House of Trump, House of Putin2

by Craig Unger

  For an intelligence operative who had been a promulgator of such abuses himself, what more could one ask for? The fox had been given keys to the proverbial henhouse. Putin launched inquiries into dozens of regions and took disciplinary action against hundreds of officials. As one scandal after another unraveled, Putin unspooled the narrative exactly as he saw fit, attacking his enemies while whitewashing and protecting potential allies who would surely pay back his favors with interest. He drew up a report on corruption at a foundation created by Anatoly Chubais, the deputy prime minister who had rejected him for a job a year or so earlier.28 But he publicly absolved President Yeltsin and his former defense minister, General Pavel Grachev, of allegations regarding illegal sales of $1 billion in weapons to Armenia earlier.29 Before long, he had burnished his reputation as a powerful campaigner against corruption and had strengthened his position politically.

  Then, in July 1998, at a time when the Russian economy was in free fall and his administration was lurching wildly about, Boris Yeltsin decided he needed to instigate a complete overhaul of the Russian security apparatus. At the time, Putin had been a highly disciplined model of discretion. His written reports were said to be “a model of clarity.”30 While countless other bureaucrats were groveling for advancement, Putin’s relative “coolness” was attractive to Yeltsin.

  And so, Lubyanka, the massive neo-baroque building in the Meshchansky District of Moscow, headquarters of the FSB (formerly KGB) and the site of its affiliated prison, with its dark, dark history of torture and executions, now had a new boss. Lubyanka was where Nikolai Bukharin, the Bolshevik revolutionary and foe of Joseph Stalin, was wrongly charged in 1937 with plotting to kill Vladimir Lenin, and was sentenced to death in a show trial.31 It was where Lavrentiy Beria, Stalin’s bloodthirsty executioner and the architect of Stalinist purges, sent countless victims to their graves. Beria was himself shot by a firing squad in 1953.32

  And now, Vladimir Putin, a mere lieutenant colonel in the KGB, had leapfrogged over scores of multistarred generals to take charge of the Russian secret service and reshape it in his image. He moved into a relatively modest office on the third floor of Lubyanka and turned the official executive office, which had been occupied by KGB chiefs from Beria to Yuri Andropov, into a shrine of sorts, with a small statue of Felix Dzerzhinsky, aka “Iron Felix,” the Bolshevik revolutionary who was the founder and director of the Soviet secret police, on the desk.33

  Just as Donald Trump had risen from the ashes of Atlantic City, Putin began a second act as well. He started by completely restructuring the agency he loved, bringing in confederates from his old days at the KGB, and purging his enemies. Among the latter were two key agencies, the Directorate for Economic Counterintelligence and the Directorate for Counterintelligence Protection of Strategic Sites, both charged with investigating high-level economic crimes, which inevitably involved Putin and his allies. In the hands of his political foes, these agencies, not unlike the Special Counsel’s Office in the United States, potentially posed a serious threat to Putin. Now that he had the power, Putin made sure that both agencies were swiftly eliminated.34 Having control over agencies that had the power to investigate you was just one perk that came with Putin’s new position and it was indispensible to anyone who wanted to retain power for long periods of time. In the United States, of course, the separation of the judiciary from the executive branch made that impossible—theoretically at least. If, for example, the president were to fire a special counsel who was investigating the White House, that could not happen without causing a grave Constitutional crisis.

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  On August 20, less than a month after Putin’s appointment to head the FSB, Russians got a serious taste of the treatment facing his critics when Anatoly Levin-Utkin, a journalist for a newly launched paper called Legal Petersburg Today (Yuridichesky Petersburg Segodnya) left his office and returned to his apartment on Rednova Street.35

  Levin-Utkin’s newspaper had only published its first three issues but it had already provoked controversy thanks to its investigations into the corruption surrounding privatization by the deputy mayor of St. Petersburg who had just become head of the FSB. One of the paper’s articles was headlined “Vladimir Putin Became Head of the FSB Unlawfully.” Levin-Utkin had not written the article, but he had contributed to it.

