by Craig Unger
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As it happened, Donald Trump wasn’t the only future president who had vital business relationships with the Russian Mafia. In Russia at roughly the same time, in the early and midnineties, the deputy mayor of St. Petersburg was also working with them. His name was Vladimir Putin.
Born in 1952, Vladimir Vladimirovich Putin grew up in war-ravaged Leningrad (now St. Petersburg), the only child of parents who had both suffered badly in World War II. His family was not particularly well off, and one of its most notable marks of distinction, revealed in a two-hour documentary called Putin that was released in 2018, was that Putin said his paternal grandfather had been a cook for both Vladimir Lenin and Joseph Stalin in their dachas in the Moscow area.6
Impulsive, angry, and undisciplined, Putin was so uncontrollable as a schoolboy that he was initially rejected by the Pioneers,7 the Soviet youth movement that was roughly the Russian equivalent of America’s Boy Scouts, but with a communist twist.
Despite his rebellious streak, Putin had already begun cultivating two passions to which he would remain deeply committed for the rest of his life—the KGB and judo. Inspired by The Shield and the Sword, a popular book/miniseries that romanticized Soviet espionage and its heroic KGB agents, he dreamed about becoming a Soviet spy. In ninth grade, Putin actually went to the offices of the KGB directorate in Leningrad to enlist, only to be told that he was too young and should probably go to law school before applying.8
Knowing that the KGB expected its adherents to be proficient in hand-to-hand combat,9 he also took up both sambo* and judo as sports he practiced his entire life. “Judo is not just a sport,” Putin said. “It’s a philosophy. It’s respect for your elders and for your opponent. It’s not for weaklings . . . You come out onto the mat, you bow to one another, you follow ritual.”10 Later, once he was in power, Putin would follow a judo-like practice of turning his adversaries’ greatest strength against them.
Judo also shaped Putin in ways that are not widely recognized.11 For starters, there’s the matter of his coach, Leonid Ionovich Usvyatsov. Putin had other judo coaches who are frequently cited in the media, but Usvyatsov may have been the most influential. In First Person, Putin speaks fondly about Leonid Ionovich, or Lyonya, Usvyatsov’s nickname, but he would often omit the last name of the beloved coach who was such an influential force in his life. The reason for that apparent oversight may be that he did not want people to know his beloved coach was a mobster. Usvyatsov’s epitaph on his tombstone in St. Petersburg suggests the depth of his ties to the mob. “I may be dead,” it reads, “but the mafia is immortal.”12
Whatever talents Usvyatsov had in the martial arts, few people realized that Putin’s coach was also a key figure in the Tambovskaya13 crime gang (aka Tambov), based in St. Petersburg, which has been referred to as “the Russian Goodfellas”14 and became known for smuggling heroin from Afghanistan to St. Petersburg and Western Europe.15
In the late sixties, while still in his mid-teens, Putin also began going to judo workouts at the Trud athletic club at 21 Decembrists Street in Leningrad, with Usvyatsov as his coach. Still a highly impressionable teenager, for the first time, Putin encountered a world that was a precursor to the kleptocracy he later created, complete with wannabe oligarchs and Bratva mobsters.
Indeed, when Putin first began training under Usvyatsov, his coach had already served a ten-year prison sentence for rape.* In addition to his criminal record, Usvyatsov, according to a fellow stuntman, had close ties to Mogilevich henchman Vyacheslav Ivankov.16 Their connection was an unusual one: Just as Ivankov had an aboveboard career as a stuntman at Mosfilm in Moscow, so Usvyatsov had a similar career as a stuntman at Lenfilm in Leningrad. That made them both gangsters who happened to moonlight as stuntmen for the silver screen.
