RESET CRACKS AND SKOLKOVO HACKS
The Russian-Silicon Valley
Tech Transfer
“Our critics constantly labeled us Russophobes, but I wanted to prove that some of us, including Obama, were Russophiles. How could a man with a daughter named Sasha not love Russia!”1
—Michael McFaul, From Cold War to Hot Peace, 2018 memoir
Michael McFaul was a tenured Stanford professor before Obama hired him as senior director for Russian affairs on the National Security Council. He had lived in Silicon Valley for most of his adult life apart from a few stretches of living in Russia while studying abroad at a Soviet university in 1983.2
Now, in June 2010, McFaul would be giving Russian President Dmitry Medvedev a tour of his West Coast stomping grounds. As the “architect” of the reset, McFaul had planned the trip for nearly a year with three objectives that he wanted to achieve. First and foremost, he wanted to show the results of the reset. Second, he wanted to emphasize the administration’s current engagement with Russia. Third, he wanted to highlight its expanding Russian agenda (focusing on economic ties).3
Nuclear cooperation with Russia was the number one priority of the reset based on the sheer number of nuclear dealings it achieved (such as New START, 123 Agreement, Uranium One, and cooperation on Iran, among other things). Having worked tirelessly to accomplish the nuclear side of the reset, McFaul was excited to pivot to an area more within his wheelhouse: academia and technology.4
McFaul personally lobbied for the Russian president to visit Stanford (McFaul’s alma mater) along with Silicon Valley. Secretary Clinton officially arranged the trip a few months prior on her April 2010 visit to Moscow. Though they did not know it at the time, Medvedev’s June 2010 visit would be the final “full-fledged Russian-American summit of the Obama era.”5
Cracks were already beginning to form in the reset, despite Obama’s and McFaul’s desperate insistence to the contrary.
Medvedev’s trip to California was a success. He had dinner with some of the “founding fathers” of Silicon Valley. The next day, Steve Jobs gave him the newest iPhone 4G model, which had not yet been released to the public. (Two months later, Putin’s old KGB comrade Sergey Chemezov unveiled a 4G Russian prototype that fueled speculation it was an iPhone copycat.)6
Medvedev also met with Cisco CEO John Chambers and Google CEO Eric Schmidt, both of whom pledged to increase substantially their Russian investments. Medvedev opened a Twitter account and soon began tweeting Obama and California Governor Arnold Schwarzenegger.7
In addition, McFaul was able to secure a private meeting with Medvedev for his former Stanford students at a nearby coffee shop. Several Russians working in the Valley attended. At Medvedev’s speech to McFaul’s alma mater, the tech-savvy president famously read his remarks from an iPad. McFaul was loving every minute.8
Days earlier and three thousand miles away, Obama was in the White House Situation Room mulling what to do about the Russian spy ring that his intelligence chiefs had just brought to his attention. The Russian spies included a beautiful red-haired woman operating under the name “Anna Chapman,” and at least one of the spies was preparing to flee the country. Something had to be done or the FBI and CIA might lose them.9
Medvedev was in Silicon Valley promoting a high-tech project known as “Skolkovo,” which was Russia’s attempt to re-create Silicon Valley. At the time, no one knew (not even Chapman) that Skolkovo would become the next mission for the Kremlin’s “sexy spy.”10
McFaul, a major proponent of the Skolkovo project, recalled Medvedev’s promotion in his memoir:
At the time, Medvedev was trying to jump-start Skolkovo, a high-tech business area just outside Moscow. Most Americans rolled their eyes at the idea of a state-led Silicon Valley in Russia, but I was a supporter. I knew the odds were long for the project, but reasoned that it could be in the United States’ interest to have the Russian government invest in high tech and education.…
I also saw business opportunities in Russia for our high-tech firms. Cheerleading for Skolkovo seemed like an easy call.11
When Medvedev arrived in Washington, Obama did not want to offend him by bringing up the Russian spies who had infiltrated the highest levels of Washington (including Secretary Clinton’s inner finance circle). Instead, Obama allowed Chapman and the others to operate just a bit longer and showed Medvedev around Washington while the Russian president “went on and on about the Valley’s energy.”12
At a highly publicized lunch meeting, the two leaders shared a small table at a cozy restaurant called Ray’s Hell Burger. McFaul was worried that the Russians would feel offended by the casual venue, but in the eyes of Obama’s team the “Burger Summit” was deemed a huge success. Next up on the two leaders’ agenda was meeting the titans of American industry at the U.S. Chamber of Commerce.13
At home in Moscow, Putin may have found the PR stunt sophomoric, but he must have appreciated the subsequent meeting that Obama convened with top American technology companies who pledged their support (and funds) to Russia’s new cyber project.
