Hermitage Capital Management
Encyclopedia
Hermitage Capital Management is an investment fund and asset management company specializing in Russia
n markets founded by Bill Browder and Edmond Safra
. Hermitage Capital Management headquarters are in Guernsey, whilst it also maintains offices in the Cayman Islands
and Moscow, Russia.
Its main investment fund, the Hermitage Fund created in 1996, has been extremely successful, earning 2,697% through December 2007, according to Opalesque.TV. It has been ranked the World’s Best Performing Emerging Markets Fund over the 1996-2001 five-year period by Nelsons
.
Hermitage is an activist fund
. One of its main tactics is to expose corporate corruption in the companies it is holding, in the hope of improving managerial behaviour and lessen the significant discount that corruption has on share prices. Most famously, Hermitage has helped to expose several high-profile cases of corruption in Russia's largest company Gazprom
between 1998 and 2000. In October 2000, Hermitage reported that "investors are valuing this company as if 99 percent of its assets have been stolen. The real figure is around 10 percent so that's good news."
In April 2007 the firm launched Hermitage Global, an activist fund focused on global emerging markets.
, in 2006 he was blacklist
ed by the Russian government as a "threat to national security" and denied entry to the country. The Economist
has accused the Russian government that this blacklisting occurred because he interfered with the flow of money to "corrupt bureaucrats and their businessmen accomplices."
As the New York Times reported in 2008, over the next two years, several of his associates and lawyers, as well as their relatives, were victims of crimes, including severe beatings and robberies during which documents were taken. In June 2007 dozens of police officers swooped down on the Moscow offices of Hermitage and its law firm, confiscating documents and computers. When a member of the firm protested that the search was illegal, he was beaten by officers and hospitalized for two weeks. Hermitage became victim of what is known in Russia as "corporate raiding": seizing companies and other assets with the aid of corrupt law enforcement officials and judges. Three Hermitage holdings companies were seized on what the company's lawyers insist are bogus charges.
On 8 October Hermitage released a video on YouTube accusing Russian Police of fraud.
On November 16, 2009 Sergei Magnitsky
, a partner of the legal company Firestone Duncan, who was a representative and legal consultant for William Browder in Moscow, having been accused in tax fraud and imprisoned for 11 months, died in prison. He had yet to be put on trial at the time of his death.
Opalesque.TV released a video on February 8th 2010 in which Browder reveals details of Sergey Magnitzky's ordeal during his eleven months in detention.
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
n markets founded by Bill Browder and Edmond Safra
Edmond Safra
Edmond J. Safra was a Jewish Brazilian-naturalized, Lebanese banker who continued the family tradition of banking in Lebanon, Brazil and Switzerland. He married Lily Watkins. He died in a fire that attracted wide media interest and was judicially determined to be due to arson.-Life of Edmond...
. Hermitage Capital Management headquarters are in Guernsey, whilst it also maintains offices in the Cayman Islands
Cayman Islands
The Cayman Islands is a British Overseas Territory and overseas territory of the European Union located in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac, and Little Cayman, located south of Cuba and northwest of Jamaica...
and Moscow, Russia.
Its main investment fund, the Hermitage Fund created in 1996, has been extremely successful, earning 2,697% through December 2007, according to Opalesque.TV. It has been ranked the World’s Best Performing Emerging Markets Fund over the 1996-2001 five-year period by Nelsons
Nelsons
*Nelsons , a London-based international producer of homeopathic medicinal products*Nelsons , a large East Midlands law firm based in Nottingham, Leicester and Derby, UK...
.
Hermitage is an activist fund
Economic activism
Economic activism involves using economic power for change. Both conservative and liberal groups use economic activism to boycott companies and organizations that do not agree with their particular political, religious, or social values. Conversely, it also means purchasing from those companies and...
. One of its main tactics is to expose corporate corruption in the companies it is holding, in the hope of improving managerial behaviour and lessen the significant discount that corruption has on share prices. Most famously, Hermitage has helped to expose several high-profile cases of corruption in Russia's largest company Gazprom
Gazprom
Open Joint Stock Company Gazprom is the largest extractor of natural gas in the world and the largest Russian company. Its headquarters are in Cheryomushki District, South-Western Administrative Okrug, Moscow...
between 1998 and 2000. In October 2000, Hermitage reported that "investors are valuing this company as if 99 percent of its assets have been stolen. The real figure is around 10 percent so that's good news."
In April 2007 the firm launched Hermitage Global, an activist fund focused on global emerging markets.
Russian Government controversy
Although the fund's founder William Browder was a supporter of Russian president Vladimir PutinVladimir Putin
Vladimir Vladimirovich Putin served as the second President of the Russian Federation and is the current Prime Minister of Russia, as well as chairman of United Russia and Chairman of the Council of Ministers of the Union of Russia and Belarus. He became acting President on 31 December 1999, when...
, in 2006 he was blacklist
Blacklist
A blacklist is a list or register of entities who, for one reason or another, are being denied a particular privilege, service, mobility, access or recognition. As a verb, to blacklist can mean to deny someone work in a particular field, or to ostracize a person from a certain social circle...
ed by the Russian government as a "threat to national security" and denied entry to the country. The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
has accused the Russian government that this blacklisting occurred because he interfered with the flow of money to "corrupt bureaucrats and their businessmen accomplices."
As the New York Times reported in 2008, over the next two years, several of his associates and lawyers, as well as their relatives, were victims of crimes, including severe beatings and robberies during which documents were taken. In June 2007 dozens of police officers swooped down on the Moscow offices of Hermitage and its law firm, confiscating documents and computers. When a member of the firm protested that the search was illegal, he was beaten by officers and hospitalized for two weeks. Hermitage became victim of what is known in Russia as "corporate raiding": seizing companies and other assets with the aid of corrupt law enforcement officials and judges. Three Hermitage holdings companies were seized on what the company's lawyers insist are bogus charges.
On 8 October Hermitage released a video on YouTube accusing Russian Police of fraud.
On November 16, 2009 Sergei Magnitsky
Sergei Magnitsky
Sergei Leonidovich Magnitsky was a Russian attorney whose death in police custody generated international media attention and launched an investigation into allegations of abuse. Magnitsky, who had alleged wide-scale tax fraud sanctioned by officials before being himself arrested, died days...
, a partner of the legal company Firestone Duncan, who was a representative and legal consultant for William Browder in Moscow, having been accused in tax fraud and imprisoned for 11 months, died in prison. He had yet to be put on trial at the time of his death.
Opalesque.TV released a video on February 8th 2010 in which Browder reveals details of Sergey Magnitzky's ordeal during his eleven months in detention.