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ASIO set up to catch Soviet spies -

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STEVE CANNANE, PRESENTER: With the terrorist threat from ISIS a preoccupation of Australia's intelligence service in recent months, the operations of ASIO and the adequacy of its powers have been a topic of fierce debate.

Tonight we're going to look back at the origins of our intelligence service.

David Horner has completed the first of his three-volume history of ASIO, titled 'The Spy Catchers'.

David is Professor of Australian defence history in the Strategic and Defence Studies Centre at the ANU and the author or editor of 32 books on defence, intelligence and the military. He joins us now from Canberra.

David Horner, thanks for joining us.

DAVID HORNER, AUTHOR: Good evening, Steve.

STEVE CANNANE: Your book looks at the early years of ASIO, from 1949 to 1963. Remind us why ASIO was set up in the first place?

DAVID HORNER: Well, ASIO was set up essentially to catch spies and that's why the book is called 'The Spy Catchers'. And I did that deliberately to remind people that the job was initially and throughout its existence to catch spies.

And it started in 1949, when in the previous several years the British and the Americans managed to crack the codes used by the KGB, the Soviet intelligence service, between their headquarters in Moscow and their outlying stations, such as in Australia.

And these broken codes show that there was a spy ring operating out of the Communist Party, passing information to the Soviet embassy in Australia. And the Australians didn't know about this.

And the Americans and the British didn't want to pass on this secret, but they wanted to have the spies dealt with, so they pressured the Australian government to set up an organisation that could do two things: deal with this spy ring but, secondly, make sure that a security organisation was in existence that could deal with other problems like that.

STEVE CANNANE: So these codes were cracked as part of the Venona project. And it seemed like what they cracked and decrypted when it came to the spy ring in Australia was actually decrypted quite quickly. Why was that?

DAVID HORNER: Well, the Americans in particular and the British had been working on this, really, since 1943. And gradually they worked out ways of cracking the ciphers and then they got to a point where they could crack them fairly quickly.

But the problem was that the messages that they cracked talked about people in terms of their cover names, so it didn't always say who the person was. So the problem was to try and track down who the spies actually were.

STEVE CANNANE: OK. So there was this Russian spy ring in Australia and ASIO was set up from scratch to catch them. How did these new spies fare against a bunch of hardened professionals from Russia?

DAVID HORNER: Oh, well, ASIO was very much an amateur organisation right at the beginning and it had to quickly develop some professionalism. They were helped in this regard by MI-5, the British intelligence service but they also had to work out themselves how to do it.

STEVE CANNANE: All right. So if this is the foundation stone of our intelligence agency - being set up to smash a Soviet spy ring - is it inevitable that, in those early days at least, that there would become ingrained in the culture an obsession with countering communism and, potentially, to the detriment of that organisation?

DAVID HORNER: Well, certainly having identified that it was the Communist Party that had the spies in it and then in the Cold War the problems of dealing with the Soviet threat; if there was a war against the Soviet Union, well then perhaps the Communist Party would be supporting the Soviets and therefore the Communist Party was seen as the enemy. ASIO had to deal with the enemy.

And then you can expand out from there: if the communists are passing information to the Soviets, well, then you want to keep the communists out of government positions. So you have to have vetting and then you have to find out: well, is that person a communist or not? Try and track down who the communists are. And so it expanded out from there into a massive surveillance campaign.

STEVE CANNANE: And so, in that instance, do you end up looking for communists everywhere and start accusing people who may be sympathisers to the Left as being communists?

DAVID HORNER: I think ASIO in the end tarred everybody with the same brush. If you were a communist, part of a, member of a communist front organisation - that's an organisation operating on behalf of the Communist Party - or anybody who might be a sympathiser: as far as ASIO was concerned, they were all tarred with the same brush. They were all communists or potential communists and, therefore, people to be kept out of those positions in government.

STEVE CANNANE: Now, you've uncovered evidence that long-term head of ASIO Charles Spry crossed the line and gave information to prime minister Robert Menzies, actually gave political advice to the prime minister of the day, in the lead-up to the referendum in 1951 to ban the Communist Party. Tell us more about what you found out?

DAVID HORNER: Well, it's not so much political advice. Menzies was making speeches to try and get people to vote in favour of the referendum. The opposition leader was against the referendum.

And what Spry did was: he said to Menzies, "I want you to put this information into one of your speeches and that will cause problems for the Communist Party." So you could put one interpretation that what he was trying to do was maintain the pressure on the communists.

But if the leader of the opposition, "Doc" Evatt, had found out about this or the Communist Party had found out about this, they rightly would have condemned Spry for interfering in what was essentially a political argument.

STEVE CANNANE: Well, Labor's "Doc" Evatt, of course, found conspiracies between Menzies and ASIO that didn't exist. What would he have done with this information, do you think, if he got his hands on it?

DAVID HORNER: Well, that's right. It would have been grist to the mill for him.

We need to get the timeframe right here: this is 1951, during the referendum campaign. The referendum was lost and the Communist Party was not banned. And after that, for a few years there was quite a deal of interaction between Spry and Evatt. A lot of people don't know that. They had meetings. They discussed things. They seemed to be on good terms. Evatt was very complimentary about Spry.

It wasn't until after the Petrov defection and then the royal commission that the relations between ASIO and Evatt broke down over Evatt's claim that the government and ASIO had engineered the Petrov defection to keep the Labor Party out of power.

STEVE CANNANE: Did ASIO's focus on communism at this time make the organisation blind to working with Nazi criminals - and at least 10 Nazi criminals, as documented in Mark Aarons' book 'War Criminals Welcome'?

DAVID HORNER: Well, we need to get some balance here. Across the broad sweep of ASIO's activities, the matters to deal with potential Nazis is only a small aspect of it.

But if we look at that, we can find that there are areas where the people that ASIO was hoping to recruit against the communists: there could have been evidence that they were perhaps war criminals. And ASIO did not pursue that because they were blinded - if you can put it that way - blinded in their focus on dealing with the communists.

STEVE CANNANE: But they did know, didn't they, that they were dealing with Nazi war criminals?

DAVID HORNER: It's not always as, not always as clear-cut as that. The problem was that to find out if a person had been involved in war crimes, you'd need to go back to Europe and get information out of Europe. And so it wasn't quite as easy as just a sort of opening a file...

STEVE CANNANE: Well, not necessarily, if I could pick you up on that point. There was a Nazi war criminal known as Alfacic, who came to Australia in 1951. And ASIO spoke with US intelligence about him and his war crimes and found out what he was up to during the war?

DAVID HORNER: Yes. And I've mentioned some of this in my book and I've pointed out that there were occasions when ASIO, if it was pressed... They'd say, "Well, what are we going to do with this person?" And the reply would go back from ASIO, "Well, he's a good non-communist. He's giving us good information on the Communist Party." An example of how ASIO's focus was on the communists.

And they would say - I mean, people wouldn't agree with this - but they would say, "Well, if a person had been a war criminal, that was actually not against the security of Australia." It might have been a dreadful thing - and ASIO was being very narrow in its interpretation here and they can be criticised for that - but they would say, "That's not a matter of national security of Australia, whereas the communists are."

STEVE CANNANE: OK. So Mark Aarons in that book: he relied on sources, people he spoke to. He relied on declassified US intelligence files. He also relied on censored ASIO files. Did you go to the censored ASIO files that he looked as his source to confirm to what degree ASIO knew they were working with Nazi war criminals?

DAVID HORNER: Yes, I did. And essentially, what Mark Aarons has uncovered is right. There's nothing in the classified that would cause us to change the views that are put in Mark Aarons' book.

So people would say that they go to the archives and they see things that have been blanked out. But generally, what has been blanked out is the names of informants. The essential story is still the same.

STEVE CANNANE: All right. You decided not to devote much space in the book to ASIO's surveillance of writers and artists and academics and students. Why is that?

DAVID HORNER: Well, when I started the project, we were aware of all the books and articles that had been written about ASIO and we thought: perhaps we should check up on all those things. But then I thought: the way we have to do it is we have to start with ASIO's policy files and work downwards. The files are our starting point, rather than articles that are out there in the community.

And when we did that, we found that there was a broad sweep of activities that ASIO was involved in. And as far as ASIO was concerned, the looking at artists and writers was only a small part of the story. And in any case, a lot of that is already out there on the street.

Yes, I commented on it. I said that ASIO was wasting a lot of resources doing this and it was a lot of wasted time and effort. But I did want to tell the broad sweep of what ASIO was doing. And if you read the book, you'll find that they were involved in a whole range of things, not just looking at artists and historians and authors.

STEVE CANNANE: Are there any lessons we can learn from the history of ASIO about how much power we should be giving intelligence agencies when it comes to surveillance?

DAVID HORNER: One of the things that people might be surprised to read about is that it was the initiative of Charles Spry, the director-general, that got the ASIO Act up and running in 1956. And then he looked at phone tapping. He had been given permission to do phone tapping on the say-so of the prime minister. He thought there ought to be legislation to cover phone tapping.

So we can see in the history of ASIO an attempt to put in place some parameters and some legislation to control what they were doing. But of course, that legislation has to change as technology changes. And for many years the same legislation that was put in place for the old-fashioned technology continued to apply well into the future.

STEVE CANNANE: David Horner, we've run out of time. Thanks for talking to us. Good luck with the next edition.

DAVID HORNER: My pleasure. Thank you.