Churchill's Spy Files

by Nigel West

  8. On the evening of the 11 May 1942 Major Rupert Speir discovered through an acquaintance in the JAG’s office that the papers relating to contemplated charges against Captain Seddon and Major Wise had already passed through that department and had been returned to AG3 at the War Office for a decision as to whether Court Martial proceedings should be launched. Major Speir communicated with AG3 (Colonel Barnwell) from whom he learned that the War Office file containing the report of the Court of Enquiry in Iceland had been referred to MI6 for their views as to whether there was any objection to the Court Martial taking place, and that MI6 had replied in the negative. Despite the fact that the case of the Arctic was being handled by MI5 with the knowledge and consent of MI6 and that the interrogations in Iceland were being carried out on our behalf and in our interests, not only was this reply given by MI6 without reference of any sort to this department but we were kept completely in the dark in respect of the whole affair.

  9. On the instructions of ADB1 in company with Major Speir I saw Colonel Barnwell at the War Office at mid-day yesterday (12 May 1942). A separate note of this interview is set out at serial 73A on the file. Colonel Barnwell was surprised that MI5 should not have seen the papers and undertook that we should receive the findings of the Court of Enquiry the moment they were returned to the War Office by MI6.

  10. At approximately 5:30 p.m. on the 12 May 1942 we received for the first time a copy of the proceedings of the Court of Enquiry which had been held in Iceland on the 5 May 1942, and from which it appeared that the incident referred to took place on the 23 April 1942 during the interrogation of three members of the crew of the Arctic – the first mate, the second mate and the cook. The report is attached. The findings of the Court appear on the final page. Briefly they were that the prisoners had received superficial injuries, not of a serious character, as a result of blows struck with the open hands and fists of two American Policemen, the blows having been struck in order to induce them to part with information; the action was taken with the concurrence of Captain Seddon who had acted on the instructions of Major Wise. From reading the evidence the following facts appear:

  (i) The methods complained of were only adopted when all other methods had failed.

  (ii) In each case they were not resorted to until the prisoner had deliberately withheld information and had either avoided or refused to answer questions.

  (iii) It appears that the men had made admissions which implicated them in the espionage conspiracy and were regarded by Captain Seddon and Major Wise as falling within the category of spies.

  (iv) The men had resisted and free fights had ensued with the American Police.

  (v) The two American Military Police who had struck the blows were ‘specialists in this kind of work’.

  This potentially disastrous turn of events required some deft manoeuvring behind the scenes, and persuasive arguments were deployed to prevent the War Office from taking the matter further. Petrie intervened personally to write to the War Office:

  It is not my purpose to suggest that the conduct which formed the subject of enquiry by the Court should be condoned or regarded as undeserving of official notice. There were, however, certain extenuating circumstances, among them that the interrogators did not act in a fit of temper or from any feeling of personal resentment, but because they believed that the information in possession of the prisoners was so valuable that in obtaining it the end would justify the means.

  Their view as to the extreme importance of the information was correct, though their ideas on methods may have been misguided. There has been no loss of temper or deliberate cruelty, but rather an excess of zeal, which even if reprehensible, has redounded greatly to the advantage of our war effort.

  In all the circumstances it is clear that most valuable information has been obtained, albeit through unorthodox methods. The officers concerned are Army officers and I feel that it is not within my province to do more than describe the facts which underlie the history of the incidents so that you may be assisted in reaching your decision as to what disciplinary steps should be taken.

  Petrie prevailed, and H.J.D. Seddon was released from custody with a very stiff warning from the Deputy Director of Military Intelligence, with Wise escaping all punishment. The two American military policemen, Sergeant Lyons and Warrant Office Wooldridge, were removed from Iceland and posted elsewhere. Meanwhile, there were complications with Palsson, now code-named LAND SPIDER, who suffered from a crippling stammer that made conversation, and verbal interrogation, next to impossible. Exchanges with his interrogator, Major Samson, were conducted in writing, and he agreed to be flown back to Iceland so he could perform his role in Plan SPIDER and, when that project was replaced by Plan E.S., be returned to Camp 020. He would later suggest a plan to plant another Icelandic ship, the Katla, with a reliable wireless operator, Adolf Dundunderson, on the Germans in Vigo, but the proposal was vetoed by Tommy Robertson, who remarked that ‘we don’t want to have another Arctic on our hands, still less to create one’.

  No sooner had MI5 extricated itself from one crisis, than it was plunged into another. On 28 May, under naval supervision, the remainder of the Arctic’s crew sailed the ship to Gourock and internment, but one of them, Arne Magnusson, the 40-year-old second engineer, committed suicide during the voyage. When the vessel docked on 30 May the local police informed the Icelandic vice consul of the death, and he began to take an interest in Magnusson, the rest of the crew, and the Arctic’s precise status. These awkward enquiries sent the SCO at Gourock, Major Brown, scrambling to plug the potential leak, and to avoid any public statement the procurator fiscal was persuaded to grant a death certificate without the usual formalities.

  The Icelandic crewmen were finally questioned at Camp 020, the full truth emerged, and Jonsson explained how he had been introduced by the Danish vice consul, Alvarez Tome, to the German captain of one of the tankers moored at Vigo, and had been coerced into assisting the Abwehr.

  The crewmen were interrogated at Camp 020, but on 13 July 1943 Jonsson, who suffered from tuberculosis and kidney stones, died in St Clement’s Hospital, in east London, from bowel cancer. The rest of the crew sailed back to Iceland, where they arrived on 19 September 1942, but Palsson was interned until the end of the war. Magnusson and Dalberg were repatriated in August 1942, and the latter, who had been studying law at Reykjavik University, was paid £100 in compensation, his offer to act as an SIS source in Iceland having been gratefully accepted. He would later receive a scholarship from the British Council to enable him to continue his academic career.

  The final chapter in the Arctic story concerns a dastardly scheme, code-named ASSASSIN, which was dreamed up by Robertson, Foley, Milmo and Montagu in August 1942, just as the crew was being prepared for repatriation. ASSASSIN’s objective was to utterly compromise Tome, the Dane who had been responsible for orchestrating the recruitment of Jonsson and Palsson by having COBWEB, GARBO and the released crew simultaneously reveal to the Abwehr that the consul had sold out to the Allies.

  COBWEB should send over the following message:

  I have learnt that a vessel called Arctic was seized here some time ago by the British. Friend I have made in Iceland Police tells me that ship being Government property is coming back soon with all of crew except skipper and radio man. He tells me that Consul at Vigo, Tome, had got the skipper and radio man to work for him and then had gone to British and sold them for large sum. British waited until Arctic sent radio message from here and then seized ship and took it and crew to England.

  Mr Milmo will arrange that some members of the crew should be told when they are being released that Tome betrayed the undertaking to the British.

  As soon as the men reach Glasgow, probably Monday next, GARBO shall write a letter saying that he has heard from his Glasgow agent the following startling story which he finds difficult to believe. Some Icelandic sailors were in Glasgow to take a ship called the Arctic, which has been in the Clyde for some time, back to Iceland.
They were celebrating in a public house their being released from internment. They said they were all released except the skipper and radio man and that they were out for the blood of the man who had betrayed them who was their agent in Vigo whose name sounded like ‘KUNE’ but they were rather drunk and it was indistinct to hear.

  Whether Tome survived ASSASSIN is unknown, but the Germans were not known to treat traitors leniently, as MI5 well knew, and the scheme would have been enough to discredit him in the eyes of the Abwehr. Additionally, pressure was applied to the Icelandic government to cease using Tome as a ship’s agent in Vigo, a condition that Reykjavik accepted in return for the Arctic, which was not claimed by the Admiralty as a prize.

  * * *

  BEETLE was Petur Tomsen, landed by U-boat in September 1943. Thus, by the beginning of 1944, the Abwehr was dependent for information on just COBWEB and BEETLE, so this unsatisfactory situation was rectified by a veritable wave of espionage comprising no fewer than seven more spies.

  The unexpected arrivals began on 17 April 1944 when a motor yacht crewed by two young Icelanders, Einar Sigvaldason and Larus Thorsteinsson, turned up on a two-masted 28-ton vessel off the island’s north coast near the RAF camp at Raufarhöfn. They were brought ashore and when questioned by RAF personnel claimed to have escaped from Denmark through Sweden and Norway. They were then escorted to Reykjavik, where Sigvaldason introduced himself as having won an accordion playing competition in 1941, and described the circumstances of his escape from Kristiansund in the elderly, unseaworthy vessel.

  On 2 May the two prisoners were escorted aboard the trawler Lady Madeleine for a voyage to Birkenhead and were transferred on 12 May to Camp 020 where, almost immediately, Thorsteinsson, a 26-year-old seaman who had contracted tuberculosis, confessed to his role as a Sicherheitsdienst spy on a mission to report meteorological data and stated that they had thrown both their German transmitters overboard before they landed. Sigvaldason promptly followed his lead and gave a detailed account of his recruitment in Denmark, where he had settled before the war, and his training at the SD’s facility at Lehnitz in Prussia. Both also acknowledged having encountered a compatriot, Gudbrandur Hlidar, who would fall into MI5’s hands in February the next year. They also identified his childhood friend, Sigurdur Juliusson, as a spy likely to be dropped into Iceland by parachute, unaware that he was already in custody, and Thorsteinsson named Pedur Tomsen as a German recruit he had heard about at the Icelandic Club in Copenhagen.

  During the lengthy period of questioning that followed, both men corroborated each other in separate sessions and MI5 identified their SD handler as Helmuth Daufeldt, a familiar Abteilung VI figure based in Copenhagen.

  Thorsteinsson’s tuberculosis was treated in Brixton’s hospital wing and he was transferred in July 1944 to Camp X at Peveril on the Isle of Man, MI5 being reluctant to risk having him infect others at Camp 020 or 020R. Another objective was to recruit him as a stool pigeon to extract further information from Pell Sigurdsson, who was believed to have been less than frank in his interrogation. They were accommodated in the same room at Peveril but Sigurdsson was so helpful to Thorsteinsson, by teaching him English, that he was not inclined to inform against him, as MI5 had intended.

  This pair was followed on 25 April by Magnus Gudbjornsson and Sverir Matthiasson, two young Icelanders who had been living in Denmark in 1940, and had moved to work in Germany. Gudbjornsson had been employed as a broadcaster on Berlin Radio, while his companion had worked in a Hamburg printing business. During the spring of 1942 they were both recruited by the Abwehr with the offer of a passage home, and they underwent agent training in Copenhagen, Hamburg and Lubeck. They embarked in U-289 in Bergen and landed on Iceland’s north-east coast near Langanes after a voyage lasting ten days, but were quickly reported by a local farmer and arrested by the US occupation forces, who found two wireless transmitters. After a night under guard at Thorsforn they were escorted on to the Erraid and transferred to Reykjavik, where they embarked on the frigate HMS Bullen for a voyage to Liverpool, arriving on 1 May.

  Once installed in Camp 020 the pair completed detailed statements in which they described their recruitment in May 1942 by Eduard Draude of the Abwehr’s Eins Marine, based at the Hotel Cosmopolite in Copenhagen, a Kriegsmarine officer already identified by Ib Riis as his handler. Aspects of their wireless training in Hamburg in February 1943 were confirmed by ISOS in which they appeared as THORMATT and RUFU.

  Aged 26, Gudbjornsson had been working in a cigarette factory in Hamburg in September 1941 when, as a virulent anti-Communist, he had volunteered to join the SS Panzer Division Wiking to fight on the Russian front. However, quickly disillusioned, he obtained a posting to Berlin, where he compiled and translated transcripts of shortwave radio bulletins. He was still in Berlin in May 1942 when he was contacted by Matthiasson, who invited him to return with him to Iceland where they believed conditions were better.

  Under interrogation Matthiasson, the 32-year-old nephew of Iceland’s Prime Minister Bjorn Thordarson, identified Gudbrandur Hlidar as the man who was to be their principal contact on the island, following his anticipated imminent arrival. They had been instructed to report on Allied activity in six named Iceland ports, an assignment that lent credence to the view that:

  … these cases afford persuasive evidence that the enemy is anticipating an offensive of some magnitude to be launched from Iceland at some not far distant date. The fact that the Abwehr and the SD have hurriedly dispatched expeditions to this part of the globe suggests that this idea is not confined to the Intelligence Services, but may well be occupying the minds of the OKW itself.

  Once safely established in Iceland, Gudbjornsson had been instructed to send an innocuous letter to Matthiasson’s wife in Copenhagen, and this would be the signal for the Abwehr to open a radio link. Although this never happened, RSS reported in November 1944 that a message, numbered ‘11’, had been intercepted:

  You are at present in danger. Hide everything incriminating and stop transmitting until 29/1. We shall continue to transmit as hitherto and occasionally send information. Only listen in when it is not dangerous to do so.

  It was the fact that the Germans had invested six transmitters in the theatre, and had deployed assets of longstanding, that seemed so significant. ‘Five of the … seven agents were recruited for espionage purposes as far back as 1942, the other two being recruited the following year’ and ‘they have all been given extensive training’, which suggested this was a serious commitment, reflecting a genuine anxiety.

  Finally, on 30 April 1944, at the third attempt, U-2894 dropped a trio of agents, two Icelanders, Hjalti Bjornsson and Sigurdur Juliusson, and a German, Ernst Fresenius, onto the Icelandic coast near Selvoganes, but they were apprehended on 5 May after they had been spotted by a search party of American troops who had been alerted to their suspicious behaviour by a local seal hunter. Once in custody, but still on the mountainside, Fresenius declared himself to be a German soldier and asserted that he had been a PoW in England during the previous war. Moments later, apparently shocked by this disclosure, Bjornsson revealed the hiding place of a transmitter and pedal-powered generator. He was questioned again by SIS’s Harold Blyth and the CIC’s Kenneth Haan in Reykjavik harbour aboard the Erraid, when he made a formal statement in which he acknowledged possession of $9,000 and described his mission. Aged 29, he had previously been employed as a cook on the merchantman SS Lagarfoss. He explained that the trio had been at liberty for a week, had provisions for another week, but had failed to make radio contact with the Abwehr despite numerous attempts because of poor atmospheric conditions.

  All three were kept in American custody until 18 May when they were transferred on an anti-submarine trawler, HMS Cape Mariato, to Loch Ewe. They then went by train from Inverness to Camp 020, where the two younger men quickly abandoned their prepared cover story and, confronted with their confessions, Fresenius admitted to his espionage and gave directions to the site of a second buried tra
nsmitter. Ultimately he also provided details of his control sign (or security check) that would indicate his signals were made under duress and an attempt was made to establish contact with the enemy. At one point MI5 contemplated using one of Fresenius’ two transmitters to request a pick-up for a return journey, and thereby lure a U-boat into a trap, but the idea was abandoned on the grounds that such a scheme would ‘be doomed to failure’.

  A convinced Nazi, Fresenius had been born in the Black Forest village of Alpirsbach in August 1887, studied theology at Giessen University, and had been wounded twice while serving with the 44th Infantry Regiment in the Battle of the Somme during the First World War. In August 1918 he had been taken prisoner by an Australian division, remaining a PoW in England until November 1919. After completing his university education he moved to Iceland in 1926 to study agriculture and acquired Icelandic citizenship in 1930, but eight years he later returned to Germany with his wife, Elisabet Fallen, and their four children.

  In his statement Fresenius explained that he had been selected for the mission because he had farmed in Iceland for twelve years before the war, and had been recruited by an Abwehr representative, Dr Hellmuth Lotz, who knew of his background. He had been introduced to his two companions while attending an Abwehr radio course at the Schierensee Schloss near Kiel. The MI5 interrogators were particularly amused to learn that one of their instructors on a sabotage course in Norway had been a foreigner named Fritz, whom MI5 realised was actually Eddie Chapman. Fresenius soon dropped his cover story, that he and his subordinates had been engaged by a shipping institute to collect weather information, and explained that he had been ordered not to disclose German fears of an invasion in northern Europe.