- The Washington Times - Tuesday, May 30, 2006

The United States and Britain are concerned that Russia has banned a top Western businessman who was waging a war on corruption and crime in the country’s boardrooms, and are considering raising the issue with President Vladimir Putin at the Group of Eight meeting in July.

William F. Browder, the chief executive of Hermitage Capital Management Ltd., the largest fund for Western investors in Russia with $4 billion in assets, was declared “persona non grata” and barred from the country in November. Russian security forces said he was a “security risk.”

Mr. Browder thinks the security forces are aligned with corrupt corporate executives he is fighting. He has appealed to Mr. Putin to restore his access to the country.

How Mr. Putin responds will determine whether the incident turns out to be a passing misunderstanding or the beginning of a new round of curtailments in economic and personal freedom in Russia, with particular costs for Western citizens who do business, invest and live there.

Anything perceived as a broad assault on Western investors in Russia eventually would rebound on Mr. Putin and create economic difficulties for the country, which is experiencing an economic boom from a flood of revenue brought in by its lucrative oil and gas exports.

“Maybe I’m the canary in the coal mine,” Mr. Browder said in an interview in between visits to congressional, White House and State Department offices recently to present his case and plead for help. He noted he is not the first businessman to be banned arbitrarily from Russia as a “security risk.”

In 2004, BP PLC employees were barred from entering after a dispute with the company’s Russian partners, but the conflict was resolved after Britain intervened.

Britain has brought the case of Mr. Browder, a British citizen who was born in the United States, to the attention of Russian authorities as well.

“This is a man who has brought billions of dollars to Russia and who speaks out defending Russian economic policy,” said Anthony Brenton, Britain’s ambassador to Russia. “This seems to me to be very damaging to Russia. We’ve never had a detailed or proper explanation of why he has been excluded.”

Mr. Browder said he has counted Mr. Putin as an ally in the past. The president personally intervened to shut down a scandal at Gazprom, the giant energy company, after Hermitage uncovered and publicized it in its campaign to clean up Russian businesses. Mr. Putin has said he will not tolerate corruption in the boardrooms and state bureaucracy.

Mr. Browder said he has the ear of economic reformers in Mr. Putin’s Cabinet, including Finance Minister Alexei Kudrin and Trade Minister German Gref, who have submitted inquiries on his behalf. But for months, Mr. Putin has put off deciding between his economic advisers and his security staff, perhaps because someone close to him was behind the visa ban, the finance executive said.

“He’s letting the inmates take over the asylum,” Mr. Browder said. “But if he tries to keep out the largest foreign investor, what’s everyone else going to think? If they can arbitrarily lock out a person who spent 10 years of his life and provided $4 billion in investment, they could do this to anybody.”

Mr. Browder, who has been the target of physical threats, lawsuits, phone bugging and other harassment, said he made some rich and powerful enemies among Russia’s corporate elite as a result of charges he has leveled against a list of powerful Russian companies, including Gazprom and the state banking empire, Sberbank.

“Trying to clean up companies has made a lot of people unhappy,” and someone is exacting vengeance, he said. “We stand between somebody and their ill-gotten gains.”

A 2000 Hermitage study exposed a fraud at Gazprom involving asset stripping, export losses and cost overruns. It prompted the firing of Gazprom’s chief executive and his replacement by Mr. Putin’s candidate, Alexei Miller, who had a mandate to recover lost assets worth $5 billion. That helped prompt a 1,700 percent increase in the company’s stock price.

Boris Fyodorov, a Gazprom board member who has clashed with Mr. Browder, said the finance mogul has a loud mouth that has earned him a reputation as a troublemaker. Mr. Fyodorov said he doesn’t know why the executive was expelled, but added, “My personal view is that he’s such an obnoxious personality that you can find a thousand reasons.”

A spokesman for the Russian Embassy’s trade office said in Washington yesterday that he did not know whether discussions to restore Mr. Browder’s access were taking place and that his office had no comment.

Mr. Browder’s protest against questionable closed subscription stock sales at Sberbank in 2000 led the Russian parliament to enact a law banning dilutive share issues in 2001, which spurred a twentyfold increase in the bank’s stock price.

“We are trying to stop people from stealing,” Mr. Browder said. “We are trying to expose leaking and graft.”

About a quarter of the money Mr. Browder manages comes from U.S. investors, so he said his story has been heard with sympathy by top officials in Washington, who have promised to pursue his case at the G-8 meeting in St. Petersburg if Mr. Putin hasn’t resolved it by then.

Given Russia’s desire to join the World Trade Organization by the end of the year and otherwise be accepted among the “club” of developed countries, Mr. Putin can ill afford arbitrary actions such as this that sour the business and investment climate, Mr. Browder said.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide