|The Spy rock with electronics|
It appears that the observed Russian person collected sensitive information, stored it on a pocket computer and then transmitted the information to the fake rock while walking alongside it. The embassy personnel later retrieved that same information, stored in the rock, with their own pocket computer. More info on BBC Europe, The Telegraph and The Guardian.
The system is a modern high-tech version of an old spy trick called dead drop. This system, often used by intelligence services, enables a safe exchange of documents, microfilms, photos or money, without any contact between the spy and his handler. A dead drop is usually a small cylinder, hollow brick or another cache. The agent or his handler leaves the dead drop at a pre-determined place and time. Next, an innocuous signal like a chalk cross on a traffic sign pole or some flowers behind a window notifies the recipient that a dead-drop is activated. He can now collect the information from his courier without any risky personal contact that could compromise the operation, Some real spy gadgets, including a dead drop spike, can by found on the CIA virtual museum tour. Who said that the Cold War was over?
Update: in november 2011, the FBI released information on the Russian SVR spy ring case, including FBI surveillance videos of dead drop exchanges by Russian agents.