58 pages • 1 hour read
Bill BrowderRed Notice: A True Story of High Finance, Murder, and One Man's Fight for Justice
Nonfiction | Autobiography / Memoir | Adult | Published in 2015A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Themes
The Risks of Investing
Entrepreneurs and investors work in an inherently risky environment. Business startups and their backers must take chances with their resources, as nothing is certain in the competitive world of buying and selling and profit and loss. These risks are especially pronounced in areas where there is little information: ignorance can lead not only to financial ruin but, sometimes, to personal danger.
In Russia, the spoils go to those who can see deeper into new situations and place their efforts where they will produce profitable results. The trick is to do so without suffering the all-too-frequent losses caused by officials and their cronies who, in an unstable marketplace, have elbow room to game the system and, now and then, hijack the hard work of foreign investors. This is what happens to Browder and his team.
Emerging markets are places in the world where otherwise impoverished societies begin to develop their economies with the hope of becoming prosperous. To do so, they need investors from wealthier nations who will risk their money in the hope that the emerging markets pan out.
Browder cuts his financial teeth on newly privatized countries such as Poland and Russia, where the risks to an outsider are great but the opportunities are greater, and he becomes one of the first to do so successfully. Essentially what he is doing is called arbitrage: the discovery and purchase of undervalued resources. Arbitrage can occur on a daily basis, as when investors discover discrepancies in currency exchange rates; it also happens when, as with Browder’s Hermitage business, outsiders from one marketplace find undervalued assets in another.
As such, arbitrage performs an important marketplace function: bringing to light assets that others, in turn, can use and develop. It’s as if the arbitrageurs are “mining” the marketplace for hidden gems of value, and the first one to strike a lode will stake a claim to the profits.
All too soon, however, Browder discovers a risk worse than financial failure: the danger to life and limb posed by a corrupt culture that offers him no sanctuary.
The Corruption of Russian Politics
The Soviet economy, long burdened by Marxist ideology, has by the late 1980s fallen far behind the rest of Europe. Efforts to modernize its socialist policies fail, and the Soviet Union collapses. Russia emerges, battered yet ready to build a free market. The effort leads to improved economic conditions, but the price is endemic financial corruption.
The massive privatization process is unprecedented and unstable, administered by Russians who have little concept of the workings of an open market. The resulting Wild West environment benefits a cadre of corrupt officials and newly-minted billionaires who take advantage of the chaos to pilfer, hijack, and otherwise rob the newly-created companies.
Adding fuel to the fires of injustice is a deeply rooted bureaucratic mindset, in place since Czarist times and strengthened under the Soviet regime, that employs arbitrary decision-making bolstered by an entrenched system of kidnapping, torture, and assassination. The economic culture has undergone a massive change, but the political culture still functions as before, venal and malign, now replete with shakedowns, blackmail, and the use of sanctioned police violence.
The Fight for Justice
Browder dives into the Russian emerging market both confident and naive; his team’s smarts and dedication prove fruitful, and Hermitage Capital becomes world famous. It also attracts shakedown artists, and the team’s efforts to avoid such problems result in police raids, bogus charges, expulsion, arrest, torture, and murder. That is more than any enterprise ought to tolerate, and the death of Sergei Magnitsky is utterly unconscionable. Browder’s world is turned upside-down; when he gets back on his feet, his purpose has changed. The corruption and cruelty Browder has witnessed make his investing activities seem unimportant. He dedicates himself instead to getting justice in the name of Sergei.
Browder learns the hard way that redress doesn’t come easily. Many forces militate against his team, including vicious attacks by opponents; corrupt and venal incompetence among Russian officials; difficulties obtaining useful information in enemy territory; foot-dragging politics that slow passage of legislation to redress the evils; and simple exhaustion from constant vigilance and fear of assassination.
The reward for Browder is the satisfaction of knowing that the US has enacted legislation to penalize the malefactors, and of seeing the looks of gladness on the faces of Sergei’s widow and child as they witness the European Parliament pass similar sanctions.
