Magazine

I Spy??or Capitalism


In late May, a Russian agent slipped unnoticed into a Moscow movie theater showing Pirates of the Caribbean: At World's End. He donned night-vision goggles, scanned the theater, and spotted his target. But this was no Cold War spy scenario: The agent was an ex-Russian cop, and he was searching for real-life pirates making illicit copies of the Walt Disney (DIS) film.

The agent worked for a small consulting firm called Trident Group, based in the Virginia suburbs of Washington, with an office in Moscow. Founded in 1996, Trident specializes in helping American companies navigate the woolly Russian market. But it is unlike any other consultancy in the U.S.: Trident's president is former Soviet military intelligence officer Yuri A. Koshkin, and several of its employees are veterans of the legendary intelligence service of the former Soviet Union, the KGB. Today they're serving as foot soldiers of capitalism, representing American corporate interests in the Motherland. Says former CIA General Counsel Robert M. McNamara Jr.: "Is this a great country or what?"

It's not unusual for spooks to enter the private sector. The current generation of CIA officers is far more likely to retire from government service and enter the business world than were its predecessors, say former agency officers. In 2006, for example, Lehman Brothers Inc. (LEH) quietly promoted 35-year CIA veteran Ted Price from its corporate-security department to head the firm's Indian operations, based in Mumbai. Price was deputy director of operations at the CIA before becoming an investment banking executive. Earlier this year, Mike Baker, a 16-year CIA veteran, launched a corporate-intelligence firm, Prescience, in New Canaan, Conn., to serve hedge fund clients.

But Trident appears to be the only U.S.-based corporate-intelligence firm launched and run by former Soviet operatives. Founder Koshkin, who agreed to be interviewed by BusinessWeek but declined to offer much detail about Trident's current operations, was born in 1958 into a Moscow clan he describes as a "typical family of the Russian intelligentsia." In 1975, he says, he enrolled in the Military Institute of the Soviet Ministry of Defense. There he studied the English and Cambodian languages on his way to becoming an intelligence officer in the Red Army. "Cambodian was boring," Koshkin recalls, "but you didn't get to choose which languages you studied. It was the military." After graduating in 1980, Koshkin served as a military adviser to Tanzanian forces in Africa. Later he wrote a dissertation on inter-service rivalry within the American military while studying at the Soviet Institute of USA & Canadian Studies. He first came to the U.S., Koshkin says, as a Russian soldier taking part in a Soviet-American joint working group at the Pentagon designed to prevent accidental and potentially catastrophic clashes between the militaries of the two superpowers.

PERCEPTION GAP

With the advent of perestroika, Koshkin was able to leave the military before completing the customary 25 years of service, and in 1989 he became a civilian, working for an American documentary film company in Moscow. From there he bounced into a job at a public- relations firm in San Francisco, where he says he first spotted a big perception gap between American and Russian businesspeople. "I saw lots of companies that were going into Russia didn't really know who they were dealing with," Koshkin says. "They couldn't tell the good guys from the bad guys."

That insight led to a collaboration with Yevgeny N. Pshenichny, a Moscow lawyer who had studied at the same military institute as Koshkin. The two launched Trident in 1996. Through the late 1990s they worked for, among other outfits, East West Invest Ltd., a group of American investors trying to open Subway sandwich shop franchises in Russia. When the Russian half of the partnership tried to force the Americans out of the deal, East West sued in Russian court, saying it was being muscled out of the sandwich business by the Russian mafia. The case went all the way to the Russian supreme court. Throughout the years-long battle, Trident found witnesses, identified key documents, and connected the dots among the main players in the case. In the end, the court ordered the Russian partner to pay East West $1.2 million in compensation.

Litigation support in Russia is now a big business for Trident, with clients that include such law firms as Washington-based Akin, Gump, Strauss, Hauer & Feld. "We've worked with Trident quite a bit. Due to the sensitive nature of the work, we can't go into detail," says Akin Gump communications manager Kristen M. White, "but we hold their work in the highest regard."

In another long-term legal battle, Trident represented Kenneth B. Dart, an American investor who is heir to the Styrofoam cup fortune generated by his family's Dart Container Corp. For several years in the late 1990s, Dart battled with Russian oil giant Yukos in a dispute over the dilution of shares of Yukos subsidiaries in which Dart held an interest. That fight ended in a confidential settlement.

It was the kind of battle that can become physically dangerous in Russia. Koshkin says Trident was threatened so many times during its work with Dart that one of the firm's employees was getting ready to evacuate his family from Moscow when the two sides settled the dispute in 1999. Yukos founder and Russian oligarch Mikhail Khodorkovsky later ran afoul of the Russian government and is now serving an eight-year jail term for tax violations.

Today, Koshkin says Trident has 15 employees, including Vladimir Joujelo, a KGB veteran who helped the Russians provide security for world leaders, including Mikhail Gorbachev, Boris Yeltsin, and Ronald Reagan; Alexander Trifonov, a former KGB officer; and Alexander B. Vinogradov, a retired Russian Army colonel who specialized in military intelligence. "They're good at what they do, but they charge a lot of money to do it," says Raelynn Hillhouse, who blogs about corporate intelligence for thespywhobilledme.com. "Legally, Russia remains the Wild West. It's convenient to be able to hire people who have experience in that environment."

Koshkin, 49, won't discuss most of Trident's clients. Nor will he reveal the firm's billing rates or annual revenues, but he has made a good enough living from it to buy a house from former AOL executive Bob Pittman in Great Falls, Va., and an apartment on New York's Upper East Side.

From his office in Arlington, Va., high above the Potomac, Koshkin can see the glint of the white walls of the Russian Embassy across the river in Georgetown. "Sometimes I sit back and contemplate and wonder about the quirks of life," he says. "We were trained that the U.S. was enemy No.1." Now that enemy is his No.1 client.

By Eamon Javers


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus