Spycatcher (56 page)

As soon as the Lyalin case began we realized that this was the best possible test as to whether high-level penetration of MI5 still existed. If Lyalin survived we were in the clear. From 1966 until at least 1976 we had no evidence of Russian interference with our operations. We had five spy cases, and the Lyalin case and the expulsion of the 105 Russian diplomats, both of which had been in existence for at least six months. Yet up to the end of 1965, every case for twenty years or more was tainted by Russian "sticky fingers." We should note that Hollis retired at the end of 1965. The secret was known to only ten people, and to no one outside the office apart from Dennis Greenhill, Permanent Secretary at the Foreign Office. Greenhill was a good friend of MI5, and I enjoyed especially warm relations with him. He too had been to Bishop's Stortford College, along with Dick White and me. I first dealt with him over the French STOCKADE operation, but we began to have much more to do with each other when I took over D3, and routinely provided security briefings for his senior diplomats.

Lyalin soon began to exhibit the strain of leading a double life. Brookes and Wharton arranged safe houses where he could meet his girlfriend for love sessions. The arrangements for these visits were laborious, and each time one or the other had to sit outside the room monitoring events inside for telltale signs of stress or betrayal.

Lyalin began to drink too heavily, and when he was posted back to Moscow we decided to bring his ordeal to an end. Lyalin himself was quite game to return to Russia and continue to spy in place, but we had already concluded that he would never survive. Lyalin was attached to the Trade Delegation but had no diplomatic immunity, so we decided that we would simply arrest him as he walked through customs at Heathrow Airport, and force his hand.

Almost immediately our plans fell apart. I was living in London during the week, and one night in February 1970, at 3 A.M., I received a telephone call from the Duty Officer.

"Get in quick," he said, "we need access to your safe."

I dressed and took a taxi to the office, to find Tony Brookes waiting for me.

"We need the antidote kit," he told me. "Lyalin's blown. He was arrested for drunken driving a few hours ago, and he's in the clink at Marlborough Street!"

I unlocked my safe and produced a small roll like a toolkit which Dr Ladell of Porton Down had given me ten years previously toward the end of my time as Scientific Officer. It contained antidotes to all the known poisons used by the KGB. Whenever a defector came out we had the case near him twenty four hours a day, but otherwise it remained in my safe. No one else cared to hold it so close.

I quickly described to Brookes the basic symptoms of nerve gas or toxic poisoning, and told him how to administer the antidote. He rushed off to the prison to guard Lyalin, while I hoisted the deputy head of Special Branch out of bed, and got him to alert Marlborough Street to the identity of the drunk in their basement cell. Meanwhile the MI5 Legal Department applied to the Home Secretary and the Attorney-General for formal immunity for Lyalin from his drunken charge, explaining that there was serious risk of assassination if he was brought before an open court.

The successful defection of Lyalin presented MI5 with a unique opportunity. Ever since F.J. became Director-General he had nursed the dream of decisively changing the balance of forces ranged against him. He knew that the central problem facing MI5 was the massive superiority in the numbers of Soviet intelligence officers in London. Throughout the 1960s he had struggled to get the Treasury to agree to an expansion of MI5's counterespionage capability, but they were always reluctant.

He had been able to achieve a certain amount by redirecting resources internally in favor of D Branch, but we were still outnumbered by a factor of more than three to one. With Edward Heath in power, F.J. put the case for a major reduction of intelligence officers to him, citing the order-of-battle figures for intelligence officers. This was before Lyalin came on the scene. Heath's reaction was "throw the lot out," The Foreign and Commonwealth Office (FCO) protested, but we were not keen to do this either since we wanted a number here to retaliate with if the Russians were vindictive. However, the whole arrangement was agreed between us and FCO by March 1971. We delayed action until the autumn because Lyalin had come on the scene and we did not want to disturb things until he either defected or had gone home.

In his debriefing, Lyalin identified dozens of KGB officers active under diplomatic cover. Most of these identifications were already known to us through the Movements Analysis program, which I had helped establish in the early 1960s with Arthur Martin and Hal Doyne Ditmass.

Calculating KGB strength has always been a contentious business, and yet it lies at the heart of a rational assessment of the threat posed by hostile intelligence. When I ran D3 I made a series of analyses of Soviet strength in 1945, based on the VENONA material. Although we broke only a small fraction of the traffic, GCHQ were able to statistically assess the total number of spies active in Britain at between 150 and 300. (The statistical analysis was conducted using methodology devised by one of the top cryptographers, I.J. Good.) By the 1960s, through rough analysis of the VENONA, and through comparing intelligence provided by defectors, as well as Blunt and Cairncross, with our own passport records, we were confident that there were between forty-five and fifty Russian intelligence officers in London in 1945, of whom about twenty-five were agent runners. Dividing this into the number of spies demonstrated in the VENONA gave a median figure of around eight to nine spies per agent runner, which dovetailed neatly with the one week of VENONA traffic which demonstrated that Krotov was running eight spies.

Now the real question is how far those figures can be extrapolated into modern times. By the late 1960s the Movements Analysis program was indicating between 450 and 550 Russian intelligence officers active in Britain. But what percentage of those were agent runners? Even if we assumed that the number of agent runners had remained static over a twenty-year period, at around twenty-five, and that the rest were there to provide cover, countersurveillance, internal security, and analysis, this still left us facing a huge problem. It meant that there were upward of 200 spies currently active in Britain. If we took the figure of agent runners to have expanded commensurately with the rise in total numbers of intelligence officers, the situation was even more alarming - more than a thousand spies! Of course, the vast majority of those spies would be low-level contacts among the Communist Party and various trade unions, but if even 1 percent were penetrations of the level of Houghton or Vassall, the implications were disastrous.

Whenever I placed these analyses forward to the Home Office for inclusion in the routine threat assessments, there was strife. John Allen, a former lawyer, and fast rising in K Branch, repeatedly disputed my analysis.

"You can't say that, there can't be that many IOs in London, the Home Office will never believe it!"

But Lyalin's defection removed all the objections. He confirmed the Movements Analysis figure of around 450 intelligence officers based in London, and maintained that a large percentage were active agent runners. He proved beyond any shadow of doubt that the Movements Analysis program was quite correct and my statistical arguments valid. It was also apparent that not all the increase was in low-level spies. With greater determination than I ever saw him pursue anything, F.J. put to the Foreign Office the case for mass expulsions of a large number of the Russian diplomats. In the end, Ted Heath and the Foreign Secretary, Alec Douglas-Home, agreed, after a discreet approach by Home to the Soviet Foreign Minister, Alexei Kosygin, suggesting the Russians remove some of their intelligence officers without publicity was brushed aside imperiously.

The expulsions were seen as a brilliant coup throughout the Western intelligence world, and we received telegrams of congratulation from the heads of every Service. It was F.J.'s greatest triumph, made sweeter because the fact that the plan had clearly not leaked to the Russians proved that, whatever the truth of the past, high-level penetration of MI5 was definitely at an end.

Angleton supported the expulsions unreservedly, and confessed that he had long wanted to engineer something similar in Washington. But Henry Kissinger was a firm opponent. Angleton told me that Kissinger had exploded when he learned of the British expulsions. He was desperately pursuing detente with the USSR, and minuted the CIA angrily, telling them that had he known of the proposal he would have used every power at his command to get it quashed. Luckily, the CIA were able to state truthfully that they had known nothing of the plan.

But Angleton was deeply suspicious of Lyalin. After the defection Angleton paid a secret visit to London. He looked worse than ever, consumed by the dark, foreboding role he was committed to playing. He viewed himself as a kind of Cassandra preaching doom and decline for the West. He thought Lyalin was a plant, and told us all so at a meeting in Marlborough Street.

"Oh come on, Jim," I said, "Lyalin's just not that big. He's a KGB thug, what possible disinformation interest could they have in him?"

Angleton felt betrayed. We had not told him about Lyalin while we were running him in place, and he told us stiffly that the whole purpose of UKUSA was the full exchange of intelligence. Patience with Angleton was rapidly wearing thin in London in 1970. Maurice Oldfield had an ill-concealed hostility to all his ideas and theories, and even inside MI5 he had begun to make enemies.

We learned later just how far he was prepared to go to discredit Lyalin. As Lyalin was debriefed, we routinely sent over our intelligence digests containing his material to the FBI for circulation through to the CIA, and on to the National Security Council and up to the President.

