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Poisoned at the Source


His fortunes changed in 1989, Zeltser says, when he decided to become a U.S. lawyer. Attending law school in Russia, as he says he did, technically qualified him as a lawyer in the U.S. if he took New York's bar exam. He passed on his first try. "I took it at the same time as JFK Jr., who failed on his second try," Zeltser says.

"I used to do a lot of matrimonial work, criminal cases, things of this nature, but at this point, primarily I have four or five very, very wealthy clients, in Eastern Europe," Zeltser says. "I spend a lot of time litigating in various international tribunals, like the Hague." In 1992, he managed to persuade the giant Russian Inkombank to retain him to do legal work in New York.

Zeltser's account of his relationship with O'Brien couldn't be more different from the one the reporter tells. "I was fairly friendly with O'Brien," he says. "We went out for drinks, primarily to the Marriott Marquis, to the eighth floor, but also to the Russian Samovar. This was not just reporter-source relationship. This was the kind of relationship where he would walk in without a telephone call at ten o'clock in the evening. That is what hurt."

O'Brien's next meeting with Zeltser cleared up absolutely nothing. Zeltser supplied a fax from another friend of his, which said that she had given the Journal the controversial memo. O'Brien called it preposterous, and they sparred for a time. Then Zeltser asked others in the office to excuse them. "Tim, do you not trust me anymore?" he said when they were alone. "Can we just hold hands and reestablish trust?"

"No, Emanuel, we can't!" O'Brien replied. "I am doing a story now. And I have questions about your credibility."

But Zeltser, says O'Brien, wasn't ready to give up. He invited O'Brien to dinner, promising that a European bank executive would be there who would verify everything. O'Brien agreed to treat him and one of the women for dinner at the Russian Samovar, a Russian-immigrant hangout on 52nd Street near Eighth Avenue with dark-red banquettes and a white grand piano by the bar. Zeltser had brought along another woman -- 26 years old, tall and slender, with long dark hair and pale skin. Zeltser introduced her as Oxana Berkounova, an employee of an international-development bank based in London.

Berkounova assured O'Brien that everyone knew about the insider trading, and told him about Zeltser's work as an anti-corruption crusader. O'Brien wasn't convinced, but he let the conversation drift away from business. When the Russians asked where O'Brien lived, he mentioned that he had recently moved. He had been separated from his wife, he said, and they were in the middle of a divorce. But he wanted to stay near their two children, he said, in a town in northern New Jersey.

On the way to an after-dinner drink at Benvenuti, in the Hotel Pennsylvania, Zeltser excused himself, and O'Brien continued on with the women. They sipped martinis, and O'Brien soaked up gossip about the journalists hanging around Zeltser. He was particularly curious about Berkounova. She was attractive, for one thing, but O'Brien also wondered about her connections to Zeltser. They chatted about her job in London -- he thought she seemed fuzzy on some details -- and also about her plans in New York. Finally, he left to catch a bus at Port Authority.

On Monday, O'Brien called another Russian source. As it happened, the source had seen him at the Samovar with Berkounova; she told O'Brien that Berkounova worked not for a bank in London but for the World Bank in Washington. What's more, she was actually Zeltser's old friend and protégée.

O'Brien instantly dialed the World Bank switchboard, and sure enough, they put him through to Oxana Berkounova. "That is when things really started clicking for me," he says. If she was Zeltser's mole inside the World Bank, he theorized, she might have helped him concoct the Grigoriev memo.

"I want to talk to you about your relationship with Emanuel Zeltser," O'Brien demanded.

Berkounova gasped. "I am busy with work. I will call you back in an hour," O'Brien remembers her saying. She didn't call back, so O'Brien called again and again. He was determined now, and his messages grew more insistent, but she still didn't talk.

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