Broker, Trader, Lawyer, Spy (29 page)

Business was good, until recent years, when Vasilenko ran afoul of Putin’s government. Former KGB men dominate the current Russian hierarchy. Actually, as Vladimir Putin himself told a gathering of Russian spies in 2005, when he was president of the Russian Federation, “There is no such thing as a former KGB man.”
⁴
Many of these officers never gave up their dark red KGB identity cards when the Soviet Union collapsed. To this day, Platt says, they can flash the cards to win all sorts of special favors in Russian society—from getting a speeding ticket fixed to being offered career opportunities. The powerful ex-KGB men never quite gave up the idea that Vasilenko had been a secret spy for the Americans. “There were those that never believed that I didn’t recruit him,” Platt says. Vasilenko was arrested in Russia and sent to prison. He’s still in jail today, and Platt says it is once again just a misunderstanding. “He didn’t spy, no matter what they said about him. He just got caught in a power struggle.”

That leaves Platt without a valued colleague at his firm, the Hamilton Trading Group. Today, Platt works primarily for corporate clients, law firms, financial firms, and hedge funds. Mostly, the work involves figuring out who the people on the other end of a business transaction are. Who are the owners of the firm? Who do they know? Platt explains this with a Russian metaphor,
krysha
, meaning “roof.” In the old days, Russian intelligence services used it as slang to describe the cover story of a spy operation. Today, though, the Russian Mafia uses
krysha
in a different way, to mean
“godfather” or, more loosely, “protection.”
Krysha
can thus refer to a network of musclemen who protect a businessman, or a company that has paid protection money to the mob. Platt says he’s in the business of finding out who provides a company’s
krysha
—who backs the firm, who’s connected to it, who’s looking out for it.

Depending on the case, this service is not always expensive. Corporate investigators like those at Hamilton Trading Group might charge as little as $75 per hour, plus expenses and a premium for difficult work. They know, of course, that the law firms pass those bills along to their corporate clients at upwards of $125 per hour—and pocket the difference. Platt explains that his firm and others like it typically work for law firms that are in turn working for the corporate client. That way, much of the investigative work is concealed behind attorney-client privilege and can’t be revealed to the other party in a transaction.

But there are always leaks—the corporate equivalent of Robert Hanssen—and a veteran spy like Platt knows this all too well. “At the top of every report that I send to somebody, I say ‘privileged and confidential.’ But the bottom line is that doesn’t mean shit,” Platt says.

Platt doesn’t want to discuss Vasilenko’s disappearance. He says publicity wouldn’t be good for Vasilenko’s chances of getting out of prison, but he is bitter about the way the Russian government is being run under the supervision of KGB veterans such as Putin. “These secret police guys have no fucking idea what an economy is,” Platt says dismissively. That’s going to prove disastrous for the Russian people in the long run, Platt believes. And with a government run by Putin—even if he’s officially now in Russia’s number-two political job—Platt knows he may never see his old friend and partner again.

N
OT ALL STORIES
about Russian corporate intelligence have such a grim ending. One example is the story of Yuri Koshkin, a former
Soviet military intelligence officer who relocated to the United States when the cold war ended. Today, at age forty-nine, he operates a small intelligence firm, Trident Group, in Rosslyn, Virginia, not far from his former enemies at the Pentagon.
⁵

On May 26, 2007, a Russian agent working for Trident slipped unnoticed into a movie theater in Moscow showing Disney’s
Pirates of the Caribbean: At World’s End
. He donned night-vision goggles, scanned the theater, and spotted his target. This maneuver was no cold war spy scenario: the agent was a former Russian cop, and he was searching for real-life pirates making illicit copies of the film. On the Internet, a single copy of this blockbuster film could cost Disney millions in lost sales. Disney wanted the pirates caught—and fast.

That day, the culprit was the projector operator. He was given away by a telltale stream of light seeping out of the projection room.
Hey—what’s going on in here?
As the agent burst into the room, the startled operator looked up and offered him a $1,000 bribe to keep quiet about what he’d seen. The agent turned the bribe down, and radioed Trident Group’s 24-7 operations center in downtown Moscow, an office staffed by former KGB officers, veterans of Soviet military intelligence, and ex-cops.

Founded in 1996, Trident specializes in helping American companies like Disney navigate the Russian market. Trident consulted with Disney about the bribe offered to its employee, and Disney authorized a $1,000 bonus to the agent for turning down the bribe. This was a successful clandestine operation, and typical of what’s going on in the global economy as spies help companies feel their way into tricky emerging markets around the world. It’s a sign of the urgency those companies feel that they’re overriding years of corporate history. In this instance, Walt Disney himself was a virulent anticommunist who testified before the infamous House Committee on Un-American Activities in 1947 that the Screen Animators Guild was dominated by communists. Today, his namesake
company is working hand in glove with a firm founded by men who were educated as Soviet Marxists, some of whom spent the better part of their early careers spying on the United States. Says the former general counsel of the CIA, Robert M. McNamara, Jr.: “Is this a great country, or what?”

Yuri Koshkin was born in 1958 in Moscow, into what he describes as a “typical family of the Russian intelligentsia.” In 1975, he says, he enrolled in the Military Institute of the Soviet Ministry of Defense. He studied the English and Cambodian languages on his way to becoming an intelligence officer in the Red Army. “Cambodian was boring,” Koshkin recalls, “but you didn’t get to choose which languages you studied. It was the military.” After graduating in 1980, Koshkin served as a military adviser to Tanzanian forces in Africa.

The advent of perestroika allowed Koshkin to leave the military before completing the customary twenty-five years of service. In 1989 he became a civilian, working for an American documentary film company in Moscow. From there he bounced into a job at a public relations firm in San Francisco, where he says he first spotted a big gap in perception between American and Russian businesspeople. “I saw lots of companies that were going into Russia didn’t really know who they were dealing with,” Koshkin says. “They couldn’t tell the good guys from the bad guys.”

Trident once represented Kenneth Dart, an American investor who is heir to the Styrofoam cup fortune generated by his family’s Dart Container Corporation. For several years in the late 1990s, Dart battled with the Russian oil giant Yukos in a dispute over the dilution of shares of Yukos subsidiaries in which Dart held an interest. That fight ended in a confidential settlement.

It was the kind of battle that can become physically dangerous in Russia. Koshkin says Trident was threatened so many times during its work with Dart that one of the firm’s employees was getting ready to evacuate his family from Moscow when the two
sides settled the dispute in 1999. The Russian oligarch Mikhail Khodorkovsky, who was the founder of Yukos, later ran afoul of the Russian government and is now serving an eight-year jail term for tax violations.

Today, Koshkin says, Trident has fifteen employees, including Vladimir Joujelo, a KGB veteran who helped the Russians provide security for world leaders, including Mikhail Gorbachev, Boris Yeltsin, and Ronald Reagan; Alexander Trifonov, a former KGB officer; and Alexander Vinogradov, a retired Russian army colonel who specialized in military intelligence. “They’re good at what they do, but they charge a lot of money to do it,” says Raelynn Hillhouse, who blogs about corporate intelligence for thespywhobilledme.com. “Legally, Russia remains the Wild West. It’s convenient to be able to hire people who have experience in that environment.”

Koshkin won’t discuss most of Trident’s clients. Nor will he reveal the firm’s billing rates or annual revenues, but he seems to have made a good living from it. He bought a house from a former executive of AOL, Bob Pittman, in Great Falls, Virginia, and an apartment on the Upper East Side in Manhattan.

From his office in Arlington, Virginia, high above the Potomac, Koshkin can see the glint of the white walls of the Russian embassy across the river in Georgetown. “Sometimes I sit back and contemplate and wonder about the quirks of life,” he says. “We were trained that the United States was enemy number one.”

Koshkin’s old enemy is now his number one client.

In from the Cold

I first met Yuri Koshkin over coffee at a Starbucks in suburban Rosslyn, Virginia, just a few blocks from the Key Bridge over the Potomac River into Georgetown. He’s a charming and fascinating character, and I enjoyed our wide-ranging discussion immensely. Our meeting got me thinking about the implications of the industry Koshkin came from and the one he’s in now.

Washington, D.C., has always been a special target for spies—the first ones probably arrived soon after the capital was founded on July 16, 1790. Their stories are epic, sometimes bizarre, and frequently tragic. This is the city where Allan Pinkerton chased after the confederate spy “Rebel Rose” Greenhow during the Civil War. And it’s also the city where Allen Dulles oversaw the CIA’s surreal experiments with amphetamines, sleeping pills, and LSD to develop new interrogation methods for the cold war.
¹
It was here that the veteran FBI agent Robert Hanssen betrayed his country to the Russians, and the young FBI agent Eric O’Neill helped bring him down.

Today, intelligence services from all over the world send operatives to Washington, D.C., to try to pry secrets out of the government. Spying is so much a part of the fabric of the town that when
a neighbor at a barbecue says he works “for the government,” most people know not to ask any further questions.

But as I sat at the tiny table at Starbucks sipping my latte, it struck me that Koshkin and his spying colleagues in the private sector represent something new in Washington. For they are extending the espionage culture of the cold war into the global economy. For good or ill, the heirs of Allen Dulles and his rivals at the KGB are hanging out their shingles and selling their services to clients around the world.

That’s the reason why Washington is a hub of their global private intelligence industry. The spy firm Diligence once had its headquarters here, and today it maintains an office just two blocks from the White House. Three blocks on the other side of the executive mansion is the headquarters of TD International, where several intelligence veterans offer what the firm blandly describes as “strategic advisory and risk management” consulting services. Kroll’s office is just outside Georgetown. From there, it’s a short walk to the offices of Investigative Group International, which is headed by Terry Lenzner, the man who became known as Bill Clinton’s private investigator during the scandal over Monica Lewinsky. There are more: Executive Action, Fairfax Group, and Corporate Risk International all have headquarters in this area, offering some combination of risk management, investigative, and intelligence services. The offices of Koshkin’s Trident Group are in Rosslyn, Virginia.

A fifteen-minute drive away in northern Virginia, the firm Total Intelligence Solutions operates what it calls a “global fusion center”—a data gathering operation—at its bland corporate offices. I toured the facility with Matthew Devost, who was the company’s president in 2008—an unassuming guy who on that day was wearing a blue polo shirt and khakis. Devost is something new in the intelligence world: he has spent his entire career in the private sector—not in the government. His career is a sign that the private-sector intelligence business has reached its next stage of
evolution. The industry is now incubating the careers of intelligence professionals from entry level to executive rank.

Devost told me he’d worked on a dramatic intelligence operation in Lebanon in 2006. Total Intelligence Solutions worked frantically during that year’s thirty-four-day war between Israel and Hezbollah extremists. The corporate clients had employees trapped in Lebanon when the shooting started, and needed to get them out. Devost and his colleagues used real-time satellite images and a network of private informants on the ground to determine which bridges had been bombed, and where heavy fighting might block evacuation routes. It was the kind of work a CIA officer might once have done for Americans stranded during a coup in a banana republic. But this was a completely private-sector intelligence operation, with no government agents involved at all.

One level below such organized, corporate, and official spy firms is an enormous network of sole practitioners and small operators. These are private intelligence operatives who are available for hire on a case-by-case basis to anyone with the cash to pay for a few days—or a few hours—of work. They come from diverse backgrounds. I’ve met former FBI agents, former investigators for the SEC, and former investigative reporters who sell their services to clients. In March 2009, two reporters I admire greatly—Glenn Simpson and Sue Schmidt of the
Wall Street Journal
—announced their resignations. They formed SNS Global, LLC, a firm that will do what Simpson described as “some public interest work and some consulting.”
²
Both are well known in the world of investigative reporting: Schmidt won a Pulitzer Prize after breaking the story of the corrupt lobbyist Jack Abramoff; and Simpson has made a career out of probing the darker reaches of money laundering, financial crime, financing of terrorists, and all sorts of corporate misconduct. Now their skills are available for hire on the private market, too. The quest for an information edge goes on.

But where does it stop? We live in an age when technology is increasingly blurring the line between what was once thought to
be private and what is now public information about our most intimate selves. That’s causing wrenching adjustments in the way we think about the boundaries between ourselves and our society. In England, for example, the introduction of Google Street View provoked a firestorm of controversy. The company dispatched camera-equipped cars to photograph street scenes for its mapping software, but many people feared it would catch them in compromising situations. The rock star Liam Gallagher of the band Oasis was forced to deny that one image was of himself drinking at a streetside café.
³
The increased intrusiveness of technology has made us a society struggling to sort out the villains from the victims. In the United States, a fourteen-year-old girl in New Jersey was charged with child pornography after posting nude pictures of
herself
on the social networking Web site MySpace.com.

Such evolutionary leaps in technology have unsettling implications for privacy. And the exploding growth of the private intelligence industry represents yet another trend in the 100-year balance of power between private and government intelligence. In an increasingly fragmented geopolitical environment, the balance seems to be shifting away from governments and toward corporations and even private individuals, who have access to more intelligence and information-gathering ability than many governments in history ever had.

What comes next?

I asked Peter Earnest, a retired CIA officer who serves as the executive director of the International Spy Museum in Washington, D.C. Earnest sees corporate espionage as a natural outgrowth of increased globalization and an ever-increasing demand for information. Over the coming years, he says, intelligence operations will be ever more effective. “Spying doesn’t change; the tactics have been the same throughout human history,” he says. “But the technology keeps getting better and better.”

Even after meeting many of the top corporate spies in the world, exposing operations that many of them did not want exposed, and
poring over the history of their industry, I’m still conflicted about whether all this is headed in a positive direction for society. As a journalist, I’m a strong believer in the importance of gathering information. And I’m a fundamentalist when it comes to the First Amendment. But what separates me, and reporters like me, from the corporate spies is that we believe in making sure the information we report reaches the widest possible audience. Spies do the opposite: they make sure the details they harvest reach only a very narrow—and very high-paying—audience.

I don’t think that’s always good for society. So I’ll offer one modest suggestion. The spy firms must be dragged farther into public view, where citizens can keep an eye on whether what they’re doing is constructive or destructive.

There’s one way this could be done. Today, American lobbyists must register with Congress, revealing to the public how much they’re getting paid, who their clients are, and what they’re trying to accomplish. When they were put into place in the mid-1990s, the regulations were hotly resisted by Washington’s lobbying community. But they have helped to clean up an industry, and made it easier for the media and the public to spot the problem firms before these firms can do too much damage.

A spy registry modeled on the lobbying disclosure rules could be coordinated by the SEC, which already processes millions of pages of public disclosure documents from public companies every year. Free markets do work best without friction, and a big source of friction in the economy is misinformation. The ability of investors and corporate leaders to stamp out confusion in the market by finding out the truth of a situation helps boost confidence, speed transactions, and prevent prices from spiraling too high or too low.

It’s time for the spy firms to come in from the cold.