Remember the case of the fake Russian spies including the sexy Anna Champan?
If not, check out my piece The proof that the 11 Russian spies were not spies at all.
First, all the so-called "evidence" that they guys were spies? It was all nonsense. The FBI had no proof at all. The FBI had something far better and more precious, something they chose to hide as best they could. The FBI had an absolutely unique agent inside the super-secret department of the Russian Intelligence Service which deals with "illegals": the "S" Directorate of the SVR. Kommersant found out the real name, rank and position of this traitor: Colonel Shcherbakov, head of the US Direction of the "S" Directorate of the SVR. In terms of intelligence, this is a nuclear bomb. This means that the person who betrayed these illegals was basically the top man for all illegals in the USA. I would say that a betrayal by a person in such a position is worse than Robert Hanssen, Ana Belen Montes, John Walker and Aldrich Ames combined, not so much in terms of compromised secrets, but in terms of the US being able to penetrate the "Holy of Holies" of the SVR.
Let me immediately add here that there are no details of how Shcherbakov became an US mole. My personal opinion is that, as is the case with the vast majority of high-level spies, he was not recruited but that he was a so-called "walk-in" - a person who deliberately approaches a foreign intelligence service and offers his/her services. Still, even if Shcherbakov was a walk-in, the fact that the FBI could maintain a contact with him for about 10 years is an absolutely monumental failure for the SVR.
To make things even worse, it now appears that the SVR also managed not to notice that Shcherbakov's daughter was studying in the USA and that his other son suddenly left the country right before Medvedev's visit to the USA.
And while everybody was focused on the sexy Anna Chapman, it was another spy, much less noticed, which had a stellar career which was compromised by Shcherbakov's betrayal: "Juan Lazaro", whose real name was Mikhail Anatolevich Vasenkov (see photo), who had spend his entire career undetected. Born in 1945, he was infiltrated into the West sometime in 1961 and he was given the right to retire with the rank of General, but he turned down the offer and continued to collect valuable information (in particular photographic). After his arrest, he was tortured by the FBI who broke several of his ribs and one leg, yet he did not say a single word under interrogation. The mere fact that the FBI could shadow these 11 spies for a decade without ever finding out any proof of their activities is in itself a testimony to their skills.
This is why Shcherbakov's betrayal hurts the SVR so much.
According to Kommersant, this total debacle in the SVR has triggered an enormous rage amongst the SVR cadre and the rest of the government. One SVR official openly told Kommersant that a killer team has been send out to execute Shcherbakov and that "heads and epaulets" will be "torn off". Rumors also abound that the SVR will be re-subordinated to the FSB thereby re-creating a real "KGB-successor" agency. A massive investigation is now under way and many officials will loose their jobs or be investigated for criminal actions.
Now that this story has broken into the open the FBI has no more reasons to feed the public all sorts of lame fairy tales about invisible ink, Anna Chapman calling daddy in Moscow and the rest of the nonsense we were told. Still, we will not be told too much: according to Kommersant, this entire affair is so huge that both sides chose to tone it down to a minimum to avoid tensions between Russia and the USA.
What is certain is that a major crisis is now affecting at least two of the key elements of the Russian state: the Ministry of Defense and the SVR. And its not like the military intelligence service can gloat over the SVR's current misery. They had their own super-traitor, GRU Major-General Dimitry Poliakov (another walk-in) who worked for the FBI from 1960 until his retirement in 1980 (he was finally caught in 1986 and executed in 1988). The GRU, by the way, is also in a crisis due to various pressures to downsize it or even re-subordinate it.
The Russian government is in a mess, and there are no signs at all that Medvedev has any ideas as to how to fix it.
UPDATE1: President Medvedev has essentially confirmed the information published by Kommersant by stating that: "As far as I am concerned, what was published in Kommersant was not news. I found out about it on the day it happened, with all its attributes, but there has to be an examination of this. Life goes on. The relevant lessons from it will be studied," Medvedev said at a G20 summit press conference. Medvedev refused to comment on the situation within the SVR but said a thorough investigation into the episode had been launched. "We would not want to comment on our further decisions. This is a question for those bodies concerned with this matter"
UPDATE2: According to Argumenty i Fakty, SVR officials denied that they ever had a "traitor Shcherbakov" in their ranks. Not only that, but the SVR sources AiF spoke to denied literally every single aspect of the story published by Kommersant. They probably were not told that their President thought otherwise.