Some months later, J. Edgar Hoover took a vacation in Florida, and took the opportunity to call on President Nixon at his holiday home on Key Biscayne.

"How do you like the British reports from their source Lyalin, Mr. President?"

"What reports?" replied Nixon. He had never received them.

When Hoover checked back with Kissinger, he had not received them either. Kissinger got on to the CIA and instituted a full search. They were finally found in Angleton's safe. He had concluded Lyalin was a provocation, and simply refused to circulate the documents. Tom Karamasines, the CIA Director of Plans, issued a stern rebuke, and it was the beginning of Angleton's slide from power.

The roots of his demise lay much earlier in the Golitsin-Nossenko feud. For Angleton it became an article of faith that Nossenko was a plant, since that ensured Golitsin primacy among all the defectors who arrived in the early 1960s. I remember in 1967, after the first CAZAB conference, telling Angleton that I was traveling back to Britain via the USA. My daughter was living in Boston, and I thought I would combine some business with a purely personal visit. As soon as I told Angleton I was visiting Washington he became quite aggressive. He told me I had no right to visit Washington unless he was in town. At the time I thought his worry was to do with the Israelis. The Middle Eastern situation was brewing up, and Angleton always jealously protected his relations with the Israeli secret service, Mossad. He knew of my close friendship with Victor Rothschild, and often tried to break it off. On one occasion he even wrote to F.J. to try to curtail it as an interference in the CIA-Mossad liaison, but F.J. treated the letter with the contempt it deserved.

But Angleton's distress had nothing to do with Israel. I learned the truth. Just before the CAZAB conference an internal CIA inquiry led by a security officer named Bruce Solie had concluded that Nossenko was almost certainly a genuine defector, although it could offer no explanation for the curious contradictions in his story. Angleton had never told the British this fact, despite its implications for Nossenko's and Golitsin's information. He was obviously frightened that if I visited Washington I might get to hear of Solie's report through another channel.

Incidents like these began to undermine Angleton's credibility. The Nossenko and Lyalin incidents did much to shake the faith of even those who knew him best and defended him longest. We began to doubt whether, after all, the secret sources to which Angleton claimed he had access actually existed. Perhaps it was, after all, just a three-card trick.

In 1970 Angleton suffered the greatest blow of all. He lost his administrative officer and effective number two, Jim Hunt. Hunt was a hard man, who treated Angleton's obsessions with balanced skepticism. He had his feet on the ground, and he made things happen. Angleton, like myself, was a hopeless administrator, and Hunt ensured that papers were circulated, requests replied to, and the day-to-day routine, upon which an efficient intelligence service relies, was maintained. Without him, Angleton became a ship without anchor, drifting slowly toward the abyss.

Lyalin's defection and the expulsion of the 105 Russian diplomats were not the only signs of a new dawn which seemed to be breaking for

British Intelligence in the 1970s. Following his election as Prime Minister in 1970, Edward Heath appointed Victor Rothschild as head of the Central Policy Review Staff (CPRS) - the Think Tank. Never was a man more perfectly suited to a job. Victor had the right qualities of inspiration and radicalism to provide the kind of challenging policy unit Heath wanted. The call came at just the right time for Victor. I could tell that he was becoming slightly bored toward the end of the 1960s. He had no regard for Harold Wilson, and there was no role for him in public life. He maintained his links with British Intelligence, utilizing his friendship with the Shah of Iran, and running agents personally for Dick White in the Middle East, particularly Mr.

Reporter, who played such a decisive role in MI6 operations in the 1950s. It was exciting, but he hankered after a real challenge, and the Think Tank was exactly what he needed.

As head of the Think Tank, Victor Rothschild took a close interest in security, and Heath encouraged him to do so, much to the irritation of the Home Office, and in particular the powerful Permanent Secretary of the time, Philip Allen (now Lord Allen of Abbeydale, and a member of the Security Commission). Victor became, in effect, the Lord Wigg of Heath's Government. Once inside the Cabinet Office Victor teamed up with Dick White, the newly installed Cabinet Intelligence Coordinator following his retirement from MI6. Together they combined to give British Intelligence its highest ever postwar profile.