The One Man Putin Can’t Get Out of His Head

(Bloomberg Opinion) -- It's just amazing how badly Russian President Vladimir Putin wants to put Bill Browder behind bars.

You know who Browder is, don't you? He's the hedge fund manager who set up shop in Russia just as the country was privatizing, only to later become a critic of its oligarchs, which resulted in his being run out of the country, after which a handful of Russian officials “took over” his company and used it, in classic Russian fashion, to claim a phony $230 million tax refund. Which they received within 24 hours.

Although Browder persuaded most of his staff to move to London with him, his outside counsel, Sergei Magnitsky, refused to leave and instead investigated the tax fraud, after which he was tossed in prison, where his health deteriorated amid the brutal conditions and he died eight months later, at 37, apparently murdered by his captors.

Browder vowed to devote himself to avenging Magnitsky's death, and began a worldwide campaign to have nations pass something called the “Magnitsky Act,” which denies visas and freezes the assets of human rights abusers, starting with the officials involved in Magnitsky's death. It became law in the U.S. in 2012. Since then, an additional six countries have enacted their own Magnitsky Act, with nine more teed up, including Germany, Sweden and Australia. Meanwhile, Browder wrote a best-selling memoir in 2015, “Red Notice,” and has worked tirelessly to spotlight Russia's human rights and rule-of-law abuses.

Yeah, that guy.

The Magnitsky Act has messed with the heads of Putin and the Russian elite like nothing else. The economic sanctions imposed by the U.S. and Europe after Russia's takeover of Crimea scarcely compare. Economic sanctions merely hurt the Russian population. The Magnitsky Act hit Putin and his cronies where it hurt: in their pocketbooks. Any Russian with wealth keeps most of it outside the country. And most wealthy Russians own property in places like London, Miami and New York. The Magnitsky Act prevents the elites from accessing their money and visiting their property. From the Russian point of view, it is galling that this one man has been able to so humiliate the Russian elite. And Putin wants revenge.

Just a few weeks ago, during the Helsinki summit, Putin said he would be willing to allow special counsel Robert Mueller to question the Russian hackers he'd indicted if Russia could interrogate “certain U.S. officials it suspects of interfering in Russian affairs,” as the Washington Post put it. (“An incredible offer,” replied a clueless President Donald Trump before being wised up when he returned to Washington.) Who were those U.S. officials? With the exception of former ambassador Michael McFaul, they were all associated with the passage of the Magnitsky Act, starting with Browder, whom Putin ludicrously accused during the press conference of avoiding taxes on $1.5 billion and contributing $400 million to Hillary Clinton's campaign.

Indeed, Russian prosecutors have already tried Browder twice in absentia, sentencing him to nine years in prison each time. (Prosecutors also convicted Magnistky — posthumously! — of tax fraud.) In May, during a trip to Spain, Browder was detained by the police after Russia issued an arrest warrant via Interpol. It was the sixth time the Russian government has attempted to use Interpol, the international agency that facilities police cooperation, to nab Browder. Interpol has consistently rejected Russia's efforts, and the Spanish police released Browder once Interpol intervened.

In July, about the same time as the summit, a Russian prosecutor said that the country would redouble its efforts to capture Browder — “He shouldn't sleep peacefully at night,” the prosecutor said — and sent out a seventh Interpol request. Late last week, the ministry of foreign affairs announced that it was opening yet another case against Browder, describing him as the head of a “criminal organization.” (A few years earlier, a Russian company hired Fusion GPS — the same political research firm that hired Christopher Steele to compile the Trump dossier — to collect “evidence” against Browder, which is now regularly cited by the government.) On Monday, Bloomberg News reported that a Supreme Court justice in Russia had rejected a settlement reached by HSBC with Russian prosecutors. HSBC's crime? It was the trustee for Browder's hedge fund when he operated in Russia.

After last week's announcement by the ministry of foreign affairs, I called Browder. Over the years, I've written about him and the Magnitsky Act; it now occurred to me that this constant harassment by Russia had to be affecting his life. It was.

He told me that the prosecutor's dark warning was a reminder — not that he really needed one — that he has to be constantly looking over his shoulder. He has full-time security, of course. And he is very careful when he travels — he told me that he recently decided to skip a planned trip to Italy because the new prime minister, Giuseppe Conte, is “pro-Putin.” When I asked if he was worried Putin might try to have him killed, as he has allegedly done to various others he viewed as enemies, he didn't shrug off the idea. But he said he thought was protected by his visibility — “If they kill me, everyone will know who did it,” he said.

Then again, Browder went on to say, every time Putin and the Russian government take steps against him, it proves the potency of the law as an instrument to punish human rights abusers. “We couldn't get better recognition of how powerful this tool is. It is a total vindication of all our efforts these past years.”

“The primary objective of Putin and his senior people,” Browder went on, “is to steal money. They are kleptocrats in the truest sense. But to do it, they have to commit grave human rights abuses. And once they have the money they have to move it to the west, where there are property rights. Because the Magnitsky Act freezes that money, it puts their business model at risk. That's why it makes them so crazy.”

So what's his end game?

“My goal is for every civilized country in the world to have a Magnitsky Act and to use it aggressively,” he replied. “I want this to become a pedestrian piece of policy that is enacted almost routinely, so that it becomes a real deterrent for bad behavior.”

One final thought about the Magnitsky Act. Remember the aftermath of that infamous 2016 meeting in Trump Tower, the one where Donald Trump Jr., Paul Manafort and Jared Kushner met with the Russian lawyer Natalia Veselnitskaya, who claimed she had dirt on Clinton? When the meeting was later exposed, Trump Jr. claimed that all they talked about was “Russian adoption policy.” That was code for the Magnitsky Act. Russia has banned adoptions of Russian children by Americans as a retaliatory measure. It seems likely that Veselnitskaya, whose clients include the company that commissioned the Fusion GPS report against Browder — and who has ties to the Kremlin — was probing to see if Trump might be willing to trade an end to the Magnitsky Act for lifting the adoption ban if he became president.

That meeting, of course, is now an important piece of Mueller's investigation into possible collusion between the campaign and Russia. Which means that if, in the end, that investigation does serious damage to the Trump presidency, you may well have Bill Browder to blame.

Or thank, as the case may be.

To contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. He is co-author of “Indentured: The Inside Story of the Rebellion Against the NCAA.”