Financial Crime in Russia and the Heartbreaking Story of the Magnitsky Act

Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice, by Bill Browder
published 2015 by Simon & Schuster Used or new @

The American-born, now British financier Bill Browder got in on the nascent world of free-market Eastern Europe at the beginning, when, during his work for the Boston Consulting Group on a project in Poland, he saw massive potential in newly privatized company stocks. Eventually he would move on to Moscow, founding Hermitage Capital Management. Because of his early sense of the potential in this new market, for a long time he was “effectively the gatekeeper for every Western financial transaction in that part of the world” by the age of 27.

It was through this work with Hermitage that he hired a young tax lawyer named Sergei Magnitsky, known for being the country’s best in his field. Magnitsky would uncover a massive tax fraud scheme perpetrated by individuals in Moscow’s tax collection office, to the tune of $232 million siphoned away. A true patriot, as Browder explains, Magnitsky refused to lie or look the other way when the government pressured him to do so. He would pay for it with his life, after a year of unthinkable torture leading up to his death in a Moscow jail, days before he would’ve had to be released without a trial.

You probably recognize his name from the Magnitsky Act, which was the legislation Browder fought for in the US in response to his heartbreaking death. The law sanctions individuals involved in human rights crimes, freezing their assets in the US and refusing them entry, among other penalizations. Putin needed a slapback in response, and he was in a thorny position because the typical one of expelling American diplomats from Russia would’ve just led to the same from the American side — so essentially nothing. A financial penalty would’ve hurt Russia even more, as they already were suffering under US sanctions.

So, being the truly evil real-life villain he is, he smiled a Grinch smile and retaliated by banning US citizens from adopting Russian children.

What does this mean? Traditionally, Russia has only allowed Americans to adopt children with severe disabilities — spina bifida, Down syndrome, those suffering the effects of Russia’s widespread intravenous drug use and HIV epidemics, etc. These children require long-term, expensive medical care, and wealthy Americans have ensured that more than 60,000 Russian orphans have gotten such care through adoptions. (Watch the documentary The Boy From Baby House 10 for a story of one, although fair warning — it’s a tearjerker to say the least. I think it’s based on his memoir as well, though I haven’t read it.)

So Putin’s checkmate was to deny thousands of children a chance at healthy, secure lives — even the chance of living at all, as Russia’s orphanages are in a bad state and horribly underfunded (as Browder points out, that $232 million bought officials luxury homes abroad, expensive cars, and pricey foreign vacations when it could’ve solved a lot of problems in the orphanages instead). To make it all even worse, many of the children had already met their new American families, who’d returned to the US to await the final adoption approvals, and they would never see their promised new homes. I can’t even write this without starting to cry again. Putin sacrificed the lives of sick orphans with disabilities to punish a personal enemy. He is such a fucking demon.

Stalin infamously said that “One death is a tragedy; one million is a statistic,” and Sergei Magnitsky’s death managed to be that one tragedy that galvanized major political action, bringing some amount of justice, bittersweet as it is, for his death and the torture he endured.

There is no shortage of suffering in this world, but somehow Sergei’s tragedy resonated and cut through as few tragedies ever do…It pricked the bubble of impunity that ensnares modern Russia, leaving a legacy that he and his family could be proud of.

Because of that “bubble of impunity,” there’s no understating how significant – and unusual – the passing of the Magnitsky Act was. It showed what can be accomplished with bipartisan support and pulling together, even against blatant politicking (John Kerry is an unexpected villain; John McCain an unsurprising hero). It’s an incredible and hopeful story, although it’s also devastating. I don’t want to say how many times I cried reading this, and Browder emphasizes how often that happened when people heard this story as his campaign for legislation and action in the wake of Magnitsky’s death grew.

It’s singularly affecting; again, that tragedy that managed to impact instead of the anonymity of the statistic, which, unfortunately, is no anomaly in modern Russia. (No, I don’t mean a million people have died this way, but the list of Putin’s enemies who have been killed is like one of those unfurling scrolls that rolls across the floor until it hits a wall.)

I did feel there was so much more information that could’ve been included about the activism that Magnitsky’s death set in motion. There are a few throwaway lines about some of the Russians who did extraordinary things inside Russia (danger level: infinity) to expose the corruption and abuses that took place. Instead, there’s unnecessary minutiae about the author, and after the massively compelling first chapters establishing his background (grandson of a well known American Communist leader) and his rather thrilling early work in finance and for BCG, his personal story, including his two marriages, didn’t grip me. It’s not the worst, because he moves through the narrative quickly and when he isolates important events they’re told in a highly impactful way, but I wanted more of that all the time and less of his romantic life/conflicts because of his work.

Browder is also no saint, despite the hard and commendable work he’s done on getting the Magnitsky Act passed and relocating Sergei’s family to the UK. He describes the thrill of making unbelievable returns on Polish stocks in the 1990s, and all I could think of were my husband’s stories of knowing food insecurity during these same years, from his childhood in Poland before his family left to try their luck in Austria — illegally, but desperate, having already fled war in Yugoslavia and lacking sufficient work and food in Poland. So, sure, not every business is a charity, but Browder isn’t reflective about what his high-yielding dividends meant — these countries were struggling, terribly, and he wanted to help the West cash in where possible. It didn’t sit right with me because he doesn’t exhibit the introspection to acknowledge the nuances of the situation and his role.

I was also frustrated with a secondary story that suddenly disappeared with no resolution: another Russian man had been feeding Browder and his investigative team information and then supposedly dropped dead on the street in England, which was obviously mighty suspicious. To anyone else who’s read it, did I miss something, or did he return to what happened there?

So it has its flaws, but it’s worth it for Sergei Magnitsky’s story — a devastating but crucial one to know. Just this week we had more bombshell revelations about Putin’s manipulations on putting Trump into power, and the Magnitsky Act was the oft-cited reason for Don Jr.’s Trump Tower meeting with Russians. This is all still very present and will continue to affect US-Russian relations.

And I’m glad to know something about who Magnitsky was, this ordinary person who showed extraordinary bravery under unimaginable circumstances. His family’s descriptions of him had me in tears, like that he would buy the products from poor street sellers that no one else wanted. Browder commemorates him admirably and underscores heavily why his story matters immensely.


6 thoughts on “Financial Crime in Russia and the Heartbreaking Story of the Magnitsky Act

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  1. I would like to read about Russia in the 90s and Westerners cashing in. I knew a lawyer who was a partner in a UK law firm and was based in Moscow for years, dealing with high value commercial property transactions, his ex-wife became the doyenne of her own high net worth divorce firm in London Vardags after she divorced him, and is always shilling for work in the Daily Mail…also interesting that John Kerry was the villain, in the book by Samantha Power, Education of an Idealist, he is depicted as a saintly character.

    Liked by 2 people

    1. I’m so fascinated by this story of the lawyer you knew!! Yeah, about John Kerry, I suppose it’s a case of no one being either a saint or a devil, regardless of how they’re depicted… his stance here was because of his specific politicking as Secretary of State. Which shouldn’t be a factor, because this law had widespread bipartisan support, so I was really disappointed to learn that he opposed it for the reason he did.

      Liked by 1 person

  2. Came back here having read the book. Your review is great. You describe the book so well. Also you put into words the unease I kept feeling about Browder. He made a huge amount of money not only for his clients but also for himself, he operated in a dangerous place to make money and sadly Magnitsky paid for this with his life. I just wish Magnitsky had saved himself by signing the false confession it was not worth losing his life over.


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