American Kompromat

by Craig Unger

  At a time when the theft of America’s nuclear secrets by Russia was the central narrative in the country that made Robert Maxwell a person of interest. Phone calls were monitored. FBI assets at the Plaza Hotel kept an eye on Maxwell when he stayed in New York.20 And scores of FBI agents and assets reported on him for the next eight years.

  Ultimately, no charges were filed, but Maxwell had in fact been cultivating ties in Moscow. The Soviets had given him exclusive rights to publish the work of Soviet scientists. Maxwell translated them, published them through Pergamon, and made millions. In addition, according to The Independent, the KGB also paid him to publish a series of groveling hagiographies of Soviet leaders, one volume of which famously had Maxwell tossing a big, fat, slow pitch right across the middle of the plate to the brutal Romanian dictator Nicolae Ceauşescu: “How do you account for your enormous popularity with the Romanian people?”21 (Maxwell reportedly duped the Soviets about how many copies were printed.)22

  Soon, Pergamon Press became a major publishing house. In 1964, Maxwell was elected to Parliament as a member of the Labour Party. In 1981, he acquired the British Printing Corporation and later made it a subsidiary of Maxwell Communications Corporation, the umbrella corporation for his other media properties. Three years later, he bought Mirror Group Newspapers, the publisher of six British papers. He had become a major figure in British publishing. Before long, the man who was born Ján Ludvík Hyman Binyamin Hoch, an impoverished Czech Jew who was very much an outsider, had transformed himself into Cap’n Bob, a larger-than-life figure who rattled the cages of Britain’s rigidly stratified social world, often to the distress of other socialites.

  Maxwell’s enormous girth was merely the physical manifestation of an outrageously flamboyant media mogul who knew no boundaries and won extraordinary access to the powers that be in the Kremlin, Downing Street, the White House, Lubyanka, and Mossad headquarters. Not only that, but he wasn’t above taking liberties with any or all of them.

  Among them, Maxwell’s most important relationship may have been with General Vladimir Kryuchkov, the former head of the First Chief Directorate who became head of the KGB in 1988 and won notoriety as a hard-liner whose greatest achievements lay in penetrating US intelligence and launching successful disinformation operations. It was not just that Maxwell and Kryuchkov were on a first-name basis; both men happened to speak Hungarian, which gave them a special bond of sorts. They worked together for years.

  Ultimately, the Soviets saw Maxwell as a roguish unofficial ambassador who was comfortable engaging in the highest levels of international diplomacy on the world stage, delivering crucial messages between Margaret Thatcher in London, Mikhail Gorbachev in Moscow, and George H. W. Bush in Washington.23

  It was a role that Maxwell relished. Prime ministers came and went, but Maxwell was there forever.

  These men (and they were mostly men) were part of the Western financial and intellectual elite, members of an exclusive and privileged class who offered access to the West in terms of both knowledge and capital markets, and who would trade favors for operations that were mutually beneficial.24 In Maxwell’s case, as in Trump’s, money laundering was a major part of the game. Maxwell also made it clear to the Soviets that he would not tolerate any actions taken against Israel. In return, he offered his trust and loyalty.

  In addition, Trump and Maxwell were friends—at least in the transactional sense of the word. They went to the same parties and bought their yachts from the same families. More specifically, in 1986, Maxwell bought the yacht that would become Lady Ghislaine from Emad Khashoggi, a wealthy Saudi real estate developer who was Adnan Khashoggi’s nephew, and three years later, having just bought Macmillan Publishing, hosted Donald Trump and a plethora of other celebrities on the Lady Ghislaine in New York.25 Other guests included European aristocrats, movie stars, and politicians, including former US senator John Tower (R-TX), whom Maxwell reportedly paid $200,000 a year in return for access to the White House and the defense establishment contacts he had acquired as chairman of the Senate Armed Services Committee.

  Less than two years later, Trump bought his 280-foot yacht, renamed the Trump Princess, from the sultan of Brunei, who, in turn, had just bought it from Emad’s uncle, Saudi arms dealer Adnan Khashoggi.26 (Emad was the cousin of Washington Post journalist Jamal Khashoggi, who was murdered in 2018 by the Saudis. Adnan was Jamal’s uncle.)

  It is also worth noting that, according to Dylan Howard’s book Dead Men Tell No Tales, written with Melissa Cronin and James Robertson, Adnan Khashoggi, who was implicated in the Iran-Contra affair that year, was a client of Jeffrey Epstein, the convicted pedophile and finance manager who mysteriously died in jail in 2019.27

  These were a new kind of superrich. Theirs was a world with opulent villas, costume balls, private jets, and hookers galore. Excess knew no bounds. Yachts were not just important; they were essential. Size mattered. In 1985, Adnan Khashoggi, who was dubbed “one of the greatest whoremongers in the world” by Dominick Dunne in Vanity Fair, gave himself a fiftieth-birthday party that reportedly cost $6 million (more than $14 million in 2020 dollars), which he covered by selling an apartment.28 Trump and Maxwell were both there.

  Celebrated in gossip columns the world over, they were also precursors to a new breed of corrupt oligarchs who leveraged ties to intelligence agencies in the United States, the Soviet Union, Israel, Iran, and other countries, all while reaping riches in the world of arms dealing, money laundering, and covert operations related to the Iran-Contra scandal, the Bank of Credit and Commerce International collapse, and various other incidents.

  Among those outrages was the so-called Inslaw scandal, which dated back to 1985, when Maxwell set up a tiny publishing company in McLean, Virginia, and hired two senior computer technicians from the Reagan administration’s Justice Department. According to a “Memorandum in Response to the March 1993 Report of Special Counsel Nicholas J. Bua to the Attorney General of the United States Responding to the Allegations of INSLAW, Inc.,” the technicians were crucial because they were familiar with software known as PROMIS (Prosecutors Management Information System) that had been designed to aid prosecutors in tracking cases as they made their way through the criminal justice system.29 The program was proprietary software created by a small tech company called Inslaw.

  Over the years, the world of investigative reporting has been populated with a number of deep-in-the-weeds rabbit holes, one of the deepest of which is the Inslaw scandal, which won national attention in the nineties, thanks in part to two mysterious deaths. As chair of Pergamon-Brassey’s International Defense Publishers, a defense publishing house owned by Maxwell, John Tower put the considerable political capital he had acquired in his nearly twenty-four years in the Senate to work running interference for Maxwell, who had just acquired PROMIS. But on April 5, 1991, Tower died in a plane crash in Georgia, which investigators blamed on the failure of the plane’s propeller control unit.30 Reports of mechanical failure notwithstanding, according to Robert Maxwell, Israel’s Superspy, Maxwell feared that Mossad was behind the plane crash.

  In addition to Tower’s mysterious death, there’s also the story of a forty-four-year-old freelance reporter named Danny Casolaro, who had been found dead in a bathtub at a Sheraton Hotel in Martinsburg, West Virginia, while he was investigating the Inslaw story.31

  Casolaro had bled to death from severed arteries in his wrists, which had been slashed ten to twelve times. At first his death was ruled a suicide, but that wasn’t the whole story. Casolaro told friends he had finally made a major breakthrough in his reporting and was off to West Virginia to meet a source who would provide solid evidence about what he called “the Octopus,” a network of people said to be behind various scandals including Iran-Contra, the collapse of the Bank of Credit and Commerce International, and the theft of PROMIS from Inslaw. He also had been getting death threats. “He told us . . . if there was an accident and he died, not
to believe it,” his brother Anthony Casolaro told the Boston Globe.32

  Casolaro’s death and the mysteries he was trying to unravel were never fully resolved, but several key elements of the scandal were clarified in the “Memorandum in Response to the March 1993 Report of Special Counsel Nicholas J. Bua,” which was signed by former attorney general Elliot Richardson, who was then one of Inslaw’s attorneys.

  According to Richardson’s memo, the PROMIS software was first stolen in 1983, when the Justice Department turned over a copy to a visiting Israeli official who came to the Justice Department, introduced himself as Dr. Joseph Ben Orr, and said he was there because Israel hoped to lease PROMIS so that it could computerize its public prosecution offices. About three months later, the Justice Department gave Dr. Orr a copy of the PROMIS software.

  As Inslaw finally learned years later, however, “Dr. Ben Orr” was a false identity. The man using that name to get PROMIS was really Rafi Eitan, a legendary Israeli spymaster who at the time was director of a top-secret agency called LAKAM in the Ministry of Defense, which was responsible for the collection of scientific intelligence through espionage.

  The memorandum added, “Among the individuals whose companies served as cutouts for the illegal dissemination of PROMIS by Israeli intelligence, according to the author, were Earl W. Brian (a California businessman who was later sentenced to four years in jail for conspiracy) and the late British publisher, Robert Maxwell.”

  One of the most distinctive features of the software, in those early days of the computer era, was the fact that PROMIS could integrate numerous databases. But if such features were useful in allowing clients to track cases in the judiciary, they could easily be adapted to help clients track other things. In fact, according to Inslaw founder Bill Hamilton, who worked at the National Security Agency for seven years, PROMIS is especially useful in the world of intelligence, so useful that he heard from multiple informants that hijacked versions of PROMIS had been installed at the NSA, FBI, CIA, and other intelligence agencies.33

  And when PROMIS was disseminated to other parties, especially to other countries, it was widely alleged to contain a feature that was meant to be secret—namely, a trapdoor engineered by Israeli programmers that enabled Israel and the United States to listen in secretly.34 In other words, it was an electronic Trojan horse: In solving the software needs of allied or neutral nations, the seller would also be able to steal their secrets.

  As Inslaw attorney Elliot Richardson explained to the Washington Post, “It’s extremely plausible that if the hardware also contained software with which the U.S. was totally committed, it would then be possible to interpret the signal. If the purchaser was a foreign intelligence agency, the U.S. would thus have succeeded in penetrating the intelligence files.”35

  And so, while working with Rafi Eitan—and therefore, Israel—Robert Maxwell used an Israeli computer company he owned, Degem, which was really a front for Mossad, to distribute PROMIS to other countries all over the world. In the end, Maxwell had played a key role in one of the great intelligence scams in contemporary history. In the end, Israel was able to get paid by countries from which it was stealing classified information.

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  Much as he loved Israel, Maxwell at times was equally welcome in the Kremlin. One indication of how high Maxwell had climbed into the upper reaches of the Kremlin comes from The Diary of Anatoly Chernyaev, the author of which served as Gorbachev’s national security advisor from 1986 to 1991. A key figure in orchestrating the peaceful end of the Cold War, Chernyaev reveals that he finds Robert Maxwell is so close to General Kryuchkov that Kryuchkov constantly pushes Maxwell straight into conversation with Mikhail Gorbachev no matter what else is going on.36

  As Chernyaev wrote on June 26, 1991: “Maxwell was imposed on M.S. [Mikhail Sergeyevich Gorbachev] by Kryuchkov, they have some business going on! Every time he visits, he is ‘presented’ to the top. He is impudent: Gusenkov* told me that he was lecturing Gorbachev on how to live in London, how to use the President’s time. When I found out from Primakov the day before that Maxwell wants to see M.S., I objected and decided not to tell Gorbachev. But he asked me himself.”37

  Chernyaev added that Gorbachev even confided to Maxwell that he might not run for another presidential term. “Even if he decided not to, he shouldn’t spill the news to the West,” Chernyaev wrote, because Western leaders might then dismiss him as a helpless and ineffectual lame duck.

  According to Robert Maxwell, Israel’s Superspy, in Maxwell, Kryuchkov had an unusual asset who plied him with gold cuff links, a cashmere coat, hi-fi equipment, and crates of Scotch whisky and champagne.38 In return, Maxwell was put in charge of laundering money through a special coded account in the Bank of Bulgaria and given wide latitude to do as he saw fit. Kryuchkov created an umbrella of companies to receive and resell technology stolen from the West, leaving Maxwell to launder the profits.

  And Maxwell was comfortable working the dark side. General Kryuchkov had put together one of the most ambitious clandestine operations in the history of intelligence, positioning the KGB first to launder vast amounts of money, and later to rise again after the fall of the Soviet Union—and he brought Maxwell in to help design the financial model that would see the KGB through.

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  Starting back in the mid-eighties, when the West was welcoming the genial overtures of Mikhail Gorbachev, Kryuchkov, a fearsome hard-liner, had secretly launched about six hundred front companies as a safe haven for Soviet leaders and KGB operatives.39 Buying commodities such as oil, steel, and aluminum from Soviet enterprises at 5 percent of the world market price, these new companies could turn around and sell them in the West at market value. Then, with billions in profits, they could go on to establish authentic trading relationships that went to the heart of Western capitalism—Wall Street, the Paris Bourse, and London’s Square Mile and Canary Wharf. In doing so, these KGB-infiltrated companies would gain access to the Western banking system, through which they would learn how to launder billions and navigate the byways of the capitalist world.

  Kryuchkov knew that these companies—some of them multibillion-dollar commodity firms—would outlast the disintegrating Soviet Union, and that through them, KGB operatives would rise, phoenixlike, many years later when the dust had settled. Only then, after it had been lulled to sleep with the dream that it had won the Cold War, would the West awaken to find that a Russian asset named Donald Trump was in the White House, and that Trump had been helped by some of Kryuchkov’s minions who did business with him many years later.

  To assist with the money laundering, Kryuchkov introduced Maxwell to Semion Mogilevich,40 the legendary figure in the Russian Mafia whom I wrote about in House of Trump. “The most dangerous mobster in the world,” as the FBI calls him, Mogilevich was renowned as the “Brainy Don,” thanks to his mastery of sophisticated financial crimes. Kryuchkov’s plan was to divide the spoils of the fallen Soviet Union by taking $50 billion in gold bullion from the Communist Party and putting it in commodity firms and shell companies controlled by Mogilevich, Maxwell, and others.

  With Maxwell’s help, Mogilevich got an Israeli passport and finally could travel anywhere in the world, at a time when it was difficult for Soviet citizens to leave the country.41 Off he went to the Channel Islands and the Cayman Islands, to Liechtenstein to set up a new money-laundering operation, to Gibraltar, to Cyprus and other destinations. As I described in House of Trump, as part of the operation, years later Mogilevich took over the lucrative Ukrainian energy trade and skimmed a fortune off the top.

  The inner workings of Mogilevich’s relationship with Dmitri Firtash, the Ukrainian oligarch who served as Mogilevich’s front man, were best described in an unusually intriguing memo classified “Secret” by William Taylor, the ambassador to Ukraine who later became a courageous witness against Trump in the 2019 impeachment hearings. In
his cable to the State Department, Taylor described meeting Firtash, who at first downplayed his ties to Mogilevich, “stating he needed Mogilevich’s approval to get in the business in the first place. He was adamant that he had not committed a single crime when building his business empire, and argued that outsiders still failed to understand the period of lawlessness that reigned in Ukraine after the collapse of the Soviet Union.”

  Maxwell’s eager embrace of Mogilevich was astonishing even for someone with a reputation as an unscrupulous corporate raider. Warfare in the world of international finance and hostile takeovers was one thing, but Mogilevich’s world was one of prostitution, human trafficking, arms sales, and drugs—and Maxwell plunged right in. Maxwell courted royalty. But this was a world of transnational organized crime, and Maxwell became a bagman of sorts who moved millions of dollars around at the toss of a hat. He became very close to the Politburo. The information he provided was priceless. He began sharing valuable Western technology with Moscow—stealing it, really—and worked every side of the fence, spending one day in the White House with Reagan, the next in the Kremlin, and then, perhaps, off to Israel.

  In effect, Kryuchkov had designated Maxwell as an intermediary between the dark world of organized crime and the KGB and its intelligence services.42 Later, Putin used these relationships to forge a new Mafia state. “Some of Maxwell’s associates were involved in narcotics, illegal weapons, and contract killings, of which there may be as many as five hundred a year,” the late John P. O’Neill, a legendary FBI agent who died in the attacks of 9/11, told a reporter. “They were also into smuggling precious metal and counterfeiting. They had links with the Russian military. Any Russian banker that didn’t do their bidding knew what to expect. He got a grenade tossed into his car.”43