But Zatuliveter decided to fight deportation. In a remarkable court battle—held partly in the open and partly in secret—her lawyers challenged the MI5 case. The press drew the analogy with Anna Chapman. “There are also similarities in that they both happen to be young women, that is a similarity, and that they are very adept networkers,” an MI5 officer testified. The case was different, though—there was no proven contact with the Russian intelligence service. Her diaries suggested she was genuinely interested in the men she was involved with. MI5 officials doubt if Zatuliveter was sent out as a spy—but believed that once she was spotted as having interesting contacts, she could have been approached by the Russian intelligence services. But the court found she had not been tasked to seduce Hancock or the NATO official. Their conclusion was that “at least on the balance of probabilities” she was not a Russian agent. Zatuliveter won the case. It was a blow to MI5’s spy hunters.
It was not the only contact Hancock had with a Russian woman. In the late 1990s he met another young Russian—Ekaterina Paderina. Paderina had arrived on a student visa in the late 1990s and in 1998 married a retired merchant seaman more than twice her age. The marriage lasted a matter of months. She was served with a deportation notice but went to Hancock for help to remain in the country. She succeeded. Paderina was allowed to remain and in November 2001 went on to marry a millionaire insurance company director. He was not particularly well known at the time. His name was Arron Banks. He was increasingly politically active in the coming years and eventually would become the most public bankroller of the campaign for Britain to leave the European Union. Paderina drove around in her husband’s Range Rover with the number plate “X MI5 SPY.” She and her husband have always dismissed any accusations she is a spy.
But what of America? There was only the briefest of stand-downs for Russian intelligence in the wake of the arrests. And you might assume the SVR’s sending of spies under illegal cover would be at the very least paused. That was not the case. It only took weeks for the Russians to be sending more spies over—albeit under different cover.
THE ILLEGALS HAD barely unpacked their bags in Moscow when Evgeny Buryakov arrived in New York in August 2010. He was a banker in his mid-thirties who was about to become the deputy representative of Vnesheconombank (also known as VEB), the Russian state development bank. With a wife and two kids, he lived a quiet life in a modest house in Riverdale in the Bronx. He was code-named “Zhenya.”
The FBI’s New York field office would open an investigation—with Maria Ricci supervising—that eventually led to the indictment of three men. It was the arrival of one of them, Igor Sporyshev, in New York on November 22, 2010, that started things off. In his late thirties, he had been posted as a Russian trade representative, but his father had been a senior figure in the KGB and then the FSB. That gave him the profile of a potential spy and the FBI began to investigate. Another of the three, Victor Podobnyy, was in his mid-twenties. He arrived on December 13 as an attaché at the permanent mission to the UN. Both, the FBI would establish, were undercover SVR officers.
The banker Buryakov was the most interesting figure. He was an undercover SVR officer working without diplomatic immunity. But he was not hiding his Russian nationality. Rather he was working under what Americans would call “non-official cover” as a banker. In that sense he was closer to the Anna Chapman model but was a fully trained officer rather than a True Name or Special Agent illegal trained up on the job. He worked not for Directorate S but Directorate ER. This focused on economic intelligence. Its priorities were information on sanctions against Russia as well as attempts by the United States to develop alternative energy resources, such as fracking, which undermined Russia’s economic leverage. Because this team worked for a different directorate from Poteyev, the SVR would have hoped they were not compromised by his departure.
Buryakov had already spent five years in South Africa from 2004 as a banker and undercover SVR officer (even his boss had not known his true role until an SVR officer blurted it out over dinner one night). Buryakov’s cover meant he could not visit the SVR’s rezidentura. Sporyshev and Podobnyy were carrying out the standard intelligence tasks of trying to recruit New Yorkers as sources but were also acting as handlers for Buryakov, transmitting his intelligence back to Moscow Center. Buryakov was careful not to discuss anything intelligence related with the others over phone or email, instead meeting face-to-face.
