In the 10 months since Vladimir Putin’s war began, the FSB’s intelligence failures and the staggering combat losses inflicted on Moscow’s invading army by Ukraine’s Armed Forces and civilian defense units have fundamentally undermined the governing structure that Putin meticulously and ruthlessly put in place after coming to power in the late 1990s.

Dubbed ‘the Lubyanka Federation‘ by Kremlinologists, a reference to the FSB’s headquarters in Moscow, it is comprised of current and former FSB spies and secret police that have successfully penetrated every sector of Russian society, including having its members placed in key leadership positions throughout the Russia’s 85 republics, provinces, territories and districts.

The Chekists’ power was absolutely unopposed until the invasions of Ukraine

For nearly a century, the term ‘Chekist’ has been used by Soviet and Russian intelligence officers to refer to one another and as a nod to the Cheka, the first Soviet secret police founded by Bolshevik leader Felix Dzherzinsky.

The Cheka and its successors – the NKVD, KGB and FSB – have long considered themselves ‘the state within the state’. But with the unravelling of the FSB’s authority as a result of the agency’s incompetence and mounting combat losses in Ukraine, its loss of influence could fundamentally alter the existence of the Russian state.

In the years leading up to the February 24th invasion, the various rival groups within the Russian intelligence community were generally not in open conflict with one another but were instead vying for influence in the Kremlin over domestic and foreign policy.

Unlike their KGB predecessors, however, rank-and-file FSB officers have had little ideological motivation to influence their loyalty to the state, or Putin himself. They have focused more on having full or partial control over Russia’s most important business dealings, with the cumulative effect ultimately being that the FSB has become one of the world’s most proficient and corrupt interventionist state regulators. Still, the organization is a far cry from being ranked alongside the CIA, MI6, Mossad or their feared forebearers – the KGB – with regard to their success as an independent spy service.

Moscow’s botched invasion of Ukraine, the planning of which was based on poor intelligence provided by the FSB, has unleashed an internal war within the old Chekist order, one that is threatening its stranglehold on the governance of Russia for the first time since the early days of hope and optimism that followed the end of Soviet Communism more than 30 years ago.

The rise of mercenary influence

In November, shocking videos went viral of a former convict-turned-Russian soldier, Yevgeny Nuzhin, being killed with a sledgehammer. Nuzhin had previously served prison time for murder but was later recruited by Russia’s notorious mercenary group, Wagner.

Nuzhin was personally invited to join Wagner – named after the famed German composer and Adolf Hitler favorite, Richard Wagner – by its owner and close Putin confident, Yevgeny Prigozhin, to fight in Ukraine. As a Wagner mercenary, Nuzhin was captured by the Ukrainian military but later told a journalist that he wanted to fight for Ukraine against Russia. Rather than grant his wish, Ukraine deported Nuzhin to Russia, where he was immediately handed over to members of Wagner.

In what can only be described as a gruesome demonstration of Wagner’s brutality, Nuzhin was executed, complete with an ISIS-style accompanying video of his death. Shortly after the video appeared online, Prigozhin personally sent a sledgehammer smeared with red paint – similar to the one used to execute Nuzhin – to the European Parliament, just as it was debating the possibility of classifying Wagner as a terrorist group.

Two Putin associates vie for more influence

Prigozhin, who is often referred to by the Western media as “Putin’s chef” after having made his fortune in various catering businesses, is said to be able to get “the general staff and the FSB” to obey his wishes. Until recently, only Putin himself had this type of power. But with Prigozhin’s army of Wagner mercenaries acting as the most battle-ready units that Moscow can put in the field, the FSB has had to acquiesce to most of Prigozhin’s demands. This has led many Kremlin insiders, as well as those in the military, to wonder who is actually running the day-to-day operations of the FSB.

Chechnya’s eccentric dictator Ramzan Kadyrov assumed power in 2007 and has seen his status elevated as the years have gone by. Once a foot soldier in Chechnya’s independence movement in the early and mid-1990s, he and his father, Akhmat Kadyrov, switched sides and swore allegiance to the Kremlin prior to the start of the Second Chechen War in 1999.

Though the two are believed to have had little trust in one another, the elder Kadyrov – who had previously served as Grand Mufti of the independent Chechen Republic of Ichkeria – was handpicked by Putin to head the restive North Caucasus nation once Russia re-occupied most of its territory

Following the mysterious assassination of his father in 2004, Ramzan Kadyrov became the de facto head of Chechnya, with his private army – which is roughly the equivalent of a praetorian guard known as “Kadyrovtsy”; all of whom act outside of the FSB’s jurisdiction – enforcing Kadyrov’s authority over the Chechen people.

To further his status as a power broker and to put himself in Putin’s good graces, Kadyrov’s troops have been fighting in Ukraine since 2014, at times finding themselves in combat against anti-Moscow Chechens who fought for the region’s independence over a generation ago.

While both have been in the public eye at various times in the past, neither of the two men has ever openly criticized Putin’s policies until this past autumn. This changed with their critiques of how the invasion has been prosecuted by the Russian Defense Ministry and the General Staff of the Armed Forces.

That said, a coup d’état is not a realistic possibility in Putin’s Russia. But power-hungry players like Prigozhin and Kadyrov can play a major role in shaping the immediate future of the country.

Both Prigozhin and Kadyrov have been less-than-subtle about wanting to establish their own power bases on the national stage. Kadyrov has a close relationship with Viktor Zolotov, who heads the Rosgvardiya (the National Guard of the Russian Federation), and Prigozhin has a working relationship with the Defense Ministry through his patronage of the Wagner mercenaries.

As Russia’s military failures in Ukraine continue to mount, most predict that Zolotov will replace the now-disgraced and discredited Sergey Shoigu as defense minister. Commanding the ministry with the largest budget would give Zolotov immense power, but Kremlin observers also believe that Kadyrov wants a promotion to a significant federal post and would easily secure his standing in the Russian leadership’s hierarchy by being named as Zolotov’s Rosgvardiya replacement. 

Meanwhile, Prigozhin has let it be known within the Kremlin that he wants to be the next FSB director. As someone who has a criminal background, Prigozhin spent nine years in a Soviet prison for robbery and fraud, and who does not have an intelligence services background, his political ambitions do not sit well with the FSB’s current boss, Alexander Bortnikov, a who man who comes from the same Chekist tradition as Putin and who reportedly despises Prigozhin.

Bortnikov has ordered some of his agents to collect compromising material on Prigozhin and his staff as a preemptive measure to keep him from gaining more influence over Putin’s much-talked-about vertical of power.

Bortnikov is well aware that despite his close relationship with Putin, the former will not give Prigozhin a chance to head the country’s main spy agency and to accumulate the power that comes with the position. Bortnikov is basing his action on the unspoken Chekist honor code – the FSB cannot be headed by a former criminal like Prigozhin. He can, according to the Russian intel community’s practices, be useful to do the agency’s dirty work.

The FSB’s role in the invasion of Ukraine?  

British journalist Owen Matthews has claimed that Putin was persuaded to invade Ukraine by the tandem of Nikolai Patrushev, head of the Security Council, and Bortnikov, two of the most well-known Putin hardliners. The Putin-Patrushev-Bortnikov triumvirate has the same worldview, shaped by their experiences in the clandestine services and their belief in the primacy of spy agencies.  

Soon after the invasion began to falter, however, the FSB began to initiate a massive internal purge. A fortnight after Russian troops crossed the Ukrainian border, Putin placed the heads of the FSB’s 5th Directorate, which is responsible for military operations and intelligence, including naval and air force intelligence, under house arrest.

The 5th Directorate, known as the Operative Information and International Relations Service, supplied Putin with faulty intel from Ukraine in the lead-up to the invasion and was responsible for sourcing and creating a network of field agents in Ukraine, as well as in Belarus, Moldova and Georgia, in the run-up to the start of the war.

The FSB had recruited dozens of what they thought were loyal pro-Russian politicians in Ukraine since Moscow’s illegal annexation of Crimea in 2014, but nearly all of their supposed assets turned on the Kremlin once the invasion began. This, along with the fierce resistance of the Ukrainian military and civilian defense units, left the Russians with zero support on the ground.

Not unlike the Americans’ faulty intelligence and oversimplified assumptions about the Iraqi population’s reaction to being invaded, the FSB’s even more serious shortcomings concerning Ukraine may explain Russia’s numerous tactical failures.

Infighting and finger pointing

Against the backdrop of these rumors, a war between the rival factions within the FSB has become more intense as the intelligence agency asserts more control over private businesses and state corporations.  

One of the FSB’s most powerful departments is the Economic Security Service, or ESS, as it controls almost all business processes in the Russian Federation. Officially, the ESS is an anti-corruption department tasked with fighting economic crimes. The reality, however, is that it had a history of high-ranking officials that have been involved, and in some cases arrested, for illicit business dealings. Two of the most high-profile cases involved a pair of FSB colonels, Kirill Cherkalin and Dmitry Frolov, who headed racketeering operations through their connections and security clearance in the ESS.

More than 12 billion rubles ($200 million) in cash and jewellery were seized from the two colonels in 2019 after they had supervised Russia’s banking activities and Deposit Insurance Agency. Under Cherkalin and Frolov’s watch, the Deposit Insurance Agency (DIA) systematically stripped any bank of its assets once the Central Bank revoked its license. The fraud scheme was simple – all of the real assets of a collapsed bank were moved to front companies where the Deposit Insurance Agency acted as bankruptcy administrators. This left creditors and depositors with illiquid assets.

Over the last 15 years, the average percentage of settled claims with creditors of failed Russian banks is well below 50%.

Not surprisingly, immediately after Cherkalin’s arrest, the DIA’s Deputy Director, Valery Miroshnikov, fled Russia. He was later blocked from carrying out a 900 million ruble ($15 million) sale of his Moscow apartments.  

To understand the scope of the ESS’ graft operations, Cherkalin and Frolov both met with a banker who had more than 11 billion rubles ($160 million) stolen from him while in the presence of FSB First Deputy Director Sergey Smirnov. In 2020, Smirnov was officially dismissed in 2020 having reached the state-mandated 70-year-old retirement age limit.  

Last year, Sergey Korolev, the former head of the ESS, was appointed as the FSB’s First Deputy Director. He is expected to be appointed FSB director should Bortnikov suddenly decide to retire. In this case, Korolev was not only found to be the owner of expensive real estate, not unlike most of the FSB’s top brass, but he is also believed to have long-standing connections with some of Russia’s most notorious organized crime groups. 

Russian daily Novaya Gazeta wrote in 2019 that the Lubyanka could become divided into two rival clans known as ‘Liteiny‘ and ‘Border‘, with the possibility of a third emerging under the self-explanatory name ‘Moscow‘. 

Liteiny takes its name from a street in St. Petersburg where the regional FSB office is located. Those who are a part of its power structure include Smirnov and his successor, Korolev.  

The Moscow faction is led by the head of the capital city’s FSB chief, Alexey Dorofeyev, who in 2019 was close to losing his position after he was connected to an attack against a journalist. Dorofeyev is widely considered to be one of Security Council head Nikolay Patrushev’s top protégés. 

Border, so named because its leader, Oleg Feoktistov, was once a member of the Border Guards service, a branch of the FSB. Feoktistov and the Border clan were closely associated with Igor Sechin, the CEO of Rosneft, Russia’s largest state-owned energy company. Feoktistov worked at Rosneft and was instrumental in the arrest and conviction of former economy minister Alexey Ulyukayev.

Ivan Tkachev, the head of the ESS’ ‘K Department’, acts as Feoktistov’s FSB insider. The former mobilized his agents in the Ulyukayev investigation, the findings of which were then used in the case against him.

The ‘K Department’ first became known to the public in 2007 after having been involved in the infamous Sergey Magnitsky case. Tkachev’s predecessor, Viktor Voronin, helped orchestrate the trumped-up case against Magnitsky and was later sanctioned for his involvement in the anti-corruption lawyer’s death. Magnitsky died mysteriously in 2009 after being held in pre-trial detention for 358 days in Moscow’s notorious Butyrka prison. His death caused an international outcry and later led to the Global Magnitsky Act; authorizing the US government to sanction foreign government officials worldwide who are deemed to be human rights offenders

Under Feoktistov’s leadership, Tkachev built his reputation by taking part in high-profile cases, while also gaining access to the upper echelons of power. The Liteiny faction pushed to have Tkachev transferred to the FSB’s military counterintelligence service and the Directorate for St. Petersburg, but Tkachev was ultimately not approved for either assignment.  

Tkachev’s unsuccessful bid to be reassigned to more important may have been due to his main rival, and his own superior in the chain of command, Sergey Alpatov. The latter is a member of the Moscow clan and has been acting head of the ESS for more than a year. Alpatov earlier headed the FSB’s ‘M Directorate’, which oversees the Prosecutor General’s Office, the Investigative Committee and Russia’s judges. 

Some analysts believe that the current conflict between Alpatov and Tkachev stems from when the latter was part of the team charged with the destruction of Yukos, once Russia’s main oil company headed by Mikhail Khodorkovsky after the oil tycoon emerged as a political dissident and major rival to Putin in the early 2000s.

Alpatov, as a supervisor of the Investigative Committee and the Prosecutor General’s Office, actively moved to slow the opening of a third case against Yukos in 2019; almost a year after Alpatov had moved from the “M Directorate” to deputy head of the ESS. His informal contacts with what was left of Yukos’ former directors, after years of litigation against the company, most likely prevented Alpatov from being named to the ESS’ top job. 

During the COVID pandemic, and since the launch of Moscow’s war in Ukraine, the Liteiny have grown stronger and strengthened their position by keeping Dorofeyev and Alpatov out of Moscow. When the invasion of Ukraine was launched last February, several factions within the FSB began to contradict one another, in particular about the accuracy of the intelligence that had been gathered in the run-up to Putin’s decision to go to war. Corruption of the kind that Alpatov and Tkachev had grown used to was reduced, the workload for the agency increased due to trips to the war zone, and, most importantly, Putin began to draw certain conclusions about the effectiveness of some of the FSB’s nearly endless number of departments.  

Endemic corruption instead of state service 

Putin’s managerial concept is obvious to Russia’s governors, officials and security services: “If you want to make money, do your job and show results.” The invasion of Ukraine has revealed that the FSB can no longer be regarded as one of the world’s premier spy agencies. Instead, it has come to be characterized by a complete lack of oversight, amateurish incompetence and corruption, all of which lead to a dearth of verifiable results. 

All of the aforementioned FSB generals are multimillionaires. Officially, they are not as wealthy as their now-under-custody subordinates, Cherkalin and Frolov, but this is only because their assets remain hidden. 

Sergey Smirnov, the second-in-command of the FSB, is the sole owner of an undeclared Moscow apartment worth 45 million rubles ($750,000). But the family of his successor, Korolev, turned out to be far richer. His 25-year-old son Boris was found in an apartment worth 100 million rubles ($1.4 million). Alpatov, the acting head of the ESS, owns a house worth an estimated 150 million rubles ($2.5 million) in one of the Moscow region’s upscale districts.  

Incidentally, the authorities confiscated 6.3 billion rubles (over $100 million) worth of property, including five apartments and two houses, from Cherkalin. The houses of Dorofeyev and his deputy are valued at 75 million rubles (over $1.2 million).  

Active and former FSB officers are clearly linked to big business in Russia. Korolev is reported to have ties to Uzbek billionaire Alisher Usmanov and his affiliates. Alpatov has ties to former Yukos chief Khodorkovsky’s ex-inner circle. Dorofeyev is believed to be closely affiliated with the Moscow-based Mazaraki family, which controls a highly lucrative funeral service business in the Russian capital.  

FSB generals control all big business in Russia, with its financial sector being firmly in the hands of Ivan Tkachev, a man who has been accused of rampant corruption for years. His criminal business practices have been brought to the public’s attention through leaked audio recordings, but, unsurprisingly, this didn’t lead to his resignation. Instead, Tkachev received state awards and was promoted to a new rank.

A symbiotic relationship

Ties between the business world and security services have a long history in Russia. The existence of the ‘Lubyanka Federation’ will not surprise a single Russian citizen, largely due to what they witnessed and suffered from in the 1990s when the newly created oligarch class generally preferred to hire either ex-KGB or then-active FSB officers to fill certain roles in their power structure.  

Yukos – the subject of much of Putin’s wrath during the early years of his presidency – often used the services of former spies, both before and after Khodorkovsky’s arrest. A top Yukos manager, Alexey Kondaurov, had been an FSB general before he became a member of parliament not long after Yukos was dismantled. 

Despite his intel background, Kondaurov later joined the anti-Putin opposition, going so far as to sign a resolution in 2014 against military action in Ukraine, This was a political move that lifted the veil on just how complex the relationships actually are at the top of the Russian government. 

Kondaurov has, at times, openly sided with Yukos’ shareholders against the Kremlin and demanded that Khodorkovsky be released from the labor camp that he’d been sent to while in serving his sentence.

Now residing in London, Khodorkovsky hopes to play a prominent role in the transfer of power, if Putin’s system of governance collapses. Khodorkovsky would use various media assets that Roskomnadzor, Russia’s powerful censorship body, cannot fully silence due to the millions of subscribers and lobbyists, including members of the FSB, who are sympathetic to Khodorkovsky’s pro-democracy, reform-minded agenda.

It’s no coincidence that such repugnant individuals like Prigozhin and Kadyrov, with their endless funds and Kremlin back, have now come to the forefront during Russia’s war against Ukraine. In addition to doing their usual “dirty work,” Prigozhin and Kadyrov are now tasked will reeling in the FSB ‘merchants’ who have made huge sums of money but have little to show from their intelligence gathering.

Putin will no doubt order Prigozhin to force the FSB to turn its focus to serving Russia’s security interests instead of looking to bolster the personal fortunes of the agency’s highest ranking officers. 

A diminished force 

The FSB has lost its grip, and soon will apparently lose some of its leaders. Putin will no doubt order Prigozhin to tell the FSB to turn their attention to serving Russia’s security interests, but it is impossible to predict what role the country’s main spy agency will play in post-Putin Russia