Bill Browder - Red notice

After that we spoke every day, and I would have been happy to see her every day too, but she had time to see me only once a week or even once every two weeks. We carried on like this for three months — nice dinners, nicer conversation, a real kiss before going our separate ways. I wanted more and it seemed that she did too, but I couldn’t figure out how to get past her defenses. So I decided that I had to do something rash and romantic.

The May holidays — a big deal in Russia, when everything shuts down for ten days — were fast approaching. One afternoon I called her. «How would you like to go to Paris with me for the holiday?»

She hesitated. I surely wasn’t the first man to ask if I could whisk her away for an impromptu getaway, and we both knew what would happen if she said yes. After a few seconds she said, «Let me think about it, Bill».

Ten minutes later she called back. «I’d love to come with you if I can get a visa». A warm feeling welled in my chest and stomach as I heard I’d love to , but it was quickly tempered by the words if I can get a visa . Getting West European visas for Russian girls under the age of thirty was no small feat. It usually required a few weeks and a mountain of documentation to show that the applicant had no intention of staying in the West. Making it worse, we had only four days before the start of the holidays to sort it out.

Elena called some travel agents. Luckily, one was organizing a group tour to Paris and was on her way to the French embassy that afternoon with thirty passports for visas. If Elena could deliver the paperwork in time, she had a shot at getting her visa quickly. She put everything together and, amazingly, her application was approved the next day. Less than a week after I’d asked her, we were sitting next to each other on an Air France flight bound for Paris.

In an attempt to impress Elena, I booked a suite at the Hôtel Le Bristol, one of the nicest and most lavish hotels in France, if not the world. A pair of white-gloved bellhops took our two small bags and escorted us to our room. I walked behind Elena down the blue-carpeted halls decorated with Louis XV armchairs and wall sconces, peeking over her shoulder to gauge her response. She had a slight smile on her face, but she always seemed to have a slight smile on her face, no matter what her mood. We reached our room. The first bellhop opened the door, and we walked into one of the most impressive hotel rooms I’d ever been in, and by then I’d been in quite a few. I tipped the bellhops and uttered my thanks in my regrettable French and turned to Elena.

She was not impressed, or if she was, the same slight smile masked it perfectly. «Let’s go out», she said.

We freshened up and made our way downstairs to Avenue Matignon. Paris is made for strolling, so we walked slowly, talking now and then about nothing in particular. We held hands at intervals, but never long enough to give me comfort that I’d finally won her over. The sky grew more ominous as we walked, and as we turned onto the Champs-Élysées, the clouds overhead were heavy and looked ready to let loose. «I can smell the rain coming», Elena said.

«Me too».

We picked a café that had umbrellas over its outdoor tables and sat. The waiter brought warm bread and I ordered a bottle of Bordeaux. We had mussels in white wine and a big bowl of frites . The rain held off. I ordered a crème brûlée and a pot of English breakfast tea, and when the dessert arrived, fat raindrops began to pelt the sidewalk and the umbrellas in a staccato rhythm. The umbrella was not big, so I scooted my chair around the table and wrapped my arm around Elena’s waist in an attempt to keep her dry. We giggled like schoolkids as the sky opened up and the rain fell in a heavy spring downpour. I pulled Elena directly into my lap, and she wrapped her arms over mine and we squeezed each other.

At that moment I knew that she was all mine, and that I was all hers.

It’s amazing how being in love changes things. When Elena and I returned to Moscow, I was totally reenergized. With Elena at my side, I felt as though I could take on any challenge.

At the time, my overriding concern was to stop the massive theft taking place in the companies in the fund’s portfolio. The Hermitage Fund had already lost 90 percent of its value from the Russian default, and now the oligarchs were in the process of stealing the remaining 10 percent. If I didn’t do something, the fund would be left with absolutely nothing.

These thefts were happening in every business sector, from banking to natural resources, but the company that truly distinguished itself was Russia’s largest — the oil and gas giant Gazprom.

In terms of output and strategic significance, Gazprom was one of the world’s most important companies. Yet the entire market value of the company — $12 billion — was smaller than your average midsize US oil and gas firm. In terms of hydrocarbon reserves, Gazprom was eight times the size of ExxonMobil and twelve times bigger than BP, the largest oil companies in the world — yet it traded at a 99.7 percent discount to those companies per barrel of reserves.

Why was it so cheap? The simple answer was that most investors thought that 99.7 percent of the company’s assets had been stolen. But how could virtually all of one of the world’s largest companies even be stolen? No one knew for sure, but everyone accepted it as fact.

Even though I knew how crooked the Russians could be, I couldn’t accept that Gazprom’s management had stolen the whole thing. If I could somehow prove that the market was wrong, then there was a lot of money to be made. I needed to study this company and figure out what was really going on. What I needed to do was a «stealing analysis».

But how do you do a stealing analysis of a Russian company? This wasn’t something they taught at Stanford Business School. I obviously couldn’t confront Gazprom’s management directly. I also couldn’t ask the research analysts at any of the major international investment banks. All that mattered to them was fee-paying work, meaning their lips were so firmly planted on the asses of Gazprom’s management that they would never publicly acknowledge the egregious thefts going on under their noses.

As I thought about how to proceed, I realized that my experience at BCG was worth something in this situation. As a management consultant I’d learned that the best way to answer difficult questions was to find the people who knew the answers and interview them.

So I made a list of people who knew things about Gazprom: competitors, customers, suppliers, ex-employees, government regulators, and so on. I then invited each of them to a breakfast, lunch, dinner, tea, coffee, or dessert. I didn’t want to scare them off prematurely, so I didn’t tell them my whole agenda. I just said that I was a Western investor interested in talking to them. Surprisingly, about three-quarters of the roughly forty people I invited agreed to meet.

My first meeting was with the head of planning at one of Gazprom’s small domestic competitors. Bald and slightly overweight, he wore a Soviet watch and a rumpled gray suit. Vadim and I met him for lunch at an Italian restaurant called Dorian Gray, directly across the Moscow River from Bolotnaya Square.

After the usual introductory chitchat, I said bluntly, «We wanted to talk to you because we’re trying to figure out what’s been stolen from Gazprom. You’re one of the experts in the field, and I was wondering if you might be willing to share some of your knowledge with us?»

There was a moment of silence and I thought maybe I’d crossed a line. But then his face lit up. He placed his hands on the white tablecloth and leaned forward. «I am so glad you’ve asked. Gazprom management is the biggest bunch of crooks you could imagine. They’re stealing everything».