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Paul Monk :Soviet Moles in Australia Really long and really interesting

Posted By Ruth King on June 11th, 2017

Breaking the Codes, by David Horner and Des Ball, twenty years ago, set out the evidence that there had been a KGB spy ring led by Walter Seddon Clayton in Australia in the 1940s. It was exposed by the Venona signals intercept program and had at least fourteen members. Ten of them were identified by name. Four—codenamed Former, Spirited, Glory and Grandson—were never identified. Venona material began to be released in 1995, but only a tiny fraction of the intercepted cables was ever decrypted. Even so, in the case of the United States, Venona disclosed the identities and activities of more than a hundred Americans working for Moscow and revealed the codenames of over a hundred others that American counter-intelligence never identified as long as the Cold War lasted. Post-Cold War disclosures, chiefly by defectors from the KGB, revealed scores of these people in the United States and elsewhere in the West, as John Earl Haynes, Harvey Klehr and Alexander Vassiliev pointed out in 2009 in Spies: The Rise and Fall of the KGB in America.

Strangely, Australia has remained largely a closed book when it comes to the history of Cold War espionage here. There are good reasons for believing that a GRU (Soviet military intelligence) ring was developed from 1943, by Viktor Zaitsev, who was sent here after supporting the famous Sorge ring in Tokyo and was later posted to Washington, which suggests he had done well in Canberra. But whatever Zaitsev accomplished here, before there was any ASIO to even attempt to keep his activities in check, has never been brought to light. Unlike the KGB, the GRU has never opened its archives. Zaitsev left Canberra in 1947, the security leaks from Canberra became acute in 1948, and ASIO was created in 1949 to stem the tide. But that very year, Venona was betrayed to Moscow by Kim Philby, then the MI6 liaison officer in Washington. The KGB codes were changed and the Venona intercepts dried up. Soviet espionage, however, did not dry up at all.

It is against this background that we need to inquire of the official history why the Australian authorities persist in keeping secret truths long known in Moscow, but withheld for decades from the Australian public—who are supposed to be protected by ASIO and who pay its bills. All those familiar with the history of Soviet Cold War espionage know that British, American, French, German and other allied intelligence services were penetrated by the Soviet bloc in the course of the Cold War. We know, also, that this did not end with the exposure by Venona of the Cambridge spies in the UK or Alger Hiss and many others in the United States. It continued right through the Cold War, with such moles as George Blake and Geoffrey Prime in the UK and Aldrich Ames and Robert Hanssen in the United States. We also discovered, after the end of the Cold War, that there had been many other Soviet moles in the West who had gone undiscovered and who remain undiscovered. What possible justification can there be, then, for the identities and treacheries of Soviet moles in Australia being kept secret after all this time?

There were suspicions within ASIO well before the Hope Royal Commission of 1974–77 that it had been penetrated by the KGB or the GRU. When, however, it was found, by Operation Liver and the Cook Report, in 1994, that this was true, the evidence was buried by the Keating government, never to see the light of day. Cook’s became the report no one is allowed to read. The official historians have both written and said that ASIO was, indeed, penetrated and by more than one mole, but no evidence has been produced to substantiate this: no names, no pack drill, as they say in the military. The denials have come to an end, but the obfuscation is tenaciously maintained. It’s time for all those who are actually serious about national security and intelligence, as well as about government accountability, budgetary allocations, freedom of information and the justifications for having a security intelligence service to insist that such obfuscation simply will not do.

The crucial chapter of the entire official history is the nineteenth and final chapter of Volume 3, “Looking for Moles”. Its opening statement about the problem provides a frame of reference:

Allegations of penetration—that the RIS might have placed moles within ASIO—have circulated for years. We now know, as a result of the 2014 public release of Vasili Mitrokhin’s KGB notebooks, that penetrating Australia’s intelligence agencies was one of the KGB’s objectives following the resumption of diplomatic relations between Australia and the Soviet Union in 1959. It now appears evident … that they succeeded, although in most instances, the fact of penetration during these years was revealed through information that only came to light after the Berlin Wall fell … While concern about penetration existed during the years covered by the first two volumes of this history, it was more acute in the period covered by this volume. This chapter examines how the question of penetration was dealt with inside ASIO during the Cold War.

A few textual nuances call for close attention here. First the reference to the “RIS” (Russian Intelligence Service), an acronym long used in the UK which obscures the difference between the KGB and the GRU. Margaret Thatcher informed the House of Commons in 1981 that the government did not believe Roger Hollis (whose career in MI5 lasted from 1938 until 1965, during the last decade of which he was Director General of the organisation) had been a KGB mole. Now it’s true that Hollis was not a KGB mole. There is a considerable possibility, however, that he was a GRU mole; despite the insistence by the authorised history of MI5 that he was not. The GRU, as we have seen, was active in Canberra from no later than 1943. And the KGB already had a substantial network by then. The official history somewhat oddly implies that only with the Mitrokhin revelations did it become clear that the KGB sought to penetrate Australia’s intelligence agencies. It should have been assumed from the start that this would be one of their priorities.

We are told, moreover, that “it now appears that they succeeded”. It now appears? This is a rather curious locution for the official historians to use. Do they know or not? John Blaxland declared to Andrew Bolt on air that he had read all the reports that named specific individuals as moles; that it was all really “quite shocking” and that it would be “hard to quantify the devastation”. Yet the official history simply states that it now appears that the KGB succeeded; there is no word about the GRU. The official history says that “in most instances” the fact of penetration only became clear after the fall of the Berlin Wall. Does this pertain to the moles themselves or the pieces of evidence pointing to them? Blaxland told Bolt there were multiple moles and that the official historians know who they were. Yet none of the evidence and none of the names are disclosed in the three-volume official history. This is, itself, quite shocking.

The history states that concern about penetration existed from very early on, but was “more acute” between 1975 and 1989. A possible reason for this is that by 1975 the anomalies in tradecraft failures and the lack of defections had been going on for a generation and, for that reason, the pattern had become increasingly troubling. Were there more or greater anomalies after 1975 than before, or was it simply that from about 1975 growing concerns were being expressed, without any resolution being reached? Either way, although the official history does not enlighten us on the matter, the reality is that there may have been either KGB or GRU penetration of ASIO well before 1975, with the effects becoming all but undeniable after that time—but not pinned down until the game was all over. Our side won the game; next time, it might not. Right now, the danger of hostile penetration is acute on several fronts. We need reassurance that we have nailed the history of the problem, and evidence that we are on guard against the danger in the new era. The official history provides neither of these things.

The vulnerability of ASIO during the Cold War years seems to have been due to a strange general complacency about penetration. This mirrored the complacency in the UK of the 1930s and 1940s, which had made large-scale Soviet penetration so easy. Betrayal of the intelligence services from within was dismissed as inconceivable, despite the abundant evidence by the early 1960s that it had been occurring. ASIO’s counter-intelligence function, never robust, was even more severely eroded by the mid-1970s. As Blaxland and Crawley express it:

At its peak, in 1969, D5 had nine staff, but it had shrunk to only three people by 1974. By the mid-1970s, ASIO’s counter-intelligence capabilities were so poor, despite the continuing efforts of some judicious officers, that they were almost non-existent.

This was the environment in which Molly Sasson, whose memoir More Cloak than Dagger was published in 2015, worked from 1969 until 1982. She suspected penetration of ASIO throughout this period. She was not interviewed for the official history. The official historians say that, as far as D5 and its bureaucratic and political masters were concerned, “there was no evidence that any hostile intelligence service had ever succeeded”. Given, however, that the function was almost non-existent, how could it evaluate any such evidence effectively?

Without supplying a cohesive narrative of the development of suspicions after 1975, the official historians then add:

the implication of a breach in ASIO’s classified communications networks was severe and could explain the failure of many operations. At the same time, the notion that the Soviets were intercepting ASIO’s telephone and telex services was less sinister; and therefore less uncomfortable, than another possibility: that a mole or moles inside ASIO was revealing secrets to the Soviet Union and betraying ASIO and the Australian people.

We are not told what operations failed, or even when they occurred. Nor are we told what investigations were made into those failures. The reason for a Royal Commission being set up in 1974, however, was that there were concerns about a long string of inexplicable failures. When did they date from? The official historians do not tell us. What they do tell us is that Justice Hope, “in the top secret supplement to his fourth report”, raised the possibility that there might be a Soviet mole inside ASIO, while remarking that his Royal Commission on Intelligence and Security was not a suitable vehicle for a counter-intelligence investigation and did not have the resources for it. This was seventeen years before the Cook Report. In between, no investigation would be given the necessary resources. Yet ASIO, it is now clear, was penetrated throughout that entire period.