The FBI began surveillance of Buryakov in March 2012 and watched nearly fifty meetings with Sporyshev. The meetings would come after a quick phone call in which it was explained that some ordinary item like a ticket, book, umbrella, or hat had to be handed over. A dozen times they talked about handing over tickets, but they were never seen attending an event that required one.
There were other slipups. On May 21, 2013, Sporyshev called Buryakov on a tapped phone line. He needed help urgently. A Russian news agency had the chance to talk to someone at the New York Stock Exchange and Sporyshev needed the banker’s help with questions to extract the best intelligence. Buryakov said they should ask about exchange-traded funds, including mechanisms of their use for the “destabilization of markets.” Were the Russians simply worried about the possibility? Or were they trying to research how to do it? At least one senior US intelligence official believes the Russians were looking at ways of creating their own “flash crash” of the markets if they ever wanted to.
Buryakov was providing intelligence on a major potential multibillion-dollar deal in which the Canadian aircraft manufacturer Bombardier would make planes in Russia. Buryakov traveled to Canada twice to attend conferences using his banking job as cover and learned that Canadian unions were unhappy with the plan. So he came up with a proposal to influence the deal. It would involve calling the resources of the SVR’s Active Measures Directorate to find some way of pressuring the unions. This showed Buryakov’s value—his cover as a banker allowed him to move in business circles and gain useful intelligence, which in turn could be used to actually influence international business deals to Russia’s advantage.
In April 2013, Sporyshev told Podobnyy he was trying to recruit two women. Preferred targets seemed to be young women who had just graduated. He explained to one woman, who worked for a financial consulting firm, that he wanted her help to find material that was not available in open sources—perhaps from specialist journals but also from people who discussed the subjects behind closed doors. But he was having more trouble with another woman. He seemed to want to be some kind of male honey trap but it was not quite working out: “In order to be close you either need to fuck them or use other levers to influence them to execute my requests.” The FBI approached the two women, who explained that Podobnyy had tried to ingratiate himself and gain information from them.
The FBI had the SVR’s New York rezidentura wired thanks to a clever operation. An undercover placed in Sporyshev’s path posed as an analyst from a New York–based energy company. She provided the Russian with a set of binders that were supposed to contain industry analyses. She explained they would be missed eventually so they needed to be returned, but she could then get more. Inside each set of binders were covert recording devices. Sporyshev took these binders into his office in the rezidentura. When they were returned to the undercover, the audio could be transcribed and translated. And by then a new binder was in place. There would be hundreds of hours for Ricci’s team to work through.
There was a particularly amusing conversation between Sporyshev and Podobnyy on April 10, 2013, when Podobnyy complained that life as an undercover spy was not what he imagined when he first joined the SVR. It was not even close to James Bond, he moaned. Even Russian spies seemed to reference their job against British intelligence’s most famous fictional spy and complained when reality did not match up. He knew he would not be flying helicopters but he had hoped at least he would be undercover. Sporyshev agreed. “I also thought that at least I would go abroad with a different passport,” he said glumly.
/> A concern that they were not “real” spies was a recurring theme. The pair, a few weeks later, on April 25, 2013, discussed their envy of illegals. “Directorate S is the only intelligence,” Podobnyy said.
“It was,” Sporyshev said. The reason for him using the past tense, it seemed, was that Directorate S appeared to have fallen on hard times since the 2010 arrests.
“I don’t know about now,” Podobnyy said, half agreeing before correcting himself. “Some things remain, like the Middle East, Asia, not everything has fallen.”
Parts of Directorate S were decimated—namely Department 4, which covered the Americas but also the European division in the wake of 2010—but the directorate’s work in other parts of the world seem to have survived Poteyev.
In the summer of 2014, the FBI closed in. As with Ghost Stories, they needed evidence. Buryakov met two people representing wealthy investors who wanted to develop casinos in Russia. Sporyshev warned Buryakov it might be a trap. He was right. One was an undercover FBI source, another an undercover FBI agent. But he ignored the warning. The source invited Buryakov to his office in Atlantic City, New Jersey, and they went on a tour of casinos. The source offered a document labeled “Internal Treasury Use Only,” which contained a list of Russians who had been sanctioned by the United States. In a world in which oligarchs and the Kremlin worried about their money, this was a top priority for Moscow. The source said he could get more if Buryakov was interested. Buryakov made clear he was eager for anything on sanctions. On a cold winter’s morning in January 2015, Buryakov was buying groceries at the local store and the FBI pounced. He was sentenced to thirty months for failing to register as a foreign agent. Sporyshev and Podobnyy had diplomatic immunity. But one particular encounter with an American would cause waves years later.
ON THE MORNING of Friday, January 18, 2013, a small crowd gathered at 725 Park Avenue, home to the Asia Society. They were enjoying breakfast before a symposium titled “The Triangle of Sino-American Energy Diplomacy.” It was the kind of talk that attracted a niche crowd. In the audience was an American who, like others, came to these events to make connections. His name was Carter Page and he had been fascinated with Russia for much of his adult life. It started when he was young and he had come home from skateboarding one day to see Ronald Reagan and Mikhail Gorbachev on TV meeting in Reykjavik to discuss nuclear weapons. He joined the navy and first visited Moscow in June 1991, just before the coup, as a US Naval Academy midshipman. After working as a surface warfare officer, he left to try to make his fortune at the point where business and foreign policy intersected, moving between London, New York, and Moscow. He had lived in Russia between 2004 and 2007, working as deputy manager of Merrill Lynch’s office in Moscow, specializing in energy deals and working with the Russian energy giant Gazprom. He then set up a firm, into which he had plowed his life savings, that advised on investment in the energy market. He also received a PhD from the University of London and was linked to various American think tanks and policy institutes, including working as an adjunct professor at NYU. Russia was always his focus and Page says he has always sought to “turn the increasingly dangerous tide” between the United States and Russia.
At the Asia Society symposium, one of those he met was a young attaché from the Russian consulate in New York. He introduced himself as Victor Podobnyy. “He happened to be in the audience, and we struck up a conversation,” Page would later explain. The two traded some emails and a couple of months later in March they met again for a Coke.
Page says the Russian never asked him for anything. It was just a discussion about international relations. The two did, though, talk about Gazprom, the Russian energy giant, which Page had advised. He talked to Podobnyy about the shale gas revolution that was taking off in America. Page had a relationship with one of the largest producers and it was looking to increase demand for natural gas. Russia was looking to do the same. There was more contact in June 2013.
Podobnyy did not think that much of Page. “I think he is an idiot and forgot who I am,” he complained after Page failed to reply to a message. The Russians discussed how Page had “got hooked on Gazprom”—the giant Russian energy company. “[I]t’s obvious he wants to earn lots of money,” he said. Podobnyy told Sporyshev that he could use his cover role to dangle contracts in front of Page. This is a classic Russian trick—reel someone in by promising a juicy business deal down the line. But the deals were often a mirage. Podobnyy laughed about it when speaking to Sporyshev and added: “I will feed him empty promises. . . . This is intelligence method to cheat. You promise a favor for a favor. You get the documents from him and tell him to go fuck himself.” Page may never have been reeled in, but the case provides an insight into the way the Russians operate. There is no shortage of people who want to make money and see deals with Russia as a way to achieve that. Often the Russians do not need to approach them since these people will approach Russians, who themselves have links to the intelligence services. They can then be studied to determine if they might be useful then or in the future. The possibility of a juicy contract will be enough to get things moving and is an effective way for the Russians to exploit not just the openness but the greed of some in the West.
