Red Notice

by Bill Browder

  I was supposed to have been Autosan’s knight in shining armor, but instead I was a traitor. I was filled with a mixture of anger, self-doubt, and humiliation. Maybe Eastern Europe wasn’t the place for me after all.

  I left Poland knowing one thing for certain, though: I hated consulting.

  Over the following months I thought a lot about Autosan, wondering what had happened and if I could have done anything differently. Communication with them was almost impossible, but later I got word that the Polish government had completely ignored BCG’s recommendations and continued to subsidize Autosan. Normally consultants hope that their advice is followed, but in this case I was thrilled that it hadn’t been.

  My only remaining connection to Poland was my little stock portfolio, which I regularly checked. After leaving Sanok, they rose steadily. With every percentage point increase I became more and more convinced that I had found my calling.

  What I really wanted to do was become an investor in the privatizations of Eastern Europe.

  As it turned out, I couldn’t have been more right. Over the course of the following year my investments would double, and then double again. Ultimately, they went up almost ten times. For those who don’t know, the sensation of finding a “ten bagger” is the financial equivalent of smoking crack cocaine. Once you’ve done it, you want to repeat it over and over and over as many times as you can.

  * * *

  1 The Polish national airline.

  5

  The Bouncing Czech

  I now knew exactly what I wanted to do with my life—only it was in a field that barely existed. Although the Iron Curtain had been lifted, nobody was investing any money in Eastern Europe. I knew that would eventually change, but in the meantime my best option was to simply stay at BCG—assuming they would let me.

  After returning from the fiasco in Sanok, I kept my head down, praying that Wolfgang hadn’t submitted a recommendation to fire me. To my great relief, he was either too distracted or had forgotten, because nobody came to my office with a pink slip. I finally knew I was in the clear in late January 1991 when John Lindquist suggested that he and I write an article together. If I were going to be fired, why would one of the top partners in the firm want to write an article with me?

  The piece he had in mind was about investing in Eastern Europe, which we would submit to a trade magazine called Mergers & Acquisitions Europe. I looked into M&A Europe and it appeared to have an almost nonexistent circulation, but I didn’t care. I was ready to exploit any avenue that would help me establish myself as an expert on investing in the region.

  To write the article, I studied everything I could get my hands on. I read a stack of more than two hundred news stories and quickly learned that fewer than twenty deals had ever been done in the former Soviet Bloc in the previous decade. The most prolific investor was Robert Maxwell, a maverick 350-pound British billionaire who was originally from Czechoslovakia, and who had done three of the twenty deals.

  I figured I would impress John if I could get an interview with someone in Maxwell’s organization, so I called Maxwell’s press office, mentioning the article. They must not have done any homework on M&A Europe, because amazingly I was offered a meeting with the deputy chairman of Maxwell Communications Corporation (MCC), Jean-Pierre Anselmini.

  The following week I showed up at Maxwell House, a modern building halfway between Mayfair and the neighborhood known as the City of London. I met Anselmini, a suave, English-speaking Frenchman in his late fifties, and he welcomed me into his plush office.

  As we made small talk, I arranged my paperwork neatly between us. But just as I started to ask my first question, Anselmini pointed at one of my spreadsheets and asked, “What’s that?”

  “That’s my Eastern European deal list,” I said, happy that I had come so well prepared.

  “May I have a look at it?”

  “Of course.” I pushed the spreadsheet across the table.

  He examined it and tensed up. “Mr. Browder, what kind of journalist makes an M-and-A deal list?” It had never occurred to me that I might be too well prepared for this meeting. “Could you tell me a bit more about this magazine you work for?”

  “Well, I—I don’t exactly work for a magazine. I’m actually with the Boston Consulting Group. I’m doing this article freelance because I’m fascinated by investing in Eastern Europe.”

  He leaned back and gave me a thoughtful frown. “Why are you so interested in Eastern Europe?”

