Spoils of War

By Michael Haywood

The first-person account of an American intelligence officer working in Moscow for a billionaire investor during the privatization of the Russian economy and Vladimir Putin's rise to power.  The turbulent period following the dissolution of the Soviet Union was a pivotal moment in history, offering an incredible opportunity to reset East-West relations after seventy years of hostilities embodied by the Cold War. But something went awry. Russia's brief flirtation with democracy was undermined by massive corruption, greed, weak institutions, and the blind ambition of a political leader seeking to restore Russia's lost status as a global superpower.  SPOILS OF WAR provides a unique window into the underlying political and economic factors enabling a small group of oligarchs to gain control of the country's wealth and power before losing it all to an aspiring dictator.  The book blends the perspective of Russia's biggest foreign investor seeking huge profits with the observations and analysis of an intelligence officer assigned to protect his employer's interests. Approximately 273 pages.

• Language: English
• Publisher: CLEVER MEN PUBLISHING LLC
• Release date: Mar 1, 2023
• ISBN: 9798986398402

Michael Haywood

Michael Haywood has been an athlete, soldier, security professional, and hedge fund manager. His career included twenty years living abroad in diverse countries such as Germany, Cayman Island, Russia, and the United Arab Emirates. Overlapping his civilian jobs were twenty-five years serving as a U.S. Army Intelligence Officer.  He retired as a Lieutenant Colonel and lives in Florida with his daughter, Nicole.

Book preview

SPOILS OF WAR

A Soldier in a Billionaire’s Battles with the Russian Oligarchs

Who Placed Vladimir Putin in Power

A Memoir

MICHAEL HAYWOOD

Copyright © 2023

MICHAEL HAYWOOD

Clever Men Publishing LLC

SPOILS OF WAR

A Soldier in a Billionaire’s Battles with the Russian Oligarchs

Who Placed Vladimir Putin in Power

A Memoir

All rights reserved.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law.

MICHAEL HAYWOOD

Clever Men Publishing LLC

13800 Egrets Nest Drive

Jacksonville, FL 32258

First Edition 2023

Library of Congress Cataloging-in-Publication Data

Cover Designed by DejaVu

Dedicated to my daughter Nicole, a constant source

of pride, joy, inspiration, and love.

Table of Contents

Prologue

Chapter 1

A Lot of Money

CHAPTER 2

Cause and Effect

CHAPTER 3

Cayman Islands

CHAPTER 4

Ken Dart’s Orbit

CHAPTER 5

The Dart Way

CHAPTER 6

The Value Investor

CHAPTER 7

Russian Privatization

CHAPTER 8

Dart Management

CHAPTER 9

Moscow Exposed

CHAPTER 10

Russian Investment Challenges

CHAPTER 11

Moscow Security Preparations

CHAPTER 12

Russian Far East

CHAPTER 13

Simmering Hostilities

CHAPTER 14

Recruitment

CHAPTER 15

Move to Moscow

CHAPTER 16

Loans-for-Shares

CHAPTER 17

Holding Companies

CHAPTER 18

Masters of Theft

CHAPTER 19

Workout Group

CHAPTER 20

Facilitators and Enablers

CHAPTER 21

Illusions of Progress

CHAPTER 22

Who Owned Sibneft?

CHAPTER 23

Trial Above the Arctic Circle

CHAPTER 24

Brain Trust in London

CHAPTER 25

The $750 Million Solution

CHAPTER 26

The Big Gamble

CHAPTER 27

The Purge

CHAPTER 28

Resurrection

CHAPTER 29

Welcome to Russia, BP

CHAPTER 30

The Curious Case of Bill Browder

CHAPTER 31

An Unexpected Turn

CHAPTER 32

Prospect of Riches

CHAPTER 33

Wag the Dog

CHAPTER 34

Expanding Responsibilities

CHAPTER 35

The KGB Chairman

CHAPTER 36

Moscow Companies

CHAPTER 37

Renaissance Investment Conference 2000

CHAPTER 38

Strategic Retreat

CHAPTER 39

The Kursk

CHAPTER 40

All Americans Are Spies

CHAPTER 41

End of an Era

CHAPTER 42

Pharos

CHAPTER 43

Dubrovka Theater, The Final Act

CHAPTER 44

Changing of the Guard

CHAPTER 45

Duty Calls

CHAPTER 46

Russian Tsar

CHAPTER 47

Russia Today

EPILOGUE

Prologue

R

ussia’s systematic effort to undermine U.S. elections in 2016 blindsided millions of Americans old enough to remember the Cold War and the incredible surge of euphoria erupting after the collapse of the Soviet Union in 1991. After dominating American foreign policy for over forty-five years, Russia had been reduced to a European problem, no longer worthy of serious consideration in the global scheme of things. New threats had replaced our erstwhile enemy, and fears of local school shootings were much more terrifying than forgotten images of Russian intercontinental ballistic missiles streaking across the Manhattan skyline. The evil empire had been vanquished, and there was little interest in paying much attention to anything Russian, especially considering the country was nearly five thousand miles away. This misguided assumption coursed through the American political and economic systems like fresh blood from a transfusion, quickly replacing decision-making policies in place since World War II.

Fast forward twenty-five years, and the United States found itself under a coordinated assault, not from Russian missiles falling from the sky but from millions of electronic pathways aimed directly at the heart of America’s democracy by our former adversary. What transpired in these intervening years to alter the promising course Russia appeared destined for in 1991 and send the country back into the grip of a dictator? Although the United States bore no obligation to assist in Russia’s political and economic transformation, some modicum of foresight might have resulted in a different outcome besides a reinvigorated enemy born out of the ashes of the former Soviet Union. Twenty-five years of benign neglect comes with a price. Left to its own devices, Russia succumbed to authoritarian tendencies seemingly ingrained into its DNA. America must now contend with the naked ambitions of one man for whom the war with the West never ended.

As an American intelligence officer working as a civilian in Moscow during the critical period when Russia’s future was being determined, I had a first-hand view of the underlying events placing Vladimir Putin at the pinnacle of power. I witnessed the economic deprivations endured by the resilient Russian population, the terrible legacy of socialism, the battle for control over the country’s wealth, rampant corruption, the emergence of oligarchs, theft on an unprecedented scale, the emasculation of the military, the decline of an effective central government, the birth and death of an independent media, the creation of a middle class, and the rise of a dictator in the guise of a patriot.

My unique vantage point was provided by a reclusive billionaire investor with an appetite for risk who saw long-term value in Russia at a time when U.S. policymakers focused on short-term savings.

Chapter 1

A Lot of Money

"F

ifty billion in seven years. This was the amount of money my boss, Kenneth B. Dart, expected to make off his Russian investments. It was February 1997, and we were sitting in the study of an elegant London home a few blocks from Kensington Palace, where Princess Diana resided. I would have laughed at such an absurd statement three years earlier, but things were different now. Ken Dart was a billionaire and the most intelligent person I had ever known, and if he thought fifty billion dollars was realistic, I didn’t doubt him. Ken was not much for small talk, but if you stumbled across a topic he found interesting, he would sit fully engaged while soaking up any useful information. His mind was in constant motion, but I was careful not to distract him with frivolous ideas. The only casual conversations we ever shared occurred when the Boss" quizzed me on something specific, but this was different.

I have a lot of money invested in Russia but nobody on the ground to look after my interests. I want to set up a support structure we can depend on all across the country. Drivers, interpreters, and local people who know what is happening in the regions where they live and can help us manage my portfolio. How do I do it, Mike?

Is he asking me? I was still trying to compute the number of zeros in fifty billion dollars. Ken had been one of the first major foreign investors to gamble on the Russian Federation’s economic potential and had poured billions into the opportunity. I had traveled to Russia numerous times and understood the country’s general economic situation, but my knowledge of Dart’s actual investment goals was limited. After three years of serving on Ken’s security detail, I was invited into his most coveted sanctum, where the investments defining his life were managed. I sat mesmerized by his unbridled ambition but eager to play a part in his grand vision. The many paths my life had followed had finally converged in the right place at the right time. Russia would soon become the center of my universe.

CHAPTER 2

Cause and Effect

A

shland, Kentucky, a city of thirty-five thousand perched along the sandy bank of the Ohio River in the northeast corner of the state, was my hometown. Hard work and conservative values defined the local character. Steel production and oil refining sustained the economy but polluted the area with toxic chemicals. It was the height of the Cold War, and an unconfirmed report causing considerable local angst had Ashland ranked number three on the Soviet priority target list in the event of a nuclear attack.

My childhood was ordinary except for the extraordinary events shaping one’s personality for a lifetime. Our neighborhood had six boys close in age who bonded together playing baseball and army in the open fields and rolling hills surrounding our world. I remember looking for crawdads in the small creeks and the unmistakable scent of decay from the occasional dead animal we stumbled across in some nearby grassy knoll. The Big Hill was great for snow sledding in the winter and riding cardboard boxes down in the summer. It was a simpler time of freedom and discovery, and I savored the many positive experiences I enjoyed as a child.

There were plenty of demons I did not escape, and I carry the emotional baggage of those hard doses of reality with me to this day. I don’t recall the first time I heard my mother’s screams as my father beat her during some drunken binge. He was haunted by events of an abusive childhood growing up in the mountains of Eastern Kentucky until he ran away at fifteen and ended up joining the Army. My father had suffered a terrifying experience after being severely wounded in the frozen grounds surrounding Bastogne, Belgium, in December 1944 during the Battle of the Bulge. I still don’t know if the screams he would frequently emit in his sleep were connected to his childhood or his experience of being wounded in combat. The one part of him I coveted was the Purple Heart he received for his battlefield injuries. The fact that he had once done something honorable kept me from totally despising him for his failings as a husband and a father. If not for my mother’s strength and determination, I could have ended up in a much darker place.

I sought refuge from domestic violence in history books or playing with my toy soldiers. I could recite the known facts of the Seven Wonders of the Ancient World or set up elaborate battle formations on the living room floor while imagining I was Julius Caesar. As a seventh grader, I enrolled in a private boarding school, Millersburg Military Institute, in a small town near Lexington, Kentucky. I excelled in the school’s structured environment and military culture because I knew what was expected of me, but I was a teenager living in an artificial world.

I transferred back to public high school in Ashland in my junior year, and although I was an aspiring basketball player, I soon discovered I had more talent as a distance runner. By my senior year, I had won the Kentucky State Cross Country Championships and broken several state records in the two-mile run, earning a full track scholarship to the University of Kentucky (UK). After graduating from UK, I moved to Eugene, Oregon, to pursue the Olympic dream as a postgraduate runner.

I lived and trained in Eugene for five years in an unsuccessful bid to make the U.S. Olympic Team before concluding it was time to pursue a more productive career. Great athletes are ultimately driven by passion before reaching their full potential, but I lacked this essential motivator. While I had enjoyed some moderate success, my natural ability could only take me to the edge of where I wanted to be, but not over the finish line. After bouncing around for a couple of years and attending graduate school, I decided the best option to get into my chosen profession was to join the Army. In 1984, I enlisted as a thirty-two-year-old private and headed to Basic Training.

My plan was not as ill-conceived as it may appear because I wanted to be an intelligence officer. James Bond was the ultimate role model for my generation, the consummate hero who was as comfortable in a wetsuit as he was in a tuxedo. Although I had a deep desire to work for the Central Intelligence Agency (CIA), my average academic record and lack of exceptional skills precluded the possibility of being hired. On the other hand, the military offered the most realistic path to getting started, so I accepted the risk, hoping I would eventually end up where I wanted to be. The plan began splendidly as I earned my first Military Occupation Specialty as an Intelligence Analyst and was granted a Top-Secret security clearance.

Instead of reporting to my first duty station after completing the analyst course, I was selected to attend Officer Candidate School (OCS) and sent to Ft. Benning, Georgia. Upon graduating from OCS, my career plans in intelligence were summarily discarded by the Army’s infinite wisdom as it was decided I should be an Infantry officer instead. In normal circumstances, this assignment would have been appreciated since Combat Arms provides a newly commissioned 2nd Lieutenant with the essential skills and understanding of warfare from the perspective of those trained to fight.

When I pinned on my butter bar, I was a mere two weeks away from my thirty-fourth birthday, and the idea of being stuck in the Infantry for at least three years before I could even contemplate branch transferring into Military Intelligence (MI) was not what I had envisioned when I enlisted. Feeling somewhat chagrined but relieved at having gained some direction in my life, I attended Airborne School before departing for my next duty station in the Federal Republic of Germany as a mechanized infantry platoon leader in the 1st Infantry Division (FWD).

Living in a divided Germany fulfilled a lifelong desire to explore the rich history of Europe, as I had easy access to the cradle of Western civilization. Although the Iron Curtain restricted travel to the nations under Soviet influence, Western Europe was spread out before me in all its splendor. Long weekends and vacations spent traveling to locations I had only experienced through the pages of history books reinforced my intellectual orientation towards a global perspective predicated on U.S. leadership.

West Germany, a neat, orderly country with a sordid past, was dotted by hilltop castles standing watch over fertile lands and thick forests. Although East Germany was sealed off behind a vast system of electric fences and dedicated border guards, Berlin was accessible to U.S. military personnel driving along a single authorized highway from Helmstadt, West Germany. Still visibly scarred from the Nazi regime’s suicidal fight to the end, Hitler's capital city offered a close-up view of the enduring conflict with the Soviet Union.

Russian military personnel monitored traffic into East Germany and physically controlled access into East Berlin from the West. East German military and police officials had no authority to stop any American vehicle traveling along this corridor, a constant reminder of the limits of their country’s sovereignty after losing the war.

There was a cost to this wonderful adventure. During major field training exercises, I would sit in my platoon’s defensive position on the high ground overlooking the Vltava River on the West German border with Czechoslovakia, imagining what a Soviet invasion would look like. We were the first line of defense in this section of the Forward Edge of Battle Area. Despite many hours spent in thoughtful contemplation, I could never devise a strategy whereby my platoon would still exist ten minutes after the initiation of hostilities. The Warsaw Pact countries enjoyed a significant superiority in conventional forces, including nearly a 3:1 advantage in tanks. Fortunately, President Ronald Reagan reached a similar assessment in 1983 when he authorized the deployment of Pershing tactical nuclear weapons to the European theatre of operations to address this imbalance of forces.

In 1989, my three-year active-duty commitment was over, so I moved to Washington, D.C., to find a job with a government agency. I knew my age would be a factor since I had just celebrated my thirty-seventh birthday a couple of months earlier, and thirty-five was the age limit for many positions I coveted.

I began working for Vance International, a well-known security company in Oakton, Virginia, just inside the Capital Beltway to support myself. Chuck Vance, a former Secret Service agent, and ex-husband of President Gerald Ford’s daughter Susan, founded Vance International (originally MVM) in 1979. With excellent contacts, hard work, and an organization imbued with professionalism, Vance quickly emerged as the preferred security solution for many high-profile clients.

My first assignment was as a shift supervisor at the USA Today building in Rosslyn, Virginia, one of two glistening silver towers comprising the Gannett Company headquarters dominating the skyline across the Potomac River from Washington, D.C. Government contractors occupied much of the local Rosslyn office space. The CIA had a recruitment annex a couple of blocks away, but I never ventured inside the glass doors of this nondescript building. The simple lobby looked like a check-cashing operation with a single employee seated behind a plain desk greeting walk-ins. Still, it plagued my dreams like a Venus flytrap, as I suspected the surest way not to get hired by the CIA was to walk through those beckoning doors.

I occasionally worked extra shifts on other Vance contracts. My most memorable assignment was a security detail for a historical society touring the United States with a group of German and British WW2 fighter aces. Three famous German Luftwaffe generals, including Adolf Galland and Gunther Raul, shared the stage with British Group Captain Peter Townsend, regaling the audience with stories of aerial combat and signing posters while I ensured they were safe from any seventy-five-year-old veterans with a grudge.

I purchased a print depicting a Messersmith 109 that the Germans happily autographed, but I neglected to ask Group Captain Townsend to sign because I considered his wartime achievements less noteworthy when placed alongside several of Germany’s greatest fighter pilots. I would regret this oversight after Townsend’s storied career was resurrected through the popular Netflix series The Crown some twenty-seven years later.

Vance International had several divisions, and I was soon promoted to executive protection. Among the company’s high-profile clients were Saudi royal family members who flocked to the U.S. during the summer months to escape the desert’s oppressive heat and the scrutiny their official positions entailed in the Kingdom. Los Angeles was a popular destination. On August 1st, 1990, I was sitting in a Beverly Hills mansion waiting for the arrival of Muhammed bin Nayef bin Abdul-Aziz, who would later serve as Saudi Arabia’s Crown Prince.

You never knew exactly when the Saudis would show up for anything because they usually operated on their schedule, and information sharing was not a common practice. By accident or design, security was always the last to know the plan for the day, and it was a constant challenge to effectively perform our duties while being jerked around like puppets on a string, motivated only by the promise of a fat envelope filled with cash when the detail was over.

The multi-million dollar home was a furnished rental the embassy staff in Washington had contracted through some opportunistic real estate agent trying to earn some unexpected income off a vacant house with a grisly past. After our advance team moved in and began preparing the property for the arrival, we soon discovered the home belonged to the Menendez family and was the site of a notorious murder a year earlier. Two brothers, Erik and Kyle, had executed their parents with shotguns in the den of the house we were now prepping. When I inspected the room, I found traces of dried blood on some dark wooden furniture bearing witness to the terrible deed.

Our team was rightfully concerned the prince’s family might take exception vacationing in a home where such a gruesome murder had occurred. I assumed it was just a matter of time before the truth was discovered, and the detail would quickly fold up and move to another location. Indeed, the daily stream of open-aired tourist buses and the sound of megaphones blaring out the mansion’s dark history to gawking passengers wielding video cameras just a few feet beyond the property’s wrought-iron fence were going to raise some questions.

On August 2, 1990, Saddam Hussein’s forces invaded Kuwait, changing the political dynamics of the Middle East overnight. Our team was stuck in limbo for the first few days, uncertain if Prince Nayef would show up for his vacation. The matter was only settled after King Fahd abruptly ordered all royal family members to return home, as the Kingdom was suddenly under direct threat of invasion by Iraqi forces who had quickly subdued Kuwait while the rest of the world was caught flatfooted.

Since I was officially in the Inactive Ready Reserves, I had options if I wanted to participate in the American response to this crisis. A former teammate from the All-Army track team was married to the deputy commanding general of the U.S. Army Reserves, and the couple lived in the same complex as I did in Rosslyn. As soon as I arrived back from Los Angeles, I ventured down to their apartment and asked for guidance on how I could deploy in support of the expected invasion of Iraq.

The General was aware of my longer-term career goals. Although he had a few infantry slots available for immediate assignment, he suggested I attend the Intelligence Officer Advance Course in Ft Huachuca, Arizona, and get re-branched as an MI officer. This transfer would open more opportunities in the field I wanted. The conflict would still be in progress after the six-month course, and the graduates would undoubtedly be deployed if actual fighting had broken out, so I accepted his offer. The paperwork was submitted for me to attend the next class starting in January 1991.

With my reporting date five months away, Vance assigned me to the residence of the Saudi Ambassador to the United States, Prince Bandar bin Sultan bin Abdul Aziz. The sprawling complex on the bank of the Potomac River was a couple of miles down U.S. Route 123 from CIA headquarters. Prince Bandar was a much respected, highly influential figure in American foreign policy circles, and he frequently entertained senior political and government officials in his home.

A team of British ex-military personnel handled his personal security needs while a detail of Diplomatic Security Service officers accompanied Prince Bandar to and from the embassy compound in Washington, D.C. There were some security requirements not covered by other resources; this is where Vance stepped in to fill the gap. The Brits secured the residence’s interior while Vance personnel controlled entry into the estate and patrolled the grounds after hours.

The Brits had been with Prince Bandar for several years and were well settled into his daily routine, although this was a period of heightened security concerns. On my first day on the job, I received a call from the command center inside the house, instructing me to inspect trashcans a crotchety old neighbor had placed alongside the driveway at the entrance to the compound.

The neighbor’s property, situated along Rt. 123 was considered an inconvenience from a security perspective, and his refusal to sell created tensions between the two parties. I thought the request was somewhat dubious, but I dutifully walked out the electronic gate and began rummaging through the trashcans, looking for some suspicious package among the leftover food and empty bottles.

Within sixty seconds of starting my search, an irate sixty-five-year-old man stormed out of his modest house and began berating me for violating his personal property as I stood in the street holding a bag of his trash. I apologized profusely and tried to extricate myself from the embarrassing confrontation. Unbeknownst to me, the Brits inside the control room watched the scene on the video monitor covering the driveway, amused at their innocent prank's success. They later told me they were impressed with how I handled the combative neighbor, and I was subsequently accepted as a dependable team member.

The air war against Iraq began on January 17, 1991, a week after I had reported to school at Ft. Huachuca. The unexpectedly quick conclusion of the Shock and Awe campaign left my classmates wondering about their subsequent assignments since deployment was now unlikely. I was the lone reservist in the course. Upon graduation in June, I would be released from active duty as a newly minted intelligence officer and revert to my reserve officer status with no other service commitment on the horizon.

Once again, the General came to my rescue. He told me about a position opening in a classified active-duty unit and believed I was a good candidate. I would have to be interviewed by the unit involved. If accepted, he promised a rewarding experience in intelligence, surpassing anything I had previously been exposed to. Since the application process would take a few months, he arranged a thirty-day tour for me in Panama, where I worked in a secured mountain tunnel as a desk officer for Central America on the staff of the SOUTHCOM Commander. After completing my Panamanian tour, I returned to Virginia and resumed working at Prince Bandar’s compound.

In November 1991, Vance was hired to provide security for Imelda Marcos’s much-anticipated return to the Philippines. The former First Lady had spent five years living in exile in the United States, and it was time to go home. I was selected for the detail and flew to New York City with several other team members to begin our duties.

I first met Mrs. Marcos in a Manhattan brownstone where she had been residing, but it was unclear who owned the expensive property. There wasn’t a great deal of transparency in anything regarding Mrs. Marcos’s financial affairs. The Philippine Government had filed claims over billions of dollars in assets her late husband, Ferdinand Marcos, allegedly acquired during his twenty years as the dictatorial ruler of the Asian country. Much of the fortune believed looted from the Philippines was reportedly disguised in accounts held by Marcos family members and other trusted individuals, so it was virtually impossible to know who owned