The companies were also excited by the package of incentives Medvedev offered to “stimulate” participation in Skolkovo. As McFaul put it, “The American Chamber of Commerce did not normally lead cheers for Obama. On this day, however, its members embraced him with glee.”14
But it was not such a joyous time for some Obama officials. As the Burger Summit and the deal-striking meetings were taking place, Obama’s hawkish foreign policy and intelligence veterans (like CIA Director Panetta and FBI Director Mueller) were nervously hatching plans to deport the illegal Russian spies.
Furthermore, Obama’s critics (particularly from human rights groups) did not like the president’s choice to “tone down” criticism of Russia’s atrocious human rights record—a decision McFaul advocated in 2009, in stark contrast to the Bush administration’s vocal criticism.15
Undeterred, McFaul and the rest of the Obama administration were able to convince themselves that Medvedev was changing Russia for the better—and that Putin, the ex-KGB elephant in the room, could be ignored a bit longer. There were still more deals to be made. Clinton had selected the perfect team to get them done.16
The Globalist Deal Makers
One week before Medvedev’s visit, State Department Undersecretary Robert Hormats delivered the keynote address at the St. Petersburg International Economic Forum in Russia. There, he reiterated the State Department’s commitment to bolstering economic partnerships with Russia and welcomed Russian investment in the U.S. (and, as mentioned, he gave a wink to the secretive CFIUS review process that Russian nuclear oligarchs would soon find themselves navigating).17
Hormats was one of the State Department officials directly responsible for reviewing CFIUS transactions and later admitted responsibility for the Uranium One approval. When the Uranium One scandal exploded a few years later, Hormats, like his colleague Jose Fernandez, protected his former boss Hillary Clinton: “As I recall, the Secretary of State never discussed this case with me or intervened with me about it in any way.”18
In an opinion article published after his visit to St. Petersburg, Hormats extolled the virtues of increased collaboration with Russia. He praised Medvedev and his team at the Kremlin for making “innovation a high national priority, to diversify the Russian economy and reduce dependence on energy and raw materials.”19
Hormats specifically identified the Skolkovo project as a good way for American businesses to help Russia diversify its economy. He hoped that Skolkovo would “inspire other centers of innovation to flourish.”20
Hormats had pushed for controversial deals like Uranium One and Skolkovo (which many believed were against American interests) his entire career. Though hardly a household name, he had been a pillar of the Washington establishment since 1969, advising President Jimmy Carter, Zbigniew Brzezinski, Brent Scowcroft, and Henry Kissinger through various posts in the State Department. He left State in 1982 to work for Goldman Sachs, spending twenty-five years there as vice chairman.21
In 1993, President Bill Clinton appointed Hormats to the Board of The U.S.-Russia Investment Fund—a shadowy entity that capitalized on the crooked privatization schemes under Yeltsin.22
Throughout President Clinton’s tenure, Hormats championed Goldman’s preferred policies of “widescale deregulation.” This meant departing from a Cold War mindset by granting China most-favored nation status, sponsoring China’s accession to the WTO, and bringing China and Russia into the West’s economic embrace.23
Before rejoining the State Department in 2009, Hormats served as a director at the Council on Foreign Relations (CFR) from 1991 to 2004. His official title in the Clinton State Department was Undersecretary of State for Economic Growth, Energy, and the Environment. In this role, he was the direct supervisor of CFIUS decider Fernandez and worked closely with McFaul.24
Like many of Obama’s appointees and Clinton’s State Department advisors, Hormats, McFaul, Fernandez, and Rosatom’s CFIUS agent Ted Kassinger were card-carrying globalists. Some associate the term “globalist” with wild conspiracy theories. In reality, self-described globalists are proud of the label.
According to the founder of The Globalist, a publication to which Hormats contributed his insights, “Globalists are patriots who have a worldview that is not limited to the political boundaries of one state,” and “by no means an elite circle of business or political leaders determined to push forward their agenda in a rapid-fire fashion.”25
The Obama administration figures in charge of crafting and executing U.S. foreign investment and energy policy shared this common linkage: they were proud globalists and members of the CFR—an international membership organization where globalists seem to congregate.26
Like Kassinger, Hormats had advised the CFR on foreign investment in the U.S. before joining the Obama State Department. He also contributed to a CFR report after the Dubai Ports fiasco that warned legislators to “use a scalpel, not a chain saw” in their CFIUS reforms.27
The report recommended looser restrictions and an open investment stance, stating that “when investments are blocked, politicized, or unnecessarily delayed, the United States sends a negative signal to the rest of the world about the openness (or lack thereof) of its markets.”28
When Secretary Clinton tapped Hormats to be her economic guru, she likely knew that he would push globalist policies that favored foreign entities like Rosatom, just as she likely knew that Kassinger would advise such entities. Both men had been openly working for foreign and multinational interests for decades. It was not a secret.
As Clinton’s undersecretary, Hormats was in frequent contact with Russian officials, oligarchs, and their lobbyists seeking favorable treatment from Obama. The Russian Federation retained Ketchum Inc., which paid another lobbying firm, Alston & Bird, to meet with Hormats and Vice President Biden’s advisor, Antony Blinken, in September 2011.29
Russia’s lobbyists sought to convince Hormats and Blinken to facilitate meetings for Igor Shuvalov, whom Putin had tapped to be Russia’s chief economic negotiator.
According to a Senate report, Shuvalov was central to formulating Putin’s “energy superpower” strategy and the weaponization of energy deals.
Mr. Putin’s Kremlin employs an asymmetric arsenal that includes military invasions, cyberattacks, disinformation, support for fringe political groups, and the weaponization of energy resources, organized crime, and corruption…
As Putin’s sherpa to the 2005 G8 summit, Shuvalov developed a new energy policy approach for Russia and proposed that the Kremlin make the European countries an offer at the upcoming G8 summit:
Moscow would take care of ensuring a flow of fuel sufficient to supply every house in Europe, and in return Europe would show friendship, understanding, and loyalty…. [emphasis added]30
According to the Senate report, this strategy would “make Putin the energy emperor of Europe.”31
Meanwhile, shortly after meeting Hormats in September 2011, Shuvalov made headlines for being linked to questionable deals involving the purchase of U.S. assets by his own offshore holding companies.32
So, when Clinton put Hormats in charge of the “Innovation Working Group” of the U.S.-Russia Bilateral Presidential Commission (BPC)—the group that dealt specifically with Skolkovo—it was clear to Western globalist investors and Russian oligarchs alike that this was a man they could do business with.33
Governor Schwarzenegger threw his support behind the Russian technology transfer project as well.
Just days before CFIUS approved the sale of Uranium One, Putin dispatched some of his top economic and business leaders to San Francisco to promote Skolkovo at an event sponsored by the U.S.-Russia Business Council. A Russian venture company paid Chicago-based lobbying firm Edelman Imageland LLC, which in turn engaged Governor Schwarzenegger, to deliver the pro-Russian talking points.34
Schwarzenegger’s speech, just ten days after touring Moscow for an official visit, was largely about climate change and highlighted nuclear power as “a non-CO2-emitting energizer.”
The “Governator” praised Obama and Medvedev’s efforts to reduce nuclear weapons:
But everyone is trying to—every country is kind of concerned about how do you get—how do you reduce that? Because there are those in America that are trying to flex their muscles and pretend they’re ballsy by saying, “we’ve got to keep those nuclear weapons.” That’s very rugged, when you say that. It’s not rugged at all; it’s an idiot that says that. It’s stupid to say that.35
Schwarzenegger also advocated for admitting Russia to the World Trade Organization (WTO)—a top priority for Medvedev given the trade advantage WTO members receive.36
At the Burger Summit, Obama had promised to elevate Russia into the WTO within three months, but there were several delays. Georgia objected because of its 2008 conflict with Russia, and in 2009 Putin “abandoned” his WTO aspirations, saying he wanted joint entry with Kazakhstan and Belarus. Nevertheless, Russia would officially join the WTO in 2012 and Kazakhstan in 2015.37
In his speech, Schwarzenegger showered Medvedev with praise, calling the Russian leader “a great visionary” and an “action president.” He called Russia a “gold mine” for foreign investors and pledged, “We want to do what we can as Californians and as Americans because it is in our interest to make Russia successful…. We don’t see Russia as an enemy. We see Russia as our friend.”38
This mindset surrounding the reset allowed Skolkovo (and related espionage operations) to flourish, both in Moscow and in Washington.
Skolkovo: Russia’s “Silicon Steppe”
Skolkovo was perhaps the Kremlin’s boldest maneuver yet. Envious of America’s technological success, the Russians sought to re-create the West Coast high-tech industrial hub in the suburbs of Moscow. But unlike the bottom-up innovation that defines Silicon Valley, where computer geniuses like Bill Gates and Steve Jobs pinched their pennies and built the first personal computers in their garages, Skolkovo was a top-down state-run project that sought to replicate decades of trial and error seemingly overnight.
It was also a ploy to steal American intellectual property and transfer technological secrets to the Kremlin.
Former federal prosecutor Andrew C. McCarthy described the Skolkovo scam best: “The project was like an espionage operation in broad daylight, openly enhancing Russia’s military and cyber capabilities.”39
Indeed, multiple Defense Department (DOD) agencies and the FBI condemned Skolkovo as an espionage front that posed a clear and present danger to U.S. national security.