  When Levin-Utkin got home and checked his mail, two men assaulted him from behind, shattering his skull in several places, and left him unconscious on the floor. He died on the morning of August 24.36

  No one was convicted of the murder, nor, for that matter, was it clear that there was ever any serious investigation. As a result, no evidence surfaced linking Putin to the crime. Nevertheless, the murder of Anatoly Levin-Utkin sent a signal about the value of loyalty to Putin and his allies, and was a harbinger of things to come.

  On November 17, 1998, four months after Putin became head of the FSB, six men, four of whom wore masks and two of whom were unmasked, held an extraordinarily dramatic press conference in Moscow. All six had investigated organized crime for the FSB, and, as they told the assembled journalists, the organized crime unit they worked for had been transformed into a brutal and corrupt criminal enterprise itself.37

  The unmasked leader of the group, Alexander Litvinenko, was a lieutenant colonel, the same rank, ironically, as Putin, and took the lead in revealing how his superiors in the FSB were involved in kidnapping, extortion, and the like. But the most sensational disclosure of all was Litvinenko’s revelation that he had been ordered by the FSB—now headed by Putin—to assassinate Boris Berezovsky.38

  An engineer and mathematician by training, Berezovsky had become a billionaire oligarch in the nineties through the privatization of automobiles, television, Aeroflot, and other state assets. He had met Putin in the early nineties, when Berezovsky wanted to open a car dealership in St. Petersburg. Stunned to see Putin turn down a bribe, Berezovsky put in a good word for him with Yeltsin. “He was the first bureaucrat who did not take bribes,” Berezovsky said. “Seriously, it made a huge impression on me.”39

  Berezovsky was influential enough that his remarks to Yeltsin were widely seen as a factor behind Putin’s ascent to the top of the FSB. He had already used his money and power to promote Yeltsin’s 1996 reelection, and, as a result, had become a member of Boris Yeltsin’s inner circle, known as the Family.40

  But that didn’t mean Berezovsky was in a secure position. Having come to wealth through the automobile industry initially, Berezovsky switched to the media when he took the remnants of Soviet television—Channel One Russia, the only Russian broadcaster with a nationwide reach, spanning eleven time zones—and turned it into a powerful tool promoting Yeltsin’s reelection in 1996.

  Like many state-owned industries, Channel One, also known as ORT, had been steeped in corruption. By some estimates, advertisers paid five times as much as the network received, with the difference going into the pockets of gangsters and various middlemen, all of whom were now at risk with Berezovsky orchestrating a massive restructuring.41

  In 1995, Berezovsky had declared a moratorium of a few months while he built a new in-house sales department and cut out the middlemen. But nine days later, on March 1, Vlad Listyev, the new director general at Channel One, and a popular broadcasting personality, was gunned down at his Moscow home.42

  Clearly, Berezovsky was the next in line. Not only was he cutting off the livelihood of scores of gangsters, he also controlled a political tool of immense power.

  Meanwhile, Litvinenko had done something unheard of—he had taken on Putin and the kontora (the company) on national TV. Putin’s response to the sensational press conference was twofold. Publicly, he held a press conference in which he announced that there would be internal investigations into all the accusations made by Litvinenko and company. “We are not afraid to wash our dirty linen in public,” he said.43

  But privately, he called Litvinenko in for a meeting at Lubyanka Square. Litvinenko a
rrived accompanied by two colleagues and a hefty dossier documenting his allegations. But Putin refused to accept the dossier and insisted that Litvinenko come into his office alone. Their encounter was chilly and brief. Later, Litvinenko described the meeting to his wife, Marina. “I could see it in his eyes that he hated me,” he told her.44

  He was right.

  Shortly afterward, Putin met with President Yeltsin and argued that Litvinenko had betrayed the FSB. Rather than investigate Litvinenko’s allegations, he gave Yeltsin documentation suggesting that Litvinenko and his allies had betrayed their oath of office as intelligence officers. Then, he fired them.45

  But removing Litvinenko from the hunt was not enough. An even more serious threat to both Yeltsin and him was in the works from Russia’s prosecutor general, Yuri Skuratov, whose investigation went so far as to target Yeltsin and the Family about millions of dollars of dubious transactions surrounding the restoration of the Kremlin and the renovation of Yeltsin’s dacha. Members of the Duma had already raised the question of impeachment.46

  Skuratov’s investigation had also begun probing corruption in St. Petersburg under Mayor Sobchak, including the privatization of apartments by a company called Renaissance, some of whose apartments went to Putin.47 Now was the time for Putin to prove his loyalty to Yeltsin—and save his own skin in the process.

  On March 17, 1999, the newscast on RTR state television broadcast a caveat that the report to follow might not be suitable for young viewers.48 What followed were clips from a black and white surveillance video taken inside a Moscow apartment. The segment, titled “Three in a Bed,”49 featured two young women, partially dressed, who were described as prostitutes, moving in and out of the frame, and a man appeared who, the narrator said, “very much resembles the Prosecutor General.”50

  And so Yuri Skuratov was forced to resign. His ouster had all the hallmarks of having been orchestrated by a master of KGB tradecraft and the arts of kompromat and honey traps.

  And what role, if any, did Putin play? According to an article by authors Yuri Felshtinsky and Vladimir Pribylovsky* on Garry Kasparov’s website,51 Putin’s agents rented and paid for the apartment in which the video was shot. Putin’s agents videotaped the evening. “A man who looked like the head of the FSB”—i.e., Putin—personally delivered the video to the head of RTR. And, finally, it was Putin who publicly announced President Yeltsin’s demand for Skuratov to resign.

  But was the man in the apartment actually Skuratov? Former KGB general Oleg Kalugin maintains that the whole episode ‘‘was a special FSB operation to discredit an official with the help of a video featuring a person who resembled the prosecutor-general.’’52 It was classic KGB work that had been transformed into a riveting media spectacle for maximum political impact.

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  Ousting Skuratov solidified Putin’s relationship with Yeltsin, but it was unclear exactly what that meant for the ambitious young FSB director. It would be an understatement to say that at the time, the Yeltsin administration was on shaky ground. The ruble had collapsed the previous year, leading to a nationwide financial crisis. Impeachment proceedings in the Duma were now under way against Yeltsin. It was unlikely impeachment had enough support to pass, but incessant reports in the media about corruption in Yeltsin’s “Family” left him deeply wounded politically at a time when he sorely needed to put together a parliamentary majority in the Duma. Prime ministers came and went with alarming regularity. By the summer of 1999, he had already fired seven prime ministers and acting prime ministers.

  Finally, on August 5, 1999, Yeltsin called Putin to his dacha outside Moscow. “I’ve made a decision, Vladimir Vladimirovich,” Yeltsin told him, “and I would like to offer you the post of prime minister.”53

  Putin wanted the job, but he had no desire to be a sacrificial lamb like so many short-lived previous prime ministers. He needed political capital because Yeltsin and his “Family” were still facing possible criminal prosecution and wanted protection. But to the public at large, he was a nonentity.

  Thus, according to historian David Satter, a plan called Operation Successor was implemented to resolve precisely those problems.54 It began on the night of September 4, when a huge explosion rocked a five-story building in Buynaksk, a town of about sixty thousand in the Russian republic of Dagestan, killing sixty-four people. Five days later, another explosion destroyed a nine-story apartment building in Moscow. This time, ninety-four people died.55

  On September 13, yet another explosion rocked another Moscow apartment building. This time the death toll was 118. And a fourth bombing took place on September 16 in the southern city of Volgodonsk, killing seventeen.

  To tens of millions of Russians, these bombings were roughly the equivalent of 9/11, and were widely blamed on separatist rebels from Chechnya, the tiny, largely Muslim republic near the Caspian Sea that had been part of the Soviet Union. In the aftermath of the bombings, with all of Russia crying out for vengeance, Putin, who had just been appointed prime minister, appeared on national television night after night, the one man who could assuage their fears and stave off the collapse of the Russian state.

  A new hero had been born.

  But then, on the evening of September 22, 1999, something happened in Ryazan, a medium-sized city about 120 miles southeast of Moscow, that reversed the narrative entirely. Many questions about the episode remain unanswered, but according to a book that was banned in Russia, Blowing Up Russia: The Secret Plot to Bring Back KGB Terror, by Yuri Felshtinsky and Alexander Litvinenko, at about nine fifteen p.m., a man named Alexei Kartofelnikov called authorities and told them he had seen two men and a woman carrying three large sacks into a twelve-story apartment complex.

  By the time the police arrived at 9:58 p.m., all three had gone, but officials discovered three fifty-kilogram sugar sacks that were stacked on top of each other in the basement. It was soon determined that instead of sugar, the sacks contained a powerful explosive known as hexogen or RDX, for Royal Demolition Explosive. There was a slit in the upper sack through which one could see an electronic device with wires, insulating tape, and a timer.56 When the sack was cut open, the police found batteries, an electronic timer, and a detonator. It was set for five thirty the following morning.

  In the end, the authors conclude that this failed effort to bomb yet another apartment building produced compelling evidence that the real perpetrators were not Chechen terrorists at all but an elite team from the FSB. In other words, the heinous bombings that killed nearly three hundred innocent Russians were likely the product of a “false flag” operation that enabled Putin to consolidate power, much as Adolf Hitler did after the Reichstag fire.

  “To blow up your own innocent and sleeping people in your capital city is an action that is almost unthinkable,” writes Karen Dawisha. “Yet the evidence that the FSB was at least involved in planting a bomb in Ryazan is incontrovertible [ . . . ] and it strikes at the heart of the legitimacy of the Putin regime.”57

  But few Russians were aware of what had really happened. As the newly appointed prime minister who had been put in charge of the war, Putin won popularity overnight.

  On December 31, 1999, the last day of the millennium, Boris Yeltsin resigned and appointed Putin acting president. He became president having pledged to chase Chechen terrorists everywhere, famously promising to “rub them out in the outhouse,” if necessary.58 He had promised to stop the plundering of the Russian state by rich oligarchs. But very few Russians knew that Putin had been a primary actor in the same kind of activity in St. Petersburg. And as for cleaning up corruption, one of Putin’s first acts as president was to pardon Boris Yeltsin, thereby guaranteeing immunity from prosecution to the outgoing president.59

  Across the ocean, it was unclear whether or not Trump took notice of Putin’s act of clemency—one that would become very important to him years later. Nevertheless, the 2000 election cycle was just getting under way, and Donald Trump had made a very important decisi
on: He wanted to be president of the United States.

  CHAPTER TEN

  THE MONEY PIPELINES

  On October 7, 1999, on CNN’s Larry King Live, Trump formally announced that he would form a presidential exploratory committee, in hopes of winning the Reform Party’s presidential nomination. Over the next six months, he jousted with fellow Reform Party candidates, principally pundit and strategist Pat Buchanan, in the closest approximation of a political campaign he had ever had.

  But close was not good enough, and on February 14, 2000, Trump dropped out, and blamed the Reform Party itself, noting that it was dominated by a “fringe element” that he didn’t particularly care for. More specifically, Trump complained that at a reception in California for the party, “the room was crowded with Elvis look-alikes.”1

  Meanwhile, in Moscow, Vladimir Putin had a very different set of issues to deal with. When he took office as acting president on January 1, 2000, he was essentially a blank slate to the Russian people, a man who was known largely for being inscrutable. A Russian newsmagazine headlined a profile of him “Magician Without a Face.”2 Russian political analysts referred to him as a “black box.”

  “He is a grey man, an invisible man,” said Ruslan Linkov, a liberal politician from St. Petersburg. “He was always in the shadows. He has psychological skills, and he uses his KGB skills in the political structures. Nobody quits the KGB forever. If someone works there, he works there until his death.”3

  To the West, Putin was little more than an enigma whose ascent elicited anodyne critiques. “He’s a smart, cool customer who is one of those solution-oriented problem solvers and virtually unflappable,” said Bill Clinton’s national security adviser, Samuel “Sandy” Berger. “The next three months (before March 26 Russian presidential elections) will reveal much about where his instincts lie.”4