William Browder is the largest foreign investor in Russia's stock market and one of the country's biggest promoters. But now the government won't allow him back into the country, and therein lies a tale of the sticky challenge of investing in a booming economy caught between the forces of capitalism and state control.
Browder, 42, spent 10 years in Russia building Hermitage Capital Management into a US$4 billion asset shop. As one of the most vocal critics of Russia's weak standards in corporate governance, he was responsible for fostering changes at giants like Lukoil and spurring new local laws to protect shareholders' rights.
Yet even though he has billions at stake in Russia, Browder is no longer welcome and has been stopped at the country's doorstep.
In November last year, Browder arrived at the VIP lounge in a Moscow airport during one of dozens of annual trips he takes in and out of the country. Rather than being whisked through as usual, he was turned away with no explanation, even though he carried a valid visa.
Since then, he said, politicians and businessmen from British Foreign Secretary Jack Straw to HSBC chief Stephen Green had inquired on his behalf, to no avail.
Browder, who was born in the US but gave up his passport to become a British citizen, finds himself in a paradox: he's pushing investment in many of Russia's largest companies, based on analyses of their business fundamentals, while suffering firsthand from the bureaucracy and capriciousness of the Russian system, which continues to scare some foreign investors away.
Browder is no stranger to paradox. His grandfather was Earl Browder, leader of the American Communist Party. The younger Browder decided to go to Russia while at the Stanford business school.
"I had a romantic notion of following in my grandfather's footsteps to Russia, not as a communist but as a capitalist," he said in an interview in London, where he has been living since November.
Underscoring such contradictions, Browder locates his Moscow office in a luxury high-rise building, but he decorates it with a socialist realist painting of Lenin at Finland Station.
Browder did not start the fund thinking that he would be campaigning to change Russia's governance standards. Instead, he said he was compelled to vocalize his criticisms by what he calls the "orgy of stealing" that the oligarchs embarked on after the Russian currency collapse.
"It was pure necessity," he said. "It wasn't like I was saying I wanted to be an activist. If I wasn't, they would have stolen everything from me."
Now, he says, the country is about "halfway" through its journey toward Western-style business practices, and the trip is taking much less time than he expected. That is part of the reason he says he does not want to abandon the country now.
"By the time it gets to capitalism the way that we know it here, there aren't going to be any opportunities left," he said.
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