(Illustration by Darren Hopes)

Reversal of fortune

William Browder, AB’85, was once the biggest capitalist in Russia. After his lawyer was tortured and died in jail, he became one of the Kremlin’s fiercest enemies.

It seems so long ago now, the moment he thought he’d escaped the worst. In 2007, almost two years after being stripped of his visa and expelled from Russia—his home and headquarters for nearly a decade, the place where he made an immense, improbable fortune—investment banker William Browder, AB’85, was on the phone with his lawyer, listening to him explain the huge fraud Browder had narrowly avoided. The scheme had been elaborate, involving a series of phony court filings secretly expropriating $1 billion from his firm, Hermitage Capital Management, to organized criminals and corrupt government officials.

But when the perpetrators arrived at the banks to claim the money they’d stolen, they found nothing there. The accounts were empty. Wary after his expulsion, Browder had quietly withdrawn everything. Weeks after the failed theft, his lawyer pieced together what had happened. “And I began to laugh sort of nervously, but happily,” Browder recalls, “because we had successfully avoided them grabbing our assets.” His lawyer, a 36-year-old Russian named Sergei Magnitsky, didn’t laugh.

Instead he warned Browder, “Russian stories never end this way.”


For Magnitsky, the story ended in death. Looking deeper into the attempted theft, he uncovered another crime, a $230 million tax fraud linked to the same shell companies and the same criminals and corrupt officials who’d tried to defraud Browder’s firm. When Magnitsky reported what he’d found to the authorities, he was arrested and accused of the crime himself. He died almost 12 months later in a Russian jail cell, sick and thin and bruised. Investigators later concluded that he was tortured.

For Browder, anguished and transformed by Magnitsky’s death, the story isn’t over. Once the largest foreign portfolio investor in Russia, whose conduct typified to some the recklessness and rapacity of post-Soviet capitalism, Browder has become a crusader for human rights. Once among Vladimir Putin’s most vociferous cheerleaders, firm in his belief—despite others’ skepticism, and despite Putin’s own encroachments on business and civil liberties—that the Russian president was acting in the best interests of his people, Browder has now become a vehement enemy of the Russian state.

Magnitsky’s grave. (Photography by Dmitry Rozhkov, CC BY-SA 3.0)

Mostly, he’s earned Russia’s ire by telling Magnitsky’s story to anyone who will listen. For three years Browder has lobbied Western governments to enact sanctions against the Russian officials involved in Magnitsky’s detention, brutal treatment, and death—laws “naming names, banning visas, and freezing accounts,” as he puts it. His relentlessness led to the Magnitsky Act, signed into US law last December, which prevents complicit Russian officials from visiting the United States or investing money, depositing assets, and owning property here. It also freezes their current assets. Vigorously opposed by the Kremlin, the Magnitsky Act has soured US relations with Moscow and earned Browder a fresh round of death threats and reprisals from the country where he once lived.

He presses on. In Europe and Canada, blacklist laws similar to the Magnitsky Act are making their way through parliaments and legislatures; campaigning for them has become, Browder says, a full-time job, which he conducts on top of his investment business. “I’m working 16 hours a day, seven days a week.”

So he talks about Magnitsky, to politicians and policy makers and reporters, some of them the same ones to whom he once raved about Russia’s boundless potential. During the past few years, he’s appeared in dozens of newspapers and magazines: the New York Times, the Washington Post, the Daily Telegraph, the Financial Times, Foreign Policy Magazine, Newsweek, Time, Forbes.

Some of the published stories, in tidy rows of black frames, line the conference room walls of his London office. It’s a kind of monument to Magnitsky’s suffering and to Browder’s quest, driven by grief and anger and remorse. Headlines call out in English, French, German, Dutch, Cyrillic. “Dying in Agony,” reads one from London’s Sunday Times. From Barron’s: “Crime and Punishment in Putin’s Russia.” And from Italy’s l’Espresso magazine, “Browder Contro Putin.” News photographs show Magnitsky’s half-smiling office portrait, his grieving mother, his casket ringed with mourners.

Taking a seat at the head of the conference room’s long wooden table, Browder asks, “Well, should I tell you the Magnitsky story from the beginning?” Then he takes off his glasses, rubs his face, and begins.


Browder graduated from Stanford business school in 1989, the year the Berlin Wall fell and capitalism came flooding into the former Soviet bloc. But his Russian connection goes back further, to  a grandfather who led the American Communist Party during some of its most robust and raucous years. Born in Wichita, Kansas, in 1891, Earl Browder joined the Socialist Party at age 14. By the time he was 30 , he’d been to jail twice for opposing the draft and World War I, and he’d gone from bookkeeping and factory work to union organizing and activism. 

The Comintern invited Earl to Moscow in 1921 and again in 1926 as part of a labor delegation. He married a Russian woman and began working for the American Communist Party. In 1934 he ascended to the party’s highest post, general secretary. Earl led the party—running for US president twice—until 1945, when he was kicked out for suggesting that communism and capitalism could coexist. (In a Harper’s essay 15 years later, he wrote that Stalin had personally ordered his expulsion.) Earl spent the 1950s defending himself against accusations from Senator Joseph McCarthy and the House Un-American Activities Committee, and fighting a deportation order against his wife, Raissa, that dated back to the 1930s.

“So this was my family,” Browder says. After a fairly ordinary American childhood in Hyde Park, where his father, Felix, chaired the University of Chicago math department and Browder earned a degree in economics from the College, that family offered an ancestral link back to Russia. Also, Browder thought to himself in 1989—as the Wall was coming down, communism was crumbling, and the ink was drying on his new MBA—it offered a comparative advantage in business. Looking for jobs that would send him to Eastern Europe, he found one with the Boston Consulting Group in London.

His first assignment took him to Poland, to a failing bus factory in a town on the Ukranian border. There, reading the newspaper one morning, he stumbled on his calling: a series of financial statements for the first privatizations of state-owned Polish companies. A few informal calculations revealed that the companies were being sold for less than half of their previous year’s profits. Browder took out his entire life savings, $4,000; converted it to Polish zloty; and bought shares in a tire company, a bank, and a trading company. In the next 12 months, their value went up ten times. “Now, if you’ve ever made ten times your money on anything,” he told an audience during a 2009 Stanford talk, “you’ll know that it releases a certain chemical in your body. And you want that chemical released again.” 

A couple of years later, working for Salomon Brothers, Browder declared himself the firm’s investment banker in charge of Russia, a job no one wanted in a department that didn’t yet exist. “This was 1992,” Browder said. “There was no investment work in Russia.” Still, he wrangled a nickel-and-dime assignment advising on a privatization deal for a fishing trawler fleet in Murmansk, in the far northwest reaches of Russia, 300 miles beyond the Arctic Circle. There he discovered a similar situation to the one in Poland: the company was being privatized for a fraction of its real value. Its 100 ships were worth $1 billion, he estimated, but the total price of shares was only $5 million. He told the company’s managers to buy the 51 percent stake they’d been offered.

Afterward, instead of returning to London, where he was based, Browder went to Moscow. The whole country, he discovered, was up for sale at absurdly low prices. “The entire value of Russia  in 1992 was $10 billion,” he said. “For the whole country. All the oil, all the gas, all the metals, all the everything. Ten billion dollars.” He convinced his bosses at Salomon to give him $25 million to invest. Seven months later he’d turned it into $125 million. Not long after that, Browder left Salomon to start his own management fund. He was 32 years old.


Browder moved to Moscow in 1996 without knowing a word of Russian. He had $25 million in initial capital from Lebanese-born banker and billionaire Edmond Safra. Browder called his new company the Hermitage Fund (now Hermitage Capital Management) after the State Hermitage Museum in St. Petersburg, the place where Russia kept its treasures. His first office furniture consisted of a picnic table and chairs.

Browder began investing in large but little-known and vastly undervalued companies. The ability to conduct his own firsthand research gave him an advantage over Wall Street investors an ocean away in New York, who had to rely on Moscow brokers. “So I went and visited the oil company that traded at one-tenth the valuation of Lukoil,” a giant Russian oil company, Browder told his Stanford audience. “And there was no difference.” At the less-famous firms, he found “the same surly management, the same rusting oil derricks, the same bad tax inspectors, the same everything.” But their shares cost 10 percent of those of better-known firms like Lukoil. In the same spirit, he invested in Siberian oil fields and chocolate factories on the Volga River.

Browder at the 2011 annual meeting of the World Economic Forum in Davos. (Copyright by World Economic Forum; photography by swiss-image.ch/Michael Wuertenberg, CC BY-SA 2.0)

In the first month, Browder’s fund went up 35 percent. “Not in a year, but in a month.” Seventeen months after that, it was up more than 800 percent, attracting more than $1 billion in investments as more and more investors joined. Browder was featured on the front pages of newspapers. Overjoyed clients invited him to their yachts. “I thought I’d just figured it all out.”

