Mission: Impossible? Ukraine's New President Ventures To Reform Powerful State Spy Agency

KYIV -- When Ukraine's domestic security service revealed last year that it had faked the death of a dissident Russian journalist to expose a team of hit men allegedly hired by Moscow to destabilize the country by assassinating high-profile figures in Kyiv, it expected to take victory lap.

Instead, the stunt sparked widespread criticism and turned into a public-relations nightmare --- one of many in the past 28 years that have tarnished the reputation of the Security Service of Ukraine.

A year later, fresh off huge election victories that brought him and his fledgling Servant of the People party to power, President Volodymyr Zelenskiy -- a former comedian who has vowed to end endemic corruption and implement sweeping reforms – may have a chance to do what none of his predecessors was able to do: revamp the agency and restore its credibility.

How successful the 41-year-old Zelenskiy and his young team of reformers are in cleaning up the agency -- arguably the country's most powerful institution -- will be a litmus test of his administration's resolve to bring Ukraine more into line with Western democracies.

On the other hand, failure to reform the security service, critics say, could hobble wider efforts to curb corruption and economic crime, as the agency's activities have much to do with Ukraine's efforts to bolster the rule of law, and its checkered reputation deters foreign investors from bringing business to a country where the security service has enabled economic crime.

"Now there is a real opportunity to reform [the security service]," William Taylor, the current charge d'affaires of the U.S. Embassy in Kyiv and a former ambassador to Ukraine from 2006 to 2009, told RFE/RL in a recent interview.

Taylor said he was "cautiously optimistic" about Zelenskiy's chances, given that the agency has proven nearly impervious to change in the past.

Taylor was part of an international advisory group composed of representatives of the European Union, NATO, and the United States who attended an August 13 meeting with acting Security Service chief Ivan Bakanov and National Security and Defense Council (NSDC) head Oleksandr Danylyuk to discuss reforming the security agency, which is known by its Ukrainian acronym SBU.

Danylyuk, a former finance minister appointed to the NSDC by Zelenskiy, told the BBC's Ukrainian Service ahead of the meeting that a law was being finalized to overhaul the security service to "make its core functions of counterintelligence and combating terrorism stronger..."

"It is very important that this time it be a successful and effective reform," Danylyuk said, underscoring what he called a "top priority" of the Zelenskiy administration.

'The Most Powerful Institution In Ukraine'

The security service is the direct descendant of the Soviet KGB.

Despite nearly three decades operating independently, "it's kind of an under-reformed Soviet special service," said Oleksiy Melnyk, co-director of the foreign policy and international security programs at the Kyiv-based Razumkov Center.

"The SBU is very much how it was as the KGB or even the NKVD," he added, referring to Soviet dictator Josef Stalin's secret police.

It is also a behemoth.

Ukrainian President Volodymyr Zelenskiy wants to overhaul the SBU, which has earned a reputation as one of the country's most notorious and corrupt institutions.

With more than 30,000 employees, the SBU is more than seven times the size of the U.K.'s domestic security service, MI5, and more than four times the size of Israel's Mossad national intelligence agency.

Besides performing the traditional intelligence-gathering and counterintelligence roles of most domestic spy services, the SBU's thousands of agents also conduct activities that fall under the scope of law enforcement in most Western democracies, such as combating economic crimes and corruption.

According to Ihor Smeshko, who served as head of the SBU from 2003 to 2005, that has made the agency "the most powerful institution in the country."

Over the years, abuse of its power -- including accusations of blackmail, corruption, arms trafficking, secret jails, torture, and links to Russian security services -- has cast a shadow over the SBU.

Yet, through it all -- and buoyed recently by the need for security and intelligence gathering amid the ongoing war with Russia and separatist forces Moscow backs in eastern Ukraine that has killed more than 13,000 people -- the SBU has proven immune to reform.

"Ukraine has used the war as an excuse to not reform the SBU," said Mark Galeotti, a senior associate fellow at London's Royal United Services Institute (RUSI) and author of the recently published book Armies Of Russia's War In Ukraine.

'Responsible Only To The President'

Another reason why reform efforts have lagged, experts and diplomats interviewed by RFE/RL said, is the reluctance of previous Ukrainian presidents to relinquish direct control over the powerful service.

"The SBU is responsible only to the president," said Smeshko, the former SBU chief.

