Secret

by Brian Toohey

  After being promoted to Saigon station chief, Shackley subsequently headed the Western Hemisphere division, where his most important job was to foster the conditions for the removal of President Salvador Allende’s elected government in Chile. The intervention culminated in Allende’s death during General Augusto Pinochet’s military coup in September 1973. Many of Pinochet’s opponents were tortured, executed or ‘disappeared’ in secret prisons. Whitlam’s withdrawal of two ASIS officers who had been posted to Chile to help the CIA was one of the many things that upset Shackley about the Labor government. He became head of the East Asia division in May 1973. Frank Snepp, who had worked for him in Saigon, said that when Shackley took over the East Asia division he ordered his staff to ‘have no dealings whatsoever with the Australians … [They] might as well be regarded as North Vietnamese collaborators.’6

  Shackley’s next job, which he took up in May 1976, was as deputy CIA director in charge of covert operations. It later emerged that he was a close friend of Edwin Wilson, a former CIA operative who in 1983 was convicted of illegally selling weapons to the Libyan dictator Muammar al-Gaddafi in the 1970s. A new CIA director, Stansfield Turner, sacked Shackley in 1979. Shackley later wrote a book, The Third Option, that made a case for covert action when neither diplomatic nor military efforts would work.

  Not surprisingly, Attorney-General Lionel Murphy’s ‘raid’ on ASIO’s headquarters on 16 March 1973 greatly agitated Angeleton, who tried to have Whitlam removed shortly afterwards. The raid was prompted by Murphy’s concern that the security preparations for the forthcoming visit by the Yugoslav prime minister, Džemal Bijedić, a Serb, were inadequate—the police had received credible threats regarding attempts to assassinate him, and there had been numerous acts of politically motivated violence by Croatians against Serbs, and vice versa, in Australia over many years. Murphy believed the former Coalition attorney-general Ivor Greenwood had prevented ASIO from investigating potentially violent Croatians, and found supporting evidence when ASIO’s director-general, Peter Barbour, told him Greenwood had said that the ASIO Act stated it ‘was only concerned with subversion against Australia and the Croatians were not involved in this’.7

  An interdepartmental committee heard on 2 March 1973 that a police report said Croatian extremists might make another incursion into Yugoslavia.8 On 15 March 1973, Murphy received information stating that the interdepartmental committee, including its ASIO representative, did not want to contradict Greenwood’s relaxed attitude towards the Croats. He then asked ASIO’s Canberra branch for a late-night meeting, where its staff produced a report of the committee meeting that said the briefing for Murphy’s statement on the Croats ‘should not be contrary or inconsistent to that of the previous government’.9 The wording gave Murphy reasonable grounds to visit ASIO headquarters in Melbourne the next morning to find out what was going on. He was fully entitled to do so, and to examine files where necessary. Precisely what he authorised the Commonwealth Police to do is unclear, but they turned up at ASIO headquarters before Murphy, sealed safes and confined staff to the auditorium as they arrived for work. None of this was necessary. Murphy should simply have told Barbour earlier that morning that he would be arriving to discuss Bijedić’s visit.

  Some senior staff who had been told by ASIO’s Canberra office about Murphy’s impending visit, however, removed files from the building before he arrived, without Barbour’s consent According to confidential sources with an intimate knowledge of what happened, Barbour’s deputy, Jack Behm, was involved in storing the files at Melbourne’s City and Overseas Club—contrary to the rules about handling classified material. Understandably, the culprits didn’t make a note for inclusion in ASIO files about their illicit action.

  During the raid Murphy looked only at files he asked for relating to Croatian extremists,10 but this didn’t stop the delusional Angleton claiming in an interview with the ABC that Murphy had ‘barged in and tried to destroy the delicate mechanism of internal security which had been built on patiently since World War II … Everything worried us. You don’t see the jewels of counter-intelligence being placed in jeopardy by a party that has extensive historical contacts in Eastern Europe, that is seeking roads to Peking, when China used to be one of the major bases of the illegal NKVD [Soviet secret police agency] operations which encompassed Japan, Australia and New Zealand.’11 Murphy didn’t look at any counterintelligence ‘jewels’—just skimpy files on Croatian extremists in Australia—and Whitlam, like Nixon, was right to seek a path to China.

  After he retired, John Walker, the CIA’s station chief in Australia for much of the Labor government’s years, and I had lunch in New York in 1981. At that lunch he gave me some background on the attempt to remove Whitlam.12 Walker was previously the CIA station chief in Israel, where he reported to Angleton instead of the head of the Near East division. He said dissatisfied ASIO staff in contact with Angleton initially suggested the move against Whitlam, and that Angleton, whom Walker greatly admired, considered Whitlam a ‘serious threat’ to the US. He said Angleton instructed him to get Barbour to publicly state that Whitlam had lied when he told parliament that the ASIO director hadn’t complained to him about Murphy’s visit; Whitlam would then supposedly be sacked for lying to parliament. Walker said that when asked to do this, Barbour refused. The record of the meeting taken by the head of the PM’s Department, Sir John Bunting, contained nothing about a complaint, reinforcing Barbour’s refusal to destroy a prime minister he was supposed to serve.

  None of those involved in pressuring Barbour seemed concerned that it would be a serious espionage offence for CIA and ASIO officials to interfere in Australian politics in this manner. The job of Australia’s counterintelligence organisation is to prevent espionage, not encourage it. The gently spoken Barbour was left in an invidious position where a significant proportion of senior officers strongly opposed his continued leadership. To Whitlam’s discredit, he didn’t realise that Barbour had acted honourably, unlike other ASIO officials.

  Following Barbour’s refusal to call Whitlam a liar, some disgruntled ASIO staff and ex-staff put Barbour under surveillance to establish if he was having an affair with a young woman who was his executive assistant.13 The head of ASIO’s Canberra branch, Colin Brown, told the Hope Royal Commission in August 1975 that Barbour’s habit of travelling with his secretary was ‘ill-advised, indiscreet and I think could well lead to someone asking a question in the House’.14 Hope added this to other complaints that convinced Whitlam to dismiss Barbour in September 1975. In contrast, Whitlam had quickly rejected concerns that the JIO head, Gordon Jockel, could be a security risk because he lived with a young woman from Indonesia who was supposedly connected to that country’s intelligence services.

  Brown’s concern for the proprieties of Barbour’s travelling with his secretary—a common practice at departmental-head level—showed a certain chutzpah. During our lunch in New York, Walker told me that while Brown was head of ASIO’s Canberra branch, he had an affair with Walker’s wife, Diana.15 Walker described Diana as very wealthy. She and Brown moved to the US after marrying in Canberra, with several senior ASIO staff as guests at the wedding. Walker, who was wealthy himself, told me ‘I was angry about the affair, but found out too late for it to really affect my relationship with ASIO, where Brown was my principal point of contact’.16 He also told me he was conscious of the irony that Shackley asked him to find out if Junie Morosi was having a relationship with a coalition shadow minister as well as Jim Cairns.17 Almost no one in ASIO, including those who peddled vindictive rumours about Barbour’s more innocuous activities, was concerned about Brown’s relationship with the wife of a senior foreign intelligence officer.

  Brown could see the problem, though. His former wife, Rosemary, wrote me a letter on 28 June 1981 in which she said the affair had been going on since 1973, but she had waited until the following year to confront her husband. She said she told him she would have to tell Walker about the ‘two-edged sword’ Br
own was holding, but Brown told her she ‘would destroy ASIO’s relationship with the CIA’ if she did.18 As a result, she said, she did nothing, explaining that ‘ASIO wives are very thoroughly brainwashed. So, in the name of the ASIO/CIA cause, a 34-year marriage was dissolved, a family broken and the ex-Mrs Brown left in midair with nothing.’19

  Whitlam caused US intelligence officials further anxiety after the Soviet Union proposed setting up a joint ground station with Australia to photograph objects in space. In itself, there was nothing wrong with working cooperatively with the Soviets—Nixon had showed the benefits of doing so when he negotiated the SALT agreements. Whitlam strongly resented the pressure from Foreign Affairs and the US to reject the proposal, adding his own defiant caveat to the departmental answer prepared for a parliamentary question. On 3 April 1974 he told parliament: ‘The Australian government takes the attitude that there should not be foreign military bases, stations, installations in Australia. We honour agreements covering existing stations. We do not favour extension or prolongation of any of those existing ones.’

  Given that notice could be given on 10 December 1975 to terminate the Pine Gap agreement, alarm bells rang in Washington. Ambassador Green told the Foreign Affairs head, Alan Renouf, that, taken at face value, Whitlam’s words ‘represented a grave threat to the global Western balance against the Soviet Union, and ANZUS would be called into question’.20 However, shutting Pine Gap would not have threatened the Western global balance against the Soviets, for the good reason that the latter did not even have a signals intercept satellite like Pine Gap’s. This imbalance heavily favoured the US. What mattered was nuclear balance—each side had far more than enough weapons to deter the other. Nothing in ANZUS required Australia to host intelligence-gathering bases. Even if Whitlam shut Pine Gap, the US would still have its associated satellites, and they could be linked to ground stations elsewhere, such as Guam.

  But once the satisfying taste of his rebellious parliamentary answer faded, Whitlam said the bases could stay. The obvious exception to tolerating the bases would have been if he had discovered that the US was actively undermining his government.

  The US concerns about losing Pine Gap produced a serious reaction at the highest level. Before Nixon was forced to resign in August 1974, he commissioned National Security Study Memorandum 204. It was finalised in July. As set out by Curran, the central concern of the memorandum was how to assure the continued presence of the US facilities in Australia. It said Australia’s desire for greater self-reliance in foreign policy was characterised by an ‘aversion to anything that smacks of the Cold War or superpower condominium and by a desire to associate with the causes of the world’s underprivileged’. Curran says James Schlesinger’s recommendation, called Option One, took the hardest line. It proposed shifting the US bases out of Australia, reducing the flow of intelligence and the number of joint military exercises, increasing restrictions on US–Australia trade and capital flows, and adopting a ‘vigorous reaction’ to foreign policy initiatives that undercut the US position. Option One’s value was said to be that it ‘could undermine [the Labor government] with the Australian people, setting the stage for an opposition victory’.21 As Curran said, ‘It was a remarkable comment: the administration was contemplating what course of action would have the most devastating domestic political effect.’22

  It’s hard to reconcile this proposed foreign interference with some commentators’ sneering dismissal of any suggestion the US seriously considered getting rid of the Whitlam Government. Option One was ultimately rejected as Pine Gap could be shut before being replicated elsewhere. The memorandum noted, ‘It is less than certain that the government of Australia … will not exercise its option to terminate the existing agreement upon one year’s notice after December 1975.’23 Curran says the White House eventually decided to persevere with the Labor government, ‘test and clarify Whitlam’s intentions’ over the remainder of 1974, and make ‘selective use of pressure on Whitlam if necessary’.24

  31

  FRASER’S NARROW ESCAPE

  ‘Disenchanted Australians … agree with the Prime Minister [Whitlam] and blame the Liberal-Country coalition for the mess … [Fraser’s] ability to force an election has clearly been weakened.’

  CIA analyst Dunning Idle IV, 8 November 19751

  The historian John Blaxland says that by early 1975, US concerns about the Whitlam Government had become more intense and its embassy officials confided to ASIO that the ‘maintenance of the ALP government in power is essential to Soviet planning for this area’.2 (There are no credible suggestions that the Soviets helped Labor.) In June 1975, US embassy officials issued another warning to ASIO, this time about how Whitlam was allegedly risking the bilateral intelligence relationship.3 James Curran says a remark by the US ambassador to Australia, Marshall Green, to the US defence secretary in March 1975 ‘suggests a distinct edginess at the highest levels about the possible revelation of some kind of CIA activity in Australia’.4

  The CIA had abundant opportunities to damage Whitlam, including the decision by Labor’s energy minister, Rex Connor, to use the con man Tirath Khemlani to raise a large loan in the Middle East. In June 1976, an ASIO official told The Bulletin: ‘Some senior ASIO men suspect … there was a certain CIA involvement in the loans scandal. Some had expressed the thought that at least some of the documents which helped discredit the Labor government in its last year in office were forgeries planted by the CIA.’5 The CIA had access to the intercepts of the flurry of telexes that Khemlani and other ‘chancers’ generated in the hunt for the money; these others included intermediaries with links to the CIA, such as Commerce International. The CIA revealed in answer to a freedom of information request that it held fourteen intelligence reports on this company, but it refused to release a word because of national security exemptions.6

  By mid-1975 Khemlani had run up large travel expenses but hadn’t received a cent from Connor. One well-placed Coalition source told me that the CIA had laundered US$400,000 through an American mining company to pay Khemlani to come to Australia on 14 October 1975 and release damning information about how Connor was still chasing a petrodollar loan despite the withdrawal of his authority. My source had no obvious motive to lie, but said he couldn’t break a confidence about how he knew the money was from the CIA rather than the mining company that stood to gain from Labor’s demise.

  The Opposition leader, Malcolm Fraser, used Khemlani’s revelations to justify his announcement on 15 October 1975 that the Coalition would block the budget in the Senate to try to force an early election. Khemlani’s New York associates also told me he had received a large sum of money during the loans affair; however, his lawyer refused a request for me to interview his client about the source of this money.7 Although plausible, none of these claims show the CIA actually tried to destabilise the government in 1975 after undertaking some planning in 1974.

  Whitlam continued to unnerve the White House after Fraser refused to pass the budget. He sacked the head of ASIS, Bill Robertson, on 21 October, prompting Governor-General Sir John Kerr to demand a full explanation. A month earlier, Whitlam had sacked Peter Barbour as head of ASIO after a recommendation from the Hope Royal Commission on Intelligence. In my view, both dismissals were unjustified.8

  On 2 November, without supporting evidence, Whitlam accused the National Country Party (the junior Opposition partner) of accepting CIA funding. A US author with good intelligence sources said the CIA ‘secretly poured money heavily into the opposition Liberal and National Country parties. The CIA wanted Whitlam out.’9 It wouldn’t be surprising if this happened: the CIA told the Pike congressional committee in the mid-70s that 32 per cent of all CIA covert action abroad consisted of ‘election support—the largest single category’.10

  I revealed in the AFR on 3 November 1975 that the CIA ran the Pine Gap base near Alice Springs, not the US Defense Department as Australian governments had previously claimed.11 I reported that its first head was Richar
d Stallings, a CIA official. After the State Department denied this, the National Country Party leader, Doug Anthony, put a parliamentary question on notice on 6 November challenging Whitlam to confirm that Stallings worked for the CIA. Whitlam intended to do so when parliament resumed on 11 November, but couldn’t because Kerr sacked him earlier that day.12 Kerr’s decision was hugely controversial, not least because he violated the fundamental constitutional convention that the leader with the majority in the House of Representatives (Whitlam) should be prime minister.

  During the lead-up to these tumultuous events, a CIA analyst in the Canberra embassy, Dunning Idle IV, did a balanced, often insightful job of reporting to Washington. The public learnt what Idle was reporting after the National Times published extracts from leaked editions of the National Intelligence Daily (NID), a four-page top-secret newsletter prepared for the president early each morning. Idle had bad news for those National Security Council members who Curran reported had assumed that destabilising Whitlam’s government would lead to his defeat. Instead, by October 1975 it seemed US policy-makers might get their worst possible outcome: Fraser’s defeat and the loss of Pine Gap.

  Idle reported in NID on 8 November that the determination of the Australian Opposition to force a general election was weakening. He said Whitlam had managed to raise ‘real alarm about the dire consequences of government bankruptcy, which he claims will result from the Opposition’s blocking government appropriations. Disenchanted Australians … agree with the Prime Minister and blame the Liberal–Country coalition for the mess … Fraser this week offered to delay the election for six months—a proposal quickly rejected by the Prime Minister … [Fraser’s] ability to force an election has clearly been weakened.’13

  Idle’s analysis suggested that if Kerr had not sacked Whitlam on 11 November, the Coalition might have backed down and passed the budget. Idle had earlier reported for NID, on 22 October, that many Liberals privately agreed with Whitlam that the upper house had no right to block the budget. He said, ‘Fraser has accomplished what no Labor Party leader could ever do. He has united the Labor Party and bound union leaders more tightly to it. Unpopular, weak, and apprehensive that they were losing their grip, party figures overnight had become fiercely angry, solidly united and ready for a fight.’14 Several Coalition MPs, including the Liberals’ deputy leader, Phillip Lynch, told me at the time that a backdown was a distinct possibility. If so, Labor would have been in a better position to perform credibly at the normal election due around May 1977. It was a much improved government after Whitlam sacked three troublesome Cabinet ministers, Conner, Cairns and Cameron, in mid-1975 and replaced them with highly competent performers such as the new treasurer, Bill Hayden.