Then in August 1998, the financial crash. Awash in debt, Russia defaulted; its currency devalued, and its stock market dropped 88 percent. Hermitage’s $1 billion suddenly shrank to $100 million. But more alarming than the financial meltdown, he says, were the new enemies it unmasked: Russian oligarchs.

They’re infamous now, but they were mostly unknown then: a powerful, small, and super-rich elite who’d acquired majority shares in almost every Russian company. After the crash, most Western investors withdrew their money and went home, and with them went the oligarchs’ strongest incentive to behave. What followed, Browder told the crowd at Stanford, was “an orgy of stealing”—financial misbehavior of almost every kind. “Asset stripping, transfer pricing, dilution, embezzlement. You name it, they were doing it.” With a 1 or 2 percent ownership stake in companies that the oligarchs were fleecing, Browder saw Hermitage losing money. He decided he had two choices: leave or fight. “I could not just watch it happen.”

He fought. He became what he calls a “shareholder rights activist,” exposing corruption, embezzlement, and mismanagement to force reforms. After a company cleaned up, its share price rose. “My big approach to Russia was that it was a flawed country,” he says, “but trying to fix some of those flaws created opportunity.” While other shareholders urged caution and quieter methods, Browder hired forensic fraud investigators, dug up dirt, filed lawsuits, called reporters. He took on the majority shareholders of the oil firm Si­danco, the electricity monopoly UES, the national savings bank Sberbank, and oil and gas company Surgutneftegaz. He started getting death threats; he employed 15 bodyguards.

Browder’s most famous fight involved Gazprom, Russia’s mammoth gas company. The theft and corruption he exposed there—managers were stealing “an oil company the size of Exxon out of Gazprom,” he said—prompted parliamentary hearings and shareholder votes. Seven months later, Putin fired Gazprom’s boss; actions like that helped convince Browder that his interests aligned with Putin’s. Between 1999, when Browder started buying shares, and 2005, Gazprom’s stock price went up 100 times. Hermitage’s fund went up 40 times, from $100 million to $4 billion. But Browder’s coerced clean-ups were causing dangerous people to lose money.

Returning to Russia after a trip to London in November 2005, Browder was stopped at Moscow’s Sheremetyevo Airport and thrown into detention for 15 hours. The next day he was deported back to London and declared a threat to Russia’s national security.


It was a sign of worse things to come. Browder understood that. In 2003 he’d seen Mikhail Khodorkovsky, Yukos Oil’s chief and once Russia’s richest man, brought up on phony fraud charges and sentenced to eight years in prison after falling afoul of Putin. Browder had at first cheered Khodorkovsky’s undoing; he was one of the executives Browder had battled. As Browder told the New York Times in 2011, he didn’t realize until later that the Putin government’s crackdown against the oligarchs was a sign less that it was trying to root out the oligarchs’ corruption than that government officials were moving in on their turf.

His own expulsion shocked him into realization. It occurred to him he could end up like Khodorkovsky. “I didn’t want to be another victim like him,” Browder says. From London, his base of operations ever since, he evacuated Hermitage’s employees from Moscow. He began liquidating the firm’s Russian holdings and quietly withdrawing the money, leaving a skeletal presence in the country in case his visa was reinstated and it became safe to return.

Then, on June 4, 2007, 50 interior ministry police officers raided Hermitage’s office and that of its attorneys, Firestone Duncan. This was the firm where Magnitsky worked as a lawyer. Claiming they were investigating underpaid taxes, the police took documents, computers, corporate seals, and articles of association for holding companies through which Hermitage made its investments. When a junior lawyer at Firestone Duncan protested the raid, he was beaten so badly he had to be hospitalized.

As Magnitsky later discovered, the seized documents and seals were used to transfer ownership of three Hermitage holding companies to a convicted murderer recently released from prison. Then backdated contracts were forged, showing that those holding companies owed $1 billion to three empty shell companies. Those companies then sued Hermitage’s former holding companies in court, and in a hearing that lasted five minutes, three lawyers hired by the perpetrators pleaded guilty and a judge ordered the holding companies to pay $1 billion to the three empty shell companies. 

