By 1996, the party in Russia was in full swing. The oligarch class had come into full bloom, the Russian mafia was siphoning millions of dollars out of Russia, Bill Browder started his own firm, and Yeltsin was reelected the previous year. In fact, things were looking better than ever for Browder who left Salomon Brothers after almost four years to open his own firm, Hermitage Capital, with investors Edmond Safra, the banking giant behind the Republic National Bank of New York, and Israeli billionaire and diamond magnate, Beny Steinmetz. According to Browder’s book, he initially met Steinmetz during his jet-setting days at Salomon and it was only a few years later that Steinmetz reached out to Browder about investing in Russia. Shortly thereafter, Steinmetz set up a meeting between Browder and Safra, a Brazilian Jewish banker who had been deeply involved in finance well before Bill Browder came along. Here’s what I wrote about him previously,
“According to the icij.org, he was the ‘descendant of a banking dynasty from Syria’ and a ‘colossus of the finance world who established banks across Brazil, Switzerland and the United States.’ However, according to The Guardian it was rumored that Safra was connected to ‘drug, gold and currency trafficking, money laundering and organized crime’ as far back as 1957. And although the article demurred about Safra’s involvement with the Iran-Contra affair, there’s no disputing that at least two of his bank employees were involved according to the final Walsh report. The New Yorker also reported that ‘many of Safra’s clients had been Russians alleged to have criminal ties’ and a U.S. prosecutor once remarked, ‘Republic always had some very interesting customers who find the government looking at them, more so than maybe other banks.’”
In a 1996 article entitled, “The Money Plane,” published by New York Magazine which detailed how the “Russian mob gets a shipment of up to a billion dollars in fresh $100 bills,” Edmond Safra’s bank, Republic National, was directly implicated. After reporting that the Russian mob had long been using “an unimpeded supply of freshly minted Federal Reserve notes to finance a vast and growing international crime syndicate,” the author of the article, Robert Friedman, asked the obvious question, “So then why are Republic National Bank and the U.S. Federal Reserve continuing to supply millions of crisp, clean $100 bills to banks that so many money-laundering experts agree are tainted?” And that’s a great question especially since the article went on to quote an official from the office behind regulating Republic National Bank, the Comptroller of the Currency, who stated that the U.S. government “sees nothing wrong with it.” Keep in mind that when this article was published Clinton was still president and Bill Browder was already working with Safra.
As for Browder’s other partner, diamond magnate Beny Steinmetz, it may be the first time some of you are hearing about him because Browder rarely if ever talks about this guy and his initial involvement in Hermitage Capital (he allegedly pulled out of Hermitage in late 1998). Maybe it’s because of Steinmetz’s background which includes a laundry list of crimes like money laundering and bribery. For example, his company’s mining license was revoked in Guinea for essentially bribing Mamadie Toure, the wife of President Conte, in order to obtain lucrative mining concessions. In 2015, he was allegedly involved in a 136 million euro corruption investigation in Romania, and at the end of 2016, Steinmetz along with four others were arrested on suspician of “money laundering, falsifying documents, using fake documents, false registration of corporate documents, fraud, breach of corporate trust, obstruction of justice, and bribary.” Not surprisingly, Steinmetz is considered the prime suspect in the case.
Additionally, if you missed @AnonScan’s tweet about the Democratic Republic of Congo it reminded me that there’s a chance Steinmetz may have been involved in the 2004 Dikulishi mining massacre because of his relationship with Daniel Gertler. Gertler maintained a close relationship with DRC President Kabila and Kabila’s close aide, Augustine Katumba Mwanke at the time of the tragedy but no quotes on Steinmetz’s involvement because I haven’t done a lot research on the subject. If you have more time than I do to look into this further you’ll probably want to start with Anvil Mining and Global Enterprises Corporation (GEC). If you want to throw Marc Rich into the mix because somehow you can always find a way to throw his company, Glencore, into the mix, you can. In June, 2007, Steinmetz, Gertler and Glencore became partners in the mining company Nikanor Plc. and interestingly enough it was only a few days ago that Bloomberg reported on a recent data breach exposing Glencore’s dealings with Gertler and Steinmetz, including the 2007 merger with Nikanor Plc.
Like everyone else that Browder has worked with we could be here all day talking about Steinmetz. In 2005, Steinmetz teamed up with another diamond magnate, Lev Leviev, to purchase the top ten floors of Israel’s Diamond Tower which also houses the Israeli Diamond Exchange. Haaretz.com reported that “the buyers intend to build a connector from the 10 floors – the top 10 floors of the building – to the diamond exchange itself in order to benefit from the security regime of the other offices within the exchange.” And benefit they did. According to one website reporting on a Channel 10 (Israel) news story, from 2005 – 2011, an “underground” bank was set up to provide “loans to firms using money taken from other companies while pretending it was legally buying and selling diamonds.” The bank apparently washed over $100 million in illicit funds over the course of six years and both Steinmetz and Leviev were directly implicated as “customers” of the bank but I don’t believe either of them were charged in the case.
Then there’s HSBC’s involvement in the diamond industry and Leviev’s ties not only to arms dealer Arcadi Gaydamak via Africa-Israeli Investments but Roman Abramovich through the Federation of Jewish Communities in Russia (FEOR) but seriously, who’s got the time? Nah, I’m kidding. I have the time and trust me, we’ll be revisiting HSBC, Africa-Israeli Investments and Roman Abramovich soon enough.
So there you have it. With his shady, billionaire friends in tow, Browder’s Hermitage Capital went on to become the largest foreign investment portfolio in Russia. However, continued success may have been hard to come by had Yeltsin not been reelected in 1996. It was rumored that his opponent, communist candidate Gennady Zyuganov, was going to expropriate privatized companies which needless to say would have hampered Browder’s fun in Russia. Here’s what Browder said about the situation,
“I can stomach strikes, food shortages, street crime but not government ex-appropriation if Yeltsin lost and Gennady Zyuganov took control.”
Cute, huh? Starving Russians in the streets, meh…but take away Browder’s cash cows and watch his head spin. Do I have to bring up the cat tweet again here, folks? Bottom line is that as fate would have it, the Russian oligarchs (Semibankirschina) who normally fought like kindergartners amongst themselves put aside their differences and used their money and power to get Yeltsin reelected leaving Browder in a financially fantastic position. But like most things, the party in Russia wouldn’t last and in the next few years things would change drastically for both Browder and his partner, Edmond Safra.