  I then told him the story of how excited I was to be an investor in the very first privatizations in Poland, and about Autosan, and my career ambition of investing in the Eastern Bloc.

  When it became clear to him that I wasn’t there to spy on Maxwell or his company, Anselmini started to relax. “You know, your coming here today might actually be very fortuitous.” He stroked his chin. “We’re in the process of setting up an investment fund called the Maxwell Central and East European Partnership. You strike me as just the type of person we’d like to hire. Would you be interested?”

  Of course I would. I tried to conceal my eagerness, but I couldn’t, and by the time I left, I had a job interview scheduled in my calendar.

  To prepare for it I spent the next two weeks tracking down anyone who knew what it was like to work for Robert Maxwell. He owned the Daily Mirror in London, a local tabloid, and was regarded as not merely eccentric but imperious, testy, and impossible to deal with—so I had my concerns.

  I found an ex-BCG consultant named Sylvia Greene who had once worked for him. I got her on the phone and asked for her advice.

  After a long silence, she said, “Listen, Bill, forgive me if I’m being blunt—but in my opinion you’d be totally out of your mind going to work for Maxwell.”

  “Why’s that?”

  “Robert Maxwell is a monster. He fires everybody all the time,” Sylvia said with feeling, making me wonder if she’d been one of the people he’d fired.

  “That’s not very comforting.”

  She paused again. “No, it isn’t. There are lots of stories I could tell you, but there’s a dramatic one that’s been making the rounds. About six months ago, Maxwell was on his private jet in Tampa, Florida. The plane was taxiing toward the runway and he asked his assistant for a pen to sign some documents. When she handed him a Biro ballpoint instead of his usual Montblanc, he became furious. He demanded to know how she could be so stupid not to have the right pen. She didn’t have a good answer and he fired her on the spot. She was literally deposited right onto the tarmac. This poor little twenty-six-year-old secretary from Essex had to find her way back to London all on her own.”

  I found three more ex-Maxwell employees and got three equally outrageous and colorful anecdotes, all with one common denominator: everyone was getting fired. One banker, a friend at Goldman Sachs, said to me, “The probability of you lasting a year there is zero, Bill.”

  I considered these stories carefully as the interview drew nearer, but they never succeeded in scaring me off. So what if I got fired? I had a Stanford MBA and BCG on my résumé. Surely I could find another job if I needed to.

  I did the interview, then two more. Within days of the last one I was offered the position.

  Against all the warnings, I accepted it.

  I started my new job in March 1991. With my higher salary, I moved into my own place, a nice little cottage in Hampstead, North West London. From there I walked down a narrow road and got on the Northern Line to Chancery Lane, where I made my way to Maxwell House. Robert Maxwell had purchased this building in part because it was one of only two in all of London that allowed helicopters to land on the roof. This enabled Maxwell to commute from his home at Headington Hill Hall in Oxford to his office by helicopter, avoiding the traffic.

  The idea of the boss arriving in such style sounded impressive until I experienced it for the first time. With windows open on a warm spring day, I heard the staccato whirl of a helicopter approaching. As it got closer, the sound
became more intense. By the time it was directly overhead, papers in the office started to fly everywhere. All telephone conversations had to stop because of the noise. Things returned to normal only when the helicopter had safely landed and the rotors were switched off. The whole ordeal lasted four minutes.

  On my first day of work I was told that I could pick up a copy of my employment contract from Maxwell’s secretary. I headed up to the tenth floor and waited in the reception area for his secretary to get around to dealing with me. As I flipped through an annual report, Maxwell himself burst out of his office. His face was red and the underarms of his shirt were soaked through with dark circles of sweat.

  “Why have you not yet got me Sir John Morgan on the telephone!” he shouted at his assistant, an unflappable blond woman in a dark skirt who was neither surprised nor offended by this outburst.

  “You didn’t tell me that you wanted to speak to him, sir,” she said calmly over the top of her glasses.