But the bank accounts were empty. Months later, after getting a strange and unexpected phone call from a bailiff at the St. Petersburg Arbitration Court, inquiring about one of the judgments against the holding companies, Browder asked Magnitsky to investigate. Over several weeks, Magnitsky pieced together the plot and traced it to organized criminals and corrupt government officials. Relieved to have escaped the theft, Browder figured the story was over; Magnitsky knew it wasn’t. He kept investigating and eventually uncovered another crime.

Failing to seize Hermitage’s assets, the perpetrators, Magnitsky found, turned to the $230 million in taxes Hermitage had paid a few months earlier on its 2006 profits. “When we were exiting Russia, we exited very quickly, and we sold a lot of shares,” Browder says. “We declared a profit of $1 billion, and we paid $230 million in taxes to the Russian government.” Using the same documents and court judgments, the thieves applied for a tax refund. “It was the largest tax refund in the history of Russia,” Browder says. “They applied for it on December 24, 2007. And it was granted the same day, no questions asked, on Christmas Eve.”

He and Magnitsky, believing that this was a “rogue operation,” reported what they’d found to the Russian government, filing nine criminal complaints with law enforcement agencies. “And then we waited for the SWAT teams in helicopters to go after the bad guys.” Instead, Browder and his lawyers—seven, including Magnitsky—found themselves under attack. Russian authorities opened criminal cases against them. Browder evacuated his lawyers to London, all except one: Sergei Magnitsky. Younger than the others, he was, Browder says, less haunted by the memory of the Soviet system’s capriciousness and brutality. “Sergei was 36, and he was an optimist and an idealist,” Browder says. And despite the crimes he’d just uncovered and the response he’d gotten for reporting them, “he thought Russia had changed and that there was rule of law.”

So Magnitsky pushed forward, testifying twice against the police officers who’d raided the offices. A couple of weeks after his second testimony, in November 2008, three officers came to his apartment one morning and arrested him in front of his wife and two children. He was charged with fraud.

Browder knew Magnitsky more as an acquaintance and associate than as a friend. But he admired and respected him. “Sergei wasn’t involved in politics, he wasn’t an oligarch, and he wasn’t a human rights activist. He was just a highly competent professional,” Browder wrote in a Foreign Policy article in December 2009, when the shock of Magnitsky’s death was still fresh. Sitting in his London office more than three years later, surrounded by framed accounts of Magnitsky’s ordeal and his own crusade, Browder remembers Magnitsky as smart and unpretentious. A guy who took the metro to work and came home to his wife and children. “He was one of these people—you always have these people in class—who knows how to do everything,” Browder says. “People were always going to him with complicated questions; he was the guy who could figure everything out.” That’s why Browder asked for his help after the raid on his office. As he told Charlie Rose in 2012, Magnitsky was “just the most reliable guy we knew.”

Browder didn’t know that he was also incredibly brave.


The nearly 12 months of Magnitsky’s detention and torture are remarkably well documented, laid out in dutiful, matter-of-fact detail by Magnitsky himself.  Citing prison cell numbers, dates, hours, statutes, he passed his notes to his own lawyer, who sent copies every month to Browder in London. In 358 days as a prisoner, he filed 450 complaints about his treatment, even as he was beaten and starved and nearly frozen, as he lost 40 pounds and grew sick and then sicker. He was put into cells with 14 inmates and eight beds, into cells so crowded he had to stand up, cells with no panes the window in December and no toilet except a hole in the floor, where the lights stayed on 24 hours a day and sewage bubbled up from below. One night he and his cell mates repaired a broken toilet by making a plug out of a plastic cup. They awoke the next morning to find that a rat had bitten a hole in it the size of an apple. “People were afraid to file even one complaint,” Browder says. “He filed 450.”

They are heartbreaking in their prosaic straightforwardness. “At about midday, in the cell,” reads a translation of one, “sewage started to rise from the drain under the sink, and half of the cell floor was flooded straight away. We asked for a plumber to be called, but he only arrived at 22:00 and could not repair the fault. … It was impossible to walk on the floor and we were forced to move around the cell by climbing on the beds like monkeys.”

His jailers kept pressing Magnitsky to sign a confession admitting that he’d committed the crime he’d reported and that Browder had put him up to it. He wouldn’t sign. They must have been so surprised, says Browder. “They figured, ‘Here’s this guy, he’s got a soft handshake, he wears a suit to work. … Put him in a cell with hardened criminals, where they’re fighting over beds and tired and distracted and angry, and within a week he’ll sign anything.’”  Instead, Magnitsky kept filing complaints.

