What Democratic senators and representatives wanted to know was this: Was there a connection?
It was a good question.
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My attempts to get information from Deutsche Bank over its lending to Trump were unsuccessful. House and Senate Democrats fared no better.
There were legitimate questions to ask. Such as:
Had Deutsche Bank sold any part of Trump’s debt to foreign entities?
Plus, what meetings had the bank held with the Trump administration? Had Trump or his family received preferential treatment? Who decided to carry on lending to Trump after he defaulted in 2008? Had Russia or Russian entities underwritten any aspect of these loans? Was Deutsche Bank shielding the president of the United States because of the Justice Department’s ongoing investigation into mirror trades?
Every inquiry, question, and query came up against a wall. Deutsche Bank’s press offices in London and Frankfurt refused to comment. The policy was to say nothing about the president, whose tax filings remained a mystery. It was difficult to interpret the bank’s noncooperative approach. A cover-up? Or the actions of an institution terrified of what the Trump White House might do to it, given the motivation?
Meanwhile, I was piecing together another Russian money-laundering scheme, one also involving Deutsche Bank. A group of Moscow bankers were sending cash out of the country via a different route, nicknamed the Global Laundromat. Putin’s cousin Igor Putin sat on the board of one such bank. The Laundromat ran between 2010 and 2014. It processed at least $20 billion. The true figure may have been $80 billion.
It was this investigation that had led me and my Guardian colleague Nick Hopkins, in December 2016, to the Shakespeare Pub and our meeting with Christopher Steele.
The scheme involved shell companies set up in the United Kingdom. These companies “lent” money to one another, at least on paper. Russian businesses underwrote these “loans.” Company A would default on paying back Company B. Typically, a Moldovan citizen was involved. The companies would obtain a court judgment in Moldova asking the Russian firms to settle the debt.
And voilà! The Russian businesses would legally transfer hundreds of millions of dollars to a bank in Moldova’s capital, Chisinau. From Chisinau the money went to a bank in Latvia, Trasta Komercbanka. From Latvia, the cash went everywhere, to ninety-two countries, much of it vanishing offshore. The use of Moldovan judges was an imaginative ruse.
The Latvian bank required a corresponding Western bank to process its dollar-denominated transactions. Most U.S. banks, including JP Morgan Chase, refused to offer banking services to Trasta, given Riga’s notorious reputation as a European money-laundering hub. Only two Western banks agreed. Both were German. They were Deutsche Bank and Commerzbank.
Once again, Deutsche Bank was the entry point for criminal Russian money into the global financial system. (Deutsche Bank severed its relationship with Trasta shortly before Latvian officials shut down the bank in 2016 for money laundering.) According to the DFS, Deutsche Bank was reluctant to classify Russia as “high-risk,” doing so only after other “peer banks” improved checks.
Overall, Germany’s largest bank was in trouble. Its staff was demoralized. It was clocking up vast losses. And record fines. In 2005 the DFS reprimanded the bank for rigging the LIBOR, the main interbank lending rate. There was a further fine for sanctions busting—processing dollar transactions on behalf of entities in Iran, Libya, Syria, Myanmar, and Sudan. And another $7.2 billion for selling high-risk mortgage-backed securities before the 2008 slump.
Since our forward approach to Deutsche Bank’s corporate office was rebuffed, we tried other routes. We talked to current and former Deutsche Bank staff. According to one senior ex-employee, who worked in equities in Asia and New York, the bank’s problems went way beyond these scams.
The 2008 crash hit Deutsche Bank badly, the employee said. In order to paper over holes in the balance sheet, a few members of staff conducted deals with “hair”—complex, creative, and possibly illegitimate forms of finance. These dark-arts practices were extensive, the person alleged. They might involve innovative and opaque ways of getting outside parties to underwrite risky loans, the banker added, using structures “out of the cookbook.”
Did Trump accept Russian sources of funding during these times? Richard Dearlove, the former head of MI6, said this question hangs over the president. Dearlove told the magazine Prospect: “What lingers for Trump may be what deals—on what terms—he did after the financial crisis of 2008 to borrow Russian money when others in the West would not lend to him.” (Dearlove said allegations of illegal contact between Trump’s staff and Moscow were “unprecedented.”)
