Russian diplomat under U.S. scrutiny in election meddling speaks

Mikhail Kalugin, the former head of the Economic Section at the Embassy of Russia in Washington, has been drawn into a furor over Russian tampering with last November’s U.S. election.
Mikhail Kalugin, the former head of the Economic Section at the Embassy of Russia in Washington, has been drawn into a furor over Russian tampering with last November’s U.S. election. Facebook

A Russian diplomat who worked in the Washington embassy left the country last August while federal investigators examined whether he played a key covert role in the alleged Kremlin-directed plot to influence last fall’s U.S. elections.

Two people with knowledge of a multi-agency investigation into the Kremlin’s meddling have told McClatchy that Mikhail Kalugin was under scrutiny when he departed. He has been an important figure in the inquiry into how Russia bankrolled the email hacking of top Democrats and took other measures to defeat Hillary Clinton and help Donald Trump capture the White House, said the sources, who spoke on the condition of anonymity because of the sensitivity of the investigation.

Kalugin’s name – albeit misspelled ‑ first surfaced publicly in January in a former British spy’s jarring but largely uncorroborated dossier of intelligence collected for Trump’s U.S. political opponents. The 35 pages of opposition research quoted Russian sources claiming that Trump campaign associates had colluded with the Kremlin, including in the public release of Democrats’ emails that proved embarrassing to Clinton at a time when polls found her leading Trump.

Kalugin was “withdrawn from Washington at short notice because Moscow feared his heavy involvement in the US presidential election operation . . . would be exposed in the media,” the former British MI6 officer Christopher Steele reported. “ . . . His replacement, Andrei Bondarev however was clean.”

Now back in Moscow, an indignant Kalugin recently denied the allegations in an email to McClatchy, saying he wanted “to stop once and for all the continuous stream of lies and fake news about my person.”

Kalugin was replaced by Andrey Bondarev, whose first name was spelled differently in the former spy’s dossier. Kalugin said in the email that his return to Russia had been planned and widely known for at least six months before he departed. He now occupies a senior position in the Russian Foreign Ministry.

Interviews with a half-dozen people who’ve met Kalugin elicited contrasting views about his activities and his character while in the United States.

McClatchy reported in January that several law enforcement and intelligence agencies, led by the FBI, are collaborating in the investigation of Russia’s influence on the election. Five congressional panels, including the House of Representatives and Senate Intelligence committees, are conducting their own inquiries.

Several members of Congress, both Democratic and Republican, said Monday’s resignation of retired Army Lt. Gen. Michael Flynn as Trump’s national security adviser reaffirmed the need for investigations into Russia’s meddling. In resigning Monday, Flynn acknowledged that he had discussed U.S. sanctions with Russia’s ambassador before Trump’s inauguration and had misled others about the nature of the conversation.

Flynn was mentioned in Steele’s reports as one of several U.S. citizens Russia cultivated. In December 2015, Flynn was paid an undisclosed sum to speak at a Moscow gala, where he sat beside Russian President Vladimir Putin.

Although Steele began sharing what he’d learned with the FBI last July, it is not clear whether he alerted U.S. investigators to Kalugin or they already were scrutinizing his activities.

Steele, who built a strong reputation in the intelligence world, spent much of his career spying on Moscow and tapped a longtime network of Russian sources. He spent months gathering research about Trump for a Washington consulting firm. Last fall, Mother Jones magazine quoted him, before he was publicly identified, as saying he was so alarmed by what he found that he began sharing information with the FBI.

His dossier, which purports to detail conversations among Kremlin officials between last June and early December, alleges that Trump aides colluded with the Russians in the release of the hacked emails and other parts of the operation. It includes salacious accusations about Trump and impugns some of his associates. Steele’s reports have drawn skepticism for their apparent inaccuracies, especially from Trump and the Russians, who have dismissed them as lies and fake news. However, CNN reported last week that U.S. investigators have verified that some of the Kremlin conversations did occur on the dates Steele described.

Information from the dossier began to seep into news reports before the election. On Jan. 9, days after FBI Director James Comey advised President-elect Trump that the dossier suggested the Russians may have compromising information about him, the Internet news site BuzzFeed posted the entire document. Trump called BuzzFeed a “failing pile of garbage,” and the news site drew other criticism for publishing the unsubstantiated accusations from murky sources. A Russian-owned tech firm named in the dossier has since filed a defamation suit against BuzzFeed.

Steele has not been seen in public since he was identified as the author of the dossier in January.

A Steele report, dated Sept. 14, 2016, said Kalugin was involved in moving “tens of thousands of dollars” to cyber hackers and other operatives through a system that distributes pension benefits to Russian military veterans living in the United States.

One of the sources familiar with the federal investigation gave credence to parts of that statement, saying: “The Russian embassy was known to funnel payments and make contacts with current Russian citizens, former Russian citizens who are now American citizens, and American citizens.”

Steele quoted his sources as saying Russia had used its consulates in New York, Washington and Miami as conduits to disguise money flowing to its operatives as pension payments. Russia, however, doesn’t have a consulate in Miami.

The possibility of such an arrangement didn’t surprise Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University in Virginia.

