Corruption threatens international investment

The story of Bill Browder is not a pleasant one. He moved to Russia in 1996 with $25 million dollars to invest in the Russian oil and gas industry. After revealing corruption in many Russian corporations he was at last kicked out of Russia in November, 2005. His company was seized and used to obtain $230 million in fraudulent tax rebates. One of his Russian employees, Sergei Magnitsky, refused to flee and was detained in prison for over a year. Magnitsky died in captivity. (Triesman).

Browder’s story is a sobering one for the global citizen. While American citizenship protected Browder from more than expulsion, his native associates were not so fortunate. Browder’s attempts to draw out corruption ended in the death of one of his lawyers and the demolition of his company. Any entrepreneur who resists corruption may face trouble. But justice may never come, even if they enlist the pressure global publicity. An entrepreneur that wishes to be a global citizen must realize their efforts to combat corruption may be fiercely opposed, and to be ready for a full and complete end to their enterprise.

I’ve heard many stories of Christians being kicked out of countries, and I often assume it’s because of their faith. Even a secular effort to improve the marketplace of another country may meet the same fate, however. And Browder had advantages I do not. He possessed financial clout since he came to Russia with $25 million to invest. He produced positive business results, which ought to have given him leverage. He was able to raise international attention. He even managed to extract all his employees (except Magnitsky) to London (Triesman). Without those advantages the likelihood that I will face similar adversity with zero recourse is even more likely and I will need to plan for it from day one (sadly). At the very least that means the startup cost will be higher to account for evacuation.