It wasn’t just Donald Trump who maintained a warm relationship with Deutsche Bank. The German bank looked after his entire family. Jared Kushner, Ivanka, and Kushner’s mother, Seryl Stadtmauer, were all Deutsche Bank clients. Kushner’s relationship with Deutsche Bank emerged in 2013 when he ordered a flattering profile of Trump’s wealth manager, Rosemary Vrablic. It appeared in The New York Observer, which Kushner owned.
Vrablic was a former Citibank employee who joined Deutsche Bank in 2006. In 2014 she attended a society dinner with Kushner at the Frick Museum in New York, held against a backdrop of Vermeers and Goyas. Trump described her (wrongly) to reporters as Deutsche Bank’s “boss.” And later invited her to his inauguration, The New York Times reported.
According to our sources inside Deutsche Bank, Trump’s bid to become president made him a politically exposed person, or PEP. Banks were obliged to scrutinize PEPs carefully. Deutsche Bank reviewed its lending to Trump and his relatives, and the review was sensitive. Its goal was to discover if there was a Russian connection to Trump’s loans. The DFS also requested information.
The sources insist that the answer was negative. No trail to Moscow was ever discovered, they told us. Deutsche Bank, however, refused to make a public comment. Nor would it provide details of its private review to Capitol Hill. Senators wrote letters; the bank stonewalled, citing privacy rules. Congress showed interest in mirror trades. It got the same evasive nein.
In a letter to Bill Woodley, Deutsche Bank’s U.S. CEO, Senator Chris Van Hollen expressed concerns about the bank’s lending to Kushner. Kushner had a $25 million line of credit with Deutsche Bank. Additionally, in October 2016, it loaned him $285 million. The cash was used to replace an existing loan on the old New York Times Building, the retail property Kushner bought the previous year from the Russian Lev Leviev.
The loan was made at a time when Kremlin representatives were eagerly seeking Kushner’s ear. This was when Kushner first met Sergey Kislyak, in April, when Trump gave his foreign policy speech at D.C.’s Mayflower Hotel—just a handshake and pleasantries, Kushner said. Next came the meeting with Natalia Veselnitskaya. Then, on November 16, Kislyak got in touch again. By this point it was clear that Kushner would become senior adviser to the president.
The Kushner-Kislyak meeting on December 1 took place at Trump Tower. Michael Flynn was present, too. Kushner made an unusual proposal. He asked Kislyak if it would be possible to set up a secret and secure communications channel between the Trump transition team and the Kremlin. The purpose, seemingly, was to keep any conversations hidden from the outgoing Obama government and U.S. intelligence. A back-channel, in effect.
Could this be done, Kushner wondered, by using Russian diplomatic facilities in the United States?
The inquiry was staggeringly naïve. If Kushner or Flynn were to drop by the Russian embassy, U.S. intelligence would certainly notice.
The FBI didn’t bug the conversation but learned of it afterward, when Kislyak reported to his superiors back in Moscow. According to FBI intercepts of Russian communications, Kislyak was taken aback by Kushner’s unusual request. It was unlikely Moscow would allow any American to use its encrypted networks. The Trump transition team said nothing about these secret negotiations. One person who knew the details was so alarmed he sent The Washingt
on Post an anonymous note.
Russia, it seemed, didn’t need to expend much effort to get close to Trump’s aides. Kislyak came up with a suggestion of his own. Perhaps Kushner would like to meet with another person from Moscow, someone with “a direct relationship” to President Putin?
The details were agreed during a meeting on December 12 between Kislyak and Kushner’s assistant, Avi Berkowitz. Putin’s emissary turned out to be a banker, or more accurately, a banker-spy. His name was Sergei Gorkov. He was the head of VEB, the state development bank, which Kostin had run, and whose board Putin had chaired during his four years as prime minister.
It was VEB that had played a role in the story of Russian intelligence and Carter Page. VEB’s office in Manhattan was an espionage front. The two SVR officers who had discussed Carter Page—calling him a “bit of an idiot”—had been working with an undercover colleague based at the bank, Evgeny Buryakov. (It was the unfortunate Buryakov who was jailed in 2015 for acting as an unregistered foreign agent.)
Gorkov was a cut above Buryakov and his two U.S.-based SVR colleagues, all of whom were midlevel intelligence operatives.
Gorkov’s path was shinier. He had trained in the 1990s at the FSB’s academy before joining Yukos and state-run Sberbank. Like VTB, Sberbank performed certain Kremlin functions. It was the official sponsor of the 2013 Miss Universe contest in Moscow, attended by Trump and hosted by Emin Agalarov. Eight days after the contest, Sberbank announced it was lending Agalarov 55 billion ($1.3 billion) to finance new projects. One of those under consideration was Trump’s Moscow Tower. In February 2016 Putin promoted Gorkov to VEB chief.
VEB’s mission was to support Moscow’s political programs. It provided capital to build facilities at the Sochi Olympics and cash to secessionist rebels in eastern Ukraine. These top-down ventures lost money. VEB had large debts. The United States had included VEB, VTB, and Sberbank in its 2014 sanctions package—the same package that led Putin to ban U.S. couples from adopting Russian children. Gorkov’s job was to restore the bank’s fortunes.
Gorkov was well prepared for his meeting with Kushner, as befits a graduate of what was known in KGB times as the Dzerzhinsky Higher School. He flew in from Moscow. On his plane were gifts. There were a piece of art and some earth carefully dug up and transported from the town of Novogrudok in northwest Belarus.
The town was where Kushner’s paternal grandmother, Rae Kushner, grew up. In 1941 the German army arrived. The town’s Jewish inhabitants were rounded up and forced to live and work in an agricultural college. Around half were executed. The survivors dug a tunnel, and in September 1943 they crawled out, fleeing into the forest.
This and much else would have been included in the FSB’s bulging Kushner file. Gorkov’s presents were chosen to remind Kushner of his origins in a part of the world that once belonged to the Soviet imperium, and of his spiritual roots. This subtlety was wasted. In evidence, Kushner said Putin’s messenger had given him a “bag of dirt.” It came from “Nvgorod,” he wrote, spelling his grandmother’s birthplace incorrectly.
This meeting took place on December 13. According to Kushner, Gorkov introduced himself and “made some statements about the Russian economy.” The banker said he was friendly with Putin, expressed disappointment about the state of U.S.-Russian relations under Obama and “his hopes for a better relationship” in the future, Kushner told congressional committees.
There was no discussion of lifting sanctions, Kushner said. Nor was he offered any commercial deals.
Kushner characterized the encounter as brief, meaningless. Without an official note this was hard to verify. After all, it was difficult to discuss the Russian economy without mentioning its depressed state. Next Gorkov flew directly from New York to Japan, where Putin was attending a summit. The banker would have certainly reported to his boss.
Kushner’s official account of his dealings with Kremlin representatives runs to eleven pages. It’s a flat, sterile document, clearly reviewed by other hands. In his version there was no wrongdoing. What happened was a series of inconsequential meetings during a hectic campaign. Kushner said he forgot Kislyak’s name. There was no secret channel. Nor did he rely on “Russian funds” to finance his business. In short, a nothing burger.
Despite these protestations, it’s clear that Russian intelligence found it remarkably easy to gain access to Trump’s inner circle. Ambassadors, lawyers, bankers bearing bags of dirt…all made their way to Trump Tower in 2016, all were welcomed and listened to. Gorkov was one part of a multiperson penetration exercise. The cast included Kislyak, Veselnitskaya, the Agalarovs, and other unknown actors working behind the scenes.
Targeting Kushner was logical. He was soon to become a federal employee. His portfolio included tax, banking policy, the military, and international affairs. In a protean White House—where anyone could be fired—Kushner’s status as the president’s son-in-law made him unfireable.
During his meetings with Russians, Kushner said nothing about Moscow’s attack on U.S. democracy.
Afterward, he kept quiet about the encounter. So did the Trump administration. In his security clearance form Kushner didn’t mention Gorkov or Kislyak. (Kushner said this was an administrative mistake, made by an underling, and that he left out details of all foreign contacts.) The American public only found out because of leaks.
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By autumn 2017 the questions that led us to meet with Steele had acquired greater definition.
Was Moscow blackmailing Trump? And if yes, how exactly?
As a candidate, Trump’s praise of Putin had been a steady theme. In the White House, his fidelity to Russia’s president had continued, even as he lambasted other world leaders, turned on aides and allies, fired the head of the FBI, bawled out his attorney general, and defenestrated his chief ideologue, Steve Bannon.
It was Steele’s dossier that offered a compelling explanation for Trump’s unusual constancy vis-à-vis Russia. First, there was Moscow’s kompromat operation against Trump going back three decades, to the Kryuchkov era. If Trump had indulged in compromising behavior, Putin knew of it.
Second, there was the money: the cash from Russia that had gone into Trump’s real estate ventures. The prospect of a lucrative deal in Moscow to build a hotel and tower, a project that was still being negotiated as candidate Trump addressed adoring crowds.
And then there were the loans. These had helped rescue Trump after 2008. They had come from a bank that was simultaneously laundering billions of dollars of Russian money.
Finally, there was the possibility that the president had other financial connections to Moscow, as yet undisclosed, but perhaps hinted at by his missing tax returns.
Together, these factors appeared to place Trump under some sort of obligation. One possible manifestation of this was the president’s courting of Putin in Hamburg. Another was the composition of his campaign team and government, especially in its first iteration. Wherever you looked there was a Russian trace.
Trump’s pick for secretary of state? Rex Tillerson, a figure known and trusted in Moscow, and recipient of the Order of Friendship. National security adviser? Michael Flynn, Putin’s dinner companion and a beneficiary of undeclared Russian fees. Campaign manager? Paul Manafort, longtime confidant to ex-Soviet oligarchs. Foreign policy adviser? Carter Page, an alleged Moscow asset who gave documents to Putin’s spies. Commerce secretary? Wilbur Ross, an entrepreneur with Russia-connected investments. Personal lawyer? Michael Cohen, who sent emails to Putin’s press secretary. Business partner? Felix Sater, son of a Russian American mafia boss. And other personalities, too.
It was almost as if Putin had played a role in naming Trump’s cabinet. The U.S. president, of course, had done the choosing. But the constellation of individuals, and their immaculate alignment with Russian interests, formed a discernible pattern, like stars against a clear night sky. A pattern of collusion.
If Trump had been telling the truth—about his visits to Moscow, his dealings
with Russian and Soviet emissaries, his financial entanglements—he had nothing to fear. It was a big if.
If he had been lying, the situation was grave. Sooner or later, the truth might engulf him and sweep away his presidency.
EPILOGUE
2017–?
Washington, D.C.–Moscow
Jerk-off artists, playing jerk-off games, thinking you’re the biggest fucking wise guys in the universe. You’re nothings, hear me!
—JOHN LE CARRÉ, A Legacy of Spies
On the eve of his first year in office, Trump’s achievements were few. In fact, it was hard to think of any. There was plenty of noise: tweets on immigration and tax reform, speeches to his loyal base, and personal insults thrown at North Korea’s dictator, Kim Jong-un. But nothing that might heal America, restore common values, or soothe the country’s painful racial and cultural divide.
His White House was beset by problems. Most were self-created. Even Trump’s natural allies were struggling. Relations between Trump and Senator Mitch McConnell, the Republican majority leader, were so bad that they were no longer speaking. The president repeatedly berated Congress, too.
Trump’s Republicans controlled both houses, but he was surely the weakest president of modern times. Much of his personal energy went into fighting gratuitous battles. He was at odds with his staff, big business, the National Football League, the U.S. intelligence community, and the FBI.
It was this last institution that posed a mortal threat to Trump. Robert Mueller’s investigation was moving aggressively forward. The bureau leaks that characterized the first half of 2017 had pretty much dried up. It was difficult to be sure, but Mueller seemed to be proceeding with a determination, a ruthlessness even, that boded ill for the president. Nothing less than the FBI’s credibility was at stake.
Collusion: Secret Meetings, Dirty Money, and How Russia Helped Donald Trump Win Page 28