How Spy Games Are Sabotaging Ukraine’s Intelligence Agency

KIEV, Ukraine -- When Moscow-backed separatists were starting their war in east Ukraine last spring, the country’s main security agency sent a covert team to capture a rebel leader.

Alexander Khodakovsky (L), former head of SBU's counterterrorism unit in Donetsk, is one of the highest-profile defectors to the rebels.

But word of the classified mission leaked out, and three Ukrainian operatives were themselves captured and thrown into a separatist jail.

Rebels stripped them to their underwear, bound their wrists and blindfolded them, then paraded them in front of Russian journalists. 

Ukrainian counterintelligence officials now believe their capture was an inside job, the result of a betrayal by a high-ranking employee of the Security Service of Ukraine.

The agency, roughly equivalent to the U.S. Federal Bureau of Investigation and known by its Ukrainian acronym SBU, has battled corruption, internal intrigue and treason for years.

Ukrainian officials said in interviews that by the time the war began last year, the SBU was riddled with Russian spies, sympathizers and turncoats, and many of its files had been stolen and taken to Russia. 

The SBU’s troubles come amid broader tension in Ukraine about whether the country should ally itself with Moscow or the West.

As Russian and Western powers drift toward a new Cold War over the crisis, U.S. officials have grown concerned about special operations, spycraft, propaganda and other actions Moscow has undertaken in Ukraine and could attempt elsewhere.

The Kremlin, for its part, has disavowed any role in the war.

“We do not interfere in Ukraine’s internal affairs,” Russian Foreign Minister Sergei Lavrov said last year.

“There are no Russian agents there.”

The U.S. is careful about sharing intelligence with the Ukrainians, in part out of concern that it could fall into Russian hands, American officials say.

U.S. spy-satellite images, for example, are degraded before they are shared.

Valentyn Nalyvaichenko, current head of the SBU, said in an interview that when he took over the agency last year, days after Ukraine’s pro-Kremlin regime fell, he faced a gutted institution.

“We entered this empty building. All the deputies had disappeared,” he said recently at SBU headquarters in downtown Kiev.

“Nobody was home.”

Ukrainian intelligence officers say Mr. Nalyvaichenko’s predecessor fled to Russia early last year and later was involved in funneling weapons to the separatists.

Unlike some other former Soviet republics, Ukraine didn’t purge the ranks of its spy service when it gained independence in 1991.

Many agents at the newly created SBU came from the former Soviet KGB’s 5th directorate, which had focused on rooting out domestic political dissent, according to Ihor Smeshko, a former intelligence chief and now adviser to Ukraine’s president.

When the Soviet Union broke up, two specialized military-intelligence brigades that once reported directly to Moscow were left on Ukraine soil.

Those brigades had been responsible for organizing sabotage and guerrilla warfare in the event Soviet Ukraine became occupied by the West, according to Mr. Smeshko.

KGB files 

In the early days of independence, Ukrainian operatives in Kiev loaded KGB agent files onto a truck at night and drove them to a secure location to prevent the former local KGB boss from taking them back to Moscow, recalls Nicholai Malomuzh, who would later lead Ukraine’s Foreign Intelligence Service.

Nevertheless, cooperation between Russian and Ukrainian intelligence services remained close.

“We were closer even than the U.S. and U.K.,” recalls Vitaly Naida, who joined the SBU in 1997 as a counterintelligence officer.

“The Russians could pick up the phone and call any office here. There was a direct secret connection line.”

Corruption spread through the security service, according to current and former officials.

Reports of SBU involvement in arms sales abroad began appearing regularly in the early 2000s.

One case involved a former SBU officer and Russian intermediaries who sold Ukrainian cruise missiles to Iran and China.

Ukrainian authorities later acknowledged the sale and arrested some alleged participants.

Ukraine’s then-President Leonid Kuchma was caught on tape in 2000 discussing a possible sale of antiaircraft radar to Saddam Hussein’s Iraq.

The surveillance of the president’s office was conducted for years by a career security officer assigned to Mr. Kuchma’s protective detail, though it remains unclear whether the officer acted alone.

Mr. Kuchma said he never authorized the sale to Iraq.

The tapes include comments by the president to senior advisers about an opposition journalist.

On one tape, then-chief of the SBU Leonid Derkach promises the president he will deal with the reporter, who he says is already under surveillance.

The journalist, Georgi Gongadze was later strangled, decapitated and buried.

A police general was sentenced to life in prison for the murder in 2013, more than a dozen years later.

The former president and his associates, including Mr. Derkach, have denied any role.

Another murky chapter in recent Ukrainian history involves the 2004 poisoning of pro-Western politician Viktor Yushchenko.

His successful run for the presidency that year against a Moscow-backed candidate triggered Ukraine’s Orange Revolution.

During the campaign, Mr. Yushchenko ingested dioxin, a powerful toxin that left him in severe pain, his face discolored and bloated.

Shortly before becoming ill, he had attended a small private dinner with Ihor Smeshko, then SBU chief.

Ukrainian investigators zeroed in on the dinner as a possible site of the poisoning.

Mr. Smeshko, whom Mr. Yushchenko had fired upon becoming president, was interrogated by prosecutors.

Mr. Smeshko denies he had anything to do with the poisoning, which remains unsolved.

As president, Mr. Yushchenko sought to steer the SBU away from its former Soviet influences.

The so-called de-KGBzation campaign involved declassifying and publishing archives dealing with the deadly famine unleashed by the Kremlin on Ukraine in the early 1930s.

The president’s point-man for the project was the SBU chief at the time, Mr. Nalyvaichenko, who now holds that job for a second time.

He says the effort to relieve the SBU from its Soviet baggage was “a very important thing for the society and for the security service itself.”

On the ground in Crimea, Ukrainian counterintelligence teams began confronting Russia’s Federal Security Service, or FSB, the main successor to the KGB.

Officially, the FSB was on the peninsula to protect Russia’s Black Sea Fleet stationed there under a treaty with Ukraine.

Ukrainian counterintelligence claimed the FSB went beyond its mandate.

“They were executing clandestine operations, collecting human intelligence, recruiting Ukrainian officials, police, trying to steal secret documents,” says Mr. Naida, the longtime SBU officer.

Russian operatives were establishing links with pro-Moscow organizations active on the peninsula, he says.

Those organizations would later prove instrumental in the Russian annexation of Crimea.

Russian officials have said FSB officers in Crimea dealt only with fleet security.

In 2009, Mr. Yushchenko’s government revoked the deal that had allowed limited official FSB presence in Crimea.

In 2010, with his popularity waning, Mr. Yushchenko was replaced as president by the Moscow-backed politician he previously had defeated, Viktor Yanukovych .

Yanukovych sought to reorient Ukraine toward Moscow.

Inside SBU headquarters Kiev, Russian officers became a common sight.

“It was the golden age of Russian special services,” says Mr. Nalyvaichenko, who left SBU when Yanukovych became president and joined the opposition.

“They simply came in with their equipment, their people and their mentality.”

A veteran SBU officer from Odessa said in an interview that counterintelligence operations against Russia were deliberately blunted.

Ukrainian officials now say the SBU returned to its old role of spying on opposition activists, wiretapping their phones and tailing them around Kiev.

But President Yanukovych’s decision to spurn European integration in favor of the Kremlin’s Eurasian economic union set off the street protests that eventually led to his flight from the country early last year.

After his government fell, the SBU was supposed to take the lead in dealing with the pro-Russian separatist unrest that followed.

But when Russia annexed Crimea, the local head of the SBU switched allegiances to the FSB.

Later in Donetsk, now the capital of the self-proclaimed Donetsk People’s Republic, nearly one-third of SBU employees supported the separatists, according to Ukrainian counterintelligence officers.

The highest-profile defector was Alexander Khodakovsky, a former paratrooper who for years had led the SBU’s counterterrorism unit in Donetsk.

During the protests against President Yanukovych, his team had deployed to Kiev’s Maidan square, the center of the protests, for crowd control.

Khodakovsky says he was shocked by the revolution.

He returned to Donetsk frustrated and demoralized.

His feeling was shared by other officers at Maidan square, who faced scorn from the protesters and later from the new government in Kiev.

Khodakovsky says that led him to join the separatists.

In Kiev, Mr. Nalyvaichenko once again took charge of the SBU.

When the unrest began in Donetsk last spring, he didn’t trust the agency’s operatives in the city.

So he sent a team from Kiev to track and capture a rebel chieftain.

Mr. Nalyvaichenko claims that Khodakovsky, the defector, called one of the operatives’ cellphones, fished out details of the mission and relayed them to the rebels.

That led to the capture of the three SBU operatives.

“He’s a traitor,” says Mr. Nalyvaichenko, Khodakovsky denies this, saying SBU counterterrorism commandos “remain my family. To betray them is unthinkable.”

They spent 10 days in the basement of the former SBU headquarters in the town of Slovyansk.

The three eventually were released in a prisoner swap that included the separatists’ self-proclaimed “people’s governor,” who had been captured earlier by the SBU.

Khodakovsky used his inside knowledge to help the rebels.

Last May, when the rebel leadership decided to storm the Donetsk International Airport, Khodakovsky says, he and his men surprised the Ukrainian forces inside by using a secret, special-forces airport entrance.

The raid led to months of fighting that left many dead and reduced a multimillion-dollar facility to rubble.

After leading his own battalion staffed with many Russian fighters, Khodakovsky now serves as the secretary of the Donetsk People’s Republic’s security council.

SBU’s Donetsk headquarters has become the separatists’ command-and-control center and jail.

The SBU officers who remained loyal to Kiev regrouped in Mariupol, a port city in the Donetsk region that remains in Ukrainian hands. 

Vadim Tsvihun, a deputy chief of the regional SBU branch, says that after the protests at Kiev’s Maidan square, “there was no real authority in the country.”

Pro-Russian groups mobilized.

One such group, called Mongoose, took part in a deadly raid on Mariupol’s police headquarters last May that destabilized the city.

A Mole 

Mr. Tsvihun says Mongoose had a mole inside the SBU who helped supply weapons to Mongoose commandos.

When the mole was arrested by SBU counterintelligence, he turned out to have links to Russian security agencies, including a laptop for encrypted communications, Mr. Tsvihun says.

The operative, he says, was released in a prisoner swap requested by the former SBU chief in Crimea, who also had sided with Moscow. 

Back in Kiev, Mr. Nalyvaichenko, the SBU chief, resumed the “de-KGBzation” campaign he had begun when he first held the job.

He laid off top officers who had substantial Moscow links.

Mr. Nalyvaichenko, a former diplomat who served in Washington, had himself studied in an elite Moscow foreign-intelligence school.

But he says he never graduated, which allowed him to keep his job. 

His pro-Western bent is so strong that SBU’s former chief, now living in Russia, has accused him of being a CIA agent, something Mr. Nalyvaichenko dismisses with laughter.

SBU recently arrested its former counterintelligence chief, Vladimir Bik, accusing him of bringing FSB groups to Kiev to suppress the Maidan protests, where more than 100 protesters were shot to death.

Bik’s lawyer, Taras Popovchenko, characterized the charges as “a political prosecution” and the “rants of a madman.”

Some of SBU’s recent actions have stoked criticism that it is overreaching.

The agency arrested a Ukrainian journalist in part because he questioned mass military mobilization in Ukraine.

Mr. Nalyvaichenko and President Petro Poroshenko accused a close aide of President Vladimir Putin of personally supervising sniper teams during the Maidan protests.

No evidence has been presented to prove or disprove a Russian connection.

Putin ridiculed the accusation.

“It’s complete and utter nonsense,” he said in a Russian television interview.

Mr. Nalyvaichenko is unapologetic about the charges, or about the broader battle against Moscow.

The SBU’s new logo features an eagle stomping on a snake with two crowned heads.

The heads appear to be cut and pasted from the Russian state coat of arms.

The logo carries a Latin proverb:

“The eagle doesn’t chase flies.”

Source: The Wall Street Journal