ALEX CHADWICK, host:
This is Day to Day. I'm Alex Chadwick.
MADELEINE BRAND, host:
I'm Madeleine Brand. In a few minutes, the air is getting bad in Beijing. An update on what the athletes will be breathing when the Olympic Games begin.
CHADWICK: First, if you think the international oil business feels like highway robbery every time you fill up these days, try doing oil business in Russia. British Petroleum has a very big deal there, but what's developing reads more like a thriller novel than a business prospectus.
BRAND: BP has a joint operation to handle its Russian pumping operations. A couple of weeks ago, the British CEO fled Moscow after what he called sustained harassment of the company and myself. He is still CEO, but BP says he's now operating from an undisclosed location in central Europe.
CHADWICK: Then this week, the venture's chief financial officer quit after a heated dispute with these Russian partners. Bill Browder was himself thrown out of Russia three years ago. He is CEO of the Hermitage Capital Management Fund. That's the biggest equity fund invested in the Russian stock market. Bill Browder, welcome to Day to Day. Does this BP situation remind you of your own time?
Mr. BILL BROWDER (CEO, Hermitage Capital Management Fund): Well, it's almost exactly the same. I was running a very big and successful investment management operation in Russia for 10 years, and I showed up at the airport in Moscow in November 2005 to discover that I was no longer allowed in the country. And that was just the beginning of my troubles with the Russians.
CHADWICK: There is some question about the role of the Russian government in all this. The government says, we don't have anything to do with this. This is just the Russian partners who are doing this, and it's hands-off for us. Do you believe that?
Mr. BROWDER: Well, let me tell you what happened to me. After I got kicked out of Russia, or my visa was taken away - and by the way, the reason that they gave for taking away my visa was that I was a threat to national security.
About a year and a half later, after that, the tax police took away all the documents from my office. And then those documents were used to fraudulently reregister the ownership of our Russian investment holding companies out of our names into the name of a guy who turned out to be a convicted murderer, all done in collusion with the police. In our case anyways, I can't speak about BP's case, but our case, it involved government officials with their fingerprints all over it, from top to bottom.
CHADWICK: With your own Hermitage Fund that you run, this is an investment fund in Russia that you continue to run. It's got more than three billion dollars in assets, I believe. How can you continue to do business in a country like this, where it doesn't look as though there are any kind of rules?
Mr. BROWDER: Well, in my case, what I did was I took my money out of Russia. We run three billion dollars, but 95 percent of it is out of Russia because I agree with you. It's a place where there are no rules, where there is no property rights.
CHADWICK: In this case, BP struck a deal with these Russian partners. It wanted to be the western company that would be operating in the Russian oilfields. There are huge oil reserves there. This is a place where a petroleum company would want to be. So they had to agree to these terms or else they couldn't get in.
Mr. BROWDER: When they started their business there, it was all looking very good for about five years. But as oil prices rose and as people got more and more excited, that's where the trouble's begun for them right now. With oil above 120 dollars a barrel, everybody wants a piece of that action. It may be that the Russian government wants a piece. They've had something like 14 different raids by law enforcement agencies trying to take their stuff away.
CHADWICK: Has BP called you up and said, hey, you used to run a pretty successful venture there. What should we do?
Mr. BROWDER: You know, it's interesting. Whenever anyone has trouble in Russia, the last thing they want to do is call up somebody else who's had trouble in Russia because nobody wants to associate themselves with any other problems.
CHADWICK: Well, what would you advise them? I mean, this is a big, big company with a lot of money on the line in Russia. What would you tell them to do?
Mr. BROWDER: Well, if you look at BP's situation, it's very dire at the moment because they get about - I think about 30 percent of their reserves come from this joint venture. And so they have no choice but to fight until the bitter end. And that's apparently what they're doing. My advice is carry on fighting. Don't roll over.
CHADWICK: I don't operate in the financial world in the way that you do. I just read about it. But when was the last time you knew of a big venture that was run by a chief executive officer who was in an undisclosed location in central Europe?
Mr. BROWDER: I think it's unprecedented, and it's an absolute damning statement about the state of business in Russia at the moment.
CHADWICK: Bill Browder runs the Hermitage Capital Management Fund, formerly heavily invested in Russia. Now, not so much. Bill, thanks so much.
Mr. BROWDER: Thank you.
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