A shadowy Russian tried to lure US officials into falling for 'kompromat' on Trump

Donald Trump. Picture: Getty Images
  • US officials paid a shady Russian $US100,000 last year to re-acquire stolen NSA cyberweapons. But instead of delivering the hacking tools, the Russian provided unverified and dubious dirt on President Donald Trump.
  • American spies tried to recover the cyberweapons during several meetings. But each time the Russian came back with “kompromat” on Trump until, finally, US officials cut off the deal and warned the intermediary to return to Russia.
  • The interactions appear to have been part of a counterintelligence operation aimed at sowing discord between Trump and the intelligence community, and casting doubt on the legitimacy of the Russia investigation.

In a bombshell report published Friday, The New York Times found that American spies paid thousands of dollars to a Russian with shady connections in an effort to recover stolen cyberweapons. But instead of receiving the cyberweapons in return, they were handed dubious “kompromat,” or compromising material, on President Donald Trump.

The Shadow Brokers, a hacking group said to be allied with the Kremlin, claimed to have first stolen the tools from the National Security Agency in August 2016. The theft caused panic throughout the US intelligence apparatus because the custom-made cyberweapons – including zero-day exploits that targeted antivirus software and Microsoft products – could wreak havoc when used by the wrong entity.

The Russian offering to sell the weapons back to the US first got in touch with American officials in early 2017 as they were trying to make a deal with a separate hacker to re-acquire the tools, according to the Times. When that deal fell through, the Russian offered to step in and manage the transaction. He had ties to Russian intelligence and acted as an intermediary between US officials and senior officials at the FSB, Russia’s primary counterintelligence agency and the successor to the KGB.

He was also involved in money laundering and used an almost-defunct company as his cover business, according to the report. The Russian initially demanded a $US10 million payment. The price was later whittled down to $US1 million, to be paid in separate installments. The first payment of $US100,000 was sent in late September 2017.

But throughout the course of negotiations, officials said, the Russian appeared to be more interested in pitching them documents which he claimed proved Trump’s extensive ties to Russia and Russia-linked individuals. Among those materials, per the report, was a tape that purportedly showed Trump engaging in sexual activity with prostitutes in a Moscow hotel room in 2013.

Two separate documents claiming to show collusion between Trump and Russia have alleged the existence of the tape: the Steele dossier, which was compiled by former British spy Christopher Steele, and the Shearer memo, which was created by Cody Shearer, a former political activist and longtime ally of Bill and Hillary Clinton. The FBI currently possesses both dossiers.

US officials made it clear to the Russian intermediary that they were not interested in the kompromat he was offering on Trump. Moreover, the report said, upon closer examination of the materials the Russian provided, counterintelligence officials found that they did not bear the hallmarks of a Russian intelligence product.

Rather, they appeared to have been pulled from public news reports. US officials therefore feared they were part of a disinformation campaign aimed at stoking tensions over the Steele dossier, which the FBI is using as a “roadmap” while it investigates Russia’s interference in the 2016 election.

PutinEduardo Munoz Alvarez/Getty ImagesA demonstrator holds up a sign of Vladimir Putin during an anti-Trump ‘March for Truth’ rally on June 3, 2017 in New York City.

Right out of the Russian counterintelligence playbook

The interactions carry all the signs of a classic Russian intelligence operation, said Rick Smith, a former FBI counterintelligence agent who served at the bureau for 25 years. He added that one should “count on” the notion that the FSB and SVR – Russia’s primary foreign espionage agency – were directly involved.

Joseph Pelcher, a former FBI agent who was stationed in Russia and specialised in organised crime, echoed that point.

The Russians’ modus operandi, he said, was to offer adversaries “what they want and then give them what you really want them to have. If you can sow discord between the intelligence agencies and whatever administration is in power, then you’ve done your job.”

Because of their underlying value, Americans attempted to move forward with a deal to re-acquire the stolen cyberweapons multiple times last year. But after several meetings between October and December of 2017, during which the businessman only handed over the alleged kompromat on Trump and not the hacking tools, US officials cut off the deal and warned him to go back to Russia and never return, the report said.

The Russian appeared to be pulling from two related tactics in a counterintelligence playbook the Kremlin often favours. One was to embark on a disinformation campaign to stoke discord about the Steele dossier and, to a broader extent, the Russia investigation as a whole. The other was to dangle seemingly explosive information about the president to gauge whether US officials took the bait.

The latter tactic, sources told The Times, led American spies brokering the deal to believe Russia was working to pit the US intelligence community against a president who has accused top officials of conspiring against him.

“That’s basically how Putin has been operating for a long time,” Pelcher said. “You can make as much money as you want as long as you do what I tell you to do.”

Trump weighed in on the news the morning after it broke. “According to the @nytimes, a Russian sold phony secrets on ‘Trump’ to the U.S. Asking price was $US10 million, brought down to $US1 million to be paid over time,” Trump tweeted. “I hope people are now seeing & understanding what is going on here. It is all now starting to come out – DRAIN THE SWAMP!”

‘Part of the business’

Donald Trump Jr. President Donald TrumpSaul Loeb-Pool/Getty Images

It’s not the first time Russia has offered compromising information on a contender to gain a foothold in US politics. The White House was thrown into a frenzy last summer when it emerged that former campaign chairman Paul Manafort, senior adviser Jared Kushner, and Trump’s eldest son Donald Trump Jr. met with a Russian lawyer at Trump Tower in June 2016 who had promised dirt on then Democratic candidate Hillary Clinton.

The offer was extended as “part of Russia and its government’s support for Mr. Trump,” and appeared to be an attempt to push for the repeal of the 2012 Magnitsky Act, which sanctioned wealthy Russians accused of human-rights abuses.

Former CIA clandestine services officer John Sipher said that despite its end result, the US’s participation in the deal to recover the stolen cyberweapons was not unusual and that the US would have had to “engage when there is an offer of such potentially interesting information.”

“In these cases, the CIA is well aware that it might be a scam but needs to play it out in case it is real,” he said. “If it appears to be Russian deception, it is important to develop as much information as possible in order to determine what they might be up to. These kinds of things often appear awkward but it is part of the business.”

The Intercept reported Friday that the NSA and CIA were at odds over how to approach the deal. While the NSA was more willing to engage with the Russian to recover its stolen hacking tools, the CIA was “reluctant” to stay involved in the operation.

It’s unclear whether the hesitance was because the CIA feared obtaining material related to Trump from the Russians while the president is embroiled in the Russia investigation, or because officials were aware that the deal was likely a Russian counterintelligence operation.

Both the Times and The Intercept noted, however, that CIA officials were involved in aiding the operation from the agency’s Berlin office last April.

Reached for comment, a CIA official said, “The people swindled here were James Risen and Matt Rosenberg,” who are the authors of the Intercept and Times stories, respectively. “The fictional story that CIA was bilked out of $US100,000 is patently false.”

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