There was a joke more than 30 years ago, when immigrants from the former Soviet Union began settling in Toronto’s North York neighbourhood, that they came here because it was as drab and grey as the Soviet cities they’d left behind.
That description still fits parts of this vast and occasionally bleak suburb. But not this tidy, manicured avenue, lined as it is with multimillion-dollar houses – one of which, for me, is the end of a journey that began shortly after the January, 2017, inauguration of U.S. President Donald Trump, when a diplomatic source capped off our lunch in an Eastern European capital with this intriguing comment: “If you want to understand this whole Trump-Russia thing, look into a guy named Boris Birshtein.”
The broad outlines of the man, I discovered, were easy enough to discern: Boris Birshtein was born in 1947 in Soviet-occupied Lithuania. He first gained a measure of fame in the early 1990s, as one of the most powerful businessmen to emerge from the collapse of the USSR. He dabbled – not unlike Mr. Trump – in real estate and entertainment, and he dreamed, as well, of building a hotel in the centre of Moscow. In an era when the former Soviet Union was moving from outright communism to a form of crony capitalism still utterly dependent on political connections, he wielded enormous clout over the fledgling governments of Ukraine, Moldova and Kyrgyzstan; he did so by fashioning himself as a middleman for Western companies, including several in Canada, looking to expand into those newly independent states.
But the deeper I dug, the more labyrinthine the tale became. Law-enforcement and intelligence sources told me they themselves had struggled for decades to understand just who Mr. Birshtein was, and who, if anyone, he worked for. Some diplomats and intelligence agents described his powerful and multitentacled company, Seabeco, as a front for KGB-linked operations. Police told me they believed, but could never prove, that he operated under the protection of the Russian mafia.
And yet, others who dealt with Mr. Birshtein portray him more simply as a businessman with an uncanny knack for turning up in the middle of world-changing events.
There are photographs of Mr. Birshtein – who first emigrated from the USSR to Israel, before settling in Canada in 1982 under a fast-track program for wealthy investors – alongside former Canadian prime ministers Brian Mulroney and Jean Chrétien. He’s also been photographed in meetings with Israeli Prime Minister Benjamin Netanyahu, with Mr. Netanyahu’s predecessor Ehud Olmert, and with half a dozen other world leaders. He even seems to have had some kind of relationship with an ex-KGB agent who went on to become President of Russia, Vladimir Putin.
And Mr. Birshtein is not unacquainted with danger. He survived a 1991 car crash that killed the prime minister of Kyrgyzstan. No less than former Russian president Boris Yeltsin accused Mr. Birshtein of helping to finance a failed 1993 effort to oust him from power, a plot that deteriorated into deadly fighting on the streets of Moscow and which even saw shots fired into the home of a former business partner of Mr. Birshtein on Toronto’s Bridle Path.
Then, suddenly, Mr. Birshtein disappeared from the headlines, becoming just another Soviet emigré, if a remarkably wealthy one, living out his semi-retirement in staid North York.
But no sooner had Mr. Birshtein retreated from the spotlight than his son-in-law, Alex Shnaider, stepped into it. Himself a Russian émigré to Canada, also by way of Israel, Mr. Shnaider has told reporters that he stocked shelves at his parents’ North York deli before he came into contact with Mr. Birshtein.
Before long, a twentysomething Mr. Shnaider was working at Seabeco alongside Mr. Birshtein, who would eventually become his father-in-law. Within a decade, Mr. Shnaider was a billionaire, one who had made much of his fortune through an eastern Ukrainian steel mill that he and a partner gained control of while the country was ruled by a president seen as close to Mr. Birshtein. By 2007, Alex Shnaider was smiling for the cameras alongside an even more famous self-proclaimed billionaire, as he and Mr. Trump wielded golden shovels at the future site of the Trump International Hotel and Tower in downtown Toronto. (Remarkably, two of Mr. Birshtein’s other former employees at Seabeco were by then already involved in the financing of another Trump-branded tower.)
Mr. Birshtein wasn’t at the glitzy sod-turning ceremony at the corner of Bay and Adelaide. This past January, the one time I managed to speak with him, briefly, by telephone, he claimed that he had long since fallen out with Mr. Shnaider, who had recently divorced his daughter, Simona. Mr. Birshtein also said he had never met Mr. Trump.
So who is Boris Birshtein? A legitimate businessman whose greatest genius involved being in the right place at the right time? Or was his career built on connections to the KGB and the mafia?
I decided to try to find out.
Twenty months after being given that first tantalizing suggestion in the wake of Mr. Trump’s election, I stood on the steps of the stone house in North York, clutching a notebook containing far more questions than answers. To make sure I was in the right place, I peeked into a novelty mailbox mounted amid bushes in front of the $2.3-million house. After spotting mail addressed to Mr. Birshtein, I strode up and rang the doorbell.
As I stood on the front step, I could sense someone watching me on a security camera mounted just to the left of the entrance. But no one answered the door.
It was just one of the many dead ends I would encounter as I wandered the serpentine world of Boris Birshtein. It’s a place of murky transactions that connect the opaque world of post-Soviet capitalism to the tumult rocking Western politics today – via an elaborate web of companies that obscure the exact provenance of the wealth being generated and transferred, and which hands have sullied it along the way.
St. Petersburg, Russia
“Boris knows everyone” was how one 1993 newspaper headline put it. That was perhaps an overstatement. But knowing Boris Birshtein certainly didn’t hurt the cause of anyone hoping to do business in the years after Soviet leader Mikhail Gorbachev introduced glasnost, or economic openness, in 1986.
At first, fewer than 300 firms were allowed to conduct foreign trade in the USSR. Seabeco was one of them. Crucially, it was also the only Canadian firm on the list: Any Canadian brand seeking a foothold in the Soviet Union had to go through Mr. Birshtein, an outwardly unassuming, round-faced gentleman whose hair and mustache were grey even in his 40s.
And go through him they did. As the Soviet Union collapsed, and a chaotic array of suddenly capitalist republics emerged in its wake, the likes of Molson, Gillette and Magna International all entered the rapidly changing region with the help of Boris Birshtein and Seabeco. The company’s annual revenues, in the years after the Berlin Wall fell in 1989, swelled to a reported US$500-million.
One group of Canadian businessmen got a taste of Mr. Birshtein’s influence when they set out to win the contract to build the Okhtinskaya Hotel in Leningrad (now St. Petersburg). To succeed, they were told by their Russian interlocutors, they first had to enter into a partnership with Mr. Birshtein – and Seabeco. Or, rather, with an offshoot company, Seabeco Capital Inc., that was formed in late 1989, with an address on Main Street in Winnipeg.
The new company had two directors. One was Mr. Birshtein. The other was Harry Giesbrecht, whose own firm, Winnipeg-based Central Canadian Structures, was tasked with the job of actually building the Okhtinskaya.
As the Soviet Union crumbled around it, the Okhtinskaya rose up on the banks of the Neva River. Until it didn’t: The lawless capitalism of post-Soviet Russia saw a scramble to export whatever raw materials the country produced, including, as it happened, the kind of gravel needed to build the 13-storey Okhtinskaya.
But then Mr. Birshtein pulled a string. The city’s deputy mayor intervened. And gravel appeared. The deputy mayor was Vladimir Putin.
“I don’t know if [Mr. Birshtein] is a KGB guy, but he was connected to everybody. He introduced us to people when we got to Leningrad,” recalls Ossama AbouZeid. The son-in-law of Mr. Giesbrecht, Mr. AbouZeid briefly moved to Russia in the early 1990s to oversee construction of the Okhtinskaya.
Mr. Putin, in turn, got something for his help with the hotel: In the summer of 1992, he would travel to Canada on a visa that Central Canadian Structures helped to arrange. During his visit, Mr. Putin attended a barbecue in Winnipeg hosted by Mr. AbouZeid, followed by a visit to each of Ottawa, Toronto and Niagara Falls, Ont. The late Mr. Giesbrecht told the Winnipeg Free Press in 2014 that he drove Mr. Putin to the Canadian border at the Falls, and – because Mr. Putin said he longed to visit America – he stretched out a cross-border U-turn as far as possible, so the future Russian leader could say that he’d been to America.
In late 1991, Charles McMillan was sitting aboard a private plane that had stopped, briefly, at Moscow’s Vnukovo International Airport. Four years removed from his post as senior policy adviser to prime minister Brian Mulroney, he was scheduled to meet that day with Boris Birshtein. When Mr. Birshtein boarded the plane, he was accompanied by a Soviet bureaucrat whom Mr. Birshtein introduced as Askar Akayev. The red flag of the Soviet Union still flew over the airport terminal, and the men were meeting that day to discuss business opportunities in Mr. Akayev’s home republic of Kyrgyzstan, in Soviet Central Asia.
Instead, they spent much of the short meeting talking about an event that hadn’t yet happened: the breakup of the USSR.
After returning to Canada, Mr. McMillan immediately called Mr. Mulroney, who was still two years from leaving office. “Brian said, ‘Walk me through this: The Soviet Union is breaking up around Christmas, and the flag of Russia will go up on the Kremlin, and Boris Yeltsin is going to be the president?’” Mr. McMillan recalled to me, over breakfast at a London hotel late last year. “Brian said, ‘I’m dumbfounded. Where are you getting this information?’”
A few weeks later, the Soviet Union did, in fact, collapse, and Mr. Yeltsin assumed the presidency of the newly independent country of Russia, precisely as Mr. Birshtein had predicted. What’s more, Mr. Akayev became the first president of his own country, the newly independent Kyrgyzstan.
Mr. McMillan later accepted what he describes as a non-paying post at Seabeco, in which he travelled to several countries of the former Soviet Union, goggling at the deference their leaders gave to Mr. Birshtein. He also says he met Mr. Shnaider at least twice in his travels.
Among Mr. Birshtein’s Seabeco partners at the time was Georgy Arbatov, a prominent Soviet intellectual who was later identified as having been an important KGB asset in the days of Soviet rule. Another key figure at Seabeco was a former KGB colonel, Leonid Veselovsky.
