IIn 2008 a young Russian lawyer called Sergei Magnitsky uncovered a massive tax fraud. He found evidence that a group of well-connected Russian officials had stolen a whopping $230m. The same officials had Magnitsky arrested; he was tossed into a freezing cell and refused medical treatment. Magnitsky – who suffered from pancreatitis and gall stones – spent months in pain. This state-sanctioned torture was meant to make him withdraw his testimony. He didn’t. One day his condition grew critical. Guards put him in an isolation cell. There, they beat him to death.

Magnitsky’s case was to become the most notorious and best-documented example of human rights abuse in Vladimir Putin’s Russia. That this happened was down to one man: Bill Browder, a US-born financier and the CEO of a successful asset management company. Once a Putin fan, Browder found himself in trouble in 2005 when he was deported from Russia. He hired a team, including Magnitsky. When the Kremlin got nasty, most of the lawyers fled. Magnitsky – a family man with two small boys, who liked Beethoven – refused to leave. He believed the law would protect him, that Russia had said farewell to its Soviet ghosts. It was a tragic misjudgment.

Red Notice is a dramatic, moving and thriller-like account of how Magnitsky’s death transformed Browder from hedge-fund manager to global human rights crusader. Its title refers to the extradition request served by Russia on Interpol, demanding Browder’s arrest. (A Russian court later jailed him in absentia for nine years.) In truth, there are quite a few pretenders to the exalted post of “Putin’s No 1 Enemy”, as he describes himself. They include Michael Khodorkovsky, the former oligarch whom Putin (pictured) jailed and sent to Siberia. There is the lateBoris Berezovsky, another tycoon who fell out with Russia’s grudge-bearer-in-chief and decamped to London, playing Trotsky to Putin’s Stalin. Or Alexei Navalny, the Moscow opposition leader, currently under house arrest. Or the murdered Alexander Litvinenko, poisoned in a Mayfair hotel with radioactive green tea.

Still, there is no doubt that Browder has succeeded in annoying Putin in a way that few have. In the wake of Magnitsky’s murder, he began a campaign to bring his killers to justice. Since they occupied high positions in Russia’s interior ministry and FSB spy agency there was little prospect of this happening. Instead, Browder took advantage of an obscure law passed by president George W Bush in 2004, which allows the US to impose visa sanctions on corrupt foreign officials.

Browder took his campaign to Washington, where the state department gave him short shrift. The Obama administration had “reset” relations with Russia and didn’t want to rock the boat. Indefatigable, bloody-minded, a sort of virtuous pain-in-the-arse Ancient Mariner, Browder continued to lobby senators, journalists and anybody who would listen to him. Against the odds, Congress passed a landmark Magnitsky law in 2012, blocking 18 officials from entering the US. Most importantly, the law denied them access to US banking.

Inadvertently, Browder had found Putin and co’s Achilles heel, and a model that might be used against other mid-ranking human rights abusers. In Soviet times, the politburo lived quite a bit better than the average Soviet citizen. It had special shops and holidays on the Black Sea. In Putin’s Russia, however, the difference was vast: top bureaucrats were worth millions and enjoyed international lifestyles. They owned property in London and Florida. They sent their kids to British private schools. What was the point of stealing all that money if you could only spend it in Sochi, with its scruffy, pebbly beach?

The Magnitsky law drew an apoplectic, asymmetric response from Putin. He ended the adoption of Russian babies by childless American couples. And, in a twist that might have been written by Gogol, the Kremlin put Magnitsky on trial. That he was already dead was apparently not a problem. In summer 2013 a judge convicted him of tax evasion, announcing a surreal verdict to an empty barred cage.

All of this is well told, in a memoir with many grotesque moments. Browder’s personal story is interesting, too. He is the grandson of Earl Browder, the head of the American Communist party. In the 1920s Earl visited Moscow and fell in love with a Russian lawyer. They married and had three children. When Earl returned to the US he ran for president on the Communist ticket, in 1936 and 1940, winning 80,000 votes. As a teenager, the young Browder decided the only way to rebel against his brainy leftwing family was to become a capitalist. Inevitably he was drawn to eastern Europe and his timing was impeccable: he got his first foot in the door, with the Boston Consulting Group, two months before the Berlin wall fell down.

The early chapters of Red Notice read like a mixture of Bildungsroman and a self-help manual for aspiring carpetbaggers. Browder was sent to Poland to rescue a crumbling bus factory. The trip wasn’t a success. Polish food didn’t agree with him; he lost a stone; the firm’s employees felt betrayed when he reluctantly concluded that most of them had to be sacked. While he was there Browder subscribed to Poland’s first-ever privatisations; quicker than most investors, he realised the demise of the communist bloc offered a once-in-a-lifetime opportunity to get stupidly rich.

There were false starts. Browder went to work for Robert Maxwell. Every day a whumping from the heavens signified the great man’s arrival by helicopter. Maxwell’s watery death left Browder unemployed. He soon bounced back and was off advising a Russian trawler fleet north of the Arctic circle. What Browder really wanted to do was to run his own investment fund. After some comic negotiations, with a stuffy London bank and a pair of billionaires, he got the seed millions he needed. He called his new firm Hermitage Capital and moved to Moscow.

The story of Russia’s scandalous privatisation programme under Boris Yeltsin is familiar. Facing defeat in the runup to the 1996 presidential election, Yeltsin gave state assets away cheap to the oligarchs. In return they got him re-elected. Browder, meanwhile, piled into the Russian stock market. By 1997 Hermitage had become the best performing investment fund in the world, and its CEO hailed as a financial superman. But he failed to anticipate Russia’s 1998 crash; in its aftermath, oligarchs screwed western investors like Browder by diluting their shares in Russian companies. Browder fought back and when Putin became president in 2000 hailed him as an ally in the fight against oligarchic malfeasance. In reality, the new president wasn’t interested in cleaning up Russia. His goal was simple: to redistribute the states’s abundant resources among his KGB friends.

Red Notice offers a scant and less than convincing account of these years when Browder talked up Russia in western forums. He now admits he was “naive” to take Putin at face value. And yet it’s impossible not to admire him for his subsequent pertinacious campaign against the officials who caused his lawyer’s death.

The British government wasn’t much help, we learn. (Browder, based in London, is a UK citizen.) Two interior ministry officials – Artem Kuznetsov and Pavel Karpov – allegedly orchestrated the $230m fraud, stealing taxes paid by Hermitage to the Russian state. Browder found out where the money went – on Range Rovers, Moscow real estate and tacky properties in Dubai. A Russian living in the UK, Alexander Perepilichnyy, offered further clues as to how the officials had routed the “rebate” via a Moscow tax office.

In November 2012 – just as the Magnitsky act was passed – Perepilichnyy collapsed and died while jogging outside his Surrey mansion. He was 44. His cause of death is still a mystery.

• Luke Harding’s Mafia State: How One Reporter Became an Enemy of the Brutal New Russia is published by Guardian Faber.