Spycatcher (45 page)

Hanging over everything from late 1963 onward, when Hollis made his trip to Washington, was the Mitchell case, and the fear that MI5 itself was deeply and currently penetrated at or near the summit, with the Secret Service apparently incapable of wrestling with the problem. The sacking of Arthur Martin only compounded American suspicions. They knew he was committed to hunting down Stalin's Englishmen wherever they were hiding, and to American eyes it seemed as if a public-school cabal had seen him off.

In mid-1965 matters came to a head. President Johnson commissioned a review of British security from the President's Foreign Intelligence Advisory Board (PFIAB), a committee of retired intelligence notables, bankers, industrialists, and politicians, formed to advise the President on improvements in national security. Two men were given the task of conducting this Top Secret review - Gordon Gray, a former Secretary of Defense under President Eisenhower, and Governor of North Carolina, and the, Secretary the PFIAB, Gerald Coyne, a former senior FBI officer who ran PFIAB for fifteen years.

Gray and Coyne came to London secretly in the summer of 1965 and began reviewing the Anglo-American intelligence relationship, and in particular the effectiveness of MI5. The work was delicate in the extreme. No one in British Intelligence was to be told that the review was even taking place. In any other country the review would be known by a cruder name - espionage. Most of Gray and Coyne's material was supplied by Cleveland Cram, the CIA officer in charge of liaison in London with MI5. Cram was a brilliant and levelheaded CIA officer who had served in London for many years, and knew the weaknesses of MI5 only too well. Cram brought Gray and Coyne into Leconfield House and MI6 headquarters on a number of occasions, introducing them merely as colleagues. At this time CIA officers of Cram's stature had open access to all British Intelligence establishments, and the subterfuge was easy to perform on us.

I first heard about the Gray and Coyne review when I visited Washington in 1965. Angleton briefed me on the contents of the finished report. I was thunderstruck - Gray and Coyne had produced a devastating critique of MI5. They cited the inadequate size of British Counterespionage, and said that many individually talented officers were betrayed by poor organization and lack of resources. The report was especially critical of the quality of leadership inside MI5, particularly that provided by Hollis and Cumming, then the head of Counterespionage. Gray and Coyne concluded that Hollis had evidently lost the confidence of his senior officers (which was true) as well as that of his peers in Whitehall, which was also true.

Angleton was thrilled by the report, and told me that it would form the basis of a new relationship between British and American counterintelligence. He told me that the CIA intended making a direct approach to Harold Wilson, along with the American Ambassador in London, David Bruce, to brief him on the findings.

"Everything'll change now," he said, "we're going to have a beefed-up CIA London station, and half those officers are going to work directly inside MI5. We'll have access to everything, and help you where we can."

Once I had heard about the Gray-Coyne report, I was in an invidious position. Angleton had briefed me in confidence, but I was duty-bound to report the existence of such a document, and the planned approach to Wilson. Angleton's ambitions were obvious: he wanted the CIA to swallow MI5 up whole, and use it as an Agency outstation. I returned to London and told Hollis and F.J. everything I knew. It was one of the few occasions when Hollis showed any visible sign of shock. He ordered a check of records, and within a few hours got confirmation that Gray and Coyne had indeed visited virtually every British Intelligence establishment without ever declaring their true purpose.

Later that afternoon I saw both men sweep out to a waiting car at the front of Leconfield House.

"Thank you for your help, Peter," said F.J. grimly. "Never can trust the bloody Americans to play it by the rules!" I thought this was a touch sanctimonious, but I judged it better to keep clear of the flak which was rapidly building. F.J. and Hollis were off to see the Foreign Secretary to protest at this blatant abuse of the UKUSA agreement, and there was no telling where the row might end.

Poor Cleve Cram was hauled over the coals. He opposed the approach to Wilson, yet Helms and Angleton insisted he begin sounding out George Wigg, Wilson's security adviser. But Hollis was in no mood for excuses. He had been humiliated in front of the entire intelligence establishment in London and Washington, and Cram was threatened with expulsion if there were any further transgressions. I saw Cram a few days later skulking around the fifth floor of Leconfield House. He looked a little sheepish.

"You nearly got me PNG'd," he said, smiling ruefully. He knew the CIA had been trying it on, and had been caught fair and square. The Gray-Coyne report was a terrible indictment of Hollis' tenure as Director-General of MI5, and he knew it. But the Americans, typically, had handled the affair with all the finesse of a bull in a china shop. The essence of their plan was well-meant - to provide the resources and manpower which MI5 lacked. Of course they had other motives. They wanted MI5 as a supplicant client, rather than as a well-disposed but independent ally.

Improvements did flow from the report. For the first time MI5 management conceded the need to drastically expand D Branch, and the old colonial appendages, like E Branch, withered on the vine.

Henceforth D Branch had first call on all resources. It was inevitable that new management would be sought for the revamped D Branch.

Alec MacDonald, a former colonial policeman, was brought in, and Malcolm Cumming, realizing that he would never become Deputy DG, opted for early retirement.

The other important initiative which flowed from the report was the recognition which followed that a mechanism was needed to secure closer cooperation between Western counterintelligence services. GCHQ and NSA had a formal exchange under the terms of the UKUSA agreement. MI6 and the CIA regularly exchanged foreign intelligence assessments via the Joint Intelligence Committee in London and the National Security Council in Washington. But counterintelligence was still basically ad hoc. Angleton and I had often discussed the value of creating a forum for the regular free exchange of counterintelligence. So much counterintelligence, particularly when it flowed from defectors, ranged across national borders, and access to each country's files was essential if the best progress was to be made. But Angleton was an autocratic man; he wanted to use the Gray-Coyne report to force a one-way flow. But finally he became converted to the virtues of a genuinely mutual forum and, at his urging, a conference of senior counterintelligence officers from the USA, Britain, Australia, Canada, and New Zealand was organized to take place roughly every eighteen months. The conferences were called CAZAB, and the first was held in Melbourne, Australia, in November 1967.

The Gray-Coyne report was not the only epitaph to Hollis' career. As he approached retirement, the shape of the FLUENCY conclusions became clear. The Working Party consisted of Terence Lecky and Geoffrey Hinton from MI6 Counterintelligence, as well as Arthur Martin when he was transferred over in mid-1965. The MI5 contingent was Patrick Stewart, Anne Orr-Ewing, and Evelyn McBarnet from D3, with me in the chair. The papers were circulated direct to the Director D, Alec MacDonald, and the head of Counterintelligence, Christopher Phillpotts. We met every Thursday in my office or a fifth-floor conference room at Leconfield House.

The mood was tense to begin with, each member aware of the awesome significance of the task at hand - to review in detail every single allegation which had ever been made about the penetration of British Intelligence. The first decision FLUENCY made was to change the approach to penetration which Arthur and I had adopted in the Mitchell case. In 1963, when we presented the case for penetration to Dick White, we relied heavily on analysis of the oddities and discrepancies in technical and double-agent cases, known in the jargon as "manifestations." FLUENCY decided to dispense with all manifestations. They were felt to be an overlay of specific allegations of penetration which had been made by defectors. These were the primary evidence, and we concentrated solely on them.

The first task was to collate the allegations. This was relatively straightforward, as much of the work had already been done during the Mitchell inquiry, and continued at my instigation as part of D3's overall program of research.

After six months' work we had compiled a large file, which contained the full list of allegations - over two hundred in all, some dating back to World War I. The allegations were then apportioned to various officers around the table. Those that came from Polish sources, like Goleniewski, were given to Terence Lecky. Evelyn McBarnet handled the old MI5 allegations, Patrick Stewart took the Golitsin material, and I looked at Krivitsky, Volkov, and VENONA.

Once the allegations were gathered we set about assessing them. We examined each allegation carefully, and made a decision about its validity - that is to say, whether we believed it to be true. In some cases, for instance, a defector might have said a spy existed in MI5 or MI6, but we were able to satisfy ourselves that they were mistaken.

Where we satisfied ourselves that an allegation was true, it was termed, in counterintelligence jargon, "a true bill." Then we checked whether each allegation had ever been attributed to a known spy, such as Philby, Burgess, or Blunt, and if it had, the attribution was reexamined to see if it was still valid in view of any intelligence which might subsequently have come to light.

