This was unprecedented. Not only was it a personal disaster for Khodorkovsky, but for the whole financial market. The fear of expropriation sat at the back of every investor’s mind, and now it was happening under Vladimir Putin. Over the next four business days, the market slid a further 16.5 percent, and Yukos lost 27.7 percent of its value.
Why was Putin doing this? The most popular theory was that Khodorkovsky had broken Putin’s golden rule: «Stay out of politics, and you can keep your ill-gotten gains». Khodorkovsky had violated this maxim when he’d sent millions of dollars to the opposition parties for the upcoming parliamentary elections, and when he had begun to make statements that were clearly anti-Putin. Putin is a man who believes in symbols, and since Khodorkovsky had overstepped the mark, Putin had to make an example out of him.
As if to drive this home, Putin engaged in a full-scale witch-hunt against anyone connected to Khodorkovsky. In the weeks that followed his arrest, Russian law enforcement agencies went after the political parties he’d financed, his charities, and scores of his employees.
In June 2004, Khodorkovsky and his business partner, Platon Lebedev, were put on trial and convicted of six counts of fraud, two of tax evasion, and one of theft. Each was sentenced to nine years in prison. Since this was all about symbolism, Putin did something unprecedented: he allowed television cameras in the courtroom to film Russia’s richest man as he sat silently in the courtroom cage.
It was a powerful image. Imagine you’re Russia’s seventeenth-richest oligarch. You’re on your yacht moored off the Hôtel du Cap in Antibes, France. You’ve just finished screwing your mistress and you wander out of your stateroom to the galley to pick up two glasses of Cristal champagne and some caviar. You grab your remote and switch on CNN. There, right before your eyes, you see one of your peers — a man who is far richer, smarter, and more powerful than you — sitting in a cage.
What would your natural reaction be? What would you do?
Anything to make certain that you don’t end up in that cage.
After Khodorkovsky was found guilty, most of Russia’s oligarchs went one by one to Putin and said, «Vladimir Vladimirovich, what can I do to make sure I won’t end up sitting in a cage?»
I wasn’t there, so I’m only speculating, but I imagine Putin’s response was something like this: «Fifty percent».
Not 50 percent to the government or 50 percent to the presidential administration, but 50 percent to Vladimir Putin. I don’t know this for sure. It could have been 30 percent or 70 percent or some other arrangement. What I do know for sure was that after Khodorkovsky’s conviction, my interests and Putin’s were no longer aligned. He had made the oligarchs his «bitches», consolidated his power, and, by many estimates, become the richest man in the world.
Unfortunately, I wasn’t paying enough attention to see that Putin and I were on a collision course. After Khodorkovsky’s arrest and conviction I didn’t alter my behavior at all. I carried on exactly as before — naming and shaming Russian oligarchs. There was a difference this time, though. Now, instead of going after Putin’s enemies, I was going after Putin’s own economic interests.
You might wonder why I couldn’t see this. It all came back to that incident with the man in the road. The police had ignored me that day because I wasn’t Russian. I believed that, because I was a foreigner, I was somehow exempt from the informal rules that governed everyone else’s lives in Russia. If I had been a Russian citizen engaging in my anti-corruption work, I would certainly have been arrested, beaten, or murdered.
But Putin was not as brazen then as he is now. Back then killing a foreigner would have been too drastic a move. And putting me in prison would have made Putin just as much of a hostage to the situation as I was. If he did this, every Western head of state would have been forced to spend a third of their meetings with Putin arguing for my release. In the end, Putin came up with a compromise that satisfied everyone in his circle — on November 13, 2005, upon returning to Moscow from London, I was stopped in the VIP lounge at Sheremetyevo-2, detained for fifteen hours, and expelled from the country.
19. A threat to national security
As soon as I got off my deportation flight from Moscow, I began making calls to try to figure out what had gone wrong. Elena, who was eight months pregnant, tried helping me in any way she could. I’d spent the previous ten years painstakingly building my business brick by brick, forgoing a social life, obsessing about every move in the stock market, treating weekends like workdays, all to create a $4.5 billion investment-advisory business. I couldn’t let the cancellation of my visa destroy it in one fell swoop.
My first call was to a well-connected immigration lawyer in London. He listened to my story and was intrigued. He’d just heard that another British citizen, Bill Bowring, a human rights lawyer, had been denied entry to Russia on the day after me and suspected that my expulsion was a case of mistaken identity. I thought that was pretty far-fetched, but this was Russia we were dealing with.
My next call was to HSBC, my business partner after Edmond had sold the bank. As an enormous bureaucratic bank, it’d been wholly uninspiring when it came to moneymaking, but it was world-class when it came to dealing with the British establishment.
I first spoke to the CEO of HSBC’s private bank, Clive Bannister. Within fifteen minutes he connected me to Sir Roderic Lyne, a former British ambassador to Russia who was on retainer to HSBC for issues like these. Sir Roderic promised to help me navigate the departmental maze of the British government. Fifteen minutes after speaking to him, I had an appointment with Simon Smith, head of the Russia Directorate of the Foreign and Commonwealth Office, Britain’s version of the State Department.
A couple of days later I made my way to the Foreign Office building in London, an ornate and imposing neoclassical building on King Charles Street, just down the road from No. 10 Downing Street. After announcing myself at the reception area, I was escorted across a big courtyard to the main entrance. Inside were vaulted ceilings, marble columns, and Victorian imperial details. The place had been designed at the height of the British Empire to intimidate and awe visitors, and although I had met with many corporate CEOs, politicians, and billionaires, it had that same effect on me.
Simon Smith arrived a few minutes later. He was about five years older than me with thick, graying hair and wireless glasses that framed a ruddy face. «Hello, Mr. Browder. So glad you could make it», he said jovially with an educated British accent. We sat and he poured tea from a blue-and-white china pot for each of us. As the smell of Ceylon tea filled the room, Smith said, «So, it sounds as if you’ve got yourself into a bit of trouble with our friends in Moscow».
«Yes, it seems that way».
«Well, actually, you’ll be happy to know that we’re already on the case», he said professionally. «Our minister for Europe is in Moscow right now. He’s planning to raise your case tomorrow with Putin’s foreign policy adviser, Sergei Prikhodko».
That sounded reassuring. «Wonderful. When do you think we might know something from that meeting?»
Smith shrugged. «Soon, I hope». Then he leaned in and held his cup with both hands. «Bill, there’s one important thing here, though».
«Yes?»
«I watched your shareholders’ rights campaigns with great admiration when I was at the embassy in Moscow, and I know how successfully you used the press to advance your causes. But in this situation you absolutely must keep this away from the press. If this story is given a public airing, we won’t be able to help you. The Russians will dig in their heels and your issue will never be resolved. Russians always need a way to save face».