Mr. McMillan says he never completely understood the sources of Mr. Birshtein’s money and clout. But he says he came to believe that some of his fortune sprang from a rumoured multibillion-dollar payment made – as the Cold War drew to an end in 1990 – to the USSR by West Germany, as compensation for the cost of withdrawing and resettling Soviet troops that had been stationed in East Germany. The USSR never acknowledged receipt of the money; Mr. McMillan, though, says he believes some of it ended up in the Swiss bank accounts of well-connected companies like Seabeco.
“This is just what I was told,” Mr. McMillan told me, “but I find it to be a plausible explanation for what happened.”
Other clues point to Mr. Birshtein’s multiple and murky connections. The most damning is what appears to be a leaked 1996 FBI report, anonymously posted online, into Russian organized crime, and specifically a group known as the Semion Mogilevich Organization. (Semion Mogilevich himself gained infamy in Canada as the mastermind of the YBM Magnex stock swindle of the 1990s, which saw investors bilked of an estimated $360-million.) The document describes his organization as being involved in “weapons trafficking, nuclear materials trafficking, prostitution, drug trafficking, dealing in precious gems, and money laundering” – and says it is affiliated with the Solntsevskaya Organization, another Moscow-based gang headed by another alleged don, Sergei Mikhailov.
According to the document, in October of 1995, the main Russian mafia organizations convened for a summit of sorts in Tel Aviv, to “discuss the sharing of interests in Ukraine.” Although the various bosses, including both Mr. Mogilevich and Mr. Mikhailov, spent nine days in Israel, their key meeting was hosted in “Boris Birshtein’s office in the diamond centre of Tel Aviv” – a meeting Mr. Birshtein allegedly took part in.
A lawyer for Mr. Birshtein said the purported FBI report was “a complete fabrication. … Our client has no knowledge of and did not participate in any such meeting, let alone organize or host it.” A spokesman for the FBI told The Globe and Mail that the bureau would not “confirm or deny the authenticity of the document.”
But the document is not a one-off. In a 2007 report, Switzerland’s counterintelligence service also named Mr. Birshtein and Seabeco as having “deep connections in the criminal world,” principally, according to the Swiss, via the Solntsevskaya Organization. The report also paints a portrait of a man whose connections are not limited to that world. “He is a former KGB officer and probably still maintains contacts with Russian and Israeli intelligence agencies,” the 18-page Swiss document alleges.
The report suggests he was a man pursued, unsuccessfully, by many before me: “Birshtein was the object of many court orders … but none of the investigations conducted (in Canada, Belgium, Switzerland) has yet resulted in a charge.” As a result, it continues, “It has so far been impossible to prove that the KGB is behind illegal financial transactions. If there is evidence, then it is in places where there is no interest in disclosing them.”
Mr. Birshtein denied, through his lawyer, he had any connections to the Russian mafia: “patently false and accordingly intentionally and maliciously defamatory.” He denied having any connection to the KGB as well: “To associate Mr. Birshtein with an organisation such as the former KGB would be to level an allegation of the utmost gravity against him on the basis of false information gleaned from sources that are clearly wholly unreliable.”
The capital of Ukraine is graceful and warm in summer. As war rumbles on in the east of the country, pitting Moscow-backed separatists against the Ukrainian army, Kiev’s political elites worry, as well, about another battle: the one for the affections of Donald Trump. There’s deep concern here about the alleged ties between Mr. Trump and the Kremlin, and a visceral fear that the U.S. President will let Mr. Putin have his way in Ukraine.
Among those who have worked for the Kremlin in Ukraine is Paul Manafort, the political operative who helped install Viktor Yanukovych, a Moscow-friendly ex-convict, as Ukraine’s president in 2010, six years before Mr. Manafort turned his hand to running Mr. Trump’s presidential election campaign. (Mr. Yanukovych was later toppled in a pro-Western revolution that precipitated Russia’s military intervention in the east of the country; Mr. Manafort now stands charged with lying, to U.S. Special Counsel Robert Mueller, about his contacts with Trump administration officials and his interactions with a Russian linked to Moscow’s intelligence service. He was found guilty of other felonies in a separate criminal probe.)
But Ukraine’s long struggle to escape Moscow’s influence predates the era of Mr. Manafort. The country’s first two post-Soviet presidents, Leonid Kravchuk and Leonid Kuchma, were tainted by accusations that they had colluded not only with the Kremlin but with the Russian mafia – and Boris Birshtein.
“On Dec. 1, 1991, when Kravchuk became president, the first person he met with was Boris Birshtein,” Vladimir Slednyev, an MP in the first parliament of independent Ukraine, tells me when I visit him at a government retirement home on the outskirts of Kiev.
Why would the president of a new country see Mr. Birshtein before anyone else? Because, Mr. Slednyev says, the silver-haired Lithuanian was regarded as “the accountant of the Communist Party.”
Mr. Birshtein’s connections made him a powerful figure not only in Ukraine, but across the former Soviet Union. In Kyrgyzstan, he capitalized on his relationship with President Akayev to get himself appointed as head of that country’s economic-development commission: Suddenly he was gatekeeper to economic opportunity in a resource-rich new state. (After bringing Mr. Akayev to Ottawa to meet then-prime minister Mulroney in 1992, Mr. Birshtein helped ensure Canada’s Cameco Corp. won the contract to develop Kyrgyzstan’s giant Kumtor gold mine. Mr. Mulroney said through a spokesperson that he had “no recollection” of meeting Mr. Birshtein.)
In Moldova, Mr. Birshtein gained similar sway after he gave a top Seabeco post to the son-in-law of that country’s president – Mr. Birshtein found himself to be the owner of Moldova’s top hotel, complete with a licence to operate a casino within it. A company controlled by Mr. Birshtein would also eventually produce all Moldovan passports and other forms of official identification.
Mr. Birshtein’s access to the highest levels in Ukraine, meanwhile, grew under the presidency of Mr. Kuchma, who placed him in charge of a company called Ukraina AG. The quasi-government firm would buy Ukrainian steel and fertilizer at depressed prices, and then sell them abroad on the international market at substantial profits.
As he had done at Seabeco, Mr. Birshtein hired an ex-KGB officer as the vice-president of Ukraina AG. There are allegations that President Kuchma was on the payroll too; Belgian prosecutors traced payments worth at least US$5-million from Mr. Birshtein’s companies to members of Mr. Kuchma’s inner circle, according to a Financial Times report.
Mr. Slednyev, the former MP who spoke to me at his retirement home, was then the manager of a steel mill in the eastern industrial Ukrainian city of Donetsk (the capital of a region that since 2014 has been under the control of pro-Russian separatists). He says there was, in fact, a double swindle going on: The profits from exports funnelled through Ukraina AG were held outside the country, forcing the factories to pay their operating expenses by issuing IOUs – IOUs that were purchased by allies, then swapped for shares in the factories.
Mr. Slednyev says that Mr. Birshtein used such a scheme to cause the owners of one of Ukraine’s biggest steel mills, Zaporizhstal, to sell their shares in the mill to a newly formed company called Midland Resources Inc., which was co-owned by Mr. Birshtein’s son-in-law, Alex Shnaider. Media reports have valued the Zaporizhstal sale at US$70-million. A decade later, Midland would sell the same mill for US$850-million.
“Boris Birshtein was the real owner of Ukraine,” Mr. Slednyev told me. “And Boris Birshtein and Alex Shnaider were the same person.”
(Through a spokeswoman, Mr. Shnaider said it was “incorrect” to suggest Mr. Birshtein had played any role in Midland’s acquisition of the steel mill. Mr. Birshtein’s lawyer said that “our client has not had any dealings with Midland and Zaporizhstal in almost a quarter-century when he completely divested any interest he may have once held in Midland.”)
The buyers who put up US$850-million for Zaporizhstal in 2010 turned out to be a group of shell companies backed by VEB, a bank that has been the foreign investment arm of the Kremlin since Soviet times, and whose board is, by law, chaired by the Russian prime minister. Which means that Vladimir Putin was at the bank’s helm when Mr. Shnaider and his partners made an immense profit while effectively transferring control of the Zaporizhstal mill to the Russian state.
VEB effectively finances Russia’s foreign policy, as well as projects that are known to be dear to Mr. Putin, such as the US$51-billion 2014 Winter Olympics in Sochi, the most expensive Games ever held. Before Ukraine’s 2014 popular revolution, which deposed the Moscow-backed Mr. Yanukovych, VEB spent hundreds of millions of dollars acquiring industrial assets in eastern Ukraine.
Former Ukrainian president Viktor Yushchenko – whose own election, back in 2004, had also followed a pro-Western revolution – put it to me in simple terms when I asked him about the rationale for VEB’s interventions in Ukraine: “This was used as a complex instrument to influence our economy and political players who were financially interested.” In a long conversation over tea and biscuits served at his dacha outside Kiev, Mr. Yushchenko said that he tried to launch a review of the privatization of Zaporizhstal and other assets while he was in office, but that the effort was blocked by pro-Russian members of Ukraine’s parliament.
It wasn’t the only time Mr. Shnaider and Midland Resources appeared to be co-operating with the Russian state. In 2002, Midland bought the company that runs the electricity grid in the former Soviet republic of Armenia, then sold the asset on to a Kremlin-run firm, giving Mr. Putin another lever over one of Russia’s once-Soviet neighbours.
A year later, Midland bought a steel mill in Russia itself, only to sell it to a subsidiary of the Kremlin’s military sales arm, Rosoboronexport, that had been charged with buying up raw materials to feed the country’s growing armaments industry. According to Russian media, Midland was given a 25-per-cent stake in the subsidiary, making Mr. Shnaider and his company full-on business partners with the Kremlin.
But although Midland Resources was involved in all those transactions, the sale of the Zaporizhstal mill carried a distinct Canadian connection that went beyond Mr. Shnaider’s adopted nationality. The influx of cash that Midland received from the 2010 deal came at a critical time in the construction of the Trump International Hotel and Tower in downtown Toronto. A lawyer for Mr. Shnaider told The Wall Street Journal last year that US$15-million from the steel-mill sale went directly to the tower’s financing. He later tried to retract the remark.
Asked to clarify, Mr. Shnaider’s spokeswoman said there was no connection between the sale of Zaporizhstal and the construction of Trump Toronto.
When Boris Birshtein travelled to Moscow on business trips, he lived in a guarded villa that the Communist Party had once reserved for such visiting dignitaries as Fidel Castro and Henry Kissinger. He drove around the Russian capital in the ZIL-brand limousine favoured by Soviet leaders since the days of Stalin; in the air above the former USSR, he flew aboard private jets emblazoned, in gold, with the word “Seabeco.”
And he could access the corridors of power at will. In his memoirs, Boris Yeltsin recounts how Viktor Barannikov, his security minister – and the man responsible for overseeing the domestic arm of the rebranded KGB – tricked him into an unplanned meeting with Mr. Birshtein in 1993, two years into Mr. Yeltsin’s term as Russia’s first post-Soviet president.
In the1994 memoir, The Struggle for Russia, Mr. Yeltsin wrote, “Barannikov was introducing me to an older man, who was smiling and who stretched out his hand, and said, ‘I’m Boris Birshtein.’ This was completely against all the rules. Barannikov should definitely have warned me that he had some guests.” Mr. Yeltsin added that it became clear, as the men ate dinner that night, that Mr. Birshtein had some kind of hold over the Russian security minister. “As I see now, it was so important to Barannikov that Birshtein meet me, he was so dependent upon him, that he was prepared to overstep any bounds of decency and protocol to make this meeting happen.”
Mr. Birshtein and Mr. Yeltsin did not get along at their dinner, and Mr. Yeltsin and others have accused Mr. Birshtein of providing financial support to vice-president Alexander Rutskoi, who opposed Mr. Yeltsin’s economic reforms and tried to oust him from the presidency later in 1993. The power struggle – which saw parliament back Mr. Rutskoi and name him acting president – turned violent when Russia’s army sided with Mr. Yeltsin. Nearly 200 people were killed in the worst clashes in Moscow since the 1917 Bolshevik Revolution. “Birshtein tried to get to the very top – and he almost made it,” Mr. Yeltsin wrote in his memoir.
It was the Moscow uprising that briefly spilled over onto Canadian soil when three shots were fired into the Bridle Path mansion of Dmitry Yakubovski, another alleged former KGB operative who worked for Seabeco until a falling-out with Mr. Birshtein. Mr. Yakubovski and Mr. Birshtein wound up on opposite sides of the political showdown in Moscow. A note left at Mr. Yakubovski’s home after the shooting reportedly warned him to stay away from Mr. Rutskoi and Mr. Birshtein. (Law enforcement sources who spoke with me said they only heard of the letter in media reports, but hadn’t seen it, adding yet another layer of intrigue.)
Mr. Yakubovski returned to Moscow after the incident, where he made public claims that he had proof of Seabeco’s having received “tens of millions of dollars … to finance operations of Soviet KGB operatives in Europe,” and also of having made payments to Mr. Rutskoi. However, Mr. Yakubovski, who now works as a lawyer in the Russian capital, has never produced such evidence, and declined to be interviewed for this article.
Through a lawyer, Mr. Birshtein dismissed the version of history presented in Mr. Yeltsin’s memoir: “Mr. Yeltsin’s substance abuse and related cognitive disabilities are well documented,” he wrote, referring to Mr. Yeltsin’s struggle with alcoholism. Mr. Birshtein, the lawyer added, had “absolutely no knowledge of any incident involved Dmitry Yakubovski.”
After the Yakubovski affair, Mr. Birshtein began adopting a lower profile. That was the case both in Canada, where a law enforcement source who was active at the time told me Mr. Birshtein and Mr. Shnaider were warned they would be held responsible for any spillover of violence from Eastern Europe into North York; and abroad, where Mr. Birshtein’s clout was diminished by the failed bid to oust Mr. Yeltsin.
The Seabeco brand also lost its lustre, and Mr. Birshtein busied himself instead with less prominent efforts, most of them focused on tiny Moldova. But as he faded, his protégés expanded their reach.
In Kazakhstan, a Central Asian state wedged between Russia and Kyrgyzstan, two former employees, Patokh Chodiev and Alexander Mashkevich, emerged as prominent businessmen, with their Eurasia Group company bankrolling the re-election campaigns of the country’s long-ruling President Nursultan Nazarbayev (now in his 28th year in power). In Kazakhstan and beyond, Mr. Chodiev and Mr. Mashkevich, along with a third Kazakh businessman, became simply known as “the Trio.”
It was a trio that Mr. Birshtein helped bring together. In a 2000 interview, Mr. Chodiev told Belgium’s Le Soir newspaper that he first met Mr. Birshtein in Moscow in 1988 – where Mr. Chodiev worked at the Soviet Foreign Ministry – and moved to Belgium in 1991, at Mr. Birshtein’s request, to open a new company, Seabeco Belgium SA. Mr. Chodiev said that it was at the new firm that he met Mr. Mashkevich, and where the two men decided to strike out on their own in Kazakhstan.
It proved an astute move. By the mid-2000s, the Eurasia Group was estimated to account for as much as 20 per cent of Kazakhstan’s economy. The Trio’s empire even gained a foothold in the United States, through its association with a real-estate company known as Bayrock Group.
Bayrock Group, in turn, was fronted by Russian-born Felix Sater, a brash entrepreneur – with past mob ties of his own – who as recently as 2010 was brandishing Trump Organization business cards that identified him as a “Senior Advisor to Donald Trump.” Bayrock Group was the primary contractor behind the building of the Trump SoHo, a Manhattan hotel and condo tower completed in 2008. Bayrock also spearheaded the long but unrequited effort to erect a Trump-branded property in downtown Moscow. While Mr. Sater was the front man for those efforts, Bayrock revealed in a 2007 report to investors that it had two main financial backers, one of which was named as Mr. Mashkevich and the Eurasia Group.
Alex Shnaider had an even more direct tie to Mr. Trump. After Mr. Trump’s initial Toronto business partner pulled out of a project to build a hotel in the heart of the city’s financial district, Mr. Shnaider – along with his partner Val Levitan and their company, Talon International – emerged to fill the void. To finance construction of Trump Toronto, Talon International secured a US$310-million loan from Raiffeisen Zentralbank (or RZB) of Austria.
Taken together, the fact that several ex-Seabeco employees (Patokh Chodiev, Alexander Mashkevich, and Mr. Birshtein’s son-in-law, Mr. Shnaider) had wound up financing multiple Trump real-estate projects – all at a time when the real-estate magnate was known to be short on cash and struggling to secure credit in the United States – looked like more than a coincidence. In January of 2018, after a year of researching this story, I decided to call Boris Birshtein and ask why he thought so many people had moved from his orbit to Mr. Trump’s.
The first time I called, Mr. Birshtein himself answered. Speaking raspy, lightly accented English, he said he had not spoken to his former son-in-law, Mr. Shnaider, in 20 years. In our short conversation, Mr. Birshtein also told me he had no connection to Mr. Trump. “I’m not involved in that at all,” he said. He then claimed he was ill, and asked me to call back three days later.
When I did so, his wife, Tamara, answered. She said her husband had suddenly left the country, and she didn’t know when he’d be back. “He left with open [return] date,” she told me, adding that he was somewhere in Europe – and there was no way to reach him. “I don’t call him, he calls me.”
In November of 2017, the U.S. House intelligence committee summoned Glenn Simpson, the co-founder of strategic-intelligence firm Fusion GPS, to testify about his role in producing what became something like the foundation documents of the entire Trump-Russia saga, a series of memos written by former British spy Christopher Steele. Mr. Steele had written that his sources in Moscow believed Mr. Trump had been heavily compromised by his behaviour, during a 2013 visit to the Russian capital, that included scandalous acts involving prostitutes, which Mr. Steele said had been videotaped by the KGB’s successor agency, the FSB.
Mr. Simpson, tasked by Mr. Trump’s political opponents to dig up dirt on the Republican presidential candidate, had hired Mr. Steele to research and write his report. Speaking to the intelligence committee, Mr. Simpson not only defended Mr. Steele’s findings; he provided intriguing insights into the vast web of connections between Mr. Trump and figures associated with both Russian organized crime and the Russian state.
Mr. Simpson also spoke about Mr. Trump’s business ties in Toronto; and in this part of the testimony, he gave both Boris Birshtein and Alex Shnaider starring roles. Mr. Shnaider, he said, was “probably the most interesting” of Mr. Trump’s former business partners. Why? In large part because his father-in-law was Mr. Birshtein, a man Mr. Simpson called “a very important figure in the history of the KGB-mafia alliance. Boris is connected to [alleged mob boss Semion Mogilevich]. And all these people know each other. And they are all connected in one way or another to the Russian mafia, and some of them are connected to the intelligence services.”
In an e-mail reply to questions from The Globe and Mail, Mr. Shnaider’s spokeswoman said that “any statement implying that there was improper conduct relating to the [Trump Toronto] project is false.” She said Mr. Shnaider had severed business ties with his father-in-law in 1995, and that the two men had been estranged since 2003. “Mr. Shnaider has no information regarding any improper activity involving Mr. Birshtein,” she wrote, adding that Mr. Shnaider had been “deeply saddened” that Trump Tower Toronto (which came under new management last year, stripped of the Trump name, and rebranded the St. Regis) had proved a failure.
In his Washington testimony, Mr. Simpson also claimed that RZB, the Austrian bank that financed the construction of Trump Toronto, was “the go-to bank for top-level Russian dirty stuff,” an allegation based on a series of Russian corruption scandals. (In response to written questions from The Globe, a spokeswoman for the parent company of RZB said Austria’s bank secrecy laws prevented her from commenting on the bank’s involvement in the Trump Toronto project. But she called Mr. Simpson’s comments “absolutely unsubstantiated.”)
Intrigued, I flew this fall to Washington, and visited the offices of Fusion GPS. Although Mr. Simpson was welcoming, the former journalist was also cagey about saying anything more on the record about Mr. Trump, the Kremlin, or Mr. Birshtein and Mr. Shnaider. Fusion GPS, he told me, had become a target of right-wing hate in the wake of his testimony. Indeed, he was less worried about the lawsuits launched against himself, Mr. Steele and Fusion than he was about a car often stationed across the street from the unmarked door of his firm’s office; Fusion staff are convinced someone is surveilling the comings and goings of those they meet with.
The stakes are only getting higher in Washington, where Democrats have now won control of the House of Representatives. Jackie Speier, the congresswoman who elicited Mr. Simpson’s testimony about Mr. Birshtein and Mr. Shnaider, is a top Democrat on the House intelligence committee. And she is laser-focused on finding out whether Mr. Trump’s “bizarre behaviour” vis-a-vis Russia – most notably his public deference to Mr. Putin – is a result of his business ties to alleged Russian mafia figures. Her staff has even invented a mock board game called “Trumpopoly” to help voters visualize the U.S. President’s curious real-estate dealings around the world. (Trump Toronto is an orange tile, located where St. James Place would be on a regular Monopoly board. The White House occupies the Boardwalk square.)
“There was Russian money that came into Trump’s orbit for decades. At one point, I thought they were laundering money, then I came to believe these were payments to Trump,” Ms. Speier told me when I visited her Capitol Hill office. “That’s the Russian way. Long-term focus. Develop a relationship with individuals who can be helpful to Putin and the regime, and make them indebted to you.”
Ms. Speier said the committee’s hearings into Mr. Trump’s ties to Russia – which concluded that there was no evidence of collusion – were “a joke.” Speaking just before last month’s midterm elections, she vowed hearings would start anew if Democrats won control of the House, which they have: “Subpoenas will be flying off the chairman’s desk.”
The press service of the Trump Organization did not reply to e-mailed questions about Mr. Trump’s business dealings.
There was someone else who entertained suspicions about Boris Birshtein: His son (and Simona Shnaider’s only sibling), Alon Birshtein.
In mid-2005, Boris and Alon fell out over the ownership of a condominium on Avenue Road, in Toronto’s upscale Yorkville neighbourhood, and Alon sued his father in an effort to take possession of the property. In his statement of claim, Alon alleged that the $1.7-million condominium had been transferred into his name in 1997 as his father sought to hide assets “from powerful enemies in the Russian, Belgian, Kyrgyz and Ukrainian governments.”
Over an audacious 47-page statement of claim, Alon Birshtein described a wild childhood that saw his father, “with the help of former KGB employees he had put on the payroll,” grow Seabeco into one of the most powerful companies in Eastern Europe.
In his statement, Alon also claimed his father once brought Mr. Mikhailov, the reputed head of the Solntsevskaya mafia, to the family’s home in Zurich while the Birshteins were living between Belgium and Switzerland in the mid-1990s. The lawsuit also explains how organized crime insinuated itself into every corner of Russia back then. “With the disintegration of traditional political authority, there was no effective legal system … bankers, entrepreneurs, and manufacturers depended on the assistance of organized crime to operate. Many of those alleged to be members of organized crime were those who had been members of the KGB secret police before the Soviet Union disintegrated.”
Danger swirled around the family throughout. After the 1991 car crash that killed the prime minister of Kyrgyzstan, which Boris Birshtein interpreted as an attempt on his own life, he decreed that none of his immediate family was allowed to travel anywhere without being accompanied by “private bodyguards, police escort, or both,” the affidavit says.
Alon Birshtein said the failed move against Mr. Yeltsin in 1993 had been a “watershed” for his father: “[His] public image was deteriorating, and his circle of allies seemed to be shrinking.” Mr. Birshtein abandoned a planned hotel he had hoped to build in Moscow – a project first announced shortly after Mr. Trump’s own first visit to the Russian capital, in 1987, during which Mr. Trump declared he “really wanted” to build a Trump-branded Moscow hotel.
According to Alon’s lawsuit, Belgian police raided the family’s Antwerp home in June, 1996, planning to arrest Mr. Birshtein on charges of forgery and money laundering – but could not, because the family was vacationing in Puerto Rico at the time. Three months later, Mr. Mikhailov was arrested in Geneva on charges of belonging to a criminal organization; a Rolls-Royce owned by one of Mr. Birshtein’s companies was in the garage.
Mr. Birshtein never did return to Belgium – claiming, as he would more than two decades later when I sought to interview him – that he was too ill. (“This was false,” his son’s lawsuit says; he was “completely unimpaired by ill-health.”) Instead of returning to Belgium, the family found what Alon described as “safe haven” in North York.
Mr. Mikhailov, meanwhile, spent two years in a Swiss prison awaiting trial, during which a key witness was assassinated and evidence mysteriously disappeared. He was acquitted in 1998. In a recent interview with the Financial Times, Mr. Mikhailov described Mr. Birshtein as “a very talented businessman” who “trusted me and this is a very important factor in business.” (He also recalled meeting Mr. Birshtein’s son-in-law, Mr. Shnaider, at a restaurant in Belgium in the 1990s.)
Mr. Birshtein’s lawyer told The Globe that his client “has no comments regarding any alleged connections to Mr. Mikhailov, and has never had any business dealings with him.”
Shanty Bay, Ont.
No decision was ever filed in the case of Birshtein v Birshtein, opened at the Ontario Superior Court of Justice. The most recent publicly available document is an affidavit filed in 2005 by a law student tasked with serving Boris Birshtein with his son’s statement of claim.
After trying, and failing, to deliver the documents at two Toronto addresses, the law student, Carlin McGoogan, made the 75-minute drive north to Shanty Bay, a quilt of elegant farm and cottage properties on the western shore of Lake Simcoe. Faced with a gated driveway and what he described as a 10-foot-high fence at Mr. Birstein’s home there, Mr. McGoogan taped Alon Birshtein’s statement of claim to the iron gate.
This fall, 13 years later, I found myself following in the student’s footsteps.
Along with the foray to the house in North York, I tried twice to visit the Toronto offices of Royal HTM, one of Mr. Birshtein’s post-Seabeco companies. On my first visit, in January of this year, I peeked in the windows to see a bare reception area with outlines on the walls where pictures once hung. Property records showed that a numbered corporation controlled by Boris and Tamara Birshtein had sold the building in 2017 to a Chinese developer for almost $5.5-million. When I returned in September, the address was inhabited by a Russian hairdresser.
Shortly after my attempts to visit Mr. Birshtein, I received a phone call from Gavin Tighe, a lawyer who had represented Doug Ford, now the Premier of Ontario, and his late brother and former Toronto mayor, Rob, through a series of scandals (and who was recently awarded by the Ford government to a four-year, $667,000 contract to serve as chair of the province’s Public Accountants Council, a body whose job, according to its website, is to “ensure that public accounting in Ontario is practised in accordance with internationally respected public accounting standards”). Mr. Tighe informed me – shortly after his new appointment– that he was now representing Mr. Birshtein. He asked me to stop trying to contact Mr. Birshtein, and instead to send him any questions I might have.
I then e-mailed him a list of 37 questions about Mr. Birshtein, along with a request for an interview with the businessman. The four-page reply arrived replete with denials and threats of legal action: “Any and all allegations of impropriety, criminality or association with criminals are vehemently denied. Our client is a law abiding businessperson with no criminal record or history,” it reads in part. Added Mr. Tighe, “He is not obligated to provide an interview to you or any other journalist.”
Like Mr. McGoogan before me, I found myself with only the Shanty Bay address left to try. So I rented a Chevrolet that I hoped looked nondescript, and headed north from Toronto on an early autumn afternoon. I found the property exactly as Mr. McGoogan had described it – but on this day, the gate was open, though dense forest obscured any view of what lay beyond.
As the Chevrolet rolled down a long gravel driveway that wound through the trees, I found myself thinking of the fatal car crash in Kyrgyzstan, Alon Birshtein’s full-time bodyguards, and those shots fired on the Bridle Path. While much about Mr. Birshtein remained mysterious, this was a man who knew key players in both the Russian mob and the former KGB (at least according to several intelligence agencies, business associates and even his own son).
But Shanty Bay provided no more answers than had Mr. Birshtein’s lawyer. At the end of the driveway sat a palatial house, complete with Romanesque pillars and bedecked with an immense clock. It was, however, in the midst of a full-blown teardown. Construction workers were redesigning the façade and building a brand-new two-storey annex.
I asked one of the workmen if the owner was around. “No one really knows who [the owner] is,” the young man said. “All we’ve heard are rumours.”
What appeared to be the foreman walked over. I asked him if the owner was Mr. Birshtein, describing his stocky build, white hair and mustache. “Oh, the Russian guy?” he replied. “He sold the place. No one has seen him in a while.”
It appeared Mr. Birshtein was on the move once again. And in fact, records show that he and his wife sold the property in early 2016 for almost $6.7-million. The buyer was a numbered company.
So I called the North York phone one last time. Tamara Birshtein, once again, answered in her thickly accented English. She said her husband, once again, was travelling in Europe. “He is not going to be back soon,” she told me, sounding bored by the need to explain his absence yet again.
Then I asked her whether her husband had ever been contacted by anyone from the U.S. Congress or from the ongoing FBI investigation into Donald Trump’s alleged Russia ties. After a pause, she replied that, although she didn’t know the details, her husband had drafted an affidavit in late 2017 “saying he is not involved.” She said she didn’t know whom the affidavit was for.
Ms. Birshtein pleaded with me to stop asking questions about the past. “He is very upset and doesn’t want to talk to anybody,” she said of her husband. “He is retired now.”
With reporting by Greg McArthur, Colin Freeze, Stephanie Chambers and Rick Cash
Where Boris Birshtein has been: An annotated guide to his global career