*
‘You in the West, you think you’re playing chess with us. But you’re never going to win, because we’re not following any rules.’
A Russian mobster to his lawyer
*
‘One time, a Soviet agent was sent to the UK and he ran out of money. He was introduced into a poker-playing circle and he decided to play to save his situation. He noticed that when you play poker in the UK, your cards are not normally checked or shown. Everyone takes you at your word as a gentleman. He began to win, because no one was checking his cards. He was winning big money. It’s the same situation here.’
A Russian tycoon who’d been among the first wave of illegals sent into the West in the perestroika era
*
When Shalva Tchigirinsky first met Donald Trump at the Taj Mahal casino in Atlantic City in November 1990, he’d been in the West for more than three years.[1] He’d left Russia before the Soviet Union fell, permitted by the government to join his wife, a Spanish citizen who’d been brought up in the Soviet Union and then allowed to leave in a wave of repatriation in the early eighties. But this supposed marriage, by Tchigirinsky’s own admission, was a fiction. Long before he left the Soviet Union he’d been befriended by two leading lights of Soviet foreign intelligence. He told people that he’d been hounded by the KGB over his black-market business to such a degree that for five years he never used the telephone. But in fact the Russian spymaster Yevgeny Primakov was like a father to him, while the former head of Soviet military intelligence in the United States, Mikhail Milshtein, was known to him as ‘Professor’, and he went often to his home. ‘He was a general and he was also my friend,’ Tchigirinsky told me. ‘He loved me very much, and I loved to debate with him on history.’[2]
Tchigirinsky, an ethnic Georgian with a thick mane of dark hair and a distinguished air, had trained as a doctor in Moscow, but his business was antique-smuggling: he sold ancient icons, paintings and other valuables into the West. While one branch of the KGB pursued him for his black-market activity, top minds in foreign intelligence encouraged and cultivated him, and then helped send him to the West. The dichotomy reflected the broader split in the Soviet security services as, beginning from the time of former KGB chief Yury Andropov, progressives pushed and prepared for a transition to the market as the only way to survive the rivalry with the West, while the old guard fought any sign of change. The progressives cultivated a network of agents in the black market, and funnelled out antiques and then raw materials through them. They turned to organised-crime networks, which sent out representatives in the wave of emigration permitted in the late seventies and early eighties who opened trading businesses in Austria and Switzerland, and then deeper into the West. Security men like Primakov at Moscow’s Institute for World Economy, and Mikhail Milshtein at the Institute for USA and Canada, had led in pushing for reforms.[3] When the Soviet Union collapsed under the frenetic force of change and the flood of assets into the West, the KGB progressives were to some degree prepared. Their agents were already embedded, the cash networks they’d created – at least in part – still under their control.
Tchigirinsky would never directly admit that he was part of this process. But the story about him leaving Russia to join his wife was no more than a cover, and the identities of the men he hobnobbed with as he made his way in business on the other side of the Iron Curtain, were indications that he had high-level backing.[4] He claimed he lived in poverty for the first few months after his departure from the Soviet Union in 1987: ‘I slept on the floor for two months in the flat of my friend.’[5] But that same year he’d set up one of the Soviet Union’s first joint ventures from his base in Berlin on the Western side of the Wall, which he began to criss-cross smuggling cigarettes and alcohol to Soviet military bases in the East. He rented a small flat above a casino run by Soviet émigrés just off the Kurfürstendamm, West Berlin’s main thoroughfare, and was soon frequenting the grand halls of the Hotel Bristol, near which he set up an office. On the West side of Berlin he had high-level protection, having become friends with the Soviet consul, Rudolf Alexeyev. The year the Wall fell, Tchigirinsky attended the May 9 victory celebrations in Berlin’s Spandau Castle with Alexeyev and other Soviet dignitaries.[6]
By the time he met Donald Trump in November 1990, Tchigirinsky had made it. The joint venture he’d set up – almost exactly following the KGB memos for the transition to the market economy – had expanded into trading computers, and then into construction. His contract to build the first business centre for foreign companies in Moscow, which was to house the French energy major Elf Aquitaine, made the eyes of his partners in the Soviet foreign ministry water with joy. Not only could they keep close watch on their foreign tenants, they would receive huge sums from them too. Tchigirinsky was already rich enough to be what the casino industry calls a high roller, and when he entered Trump’s Taj Mahal in Atlantic City, he liked what he saw. The Taj Mahal was a vast palace of thirty-nine storeys dripping with chandeliers and gold, and covered with an onion dome. There were hundreds of gaming tables, and elegant lounges, restaurants and bars. ‘I saw him for the first time around 3 a.m.,’ Tchigirinsky recalled. ‘Suddenly there was Trump, and around him were forty people. We were there for three or four days, and every night he would appear at 3 or 4 a.m. It was an unrepeatable project. It was a huge operation. He spent huge money on this. Trump was such an attractive man. He was very polished and full of energy. We were playing in the casino. We already had money by then. We had big money by then. Trump showed us the Taj Mahal, where the cash room was, where the safe was, where the computers were and everything. He lived there, and around him there were many beautiful girls.’[7]
The relationship Tchigirinsky began to forge with Trump that night would form the roots of a network of Russian intelligence operatives, tycoons and organised-crime associates that has orbited Trump almost ever since. The people tied to Tchigirinsky included a Georgian, Tamir Sapir, his business partner Sam Kislin, and an Azeri, Aras Agalarov, who set up some of the first Soviet–American joint ventures and US trading operations before the Soviet fall. They were part of an interconnecting web of figures that became testimony to the enduring power of the black-cash networks created in the final years of the Communist regime. Some of them later joined Trump in real-estate ventures, helping bail him out when he fell into financial difficulty, offering the prospect of lucrative construction deals in Moscow, while Agalarov organised the 2013 Miss Universe pageant in Moscow for him. They were among those who, according to Yury Shvets, later helped ‘save Trump from bankruptcy’.[8]
The money flows that went through part of this network to Trump’s business operations are yet to be fully uncovered – they remain at the centre of a legal standoff between the Trump Organization and Congress over what records can be disclosed. But some of the contours of Moscow’s influence over Trump can be traced. Tchigirinsky, Agalarov, Sapir and his business partner Kislin were among those in the vanguard of the first KGB experiments at funnelling money into the West. They operated in the half-light between the Russian security services and the mob, with both sides using the other to their own benefit. Tchigirinsky faced rumours that he was connected to the Solntsevskaya organised-crime group, which was emerging at the end of the eighties as Russia’s most powerful, with ties to the top of the Moscow city government, and which Semyon Mogilevich had worked with as he ran money into the West for the KGB and the mob.[9] Tchigirinsky always denied any links to organised crime (‘There is no such thing as organised crime,’ he said. ‘There’s just a group of people who support and protect each other’). But he admitted he knew Mogilevich, as well as another of his close associates.[10] Others in the same network were also closely tied to the group.
Tchigirinsky had been invited to meet Trump that evening by a leading player in the Atlantic City casino industry – a lawyer named Martin Greenberg, who’d drafted New Jersey’s casino laws in the early eighties, and had then become president of one of the state’s biggest casinos, the Golden Nugget.[11] Greenberg had first met Tchigirinsky a year earlier, in 1989, just as progressives in the KGB’s foreign-intelligence arm were stepping up plans to transfer the Communist Party wealth into havens abroad.[12] Together with Alfred Luciani, an assistant attorney general who’d also worked on New Jersey’s casino laws, and had then become the Golden Nugget’s executive vice president, Greenberg had been drawn to talk business with Tchigirinsky by rumours of the fabled Communist Party wealth.[13] The three men met in the fading glory of the Soviet resort town of Yalta, on the Crimean peninsula, and discussed potential investments, including possibly building a Soviet casino there. But the Americans were also ‘looking for investments in their casinos’, said Tchigirinsky. ‘They’d heard the myth of the Party money, and they decided the casinos would be a good home for it.’
Tchigirinsky denied that the talks resulted in any investment. (‘US business is too transparent. It’s not possible to do anything,’ he said.) But shortly after, he travelled to Atlantic City with one of his foreign-intelligence friends, and Greenberg took him to the Taj Mahal and introduced him to Trump.[14] By that time Tchigirinsky had joined in a business partnership with the son of the man he called ‘Professor’, the former head of Russian military intelligence in the US, Mikhail Milshtein, who’d taught generations of future intelligence officers. His son Vadim was officially an economist,[15] but he’d also set up a translation agency that looked like a front, where his business partners included a former member of the KGB’s elite Alfa special forces and the former Soviet envoy to the UN.[16]
At the time he met Tchigirinsky, Trump had poured so much money – more than $1 billion – into building the Taj Mahal, which he liked to call ‘the eighth wonder of the world’, that he was deep in debt and facing bankruptcy.[17] Tchigirinsky recalled him saying that the casino business was ‘an uphill struggle’. Trump later told New York Magazine that in 1990 he was $5 billion in debt, with $980 million in personal guarantees. ‘I was worth minus 900 million,’ he said. The real-estate market had entered into a downturn, and he told the magazine of how he’d pointed to a blind beggar outside Tiffany’s in New York when he was out walking with his wife of the time, Marla Marples, a glamorous blonde beauty-pageant winner, and said to her: ‘How would you like to know he’s worth $900 million more than me today?’[18]
But by 1992 Trump had achieved a remarkable turnaround. He’d reduced his personal guarantees to $115 million by selling off a string of yachts and planes, and had somehow reached a restructuring on the rest of his debts.[19] In July 1991 the Taj Mahal had entered pre-packaged bankruptcy, but Trump was bailed out by bondholders who agreed to extend his debt payments as long as he gave them 50 per cent of the casino.[20] He’d been helped in the process by two titans of Wall Street: hedge-fund owner Carl Icahn, and Wilbur Ross, who headed the bankruptcy division at the investment bank N.M. Rothschilds.[21] Together, they were reported to have helped herd the bondholders into agreeing the deal. The same Martin Greenberg who’d introduced Tchigirinsky to Trump also had a connection: he represented the bondholders in the restructuring; Tchigirinsky, for his part, admitted he knew Icahn.[22]
Whether Tchigirinsky was involved in the Taj Mahal bondholders’ pact we may never know. (He insisted he’d never invested in the Taj Mahal, but at one point when we were speaking of the financial difficulties that were facing the casino at that time, he spoke of the business almost as if it were his own. ‘We’d never been in this business,’ he said. ‘We didn’t understand everything about this business then.’[23]) In any case, business at the Taj Mahal soon began to boom again. By September 1992 Trump was boasting of record profits for the house three months in a row, with more than $80 million being reaped in the two preceding months.[24] Russian émigrés had been going there in droves almost ever since it opened, attracted by its bling, the Trump name and the Russian pop stars brought in to perform there. Russian high rollers would plunk down $100,000 a visit, and receive the special treatment reserved for favoured customers,[25] including plush hotel rooms, free food and alcohol, and chauffeur services in stretch limousines or even helicopters. The Taj Mahal was also a place where few questions were asked, and it became a favoured venue for laundering cash. The US Treasury’s Financial Crimes Enforcement Network later found that it had regularly failed to report suspicious transactions and file the reports it was required to make whenever a customer gambled more than $10,000 in a twenty-four-hour period.[26]
It became a favourite haunt of Vyacheslav Ivankov, or ‘Yaponchik’, the feared associate of the Solntsevskaya group with the ice-cold eyes and the violent temper who’d landed in New York in March 1992 after Mogilevich, in partnership with the KGB, helped win him early release from the Russian jail where he’d served ten years for forgery and drug trafficking.[27] The FBI believed Yaponchik was leading an international criminal organisation out of his base in Brighton Beach, dealing in drugs, extortion and murder, and overseeing the US interests of the Solntsevskaya.[28] Agents eventually tracked him down to a luxury condo in Trump Tower in Manhattan, and then to the Taj Mahal, to which he made nineteen visits while under surveillance between March and April 1993, gambling $250,000 there.[29]
Trump had survived his first threat of bankruptcy, and the Russians were among those who had helped him do so. The Taj Mahal became such a popular spot for Russian émigrés that part of a Russian movie was filmed there, a comedy that featured a casino owned by the Russian mob.[30]
While Trump climbed out of near-bankruptcy, Tchigirinsky stayed close by. He grew close to the Sotheby’s owner Alfred Taubman and his son-in-law Louis Dubin, a New York real-estate developer who was friends with Trump.[31] He hired one of Trump’s top executives, Louise Sunshine, who’d served as the Trump Organization’s executive vice president, and he nearly bought Mar-a-Lago, Trump’s palatial estate in Palm Beach, Florida – he decided against it, he said, because Taubman warned there were too many low-flying planes. He hobnobbed with Steve Wynn, the Golden Nugget casino owner who was in turn a rival and then a close friend of Trump.
The hundreds of millions of dollars the charming and debonair Tchigirinsky made as he expanded his businesses in Moscow had won him easy entrée into US high society.[32] He was working in close cooperation with Yury Luzhkov’s Moscow city government, even sharing an office with senior officials of the city’s new construction department. Together with Milshtein and Yelena Baturina, the wife of Moscow’s mayor, he became an owner of the Moscow oil refinery, which supplied most of the city and the surrounding region through a lucrative contract with BP.[33] The refinery was contracted to sell at least $800 million worth of oil-product exports through Tchigirinsky’s enigmatic fellow Georgian associate Tamir Sapir in New York.[34]
Sapir had emigrated from the Soviet Union to New York in 1975, becoming a pioneer in the first KGB-backed oil trade operations there.[35] He’d worked first as a taxi driver and then providing an exclusive clientele of Soviet officials and KGB officers with the latest in American electronic goods. In those years he’d operated from a store called Joy Lud in the centre of Manhattan, whose customers included Soviet foreign minister Eduard Shevardnadze and Yevgeny Primakov. But the shop became a front for a much bigger operation, which granted Sapir lucrative licences to trade large amounts of Soviet fertiliser and oil products. Soon he became a billionaire. His partner in the business was Sam Kislin, a barrel-chested émigré from the Ukrainian port of Odessa who also traded in metals with Mikhail Cherney, one of the first alleged mobsters to transfer Soviet wealth through KGB-linked firms. Neither of them would have been able to run such operations out of New York without the explicit support and involvement of the KGB.[36] Kislin had met Trump as long ago as the seventies, when he gave Trump a loan for seven hundred television sets, he later said.[37]
Later, Sapir and a business associate of Kislin, a former Soviet trade official named Tevfiq Arif, were to join forces to bankroll the construction of a Trump Tower in Manhattan, SoHo, just at the time when Trump most needed cash. Kislin, meanwhile, went on to forge a close relationship with the New York mayor Rudy Giuliani, later Trump’s personal attorney.
The Moscow billionaire who was later to invite Trump to hold the 2013 Miss Universe beauty pageant in Moscow – and would set up a fateful meeting between Trump and a mysterious Moscow lawyer promising dirt on Hillary Clinton’s presidential candidacy – was Tchigirinsky’s protégé, the construction tycoon Aras Agalarov. An imposing former Communist Party official born in the Soviet republic of Azerbaijan, Agalarov had been chosen to set up another of the first Soviet joint ventures under the KGB memos for the transition to the market economy. He’d been among the few allowed by the KGB to leave for the US, where in 1989 he founded the US–Soviet joint venture Crocus International. ‘He is my pupil,’ said Tchigirinsky. ‘I’ve known him for a long time.’[38] Tchigirinsky went on to hastily explain that he meant he’d taught Agalarov everything he knew about the construction business. But for most of the nineties, before he’d gone into construction in Moscow, Agalarov remained in the US, running an import-export business out of a small office in midtown Manhattan and then in New Jersey.
Agalarov appeared to be another of the agents recruited by the KGB in the twilight years of the Soviet Union to funnel cash into the West, according to Yury Shvets.[39] ‘In those days, any Soviet–American joint venture could be established only with KGB approval,’ said Shvets. ‘My professional analysis from the point of view of the modus operandi of the Russian security services shows that he was recruited.’ Like many joint-venture operators at that time, Agalarov and his partners started out by importing much-needed computer technology into the Soviet Union. They then expanded into trading consumer goods, including from China, into Russia, after the Soviet fall.[40] Agalarov had also acquired a stake in Europe’s biggest outdoor market, the Cherkizovsky Rynok, a vast warren of plywood shacks on the outskirts of Moscow that gained a reputation as a Mecca for Chinese imports and smuggled goods, and as a ‘state within a state’ with its own ‘police, customs service and courts’, and legions of migrant workers.[41] Agalarov’s co-owners of the market included other Azeri associates of Tevfiq Arif, the former Soviet trade official who later bankrolled the construction of the Trump Tower in SoHo.[42]
As Agalarov’s US-based import-export business began to grow in the nineties, one of his closest partners in the US became the subject of a money-laundering probe. American officials were becoming aware of the Russian black cash that was starting to flood into the country, and suspected Irakli Kaveladze of being involved. According to Yury Shvets, the dapper ethnic Georgian was an ‘illegal’ – an agent the Russian intelligence services were seeking to infiltrate into America, where it was intended that he gain US citizenship.[43] If initially the KGB had mostly focused its efforts on developing an elaborate programme for its ‘illegal’ operatives to take on the stolen identities of real Western citizens, once emigration from the Soviet Union began to grow from the seventies onwards, it also sought to cultivate agents among the emigrants. Kaveladze was one of them, said Shvets. In 1989, at the age of twenty-eight, after graduating from the prestigious Moscow Finance Institute, he was allowed to travel to the US, where he became close to an American family in Gettysburg, Pennsylvania. Two years later, he acquired US citizenship: apparently he’d been ‘adopted’ by the mother of the family, Judith Shaw. (When she died in 1993, at the age of forty-nine, her obituary described Kaveladze as her ‘adopted son’.[44]) ‘He was sent there under the immigration line,’ said Shvets. ‘Soviet intelligence had always envied the Chinese and Mossad. You could go to any country, and there would always be a big contingent of Chinese and Jewish diaspora. They could always go to their countrymen. Before the collapse of the Soviet Union, there was a huge wave of emigration that was under the control of the KGB. Kaveladze was sent out as an émigré.’[45] (Kaveladze, himself, failed to respond to requests for comment.)
For nearly a decade, Kaveladze served as the vehicle for transferring more than $1.4 billion in Russian and East European black cash into US bank accounts.[46] After graduating, he’d fast been hired as a vice president at Agalarov’s Crocus International joint venture, and in October 1991 his newly acquired US citizenship allowed him to start opening a web of US bank accounts. He set up his own venture, International Business Creations, which shared a midtown Manhattan address with other Agalarov outfits, and through which US investigators later found he had opened accounts for more than a hundred suspicious Russian clients at a pillar of the US financial system, Citibank, and a hundred more at the Commercial Bank of San Francisco, which was part-owned by a Latvian also alleged to have links with the KGB.[47] Citibank later admitted to investigators that Kaveladze had opened these accounts without his Russian clients ever having to appear in person, or provide evidence of their business activities.[48] Kaveladze also registered about two thousand corporations in Delaware for Russian clients he claimed to know little about – not even their true identities.[49]
According to a former Kremlin official, part of the cash flow stemmed from a billion-dollar slush fund created by an outfit known as the Russian National Sports Fund,[50] which in the mid-nineties was given the right by Yeltsin to import alcohol and tobacco into Russia tariff-free. The fund became a black hole for smuggling, and was linked to senior security service officials of the Yeltsin era, including Yeltsin’s bodyguard Alexander Korzhakov. What most troubled one of the US investigators examining the Kaveladze-created accounts was that no cash had ever been transferred through some of them, while other companies were used to make transfers only once. It was as if cells were being set up for future operations, said a person familiar with the investigation. ‘He was setting up so many goddamn corporations. He uses them when he needs them – just like they were burner phones.’[51]
The Kaveladze accounts were just the tip of the iceberg. Some of the transfers through the Commercial Bank of San Francisco were found to be connected to a much bigger operation: the $7 billion Bank of New York money-laundering scandal.[52] Essentially, the funds Kaveladze handled were part of the flow of Russian black cash that had been flooding into the US since before the Soviet collapse – and much of the architecture of the transfer system appeared to be run by the KGB and the Russian mob.
The Bank of New York cash channel was linked to the Russian mobster Semyon Mogilevich, whom Shvets described as an ‘especially important agent for Russian foreign intelligence’, and who’d long been running money into the West for the Solntsevskaya and the KGB. But after the scheme had been exposed in the summer of 1999, the scandal had soon been forgotten. There was no real criminal investigation, and the scheme was brushed aside as mostly tax and customs evasion by everyday Russian business. The architects of the scheme’s connections to Mogilevich and the Russian security services were papered over, as were possible links with US brokerages, and stock-fraud scams. To Shvets, this was a fatal mistake. The West had been blinded by what it believed was its victory in the Cold War: ‘They thought Russia was finished forever … They didn’t care about stealing, just as long as it wasn’t too visible. When Bush Senior said the Cold War is over and a new era of cooperation is beginning, that was it. But the Russians used cooperation to deceive the US. The Americans, they’re like children. If you’re cooperating, you’re cooperating. That’s it, and no questions are asked – even if the Russians are holding a brick behind their backs.’[53]
The way had been left open for the Russian intelligence services and their partners in organised crime to find other ways to funnel money into the US. Later, a new generation of shadow bankers linked to the same mob and the KGB invented the Moldovan Laundromat and the mirror-trade schemes. But before that, according to Shvets and a former Mogilevich associate, it seems one of the channels they focused on were the business operations of Donald Trump.[54] ‘They needed to find more subtle ways to launder cash through businesses and not directly through US banks,’ said Shvets. ‘And there was Trump and his financial problems – it was a solution that was very much on time.’[55]
There’s no evidence that Trump was aware there might be any issues with the former Soviet businessmen who began to line up in the early 2000s to offer him lucrative business deals. The Trump Organization’s chief counsel, Alan Garten, said he’d had no reason ever to question the source of funds.[56] But in those days Trump was still mired in debt. He’d already escaped personal bankruptcy in the early nineties, but had been forced to sell prized properties like the Plaza Hotel and a prestigious development project on the Upper West Side of Manhattan, as well as part of the Taj Mahal casino.[57] The ownership of the rest of his vast real-estate empire was murky at best, and he was still wrestling with nearly $2 billion in bond debts owed by his casino and hotels group, Trump Hotels and Casino Resorts.[58] Western banks – apart from Deutsche Bank – had become wary of lending money to him. Instead, one by one, a string of former Soviet businessmen came to him with proposals to build a succession of Trump Towers. For the first time, Trump was being offered handsome licence and management fees just for the honour of featuring his name on the buildings. In at least one case, he would receive an 18 per cent equity stake without making any investment at all. The deals could not have been more serendipitous for Trump. And few questions were asked. ‘Donald doesn’t do due diligence,’ a former senior Trump Organization executive, Abe Wallach, said later.[59]
Most of the businessmen who came to Trump then were connected to the same nexus of KGB-linked money men, some with ties to the Solntsevskaya group. There was Shalva Tchigirinsky’s Georgian associate Tamir Sapir. There was Tevfik Arif, a former Soviet trade official with connections to Aras Agalarov, backed by a trio of Kazakh metals tycoons who’d earlier joined in business with an alleged associate of the Solntsevskaya group. There was Alex Shnaider, the metals-trading son-in-law of an alleged Solntsevskaya associate who’d funnelled out Communist Party cash in the twilight years of the Soviet regime.
The charm and the cash offensive of this network started with the son of an associate of Semyon Mogilevich, who’d grown up in Brighton Beach, the New York enclave that was home to Russian émigrés and mafia gangs.
When Felix Sater first approached Donald Trump sometime in 2001, he’d already lived several lives, and by his own admission he’d long been working with senior figures in Russian intelligence.[60] The pugnacious former stockbroker with the face of a boxer had left the Soviet Union with his family at the age of eight, part of the wave of Jewish emigration permitted in the early seventies. They set up home in Brighton Beach, where according to two former Mogilevich associates, Sater’s father, Mikhail Sheferovsky, became an ‘enforcer’ for some of Mogilevich’s interests there.[61] Sater was brought up in a world where gangland shootings and turf wars between mafia groups were commonplace. It was also a world where Russian organised crime was expanding into white-collar crime, forging alliances with Italian crime families – first to sell bootlegged petrol, then into the diamond industry in Sierra Leone, then into stock manipulations, fraud, and elaborate commodity-trading schemes, as well as the more standard gun and drug trafficking.
Sater would claim he’d never been involved in any of that. But when we spoke, he could not disguise his pride in his background. ‘Me and my friends grew up in Brooklyn, and being afraid was not something that was the first thing on your mind,’ he told me, puffing up his chest. ‘I would say it’s a pretty unique group of people.’[62] Not long after starting out as a stockbroker at a series of Wall Street firms, he ran into problems with the law. In 1991 he wound up in jail for fifteen months for stabbing a commodities broker in the face and neck with the broken stem of a cocktail glass. Then he escaped charges for running a $41 million ‘pump and dump’ stock-fraud scheme in collusion with members of the Gambino and Gravese Italian crime families, contacts he had made through his father’s connections.[63] Through two New York brokerages he co-founded, Sater and his partners had secretly acquired large blocks of stock, and then artificially inflated their price by paying off brokers to issue false statements and deploying the muscle of the Italian crime families.[64] Some of the brokerages involved had been investigated for links to the Bank of New York money-laundering scheme.[65] When that scheme collapsed in 1996, Sater left New York for Moscow, where his Brighton Beach connections helped him make friends at the top of Russian intelligence. He claimed he’d gone to Russia as a consultant for the US telecoms firm AT&T, to negotiate a $100 million deal to rent out a transatlantic cable to the United States, and that it was through this proposed deal that he came into contact with high-level officers from Russian military intelligence, who controlled the country’s telecoms.[66] But he would never have gained such access so fast had it not been for his connections in Russian organised crime. Those connections included Mogilevich, who collaborated with Russian foreign intelligence, according to Yury Shvets and a former close Mogilevich associate who knew Sater then.[67]
In January 1998, soon after the FBI in New York uncovered a stash of documents revealing his involvement in the stock-fraud scheme, Sater contacted US intelligence officers in Moscow and offered his cooperation.[68] He would supply top-grade information on the activities of the Taliban and the Northern Alliance in Afghanistan, where Russian intelligence operatives and organised crime had long been active. For Sater – and for Russian intelligence – it was the beginning of a beautiful friendship. Sater first provided information on lost Stinger missiles the US government had long been trying to trace, even providing their serial numbers, and relaying the information that they were in the hands of the Northern Alliance, who now wanted to sell them.[69] Then, after providing further information including the coordinates of Al Qaeda camps and what he said were five satellite-phone numbers belonging to Osama bin Laden, he returned to the US to give himself up. On his arrival he made a deal with the FBI that enabled him to avoid the charges – and a potential twenty-year jail sentence – for the stock-fraud scam. Instead, he won plaudits for what became ten years of fruitful cooperation with the FBI.[70]
But Sater was also following a time-honoured tradition. Ever since Soviet times, Russian mafia associates from Brighton Beach had offered themselves as FBI informants in exchange for criminal charges being dropped.[71] But Sater’s organised-crime and Russian intelligence contacts should have set alarm bells ringing. He’d even helped the FBI uncover the stock-fraud scheme, leaving a stash of documents in a safety deposit box he failed to pay for and then helping agents decipher them.[72] When we met in May 2018 he told me his Russian intelligence contacts, including in military intelligence, the GRU, agreed to provide him with information because they were desperate for cash. ‘The GRU weren’t worried about spying on America then. They worried only about making money. They weren’t exactly financially savvy, and I was someone who worked on Wall Street, spoke fluent Russian and English and understood finance – and I was talking to them about a deal that would make $100 million.’ That deal never came off, and Sater could not explain what – if any – money he ever paid them.
According to Yury Shvets, Sater’s top-level contacts in Russian intelligence were following a time-honoured tradition, dating back to Soviet times – funnelling information through an asset in order to raise his standing and influence. It would have been impossible for Sater to gain access to such information without the active cooperation and assistance of high-ranking members of Russian intelligence and organised crime. Shvets said he believed Sater’s connections stemmed from an alliance with Mogilevich and Shabtai Kalmanovich, another KGB-linked Solntsevskaya associate, who’d been jailed by the Israelis in the eighties for spying for the Soviets: ‘Kalmanovich decided everything for Sater.’[73] Mogilevich and Kalmanovich were at the centre of an arms-smuggling empire that traded weapons with all sides – with the Taliban and their opponents the Northern Alliance – and carried out tasks for Russian intelligence. According to a former Mogilevich associate who knew him then, Sater had never set foot in Afghanistan, and the information on bin Laden’s phone numbers and the missing Stinger missiles ‘would have most likely come from Seva’.[74]
Ever since childhood, Sater had been part of a vicious world in which to survive was to play a double or even triple game, changing one’s mask according to the circumstances. ‘Everyone has many faces, and it is very difficult for us to know which is true and which is not,’ said another former associate of Mogilevich. ‘They had to be like this to survive.’[75] Theirs was a world of backroom deals and an underground economy which had operated in the shadows since Soviet times, where a single misstep could land you a lifetime in jail, or more likely a bullet in the head.
Sater insisted he’d never had any contact with Mogilevich, nor had the mobster ever assisted him in his dealings tracing weapons and Al Qaeda camps for the FBI. Any suggestion he was connected to Mogilevich: ‘I am telling you it is complete and utter bullshit. It’s a complete fucking lie. I wouldn’t know him if he came and sat down next to us.’[76] However, he could not help bragging that his connections went higher than that: ‘Any claim I’m associated with Mogilevich is kind of insulting. I am active on a much higher level than him.’[77]
In fact, Sater’s ties extended into the new generation of Russian mobsters who took over some of the illicit black-cash transfer schemes after Mogilevich was exposed in the Bank of New York scandal. His closest friend since childhood was Yevgeny Dvoskin, the shadow banker who’d worked in close cooperation with a senior FSB general to become an architect of many of the new money-laundering schemes of the 2000s –the Moldovan Laundromat and the Deutsche Bank mirror trades – that funnelled tens of billions of dollars of illicit transfers into the West.[78] The two had grown up together on the same block in Brighton Beach, Brighton Twelfth Street.[79] ‘I knew him very well,’ said Sater. ‘I knew his first wife and then I knew his second wife. I grew up with him. He is an old and dear friend of mine.’[80]
Sater was proud of his connection to Dvoskin, who, he said, ‘wouldn’t even piss on Mogilevich if he was on fire’. He told of how Dvoskin had worked closely with Ded Hasan, another powerful Russian mobster, who was later shot dead in a Moscow restaurant. When I naïvely asked if he hadn’t been worried when his best friend was doing business with Ded Hasan, Sater snorted scornfully, ‘Look at what happened to Ded Hasan. They were the ones who should have been worried doing business with [Dvoskin].’[81]
*
By the time he met Donald Trump in 2001, Sater had joined forces in business with the former Soviet trade official Tevfik Arif.[82] Arif had made his money trading chrome from Kazakhstan as an agent for Mikhail Cherney’s metals trader, TransWorld Group. He’d then forged a close partnership with a group of Kazakh metals tycoons known as ‘the trio’, led by Alexander Mashkevich, who started out in business working for Boris Birshtein, an alleged Solntsevskaya associate.[83] (Mashkevich did not respond to requests for comment.) Arif ‘was doing business with Mashkevich. They’ve known each other for twenty or thirty years,’ said Sater. ‘It was Transworld … and Mikhail Cherney. He was working with Cherney in the beginning.’[84]
Sater claimed he’d known Arif for only three months before he agreed to go into business with him. They’d met, he said, because Arif was his neighbour in Sands Point, an exclusive Long Island enclave, once home to William Randolph Hearst and the Guggenheims, that had been the model for The Great Gatsby’s East Egg.[85] Together they set up a real-estate development firm called the Bayrock Group, and moved into an office one floor below the Trump Organization headquarters in Trump Tower at 725 Fifth Avenue, staffed with ‘eye-catching’ women from Eastern Europe.[86] One of Trump’s managers started stopping by, and soon he was providing an introduction for Sater to Trump.[87] The way Sater tells it, the meeting was spontaneous and on his initiative: ‘I walked into his office and told him, “I’m going to be the biggest developer in New York City.” He laughed. I think he enjoyed my Trumpesque approach. We started working together right away.’[88]
Sater and Arif offered Trump a deal he could hardly refuse. The Bayrock Group would take on the financing and construction of a series of luxury developments, paying Trump a licence fee for the honour of using his name.[89] A luxury condominium-hotel resort at Fort Lauderdale in Florida was announced at the end of 2003.[90] There would be the $200 million Trump International Hotel and Residence in Phoenix, Arizona, purchased by Bayrock at around the same time.[91] Then, in 2005, Bayrock bought a site on an up-and-coming street in Manhattan’s SoHo that would become Trump SoHo, a $450 million forty-six-storey glass tower of luxury and excess, of condos, a hotel and Fendi furniture.[92] Trump was to be given an 18 per cent equity stake in the project, and a steady stream of management fees, despite not having to contribute a cent.[93] The deals couldn’t have come at a better moment for Trump. By 2004 the casino and hotels branch of his empire was filing for Chapter 11 bankruptcy protection and another restructuring deal.[94]
The tie-up also provided potential benefits for Bayrock. Real-estate developments offered a way around the stricter US banking regulations imposed following the Bank of New York scandal and the September 11 terror attacks. ‘They couldn’t easily bring money in through shell companies any more,’ said Jack Blum, a Washington lawyer specialising in white-collar financial crime. ‘But the money then flowed into real estate in Miami, New York and London. Real estate was exempt from any kind of reporting of suspicious activity. All of a sudden you had these luxury condos springing up. No one asked where the money was coming from. If I’m a crook and looking around for someone to help cover things up, then the whole deal was how about I invest in your real estate. “I’ll do the building and you provide the cover. You’ll even make some money from it.” It became a model for the Trump Organization all over the world.’[95]
It took almost two decades for US Treasury officials to warn that premium US real estate was becoming a vehicle for corrupt foreign officials and transnational criminals to launder dirty money. An investigation by the Treasury in 2018 found that one in three cash buyers of high-end property were suspicious, while most sales at the top of the market took place through companies whose ownership was hidden.[96] And even if those behind the schemes sold apartments at a loss, said a US investigator, they could make a profit by taking a cut for laundering the cash.
For Bayrock’s former finance director Jody Kriss, the source of the company’s funding became an alarming question. He later claimed in a racketeering lawsuit against Bayrock that its backers included ‘hidden interests in Russia and Kazakhstan’, and that the company was no more than a front for laundering cash. ‘Tax evasion and money laundering are the core of Bayrock’s business model,’ the lawsuit filed by Kriss initially stated.[97] Bayrock, he claimed, was ‘largely a mob-owned and operated business’ which had ‘access to cash accounts at a chromium refinery in Kazakhstan’.[98] Bayrock denied the claims.
The refinery Kriss was referring to was the sprawling Aktyubinsk Chromium Chemicals Plant, the world’s second-biggest producer of chromium-based chemicals, which belched smoke into the bleak Kazakh steppeland and leaked toxins into the local water supply, making it undrinkable.[99] It was owned by Arif and his brother, who’d served as a senior official in the Kazakh industry ministry in the nineties. In a sign of the close ties that bound this network, the chromium mine that supplied the plant was owned by the Kazakh metals tycoons known as ‘the trio’, or more officially Eurasian Natural Resources Corporation (ENRC).
The town that surrounded the plant was no more than an impoverished hub for migrant workers. Clearly all the profits were sent elsewhere. Bayrock itself never seemed to run out of cash. Arif and Sater, Kriss alleged, would come up with funds ‘month after month, for two years, in fact more frequently, whenever Bayrock ran out of cash’.[100] Every time cash flow started getting tight, according to the lawsuit, the owners ‘would magically show up with a wire from “somewhere” just large enough to keep the company going’.[101] But Trump never seemed to ask any questions. In fact, he later admitted in court proceedings that he ‘never really understood who owned Bayrock’.
At the same time, Trump began signing similar deals with a string of other former Soviet outfits. In early 2002 an Israeli Soviet émigré, Michael Dezer, and his son Gil signed a licensing deal with Trump for the $600 million Trump Grand Ocean Resort and Residences on a stretch of prime beachfront in Sunny Isles, near Miami.[102] A Reuters investigation estimated that Trump made tens of millions of dollars from the deal, in which the Dezers took on all the costs and risks.[103] In total, more than $98.4 million worth of property in south Florida was bought by Russians in seven Trump-branded luxury towers. Six of them were developed by the Dezers. A third of the more than 2,000 apartments in the seven Trump buildings had been bought through anonymous ownership vehicles – limited liability companies or LLCs. A number of politically-wired second- and third-tier Russian businessmen, or ‘minigarchs’, including three former state officials, paid out millions of dollars for condos in the Trump developments.[104]
Then there was Alex Shnaider, a thirty-six-year-old Russian-born metals trader who’d made a $2 billion fortune by acquiring a Ukrainian steel mill and then expanding across Eastern Europe into Serbia, Montenegro and Armenia, where he owned the country’s electricity grid.[105] Built like a boxer, with close-cropped hair and a square, determined jaw, Shnaider just happened to be the son-in-law of Boris Birshtein, who according to the FBI was an associate of the Solntsevskaya group.[106] In 2003, Shnaider’s Midland Resources became the developer for the $500 million Trump International Hotel and Tower in Toronto, a sixty-five-storey block of condos and hotel rooms behind a shining glass façade.[107] In Soviet times his father-in-law had set up Seabeco, the commodities trader which was among the first wave of vehicles set up by the KGB for funnelling Communist wealth into bank accounts in the West.[108] Along the way, he’d also become a key operative for the Solntsevskaya group. According to an FBI report, in October 1995 Birshtein hosted a meeting for Solntsevskaya bosses at his office in the diamond centre in Tel Aviv.[109] Among them were Semyon Mogilevich and the Solntsevskaya chief Sergei Mikhailov. The subject under discussion, the FBI reported, was ‘the sharing of interests in Ukraine’.
The FBI was not the only arm of Western law enforcement examining links. Swiss intelligence in a 2007 report also mentioned Birshtein’s ‘close connections’ with the Solntsevskaya,[110] while Swiss police noted that when Birshtein left Seabeco later in the nineties to set up his own operation in Antwerp, Belgium, he established at least one company there, MAB International, with Mikhailov.[111] Birshtein, however, through a lawyer, has denied ever working with the Solntsevskaya.[112] He also established a close connection with the trio of Kazakh metals tycoons who worked closely with Arif and Bayrock. One member of the trio, Patokh Chodiev, founded a branch of Seabeco in Brussels in 1991, while another, Alexander Mashkevich, who started out in the late eighties as a Seabeco vice president, also set up another Brussels-based company with a separate Seabeco associate.[113] Shnaider claimed to be estranged from his father-in-law, but his closest business partner testified in London’s High Court that he owed his career to his relationship with Birshtein.[114]
Trump was soon being courted by others who would help him expand further afield. In 2005 a Lebanese importer-exporter with no experience in the property industry, Roger Khafif, approached him with an offer to build the Trump Ocean Club International Hotel and Tower in Panama.[115] The gleaming seventy-storey building was to bring Trump $75 million in fees. The broker brought in by Khafif to sell apartments in the tower was a Brazilian former car salesman named Alexandre Ventura Nogueira, who would later be charged with money laundering.[116] Nogueira, who’d been caught on tape by a former business partner talking about laundering ‘drug money’, in turn worked closely to sell the Trump Ocean Club apartments with two former Soviet Canadian émigrés, Alexander Altshoul and Stanislau Kavalenka, despite the fact that both faced accusations from Canadian law enforcement of being linked to organised crime.[117] Altshoul had been charged with participating in a mortgage-fraud scheme, while Kavalenka was accused of kidnapping and pimping Russian prostitutes.[118] In both cases, the charges were later dropped.
Alan Garten, the Trump Organization’s chief legal counsel, has told Reuters that no one at the company could recall ever having any dealings with Nogueira, nor any involvement in the sale of the apartments. Trump, he said, was merely licensing his brand and providing management services. But for Trump, regardless of who or what was behind them, the deals looked like no-brainers. They became a totem signifying his financial health. When the US was hurtling into the credit crunch at the end of 2007, Trump brandished them as proof that his empire was firmly afloat. ‘In an environment when no developers are getting financing for their jobs,’ he wrote in a letter to the Wall Street Journal in November 2007, ‘we have successfully secured financing within the last three months for our Trump International Hotel & Tower in Toronto, Trump SoHo, and Trump International Hotel & Tower in Panama. Those facts are a testament to the strength of the Trump name and brand within the financial community.’[119]
The men who joined Trump in business then were all interconnected, and by the time he was writing the WSJ letter they’d indeed taken steps to bring in more financing. In 2006 Tamir Sapir, the denizen of New York real estate who’d made his fortune trading Soviet oil, joined Bayrock in the development of Trump SoHo. And in early 2007 the Kazakh trio, through their holding company ENRC, officially came in as strategic partners to Bayrock who could provide equity financing.[120] Without access to Bayrock’s finances, it’s not clear what, if any, funding they could have provided. But the network was becoming complete. Shalva Tchigirinsky too was among them. He, Mashkevich, Sapir, Arif and Sater were all friends and associates. They attended the weddings of each other’s offspring[121] and all at some point conducted business with Trump.
As the financial crisis came ever closer, Bayrock continued to seek support. In May 2007 it signed off on a $50 million ‘loan agreement’ with a murky Icelandic financial company, FL Group. This loan would turn into a controlling stake in a new joint venture comprised of Bayrock’s interests in four of its projects, including Trump SoHo, just before the projects were expected to pay out to shareholders more than $500 million profits over the following two years.[122] In fact, according to the initial version of the racketeering lawsuit later filed by Bayrock finance director Jody Kriss, the arrangement was intended as a way for FL Group, Sater and Arif to ‘strip’ hundreds of millions of dollars in earnings out of the projects, leaving other creditors high and dry.[123] But this claim was later withdrawn and it’s not clear whether cash and assets were transferred into this new venture, leaving the main Bayrock development firm an empty shell, or whether Trump received any share of these profits from the 18 per cent stake he was granted in the Trump SoHo venture. The Icelandic outfit’s ownership was part of a tangled web of companies that were persistently rumoured to be connected to Putin’s Kremlin, and that were soon to collapse in the financial crisis amid allegations of financial crimes. Jody Kriss, the former Bayrock financial director, later testified that he’d been told by Arif and Sater that FL Group was ‘close to Putin’. But the truth seemed buried in the financial crash.[124]
When the cash crunch tightened further, another Russian tycoon appeared on the horizon to help Trump out. In July 2008, on the eve of the crisis, fertiliser magnate Dmitry Rybolovlev agreed to buy a Palm Beach mansion from Trump for $95 million, more than twice what Trump originally paid for it. (Rybolovlev never lived in the property. He eventually demolished the mansion and parcelled up the land for sale.)
Then, when many of these projects went belly-up after the financial crisis, it didn’t seem to matter much to any of them. First, Bayrock’s development in Fort Lauderdale, on which more than $140 million had been spent on construction, teetered into bankruptcy.[125] In 2009, with the tower still an empty concrete shell, Trump pulled his name from the project, while Bayrock stiffed scores of buyers out of the millions of dollars they’d put down in deposits – as well as the main lender bank. By that time, in any case, Bayrock would appear to essentially transfer a controlling interest in this and other projects to the new FL Group-backed venture.[126] The glitzy development Bayrock had promised in Phoenix, Arizona, had never even got off the ground, locked in conflict with a local investor who alleged Felix Sater had skimmed cash from it.[127] Trump SoHo opened with great fanfare in 2010, but Bayrock and Trump faced lawsuits from buyers alleging they’d been tricked into purchasing units by means of artificially inflated sales figures.[128] Three years later, Trump SoHo went into foreclosure.[129] Four years after it opened in 2012, Alex Shnaider’s Trump Tower in Toronto was still three-quarters empty. By 2016 it was bankrupt, while the development company Shnaider founded to build it had gone bankrupt in 2015, defaulting on a $300 million loan from Raiffeisen Bank, the Austrian bank known for its close connections with the Kremlin’s ruling elite, and earlier with the black-cash transfers involving Diskont Bank.[130]
If it was all a mirage, Trump had nevertheless benefited massively from undisclosed licence payments and management fees, while the likes of Bayrock and Shnaider had been able to funnel money through the projects and, potentially, still make a killing. ‘In a lot of places bankruptcy was very profitable,’ said the white-collar-crime lawyer Jack Blum. ‘You borrow money from banks for the project and then put it in bankruptcy. You still walk off with the construction money.’[131]
Evan as the US property deals came together, the same network dangled a series of proposals for a grandiose Trump Tower in Moscow, where Trump would again make a hefty percentage for lending his name without putting up any of the construction costs. None of these deals would ever get off the ground, but they were enough to keep Trump’s interest – and to keep him and his family travelling to Moscow. In 2005 Sater, through Bayrock, promised a Trump Tower on the site of an old pencil factory on the Moscow river.[132] The land was owned by two bankers, one of whom was on the board of Diskont Bank, the same Moscow bank which had been at the heart of the money-laundering scandal that led to the killing of the deputy central banker Andrei Kozlov.[133] The deal fell apart when the banker fled Russia after the scandal, claiming he’d been forced to conduct financial operations under threat from the security services.[134] But by that time Sater had escorted Trump’s daughter Ivanka and his oldest son Donald Jnr on visits to Moscow. On one occasion, in the icy grey of a Moscow winter in February 2006, he leveraged his connections to arrange a tour of Putin’s Kremlin office for Ivanka.[135]
Soon Tchigirinsky stepped into the fray. The Georgian-born businessman frequently schmoozed with Ivanka and Donald Trump Jnr in Moscow and Mayfair, and proposed an elaborate glass skyscraper designed by Norman Foster, planned to be Europe’s tallest and costing $2–2.5 billion, in Moscow’s upcoming financial district.[136] He said he was willing to give Trump 20 per cent of profits just for the honour of using his name. That project went south in the 2008 financial crisis, when Tchigirinsky’s business empire – leveraged to the hilt – collapsed.
Aras Agalarov, the former Communist Party official who’d been Tchigirinsky’s protégé, was fast to take over. By then Agalarov had long graduated from his roots running one of the first Soviet–American joint ventures, becoming one of Moscow’s biggest construction tycoons, noted for Crocus City, a huge luxury shopping mall and concert hall he’d built on the outskirts of Moscow. In November 2007 he invited Trump to the Millionaire Fair, an annual luxury-goods exhibition he hosted there. Trump ostensibly attended this festival of extravagance and bling, where luxury yachts, diamond-encrusted mobile phones and entire islands were up for sale, to market the launch of his Trump-branded ‘24K Super Premium Vodka’, which came in a bottle decorated with 24-carat gold. This effort at launching a vodka venture in Moscow was about as successful as bringing coals to Newcastle, but it seems that in Agalarov, Trump made a new and fateful acquaintance.
In November 2013 Agalarov again hosted Trump in Moscow, this time for the Trump-owned Miss Universe beauty pageant. Agalarov was legendary for his hospitality – and, according to one Western banker, for the beautiful girls who worked for him. Trump stayed two nights in the penthouse suite of Moscow’s luxurious Ritz-Carlton hotel overlooking Red Square, and emerged beaming. The fact that he hadn’t met Vladimir Putin, as he’d hoped, did nothing to dampen his mood. ‘I had a great weekend in Moscow with you and your family,’ he tweeted to the Agalarovs. ‘TRUMP TOWER – MOSCOW is next.’ The project for a Trump Tower in Moscow had been revived, and Agalarov began talking about plans for a major new business development. Irakli Kaveladze, who’d worked with Agalarov to open hundreds of US bank accounts, led the discussions. Plans were under way to build twelve properties near the Crocus City Mall, a project that would be called ‘Manhattan’, with two towers at the centre of it – one to be named after Trump, the other after Agalarov.[137] Sberbank, the Russian state bank, was meant to be lining up financing.
This was yet another project that failed to materialise. Nevertheless, while Agalarov deepened his relationship with Trump, he was fast climbing up the ranks in Moscow. Putin’s government selected him for a series of prestige state infrastructure projects: first for a 73-billion-rouble contract for a new university in the far east, and then for the construction of two football stadiums for the 2018 World Cup, for 18 billion roubles apiece.[138]
In 2015, when Trump decided to run for the US presidency, Shalva Tchigirinsky was close by. He told me he was with Trump’s close friend and ally Steve Wynn, the casino owner who was to become a major donor for the Trump election campaign and subsequently the Republican Party’s finance chairman, soon after the decision was announced. Tchigirinsky remembers shaking his head with joy, but also with disbelief: ‘Wynn told me, “Shalva, it’s going to last maximum two months, then he will be done. He knows about that. But then in three months he didn’t give up. He was more and more popular, making speeches all over the US. He had so much energy. When I spoke with him, I was surprised by his determination, energy and self-confidence.’[139]
Even as Trump ramped up his bid for the presidency, the same Russian network stepped up its courtship of him. Felix Sater reappeared on the scene almost as soon as the decision was announced. He began working with Trump’s personal lawyer, Michael Cohen, who he’d been close to since his teenage days in Brighton Beach, and whose father-in-law Yefim Shusterman, a Ukrainian-born taxi-fleet owner, kept close ties at the top of the Moscow city government.[140] Together, they began to seek another Moscow Trump tower project, this time even grander than all the proposals that had gone before. Sater boasted that the tower, a hundred-storey glass-encased obelisk that would be Europe’s tallest, would bring Trump $100 million under a licensing deal.[141] In a letter to Cohen in October 2015, he promised to leverage all his Kremlin connections to get it done: ‘I will get Putin on this program and we will get Donald elected,’ he wrote. ‘We both know no one else knows how to pull this off without stupidity or greed getting in the way … I will get all of Putin’s team to buy in on this.’[142] Sater had turned to VTB, the state bank for special Kremlin projects, and then to Genbank, an obscure sanctioned Crimean bank part-owned and run by his childhood friend Yevgeny Dvoskin, the shadow banker behind so many black-cash schemes, for funding. It was as if all scruples about potential conflicts of interest had been flung to the wayside. But for Sater – and for Russian intelligence – that may have been the point. In this analysis, they needed to continue to compromise the candidate. As if to underline that, Sater even proposed that a $50 million penthouse in the tower would be gifted to Putin. This suggestion had zero chance of ever coming off, but it was one that would compromise a future US president. Emails about the proposed tower were still flying back and forth in June 2016, when Trump was officially announced as the Republican Party’s presidential candidate.
At the same time as Michael Cohen and Sater were scheming, Agalarov was working another angle. He set up a meeting between a Moscow lawyer he was close to, Natalia Veselnitskaya, and Donald Trump Jnr. The meeting had been pitched by Agalarov’s son Emin, who’d become a well-known pop star across the former Soviet Union, via Emin’s publicist, a squat former journalist from the north of England named Rob Goldstone, who told Donald Trump Jnr that Veselnitskaya was offering dirt on Trump’s Democratic rival Hillary Clinton. Details of the meeting, which took place at Trump Tower in New York on June 9 2016, emerged after Paul Manafort, the Kremlin-linked American lobbyist who for a time had headed the Trump campaign, and who was present at the meeting, testified to US congressional investigators. Leaked emails later showed that Goldstone had written to Donald Jnr stating boldly that Aras Agalarov had met the ‘crown prosecutor of Russia’ and was offering ‘to provide the Trump campaign with some official documents and information that would incriminate Hillary and her dealings with Russia and would be very useful to your father … It is part of Russia and its government’s support for Mr Trump – helped along by Aras and Emin.’[143] ‘If it’s what you say I love it,’ Donald Jnr wrote back.[144]
If the accounts of most of those who attended are to be believed, however, the meeting turned out to be a bust. Veselnitskaya had merely lobbied to lift the Magnitsky Act, a set of punitive sanctions against Russian law enforcers for human rights abuses, pushed through Congress by the activist American investor Bill Browder following the death in a Moscow prison of his lawyer Sergei Magnitsky. The only dirt Veselnitskaya seemed to have on Trump’s rival for the presidency was some documents showing that a hedge-fund backer of Browder had donated a few million dollars to the Clinton campaign. Even Goldstone seemed embarrassed by the meeting. But the next day Goldstone had a new message from the Agalarovs for Trump, telling Trump’s assistant that Emin and Aras Agalarov ‘have a fairly sizeable birthday gift for Trump’, whose birthday was a few days later, on June 14. A painting, accompanied by a note that no one apart from Trump seems to have read, was delivered shortly afterwards.[145] A few days later, news broke that the Democratic National Committee’s computer servers had been hacked earlier that spring, apparently by a Russian group calling themselves ‘Guccifer2.0’.[146]
The rest is history. One month before the election, WikiLeaks began releasing a series of emails hacked by the Russians from the account of John Podesta, the chairman of Clinton’s campaign. Those leaks seem trivial now, in comparison to what’s been revealed about the workings of the Trump Organization. But the spin that surrounded them bolstered Trump’s populist claims that Washington was a swamp, from which the United States was run by and for the benefit of an insider elite. Ahead of the leaks, close Trump ally Roger Stone tweeted twice that WikiLeaks was about to destroy Clinton.[147]
When Trump won the presidential election in November 2016, at first the Russians couldn’t seem to believe their luck. The scenes in the Russian parliament were uproarious: when a lawmaker ran into the parliamentary session that morning to shout the news that Trump had won, the entire hall leapt to their feet in raucous applause. That evening, champagne was poured. ‘Tonight is a night of Trump for all Americans and the world,’ declared Boris Chernyshev, a member of the nationalist LDPR. ‘Tonight we can use the slogan with Mr Trump: Yes we did,’ he said, citing Barack Obama’s 2008 slogan.[148] ‘This is a great day for American democracy,’ crowed Sergei Markov, one of the Kremlin’s main ideologues. ‘We have to respect American democracy.’ In New York ostensibly for a chess tournament, Putin’s spokesman Dmitry Peskov could barely disguise his exuberance. Putin and Trump, he said, ‘set out the same main foreign policy principles, and that is incredible. It is phenomenal how close they are to one another when it comes to their conceptual approach to foreign policy.’[149]
*
Had Russia pulled off a monumental operation to install its man in the White House? If not, what had been the point of all the cultivation, the dangling of deals by those with links to Russian intelligence ahead of Trump’s vault to the presidency? Was it all meticulously planned, or sheer opportunism? Could they really have a hold on him? According to Yury Shvets, Trump had long been of interest. Approaches were made in July 1987, when he’d first visited Moscow at the invitation of Yury Dubinin, the then Soviet ambassador to the US.[150] He had been wowed by the spectacular architecture, the generous hospitality, and particularly by the women. ‘His interest in Russian girls, in Slavic girls, was always without question very big,’ one senior former KGB officer close to Putin told me with a chuckle.[151]
According to Shvets, the KGB at least believed it had recruited Trump then. Whether Trump was aware of any of this is another question. But soon after his return from Moscow he ran a full-page ad in three US newspapers declaring his opinion that America should withdraw its support for and defence of key strategic allies in Japan and the Persian Gulf. ‘It’s time for us to end our vast deficits by making Japan and others who can afford it, pay,’ he wrote. ‘Our world protection is worth hundreds of billions of dollars to these countries, and their stake in their protection is far greater than ours.’ It was a policy that appeared designed to unravel the US’s position as a global superpower. And according to Shvets: ‘It was a total collection of views and interests forwarded by the KGB.’[152]
We may never know if Russia was providing Trump with cash that long ago. Trump himself has consistently denied ever receiving any funds of Russian origin. ‘I HAVE NOTHING TO DO WITH RUSSIA – NO DEALS, NO LOANS, NO NOTHING!’ he tweeted in January 2017. But what’s clear is that ever since Tchigirinsky first appeared at the Taj Mahal in 1990, a network of Moscow/Solntsevskaya money men and intelligence operatives surrounded him, and that they stepped up the business connection after 2000, when Bayrock appeared on the scene.
Agreement was never finalised for a Trump Tower Moscow. But it didn’t matter whether Trump sealed a deal there or not: it was enough for it to be constantly dangled before him. The US property deals arranged by the same network of Solntsevskaya-linked former Soviet businessmen provided cash flow instead. The same principle applied to the Trump Tower meeting in New York in June 2016. For the Russians, it was enough for Don Jnr to full-throatedly approve the idea of receiving dirt on his father’s opponent from someone sent by the ‘crown prosecutor’ – i.e. a representative of the Russian government. In Yury Shvets’s view, the meeting was all about intelligence games. By then it was an opportunity to further compromise the future president.
We still don’t know how much the Trump Organization may have made from the licensing deals and the 18 per cent equity stake in Trump SoHo, or whether Trump had any other hidden stakes in the Bayrock development projects, or in Alex Shnaider’s Trump Tower Toronto. In one legal deposition in 2008, Sater said the Trump Organization was receiving ‘ongoing’ monthly payments from Bayrock for ‘development services’ for the Trump Tower in Phoenix, even though it never got off the ground.[153] But he did not disclose how much those payments were for, apart from one $250,000 transfer for ‘services rendered’.[154] Without access to Trump’s financial records, for now it’s impossible to know how much Bayrock paid him.
