“WE’VE GOT THEM by the balls,” Mike Sulick said. “Now let’s squeeze.” Sulick, a veteran of Russia House, had risen to become head of the National Clandestine Service of the agency and was talking to his boss, CIA director Leon Panetta. The veterans of the spy wars with Russia had the upper hand with their old adversary and they wanted to stiffen the sinews of those around them. As Panetta picked up the phone in his Langley office two days after the arrests, he was going to hear what the squeeze sounded like. On the other end of the line was Mikhail Fradkov, the head of the SVR. Panetta, who liked the odd spy film himself, thought his opposite number was straight out of central casting. There had been some surprise when Putin had made Fradkov prime minister in 2004 and then head of the SVR in 2007. That had made some wonder whether his years as a trade and economic official back in the 1970s and 1980s had been cover for a KGB career.
Panetta and Fradkov had been trying to build some kind of working relationship. It was the old story of the attempt at dialogue and liaison. But the ghosts of the past were always there. Fradkov had been Panetta’s guest at Langley a few months before the phone call. The two looked at the photographs that line the walls outside the CIA director’s office. One was a picture of Oleg Penkovsky, the GRU colonel who had provided secrets to CIA and MI6. Fradkov visibly winced. That night they went to a restaurant. The conversation was stilted. There was vague talk of cooperation but no common ground on what that meant. Old Russia hands in the CIA, who remembered the misfires of the 1990s, were deeply skeptical about discussions of creating a joint working group. “The old Cold Warriors in the CIA’s clandestine service—including Mike Sulick—told me I was wasting my time,” the CIA director later reflected. They said the Russians would never share anything and just use it as a ruse to try to recruit the officers involved in liaison. “These are a hard-knock group of people who have been doing this for years,” Panetta said of his Russia House staff. He knew they had never bought the idea that the Russians had changed their tune with the end of the Cold War.
What did Panetta think had been his country’s worst intelligence or foreign policy mistake, Fradkov asked Panetta over dinner? The mismanagement of the Iraq War was the American’s answer. Panetta asked the same question about the Soviet Union. Fradkov paused for a long moment, and then answered with one word: “Penkovsky.” The greatest mistake was not a policy choice like the Soviet Union invading Afghanistan, but someone within the intelligence services who had betrayed. That said a lot about how treachery was viewed in Moscow.
Panetta, accompanied by Sulick and a few others, had also been over to Moscow. “I think I can still hear the screams from the basement,” his chief of staff whispered to Panetta as they walked through the Lubyanka. During that visit Panetta carried a secret. Just weeks before, the FBI had briefed him on the illegals they had under surveillance with the news that the operation was moving toward the arrest phase. While touring Yasenevo and meeting Fradkov, Panetta and Sulick had kept quiet that they were about to deliver a crushing blow to the man they were meeting.
Now on the phone, Panetta was going to broach the idea of a swap. There were many obstacles. But one of the biggest was that the Russians had to admit that the people the FBI had arrested were their spies. The SVR would have to blow their own carefully constructed cover. Everyone knew this would be a difficult moment. The capture was a disaster when Russia’s spies were already on the back foot amid concerns that President Medvedev was going to reduce their power.
The Russians’ initial response to the arrests had been predictable—the charges were “baseless and improper.” But one reason the indictments were so detailed and broad was precisely to confront Russia with the truth—the Americans had not just caught their illegals but knew everything about them. By revealing that some of the surveillance went back a decade and included coverage of their houses and clandestine meetings, the Russians would hopefully be forced to face up to the reality that the illegals’ cover was blown.
Panetta used the speakerphone for the call. Around him were the top Russia hands from the CIA. Expectations were low. “These are old Cold War warriors who had been through a lot,” Panetta recalls. The assumption was that the Russians would deny everything.
“Mikhail, we have arrested a number of people, as you saw in the press. Those people are yours,” Panetta said. A CIA interpreter translated the words. Then there was a long pause on the other side. If the Russians did not acknowledge the illegals, there could be no swap. There was a long pause before Fradkov replied.
“Yes, they are my people.”
“The men and women around me had to stifle themselves to keep from cheering out loud,” Panetta later said. “Instead, a silent round of raised eyebrows and high-fives ran through our room as we realized that we were already past denial and into negotiations.” Panetta made his offer: “We’re going to prosecute them. If we have to go through trials, it is going to be very embarrassing for you.” There was an element of bluff in this since the White House had indicated they did not want high-profile prosecutions damaging the relationship.
There was another long pause.
“What do you have in mind?” Fradkov asked. The Russian sounded humble on the other end, one of those involved recalls. It was clear he had been given his orders—get the people out.
“I propose a trade,” Panetta said.
Fradkov did not immediately agree. He said he would check. “From our side, we believed he had to check with Putin,” says Panetta. The game was on.
The SVR was in a tough corner. The whole point of illegals was that they were “illegal”—they had no diplomatic protection and cover. Once caught, the option of maintaining their cover by not admitting the truth risked consigning them to a trial and—given the scale of the evidence the FBI had already presented—an almost certain prison sentence. This was where the culture of Russian espionage again came into play. Illegals were heroes. They were not agents, people like Hanssen and Ames who had sold out their country for money—they were officers. They were patriotic Russians. To leave a hero rotting in an American jail was not a good option. The CIA knew this. That was why the old Russia House hands like Mike Sulick wanted to squeeze.
The United States had the upper hand. Word soon came back from Fradkov that a deal would be done. Normally this took time, but no one wanted to wait. The Americans were surprised at how receptive Fradkov had been to a swap. So how could the CIA use its leverage?
They decided to ask for something unprecedented. There had been plenty of spy swaps before. But those in the Cold War were typically a Russian caught in America exchanged for a Westerner caught in Russia—like British businessman Greville Wynne, who had been involved in the Penkovsky operation, who was traded for KGB illegal Konon Molody (also known as Gordon Lonsdale). Or downed American U-2 pilot Gary Powers for the illegal Rudolf Abel. But what was being proposed in 2010 was going to be different. The Americans wanted Russians to be swapped for Russians. Moscow was going to be asked to give up its own citizens—people it regarded as traitors. This was much more painful for Moscow and its intelligence services. It was the equivalent of Russia asking the FBI to free Robert Hanssen from his prison sentence.
The priority for the CIA was Alexander Zaporozhsky. He had been an important asset for the CIA and the agency had long wanted him back (even though a few inside were annoyed that he had got himself into trouble by returning to Moscow). The Russians knew how bad the Americans wanted him. They had, it can be revealed, offered to swap him for a number of years. But the person the Russians wanted in return was someone the CIA would not give up—the agency’s very own traitor: Aldrich Ames. The Russians had raised this year after year. And year after year they had been rebuffed. Now the CIA had the chance to get Zaporozhsky out without giving up their own traitor. But one was not enough. Everyone knew that would look like a bad deal. “We had ten people plus their families and we thought if this thing was going to be able to be justified, it had to be a group of people on
our side that were going to be exchanged,” Panetta says. “This was a good opportunity to get as much as we could.”
A second name was added—Gennady Vasilenko. He had played an important—even if unwitting—role in helping catch Robert Hanssen by helping get the man who sold the file over to the United States. There was a sense of guilt for the fact that Zhomov had made him pay a price for that. But that was only two.
It was time to offer a favor to some friends. Mike Sulick called his opposite number, the director of operations at MI6, who had worked the Russia target back in the 1990s. Sulick asked if there was anyone MI6 wanted out of Moscow. The MI6 man went to see John Sawers, the head of MI6, in his sixth-floor office at Vauxhall Cross. Sawers was six months into his job as “C” or chief.
Britain had not been told about the plan for the arrest of the illegals. But the news was met with undisguised pleasure in London when it broke. MI6 had no direct relationship with the SVR—post-Litvinenko it had wanted a back channel to send messages, but MI5 had quashed the idea. Cooperation between the CIA’s Russia House and their counterparts at MI6 was close, aided by the fact that both sides knew the other had to keep secrets even from their own colleagues to succeed. Sawers’s people came up with two names. One was Sergei Skripal—he was their agent and they felt they owed him a debt. The other was Igor Sutyagin. In his case, there was a sense of guilt inside Vauxhall Cross. He had paid a heavy price even though he had always denied working for them. Sutyagin’s name had also come up in Washington in another context. Mike McFaul, the senior director for Russia at the National Security Council, had known the Russian when he visited Stanford in the early nineties and had followed his case.
So now it was four. Even that, some reflect, was not as good a trade as it could have been. “We didn’t get enough,” says one person involved at the time. But then perhaps it was a good thing there were not more people festering in Russian jails having been convicted of espionage for the United States or United Kingdom.
MI6 and the CIA may have had a unique opportunity to get people out. But delivering a deal was not going to be straightforward. The problem was one that few would have predicted. Those accused of crimes had to admit the truth for the deal to work. And on both sides there were some people who did not want to be swapped. They did not want either to plead guilty or to go where they were told.
The illegals, held in Boston, New York, and Washington, had been read their Miranda rights on arrest. According to material provided to the court, Zottoli and Mills waived their rights and admitted these were not their real names and that they were Russians. But they did not say who they really were. And others were also reluctant to own up.
On the night retired spy Lazaro was arrested, he talked for several hours to the FBI and made a lengthy statement. He was not born in Uruguay, nor was he Juan Lazaro. He said that his wife had indeed gone to South America and delivered letters to the “Service” on his behalf. The house in Yonkers had been paid for by the “Service.” He said one more surprising and personal thing. He said that although he loved his son, he could not violate his loyalty to the “Service” even for him. He was a professional doing his job. But there was one other thing he would not do. He refused to give his real name. FBI agents thought the experience of talking was almost cathartic—a release after so long living a lie. A bed was made for him in the office but when he woke up the next morning, he stopped talking.
At a July 1 hearing, the government made the case for the illegals not to be given bail. The fear was that the SVR could whisk them away (an argument helped by the fact that Metsos had fled). Since the illegals did not have access to classified information and were not being charged with espionage, the criminal complaint had to be carefully drafted. Since they had used their true names, Semenko and Chapman were charged with failing to register as agents of a foreign government—with a possible sentence of five years. The family illegals were charged with acting as unregistered foreign agents and it was alleged they had used false identities to illegally move money to obtain mortgages and rent properties, allowing an additional money-laundering charge. The white-collar fraud charges offered a potential for significant jail time—up to twenty-five years. That, in turn, would raise the pressure on Moscow to come to a deal.
Elena Vavilova was kept in solitary. The air-conditioning was on full. “It was cold and lonely,” she later said. There was plenty of time to pace the cell, to speculate about what had gone wrong and worry about how many years she might be facing behind bars. But there was no tough interrogation. And she soon understood why. As they read the criminal complaint against them, the illegals realized that this had not been a lucky break by the Americans. The scale of the evidence was stunning. “When I read the paper and saw lots of people’s names and place names there, it became obvious that one single mistake made by one person could not have brought about this catastrophe,” Vavilova later said. On the one hand there was relief that they had not been caught because they made a mistake. But on the other, there was the realization that it had been due to something much worse. They had been betrayed. There was a mole.
This was a difficult time for the children. One minute they were normal American kids, next they were the sons and daughters of Russian spies. The entire worlds that had been constructed around them suddenly collapsed amid a flurry of tabloid headlines and breathless news reports. At the hearing, Vicky Pelaez cried and gestured to her two sons from the courtroom. Her children maintained the whole thing had to be some kind of mistake as journalists scrambled to find out what they knew. “It’s a circus. This is pure psychological pressure. It’s total confusion. He’s an old guy. His English isn’t so good,” Waldo Marsical said of his stepfather, Juan Lazaro. The charges were “ridiculous,” he said, explaining that his parents were clueless when it came to computers and technology and often needed help accessing their Yahoo email accounts. So how could they manage clandestine communications with Moscow?
At the first hearing, the two sons of Donald Heathfield and Ann Foley had watched in shock as their parents entered shackled and wearing orange uniforms. “I never had any doubt about my parents’ identities,” Alex later said, before adding something that not many teenagers could say about their parents: “Never once in my 16 years of life had they done anything that seemed odd, or unexplainable.” At the hearing, the boys had managed to talk briefly to their parents. They spoke in French so that people around them could not understand. “We told them to try and leave the city,” Vavilova recalled. She says she found it hard as a mother to see her children look so scared. But of course it was her choice that had put them there.
On the fourth floor of the New York courthouse were a US Marshals Service office on one side and a holding area for defendants on the other, with a corridor and some seats in between. As lawyers for the illegals arrived, they noticed two men in the corridor in suits pacing and sometimes talking in hushed tones. They were there when the lawyers arrived and there when they left. In a highly unusual move, the two men also went into the holding area to talk directly to the illegals without their lawyers present. The men, it emerged, were from the “Russian Government.” They looked like Russians, the American lawyers thought. They were there to cajole and pressure their people to sign up for the deal. It was not going to be easy.
Heathfield and Foley initially had brushed away all the accusations against them. They were who they said they were and nothing else. A fellow inmate approached Heathfield in prison after a couple of days and showed him a newspaper story about Russian spies with his photograph. “Is that you?” “I said it was some mistake,” he later recalled. That all changed when they were paid a visit by a Russian official. He explained that a deal was in the works. They had permission to blow their own cover and admit their real names. After nearly a quarter of a century undercover, it was over.
Lazaro and Pelaez would prove the real problem. Vicky Pelaez was not a Russian. She had never lived in Russia. She had not even, she said, known
her husband was Russian. Her lawyer said he believed she would not want to go to Russia. Robert Krakow, meanwhile, had been assigned as a lawyer to Juan Lazaro. He found him smart, intelligent, and engaging. They talked a little about Lazaro’s university work. Lazaro seemed surprisingly calm at the way events had turned out. He also did not seem to want to go to Russia. He had two grown-up kids and a life in America. And he was retired from spy work. “What am I going to do in Russia?” he asked.
The illegals were told they did not have a choice. There was a deal and they would all have to accept it. For Heathfield and Foley and others this was straightforward. They were going to follow orders. Others were less keen. Lazaro was pressured by a heavy-handed Russian, his lawyer said at the time. “His manner was: ‘This is what’s going to happen.’” Pelaez was promised she would get two thousand dollars a month and housing if she went to Russia, although she would be free to go elsewhere if she wanted.
Lazaro and Pelaez had a peculiarly intimate problem. She has always maintained she did not know her husband was a Russian illegal whose real name was Mikhail Vasenkov. At one point, she spoke direct to her husband in custody. “What’s your name? Your real name,” she asked him, according to lawyers who were present. “My name is Juan Lazaro,” he replied. The fiction, it would seem, remained. And while it was there, the swap could not take place.
IN MOSCOW THE CIA’s chief of station, Dan Hoffman, was having his own problems. Panetta and Fradkov had agreed to the overall deal but had left their declared officers in the other’s capital to work out the details. For the CIA, they knew closing the deal was important. If something went wrong and the deal collapsed, the four imprisoned Russians they had identified as wanting to leave could be in real danger.
Hoffman, a tough character who did not shy away from a fight, found himself sitting down to negotiate with someone the CIA knew all too well. There across the table was Russia House’s long-standing nemesis—Alexander “Sasha” Zhomov. More than two decades before, he had been PROLOGUE—the young KGB officer who tricked the CIA as a “dangle,” pretending to spy for them in Moscow while feeding false information. Later, as the KGB and then FSB’s chief hunter of American spies, he had arrested their agents. And Zhomov would have known much about Hoffman—down to the most personal details. The American had served an earlier tour in Moscow as a young officer and so detailed surveillance reports about his life would have been delivered to Zhomov. Now these two adversaries had to work together to deliver a deal.
Russians Among Us Page 26
