From the day he arrived at the Russian mission to the UN, Poteyev had been closely observed by the FBI. They did this to all Russian officials using observation posts, surveillance teams, and bugs. But the FBI and CIA had a particularly good insight into what was going on at the Russian mission to the UN while Poteyev was there. That was because they already had a spy on the inside. Sergei Tretyakov was technically a first secretary but actually the deputy SVR resident since his arrival in 1995. A rotund, outgoing character, Tretyakov was one of those who looked at the SVR in the mid-1990s and saw only decay. When he visited Yasenevo, he remembered how it had grown grimy in his absence. The bathrooms, once spotless, now looked more like you would expect in a railway station. People looked unkempt and were drinking and leaving the office early. Jobs had been cut and many had gone off to make money. Disillusioned, he began working for the Americans and would spend the late 1990s providing highly valuable intelligence, including the names of undercover SVR officers across the United States and their agents.
The two Russians would have known each other, but Tretyakov did not introduce Poteyev to the Americans. Keeping agents separate was a vital principle of tradecraft or else the risk would be that one of them—if discovered or turned—could compromise the other. Tretyakov would, though, have been able to tell the Americans all about the officers in the mission, including Poteyev, which may have aided their understanding of him and whether he could be approached. In October 2000, rather than return to Russia, Tretyakov simply disappeared. SVR operations in North America were dealt a huge blow. But the SVR did not know things were even worse than they feared. There was another spy.
Poteyev was watched for some time by the FBI. FBI teams study every Russian diplomat, building up a file on them. What is their work pattern? Does their routine make them look like a real diplomat or might they be a spy? What kinds of things do they do in their spare time? As well as hoping to catch them in the act of espionage (always difficult), the counterspies are looking for “the hook”—the aspect of their life you can cast your line toward and hope it catches so you can reel them in. Sometimes they will be overheard on the phone talking in a way that sounds like high-minded ideological disillusionment but other times it is because they are observed gazing longingly at large plasma screen TVs in shop windows as they walk downtown.
What motivates such people to turn against their country and spy? Occasionally in the Cold War there were genuine ideological turncoats. But money and general disillusionment were more of an issue for Russian spies in the 1990s. They had watched the ideology they had signed up for disappear and their savings evaporate. Some literally became chicken farmers. Meanwhile, they could see others back home cash in in the new world of crony capitalism. Why—after all their service—should they not have some little nest egg to prevent their family from struggling? That was one reason. But the truth is that simple answers rarely suffice. Each case is unique. If you speak to those who target Russians, they say the simple notions of motivation rarely apply. The reality is much harder to unpick. It is sometimes tempting to reduce it all to something like money or grievance or ego. But, one old hand explains, the Russians are complicated. They are all maneuvering in their bureaucracy against each other, sometimes sleeping with each other or their partners, collecting compromising information on each other, and holding grudges for some slight inflicted on them years ago—any of which could lead one of them to suddenly decide to turn. Another former spy has a different take. In post-Soviet Russia it was not the people you expected to turn who did. Rather than unhappy, low-level intelligence officers, it was more senior ones who changed sides. They had got far up the tree but then realized they were not going to go any further since when you reached a certain level, politics and corruption took over and it did not matter how good you were. That was the moment you might be willing to turn.
What was the case with Poteyev? Russian spies would later bitterly attribute Poteyev’s actions to the “unraveling” of the 1990s, when everything was for sale and when security was so lax and no one cared where you got your money or stashed it away. The 1990s were difficult times for Russia’s spies—the old certainties of communism gone, a new, almost alien world back in Russia in which a wild form of capitalism and gangsterism seemed to be flourishing. For old SVR hands, a demoralized service without an ideological compass was vulnerable to its opponents, allowing MI6 and the CIA to have a field day. His former colleagues would claim Poteyev sold them out “banally” for greed, saying the Americans exploited his love of money and alcohol. They would say that he had got fond of life in the United States and its luxuries. There would be talk of shady deals in which Poteyev was involved in money laundering and helping other SVR officers buy homes and move their cash to America. All of this was used by the CIA, the Russians would later say. Much of this was wrong, misinformation, or reflected the bitterness of betrayed colleagues. Here, for the first time, are the outlines of the story.
The recruitment of Poteyev took place in 1999, at the end of his posting. It was not by the CIA but by the FBI’s New York field office. Recruiting Russian intelligence officers inside the United States is the province of the FBI rather than the CIA. In general, the FBI’s job is to catch people breaking the law and the CIA’s job is to break the laws of other countries by stealing their secrets. One side is cops, the other robbers. They have different cultures and relations can be rocky. There was real tension in the late 1990s between the CIA and FBI over counterterrorism, but the relationship in New York on counterintelligence was tighter. New York—with the world of business as well as the UN—was a fertile hunting ground for the bureau’s officers seeking to recruit Russian assets and the FBI’s New York office was big enough to have a critical mass of counterintelligence expertise. “The New York field office is its own world—with its own worldview,” one former FBI counterintelligence officer explains. “Most New York agents believe the sun rises and sets in the New York office,” says another. With so many potential targets in the city, the office had experience and swagger.
