World Periscope

WikiLeaks cables: UK on constant alert to Russian espionage

2010-12-08T04:26:00.000-08:00

Leaked dispatches reveal British-Russian relations stalled since death of spy-turned-dissident Alexander

Litvinenko

Luke Harding
Wednesday 1 December 2010

Russia poses a “real intelligence threat” to Britain, with suspected undercover agents frequently applying for UK visas, Foreign Office officials have told the White House.

A series of leaked diplomatic cables from the US embassy in London, released by Wikileaks and seen by the Guardian, paint a disheartening and gloomy picture of British-Russian relations in the three years since the fatal 2006 poisoning of Alexander Litvinenko, the Russian spy-turned-dissident.

There had been no let-up in Russian espionage activities in London and Russia’s domestic spy agencies had hounded Russian staff working at the British embassy in Moscow, according to a briefing by UK officials to their US counterparts.

On 10 August 2008, US officials reported back on Gordon Brown’s first one-to-one meeting with Dmitry Medvedev at the G8 summit in Japan. Medvedev had just taken over as Russia’s president, with ex-president Vladimir Putin becoming prime minister.

British officials described the Brown-Medvedev encounter as positive. The Russia department of the Foreign Office (FCO) expressed hopes that Medvedev was a leader “more open to domestic liberalisation and co-operation with Britain” than Putin, his hard-line, Anglophobic predecessor.

Despite “signs of a thaw in top-level UK-Russia relations”, the FCO said it saw no reason to remove sanctions imposed on Russia. In July 2007 the then foreign secretary, David Miliband, expelled four Russian diplomats and cut links with Russia’s FSB spy agency after Moscow refused to extradite Andrei Lugovoi, Litvinenko’s alleged killer. Miliband also imposed a visa regime on Kremlin officials visiting London.

The cable said: “According to the FCO, HMG (Her Majesty’s government) has had good reasons to refuse many Russian visa requests. HMG officials see a real ‘intelligence threat from’ Russia (in addition to China) and regret a ‘missed opportunity in the late 1990s and early 2000s to assess these intelligence threats’.”

FCO officials told Washington the Russian government was restricting visas to UK diplomats, prompting reciprocal British measures. They revealed that the government was unable to fully staff the British embassy in Moscow because the FSB was continuously harassing its “local Russian hires”.

Britain had proposed a deal to ease visa restrictions, but the offer had run into problems because Russia was insisting that the British government had to consult first with the FSB. “HMG continues to refuse to engage directly with the FSB, pending resolution of the Litvinenko murder case,” Richard LeBaron, deputy head of the US embassy in London, wrote.

During their G8 meeting, Brown briefly brought up the Litvinenko murder and Britain’s Lugovoi extradition request. Medvedev did not budge. He described Litvinenko’s death as a sad affair but “sought to bury the matter by referring to it as a ‘legal issue’”. “No transformative dialogue occurred, and no progress was made on that issue,” LeBaron told the White House.

In other classified dispatches, the US ambassador in Moscow, John Beyrle, expressed glum solidarity with Britain’s attempts to bring Litvinenko’s alleged killer to justice. In May 2007, when the Crown Prosecution Service charged Lugovoi, Beyrle reported that the British embassy was bracing itself for more diplomatic fallout, and expected a “further worsening in the UK-Russia and EU-Russia relationship”.

As the UK’s ally, all Washington could do was “reinforce to the Russian government the damaging consequences to Russia’s reputation should this case fail to reach trial”, Beyrle said. This attitude, however welcome in London, appears to have brought few practical results.

In November 2009 Miliband flew to Moscow for a two-day visit that, according to Beyrle, put an end to the “period of standoff”. Despite a cordial meeting with Russia’s foreign minister, Sergei Lavrov, Miliband went home with “little concrete to show” from his Moscow visit, the US ambassador reported.

Both Medvedev and Putin refused to see Miliband, “apparently out of a desire to avoid giving Miliband a success that he could use in a potential run to head EU foreign policy”, Beyrle observed. (Miliband had been approached for the job of the EU’s new foreign secretary but turned the job down, convinced at the time that his future lay in Westminster politics.)

While Russia and the UK found some common ground during Miliband’s visit, there was a “lingering hesitancy” from the Russian side. “The GOR (government of Russia) could have gone further in offering the UK (either land or air) to support British operations in Aghanistan, but hedged,” Beyrle said.

Other dispatches made clear that Russia remains a major strategic and policy headache for Britain. After the Brown-Medvedev meeting, Cabinet, FCO and intelligence principals conducted parallel exercises designed to give Brown a “clearer picture of Russian foreign policy”, and recommendations on how to deal with the Kremlin.

Michael Davenport, the FCO’s then director of Russia, Caucasus and central Asia, admitted there were internal divides in the government on how to tackle Russia. Some favoured “a posture of cold war-type ‘containment’”, while others argued that such a tactic was outmoded and inappropriate, LeBaron reported.

Davenport said the UK believed Russia’s foreign policy goal was to maintain influence over its “near abroad”, and “to deter western influence, especially NATO enlargement”. After the war in Georgia it was obvious Russia would use all available levers to pursue its goals, with “military means now part of the Kremlin’s tactical lexicon”, he said.

The Foreign Office description of Russia’s political system is unlikely to delight the Kremlin, which insists the country is democratic, despite overwhelming evidence to the contrary. Today’s Russia was a “corrupt autocracy”, but it was a confident one, Davenport said.

WikiLeaks cables allege Russia bribed Viktor Bout witnesses

2010-12-08T04:23:00.001-08:00

Embassy cables show US diplomats believe Moscow tried to block extradition of ‘merchant of death’ from Thailand

Luke Harding Wednesday 1 December 2010

Russia tried to block the extradition of the suspected international arms trafficker Viktor Bout from Thailand to America by bribing key witnesses, the US claims.

Diplomats in Bangkok alleged in cables released by WikiLeaks that Bout’s “Russian supporters” had paid witnesses to give false testimony during his extradition hearing.

Dubbed the “merchant of death”, Bout was seized by the Thai authorities in March 2008 but only extradited to the US on 16 November this year. The US accuses him of conspiring to sell millions of dollars of weapons to Revolutionary Armed Forces of Colombia (Farc) rebels to kill Americans. The Kremlin strongly opposed his extradition.

The Russian businessman, accused of running arms-trafficking networks around the world, maintains he is innocent in a case that turned into an undignified tug-of-war between Washington and Moscow.

In a cable written on 13 February 2009, US diplomats said that in the year after Bout’s arrest, extradition proceedings in Thailand were “going in the way we want” – albeit at a “painfully slow” pace.

More recently, however, the case had taken a worryingly wrong turn: “There have been disturbing indications that Bout’s … and Russian supporters have been using money and influence in an attempt to block extradition,” the diplomats reported.

Bout’s claim was that he had flown to Thailand on official government business. American agents posing as Farc rebels arrested him in a sting operation in a Bangkok hotel after he allegedly agreed to sell them millions of dollars of weapons.

On 12 February 2009, the US ambassador in Bangkok, Eric John, raised his concerns about the case in a meeting with Thailand’s prime minister, Abhisit Vejjajiva. He warned that the extraditions proceedings had become “tainted as a result of the efforts by Bout’s associates to bribe Thai officials”.

John said the Americans had uncovered several examples of influence and corruption. These included the false testimony by a witness, an attempt to procure the personal secretary of the crown prince of Thailand to testify on Bout’s behalf, and “evidence of bribery schemes gathered throughout the world”.

Abhisit gave a noncommittal response, promising to examine any irregularities. In August 2009, the judge ruled Bout could not be extradited in a stunning setback to the US embassy and its “Bout team”.

The ruling – appealed against by the US – prompted John to write a cable urging US President Barack Obama to telephone Abhisit and initiate “a serious discussion of our concerns over the implications of the Bout verdict”.

“We believe Potus [president of the US] involvement on Bout would have a significant effect here,” he pleaded.

The ambassador suggested a gambit to shame Moscow if Bout was freed to go back to Russia. “We should consider asking the Russians to prosecute Bout if, in the end, he walks here in Thailand. At the very least perhaps we could force the Russians to publicly refuse to do so.”

Other cables reveal that Bout’s fleet of aircraft – allegedly used to deliver arms to Sierra Leone, Liberia and Congo – are currently rusting at an airstrip in the United Arab Emirates. On 7 January 2010, the US consulate reported several of his Soviet cargo planes were stuck at the “sleepy” Ras al-Khaimah (RAK) airport.

“The airport is also working to distance itself from its reputation as a transport facilitator for clients such as international arms trafficker Viktor Bout, who used the RAK airport as a base of operations. The Wing Air aircraft once linked to Viktor Bout are grounded and effectively abandoned,” it said.

Another cable chronicled the unstoppable rise in Russia’s international arms sales – up from $6.7bn (£4.3m) in 2006 to at least $8bn in 2007. It said Moscow exported large quantities of weapons to, among others, Iran, Syria and Venezuela, and was prepared to entertain the “grandiose regional visions” of Venezuela’s president, Hugo Chávez.

The then US ambassador in Moscow, William Burns, admitted that Russia was unwilling to establish “an expert-level dialogue on arms sales” with Washington and was “deeply cynical” about any US attempts to curb Russian arms exports.

“Russia attaches importance to the volume of the arms export trade, to the diplomatic doors that weapon sales open, to the ill-gotten gains that these sales reap for corrupt senior officials and to the lever it provides the Russian government in stymieing American interests.”

On this topic the US had few instruments of persuasion, Burns added: “Russian officialdom and the public have little, if any, moral compunction about the arms trade, seeing it instead as a welcome symbol of Russia’s resurgent power and strength in the world.”

WikiLeaks cables: Moscow mayor presided over ‘pyramid of corruption’

2010-12-08T04:22:00.001-08:00

Criminality, bribery and sleaze endemic in city administration, US ambassador reported to Washington

Luke Harding Wednesday 1 December 2010

The US ambassador to Russia claimed that Moscow’s veteran mayor Yuri Luzhkov sat on top of a “pyramid of corruption” involving the Kremlin, Russia’s police force, its security service, political parties and crime groups.

The 74-year-old has subsequently been sacked as mayor by President Dmitry Medvedev, after the Kremlin-controlled media broadcast allegations of corruption aimed at him and his billionaire wife, Yelena Baturina, who heads a construction company called Inteko. The couple has vehemently denied the accusations as “total rubbish” designed to make Luzhkov “lose his balance”.

In a leaked secret cable sent in February, the US ambassador John Beyrle gives a forensic account of Moscow’s “murky” criminal world, alleging a shadowy connection between bureaucrats, gangsters and even prosecutors.

According to Beyrle corruption in Moscow was “pervasive”. “Luzhkov is at the top of the pyramid,” he claimed. He told the US state department: “Luzhkov oversees a system in which it appears that almost everyone at every level is involved in some form of corruption or criminal behavior.”

Russia’s well-developed system of bribe-taking was ubiquitous, Beyrle said. In the absence of laws that worked, Luzhkov – as well as other mayors and governors – paid off “key insiders in the Kremlin”. Officials had even been spotted entering the building carrying large suitcases, presumed to be “full of money”.

The ambassador wrote his cable in response to speculation that Luzhkov, the capital’s charismatic mayor since 1992, was about to lose his job. When Medvedev ignominiously dismissed him in September, the Russian president said he had lost confidence in Luzhkov.

Most analysts believe the firing had little to do with the allegations of corruption but was linked to a power struggle between Luzhkov and Russia’s federal leadership, which Luzhkov eventually lost.

In a section called “Background on Moscow’s criminal world”, Beyrle asserted bluntly: “The Moscow city government’s direct links to criminality have led some to call it ‘dysfunctional’ and to assert that the government operates more as a kleptocracy than a government”.

“Criminal elements enjoy a ‘krysha’ [a term from the criminal/mafia world literally meaning 'roof' or protection] that runs through the police, the federal security service (FSB), ministry of internal affairs (MVD) and the prosecutor’s office, as well as throughout the Moscow city government bureaucracy.

“Analysts identify a three-tiered structure in Moscow’s criminal world. Luzhkov is at the top. The FSB, MVD and militia are at the second level. Finally ordinary criminals and corrupt inspectors are at the lowest level.”

Under this system, all businesses in Moscow were forced to pay bribes to law enforcement structures, in a virtual parallel tax system: “Police and MVD collect money from small businesses while the FSB collects from big businesses.” An FSB krysha was the most sought after, Beyrle said, with the FSB protecting Moscow’s top organised crime gang.

This sleaze went all the way to the top of Russian power, Beyrle said. Bribes were distributed upwards under the “power vertical”, Vladimir Putin’s bureaucratic hierarchy. He quoted one source who said: “Everything depends on the Kremlin … Luzhkov, as well as many mayors and governors, pay off key insiders in the Kremlin.”

The same source alleged that officials went into the Kremlin “with large suitcases and bodyguards”, and speculated that the “suitcases are full of money”. Another source disagreed. He pointed out it was simpler to pay bribes “via a secret account in Cyprus” – an offshore route popular with rich Russians.

The ambassador offers the most detailed and apparently authoritative account so far of corruption in the Russian state and its security agencies. He cites Transparency International’s 2009 survey which confirms Russia as the world’s most corrupt major economy. The report estimates bribery costs Russia $300bn (£190bn) a year, about 18% of its gross domestic product.

