The Defence of the Realm (90 page)

With a few notable exceptions such as Aden and British Guiana, a majority of SLOs later looked back with nostalgia on their experience of the end of Empire and the friendships they had made with local security personnel. Service in the Empire and Commonwealth was part of the experience of most of the post-war generation of Security Service officers. At the end of the 1960s, however, most of the Service's post-imperial role
came to an unexpectedly abrupt conclusion. In 1968 a newly appointed Committee on Overseas Representation began looking for economies. As part of its inquiries, the distinguished retired diplomat Sir Frank Roberts prepared a top-secret report on British intelligence stations abroad. In the ten countries which had both MI5 and SIS representation, Roberts proposed a single combined station headed by an officer of the Service with the main interest in the country concerned. Furnival Jones resisted the Roberts Report, arguing that, because of the different priorities of MI5 and SIS, combined stations would not necessarily produce real economies. Save for India, where the SLO post was already scheduled for closure, all the high commissioners in the countries covered by the Roberts Report recommended the maintenance of SLOs. The FCO reported to the Security Service that its geographical departments had ‘confirmed the striking vote of confidence which you have received from the High Commissioners'. The Service, however, was less good than SIS at arguing its case in Whitehall. In most countries where it had been represented, SLOs were phased out in favour of sole representation by SIS.
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The recall of the SLOs was greeted with dismay by many, perhaps most, of the Commonwealth security services to which they were accredited. The Delhi Intelligence Bureau, then headed by S. P. Varma, was warned personally by the DG, Furnival Jones, that the current SLO would not be replaced at the end of his tour of duty. Varma's reaction was ‘immediate and strong'. He would regard it as a disaster if the post closed and he ‘did not know how they would manage without it'.
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The DIB subsequently wrote in a formal letter to FJ: ‘Since its establishment, we have had nearly 20 years of uninterrupted liaison with your organisation through the Resident SLO in New Delhi. The withdrawal of this officer now would break the longstanding contact at a personal level which has proved invaluable to us.'
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The Service's Overseas (E) Branch was wound up in 1971 and its remaining responsibilities divided between the Secretariat and the intelligence branches.
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In the long run, since SIS was Britain's foreign intelligence service, there was a good case for transferring to it most of the Security Service's responsibilities in former colonies. It increasingly made little sense, for example, for MI5 to have the dominant role in an African country which belonged to the Commonwealth and for SIS to take the lead in its non-Commonwealth neighbours. The abrupt disappearance of the SLOs, however, left too little time for an orderly transfer of responsibilities, and led in some countries to a gap in intelligence collaboration which was not immediately filled by SIS. In May 1969, the Kenyan Director of
Intelligence, James Kanyotu, was reported to be ‘very resentful' of the way in which the changes were made.
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So were some members of the Security Service.

9

The Macmillan Government: Spy Scandals and the Profumo Affair

Relations between Harold Macmillan and the Security Service never recovered from Sir Dick White's move to SIS in 1956 and his replacement by Sir Roger Hollis, who remained DG throughout Macmillan's seven years as prime minister (1957–63). White found Macmillan ‘marvellous to deal with'. Macmillan in turn liked and respected White. But Macmillan took a dislike to the far less clubbable Hollis, later claiming that he had found him ‘insignificant' and inept.
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Had White remained DG, the Service's relations with Macmillan would doubtless have run more smoothly. Rab Butler, Macmillan's first Home Secretary, had much greater sympathy for Hollis and MI5 but took office with little grasp of their work. Most ministers who dealt with the Security Service during at least the first half of the Cold War were poorly informed, if not actually misinformed, about its operations. Rab was no exception. He told Hollis at their first meeting in January 1957, that ‘he knew already that the Security Service was doing a very good job, and promised us all the support he could give us.' It turned out, however, that Butler did not even know where the Service was based. When told that its headquarters was in Leconfield House, he expressed surprise ‘as he imagined we operated under cover' – presumably supposing that MI5 had a series of safe houses hidden around London rather than a conventional office building. He accepted Hollis's invitation to see the premises for himself.
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The basis of counter-espionage against KGB and GRU operations in London was the wearisome surveillance by various means of the Soviet embassy and Trade Delegation, which provided cover for intelligence officers. Though few significant leads emerged from this activity in the later 1950s, it provided interesting insights into the lifestyle of Soviet officials – sometimes including comments on their favourite London restaurants. On one such occasion Provotoroff, an official at the Trade Delegation, was heard discussing with Kaplin, the visiting chairman of the Soviet fur-trading association, Soyuzpushnina, where he would like to have
dinner. ‘Provotoroff suggests the Savoy Grill. Kaplin thinks it would be too crowded. Provotoroff suggests the Mirabelle. Kaplin says it was the first one he ever visited . . . Provotoroff sings praises of the Mirabelle – it is downstairs, wealthy, fresh, has a fountain, [and is] comfortable.' These comments aroused the interest of a Security Service staff member with a particular interest in fashionable London restaurants. When Kaplin was heard saying a few days later that the Caprice Restaurant was ‘evidently run by the Ritz', the staff member commented: ‘This is not accurate. Mario, previously head waiter of the Ivy, runs it and it is backed by Robert Morley and others.'
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Macmillan hated spy scandals and, partly for that reason, disliked direct contact with the Security Service on counter-espionage matters. As foreign secretary in 1955, he had been forced, reluctantly, to clear Philby in the Commons of charges that he was a Soviet spy, because of lack of proof of his guilt. He had loathed and despised the media ‘hue and cry' which followed. It was, he believed, ‘dangerous and bad for our general national interest'
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– as well as embarrassing for the government – for such matters to be discussed in public. To his relief, no spy scandals disturbed the first three halcyon years of his premiership from which he emerged with a reputation as ‘Supermac' and a convincing electoral victory in 1959.

The Security Service had little success during the later 1950s against the Soviet target. Its investigation of the case of the Magnificent Five was making slow progress.
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The KGB residency, by contrast, was running a major penetration agent in SIS.
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The Service's main counter-espionage successes during the later 1950s were achieved not against the KGB but against the Polish UB intelligence station in London. No doubt to Macmillan's relief, they attracted no publicity. By 1958 thirty-one UB agents had been identified and a number turned into double agents. As a result of the achievements of the double agents and the intelligence obtained from several Polish defectors, the DDG, Graham Mitchell, proudly declared that D2's operations against the UB were ‘of a quality which no security organisation could hope to better'.
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The leads which led to the resolution of the two main Soviet counter-espionage cases of the early 1960s also came from a Polish intelligence officer, Michal Goleniewski, who was recruited not by the Security Service but by the CIA with the codename SNIPER, and who later defected to the United States.

