Deception

⁷ The New Illegals

The clearest traces of this new echelon of Russian spies (one might call them the ‘legal illegals’) were left by Ms Chapman and the rather less glamorous (but more impressive) Mikhail Semenko, a fluent Mandarin speaker who worked at a travel agency but hung around Washington think tanks. Like Heathfield, Semenko maintained a profile on the business networking site LinkedIn.¹ This gives his genuine Russian academic credentials, from Amur State University and the Harbin Institute of Technology in China, as well as his American alma mater, Seton Hall. It describes him, in convincing resumé-speak, as a:

It lists his interests in ‘non-profits, think tanks, public policy, advocacy and educational institutions’ and his specialities as: ‘International Relations, Foreign Policy Analysis; Program and Project Management; Policy Research and Writing; Senior Executive Council Coordination; Marketing and Sales Management; Membership Recruitment Initiatives; Client and Public Relations.’ Like Heathfield, Semenko constructed a suitable web presence, marketing his expertise with an enjoyable and interesting blog on the Chinese economy. In mid 2011 it was still available at chinaeconomytoday.wordpress.com. It describes him as ‘an expert in Chinese economic policy’ with fluent Mandarin and ‘Rusian’ [sic], available for translation and consulting. The last blog entry, on 24 June 2010 (just before the spy scandal broke) was a thoughtful piece about the undervaluation of the Chinese currency. Two days earlier, an interesting posting dealt with Chinese business manners; before that came a witty piece about the mangled ‘Chinglish’ of confident but inexpert Chinese English-speakers. Semenko matched Heathfield in audacity, but lagged behind him in other respects. Whereas Heathfield, two decades his senior, hobnobbed with the big beasts of American business and government, Semenko moved in a lower orbit, impressing people with his youthful eagerness rather than his expertise. But even in the wonkish world of Washington, people who speak both Russian and Mandarin fluently are thin on the ground. Semenko’s mission, according to a decrypted message from his bosses in Moscow, was to ‘search and develop ties in policymaking circles’.² That would have presumably meant gaining a job in a think tank and then perhaps in government, where he could have worked as a passive or even an active asset. At some point he, like many other foreigners working in America, would have swapped his H1B visa (issued to highly qualified foreign workers) for a Green Card and then American citizenship. That creates an important line of defence for a spymaster. A detailed background check would have exposed Heathfield as a fraud. He had stolen a dead baby’s birth certificate. But a similar check on Semenko, whether or not he eventually became a US citizen, would have produced nothing incriminating. His account of himself was not untrue. It was just not the whole truth.

Semenko was recruited at university and trained during gaps in his academic career. Had he grown up in a country where co-workers and fellow-students could be quizzed, and foreign travel records scrutinised, he would have been left dangerously open to discovery. A Finnish, Indian or Brazilian student would find it hard to explain or conceal frequent trips to Russia. But it is all but impossible to check out the credentials of someone like Semenko, who divided his time between his native Russia and China. If such a Russian says he spent a summer at a relative’s dacha when in fact he was at spy school, how will the bureaucrat ticking the boxes on his American security clearance spot it? Had Semenko become an American citizen, discriminating against him on grounds of origin would have been offensive and possibly illegal. Only a Western penetration agent inside Russia’s own security and intelligence apparatus would have been able to uncover him. As we will see, that seems to have been the case – on this occasion.

But even Semenko’s entry-level spying activities are worth analysing. Among the think tanks he targeted was the American Foreign Policy Council.³ This is a small, hawkish outfit, which has a long (and in my view admirable) record of contradicting the consensus among Washington-based Russia-watchers. One of its Russia experts until recently was J. Michael Waller, a proponent of the theory that the former KGB retained influence in Russia after the Soviet collapse, and returned to power with Mr Putin in 1999.⁴ Another is Ilan Berman, an expert on Russian links with Iran and the Muslim world, and a consultant to both the CIA and the Pentagon. Keeping an eye on those in America who truly understand Russia may be more valuable than more overt Kremlin activities (discussed in previous chapters) such as peddling propaganda that all is well, and soft-soaping those who believe it.

On 26 June an undercover FBI agent made contact with Semenko, pretending to be a Russian intelligence officer. The exchange (initially in Russian) went: ‘Could we have met in Beijing in 2004’ to which Semenko replied: ‘Yes we might have but I believe it was in Harbin’. This was no casual chat: the FBI agent was using a codeword to establish his credentials. Semenko’s response showed that he had accepted the American’s bona fides. The FBI agent then asserted that the most recent data swap on 5 June between Semenko’s laptop and that of a Russian official had failed. He admonished Semenko to take more care of the ‘sensitive’ equipment. Semenko then accepted a package containing $5,000, which the FBI agent told him to take to a dead drop at a park in Arlington the next day. He did so and was arrested shortly afterwards.

A far snazzier version of Semenko was, of course, Ms Chapman.[34] Her career took her via an unwitting English husband, Alexander, to the glitziest nightclubs in London and New York, and a social life that has attracted prurient attention⁵ from the tabloid newspapers, not least when he sold topless pictures taken during their marriage. But the revelation that a young Russian woman has not only breasts but a sex life is news only by the standards of the popular press. Her cover story was utterly convincing: a young Russian who marries a British man, working first in banking, then in an executive jet company, and then in real estate. These are all jobs that can be useful for an intelligence service. But nothing about her personal or professional life distinguished her from hundreds of thousands of other young women from the ex-communist world who head abroad in search of fame, fortune, marriage and travel.

Later on I plot her meteoric career on her return to Russia. A convenient first point of analysis of her career before that is her entry on LinkedIn.⁶ Like those of her colleagues it is an artful mixture of truth, exaggeration and outright falsehood. She was born in Russia and speaks English fluently, with a mild accent that disguises her indifferent grammar.⁷ She also claims conversational German and basic French. After that, it gets more complicated. Illegals commonly set up an identity in one country and then use it as a springboard for a more effective and espionage-focused life in another one. Ms Chapman built up an English CV and gained a real passport by marrying a British citizen, before moving on. It is unclear who paid for her jet-setting lifestyle: certainly not her work as a personal assistant or as a humble banking adviser. Southern Union, a company with which she was associated, may have provided some. She says she received a grant from a Russian government fund that supports start-ups. This may have been a disguised payment from Russian intelligence.

She returned to Moscow in 2006 to try to set up a Western-style real-estate company called domdot.ru. She describes it as a ‘search engine in real estate for [sic] Russian speaking audience’ and her own role as ‘running all aspects of business, setting strategy for development, international expansion, people management, investors reporting.’ Business contacts who had email dealings with her say she made an unremarkable but professional impression.⁸ But it seems to have got nowhere. She then moved to New York, where it is unclear if her business idea, a property search engine called NYCRentals.com, was part of a cover story or a real business. The business plan on its website was written in careless, Russian-inflected English that would have inspired little confidence among potential investors:

A video interview she gave about it for an entrepreneurship event in New York was notably light on content and heavy on flirting with the camera.¹⁰ Plans were not far advanced: she bought the NYCRentals.com website only on 22 June 2010, for $25,350.¹¹ Her private life, however, was another matter. Former friends in New York describe her as a hard-partying and insatiable networker. Among her conquests was a multi-millionaire businessman from New Jersey, more than twice her age. The New York Post called her a

She seems to have come on to the spycatchers’ radar quite late in the story. The FBI says that on ‘approximately ten Wednesdays’ in the first half of 2010, Ms Chapman used a laptop to exchange clandestine messages with a Russian government official.[35] On one occasion the official drove a minivan past the coffee shop, long enough for Ms Chapman to send a burst transmission from her laptop to a computer in his car. On another, she was inside a bookshop while the official was passing near by. On a third occasion, the official appears to have noticed that he was under surveillance and aborted the mission. The same official had already been spotted carrying out a brush-pass with one of the other illegals in 2004: it is likely that he led the FBI to Ms Chapman, not vice versa.

In the curious sting operation that followed, an FBI undercover agent posing as an intelligence officer based at the Russian consolate made contact with Ms Chapman, saying that he urgently needed to meet her. As with Semenko, he used a series of passphrases to establish his credentials, claiming to be called ‘Ilya Fabrichnikov’ – a code name that she had previously been given from her controllers in Moscow. She was willing to discuss the technical problems she was having with her computer and hand it over to be repaired; she also agreed to a second meeting at which she would be given a passport in a false name which she was to pass on to another female illegal. On 26 June, a Saturday, the FBI man called Ms Chapman again, saying that he needed to meet with her that day. She phoned back and asked if the meeting could be postponed until the next morning but then changed her mind and agreed to meet that afternoon. She seems to have made little attempt to check his bona fides, and discussed both her technical problems and her Wednesday electronic hook-ups. Mr ‘Fabrichnikov’ (evidently a native Russian-speaker, although the pair spoke English later in the conversation) then asked her if she would be willing to pass on the document, saying: ‘There is a person here who is just like you… but unlike you she is not here under her real name… we have to give her new documents… are you ready for this next step?’ Ms Chapman replied: ‘Shit, of course.’ She received the false passport, a description of its intended recipient and instructions about how to recognise her. Ms Chapman was to ask: ‘Excuse me, but haven’t we met in California last summer?’ The other party would reply: ‘No, I think it was the Hamptons.’ Ms Chapman handed over her faulty computer.¹³

This was all oddly hurried behaviour by the FBI. It strongly suggests that the American officials had to force the pace, probably because their source in Moscow had bolted, and would soon be missed. Ms Chapman belatedly had second thoughts about the meeting. She hurried to a pharmacy and then to a mobile phone shop where she bought a cell-phone and two international calling cards. She took only limited anti-surveillance measures, not the through ones that would be expected from a well-trained intelligence officer who realises that the hunt is on. She phoned her father in Moscow, to be told that a senior SVR officer dealing with the illegals had disappeared. That was oddly sloppy tradecraft. So was giving palpably fake identity details on the customer agreement, where she described herself as ‘Irine Kutsov’ of ‘99 Fake St’. A cardinal principle of undercover work is to tell no unnecessary falsehoods and shun any indulgence in humour. A simple ‘Jane Smith’ and an unremarkable but illegible scribble for the address would have been more consistent with the professionalism normally expected of one of the oldest and savviest spy services in the world. Evidently alarmed, the next day she went to a police station in Manhattan and handed in the passport – apparently claiming that she had been given it in error. When FBI officials arrived they arrested her.

But whom had they caught? Anna Vasilyevna Kushchenko was born on ‘Defender of the Fatherland Day’, 23 February 1982. Her grandfather was a Cossack, her father in the KGB and her favourite children’s story was a bombastic Soviet fable called ‘The Tale of the Military Secret’.¹⁴ She enjoyed acting it out, making her grandmother play the role of the hateful ‘bourgeois’, who tortures a little boy to make him confess the ‘hidden secret’ of the Red Army (which is, of course, the inspirational power of communism). By the time she was ten that world had collapsed, and with it the prison-like constraints it imposed on its inmates. Ms Chapman’s generation had the world in front of them. One childhood friend, Elena Slesarenko, went on to win an Olympic gold medal in 2004. Another classmate is said to have ended up in Japan as a successful model. Ms Chapman’s interests turned abroad too. At the age of sixteen, as the film Titanic came out in Russia, she penned a drawing of its star Leonardo DiCaprio so popular with her classmates that she and her sister earned pocket money selling photocopies.

When Ms Chapman was thirteen her father Vasily was posted back to Africa, while she stayed behind in Volgograd with her grandparents. Her grandfather was ill and the young teenager learned a toughness and self-reliance that would later stand her in good stead. In a chaotic and poverty-stricken country, she yearned for the comfort and glamour of life in the West. A song that epitomises those years – enough for Mr Medvedev to be caught on video clumsily dancing to it over two decades later – is the 1990 ‘American Boy’ by the girl-band Kombinatsiya.¹⁵ When Ms Chapman told a school friend, Valeriya Apanasenko, ‘I’ll find myself a husband in England, I’ll go there and live there,’ she was at least unconsciously reflecting its stilted and saccharine English lyrics, which bemoan the lot of a ‘simple Russian girl’, who has never been abroad and is waiting for her ‘foreign prince’ to whisk her away to a world of luxury.

Her first stop was Ramneki, a smart Moscow suburb, where she lived before a stint with her family in Zimbabwe. She was not a star pupil: her mother Irina, a former teacher, describes her as having ‘solid Bs’. None the less, perhaps thanks to her father’s professional connections, she was able to study at the University of People’s Friendship in Moscow, a shabby but trendy establishment known since Soviet days for its lively social scene and large numbers of students from developing countries. But this was just a staging post. Aged 19, she met the 21-year-old Alex Chapman at a rave in London’s Docklands in the summer of 2001. The English boy came to Moscow while she finished her studies. In March 2002 they married in a civil ceremony. Ms Chapman told a friend that she had married her husband in order to obtain a British passport (it was later cancelled by the authorities). That is in itself not a sign of an intelligence connection: Ms Chapman would not be the first Russian woman to marry a gullible foreigner in the hope of acquiring his nationality and name. The couple lived in the unglamorous inner-London district of Stoke Newington.¹⁶ According to her own account of her life, Ms Chapman worked at a hedge fund, Navigator Asset Management. People recall that she partied hard, often in the company of rich nightclubbers. Her boss, Nicholas Camilleri, described her later as a ‘green, wet behind the ears’ type of girl.¹⁷ She then moved briefly to a junior job at NetJets, a company that provides executive jet services to wealthy customers. Ms Chapman claims that she was:

• Primarily involved in selling private jets to companies and individuals in Russia

• Conducting research on East European markets, keeping updated on territory social events and business news, participated and helped organise NetJets European marketing events

• High-end client interaction, targeting Senior Executives and key decision makers within multi-national global organisations and wealthy individuals

• Cold-calling prospects based on research obtained from industry sources

• Developing proposals and formulating documentation in line with client requirements

• Working to timescales as set by the client, with a sales cycle of between one week and one year, depending on the complexity of sale

• Post-sales relations to ensure smooth running of processes, involving customer service problem-solving

For a three-month stint in a junior position, some might think that was on the effusive side. If Ms Chapman was even on the books of the SVR at this point, her main role was probably acquiring cover, with a view to some serious spying later on. But the people who use executive jets are often of interest to intelligence services; bugging their conversations, for example, would require placing and removing a recording device on an aircraft. It might also be useful simply to know who was travelling with whom, and where. The same applies to her next job, as an adviser in the small business division of a branch of Barclays Bank in Ealing, west London. Ms Chapman’s LinkedIn profile refers caustically to her post as ‘slave’ – and also places it in the more glamorous-sounding investment banking division of Barclays Capital.

But slaves can be good spies. Understanding how the rules work inside an organisation helps those wanting to bend or break them. Even a junior bank employee may be able, for example, to make credit checks. That would be handy for the SVR’s N-line department (which establishes identities for illegals). It needs to see if its work is accumulating the right degree of solidity. It could also help evade or manipulate ‘know your customer’ requirements: useful for anyone needing to establish a bank account in a hurry. A lowly employee may also have access to customers’ account details, meaning that such a person could see if potential targets for recruitment had money worries. (If Barclays has kept logs of Ms Chapman’s activities, spycatchers may find them rewarding subjects of enquiry.) A glaring instance of resume padding came in a Russian television interview where Ms Chapman claimed to have worked for the billionaire Warren Buffett (who indeed owns Netjets but was hardly her boss).¹⁸ In fact, her experience of the overlap between spycraft and finance was of a different, less prestigious and more troubling kind.

Despite her unremarkable professional career, Ms Chapman was fast ascending the London social ladder. Her marriage came under increasing strain and the couple parted in 2005. Mr Chapman says that following the split his ex-wife slept with a series of wealthy older men. Another Russian woman, Lena Savitskaya, who claims to have shared a flat with Ms Chapman for two years, says that her friend moved in the same circles as, among others, the fugitive Russian oligarch Boris Berezovsky. A picture from those days shows the young women partying with two junior members of the European aristocracy: the heir to the Grand Duchy of Luxembourg and a minor member of the former Russian imperial house of Romanov.¹⁹ She also hung out in London nightclubs patronised by members of the British royal family, befriended the managers and seemed to show eagerness to get to know their best-known clients personally, leading some British tabloids to wonder if her real mission had been to bed a prince. That seems unlikely: intimate friends of the royal family are subject to intense if discreet background checks to exclude any security risk. Any such scrutiny would have exposed not only Ms Chapman’s family connections with Russian officialdom but also some curious business activities that she was already involved with at this time.

Her presumed acquaintance with Mr Berezovsky is a more plausible sign of real intelligence activity. In the eyes of the Russian authorities, the tycoon is the epitome of the influence-peddling and sleaze that characterised the presidency of Boris Yeltsin. Mr Berezovsky was a friend of the former Russian president’s daughter, and at one point had an office in the anteroom of the then-prime minister, Viktor Chernomyrdin. Mr Berezovsky was closely associated with Mr Putin in the early years of his rule, brokering deals and easing the transition between the old and new regimes. Some even wondered if the tongue-tied ex-spook from St Petersburg, who initially seemed so ill at ease in the limelight, would end up the puppet of the wily master manipulator. Mr Berezovsky lost out, fleeing the country in 2001.[36] He maintains a caustic commentary on the corruption and incompetence of the Putin regime, and conducts bewildering political and business manoeuvres in the countries of the former Soviet Union. In June 2007 British police arrested and deported a contract killer only minutes away from Mr Berezovsky’s office. ‘I was informed by Scotland Yard that my life was in danger and they recommended that I leave the country,’ the tycoon told a journalist at the time.²⁰ Friendship with Mr Berezovsky would provide insights into his movements, routines and security procedures – just the sort of information that an assassin would need. Mr Berezovsky declined to comment. But the most startling aspect of Ms Chapman’s life in London has nothing to do with her glitzy friends; the clues to it lie in the dry documents of London’s Companies House.

At first sight, the now defunct company Southern Union appears to have done little of consequence. Founded in 2002, its declared activities were wholesale trade in food ‘including fish, crustaceans and molluscs’ and ‘other monetary intermediation’. It bears the same name as a former large money-transfer firm based in Zimbabwe, run by a bank close to that country’s ruling authorities, which transferred millions of pounds a month, often using ingenious financial mechanisms to avoid currency-control rules and local hyperinflation. The British Southern Union published its last accounts in 2009 and was wound up on 1 February 2011. A Steven Sugden, born on 20 May 1974, became a director in 2002, also registered at the Chapmans’ address in Stoke Newington. An outsider might wonder if having a lodger in the couple’s one-bedroom flat was rather a tight fit. In 2006, Mr ‘Sugden’, according to company documents, moved to Dublin.

Had Ms Chapman not been unmasked as a spy, Southern Union and its directors would have escaped scrutiny. Yet the documents I have obtained and the evidence of witnesses suggest a tangled story reeking of identity theft, money laundering and secret-service dirty tricks. The story starts with a prominent Zimbabwean businessman called Ken Sharpe, who is a friend of Ms Chapman’s father. Mr Kushchenko introduced Mr Sharpe to his Russian wife, Joanna, a former dancer.[37] In 2002 the Chapmans honeymooned in Zimbabwe, staying with the Sharpes. Most whites in Zimbabwe fare poorly. But those close to the regime can flourish mightily. American diplomats say Mr Sharpe is friendly with the regime of the Zimbabwean dictator, Robert Mugabe, and active in controversial construction schemes and also the gemstones trade. ‘In a country filled with corrupt schemes, the diamond business is one of the dirtiest,’ said a cable published on WikiLeaks, snappily entitled ‘Regime elites looting deadly diamond field’.²¹ It would be easy to see why someone involved in such business might feel at home in Russia, and be disinclined to open his business affairs to scrutiny. At any rate, Mr Sharpe declined to respond to questions. The Sharpe family is clearly connected with the London company bearing the Southern Union name. Ken Sharpe’s sister-in-law Lindi Sharpe is listed on a document from September 2002 authorising the appointment of a director. This is puzzling. A search of Companies House shows no Lindi Sharpe connected with Southern Union.²² It is not clear therefore how she was in a position to make such an appointment. In 2006 she and a Kenneth Sharpe were listed on the UK electoral roll at an address in London.²³ Nobody there responded to questions.

By Mr Chapman’s admission, Southern Union was the couple’s principal means of support in the early years of their marriage. It paid him £40,000 a year plus a £10,000 payment in return for becoming a director.²⁴ That is not necessarily sinister: it could just have been a generous father-in-law asking an old friend to make sure that the newly-weds had an income. Mr Sharpe strenuously denies any wrongdoing, or indeed any connection with the UK end of Southern Union. He has said he was a client of the Zimbabwean end of the operation, but did not found it, operate it, or benefit financially from it. But according to Mr Chapman, his Southern Union, as well as handling large numbers of transactions with southern Africa, chiefly Zimbabwe, also made payments on the direct instructions of Ken Sharpe. A foreign intelligence service needing to send money to pay sources and fund operations would have found the company’s capabilities interesting.

The links in this chain are individually just curiosities. Why are Russians and Ukrainians involved in what looks like a large money-smuggling operation in Zimbabwe? That could just be people from one corrupt country turning a profit in a place with a similar business culture. But the story is about more than that. One of this operation’s patrons appears to have been a Harare-based Russian intelligence officer – Ms Chapman’s father. That links the world of Russian espionage (itself often overlapping with organised crime, as we have seen in previous chapters) with the questionable money-transfer business in Harare. The nature of that business is odd too. As noted, spy agencies love the ability to make untraceable payments for clandestine purposes. Finally, the British dimension adds extra spice. In short, an enterprise able to make large numbers of effectively untraceable transactions all over the world, based in one of the most lawless countries imaginable, and with personal ties to Russian intelligence, was operating under the noses of the British authorities. It also had a phantom owner.

Within a month of his marriage breaking up Ms Chapman’s husband Alex ceased to be a director. The only remaining director then was Mr ‘Sugden’. The name, date of birth and signature fit a man of that name, a married father of two who works in the telecoms business in Tunbridge Wells – but the Kentish Mr Sugden has never met the Chapmans or heard of Southern Union.²⁵

An obvious place to find answers to these questions would be Southern Union’s accountants, Manningtons of Heathfield, East Sussex. But its senior partner Alan Staples, whose signature appears on the company documents, says he has no instructions that permit him to answer my repeated questions about the circumstances in which his reputable firm registered the company; or whether he or colleagues met in person with anyone purporting to be ‘Steven Sugden’; or took any steps to verify his identity. The main bank involved was HSBC. It declines to comment on whether it has ever had a banking relationship with Southern Union or any company trading under that name. Mr Chapman declines to comment on the circumstances in which ‘Mr Sugden’ became a co-director, or indeed on anything relating to Southern Union. It is unclear why the signature used by the director ‘Steven P. Sugden’ varies between documents but on some occasions is the same as the signature of the real Mr Sugden of Tunbridge Wells.

All this is odd enough. But the mystery deepens when we follow Mr ‘Sugden’ on his purported move to Ireland. The trail leads to Rossmore Grove, a cul-de-sac in the plush Templeogue south-western suburb of Dublin, coincidentally not far from the Russian embassy. According to documents at Companies House in London, Mr Sugden moved there in 2006, first ostensibly to number 10, then to number 12. This is odd. Templeogue is misspelled on more than half a dozen documents. One thing that people tend to get right is their own address. Much odder is that James Farrell, the owner of 10 Rossmore Grove for the past thirty years, has never heard of either a Steven Sugden or of Southern Union. The neighbouring house, 12 Rossmore Grove, was until recently rented out to a number of East European (mainly Polish or Lithuanian) migrant workers. Nobody there recalls a Steve Sugden either. (Nor, incidentally, have the British or Irish authorities approached the occupants.) Only on 1 September 2010, more than a month after the spy scandal broke, did someone purporting to be Steven Sugden apply to have Southern Union struck from the register. It was dissolved on 1 Feburary 2011.

A strange clue to this mystery comes from Zimbabwe, where a Steven Sugden works for Mr Sharpe, at his company Augur Investments, a Ukrainian company registered in Estonia. A profile for a ‘Steven Sugden’ on an obscure social-networking site called Hi5 claims the same 20/05/74 birth date as that cited in the company documents (and belonging to the real Mr Sugden of Tunbridge Wells). The Hi5 profile also had two other notable features: it said that the Zimbabwean Steven Sugden was based in Dublin and listed his languages as English and Russian.²⁶ What happened next could be seen as a panicky attempt to cover tracks. I identified and contacted (by Twitter, Facebook and email) the ten or so friends listed on the site. Within twenty-four hours, the mysterious Zimbabwean Mr Sugden cancelled his membership of Hi5, deleting the profile.[38] After a few initial responses, none of the friends was prepared to give any details of Mr Sugden’s background or to confirm his identity. Also within twenty-four hours of my enquiries starting, someone deleted an entry for a Steve Sugden based in Dublin on another social networking site, namesdatabase.com,²⁷ claiming him to be part of the ‘Class of 1992’ from Blackrock College, a leading Dublin secondary school. (Blackrock College School says that nobody called Steven Sugden ever studied there.) A request for contact to a Skype address for a Stephen P. Sugden in Zimbabwe went unanswered. A Twitter feed in the name of stephenpsugden has been protected so that outsiders cannot read it. An email then arrived, in lamentable English, reading as follows:

Repeated requests for clear answers to my questions brought belated and inconclusive replies and then a threat of legal action.

