One of the weirdest stories thus far in the Trump/Russia Conspiracy is the meeting in Trump tower on June 9, 2016. It’s been confirmed that at least three Trump campaign officials (Don Jr, Jared Kushner and Paul Manafort) met with a group of people ranging from a Russian attorney to a British public relations manager for an Azerbaijani pop singer. Not only were the people in the meeting strange, but the topic of conversation seemed strange as well. Both the Trump team and the Russia-linked attendees agree that the focus of the conversation was adoption.
Adoption? Was this just a cover story used by those involved to keep the heat off the fact that they were really talking about getting help from a foreign country to try to win an election? Probably not. That’s a really bad cover story. That’s the kind of rushed excuse you hear when the obnoxious guy in the office walks up on a group of people planning a small happy hour after work. “What are you guys talking about?” Says the obnoxious guy. “Adoption.” Says the group.
Natalia Veselnitskaya, the Russian attorney heading up the meeting, has always made it clear that the topic of conversation was adoption. Even Don Jr. has corroborated this by saying he wanted to talk about Hillary, but the Russian lady just kept talking about adopting Russian babies, a topic so boring it made Paul Manafort play Candy Crush on his phone for 45 minutes and caused Jared Kushner to slink back into the shadows and float out of the room 15 minutes in. That is, if you believe the timeline given by Don Jr.
But why was the topic of adoption so important to Veselnitskaya? And why did Don Jr. think he was getting some dirt on Hillary Clinton? What was the price tag for the Clinton dirt? As it turns out, there are a lot of Russians losing lots of money because a guy named Bill Browder made Vladimir Putin so mad that he ended the practice of Americans adoption Russian babies.
Seems complicated, right? Well… like everything else Trump/Russia, it’s easy to follow if you just remember the following formula:
Capitalism cures all.
William Felix Browder was born in Chicago in 1964. Bill was not exactly a Rhodes Scholar, a fact that he readily admits in his book Red Notice. He was the son of a mathematics prodigy, and the grandson of Earl Browder, the leader and presidential candidate of the Communist Party in the US in 1936 and again in 1940. As a tip of the hat, or more appropriately, a flip of the middle finger, to his academic father and communist grandfather, Bill went into the world of high finance.
Bill graduated from Stanford Business School in 1989, the same year the Berlin Wall fell. A few years later, Bill’s career took him to London as a stock broker, specializing in emerging markets in eastern Europe. The grandson of one of the most influential communists in America was helping the largest communist government to date turn itself inside out in a matter of months.
It’s important to note something about the world in which Bill lived during the early 1990s. Old ways of life were replaced with new processes and procedures. The country was in a massive state of flux as Russia rumbled haphazardly toward free-market, capitalist society. It was a particularly messy process, and there were plenty of opportunities for abuse.
Bill was living in Moscow at a time when billionaires sat in meetings with leg-breaking mobsters. To paint the picture for you, imagine if the cantina on Tatooine from Star Wars had 125 million angry Russians in it.
For the better part of the 90s, Bill Browder had taken advantage of the fledgling Russian economy. He bought stock at massive discounts and earned his investors millions of dollars in the process. He was sitting on a gold mine and the end was nowhere in sight. That is, until 2005 when Browder was declared a threat to national security by the Russian government… but we’ll get to that later.
In 1996, Bill was just getting started. Boris Yeltsin, Russia’s first democratically elected president, was running for re-election with an approval rating that makes Donald Trump’s 35% look like a lovefest. There was a growing fear in the financial community that that the opposing candidate, a member of the old communist party, would win and all the capitalist fun would come to a screeching halt.
Luckily for Bill, Yeltsin made a sudden resurgence and won re-election. Although seen as a great comeback story, the history books may show a different narrative in the end. As the decades go by, rumors about election rigging and voter manipulation are only growing. But for mid-90s Russia with Yeltsin securely at the helm, the ride on the non-stop freight train of capitalism could continue into the new millennium. And Bill was all-in.
Hermitage Capital, Bill’s Moscow-based investment firm, was turning millions into hundreds of millions almost overnight, making his investors extremely happy and making Bill very rich. Bill had become a British citizen before starting Hermitage Capital in 1995. He gave up his US citizenship in 1998 so he wouldn’t have to pay taxes in both Great Britain and the US. A decidedly Unamerican thing to do, to be sure.
On New Year’s Eve, 1999, Yeltsin made a surprise decision. He told a national television audience that he was resigning and that Vladimir Putin would be the interim president of Russia, effective immediately. Although a bit of an odd choice from a political experience standpoint, Putin became the odds-on favorite to win the upcoming 2000 presidential election.
In the beginning, Bill and his western investor buddies were excited about Putin taking the helm of the government. Putin was billed as an anti-corruption leader. Which, for Bill, meant that the biggest thorn in his side, the Russian oligarchs, would be held in check.
Oligarch, shmoligarch.
