From Russia with Blood

ix

Oxfordshire and St. Petersburg—2006

A winter mist hung low over the lake as limousines streamed up the drive toward the moonlit palace. The guests climbed out in their evening finery, pausing to gaze up at the grand towers and flying buttresses overhead before ascending the steps toward the columned portico at the entrance to the great hall.

It was January 23, 2006, and Boris Berezovsky was celebrating his sixtieth birthday with a black-tie ball in the baroque splendor of Blenheim Palace—the ancestral home of Winston Churchill and the Dukes of Marlborough. Through doors guarded by red-liveried footmen in bearskin hats, a string quartet was playing as two hundred guests sipped pink Champagne by a magnificent fire. Among them were all the key players in the oligarch’s global chess game.

Badri Patarkatsishvili was a picture of bonhomie, throwing his arms wide and planting kisses on the cheeks of all who passed him, while Ruslan and Katya Fomichev sashayed arm-in-arm through the crowd, Yuri Felshtinsky pontificated before a small audience, and Scot Young networked his way energetically around the hall. On the sidelines, Yuli Dubov laughed and clapped his hands with Berezovsky’s youngest children while Alexander Litvinenko and Akhmed Zakayev huddled conspiratorially in the corner, deep in conversation. What nobody yet knew was that an agent of the enemy was in their midst. Vladimir Putin had, finally, gotten a pawn to the back of the board.

Andrey Lugovoy did not turn up by limousine. He was among the less glamorous guests who were brought to the palace by bus from London, arriving in a shabby brown corduroy coat slung over his dinner suit. Boris and Badri’s former head of security at Channel One had finished serving his time in Moscow for the plot to spring Nikolai Glushkov out of jail, and no one thought twice about trusting him when he washed up in the UK looking for help getting back on his feet. It was Patarkatsishvili he’d called first. The Georgian oligarch was now splitting his time between Surrey and Tbilisi, having snapped up the deeds to Downside Manor, a grand residence not far from Berezovsky’s Wentworth Estate house, and he’d invited the former security man to visit.

Lugovoy was as fair and boyish as he was inscrutable. His rosy cheeks, short blond bangs, and easy smile created a general appearance of wholesomeness—but for a slight tension in his gait and the way he watched the crowd from the corner of his eye. He had served in the KGB as a bodyguard before going on to work for Boris and Badri, so Litvinenko had been particularly eager to welcome him into the world of the exiles. The defector wanted to start making money selling private intelligence in London, and he was looking for a Russian partner.

The pair could almost have been brothers, with their sandy hair, watchful manner, and KGB academy ways, and they had struck up an immediate rapport. So when Lugovoy sidled into the great hall, Litvinenko hastened to join him, keen to continue their discussions about ways to make their security acumen pay in London. Lugovoy was only too happy to talk shop and smile for pictures with Litvinenko and his elegant wife, Marina. He knew this little partnership would indeed prove very lucrative.

A commotion erupted as Berezovsky entered the hall. The oligarch swept past a giant Kremlin-shaped ice sculpture and a look-alike of the queen in a red cape and feathered hat as he made a beeline for Patarkatsishvili. The old friends shared a warm backslapping embrace before Berezovsky broke away to greet his fixer. Young was not looking quite himself. His dark curls were slightly slick with sweat around his collar, his bow tie was askew, and his eyes were a touch glazed. But he broke into a brilliant grin as soon as he saw Berezovsky, throwing his arms around the oligarch and bellowing, “Boris! This is fantastic!”

The guests were soon ushered into the library for a candlelit banquet serenaded by opera singers. During the meal, Berezovsky’s twelve-year-old daughter burst out of a cake and performed a belly dance in a pink sequined skirt and bra. When the repast was over, Young slugged back a large brandy as he watched Zakayev present his benefactor with a carefully wrapped samurai sword while Patarkatsishvili cavorted around the dance floor to “Brown Eyed Girl” with Marina Litvinenko and Lugovoy strolled through the crowd stealing sidelong glances and puffing on a cigar.

Berezovsky was in his element—the big man at the party, embracing everyone, toasting mother Russia, and showering his loyal followers with largesse. The evening culminated in a spectacular fireworks display over the lake before the chauffeurs brought the cars around and the guests said their flurry of goodbyes. The exiled oligarch stood on the steps of the palace, watching his guests roll away down the torchlit drive until the last of the limousines had vanished into the darkness. Then, suddenly, it was all over.

The Kremlin chose Berezovsky’s birthday to fire a humiliating salvo at Britain. The Russians had discovered an MI6 portal into Moscow—a transmitter hidden inside a fake rock that had been planted on a city street. The device was being used to conduct digital dead drops: a Russian source would stroll past and beam secret information into the rock using a small handheld computer, and MI6 officials would come along a few hours later to harvest it using a wireless receiver. The FSB had known about the rock since the previous year and had been spying on the spies for months, secretly filming them and their top-secret Russian sources performing their drops and pickups.

Russian state TV revealed the find in a crowing newscast, showing images of the rock with its top sawed off to expose the transmitter inside and airing the secret film of the agents and their handlers at work. The covers of four British spies were blown, and a mole they had been running inside Russia was arrested. It was an unalloyed disaster for MI6, and it came at a particularly delicate time.

Britain had just handed over the presidency of the G8 to Russia, and preparations were under way for the group’s first summit to be held in St. Petersburg that summer. Days before the spy rock scandal broke, the Kremlin-owned gas giant Gazprom had sent shock waves through European energy markets by shutting down a critical pipeline through Ukraine, threatening to cut off the heat in homes across the continent in the depths of winter. The taps had been turned back on after a four-day standoff over prices, but the crisis was a stark reminder of Russia’s stranglehold on European energy, and EU leaders were anxious to lock the Kremlin into guaranteeing a secure supply of gas and oil at the summit.

Britain was eyeing another big energy prize. The London Stock Exchange was readying itself for the flotation of Rosneft, the Russian state oil company, which was scheduled to go ahead on the eve of the summit, in mid-July. Britain’s Financial Services Authority had approved the initial public offering—despite protestations that the bulk of Rosneft’s assets were stolen from the rival oil giant Yukos, whose owner, Mikhail Khodorkovsky, had been jailed and stripped of his riches after criticizing Putin. The flotation promised to earn the City of London a fortune, and the British oil giant BP was planning to snap up a massive stake in its Kremlin-owned rival. So the government was eager to ensure it all went smoothly, and the spat over the spy rock was not a happy development.

It was at this sensitive moment that Berezovsky chose to launch his latest broadside. Incensed by a story planted in a Kremlin-controlled newspaper alleging that he had obtained political asylum in Britain through fraud, the oligarch lashed out more ferociously than ever—phoning in to the Echo Moscow radio station to announce baldly that he was plotting the violent overthrow of the Russian government.

“The regime is doomed, and I want to see it collapse before Russia collapses,” he declared. “There is only one way out: a coup. A forced seizure of power.”

Berezovsky, who claimed to have been plotting an armed uprising for eighteen months, could have made no more incendiary statement as Putin licked his wounds in the wake of the Orange Revolution. The move threatened to plunge diplomatic relations between London and Moscow further into the freezer—infuriating Blair, who had taken such pains to repair the damage after the last row over Berezovsky’s asylum status.

The foreign secretary was dispatched to the House of Commons to condemn the oligarch’s remarks and restate the country’s “close working relationship with Russia, as a valued partner of the UK.” Jack Straw stressed that Berezovsky had not entered the UK at the government’s invitation, and he issued a stark warning to the turbulent oligarch.

“Those granted asylum in the United Kingdom have duties to the UK,” he said. “They are advised that their refugee status can be reviewed at any time where it is considered their presence is not conducive to the public good.”

The Kremlin promptly challenged Straw to put his money where his mouth was, issuing a fresh extradition warrant for Berezovsky on charges of violent sedition. But again, Judge Workman stood in the way, throwing out the request at Bow Street magistrates’ court that June. Berezovsky had succeeded in landing another stinging blow on the Kremlin before ducking back behind the obdurate shield of British justice. But by then, a furious Putin had already set other plans in motion.

The following month, a new “antiterror” law passed through the Russian parliament, giving the FSB a license to kill enemies of the state on foreign soil. It was accompanied by the announcement that the Kremlin’s hit list of targets had already been drawn up. The exiles soon heard from their remaining FSB contacts exactly what they already feared: Litvinenko, Berezovsky, and Zakayev were at the top of the list, along with their friend the Novaya Gazeta journalist Anna Politkovskaya.

Litvinenko was particularly terrified. Putin’s murderous intentions were no surprise, but this amounted to a public declaration of war. At least covert killing was a hit-and-miss business, but whacking people in broad daylight would be child’s play for trained assassins. For the first time since he got his British passport, the defector no longer felt safe in the land he had made his home. He turned to a new hero for help.

Oleg Gordievsky was the jewel in the crown of British espionage during the Cold War. The former KGB colonel was the most senior Russian spy ever recruited by the West, working for MI6 as a double agent for more than a decade in the ’70s and ’80s. During that time, by happy fluke, he was put in charge of intelligence gathering at the Soviet embassy in London, thus nullifying Russian spying operations in Britain with a single stroke while continuing to feed his handlers prized intelligence on Soviet nuclear plans and political machinations. Gordievsky was a national hero who went on to be decorated by the queen for “services to the security of the United Kingdom,” and he had become something of a mentor to Litvinenko. After discussing the new laws with the younger defector, he sent a letter to the London Times that minced no words.

Sir,

As the seven leaders of the world’s most industrially developed democracies are packing their suitcases in order to go to St Petersburg for the G8 meeting, their would-be host, Former KGB Lieutenant–Colonel Vladimir Putin, has rushed through the state Duma two new pieces of legislation.

First, a new law enabling him to use his secret services as ‘death squads’ to eliminate ‘extremists’ anywhere abroad (including in this country). Second, an amendment to existing law on fighting ‘extremism’, providing a much broader definition of that ‘crime’ which, among other things, will include now any ‘libellous’ statements about his Administration.

Thus, the stage is set for any critic of Putin’s regime here, especially those campaigning against Russian genocide in Chechnya, to have an appointment with a poison-tipped umbrella. According to the statement by the Russian Defence Minister Sergei Ivanov, the black list of potential targets is already compiled. In keeping with the best traditions of the Soviet-era foreign policy, which always strived to make the world an unwitting accomplice of their crimes, this masterpiece is delivered precisely to coincide with the G8 meeting, which will serve to provide a semblance of approval, or at least of acceptance, by the world of this new development in the ‘common fight with terrorism’.

Needless to say, this is an extremely dangerous development. Unless the Western leaders are prepared to share responsibility for murder…they must cancel their meeting, or, at the very least, should protest loudly against such abuse of the G8 chairmanship.

The summit in St. Petersburg went ahead in mid-July without a hitch. Energy was at the top of the agenda. As Blair landed in the city, he received news that the Rosneft flotation had netted the Kremlin $10.7 billion—making it the then fifth-biggest initial public offering in world history—and BP had snapped up a $1 billion stake. That didn’t stop Putin from making his rancor over Britain’s refusal to extradite Berezovsky and Zakayev felt during the talks at the Konstantin Palace. In response to suggestions that Russia’s allies Iran and Syria should be sanctioned for harboring Hezbollah fighters, he fired a shot in Blair’s direction: why, he asked, didn’t the group focus instead on “other countries that harbor people who are quite obviously terrorists?” But the summit moved toward a broad agreement that Russia would guarantee a steady supply of oil and gas to the European mainland—even if Putin did manage to duck out of signing anything locking him into that pledge.

If the foreign secretary’s threat to withdraw Berezovsky’s political asylum had given the oligarch any pause, he wasn’t showing it. Instead he had taken out full-page newspaper advertisements on the eve of the summit, portraying Putin as Groucho Marx. Underneath was the comedian’s famous slogan: “I wouldn’t want to belong to any club that would have me as a member.”

Berezovsky’s mischief making was easily ignored—and so was Gordievsky’s letter. The assembled world leaders raised not a word of public protest about Russia’s new laws legalizing overseas assassinations. They carried on courting Putin.

London, Moscow, and Miami—2006

Project Moscow was on the rocks. The trouble had arisen just before Christmas, a few weeks ahead of Berezovsky’s birthday party, when Young missed the deadline to provide the last tranche of money he had promised to put into the deal. The usually cool and collected Fomichev sent him a furious email. “Today on thursday 22 DECEMBER!! we received no moneys from you,” he wrote. “I do not feel that i have to be responsible towards you when you are not doing the same to me.”

The fixer kept resurfacing with promises that the money was coming at any moment, but when he missed another payment deadline at the start of February, his Russian partner was at a loss for words. “What the.….…!!!!!!” Fomichev wrote.

“I am juggling,” Young responded. “You will have it before 12 tomorrow.”

Young’s final $5 million was vital for keeping the city government on board: a raft of payments was due to officials in charge of granting permission for the development, and Luzhkov was quick to anger when his people didn’t get what they were owed. “I am leaving tom to moscow and need to meet with you to discuss our position with the moscow mayor,” Fomichev* emailed Young, to no avail.

The funds never materialized, and in March, Fomichev finally pulled the plug on Project Moscow.

The first Jonathan Brown heard of the trouble was when news reached him that Young had lost everything, had attempted suicide, and had been committed to the Priory “psychiatric” hospital. Brown didn’t believe a word of it, and he got on the phone to Young.

“Scot, it’s me,” he bellowed. “You’re not in the fucking Priory. Let’s go to Boujis and do some blow!”

Brown’s hunch was right: Young had not been committed, though he had visited the Priory voluntarily after taking too many tranquilizers and superficially cutting his wrists—something doctors noted he had done because he “wanted people to think he was suicidal.” Then he had fired out a series of incoherent emails to the Project Moscow investors, to whom he owed millions, telling them he was “heavily sedated,” rambling about suicide, and promising to resolve the crisis when he recovered.

Brown persuaded his friend to get on the first plane to Miami. When he arrived, it became clear that Young’s suicide attempt was a sham designed to buy time with his angry creditors, and Brown soon had him chucking back cocktails at the GreenStreet Café, in Coconut Grove. But it was also clear that trouble really was brewing in London and Moscow. Young insisted that he had lost everything and was tens of millions of pounds in debt, but he wouldn’t say how this had come to pass. To Brown, it seemed as if the sky had suddenly fallen in on his friend.

Young had underwritten every penny that British investors had funneled into his half of Project Moscow, and now that the scheme had collapsed he owed them more than $20 million. On top of that, he had racked up huge loans and mortgages with various banks and a whopping bill from the UK tax authorities that he said he could no longer afford to pay. Most alarmingly of all, back in Moscow, Mayor Luzhkov’s government was on the warpath.

The city administration had turned on the Project Moscow investors following the failure to pay for the required permissions to build the development, and now it was attacking from all sides in a bid to seize control of the site and all its assets. Officials were claiming a debt of “several million rubles” in back rent for the government-owned buildings on the land, and politicians were raising a hue and cry in the state parliament about unauthorized construction, demolition, and the felling of trees on the site. Then state prosecutors announced that all the investors were under investigation for “economic crimes,”† and the FSB started digging into the finances behind the development. Suddenly Berezovsky’s secret investment was in danger of being exposed.

