by Brian Toohey
The ultra-secretive US deciphering project called Venona decoded the content of cables sent between Moscow and its intelligence officers in several countries in the 1940s. In 1995, the NSA released the translations of every message the codebreakers deciphered fully or partly, and the suspected identities of those whose real identities were hidden behind unbreakable pseudonyms in the original messages.2 The following analysis is based on the material released about the messages communicated between Moscow and the Soviet embassy in Canberra from 1943 to 1948.3
In contrast to Weisband’s efforts, it is clear that the highly classified material handed over by the Australian spies was of no consequence. Supposedly, the most valuable were two top-secret British papers written in May 1945 that Milner and Hill indirectly passed on to Moscow in March 1946—assuming double agents in London hadn’t already done so. The original documents in the British archives show banal, often erroneous predictions by UK officials about the strategic circumstances between 1955 and 1960.4 It is hard to believe anyone in Moscow took any notice, especially Soviet leader Joseph Stalin. For example, he ignored numerous intelligence warnings of the German invasion of Russia on 22 June 1941, codenamed Barbarossa.5
The two British papers that were sent to Moscow from Canberra, written for the UK Cabinet by the Post-Hostilities Planning Staff, were called ‘Security of India and the Indian Ocean’ and ‘Security in the Western Mediterranean and the Eastern Atlantic’.6
The first said the continuing ‘integrity of India’ was of major strategic significance but didn’t foresee that the British government would grant India independence in 1947. Nor did it realise the government would destroy India’s integrity by partitioning the country into Pakistan and what was left of India in 1947. It did raise concerns about possible civil unrest after 1955, but partition immediately created tremendous civil upheaval and loss of life. The paper also stressed India’s strategic importance as a base and the contribution its fighting forces could make to Britain in future. India contributed two million troops to Britain in World War II compared to Australia’s 993,000 to the overall war effort; 89,000 Indian soldiers (4.5 per cent of those who served) were killed compared with Australia’s toll of just over 27,000 (2.7 per cent).7 Since independence, successive Indian and Pakistani governments have shown no interest in making further troop contributions to Britain. However, partition did result in several wars between Pakistan and India, the first in 1947–48. The paper described the Soviet Union as the only major power capable of seriously threatening British interests in India. After independence the Soviets and India freely formed an enduring friendship. China now has more influence in Pakistan, as does Islamic extremism.
The other paper stated the obvious: that by 1955–60 Britain would want to control sea communications in the East Atlantic, retain its bases on Gibraltar and avoid the rise of hostile or neutral countries around the Western Mediterranean.
The biggest strategic factor missing from the papers is the development of nuclear weapons, something other British officials already knew was underway in 1945. By 1955–60, the nuclear stand-off effectively meant the Soviets could not invade countries in the Western Mediterranean, nor control the East Atlantic sea lanes.
Clearly, the fatuous predictions made in both of these papers would have been of little use to the Soviets. But David Horner, author of the first volume of the official ASIO history, states that several documents handed over ‘would have been of great value to the Soviet Union, especially when it was negotiating with the allies over postwar arrangements in Europe’.8 He doesn’t support his claim by discussing the content of the documents. ANU researcher Adam Hughes Henry says the British had already alerted the Soviets to their desire to ‘hold on’ in the Mediterranean when Churchill negotiated his October 1944 ‘Percentages Agreement’ with Stalin on allocating spheres of influence.9
The rest of the British papers sent from Canberra were trite. A typical example was a Foreign Office telegram in October 1945 stating, ‘Argentine export of meat is a vital factor for Great Britain’.
Apart from Milner and Hill, non-diplomats in Australia also supplied documents sent to KGB headquarters in Moscow.10 Contrary to widespread assumptions, this so-called Australian ‘spy ring’ was not the result of skilled recruitment by the KGB. Instead, an exceptionally energetic member of the Communist Party in Australia, Walter Clayton (codenamed Klod), organised a small band of people to give him information that he passed indirectly to the KGB without it having to lift a finger. One striking feature of the Venona transcripts is how the KGB’s Moscow headquarters urged its Canberra representative, Semyon Makarov, to stop sending so much material. But Makarov, who didn’t meet Clayton until 1948, had no direct control over what Clayton supplied to a go-between. Despite his diligence and skill, Clayton got few thanks from KGB headquarters. Moscow told Makarov not to let him recruit new agents, not to send any document that was more than a year old, not to be overeager to achieve success, and to stop obtaining information of little importance. Moscow even complained that Clayton had obtained material (including the British telegrams sent from Australia) without first asking for approval.
Clayton’s most productive period was 1945–46, when many Australians saw the Soviet Union as a wartime ally whose population had made horrendous sacrifices to ensure victory over Hitler. But on 24 October 1946 Moscow ordered Makarov to suspend all contact with Clayton. This was effectively the end of the ‘spy ring’.
On the available evidence, some of Clayton’s agents knew they were passing information to the local Communist Party but seemed genuinely unaware that it was then passed on to Moscow. Others who didn’t hand anything over are still often described as part of a spy ring simply because they were mentioned in the messages, were suspected by ASIO, or were a target of KGB recruitment. None of this meant they were agents. Some commentators still bluntly state that another diplomat, Ric Throssell, was an agent. After interviewing him in 1953, ASIO concluded that he ‘is a loyal subject and is not a security risk in the department in which he is employed’.11 Frances Garratt (née Bernie) is often still viewed as being a Soviet agent while she was working mainly on political party issues as a young secretary/typist in the Sydney office of the External Affairs minister, Bert Evatt, between November 1944 and April 1946. She later told ASIO she handed over information to Clayton but stopped in 1945. She insisted that she thought she was simply giving the local Communist Party some political information. She acknowledged being a party member during 1941–44, saying, ‘It was a period … of youthful idealism but has completely finished’.12 She was never charged.
One message Garratt passed on revealed nothing more than the parochial approach of one of Evatt’s private secretaries, who wrote to him in April 1945 suggesting he return immediately from a San Francisco conference to deal with domestic political matters. Evatt stayed in the USA and made a widely praised contribution to the landmark conference that culminated in the formation of the United Nations.
Although the existence of Clayton’s ‘spy ring’ caused understandable concern in Washington and London, other pressures on Canberra to replace the existing security organisations in Australia with ASIO are more troubling. The US relied on crude prejudices to try to damage Prime Minister Ben Chifley and his Labor government. In 1980, the National Times unearthed voluminous files in the national archives in Washington about a US Navy–inspired ban on the supply of any classified information to Australia in mid-1948. The files show the State, Army, Navy, Air Force Coordinating Committee (SANACC) imposed the ban after a navy submission in May 1948 claimed Australia was a poor security risk because of a leftist government ‘greatly influenced by Communist-infiltrated labour organisations’.13 The US army and air force opposed the ban, as did the British government. The navy then produced its trump card: it claimed to have fresh evidence of ‘breaches of Australian security in the handling of highly classified US military information’ in 1947.14 No evidence has emerged to support the navy’s cla
im about a security breach involving highly classified US military information in Australia in 1947, or at any other time. The US army and air force and the UK continued to argue against a complete ban on the supply of classified information to Australia, but SANACC cut off everything, including information in the lowest classification.
In a highly damaging example of foreign interference, the navy relied on shoddy information from fervently anti-Labor US officials in the Canberra embassy, based on accusations fed by Australian security and military officials. ASIO historian Horner says these officials supplied what he describes as ‘wildly extravagant reports’.15 He says the Defence Department head, Sir Frederick Shedden, later acknowledged he shouldn’t have discussed the ban with the US ambassador, Myron Cowen, and the naval attaché, Stephen Jurika, because their views ‘were adverse to Australia’. Jurika told Washington there was ‘not one chance in 10 million’ of any effective action against communism being taken until the Labor government was removed, and also claimed communism was ‘rife in the highest governing circles’ and had spread throughout the armed services.16 Jurika was peddling malicious rubbish. Chifley sent in the army to break a coalminers’ strike in 1949—the first time the army had been used in peacetime for strikebreaking. Although the Communist Party was active in Australia, it was small compared to Labor and the Coalition parties.
Chifley replaced the existing security bodies with ASIO on 2 March 1949, but the ban remained and was only lifted in mid-1950. The US even threatened to cut off the flow of information to Britain in early 1949 unless it stopped supplying Australia with information on guided missiles being tested at the Woomera Rocket Range. The British put up fierce resistance but eventually succumbed to preserve their own access to US data. Australia had paid for the range’s construction and for a large number of security staff who vetted all Australians working there, but this meant nothing to the US.
The most disturbing secret at the time of ASIO’s birth is that the most important traitor was Weisband, who worked on the Venona project decoding messages between many countries, including Australia and the USSR. The online chronology posted by the NSA says that its forerunner, the Army Security Agency, made an initial break in decrypting Soviet messages in late 1947 as part of Venona’s cryptology attack undertaken with its British counterpart, the Government Communications Head-quarters (GCHQ). The NSA chronology revealed that Venona was so sensitive that the CIA was not officially briefed until 1953.
Senior officials from the British counterintelligence body MI5 took the lead in trying to convince the Chifley Government to set up its own counterintelligence agency. But secrecy meant they couldn’t explain how they knew that the Australian spies actually existed. Horner says they decided that Chifley would be the first person in Australia to be told that the evidence came from intercepts of communications between Moscow and its Canberra embassy. Horner quotes MI5 officials as saying that the head of the External Affairs department, John Burton, probably had more influence than they did in convincing Chifley to act.17 Yet evidence-free claims still appeared decades later claiming that Burton was part of the KGB ‘spy ring’.
The Soviets switched to unbreakable encryption systems in October 1948 after Weisband, an employee of the US Army Security Agency, told the Soviets what Venona did. He had started working for the KGB in America in 1934 but was never charged because the authorities, reflecting a perverse official addiction to secrecy, feared the publicity would reveal that the Soviets already knew of Venona’s existence. The significance and sensitivity of Weisband’s activities resulted in suppression of any public acknowledgement of his treachery until 28 June 2000, when the NSA released a report saying he had been responsible for ‘perhaps the most significant intelligence loss in U.S. history’.18 Undeterred by hypocrisy, the US imposed a complete ban on supplying any classified information to Australia in May 1948, although Weisband had done vastly more damage than any Soviet agent in Australia would ever do.
Despite the fact that Venona was no longer a secret from the Soviets when it switched encryption systems in October 1948, Horner notes that ‘For the next 20 years, American, British and Australian security agencies, including ASIO, would work with almost fanatical diligence to preserve the Venona secret, while the Russians knew about it the whole time.’19 He doesn’t reveal how long it took US officials to tell their Australian counterparts about Weisband. I asked ASIO when the US informed it (or its predecessor) that Weisband had told the Soviets that Venona was able to read its messages; ASIO replied in an email on 30 June 2017: ‘The information you refer to is not drawn from ASIO records.’ ASIO also told the National Archives of Australia (NAA) that it does not hold any open period records (i.e. up to 1993) about the US notifying it that Weisband told the Soviets about Venona.20 The US should also have told the Defence Signals Directorate (now the Australian Signals Directorate, or ASD). When I asked ASD, via Defence, it declined to answer.
If the supposedly close intelligence relationship were to mean anything, the US should have told Australian counterintelligence about its own massive counter-espionage failure immediately it found out about it, and apologised. It should also have told the Defence Signals Directorate. Yet the US decision to withhold this crucial information is never mentioned by the many gullible political commentators and journalists who worship the wonderful intelligence the US supplies to Australia. Weisband’s case brutally demonstrates that the US will withhold what it wants, when it wants, even when Australia has every right to know.
2
ASIO STRUGGLES WITH CHANGE
‘I passed the ball to Hawke, who kicked it out of the ground.’
Harvey Barnett, ex-ASIO head1
The Chifley Labor government’s appointment of the South Australian Supreme Court judge Geoffrey Reed as the first head of ASIO in 1949 reflected a short-lived concern that secrecy gave the new body an ingrained potential to abuse its powers. Instead of replacing Reed with another judge, in July 1950 the Menzies Government appointed the director of military intelligence, Brigadier Charles Spry, as ASIO’s director-general. Spry brought a habitual commitment to secrecy to the job. His activities soon spread well beyond communists to targeting people who were simply exercising their rights of free speech and association. In 1960 Spry believed there were as many as 60,000 potential subversives in Australia.2
The ASIO official history argues that Spry went beyond the organisation’s charter by giving political support to the Menzies Government during the 1951 referendum on the dissolution of the Communist Party.3 Menzies held the referendum after Labor’s opposition leader, Bert Evatt, decisively won a High Court challenge to the ban’s constitutional validity. The Communist Party continued to exist for decades without posing a threat to the elected government, and in 1991 it dissolved itself. A tiny version has since reappeared.
There is little reason to believe Spry conspired with Menzies to engineer the 1954 defection of the KGB chief in the Canberra embassy, Vladimir Petrov, and his wife, Evdokia. But ASIO arranged the defections, which helped the Coalition parties, particularly after Menzies established a royal commission into espionage. Petrov couldn’t give the commission any information about a current Soviet spy ring because there wasn’t one. Nor did he have any knowledge of any Soviet ‘illegals’ (intelligence officials embedded in the community). Despite intensive ASIO efforts for many years, none were ever found.
Petrov was a heavy drinker with no appetite for the tedious work of agent handling, preferring to visit Kings Cross to drink and find prostitutes who would accept his money. By the time he arrived in February 1951, none of the agents from the mid-1940s were still active. The only important secret he brought with him after defecting was that he hadn’t recruited any agents to replace the earlier ones.
Although the defections were widely acclaimed as a triumph for ASIO, which babysat the Petrovs for decades, their sole value was to help overseas counterintelligence agencies identify a few KGB officers. Other defectors have given more valu
able information without a high-profile royal commission. The commission contributed nothing other than a political advantage for the Menzies Government following Evatt’s fierce and sometimes intemperate attack on the commission.4 The attack helped trigger a split in the Labor Party. A minor new party emerged, largely organised by the secretive National Civic Council (NCC) led by a zealous Catholic, Bob Santamaria. Called the Democratic Labor Party, it wrecked Labor’s election chances until 1972.
Commissioned by the Whitlam Government, the Hope Royal Commission into Intelligence and Security (RCIS) produced a report in 1976 that was released by the NAA in May 2008. It gives a damning portrayal of ASIO as a dysfunctional agency that was much too close to particular political organisations (although unnamed, Santamaria’s NCC was the key body). In a speech at the official release of the report, the commission’s secretary, George Brownbill, said it had found ‘a security service that was badly politicised … The ASIO files disclosed numerous cases where gossip and tittle-tattle about people and their so-called communist sympathies was recounted to certain figures in the Menzies governments and then revealed in some cases under parliamentary privilege. As we found with a more detailed enquiry, much of this was no more than slander under privilege.’5
Although David Horner’s first volume of the official ASIO history is called The Spy Catchers, the organisation never caught any Australians working as agents for a foreign intelligence service. Governments over the years expelled a couple of KGB officials whom ASIO had assessed as trying to recruit Australian agents, but for ASIO, catching spies took a back seat to snooping on innocent Australians. Although not a trenchant critic of Spry, Horner concluded, ‘ASIO officers came to believe that any political movement or society or societal group that challenged the conservative view of society was potentially subversive.’6 He also noted: ‘It is now clear that ASIO’s surveillance of academics, intellectuals, writers and artists and the gathering of information into voluminous files was a massive waste of time and resources.’7