A big problem for Bill in Russia had always been the oligarchs, a handful of super-rich businessmen who had cornered markets on everything from aluminum to fertilizer.
These oligarchs had spent the early years of post-soviet Russia seizing control of a vast percentage of the new economy. By the time the figurative, and literal, dust settled from the crumbling of the Berlin Wall, roughly 111 people controlled about 20% of all wealth in Russia. 15 of these elites were so powerful that they became known as “Karon” or the oligarchs.
Bill Browder was making a fortune in Russia, but the oligarchs weren’t making things easy. Often using intimidation tactics, bribery and blackmail, Oligarchs were famous for squeezing small-time money-men like Bill out of deals. Although lucrative, Russia was not a place for the faint of heart.
Putin was supposed to put a stop to the oligarchs. He was supposed to stabilize what was still a very volatile economic environment. After all, why would foreign investors waste their time and money in Russia if they knew the deck was stacked.
But this, unfortunately for Bill, was not Putin’s plan for Russia. In 2003, Putin had Mikhail Khodorkovsky, at the time Russia’s wealthiest man, arrested for fraud. Although you may think Putin was doing guys like Bill a big favor by taking down Russia’s biggest oligarch, the reality is that Putin may have just been inserting himself at the top of the proverbial food chain.
Khodorkovsky was put on trial. It was televised. He was in a cage. Yes... a cage. The richest man in all of Russia was put in a cage on national television. The message was clear: If Putin could put the biggest oligarch in a cage and take all his money, he could do it to any of the oligarchs. With that, Putin declared himself the toughest kid on the playground.
Putin money in the bank.
In his book, Red Notice, Browder makes the claim that Putin put the word out to all the oligarchs that if they didn’t want to end up like Khodorkovsky, then they had to give Putin a cut of their profits. Mind you, Bill’s claim is not that Putin levied a tax on all the oligarchs’ financial transactions to support the Russian government. The assertion is that Putin demanded a cut of all the oligarchs’ transactions to be paid to Vladimir Putin personally. It’s a claim that has been made by several anti-Putin folks, but is nearly impossible to prove.
Although unsubstantiated, if the claim were true, that would make Putin not only the wealthiest man in the world, by a few hundred billion dollars, but also Putin would control a large percentage of the natural resources of Russia, something that was supposed to be owned by the citizens of Russia as a matter of course when the Soviet Union fell apart. This type of system in which the head of the government makes political decisions based on their own pocket book rather than what’s best for their people is the essence of political corruption.
We hope you enjoyed your stay in Moscow.
Bill was a bit of a nuisance to Putin in the early 2000s. Through aggressive investing, Bill’s company, Hermitage Capital, became a major shareholder in the colossal Russian gas company Gazprom. It was in this capacity that Bill drew the ire of Putin.
Since Gazprom was partially state-owned, the Russian government, or more simply put, Putin, generated a tremendous amount of wealth from the company. Bill was very vocal in his criticism of the institutionalized corruption he saw in one of his largest investments. Speaking out against corruption at Gazprom was essentially speaking out against Putin.
If Putin could throw the richest man in Russia into a cage, he could kick Bill Browder out of the country. Well, to be more specific, he prevented Bill from coming back into the country after a trip to London in 2005. The Russian government had declared Bill to be a threat to national security. This meant that they didn’t have to charge him with a crime. They could just keep him from entering based on little more than the fact that Bill was a non-Russian living in Russia.
After a couple of years of pleading, Russian officials informed Bill that he could re-apply for a Visa to enter the country. Right on cue, Bill’s company, Hermitage Capital, was accused by the Russian government of tax fraud. That pretty much meant going back to Moscow wasn’t in the cards for Bill anymore.
The Moscow police effectively shut down the offices of Hermitage Capital. The Russian government claimed that Browder owed over $300 million in unpaid taxes, which essentially meant that Hermitage owed more taxes than it had in available funds. For non-numbers people, that means they were ruined, destroyed, out of business.
The whole thing seemed completely ridiculous. How could Bill and his tax lawyers have screwed up so badly? How could they have gotten so upside down when the previous year they had actually paid over $100,000 more in taxed than they should have? What did they miss?
Crime doesn’t pay… but you can get rich by looking the other way.
Sergei Magnitsky, one of Bill’s lawyers, immediately went to work on an audit trail. After some digging, he believed he had found the cause of the tax problem. Somehow, one of Hermitage Capital’s subsidiaries had taken in large sums of money for no apparent reason over several years without every paying the tax bill. The thing was, Bill Browder was no longer the owner of the company. Bill had signed over control of the subsidiary to a convicted murderer serving time in a Russian prison, which was clearly a bad decision on Bill’s part. The problem was, Bill was pretty sure he never signed off on that.
Magnitsky had a theory. When the police raided the law office representing Hermitage Capital, they seized Hermitage’s corporate registration documents. The documents could then be used to move ownership of one or more parts of the company from one person to another. Signatures from Bill and the accountants would all have to be forged, of course, and the change of ownership would have to be backdated a few years, but if you pass the filing clerk a few million rubles or so, it shouldn’t be a problem.
Then the new owner is free to take piles of dirty money, collected from arms dealing, drug sales, human trafficking, and other unsavory sources, and claim it was legitimate revenue collected by a perfectly reputable subsidiary of Hermitage Capital over a number of years.
For the folks running the scheme, the final piece of the puzzle would be paying off a tax lawyer to represent Hermitage Capital in court, unbeknownst to Browder or anyone else at Hermitage. If you find a judge who is willing to play ball, maybe in return for a mansion on the coast, the court could decide that the transfer of ownership is legitimate and Hermitage is responsible for the subsidiary’s tax bill. Then the tax lawyer representing Hermitage simply signs off on the judgement and Bill Browder now owes $300 million.
You can’t fight City Hall.
Sergei Magnitsky was convinced. He thought he had not only solved Hermitage’s tax problem, but that he had also uncovered a serious case of corruption in Moscow’s police department and court system. If you can’t guess what happened next, I’ll give you a hint… Magnitsky wasn’t given the key to the city.
Magnitsky became a target of the investigation in the Hermitage Capital fraud case. In essence, he was accused of running the money laundering and tax fraud scheme he had just uncovered. He was arrested and thrown in prison to await trial. Sitting in prison, awaiting trial for a crime he was sure was actually committed by the people who threw him in jail, Magnitsky's day-to-day life was pretty brutal.
Magnitsky suffered mental and physical abuse and died in prison after 358 days of waiting for his trial to begin. Not coincidentally, Russian law mandates that a person accused of a crime cannot be imprisoned for more than a year without a trial. The Russian government was 1 week away from having to put Magnitsky on trial. Luckily for them, Magnitsky died, so there was no trial, no embarrassing claims from the defense attorney, no questioning of the judgement against Hermitage and no threat to the status quo.
Although Bill and Sergei Magnitsky weren’t close friends, Sergei’s death became the catalyst for Bill’s new career, exposing the corruption of Putin’s Russia. Before the Magnitsky scandal, it was corporate fraud Bill cared about. He wanted to make sure billionaire oligarchs didn’t keep him from making millions. After Magnitsky’s death, Bill wanted the Russian government to pay for what they had done.
On December 9, 2012, President Barack Obama signed the Magnitsky Act into law. The main purpose of the legislation was to punish those who allegedly framed, incarcerated and ultimately murdered Sergei Magnitsky. Individuals named in the Magnitsky Act were barred from entering the US and, more importantly, from accessing the US banking system.
For some of these people named in the legislation, this was not that big of a punishment. Low-level players in the conspiracy didn’t have a lot of money in America. But the higher up the food chain you went, the more effective the law was. Imagine having hundreds of millions of dollars in investments in the US that you have no access to.
One of the most aggravating results of the Magnitsky Act for Putin was the universal acceptance of the charges levied against his government. Over the last 5 years, Bill Browder has become a driving force for the passage of the Magnitsky Act (or versions of it) in every country Russia does business with, making him one of Vladimir Putin’s most successful enemies.
Maybe we can work something out.
On December 14, 2012, 5 days after Obama signed the Magnitsky Act, Putin retaliated. In a much-criticized move, Russia passed legislation that banned adoption of Russian children by US parents. The fact that Putin was unwilling to prevent American investors from spending money in Russia, a more obvious tit-for-tat response, shows more about how important American dollars in Russia are to Putin then it does about how much he cares about Russian babies living in the US.
On June 9, 2016, Natalia Veselnitskaya, a Russian attorney, along with at least 4 other Kremlin-tied individuals met with members of the Donald Trump presidential campaign to discuss the removal of the ban on adoption of Russian orphans by US citizens. The ultimate goal for the Russians in the meeting was to gain support for the killing of the Magnitsky Act. According to Donald Trump, Jr., the bait used to get the meeting was compromising information on Hillary Clinton.
According to Veselnitskaya, she began the meeting by explaining how this American traitor, Bill Browder, had fooled the gullible Barrack Obama into levying what amounted to sanctions on innocent Russians. She wanted to gain some support from the Trump team for the lifting of these sanctions. Bullet point 2 on her agenda was apparently, “oh by the way, we have this ban on adopting Russian babies thing.”
So here’s the completely wacky, off-the-wall conspiracy theory about what went on at this meeting: An agent of Russia offered to deliver anti-Clinton material to the Trump campaign in exchange for the future president Trump’s promise to rip up the Magnitsky Act. And if anyone asks why he wants to rip it up, he can say that he wants to make sure Russian babies can be adopted by Americans again. Because who doesn’t like babies?
Trump gets dirt on Hillary. Sanctioned Russians get their money back. Russian babies get to become American babies. Everybody wins! Whada ya say, America!?!?
