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Australia's Security and Intelligence Agencies - Report of Royal Commission on terms of reference (c), (Commissioner, Mr Justice R. M. Hope), dated December 1983


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The Parliament of the Commonwealth of Australia

ROYAL COMMISSION ON AUSTRALIA'S SECURITY AND INTELLIGENCE AGENCIES

Report on Term of Reference (c)

December 1983

Presented and ordered to be printed 6 December 1983

Parliamentary Paper No. 323/1983

Royal Commission on

Australia's Security and Intelligence Agencies

Report on Term of Reference (c)

December 1983

ROYAL COMMISSION ON

AUSTRALIA'S SECURITY AND INTELLIGENCE AGENCIES

Report on Term of Reference (c)

December 1983

Austra lian Government Publishing Servi c e Canberra 1983

© Commonwealth of Australia 1983

ISBN 0 644 02988 9

Printed by C.J. Thompson, Commonwealth Government Printer, Canberra

Chapter

1

2

CONTENTS OF REPORT

THE CONDUCT OF THE ROYAL COMMISSION IN RESPECT OF TERM OF REFERENCE (c)

Setting up - Terms of Reference -First Sittings Collection of information

Appeal procedure if Counsel assisting the Commission declined to lead evidence

The classification of evidence

Balance of conflicting interests

Parliamentary Privilege

Crown Privilege

Standard of proof

Use of transcripts

Form of the Report

ASIO ' S CASE

Valeriy Nikolayevich Ivanov

Harvey David Mathew Combe

Contact between Ivanov and Combe

Combe's trip to the Soviet Union

Combe's return from the Soviet Union

Dinner at Ivanov's home on 4 March 1983

Further contact between Ivanov and Combe

Combe visits Ivanov's home on 3 April 1983

Barnett seeks an appointment with the Prime Minister

Final contact between Ivanov and Combe

iii

Para

1

1 1.1

2 1. 8

5 1. 11

5 1.1 2

7 1. 20

9 1. 26

10 1. 29

11 1. 33

11 1. 34

11 1. 35

1 2

1 2 2 . 4

14 2 . 11

15 2 . 12

1 5 2 . 14

1 6 2 . 1 6

1 8 2 . 22

20 2 . 25

20 2 . 2 8

22 2 . 32

23 2 . 33

Chapter

2

(Cant 'd)

3

4

Barnett's meeting with the Prime Minister on 20 April 1983

Assessment of ASIO's case

THE GOVERNMENT'S RESPONSE TO ASIO'S CASE

Establishment of NISC

Meeting of NISC Ministers on 20 April

Meeting of NISC at 8,30 a.m. on 21 April

Meeting of NISC at 12.30 p.m. on 21 April

Discussions concerning the expulsion

The briefing of the Leader of the Opposition

Barnett informs the Prime Minister of an ASIO error

Meeting of NISC at 5.30 p.m. on 21 April

Decisions made by NISC

Mr Hayden summons the Soviet Ambassador

The public announcement of the expulsion and subsequent events

FACTS UP TO 20 APRIL 1983

Resolution of conflicts in the Evidence

Ivanov as a KGB Officer

Characteristics of Ivanov and his activities in Australia Career and character of Combe

Matheson's role

Australia-USSR Society

iv

23

27

30

30 30

33

35

37

37

38

39

39

45

46

47

47

47

48

50

56

58

Para

2.34

2.41

3.2

3.3

3,7

3.10

3,17

3.18

3.20

3.21

3.22

3.31

3.32

4.2

4.3

4.6

4.12

4.22

4.25

Chapter

4

(Cont'd) The political system of the USSR

Post-Afghanistan Sanctions

Combe's association with Soviet o fficials

Arrangements for Combe's 1982 visit to the USSR

Comb e's role as a consulta nt to CBA

Combe's v isit to the USSR

Combe's Report to CBA

Comb e's contact with Ivanov after the visit to Moscow Dinner a t the Ivanov home on 4 March

for Combe

The Moscow proposal and its effect o n Combe's contract with CBA

Conv ersat i on between Combe and Matheson of 7 March

Ivanov 's visit to Combe on 15 March

Mr Combe's claim to represent the Soviet Central Commi t tee

Meeting of Combe and Ivanov at Lakeside Hotel on 21 March

Combe reques ted by CBA to provide documents to the Soviet Embassy

Ivanov's 'warning' to Combe on 3 April

Further meeting between Combe and Matheson on 6 April

Last contacts between Combe and Ivanov

Combe's attitude to Ivanov

Comb e's Access to Ministers

Questions to be determined in light of the facts up to 20 April

v

Page Pa r a

59 4 . 26

60 4 . 2 8

6 1 4 . 29

6 1 4 . 31

62 4 . 33

64 4 . 3 8

67 4 . 44

70 4. 4 9

71 4 . 5 3

83 4 . 71

84 4 . 7 2

86 4 . 75

87 4 . 76

88 4 . 77

89 4.7 8

89 4. 79

94 4 . 87

95 4. 89

96 4 . 9 1

100 4 . 95

101 4 . 96

4

(Cont'd) Ivanov's Intentions

5

Combe's Position

The threat to national security from the Ivanov/Combe relationship

Errors or alleged errors by ASIO

EVENTS AFTER 22 APRIL

Surveillance of Combe

Cabinet discussion of proposal that Combe be denied access to Ministers

Discussion and speculation outside Cabinet about proposed embargo on Combe

Briefing of Chief Minister of Northern Territory

Discussion between Farmer, Butler and Combe of 29 April

Hogg and Cameron as intermediaries between the Government and Combe

Preparation of Combe's statement to the Government

Termination of surveillance of Combe

First steps towards setting up a Royal Commission and other actions of the Prime Minister

Speculation in public about a connection between Combe and Ivanov

The Government's reaction to increasing public speculation

Meetings on 11 May between Combe and the Attorney-General

The agreed statement

The agreement and the circumstances in which it was reached

vi

101

106

109

111

117

117

121

123

126

128

131

136

13 7

139

139

143

146

149

150

Para

4.97

4.104

4.109

4.110

5.1

5.8

5.11

5.16

5.21

5.28

5.37

5.39

5.44

5.46

5.49

5.56

5.60

5.62

Chapter

5

( Cont 'd)

6

Did the Government or Combe repudiate the agreement of 11 May?

Announcement of the Royal Commissio n

MR COMBE ' S OPPORTUNITY TO BE HEARD

7 DISCLOSURES

8

9

Young to Walsh on 21 April 1983

Youn g to Cameron and oth ers on 22 April

Prime Minister to Butler and Farmer on 24 April

Bowen to Combe on 5 April and Bowen to Walsh on 28 April

Hurford to Farmer on 2 May 1983

WHAT ACTION, IF ANY, SHOULD NOW BE TAKEN BY THE GOVERNMENT IN RELATION TO MR COMBE BY REFERENCE TO NATIONAL SECURITY CONSIDERATIONS

ANSWERS TO ISSUES AND RECOMMENDATIONS

Issues

Recommendations

15 3

1 59

1 60

180

1 96

200

205

205

207

211

211

218

APPENDIXES TO REPORT ON TERM OF REFERENCE ( c )

APPENDIX A

APPENDIX B

APPENDIX C

APPENDIX D

Contents

TERMS OF REFERENCE

REPRESENTATION BY COUNSEL

SUBMISSION BY COUNSEL ASSISTING THE ROYAL COMMISSION IN RESPECT OF PARLIAMENTARY PRIVILEGE AFFECTING CERTAIN OF THE ISSUES DEFINED FOR

INVESTIGATION IN THE CONTEXT OF PARAGRAPH (c) OF THE TERMS OF REFERENCE

PROCEEDINGS IN CABINET AND COMMITTEES OF CABINET

vii

Pa r a

5 . 68

5 . 7 8

7 . 1

7 . 39

7 .48

7 . 6 4

7. 65

2 20

2 24

2 25

23 0

APPENDIX E

APPENDIX F

APPENDIX G

APPENDIX H

GLOSSARY

Contents

EDITED TRANSCRIPT OF CONVERSATION BETWEEN 235 MR IVANOV AND MR COMBE AT DINNER IN MR IVANOV'S HOUSE ON 4 MARCH 1983

STATEMENT BY MR COMBE TO THE ATTORNEY- 275 GENERAL ON 11 MAY 1983

MINISTERIAL STATEMENT BY THE PRIME MINISTER 304

SUBMISSION FROM COUNCIL OF CIVIL LIBERTIES 308 (NSW)

311

viii

CHAPTER 1

THE CONDUCT OF THE ROYAL COMMISSION IN RESPECT

OF TERM OF REFERENCE (c)

Setting Up - Terms of Reference - First Sittings 1.1 The Royal Commission on Australia's Security and Intelligence Agencies was announced by the Prime Minister in the House of Representatives on 12 May 1983, as reported in the

Hansard for that day at page 506. The Letters Patent embodying the Royal Commission were issued to me by His Excellency the Governor-General on 17 May 1983 and their full text is set out a s Appendix A to this report. Mr D.M. Ryan Q.C. and Mr J.W.

Rapke were appointed as Counsel assisting the Royal Co mmi ssion .

1.2 I am required by the Royal Commission to furnish t o His

Excellency the Governor-General first and as soon as p ossible a report of the results of my inquiry and recommendations in relation to the matters specified in paragraph (c) of the Terms of Reference.

1.3 After appropriate advertising in major newspapers throughout Australia a preliminary hearing was held on 1 June 1983 at which I received applications for leave to appear. I indicated that, apart from those of Counsel assisting, all appearances before the Commission would be by leave to b e

granted on the basis of some interest in the matters specif ied in paragraph (c). I indicated further that, even where such leave had been granted, the questioning of witnesses by Counsel or other persons so allowed to appear would be restricted to

matters which I deemed relevant to the . inquiry.

1.4 Appearances by leave granted in accordance with this ruling are set out in Appendix B.

1

1.5 I indicated at the preliminary hearing that, so far as

circumstances permitted, the hearing would be in public, although the nature of the matters referred to in paragraph (c) might require that some evidence adduced in respect of them be taken in private. The manner in which I dealt with the need to

hear evidence in private is described in 1.12 to 1.19.

1.6 I indicated also at the preliminary hearing that any person who considered that he had material information which should be

placed before the Commission should inform Counsel assisting the Commission accordingly, whether or not that person had obtained leave to appear, and that if Counsel assisting the Commission declined to call the evidence, application might be made to me, supported by affidavit or declaration, for my decision as to

whether such evidence should be adduced.

1.7 Applications for the issue of summonses requiring any persons to give evidence or produce documents were directed to be made to me at a sitting of the Commission or through the

Secretary to the Commission.

Collection of information 1.8 Counsel assisting the Commission collected and considered information in the following ways and from the following classes of persons:

(i) all Ministers who were members of NISC were interviewed and statements were taken; (ii) other relevant Ministers were interviewed and statements were taken; (iii) the Leader of the Opposition, and other Opposition

members, were interviewed and statements were taken; (iv) Permanent Heads and dther senior officers of relevant departments of the Federal Government were interviewed and statements were taken from some of

them;

2

(v) staff of some Ministers were interviewed a n d statements were taken from some of them; (vi) members of the public were interviewed and s t ate ments were taken; (vii) all relevant departments of the Federal Go vernment

were requested through their Permanent Heads to provide any relevant papers or material for examination by Counsel assisting the Commi ss i on; (viii) copies of correspondence between the Atto r ney- Gen e r al

and Mr Combe's solicitors were provided by the Attorney-General to Counsel assisting the Co mm ission ; (ix) files and documents of ASIO were examined a nd t a pe recordings of the conversations between Mr Combe a nd

Mr Ivanov on 4 March and 3 April were listened t o by

Counsel assisting the Commission; (x) Hansard reports of proceedings of the Ho us e of Representatives and of the Senate were perused by Counsel assisting the Commission and the appr oval of

the Speaker of the House of Representative s and th e President of the Senate was sought and ob t a i ned f o r relevant extracts to be adduced as evidence be f or e the Royal Commission; (xi) the Chief Minister of the Northern Territo r y was

requested to provide a statement and was interviewed ; (xii) relevant newspaper articles and transcrip ts of radi o and television programmes were examined by Counsel assisting the Commission. Those responsible f or

writing articles or compiling certain progra mm es wer e interviewed or asked to provide statements .

1.9 After consideration of all the material collected a nd examined as described in 1.8, Counsel assisting the Commi ssion applied to it a process of selection for presentation t o t he Royal Commission as evidence. The criterion used for s e lecting

such material was that it should tend to establish some f act relevant to the matters into which inquiry was directed by paragraph (c) of the Terms of Reference. Because of the width o f

3

the subject matter of paragraph (c), I considered it appropriate that there be formulated a list of more specific issues which it appeared necessary to resolve in the course of expressing a conclusion on such a wide subject matter. Accordingly, I requested Counsel assisting the Commission to draft a set of

issues. This was then used as the basis for discussion between the parties and submissions to me. Having considered those submissions I published a statement of the issues to be resolved in respect of paragraph (c) of the Terms of Reference on 11 July

1983. I then indicated that the statement was not a final one

and could be reviewed at any appropriate time. The statement was

in fact reviewed and amended during the course of the hearing before it emerged in its final form. It was necessary to

re-define certain issues to avoid infringing Parliamentary privilege. The issues as finally defined were used as criteria for determining whether evidence sought to be adduced or questions asked in examination of witnesses were relevant to the

matters under inquiry. The list of issues as finally settled, together with my answers to those issues, is set out in Chapter 9. Although cross-examination of a witness on matters going to his own credit was permitted, Counsel assisting the Commission

declined to call witnesses whose testimony could be used only to impugn the credit of some other witness.

1.10 During the hearing, Counsel for Mr Combe sought the inclusion of three additional issues which related to the fairness of ASIO's presentation of information to Ministers on 20 and 21 April, the dealing by members of NISC with matters

involving Mr Combe and their decisions relating to him, and the dealing by the Government and its members with matters concerning Mr Combe at the meetings of 26 April and 2 May. I declined to include these issues. My reasons for so doing were

that they concerned matters which would be dealt with in the report without being made the subject of one or more separate issues, were already covered by existing issues, or were outside the Terms of Reference.

4

Appeal procedure if Counsel assisting the Commission d e c lined to lead evidence 1.11 I have mentioned in 1.6 that I directed that if Counsel

assisting the Commission declined a request from any pers o n t o lead evidence, application could be made to me for a r ev i ew of that decision. Only one such application was made and I upheld the decision of Counsel assisting the Commission.

The classification of evidence 1.12 I indicated at the commencement of the hearing that although I desired to hold as much of it in public a s p o s sible ,

the nature of the matters set out in paragraph (c) of th e Terms of Reference would require that some evidence be heard in cl osed session. This general observation required even further refinement when it became necessary to consider the d ifficulties

resulting from the exclusion of Mr Combe from part of the hearing notwithstanding that he was mentioned by name in paragraph (c) and had a clear interest in findings which I might make.

1.13 In coming to a decision on this matter I was guide d by th e

'need-to-know' principle, which I have discussed in the Fourth Report of the Royal Commission On Intelligence and Securi ty , 1977 Volume 1 p. 114 et seq.

1.14 Counsel for ASIO proposed that information should be characterised as belonging to one of four classifications:

Class 1 Matter so sensitive it should not be shown either to Mr Combe or his Counsel.

Class 2 Matter which could be shown to Mr Combe's Co u n s el , but not to Mr Combe or his instructing soli c itor .

Class 3 Matter which could be shown to Mr Combe a nd his

instructing solicitor.

Class 4 Matter which could be made public.

1. 1 5 I accepted this proposed classification and the hea ring o f evidence proceeded in accordance with these guidelines. I ma de a

5

general order that evidence falling within a specified class should not be published except in a manner appropriate to that c lass. In addition I made appropriate class orders from time to

time covering specific portions of the evidence. Every e xhibit wa s listed with a notation showing to which of the four cl a sses

it was assigned by reason of its contents.

1.16 There were only two pieces of evidence which fell within Class l. They were of only peripheral relevance and had no

bearing upon my conclusions. Mr Combe was represented by Couns e l during the taking of all evidence upon which I have made findings.

1.17 In relation to Class 2 evidence, I made an order that o nly

Counsel and the witness giving evidence should remain in Court

whil e it was being heard. This order, which had the consequence that all instructing solicitors were generally excluded from the hearing of Class 2 evidence, was made solely on the basis of the 'ne ed-to-know' principle I have already mentioned. Using that

criterion, I considered it inappropriate to distinguish between Mr Combe and his solicitor on the one hand and any other

persons, except Counsel, on the other. It is appropriate to r e cord here that of a total of 68 hearing days there were

hearings in camera on 54 days. On some of those days the hearing in camera took a full day but on others took only part of a day

varying in length from minutes to hours. There were public hearings on 48 days.

1.18 Throughout the hearing a full transcript of the public sessions, and an edited transcript of the evidence received in camera, were published. In editing the transcript, the objec ti v e was to leave in as much of the evidence as possible. M a teria l

was deleted only for reasons concerning nati onal security or t o preserve the privacy of persons in cases where publication woul d serve no purpose relevant to the Commission's Terms of Reference, because of a condition which I imposed upon the

tendering of evidence as to which there had been a claim of

6

Cabinet privilege, or, in a very few cases, where the ma t ters a ffected Australia's international relations. The national security considerations taken into account in editing ma t erial included information on ASIO's sources, methods of operation ,

resources, technical capacity, knowledge about foreign intelligence services and methods of countering their act iviti es .

1.19 After preliminary editing by staff under the direction of the Secretary to the Royal Commission, transcripts of hea r ings which had been conducted in camera were circulated to Counsel for ASIO, Counsel for the Government and Counsel for Mr Combe

to enable them to express views as to what should be included in, and what should be deleted from, the transcripts as published. Where appropriate a similar opportunity was a ffor ded to Counsel for a particular witness or other person affe c ted by

a specific aspect of the evidence taken in camera. By th i s

process a large measure of agreement was reached as to wh at sho uld be published but when a difference remained it wa s resolved by me.

Balance of conflicting interests 1.20 Throughout the hearing I was faced with the difficult problem of balancing competing interests. Having said o n the first day of the taking of oral evidence, 15 June 1983, that I

would like to go as far as security considerations all owed in telling Mr Combe what was held against him, I was acutely conscious of the need to strike a balance between what I regarded as valid security considerations, valid consideration s

o f the public interest and Mr Combe's interests.

1.21 The need to make a ruling in this area arose frequently

when consideration had to be given to the publication of evidence. It arose, for instance, when ASIO advanced legitimate national security arguments for non-publication. It arose f o r the first time in relation to the publication of transcripts of

the intercepted conversations at Mr Ivanov's home on 4 Mar ch and 3 April 1983. After hearing evidence from ASIO officers and

7

submissions by Counsel, I decided that an edited version of the transcripts should be published.

1.22 Special instances occurred when permission was sought by Mr Combe's Counsel to show classified material to particular

persons outside the category pertaining to its classification for the purpose of obtaining an opinion on, or an analysis of, the material. Such permission was granted, for example, to enable preparation of separate transcripts of the conversations at Mr Ivanov's horne on 4 March and 3 April 1983 and a technical

report on them.

1.23 During the course of the hearing, I had to deal with

requests by Counsel to have witnesses called whom Counsel assisting the Commission had not originally intended to call. Several such requests were made to Counsel assisting who interviewed the witnesses, prepared statements, and then either called them to give evidence or tendered their statements, according to the wishes of the party making the request. This process occurred in particular with a number of journalists whose evidence was received during the latter stages of the hearing.

1.24 Another matter with which I had to deal in the course of

the hearing was the protection of the privacy of citizens. There was deleted from evidence, before it was published, material which impinged upon the privacy of persons where its publication would serve no purpose relevant to the Terms of Reference. Indeed, the protection of privacy was taken further. Transcripts of intercepted telephone conversations were not tendered in evidence unless they were relevant to the issues to be determined under paragraph (c) of the Terms of Reference. Thus, of a total of 196 intercept reports made while Mr Combe was

under surveillance between 22 April and 4 May 1983 only 42 were received into evidence.

1.25 Two very important issues were raised at the hearing to

8

which I propose to devote the following two sections o f this chapter, although they, no less than the matters I have de a l t with in 1.20 to 1.24, might be considered under the gen e r al heading of Balance of Conflicting Interests. They a re Parliamentary privilege and Crown privilege.

Parliamentary 1.26 Counsel assisting the Commission wrote to the At tor ney General at the outset of the hearing requesting him to a r range the waiver of Parliamentary privilege attaching to the Hansa r d

reports of proceedings in the Senate and the House of Representatives to enable extracts to be tendered to prove t hat statements contained in them were made on the dates, a n d by t h e persons, attributed to them. The Deputy Speaker of the Hous e o f

Representatives and the Deputy President of the Sena t e r eplied giving their consent to the extracts being adduced into eviden c e for that limited purpose. Any investigation of what h appens in Parliament is, of course, prevented by Article 9 of s.l o f th e

Bill of Rights, 1688 (1 Will and Mar. sess. 2 c. 2) as applied

by s.49 of the Constitution, which is in the following t e r ms :

That the freedom of speech, and debates or proceedings in Parliament, ought not to be impeached or questioned i n a ny court or place out of Parliament.

1.27 The consent given for the use of the Hansard extr a c ts wa s expressly conditioned by reference to that clause.

1.28 Counsel assisting the Commission circulated a written submission on the subject of Parliamentary privilege, whi ch is set out as Appendix c. No other Counsel sought to argue that privilege had any different impact on the processes of the Ro yal

Commission. Counsel for the Speaker of the House of Representatives submitted to me that certain of the issues a s originally drawn, because they invited the Commission t o embar k upon an inquiry into the accuracy of statements made in

Parliament, should be redrawn to avoid the breaches of Parliamentary privilege which that would entail. As indica t ed in

9

1.9, the issues were amended accordingly. The Speaker of the House of Representatives continued to be represented by Counsel.

Crown Privilege

1.29 On 28 June 1983 Counsel for the Government made a claim

for public interest or Crown privilege in respect of discussions by the Ministers who constituted NISC on 21 April 1983. This claim did not go to the material that was placed before the

Committee, or the decisions of the Committee. It was limited to a claim in respect of the discussions by Ministers, including

any record of those discussions.

1.30 Dealing with the claim in respect only of the meetings of NISC on 21 April 1983, I carne to the conclusion that on the

material which I had seen in interlocutory proceedings, it appeared that paragraph 1 of the Cabinet minute of the NISC decision set out what might be considered the collective reasons of the members of NISC for their decision. On that basis, I

reached the conclusion that the claim for privilege should be allowed, saying however, that if it were not - established that the minute did record the collective reasoning of the members of NISC I would reconsider my decision.

1.31 It later became apparent that what was included in the minute could not be considered the collective reasons of NISC in the sense I intended when giving that ruling. On 1 August, shortly before the Prime Minister, the first member of NISC to be called, commenced his evidence, I decided to disallow the

claim for the time being. I directed that the evidence given of

the discussions of Ministers at the NISC meetings and the considerations to which they had regard in coming to their decisions should be received on a Class 2 basis, with the question of its publication to be considered later.

1.32 As the hearing proceeded it became apparent that the claim for privilege could not be wholly sustained. I disallowed in part the claim for privilege for Cabinet notebooks and these

10

were admitted into evidence on a Class 2 basis to the ext e nt

that they disclosed assertions of fact. I allowed the claim f o r privilege in respect of expressions of opinions held by Ministers at the meetings, and disallowed it in respect of questions asked, or statements of fact made, by Minis ters.

Standar? of proof 1.33 Although much of the evidence before the Commi ssion went to matters which were common ground, many asserti ons o f prima r y fact and many inferences were contested. The signifi cance ,

either to the public interest or the interest of any person affected, of the findings I shall make and the infer ences I shall draw in the course of the report varies from slight t o

substantial. In coming to a conclusion on any contested mat te r , I have considered it proper that the degree of my satisfactio n

as to the correctness of that conclusion should match its significance, and it is upon this basis that I have ac t ed .

Use of transcripts

1.34 In a number of sections of the report I refer t o , and

quote from, a conversation which took place on 4 Mar ch 1983 between Mr Combe and Mr Ivanov. That discussion was reco r de d b y ASIO through listening devices which had been installed in

Mr Ivanov's horne. A transcript of the full conversati on prepa r ed

by ASIO is set out as Appendix E. However, several different transcriptions of the same conversation were produced during th e hearings of the Royal Commission. When I have found it appropriate to quote a part of the conversation in the body o f

the report, I have adopted the practice of quoting fr om whichever of the transcripts in evidence I considered t o reproduce most completely and accurately that part.

Form of the Report

1.35 The report, including Appendixes A - H, contains all the material which, in my opinion can be made public. Other material, which I have recommended ought not to be published , is contained in a separate volume of Appendixes, numbered I - VI.

11

CHAPTER 2

ASIO'S CASE

2 .1 I n this Chapter I shall deal with the facts o f what has

come t o be known as the 'Ivanov-Combe affair' as they were known to , a n d a ssessed by, ASIO up to and including the meeting be t we en the Prime Minister and the Director-General of Security, Mr T.H. Barnett, on 20 April 1983. In later sections I will

examine ASIO's assessment of the matter in the light of the ev i d ence which emerged during the hearings of the Royal Co mmm i ssion. Some of that evidence indicates that there were

er r o rs made by ASIO. These errors are dealt with in later parts o f t h e report.

2 .2 ASIO is required by the provisions of s.l7 of the

Intelligence Organization Act 1979 'to

obtain, correlate and evaluate intelligence relevant to

security'. 'Security' is defined in s.4 of the Act as including ' e spi o nage .•. whether directed from, or committed within, Australia or not'.

2.3 When a diplomat from the Soviet bloc applies for a visa t o

enter Australia, enquiries are often conducted to ascertain whether the applicant is a genuine diplomat, or an officer of a foreign intelligence service seeking admission to Australia un der the cover of diplomatic status. Visas are generally issued

only to those applicants who appear to have no intelligence connections or background. The process by which assessments of f oreign diplomats are made is set out in Appendix I.

Va leriy Nikolayevich Ivanov

2.4 On 27 February 1981, Mr Valeriy Nikolayevich Ivanov applied, at the Australian Embassy in Moscow, for a visa to enter Australia as a diplomat. His visa application stated that he was employed as a senior liaison officer at the Department of

12

British Countries of the Union of Soviet Societies f o r Friendship and Cultural Relations with Foreign Countr ies . He was d esignated to take up a position in the Soviet Emb a ssy i n

Canberra with responsibility for liaison with the Aus t r ali a - USSR Society (AUS). That body, which was established in its exist ing form after the Second World War, aims 'to promote mut ua l understanding and friendly relations between the peoples o f Australia and the USSR.'

2.5 The enquiries which were made at the time of Mr I vanov ' s

visa application revealed little information about him. All t h at was known was that he had served for a short time in the Uni t ed

Kingdom. It was concluded that he was probably a g e nu i ne

diplomat within the Ministry of Foreign Affairs. Accor dingl y , o n 24 April 1981, the Australian Embassy in Moscow issued v i sas t o

Mr Ivanov, his wife and young daughter.

2.6 Notwithstanding Mr Ivanov's apparent lack of intellige n ce connections, from the time of his arrival in Australia on 2 0 June 1981 his activities were monitored in the same way a s t h o s e of other newcomers to the Soviet Embassy. From the day o f his

arrival in Australia, ASIO's suspicions about Mr Iva n ov wer e aroused. His behaviour and activities alerted ASIO t o the possibility that he might be something other than a Ministry o f Foreign Affairs diplomat (see Appendix I). Further, be i ng j ust

under 35 years, he was considered young to receive a p o s ti n g , particularly a first operational posting overseas, a s Fi rst Secretary in a Soviet Mission.

2.7 By early June 1982 ASIO had made sufficient obse r va ti o ns o f Mr Ivanov's conduct to lead it to suspect that he wa s an o f fi cer

of the KGB. Accordingly, on 30 June it applied to the the n Attorney-General for the issue of a warrant under s.2 6 (4) o f th e Australian Act 1979 to us e a

listening device in Mr Ivanov's house. On 2 July the Attorney-General granted the request and issued a war rant t o b e effective for a period of six months. A further warrant,

13

effective for a period of six months from 3 January 1983, was issued by the Attorney-General on 2 December 1982.

2.8 Between 8 June and 24 July 1982, Mr Ivanov was o n leave in

the Soviet Union. Such home leave is not uncommon for newly posted diplomats and is timed to coincide with the northern summer.

2.9 By November 1982, ASIO was satisfied as a result of its

surveillance of Mr Ivanov's activities and movements that he was a KGB officer. Detaiis of Mr Ivanov's conduct and pattern of

behaviour upon which ASIO relied to make its assessment are set out in Appendix I.

2.10 In early 1983 ASIO received confirmation from an overseas s o urce that its assessment of Mr Ivanov as a KGB P.R. Line

i ntelligence officer was correct. Details of this confirmation

a re contained in Appendix I. Obviously, in view of the time at

which that confirmation became available to ASIO, it played no part in ASIO's identification of Mr Ivanov which it had made b y November 1982. It merely confirmed that identification and assisted ASIO in issuing a 'formal assessment' of Mr Ivanov as a KGB officer on 25 March 1983.

Ha rvey David Combe

2.11 Although ASIO first observed contact between Mr Ivanov and Mr Combe in March 1982, the name 'Harvey David Mathew Combe' ha d

been previously known to ASIO as that of a former National Secretary of the ALP. In 1975, following a directive of the then Director-General of ASIO, all of the Organization's files on Mr Combe were destroyed. A new file on Mr Combe was commen c ed i n

1976 recording ASIO's observations of contact between various officials of the Soviet Embassy and Mr Combe. However, to the exte nt that ASIO attempted any reconstruction of the earlier years of Mr Combe's contacts and dealings with the Soviet Union a nd Soviet officials, there was very little information available to ASIO when it first observed contact between

14

Mr Ivanov and Mr Combe.

Contact between Ivanov and Combe 2.12 The first observed contact referred to in 2.11 occurr ed on 2 March 1982 when Mr Ivanov contacted Mr Combe by t e lephon e

about what Mr Ivanov described as 'problems' in rel a ti on to that month's meeting of the National Council of AUS. Mr Co mbe agreed to meet Mr Ivanov that day in Mr Combe's home. Two days later

Mr Combe unsuccessfully attempted to contact Mr Iva n ov . Fur ther

contact between the two took place on 20 March at a cocktail party held in conjunction with a meeting of AUS, and i n early May when Mr Ivanov rang Mr Combe and explained that h e was

shortly going to Sydney and suggested that they meet t her e . It is thought by ASIO that, although Mr Ivanov attempted to contact Mr Combe whilst in Sydney, no contact was in fact ma de . Further

telephone contact took place in mid-September 1982 a n d Mr Ivanov then arranged to visit Mr Combe at his home on 22 Se p t ember to

give him some souvenirs from the USSR.

2.13 Thus, between 2 March and 22 September Mr Ivanov 's interest in Mr Combe appeared to be sporadic, and, except for the giving of gifts to a person with whom he had h a d v e r y few

dealings, unremarkable.

Combe's trip to the Soviet Union 2.14 On 1 October 1983 Mr Ivanov rang Mr W.G. (Bill) Mountier , the Secretary of AUS, and enquired whether it would b e possibl e for someone from AUS to go to Moscow from 23 to 25 No v e mber to

attend an international meeting of representatives o f th e Friendship Societies. It was indicated by Mr Ivanov that the fares of the representative from Singapore to Moscow a n d return would be paid by the Soviet Union. After some discussio n as to

who would be attending on behalf of AUS, Mr Ivanov suggested

David Combe as an appropriate person. Mr Mountier ind i cat ed that he thought Mr Ivanov's suggestion was a good idea and undertook to pursue it with AUS. On 8 October Mr Mountier advised Mr Ivanov that Mr Combe had accepted the invitation. On

15

9 November, in a further conversation between Mr Ivanov and

Mr Mountier, reference was made for the first time to the fact

that Mr Combe was to be accompanied by his wife on the trip.

This, in ASIO's view, was unusual and not in accordance with customary AUS practice. Finally, on 15 November, Mr Ivanov and Mr Mountier once again conferred on the proposed trip and Mr

Mountier was told that after the conference the Combes would spend a week travelling to other places. It was ASIO's view that it was customary for such 'side trips' to be offered to persons who were regarded as important guests of the Soviet Union. The o ffer to Mr Combe was seen as probably reflecting his status as

a member of the executive of AUS and in the wider community.

2.15 Before Mr Combe's visit to Moscow, ASIO had limited its interest in him to noting his membership of AUS and his interest in Russian things. However, his trip to the Soviet Union in November 1982 once again drew ASIO's attention to Mr Combe and

heightened its interest in his association with Soviet officials. That was particularly so as ASIO perceived Mr Ivanov t o b e 'stage-managing' Mr Combe's trip, even to the extent of

hosting a dinner for Mr Combe and his wife on the evening of 26

October, which may have been preparatory to. Mr Ivanov's recommending the issue of a visa to Ms Meena Blesing (Mrs David Combe). It was after Mr Combe's return from Moscow that ASIO b egan to evince concern about his relationship with Mr Ivanov.

Combe's return from the Soviet Union 2.16 Mr Combe's first known contact with Mr Ivanov upon his return from the trip was when he rang Mr Ivanov on 15 December. Certain aspects of that conversation attracted the attention and

concern of ASIO. Mr Combe informed Mr Ivanov that he had met Mr Parasteyev (of the Union of Friendship Societies) and

Mr Kudinov (of the Central Committee) and had come away with

lots of undertakings. He referred to having spoken to Mr Kudinov about the 'episode' and to Mr Kudinov's having sought his, Combe's, advice on relations between the ALP and the Soviet Union. Mr Combe indicated that he had told Mr Kudinov that he

16

was more than happy to do what he could, and said to Mr Ivanov

that he would like to talk to him about it as he had hi s own

thoughts on it and would not mind acting in a liaison capacity . Mr Combe mentioned to Mr Ivanov that he had also met Mr Sharif,

Mr Lagutin, Mr Raina, Mr Saprykin and Mr Sulikov whilst i n

Moscow. Mr Combe then indicated to Mr Ivanov that other matte rs

should not be discussed on the telephone. Mr Ivanov concluded the conversation by saying that he thought they were in f or a long session when they met, and suggested a call on Mon day .

2.17 ASIO noted the seniority of the Soviet officials whom Mr Combe met whilst in Moscow and felt that one or two o f them

were more senior than the officials ordinarily encounte r ed by delegates from friendship societies. The references by both Mr Combe and Mr Ivanov to further meetings and discussions

caused ASIO to be interested in the apparent developing relationship between the two men. ASIO also attached significance to Mr Combe's offer to act in a liaison capacity and to Mr Ivanov's comment that he thought they were in for a

long session when they met. ASIO concluded that there was a taking up of arrangements apparently begun in Moscow, a n d was concerned to ascertain what liaison capacity was contemplated . Finally, Mr Combe's comment about not discussing the other matters on the telephone attracted ASIO's attention be c a use it

indicated a new and heightened awareness of security matters on his part.

2.18 Following Mr Combe's return from Moscow, ASIO obta i ned information on his activities in the Soviet Union. Deta i l s of that information and its sources are set out in Appendix II . However, action in regard to Mr Combe was confined to recording

the information on his file.

2.19 Between 15 December 1982 and 4 March 1983 ASIO was aware of a number of telephone and personal contacts between Mr Combe and Mr Ivanov. It appears that they met on two occasions - once , on 25 December, when Mr Ivanov brought some 'small souvenirs' to

17

t h e Combes' house for Christmas and, again, on 7 January, when

Mr Combe invited Mr Ivanov to his horne for drinks before going

ou t t o dinner with him.

2.20 Although by 3 February 1983, ASIO was becoming concerned about the developing relationship between Mr Combe and Mr Ivanov, it was cautious and unwilling to jump to conclusions

abou t it. This was reflected in the fact that, in a routine

b ri e fing of the then Attorney-General which took place on that

day, no mention was made of Mr Combe when the Director-General o f ASIO informed the Attorney that Mr Ivanov had been assessed

as part of the KGB Residency.

2.21 However, ASIO was sufficiently concerned about Mr Ivanov's int e rest in Mr Combe to commence obtaining opinions about Mr Combe's likely reaction to an approach by ASIO to obtain

i n f o rmati on on Mr Ivanov's activities, particularly his reasons

fo r being in contact with Mr Combe, and to explain to Mr Combe

the danger he was getting into by associating with Mr Ivanov. This process began on 7 October 1982 and was resumed in 1983. Mos t of the opinions about Mr Combe's probable reaction

sugge sted that he would be unreceptive to such an approach, and c onsequently ASIO concluded that an interview of Mr Combe was

not likely to be productive.

Dinner at Ivanov's horne on 4 March 1983 ·-·-------2.22 On 4 March 1983, the eve of the federal election, Mr Combe

dined at Mr Ivanov's house. ASIO was unable to establish when and in what circumstances Mr Ivanov issued the invitation to Mr Combe. As ASIO was unaware of any discussion between the two

about the arrangements for the dinner, it concluded that either there had been another meeting in late February or Mr Ivanov had telephoned Mr Combe from a public telephone (which was a known KGB practice). The dinner, attended only by Mr Combe and

Mr Ivanov (although Mrs Ivanov was present intermittently in the

dining room) lasted for almost six hours. The discussion whi ch took place in Mr Ivanov's horne during the course of the evening

18

was recorded by ASIO through the listening devices wh ich h ad

been installed under warrant. ASIO believed that wh en Mr Ivanov's report of the dinner was received by the KGB (i t

being standard KGB practice to remit reports on case devel o pm ent to its headquarters for assessment) the report woul d ha v e created or confirmed a view of Mr Combe as being an e xcellent candidate for recruitment by the KGB.

2.23 The conversation between Mr Combe and Mr Ivanov was l o n g , and covered topics such as the next day's federal elec tion , t h e

possibility of the Soviet government building a new e mb ass y i n Deakin, the CIA and a film then in production dealing with t h e Australia/ U.S. alliance, Afghanistan, trade, Soviet/ Aus tr a l ian political relations, Mr Combe's hopes and plans for h is p e rsonal

and business future, the conference Mr Combe attended i n Mo sco w and the plight of Jews and dissidents in the Sov i et Un i on . The

main features of the discussion which led ASIO to c oncl ude , in the words of one witness, that Mr Combe had, in effe ct, handed to the KGB the central elements for recruitment, wer e :

(i) his willing declaration of a personal friendsh i p with Mr Ivanov;

(ii) his desire to get rich quickly; (iii) his anti-Americanism; (iv) his claimed access to Ministers and senior governmen t officials;

(v) his enthusiasm for things Soviet, including hi s enthusiasm for Mr Ivanov's proposal that he should work for the Soviet Union.

2.24 Before the conversation of 4 March, the situation which confronted ASIO was one which it had observed on a number o f previous occasions - the pursuit of an Australian citizen by a KGB officer. It was not something which unduly worried ASIO f or

the KGB officer was doing no more than ASIO expected him t o d o . It was felt that it was a controllable situation. However, wi th the knowledge gained from the tape of the conversation of 4

19

March, ASIO began to consider whether the Government should be briefed on the situation. That consideration was prompted by ASIO's perception that, for the first time in the pursuit of Mr Combe by Mr Ivanov, all the elements for which a professional

intelligence officer would be looking before attempting a recruitment had come together.

Further contact between Ivanov and Combe 2.25 It came to ASIO's notice that Mr Ivanov rang Mr Combe on

15 March. In that conversation, Mr Ivanov invited Mr Combe to

visit him at his home that night. Mr Combe asked Mr Ivanov if he had any news. Mr Ivanov replied - 'Yes'. Mr Combe a.sked if it

was good or bad. Mr Ivanov replied 'Not bad'. ASIO has

speculated that the news to which Mr Combe referred was the response from Moscow to the proposal discussed by Mr Combe and Mr Ivanov on 4 March that 'Mr Combe should take on a direct

contractual role with the Soviets.'

2.26 On 20 March Mr Ivanov twice sought to speak to Mr Combe on

the telephone. To ASIO this indicated that Mr Ivanov was anxious to make contact with Mr Combe.

2.27 On 21 March Mr Combe and Mr Ivanov agreed to meet at the

Lakeside Hotel, Canberra, for lunch. Mr Combe suggested that they meet in the foyer. However, Mr Ivanov indicated that he would meet Mr Combe in the parking area at the back of the

hotel. ASIO regarded that suggestion of Mr Ivanov as reflecting standard KGB practice whereby the intelligence officer always dictated the meeting place. The lunch meeting took place and was observed by ASIO surveillance officers who reported that Mr

Ivanov took care to select a table in the restaurant which afforded a wide view of the rest of the restaurant and that

during the meal both men appeared relaxed and neither dominated the conversation.

April 1983

2.28 On Sunday 3 April 1983 a further significant contact

20

occurred between Mr Ivanov and Mr Combe. On that day, a t approximately 5.00 p.m., Mr Combe arrived without warning at Mr Ivanov's home. The conversation, which lasted for

approximately one hour, was recorded by ASIO through lis tening devices installed in Mr Ivanov's house. In the course o f the discussion, which principally concerned trade, Mr Combe mentioned that he was getting documents concerning 1975 and th e

CIA and would give them to Mr Ivanov. ASIO attached signifi cance

to Mr Combe's offer to provide documents to Mr Ivanov, f or not only were the documents of a political nature and unco nnect ed with trade, but the provision of any documentary material , however innocuous in content, was seen as a further step in th e

cultivation process which would condition Mr Combe to t he handing over of documents. It was the view of ASIO that, once one set of documents had been given, it would be easier t o ask

for another set and, before long, the KGB officer would seek classified material. It should be noted that the contents o f th e conversation of 3 April did not come to the attentio n o f the

responsible officers in ASIO until 20 April. Until tha t time, it was known that the conversation had been recorded, but it was

not known how much of use could be recovered from the t ape .

2.29 As Mr Combe was leaving Mr Ivanov's home on 3 Apri l , Mr

Ivanov issued what has been described before me as 'a warning' to Mr Combe . Mr Ivanov warned Mr Combe to adopt a very l o w

profile and not to ring or see him. He told Mr Combe tha t f r o m

the moment he (Mr Combe) returned from Moscow he had been under surveillance and that his phone was monitored and his h o use bugged. Mr Ivanov informed Mr Combe that he (Mr Ivanov) was th e subject of attention by ASIO and, accordingly, Mr Combe was not

to contact him but he would contact Mr Combe when requir ed . Mr Ivanov told Mr Combe that, in his opinion, he was being set up

to be expelled as had recently happened to other Soviet diplomats in France. Mr Ivanov's warning to Mr Combe was, according to ASIO, an important element in the case, for it perceived the warning as raising the relationship to a

clandestine level. As ASIO saw it, to invoke clandestini ty ,

21

confidentiality or secrecy, as Mr Ivanov did, is a very deliberate act indicating that the KGB is very serious in its

pursuit of the person being cultivated. Further, ASIO was c oncerned that if the relationship became clandestine it might

no t be able to monitor it and thus the situation would be more

hazardous for national security.

2.30 The warning of 3 April caused ASIO concern for another reason. As far as ASIO could tell, Mr Combe had neither rejected nor challenged Mr Ivanov's proposal of clandestinity. Nor had he f e lt sufficiently uneasy about it to seek advice from anyone on

how he should conduct himself with Mr Ivanov. This, coupled with

a lack of further telephone contact between the two men, led

ASIO to conjecture whether Mr Combe had, in fact, acceded to Mr

Ivanov's proposal.

2.31 Because of the time at which Mr Ivanov's warning to Mr Combe became known to ASIO, the warning formed no part of the

decision of the Director-General of Security to seek an appointment with the Prime Minister. It did, however, form part of the material which was placed before the Prime Minister and NISC on 20 and 21 April. (The manner in which ASIO became aware

of Mr Ivanov's warning to Mr Combe of 3 April is dealt with in

Appendix II.)

seeks an ap.t:ointment with Prime

2.32 ASIO's concern about Mr Ivanov's activities led its Director-General, Mr T.H. Barnett, on 5 April, to seek an appointment with the Prime Minister to discuss what he termed 'a matter relating to Australia's national security'. The request

for the appointment was made through Mr J.D. Enfield, a Deputy-Secretary of the Department of the Prime Minister and Cabinet. Because of the Economic Summit which was to be held in Canberra the following week, Mr Barnett was advised that the

Prime Minister would be unable to see him until the week beginning 18 April. Eventually, on 19 April, Mr Barnett was advised by Mr Enfield that the Prime Minister would see him the

22

following day.

Final Contact between Ivanov and Combe 2.33 The final contact between Mr Combe and Mr Ivanov of wh ich ASIO was aware occurred in Melbourne on 16 and 17 April wh e n

both Mr Combe and Mr Ivanov attended the 8th National Con f erence of AUS. Nothing untoward was observed in their conduct t o gether .

Barnett's meeting with the Prime Minister 20 April 1983 2.34 Mr Barnett's meeting with the Prime Minister, which h e had sought originally on 5 April, took place in the Prime Mi nister ' s o ffice in Parliament House at 4.45 p.m. on 20 April. Mr Ba r nett

informed the Prime Minister that he had sought the meeting to d iscuss a matter of national security, involving Mr Valer iy

I v anov, the First Secretary of the Soviet Embassy who was

concerned with AUS. He told the Prime Minister that when Mr Ivanov first applied for entry into Australia there was no b elief on the part of ASIO that he was KGB but that since his

arrival in Australia he had been observed engaging in a number of activities which had led ASIO to conclude that he was a KGB intelligence officer. The Prime Minister was told of tho s e activities. Mr Barnett also informed the Prime Minister that Mr

Ivanov had been using the modus operandi of the professional i ntelligence officer and that ASIO's assessment of Mr Ivanov as a KGB intelligence officer had been confirmed in March 198 3. The

Prime Minister was given the information contained in Appe n dix I .

2.35 Mr Barnett then said to the Prime Minister that he h ad

what he regarded as a d i fficult and delicate task, and that was to explain that Mr David Combe was one of Mr Ivanov's contacts and it was ASIO's belief that Mr Ivanov was cultivating him . The Prime Minister was told that Mr Combe had enjoyed travel privileges from the Soviet Embassy in 1976 when he travelled

without charge on board the Soviet cruise ship, Leonid Sobinov -a trip which had been arranged in Sydney by a KGB officer. He

was also told of Mr Combe's membership of AUS and his posi t i o n

on its executive. Mr Barnett informed the Prime Minister that i n

23

November and December 1982, under arrangements concluded by

Mr Ivanov, Mr Combe had visited the Soviet Union and that the

cost of Mr Combe's and his wife's air tickets and their expenses in the USSR had been met by the Soviet Union. The Prime Minister was told that KGB officers frequently make these arrangements. Mr Barnett said that Mr Ivanov had offered gifts to Mr Combe and

there had been a number of contacts, personal and by telephone, following Mr Combe's return from Moscow. Other information provided to the Prime Minister and, subsequently, NISC is set o ut in Appendix III.

2.36 The Prime Minister ' s attention was drawn to the conversation recorded in Mr Ivanov's house on 4 March. He was informed that it was this conversation which caused ASIO concern because of the fear that Mr Combe was being assessed and

cultivated with a view,perhaps, to recruitment. He was told that the meeting of 4 March was, substantially, between Mr Ivanov and Mr Combe alone and that throughout the conversation the

television set had been operating and creating background noise and that, at several points in the conversation, Mr Ivanov had lowered his voice, which, Mr Barnett claimed, was indicative of Mr Ivanov's concern that the house might be bugged. Mr Barnett

informed the Prime Minister that Mr Combe had told Mr Ivanov of his closeness to the Government and its members and his consequent ease of access, his intention to make the next two years economically the most fruitful of his life and his hope

for a 'job for the boys' (such as the chairmanship of Qantas -

mentioned somewhat facetiously- or ambassador to Moscow). Mr Barnett said that the conversation revealed that Mr Combe harboured resentment against the United States because of his belief that the CIA played a role in the overthrow of the

Whitlam Government in 1975. The Prime Minister was told that Mr Combe was broadly sympathetic to the aims of the USSR and had

displayed enthusiam for developing relations between the USSR and Australia. In this regard, he was further told that there had been discussions between the two men about a proposal whereby Mr Combe would work for the Soviets and transmit

24

information to the Soviet Union at high levels. It was po i nted out to the Prime Minister that such a proposal would have been processed at high levels in Moscow.

2.37 Mr Barnett told the Prime Minister of the suggestion ma de recently by Mr Ivanov to Mr Combe that their relationship s h ould become clandestine. The Prime Minister was informed that Mr Ivanov had told Mr Combe that ASIO had put Mr Combe under

surveillance since he returned from the Soviet Union in December, and that his house and phone were bugged. There was a lso recounted to the Prime Minister Mr Ivanov's suggest ion that

he himself was under suspicion and likely to be expelled, thus creating a problem for Mr Combe because of their relationship . Mr Barnett then adverted to Mr Ivanov's suggestion that Mr Combe

should adopt a low profile and not contact him but await contact from Mr He advised that Mr Ivanov's false informa t ion t o

Mr Combe was classic disinformation and was a standard KGB ploy

in a process of cultivation. Mr Barnett indicated to the P r ime Minister that the introduction of clandestinity into the relationship was significant as it marked a definite stage in the cultivation process. The Prime Minister was told that ASIO

was uncertain whether Mr Combe had acquiesced in the proposal

but that the Organization believed that Mr Combe thought Mr I vanov was a KGB officer. Mr Barnett stressed that the

relationship had now become very dangerous, for not only would Mr Ivanov's continuing cultivation of Mr Combe have bee n

determined in Moscow, but also ASIO could not guarantee surveillance of the relationship if it became clandestine. Th e Prime Minister was reminded that the danger to secu r ity

was heightened by Mr Combe's access to members of the Government

and confidential material held by its members.

2.38 Mr Barnett expressed the view to the Prime Minister that Mr Ivanov was attempting to compromise Mr Combe with a vi e w to

his ultimate recruitment as an agent. The Prime Minister wa s deeply concerned about the information which had just been relayed to him. He concluded that the relationship consti tuted a

25

very real risk to national security and felt that if it were

permitted to develop further Mr Combe could be irretrievably compromised.

2.39 At the invitation of the Prime Minister, Mr Barnett detailed what he perceived to be the alternative courses of action open to the Government in the circumstances. First, Mr Combe could be summoned and counselled about his position. Mr

Barnett indicated however, that Mr Combe, as a private citizen, would not be required to accept any advice given to him, and thus there remained a risk that he could alert Mr Ivanov to ASIO's activities in relation to him. Both the Prime Minister and Mr Barnett concluded that this course of action was

inappropriate as it involved unacceptable security and political risks for the Government. Secondly, Mr Barnett suggested that, since the new government wanted to improve relations between and the Soviet Union, Mr Ivanov could be expelled

quietly and without public announcement. The Prime Minister rejected this second suggestion on the ground that news of the expulsion would inevitably leak, thereby defeating the object of the exercise. He considered, in any event, that where an accredited diplomatic representative had flouted accepted

conventions for subversive purposes, it was quite impossible to contemplate that course of action. Thirdly, it was suggested b y Mr Barnett that Mr Ivanov could be expelled publicly. In

indicating to the Prime Minister that he favoured the third course, he made it clear that, as ASIO had for a long time been

accused of not having detected a spy, the publicity which woul d attend the expulsion would be to ASIO's benefit for ASIO would then be seen as having achieved a significant result. Although he did not then indicate it to Mr Barnett, the Prime Minister ,

upon hearing the advice and suggestions from the Director-General of Security, formed the belief that Mr Ivanov had to be expelled publicly.

2.40 The Prime Minister formed the opinion, almost immediately, that he should call a meeting of NISC. I shall deal with the

26

meetings of NISC in the next Chapter.

Assessment of ASIO's case 2.41 As will become apparent in later sections of my report, there were certain errors and misconceptions contained in some of the information provided by Mr Barnett to the Prime Min ister at their meeting in the afternoon of 20 April. The nature and

significance of those errors and misconceptions will be examined later. Before turning to the response of the Government to ASIO's case, I make the following observations of ASIO's handling of the matter up to and including Mr Barnett's meeting

with the Prime Minister on 20 April -

(i) ASIO's detection and identification of Mr Ivanov as a KGB officer less than 12 months after he arrived in

Australia was achieved through a process of careful and professional analysis. Its identification of Mr Ivanov was correct and was confirmed to be so in

early 1983. (ii) When ASIO formed its opinion as to Mr Ivanov's intentions in regard to Mr Combe, it adopted a cautious and objective attitude to Mr Combe's

relationship with Mr Ivanov. It was conscious of Mr Combe's position both in political circles and the community generally, and avoided taking any precipitate action which might have unfairly affected

Mr Combe. An example of this occcurred on 3 February

1983 when the Director-General of Security deliberately refrained from mentioning Mr Combe' s name in a routine briefing of the former Attorney-General, Senator the Honourable P. Durack, during which the activities of Mr Ivanov were outlined. (iii) There is no evidence that, before 21 April 1983,

Mr Combe was the target of any surveillance by ASIO.

To the extent to which ASIO made observations of

Mr Combe's movements and activities, they were

entirely incidental to its surveillance of Mr Ivanov

27

and other Soviet officials. (iv) The Director-General of Security acted respon sibly a nd within the provisions of sub-s.l7 (1) of the Australian Intell i gence Organisation Act

1979 in deciding, on 5 April, to notify the Prime Minister of his concern. However, after he was advised that the Prime Minister would be unable to see him f o r almost two weeks it would have been proper for him to have sought an appointment with the Attorney-Genera l,

who was the Minister responsible for the

administration of the Act. It is now clear that no damage to the national security occurred as a result

of the delay in briefing the Prime Minister. However, this judgment is made with hindsight. The potential damage to national security from delay was serio us. (v) On the material available to ASIO on 20 April there is

no doubt that its conclusion that Mr Ivanov's

(vi)

relationship with Mr Combe was such as to have serious implications for national security was correct. Those implications are discussed in Chapters 3 and 4. The evidence satisfies me that it was reasonably open

for ASIO to conclude that there were grave dangers in attempting to acquaint Mr Combe with any of the relevant material before communicating with the Government. Not only were the opinions about Mr Combe's likely reaction to such an approach overwhelmingly against making it, but the information which ASIO gleaned from his conversation of 4 March with Mr Ivanov entitled it to conclude that Mr Combe would probably be hostile to an approach from ASIO. ASIO's view was confirmed by the Prime Minister who rejected the notion of counselling Mr Combe on

security grounds amongst other reasons. (vii) With the qualifications indicated in 4.110 to 4 . 113 and Appendix V Mr Barnett's presentation to the Prime Minister was adequate, objective and fair. He was

28

aware of the delicacy required in putting to a Pri me Minister that a close political colleague had bec ome involved with a Soviet spy. He showed an appre c i ation of the sensitivity of the whole matter and di d n o t

fail to declare the interest of ASIO in achiev ing the public expulsion of Mr Ivanov with concomitant publicity and kudos for ASIO.

29

CHAPTER 3

THE GOVERNMENT'S RESPONSE TO ASIO'S CASE

3 .1 During the Prime Minister's meeting with the

Director-General of Security, which bega n at 4.45 p.m. on 20 Ap ril 1983, the Prime Mi n ister determined that the info rmati o n

p r ov ide d by Mr Barnett was so seriou s that it r e quired the

con v ening of the National and Internatio nal Se c urity Commi t t ee o f Cabinet (NISC) to consider the materia l and the Government's

course s of action (see 2.40). In my view, t he Prime Ministe r wa s justified in concluding that the situation warranted calling a meeting of NISC.

Es t ablishment of NISC

3 .2 Although NISC was established as a sub-committee o f the

De fen c e and External Relations Committee; it functioned fr o m the

o uts e t as a committee of Cabinet. While it wa s established

shortly after the election of the Labor Government on 5 Ma rch 1 983, it had not previously met before it was convened t o

consider the Ivanov matter. As at 20 April its members we re the Prime Minister (the Ho noura ble R.J.L. Hawke), the Deputy Prime Minister and Ministe r for Trade (the Honourable L.F. Bowen), the Minister for Foreign Affairs (the Honourable W.G. Hayden), the Attorney-General (Senator the Honourable G.J. Evans), the Minister for Defence (the Honourable G.G.D. Scholes) and the

Special Minister of State (the Honourable M.J. Young). As its name suggests, the Committee was principally concerned with security sensitive matters affecting defence and international r e lations.

Meeting of NISC Ministers on 20 April 3.3 At approximately 8.30 p.m. on 20 April, at the Prime

Minister's request, a number of the members o f NISC met i n the

Prime Minister's office in Parliament House. The Prime Minister informed the Ministers that the Director-General of Security h ad

30

been to see him and had informed him that a matter of national security had arisen concerning the activities of a Soviet diplomat with David Combe. The Ministers were informed brie f ly of the nature of some of the material which Mr Barnett h ad

presented to the Prime Minister. It was then decided that Mr Barnett ought to be summoned to attend the meeting t o outline

the details of the problem which had arisen.

3.4 At 9.00 p.m., Mr Barnett carne to the Prime Minister's office. Present on this occasion were the Prime Ministe r , the Minister for Foreign Affairs, the Attorney-General, the Special Minister of State and Mr Graham Evans, the Prime Minister's Principal Private Secretary. The Deputy Prime Minister wa s

thought, at the time, to be in Sydney and unable to atten d the

meeting. It was later discovered that he had, in fact, returned to Canberra in the evening of 20 April. The Minister f o r Defence was unavailable to attend the meeting. At the request of the

Prime Minister, Mr Barnett related to those present what h e had earlier told the Prime Minister (see 2.34 to 2.38). At b o th h is

earlier meeting with the Prime Minister and the meeting o f NI SC at 9.00 p.m., Mr Barnett, in the course of his presentation, referred to a document which he had prepared and was enti tled -'Aide Mernoire : KGB Political Intelligence Operations in

Australia'. This document is reproduced as Appendix IV. During the course of this first meeting of NISC, the aide-mernoire was made available to both Senator Evans and Mr Young. Mr Barnett concluded his briefing of the Ministers by describing the

relationship between Mr Ivanov and Mr Combe as one which gave rise to very grave concern and ought to be terminated. Mr Barnett was questioned closely by the Ministers on a v a rie t y

of subjects including the KGB and how it operated, Mr Comb e's trip to Moscow, the conversation of 4 March between Mr Combe and Mr Ivanov and other details of the relationship.

3.5 The Ministers considered what action ought to be taken i n relation to Mr Ivanov. Mr Barnett once again declared ASIO's interest in the matter and recommended Mr Ivanov ' s public

31

expulsion and, although the other two courses which had been put previously to the Prime Minister (see 2.39) were considered, the members of the Committee clearly favoured public expulsion as soon as possible. Mr Hayden was asked to consider the diplomatic

and other relevant implications of expelling Mr Ivanov and to give consideration to the mechanics and timing of the expulsion. Senator Evans was requested to work with Mr Barnett on drafting a press release which would inform the public of what the

Government was doing while still protecting national security interests. During the meeting there was some discussion on whether Mr Combe might have committed a criminal offence, but the Attorney-General suggested that it would be premature to

form any judgment about his criminal liability without knowing more of what Mr Combe had actually done. However, he undertook to look into the question. The Ministers were generally of the view that they needed a lot more information than they had received that evening. Thus it was that Mr Barnett was requested to prepare urgently a full report on the whole Ivanov-Combe relationship. The meeting concluded at approximately midnight. A

further meeting was scheduled for 8.30 a.m. on 21 April.

3.6 Shortly after the meeting concluded, Senator Evans and Mr Barnett discussed the nature of the material which could be

included in a press release. In the course of this discussion, the Attorney asked to see the actual transcript of the conversation of 4 March. Mr Barnett indicated to his Minister that he was unwilling to show him the text of the transcript as

it was inappropriate for Ministers to look at raw intelligence material for fear that it might be misunderstood. The Attorney was referred to the following passage in the Fourth Report of

the Royal Commission on Intelligence and Security (1977):

363. Assuming that the Director-General is subject to the direction and control of the Minister to the extent I have indicated, the Minister, in the exercize of his powers, would be entitled to enter and to inspect any premises of ASIO, and to take with him such persons as he might think

necessary to assist him in any proper inspection, including members of the Commonwealth police force.

32

364. However, neither the Minister nor anybody on hi s behalf would be entitled to seize or to inspect o r othe rwi se to interfere with ASIO files holding intelligence except to the extent that the Director-General, having duly cons idered

the matter, comes to the conclusion that the intelli g ence in a particular file or in particular files should be communicated to the Minister or to his representatives f o r a purpose relevant to security.

365. If the Minister or his representatives attempted to effect any such seizure or inspection or interference without the consent of the Director-General, it would be the right and indeed the duty of the Director-General t o r esist

it. I think that I should add that at the time of the

so-called 'raid' by the Attorney-General in 1973, th e view which was then accepted and had been acted on f o r a number

of years was that the Director-General was subject in all respects to ministerial direction and control.

The Attorney accepted the view propounded by Mr Barnett and did not press to see the transcript. I feel constrained t o s ay that

the Director-General's use of the abovementioned section of the Report was, in the circumstances, misconceived. Those paragraph s we re intended to indicate that material in ASIO fil es ought not

to be made available randomly, but should only be communicated to Ministers where the Director-General feels it necessary to acquaint them with information for a purpose relevant t o security. Here, the Director-General clearly felt it neces sary

to make such a communication and, accordingly, it woul d h ave been appropriate for him to make available to the Attorney-General a copy of the transcript which had been requested. The evidence of the Attorney and other ministers who

attended the meeting on 20 April leads me to conclude that their a ppreciation of some of the matters which were put to the m by

Mr Barnett might have been enhanced had they had before th em

copies of the transcript of 4 March.

Meeting of NISC at 8.30 a.m. on 21 April

3.7 At 8.30 a.m. on 21 April, NISC met in the Prime Minister ' s

o ffice in Parliament House. Present on this occasion wer e all

members of the Committee, Mr Barnett, Sir Geoffrey Yeend, Secretary of the Department of the Prime Minister and Cabinet , and Mr Graham Evans, the Prime Minister's Principal Private

33

Secretary. At the request of the Prime Minister, Mr Barnett repeated to those present what he had told the Prime Minister and the other Ministers the night before. He was questioned closely by the members of the Committee. Many of the questions went to matters of national security and are dealt with in Appendix III. It was clear to the Ministers that, on some matters, Mr Barnett lacked the detailed and specific information

which they required and, accordingly, he was requested to obtain further information. The meeting adjourned to enable Mr Barnett to secure the attendance of officers who possessed the necessary information and arrange for the production of relevant files. Mr Barnett was also directed to consult with officers of the

Attorney-General's Department to enable them to examine the evidence and prepare an opinion on Mr Combe's liability under the Crimes Act. This consultation occurred at 10.15 a.m. and

resulted in the preparation of a written opinion which stated that 'the information contained in the Aide Memoire constitutes an insufficient basis on which any criminal charges could be brought against Mr Combe, in particular, charges under ss.78 or

79 of the Crimes Act 1914. '

3.8 The Committee also discussed the question of briefing the Leader of the Opposition, the Honourable A.S. Peacock, on the matter. The briefing of Mr Peacock eventually took place in the afternoon of the same day, 21 April and is dealt with in 3.18.

3.9 It was apparent that, up to this point, the NISC Ministers had been thorough and demanding in their examination of the material which ASIO, through its Director-General, had provided to them. Although Mr Barnett, at the invitation of the Prime

Minister, had expressed his views on the courses of action available in respect of Mr Ivanov, the Ministers were unwilling to accept those views without questioning and analysis of all the available material. Further, when it became apparent that Ministers required more information than Mr Barnett was then able to provide, they had no hesitation in adjourning the meeting and postponing the making of decisions until the

34

information could be made available.

of NISC at 12._.30 April

3.10 NISC reconvened in the Cabinet room at 12.30 p.m. On this occasion, Mr Barnett was accompanied by four ASIO offi cer s . Those who had attended the 8.30 a.m . meeting were then j oine d Messrs Henderson and Feakes from the Department of Foreign

Affairs and Mr J.D. Enfield from the Department of the Prime Minister and Cabinet and, later in the meeting, Messrs Brazil and Menzies from the Attorney-General's Department who h ad prepared the legal opinion on Mr Combe referred to in 3.7.

by

3.11 The meeting was marked by rigorous cross-examination of the ASIO officers by the Ministers about the evidence wh i ch had been collected by ASIO. Much of the questioning concerned the matters of national security referred to in Appendix III. Othe r

subjects dealt with included the extent to which trade ma t ters , as distinct from political matters, were discussed by Mr I vanov and Mr Combe, whether Mr Ivanov's instructions to deal wi th Mr Combe would have originated in the Foreign Ministry, KGB or

Central Committee of the CPSU, and which of those bodies was likely to be the final destination of information whi ch Mr Combe may provide to Mr Ivanov, the clandestinity proposal and its

significance, the conversation of 4 March including by r e f erence to the transcript, an examination of the major themes which emerged from it, the proposition that Mr Combe should enter into a financial relationship with the Soviet Government, Mr Co mbe ' s

belief that Mr Ivanov was probably a KGB officer and the dan ger to national security which was seen to arise from the relationship.

3.12 During the meeting, the officers of the Attorney-Gene r al ' s Department brought in the written opinion to which I have referred in 3.7. The Attorney read the opinion and towards t h e end of the meeting, endorsed on it in his own handwriting - ' On

the information available to me, including the detailed briefing by the DG and senior ASIO officers- I agree'. The meeting was

35

then informed of the opinion. It is my view that the advice, on

the facts then available, was clearly correct. Further, no evidence has been put before me which suggests that it is no longer correct or that it needs reappraisal.

3.13 Towards the end of the meeting, the Prime Minister asked Mr Barnett what, in his professional opinion, should be done

about Mr Ivanov and Mr Combe. Mr Barnett advised that Mr Ivanov should be expelled and Mr Combe placed under telephonic and personal surveillance to monitor any attempt by other persons from the Soviet Embassy to contact Mr Combe after the expected expulsion, and to monitor Mr Combe's own reaction. In offering

this advice, the Director-General of Security made it clear that he would not direct surveillance of Mr Combe without express authority from the Prime Minister. The Prime Minister then directed that surveillance of Mr Combe should commence

immediately but ought not to be maintained longer than was necessary.

3 . 14 The Ministers decided that the Leader of Opposition

should be briefed on the whole matter. It was considered that he should be acquainted with all of the material which had been presented to NISC but that he ought to be asked, in fairness to

Mr Combe, not to canvass his name in public as he had committed

no criminal offence and any action which might damage his

reputation should be avoided. The Prime Minister undertook to brief Mr Peacock with Mr Barnett in the afternoon of 21 April.

3.15 NISC also decided that, in view of Mr Combe's retainer as a consultant to the Government of the Northern Territory, the

Chief Minister of the Northern Territory should be acquainted with the matter. The Attorney-General was therefore requested to brief Mr Everingham during the Constitutional Convention which was scheduled to be held in Adelaide the following week.

3.16 It was resolved that Mr Ivanov should be expelled. However, it was decided that the timing and procedure for the

36

expulsion should be considered further and the arrangement s finalised at a another meeting of NISC to be held later in t he

day. Shortly before the meeting concluded at 2.00 p.m., Mr Yo ung requested ASIO to prepare a document setting out chronolo gi cally how the whole matter had developed. This was done, and the

resulting outline, together with another document which Mr Yo u ng had requested to see, was available at a further meeting of NI SC which took place at approximately 5.30 p.m.

Discussions concerning the expulsion 3.17 Between 2.00 p.m. and 5.15 p.m. on 21 April, there we r e

discussions between officers from the Department of Foreign Affairs, and the Department of the Prime Minister and Cabinet and the Director-General of Security, concerning the expulsi on o f Mr Ivanov and its likely consequences. The officers fr o m t h e

Department of Foreign Affairs conG:luded that the expulsion o f Mr Ivanov was a proper course to take. That view was then conveyed to Mr Hayden.

The briefing of the Leader of the Opposition 3.18 At 5.15 p.m., the Leader of the Opposition was briefed i n

the Prime Minister's office. on the Ivanov - Combe matter. That briefing was conducted jointly by the Prime Minister and Mr Barnett. Mr Brazil, the Secretary of the Attorney-Gener a l ' s

Department, was also present. Mr Peacock was told that Mr I van ov had arrived in Australia with no known intelligence background , but that, by keeping him under close surveillance, ASIO had b een able to conclude by November 1982 that he was a KGB officer. He

was informed that Mr Ivanov had developed a wide range of

contacts, one of whom was Mr Combe. Mr Peacock was told of Mr Combe's recent visit to the Soviet Union, details of the

conversation of 4 March including the indication that some s ort of contractual arrangement seemed to be in prospect between Mr Ivanov and Mr Combe, the proposal for clandestinity and

ASIO's view that Mr Combe was being assessed for a possible r o l e as an agent for the KGB. Mr Brazil showed Mr Peacock the lega l opinion from the Attorney-General's Department and explained its

37

effect to him. The Prime Minister told the Leader of the Opposition that the Government would have proceeded against Mr Combe, had it been able to establish liability under the

Crimes Act. He informed Mr Peacock that the Government would soon be making a decision about expelling Mr Ivanov, but that it considered as no criminal offence had been committed by Mr Combe, his name could not be mentioned in connection with the

expulsion. The Prime Minister told Mr Peacock that the Government was also going to consider its position vis-a-vis Mr Combe. Mr Peacock indicated that he would speak only with

Mr Howard and Mr Anthony about the matters upon which he had

been briefed and that in doing so he would make no mention of Mr Combe's name. He indicated that it was his view that 'if

(Ivanov) is KGB he has to go'. Mr Peacock, it appears, was

particularly concerned with Mr Ivanov's identification as a KGB officer and the need, in the light of that, to expel him from

the country. As he indicated in his evidence before me, he was not particularly concerned with how the conclusion that Mr Ivanov was a KGB officer had been reached.

3.19 Section 21 of the Australian Security Intelligence Organization Act 1979 contemplates that the Leader of the Opposition should receive regular briefings from the Director-General of Security 'for the purpose of keeping him

informed on matters relating to security'. If any statutory justification for informing Mr Peacock of the details of the Ivanov - Combe matter were needed, it is to be found in that

section. However, it is my view, that irrespective of any statutory provisions about consultation with the Leader of the Opposition, it was entirely proper and appropriate for Mr Peacock to have been informed of the Government's concern

about Mr Ivanov's activities. Matters of national security ought to transcend party political considerations and should seldom be allowed to become subjects for partisan controversy.

Barnett informs the Prime Minister of an ASIO error 3.20 I interpolate here that at approximately 4 . 40 p.m.,

38

Mr Ba r nett advised the Prime Minister of a mistake which h e had

made in one aspect of the information which he had given t o the

Prime Minister and later to the members of NISC. I have dealt with this matter in Appendixes III and V.

5.30 p.m. on 21 April

3.21 The final meeting of NISC for 21 April took place at

5 .30 p.m. The Prime Minister and the five other Ministe rs who comprised the Committee were joined by Sir Geoffrey Yeend and

Mr Graham Evans. It was relatively short and, after t h e Pr ime

Mi n ister reported on his briefing of Mr Peacock, was primarily

take n up with making formal decisions on the basis of the i n formation which had been extensively canvassed in vari o us

d i s cussions and meetings since the day before.

made by NISC

3.22 As indicated in 3.21, NISC, late in the afternoon, made a

number of decisions. An issue was raised before the Commission

a s t o how Cabinet and committees of Cabinet reach a decision , or what can be said to constitute the decision. I deal with this

issue in Appendix D and, in accordance with what is there s et o ut, I conclude that the six enumerated €lauses contained in

Cabinet Minute No. 321 (NIS) accurately reflect the decisions made by NISC on 21 April. Cabinet Minute - Decision No. 321

(NIS), omitting the preamble , reads as follows:

The Committee agreed that:

(a) the Minister for Foreign Affairs, tomorrow, summon the Soviet Ambassador, inform him that Mr. I vanov had infringed the conventions applying to the proper conduct of diplomats, and request him to

arrange for Mr.Ivanov to leave Australia within seven days;

(b) the Minister for Foreign Affairs issue a pres s statement at 3pm tomorrow - and handle any subsequent questions on behalf of the Government;

(c) the Prime Minister inform other Ministers that they should not make use of the consultancy service s provided by the Australian citizen referred to in paragraph l (c) above, but without comment o n t he

39

relationship between him and Mr. Ivanov;

(d) the Prime Minister would inform the Leader of the Opposition of the expulsion of Mr. Ivanov and the background;

(e) the Attorney-General, when in Adelaide at the Constitutional Convention next week, advise the Chief Minister of the Northern Territory of the relationship between the Australian citizen and Mr.

Ivanov, and the activities of the Australian citizen; (f) the Director-General of Security arrange for immediate surveillance of the Australian citizen by

all appropriate means.

3.23 I turn now to consider each of the decisions made by NISC

as recorded in Decision No. 321 (NIS). By late afternoon on 21 April, no member of NISC could have been in doubt that ASIO's identification of Mr Ivanov as a KGB intelligence officer was correct. The observations which ASIO had made of Mr Ivanov's behaviour and activities since his arrival in Australia coupled with the confirmation of his status to which I have already

referred admit of only one conclusion. However, there does not seem to be a generally accepted view as to the action which a

government should take when its security service advises it of the presence in the country of an intelligence officer from a hostile foreign power. In 1978, the Department of Foreign Affairs expressed the view that 'any Soviet official who can be proven to have engaged in illegal subversion or intelligence

collection on Australian territory should be subject to an immediate request to the Soviet Embassy for his withdrawal.' This prompted the then Director-General of Security to urge that 'at times there may be a need to extend the principle to cover

Soviet officials who are identified as intelligence officers and who can be shown to be operating outside their ostensible duties, even though further proof cannot be obtained of their involvement in illegal activity.' I find the 1978 view of the Department of Foreign Affairs somewhat restrictive. Had that view prevailed in the present matter, Mr Ivanov might not have been expelled. In fact, the Department of Foreign Affairs

40

officers that expulsion of Mr Ivanov was an

appropriate course. Ample justification for the approach advocated by the Director-General of Security in 1978 (wh ich, incidentally, is supported not only by the present Gov e r n me nt but also by the Leader of the Opposition, Mr Peacock - s ee 3 . 18)

is provided by the conduct and activities of Mr Ivano v. Although he was not proved to have engaged in illegal subversi o n (as defined in s. 5 of the Australian Security Intellige n ce

Organization Act 1979) or intelligence collection in Au s tralia , he had been identified as an intelligence officer and was shown to be operating outside his ostensible duties. On this appr oach , the identification of Mr Ivanov as a KGB officer withou t mo r e ,

warranted his expulsion.

3.24 However, the Government had what I consider was a much more compelling reason for expelling Mr Ivanov. Th e ev i dence

satisfies me that Mr Ivanov, who had demonstrated tha t he was an a c tiv e KGB officer, was cultivating Mr Combe whom h e p e r ceived

t o be sympathetic to certain aims of the Soviet Union, and wh o

possessed attributes which made him an attractive tar ge t f o r recruitment. Those attributes included access to Ministe r s and senior levels of Government, a desire to make a good deal o f

mo ney quickly, a hostility to the CIA and, therefore, probably

to other secret intelligence services, a willingness t o s eek and declare friendship with Soviet citizens and a keenness t o see an improvement of relations between Australia and the USSR to whi ch he was prepared actively to contribute. When the Ministe r s who

made up NISC gave consideration to the expulsion of Mr Ivanov ,

they had to determine what it was that Mr Ivanov hoped t o achieve by ingratiating himself with Mr Combe and what wer e the dangers to national security in permitting the relationshi p to develop further. The expert advice which they received fr om ASI O

was that Mr Ivanov, a KGB officer, was cultivating Mr Co mb e wi th a view to his recruitment as a Soviet agent. The dangers to

national security were explained as being fourfold - (a) t he relationship could develop to the point where Mr Combe woul d become a willing agent for the Soviet Union; (b) the

41

relationship could develop to the point where Mr Combe would be entrapped and compromised into becoming a Soviet agent; (c) Mr Combe could be cultivated as a clandestine 'agent of

influence' (with which I deal in 4.109); (d) the relationship could become clandestine and because of the difficulties in monitoring it, there would be no way of knowing what was taking place between the two men. Further, the Ministers saw the danger

to national security as heightened by what they regarded as Mr Combe's close relationships with some of the members of the

Government, and his very good access to Ministers and their senior staff. In these circumstances, the members of NISC felt that the dangers to national security warranted the termination of the relationship. Accordingly, NISC agreed to expel Mr Ivanov

from Australia. In my opinion, NISC was justified in concluding that the relationship had serious implications for national security.

3.25 It is impossible, given the presentation by ASIO to NISC and the Ministers' own perceptions of Mr Combe's access to the Ministry, to conclude that the decision to expel Mr Ivanov was not reasonably open to NISC. Once it had made that decision, it was open to the Committee, acting upon the advice of senior officers of the Department of Foreign Affairs, to allow Mr Ivanov seven days in which to leave the country. Likewise, it

was reasonable and proper to announce, at a press conference,

the Government's decision and the reasons for it as far as they could be made known in the circumstances.

3.26 NISC decided that the Prime Minister should inform other Ministers that they should not make use of the consultancy services provided by Mr Combe but without comment on his relationship with Mr Ivanov. If it was reasonable for NISC to conclude that the relationship was such as to have serious implications for national security, then it was undoubtedly open to regard further professional dealings between Ministers and Mr Combe as undesirable. In presenting its material to NISC,

ASIO indicated that it did not know whether Mr Combe had

42

accepted Mr "rvanov 's proposal that the relationship sho uld become clandestine, or how deeply involved Mr Combe wa s wi th Mr Ivanov. Given that uncertainty, any use by Ministers o f

Mr Combe's consultancy services, at least until the full extent

of his with Mr Ivanov could be determined, would

have been unwise. Furthermore, in the light of NISC ' s decision to direct ASIO to impose surveillance upon Mr Combe (se e 3 . 29), it would have been imprudent for Ministers to have continued t o d eal with Mr Combe during the period of the surveillance . This

was apparently accepted by some of the Ministers who

participated in making the decision. Although some Ministers made reference to Mr Combe's activities as a lobbyist against t h e background of his former official position in the ALP, the

decision in paragraph (c) was made essentially upon national s ecurity grounds.

3.27 The Prime Minister was enjoined to inform other Ministers of the NISC decision concerning the use of Mr Combe's services ' without comment on the relationship between him and Mr Ivanov.' The Government was alert to the possible

repercussions on Mr Combe of publicity or gossip about h i s relationship with Mr Ivanov. I am prepared to accept that it wa s the desire not to damage unnecessarily either Mr Combe ' s

reputation or his business which motivated the Committee t o ask the Prime Minister not to comment upon the relationship wh en implementing that part of the decision. I can find no fault with that request. I have considered the submission that this desire to protect Mr Combe might have been defeated by speculation in any event, but I do not think that, in the circumstances, tha t

possibility should have led NISC to take some other cours e.

3 . 28 I have dealt in 3.18 and 3.19 with the NISC decision to

request the Prime Minister to brief the Leader of the Opposition. It will be noted that NISC decided to request the

Attorney-General to advise the Chief Minister of the Norther n Territory of the relationship between Mr Combe and Mr Ivanov and the activities of Mr Combe. The briefing took place in Ad elaide

43

on 26 April and is dealt with in 5.16 to 5.20. NISC's decision

to info rm Mr Everingham of the matter was prompted by the k n o wl ed ge that Mr Combe had been retained as a consultant by the

Gover nment of the Northern Territory. Given the dangers to

nationa l security which NISC believed to flow from Mr Combe's relati o nship with Mr Ivanov, and its resultant decision to req uest the Prime Minister to inform other Ministers that they shoul d not make use of Mr Combe's consultancy services, NISC was a lmos t ob liged to alert Mr Everingham to Mr Combe's involvement

wi t h Mr Ivanov. That followed from the fact that the Chief

Mi n ister was in all relevant respects equivalent to a State

Pr em i e r, and was known to be using Mr Combe's professional

ser v i c es. If NISC felt that it was unwise for Federal Ministers

to continue to deal professionally with Mr Combe because of the possib le implications for national security, it was proper to adv is e Mr Everingham of the problem which had arisen so that he could make an informed decision on whether Mr Combe's retainer should continue, and, if so, on what terms. In addition, the Go v e rnment was concerned that if Mr Combe continued to act, as

be f o re, on behalf of the Northern Territory Government he might be bro ught into direct contact with Federal Ministers, thereby nega ting the effect of paragraph (c) of Decision 321 (NIS) which I have dealt with in 3.26. On this basis, as well, in my opinion

it was appropriate for NISC to request the Attorney to brief Mr Everingham on the matter.

3 .29 The final decision of NISC is that which directed the

Director-General of Security to arrange for the immediate surveillance of Mr Combe by all appropriate means. It is important to bear in mind that, when this decision was made, Mr Ivanov was still in Australia and likely to remain here for

up to seven days after the formal announcement of his expulsion. Further, ASIO had candidly admitted to NISC that it did not know the full extent of the relationship between Mr Ivanov and Mr Combe. Accordingly, it did not know whether in the period

before Mr Ivanov left the country he would contact or attempt to contact Mr Combe. Nor could it be predicted with certainty that

44

i n the days immediately after the announcement no a t tempt wo ul d

be made by other Sov iet officials to contact Mr Combe o r by Mr Combe to c ontac t them. From an intelligence point o f vi e w,

the re might have been benefits to be gained from monito ri ng Sov iet activity in relation to Mr Combe bearing in mi nd th e

i n t e rest which the KGB presumably had in recruiting him . Fro m a

nat i onal s ecurity p o int of view, surveillance of Mr Combe migh t h a v e i n d ica ted more fully the extent to which he wa s invol ved

with Mr I v anov , thereby enabling decisions which h ad alr ean y

been made concernin g Mr Combe t o b e reassessed and , if appropriate , varied. In deciding to place Mr Combe under s u r veillance, NISC acted upon the advice of the Director-Ge n e r a l

o f Security . In my view, that wasi in the circumsta n ces, a

p rudent and appropriate course to take.

3.30 The Government wa s, at all times, sensitive t o t he

implications f o r nati o nal security of some of the dec i sio ns i t

h a d made and which were embod ied in Decision 321 (NIS). I t also

realised the need to prevent, as far as possible, d amage t o Mr Co mbe through the public linking of his name with Mr I vanov .

Accordingly, care was taken in drafting the decisio n to avoid the use of Mr Combe's name. Further, the Minute rece i ved v e r y restricted circulation.

Mr Hayden summons the Soviet Ambassador

3.31 At 2 . 00 p.m. on 22 April, the Minister for Foreign

Affa irs, Mr Hayden, summoned the Soviet Ambassador. He i n f ormed the Ambassador, Dr N. Soudarikov, that he had been instructed o n behalf of the Government to inform him that Mr Ivanov wa s no longer acceptable as an accredited representative of the Soviet

Union in Australia as he had been engaged in activiti e s

incompatible with his diplomatic status. He advised the Ambassador that he should arrange for Mr Ivanov and his f amil y to leave Australia within sev en days. He indicated to Dr. Soudarikov that there were no grounds for any reciprocal a c tio n

by the Soviet Union and hoped that the Soviet Union woul d avo id any action which might provoke a further Austral ian response .

45

The public announcement of the expulsi o n and sub sequen t events

3 . 32 One hour later, at 3.00 p.m., Mr Hayden publicly announced

the e xpulsion at a news conference. In announcing the decisi on, t h e Minister noted that . 'the representatives of foreign

countries serving in Australia were expected to observe long establi shed norms of diplomatic behaviour. Mr Ivanov had broken these s tandards by conduct wholly improper for a diplomat and was no l onger welcome in Australia ... An accumulation of

incidents since Mr Ivanov's arrival in Australia in 1981, n o w confi rmed by information which has come to hand since the change of government , had led the government to conclude that he is a pro f essional intelligence officer of the Committee for State Secu r ity (KGB) ... By his actions Mr Ivanov had threatened Austr a lia 's national security in a way which could not be

tol erated b y the Government.'

3 . 33 Shortly after Mr Hayden's press conference, Mr Peacock

announced the Opposition's support for the e xpulsion.

3 . 34 Mr Ivanov and his family eventually departed from

Aust r a lia on 28 April, 1983.

46

CHAPTER 4

FACTS UP TO 20 APRIL 1983

4.1 I shall set out in this chapter the facts as they were

established by the evidence adduced before the Comm i ssion in respect of the period ending on 20 April 1983, when the Director-General of Security brought Mr Ivanov's activit ies to the notice of the Prime Minister and, later, some me mbers of NISC. Many of the facts relevant to this period have been described in Chapter 3. I will not repeat those facts and will

refer to them only to the extent necessary to give continuity to t he narrative.

Resolution of conflicts in the Evidence 4.2 In making my findings I have had to decide which evidence I

should accept when the testimony of witnesses has differed, or when there has been a conflict between various parts of t h e

evidence of the same witness. Those differences have gene r ally been of little or no significance in my resolution of issues. However, some differences have been significant, and in r espect of them, I will state the reasons for my conclusions. Wher e the

differences are of little or no significance, I will sta t e my findings without giving reasons, which will include my vi e w of the credibility of the witnesses, the nature of their testi mony, the existence of corroboration and inherent probability and other relevant circumstances. As I said in 1.33, in coming to

any conclusion I have acted on the basis that my degree o f satisfaction as to its correctness should match its significance, to either the public interest or the interest of any person affected by it.

Ivanov as a KGB Officer 4.3 It was basic to the case put to the Government by ASIO on

20 and 21 April 1983 and to the decision of NISC that Mr I vanov

47

was a KGB officer. I have concluded that there is no doubt

whatever that Mr Ivanov was a KGB officer.

4 . 4 Both the Government and ASIO argued during the inquiry that

no other view could be taken of Mr Ivanov. Counsel for Mr Combe spent a considerable time in the earlier part of the inquiry challenging ASIO's assessment of Mr Ivanov. However, it was

ultimately announced that this challenge was no longer persisted in, but it was never conceded that the assessment was correct.

4.5 The case that Mr Ivanov was a KGB officer is overwhelming. That case rested upon the assessment of ASIO based upon criteria built up from its own experience and the experience of security agencies in other western countries, together with several

indications satisfying those criteria. Although the challenge to ASIO's assessment was not maintained, it is still necessary for me to make my own finding on the matter. In the course of

cross-examination by Counsel for Mr Combe, attempts were made to chip away at ASIO's assessment, by reference both to some of the criteria, and to some of the facts relied upon. This did little damage to the assessment. I do not propose to describe those criteria or facts in detail as they are largely dealt with in Chapter 2. Only rarely will facts satisfying a single criterion establish conclusively that a Soviet diplomat is a KGB officer. More usually, a combination of facts satisfying numerous

criteria justifies the conclusion. That combination led ASIO finally to assess Mr Ivanov as a KGB officer towards the end of 1982. In my opinion, its assessment was correct. The assessment was put beyond doubt when it was confirmed by an independent and reliable source.

of Ivanov and in Australia

4.6 Mr Ivanov was born on 27 September 1947 and arrived in

Australia with his wife and daughter (born in 1975) on 20 June 1981 to take up the position of First Secretary at the Soviet Embassy at Canberra. In Canberra they lived outside the Embassy compound in a house at 26 James Street, Curtin. His ostensible

48

diplomatic responsibility in Australia was for liaison with AUS which has branches in a number of cities in this country. This led Mr Ivanov to travel frequently to other cities, and t o mak e acquaintances, many, but by no means all, of whom were me mbers

of AUS. He also had numerous acquaintances in diplomati c circles.

4.7 The evidence about Mr Ivanov and his activities sho ws that he enjoyed company and regularly entertained a range of g uests , including some Australian citizens. He also went to parti es and functions, including some given by Australian citizens. As

appears from the available transcripts of his conversati o n s , Mr Ivanov, although not fluent, spoke good English. At times h e

had to hesitate for the right word or phrase, but he usually found it. He normally spoke rather quietly. He was an intelligent man and was well-acquainted with many aspect s of Australian life, including politics. He made perceptive

assessments of the political situation in Australia.

4.8 Mrs Ivanov did not speak English. Although she started t o take English lessons she did not continue them. Unlike her husband she apparently did not enjoy entertaining, but she did what was required of her in this regard. Their daughter wen t t o

an Australian school and spoke English.

4.9 All this evidence is quite inconsistent with Mr Combe 's view that Mr Ivanov was 'essentially lonely and finding the going a bit tough and looking for friendship'. None of the evidence, including the evidence of Mr Combe, supports thi s

view. Although there is no evidence to indicate which of h is many acquaintances outside the Soviet Mission were his

particular friends, there is no basis for concluding that Mr Ivanov cultivated Mr Combe because he was bereft of friend s.

Mr Combe thought that Mr Ivanov was looking for an exchange o f

views and saw in him someone who had views 'for appropriate relations between Australia and the USSR'. No doubt Mr Ivanov did see Mr Combe in that way, but that does not explain why h e

49

chose to sihgle him out from others with a similar outlook, for an exchange of views.

4.10 Apart from carrying out his duties in connection with AUS, Mr Ivanov was also very active in his role as a KGB officer.

Some of these activities have been referred to in Chapter 2 and

Appendix I. His AUS duties provided an effective cover for his movement around Australia and his meetings with many people.

4.11 Mr Ivanov was officially a political, and not a trade,

officer of the Soviet Embassy. He could talk intelligently about many matters of trade, but trade was not within his area of

responsibility in the Mission. The USSR has a trade office in Canberra located away from the Embassy. During this period, the chief trade representative was a Mr Y.V. Dashevsky. The evidence establishes - and this would be by no means peculiar to Soviet r epresentation - that the officials of the Soviet trade office

r e garded trade as their special activity and would resent the

intrusion into particular trading transactions of political officers of the Soviet Embassy.

Career and character of Combe 4.12 Mr Ivanov was expelled because of his activities in relation to Mr Combe, and I shall deal with Mr Combe's background before describing those activities. Mr Combe was born on 26 April 1943 in Adelaide and was married in 1968. His wife apparently prefers to be known by the name Meena Blesing, and I

shall use it in this report. He has four children born in 1971,

1974, 1977 and 1979 respectively. He attended Prince Alfred College in Adelaide where he became school captain. He then enrolled at the University of Adelaide where he obtained the degree of Bachelor of Arts in 1963, majoring in politics and history . He also started, but did not finish, an economics

course. He joined the ALP in August 1962 when still a student. In 1963 he commenced employment with the Shell Company of Australia as a trainee executive. In 1965, after the election of the Walsh ALP Government in South Australia, he became a publ ic

50

relations officer to the then Attorney-General, the Honourable D.A. Dunstan. In September 1966 he transferred to the offi ce of the Premier, the Honourable F.H. Walsh, as Public Relation s Officer. He continued to hold this position when Mr Dunsta n

succeeded Mr Walsh as Premier in 1967. Mr Dunstan's Governme n t was defeated in 1968. Mr Combe then worked as a Principal Private Secretary for Mr Dunstan as Leader of the Oppositio n. In June 1968 he was elected unopposed as a State Organiser a n d

Assistant Secretary to the South Australian branch of the AL P , being the first such officer who had not come from a full-time trade union background. By early 1969, he had become the full-time acting State Secretary. (Mr M.J. Young, then the

Secretary of the South Australian branch, was also part-time Federal Secretary). Mr Combe acted in this position of Sta t e Secretary until 1973 when the office of Federal Secretary o f the ALP was re-established as a full-time post located in Canbe rr a .

Mr Combe applied for the position and was appointed to it on

11 May 1973. He continued to hold the position until his

resignation in July 1981. His salary at the beginning of thi s period was about $12,000 per annum, and at his resignati o n, a little under $30,000 per annum.

4.13 While he held these offices, Mr Combe had many responsible duties to carry out, and was very active in promoting the interests of the ALP. He held office during a period of grea t political activity and difficulty, which included the Federal

elections of 1974 and 1975. He was also involved in re-organising the Queensland Branch of the Party. In Canberra, he was largely responsible for the establishment of a national headquarters building for the ALP at Barton, and for improving

the Party's assets. He also played a significant part in the establishment of the very successful Canberra Labor Club.

4.14 Mr Combe was interested in other countries and their activities, particularly their political activities, and visited a number of them. In 1972 and 1974 he was, whilst State and

Federal Secretary, respectively, of the ALP, the guest of the

51

State Department of the USA. In 1974 he led a delegation from the ALP to Rumania, and was also at one time a guest in Iran. In

1974 he visited the Soviet Union and 1976 went on a cruise on

the Soviet ship, Leonid Sobinov. He had a continuing, but rather spasmodic, connection with the Soviet Embassy in Canberra from the late 1960s.

4.15 After Mr Combe's retirement as Federal Secretary of the ALP he took leave until the end of 1981. At the beginning of

1982 he set up business in Canberra as a consultant and lobbyist. Looking at the opportunities open to him, he saw that there were relatively few lobbyists with any deep knowledge of, or competence to deal with, the ALP. He had no real knowledge of

trade or commerce, except in the most general sense, but he saw for himself a role in making available to clients his knowledge of the ALP, its structure, policies and personnel, and in facilitating communication with it whether in or out of office. He described his role as one of giving political advice and

information to his clients to help them achieve their objectives. He was right in his assessment that there was a need for such services, and during 1982 he gradually built up a clientele, which included a number of very large companies. His prospects were enhanced when the ALP came to government in March 1983. This is evidenced by his engagement as a consultant to the Northern Territory Government. I shall discuss later Mr Combe's access to Ministers and their staffs.

4.16 Mr Combe's character is complex and I would not take upon myself the task of describing it with any degree of completeness. Although I heard about some aspects of his activities and life, and have seen him in the witness box for 11 days, the members of NISC must have had a much better knowledge of him than I could have gained during the hearing. It

is however necessary to make some observations about certain aspects of his character which are relevant to the inquiry.

52

4.17 The first and most obvious aspect of his character is

revealed by his long service for the ALP, and thus f o r

Australia, from 1965 until 1981. As well as being long, th is

service was loyal and effective. No doubt in the c o ur se o f it he

made mistakes, but those mistakes were far outweighed by the

benefits whi c h the Party derived from his service. Hi s evi dence implies that he would have made much more money had h e d irected his activities elsewhere, and I have little doubt this wo ul d have been so. On the other hand, he is obviously inte ns e l y

interested in politics, and I have no doubt that he f oun d hi s

work stimulating. It enabled him to use his considerable t alent for purposes in which he believed. One reason for hi s resignation in 1981 seems to have been the intrusio n o f hi s political life into his family life. Another reaso n was t h at he

thought it was time to get into a new field to improve h is

financial position, both in his own interests a nd tho s e o f h is family .

4.18 At Mr Combe's request, I heard evidence fr o m a numbe r o f

character referees who spoke very highly of him. These incl uded the Honourable D.A. Dunstan, the former Premier of South Australia, Mr K.L. Fry, MP, Mr M.D. Cross, MP and the Hono urable C.T. Sumner, MLA, the Attorney-General of South Austr a lia . Th ese

and other witnesses spoke of Mr Combe ·'s loyalty as an Au st r alian and of his good character. The general evidence of char acte r witnesses must always be looked at in the light of particul a r actions of the person in question. When the general e v i dence is

tested against facts otherwise established, what it ind i cate s has often to be qualified in some respects. It is true, as was

submitted by Mr Combe's Counsel, that one should not e r ase a long history because of a few particular events. I t a ke th is into account in forming a view, so far as it is necessary , o f

Mr Combe.

4.19 Mr Combe is an intelligent person of considerable political perspicacity. It was said by a number of witnesses that he is or could be 'naive'. It is not clear with wh at

53

precise meaning that word was being used. If it was used in the

sense defined in the Shorter Oxford English Dictionary as 'characterised by unsophisticated or unconventional simplicity or artlessness', I find it hard to reconcile such a description of Mr Combe with the evidence. I find more likely to be accurate

the assessments made by Mr R.M. Cameron, that sometimes Mr Combe would place trust in persons in whom other people would not, and in whom he clearly should not have placed trust, and by Mr R.L. Farmer, who found Mr Combe's views on commerce naive. It was also suggested that there were times when he lacked judgment. The example given to support this suggestion was his involvement

in the Iraqi loan affair. As Mr Combe pointed out, he was not alone in showing bad judgment in this affair, which he conceded he did. In general , his judgment appears to have been good, although it may have been affected by strong emotions, desires or ambitions. Perhaps one of his stronger traits is his confidence in himself, his judgment, and his ability to handle difficult situations as they arise. That he can be affected by strong emotions is indicated by his concession that he was a bitter hater. On his own statement, he is a person who, when he

sees an opportunity, goes for it straight away.

4.20 I needed no evidence of friends or acquaintances to accept that Mr Combe is an expansive person, who talks well, wittily and, frequently, at length, particularly about political matters. It is understandable that it was said of him that he

'was not noted for his social reticence'. There were several views of his ability to keep confidences. While some witnesses said that he could keep them, Mr Cameron said that although he revealed confidences to other people, 'he may well have been doing that as part of his job'. However, it was his experience

that he would 'tell people certain things that perhaps he should not'. Mr P.N. Gill, the owner of Peaches Restaurant, said that Mr Combe had told him things 'that should have been privy to his

business', and that he did not hesitate to disclose to Mr Gill details of his business dealings. More importantly, the evidence established what I regard as a gross breach of confidence.

54

Mr Combe's report to CBA contained descriptions of, and comments

on, conversations which he had in Moscow with Soviet o fficial s . Some of the comments being critical, and recommendations were

made for action by CBA, for the most part of a political or

propagandist nature. In his letter, headed 'Private and Confidential', forwarding the report to Mr Matheson, he wrote that the report 'was prepared exclusively for you and which I wo uld hope would not be copied or made available to anybody else because of the sensitivity of many of the observations made in

it and the possible consequences of that material passing back to Moscow'. The report itself is headed 'Private and Confidential'. In his conversation with Mr Ivanov of 4 Mar ch 1983, Mr Combe told Mr Ivanov not only of the general effect of his recommendations but also of his client's adverse react ion to

them. The disclosure to Mr Ivanov of the recommendations was a b reach of confidence, but Mr Combe may have felt that it was in his client's interests to make the disclosure. Nevertheless, it was quite unncesssary, and a gross breach of confidence, wh ich

could have had an adverse effect upon his client, to tell Mr Ivanov of Mr Matheson's reaction to the recommendations. On

the evidence before me, I conclude that Mr Combe may betray a confidence, either unthinkingly in the course of expansive talking, or quite deliberately if he thinks it to be in his own

or his client's interests.

4.21 That in 1983 Mr Combe was setting about making as much money as he could in a relatively short time is clear. That , in

itself, is no ground for criticism. Some of the uninhibited language which he used in the conversation of 4 March suggested that he had a more intense desire than most people to acquire money. This was said to justify the use of the word 'greed' in

relation to him. One word that has been used to describe this aspect of his character is 'venal', a word which in its

dictionary meaning connotes a person 'who, or whose influence, support or favour, can be bought or obtained for a price'. This pejorative connotation cannot properly be applied to a person whose legitimate occupation includes the selling of, or charging

55

for, his influence or support. It is perhaps understandable that it might be thought that the unattractive language used by Mr Combe on 4 March 1983 went so far beyond the reasonable use,

for reward, of his standing with the ALP as to show that he was

capable of acting venally. This, however, is a reaction to his language. The evidence does not establish any instance where he was venal.

Matheson's role 4.22 Mr Laurence Matheson features prominently in the narrative of Mr Combe's involvement with Mr Ivanov. He is an Australian citizen who was born on 25 April 1930. He joined the Royal Australian Navy in 1947 as a recruit seaman. He was commissioned as an officer in May 1959 and resigned his commission as Lieutenant in July 1968. Whilst in the Navy, he underwent a course in Russian, and for many years has been fluent in that

language. Before resigning from the Navy he was offered a position with the Australian Trade Commissioner Service which he accepted subject to the acceptance of his resignation from the Navy. He underwent training from July 1968 to June 1969 in Canberra, and was then posted as First Secretary (Commercial) to

the Australian Embassy in Vienna, with responsibility for developing trade with Eastern Europe with a special emphasis on the USSR. In January 1971 he was promoted to the position of Counsellor (Commercial), and in that position received full accreditation to the Australian Embassy in both Vienna and Moscow. He visited Moscow frequently and played a substantial

part in the establishment in March 1972 of the post of Australian Trade Commissioner in Moscow.

4.23 Mr Matheson was recalled to Australia shortly after March 1972, and, in November of that year, resigned and accepted a position as Director of Heine Bros Overseas Pty Limited. He was to establish a permanent commercial relationship with the USSR

conducted from Moscow. When he arrived in Moscow on 1 January 1973, the company did not have accreditation with the Soviet Government. This meant that it had no office accommodation and

56

had to operate out of hotel rooms, could not engage sta ff or telex facilities, and had to make special arrangements fo r all its activities. The company finally received full accredi t ation from the Soviet Ministry of Foreign Trade in about June 1 9 7 3 . Mr Matheson continued to live and work for the company in Moscow

until 1975 when, after the defeat of the Whitlam Go v ernme n t , it c losed down its Soviet operation and withdrew its staff.

Mr Matheson decided to remain in Moscow to try to develop t r ade . In early 1976, he formed CBA, a company incorporated in Victoria wi t h its head office in Melbourne and of which Mr Matheson was

Chairman of Directors and principal shareholder. Be caus e he had

b een in Moscow so long and had been known to the Sovi e t

authorities, CBA received full accreditation, comparat ive l y quickly, by July 1976. Mr Matheson travelled extensive l y between Mo scow and Australia and other parts of the world and in 197 8

t ook up residence in Greece. Thereafter he varied hi s p l ace of

r e sidence from time to time living in, amongst other p laces, the

Un ited States, Moscow and Switzerland. In February 198 1 he

returned to Australia to take up permanent residence .

4. 24 CBA, and thus Mr Matheson, quickly made very large sums of money from trade with the USSR, and Mr Matheson appear s t o have

l ived in very affluent circumstances. However, by the middle of 1982, CBA (though not Mr Matheson) was having difficulties, i n cluding financial difficulties. Those were partly aggr a vated b y the actions of a former employee of CBA who had set up i n

competition with CBA. This was a Mr Bruce Fasham, who h ad been with CBA for some time and was one of its senior officers, and

who had left CBA and established, in Sydney, a company called Pacific Commerce and Traders Co Pty Limited (Pactra). Mr Fa sham was very active in promoting his business, and Mr Matheson was concerned at his apparent success in obtaining business f r om the

New South Wales Government at CBA's expense. The hostility

between CBA and Mr Matheson on the one hand, and Pactra and Mr Fasham on the other, became very bitter and resulted in

litigation. I do not have to resolve the issues which these disputes raised. CBA dealt with Soviet trade organisations a n d

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with Soviet-controlled Australian companies. It traded in many classes of goods, including both primary products (e.g. meat and cheese) and manufactured goods (e.g. refrigerators). Among the special commercial interests which it had in 1982 was an agreement with the USSR concerning fishing in Tasmanian and other waters (suspended because of the post-Afghanistan

sanctions). Another interest was in the proposed use in Australia of two forms of Soviet technology, one involving the pneumatic transfer of raw materials called Transprogress, and the other involving the handling of coal in a Queensland project. In 1982, Mr Matheson decided to sell his interest in CBA. He started informal negotiations in November 1982 and

finally sold to Elders (IXL) Limited in July 1983. It was a term

of the sale that he would be retained as a consultant, and his remuneration would partly be related to trading results.

Australia-USSR Society 4.25 Mr Combe's position on the executive of AUS led to his first contact with Mr Ivanov. The aims of this Society are to promote mutual understanding and friendly relations between the peoples of Australia and the USSR. It has a national executive, and branches in various cities throughout Australia. At all

relevant times its was Mr W.G. (Bill) Mountier. It has

a counterpart in Moscow called the USSR-Australia Society which,

in common with other Moscow based friendship societies linked with specific countries, appears to be controlled by the International Department of the CPSU. Many members of AUS are Australian citizens, some quite prominent, genuinely concerned

to improve Australia-USSR relations. Mr Combe became a member of the AUS at some time in the 1970s, after his visit to the Soviet

Union in 1974, and was elected to its executive in 1980. He was

an inactive member, having attended only two executive meetings. He also attended a national conference on 16 April 1983 , when he

was re-elected to the executive. As appears from the nature of the duties given to Mr Ivanov, AUS has close links with the Soviet Embassy in Canberra. It seems that the Embassy has some influence on the Society's activities, and, in particular on the

58

selection of delegates to attend the Friendship Societies' conferences which are held in Moscow. Mr Combe was sele cted as s u ch a d elegate in 1982. At first he thought this to have been

the result of Embassy influence. He changed his mind, but l ater r everted to his original view when shown evidence that Mr I vanov

told Mr Mountier about the 1982 conference on 1 October o f that year, and suggested Mr Combe should be the Society's d e legate .

On 8 October, Mr Mountier told Mr Ivanov that Mr Combe h ad

agreed t o go to Moscow.

The political system of the USSR

4.26 So me knowledge of the complex political system of the USSR i s neede d to understand some of the evidence. A significant

feature of t hat system is that there is a formal gover nmental structure, and a parallel party (CPSU) structure. The Pa r ty str uct ure effectively controls the government which acts as an admin i strative arm for putting into effect the Party's policies

and decisions. The CPSU holds a Congress every five y ears which elects the members of its Central Committee, a body whi ch, in Au gust 1983, had 313 members and 135 candidate members. The

Centra l Committee elects a smaller executive body called t he

Polit buro, which has no fixed size but at present has 11 me mbers

and 7 candidate members. This small body is at the centre of the

e ffect i ve government of the USSR, and makes important deci sions .

The Central Committee also has a Secretariat, which is a l arge

b ureaucracy. It includes a Secretary-General and 10 other

Secretaries who administer a range of Party Departments

responsible, between them, for all areas of government a ctivity . Among t hose Departments is the International Department, wh ich

c ontains a Second European Sect i on where the Australian De s k is

to b e found. The formal Constitution of the Soviet Un ion p rov i des for a Supreme Soviet, the members of which are elected

by the people. Each member represents a single constituency . Candidate s for election are approved by the Party. The Supreme So viet elects a Praesidium, the Chairman of which is the Head of

Sta t e of the USSR. There is a Council of Ministers which is

large , and meets infrequently. It also elects a Praesid ium wh ich

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meets more frequently. The Ministers are appointed by the Supreme Soviet, and between sessions, by that body's Praesidium. Among the Ministries, there is a Foreign Ministry (which also

has a Second European Department and an Australian Desk), and a Ministry of Foreign Trade.

4.27 The external trade of the USSR appears to be controlled in part by the Ministry of Foreign Trade, and in part by a body

responsible to the Council of Ministers, called the State Committee for External Economic Relations (GKES). The Ministry of Foreign Trade deals with ordinary imports and exports, and GKES with matters such as the export of Soviet technology and

the construction abroad of capital works, including military installations, particularly where Soviet citizens are engaged on those works. The KGB plays a role in the work carried out by GKES. In particular, its officers are likely to be found

wherever Soviet citizens are engaged in constructing installations in foreign countries. Trade with Australia is sometimes carried out by a Soviet Government agency, and sometimes through a Soviet-controlled company established in Australia.

Post-Afghanistan Sanctions 4.28 Trade between the USSR and Australia, from the beginning of 1980 until May 1983, was limited by sanctions imposed by the Fraser Government on 9 January 1980, following the Soviet action

in Afghanistan. The sanctions affected trade and commerce, and cultural, scientific and other relations. They initially affected trade by restricting the supply of grain, but this restraint was lifted after the United States decided to end its grain embargo. The sanctions also involved the indefinite suspension of any discussions, arrangements or agreements about

fishing matters, the banning of Soviet cruise vessels from entering Australian ports, the refusal to allow Aeroflot personnel into Australia or to consider any Soviet request for direct Soviet-Australia air services, and the suspension of the activities of the Australia-USSR Mixed Commission on Trade. All

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sanctions were lifted by the present Government on 31 May 1 983. The combined affect of the sanctions and Soviet retaliation was to diminish greatly the amount of Soviet imports from Australia.

Combe's association with Soviet officials 4.29 Mr Combe's earlier association with Soviet officials a n d the Soviet Mission in Australia is described in Chapter 2. Mr Combe met members of the Soviet Mission from the late 1 960s

and became friendly with some of them. His association with So viet officials included an expenses-paid trip to the USSR in

1974 as Secretary of the ALP, and a cruise on the Leonid Sob i nov in 1976 . As outlined in 4.25 he became a member of AUS, and

later of its executive. The actions by the Soviet authorities show that they were interested in cultivating an association with Mr Combe, presumably because of his prominent positio n in the ALP and his general interest in Soviet-Australian rela tions . They do not reveal anything of relevance to national security , but they do suggest that he was seen by Moscow as a perso n

interested in, and willing to promote relations with, the Sov i et Union.

4.30 The Director-General of Security told NISC that the 1976 cruise had been wholly paid for by the Soviet Union, but this was a mistake. Mr Combe's accommodation had been raised from standard to deluxe at Soviet expense. Having regard to the

sources and the fact that Mr Combe was not at that time unde r

surveillance, that mistake is understandable. It had no significance in the making of any decision. I indicate in 4.113 the care which should always be taken by ASIO in presenting information to the Government.

Arrangements for Combe's 1982 visit to the USSR 4.31 As described in 4.25 Mr Ivanov arranged for Mr Combe t o b e

nominated by AUS as its delegate to the Union of Friendship Societies Conference in Moscow which was to be held from 23 t o 25 November. The theme of the conference was to be Peace and Disarmament. When Mr Combe learnt of his selection, he told

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Mr Mountier that he would not go without his wife. Mr Mountier

advised Mr Combe to speak to Mr Ivanov who responded favourably to the request. After a dinner with the Combes at a restaurant, Mr Ivanov arranged for Ms Blesing to accompany her husband. The

final approval did not come through until shortly before the Combes left for Moscow on 21 November. The arrangement was that

AUS would pay Mr Combe's return air fare to Singapore and the

cost of a day's stop at Singapore, and that the Soviet Government should pay for Mr Combe's return air fare on Aeroflot from Singapore to Moscow, and his expenses in the USSR. The visit to the Soviet Union was to be extended to allow some

travelling by Mr Combe and his wife but, in the event, this was limited to a trip to Leningrad. It was no part of the

arrangement that air fares or expenses of Ms Blesing should be paid by anyone other than Mr Combe.

4.32 When telling NISC about the financial arrangements for the trip, the Director-General of Security said that all expenses had been paid by the Soviet Government. This was a mistake, for Ms Blesing's fares and expenses were met by Mr Combe. This

mistake is hard to justify. It was described by an ASIO officer as a bad mistake but, in the event, it had no significance in

the decisions made by NISC.

Combe's role as a consultant to CBA 4.33 On 4 November 1982, Mr Combe met Mr Matheson. Mr Matheson employed Mr D. Amos as a consultant in Victoria and sought his advice on his problems in New South Wales. Mr Amos was

relatively unfamiliar with the New South Wales political scene and referred Mr Matheson to Mr Combe. When they met, Mr Matheson told Mr Combe that he and CBA were having difficulties in New South Wales because State Ministers of the Government and Heads of Departments were refusing to see him, and members of the ALP were unwilling to have dealings with him. He also told Mr Combe

that CBA's share of trade with the Soviet Union had been markedly reduced. He asked Mr Combe to identify and help to

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solve these problems, and to advise on what a future Federa l Labor Government might do about sanctions.

4.34 Mr Combe undertook to make enquiries in New South Wales on behalf of CBA. At the same meeting, Mr Combe told Mr Matheson o f his Soviet connections and his forthcoming trip to Moscow. He said that he had influence with Soviet officials and was

associated with AUS. He said that whilst in Moscow he could be of help to Mr Matheson by making enquiries on his behalf. Mr Matheson retained Mr Combe to make enquiries in Moscow a nd t o

furnish a report upon his return. He told Mr Combe that h e would pay a reasonable sum for the report.

4.35 Mr Matheson next saw Mr Combe in Melbourne on 9 No vember. They later had a number of telephone conversations in which t h e matters discussed on 4 November were raised again. Mr Matheson told Mr Combe about CBA's problems (associated with the

sanctions) with the Transprogress project and the Fishing Agreement. They discussed again CBA's problems in New Sou t h Wales, and Mr Matheson told Mr Combe of two Soviet technica l processes which he was interested in bringing to that State.

Mr Combe told Mr Matheson that he had good contacts in the Ne w

South Wales ALP Secretariat. Mr Matheson then referred Mr Co mbe to CBA's representative in New South Wales, Mr Malcolm Yell, who was principally engaged in technical work for another company associated with CBA. Before Mr Combe left for Moscow, Mr Matheson asked him to contact Mr N.N. Smeliakov, the Deputy

Minister for Foreign Trade, and the Soviet foreign trade organisation, run by GKES, which was concerned with Transprogress.

4.36 On 16 November Mr Combe had a long discussion in Sydney with Mr Yell about the affairs of CBA. Mr Yell told him of

financial difficulties which CBA was then having. He also discussed with Mr Combe the fee which he should charge for his report and suggested that it should be on the basis of a daily rate together with a proportion ('something like a third' being

63

suggested) of Mr Combe's expenses in making the trip to Moscow. Mr Combe did not mention this suggestion to Mr Matheson in his

later conversations with him.

4 .37 In the course of his telephone discussions with

Mr Matheson, Mr Combe said that Mr Fasham had a lot of support

i n New South Wales, and that Mr Matheson and CBA should

c onc entrate on other States. He also said that Mr Ivanov

(Mr Matheson thought he said Krikunov), a contact in the Sovie t

Emb a ssy, was assisting in making appointments in the USSR. He

i ndi c ated that he hoped to meet some senior officials in the

USSR, and that the Central Committee of the CPSU could be

i nfluential in the development of trade.

Comb e's visit to the USSR

4.38 Mr and Mrs Combe received their visas from Mr Ivanov on the e v ening of Friday 19 November, the day before their dep a rture from Canberra. At the same time, Mr Combe requested Mr I vanov to arrange meetings for him with Mr Suslov (a senior

o fficial in the International Department whom Mr Combe h a d met p reviously) and Mr Smeliakov. The Combes left Sydney for Moscow

o n 21 November, and arrived in Moscow on 23 November, where t h ey

were met by Mr Jarkov, an official of the Union of Friendship Societies. According to Mr Combe, it appeared that no arrangements had been made for him to meet Mr Suslov or Mr Smeliakov. He also learned that the only tour which had been

arranged for him and his wife after the conference was a visit to Leningrad.

4 . 39 Mr Combe and his wife attended the conference and were

disappointed with it. There were three days of speeches, almos t a ll about peace, by representatives of the Sov iet Union and

visiting delegates regarded by the organisers as 'reliable '. However, they were able to have useful conversations with delegates and officials outside the formal meetings of the conference, including Mr Sharif and Mr Lagutin, officials of the

64

International Department of the Central Committee whom Mr Co mbe had met before.

4.40 After the visit to Leningrad, Mr Combe discovered that f or some reason he had been allocated better accommodation and that

the appointment which he had sought with Mr Smeliakov had b een a rranged. He was told that an appointment with Mr Suslov coul d

not be arranged because Mr Suslov was tied up with an Irish delegation. In his evidence, Mr Combe attributed this more favourable treatment to the efforts of someone other than Mr Ivanov. On the other hand, in his report to CBA, Mr Combe

wrote that 'Prior to departure for and arrival in Moscow I sought a number of meetings with people whom I thought could b e helpful. All meetings sought took place except for that wi t h' Suslov. In an intercepted telephone call on 26 April, Mr Co mbe

t o ld Mr Greg Hartung, a journalist, that Mr Ivanov had helped

him get some meetings he wanted when he was in Moscow. Thus Mr Ivanov may have done what was asked of him, although it may

have taken some time for his request to be acted upon .

4.41 Mr Combe's conversations in Moscow with Soviet officials are summarised in the CBA report. He saw Mr Smeliakov on 30 November and discussed CBA's position and problems with him. Mr Sm e liakov told him that although the monopoly which he

c laimed to have been sought for CBA had not and would not be

granted, the company had received 75 per cent of available contracts. Mr Smeliakov then suggested 'getting together a group of businessmen from Australia to visit the Soviet Union for the purpose of looking at Soviet technologies in operation'.

Mr Combe said he would give thought to its possible

implementation. Mr Smeliakov was anxious that Mr Combe sho u ld meet Mr Dashevsky, the representative of the Ministry of Foreign Trade at the Soviet Embassy in Canberra, with whom Mr Smeliakov said that Mr Combe should form an 'ongoing contact programme '· He also said that Mr Combe should make himself known to

Dr Soudarikov, the Soviet Ambassador to Australia, but Mr Co mbe

said that he already had a long-standing relationship with t he

65

Ambassador. Mr Smeliakov also told Mr Combe that the problem of USSR-Australia trade was political and that the Soviet relations with Australia were considered by the Central Committee to be 'worse even than our relations with South Korea'. He also spoke of the trade imbalance between Australia and the Soviet Union which was massively adverse to the Soviet Union.

4.42 Mr Combe later saw the Australian Ambassador in Moscow, Mr David Evans, and discussed with him, amongst other things,

problems created by the sanctions. He also saw Mr Parasteyev, a senior official of the Union of Friendship Societies, who spoke frankly to him about the recent conference, and told him that it was essentially a propaganda exercise for domestic consumption. Mr Combe also learned that the Union was anxious to establish

'an annual multi-discipline dialogue of meaningful rather than superficial proportions with Australia, similar to that which takes place each year with British delegations under the auspices of the University of Edinburgh'. The Soviet proposal was that the first of the 'consultations' should be held in

Moscow. This was necessary because of the current Australian

sanctions. Mr Parasteyev also regretted that nobody from CBA played any part in the USSR-Australia Society.

4.43 Pursuant to an arrangement made before his visit to Leningrad, Mr Combe again saw Mr Sharif and Mr Lagutin. They referred him to Mr Kudinov, who was in charge of the Australian

Desk in the International Department of the Central Committee. Mr Combe spoke at some length with Mr Kudinov, spending a lot of

time on Australian politics. Mr Kudinov spoke of his concern that relations between the CPSU and the ALP had deteriorated and Mr Combe made suggestions about improving relations between the

two parties. He told Mr Kudinov he was quite happy to speak to the relevant ALP officers, and that, if he could, would himself play a role in improving relations. The question of instituting something like the Edinburgh conferences between Australia and

the USSR was also discussed, and Mr Combe's advice was sought. Mr Kudinov told Mr Combe that it was the view of the Central

66

Committee that anything which could be done towards setting up an Edinburgh-style arrangement, would help to improve di a l o gue between Australia and the USSR.

Combe's Report to CBA

4.44 After returning to Australia, Mr Combe prepared a repor t for CBA which was received by Mr Matheson on 24 December 1982. It was accompanied by an invoice for Mr Combe's fees of $2, 500 and a covering letter dated 20 December 1982. In the repo r t ,

which Mr Combe asked Mr Matheson to keep confidential f o r t he reasons set out in the letter (see 4.20), Mr Combe made the

foll owing recommendations:

1. Laurie Matheson and Commercial Bureau should be me mbers of, publicly identified with and actively involve d i n the Australia-USSR Society. The spinoff benefits fr o m such involvement if properly exploited can be

considerable because of the smallness of the s ociety and the importance given to it by Soviet authorities.

2. Commercial Bureau personnel in Moscow should belo ng to the USSR-Australia Friendship Society and/or the USSR-New Zealand Friendship Society, and should participate in the activities of those societies. They

should be seen to be in attendance at Society funct ion s such as National Day exhibitions etc.

3 . Commercial Bureau could initiate a fund to assist making the proposed Edinburgh-style consultations a reality . A significant donation and an endeavour to induce o the r companies with business interests in the Soviet Uni o n t o match it could create a fund to provide for fares t o

Moscow for the first consultations of appropriately senior and suitable people from academia, business and government. Perhaps funds could be provided direc t o r through the Australia-USSR Society. I am certain that

the dividends from a comparatively minimal outlay and some initiative could be extraordinary.

4. Commercial Bureau could examine the possibility of benefitting from an upscaling of relations between the Communist Party of the Soviet Union and the Austra lian Labor Party through my direct involvement in

facilitating such relations. What I have in mind is that in terms of any ongoing relationship between Commercial Bureau and myself, one of my functions could be CPSU / AL P relations with, I suggest, the CPSU being fully informed

that such involvement was being made possible by Commercial Bureau.

67

5. Full advantage should be taken of the facilities and assistance being offered by the Ambassador. That is, while he will not allow the embassy to be used to favour

Commercial Bureau or PACTRA, Commercial Bureau could be seen to be more professional, more integrated and more serious in its endeavours to promote trade with the USSR .

6. A programme should be devised to enable Commercial Bureau to be seen to be pursuing actively an increase in exports to Australia of goods and services from the USSR. Perhaps if it is not already done, 'audit of endeavour' reports could be provided to Soviet authorities on a regular basis.

4.45 If implemented, the first four recommendations would have involved CBA in political or propagandist activities of benefit to the Soviet Union which Mr Combe 'regarded as matters the Soviets wanted to achieve'. None of the suggested activities had been indicated by any of the Soviet officials with whom Mr Combe

spoke in Moscow, to be something in which CBA should become involved. The only comment from which any such suggestion could be inferred was that of Mr Parasteyev about the lack of CBA participation in the USSR-Australia Friendship Society in

Moscow. Mr Parasteyev had nothing to do with trade, and Mr Smeliakov, who did, made no such suggestion. However Mr Combe

held the view that all important decisions were made within the Central Committee and were politically motivated. He formed the opinion that CBA's position would be maintained and enhanced if it were to become involved in these activities.

4.46 The recommendation concerning the Edinburgh-style consultations was that the first consultations should be held in Moscow (as opposed to Australia). This was necessitated by the

Australian sanctions which restricted some aspects of Soviet/Australian relations. When he wrote the report, Mr Combe believed that there was a strong likelihood of an early election in Australia which the Fraser Government would win, and that as

a result the sanctions would remain. It was put to Mr Combe in

cross-examination that by so recommending he was seeking to avoid the application of the sanctions, and, in effect, doing so at the request of the Soviet Government. There is no reason, in

68

law, why Mr Co.mbe should not have made recommendations which would have the effect of circumventing the application of the sanctions. The only relevance of his willingness to make such recommendations is that he would be seen by the KGB as being prepared, at the request of the Soviet Government, to do

something for it which the Australian Government had sought to prevent.

4. 4 7 In the report, Mr Combe wrote that the CPSU would b.e f ully

informed that his involvement in the 'upscaling' of CPSU/ALP relations was being made possible by CBA. He said in evidence that he would have told the ALP of CBA's involvement. He recognised that some members of the ALP might react against his

involvement and that the whole recommendation might be misinterpreted. However, he thought that some members of the ALP would understand what he was doing.

4.48 The account sent to Mr Combe with his report was for a sum

of $2,500, of which $2,000 was designated as his fee and $500 as a one-third share of the costs of the Moscow visit for Mr Comb e

and his wife, and telephone calls. This account was the subject of a considerable amount of evidence before me. Although Mr Combe gave detailed evidence designed to substantiate the

bill, I do not think that the fee or the statement of

disbursements were calculated in any strict way, but were arrived at by a general assessment. Mr apparently took

a similar view when he treated the $2,500 as one gross sum. Th e

assessment of the fee was, in the circumstances, a commercial matter. Approaching it in a broad commercial way, and not with a fine tooth comb, one cannot sustain an allegation of wrongdoing by Mr Combe. In particular, the bill cannot be regarded as

fraudulent. Although Mr Matheson considered the whole report to be valueless for his purposes, he made no complaint to Mr Comb e about the bill, and paid it on 7 March. It should be added that

Mr Combe claimed that he offered, before Mr Matheson paid the

account on 7 March, to reduce it. Mr Matheson said that such an

69

o ffer may have been made. I accept Mr Combe's evidence on this

ma tter.

Combe's contact with Ivanov after the visit to Moscow 4.49 After his return from Moscow, Mr Combe spoke to Mr I v anov by telephone on 15 December. They agreed to meet to discuss the Mo scow visit. Mr Combe told Mr Ivanov of Mr Kudinov's concern

abou t the deterioration in ALP/CPSU relations. Mr Combe s a i d that he would like to talk to Mr Ivanov about this matter as he

had his own thoughts on it, and that he would not mind act i ng in

a liaison capacity. Mr Ivanov replied: 'Yes, why not.' It is

c laimed by ASIO that Mr Combe indicated to Mr Ivanov that other matters should not be discussed on the telephone. Although Mr Combe does not think that this was the language which he

used, I think on the balance of probabilities that he did. There

a re several possible reasons for making such a statement, and, i n the circumstances, I do not select a sinister one as being

more likely.

4.50 Mr Combe and Mr Ivanov met again on 7 January 1983 when Mr Ivanov had dinner with Mr Combe and his wife at Chats

Re staurant. On that occasion, Mr Ivanov and Mr Combe discussed

the events in Moscow for several hours. Then Mr Ivanov and Ms Blesing had a djscussion on the theme of the Moscow

c onference, Peace and Disarmament. There was no discussion ab o u t

CBA or Mr Combe's involvement with that company. Mr Combe

invited Mr Ivanov and his family to visit them at Narooma a nd g a ve Mr Ivanov his Narooma telephone number. The Combe family left for Narooma the following day, 8 January, and did not return to Canberra until 30 January.

4.51 It appears that whilst at Narooma in January , Mr Co mbe rang Mr Matheson and asked him about the CBA Repor t. Mr Math eson said in evidence that he found the report unsa tisfactory and some of the recommendations offensive. He told Mr Combe t h at he

found the report somewhat distressing and that he thought t h e recommendations too political for his liking . He told Mr Combe

70

t hat he had the view that he and his company should live or d i e

by their commercial performance. Mr Combe's response was that h e d id not believe that it was on that basis alone that Soviet

o fficials were inclined to make their judgments. A meeting f o r a

further discussion was proposed and, after a number of telephone calls, was arranged for 7 March.

4 .52 Both the Federal election and Mr Hawke's replacement o f

Mr Hayden as ALP leader were announced on 3 February. Shortly

a fterwards, Mr Ivanov visited Mr Combe to discuss current

political developments. Mr Combe also raised with Mr Ivano v the desire of the Honourable J.D. Wright, Deputy Premier of South

Australia, to visit the USSR.

Dinner at the Ivanov horne on 4 March for Combe 4.53 Towards the end of February, Mr Ivanov invited Mr Comb e and his family to dinner on 4 March, but only Mr Combe attended . Th e dinner took place on the eve of the Federal election.

Mr Combe's arrival at Mr Ivanov's house was delayed until about

nine o'clock. The dinner continued until nearly one o'clock. The c onversation at this dinner was recorded by ASIO, and was what

s harpened its focus on the Ivanov/Combe relationship. Mrs I van ov

wa s present in the house all the time, and, at quite regular

intervals, was in the dining room speaking in Russian to her husband. The Ivanovs' daughter appeared briefly, had a conversation and left the room. The conversation between Mr Combe and Mr Ivanov covered a variety of subjects includin g

food, Russian beer and the exercises which Mr Ivanov took. The r e was also considerable discussion of Soviet/Australian trade, the

Sov iet incursion into Afghanistan and Refusniks, as well as

discussion of Australian politics and politicians, and the n e x t day's Federal election. It was in the context of a discussion o f

these general subjects that the more significant parts of the conversation took place.

4 .54 Throughout the dinner a television set was turned on in a

r oom adjoining the dining room. Mr Combe's voice generally is

71

reasonably loud and clear on the tape of the conversation, but Mr Ivanov's voice is often quiet and difficult to understand. It

was ASIO's view that the use of the television set and the

lowering of Mr Ivanov's voice were devices to avoid surveillance, suspecting, as he would, that his house might be bugged. Expert evidence was called by Counsel for Mr Combe which established that part, at least, of the impression that voices had been lowered may have been due to technical features of the

recording. Only a small part of the conversation can be regarded as dealing with sensitive matters, chief of which was Mr Ivanov's proposal that Mr Combe should work for the Soviet

Union, the nature of that work and the source of Mr Ivanov's instructions. The expert witness agreed that if there were technical causes of the impression that voices had been lowered, they would have created the same impression of Mr Combe's voice as of Mr Ivanov's. However, Mr Combe's voice is almost always quite clear while much of what Mr Ivanov says is indistinct and certainly appears to be spoken softly. I have concluded that Mr Ivanov may have lowered his voice on occasions, including

some occasions when he was discussing the proposal for Mr Combe

to work for the Soviet Union. Having a television set on for

four hours during a dinner and the lowering of his voice at times would be consistent with a desire by Mr Ivanov to prevent surveillance. I think that the probability is that it was done, as a matter of routine, by a KGB officer who was cultivating his guest, and who intended to make the proposal which Mr Ivanov made to Mr Combe that night.

4.55 To explain some of the language which he used, Mr Combe claimed that he was affected both by the euphoria brought on by the forthcoming election, and by drink. I have listened very carefully to the tape on a number of occasions, and no part of

Mr Combe's speech appears to have been affected by liquor in any

way until the end of the dinner, and well after any significant

part of the discussion took place. Mr Combe spoke quite expansively, but that would have been entirely within character without any special stimulus.

72

4.56 Mr Combe claimed that at the dinner, he was trying t o sell

himself to Mr Ivanov, more than Mr Ivanov was trying t o make inducements to him. I have no doubt that Mr Combe was try i ng to

sell himself, but likewise I have no doubt that Mr Ivanov was tryin g both to increase Mr Combe's trust in him and to int e r est

Mr Combe in what he had to offer. Clearly he was adept at

a void ing any commitment in response to Mr Combe's salesman ship

a nd, when he wanted to, in returning the conversation to matters in which he was interested.

4.57 A version of the transcript which has been edited f o r n a tional security and privacy reasons is reproduced as

Appendix E. In the following paragraphs I will set out extracts from the full transcript from which among others the foll owi n g matters appear:

(a)

(b) (c)

Mr Combe's volunteered statement that he regarded

Mr Ivanov as his good friend.

Mr Combe's claim to access to potential Ministers.

Mr Combe's desire to get rich very quickly by making use of his relationship wit.h the ALP and its leading members, and then to get a 'job for the boys' from t h e

ALP Government.

