The great Edmond Safra founded Hermitage Capital Management with Bill Browder in mid nineties for investments in Russia. Edmond Safra died in a fire in his home in Monaco in 1999 (his death was a freak accident set up by his own bodyguard, evidently not related to Russia or Edmond Safra’s fight with the American Express corporation). After exhausting all legal venues in Russia, Bill Browder produced this video (via emerging markets).
Background from the Hermitage press release: “…Mr Browder’s strategy is to target a leading company with close connections to government and to conduct a forensic examination of its investments. Upon discovering fraud and embezzlement, a very public campaign of exposure and denunciation ensues, followed by partial recovery of funds and huge stock price appreciation. It finally ends with Mr Browder being chased out of Russia.
Hermitage Capital’s campaign against fraud at Gazprom made enormous amounts of money for investors, including many who never put their money in Mr Browder’s fund. He started with $25million in 1996, achieving almost tenfold gains in 18 months and then raised $1billion from new investors. At one stage the pot totalled $4billion and Hermitage became Russia’s biggest foreign portfolio investor. However, Mr Browder offended someone with great power – he insists that he still does not know who – and in November 2005 was refused re-entry into Russia. He has not returned since.”
- Perhaps a mistake: Although it appears that not giving the visa bribe was a mistake, given the prior Browder history with Gazprom (Medeved was awarded the Chairmanship of Gazprom by Putin after he assisted in getting rid of Mikhail Khodorkovsky), likely would made no difference and ensnared Browder even more. I tend to think that Bill Browder understood this.
- Instant classic: Hiring own lawyers to represent the opponent.
- Smart move: Immediately clearing all bank accounts!
Further Reading:
Sergei Magnitsky, Lawyer for Bill Browder’s Hermitage Fund, Murdered in Moscow Prison
Business and Life Lived as an Abstraction
The Bible as a Web 2.0 Business Model
{ 2 comments… read them below or add one }
I use to work for Renaissance Capital in Moscow ; was there when they did not allow Bill Browder to re enter Russia. At the time was VP for their funds of funds (targeting global institutions). Bill’s fund (Hermitage) was our “model to beat”. Troika Dialog and others where all trying to beat them.
Being raised in emerging markets did teach me one simple fact ;
1) Make money quietly
2) Never speak about local politics
Bill did speak a lot …..
Moise, he is an American kid from Chicago. My guess that if Safra had control, it would have been different. But than again, someone has to tell the Russians as it is. The one thing is clear whomever was messing with the Hermitage was taking orders from a very high up.