Fomichev swept in to save the day, arranging for a Russian company called Guta Group to buy out all the investors and take control of the site in an eleventh-hour deal to stave off the attacks from Luzhkov’s administration. The owners of Guta Group were old friends of Fomichev’s, and they had a number of other irons in the fire in Moscow, so they planned to use the site as a bargaining chip “for negotiation purposes with the government on other matters.” That kept the wolf from the door in Moscow, but Young was plummeting deeper into crisis. He was being served with writs and freeze orders from creditors on an almost weekly basis; one by one his mansions in London, Oxford, and Florida were being repossessed or sold to pay his debts; and his collections of exotic cars, luxury watches, and antique furniture were all seized by angry lenders.

Everyone remained mystified about what had caused the fixer’s finances to implode so suddenly. Some friends speculated that his business empire had been a house of cards all along, built by borrowing on the back of assets he never really owned. Others heard rumors that a deal with the Russian mafia had gone bad. But Michelle had her own theory. The marriage had been in trouble for years, and she was convinced this was a ruse to hide his fortune so he could leave without paying her a penny. While Young was pretending to be in the Priory, he had instructed a lawyer to phone his wife and tell her he had lost everything and attempted suicide—adding, for good measure, that he had also been having affairs with “hundreds of girls.” The call had its intended effect: shattering the marriage irrevocably and clearing the path for Young to start a new life on his own terms. But it had also filled his wife with white-hot hatred.

Michelle filed for divorce, claiming that her husband was hiding “a few billion at least.” She put together a team of lawyers, private detectives, and forensic accountants to hunt for the missing money. Then she obtained a worldwide freeze order on all Young’s assets, including the Mayfair property that had been used to funnel Berezovsky’s funds into the scheme. So began the longest-running High Court divorce battle in British legal history, conducted in a continual blaze of media attention. And the secrets of Project Moscow were at the heart of the case.

Young went to every length imaginable to keep the lid on his Russian business dealings. He flouted repeated court orders to disclose evidence explaining the disappearance of his fortune, and he destroyed hundreds of emails he had exchanged with Berezovsky. He would even spend three months in prison for contempt of court rather than reveal the truth. And yet, somehow, he maintained a lifestyle beyond the wildest dreams of the average citizen—dining in fine restaurants, staying in penthouse apartments, dressing in designer clothes, and paying for purchases with huge rolls of £50 notes.

Brown was just as mystified as everyone else. He couldn’t believe that Young’s hundreds of millions had really gone up in a puff of smoke overnight, but some sort of calamity had clearly befallen his friend. He wondered whether Young’s sudden financial collapse was linked to a change in circumstances for Berezovsky.

In February of 2006, just as Project Moscow was imploding, Patarkatsishvili announced that he wanted a financial “divorce” from his longtime partner. Berezovsky’s increasingly savage attacks on the Kremlin were getting in the way of business. Russian prosecutors bearing down on him with embezzlement and money-laundering charges had by then enlisted the help of several foreign authorities, with the result that his properties in France had been raided by armed officers and the funds he had stashed in Swiss bank accounts were being systematically frozen. The onslaught wasn’t only directed at Berezovsky: those doing business with him also risked a freeze on their accounts, and several Western banks were refusing to accept Patarkatsishvili’s money under pressure from the Russian government. Berezovsky’s call for armed revolution in Russia had been the final straw. The Georgian oligarch told his partner he wanted to separate business from politics, and Berezovsky agreed, telling everyone that the split was just a sham devised to take the heat off their shared investments. Patarkatsishvili would handle all the finances while he continued to campaign against Putin—and, behind the scenes, everything would still be shared.

Did Berezovsky’s separation from the purse strings have anything to do with Young’s sudden financial fall? Brown never did work out exactly what happened, but there were two things of which, with hindsight, he would say he was absolutely certain.

“Money went missing. And then people started fucking dying.”

* Fomichev said he had never discussed the project with the mayor and did not recall this email, but he said it had likely been sent “to pressure Scot” into paying the money.

† No charges were ever brought.