Charles Spry had expressed concerns about the staff at ASIO from the time he took over in the winter of 1950, just months before the defection of Burgess and Maclean in England would set off alarm bells across the Western world. Given that the Venona discoveries and the disclosure of the Clayton KGB ring were fresh at that point, one might have expected a thorough process to ensure that the new organisation was not penetrated. There wasn’t one. Spry ran ASIO until 1969 and by then, it would seem, the damage was already done. As the official historians observe:

ASIO had achieved no significant counter-espionage victory since Petrov’s defection in the mid-1950s. Hope saw the Skripov expulsion of 1963 as “at best only a partial success” and subsequent operations had appeared to have run to sudden and inexplicable conclusions.

Hope found that there was “no real counter-penetration capacity within ASIO and no operations review mechanism to look for signs of betrayal on operations”. He was referring to the 1960s, chiefly, not just the mid or late 1970s. Kim Philby had fled to Moscow from Beirut in 1963, confirming that he had been a KGB mole at MI6 for many years. George Blake had escaped from Wormwood Scrubs and fled to Moscow in 1966, dramatising yet again how deeply British intelligence had been penetrated. It is stunning to realise that, despite all these warnings, ASIO left itself defenceless against penetration by Soviet moles right through into the 1970s.

Concerned ASIO officers had approached the Royal Commission and named names in the organisation, including senior figures, at risk to their own careers. When Edward Woodward was appointed, in the wake of the Royal Commission, to head ASIO, he established, the official historians tell us, “an internal investigation that attempted to make sense of these vague and sometimes contradictory leads”. It did not pursue this task with any vigour or determination and the result was a failure to solve the problem. Woodward, however, concluded and stated in his own memoir that there was no evidence of penetration. Had there been a mole, he claimed, the operation against Valeriy Ivanov, in 1983, would not have been possible. He did, however, express the opinion that there was a highly placed Soviet mole somewhere in the Commonwealth public service. He thought this because he had learned that KGB officer Gerontiy Pavlovich Lazovik, who had been based at the Soviet embassy in Canberra from 1971 to 1977, had been decorated for recruiting a well-placed mole while there.

We need to pause at this point. Suspicions that there was at least one mole in ASIO went back before the time Lazovik arrived in Canberra. The official historians now tell us that they know there were multiple moles in ASIO, but they do not tell us who they were, when they entered the organisation, how long they were at work, which Soviet intelligence service they worked for, what damage they did or how they were finally discovered. After his return to Moscow, Lazovik was decorated with the prestigious Order of the Red Star for recruiting an Australian intelligence officer. There is no reason to assume that this putative intelligence officer was the first such recruit. What the official historians disclose is that when, in 1980, ASIO decided to examine the period from 1971 to 1977 to see what they could discern about Lazovik’s work, they found that nineteen files in the Canberra office bearing on Lazovik’s activities had been destroyed in February of that year without explanation. Not only was the counter-intelligence capability (D5), very weak; there was also a serious lack of internal security regarding files and records.

In 1980, ASIO headquarters was still in Melbourne. The Lazovik files had been in the Canberra office. Lazovik had been based in Canberra. The official historians do not tell us whether one or more of the moles was at the Melbourne headquarters, or whether they were in Canberra. But if the Lazovik files were filleted in February 1980 at the Canberra office, either someone at that office did it, or someone visited from Melbourne and did it. The official history does not provide any information as to who might have had such access at that precise time. If, however, they now know the names of the moles, it should be reasonably easy to establish whether, when and how one of them deleted nineteen volumes of records in February 1980 to cover Lazovik’s traces. But moles in ASIO were not the only obstacle to the organisation doing its job in the 1970s. Lionel Murphy, as Attorney-General for the Whitlam government, forbade ASIO to conduct telephone intercepts against the Soviet embassy between 1972 and 1974. It was almost certainly during this precise period that Lazovik recruited the mole or moles for which he was decorated on his return to Moscow.

Over the course of a year, to February 1981, ASIO searched in its ranks for Lazovik’s mole, despite the huge gaps in its own operational records. Suspicion fell on more than one officer, but no conclusive evidence was found and the judgment was finally reached that Lazovik’s mole was not in ASIO, but somewhere else in the Commonwealth public service. Under Woodward’s direction, there was then “a series of investigations” into “senior officials in a range of Federal Government departments, particularly those who had been identified as having had contact with Soviet officials”. In no case were the investigations able to establish or willing to assert that they had found the mole in question. But of course the lack of the Lazovik files must severely have hampered the investigations in question. Immediately after the finding, however, Brian Toohey published an exposé in the National Times declaring that a top CIA source had claimed the KGB had a mole in a key government position in Canberra. If Toohey was correct, ASIO had failed to find a plausible suspect.