  Maxwell barked, “Look, missus, I haven’t got time to tell you everything. If you do not learn to take the initiative, you and I are going to fall out.”

  I slunk into my chair and tried not to be noticed, and as quickly as Maxwell appeared, he lumbered back into his office. The assistant finished what she was doing and then handed me an envelope with a knowing look. I grabbed it and made my way back to the eighth floor.

  Later that day, I mentioned the incident to one of the secretaries near my desk. “That’s nothing,” she huffed. “A few weeks ago he shouted so loudly at someone from his Hungarian newspaper, the poor man had a heart attack.”

  I went back to my desk, my contract suddenly heavy in my hands. That evening, as if to confirm what everyone really thought of Maxwell, as soon as the whomp-whomp of his helicopter could be heard, indicating that he was leaving, loud cheers rose across the office floor. I couldn’t help but wonder, Have I made a big mistake by coming here?

  On the Monday of my second week, I arrived in my office and found a new addition, a fair-haired Englishman a few years older than me, sitting at the spare desk. He stood and offered his hand. “Hello, I’m George. George Ireland. I’m going to be sharing this office with you.” His English accent was so upper-crust and pronounced that at first I thought he was faking it. George wore a dark, three-piece suit and had a copy of the Daily Telegraph on his desk. A tightly furled, black umbrella leaned against his filing cabinet. He struck me as a caricature of the perfect English gentleman.

  I found out later that George had previously worked as Maxwell’s private secretary, but unlike the others in that position, he had quit before he was fired. As he was a close childhood friend and Oxford roommate of Maxwell’s son Kevin, another place was found for George. Whatever humiliations Maxwell inflicted on his staff, he had a strange and well-developed sense of family loyalty, which he had extended to George.

  But as soon as I met George, I was suspicious. Was he going to report back to the boss everything I said?

  After our introduction, George and I settled at our desks, and a few minutes later he asked, “Bill, have you seen Eugene anywhere?” Eugene Katz was one of Maxwell’s financial-bag carriers who sat nearby.

  “No,” I said offhandedly. “I heard that Maxwell sent him to do some due diligence on a company in the US.”

  George sneered incredulously. “Due diligence on a company! That’s the most ridiculous thing I’ve ever heard. Eugene knows nothing about companies. You might as well send your local publican1 to do this due diligence,” he said, inflecting the last two words for effect.

  Over the course of our first day together, George proceeded to destroy the possibility of my feeling deferential toward anyone in the organization. He had such a keen eye for absurdity and hypocrisy—and such a razor-sharp wit—that I had a hard time not laughing anytime one of Maxwell’s top lieutenants was mentioned in conversation.

  That was how I learned that George was not spying on me.

  From George’s running commentary, it became obvious that Maxwell managed his company more like a corner shop than a major multinational corporation. Everything about it reeked of nepotism, dysfunction, and bad decision making. Yet, I still felt that I’d landed the best job in the world. I’d achieved my goal of being an investor in Eastern Europe. Maxwell was the only person making investments in the region, and if anyone in Eastern Europe wanted to raise capital, they had to come to us. Since I was the one who vetted all the deals, I was effectively the gatekeeper for every Western financial transaction in that part of the world—all at the tender age of twenty-seven.

  By the fall of 1991 I had reviewed more than three hundred deals, I had traveled to nearly every country of the former Soviet Bloc, and I was responsible for making three significant investments for our fund. I was exactly where I wanted to be.

  But then, after returning from lunch on November 5, I switched on my computer and was greeted with a red Reuters headline: “Maxwell Missing at Sea.” I chuckled and swiveled in my chair. “Hey, George—how did you do that?” George was always organizing pranks, and I figured this was one of them.

  Without looking up from his work he said, “What on earth are you talking about, Bill?”

  “This thing on my Reuters screen. It’s really convincing.”

