Veteran KGB spy revealed as Deripaska's right-hand man

AN EX-KGB spymaster who subjected the British secret service to its worst embarrassment since the Cold War is the right-hand man of Lord Mandelson's controversial Russian friend Oleg Deripaska, the Evening Standard discloses today.

Valery Pechenkin was a high-ranking officer in the KGB and a Colonel-General in its successor, the FSB. He is employed as head of security at Deripaska's company Basic Element, but the part he plays in Deripaska's affairs goes far beyond the role suggested by his job title.

According to well-placed sources in Moscow, Pechenkin is one of Deripaska's strongest links to the Kremlin. The veteran spy holds a unique position among the siloviki, the ex-security service chiefs who exercise enormous power around prime minister and former president Vladimir Putin.

The siloviki have been steadfast supporters of Andrei Lugovoi, the Moscow businessman wanted by Scotland Yard over the murder of ex-spy Alexander Litvinenko in London in 2006. Russia refuses to extradite him to stand trial.

Kremlin watchers suspect it was Pechenkin who organised a swift entry visa for Mandelson when he turned up in Moscow to visit Deripaska three years ago. It was reported this week that Mandelson arrived by executive jet with his friend Nat Rothschild, Deripaska's adviser, but did not have the correct stamp in his passport. Mandelson, then EU trade commissioner, was allowed through immigration only after Deripaska's intervention, it was said.

Sources in Moscow say the arrangements were almost certainly made by Pechenkin who would only have needed to make a phone call or two to clear the way for Mandelson. Questions about Mandelson's meetings with the Russian oligarch remain the subject of concern. The disclosure now that he was the recipient of a favour from an old enemy of Britain's secret intelligence service, Colonel-General Pechenkin, is likely to increase the disquiet.

The ex-KGB man, 69, was talent-spotted as a student by the KGB and invited to its college in Minsk, a training school for spies. In the Eighties, Pechenkin was at the counter-espionage department of the KGB with a concise brief: unmask foreign agents.

In 1996 Pechenkin's spycatchers claimed a coup when they caught an official in the Foreign Ministry spying for Britain. Platon Obukhov, the son of Russia's ambassador to Denmark, had been secretly filmed passing information to British embassy staff.

The facts of the case seemed straight out of a spy thriller. Obukhov said he had been recruited by the British and paid £4,600 to provide information connected to his work at the Foreign Ministry. He used to travel on a trolleybus, he said, while transmitting information by radio to a British agent sitting in a Moscow restaurant. The Russians paraded Obukhov on television, with film of him radioing his British contact, and in the subsequent diplomatic uproar, staff at the British embassy were expelled, swiftly followed by tit-for-tat expulsions from Russia's embassy in London.

The affair blew over, but it left the Secret Intelligence Service badly bruised. Part of the humiliation was that the Russians had exposed Britain's spying activities as rather amateurish. Obukhov was revealed to be mentally unstable and a highly-imaginative man who wrote spy novels in his spare time. Pechenkin was cock-a-hoop. "Western special services are acting purposefully, toughly and energetically," he said, adding later that his counter-espionage operations had "revealed and neutralised" more than 60 agents of undisclosed affiliations.

Some watching the affair unfold have noted that Pechenko and his former colleagues have a reputation for being experts in compromat, the technique of discovering - or manufacturing - something compromising about a person over whom influence is sought.

Mandelson has already been embarrassed by being forced to admit his links with Deripaska go back to 2004 and not 2006 as he first indicated. He has also had to cope with allegations that changes in EU tariffs made while he was trade commissioner benefited Deripaska's aluminium business.

Mandelson has been under pressure to reveal the extent and nature of his meetings with Deripaska since it emerged he had been a guest aboard the Russian's yacht in Corfu this summer.

Mandelson continues to annoy his critics by maintaining what he does in private has no bearing on his public roles. He denies he ever showed Deripaska favour while EU commissioner.

Calls for him to disclose the details of his meetings with Deripaska continue. The Conservatives are planning action linked to the House of Lords code of conduct which requires peers to "provide the openness and accountability necessary to reinforce public confidence". Meanwhile, Mandelson's spokesman has presented an interesting counter-argument. It would not be fair for him to name dates and places, he said, because if anything were overlooked it could expose Mandelson to accusations of mendacity.