After this call Vadim and I tried to make sense of the conflicting news coming out of Russia. How could it be that people like the minister of economics or the head of the Russian securities commission were relaying messages that my situation was hopeless, while the president’s economic adviser seemed to think that he could help me get my visa fixed at the National Security Council?
It occurred to me that perhaps everyone was telling us what they thought to be true, but the Russian government was full of different factions expressing their own opinions.
Whatever was really happening, all I could do was hope that Dvorkovich’s faction was going to win and the National Security Council meeting would bear fruit for me.
But then, just four days before the big meeting, a new factor entered the equation when I received an email from the Washington Post’s Moscow bureau chief, Peter Finn. It read:
Hi Bill,
Hope all is well. Sorry to bother you with a rumor, but there’s one floating around that you’re having some visa difficulties. Anything to this? And if so, are you willing to talk about it? For an investor of your stature it would be significant.
Cheers,
Peter
Shit! How had this guy heard about my visa? This wasn’t good. All I could think of was Simon Smith’s warning about how the Russians would dig in their heels if my story got out. I didn’t respond to Finn, and thankfully he didn’t follow up.
Unfortunately, another reporter, Arkady Ostrovsky from the Financial Times, called me on Thursday. He’d heard the rumors too. «Is it true you’ve been denied entry to Russia, Bill?»
I tensed my stomach. «Arkady, I’m sorry, but I can’t comment on that».
«C’mon, Bill. This is big news. I need to know what’s going on».
Arkady and I were on a first-name basis because he was one of the journalists who’d been instrumental in the Gazprom exposé. While I couldn’t deny to Arkady what was happening, I had to delay him. «If it were true», I said, «and I gave you an exclusive on this, can you give me four more days?»
He didn’t like that, but it was better than no story at all, and we agreed that I’d call him on Monday.
I was completely on edge after talking with Arkady. Reporters were catching wind of what was going on, and all I had to do was get through the next thirty-six hours without any more of them calling. But then, at 10:30 a.m. on Friday, a Reuters reporter named Elif Kaban left me a message on my voice mail. She didn’t say what she was calling about, but she called again at 11:45 a.m.
I had a lunch scheduled with an old friend from Washington that afternoon and left the office without returning either of her calls. I met my friend at a dim sum restaurant in Chinatown and turned off my phone, but I put my BlackBerry on the table to monitor the Reuters issue just in case. After my friend and I collected a few dishes off the cart, my BlackBerry started to blink with a message from my secretary:
Bill, Elif Kaban is still trying to get through to you. She says Reuters has received solid information about you not being allowed into Russia and they’d like to give you an opportunity to make the first statement. Please get back to them as soon as possible. This is their fourth call today. Elif Kaban is being VERY persistent!!
I stared blankly at the email for several seconds, stuffed my BlackBerry in my pocket, and tried to enjoy the rest of my lunch. I knew that the shit was about to hit the fan, but I wanted a few last minutes of peace.
After leaving the restaurant I took a detour through Green Park. It was a bright, crisp spring day, one of those days when it felt good to be a Londoner. I breathed the fresh air and looked around at all the carefree people walking in the park, people who weren’t about to have their worlds turned upside down.
I finished my walk and got to my desk. A few minutes later Reuters published a red headline: «Hermitage CEO Browder Barred From Russia».
The secret was out. My phone immediately lit up like a Christmas tree. Calls came from the Wall Street Journal, the Financial Times, Forbes, the Daily Telegraph, the Independent, Kommersant, Vedomosti, Dow Jones, AP, the New York Times, and about twenty other news organizations. This was exactly what Simon Smith had warned me about, and now it was happening. There would be no way for the Russians to save face, no way to back down. Nothing would come of Russia’s National Security Council meeting anymore. My fate had been decided, and from that moment I knew that it was officiaclass="underline" I was done with Russia.
Except Russia was not done with me.
21. The G8
When the Russian government turns on you, it doesn’t do so mildly — it does so with extreme prejudice. Mikhail Khodorkovsky and Yukos were prime examples. The punishment for presenting a challenge to Vladimir Putin went beyond Khodorkovsky to anybody who had had anything to do with him: his senior managers, lawyers, accountants, suppliers, and even his charities. By early 2006, ten people connected to Yukos were in jail in Russia, dozens more had fled the country, and tens of billions of dollars of assets had been seized by the Russian authorities. I took this as an object lesson, and I was not going to allow the Russians to do similar things to me. I needed to move my people, and my clients’ money, out of Russia as quickly as possible.
I brought Hermitage’s chief operating officer, Ivan Cherkasov, to London to help do these things. Ivan had joined Hermitage five years earlier from JP Morgan, and he was the one who hounded brokers, chased banks, and organized the payroll. He was thirty-nine, tall and telegenic, spoke flawless American English, and did his job perfectly.
Ivan set up a war room in our serviced offices on Tavistock Street in Covent Garden and got to work. Getting our people out was relatively easy. Within a month everyone at Hermitage whom I thought was at risk, as well as their families, was safely outside of Russia.
The harder part was selling billions of dollars’ worth of Russian securities without anyone knowing. If the market caught wind of what we were doing, brokers and speculators would engage in a practice called «front-running». In our case, if brokers learned that Hermitage was going to sell all of its Gazprom holdings, those brokers would try to sell their shares first, driving down the price and potentially costing Hermitage clients hundreds of millions of dollars in that one stock alone.
To avoid this, we needed to find a broker who could execute the fund’s sell orders with complete confidentiality and discretion. However, brokerage firms are generally not a trustworthy bunch, and local Russian brokerage firms are particularly untrustworthy. We also couldn’t choose a major Western brokerage house that we had previously done business with because, as soon as it started executing our orders, the other brokers would put two and two together and conclude that Hermitage was selling, causing them to start dumping their shares.
This didn’t leave us with many options. We looked at who was left and zeroed in on an affable thirty-two-year-old broker who headed a two-person trading desk at one of the big European banks in Moscow. He’d tenaciously been trying to get some business from us for years, and now we were going to give him his shot.
Ivan called him up and told him that his persistence was about to pay off. «There’s one thing, though. We can only do this if you can swear to complete secrecy».