Beyrle also reported allegations about Baturina, who heads the largest construction company in Moscow. After Luzhkov entered office, his wife became Russia’s wealthiest woman, amassing a fortune put at $1.8bn. Since her husband’s sacking she has spent most of her time abroad, with the couple’s teenage daughters moving to London.Luzhkov’s dubious friends and associates, the US alleged, included Vyacheslav Ivankov – a recently murdered and notorious Russian mafia boss known as Yaponchik – and other “reputedly corrupt” Duma deputies. “[Source removed] said that the Moscow government has links to many different criminal groups and it regularly takes cash bribes from businesses.”

According to Beyrle, the same system of bribery worked in Russia’s provinces: “The governors collect money based on bribes, almost resembling a tax system, throughout their regions.” As in Moscow, businesses paid off the FSB, the interior ministry and the militia who “all have their distinctive money collection systems”. (Moscow police heads also reportedly had a “secret war chest of money … used to solve problems that the Kremlin decides, such as rigging elections”.)

Deputies in Russia’s parliament generally had to buy their seats in government, Beyrle’s cable suggested. “They need money to get to the top, but once they are there, their positions become quite lucrative money-making opportunities.”

His allegations are likely to be most embarrassing for the Kremlin, after a high-profile campaign by Medvedev against corruption. So far it has shown few results.

Beyrle noted that Putin and Medvedev faced a tricky dilemma when deciding Luzhkov’s fate. He was a “trusted deliverer of votes” for United Russia, Putin’s pro-Kremlin party, Beyrle suggested. Against this, the Kremlin had to weigh up what the ambassador claimed to be “Luzhkov’s connections to the criminal world”.

Another cable sought to lift the lid on Luzhkov’s business empire, much of it acquired using city funds to invest in “less than transparent” projects sealing agreements with former Soviet countries including Moldova, Uzbekistan, Georgia, Armenia and Azerbaijan.

The projects deliberately promoted Luzhkov’s “nationalist foreign policy”, it reported. Luzhkov channeled cash to separatist pro-Russian movements in Ukraine and the Baltics. “This was ‘at the behest of the Russian government, thereby giving the government of Russia plausible deniability when accused of funding certain political parties.”

He also struck deals in the separatist regions of neighboring countries, including South Ossetia and Abkhazia in Georgia, and Transnistria in Moldova. In Kosovo he used Moscow city funds to build housing for ethnic Serbian refugees, while in Bulgaria he bought beach resorts on the Black Sea for city hall staff.

“The Moscow city government has cultivated its influence in far-flung Russian regions as well as in foreign countries, ostensibly for the benefit of its citizens but to a greater extent for the city’s well-connected business elites,” the cable concluded.

WikiLeaks cables: Roman Abramovich denies links with Vladimir Putin

2010-12-08T04:19:00.001-08:00

‘No truth’ to allegations that billionaire has close financial connections with Russian PM, says Abramovich’s spokesman

Luke Harding Wednesday 1 December 2010 *

Roman Abramovich offered a spirited response today to what his spokesman termed an “old story”, quoted in the leaked US embassy cables, that he was alleged to have links with Putin.

The Russian billionaire’s representative, Max Clifford, said: “This is an old story which has been mentioned in dispatches for years. Anybody who is rich and successful who comes out of Russia is seen to be closely tied up with Putin and his finances. But like many of these stories, there is no truth and no substance in it.”

Along with his fellow oligarchs, the Chelsea owner has supported Putin’s pet projects such as the Russian World Cup bid, the outcome of which will be announced tomorrow. He has sunk vast sums into sport in his homeland. As well as pouring $40m (£25m) a year into a national football academy, he has supported the bid financially and via his network of high-level contacts.

Abramovich, who acquired an estimated $8.5bn through control of part of the post-Soviet aluminium industry, is one of the most high-profile of his country’s group of billionaire oligarchs.

The Guardian put to him the claim mentioned in the cables that he and Putin had a close financial relationship. The story had been told, without any supporting evidence, to the then US deputy assistant secretary of state David Kramer at a 2007 meeting in Washington with a Russian opposition figure. The state department sent a report of the conversation, marked “confidential”, to the US embassy in Moscow.

Another spokesman, from Abramovich’s investment vehicle, Millhouse, later added: “The allegation is entirely absurd. Mr Abramovich has no financial relationship of any kind with prime-minister Putin.”