In 2012, the U.S. Army Foreign Military Studies Program at Fort Leavenworth examined the security implications of Skolkovo and concluded that Skolkovo was an apparent “vehicle for worldwide technology transfer to Russia in the areas of information technology, biomedicine, energy, satellite and space technology, and nuclear technology.”
The Kremlin and the Obama State Department praised the civilian endeavors of Skolkovo and its “clusters”—information, energy, biomedical, and even space technology (among other seemingly innocuous initiatives). The promoters of Skolkovo in Moscow and Washington conveniently neglected to mention the military applications.
According to the Army’s Fort Leavenworth report:
The Skolkovo Foundation has, in fact, been involved in defense-related activities since December 2011…the [Kremlin’s] operation of Skolkovo and investment positions in companies will likely provide [Russia’s] military awareness of and access to [American] technologies.40
The FBI’s Boston field office sent warning letters to American companies involved with Skolkovo alerting them to the possibility that they had fallen prey to a Russian espionage trap. Assistant Special Agent in Charge Lucia Ziobro went so far as to publicly announce that Skolkovo “may be a means for the Russian government to access our nation’s sensitive or classified research, development facilities and dual-use technologies with military and commercial applications.”41
DOD’s European Command (EUCOM) posted an alert that stated, “Skolkovo is arguably an overt alternative to clandestine industrial espionage—with the additional distinction that it can achieve such a transfer on a much larger scale and more efficiently.”
Then EUCOM asked the obvious question: “why bother spying on foreign companies and government laboratories if they will voluntarily hand over all the expertise Russia seeks?”42
Former National Security Agency analyst John Schindler was a Navy officer and professor at the War College with deep contacts in the Pentagon. “It’s an obvious Kremlin front,” Schindler’s Pentagon source told him regarding Skolkovo. “In the old days, the KGB had to recruit spies to steal Western technology, now they do deals with you. The theft is the same.”43
Skolkovo publicly announced numerous events and programs involving some variation of the word “hack,” including a cash prize “Hackathon,” a “RoboHack,” and the RoboCenter even had a place for Skolkovo visitors to work called a “hackspace.”44 Each event was, on the surface, rather benign, but the shadowy appeal to actual Russian hackers was undeniable.
Less benign was Skolkovo’s promotion of a hacker conference in St. Petersburg called Positive Hack Days (PHD).45 The hacker conference made a valiant effort to appear innocuous by stating (in the header), “We do not teach hacking, we learn to protect by understanding the mechanisms of hacking…”46
However, the PHD hacker conference clearly did teach hacking. Each of the seminars had obvious cyberespionage implications, such as Sergey Gordeychik’s “How to hack into telecom and stay alive” class and Andrey Kostin’s “PostScript: Danger!” class on hacking PCs—both at noon.47
Alexander Peslyak taught “Password protection: past, present and future” at 2 p.m.
The “Using radio noise for hacking…” seminar at 3 p.m. certainly sounded ominous.
Also at 3 p.m., Miroslav Stampar taught “Data Leaks Through DNS,” and advised attendees to “use sqlmap.”48
More alarming still, the hacker conference was sponsored by Kaspersky Labs—accused of “helping the Kremlin spy on the U.S. intelligence agencies as part of its 2016 election meddling.”49
Kremlin-owned Sberbank (Russia’s oldest and largest bank) later became a sponsor of the PHD hacker conference. Sberbank was particularly close to Putin and bankrolled his oil giant, Rosneft, during the plunder of Yukos oil in 2004.50
Sberbank also provided financing for Rosatom investments and enterprises. When Sberbank underwrote a Rosatom affiliate bond offering in 2009, Putin’s nuclear giant obtained newly available funds to finance its investment in Uranium One.51
“Sberbank is the Kremlin,” according to a former senior U.S. intelligence official. “They don’t do anything major without Putin’s go-ahead, and they don’t tell him ‘no’ either.”52
The Kremlin—through Sberbank and other entities—sought to influence the Obama administration. They did so through Obama’s right-hand man (and longtime Clinton “fixer”): the legendary political guru John Podesta.