Moreover, Usvyatsov and Ivankov were not the only judokas who actually got screen time. Many of Putin’s judo pals were stuntmen at Mosfilm or Lenfilm, and, according to Vasily Shestakov, president of the International Sambo Federation, Putin himself sometimes appeared as an extra in films, notably in Blockade and in Izhorsky Battalion.17 Shestakov said he even played a Nazi soldier in one.18
And it was at the Trud where Putin met the men to whom he has been forever loyal, including not just coach Usvyatsov, but also two judo pals who became his lifelong friends and sparring partners, the brothers Arkady and Boris Rotenberg.* 19 (The Rotenberg brothers were sanctioned in 2014 by the US Treasury Department for “acting for or on behalf of or materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, a senior official of the Government of the Russian Federation.”)20 In essence, the Trud athletic club—whose members included a big-time mobster in Usvyatsov, at least two men who became billionaire oligarchs, and the future president of Russia—was to Putin as Manhattan’s boardrooms and back rooms were to Trump: the place where they met the men who built them and gave them power.
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One of Putin’s most noteworthy qualities, as the title of Masha Gessen’s The Man Without a Face suggests, was not so much any single easily recognizable characteristic as the absence of such traits. Vladimir Putin was faceless. Opaque. He revealed nothing. All admirable qualities in the world of espionage that, no doubt, he put to good use when he joined the KGB in 1975.
Nevertheless, Putin’s career as a spy is reported to have been far less glamorous and exotic than he might have imagined as a young boy.21 After a series of dreary assignments monitoring foreigners and foreign officials in Leningrad, in 1984, Putin spent a year in spy school in Moscow,* where he became a great proponent of the use of “active measures,” including disinformation, both within Russia and abroad, by disseminating conflicting accounts of events to create the impression that there are no reliable facts.
But in 1985, Putin was transferred to Dresden, East Germany,22 a drab Cold War backwater where, for the most part, he was reduced to collecting press clippings with useless information for the KGB. More to the point, Putin had little to show for his years of service in the KGB. Soviet leader Mikhail Gorbachev, as part of his policies of détente, had vowed to dismantle the KGB. After the Berlin Wall came down in 1989, Putin’s friends were banned from working in law enforcement, as teachers, or for the government.23
In these final days of the Soviet Union, however, Putin may have taken away one enduring lesson. In December 1990, KGB chief Vladimir Kryuchkov ordered his subordinates to create hundreds of front companies as a safe haven for money for party leaders.24
In some ways, there was nothing particularly new about this strategy. Throughout the eighties, Soviet operatives had been more or less regularly expelled from France, Italy, Portugal, Sweden, the United States, and other countries25 for industrial espionage and the like. One of the most notable of those companies was Seabeco SA,26 which was founded in 1982,27 according to Belgium’s Le Soir,28 “as a cover for the Soviet services” by Boris Birshtein, who had a close business relationship with the Solntsevskaya Bratva’s Sergei Mikhailov.
But now that the Soviet Union was dying, desperate measures were called for. After all, what would happen if their embassies were shut down? “The Russians wanted to have intelligence officers in country even if the embassy was down,” says John Sipher, who spent twenty-eight years in the CIA’s clandestine service, which included serving in Moscow and running the CIA’s Russian operations.29 “So in addition to having legal residents who were intelligence officers in embassies, they had illegal residents who might appear to be French citizens living in France or Finnish citizens in France, but they were fake. They were really Russians. It was an incredible amount of work to give these people real backgrounds, languages, passports, and real businesses. But as the Soviet Union fell apart, Kryuchkov wanted to make sure he had Russians in other countries working for Russian businesses that were self-supporting and could support intelligence activities.”
So in March 19
91, after the Baltic States and other republics split off from the USSR, Kryuchkov created a plan to launch about 600 companies run by “retired” KGB officers, often as joint ventures in the Baltics or Israel. All agents in the operation were instructed to do whatever they could to gain a commercial foothold that would enable them to be self-sustaining. The companies were there not merely to provide cover for intelligence operatives. They were there to function as real companies, as major corporations, to make money, to finance operations against the West, to launder money, and to gather intelligence that could be used against the West. This was the kind of expertise that would serve Putin well in the future as it became clear what shape the new Russia would take.
Meanwhile, after the Wall fell, Putin moved back to Leningrad in 1990, continued with the KGB, and kept a low profile.30 According to Oleg Kalugin, who was one of his bosses, within the KGB, Putin was something of a cipher. “He would knock on my door, and say, ‘Please sign this,’” Kalugin recalled.31 Otherwise, Kalugin said, Putin did not make much of an impression.
His prospects were bleak. “He came from Germany with no job,” said Kalugin. “He had to be a cab driver with his own car he brought from East Germany, a Trabant probably.* And he drove for a few months, six or eight months, just earning money.”* 32
Everything had changed. Conventional wisdom had it that the Great Game was over. The West had won. A classified ad in the International Herald Tribune told the story: “FORMER KGB agent seeks employment in similar field,” it read, accompanied by a phone number.33
For a brief period that year, Putin took an administrative post at Leningrad State University—a fairly standard cover for a KGB operative.34 Then, just as the Soviet Union was dissolving, Anatoly Sobchak, a former law professor of Putin’s at Leningrad State, became mayor of Leningrad.*
In sync with the changing times of the Gorbachev era, Sobchak had positioned himself as a strong pro-democracy politician, but he also knew that the KGB was scrambling to take charge of whatever institutions might survive—including the municipal government in Leningrad. In addition, he was wise enough to realize that he’d be better off if he picked his own deputy from the KGB rather than allowing the KGB to choose the man who would work directly under him.35
As a result, Sobchak asked Kalugin whom he should hire from the KGB. “I mentioned a couple of names, but he said they were too highly placed,” Kalugin recalled.36
Sobchak wanted someone who was not immediately identifiable as a high-profile, hard-line KGB operative, so instead, he hired Vladimir Putin, a mere lieutenant colonel, whom he had known when Putin worked at Leningrad State. Putin was still on active reserve with the KGB, which was monitoring the ascent of the new “democratic” leaders in Russia,37 and, his low profile notwithstanding, the hiring of a KGB bureaucrat by Sobchak was seen as a betrayal. “Sobchak portrayed himself as a crusader for freedom and cursed the KGB,” said Alexander Schelkanov, who served as chairman of the executive committee of the Leningrad city council at the time. “He then went out and hired a professional KGB operative as his closest deputy. He openly violated his own principles.”38
With the country still very much in crisis, KGB men began turning up at the sides of newly minted oligarchs, government ministers, at the highest levels of power. In Moscow, that included President Boris Yeltsin, who, from the first moment he succeeded Gorbachev, found that wherever he went, KGB bodyguards were watching his every move.39
Similarly, Putin’s new job may have been part of a carefully orchestrated KGB operation to penetrate Sobchak’s inner circle and that of other pro-democracy politicians. “This really means that [Putin] acted on orders [from the KGB] and was part of an operation that I would call ‘Trojan Horse,’” said Leonid Dobrovolsky, deputy chairman of the city’s food committee.40
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Even though Putin saw the collapse of the Soviet Union as a disaster, it was the best thing that could have possibly happened to his career. At an extraordinary moment in its history, Russia’s newfound lawlessness became a mission worthy of his enormous ambitions, as well as a gigantic opportunity.
At the time, hyperinflation had wiped out the savings of millions of people41 just as hundreds of billions of dollars’ worth of Russia’s natural resources—gas, oil, metals, timber, and more—were about to be sold off by the state.42 Food shortages necessitated launching a temporary system of barter operations in which the city of St. Petersburg traded raw materials—oil, timber, rare metals, and the like—with foreign companies for food.
Because St. Petersburg was the first Russian city43 in which property was privatized, Putin led the way. From his relatively unimpressive perch as deputy mayor of St. Petersburg and chair of the External Affairs Committee (KVS), he was given the mandate of encouraging, regulating, and licensing foreign investment in huge formerly state-owned enterprises. Now that the centralized command structures of the Soviet era were gone, authorities desperately needed new mechanisms to put goods into stores. Putin had acquired the power to determine who could become wealthy.