  “What’s on your Reuters screen?” He rolled his chair to my desk and we stared at it together. “I . . .” he said slowly. That’s when I realized that it wasn’t a joke at all.

  Our small office had glass interior walls and I could see Eugene, white as a ghost, running toward the elevators. Then a few senior executives rushed past, struck with similar looks of panic. Robert Maxwell was indeed missing at sea. This was horrible news. Maxwell may have been a bastard, but he was also the undisputed patriarch of the organization, and now, for better or worse, he was gone.

  Nobody in the office knew anything about what had happened, so George and I stayed glued to Reuters (this was before the Internet, and Reuters was all we had for breaking news). Six hours after the first headline appeared, we learned that Maxwell’s enormous body had been lifted out of the Atlantic Ocean off the Canary Islands by a Spanish naval search-and-rescue helicopter. He was sixty-eight years old. To this day, nobody knows whether it was an accident, suicide, or murder.

  The day after Maxwell died, the share price of MCC plummeted. This was to be expected, but it was made worse because Maxwell had used shares of his companies as collateral to borrow money to support the share price of MCC. These loans were now being called in by the banks, and nobody knew what could be repaid and what couldn’t. The most visible effect of this uncertainty was the endless procession of well-dressed, nervous bankers who lined up to meet with Eugene, desperate to get their loans repaid.

  While we were all shocked by Maxwell’s death, we couldn’t help worrying about our own futures. Would our jobs be safe? Would we get our year-end bonuses? Would the company even survive?

  A little more than a week after Maxwell’s death, my boss called me into his office and said, “Bill, we’re going to pay bonuses a little early this year. You’ve done a fine job and we’re going to give you fifty thousand pounds.”

  I was stunned. This was more money than I had seen in my entire life, and twice what I was expecting. “Wow. Thank you.”

  He then handed me a check—not a machine-typed check issued by the payroll department, but a handwritten one. “It’s very important that you go down to the bank and ask for express clearing of this to your account straightaway. As soon as you’re done, I’d like you to come back here and let me know how it went.”

  I left the office, walked quickly to Barclays on High Holborn, and nervously presented the check to the teller, requesting that it be cleared to my account immediately.

  “Please take a seat, sir,” the teller said before disappearing. I turned and sat on an old brown sofa. I tapped my feet nervously, reading a savings-account brochure. Five minutes passed. I picked up another leaflet on mutual funds, but couldn’t focus. I star
ted thinking about the Thai vacation I was going to book for the Christmas holidays when this was all over. Thirty minutes passed. Something wasn’t right. Why was it taking so long? Finally, after an hour, the teller returned with a bald, middle-aged man in a brown suit.

  “Mr. Browder, I’m the manager.” He shuffled slightly and looked at his toes before eyeing me warily. “I’m sorry, but there aren’t sufficient funds in the account to clear this check.”

  I couldn’t believe it. How could MCC—a multibillion-pound company—not have enough money to cover a £50,000 check? I grabbed the uncashed check and quickly made my way back to the office to tell my boss the news. His bonus was going to be orders of magnitude larger than mine, and to say that he was unhappy is putting it mildly.

  I went home that evening crestfallen. In spite of the dramatic developments at work, it was my turn to host a weekly expat poker game. My nerves were so frayed that I could easily have done without it, but by the time the day was over, six of my friends were already on their way to my cottage. In the age before cell phones, it would have been impossible to track each of them down to cancel.

  I went home and one by one my friends showed up—mostly bankers and consultants, plus a new guy, a reporter from the Wall Street Journal. When they were all there, we opened some beers and started to play dealer’s choice. After a few rounds, my friend Dan, an Australian at Merrill Lynch, was already down £500, which was a big loss in our game. Several of us thought he would give up and go home, but he put on a brave face. “No worries, mates,” he said cockily. “I’m going to make a comeback. Besides, bonus time is coming up, so who cares about losing five hundred quid.”