by Nick Barratt
In the summer of 1928 a young man came to the embassy and said that he was attached to one of the Italian embassies in Europe. He was received by Guelfan [Helfand], the embassy secretary. He explained that, being in great need of money, he was prepared to sell to the Soviets a secret code which he had stolen from his chiefs. Guelfan informed Ianovitch of this visit. The Italian was told that before paying Dovgalevsky [the ambassador] would have to glance at the key of the code and he duly brought them to the embassy. While he was waiting Mme Ianovitch, in an hour and a half, photographed all that was needed and he was then informed that the embassy did not buy stolen codes. Thus the deal was affected without any expense.165
More was to come, though; it was not just the Italians who had been compromised by the black market trade in official cipher codes:
In 1929 there was a similar incident in connection with a British code. An unknown man offered Ianovitch the code used by the London Foreign Office for its communication with the Indian authorities. The same little comedy was played and Mme Ianovitch again brought Ianovitch a substantial monetary reward.166
If the allegations were true, they represented a serious breach of British security. The India Office cipher codes had only been changed earlier in the year. The new edition of the cipher and re-cipher tables were circulated to all official holders and acknowledgement of safe receipt was duly recorded with a diligence and attention to detail similar to that demonstrated in the exercise Oldham had coordinated in 1924.
The leak could only have come from someone with access to the codes, which narrowed it down to three sources: a diplomat associated with the India Office, someone within the India Office or a person within the Communications Department itself, where the cipher codes were issued. The British were duly alerted about Bessedovsky’s claims and Dunderdale was sent to interview him on 5 October. However, Dunderdale did not form a very strong impression of Bessedovsky, considering him to be ‘smart and intelligent, but neither frank nor principled and quite possibly not honest’.167 Perhaps it was the disbelief that anyone from the British civil or diplomatic services could betray their country in such a way, but despite the fact that a copy of Dunderdale’s report was sent to Captain Hugh Miller of Special Branch, the allegations were not pursued.
Nevertheless, this was exactly the sort of problem that Oldham, as the new Staff Officer, and his trusted team of permanent clerks were there to prevent or, should the unthinkable have occurred, to investigate. However, the potential crisis coincided with a serious illness that incapacitated Oldham and prevented him from going to work. Although the nature of the illness was not specified, notes were placed on file in the Registry day books that he had been signed off work for a considerable period – initially for two weeks, from 18 to 31 October, with a further medical certificate issued on 7 December and a third on 23 January 1930, stating ‘that it would probably be three months before Mr Oldham would be fit for duty’.168 This was an extraordinary length of time to be away from work and the absence of the Staff Officer clearly contributed to the lack of official interest within the Communications Department.
However, Bessedovsky did not go away. A week after Oldham’s absence from the office began, Bessedovsky’s allegations began to seep out to the press in a series of articles reported in the Telegraph. On 25 October, he fuelled existing paranoia about Soviet activities by writing:
The latest Anglo-Soviet agreement in no way modifies Stalin’s plan to undermine the British colonial empire in order to achieve world revolution. Those who think Moscow no longer believes in the possibility of such revolution are mistaken.169
This, though, was only the beginning. He repeated his claims that Italian and British codes had been sold and copied, and the story was picked up around the world – not just major capital cities, but regional and local newspapers too. Faraway titles such as the Townsville Daily Bulletin, Queensland, published a syndicated summary of Bessedovsky’s claims with the headline SOVIET POSSESSES INDIA OFFICE CODE:
M Bessedovsky asserts that the Soviet also obtained by the same method the British government’s India Office code, and since has been able to translate all British code messages to India.170
The Canberra Times added:
The Foreign Office refuses to comment on the allegations concerning the Italian and British secret codes.171
The British newspapers were also strangely quiet on the matter, and in general the claim that British codes had been sold were ridiculed. The Daily Herald reported on 29 October:
STOLEN CODE STORY REGARDED WITH DERISION IN LONDON
The story of the acquisition by the Soviet Embassy in Paris of a British cipher ‘used by the Colonial Office for communicating with India’ is regarded here with derision.
M Bessedovsky, the former Counsellor of the Soviet Embassy, who tells the story, has a great flair for the topical…
An Italian cipher is stolen in Berlin; and promptly Mr Bessedovsky tells how a British cipher was stolen in London and taken to Paris.172
However, given the Herald’s role as the ‘official’ newspaper of the Trades Union Congress and therefore its greater sympathy to Soviet ideals and aims, their stance was perhaps understandable. The stories rumbled on for a few days and then gradually faded away. However, investigations and checks continued behind the scenes. On 6 December 1929, the SIS forwarded the report of Bessedovsky’s statement to their counterparts in MI5, hoping that they would pick up the trail:
Regarding the alleged sale of a British Foreign Office cipher to the Soviet embassy, Paris, in July 1929. According to Bessedovsky’s statement, the Englishman who offered to sell the cipher and who gave his name as ‘Mr Scott’, was interviewed by the second secretary of the Polpredstvo [embassy], Gelfand [Helfand].
So Bessedovsky had provided a name for the British source of the leak, and a rough date for the interview with Leon Helfand, nicknamed the ‘Eye of Moscow’ for the way he passed information back home. Although a personal file was raised on ‘Scott’, MI5 was unable to follow up on this lead – it seems that suspicion had mistakenly fallen on William Arthur Scott – and with Old-ham still absent, the Communications Department showed an equal unwillingness to stir up any trouble. Indeed, it seems that internal security remained sloppy in the wake of the affair, if a later entry in the day books is anything to go by. A report filed on 12 March 1930 noted that a safe in the Passport Office in Room 32 on the second floor had been found by the Office of Works, nightwatchman unlocked, albeit with the door closed. The incident had occurred on 20 February, meaning there was an interval of nearly three weeks before it was officially noted.173
The secret services were clearly concerned about Soviet attempts to intercept British intelligence. MI5 agent Jasper Harker noted in January 1930 that:
We are in possession of information that [O]GPU agents received instructions during 1929 to watch foreign officials residing in hotels with a view to seizing any opportunity for ransacking their luggage.174
However, it took another defection to finally rouse the Foreign Office into action. Agabekov – the man who had been sent to eliminate Bazhanov and then, it transpired, ‘liquidate’ Bessedovsky, before the mission was aborted – had been acting as an OGPU illegal and head of operations in the near east since the failed assassination attempt in 1928. However, he too sought asylum in France in June 1930 for ‘ideological reasons’, although the fact he had fallen in love with an English translator, Isobel Streater, played a large part in his decision to flee to the west. He was quickly expelled by the French – they were unconvinced by his information and were glad of an excuse to get rid of him – and deported to Brussels, where he caught the attention of the waiting British authorities.
Special Branch sent future MI5 agent Guy Liddell across to interview Agabekov, and he provided various written reports to MI5 and MI6. He also kept in close telephone contact with MI5’s Jane Sissmore, by this date in charge of B Division (investigations and inquiries) with oversight for Soviet activity
within the UK. Agabekov explained how his network of agents had operated whilst he was in Tehran and the near east, as well as the ways in which British telegrams were intercepted or copied. Amongst Agabekov’s claims, many of which subsequently appeared in the papers, was the news that:
Moscow is better informed at what happens in the British offices in Egypt than is Mr Arthur Henderson [the Foreign Secretary] himself… For the past few years, Moscow has received copies of all the secret reports of the British High Commissioner in Egypt and also copies of all the British Foreign Office correspondence with the High Commissioner.175
The repeated boasts of Soviet defectors – that they had access to restricted British codes or confidential information – could not be ignored indefinitely, especially as the security of the entire communications network would appear to have been breached. An internal inquiry was instigated within the Foreign Office, led by the Communications Department. We do not know what, if anything, the investigation uncovered or indeed who was in charge because the file no longer exists. All that remains is a line in the Foreign Office correspondence index that states that the department looked into Bessedovsky’s claims that India Office ciphers had been compromised. In fact, all official Communications Department files have been destroyed for the crucial period from 1927 to 1935.
So what, if anything, occurred in July 1929? With the British files from the period missing, we have to turn to Soviet sources, specifically the personal notes and memoirs of a key illegal and man of many identities, Dimitri Bystrolyotov. He and his associates filed reports with OGPU which now form part of the archives of its successor body, the KGB.176
Born in Akchora, Crimea in 1901, Bystrolyotov had a difficult childhood and was caught up in the growing turmoil of the revolution and civil war. He fled Russia in 1919 and ended up in Constantinople where he spent the next few years struggling to survive before moving on to Prague in January 1922. It was here that Bystrolyotov came to the attention of OGPU operatives, who recruited him into their ranks in 1925. He began work as a legal rezident as part of the Soviet Trade Mission in Prague. One of his tasks was to secure the codes of a western power. Soviet intelligence networks had been severely damaged since the ARCOS episode in 1927 and in the wake of similar raids around the world against covert operatives in Poland, Turkey, France, Lithuania, Switzerland, Austria and Japan. The lack of information helped fuel Stalin’s paranoia about enemy attacks against the Soviet Union and made him more determined to find out what was actually being discussed – hence the need for cipher codes to crack the traffic of messages flowing between governments and embassies.
The period from 1925 to 1936 saw the establishment of the network of operatives dubbed the Great Illegals – spymasters who established rezidentura in places such as Paris or Berlin and identified key targets who provided them with intelligence, either unwittingly or with complicity. These targets included people working for official organisations or institutions with access to useful information. Access could be achieved via exploiting a need for money, a shared political ideology or a weakness for sex. The role of the illegal was not only to gather intelligence from their targets but also after the early 1930s to establish ‘recruitments in place’ or double agents, such as the Cambridge spy ring in the UK. These would then carry on their work undetected by the establishment. Given the attempts to re-establish Anglo-Soviet relations, no rezidentura was initially set up in London but counter-intelligence activity continued, controlled from abroad and predominantly coordinated out of Berlin.
Since 1925, Bystrolyotov had developed a network of operatives in Prague and – despite being married – in his quest for codes he had been required to use his good looks and charms to seduce a young worker at the French embassy, Marie-Elaine Aucouturier, who had access to promising material. However, in the spring of 1930 he was suddenly transferred to the Berlin rezidentura headed by Boris Bazarov (codenamed KIN) and given his own codename, ANDREI, later changed to HANS. Bystrolyotov was provided with a false identity and passport, that of Greek businessman Alexander S Gallas from Salonika.
Bazarov controlled illegals in other countries as well, including England, and the role of his group was mainly to gather information on Anglo-German relations. However, there was a pressing case that Bazarov was dealing with – a mysterious man called ‘Charlie’ who had walked into the Soviet embassy in Paris in July the previous year, the same person that Bessedovsky had referred to as ‘Scott’. Bazarov was able to brief Bystrolyotov on what had happened, providing us with an insider’s account of the affair. According to Emil Draitser, Bystrolyotov’s biographer who interviewed him in 1973:
A modestly dressed short man, the cuffs of his jacket worn, paid a visit to the Soviet embassy in Paris and asked to see the military attaché.177
Second secretary Helfand was working in his office when a messenger told him that a stranger was asking to see a high official. Intrigued, Helfand asked the messenger to bring the man to him. The man walked in, speaking ‘poor French with a strong English accent’.
He introduced himself as Charlie, a typesetter in charge of printing copies of the deciphered British diplomatic despatches from around the world for distribution among the members of the British Foreign Office.178
Charlie was carrying a paper package under his arm which he placed on the desk in front of Helfand, asking if he wanted to inspect the contents. The package was placed on the table and unwrapped. It contained two books, one of which was bound in red buckram; they were entitled ‘Foreign Office ciphers’ and ‘Colonial and Dominions Office ciphers’.179 At this point, Charlie was instructed to leave the room so that Helfand could privately consult with his OGPU superiors, something that Charlie was incredibly reluctant to do without possession of the cipher books. Eventually, Charlie was ushered into a waiting room and Ianovitch was summoned by phone. He then took over the interview, albeit with a degree of suspicion fearing that the ‘walk-in’ was a trap. Charlie quickly set out his stall:
For a fee of £10,000, he offered to make an extra copy of these despatches for the Soviets. He made it clear that, if the deal went smoothly, he would also be willing to serve as a middleman in selling copies of the British diplomatic codes and ciphers.180
Initially Charlie had demanded £50,000, a phenomenal sum worth well over £2.75 million in today’s money, but £10,000 was still a substantial amount. It was noted at the time that Charlie wore a look of ‘last and utter desperation’,181 suggesting he faced some unimaginable financial crisis that had brought him to this desperate resolution. Nevertheless, he remained determined and was not in the least bit reckless. In fact, in his dealings with Ianovitch he displayed a clear knowledge of the way intelligence agencies worked within the diplomatic services:
Asked why he chose the Soviets as his potential customer, Charlie cited safety: in his view, unlike other embassies, the Soviet one was least likely to be infiltrated by British secret agents.182
Charlie was clearly more than a humble typesetter, something Ianovitch and his staff suspected when he made his one non-negotiable precondition to doing business: anonymity. Charlie said he would provide no further information for the Soviets if he suspected in the slightest that they were attempting to shadow him once he left. It seems clear that no transaction was agreed at that point; a further meeting was set up for the following month, again at the embassy in Paris, at which point Charlie would bring more material.
No attempt was made by Ianovitch to steal the codes that had been brought in by Charlie, despite Bessedovsky’s claims. Bessedovsky had, in fact, mixed up Charlie’s approach with events that had occurred exactly one year before in August 1928, when a short man with a red nose carrying a heavy briefcase had offered to sell Italian codes for 200,000 French francs. This was the occasion when Ianovitch deployed deception, taking the briefcase to the secure OGPU area within the embassy and passing the codes to his wife to photocopy. When this was complete, Ianovitch stormed back into the interview room and threw the c
ase at the visitor in feigned rage, claiming that the attempt was a deliberate act of provocation and threatening to call the police. The visitor left angry and empty-handed, and Ianovitch was hailed as a genius for obtaining the codes for free. He was awarded $1,000 as a bonus.183
No wonder Ianovitch was nervous about Charlie. One walk-in was fortunate, but two seemed highly suspicious. Nevertheless, Charlie returned and provided more samples of his codes, as well as a variety of diplomatic telegrams and correspondence which he claimed he secured through a source at the Foreign Office. He insisted that he was only the middleman, taking a cut of the money on behalf of someone higher up. Satisfied that Charlie was genuine, a price was agreed; an initial fee of $6,000 was paid for the first instalment, $5,000 for the second and thereafter $1,000 per month depending on the quality of information provided. Charlie was assigned the codename ARNO, and at first all went well. However, the flow of information soon became patchy, as it was dependent on Charlie’s ability to get to France to hand it over. Furthermore, the quality of material started to diminish, with much of the diplomatic correspondence of little use to the Soviets and seemingly picked at random. Charlie also prevaricated about the sale of diplomatic cipher codes. Given the potential value of Charlie as an intelligence asset, a decision was made by OGPU officials to track Charlie down and bring him under closer control, with the aim of facilitating less risky exchanges of documents away from the embassy in Paris and exerting greater leverage over the type of material that the Soviets needed. This required knowledge about who Charlie was and what he actually did. This operation was assigned to Bazarov in Berlin, which he passed to Bystrolyotov to undertake. In a briefing note Bazarov wrote:
