Thursday, July 26, 2012
Turning the tables on Russia’s power elite — the story behind the Magnitsky Act
By Bill Browder: I have my family history to blame for the fact that I ended up working in Moscow. My grandmother was from Russia and my grandfather was the head of the American Communist Party between 1932 and 1945 (he was subsequently persecuted in the 1950’s). So when I was growing up as a teenager and going through my teenage rebellion, I thought the best way of rebelling against a family of communists was to become a capitalist.
I ended up studying economics at the University of Chicago, probably the most right-wing institution in America, and then I enrolled at the Stanford Business School. I graduated business school the year the Berlin Wall came down and as I started contemplating the next stage of my life, I had a personal epiphany: ‘if my grandfather was the biggest communist in America, I should become the biggest capitalist in Eastern Europe’. So I set off to do just that.
After a spell working on the Russian privatisation programme at Salomon Brothers in London, I moved to Moscow in late 1995 to set up the Hermitage Fund, which focused on investing in the newly privatised shares of Russian companies. Over the next few years, the business grew to become the largest investment firm in the country with $4.5 billion. Success was exciting. But this turned to frustration when I realised that the companies I was investing in were essentially ‘non-profit’ entities. They were ‘non-profit’ not because they were giving money to charity, but because the senior managers were stealing the profits.