Podesta Incorporated: Kremlin Lobbyists and Russian Agents
Obama tapped John Podesta as a top advisor and Counselor to the President in December 2013. Podesta would later become Hillary Clinton’s campaign manager and oversee the campaign’s unexpected and spectacular defeat, which he, Clinton, and their allies all blamed on “RUSSIA!”53
Podesta’s and Clinton’s outrage over Putin’s alleged collusion in 2016 rang hollow. Indeed, as one Hudson Institute fellow surmised, the “sinister yarn” that Trump’s opponents wove was merely “a textbook case of denial and projection.”54
Podesta profited substantially from Kremlin-backed projects while working on Obama’s reset. And his brother Tony (and the eponymous lobbying group they cofounded, Podesta Group) was one of the Kremlin’s favorite agents in Washington.55
John Podesta met with newly minted Russian President Vladimir Putin in 2000. Podesta joined President Clinton for an evening with the new leader of Russia. “We saw Putin and then we had the evening free,” Podesta told a reporter in 2014. “We went to the Café Pushkin in Moscow, and as is habit in Moscow, we started drinking vodka shots,” Podesta recalled. That night, the three drank so much vodka that Podesta could not recall how he managed getting out of bed the next morning. “I wouldn’t even describe myself as hungover; alcohol was still pouring out of my pores.”56
More than a decade later, Podesta again fell prey to Russian wiles.
On October 23, 2010—just one day after CFIUS approved the Rosatom takeover—Podesta was tapped for a board position by Joule Unlimited, a small energy company based near Boston. By July 2011, Podesta had also joined the board of Joule’s holding company, which was based in the Netherlands. Podesta technically served on the “executive board,” according to corporate records. Joule was founded in 2007 and bragged that it could create “Liquid Fuel from the Sun,” using a far-fetched process involving biofuel produced from algae.57
One of Joule’s notable investors was a controversial and reclusive Swiss billionaire named Hansjörg Wyss, whose company was charged by the Justice Department with performing illegal human experiments, causing at least three deaths. Podesta had consulted for the Swiss billionaire, and Wyss donated up to $5 million to the Clinton Foundation.58
In his 2014 federal government financial disclosure, Podesta listed stock options from Joule. However, the disclosure does not cover any Joule transaction activity during the years 2010 through 2012. Podesta reportedly owned seventy-five thousand shares in Joule, and there remains some uncertainty about whether he fully divested them before joining the Obama White House (it appears that he transferred his Joule shares to a new shell company conveniently controlled by his daughter).59
Any potential direct payments from Joule are not known, but the Swiss billionaire Joule investor paid Podesta more than $87,000 (through a foundation) while Podesta was on Joule’s board. When the Daily Caller reported on the shady nature of Podesta’s Joule transfers, the outlet received a cease and desist letter. In the letter, Podesta’s attorney (notorious Democrat legal guru Marc Elias of Perkins Coie) called the story “entirely false” and claimed “Mr. Podesta actually reported more than was required.”60
Podesta had minimal, if any, experience with energy and certainly no biofuel expertise. Rather, Joule “gained the strategic insights and support of a long-time government expert who can help Joule build the lasting relationships needed for long-term success.” Shortly after Podesta joined the Joule board, Secretary Clinton placed him on the State Department Foreign Affairs Policy Board. As a key advisor to Secretary Clinton (and later President Obama), Podesta certainly opened doors to relationships needed for long-term success. So did former Assistant Secretary of Defense Graham Allison, who also joined Joule’s board.61
Shortly after Podesta joined the board, state-owned nanotechnology conglomerate Rusnano invested one billion rubles ($35 million) in Joule Unlimited. The Government Accountability Institute concluded that “it is hard to underestimate how close Rusnano is to the political-military elite in Russia.” In February 2012, Putin’s so-called “reformer” and chairman of Rusnano, Anatoly Chubais, joined Joule’s board of directors.62
Rusnano’s billion-ruble investment in Massachusetts-based Joule—made while Podesta was on the board—was among their largest U.S. investments. In October 2011, Rusnano’s U.S.-based subsidiary had promised to deliver “cheap money” to U.S. businesses in need of capital.63
The Boston FBI’s warning about Skolkovo seemed to be aimed directly at entities like Rusnano: “The FBI believes the true motives of the Russian partners, who are often funded by their government, is to gain access to classified, sensitive and emerging technology from the companies.”64
Rusnano played a central role in all aspects of the Skolkovo project, which the FBI warned could be a massive Kremlin-backed economic espionage scheme or cyber counterintelligence operation.65
Furthermore, Rusnano’s sizable investment in a company advised by John Podesta created yet another commercial link between Putin’s nuclear complex and Obama’s and Clinton’s inner circles. Rusnano also had extensive dealings with Rosatom—the company that was seeking approval to acquire U.S. uranium assets.66
Did Russian Interests Funnel Money to Podesta’s Think Tank?
Podesta’s Russia connections did not stop with Joule. While Podesta’s progressive think tank, the Center for American Progress (CAP), championed Obama’s reset policy, substantial funds flowed through a byzantine network of shell corporations that ultimately linked back to Moscow. Between 2010 and 2013, CAP reportedly received $5.25 million from a shadowy entity called the Sea Change Foundation, which had received $23 million from a Bermuda corporation linked to Russia.67 It appears that the Sea Change Foundation was a pass-through entity.
The connections were dizzying and bore resemblance to the signature obfuscation of Russian money laundering. But the obvious question is this: Why would international shell corporations pass millions through Caribbean tax havens (thus bypassing disclosure requirements) to fund a think tank founded by the secretary of state’s close advisor and future campaign chairman?
Podesta has refused to comment substantively on the Russian connections and denied that any untoward activity occurred. In 2016, Clinton’s campaign was asked to comment on its chairman’s relationship with Joule and the apparent divestiture, disclosure, and timing discrepancies.68 The campaign issued the following statement:
When Podesta went back to the work at the White House, he worked with White House counsel to personally divest from Joule and ensure he was in full compliance with all government ethics rules.
He transferred the entirety of his holdings to his adult children, resigned all positions with the company and filed the appropriate forms which were then certified by the appropriate ethics officials. As an additional step, he recused himself from all matters pertaining to Joule for the duration of his time at the White House.
But the statement hardly assuaged legitimate concerns and raised more questions. Does transferring ownership to your children actually remove the appearance of conflicts of interest or is it merely a technicality? What “matters pertaining to Joule” did Podesta recuse himself from? Was this recusal also an apparent technicality? Why did Joule executives remain in contact with him after he “resigned all positions”? We may never know.69
Ultimately, the timing of Joule’s incorporation, Podesta’s involvement, and Rusnano’s subsequent investment track closely with the Russian-linked donations to the Sea Change Foundation, and the latter’s donations to CAP suggest that there might be more to the story.
Not only was Joule funded by Russia, it was linked to Skolkovo corporate espionage. John Podesta tried to hide his stake by transferring it to his daughter (who did not have to disclose the Russian-backed asset the way her father would).
Podesta’s Double Standard on Russian Influence
President Donald Trump’s 2016 campaign manager Paul Manafort was sentenced to seven-and-a-half years in prison and faced solitary confinement at Rikers Island (a horrific New York City prison typically reserved for serial killers, mob bosses, and cop killers).70
In fact, Manafort had several business associates in Ukraine, including the Podesta Group. John Podesta and his brother Tony cofounded the Podesta Group in 1988. Since then, the group has lobbied for dozens of countries that run the gamut from American allies to adversaries—including multiple contracts with Kremlin interests.71
The Podesta Group raked in more than $1 million (combined) from Kremlin interests such as Sberbank, Uranium One, and the Ukrainian political group tied to the pro-Putin President Viktor Yanukovych. As Reuters reported, Tony Podesta was “among the high-profile lobbyists registered to represent organizations backing Ukrainian President Viktor Yanukovych.”72
Astonishingly, the Podesta Group did not register as foreign agents for any of these state-owned (or state-backed) entities. In an insulting display of Washington’s double standards, the Podesta Group retroactively filed Foreign Agents Registration Act (FARA) disclosures years later and only after Trump’s campaign advisor Manafort was forced to resign the campaign in August 2016. The Podesta Group filed more retroactive disclosures two months before Manafort was indicted for violating FARA (among other crimes).73
The double standard was particularly egregious since Manafort secretly lobbied for the exact same Ukrainian client as the Podesta Group—the European Centre for a Modern Ukraine (ECFMU). But instead of letting Manafort disclose the decade-old work retroactively with a quiet mea culpa (like Podesta had done), federal prosecutors threw the book at him.74
The Steele Dossier Reveals the Obama State Department Double Standard
Adding insult to injury, Clinton’s campaign contractor Fusion GPS paid ex-MI6 operative Christopher Steele to highlight Manafort’s connection to the Ukraine lobbying scheme that Fusion founder Glenn Simpson had reported nearly a decade prior in the Wall Street Journal. The infamous “salacious and unverified” (and now-debunked) “Steele dossier” ominously stated:
Ex-Ukrainian President YANUKOVYCH confides directly to PUTIN that he authorized kick-back payments to MANAFORT, as alleged in Western media. [Yanukovych] Assures Russian President however there is no documentary evidence/trail.75
While Steele’s sinister (and largely falsified) reports were circulating around the Obama State Department in 2016, so were Podesta Group requests to help their Russian client. In July 2016, a Podesta Group lobbyist emailed the State Department seeking assistance on Sberbank’s dire situation due to Obama’s 2014 sanctions imposed after the Crimea debacle:
Since imposition of US and EU sanctions, Sberbank has discontinued its operations in Crimea, Donetsk and Lugansk. Sberbank continues to operate elsewhere in Ukraine—with more than 3 million clients—despite attacks on its branches. In February 2016, Sberbank assisted Ukraine’s Ministry of Finance with a $367 million debt restructuring for two state-owned companies.
In May Helen Teplitskaya, a senior adviser to German Gref, Chairman and CEO of the bank, was in Washington and met with PDAS Warlick. At the end of the meeting PDAS Warlick suggested that when Helen returned to Washington she seek a meeting with you to discuss the impact of sanctions on the bank.…Would you have time in the next few weeks to see Helen?76
Within hours, more than a half dozen State Department staffers were peppering each other’s inboxes with suggestions on how to satisfy the Podesta Group request. Deputy Assistant Secretary Kathleen Kavalec weighed in: “Happy to meet with Sberbank together or separately—they have not approached directly as far as I know.”77
It is worth noting that Kavalec appeared to have played a very central and secretive role in laundering (for lack of a better term) the Steele dossier through the State Department. She received a detailed briefing from Steele in October 2016, before the first Foreign Intelligence Surveillance Act (FISA) warrant targeting the Trump campaign was granted.78
To recap, the Podesta Group was paid more than $1 million by Russian state-owned Uranium One, Russian state-owned Sberbank, and pro-Putin Ukrainian President Yanukovych’s political outfit. Tony Podesta’s firm advanced Putin’s interests by lobbying the State Department on sanctions relief (the exact sin that Steele falsely accused other Trump campaign staffers of committing) at the height of the 2016 campaign while Podesta’s brother, Clinton campaign chairman John Podesta, was accusing the Trump campaign of colluding with Russia.79
Worse, Obama State Department deputies quickly acted to help the Podesta Group’s Russian client at the very same time colleagues were promoting the now-debunked Steele dossier as gospel truth. Ironically, Steele’s paid sources included anonymous former FSB officials who may have been pushing Russian disinformation. Steele’s allegations against Manafort pertained to decade-old undisclosed pro-Russian lobbying and directly implicated the Podesta Group which, unlike Manafort, had since taken on controversial Russian entities, Uranium One and Sberbank, as new clients.80
John Podesta, for all his outrage over now-debunked Trump-Russia collusion conspiracy theories, concealed his own Russian interests. While his brother’s firm was raking in fees from Russian clients, John Podesta was profiting directly from a company backed by the Kremlin.
Obama Advances Russian Cyber Capabilities
Just before Obama’s reelection, in October 2012, the Department of Justice indicted a Russian agent named Alexander Fishenko, ten other Russian agents, and two corporations for conspiring to ship controlled high-tech electronics to Russia. The FBI accused Fishenko of illegally shipping $50 million worth of sensitive electronics to “Russian military and intelligence agencies.” A secretive FSB branch called the “3rd Directorate” was implicated. Meanwhile, Obama and Clinton were still helping Russia re-create Silicon Valley in Moscow and singing the praises of the Skolkovo tech transfer project.81
The very same month that Russians agents were indicted for stealing American technology, Clinton dispatched her economic guru Hormats to the hub of the Skolkovo complex (called the “Hypercube”). At the Hypercube, Hormats again enthusiastically extolled the virtues of U.S. collaboration with the Kremlin. The Fishenko fiasco was yet another blow to the reset, but, seemingly undeterred, Obama continued to try to mend the crumbling relationship.82
McFaul was starting to get nervous. Tensions were escalating between the two countries. After several years with minimal tangible results, would Obama’s reset policy ultimately be deemed a failure? Of course, they could always spin the policy as a success, and the media had cooperated with them thus far.83
Past and present officials from the Pentagon and other agencies did not like the appeasement strategy of Obama’s State Department toward the Russian satellite agency that wanted to install “monitoring stations” on U.S. soil, the deals with Russian nuclear companies, or the flagrant espionage and corruption demonstrated by the Kremlin. And they certainly did not like Obama’s desire to sweep the Russian illegals program under the rug.84
Eight months after the Fishenko tech transfer scheme was busted, Obama and Putin established the BPC Cybersecurity Working Group. The group was supposed to address issues relating to cyber security, espionage, and warfare.85
The Obama administration welcomed Russian Security Council official Nikolai Klimashin to the State Department to work with American cybersecurity officials. Klimashin, who was also the former chief of the FSB’s secretive “3rd Directorate,” chaired the first Cyber Working Group meeting with his American counterpart.86
Between the time that Putin and Obama initiated the Working Group and the 2016 primaries, Russia repeatedly hacked sensitive parts of the White House network and the State Department and tried to install monitoring stations throughout the U.S.87
In November 2013, the New York Times reported that a Russian space agency wanted to install antennae on buildings in the U.S. These monitoring stations could have been used to spy on America and would have given Russia improved guided missile technology and accuracy while operating on American soil.88
Obama’s State Department apparently thought that granting Russia the ability to compromise U.S. national security might “help mend the Obama administration’s relationship” with Putin.89
But as tensions between Moscow and Washington rose, so did Putin’s cyberattacks. For months, the Russian hackers gained unauthorized access to sensitive White House information—including the president’s nonpublic schedule. The FBI, Secret Service, and other intelligence agencies described the White House intrusions as “among the most sophisticated attacks ever launched against U.S. government systems.” The State Department email hack was reportedly the “worst ever.”90
In September 2015, Fishenko pleaded guilty to all nineteen charges. Then-Assistant Attorney General for National Security John P. Carlin stated, “Fishenko illegally acted as an agent of the Russian government in the United States and evaded export laws by sending microelectronics and other technology with military applications to Russia.”91
In July 2016, Fishenko received a $500,000 fine and was sentenced to ten years in prison.92
Shockingly, Klimashin (co-chair of the Obama-Putin Cyber Working Group) ran the exact FSB Directorate reportedly involved in the Fishenko conspiracy. Why did the Obama administration welcome him to Washington eight months after the Fishenko ring was busted? Furthermore, another Russian operative on the Cyber Working Group would, by 2016, reveal a top-secret Kremlin program that he insinuated was the electronic equivalent of a nuclear bomb.93
The Russian BPC Cyber Working Group co-coordinator, Andrey Krutskikh, was one of Putin’s top advisors on cyber issues. In February 2016 (while Fishenko awaited sentencing for the electronic espionage conspiracy), Putin’s cyber official delivered a private speech in Moscow to a group of Kremlin insiders and security experts. In his speech, Krutskikh hinted ominously that the Russians were working on some kind of powerful electronic weapon.94 The cyber official’s leaked notes read:
You think we are living in 2016. No, we are living in 1948. And do you know why? Because in 1949, the Soviet Union had its first atomic bomb test. And if until that moment, the Soviet Union was trying to reach agreement with Truman to ban nuclear weapons, and the Americans were not taking us seriously, in 1949 everything changed and they started talking to us on an equal footing.
I’m warning you: We are at the verge of having “something” in the information arena, which will allow us to talk to the Americans as equals.95
How did Krutskikh know what the Americans had in the “information arena” and why was he so confident that Russia could so easily rival the country that created Silicon Valley?
In January 2017, the Washington Post—likely still reeling from the election of Donald Trump—suggested that the Russian cyber official’s ominous warning nine months prior to Election Day might have been legitimate. Based on information from an anonymous Obama source, the Russian cyber official’s warning may have been a precursor to Putin’s new doctrine for information operations.
The anonymous Obama official told the Washington Post: “In the U.S., we tend to have a binary view of conflict—we’re at peace or at war. The Russian doctrine is more of a continuum. You can be at different levels of conflict, along a sliding scale.”
The Post failed to mention that Obama’s reset had allowed Krutskikh to exploit the inner circles of Washington in the first place as the coordinator of Obama’s and Putin’s Cyber Working Group.96 In addition, the working group’s initial meeting was cochaired by Klimashin, the Russian Security Council official.
Worst of all, at the time of the Cyber Working Group meeting in Washington, the Justice Department surely suspected that Klimashin was linked to an FSB scheme to steal controlled technology and microelectronics. The Post ignored those details despite the benefit of hindsight (and Google).97
Had the Post mentioned Krutskikh’s (and Klimashin’s) very recent history, it would have been obvious to their readers that Obama had allowed Russia to steal U.S. technology between 2008 and 2012, and then rolled out the red carpet for two Kremlin cyber officials linked to sinister plots against the U.S. Then the Post would have had to acknowledge that it was Obama, not President-elect Trump, who had advanced Russian information warfare capabilities (to make no mention of the nuclear handouts like Uranium One).98
Perhaps the Post was merely being sloppy. Or perhaps, the paper was covering its own involvement in and glowing coverage of Obama’s disastrous Russian reset.
Through the cyber and media working groups (particularly the journalist exchange program), Obama and Secretary Clinton opened the doors to potential Russian spies, hackers, and propagandists. The Washington Post and many others in the Obama-Clinton orbit participated in these initiatives. Somehow, they were all shocked when Russia exploited these cooperative Obama initiatives to (predictably) meddle in the 2016 election.99
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Skolkovo was not just a massive security threat to the United States; it turned out to be a potential gold mine for well-connected entrepreneurs and politically connected profiteers to cash in on their connections to Clinton and Obama. Ironically, those who profited from Obama’s reset would later accuse then-candidate Trump and his associates of foreign lobbying and endlessly decry Trump’s ever-elusive ties to Russia.
Their scapegoat was Manafort, and the location of the frame-up was Ukraine.