The Mueller Report, Alfa Bank, and the Deep State

Pyotr Aven, Mikhail Fridman
Pyotr Aven (left) and Mikhail Fridman (right), two of the three creators of Alfa Bank, at a literary dinner in Moscow, Russia, on May 27, 2013. Photo credit: © ITAR-TASS/ZUMAPRESS.com
Reading Time: 7 minutes

Peter Dale Scott is considered the father of “Deep Politics” — the study of hidden permanent institutions and interests whose influence on the political realm transcends the elected, appointed, and career officials who come and go.

A professor of English at Berkeley and a former Canadian diplomat, he is the author of several critically acclaimed books on the pivotal events of our country’s recent past, including American War Machine (2010) and The American Deep State (2018), which are relevant to the story below.


For two years President Donald Trump and Fox News have been attacking the “deep state” in Washington, usually referring to the intelligence agencies, like FBI and CIA, who have had Trump under investigation. But my notion of the deep state also includes private sources of power, outside government — but able to influence it illicitly — such as the Russian private Bank Alfa.

The bank’s dubious clout in Washington has included protection from senior Republicans like Dick Cheney (former CEO of the multinational oil field services giant Halliburton).

Bank Alfa was the creation of three Russian oligarchs: Mikhail Fridman, Pyotr Aven, and German Khan. During the 2016 campaign, it drew the attention of the media, as in a story by Eric Lichtblau and Steven Lee Myers, “Investigating Donald Trump, FBI Sees No Clear Link to Russia,” New York Times, October 31, 2016.

In classified sessions in August and September, intelligence officials also briefed congressional leaders on the possibility of financial ties between Russians and people connected to Mr. Trump. They focused particular attention on what cyber experts said appeared to be a mysterious computer back channel between the Trump Organization and the Alfa Bank, which is one of Russia’s biggest banks and whose owners have longstanding ties to Mr. Putin.

FBI officials spent weeks examining computer data showing an odd stream of activity to a Trump Organization server and Alfa Bank. Computer logs obtained by The New York Times show that two servers at Alfa Bank sent more than 2,700 “look-up” messages — a first step for one system’s computers to talk to another — to a Trump-connected server beginning in the spring. But the FBI ultimately concluded that there could be an innocuous explanation, like a marketing email or spam, for the computer contacts.

A more detailed account in the New Yorker — “Was There a Connection Between a Russian Bank and the Trump Campaign?,” by Dexter Filkins — gives additional reasons for suspecting that the Alfa-Trump domain link was important and highly sensitive. Bank Alfa was also discussed in the Steele Dossier.

When the Mueller report was released, one of my top concerns was to see how it handled this Bank Alfa story. But the Times story about the computer back channel is not mentioned in the Mueller report at all.

Alfa Bank itself is in the Mueller report but in an account based only upon the testimony of one of the founding oligarchs, Pyotr Aven — that makes Aven and Alfa look outside any possible conspiracy, not inside.

German Khan (#3 in the Alfa Bank) is not mentioned. His son-in-law Alex van der Zwaan is mentioned, but only in a passive role:

Gates suspected that Kilimnik was a “spy,” a view that he shared with Manafort, Hawker, and Alexander van der Zwaan, 869 an attorney who had worked with DMI [Davis Manafort Inc.] on a report for the Ukrainian Ministry of Foreign Affairs. [Van der Zwaan pleaded guilty in the U.S. District Court for the District of Columbia to making false statements to the Special Counsel’s Office. Plea Agreement, United States v. Alex van der Zwaan, 1:18-cr-31 (D.D.C. Feb. 20, 2018), Doc. 8.]

The fact that Alex is the son-in-law of German Khan, #3 in the Alfa Bank, is not noted. Nor is there any clarification of his false statements mentioned above.

But the media reported that van der Zwaan was the intermediary between Paul Manafort’s former deputy Rick Gates and an individual later identified only as ‘Person A’” (probably Konstantin Kilimnik).

The American Deep State, Peter Dale Scott

Photo credit: Rowman & Littlefield Publishers and Peter Dale Scott

Here is what I had to say about Bank Alfa in the Introduction to the paperback edition of The American Deep State:

Just before the election the New York Times reported that

For much of the summer, the FBI … scrutinized advisers close to Donald J. Trump, looked for financial connections with Russian financial figures, … and even chased a lead — which they ultimately came to doubt — about a possible secret channel of email communication from the Trump Organization to a Russian bank….