During his tenure as SBU chief from 2003 to 2005, Ihor Smeshko, known as "The General," fired dozens of high-ranking officials and reshuffled the agency.

Indeed, it is the president who appoints the head of the SBU, although parliament must give final approval. More often than not, that has meant putting political allies in the position.

Smeshko was one of the few exceptions. A professional soldier and military scholar respected in Washington, who is referred to by many as simply "The General," he was appointed by former Moscow-friendly President Leonid Kuchma to reform the SBU and polish its reputation after a previous head of the agency was found to have organized the sale of Kolchuga radar systems to Saddam Hussein's Iraq in violation of international sanctions.

During his tenure, Smeshko fired dozens of high-ranking officials and reshuffled the agency, moving it away from the KGB-style security service it had been.

"Believe me, it was almost mission impossible," Smeshko said.

But much of his work was rolled back after Viktor Yushchenko became president in 2004 and replaced Smeshko with Oleksandr Turchynov, a political ally who had helped run his campaign.

Smeshko said the break came after he failed to persuade Yushchenko to sign an executive order to place "additional steps of civil control over the security service and intelligence agencies."

Western Encouragement

In recent years, the EU and the United States have strongly encouraged Ukraine’s leadership to address problems at the SBU. NATO envoys and members of the European Union Advisory Mission in Ukraine (EUAM) even drew up a reform proposal in 2016 that was meant to outline the initial steps needed to fix it and bring it into line with NATO standards.

The proposal suggested the SBU be stripped of its law enforcement functions, which would be handed over to the newly created National Anti-Corruption Bureau (NABU) and the National Police. That would leave the SBU to work strictly as an intelligence agency, focusing on counterespionage, counterterrorism, cybersecurity, and security analysis.

The proposal anticipated that the SBU would be reformed by 2020, a goal that is unlikely to be reached.

Then-President Petro Poroshenko (right) meets with head of the SBU, Vasyl Hrytsak, in Kyiv in March 2018. Experts believe Poroshenko lacked the political will to carry out reforms of the agency.

What held it up, experts say, was Zelenskiy's predecessor, former President Petro Poroshenko, who lacked the political will to carry out the reform.

Poroshenko could not be reached through his spokesperson for comment.

While publicly backing SBU reform, Poroshenko dragged his feet behind the scenes, critics claimed, because he did not want to relinquish control of the agency as he fought for reelection.

"It is convenient to have a secret service with great powers that can work against political enemies," said Tetiana Shevchuk, legal counsel at the Kyiv-based watchdog group Anti-Corruption Action Center (AntAC). "All previous presidents had loyalists as head of the SBU."

A Western diplomat who was involved in talks with Kyiv about reforming the SBU but who was not authorized to comment by name told RFE/RL on condition of anonymity that in the past the SBU "has been used as the president's personal guards."

Directorate K

In return for serving the president, critics claimed, SBU agents have abused their sweeping powers in order to enrich themselves over the years.

"With their power, they can intervene in the work of businesses, stop production in factories…[and] control export and import operations," Shevchuk said. "They can do whatever they want."

If there is one division within the SBU that is most controversial and has caused it great reputational damage, it is the unit that fights corruption and organized crime.

Known as Directorate K, it was formed in the turbulent privatization era of the 1990s.

"It was justified then, because definitely if [the SBU] is aimed at providing state security, the country's economy is one area where bad actors can try to undermine the country," said analyst Melnyk of the Razumkov Center. "But very soon [Directorate K] learned how they could to make money."

Ukraine's controversial SBU security service has been impervious to reform. Now it is Volodymyr Zelenskiy's turn to try.

Directorate K agents have been known to shake down businesses for bribes and raid the offices of companies competing with those connected to the president they serve. Such raids have come to be known as "maski shows," because the agents involved usually wear balaclava ski masks during them.

With their fancy clothes, members of the unit were easy to spot amid the suffering economy and hyperinflation of the 1990s, Melnyk said.

"The socks of Directorate K's captain were more expensive than the suits of the agents in other departments," he said.

Today, Directorate K employees and other top SBU officials -- whose official monthly wages are less than $1,000 per month -- can be spotted not only in fancy threads but also driving high-end vehicles, including in one case a $155,000 Mercedes SUV. In 2017, deputy SBU head Pavlo Demchyna and his family were accused of owning lavish estates worth millions of dollars.

Anti-corruption activists have said this is evidence of rampant corruption within the agency.

Andy Hunder, president of the American Chamber of Commerce in Kyiv, said the activities of Directorate K have scared away potential investors.

He said he has met with members of Zelenskiy's team to encourage them to reform the SBU and warn them that anymore "maski shows" would hobble the country's ability to attract new business.

"We said, 'You know, the worst possible image any country could send to an investor, shareholder, a general manager, an employee, is when you have men in balaclavas and [with] Kalashnikovs kicking down the door of your company's office and looking for tax receipts,'" Hunder told RFE/RL.

Russian Infiltration

The SBU's infiltration by Russian agents has also been an obstacle to reform and will likely continue to be as Zelenskiy's team moves ahead, although perhaps to a lesser degree than in the past.

Current SBU officials interviewed for this story who asked that their identities not be disclosed due to the nature of their work told RFE/RL that the SBU has for decades been riddled with Russian spies working for its Federal Security Service (FSB), as well as pro-Russian sympathizers and turncoats eager to double up on paychecks. However, they said, since the war began in 2014 and many were forced to show their true colors, their numbers have dwindled.

Their comments align with what Smeshko, the former SBU chief, and security experts like Melnyk say.

"The FSB had total access to the SBU" before the 2013-14 Euromaidan uprising that ousted Moscow-friendly President Viktor Yanukovych, Smeshko said.

The man who Smeshko said had granted that access was then-SBU chief Oleksandr Yakymenko, a Yanukovych appointee who was widely suspected of being an FSB plant.

Former SBU chief Oleksandr Yakymenko was appointed by Kremlin-friendly President Viktor Yanukovych and was widely suspected of being an FSB plant.

According to the SBU officials, in the chaotic aftermath of the Euromaidan uprising in February 2014, thousands of highly classified files were stolen and taken to Russia on the orders of Yakymenko, who would flee to Russia with Yanukovych, four other senior SBU officials, and about a dozen experienced subordinates.

For more evidence showing the extent of Russian infiltration and pro-Moscow sympathies, Melnyk pointed to the Kremlin's annexation of Crimea weeks later.

As unidentified Russian special forces stormed Ukraine's Black Sea peninsula, thousands of Ukrainian security agents switched sides and declared their loyalty to Moscow.

The trend continued the next month, when dozens of regional SBU leaders in eastern Ukraine joined Russia-backed insurgents who seized buildings and fomented the armed conflict that continues today.

"Should we say they betrayed Ukraine? No, they probably served their country -- Russia," Melnyk said.

'Break It Up'

Zelenskiy's administration seems to recognize the scope of the problems within the SBU and appears willing to overhaul the agency.

When asked to address the SBU's reputation for shaking down businesses and its agents leading lavish lifestyles, NSDC head Danylyuk said reforms should happen in such a way that the "public trusts it, so that all its actions are understood."

"It is very important that this time it be a successful and effective reform," says National Security and Defense Council head Oleksandr Danylyuk. (file photo)

But in a sign that the new president – like his predecessors -- sees the value in having a close ally at the helm of the agency, he appointed Bakanov as its acting head. Previously, Bakanov headed Zelenskiy's entertainment studio, Kvartal 95, and his presidential campaign.

Some experts say it is fine to put allies in power. It can ensure that your voice is represented inside the SBU. What is perhaps more important is the overall concept of reforming the agency.

Speaking to RFE/RL from Washington, John Herbst, director of the Atlantic Council's Eurasia Center and a former U.S. ambassador to Ukraine, said the problem with Directorate K is not representative of the whole agency and to fix it, it could be enough to "abolish" that single department.

"Getting rid of it would be the simplest and the best thing," he said. He praised the SBU for "protecting the country from both Russian aggression in the east and subversion throughout the rest of Ukraine."

But others insist that broader reform of the SBU is needed. Galeotti, the security expert at RUSI, said corrupt heads should roll and the agency should be broken up "into some smaller agencies with specific remits."

The reform effort should not stop there, though, he continued.

"You can't simply do away with old corrupt officials and expect everything to change," Galeotti said. "What you do need to be doing, you need to think, 'What are you doing to teach the young, new generation of counterintelligence officers?' And then you need to push them…[and] force generational change.”