After a few months, in June 2009, he was diagnosed with pancreatitis, gallstones, and calculous cholecystitis. The prison doctor recommended surgery. Instead, he was moved to a facility without a hospital, Moscow’s notorious Butyrka Prison. There, isolated from his family and in constant, agonizing pain, his health broke down completely. His lawyers wrote desperate appeals to judges, interior ministry officials, the prosecutor’s office, begging for medical treatment. All of them were ignored. One night Magnitsky was so sick that a cell mate banged on the door for hours calling for help that never came.

On the night of November 16, 2009, Magnitsky crashed. Only then, when he fell into critical condition, was he returned to a prison with an emergency room. But when he arrived there, he was chained to a bed and beaten for more than an hour by eight riot guards with rubber batons, while doctors were kept locked outside. An investigation by a Russian public oversight commission—ordered by then president Dmitry Medvedev after weeks of public outcry—unearthed the details of Magnitsky’s final hours. According to an official document, police restrained and beat him because he appeared “psychotic.” The sign of his psychosis: he said they were trying to kill him.


The next morning, Browder got the phone call. “It was like a knife going into my heart,” he says. He knew Magnitsky was weak and sick; he knew the prison conditions were awful. And he’d been receiving threats himself—in October, a text message referencing The Godfather films: “If history has taught us anything, it is that anyone can be killed.” And just days before Magnitsky died, a voice mail with no words, only screams. Still, Magnitsky’s death stunned him.

Vengeance and justice became his new calling. At first he hoped to find satisfaction within Russia. But those involved in Magnitsky’s death and the $230 million tax theft were being promoted, not prosecuted. So Browder, who gave up his American passport when he became a British citizen more than ten years ago, turned to the US government. “These people did this crime not for ideological reasons, not for religious reasons; they did this crime for money,” he says. “What do they do with their money? The answer is, they like to take their money, put it in banks in America and England and France and Germany. They like to buy property in all these places; they like to send their kids to boarding schools and universities in all these places. And most of all, if and when the regime falls, they want to be able to flee to these places.”

Six months after Magnitsky died, Browder was telling his story before a Congressional commission and lobbying senators to enact legislation barring the alleged Russian perpetrators from gaining any access to the United States. Despite vigorous opposition from the Kremlin and deep reluctance from the Obama administration, which had been trying to reset relations with Russia, the Magnitsky Act passed last fall, sanctioning not only those involved in Magnitsky’s death but other human rights abusers in Russia and beyond—a “beautiful way,” Browder says, to “honor his memory.” In April the Obama administration released its first list of names: 18, plus others it kept classified, with perhaps more coming. On Browder’s list of Magnitsky culprits there are 60 names.

Retaliation from Russia was swift and ferocious. Putin signed a law banning adoptions of Russian children by American families, and Russia issued its own blacklist of 18 Americans. In prosecutions almost unprecedented since Stalin, Magnitsky and Browder were put on trial for tax evasion, one posthumously, the other in absentia. In April Russia issued an international warrant for Browder’s arrest. “We really found their Achilles’ heel,” says Browder, who continues to get threats. “I’m aware I’m taking huge risks by doing this. But they killed Sergei. I can’t just give it up for my own safety. He put himself at much greater risk than I’m doing. He was under their thumb. He was in their prison.”

Now Browder concentrates on emerging markets in Asia. In March the bank HSBC shuttered the last remains of the Russian Hermitage Fund, whose assets had dwindled to $60 million. “It was no longer viable,” Browder says.

Was he naïve, going into Russia so blithely all those years ago? Maybe, he says. “I didn’t know anything about Russia. … I basically said to myself, my grandfather was the biggest communist in America, and the Berlin Wall has just fallen, and I’m going to become the biggest capitalist in East Europe. And for a certain period of time I succeeded.” Looking back, he thinks he never understood the country as well as he once believed. “I still don’t know anything about Russia, even though I lived there for ten years.” Browder recalls an Italian psychiatrist he met at a Moscow cocktail party. “He said that after ten years he thought he understood the Russians, and then after being there 25 years he realized he never would.”

His Russian story isn’t over—“they murdered him,” Browder says, “and the end of the story is when they’re prosecuted for murder”—but in the meantime he keeps telling the part that matters most: what happened to Sergei Magnitsky. It feels almost like a vigil, or a memorial, or perhaps a penance. “My relationship with the world used to be about how much money I made or lost,” Browder wrote in a 2011 Businessweek column. “Now it’s more about humanity.”