At a telling point, based on knowledge of who the moles turned out to be, the official historians comment:

In hindsight, it seems that the difficult questions were often avoided or not considered. Explanations were settled on, such as indiscreet agents, with no evidence, and these were accepted over the more sinister possibility that a mole was busy undermining ASIO’s efforts. All the while, as later intelligence would suggest, a number of moles were left to continue their treachery.

The wording here warrants close attention. Later intelligence would “suggest” that “a number of moles” were at work within ASIO as of 1981. What exactly that intelligence was or is, the official historians do not disclose. How many moles exactly, other than that there was more than one, they do not disclose. How the conclusions in this matter were reached after so many years of inconclusive investigations they do not disclose. This is not exactly the forensic history one would hope for from those with apparent access to the relevant records. Moreover, every footnote that has to do with those records reads simply “ASIO Records”, without any indication about the nature of the filing system, the identity of documents, or the dating or authorship of them.

Harvey Barnett took over from Woodward and is described officially as having harboured both a deep suspicion that ASIO had been penetrated and anxiety about its still lax communications security. Yet, the official historians tell us, ASIO “had run down all reasonable and some very unlikely leads and found nothing to justify concentration on any one case”. There is not a word about how this was done or what cases were considered. Then, in 1988, just as the Cold War was ending, ASIO learned from the KGB defector Oleg Gordievsky that Lazovik’s recruit had almost certainly been in ASIO and that “the next two KGB residents, Gennady Petrovich Nayanov and Lev Koshlyakov, had also had successful tours of Australia”. Koshlyakov had worked in Australia from 1978 to 1984 and is understood to have been “one of the most dangerous KGB officers ever posted to Australia”. The unstated implication of the passage about Lazovik, Koshlyakov and Nayanov is that they might all have recruited moles between 1971 and 1989. Perhaps they did. But that still leaves unanswered questions about the 1950s and 1960s. All that the first two volumes of the official history related was that no moles were found during that period. But then none were found during the 1970s or 1980s either—only in the early 1990s.

In May 2016, Paul Dibb spoke out about having been an undercover agent for ASIO throughout much of his career in what was then called the Joint Intelligence Organisation. He expressed annoyance at the fact that innuendo had surrounded him for decades and claimed that he had been “cleared” by the Cook Report. This was a striking story in a number of ways. Dibb stated that he had approached the Soviet embassy in 1965 as a young geographer, been photographed by ASIO and then recruited by ASIO’s Deputy Director, no less, to cultivate Soviet embassy officials and try to both identify intelligence officers and open lines for possible defections. By his own account, he performed this role for twenty-one years, even as he rose through the ranks of JIO and completed the famous Dibb Review of Australian Defence Strategy for the Hawke government in the mid-1980s. He became closely acquainted with both Gerontiy Lazovik and Lev Koshlyakov. There is a story to tell here. Yet neither the second nor the third volume of the official history has so much as an entry in its index under “Dibb, Paul”. All too secret, it seems.

The final sections of the final chapter of the official history, “Revelations after the end of the Cold War” and “Reflections”, fail us all in not disclosing the internal evidence from Operation Liver and the Cook Report, which finally convinced the Australian government that ASIO had been penetrated by multiple moles. Instead, it quotes the ABC, Oleg Kalugin (a former senior KGB officer), the bungled prosecution of George Sadil in 1993, the Mitrokhin archive, the commissioning of the Cook Report by Paul Keating, my writings on the subject and those of Cameron Stewart at the Australian. Given that John Blaxland has claimed he knows who the moles were and that the damage they did was “devastating”, there then comes an almost inexplicably lame remark:

The combination of evidence suggests there could have been other moles within ASIO. Some former officers interviewed for this history even went so far as to name the officers. They, like everybody else, could offer no corroborating evidence for their accusations, but in some cases there were strong circumstantial indicators.

Those without access to the classified records certainly could not offer corroborating evidence for their “accusations”, but the official historians and ASIO apparently could have done so—and have not. They cannot have it both ways: claiming they know who the moles were and then stating that “the combination of evidence suggests there could have been other moles”. This evasion at the last hurdle is inexcusable. The very least we were entitled to expect was a forthright statement that moles were found and retired without being prosecuted and some semblance of an explanation as to why they have neither been named nor prosecuted after all these years.