In April 1960 Goleniewski reported that an agent recruited by Polish intelligence in the British naval attaché's office in Warsaw in about 1951 had been handed over to the KGB when he returned to Britain. The prime suspect was quickly identified as Harry Houghton, a clerical officer at the
Underwater Detection Establishment (UDE) at Portland, who had served as clerk to the naval attaché in Warsaw in 1951–2 and had been sent home for alcohol abuse. In 1956 the Admiralty had reported to the Security Service claims by Houghton's wife that he was revealing classified information, but raised the possibility that her allegations were made because their marriage was breaking up. The Security Service vetting section concluded without serious investigation that the claims were prompted by spite and left it to the Admiralty to pursue them. After Houghton's conviction in March 1961, Director D, Martin Furnival Jones, concluded that if his wife's allegations had been properly followed up by the Service in 1956, there was ‘a fair chance that Houghton would have been revealed as a Russian spy at that time'. When Mrs Houghton, who had since remarried, was questioned for the first time after Goleniewski's lead was passed from the CIA to the Security Service in 1960, she provided convincing evidence that her former husband had been engaged in espionage. He had brought classified papers home with him from work at the UDE, and made regular weekend trips to London, returning with bundles of pound notes. Mrs Houghton had been afraid to go to the police for fear of being attacked by her violent husband. Though Houghton had little direct access to classified information, he was discovered to be having an affair with a record-keeper at the UDE, Ethel ‘Bunty' Gee, who regularly handled top-secret documents. In July 1960 an A4 surveillance team followed Houghton and Gee on a weekend trip to London and observed them meeting a man, at first wrongly identified as a Polish intelligence officer, on a park bench near Waterloo Station. The man drove off after the meeting in a car which was found to be registered in the name of Gordon Lonsdale. A4 kept Houghton and Lonsdale under surveillance at their next meeting in a café near Waterloo Station, saw Houghton surreptitiously hand over an envelope concealed inside a newspaper, and overheard snatches of conversation between the two men on arrangements for their next meeting.
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All previous post-war Soviet espionage cases in Britain investigated by the Security Service had involved intelligence officers based at the KGB and GRU London residencies. Investigation of Lonsdale revealed, however, that he was a deep-cover Soviet illegal using a bogus nationality and identity, though his real name – Konon Trofimovich Molody – was not discovered until after he had been convicted of espionage. The son of two Soviet scientists, Molody seems to have been selected in childhood as a potential foreign intelligence officer. In 1932, at only ten years of age, he was sent with official approval to live with an aunt in California and attend secondary school in San Francisco, where he became bilingual in English before
returning to Moscow in 1938. During the Great Patriotic War he joined the NKVD and, to quote the stilted language of his official hagiography, ‘brilliantly displayed such qualities as boldness and valour'. After the war Molody graduated in Chinese and worked as a Chinese-language instructor before beginning training as an illegal in 1951.
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Three years later he was sent to establish a fictitious identity in Canada, where he obtained a passport in the name of a ‘dead double', Gordon Arnold Lonsdale, who had been born in Ontario in 1924, emigrated as a child to the Soviet Union with his Finnish mother, and died in 1943. In March 1955, Molody travelled to London under his new identity as ‘Gordon Lonsdale' and enrolled as a student on a Chinese course at the School of Oriental and African Studies (SOAS). As a qualified lecturer in Chinese, Lonsdale had no difficulty in coping with the course requirements and was able to spend most of his time developing his cover and establishing the KGB's first post-war illegal residency in Britain. Using KGB funds, he set himself up as the director of several companies operating juke boxes, vending machines and one-arm bandits. An electronic locking device produced by one of the firms in which he was a partner won a gold medal at the 1960 International Inventors Exhibition in Brussels. In retirement, Molody later made the wildly exaggerated claim that his business ventures had been so successful that he had become the KGB's first multi-millionaire illegal resident.
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On 26 August 1960 Lonsdale was seen by A4 taking packages to a safety deposit box at a bank, then observed soon afterwards leaving the country, probably en route for Russia and a rare visit to his family. While Lonsdale was abroad, the DDG, Graham Mitchell, gained permission to open his safety deposit box. Charles Elwell, the Security Service case officer, was present as the contents of the box were investigated by Peter Wright and Hugh Winterborn. Among them was a briefcase containing a Ronson table-lighter, in which X-ray examination revealed a secret compartment with one-time cipher pads, a list of London locations and map references.
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Also in the briefcase, to Elwell's surprise, was a photograph of him talking to a ‘rather pretty girl', which he reported to Furnival Jones, then Director D. When Elwell arrived at the office next day, he was told to report immediately to FJ, who demanded, ‘How do you account for the fact that there is a photograph of you in Lonsdale's briefcase?' His wife was collected from home by office car and interviewed separately. There was a curious but innocent explanation for the photograph. The Elwells had let their flat to a Canadian diplomat studying at SOAS who had invited them to a party with some of his lecturers and fellow students. One of the students was Lonsdale, who went round taking photos of the other guests. It was,
Elwell believed, ‘unique in the annals of counter-espionage' that an intelligence officer investigating an illegal should unwittingly have been photographed by his target.
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