This book was a recommendation from a friend at a recent wedding. In the first part of the book the author describes how he found investment opportunities in 1990 Russia that helped him create one of the most profitable hedge funds at the time. In the second part of the book he details how he seeks justice for a murdered friend after his fund clashes with the Russian authorities.

Bill Browder   was born in the US, then moved to London in his twenties in 1989 to work for BCG and shortly after for Salomon Brothers   . Through his family history he had an affinity for Eastern Europe and wanted to find a job that allowed him to work there. While working on an advisory project for BCG he realized that many former state-owned companies in post-Soviet Eastern Europe and Russia were severely undervalued. On his investment in Sidanco   he writes:

This was a remarkable discovery. Everyone knew that Lukoil was a steal, since it controlled the same amount of oil and gas as British Petroleum but was ten times cheaper. Now here was Sidanco, sitting on a bit less oil than Lukoil, but not much, only it was six times cheaper than Lukoil. In other words, Sidanco was sixty times cheaper than BP!. […] On 14 October 1997, BP announced they were buying […] shares in Sidanco for a 600 per cent premium to the price we had paid a year earlier. It was a home run.

By buying stocks in these companies and then demanding reforms for better corporate governance and shareholder rights, his fund Hermitage Capital Management   , generated very high returns between 1996 and 2007 and grew its $25 million seed investment to $4 billion. One of his most lucrative investments was in Gazprom   where he subsequently uncovered systematic stealing of assets by its management. (Ironically he showed that only 10% of Gazprom’s assets were stolen, not the 99% market view.) After Putin fired Gazprom’s CEO Rem Vyakhirev and the new management recovered stolen assets, the stock surged “Not 100 per cent - one hundred times.”

The book shows the chaotic transition of Russia into a capitalistic society under Boris Yeltsin and how Browder and well-connected Russian politicians and businessmen could take advantage of it. Browder describes three ways how the oligarchy formed and could quickly amass a lot of wealth:

1. Arbitrage through the voucher privatization. The government distributed vouchers to the whole Russian population which allowed them to acquire shares of more than 12000 companies at auctions (and at a steep discount. Browder writes that the vouchers implied a value of $10B for the whole Russian economy!). However, the population was ill-informed and often so poor that they sold a majority of those vouchers cheaply. Those vouchers were then accumulated by a few people, often the old management of those companies or organized Russian gangs. There are also stories of insiders physically blocking access to the auctions to be able to bid for the shares without competition.

2. Stealing of company assets. Management of the newly privatized companies were sometimes able to sell some of the company’s assets, e.g. a gasfield, at a steep discount to themselves or relatives. Widespread corruption helped those individuals to avoid scrutiny by accounting firms, police, or judges.

3. Russian raiders. Criminal gangs would take over existing Russian corporations through falsified ownership documents by colluding with local law enforcement and judges.

At the height of Browder’s financial success in 2007, he becomes a victim of Russian raiders and at the same time the Kremlin decides to investigate him. This ultimately leads to the death of his advisor Sergei Magnitsky   in a Russian prison and an Interpol red notice for Browder himself. Deeply affected by his friend’s death, Browder seeks justice and starts lobbying the American Senate and House of Representatives to pass a visa ban and asset freezing for Russians implicated in the Magnitsky case. In 2012 President Obama signed the Magnitsky Act   into law which initially sanctioned 18 Russian individuals and which has since been extended to global scope. Inspired by this law The EU followed in 2020 by introducing the EU Global Human Rights Sanctions Regime   .

Both parts of the book give a good insight in 1990s Russian economy and later in the process of US Senate lobbying. The book also nicely complements Navalny’s description of Russia during that time and later in prison in Patriot . In fact Navalny briefly features in Browder’s story since he helped lobby for the Magnitsky Act.

For completeness there are also critical reports about the truthfulness of the story. Read this SPIEGEL investigation   for more details.