In an interview with the US ABC network, Sergei Millian, a former Soviet émigré who said he had worked as an agent for Trump properties in Florida, bringing in Russian buyers, and to have met Trump and Michael Cohen along the way, claimed to know some of the answers. He said Trump had done ‘significant business with Russians’, and had received ‘hundreds of millions of dollars as a result of interaction with Russian businessmen’. He spoke most of all about Tamir Sapir, the Georgian-born businessman who’d partnered with Bayrock to finance Trump SoHo. Some of the Russians Trump dealt with, said Millian, had lost ‘tens of millions of dollars’ as a result. But while they lost out, ‘Donald Trump made a lot of money doing business with Russians.’[155]
Rumours persisted of further financial support from Moscow via Deutsche Bank, which offered Trump more than $4 billion in loan commitments and potential bond offerings in the years after he faced personal bankruptcy in the early nineties. The German bank became Trump’s lender of last resort when other Wall Street banks shunned him as too great a financial risk. After 2011 its private banking arm provided more than $300 million in loans to Trump projects, including for the Trump International Hotel and Tower in Chicago and the Doral Golf Resort and Spa in Florida. This caused great controversy within the bank, because Trump had already defaulted on a $334 million payment on a $640 million loan from Deutsche’s commercial banking arm for the Trump Tower in Chicago. Deutsche had always maintained a special relationship with Putin’s Kremlin. Under Charlie Ryan, who’d first met Putin in St Petersburg in the early nineties, its Moscow arm was home for the corporate accounts of Putin’s closest allies – Timchenko, Rotenberg and Kovalchuk – while it had cultivated close relations with the powerful Russian state bank VTB, employing the son of its head, Andrei Kostin. Josef Ackerman, the then Deutsche Bank chief, hobnobbed with Kostin and frequently consulted him. Deutsche Bank Moscow later became the vehicle for the more than $10 billion in illicit transfers through the mirror-trade scheme of which Felix Sater’s close friend Yevgeny Dvoskin was an architect.
In the beginning, Trump’s business was probably no more than a convenient vehicle through which to funnel funds into the US. ‘I don’t think this was a long-planned strategic operation,’ said Yury Shvets.[156] But at some point Trump became a political opportunity.
Putin’s security men revelled in Trump’s victory. To many, it seemed like revenge for the Soviet collapse. ‘While the West was playing James Bond … we turned our attention to gaining respect,’ said Konstantin Zatulin, a prominent Russian lawmaker. ‘When the West thought the Cold War competition was over, they lost respect for their opponent. Now they are waking up to this again.’[157]
After the dust had long settled, Putin could not help expressing his delight. Populist leaders were also rising across Europe, and with Trump’s election and Britain’s looming departure from the EU, the post-Cold War order was unravelling. ‘The liberal idea has become obsolete. It has come into conflict with the overwhelming majority of the population,’ Putin told the Financial Times in June 2019. Liberals, he said, ‘cannot dictate anything to anyone just like they have been attempting to do over the recent decades’. Even before Trump’s victory, Vladimir Yakunin for one had tried to draw parallels between the rising tide of populism in the West and the demands for the dismantling of the Communists’ political monopoly that heralded the Soviet collapse. In fact, the two processes could not be more different, but Yakunin tried to argue that the Western elite was almost as ageing and distant from the population as the Soviet elite had been in its last days. ‘Brexit and Trump should be useful in that they should cause concern in the political elite and show them that they have gotten too fat,’ he said in the summer before Trump’s election. ‘They have lost the ability to react to political situations, and they have separated themselves from the masses … It is a natural process. When the elite ages, new forces arrive to replace them.’[158] After Trump’s election, Yakunin delighted in what he saw as the defeat of the liberal world order: ‘The neocons who thought they controlled the whole world, that they had the whole world by the balls, suddenly got hit in the face so hard that everything shook for them. This system they have built is not able to exist when there is an alternative. The worst thing for them is an alternative. Putin is an alternative. The appearance of Trump is an alternative. The shaking Europe is an alternative.’[159]
Russia, he eventually admitted, had, like any other world power, used its secret services to take advantage of existing weaknesses in the West. ‘All intelligence services carry out active measures,’ he said. ‘I know what I’m speaking of. Of course, whenever there are conflicts each side tries to find an advantage. The Germans do this. The French do this. The Russians do this. There was never the aim to influence anyone. There was the aim to raise Russia from its knees. This can be done through conducting an independent policy … For this you need to have a circle of friends.’ This, he said, was a process not dissimilar to Cold War times, when the Soviets funded the peace movement in the West. ‘When there was the Soviet Union, you remember how powerful the peace movement was. The Soviet Union financed this movement. Now we have an absolutely different configuration. The problem is, our politicians have not yet understood that there will be no victors in this battle,’ he reflected, slowly shaking his head.[160]
Such ‘active measures’ had led to a backlash. In the US, allegations that Russia had a hand in Trump’s rise were under investigation. The unwitting disclosure by a Trump foreign policy adviser that he knew in advance that the Russians had access to Hillary Clinton’s emails led the FBI to open an investigation, while Trump’s firing of FBI director James Comey only exacerbated the situation. It led to the appointment of a special counsel to investigate Russia’s efforts to interfere in the election, including whether Trump had obstructed justice when he fired Comey, and possible collusion between Russia and the Trump campaign. The US intelligence community concluded overwhelmingly that Russian military intelligence had hacked the Democratic National Committee’s servers, and had sought to sway public opinion in Trump’s favour through a social media campaign – findings that led the more hawkish members of Trump’s administration to impose increasingly stringent sanctions on the Russian economy and its tycoons. For more than two years, allegations of Russia’s involvement dominated the headlines. Decades of operations were being slowly unpicked.
For Yury Shvets, the Putin regime’s campaign had been a disaster, a heavy-handed, flat-footed and opportunistic operation that, he sniffed disdainfully, was about as subtle as a kolkhoz, a giant Soviet collective farm filled with peasants. ‘How could this be a success?’ he exclaimed. ‘They turned the whole of Russia into a global pariah!’
*
But despite the new sanctions imposed by his administration, Trump was still a president who answered many of Putin’s KGB men’s dreams. He was driven by his own long-standing America-first sensibilities, as well as his chaotic decision-making style. But he’d also immediately made clear his deference to Putin and his circle. In an unprecedented Oval Office meeting at the start of his presidency he told Russia’s foreign minister, Sergei Lavrov, and Russia’s ambassador to the US, Sergei Kislyak, that he was not worried about the US intelligence community’s claims of Russian interference in the presidential election, since America did the same elsewhere.[161] Soon he began to pick away at the Western order, at the stable alliances that had dominated since the end of the Cold War. During his campaign he’d argued that NATO was obsolete, while suggesting that he might recognise Crimea’s annexation by Russia. Following his election, he actively encouraged Britain’s prime minister Theresa May – and then her successor Boris Johnson – to deepen the UK’s split from Europe, threatening to withhold a trade agreement with the US unless they did so. He constantly badgered NATO member states with complaints that they were not paying their dues. His relations with German chancellor Angela Merkel, a bastion of the global liberal order, were testy at best, and he criticised her over her immigration policy. In 2019 he would withdraw US troops from Syria, a devastating move that abandoned the US’s Kurdish ally and left Russia and Iran to fill the resulting power vacuum. He was erratic, unpredictable, and his every statement seemed to undermine American leadership. Under his watch US democratic institutions were eroded, and US society became ever more divided. Foreign policy was deployed as an instrument to trade Trump’s own political interests. The former US ambassador to Ukraine, recalled from her post by Trump, said the State Department was being ‘attacked and hollowed out from within’.[162] By 2019 Trump was even publicly lobbying for Russia’s reinstatement in the G8.
Shalva Tchigirinsky, for one, was delighted by Trump’s effectiveness. ‘Everything he’s promised he’s doing,’ he said when we met in May 2018. He found it almost impossible not to gloat. An old Soviet dream that Europe, left without US military support, would dissolve into battle between its nation states, could even become reality. ‘Then there will be nothing left but for the Russians to come and take all the women,’ he laughed.[163]
Tchigirinsky, who remained in contact with senior Russian foreign-intelligence figures such as former foreign minister Igor Ivanov, seemed to be joking, of course. But there was an edge to his laughter. The world was suddenly in a dissonant new reality, where everything seemed to be turned on its head. When Trump finally met Putin, for their first summit in Helsinki in July 2018, many who’d dismissed as media hoopla the allegations that the Putin regime had some kind of hold over him were confronted by a stark picture. There was the US president before the whole world, apparently scraping to Putin, full of praise for how he’d conducted the recently-concluded football World Cup, kowtowing to the Russian leader as a ‘good competitor’. There was Trump directly contradicting the conclusions of his own intelligence agencies about Russian interference in the 2016 presidential election, preferring what he called Putin’s ‘extremely strong and powerful’ denial.[164] Facing a packed press hall, a smiling and at times smirking Putin took the lead in almost everything. Questioned about Russia’s attempts to influence the US election, he shrugged them off as the actions of ‘private individuals’, pointing in particular to the indictment by US prosecutors of a close ally of his, a former caterer nicknamed ‘Putin’s chef’, Yevgeny Prigozhin, and his Concord Management company. Prigozhin was accused of running an internet troll factory that had been behind a sweeping online effort to influence American voters to support Trump. ‘They do not represent the Russian state,’ Putin claimed. ‘This is a matter of private individuals, not the state … You have many people, including those with fortunes worth billions, Mr Soros, for example, and they are meddling everywhere. And is this the position of the American state? No. It is the position of a private individual. It’s the same here.’[165]
Putin was being facetious. The use of the term ‘private individuals’ was a typical KGB tactic that allowed plausible deniability for any Kremlin involvement, and it went to the heart of how Putin’s regime operated. By then under his KGB capitalism, all of Russia’s significant so-called ‘private’ businessmen had become agents of the state. Since Mikhail Khodorkovsky’s arrest in 2003, their independence had increasingly been taken away from them. The financial crisis of 2008 had deepened the process, with many of the country’s billionaires dependent on state bailouts. In 2014, as Russia headed for a standoff with the West, they were given the final signal, with even a loyal billionaire being forced to turn over his business to the state. The tycoons once known as powerful oligarchs were now the vassals of Putin’s Kremlin, their every move closely followed, most of their telephones bugged. The collection of kompromat to keep them on a tight leash had become big business for law enforcement. Many tycoons sought to stay in Putin’s favour by carrying out tasks for him. ‘These are cats that like to bring dead mice to the Kremlin,’ said Mark Galeotti, an expert in Putin’s influence operations at the Institute of International Relations in Prague.[166] They needed Putin’s approval to get ahead in business, and also to survive attacks from law enforcement and rival oligarchs. ‘All of them depend on the number one,’ said a close associate of one billionaire. ‘Russia is the main place they make money, and they all depend on the nod from the number one for that.’[167]
They had become part of a feudal system in which Putin’s role as the ultimate arbiter between rivals fighting for business was the source of his power. Almost any deal above a certain level – some said over $50 million – required Putin’s approval to go ahead, although one senior Western banker said that sometimes he intervened in deals worth less than that: ‘What absolutely floored me is that Putin got involved in a deal in the $20 million range.’ That particular case involved a businessman who wanted to sell up and leave the country. ‘But he was told he wasn’t going anywhere, and had to keep his company,’ said the banker.[168] Under such a system, it is not difficult to imagine Russian businessmen volunteering to cultivate foreign politicians on the Kremlin’s behalf, in return for Putin’s nod for a piece of land or a development licence, or merely to stay out of jail.