FBI officials spent weeks examining computer data showing an odd stream of activity to a Trump Organization server and Alfa Bank. … But the FBI ultimately concluded that there could be an innocuous explanation, like a marketing email or spam, for the computer contacts.

The next day the Jewish paper Forward raised a question, not yet answered, about Alfa Bank’s principal owner, the philanthropist oligarch Mikhail Fridman, listed as #73 on the Forbes list of the world’s billionaires in 2016 (once #20), and the second wealthiest Russian:

Is a Russian Jewish oligarch with Israeli citizenship and close ties to both Vladimir Putin and Benjamin Netanyahu running a secret cyber-communications channel between Donald Trump’s presidential campaign and Russian authorities?

The various speculations about the Trump link to Alfa and Fridman, whether innocuous or shady, justify a closer look at the charges about Alfa’s influence two decades ago. (Scott, American War Machine, 187.)

As the Guardian reported in 2002, Alfa’s 1990s clout in Washington was demonstrated when its oil company, Tyumen,

was loaned $489m in credits by the US Export-Import Bank after lobbying by Halliburton…. The [Clinton] White House and State Department tried to veto the Russian deal. But after intense lobbying by Halliburton the objections were overruled on Capitol Hill [which then was Republican controlled] … The State Department’s concerns were based on the fact that Tyumen was controlled by a holding conglomerate, the Alfa Group, that had been investigated in Russia for mafia connections.

Veteran newsman Knut Royce (a major contributor to three Pulitzer Prize–winning stories) reported the details:

Under the guidance of Richard Cheney, a get-the-government-out-of-my-face conservative, Halliburton Company over the past five years has emerged as a corporate welfare hog, benefiting from at least $3.8 billion in federal contracts and taxpayer-insured loans.

One of these loans was approved in April by the U.S. Export-Import Bank. It guaranteed $489 million in credits to a Russian oil company [Tyumen, owned by Alfa] whose roots are imbedded in a legacy of KGB and Communist Party corruption, as well as drug trafficking and organized crime funds, according to Russian and U.S. sources and documents.

[Two reports, one by “a former U.S. intelligence officer,” and one by the Russian FSB] claim that Alfa Bank, one of Russia’s largest and most profitable, as well as Alfa Eko, a trading company, had been deeply involved in the early 1990s in laundering of Russian and Colombian drug money and in trafficking drugs from the Far East to Europe …

The FSB report, too, claimed that the Alfa Group’s top executives, oligarchs Mikhail Fridman and Pyotr Aven, “allegedly participated in the transit of drugs from Southeast Asia through Russia and into Europe.” (Please go here for full text.)

In 2013 Tyumen Oil was acquired by the Russian oil company Rosneft, which had just signed a multibillion-dollar oil exploration deal with Exxon, allegedly “the biggest oil deal ever.” The deal — put on hold by President Barack Obama’s imposition of sanctions on Russia — was so huge that, according to the Wall Street Journal, its temporary cancellation “put Exxon at risk.” (Daniel Gilbert, “Sanctions Over Ukraine Put Exxon at Risk: Deal With Russia’s Rosneft to Drill in Arctic Is Crucial to Oil Company,” Wall Street Journal, September 11, 2014. The deal was originally made by Rosneft with BP, but the BP deal was blocked by a successful legal challenge from a company controlled by Fridman.)

Igor Sechin, Vladimir Putin, Rex Tillerson

President Vladimir Putin; Igor Sechin, Chairman of the Board of Rosneft (left); and Rex Tillerson, Chairman of ExxonMobil signed an agreement on joint development of petroleum reserves in Western Siberia, June 2012. Photo credit: President of Russia / Wikimedia (CC BY 3.0)

In April 2017, after Exxon’s Chairman, Rex Tillerson, became Trump’s first secretary of state, “Exxon tried to get permission from the Trump administration to resume drilling in Russia. The Treasury Department denied the waiver.” (A year later, Trump fired Tillerson.)

What Mueller did research, he did thoroughly. I suspect that his findings will create problems for Trump and maybe other politicians. But the report’s silence on the Trump-Alfa connection — if not broken by eventual release of counterintelligence information now redacted — is an indication that the bank’s clout in Washington is still as powerful as it was in the 1990s.

Since the election, Trump has also acted in ways that will protect Alfa Bank from criminal investigations. In July 2018, Brian Benczkowski was narrowly confirmed as head of the Justice Department’s Criminal Division, despite Democratic concerns over the fact that he had previously, while a lawyer at Kirkland & Ellis, represented the Alfa Bank in the investigation of whether its computer servers had contacted the Trump Organization. (1)

And William Barr, now attorney general, also worked at Kirkland & Ellis during the Bank Alfa investigation, leading Newsweek to ask a week ago whether he should not now recuse himself from matters affecting the Mueller report. (2)

But there is also resistance on the Democratic left to pursuing the Bank Alfa story. Consider the experience of Franklin Foer after he wrote about the Trump-Alfa connection for Slate:

I started to get the sense that the reception to my piece might not be as warm as I had hoped. Prime-time shows on MSNBC canceled my appearances. I got word that network lawyers didn’t want MSNBC to delve into questions about the server without harder evidence. … By the time I got home, The New York Times had published its now-notorious headline: “Investigating Donald Trump, FBI Sees No Clear Link to Russia. (3)

Many individuals are now facing jail terms because of the Mueller and FBI investigations. But no such danger threatens firms big enough to participate in the higher nexus of what I call the deep state.

End Notes

  1. Charlie Savage, “Justice Dept. Nominee Says He Worked on Russian Bank’s Trump-Related Inquiry,” New York Times, July 26, 2017; Katie Benner, “Justice Dept. Nominee Who Drew Scrutiny for Russian Bank Work Is Confirmed,” New York Times, July 11, 2018.
  2. Christina Maza, “Should William Barr Recuse Himself From Mueller Report? Legal Experts Say Attorney General’s Ties to Russia Are Troubling,” Newsweek, April 15, 2019: “On Barr’s public financial disclosure report, he admits to working for a law firm that represented Russia’s Alfa Bank and for a company whose co-founders allegedly have long-standing business ties to Russia. What’s more, he received dividends from Vector Group, a holding company with deep financial ties to Russia … Barr notes that he earned anywhere from $5,001 to $15,000 in dividends from the Vector Group. The company’s president, Howard Lorber, brought Trump to Moscow in the 1990s to seek investment projects there. The trip is widely seen as the first of many attempts to establish a Trump Tower in Moscow.”
  3. Franklin Foer, “Suspended Animation in the Age of Trump,” Atlantic, October 8, 2018.

Related:

Trump vs. ‘Deep State? That’s How Light Gets In

Donald J. Trump and the Deep State, Part 1

Donald J. Trump and the Deep State, Part 2


Related front page panorama photo credit: Adapted by WhoWhatWhy from US Government and Igor Zvyaghin / Wikimedia (CC BY-SA 3.0).

Where else do you see journalism of this quality and value?

Please help us do more. Make a tax-deductible contribution now.

Our Comment Policy

Keep it civilized, keep it relevant, keep it clear, keep it short. Please do not post links or promotional material. We reserve the right to edit and to delete comments where necessary.

print

8 responses to “The Mueller Report, Alfa Bank, and the Deep State”

  1. robert e williamson jr says:

    Great stuff Giles! You ask a very interesting question about Manafort and Wilbur Ross. The pressure on the USDOJ must be kept intense because I’m thinking that as much as they have covered for CIA in the past the fix might be in again. Apparently that is how things work in Washington.

    If the rest of the world presses the US on this story maybe it will force the US government to come clean on what CIA has been up to with respect to criminal banking practices. Thank you

    And thank you to whowhatwhy for the venue.

  2. robert e williamson jr says:

    I believe there the possibility that the prevalence of offshore accounts and money laundering stories worldwide makes this the story of the century so far.

    I’m not an expert in any sense with respect to these practices, I simply follow the news and read as much as I can about the CIA, NSA, USDOJ, etc, especially since I retired. But what I see at happening ICIJ, International Consortium Of Investigative Journalists is eye-opening and foreboding. I cannot understand how if this is as bad as it appers that the world economy is going to take a big bounce.

    If you haven’t have a look for yourself, http://panamapapers.sueddeutsch.de/articles/

    Hopefully Trump ends up in prison as a footnote to the bigger story. Jane Mayer wrote the book “DARK MONEY” 2016, DOUBLEDAY. The OLIN Foundation was busted around 1966. The Foundation had secretly served as the bank for CIA from 1958 to 1966. During those eight years the CIA laundered $1.95 million through the foundation.

    Press exposure in 1967 forced the story to “go away”. But the existence of such information lends cause to my belief that there is a much larger story to be told!

    Bush 41 was connected with the BCCI scandal and the Safari Club and this was all about money also. That was 1972 to 1980 and Reagan the CIA trafficking cocaine, and ended up with BCCI in serious trouble with the U.S. banking community. By the time Bush 41 had finished his only term it seems working with CIA was good business that resulted in lots of income for those willing to sign on.

    Drugs, guns and money the stuff of cartels.

  3. ShirlB says:

    Well, one thing we know for sure is that Russia is a capitalist country now. We shouldn’t be surprised when they engage in practices that have been common in the United States and other western “democracies” for decades.

  4. Robert M Hundley says:

    One of the many reasons I have distance for Roger Stone is his many conspiracy theories. The ff may seem similar. Yet sometimes big stories are too big to wrap arms @, eg Russian Oligarch inv in Taliban Drug Smuggling. Dexter Filkin was on CNN (?) cable last night, so maybe re Barr a story & Alpha Bank is emerging. See what you think.

  5. I am asked which Russian-owned Icelandic banks were involved in the 2019 bailout of the Trump Organzation. Here they are:

    The Icelandic Glitnir Bank resurrected as Stodnir is owned by the Baugur Group, itself owned by a British Virgin Islands companies Starbook International Limited (P.O. Box 3186 Road Town, Tortola, British Virgin Islands), Waverton Group Limited (P.O. Box 3186 Road Town, Tortola, British Virgin Islands) and Birefield Holdings Limited (P.O. Box 3186 Road Town, Tortola, British Virgin Islands).

    Behind Starbook, Waverton and Birefield is Shapburg Limited (registered in the same mailbox 3186) and Quenon Investments Limited (registered in the same mailbox 3186). Shapburg and Quenon owned a stake in Alrosa Finance in Luxembourg.

  6. Mikhail Fridman, then chair of Alfa Bank, organized the 2009 bailout of the cash-strapped Trump Organization by a consortium of Russian-owned Icelandic banks, mainly off the books. Fridman inspired most of the Fusion GPS/Chris Steele report, not to tell the facts (most of the report is pure BS) but to send a message to Trump: remember we have the goods of you. List of banks available on request.
    The bailout was needed as a result of the 2008 financial crisis which had let the TO without cash. The TO’s bank of record, Deutsche Bank, was asking for a significantly higher interest rate. This did not prevent Wilbur Ross, then chair of the Bank of Cyprus, from offering the post of CEO to DB’s CEO, Josef Ackermann (who is Swiss, not German). The latter went on to take up the position of CEO at Renova Group, which is controlled by Viktor Vekselberg, a Putin crony.
    At the Bank of Cyprus Ross had as deputy former KGB General Vladimir Strzhalkovsky. The bank helped launder some of Paul Manafort’s Ukrainian-Russian money. Yet there is no record of Ross being grilled by Bob Mueller. Was he a witness for the prosecution?

  7. robert e williamson jr says:

    Until this moment I’ve known the Deep State is working hard to cover something up, I just couldn’t figure what. I think now I know.

    Thanks Pete.

  8. Manqueman says:

    I have a crazy old fart theory (because I’m a crazy old fart) that at a certain level of success, the association with other highly successful people transcends differences. I suppose when those people include our leaders, you get what Scott’s writing about. So since what you call the leadership class only cares about self-enrichment at the expense of everyone else, that’s what we get.
    Meanwhile, for the record, such as it is, our true leadership class (Wall Street for short) has been pushing for what can be called maximum extraction since the New Deal, with the exception the mid-20th century when mass prosperity enabled what, for our leaders, was excessive resistance.
    Ever so slightly related, another crazy old fart theory: While a parliamentary system is subject to chaos, that chaos comes from being more responsive than our system of rigid elections. So query why the Founding Fathers rejected that kind of system for what we got.