An innocent explanation for this could go as follows. By an unlikely coincidence, two people, both called Steven P. Sugden, share the same date and year of birth and remarkably similar signatures. One of them is from Tunbridge Wells, the other genuinely from Zimbabwe. The latter, who just happens to speak Russian, becomes a director of a London-based company established through questionable means by a relative of his boss. He initially uses the address of a one-bedroom flat rented by his friends the Chapmans, protégés of his boss, and thereafter gives a forwarding address in Dublin. He does so carelessly, misspelling the suburb and even getting the house number wrong until he later corrects it. For prankish reasons he establishes some phoney credentials on the internet purporting to show that he was at school in Dublin. When outsiders start asking questions, he takes fright and clumsily covers his tracks.

Another more sinister version could be that Ms Chapman, in cahoots with her father, was involved in a front company in London that moves money around either on SVR business or as part of some private scheme involving Russian officials and their foreign funds. One director is an employee of her father’s friend, a Russian masquerading as a Zimbabwean who has bolstered his flimsy invented identity with genuine personal data from a real person of the same name in the UK. He has created phoney internet clues to add authenticity. When Ms Chapman moves on, so does Mr ‘Sugden’, giving a misspelled – and misnumbered – Dublin address. My enquiries arouse first alarm and then attempts to escape scrutiny. Without answers from the Zimbabwean Mr Sugden it is hard to rule out either version.

Precisely what bits of Russia’s foreign espionage effort may have been involved, or for that matter how much of Zimbabwe’s natural wealth was plundered, can only be a matter of speculation. The operation seems a bit sloppy by the traditionally high standards of Soviet and Russian tradecraft. Why use a living person’s identity? Why give two successive next-door addresses (in each case misspelled) in Dublin (another address for a Southern Union company, in Northampton, was also misspelled).²⁸ Britain’s Security Service started an investigation but soon dropped it. It hunts spies, not criminals. Although its officials punctiliously refuse to discuss operational matters, on or off the record, I infer that it believes Mr ‘Sugden’ to have used a rather sloppy mixture of SVR techniques for commercial, not espionage purposes. If so, that exemplifies the blurred boundaries between Russian officialdom and wider business interests.

What is clear, however, is the damage done to entirely innocent bystanders. Steven Sugden’s name is still listed at Companies House as a director of three defunct companies (Southern Union, Intercon Trading and Africa Connection). The real, Kentish Steven Sugden is not directly out of pocket, though investigating the issue has cost him and his family considerable time and worry. Anyone doing a credit check on him might note, for example, that the companies had on occasion been less than punctilious in submitting their annual reports and accounts; an outstanding loan of £12,000 might also affect his creditworthiness in some eyes. Companies House is unwilling to delete him from their records; the police are unwilling to accept that a crime was committed; Britain’s Security Service (MI5) has asked him to cease his own investigations into the matter in order not to jeopardise its own, which has fizzled out. The blameless Mr Farrell, and the Crowe family that own 12 Rossmore Grove, have had the addresses of their properties used in a way that is certainly fraudulent and looks sinister. In short, law-abiding people can have their identity and address stolen by the Russian secret service or (at a minimum) its officers’ family cronies, and used for clandestine, or even nefarious, purposes, and when this is uncovered, nobody will do anything to help. I return to this subject in the conclusion. None of these awkward questions has clouded Ms Chapman’s return to Russia.

For a profession that prides itself on obscurity, publicity is a sign of shameful failure. Most spies retire quietly to the shadows after they are exposed. Not so Ms Chapman. Her metamorphosis from a provincial teenager to life as a go-getting émigré, then as a failed spy and finally to being her country’s leading political sex symbol says only a little about her, but a lot about Russia’s attitude to spies, the West, women and its own rulers. The spy scandal in which Ms Chapman featured came at a bad time for Russia’s rulers. The country had suffered the harshest recession in the G-20 in the previous year, and in the summer of 2010 an outbreak of wildfires had shamed the authorities. A thick, stinking smog enveloped Moscow, making one side of Red Square invisible from the other. Blame fell on the poorly privatised state forestry services, which had all but abolished the vital function of fire prevention. Contempt for the regime was growing elsewhere too. Promises of modernisation had proved empty. Trust in the security services and the police had plunged since Mr Putin took power.

The spy scandal thus cast an unwelcome light on two of the regime’s weakest points: corruption and incompetence. The illegals appeared to be an expensive throwback to old Soviet tactics. They had – at least according to the published version of events – failed to gain any secrets and had been under American observation from the start of their mission. Despite the failure of their mission, some of them deserved praise for their personal talents and dedication: Heathfield’s brains, Semenko’s language skills, or even Lazaro’s decades of service all stand out; among the women, the professional career of ‘Cynthia Murphy’, a financial adviser to rich Americans, was a solid achievement. Yet from the beginning it was the most junior and incompetent of the spies who became the celebrity.[39] She has posed semi-naked for glossy magazines; she hosts Mysteries, a lightweight television programme; she has an iPhone app allowing people to play poker with her electronic avatar and has even registered her surname (in fact her ex-husband’s) as a trademark. Chapman-branded products from cosmetics to consumables are on sale or in development. In an article headlined ‘Anna Inc’,²⁹ Newsweek magazine even termed her ‘Russia’s hottest cultural icon’. As well as her showbiz, media and marketing efforts, Ms Chapman has a job at a financial entity called FondServiceBank. This is mainly notable for its close links with the defence industry and for its initials FSB. Grigory Belkin, a spokesman, says it jumped at the chance to have her. ‘It’s very prestigious for any bank to have an employee with a specific background… linked with doing helpful things for the state.’

Ms Chapman has also moved into politics: with a prominent but nominal role at Molodaya Gvardiya (Young Guard). Founded in 2005, this is the youth wing of the ruling United Russia Party. Though it portrays itself as an apolitical do-gooding organisation, keen on ecology, education and cleaning up government, it is in fact part of a wider Kremlin attempt to forestall any mass protests that might threaten the regime. A nightmare for the ‘political technologists’ who advise Russia’s rulers is a movement on the lines of Ukraine’s 2005 Orange Revolution – a spontaneous youth revolt against a corrupt and incompetent regime, prompted by blatant election rigging. Russia may seem unpromising ground for this, but this does not mean that the authorities are complacent. Like the parallel organisation Nashi (Ours), the Young Guard offers its members excitement, glamour, perks such as holidays and a professional and educational leg-up. It also has a thuggish streak, harassing opposition figures and interfering foreigners.

She appears less useful to her real-life business employers. Yulia Shamal, head producer at the ‘Mysteries’ show, says the new presenter doesn’t have time to do research but does come to editorial meetings. ‘Anya remembered she knew this clever successful person, an artist actually, who not only saw a UFO but managed to take a picture of it,’ says Ms Shamal, struggling to find an example of her star presenter’s editorial talents.

Ms Chapman’s biography does not suggest that she was a class act. But she was an effective one. Her glib but accented English, imperfectly tinted hair, garish clothes and unremarkable professional career were not a clever bluff, but the real thing. Neither ferociously clever nor blessed with steel nerves or hypnotic people skills, she never sought to match, like Heathfield, the talents of the global elite; her forte was to dance with them, to date them and to work alongside them. As a spy, her tradecraft was startlingly sloppy. In London, her company Southern Union was unable even to spell its phoney address properly on official documentation. Her written English was embarrassingly bad. Under pressure from the FBI she failed even to buy a mobile phone without mistakes that would shame a trainee in the first week of a course at Fort Monckton. In a panic, she called her father on an easily intercepted telephone line.

If that signalled the decline in professionalism of what was once the most efficient bit of Soviet bureaucracy, the way Ms Chapman got her job highlighted something else: nepotism. It is easy to infer that she had gained her plum job, complete with generous taxpayer backing for her business, thanks to birth not brains. Andrei Soldatov, the spy-watcher and author of The New Nobility, says: ‘All she did was to try and exploit her father’s connections in the SVR for money.’ Yulia Latynina, a leading opposition journalist, refers to Ms Chapman as ‘a very high-class prostitute in the West, with the state paying for all of her beautiful underwear and all her expenses’.

If it is hard to see what service Ms Chapman has rendered to Russia abroad, it is easy to see what she has done on her return. The failed spy has been a blank canvas on which the regime’s propagandists have painted their own image of Russia: unstoppable abroad, electrically exciting at home, youthful, daring and sexy. But the first priority was damage control. Aleksei Navalny, an opposition activist who has made his name with an online campaign against corruption in big business, notes that a bad image for Russia’s spies also damages Mr Putin, who has played heavily on his own background in the KGB. Mr Putin’s former senior speech-writer Simon Kordonsky, now a professor at the liberal Higher School of Economics, sees the regime’s eagerness to get its spies out of American custody as a manifestation of ‘corporate solidarity’ among Chekists, who felt compelled to show that ‘one of their own cannot be taken’. But as her celebrity status grew, Ms Chapman’s allure, not failure, quickly became a dominant theme. Some seasoned KGB veterans seem genuinely awestruck by her nerveless approach. Viktor Cherkashin, a former counter-intelligence officer in Washington and West Germany who retired in 1991, says she has the right mix of qualities for the modern age.

The growing hype was laced with another potent ingredient: anger over the spies’ betrayal. A Russian official told the Kommersant newspaper that an assassin had already been dispatched to deal with the defector who betrayed the illegals, though this seems to have been bravado.³⁰ Mr Putin, after an evening singing patriotic ditties with the returned spies, said grimly that traitors end up ‘in the gutter’ and blamed ‘treason’ for the spies’ exposure. This approach fits broader propaganda themes favoured by the regime: cynical Western penetration and manipulation of Russian society, the ruthless use of foreign money, and the Soviet-style heroism of the state’s servants in difficult conditions.

In Russia’s glitzy, sex-obsessed media culture, Ms Chapman’s mysterious past and curvy figure were an easy sell. Joanna Seddon, an expert on branding, sees the ex-spy as a classic example of a celebrity who has ‘leveraged her misfortunes into not only media popularity but also tangible wealth’. She likens Ms Chapman to Martha Stewart, the billionaire American businesswoman who launched a triumphant commercial comeback after her five months in jail for insider trading. Each woman, she notes, ‘maintained the rightness of her actions throughout her troubles, providing a reason for her public to believe in her’. Having averted disaster and created a commercial triumph, the culmination of the propaganda response was to turn Ms Chapman into a political asset for a tired-looking regime that presides over a drab and increasingly backward country. Ms Chapman’s symbolic role in Young Guard provided the perfect platform. Yana Lantarova, the organisation’s Federal Charity Director, gushes about her new colleague:

Ms Lantarova adds helpfully that Ms Chapman ‘fires up’ the movement’s male members. The enthusiasm is not universal. Kirill Schito, a member of the movement’s governing council and of the Moscow municipal assembly, is slightly less flattering, insisting that the benefit is ‘mutual’ and that Ms Chapman is ‘quite smart’. But however artificially staged Ms Chapman’s initial foray into politics may have been, it has struck a genuine chord among at least some ordinary Russians. Support is most enthusiastic in her native Volgograd. Referring to the legendary Second World War Soviet spy, local journalist Stanislav Anishchenko explains:

The star-struck Mr Anishchenko even organised a song contest in honour of his city’s most famous daughter. The winner was ‘Anna Chapman is not Mata Hari’ – a reference to a Dutch dancer and courtesan shot for spying in the First World War. It captures the nationalistic pride that Russians hold in their spies, though the doggerel lyrics are equally dire in the original Russian as in this loose translation.³¹

This knee-jerk nationalism is a perfect antidote to public apathy and disgruntlement. Ms Chapman also contrasts sharply with the ranks of United Russia, mostly filled with balding middle-aged men. Sergei Markov, a Duma deputy with close Kremlin ties, says:

He also sees Putinesque qualities in Ms Chapman’s curves:

This linking of Putin and Chapman has already started to sink into the popular consciousness. In May 2011 a shoot-em-up game called Voinushka (Punch-up) was launched on popular Russian social networking websites. A youthful-looking khaki-clad Mr Putin features as the commander, setting tasks for the person playing the undemanding game. He has a redheaded assistant, showing voluptuous décolleté, wearing a Soviet-style military hat and toting a rifle. The game’s designers say they did not consciously choose Ms Chapman as a model.

It would be easy to dismiss this as harmless fun and games – a kind of circus in which an exotic bout of public service turns into an equally exotic private-sector phenomenon. If Ms Chapman and her colleagues seem to have done no real harm in the West, except perhaps to our image of invulnerability, then maybe it is time for bygones to be bygones. Outsiders may ogle her lightly clad figure, but must be resigned to the fact that her most interesting feature – her career in intelligence – is forever cloaked in shadow. Moreover, that someone who embodies superficiality rather than achievement has become a female role model speaks volumes about Russian femininity. Ms Chapman also embodies the contradiction between the regime’s xenophobic attitude to the West in general, and its senior members’ personal enjoyment of foreign fleshpots. As the journalist Ms Latynina notes caustically: ‘This great heroine of the Putin youth was crying, crying buckets when she was told she was going to be banned from Great Britain.’

Sleazy and sex-crazed, crass yet sinister, xenophobic yet obsessed with the West, an artificial creation of an ailing regime: Ms Chapman is emblematic of the country that recruited, ran and promoted her. She exemplifies too the threats and the failings of Russian intelligence: nepotistic in recruitment, with an increasingly blurred line between the professional and private duties of its officers, but still able to plant undetectable and effective agents in our midst.

I have explained Russia’s motivation for spying, how it spies, and why we should mind. The next section of the book looks at the history of Western espionage efforts against Russia. Despite some occasional successes, these have in many respects been feebly focused and disastrously executed, something of which British and other Western taxpayers are largely unaware. The biggest losers in this saga of fiascos have been not the Western spymasters and their staff, but the locals who trusted them. This section also sets the scene for the final part of the book, looking at one of the most serious and damaging episodes in recent years: the case of the Estonian Hermann Simm. In both the Western bungles and Russian triumphs, the Baltic states of Estonia, Latvia and Lithuania play a central role. Too small to be able to determine their own destiny,[40] they are also too important for outsiders to ignore. That has been a fateful combination: both Russia and the West have tussled for influence in the Baltic region and states, and used them as springboards for espionage efforts elsewhere.