“Russian pension funds historically are poorly monitored, and vulnerable to manipulations by individuals who have been associated with the government,” said Shelley, who has written extensively about Russian corruption and money laundering.

Spokespeople for the FBI and the CIA declined to comment about Kalugin.

Trump tweeted harsh responses Wednesday to a cascade of news about Russia, including a New York Times report that U.S. investigators had listened to electronic intercepts of frequent conversations between several Trump aides and Russian intelligence officials during the election campaign.

“Fake news media is going crazy with their conspiracy theories and blind hatred,” he wrote.

U.S. intelligence agencies are in agreement that Putin ordered a broad operation to interfere with the election, including the hacking of Democratic National Committee emails and those of Clinton’s campaign chairman, John Podesta.

In an email exchange with McClatchy, Kalugin declined to answer specific questions. But he wrote: “In my capacity as the head of the Economic Section of the Embassy in the U.S., I had nothing to do with the distribution of retirement payments to the Russian citizens in the United States. It is done by the Russian consular service and the whole system is very transparent.”

Maria Zakharova, a spokeswoman for Russia’s Foreign Ministry, said in a recent Facebook posting that the reports about Kalugin are “garbage” and “incredible crap.” Moscow especially disputes the allegation that Kalugin was whisked out of the United States quickly; Zakharova said it had been known “half a year in advance” that Kalugin would be departing in August, at the end of a six-year tour.

“We completed our assignment in the U.S. in August 2016 as it had been scheduled in advance,” Kalugin wrote. “Our plans were very well known to our American colleagues and friends.”

Like diplomats worldwide, Kalugin had immunity that would have protected him even if he had stayed in the United States. If a diplomat is caught spying, U.S. authorities usually have little recourse beyond expelling him. But by returning to Moscow, which has no extradition treaty with the United States, Kalugin is out of investigators’ grasp.

The Cold War ended long ago, but the spying game never did. A former U.S. intelligence official said it wouldn’t be unusual for an officer in a Russian intelligence agency, or even an American one, to hold an economic post such as Kalugin’s.

“Everyone does that, but the Russians do it more than anyone else,” said the official, who declined to be identified because the issue is sensitive.

Indeed, when President Barack Obama expelled 35 Russian diplomats as intelligence operatives on Dec. 28, weeks before he left office, they held a range of embassy titles, including at least one cook, said a person with knowledge of the expulsions, who wouldn’t be identified because of the secret nature of the work.

Those acquainted with Kalugin, who was chief of the embassy’s economic section, described him in different ways, from shy to arrogant.

Earl Rasmussen, a vice president of the Eurasia Center, a group that promotes trade with Russia and its neighbors, said Kalugin “knew issues of concern to him and of concern to the other side.” He said the diplomat had spoken of his planned departure for months and the two men had lunch a week before Kalugin flew home.

“I knew of his departure a minimum of six months prior,” Rasmussen said. “He was planning on taking time off to get his family settled before going back to work in September in Moscow.”

But Mark Galeotti, an expert on Russian crime and security issues, said he “heard from government sources that Kalugin seemed to take some interest in more than just economic issues” at the embassy. The Russians “have a substantial intelligence role within their embassy,” said Galeotti, a senior research fellow at the Institute of International Relations in Prague.

Anders Aslund, a former adviser to Russia and senior fellow at the Atlantic Council, a Washington think tank, described Kalugin as “young, arrogant and with a red beard like (Emperor) Alexander the Third.”

Aslund, a prominent Swedish economist, said the Russian “was very different from the three previous officeholders . . . not very interested in the substance of the economy. One got the impression that he had other interests.”

Any suggestion that Kalugin was involved in the election plot is “totally absurd,” said Alexey Khripunov, a finance executive and a self-described “good friend” who has known Kalugin for years.

Several present and former U.S. government officials and Russia observers said it was likely that Kalugin and his wife, Maria, who worked in the embassy press office and later in the political section, had lived at the Russian Embassy compound.

A former Obama administration official who knew Kalugin called his mention in the dossier “a head scratcher” because Kalugin was so capable in his economic job.

“He was certainly present at a lot of events with the Russian ambassador,” said the official, insisting on anonymity to avoid damaging relationships. “Normally you don’t want to put somebody in a position to embarrass your government in those public positions.”

Kalugin spoke at an event organized by the U.S.-Russia Chamber of Commerce of New England and to some other business councils. In a YouTube video, he was interviewed by China’s CCTV-America.

Kalugin’s LinkedIn profile says he began his service in Washington in the embassy’s U.S. political section. He later became economics chief. His four-year U.S. rotation was extended for two years.

The Kalugins have Facebook pages that show them in Washington but reveal little more. Maria Kalugin’s page displays a single photo of the couple posted on Nov. 8, 2013, at a Hawaiian beach in Maui wearing leis. Another photo, posted in May 2013, shows her smiling behind a White House podium and flashing a V for victory sign. Zakharova joked in a comment alongside the photo: “Well, finally the WH is in good hands.”

Kalugin said his activities in Washington weren’t a secret.

“I have no doubts that all my professional activities were well known to the relevant U.S. authorities,” he wrote. “They can prove my words.”

Stone is a McClatchy special correspondent.