A year in exile, but still in the game
Richard Orange meets Bill Browder, the investor who is banned from Russia but remains bullish about its future Bill Browder is strangely apologetic for the grandeur of his offices in Hudson House, a Lutyens mansion off Covent Garden. ‘I like the high ceilings,’ he says, scanning the room with a nervous smile, ‘It’s easier to work with some space around me.’ Somehow, though, neither the building’s fine façade nor the daylight flooding in through its high Edwardian windows can hide the sadness of what is at root just an upmarket serviced office. This week will be the first anniversary of Bill Browder’s exile from Russia, and he seems barely to have moved in.
Aleksandr Solzhenitsyn spent his banishment from the Soviet Union mourning his separation from his homeland. More recently, the former oligarch Boris Berezovsky cut a ghoulish figure as he vainly attempted to wield his old political influence from London. Browder, conversely, remains very much in the game. His company, Hermitage Capital Management, is the biggest fund investing in Russia, with more than $3.2 billion under management. It is Russia’s leading shareholder activist, a scourge of bad and corrupt managers in Russian companies from the gas giant Gazprom downwards. Before his visa was rejected at Moscow airport on 13 November last year, Browder had even been an outspoken supporter of Vladimir Putin’s pursuit of oil tycoon Mikhail Khodorkovsky.
‘It’s remarkable,’ he says, peering intensely though rimless glasses, ‘I don’t think it’s ever happened anywhere in the world that the largest investor is banned from the country.’ It hasn’t dampened his enthusiasm for Russia’s growth story, though. ‘My optimism about Russia stems from the price of oil and the fact that Russia is a petro-economy. The reason why the Soviet Union fell apart was because oil was at $10 a barrel and the reason why Russia is now a muscular, nationalistic country is because oil’s at $60 a barrel.’ He claims exile hasn’t changed his day-to-day life: ‘I was working 18 hours a day in Moscow and I’m working 18 hours a day here. I spend my time looking at spreadsheets, analysing companies, thinking about markets.’ His Russian friends are often in London anyway. And a nervousness retained from the ‘Wild East’ days of mid-1990s Moscow, when he hired bodyguards, means he has always ferried back prized possessions to his London flat. ‘I always had the sense that one should live with the deep understanding that you might have to leave at 35 minutes’ notice.’ In some mild version of the Stockholm syndrome, he even says he’s grateful for his banishment. ‘In a certain way it’s a big gift the Russians gave me. After ten years in Russia, I get a nice international perspective in London that was missing in Moscow.’ But the publicity blitz he launched before the G8 meeting in St Petersburg this summer is clearly now over. ‘In the summer I was flying to Berlin and Brussels, Washington and London, and then back to Berlin and back to Washington, trying to get people riled up about my case.’ So why didn’t anyone listen to him? Israel’s decision to invade Lebanon didn’t help, but Browder also thinks Russian attitudes have changed: ‘Western public outcry just doesn’t have much impact on how the Russians decide their policy right now.’ When Putin was asked in July why Browder was barred, he said he didn’t know, but he imagined Browder must have broken the law — not a promising signal.
Browder concedes that his relationship with Putin has changed: ‘Putin and I had a confluence of interests when he first came to power. The oligarchs were stealing money from me as an investor in Russian companies and they were stealing power from him as president. But our interests became different when he won the war with the oligarchs. Once he destroyed Khodorkovsky, they were no longer challenging him: they were all reporting to him. I was still com plaining about corruption, but instead of complaining about his enemies, I was now criticising his friends.’ His problems are mild, though, next to the struggle and imprisonment his grandfather, Earl Browder, endured as head of the American communist party in the 1950s. ‘Being a communist in America then was much tougher than being a capitalist in Russia now.’ Earl Browder married a Russian communist party worker, and it was this Russian blood that drew Browder to the country. Even from exile, he’s ready to defend Russia against its Western detractors.
‘It hasn’t been Putin’s job to make Westerners feel good about him. If you go back to his mission statement, he wanted to improve Russia’s status in the world and clean up the mess the oligarchs had created in the 1990s. By those measures he’s been very successful. The oligarchs are completely disenfranchised, the average Russian is four times better off than before, and everybody’s president is stopping in Moscow on their way to North Korea and Iran, because Russia has an important place at the table.’ And he thinks Russia’s legalistic attack on Shell is reasonable: Russian officials have launched an environmental investigation into the $20 billion Sakhalin oil and gas project, cancelling its permit and threatening criminal charges. Shell’s production contract, signed a decade ago, now looks overly generous, Browder argues; the only scandal is the way the authorities have attacked it on environmental grounds rather than push for a straightforward renegotiation. ‘It shows the draconian way in which they behave in all important negotiations, whether it’s Ukrainian gas prices or their relationship with Georgia. Russians always escalate and play as if it’s their last negotiation, and then they come back and do it again. They never do it in a gentlemanly way.’ This is something Europe is starting to realise as it attempts to tie Russia down to an agreement on gas supplies. Again Browder offers few comforts. ‘What power do the Europeans have in any negotiations with Russia over energy? None that I can think of. The Russians have the absolute trump card in this particular game. They have the ability to destroy any economy by turning off the gas. Anyone who tries to organise a hostile group will be penalised.... The Russians are the masters of using their leverage. There’s no country that has a better capacity to understand what people’s weaknesses are and then exploit those weaknesses.’ The visa row hasn’t stopped Hermitage agitating for shareholder rights, Browder claims, even if its battles have been out of the headlines. And he doesn’t think it will permanently prevent his return. ‘The wheels of justice move slower in Russia than they do elsewhere, but I’m expecting sooner or later they’ll give me my visa back and I can go home.’
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