!”

  I eyed one of my burly Russian guards standing just by the entry to the office. Scared or not, I’d thrown caution to the wind when I decided to go to war with these people.

  With a steadiness that surprised even me, I said, “Boris, if you think I’m not playing by the rules now, wait until you see what I’m about to do to you next.” I didn’t wait for his response and hung up. I felt as high as a kite.

  We then forged ahead to stage two, which was to make the whole story public.

  Foreign reporters were a staple of Moscow’s expat community and I had come to know a number of them, a few quite well. One of these was Chrystia Freeland, the Moscow bureau chief of the Financial Times. An attractive brunette a few years younger than me, she stood at barely five feet tall. Not that you ever thought of her as short, though; she had a zealous fire in her belly, and what she lacked in physical stature she made up for in her approach to life. In various social interactions, Chrystia had made it clear how hungry she was for an oligarch story, but couldn’t find anyone brave enough (or stupid enough, depending on your perspective) to speak on the record—until now.

  I called her up and we agreed to meet at my favorite Moscow restaurant, a Middle Eastern place called Semiramis. As we ordered, she produced a small black tape recorder and placed it in the middle of the table. I’d never worked with the press before. I was new to the whole process, so I launched into the story from the very beginning. The waiters brought hummus and baba ghanoush, and Chrystia scribbled a few notes as I spoke between bites. Then came the lamb kebabs. I kept talking, and she kept listening. Finally, I was finished. Her reticence had been a little off-putting and a small voice inside my head wondered if my tale was as good as I thought it was. As the mint tea and baklava arrived, I asked, “So—what do you think?”

  I tried not to fidget as she calmly wrapped her hands around her gilt tea glass and looked up. “Bill, this is huge. I’ve been waiting for something like this for a long time.”

  The following day Chrystia called Potanin to get his side of the story and he reacted in typical—and perfect—Russian fashion.

  Under normal conditions, this would have been the obvious point for him to back down. Potanin was making billions of dollars on the recent success of the BP deal. Why risk that so he could grab a couple of percent from us? But these were not normal conditions. This was Russia, and the far more important consideration was to not show any weakness.

  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.

  Potanin’s logical response to Chrystia’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 shareholder will be treated fairly in the issue, including Mr. Browder’s investors and Mr. 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 célèbre 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 Boris Jordan held a series of press conferences and briefings in an attem
pt 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.

  Naturally, I took precautions, and I trusted the fifteen bodyguards Edmond had assigned to me. Throughout the conflict, whenever I moved around Moscow I’d travel in a convoy made up of a lead car, two side cars, and a trail car. Near my home, the lead car would peel off so that two of the guards could arrive a few minutes before the rest and check for bombs or snipers. Then the other cars would pull up and more guards would jump out, create a protective cordon, and take me safely into the building. Once I was upstairs, two men sat on my sofa with loaded submachine guns as I tried to sleep. Some of my American friends thought this arrangement was pretty cool, but I can definitively say that there’s nothing cool about having giant bodyguards armed to the teeth in your home at all times, even if they are there for your safety.

  With stage two also having failed, we enacted stage three of our plan to stop Potanin. It was a desperate play, and if I didn’t succeed I wasn’t sure what I would do or how my business would survive.