by Nick Barratt
Chapter twelve
COVER UP (1933–1974)
Not long before he committed suicide Oldham refused to get them any more information, but the OGPU brought great pressure to bear upon him to get the full names and descriptions of his associates in order that one could be picked and tried to carry on Oldham’s work for them.
NOTES MADE BY MI5 OFFICER JANE ARCHER DURING AN INTERVIEW WITH SOVIET DEFECTOR WALTER KRIVITSKY, 1940
Oldham’s MI5 file shows that once the HOW was suspended on 3 October, it was deemed pointless to continue further monitoring of overseas phone calls to the Jules Hotel, so these ceased on 4 October. A week later, Harker spoke to Norton at the Foreign Office who confirmed that no further action should be taken, and as far as MI5 was concerned the case was closed. However, within the Foreign Office the fallout had only just begun.
An internal investigation into Oldham’s activities was launched, though the entire episode is now shrouded in secrecy since no files from the Communications Department were selected for permanent retention during the period 1927 to 1935. The day books of the Foreign Office, where a range of activities were recorded, are equally silent on both the original break-in, as already discussed, but equally there is no hint of any extraordinary activity throughout the summer and autumn of 1933.
The clearest indication of the seriousness with which Oldham’s break-in was treated can be found from the order given on 26 July 1933 to change ‘the locks and keys of a considerable number of presses in which highly confidential documents are kept in the Foreign Office within the shortest possible period.’341 The Chief Clerk, Howard Smith, found it prudent to provide only a verbal update to the Director of Printing and Binding about the ‘circumstances which render necessary the alteration of the locks’. However, it is astonishing to learn that the process was still underway in December, with no end in sight:
I have spoken to Moore and it is clear that although good progress has been made with the changing of the locks of the FO [Foreign Office] boxes, it would be impossible to finish this work, still less to deal with the boxes of the cabinet offices, which also have to be changed, before the end of December. If Moore is left alone with this work it will mean that the old lock will remain in use much longer than is desirable. I have therefore written to Mr Todd, the director of printing and binding at the Stationery Office, asking him to agree that the second locksmith will be retained until the end of March next.342
A handwritten note indicated that this topic should be brought up again on 26 March 1934 – a full seven months after the original incident. Other files suggest that there were further discussions about Foreign Office security from July to October, but even the descriptions of the file content were deemed too sensitive to commit to print.
Clearly, the Foreign Office suspected that some of its confidential material had been compromised; but equally, because of the sensitive nature of some of the diplomatic correspondence and files in its possession, it did not want external bodies such as MI5 or SIS involved until it had ascertained exactly what had happened. This was why the remainder of the investigation into Oldham’s activities took place behind closed doors, with the primary attention shifting to the source of his money throughout 1932 and 1933. Equally, the Hungarian Count Joseph Perelly was also a subject of great interest.
As a result, Oldham’s wife – with whom he had clearly travelled abroad throughout this period – came under intense pressure to reveal what she knew, although the Foreign Office worked through the family’s solicitors, Walbrook and Hosken. Kemp had previously contacted Angus Walbrook on 16 August in the presence of Harker, Cotesworth and Lee to ask about Oldham’s address and shortly after Oldham’s death it seems as though he was approached once again, this time with the request that he should compile a complete list of Oldham’s financial transactions based on the paperwork in his possession.343
To cover up the fact that the real nature of the inquiry related to the potential leak of confidential Foreign Office material to an overseas power, the reason given to Walbrook was that Oldham was one of a number of employees suspected of being involved with drugs smuggling. This was a complete fabrication, but the threat of subsequent police action was sufficiently convincing to elicit the support of the solicitor. He was asked specifically to look for any connections Oldham might have had with Germany; this was probably a result of the misinformation that Bystrolyotov had fed Kemp during the meeting with Lucy on 19 July. However, the changing international situation also played a part. On 16 October, Germany announced its intentions to withdraw from the League of Nations, amid growing fears about Hitler’s plans to expand his country’s military capability. No doubt the Oldhams’ cover story also helped add further credibility to the idea that Oldham was involved with the Germans, given that Lucy’s son had indeed spent long periods of time near Bonn, as well as the recorded occasions when the couple had flown to Berlin. However, it would seem as though her familial links to Germany remained undetected and therefore not investigated.
Walbrook duly explained the situation to Lucy and asked for her assistance, but she informed him that she knew nothing about any German connection, other than the fact that Da Vinci (Bazarov) was the man who bought any material that Oldham might have procured. She considered him to be an ‘evil man’ who had subverted both her husband as well as her ‘Hungarian count’. Walbrook clearly understood the seriousness of the situation and pressed her to reveal any details of Perelly’s whereabouts since he was the link to the Germans that had dragged Oldham ‘into some dirty business’.344 It appears that the Foreign Office claimed to have evidence that Oldham’s disappearance at the end of July was to take part in ‘a wild binge with prostitutes’ in Vienna and Berlin – a ploy intended to enrage her into a confession. However, Lucy was not fooled, and continued to claim that she knew nothing more, insistent that Perelly was of no help with the inquiries because he had merely acted as the go-between for the transactions between Oldham and Da Vinci. This was clearly disingenuous, but Lucy’s role in the whole affair is somewhat shaded in mystery. If she had instigated Oldham’s first approach to the Soviets in 1929, as Bystrolyotov believed, then her apparent lack of knowledge at key stages shows a remarkable ability to feign ignorance or innocence about the depth of her husband’s activities and throw her inquirers off the scent. This was one such example.
However, the questions would not go away and where Walbrook failed, Kemp once again turned his hand to some investigative work. First, he visited Lucy in her new accommodation, asking after her health following the death of her husband, as any concerned family friend would. However, during the conversation he tried to subtly direct her towards the whereabouts of her friend Count Perelly, who had failed to make their meeting on 20 July. Not surprisingly, Lucy refused to cooperate, at which point Kemp lost his temper and started to threaten her, accusing her of being complicit in her husband’s activities and suggesting that she too was facing arrest.
In his anger, Kemp revealed details of the investigation, including the extent of the intercepted letters and phone calls and repeated the now standard line that Oldham had been a smuggler and a spy. At this point, Lucy seems to have provided more information about Oldham’s activities, but not enough to shatter the belief that Germans, rather than any other foreign powers, were involved. To the very end, she clung to her story that she had lost contact with Count Perelly and therefore could not say where he was. Once again, Lucy was lying. She had continued to write to Bystrolyotov throughout the ongoing investigation.
Whether Kemp’s involvement was officially sanctioned or not is unclear. Indeed, it may well be that his questioning and threats were actually self-interest at work, as Kemp and other officials associated with Oldham, such as Raymond Oake, were interrogated by their superiors within the Foreign Office. According to Lucy, they were equally responsible for ‘suggesting that she should be arrested as an accomplice’.345
However, the lack of concrete information made it impossibl
e to progress the matter further and, in any case, it was decided at the very top that further digging might prove incredibly embarrassing for the Foreign Office in general and its head, Sir Robert Vanstittart, in particular. For example, there are no references made to the incident in his personal notes, perhaps unsurprisingly, given he had the most to lose from any revelations of lax security. In Kemp’s humble opinion, as he revealed to Lucy once he’d calmed down somewhat, security breaches of this seriousness were extremely rare, and nothing comparable to the gravity of Oldham’s activities had taken place in the last 300 years. It was exactly that sort of complacent attitude towards Foreign Office security that had allowed Oldham to carry on undetected for as long as he had.346
With the British sources silent, we only know how the Foreign Office handled the case thanks to Lucy’s contact with Bystrolyotov. When the dust had settled, she told her friends and acquaintances in Kensington that she needed a break and then flew to Vienna where she made arrangements to meet Bystrolyotov. He first checked to see whether she was being followed, but with MI5 out of the equation, the reach of the Foreign Office was restricted to passport control and SIS and neither had been involved in the internal investigation.
Lucy’s meeting with Bystrolyotov was significant for several reasons. For the Soviets, Lucy was able to provide an insider’s knowledge about the state of the Foreign Office investigation, as well as confirming that by December interest in Oldham was starting to abate. However, it was clearly too risky for Bystrolyotov to return to London any time soon. He commented:
Only in English novels does everything go smoothly for the intelligence services, all ends meet and the Tower of London mercilessly swallows those who have touched upon the secrets of the British empire. I accept that I could have ended up in the Tower, but only if Vansittart had been willing to wash his dirty linen in public and the matter had been entrusted to anyone other than ROLAND.347
Equally, OGPU were satisfied that Lucy had not jeopardised Bystrolyotov’s whereabouts or identity, as she still believed in the Perelly fiction. It was decided that she remained a potentially useful asset, particularly if an attempt was to be made to re-establish another line of communication into the heart of British diplomacy. An offer of money was put to the ‘desperate, ageing lady’.348 Officially, the reason provided by the Soviets was that it was ‘to save her and her children’ – Lucy claimed that she was about to turn to prostitution because of the financial hardship she was facing, a refrain she’d used previously with Bystrolyotov. She accepted the offer ‘with tears of ecstatic gratitude’.349 In reality, it was as much to ensure she did not turn against them at a future date as for the hope of any further information about the Foreign Office.
This money was indeed important to Lucy, as Oldham’s estate was finally wound up. On 30 November 1933, a letter had been sent to the Foreign Office from CF Cassella and Company Limited, inquiring after Oldham’s address – doubtless another creditor chasing an unpaid bill. They specialised in making scientific instruments, particularly magnification devices and telescopes – possibly an item commissioned by Oldham to help him with his espionage activities or simply a hobby; we do not know.350 However, claims such as this drained away the value of Oldham’s meagre financial assets.
On 27 July 1934, Lucy was granted a letter of administration for his estate – no will could be found – and on 27 August, Walbrook and Hoskens submitted a notice to the London Gazette, published four days later, alerting anyone with an outstanding claim to make against the estate that they should put it in writing by 8 November ‘by which date the assets of the said deceased will be distributed, having regard only to the claims then notified’.351 This would not have taken long. The gross value of Oldham’s estate was estimated to be £3,600 – probably the sale value of 31 Pembroke Gardens – whereas the net value of his personal estate was ‘nil’.
Yet in many ways 1934 marked the beginning of the Oldham affair. The Foreign Office wished to turn their disgraced official into the forgotten spy and sweep the whole sordid episode under the carpet for many reasons – embarrassment about the break-in, ignorance about what he’d actually done and a flawed assumption about the people he was working with – but it was a catastrophic mistake. At a diplomatic level, the Soviet Union was able to capitalise on the departure of Germany from the League of Nations and was finally admitted on 18 September 1934, a recognition that Soviet cooperation might be needed to counter the threat of Nazi Germany under Hitler.
In this respect, Oldham’s activities in 1932 were crucial and later revelations were to show that Moscow relied upon shelves of British material and deciphered communications, neatly filed, to help form its diplomatic stance when dealing with the other European powers throughout the 1930s. To continue exerting a diplomatic influence, after so many years of exclusion and isolation, required greater access to confidential information rather than less. It is in this context that Oldham’s activities need to be seen and it is with this background that he was afforded such significance by OGPU, despite the inherent problems associated with running him. The loss of access to the innermost secrets of the Foreign Office was a major blow to Moscow, so it is no surprise that Bystrolyotov’s attention shifted towards succession planning.
Before he died, Oldham revealed the names of several of his colleagues whom he deemed most suitable to approach for similar activities to his own. Two candidates were immediately identified as having the greatest potential, one of whom was part of the British delegation to the League of Nations in Geneva. However, this posed a problem. Bystrolyotov was still wary that British officials might be on high alert after Oldham’s suicide and recognise him, so he turned once again to his associate, Dutch artist Henri Pieck, to assist with the recruitment.
The process seems to have begun early in 1933, when Pieck was installed at the Hôtel Beau Rivage in Geneva. Under Bystrolyotov’s guidance, Pieck attempted to cultivate friendships with British delegates working at the League of Nations, mainly through conversations struck up at the Brasserie Universal. The first target was a man given the codename BOY, whose real identity has never been established. He seemed an unlikely candidate as he was ‘overly prim, [and] he treated every person who approached him during social interactions with icy cold politeness’.352 Indeed, he was soon abandoned for easier prey.
Next on the list was a more likely target, codenamed SHELLEY – a man permanently short of money, mainly through his extravagant lifestyle which had compromised his chances of marrying Enid, the step-daughter of the principal passport control officer in Geneva, Captain John Harvey (codenamed NORA and CHIEF respectively). He was also none other than Oldham’s close associate in the Foreign Office – Raymond Oake, whom Oldham had contacted in August 1933 from the Jules Hotel. Pieck had already ingratiated himself with Harvey, to the point where Harvey felt comfortable telling him confidential information about senior government figures. This was a useful way to gain access to Oake via NORA. Pieck quickly came to the same conclusion as Oldham (and indeed the British authorities, judging by the notes on file), namely that Oake was a wastrel who was only one step ahead of the money lenders. Oake was a poorly paid temporary clerk, so would not have a pension to look forward to when his employment came to an end. This made him doubly vulnerable to financial temptation, and thus an important potential recruit.
Given the recent furore around Oldham’s activities, it is astonishing that Oake and his associates – other unidentified colleagues within the Foreign Office given the codenames TOMMY and TED – permitted Pieck access to confidential material. One evening after dinner, Pieck followed Oake and TOMMY back to the consulate and watched on as they scrutinised the latest telegrams. Pieck had also been invited to visit them in the Foreign Office when he was next in London, where they would show him Room 22 and then go for a drink in the nearby pub – something that actually transpired on Christmas Day 1933. Pieck observed Oake open a combination lock safe and examine the contents. On discovering that Oake had alre
ady spent his December wage packet on drink, Pieck immediately volunteered to lend him sufficient money to cover some cheques Oake had issued, thus creating the foundations for financial dependency.353
Pieck exerted greater influence over Oake throughout 1934, inviting him to spend a week with Pieck and his wife in Geneva in March – where he offered to help alleviate some of his monetary worries. Posing as an intermediary for a Dutch bank interested in the British perspective on the economic climate, Pieck wondered if Oake would like to earn a little extra money by obtaining information for him to pass on, including some political material. Oake agreed.
Although his first deliveries in April were of little use and he was unwilling to provide original materials to Pieck for copying, by the summer he was ‘processing serious secret correspondence’. This did not last; by July he was getting cold feet and in August refused to provide any further packages, claiming that ‘I don’t want to go to prison just before the wedding’.354 Yet with his financial situation still rocky and the wedding on the horizon, Oake agreed to reconsider. He tentatively mentioned to his future father-in-law that he was acting part-time for an intermediary representing a bank, which Harvey thought was a good idea. Yet still Oake failed to bring anything of use to Pieck, partly because he was unable to gain access to relevant material. Some of the difficulties Oake faced in obtaining information can be discerned in a report that Bystrolyotov sent back to Moscow via Theodor Mally in October 1934:
SHELLEY’s potential remains unknown. He sits in a room with 20 other officials, at a table at which sit four others. Only a small part of the correspondence passes through his hands which he cannot copy on the spot. He must look for material in other rooms, in which he has no official business. Whether this is a consequence of measures taken after the ARNO case is not known. SHELLEY carefully conceals all details regarding his work so it is extremely difficult to give him guidance. Maybe the fear he expressed in July was of his having been caught somewhere he was not supposed to be.355
