In October, Harvard Business School began teaching a new case study about Russia, which, in the words of one of its authors, "reads like a potboiler." In 20 pages, it lays out one of the most tragic experiences a foreign investor in Russia has ever had -- the case of the American fund manager William Browder, who was banned from entering the country in 2005, and his lawyer, Sergei Magnitsky, who died in a Russian prison four years later. It is meant to impress a number of lessons on Harvard's latest crop of geniuses. For example, Exhibit 9, as the text goes, offers a "price list" of "bribes," including the cost of getting a competitor's license revoked (allegedly as little as $1 million). But the broader message lines up nicely with what seems to be Browder's creed: Kids, if you know what's good for you, stay the hell away from Russia.
Since news of his lawyer's death broke in 2009, Browder has devoted much of his time to hammering this message home, and his campaign (he prefers not to call it a "vendetta") has slowly grown into a one-man information war against the Russian state. So far he seems to be winning. A few months ago, I got a worried e-mail from a media official in the Russian government who was concerned about the awful coverage Russia was getting in the Western press. "Seems like Republicans aim to jeopardize U.S. Administration's Russian policy," he wrote. "What do you think of the timing of such a massive campaign?" A few days later, he wrote again. It wasn't the Republicans. It was just Browder. "I've calmed my colleagues down." (Read about the death of Browder's lawyer Sergei Magnitsky.)
But compared with the GOP, Browder would seem to be the bigger threat. When I reached him earlier this month, he was in Germany to address the Bundestag and was heading to Lithuania the following day to speak to its Foreign Minister and parliament. He still runs an investment fund out of London, which helps keep up his estimated fortune of over $100 million, but most of his energy these days is spent shaming the Russian government. "This is an extremely important part of my life," he told me. "There are some weeks I spend nearly all my time on it."
He gets help from a Rolodex of politicians and businessmen, and when he takes the stage, Browder can be a powerful speaker, coating the poignancy of his story with self-deprecating humor. (Asked at a recent lecture what skills one might need to succeed as an investor in Russia, he answered, deadpan, "knife-handling skills.") Over the past two years, he has told his tale to legislatures in the U.K, U.S., Canada and 10 European countries. Several of those chambers, including the U.S. Congress, have since voted to impose travel bans on Russian officials, frozen Russian-held bank accounts or denounced Russia in the press. No single activist has had this broad an impact on Russia's relations with the West since the fall of the Soviet Union, which seems ironic if you consider Browder's ancestry. Born to a middle-class family in the South Side of Chicago -- "with an old Buick and two dogs" -- he is the grandson of Earl Browder, who led the Communist Party USA for 11 years. In 1945, when the U.S. party took the Kremlin's side at the beginning of the Cold War, the elder Browder was ousted for arguing that Moscow and Washington could peacefully coexist. (See pictures of Russian police break up an anti-Kremlin protest.)
His grandson now preaches the opposite, and Harvard is his latest conquest. It may also prove to be the most significant. The new case study, based almost entirely on facts that Browder provided to the authors, will be taught at business schools around the world for many years to come. It recounts how Browder, once the biggest foreign investor in Russia's stock market, with a fund worth around $4 billion, was deemed persona non grata in 2005 after he fell afoul, according to the case study, of then President Vladimir Putin. It recounts the subsequent criminal probes and police raids at his offices, where several policemen allegedly "pulled [a lawyer] into a conference room and beat him brutally about the face and throat." Worst of all is the conclusion. Magnitsky, another one of Browder's lawyers, died in pretrial detention after he was denied medical treatment for months. He was 37, and left behind a wife and two children.
See pictures of Vladimir Putin, the action hero.
When the case was introduced at Harvard in late October, Browder went to address the class and his message seemed to connect. "Some of the students actually cried," says Aldo Musacchio, the professor who taught the course. Others went away feeling that the Russian government was one big crime family. "Even from reading the case, it seemed to play out like a mafia movie," says Adolfo Morales, one of the students in the class. "The obvious conclusion was that Russia is kind of like a mob."
Because Harvard's case studies are the standard for business schools everywhere, this idea will soon be presented to many of the whiz kids who will one day control the global economy. It will, in Browder's words, "literally be the textbook example of the cost of corruption in emerging markets." The impact of that is impossible to quantify but easy enough to imagine. Several years ago, Juan Aristi studied a version of Browder's story during his MBA program at Columbia University. He is now a strategist at a global-consulting firm whose clients include governments and major corporations. "It was shocking," he recalls. "I guess the lesson was in Russia you are always at the mercy of powerful men and police." So would he now advise his clients to invest? If they have serious Kremlin connections, maybe. "But even then, it's not for sure," Aristi says. (See why Harvard's a bargain [EM] if you're from the U.K.)
Now extrapolate how many Aristis this case will create. How many future consultants, fund managers, central bankers and politicians will internalize Browder's narrative? By any measure, it is a coup for his campaign and a creeping disaster for Russia's image. And that is where Moscow may cry foul. Many foreign businesses have had enormous success in Russia while Browder's story is a kind of worst-case scenario. Even Ray Fisman, the Columbia professor who co-wrote the new case with Harvard, admits as much. "It is a tail risk, an extreme outcome," Fisman told me.
But seeing through that tail risk to the bigger picture of Russia's economy will mostly be up to the students, and it can be easy to miss amid the force of Browder's storytelling. Subtlety is not his strong suit, and he often slips into the fire-and-brimstone language of a televangelist. Describing Magnitsky's death, he told me, "It's almost like a story of divine virtue. Here is a young man who believes in truth and goodness, stands up against an evil regime and gets punished in this horrible way." Many people might agree with that, but it is hard to call such statements objective. The case study itself is much less breathless, describing Browder's ordeal this way: "The sheer number of government officials and private individuals that must have been involved in the elaborate scam [against Browder's fund] suggested a sophisticated and well-connected adversary." (See pictures of Moscow.)
But objectivity is not exactly Browder's goal. His goal is to make Magnitsky's tormentors pay. He wants all of the officials implicated in the case to be put on trial or otherwise punished. As of Nov. 16 -- the two-year anniversary of Magnitsky's death -- Russia has not obliged. No investigations have been opened into the eight most senior officials linked to the case, including detectives, judges, prosecutors and a general of the FSB, Russian security service. All of them have either kept their jobs or been promoted. Only two prison doctors have been charged with criminal negligence, despite the evidence allegedly linking Magnitsky's case to officials in various hierarchies.
So Browder is pressing on, and thus far, Russia is making no public effort to refute him. (The only response, Browder claims, have been death threats, 11 of them, sent anonymously by SMS, e-mail and voicemail.) When I asked Ketchum, the New York City?based public-relations firm that manages the Kremlin's image in the West, whether they had any strategy to counter Browder's campaign, they gave me a curt "no comment." In 2006, Putin gave a similar response when a reporter asked him why the American investor had been blacklisted. "To be honest, I don't know why this particular person has been refused entry to Russia," Putin said. But if he hadn't heard of Browder then, he certainly has by now.
Read about a news story that slipped past the Russia's censors.
See how Putin is setting up his Kremlin comeback.
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