The field office is housed at Federal Plaza, a few blocks from the site of the twin towers of the World Trade Center. The counterintelligence team in the late 1990s was housed on the twenty-sixth floor, part of the National Security division, which was headed by the larger-than-life John O’Neill. In 2000, he mislaid a briefcase for a few hours that contained details of counterterrorist and counterespionage cases (perhaps including that of Poteyev). The briefcase incident provided one more excuse for those who did not like his hard-charging style, and he left soon after for a job at the World Trade Center, where he died on September 11, 2001.
The FBI would have seen that Poteyev liked life in America. But that was not a reason to assume he’d be open to spying for the United States. He was pitched by the FBI to see if there was a chance he might turn. This was commonplace. And it had happened with him not just once but again and again. He had declined. But as his posting was coming to an end and he was about to return to Russia, something changed. He decided he was ready. Why? It seems to have been a mix. There was certainly money. Like others in Russia in the 1990s, his pension had been cut drastically. There was also some disillusionment at the way the SVR had acted back home, including on a personal level, failing to support him through some difficult family times, including the death of a relative. But there was also disgruntlement. He wanted to extend his tour in the United States, but his request had been denied by Moscow Center. Poteyev was not quite what is called a “walk-in”—someone who walks in off the street and offers him or herself out of the blue. Rather, it was as his time in New York came to an end that he changed his mind and indicated he was interested. The Russians believe he was recruited in June 1999. US officials will not comment.
It was precisely what had annoyed him—having to go back home—that offered a rich opportunity for the FBI. Tretyakov had defected and stayed in the United States, but the real prize was being able to run an agent-in-place in Moscow who could continue to work his way up the system and deliver secrets. That is what the FBI wanted and the risk Poteyev was willing to take.
To succeed, an intelligence organization makes sure the recruitment and running of an agent is on a need-to-know basis within its own corridors. There is a reason for that. And the Poteyev case was a prime example. Just as the FBI had, in the form of Poteyev, recruited a source inside the SVR, the SVR was at that time still running its own agent inside the FBI who had not been identified. Robert Hanssen was the man who had been dropping off secrets in the park on August 19, 1991, as the Moscow coup took place. A misfit who shared details of his sexual fantasies about his wife online, he began to spy way back in 1979. He had actually stopped in the wake of the coup and the end of the Soviet Union, but in 1999, he resumed contact with the SVR and began to provide more vital intelligence. If word had got around the bureau about the new recruitment, Poteyev may not have lasted long. The counterintelligence spy games of the Cold War had still not yet finished playing out.
As he landed back in Moscow, Poteyev would have known his new secret could destroy his life if it was discovered. He was heading for a double life and walking his own tightrope, one that he knew could end at any moment if he made a slip or—more likely—if someone else betrayed his secret to the SVR. But on his return, he received a dream posting—for him and his new American friends. He was to join the senior ranks of Directorate S. He would eventually become the deputy head of Department 4—the team responsible for running illegals in the United States, Canada, and Latin America. This was one of the most secretive, compartmentalized parts of the entire SVR. Only a tiny group of people was allowed to know the identities of illegals sent abroad, in order to protect them. Only three officers had access to the personal files of illegals operating in the United States. Poteyev was going to be one of them and he was in charge of their day-to-day operational management. This was a stunning success for his handlers—if they could keep him from getting caught.
RUSSIA’S SPIES WERE on the back foot. And at the same time that the United States was scoring a success with one veteran of the Afghan war, MI6 had managed something similar with another. And the fate of the two spies would ultimately be drawn together.
IN MADRID IN the summer of 1996, a rugged first secretary at the Russian Embassy was walking in a park with a businessman from Gibraltar. The first secretary was an officer of the GRU—military intelligence. His name was Sergei Skripal. The businessman was an MI6 officer operating under “natural cover.” The Russian had been spotted by the Spanish as someone who might be interested in money. He was first introduced to a Spaniard. They talked about going into business together, exporting wine to Russia. The Spaniard next introduced Skripal to the businessman, who would offer something more lucrative but also more dangerous. The lure was the promise that together they might be able to go into the oil business in Russia. But as Skripal prepared to return to Moscow at the end of his posting, the MI6 officer showed his hand and revealed what he was really after.
This was typical of the kind of pitches to Russians in this period. It would involve approaching someone and offering them a contract for consultancy or discussions about business. No secrets would pass. But after a while, it would be explained that this work was sadly at an end but there was another possibility—perhaps further business dealings of a more sensitive nature. This would require the individual being put in touch with someone more closely associated with the British government. If you pitch right away saying, “Do you want to pass secrets for money?” the answer will be no. But one step at a time, reeling someone in can be a lot easier.
By the middle of the decade, MI6 had reduced by two-thirds the amount of effort it put into spying against Russia and the former Soviet Union. But a sharp young officer, Charles Farr, had taken over Russian operations in London and made the case that MI6 needed to take advantage of the moment and recruit sources for the long term. The officer who met with Skripal was a prodigious pitcher of Russians; “a magic recruiter” is how one of his colleagues remembers him. Skripal proved receptive. The reason was simple—he liked money and did not have much.
Skripal grew up in Kaliningrad, a strategic enclave on the Baltic coast sandwiched between Poland and Lithuania. It was a closed military zone but near enough to the West for the young Sergei to pick up the tinny sounds of BBC World Service radio, which carried news of a more colorful world. His father had been an artillery officer and Skripal joined the elite Soviet airborne troop. He, like Poteyev, had been sent to Afghanistan at the opening of the conflict to carry out undercover missions. These included targeting locals suspected of working with the CIA. Where Poteyev worked for the KGB, Skripal was selected to join Russian military intelligence—the GRU. The eyes and ears of the General Staff, it had always been a tough and uncompromising service, motivated more by patriotism and a military ethos than the ideological focus of the KGB, with which it competed.
The GRU took treachery seriously. There were claims that recruits were shown a film of one traitor being pushed into a furnace and burned alive. It was the one part of the Soviet Intelligence apparatus that did not change in name or culture as the Soviet Union became Russia. It included special forces and its own illegals whose job was to prepare for sabotage in the event of war. Caches of weapons were left ready (the West did something similar in Western European nations in case they were overrun). The GRU also had officers stationed under diplomatic cover in embassies, collecting information on military intentions and technology, including by recruiting agents. Skripal’s role, after graduating from the Diplomatic Military Academy, was in its First Directorate, which focused on Europe. After the collapse of the Soviet Union, he had ended up in Madrid. And by the end of his time there he had acquired an MI6 code name: Forthwith.
How important was he as an agent? Opinions differ. In the late 1990s, the customers of MI6—the Foreign Office and Ministry of Defence—were primarily interested in political developments in Russia and details of proliferation of weapons of mass destruction. But what Skripal could offer was largely counterintelligence—details of the GRU and its operatives. This was of niche value, although for those interested in it, Skripal was an excellent source. His cooperation was erratic rather than regular. He was not classed as a full-fledged, recruited agent when he left Madrid and no one was sure his cooperation would continue when he returned to Moscow. But it would. And his new, senior role in the personnel department meant he was able to identify hundreds of GRU officers operating under diplomatic cover overseas, whose details MI6 could then pass on to other countries.
By the start of 2000, Skripal and Poteyev were both in Moscow, providing intelligence from inside their own spy agencies. The actual recruiting of a Russian spy on their home territory of Moscow itself is almost impossible. The slow cultivation of a relationship and the careful conversations required to sound someone out would almost certainly be spotted by the vast counterintelligence machinery. But if you have managed it overseas—like with Poteyev in New York or Skripal in Madrid—then it may be possible to run them back in Russia. But only one of this pair would escape capture. With Poteyev in Directorate S, US intelligence had scored a stunning coup. They had opened up a window right into the heart of the most secretive part of their adversary’s operations against them. As long as they had their source in place, they would be able to track illegals operating in the United States.
BUT THE RUSSIA that Poteyev had returned to after his time in New York was about to change. After the chaos of the 1990s, a new power was rising in the form of a former KGB officer who had traitors in his sights. The United States had its window into the illegals program. But how long would it last?
7
The Investigation
RIFLING THROUGH SOMEONE else’s safety deposit box is the province of two kinds of people—thieves and FBI agents. On January 23, 2001, the latter were at work in Cambridge, Massachusetts, the leafy home of Harvard University. They were covertly searching through the personal items of one of the university’s recent graduates. They were there because, thanks to their source in Moscow, they believed the owner was a Russian illegal. Inside they found a birth certificate. It was for a Donald Howard Graham Heathfield. They snapped a photo and quickly returned it. It would take another four years for another piece of the puzzle to fit alongside the birth certificate. “Suddenly but peacefully,” Howard William Heathfield died at his home in Burlington, Ontario, Canada, on Thursday, June 23, aged seventy, a 2005 death notice in the Canadian press read. “Howie” left behind a wife, three children, two grandchildren, and two dogs, called MacGyver and Holly. There had also been a son, Donald. But Donald had predeceased Howard. Although the middle name was different, both the death announcement and the birth certificate listed the mother’s name as Shirley. Donald Heathfield was not who he said he was.
