Economic Espionage From Russia with Love

Stefan Keller thought he had found a good friend in a highly educated diplomat who was interested in everything the German financial manager did. Then his friend turned out to be a Russian spy.
A Russian agent has been spottet in Frankfurt, Mr. Bond.

It was a short phone call, but it turned the world of Stefan Keller, who does not want to read his real name in the paper, upside down.

The man on the phone did not say much. He gave his name, then said he was an agent with the Verfassungsschutz, Germany’s domestic intelligence agency. The agent wanted to speak with Mr. Keller. In Person.

Was it a prank call? Mr. Keller hung up, then looked online for the main telephone number for the agency’s headquarters in Cologne, and called asking for the man. A few seconds later he was on the line. “Do you believe me now?” he asked.

This is a story about espionage. About how foreign agents tap sources to have the same level of knowledge on issues such as inflation, the future of the euro and the shift to renewable energy sources as German experts.

The story resembles what happened earlier this week in New York, when United States authorities broke up a presumed spy ring. According to the unsealed court documents, the three suspects, a Russian banker and two diplomats, reportedly gathered information about sanctions and alternative energy sources and relayed them to Moscow.

Mr. Ulyanov usually sat with his back half leaning against the wall; Mr. Keller only later realized he did that so he would have a good view of the entire room.

Stefan Keller’s story shows that espionage is not limited to the United States or James Bond films. Spying is also taking place in Germany’s financial capital Frankfurt.

The story begins seven years ago, in early 2008, in the foyer of Frankfurt’s Old Opera. Mr. Keller was attending an obligatory event for financial market players. The sovereign debt crisis was still being called a banking crisis, everyone was talking about Lehman Brothers, and in Russia, Dmitry Medvedev was warming up as the transition president. Mr. Keller was there to make contacts and represent his business.

At one of the many tables he got involved in a discussion with a small group of people. One of the men asked him at the end if he would like to continue the discussion in the future. They exchanged business cards.

The man’s business card gave his name, which will be Piotr Ulyanov in this story, and said he was of the trade and business office of the Russian Federation in Germany. He had dark hair, parted on the side, and wore a goatee. His tie wasn’t perfectly tied. The man spoke fluent German, but pronounced his “r” like a “ch.” His business card listed the Russian consulate in Bonn as his office address. There was no email address. Later Mr. Keller would note that there was no connection at the telephone number listed.

There is a lot of talk about spying, but not about economic espionage. Issues such as inflation, the future of the euro or the crisis in E.U. countries are extremely important for other nations. Especially for Russia, an energy supplier with traditionally close ties to Europe, a lot rides on these questions.

Just recently, the rating agency Standard and Poor’s downgraded Russia’s foreign exchange credit rating to junk. For a country with raw materials like Russia, it makes a difference worth billions to get this information early enough. The political divisions, sanctions and disputes on the highest political level are another reason why they would want to know exactly what the other side thinks, and how they are making decisions.

Mr. Keller thought next about the business advantages from having this contact. It doesn’t hurt to have a Russian on your side, because his colleagues had to regularly apply for visas to travel to Moscow.

The men got together a couple of times, always in nice hotels or restaurants. They talked about German finance: the situation of the banks, the politics of the ECB, the future of the euro. The diplomat had a lot of questions. They covered some topics that are not even the specialty of of Mr. Keller. He was flattered by the interest his counterpart took in his opinion, and therefore didn’t have a problem saying things that had previously only been known in smaller circles.

About 400 Russian citizens have diplomatic immunity in Germany; one in three of them is an agent.

Mr. Keller is in his late forties, and works in senior management at a financial institution, one rank below the management board. Banks, insurers, investment companies, ratings houses – against the backdrop of Frankfurt’s high rises, the topics kept coming up.

Mr. Ulyanov often came casually dressed to the meetings. Mr. Keller liked that. Over the course of six years they met more than 50 times. Each time the Russian was there before him. He usually sat at a table for four, with his back half leaning against the wall. Mr. Keller only later realized he did that so he would have a good view of the entire room.

The meetings soon involved more than an exchange of business ideas. Mr. Ulyanov spoke of his children. He had a son and a daughter, both of them were devout in their Russian Orthodox faith. He wanted to know Mr. Keller’s birthday. From then on he always got a lavish present on his birthday and at Christmas.

It is very common to speak about the family and then later about business, said attorney Rainer Birke from the firm Wessing & Partner, which has many clients in Russia. That has to do with the radical changes in society, which also always turned the legal system upside down. As a result, the people in Russia learned to build trust in people instead of numbers and laws. “Gaining the trust of someone else and winning him over is in the Russians’ blood,” said Mr. Birke.

Who's watching Frankfurt's bankers?


People like Mr. Ulyanov are the spearheads of Russian intelligence abroad. About 400 Russian citizens have diplomatic immunity in Germany, and according to German authorities one in three of them is an agent. For historical reasons, they are familiar with German culture and as a rule do not officially recruit their informants. Instead, they build a relationship of trust with them, as long as the information flows to them automatically.

Three years and countless appointments later, Mr. Ulyanov had a request. They were not sitting in a chic restaurant this time, but in the Irish pub “O’Reilly’s” near the main train station. As always, they ordered a beer, toasted each other, and then talked about sports.

Then they talked about the German transition to renewable energy known as Energiewende.

That same year Germany had announced it would be phasing out the nuclear energy program. “You must have colleagues who have written more about that than what is in the newspapers,” said the Russian. Mr. Keller thought of a report that was actually only available to insiders.

He hesitated. Mr. Ulyanov noticed that, and emphasized how much the German would help him.

At their next meeting Mr. Keller gave his friend a USB stick with the non-published material. At their following meeting, the Russian had an envelope in his hand. With the help of the report, he said, he was able to write a good synopsis of energy issues, and it was read by his high-ranking superiors in Moscow. Who these superiors were, he did not say.

We are 95 percent sure that Mr. Ulyanov has agent status. Intelligence officer, Verfassungsschutz

Instead, Mr. Ulyanov shoved the envelope in Mr. Keller’s hand. Only after the meeting did the German businessman have the courage to look inside. He found several hundred-euro bills. Instead of telling his employer about it, he took his wife to a fancy restaurant with the money.

In a world of numbers, filled with people in suits who measure themselves by their achievement at work, everyone is looking to form informal relationships. Mr. Keller, the manager from Frankfurt, also felt that.

By and by the meetings were often about good food, beer, and discussions of sports and family. Business issues moved into the background. And Mr. Keller hardly noticed anymore whether they played a role. The meetings were for him a welcome change to his daily routine. And then the intelligence service called.

“We are 95 percent sure that Mr. Ulyanov has agent status,” Mr. Keller heard the intelligence official say. His head started to swim. What had he done? What had he revealed? He became dizzy. The German official said: “You can give us the other five percent.” Mr. Keller decided to cooperate.

In the financial industry the issue of espionage has long been treated as an afterthought. Deutsche Bank emphasizes it has implemented “directives on securing the correct handling of information.” A spokesman for the insurers association explained that at an insurance conference an official with the state of North Rhine-Westphalia’s domestic intelligence service spoke to them about the risks of espionage, but reportedly did not talk about recruitment.

The Verfassungsschutz has not commented on the operation. But two months ago, there was a dispute between the German and Russian authorities after a Russian diplomat was allegedly exposed as an agent and then expelled from Germany. He most recently had worked at the consulate in Bonn. Just as Piotr Ulyanov, Mr. Keller’s Russian friend, once did.


Ozan Demircan is an investigative reporter for Handelslbatt. To contact him: [email protected]