And it was a system where, especially after the annexation of Crimea, Putin’s men had given a clear signal about where they wanted things to go. ‘The idea is very clear,’ said one senior Russian businessman. ‘The West is going to destroy Russia because we are Orthodox … We have reserves that they want to take from us. We have the most talented sportsmen, artists and ballerinas, and we are envied. We have the most advanced people, the most intelligent. By now each part of the machinery deals with its own business, and the machine works by itself. Everyone does what they can.’[169]
Putin and his KGB men had gone far. The networks created on the eve of the Soviet collapse to funnel assets into the West had been preserved, and filled with new cash. The alleged organised-crime associates like Boris Birshtein were still active and within reach, while the ostensibly more respectable businessmen who’d followed them, like Shalva Tchigirinsky, were also still deeply aligned with the Russian state. If, for a brief period under Yeltsin, there had been a risk that some of these networks might spin out of control, under Putin the security services had reasserted their primacy. In Tchigirinsky’s case, for instance, Putin’s security men had a hold over him. His brother Alexander remained in Moscow after Tchigirinsky left Russia again following the 2008 financial crisis. Tchigirinsky told everyone that he was in exile, and that he no longer spoke with his brother, with whom he had fallen out. But he showed me a set of messages they’d recently exchanged, which included photos of the retirement ceremony of a senior Moscow city official which Alexander had attended, and Alexander’s property business depended almost entirely on maintaining good relations with the Kremlin.[170] The black-cash networks laid down so long ago through Mogilevich and his associates, through the Solntsevskaya, and through Sam Kislin, Tamir Sapir, Aras Agalarov and Tchigirinsky were still being deployed. Such security service networks, said Thomas Graham, the director for Russia on the US National Security Council under George W. Bush, ‘are never abandoned. They always remain in place.’[171]
Even beyond this network of Moscow money men that had expanded to include the new generation from Brighton Beach (Sater and Dvoskin), Putin had developed other levers of influence. There was Dmitry Rybolovlev, the fertiliser tycoon who overpaid for Donald Trump’s Palm Beach mansion. There was Roman Abramovich, the former oil magnate who in recent years had switched his focus from London to New York, where his second wife (until their August 2017 divorce) bought a brownstone mansion and they wined and dined Trump’s daughter Ivanka, her husband Jared Kushner and his brother. ‘I know Putin sent Abramovich there to continue the influence campaign,’ said one former close associate.[172] Then there was Viktor Vekselberg, the mandarin-like head of the Skolkovo high-tech hub who spent some of the fortune he’d acquired in Russian oil buying up American assets, including control of CIFC, one of the US’s largest managers of collateralised loan obligations, which managed $14 billion in private debt, making it a vehicle of potentially untold leverage and influence over indebted American businessmen. ‘Each one of the top ten Russian businessmen is doing something,’ said a former close associate of one Russian billionaire. ‘They have so much cash. They can buy anyone. The US was swanning around about how they have Bill Gates and how they have Mark Zuckerberg, and Russia came along and just destroyed [the illusion]. The Russians are always cleverer. On a cold level, Putin is doing a fantastic job for Russia. Any way they can get around the rules, they do. They always have three or four different stories, and then it all just gets lost in the noise.’ Putin’s people, he said, had long been active on multiple levels. ‘For them, it’s not big money if you give $3 million to Idaho for a health centre and help get a guy elected. It’s cheap.’[173]
Dmitry Peskov, Putin’s powerful press secretary who’d previously served abroad as a diplomat, had once boasted that the efforts of Robert Mueller, the special counsel appointed to investigate Trump’s ties to Russia, would never get anywhere. ‘In Russian, it’s called passing water through a sieve,’ he said. ‘That’s exactly what the process looks like.’[174] He turned out to be pretty much right. Former KGB officer Yury Shvets had nothing but scorn for the published results of the Mueller investigation. ‘It was no more than a collection of interviews,’ he said. What was published contained zero counterintelligence. ‘How can you investigate Trump without this?’[175]
The Mueller investigation, in the public pronouncements of Trump and the Republican Party, appeared to have fizzled out. But it became clear that parts of the same network of Moscow money men were continuing to operate. As the 2020 US presidential election approached, some of them appeared still to be attempting to steer things Trump’s way. Sapir’s business partner and Tchigirinsky associate, Sam Kislin, had forged close relations with Rudy Giuliani, the former New York mayor who by that time was acting as Trump’s personal attorney. Kislin liked to boast of his friendly relations with Trump, and he’d funnelled substantial donations to Giuliani’s mayoral campaign in the nineties.[176] By 2019 he was urging Giuliani to investigate allegations of corruption in Ukraine,[177] and was calling for Trump’s administration to investigate the former Ukrainian president Pyotr Poroshenko, who’d led the country through its bitter war with the Kremlin-backed separatists and Russia’s annexation of Crimea. He was doing so at a crucial time, when Giuliani was actively seeking dirt in Ukraine against Trump’s potential Democratic rival in the 2020 presidential race, Joe Biden – and Kislin appeared to be opening doors for him there.[178]
Then there were two Soviet-born businessmen, Igor Fruman and Lev Parnas, eventually arrested on charges of conspiring to circumvent laws against foreign influence, who had also befriended Giuliani and – one of them claimed – Trump.[179] They’d acted as middlemen, introducing Giuliani to three current and former Ukrainian prosecutors with information about corruption allegations surrounding a Ukrainian gas company, Burisma, on the board of which Joe Biden’s son Hunter had sat.[180] At the same time, they also began trawling for anything that might amplify a pet theory peddled by Trump that Ukraine had worked with the Democrats in 2016 to stir up the Kremlin–Trump campaign collusion claims.[181]
The two men, who splurged tens of thousands of dollars on limousine services and stays at Trump hotels, and funnelled hundreds of thousands into Trump-aligned super PACs, turned out to have been working for Dmitry Firtash,[182] the gas tycoon who’d taken over the Turkmenistan–Russia–Ukraine gas trade with the backing of the Kremlin and Mogilevich, creating a slush fund that corrupted a series of Ukrainian presidents. By then, Firtash had been under house arrest in Vienna ever since 2014 as the US sought his extradition on bribery charges. But still his reach stretched far – first into Europe and then into the US, where Parnas had begun working in 2019 as an interpreter for him. The two men boasted Firtash was funding their lavish lifestyle[183] while federal prosecutors in Chicago had noticed Parnas and Fruman during their investigation into the Firtash bribery case.[184]
The Russian black-cash networks seemed to be digging in ever deeper. Their activities, combined with Trump’s disregard for the institutions and codes of US democracy, were leading to a systemic standoff. When Trump was caught on a July 27 2019 telephone call asking Ukraine’s new president, Volodomyr Zelensky, to meet Giuliani and press ahead with an investigation into Biden, to many his actions represented an abuse of office. Trump was directly requesting a foreign power to assist him in the 2020 election. Trump appeared to suggest that US military assistance for Ukraine could be contingent on compliance with his request. For many, such actions represented a degradation of democracy, and an undermining of everything US diplomats had sought to stand for ever since the Soviet collapse. The US government had long sought to bolster democracy in Ukraine and protect it from Russian domination, seeking to eliminate the corrupt schemes that had undermined its governance. This ‘irregular policy channel was running contrary to the goals of longstanding US foreign policy’, said William Taylor, the top US envoy to Ukraine at the time of the call.[185] The only way to deal with it was through an impeachment probe.
The Russians appeared delighted with the chaos, yet also fearful about where impeachment might lead. The scandal exposed both the fragility of the American political system and how it had been corroded from within. ‘It looks like the whole of US politics is for sale,’ said a former senior Russian banker with ties to the security services. ‘We believed in Western values … But it turned out everything depended on money, and all these values were pure hypocrisy.’[186]
But from the beginning the Russian black-cash networks had, in part, been embedded to erode the system, and exacerbate corruption in the West. For one senior Russian businessman, Putin’s Russia posed an increasing threat to Western liberal democracy. In the impeachment probe and the 2020 US presidential race, the clash between liberal values and a Putin-style corrupt authoritarian order was reaching a denouement. ‘Putin understands that Russia can spend any amount of money it wants [on sowing chaos in the West]. The obschak, the black-cash box, has become the size of the budget, and they can give orders to the oligarchs as well. It is a mafia that has seized power, and the state is acting as the mafia.’[187]
The system of KGB capitalism was still working. The networks were still in place.