Bill Browder - Red notice

We hatched a three-part plan that would sequentially ratchet up the pressure on Potanin.

The first part was to expose the dilutive share issue to Potanin’s Western business contacts. As a billionaire oligarch, he had a lot of business interests that weren’t directly related to Sidanco. These included joint investments with men such as George Soros, and entities such as the Harvard University endowment and the Weyerhaeuser pension fund.

Edmond and I split up the list and called each personally. After our discussions, we sent them a PowerPoint presentation detailing the dilutive share issue. Our message was simple: this is how Potanin is screwing us. If you don’t stop him, you could be next.

Most of these people then contacted Potanin and complained. I wasn’t privy to their conversations, but I imagined them saying that this dilutive share issue would compromise the value of the investments they had together and that he should stop what he was doing to us out of self-interest.

We waited for Potanin’s response, thinking he might back off. But unfortunately, he didn’t. All he did was escalate. He probably thought, Who is this little shit from Chicago? I’ve spent a lot of time and effort cultivating these relationships, and now this guy wants to ruin my good name! How can this be happening?

It was a good question. Every other time a foreigner got ripped off in Russia, they would engage in heated brainstorming sessions behind closed doors, attempting to figure out how to resist (just as we had done). But then their lawyers and advisers would point out that retaliation was infeasible and dangerous (just as Edmond had done initially), and after all the tough talk, they would slink away like wounded animals.

But this wasn’t every other time. I wasn’t an employee of a big investment bank or Fortune 500 company. I was a principal in my own hedge fund business. What Potanin didn’t understand was that I was never going to let him get away with this without a fight.

Another person who didn’t understand this was Sabrina. She was fully aware of my intentions, and from the outset she was not happy about them. I’d spoken to her the same night that I told Edmond, and she was hysterical. «Bill, how can you do this to us?» she shouted over the phone.

«Sweetheart, I have to do this. I can’t let these guys get away with it».

«How can you say that? How can you be so selfish? You’re a father and a husband. These people will kill you!»

«I hope not, but I have a responsibility to the people who trusted me with their money. I got them into this mess, I have to get them out».

«But who cares about them? You have a family . I don’t understand why you can’t just have a normal job in London like everyone else we know!»

She was right about having a family, but I was so angry and indignant with Potanin that I couldn’t hear her.

We hung up at a complete impasse, but for better or worse I couldn’t dwell on Sabrina. I was just starting this fight and had to carry on.

Unfortunately, stage one failed. Still, it had caught Potanin’s attention. I’d sliced open a vein and let the blood drain into the water, and by the end of the week Potanin’s shark, Boris Jordan, showed up.

Potanin must have given him a real earful, because when Boris called he was irate and rattled. «B-Bill», he spluttered, «what the hell are you doing calling our investors?»

I tried to sound as calm as possible as I said, «Didn’t Leonid tell you about our meeting?»

«Yes, but I thought you understood the score».

I continued to play along, praying that my voice wouldn’t crack. «What score?»

«Bill, you don’t seem to understand — you’re not playing by the rules!»

I eyed one of my burly Russian guards standing just by the entry to the office. Scared or not, I’d thrown caution to the wind when I decided to go to war with these people.

With a steadiness that surprised even me, I said, «Boris, if you think I’m not playing by the rules now, wait until you see what I’m about to do to you next». I didn’t wait for his response and hung up. I felt as high as a kite.

We then forged ahead to stage two, which was to make the whole story public.

Foreign reporters were a staple of Moscow’s expat community and I had come to know a number of them, a few quite well. One of these was Chrystia Freeland, the Moscow bureau chief of the Financial Times . An attractive brunette a few years younger than me, she stood at barely five feet tall. Not that you ever thought of her as short, though; she had a zealous fire in her belly, and what she lacked in physical stature she made up for in her approach to life. In various social interactions, Chrystia had made it clear how hungry she was for an oligarch story, but couldn’t find anyone brave enough (or stupid enough, depending on your perspective) to speak on the record — until now.

I called her up and we agreed to meet at my favorite Moscow restaurant, a Middle Eastern place called Semiramis. As we ordered, she produced a small black tape recorder and placed it in the middle of the table. I’d never worked with the press before. I was new to the whole process, so I launched into the story from the very beginning. The waiters brought hummus and baba ghanoush, and Chrystia scribbled a few notes as I spoke between bites. Then came the lamb kebabs. I kept talking, and she kept listening. Finally, I was finished. Her reticence had been a little off-putting and a small voice inside my head wondered if my tale was as good as I thought it was. As the mint tea and baklava arrived, I asked, «So — what do you think?»

I tried not to fidget as she calmly wrapped her hands around her gilt tea glass and looked up. «Bill, this is huge. I’ve been waiting for something like this for a long time».

The following day Chrystia called Potanin to get his side of the story and he reacted in typical — and perfect — Russian fashion.

Under normal conditions, this would have been the obvious point for him to back down. Potanin was making billions of dollars on the recent success of the BP deal. Why risk that so he could grab a couple of percent from us? But these were not normal conditions. This was Russia, and the far more important consideration was to not show any weakness.

This whole exercise was teaching me that Russian business culture is closer to that of a prison yard than anything else. In prison, all you have is your reputation. Your position is hard-earned and it is not relinquished easily. When someone is crossing the yard coming for you, you cannot stand idly by. You have to kill him before he kills you. If you don’t, and if you manage to survive the attack, you’ll be deemed weak and before you know it, you will have lost your respect and become someone’s bitch. This is the calculus that every oligarch and every Russian politician goes through every day.

Potanin’s logical response to Chrystia’s questions should have been, «Ms. Freeland, this is all a big mistake. Mr. Browder saw some early drafts of the share issue that should never have gone to the financial regulators. The secretary who released it has been fired. Of course, every Sidanco shareholder will be treated fairly in the issue, including Mr. Browder’s investors and Mr. Safra».

However, because we were in Russia, Potanin couldn’t afford to be disrespected by some weak foreign investor, so he had no choice but to escalate. Therefore, his response was along the lines of «Bill Browder is a terrible and irresponsible fund manager. If he had done his job properly, he would have known I was going to do this. His clients should sue him for every penny he’s worth».

It was tantamount to an admission of his intent to screw us, and it was on the record.