In June 2013, Page says he was interviewed by FBI agents at the Plaza hotel. He acknowledged he emailed some materials to the Russian but said they were just documents he was using to teach a class at NYU titled “Energy in the World.” Page says Podobnyy showed little interest anyway—“his eyes were kind of glazing over.” He said he did not know the man was a spy. He also suggested the FBI had better things to do—especially given that a bomb had gone off at the Boston Marathon two months earlier. The FBI never believed that Page was recruited as an agent in 2013 (nor in a previous contact in 2008 with a Russian intelligence officer named Alex Bulatov, who worked at the Russian consulate in New York). He may not have become a recruited agent but Page would illustrate how individuals could end up having influence in ways it was hard to predict when they first came into contact with Moscow’s spies. “This isn’t about just stealing classified information. This is about stealing you,” Maria Ricci said soon after the case became public in 2016. “It’s about having you in a Rolodex down the road when they need it.” Russia was shaping up for a new spy war—one in which the nature of espionage—and the role of illegals—was changing. It was becoming a battle for influence as much as secrets.
25
A New Conflict
THE NEAR-NAKED RUSSIAN fighter had just pummeled his American opponent to the floor. The crowd had got what they came for. Then Vladimir Putin strode confidently into the ring to congratulate the Russian on his victory in the mixed martial arts bout. It was November 2011 and there were more than twenty thousand fans inside Moscow’s Olympic Stadium and millions more watching on live TV. Putin was a martial arts fan. These were his people. But then something strange happened. The crowd seemed to whistle, jeer, and boo Putin. Russia’s prime minister struggled to make himself heard as he lauded the Russian “warrior.” Officials would later claim the heckling was for the defeated American, but the clip went viral on Russia’s vibrant social media scene and was quickly viewed millions of times. Putin had just announced he intended to return to the presidency. And something was going wrong.
A WEEK EARLIER, Putin had met a very different crowd. He’d kept them waiting but they were not the type to jeer. It was the annual meeting of the Valdai Group—experts on Russia from around the world who were given an annual tour of the country and an audience with Russia’s leader. This year they were due to hear from him at a restaurant in Kaluga, a suburb of Moscow. It was situated next to a horse-riding school where Russia’s leaders kept the most beautiful horses that had been gifted from other countries, particularly Turkmenistan. As they waited for the guest of honor to arrive, they learned the whole restaurant had been redesigned just for that one meal—there were even some endangered fish floating around in a tank to add to the air of opulence. One person lea
fed through the pages of a property magazine lying around for the rich clientele who were normally there. It listed properties in Britain—the cheapest of which was more than four million pounds. Finally Putin arrived, nearly three hours late. There was no apology. He strode in and raised his arms. An aide walked up and took off his outdoor coat. Another aide slipped a casual coat onto his shoulders. Putin then sat and took questions for more than three hours, until well after midnight. He dwelled on how he had created stability after the chaos of the 1990s. But what those who attended the dinner and the tours before it recall is that despite the show of power there also lurked a sense of staleness and even insecurity. Beneath the surface they could feel a nervousness about the upcoming election and a disillusionment among ordinary Russians they spoke to. Putin and his people were right to be worried.
Another recent event had particularly disturbed Putin. On October 20, Colonel Muammar Gaddafi, the deposed Libyan leader, was cornered by rebels in a large drainage pipe. He was brutally killed, his corpse mutilated. Putin said he was “disgusted” by what had happened. An element of personal fear that this was how things could end lay behind the comment. But events in Libya had also been the cause of profound shock in Moscow and hastened the death of the “reset” with Washington. In spring 2011, President Medvedev abstained on a UN Security Council motion that allowed the West to intervene in Libya after Gaddafi looked set to unleash his military against protesters. Medvedev’s move deeply angered Putin, who felt that his protégé was naive when it came to the West. The dynamics between the two had been poorly understood by the West, which had invested heavily in the new leader but had failed to appreciate that the old one was not gone. Medvedev then found himself undercut and feeling betrayed when the West went ahead with regime change in Libya. The West could not be trusted, it seemed to confirm, strengthening Putin’s hard-line view.
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