Russian Spies May Be Lurking In America's Tech Sector

Russia's Prime Minister Dmitry Medvedev (left) and Skolkovo Foundation President Viktor Vekselberg visit the Apart Hotel complex in Sochi.

During the heady days of the U.S. "reset" policy with Russia, the high-tech sector emerged as a potential centerpiece for bilateral commercial and scientific cooperation, underscored by Internet-savvy Russian President Dmitry Medvedev’s 2010 visit to Silicon Valley.

But a surge of Russian cash into the U.S. tech sector in recent years has prompted federal authorities to alert start-ups in a key American innovation cradle about potential espionage via Russian venture capital firms financing their operations.

The Boston division of the FBI is taking this warning to U.S. tech firms with Russian funding, and to the Massachusetts Institute of Technology (MIT), a partner of Russia’s Skolkovo initiative, which was launched in 2010 to create a Russian version of Silicon Valley.

Lucia Ziobro, assistant special agent in charge of the FBI’s Boston office, specifically cited Skolkovo’s relationship with Russian truckmaker KamAZ, which supplies armored vehicles to the Russian military, as possibly worrying.

"As far as the Skolkovo institute is concerned, you have foreign defense contractors in the same sort of area of business that could potentially result in U.S. technology being acquired by that Russian defense firm, and then being given to the government," Ziobro said.

Russian government-backed investors in the United States have dismissed the FBI’s warnings as baseless, and the agency has not presented evidence of Russia using venture capital fund to steal technology.
Ziobro said her office’s discussions with start-ups and research hubs with Russian partners was part of a broader outreach program to inform the tech sector of the possible dangers of working with foreign investors.

"Our outreach talks about the general foreign intelligence threat, be it from China, be it from Russia, be it from, you know, any other country," she said.

The Russians Are Here

The FBI's Boston office began calling attention to Russian tech investment in the United States following a white paper it produced on the subject late last year, Ziobro said.

The office then issued a notice to Boston-area technology companies, colleges and universities identifying partnerships with Russian entities and venture capital companies as potential vehicles for Russian espionage.
Then, in an op-ed published the "Boston Business Journal" last month, Ziobro urged U.S. companies to remain vigilant when deciding whether to partner with Russian investors, specifically citing the Skolkovo Foundation, which oversees the development of the high-tech center currently under construction outside Moscow.

"The foundation may be a means for the Russian government to access our nation’s sensitive or classified research, development facilities and dual-use technologies with military and commercial applications," Ziobro wrote in the op-ed.

Aside from Skolkovo, Ziobro did not identify any other Russian entities specializing in the high-tech sector in her op-ed. But two investments vehicles funded by the Russian government have a presence in Massachusetts, home to thriving technology and biotech industries.

In 2011, state-funded Rusnano, a $10 billion fund focusing on nanotechnology, invested a total of $50 million in Boston-area nanomedicine firms, BIND Biosciences and Selecta Biosciences.

The same year it invested $35 million in the Boston renewable fuels firm Joule Unlimited.
BIND declined to comment on the FBI warnings, while Selecta and Joule did not respond to inquiries.
Rusnano currently has $1.2 billion invested in U.S. companies, including biotech, energy, coating and hardware firms, Evgeny Druzyaka, vice president of Rusnano USA, told RFE/RL.

Druzyaka declined to comment on the FBI’s statements. But Dmitry Akhanov, chief executive of Rusnano USA, told "The Boston Globe" that he thought Ziobro’s op-ed was "an April Fool’s joke."

The seven-story Hypercube building is the nerve center of Russia's Skolkovo hub, largely by virtue of the fact that it is the only functioning building to have been built.

Boston is also home to the U.S. headquarters of the state-funded Russian Venture Company (RVC), which has around $65 million invested in U.S. companies and venture funds, according to RVC-USA chief executive Axel Tillmann.

RVC has also sponsored the Massachusetts start-up initiative MassChallenge.
Tillmann said he was perplexed by the FBI’s comments about Russian venture capital.

"We are helping bilateral collaboration on business-to-business levels, and that is our main mission," he told RFE/RL. "I don’t know a single [piece of] evidence that ever came across my desk, or information I ever heard, that is an iota of suspicion that would give any credence to the FBI assertions."

Russia’s Silicon Valley

The Skolkovo Foundation declined to comment on the Boston FBI office’s suggestion that the tech initiative presents a potential espionage threat to U.S. partners.

The foundation teamed up with MIT last year to create a graduate university called the Skolkovo Institute of Science and Technology, or Skoltech, that will be located at the Skolkovo research hub outside Moscow.
Four years after Medvedev announced the innovation project and made it the centerpiece of his drive to modernize and diversify Russia’s oil-and-gas-dominated economy, the sprawling 400-hectare territory is still years off completion.

The seven-story "Hypercube" building is the nerve center of the hub, largely by virtue of the fact that it is the only functioning building to have been built. It is home to a study space and gadget workshops for the joint initiative with MIT.

In the building’s airy ground-floor lobby, a man in a suit this week looked on as a technician tested a remote-controlled four-wheel robot, which used pincers to lift a miniature bottle of whiskey and pour the amber spirit -- unsuccessfully — into a plastic cup.

Next month, the Hypercube is slated to host an annual start-up fair featuring dozens of nearby pavilions.

Four years after the project was announced and made the centerpiece of a drive to modernize and diversify Russia’s oil-and-gas-dominated economy, the sprawling 400-hectare territory is still years off completion.

So far the Skolkovo Foundation has used substantial tax breaks to lure 37 major industry players into what it calls its "innovation center."

MIT spokesman Nathaniel Nickerson told RFE/RL that the university’s collaboration with Skolkovo "is intended to help create a new institutional paradigm, bringing together education, research and innovation."
"Programs such as Skoltech are intended to build intellectual relationships in a transparent environment, centering on open, fundamental, publishable research," Nickerson said in emailed comments.
Nickerson added that in all of MIT’s international collaborations, the university "is very careful to comply with all U.S. export-control regulations."

"We also have and continue to participate in various outreach programs conducted by various federal agencies, including the FBI and Department of Commerce," he said.
Tom Balmforth contributed to this report from Skolkovo, Russia.
Source: Business Insider