Bill Browder (@Billbrowder) pioneered a brand-new market after the fall of The Iron Curtain while making powerful enemies — including Vladimir Putin. He is the author of Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice.
“I made a vow on that morning to Sergei Magnitsky’s memory, to his family, and to myself, that I was going to go after the people who killed him and make sure that they face justice.” -Bill Browder
What We Discuss with Bill Browder:
- How someone who grew up in a family of communist academics became one of today’s most successful capitalists.
- How Bill Browder saw and continues to see and profit from opportunities that others discount as foolish.
- How Russian oligarchs rip off and defraud minority and foreign shareholders.
- How an Interpol Red Notice could mean arrest and extradition to Russia to face torture.
- Who was Sergei Magnitsky, and how is Bill seeking justice for his murder by the Russian state?
- And much more…
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After the fall of The Iron Curtain in the early ’90s, Eastern Europe and Russia were ripe for investors poised to take advantage of a communist economy trying to make the jump start to a free market. State industries were privatized for pennies on the dollar, and the opportunity to profit was open to anyone paying attention.
Bill Browder, author of Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice, was paying attention. Bill joins us to discuss how he went from a $2,000 investment to making millions — and the cost of disrupting business when organized crime and corruption rule the land. Listen, learn, and enjoy!
Please Scroll down for Full Show Notes and Featured Resources!
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How does a kid who grows up in a family of multi-generational communist academics rebel? If you’re Bill Browder, author of Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice, you become a hardcore capitalist.
“I finished business school at Stanford in 1989, and that was the year the Berlin Wall came down,” says Bill. “And as I was trying to figure out what to do with myself, I came up with this idea that if my grandfather was the biggest communist in America, I’m going to try to become the biggest capitalist in Eastern Europe!”
The path was circuitous, but ultimately successful. By accepting a job in London with an American consulting firm, Bill was sent to Poland on a doomed mission to turn around a failing bus company. But while there, he picked up can’t-miss privatization opportunities from the financial pages of a newspaper tucked casually under his interpreter’s arm.
“A company cost 80 million dollars, and the previous year they made 160 million dollars,” Bill says. “You’re buying that company for half of their earnings for one year; all you have to do is stay in business for six months and you’ve made your money back. I thought to myself, ‘Wow. I’m going to buy some of this stuff.’ I ended up in the first privatizations investing my entire life savings — which was $2,000. My $2,000 over the next 12 months went up 10 times; I made $20,000…once I had that experience making 10 times more money, I knew exactly what I wanted to do with myself, which was go around and find more of these opportunities in Eastern Europe.”
Seeing an opportunity to break into the Russian privatization market, Bill joined the cutthroat Salomon Brothers, the Wall Street investment bank chronicled in Michael Lewis’ Liar’s Poker. It was 1992, and the government was practically giving away controlling shares in companies in order to make them appealing to people like Bill who were motivated to make them profitable.
“There’s a billion dollars worth of ships and you can buy 51 percent for two-and-a-half million dollars,” says Bill. “So that made my Polish deal look like nothing!”
The Russian government was trying to jump start its market economy, but the populace had been under communism for generations. So the idea was to turn a nation of communists into capitalists — and quickly.
“Everyone in the country was offered something called a voucher,” says Bill. “So 150 million people got vouchers. They were freely exchangeable instruments and they were not registered in anyone’s name — kind of like cash. And a secondary market developed for vouchers, so these things traded for about $20 each. And so 150 million times $20 gets you three billion dollars worth of vouchers. And those three billion dollars worth of vouchers were exchangeable for 30 percent of the share capital of all Russian companies, which meant that the market value of the entire country of Russia in 1992 was 10 billion dollars.
“To put this in perspective for you, this is a country where 35 percent of the world’s natural gas, 10 percent of all the world’s oil, 10 percent of all the world’s steel, 10 percent of the world’s aluminum, there’s banks, there’s fertilizer companies, there’s timber companies, there’s car companies, there’s telephone companies, electricity companies — altogether, all in the aggregate of 10 billion dollars. At the time, I think that was like an 80 percent discount to the valuation of Walmart. This is the country of Russia. And there was no restriction — anybody could buy or sell shares. You didn’t have to be Russian. Anybody could buy or sell shares, and so that’s what set off what became the most phenomenal investment opportunity in the history of the world.”
Listen to this episode of The Jordan Harbinger Show in its entirety to learn more about what it took for Bill to convince his colleagues at Salomon Brothers to take the leap into the Russian stock market when everybody else thought he was crazy, how the naysayers suddenly took an interest when he made the company five times its investments, how this put him in a position to give financial advice to the likes of George Soros, how voucher auctions and trading took place in the wild west of post-Soviet Russia, how Russian oligarchs ripped off and defrauded minority and foreign shareholders and what Bill did to work around and against them, the consequences of being a shareholder activist in such a corrupt climate, how many machine gun-toting bodyguards it takes to protect someone in such a position, what happened when Bill’s lawyer was arrested and refused to make a false confession, and lots more.
THANKS, BILL BROWDER!
If you enjoyed this session with Bill Browder, let him know by clicking on the link below and sending him a quick shout out at Twitter:
Resources from This Episode:
- Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice by Bill Browder
- Bill Browder’s website
- Bill Browder at Twitter
- Liar’s Poker: Rising Through the Wreckage on Wall Street by Michael Lewis
- William Browder: My Lawyer Sergei Magnitsky Was Murdered By Vladimir Putin, MSNBC
- Q&A: The Magnitsky Affair, BBC News