Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.twt.news From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: New life for old warriors of KGB Date: Sun, 15 Nov 92 16:56:27 EST Message-ID: \SE A;SPECIAL REPORT \HD New life for old warriors of KGB \SH KGB's warriors come in from the Soviet cold \BY Bill Gertz \CR THE WASHINGTON TIMES \DT MOSCOW ****FORMER INTELLIGENCE OFFICIALS WHO ONCE FOUGHT FOR COMMUNISM ARE DISCOVERING THE JOYS OF CAPITALISM**** MOSCOW - Lenin must be turning over in his Red Square tomb. Since the collapse of the Soviet Union in December, the huge KGB intelligence and security apparatus - once the self-professed sword and shield of the Communist Party - has disbanded, putting nearly a quarter of a million agents out of work. So tens of thousands of former secret police and intelligence officials who once fought for communism in the trenches of the Cold War are now entrepreneurial capitalists. With crime on the rise in the anything-goes, Wild West conditions of post-Soviet Moscow, these former spooks and secret policemen are plying their services in the growing field of private security and corporate intelligence. Throughout Moscow one can see scores of hired security guards dressed in combat fatigues posted at hotel entrances, outside nightclubs and bars, and in front of many private businesses. Other former intelligence officials, like their counterparts in the West, are finding lucrative work as business and marketing consultants, helping Russian companies get started and assisting foreigners. According to Stolitsa (Capital), a weekly magazine in Moscow, 75 percent of the employees of the Russian Stock Commodities Exchange Center are former KGB officials. Many of them are assisting Western businesses in checking out prospective partners vying for joint business ventures or in analyzing industry trends or the country's political stability. "People who have experience working in the West, understanding market economies and market enterprises, have an easier time getting involved in business," former KGB spy master Yuri Drozdov says. "So it's not so unusual. "By the way, former intelligence and military officers are the group least disappointed by the transition to the new way of life," he says. Gen. Drozdov, 67, once a feared and respected KGB leader, gave up a quiet retirement to form the business consulting firm Namakon earlier this year with two KGB veterans. He defends his turn to capitalism. "I never fought against private business," he says, noting that small companies he set up were useful in supporting secret agents in foreign countries. "Now, because of the new situation, this experience has helped me to be among the people and have some proper place in society, to fight, to work, to live," Gen. Drozdov says. And to get rich? "Why not?" he asks. In addition to Gen. Drozdov, who ran deep-cover KGB agents known as "illegals" in Germany, the United States, China and elsewhere until he retired last year, other prominent former KGB officials working in the private sector include: * Lt. Gen. Leonid Shebarshin, 57, acting KGB director for two days after the 1991 coup and a veteran foreign operations chief. In September he became head of Russian Federal Services for Economic Security, a holding company that works with Russian banks on security and economic counterespionage matters. Gen. Shebarshin hired a number of former intelligence officials for his company. * Maj. Gen. Viktor Budanov, 57, a former KGB operative abroad. He is now president of the International Association for Security of Business and Personnel, a group of 21 companies engaged in security and economic counterespionage activities in the private sector. * Maj. Gen. Oleg Kalugin, 57, former high-ranking spy master. He launched his own business, offering consulting services to companies in Moscow. Gen. Kalugin has been working with Paul Joyal, a former Senate Intelligence Committee staffer, and is paid up to $2,500 for a single consultation. He also signed a contract with a major U.S. booking agent for speaking engagements. Other companies run by former KGB officials are paid up to $200 a day for contract work involving corporate intelligence and security activities. A Russian security firm was paid $1,000 a day by a Western company to provide two security guards to protect its business executives. Namakon produced a report for one of its clients on the political stability in a certain region. The report was sold to other clients for an undisclosed sum. Start-up capital for security and intelligence firms staffed by former KGB officials came from individual savings, industries and banks. Namakon, for example, was launched on the pensions of its former KGB employees - a small investment of 10,000 rubles, about $200 at the time - and has since increased its capital many times. Other firms, according to published reports, are better off, with start-up funding ranging from 200,000 rubles for one security firm to a holding company with an initial investment of 200 million rubles. But most of the new companies are cash-poor, says a former U.S. intelligence official now doing business in Russia. "There's not a lot of need for political and economic analysis," the former official says. "They don't have money, but they're good at getting things done - getting licenses, setting up joint ventures and so on." The ex-KGB officers also are skilled at acquiring high-technology goods inside the former Soviet Union. The former KGB employees interviewed by The Washington Times declined to identify specific clients, claiming confidentiality. But Gerard Burke, a former National Security Agency official who heads Parvus-Jericho, a corporate intelligence and security firm in Silver Spring, says most American companies doing business in Russia, and there are many, turned to security firms in Moscow for some services. Among the U.S. companies moving into the Russian market, he says, are McDonald's, Pizza Hut, Pepsico, Coca-Cola, Mobile, Chevron and Conoco. A number of American law firms also are opening offices in Moscow and are expected to call on security firms for services. Last month, Mr. Burke hosted a delegation of 64 persons that included former CIA, FBI, military and intelligence officials who met their counterparts in the Russian security business. Delegates included security chiefs for Pizza Hut, Mary Kay Cosmetics, 3M and Honeywell - all of whom were looking to do business with the former KGB officials now in private business. Today, with the Soviet Union split into 15 independent states and the Communist Party in the dock trying to remain a legal entity, the KGB has been cut in size and its functions split among several organizations. Just a year ago, Russian officials announced the reduction of the KGB's work force from 490,000 - most within the domestic spying branch - to about 40,000 people. The foreign espionage branch with about 10,000 intelligence officers has been cut back to around 6,000, with similar cuts to its headquarters personnel, according to Yuri Kobaladze, press director of the Russian Intelligence Service, successor to the KGB's foreign spy section. Not all KGB veterans found employment. "There are a lot of colonels working as security guards in warehouses and at gas stations," Gen. Drozdov says. "It's because this is such a tumultuous period of change." Still, many security firms, staffed with former KGB employees, are thriving. Alex, which offers security services to businesses, is the largest private detective agency in the Russian capital. Alex boasts some 700 employees in Moscow, 2,000 employees throughout Russia and affiliates in several former Soviet republics and Western Europe. The company is even represented in the United States by a detective in Thomaston, Maine. Like many former police officials who worked for the Soviet Interior Ministry, or MVD, an arm of the KGB, Valentin Kosyakov, a one-time MVD detective, entered the private security business when personnel were let go. He formed Alex in 1989 with other retiring and laid-off detectives and KGB employees. At first it was difficult to convince clients that the company wasn't a front for Soviet authorities, says Mr. Kosyakov, 33, a specialist in economic crime who runs the agency. "People used to be afraid of the police and never believed they could do something well," he says. But now, Mr. Kosyakov says, "our business is going very well, and we are sure that our business and orders will increase. As more and more Western companies try to settle in Russia, they will all need at least some of our services." Rip-offs of Western businesses are one of the most common problems, where money is invested and Russian partners abscond with the cash or the equipment purchased with it. Alex is hired to recover the stolen goods. "My advice to Western businessmen is be careful," Mr. Kosyakov says. "As soon as they stand on Russian soil, that's the first danger," he says. "And second, in Russia that [there] are a lot of dishonest enterprises - economic criminals. Foreigners are not used to verifying first who they are dealing with and perhaps don't know how to check out with whom they are dealing." Alex agents have run several sting operations to recover stolen capital or goods hustled from inexperienced Westerners by fast-talking Russians. In one sting, operatives were hired by a computer software company in Moscow to find out who among its employees was selling the company's products on the black market. The security firm set up a fake computer company that advertised employment for computer programmers. Within days, the software thief showed up looking for work. He was fired by the software company. Like a good entrepreneur, Mr. Kosyakov boasts of the uniqueness of his company, saying it is the only private security firm whose personnel are authorized to carry firearms and use private communications networks. To impress a visitor, he pulls out a handgun from under his dungaree jacket. Mr. Kosyakov, who is also director of the Independent Detectives Trade Union, says 157 private detective agencies started up in Moscow over the past several years, employing 50,000 people in security and investigative work. Most are former KGB and MVD employees. To deal with the growth of security firms, Russia's parliament passed a law in March allowing the MVD to license private detective agencies for three-year periods. The law authorized companies to find insolvent business partners, research personal biographical data and do contract investigations for the authorities. The law prohibits collecting "privacy" data or information on political or religious convictions and bars current officials from moonlighting. "Doing business in Russia, you have to be ruled by the principle of dialectical materialism," says Gen. Drozdov, who started his marketing and consulting firm from his home in the spring. Despite the proliferation of security and consulting agencies, Namakon is not concerned about the competition. "Our market is bottomless. Bottomless," says Namakon deputy director Viktor Andrianov, 60, a 44-year veteran of the KGB's foreign intelligence branch. Genadi Serebryakov, also a Namakon deputy director, says he doesn't plan to become a millionaire but admits that his purpose in starting the business is to make money, contrary to the old Marxist maxim that profit is the root of evil. "The question is, to my mind, what do you mean by rich? . . . In our system you also try to go step by step, higher and higher, and live better," says Mr. Serebryakov, 54, a 30-year KGB veteran. "Personally, I was trying to have my family live better and better," he says. "I would like my family and myself to live better than someone else." Like their business counterparts in the West, the KGB veterans rely on networking. Gen. Drozdov says that before the demise of the Soviet Union, intelligence veterans met regularly to exchange views. Since the failed August 1991 coup, the number of close contacts dropped off, but former KGB officials still call him "looking for a job," he says. Namakon is working with its contacts, presumably former KGB officials, in former republics outside Russia. "We have a lot of connections because of some people we know in the former republics, now independent states," Mr. Serebryakov says. One current Namakon project includes attracting foreign businesses to invest in the Plesetsk region. Namakon is also considering cooperative ventures with former CIA counterterrorist official Vincent Cannistraro, now a private consultant, and with Mr. Burke's Parvus-Jericho, whose staff includes numerous former U.S. intelligence officials. Gen. Drozdov says he is not worried about competing with other former KGB officials now in business. The security business now headed by Gen. Shebarshin, for example, "is more concerned with economic security while we are more involved with marketing," he says. The retired cold warrior adds, "I prefer to talk not about competition, but about cooperation." ****BOX SECURITY CONSCIOUS Several new Russian government organizations have been formed from the remnants of the defunct Soviet Committee for State Security, or KGB, which was disbanded in October 1991. Ministry of Security: Largest of the former KGB components, it is in charge of domestic and military counterintelligence, internal security and counterterrorism. Recently reacquired 240,000 Border Guards trooops. Russian Intelligence Service: Conducts foreign spying and intelligence analysis. Federal Agency for Government Communications and Information: In charge of security and codes for government communications and collection of signals intelligence. Presidential Commitee for Leadership Protection: In charge of protecting Russian leaders. It also contains the Alpha group special forces commandos. Military Intelligence (GRU): Red Army general staff intelligence arm, transferred to the Commonwealth of Independent States military after August 1991 coup and recently placed under the direction of the Russian Defense Ministry. It conducts spying abroad and is the main photographic intelligence producer. Interior Ministry (MVD): Same as Soviet MVD directs police and some counterintelligence functions. Its troops are fighting civil strife outside Russia. Also contains special forces commandos. This article is copyright 1992 The Washington Times. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM