COLD WAR AUSTRALIA - PETROV COMMISSION
Around midday on Saturday, 3 April 1954, the Third Secretary in the Soviet Embassy in Canberra, one Vladimir Petrov, sought asylum. The Australian Security Intelligence Organisation (ASIO) had been courting him since his arrival three years before. On 13 April, Prime Minister Robert Menzies announced both the defection and the establishment of a Royal Commission into Espionage. Next day, the House of Representatives rose for elections due on 29 May.
Federal Labor leader Dr Herbert Vere
Evatt had reason to expect victory, but won only fifty-seven seats while
the Coalition took sixty-four. This wound left Evatt unable to weigh the
causes of this result. He might have regained his balance had his Press
Secretary, Fergan O’Sullivan, not confessed to him on 3 June that he
was the author of a three-page dossier brought by Petrov from a Soviet
Embassy safe. “Why wasn’t I told?” he charged at ASIO and Menzies.
His injured pride seized this scrap as proof that the defection had been
concocted to deny him the crown.
Reeling from the double blows of deceit
upon defeat, Evatt drove himself to distraction when it became public
that two of his long-standing staffers, his private secretary Alan
Dalziel, and the office dogsbody Albert Grundeman, were named as
informants for a second Petrov exhibit, catalogued as Document J.
Once the US became aware that a 1945 UK
strategic plan had passed through the Australian government to the
Soviets, Washington reduced Canberra’s access to classified
information. By July 1948, a complete embargo applied. This blackout was
disastrous for the Empire because the UK wanted US expertise for the
nuclear rocketry at Woomera. The ban suited the US strategists by
keeping their allies on a short lead.
The mess in Canberra had to be cleaned
up. On 7 February 1948, MI5 head Sir Percy Sillitoe and a
counter-intelligence officer, Roger Hollis, arrived to uncover how
“top secret” material had been leaked. After a search of file
records, the Defence Department concluded that an External Affairs
officer, Ian Milner, was among the culprits. In July 1948, Prime
Minister Chifley read Sillitoe’s report in London when the British
government again urged him to set up a new intelligence organisation. In
August, Hollis returned to Canberra with more MI5 men to establish ASIO.
That agency devoted itself to pursuing the nest of traitors, in what
became known as “the Case”.
Three suspects in External Affairs had
known links to the Australian Communist Party, Jim Hill, Ian Milner and
Ric Throssell. That narrowing of who leaked the secrets did not
establish the chain of command back to their contact with Soviet
intelligence, a person referred to as “K”, “Klod” or
“Claude”. The most likely Controller was the Communist official,
The pressure was on ASIO to solve the
crime on its patch. The Canadians had scored with the defection of Igor
Gouzenko in 1945, followed by its in
camera Royal Commission. ASIO hoped to find someone in the Soviet
Embassy who would do the same here. That defection would establish
ASIO’s credentials among allied intelligence agencies and give Colonel
Spry “secrets” to trade. He “opposed to giving America anything
During MI5 inquiries in Canberra in 1948,
the Secretary of the Department of External, John Burton, refused to
take an oath that he would not inform his minister (Evatt) of any
information from Defence Intelligence. Outraged, Burton complained to
Prime Minister Chifley without results. The head of Defence Intelligence
at the time was Colonel Spry who, in 1984, hinted: “It is possible
that the Prime Minister had already taken the oath himself”.
As opposition leader, Menzies had not
been ‘indoctrinated’ before his overseas tour throughout the second
half of 1948. Perhaps he glimpsed the truth in Washington where he got
the five-star treatment at an October 14 luncheon in the Pentagon with
Defence Secretary James V. Forrestal, the Chiefs of Staff, the
Secretaries for each of the services, General Omar Bradley and John
McCloy, known as “The Chairman of the Establishment”. In March 1949,
when the Secretary of Australia’s Department of Defence, Sir Frederick
Shedden, was heading to Washington to try to ease the embargo,
opposition leader Menzies wrote a letter of introduction to Forrestal, a
sign that he was in the loop, to some extent.
If so, that revelation would help to
explain why Menzies changed his mind about banning the Communist Party,
a course he had resisted despite pressure on his leadership. On his
return in January 1949, he declared that “we can longer deal with
Communism as an eccentricity … it is a form of high treason”. That
final phrase suggests that he had been told of the spy ring, if not
about the decrypts.
One strand in the argument for a
conspiracy against Evatt has been that Menzies handpicked the
Commissioners. He did, but not for their politics. The selection
criteria included whether their Honours were suitable cases for
indoctrination”. The evaluation was easier for the senior counsel
assisting the Commission, major-general Victor Windeyer. His recent
membership of the Military Board outweighed any concern that his
practice in equity and commercial law had not honed the forensic skills
required to break down hostile witnesses.