Assessing allegations depended on the quality of our records, and we faced a major problem with MI6 archives. They were in a mess. Each of the Geographical Divisions and the Counterintelligence Department kept their own records. MI6 were producers of intelligence, not collaters of it, and little thought had been given to an effective system of record-keeping. Indeed, this was a principal reason why so many allegations were simply left unresolved, and one of the by-products of the FLUENCY inquiries was a general recognition of the need to improve the MI6 Registry. In 1967 Arthur finally left Counterintelligence to take over the MI6 Registry, where he made one last major contribution to British Intelligence by totally overhauling the system.

After thorough review, each of the two hundred allegations was placed in one of six categories:

1. the allegation was a true bill, and was definitely attributable to a known spy;
   

2. the allegation was a true bill, and was almost certainly attributable to a known spy;
   

3. the allegation was a true bill, but it was not possible to attribute it to a known spy;
   

4. it was not possible to ascertain whether the allegation was or was not a true bill, because there was insufficient information;
   

5. the allegation was doubted;
   

6. the allegation was not a true bill,
   i.e.
   rubbish.
   

   As Hollis approached retirement, FLUENCY began to uncover an entirely new picture of the history of the penetration of British Intelligence. Many allegations which previously had been attributed to known spies like Philby or Blunt were found on detailed inspection to have been wrongly attributed. Twenty-eight of the two hundred allegations we examined were in the all-important C category - they were true bills, but they pointed to as yet undiscovered spies.
   

   Of those twenty-eight, there were ten really important allegations, all of which related to MI5:
   

   1. Volkov's "Acting Head," dated September 1945;
      

   2. Gouzenko's "Elli," also dated September 1945;
      

   3. Skripkin's betrayal, dated 1946 (information came from Rastvorov in 1954);
      

   4. Goleniewski's "middling grade agent," dating from the mid-1950s;
      

   5. Golitsin's information about the Skripkin investigation, also dated 1946;
      

   6. Golitsin's information about the special safe in KGB headquarters to house material from British Intelligence;
      

   7. Golitsin's information about the index to files in KGB headquarters containing material from British Intelligence;
      

   8. Golitsin's information about the "Technics" Document;
      

   9. Golitsin's information about the special arrangements for protecting the Soviet colony in London; and
      

   10. Golitsin's information about the betrayal of Crabbe's diving mission.
       

Each of the Golitsin allegations dates from 1962-63.

The really startling thing about this list was the way it followed a clear chronological pattern from 1942 to 1963. The Golitsin material, although more recent, was not specific enough to point in the direction of any one officer, beyond the fact that it had clearly to be a high-level penetration to account for the allegations. But the first three serials, even though dated, transformed the FLUENCY work, and pointed in Hollis' direction for the first time.

- 19 -

Konstantin Volkov's list was the first serial which we investigated. This was already the subject of intensive D3 inquiries to trace the second of the two Foreign Office spies mentioned in the list. I decided to have the entire document retranslated by Geoffrey Sudbury, the GCHQ officer who ran the VENONA program. Sudbury was a fluent Russian speaker, but most important of all, from the VENONA program he was familiar with the kind of Russian Intelligence Service jargon in use at the time Volkov attempted to defect, whereas the British Embassy official in Turkey who made the original translation was not.

One entry in Volkov's list puzzled me in particular. In the original translation it referred to his knowledge of files and documents concerning very important Soviet agents in important establishments in London. "Judging by their cryptonyms, there are seven such agents, five in British Intelligence and two in the Foreign Office. I know, for instance, that one of these agents is fulfilling the duties of head of a department of British Counterintelligence."

When the case against Philby was first compiled in 1951, MI5 assumed that the last spy referred to by Volkov was Philby, who in 1945 was indeed fulfilling the duties of head of a department of MI6-Counterintelligence, responsible for Soviet counterintelligence. But I knew enough Russian from VENONA myself to see that there were two words in the Russian which did not appear in the original translation - the word OTDEL, which means "section," which was closely followed by the word UPRAVALENIE, meaning "directorate" or "senior division." In any case, there was no irresistible reason why this particular entry by Volkov had to be Philby. There were five spies in British Intelligence in all, and any of those could just as easily have been Philby.