According to Marina Salye, a former city council member who chaired a commission that investigated missing food imports, Putin made a killing by signing export licenses, despite lacking the proper authority to do so, for various dubious companies. In the process, she said, he doled out more than $120 million in goods to highly suspect people—and the city received nothing in return.44
Outsiders who were unwilling to go to the dark side didn’t stand much of a chance. “This began in an era when selling blue jeans was an economic crime,” explained an American businessman who was doing deals in Moscow at the time. “You could go to jail for that. Now, suddenly there was oil. So I was working with bankers who rose to the top during this period. We had to hire security, thuggish guys who like to fight. You had your security and the other guys had security.45
“It was the Wild West. You had no idea of what was going on. There was the Mogilevich gang and Chechen gangs all fighting gang warfare. I was trying to comply with the Foreign Corrupt Practices Act, but we didn’t really know whom we were dealing with or how the system might change. And if you wanted to take over the really big enterprises, you needed the Mafia’s help. You needed protection.”
Various Mafias stepped in to fill the breach—Azeris, Chechens, Solntsevo, the Mogilevich Organization, and, in St. Petersburg, the Tambov crime gang. The criminals needed export licenses, tax exemptions, below-market-rate loans, business visas, and freedom from arrest and prosecution for their crimes. All of this and more was available from Putin and corrupt bureaucrats under him.
Money could not go abroad without the approval of Putin’s KVS. The same was true for businesses that wanted to be licensed and registered. He also was able to control the movement of money across international borders. All of which put an enormous amount of power in Putin’s hands—not Sobchak’s.46
Like Donald Trump, Putin had been well acquainted with mobsters long before he had a political career, thanks to judo coach Leonid Usvyatsov.47 In 1994, Usvyatsov was killed48 in a gang dispute, but Putin cemented ties with Tambov through its leader, Vladimir Kumarin,* 49 aka Vladimir Barsukov, who also served as an executive at the Petersburg Fuel Company, which Putin had chosen to be the sole supplier of gasoline for the city.50 In return, Tambov helped Putin and his cronies control the airport, the seaport, rail stations, and various other choke points through which flowed 20 percent of all Russian imports and exports.51
Kumarin was also on the board of directors of a subsidiary of SPAG, a German company that had huge real estate holdings in St. Petersburg and, according to the BND (Bundesnachrichtendienst, the German Federal Intelligence Service), was laundering money for Russia’s organized crime and also for Colombian drug dealers.52 According to Newsweek, SPAG executives were indicted for laundering more than $1 million in cash for Colombia’s Cali cocaine cartel.53 Putin served on its advisory board at the time.*
By 1994, the Russian economy
was in such disarray that a plan called “loans for shares” was instituted through which Russian banks lent the government money in exchange for temporary stakes in the state-owned companies that were to be auctioned off.54
But once the auctions began, the New York Times reported, “it became all too obvious that a fix was in. Foreign investors were barred from bidding for the most desirable assets, and the same banks that were assigned by the Government to organize the auctions ended up winning them, and usually at only a fraction over the minimum bid.”55
A tiny elite began to acquire control over a vast number of public enterprises. Oligarch Mikhail Khodorkovsky got a 78 percent share of ownership in Yukos, the oil and gas giant, worth about $5 billion, for just $310 million. Boris Berezovsky bought Sibneft, another oil giant, worth $3 billion, for a mere $100 million.56
A majority stake in Gazprom, the state-owned energy company that controlled a third of the world’s gas reserves, was sold for just $230 million, according to an article by James Henry, former chief economist at McKinsey & Company, in the American Interest. Russia’s entire national electric grid was privatized for just $630 million. Natural resources such as oil, iron and steel, and aluminum; high-tech arms; airline industries; diamond mines; and most of Russia’s banking system went for next to nothing.57