The need for secrecy about the decrypts
could explain why the list of informants with codenames found in
Petrov’s Document G replicated that brought out by MI5 in 1948. The
Petrov list had been in an envelope marked “N” that his predecessor
had left for him but which he claimed never to have opened during his
three years as resident spymaster. If ASIO was tempted to forge
evidence, then this section of Document G would have been a prime
instance. The reason behind such a plant would have been to get the
names into the open without giving away the existence of the VENONA
decrypts. So secret did VENONA remain that during in-camera sessions,
some evidence was not even recorded.
To make matters worse, Document J could
not be published because it was, in Windeyer’s phrase, a “farrago of
fact, falsity and filth” about the personal failings of Canberra
identities. It also alleged that the erstwhile Liberal Minister Percy
Spender would have played Petain for the Japanese in the South-west
ASIO might have done itself a good turn
if it had concealed the existence of Document J. Yet it could not do so
because a mention of Dalziel as an informant was the hook that ASIO had
for catching him. ASIO believed him pivotal in the relations between
External Affairs, the Communist Party and Soviet officials. Codenamed
“Denis” in VENONA, Dalziel was seen by ASIO as being as significant
as Clayton (“Klod”). If Lockwood had not dropped Dalziel’s name
into Document J, ASIO might have been obliged to do so.
The pursuit of Dalziel adds weight to
whether the Petrov affair was aimed at Evatt. Three times in 1953, Spry
had warned Evatt about O’Sullivan’s drinking with Soviet officials.
Petrov’s delivery of O’Sullivan’s dossier on fellow journalists
raised the stakes. Spry now knew that the Soviets had a means to
blackmail O’Sullivan. The prospect of his and Dalziel’s managing the
entourage of a prime minister notorious for carelessness with documents
should have sounded a tocsin.
Hence, MI5 and ASIO would have feared
that the return of a Labor government, especially under Evatt, whom key
US officials either disliked or distrusted, might renew the restrictions
on the transfer of data from the US.
These matters of global security pose a
puzzle. Why did Spry not move to prevent Evatt’s victory by
circulating the compromising facts about O’Sullivan and Dalziel?
We can no longer assume that Britishers
never do that sort of thing. The
Spycatcher case of ex-MI5 man Peter Wright exposed how a faction in
UK security in the early 1970s connived against British Prime Minister
Harold Wilson, whom they believed to be a Manchurian candidate. In
November 1972, a group formed within ASIO to deal with the threat from
left-wingers in the event of Whitlam’s winning the coming elections.
Had Evatt got across the line on 29 May, how would our guardians have
THE THINNING RED
Clayton had as many reasons for not
informing any other members of the Communist Party’s Central Committee
about his espionage as ASIO did for keeping quiet about how it had used
VENONA to identify him. Hence, the Party was confused about the
government’s determination to outlaw it. In particular, the leadership
thought that ASIO was after Clayton because he had set up an underground
network so that the Party could operate after it became illegal, as it
had from 1940 and 1942. ASIO, in turn, thought that Clayton had created
these covert operations for espionage.
After Evatt appeared before the
Commission on 16 August, the Communist leaders instructed their legal
team to go along with whatever nonsense he alleged. This farce reached
its apogee when communist journalist Rupert Lockwood denied that he had
written Document J, weeks after he had published a pamphlet boasting of
Evatt had decided that Document J was a
fraud to get him. Lockwood now swore for days on end that his version
had been quite different. To add detail to this thoroughly unconvincing
narrative, the Party arranged for a stenographer from Party headquarters
to claim that she had typed the original. Comrades were instructed to
hunt down evidence that the typing of a double-dash for a hyphen in
Document J was not as idiosyncratic as the ASIO expert claimed.
A Communist lawyer, Rex Mortimer,
recalled cross-examining a woman about the use of the double-dash. The
Commissioners declared themselves “sick and tired” of this line of
questioning. Mortimer was taken aback when Justice Philip remarked “Timeo
Danaos et dana ferentes!” Mortimer did not catch “Beware of
Greeks bearing gifts!”, but instead hoped he was being invited to
proceed. Turning to the Classical scholar Evatt, he asked, “What did
he say?”. Without looking up from his scribbling, Evatt muttered:
“Pay no attention to what he said. Just you say, ‘Be that as it may,
your honour’, and go on with your cross-examination”.
This anecdote spotlights why the
Commissioners had to rid themselves of this troublesome advocate. Evatt
was the unstoppable object. His paranoia had done nothing to reduce his
powers of concentration. Moreover, he intimidated the Commissioners and
the ASIO witnesses. His biggest catch was to make Petrov’s ASIO
handler, Ron Richards, admit that he had paid Petrov £5000 for the
documents. In The Petrov Affair (1987), Robert Manne observed that Richards, who
had worked under Evatt during the war, seemed about to crack.
With Evatt on the rampage, the
Commissioners lost control of the proceedings. Five months had passed
and ASIO’s investigation of “the Case” had not begun. Days had
been spent on the length of paper staples, or the authenticity of
scribbles in the margins of Document J. The prospect grew that Evatt
would so derail the proceedings that Menzies himself would have to face
cross-examination by the opponent he had vanquished only three months
His administration counter-attacked. Spry
hired Sir Garfield Barwick to advance ASIO’s interests. Barwick had
become involved in “the Case” when he led the government’s team
before the High Court in 1951 to ban the CPA. He had perhaps been
indoctrinated to some extent then so that he could appreciate why the
government was arguing that the Commonwealth’s War Powers under the
Constitution should apply during the build-up to hostilities.
The Commissioners fired the second salvo
on 7 September by seizing on Evatt’s abuse of them in the media as
grounds to withdraw his permission to represent his staff, or himself.
The task of proving that Document J was a
fake then passed to his hapless nephew, Phillip, who kept referring to
his gagged uncle as “my leader”. In truth, his leader had become the
Communist barrister Edward Fowler (Ted) Hill, with whom Dr Evatt
discussed courtroom tactics during lunches in Green Park, near the
Hill now saw a chance for the CPA to do
more than shelter inside the Labour movement. Dissent from the Catholic
Right in Federal caucus over Evatt’s Petrov-mania provided the
Communists with the chance to strike a blow against the Industrial
Groupers who had been dislodging one Communist union official after
another. As a manipulator of other people’s weaknesses, Hill fueled
Evatt’s vanity and paranoia by pointing to the black hand of Catholic
Actionists behind his election defeat.
Hill later told a post-graduate student
of the Royal Commission that he had talked Evatt into exposing the
barely known B. A. Santamaria. Evatt’s bombshell on 5 October 1954 led
to the Labor splits of 1955-57. Hill also claimed that Evatt had
promised to make him a High Court judge. Bizarre as that prospect was,
such an offer would have been vintage Bert.
A RED ARMY?
ASIO’s acolytes and critics both accept
that the fount of the leaks was External Affairs, leaving the Department
of Defence in the clear. Yet, the British ‘Top Secret’ items that
passed to the Soviet embassy in Canberra were Defence documents. The
1945-46 Royal Commission in Canada, moreover, had found penetration at
senior levels in its armed services.
In 1948, the MI5 investigators accepted
that the Defence officials with access to the British plan were of
“unquestioned reliability”. It remains to be tested in public
whether their reliability was also unquestionable. Spry would have been
the last person to ask. He had become Director of Military Intelligence
in 1946 after joining the Army when he was 17. His fellow officers were
British gentlemen, indeed, chaps.
A bigger puzzle is why academic
spy-catchers have not paid more attention to the doings of Soviet
Military Intelligence (GRU) in Australia during the 1940s. Its
representative here from 1942 to 1947 was Viktor Zaitsev. As Second
Secretary at the Soviet embassy in Tokyo until October 1941, Zaitsev had
been party to the most successful espionage operation of all time,
centered on Richard Sorge. Among several achievements, his ring had
informed Moscow of Japan’s decision to swing south, and not to join
its Axis partner in a pincer movement against the USSR.
Parallels between Zaitsev’s past and
the seepage of Allied battle documents to Tokyo in 1944-45 merit better
attention than the welter of speculations floated by Des Ball and David
Horner in Breaking the Codes.
Their tome traces Zaitsev’s socialising around Canberra, but ignores
his access to the US Embassy on consular business.
The likelihood that Soviet Military
Intelligence (GRU) had run its own agents obliged ASIO to persist with
“the Case” decades after the Klod group had ceased to be active.
Moscow had instructed its Canberra staff to establish a network that
could function here behind the lines in the event of war or the severing
of diplomatic relations. External Affairs officer Ric Throssell
concluded that ASIO had decided that its inability to prove any
wrong-doing by him in the 1940s did not establish his reliability but
rather pointed to his being a sleeper.
ASIO could never abandon the hunt for
moles in Attorney-General’s, CSIRO, External Affairs, or one of the
five defence departments. Nor was ASIO itself above suspicion. Peter
Wright’s allegations against Roger Hollis as the Soviet’s man in MI5
inflamed fears in Canberra because Hollis had set up ASIO. Had he left
sleepers behind? In 1978, Richard Hall alleged in The
Secret State that Soviet penetration of ASIO had led to the 1975
departure of its Director-General, Peter Barbour.
Fifty years on from the defection, it
seems improbable that the conjunction of “Petrov” with
“conspiracy” will cease. Lets hope that, by 2054, no one will be
talking about a plot by Menzies merely to defeat Evatt at the polls.
Attention is already moving towards the multiple conspiracies that
flowed from the need by Western intelligence to conceal VENONA while
using those decrypts for covert and public investigations into Soviet
espionage around the world.