Investigating illegals—like being one—required patience and attention to detail. Inside the safety deposit box, there were also photographs of Heathfield’s wife, Ann Foley, when she was younger. Many people have their memory boxes—the keepsakes, photos, and letters to recollect an earlier life. But for an illegal to do so was dangerous since it was, almost literally, another life. It was a security lapse. Perhaps Foley needed something to cling to in order to remind her who she really was. Not Ann Foley the Canadian, but Elena Vavilova, the Russian from Tomsk. But she had made a mistake. Surviving as an illegal is all about details—tiny details. And Foley and Moscow Center had missed one. Stamped on the negatives was the name of the company that had produced the film. It was called TACMA—a Soviet film company. It was another piece of crucial evidence for the FBI as the investigation got under way.
It is a mistake to describe the illegals arrested in 2010 as a “spy ring” or network. That implies they were one group working together. The reality was that they were sent out in pairs or individually at different times—some deep in the Cold War, others toward its end, and some after it was over. They would have been aware there were other illegals in the country, but for reasons of security they would not know who they all were. The SVR would not want the discovery of one illegal to allow the FBI to find the others by following them. But for the FBI, this was not a case of finding one illegal and then following them to another. Thanks to Poteyev, their source in Moscow, they knew who was in the United States and who was coming.
The first act that the FBI monitored had come a year before the safety deposit box. On January 14, 2000, Vicky Pelaez made a trip from New York to her native Peru. There she met a Russian official in a public park. She was given a bag. Inside was money from the SVR. What she did not know was that two FBI agents were videotaping the whole show. Once that was done, she called her house in Yonkers, New York. The FBI were also listening in on the line. “All went well,” she told Juan Lazaro. Vicky Pelaez was neither Russian nor an illegal but she was married to someone who was both. And she has always maintained she did not know her husband was a KGB illegal whose career had begun deep in the Cold War.
PELAEZ WAS A dark-haired, charismatic Peruvian. She was not a trained spy and her marriage was not arranged by Moscow Center. And rather than keep a low profile, she had lived a life marked by drama, controversy, and an outspokenness that did little to hide her political views. Born in 1956, Pelaez had studied journalism and became one of the first female reporters in Peru, working first for newspapers and then TV. Stylish and brave, she broke down barriers and challenged the stuffy style of traditional news. She quickly built a reputation as a gritty journalist, unafraid to take risks, and knew how to insert herself into a story, slipping behind police cordons and getting herself into places she was not supposed to be. The country was beset by political violence, and in 1984, she had the kind of brush with danger that can make a reporter’s name. Pelaez and her cameraman were kidnapped outside their TV station’s office in Lima by the revolutionary group Tupac Amaru. They were blindfolded and driven away. The group demanded that Pelaez’s TV channel broadcast a propaganda video that was left in a garbage can in return for the pair’s release. A few hours after the channel broadcast the clip, in which armed and hooded rebels accused the government of torture, the two were freed. When she returned to the newsroom, she encountered distrust from some of her colleagues. Soon after, she left Peru and came to the United States in 1985 on a visa as a political refugee because she was worried about possible threats from rebels.
She left for America with a new husband. Her first marriage, when she was just seventeen, was to Waldo Marsical and they had a son named after him. But the marriage did not last. It was while on assignment as a newspaper journalist in the early 1980s that she met the man who went by the name of Juan Lazaro. He was a photographer, ten years older but he looked good for it. The two soon became close, as work mingled with her private life. “She was a very passionate woman,” a colleague in Peru later said. “To her, he was a hunk.” She was a fair bit shorter than him and he taught martial arts. At one point, he pulled her up on his shoulders while out in a story so she could get a look at what was happening at the presidential palace. “I first admired him for his knowledge and ideas of social justice, then I was attracted by his physical strength,” she later wrote. On December 3, 1983, they were married. But she had married a lie.
The real Juan Lazaro was a toddler who had died aged three of respiratory failure in 1947, his mother crying whenever she talked about him in the years after. The fake one was another Russian dead double. His real name was Mikhail A. Vasenkov. Little is known of his early life but he is thought to have been born in Moscow in 1942. He left home young, leaving a brother behind whom he would not see again. Nor would he be there when his parents died. He had been selected for the KGB’s Directorate S, deep in the Cold War. Once his training was complete, he was sent out on assignment. He had come to Peru, sporting a decent-size mustache, on March 13, 1976, on a Uruguayan passport in the name of Juan Lazaro Fuentes. Spain had been his stop-off point to build the legend. After three months there he had flown from Madrid to Lima, with a forged letter on the stationery of a Spanish tobacco company saying he was coming to the country to carry out a market survey. Two years later he used his passport and a fake birth certificate saying he had been born in Montevideo in Uruguay on September 6, 1943, to request Peruvian citizenship, which he received in 1979. He said he was Uruguayan, but a lot of people found the accent a little odd, more European than Latin American. He rarely spoke of his family.