Somewhat belatedly and equivocally, the official historians settle for statements such as, “The question remains over the whole issue of penetration and whether the veil of secrecy needs to be maintained” and “secrecy for secrecy’s sake can on occasion prove counterproductive”. Yet they then refer in their final paragraph explicitly to the cases of Aldrich Ames and Robert Hanssen—“men who compromised American intelligence operations and whose actions led to the deaths of scores of Soviet agents who were prepared to risk their lives collaborating with Western intelligence agencies. The question remains: how extensive was the betrayal and how extensive was the damage?” If there was one overriding task for an official history of any real weight and credibility it was to answer this very question. Yet instead of beginning with it and answering it, the whole bulky and expensive undertaking ends with it suspended in mid-air. Ames and Hanssen were active in the 1980s. Both are now publicly shamed and behind bars. The moles who operated in ASIO in the 1980s are living in quiet retirement. The official historians tell us they know who they were, but our own government will not permit them to tell us. Why?

Some five years ago, I put that question to Michael Cook himself. He responded by e-mail:

All I can say is that not Keating nor anybody else told me or even suggested to me that I give my report a high security classification.  That I decided on my own for what I thought, and still think, were good reasons, which is why … as you correctly recall, I would not do as you asked.

Asked what the reasons were, he declined to disclose them. Given that the official history has now both admitted the existence of the Cook Report and the existence of multiple moles inside ASIO, we might reasonably speculate about those reasons. The first might be that the Keating government did not want another ASIO scandal in the tradition of the Petrov affair, the Skripov affair or the Combe–Ivanov affair and just wanted to clean out ASIO and move on. It therefore suppressed truths that the public have a right to know. But if that was the reason, the end of the Keating government in 1996 might have led the Howard government to release the Cook Report. It did no such thing. There had, therefore, to be other reasons for the matter being kept under bipartisan wraps. What might they be?

The most plausible is that the prosecution of George Sadil, in 1993, for serving the KGB inside ASIO had been a shambles. Perhaps it was feared, even by the Howard government, that if several more moles were charged, the legal proceedings and the media circus surrounding them could turn into a major debacle. Spies like Burgess, Maclean and Philby had fled to Moscow, making clear that they were traitors. Ames and Hanssen were caught red-handed and were in no position to deny their guilt. The moles in ASIO had only very belatedly been detected and perhaps on evidence that was compelling from a counter-espionage point of view, but not necessarily from a legal point of view.

Besides, bringing the most important evidence into court might risk disclosing many things that the ASIO of the mid-1990s and successive governments thereafter did not wish to expose to the light of day. Finally, the trial of three or four long-term moles, whose work had gone undetected for so long, would run the risk of utterly discrediting ASIO in the eyes of both the public and potential future recruits. So the report was buried as deeply as, for example, the Codd Report of the same period on paedophile rings in DFAT. Some things are just so damning that those in positions of trust and authority will often recoil from allowing them to see the light of day. There appears to have been a bipartisan consensus in Canberra now for a generation that the truth in both these dark cases should be suppressed. It is very troubling that this should be possible.

But not everyone thinks it even matters. In November last year, Brian Toohey, who has written on intelligence affairs for many years, wrote a review of the final volume of the official history of ASIO in which he made the claim that not only had it produced no evidence that there had ever been Soviet moles in ASIO, but that there was no good reason to go looking for moles in the first place. He went so far as to praise Dennis Richardson, who was Director-General of ASIO between 1996 and 2005, for all but shutting down the counter-intelligence arm of ASIO, in order to transfer resources to counter-terrorism. This is a rather strange attitude. The first part of his claim is only possible, however, because ASIO refused to allow the official historians to provide the evidence or reveal the names of the moles. The second part of Toohey’s claim would appear to suggest that it doesn’t matter if our intelligence and other state agencies are penetrated, so we shouldn’t bother trying to prevent such penetration to begin with.

One might retort that the damage done by traitors and spies elsewhere is well known. The only way to resolve the debate Toohey seems to want to have about spying in this country would be to set the record straight by releasing the Cook Report and showing what actually happened throughout the Cold War. The official history has failed to do that—at the insistence of ASIO. Toohey thinks it doesn’t matter. Those who take national security and intelligence seriously will disagree with him and find his attitude baffling. The irony, of course, is that those who disagree with Toohey on this matter are those with the most good will towards ASIO. They want to feel sure that it has been put in order and can do its job. For as long as it insists on protecting its “reputation” from the truth and muzzles even the official historians, it angers and disconcerts those whose trust it most needs. It allows them to deduce that in some strange way it shares the outlook of Toohey and others like him. But in that case it isn’t clear that ASIO need exist at all.

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