Jared Kushner Tempted by Russia’s Bank of Spies
Not every bank lists a convicted spy serving 30 months in an Ohio prison as its active deputy representative in New York. But then, not every bank is headed by a former spy, much less one found to have spent time with Jared Kushner during a “roadshow” last year, when Donald Trump’s son-in-law was then just a top campaign advisor and not a likely witness about to testify before a Senate committee on Russia’s meddling in U.S. democracy.
In those charmed days before the director of the FBI raised in an open session of Congress the very real possibility that some of the president’s men might be working on behalf of a hostile foreign power, there was the curious case of a Wall Street analyst who was handcuffed in his Bronx neighborhood in late Jan. 2015 after going out for groceries. His crime wasn’t peddling junk sub-primes to trusting pensioners but working for Moscow Center.
Evgeny Buryakov, a former tax inspector turned officer of the Sluzhba vneshney razvedki, or SVR, Russia’s foreign intelligence service, had arrived in the U.S. just weeks after the feds executed Operation Ghost Stories and brought down ten out of an 11-person spy ring of Russian “illegals,” without whom Anna Chapman’s clothing line and The Americans would now be impossible.
A member of the SVR’s Directorate ER, the division tasked with gathering economic intelligence, Buryakov was paid $200,000 to pump his fellow Wall Streeters on information ultimately beneficial to Russia’s GDP, or at least harmful to the nation’s marketplace competitors. His biggest coup, evidently, was helping Rostek, the state-owned defense manufacturer, nearly come away with a handsome contract with Bombardier, the Canadian aerospace firm.
Buryakov’s day job was as the second most senior executive in New York for Vnesheconobank, or VEB, the Russian state-owned development bank, and therefore a convenient cover for calling in sick to cultivate agents in Manhattan. Not that the bank was terribly concerned about its quarterly P&L.
VEB has was sanctioned by both the U.S. Treasury Department and the European Union in 2014 for its role in underwriting the ongoing war in Ukraine, a penalty the bank has said would have “no effect” on its operations. This was months after the debut of its biggest “investment,” lending the majority of the $50 billion that went into hosting the Sochi Olympics, an event described by Kremlin critic Boris Nemtsov as a winter sporting event in the sub-tropics.
The former deputy prime minister, who was fatally shot in the back within steps of the Kremlin in 2015, found that Putin’s long hoped-for games in the seaside resort city was an elaborate racket, with VEB forced to assume a Lehman-laughable liability it could never hope to recoup.
“The lion’s share of the construction is being done either at the expense of the state budget, through state corporations, or through shareholder associations which are either state property or under state control,” Nemtsov and his cowriter Leonid Martynyuk observed. “The rule operating with regard to private investments has been that 70% of the investments are covered by loans from the Vneshekonombank (a state corporation!) and 30% by private contributions. However, by the end of 2012, the government admitted that practically all the Olympic buildings, without exception, were running at a loss and would never pay for themselves.” VEB then increased its loans for Sochi to a staggering 90%.
Perhaps sensing that the veil had already slipped, Vladimir Putin appointed one of his own, a former spook with a law degree, to the chairmanship of VEB in Feb. 2016.
Sergei Gorkov had graduated from the FSB Academy, the finishing school for domestic operatives, in 1994 before heading the personnel department of Yukos, the oil company then owned by Russian oligarch Mikhail Khodorkovsky. (Full disclosure: I formerly worked for the Institute of Modern Russia, which was headed by Khodorkovsky’s son.) It was by no means uncommon in the Yeltsin era of privatization for suddenly under- or unemployed Chekists to get hired by billionaire industrialists in need of those with a skill set best defined by the expression, rabota s lyud’mi: “working with people,” roughly translated as HR for KGB.
By most accounts, Gorkov seemed well-liked and capable at his job at Yukos. One former colleague described him as being a good-calm manager “without excessive FSBness.” He was also inscrutable. Asked what stood about his tenure at Yukos, a lawyer for Khodorkovsky replied: “Nothing interesting other than what is in his Wikipedia.”
Gorkov emerged untainted from the subsequent arrest and imprisonment of Khodorkovsky and the Kremlin’s takeover of Yukos and the redistribution of its assets into Rosneft, the powerful state-owned oil company, by going to work for Sberbank, a powerful state-owned bank, in 2008. (Both Rosneft and Sberbank have also been sanctioned because of the invasion of Ukraine.)
Tatyana Stanovaya of the Carnegie Moscow Center writes that Gorkov performed “valiant service” at the state-owned Sberbank, where he served as one of 11 deputies to CEO German Gref, one of Putin’s closest friends and advisors from their days in the St. Petersburg city government in the 1990s.
Gorkov was first assigned to “optimizing personnel policy” during Gref’s reforms at bank, which were mainly geared toward international business. He was tasked with removing 30,000 people in his first two years, then another 240,000 by late 2010, and hiring the top managers.
In October 2010, Gorkov was made a member of the board as deputy head and in charge of international operations. He started acquiring foreign banks such as Volksbank International AG in Austria and DenizBank in Turkey. (Volksbank which had branches throughout Eastern Europe and the Balkans as well as Ukraine turned out to have a worse loan portfolio than realized when it was purchased: the “unreserved sum” was 80 million euros.)
In December 2015 Putin in his annual speech to the Federation Council, Russia’s Senate, had said a “clean-up” was necessary in “institutions of development.” Many of these “had turned into a garbage pit for bad debts,” he said. At that time VEB was being threatened with being put under the control of the Bank of Russia, the nation’s central bank, as a commercial institution. It needed some $22.8 billion by 2020 to cover defaults on foreign debts.
According to an anonymous source at VEB interviewed by Russian news outlet RBC, Putin had wanted someone with a “law-enforcement background” to head up VEB. Gorkov was the only man under Gref with that resume. VEB, unsurprisingly, received the $22.8 billion.
Now Gorkov finds himself in the national spotlight for having kibitzed with Kushner last year at undisclosed locations, either before or after Kushner also sat with Russia’s ambassador to the U.S. Sergei Kislyak — but hey, who hasn’t in Trumpland? All we know about these encounters were that they were perfectly innocent marriages of true minds between two captains of industry. VEB met "with a number of representatives of the largest banks and business establishments of the United States, including Jared Kushner, the head of Kushner Companies,” the bank told Reuters in a written statement.
Kushner didn’t respond to Reuters, but the White House explained his offer to testify before the Senate Intelligence Committee to CNN as follows: “Throughout the campaign and transition, Jared Kushner served as the official primary point of contact with foreign governments and officials.”
A good opening question would be: Did he realize that by meeting with this chairman of VEB, he was meeting with two different kinds of foreign government officials at once?