(d) Mr Combe's fervent belief in Soviet/Australian relations . (e) Mr Combe's seekirg of advice and guidance about h o w he should act in relation to CBA. (f) Mr Ivanov's proposal that Mr Combe should work for t h e

Soviet Union and his statement that the proposal ca rne from a very high level in the , Soviet Union. (g) Mr Combe's enthusiasm for working for the Soviet Union and his 'great belief in doing Soviet/Australian Trade' .

(h) Mr Ivanov's statement of the 'need' of the Soviet Union for the services which Mr Combe could provide, and of the importance of that work to the Soviet Union. (i) Mr Combe's preparedness to commit a serious breach of

the obligation of the confidence which he owed to Mr Matheson and his company.

73

(j) Mr Ivanov's statement in respect of a trade matter that he could speak only from a political point of view. (k) Mr Ivanov's reporting to Moscow and his receiving instructions from Moscow.

4.58 It has been said that Mr Combe exhibited an

anti-Americanism in the course of the conversation. This view depends mainly upon parts of the discussion with Mr Ivanov in which he spoke strongly about his publicly-known antipathy to the CIA which he, and no doubt many other Australians, distinguish from the American Government of which it is an arm.

I would not conclude from Mr Combe's anti-CIA statements that he

was anti-American in a general sense. In one part of the conversation, in discussing a group making a film, Mr Combe said:

You can rely on the fact that they're not interested in doing a job on the Soviet Union. They want to really nail

the Americans.

Mr Combe claims that he was referring to the CIA when he used

the term 'the Americans'. This may have been so, but Mr Ivanov, and, indeed, an independent reader of the transcript, might be excused for thinking that, in the context of the whole conversation, Mr Combe was expressing an anti-American and pro-Soviet feeling.

4.59 Part of the conversation about Mr Combe's intention to make a lot of money took this form:

C: (interrupts) So that's why I'm pursuing it, that's why I'm saying its not just a friendly discussion.

I: Yes, Yes.

C: Because it has got to the stage of being terribly

serious. I'm, I'm putting myself in a situation where, now I'll level with you because you're a friend, I regard you as

a good friend Valeriy. I'm going to make the next two years

going to be the two most economically fruitful years of my life. I've worked a long while for the Labor movement. I: I know.

74

C: I've got nothing for it. In financial terms for the next

two years with a Federal Government and four State Governments er I'm in enormous demand, I mean I'm in a

situation where I can , I can say to Esso, you know American

IBM •• 7 ••

I: (yes, yes)

C : and all these companies, well, you know, I'll listen to your proposition and er I'll make a decision in due c o urse whether I'm going to work for you. Urn, if I work for you,

well, I'll do certain things for you but I might decide not

to work for you. And er,

I: (You're right) C : You know in the next few weeks they're the decisions I

have to make. That's who I work for, and on what b as is and

I'm going to charge very big money.

I: Yes, Yes.

C: Because the buggers are going to be paying if they. I f

they want my knowledge about the Labor Party and my c o n tacts with the Ministers in the Labor government, then they ' r e going to pay for it .

4.60 As to 'jobs for the boys', after some facetious rema rks by

Mr Combe about asking the new Government for a job as chairman

of Qantas for first choice, the conversation went:

C: Quite, quite seriously I thoUght I'd wait until er after the first couple of years of his term urn, making.

I: Mrn What do you think what will?

C: Mrn, Making a lot of money which I , will do.

I: What will happen in £>. couple of years in er7

C : Oh. They'll run into (problems).

I: Whether er the er.

C: When (I've) got a couple of years down the track, wh e n

they're getting towards the end of their term, you kno w, then I'll put the heat on for a, Say 'Right, I'm ent i tled to

something . I want my job for the boys.'

I: I see.

C: 'Ambassador, Moscow. That'll do me, thank you very mu ch.'

75

I: Well er, about your boys?

C: No I mean me, jobs for the boys like. That's the

Australian term for.

I: I'm sorry I er, that was I er which the idea of this term

(new) Australian expression.

C: No, No, the term there's a term in Australia where you

give positions, you make appointments on your own supporters.

I: Ah!

C: Ah, what the Americans call patronage.

I : Oh, I know.

C: Like the American Ambassador in Australia is always a patronage appointment of the incumbent President.

I: I see!

C: In Australia we call it 'Jobs for the Boys'.

I: (laughs) Now I understand. C: As as a former Party Secretary er I'm one of the Boys,

I'm entitled to a job.

I: I believe that er.

C: And that will be accepted, but its a question of what job

I ask for, or what jobs I ask for and what I get. And what I

propose to do is not to ask for anything early, but a bit

further down the track er to ask for, perhaps ask for an

Ambassadorial post.

4.61 The important part of the conversation in which Mr Combe raised his CBA problems with Mr Ivanov, and Mr Ivanov made the proposal that Mr Combe should work for the Soviet Union, took this form. After a considerable discussion on Australia/Soviet

trade, Mr Ivanov said that he knew that Australia had 'a good potential possibility to develop trade and economic relations with USSR'. The conversation went on:

I: So, and I know that you are consulting some firms,

correct?

C: I am consulting a firm, well potentially.

I: Er, potentially? Maybe you'll er, you'll er.

76

C: No, I need your advice, should I- On Monday I'm going to

be asked to enter into an agreement to work for that firm

for a 12 months period.

I: Mm. Well er maybe we'll er need in future your a dvice

.•.• we shoulder (some kind of) long term (agreement) bec ause er generally, here in Australia, Australia , Australian market is quite important for er a Soviet company. C: Yes.

I: We don't knower with which companies we shoulder ....

C: Approach?

I: Wither what people we should deal ••• it's er o f course

of course its er political question.

C: Can I come back to this because you- we're getti n g to

the business end of the discussion which is very impo r tant to me in view of the advice I gave my er.

I: I'm sure you will.

C: My client.

There was then a break in the discussion during which, a mongst other interruptions, Mrs Ivanov asked through her husband about the meal and the Ivanov's daughter appeared and had a conversation with Mr Combe. Then Mr Combe returned to the

previous topic and asked Mr Ivanov what attitudes the Embassy had to the various companies which were trading with the Sov i et Union. Mr Ivanov replied that he 'wouldn't say it's the atti tude of the Embassy' but rather the attitude of Moscow. There wa s

then another long discussion about Soviet-Australian trade at the end of which Mr Ivanov said: ' .••• it will be considered by

our economists and trade people so forth ••• Just I, I can s peak

only from the political point of view'.

Mr Combe then said:

C: Well, in terms of what I - the role I should play,

Valeriy, let me seek your advice. I had discussions on Monday in Melbourne with Commercial Bureau .••

77

He went on to discuss his proposed arrangement with CBA and

i n dicated that he could see no reason, from his discussions in

Moscow, why he should not work for that company. He then said:

C: But they're still held in reasonably good regard as far as Soviet/Australian relations are concerned. Now, that's really what I seek your guidance on.

F u r t her trade discussions followed in which Mr Combe asked

Mr Ivanov to assume 'a normalisation of political relationships '

be tween Australia and the USSR, reminded him of earlier remarks wh i ch he, Ivanov had made about the lack of snow in the USSR c r eating 'a crisis situation'. Mr Combe then asked whether any

dec i s i o n by the Soviet authorities such as, for example, one to buy mea t from Australia in preference to the Argentine depended upon the level of Australian imports from the USSR, on price, or on 'the political relationships which exist between our two

countries' at the time when the USSR needed to buy. There was t h e n a diversion by Mr Ivanov in relation to the Falklands war

a n d the Argentine, and Mr Combe came back to the report which he h a d submitted to CBA and said -

what I essentially said to them was that they had to provide political opportunities, that they had to be prepared to prove themselves. They couldn't just go into the market place in Moscow and say 'Well you know we're an accredited trade agency and we're terrific and you know we've made a

fortune selling Australian products to the Soviet Union, therefore you should trust us'. But they have to get into, they have to get involved in some pretty tough political decisions. They have, for example, to be prepared to back er

to improve things which are likely to improve Soviet/Australian political relations •.•. So they need to get themselves in a situation where they are seen by Moscow to be doing things which are politically compatible and helpful to the USSR/Australian relations. And er, it seems

to have caused a storm in the company you know, they a re

sort of saying 'well we sort of see ourselves as being a

commercial outfit and we should be respected for our commercial professionalism' ••.• So if you are competing with this fellow Fasham who is a sort of their main

competitor for a share of the Soviet trade then you have t o

be able to convince the Soviet authorities that you are a better company to deal with from their point of view, you are going to be more politically helpful to them in terms of USSR/Australian relations. Now does that seem to you, to be proper advice? or

78

I: Sure, sure. But er I believe such kind of decisions ar e

taken in Moscow.

A little later, Mr Combe told Mr Ivanov that there was only o n e

firm which had asked him for advice in the area of

Australian/Soviet trade relations. There then followed th is conversation :

I: Of course. But er, I believe that after March ther e wil l

be more firms applying about er . Weller, maybe er if it ' s

possible er we'll ask, me personally I don't know, ma ybe e r our the commissioners will ask you to give your assi s t ance .

C: Sure, sure.

I: To research such fields of Australian products ••. C: That's for Soviet goods in Australia?

I: Soviet goods in Australia and Australian goods f o r t he USSR. it's official business, business is busines s , y o u r

work will pay, because we need such kind of research. It's very important to us, very important.

Mr Combe then asked whether Mr Ivanov had been asked t o speak t o

him by the Ambassador or by Moscow and then said that hi s question really was whether 'you're asking me to work in a professional capacity by Moscow ••• ' Mr Ivanov told him that if he had to go to Moscow for conversations he could rely on h elp

and that 'we'll do everything to improve our relationship We'll organise meetings with the person(s) in charge of this Soviet ••• ' He affirmed Mr Combe's statement that the Ambassador was not as important in the matter as the officials in Mo s cow.

Mr Combe then said:

So, really, what we need to do is to wait until next

Thursday when the Ministry is chosen then have discus sions with Hayden as Foreign Minister and whoever they ask to be Trade Minister, probably Bowen, to work out what the parameters are and then, I guess you're right, go to Mos cow

and find out what's the position.

A little later Mr Combe said:

Well that would be very good Valeriy, I mean I'd love t o

work er I'd love to worker on your behalf because I beli eve very fervently in Soviet/Australian relations.

79

4.62 The discussion later turned to the source of Mr Ivanov's instructions. Mr Combe ask ed Mr Ivanov:

No w the terms of your brief to talk to me about er making an

a ssessment of trading possibilities. Where would that originate? Would that have come from the Central Committee o r from the er Foreign Ministry or?

Mr I v anov replied that it had been 'signed by the Foreign

Mi n ister in the first place', and after a question by Mr Combe

as to whether it had come from the Central Committee Mr Ivanov indica ted that it had come through a Mr Shevrigan, and ult ima tely, from Mr Boris Ponomarev, a very senior Soviet o ffi c ial indeed. Mr Ponomarev (spelt Ponomorev in the transcript

o f evidence) has had a long history with the CPSU. He has been a

me mber of the Central Committee since 1956. Since 1955, he has

b een head of the CPSU International Department. In 1961 he

became a Party Secretary, and, in 1972, was appointed Candidate Me mber of the Politburo. Since 1966 he has been chairman of the

Fo reign Affairs Commission of the Council of Nationalities of

the Supreme Soviet. Mr Combe understandably wondered how Mr Ponomarev had come to hear of him:

C: Now how would he come to know of me? Or would he just

make it a judgment on the basis of the submissions put up to

him from Foreign Affairs?

I: Well er such kind of people as myself, political people er in an Australian (scale) so to speak (write up reports) working for our boss, our er obligation (usually) is to supply our boss with true information.

C: Yes.

I: And (he) is of course not him personally, but his

officers, on the basis of this information is working out certain propositions for Politburo and in the name of the Politburo, making certain decisions.

4.63 Mr Combe was then anxious to know what he should do.

C: OK. Now let's look at the situation where I take this on

board. We agree that the first thing is for me to go to

Moscow and assess what the various trade possibilities are, having spoken to the Foreign Minister here and the Minister for Foreign Trade.

80

I: Well first of all what I can tell you. We have a p r actice

that we should send our say official propositio ns t o Moscow . .•. Then we receive a reply and then weer sayer we wo r k

out ..•

Mr Ivanov then said that their meeting was just a fr ien d l y

getting together, and that he and Mr Comb e should dis c uss seriously the problems and should meet in a serious atmo s phere . Mr Combe replied that he would be happy to do it on a straigh t

business basis.

4.64 Mr Combe raised the problem, which he needed t o r eso l ve before meeting Mr Matheson on 7 March, of whether he c o uld wo r k b oth for CBA and the Soviet Government, pointing out the

p ossibility of a conflict of interest. He said:

..• if I agree to work for Commercial Bureau, whom I ' m

seeing on Monday, then that means I would have t o gi ve the m

an undertaking that I would work exclusively for the m in respect of trade with the Soviet Union. Now the a lte r native is that I don't do that a nd that I work for er f o r you ,

which leaves me open to deal with any trader or po t ential

trader or indeed to organise trade deals myself. So t hat that area, whole area needs to be explored y o u s e e?

Mr Ivanov replied that it was not an easy decision and was

really very serious. Mr Combe said that that was why he was pursuing it, and why he was saying that it was not just a

friendly discussion. The conversation then went on with Mr Co mb e saying that he regarded Mr Ivanov as a good friend, and that he (Combe) was going to make a lot of money in the next few years .

After some diversion, Mr Combe again posed his problem, s aying :

C: ••• Now I would be delighted to work for you. Er y ou kno w

quite obviously because I have, a, I have a great bel ief in

doing Soviet/Australian trade.

I: Yes, Ah but er can you tell me?

C: (interrupts) but you have to make the decision wh e the r I

can work for Commercial Bureau and work for you, bearing in mind that you will know that I'm actually representing t h em and I'm going to be trying to find the best opportunitie s for them or whether you want me to remain separate fro m them and find opportunities for you with whoever er can trade with the Soviet Union.

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Mr Ivanov said it was a very complicated question and went on to

d iscuss, amongst other things, how long the ALP was likely to be

in government.

4. 6 5 At the end of the evening, just before leaving, Mr Combe

s a id that they had better pursue the discussion about trade very

soon. Mr Ivanov replied that everybody would be at the Embassy on the following day and would discuss the question and that 'Maybe we'll send ••. to Moscow.'

4.66 In the course of the conversation, Mr Combe told Mr Ivanov that the first step he would take, on the assumption that he would be working for the Soviet Union, would be to speak to the

n ew Minister for Foreign Affairs, Mr Hayden, and for the new Minister for Trade who, he thought, would probably be Mr Bowen. However, as appears from the passage from the transcript set out in 4.61, what he intended speaking to those Ministers about was

'what the parameters are', that is, what the parameters of Soviet/Australian trade would be. This information was necessary for the sanctions were then still in force and the precise nature of any new arrangements would not be known until t h e new Government had indicated its attitude.

4.67 In the course of the conversation, Mr Combe made a number of remarks which indicated a close association with some prospective Ministers in the forthcoming ALP Government. Amongst other things, he told Mr Ivanov that 'What we really should do

is the next time we have dinner we should get Bill Hayden and

his wife to join us •.• because he will be the Foreign Minister'.

4.68 From time to time during the conversation, Mr Ivanov gave Mr Combe information about Soviet and Embassy activities. Such

disclosures from a Soviet diplomat to an Australian citizen might be regarded as unusual. Amongst other things, he told Mr Combe that the then Ambassador, Dr Soudarikov, would be

leaving very shortly and that a Mr Samoteykin, who had been a personal aide to Mr Brezhnev, would replace him.

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4.69 In the course of discussing how the Central Committee would know the details of something of •such little importa n ce t o the USSR as the Flinders by-election, Mr Ivanov said that information was sent each month by the Embassy to Moscow about

what was happening in Australia and that, after some sort o f processing, the facts were sent to the Central Committee a n d the Politburo members who are in charge of foreign policy. Th e process described by Mr would doubtless have been appl ied

to information, particularly political information, provi ded by Mr Combe had he contracted to work for the Soviet Government,

even if only in a trade capacity.

4.70 It seems clear that Mr Ivanov displayed greater inte r est in Mr Combe between 7 January 1983 and 4 March 1983. Befo r e the

latter date, officials in Moscow had taken the opportunity to observe Mr Combe closely. Presumably they made some ass es sment of him in the light of what he said to them, coupled with any

previous knowledge of him and his activities. Then, on 3 February, the Australian election was called, and, in t he

course of the month, it appeared highly probable that the ALP would take over the government. At some time before 4 Mar ch Mr Ivanov received written instructions, initiated at the

highest level in the Soviet Union, to ask Mr Combe to work f or

the Soviet Union. In the light of the conversation of 4 Ma r c h the KGB undoubtedly would have regarded Mr Combe as a very g ood person to cultivate with a view to his ultimate recruitment a s an agent. Whether the process would be successful would have to be determined in the future, but nothing would be lost by

trying, and the benefits from a successful cultivation would be great. Pursuant to his instructions, Mr Ivanov, with whom Mr Combe had not discussed CBA or its trade problems before

4 March, took a significant step in the cultivation.

The Moscow proposal and its CBA

4.71 Mr Combe said in evidence that he was looking forward to

hearing from Mr Ivanov about what I will call the Moscow proposal. He did not have long to wait. On 6 March Mr Ivanov and

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his family visited Mr Combe bringing with them gifts of champagne, chocolates and cigars. Mr Combe raised the question o f his entering into a contractual arrangement with CBA, a

matter which had become urgent because he was going to see Mr Matheson on the following day. The duration of the

contemplated arrangement was to have been twelve months, but it was to be reviewable and could be terminated by either party after three months. Mr Ivanov told Mr Combe that there was no reason why he should not enter into that arrangement. He also told Mr Combe that he had discussed the Moscow proposal within the Embassy and that he would send it to Moscow. Mr Combe said in evidence that he made no enquiry of Mr Ivanov as to what were the terms of the proposal. However, he did not tell Mr Ivanov that he was not interested in it. It is clear that neither

Mr Ivanov nor Mr Combe saw the contract with CBA as preventing

the Moscow proposal from proceeding. Mr Ivanov was disparaging about free enterprise agencies, and told Mr Combe that the Soviet Government preferred government-to-government trading arrangements.

Conversation between Combe and Matheson of 7 March 4.72 On 7 March 1983 Mr Combe had a meeting with Mr Matheson. At this meeting, which was after the results of the election were known, Mr Matheson paid Mr Combe, without demur, his bill

of $2,500 for the CBA report. He also agreed to retain Mr Combe for twelve months at $2,000 per month, reviewable by either party at the end of three months. A great deal of discussion went on about CBA, its activities and the pr.ospects for an

increase in Soviet/Australian trade. Mr Combe's eyes were opened to the very great potential of this trade, and consequently to how lucrative this could be for him. There was some discussion about the CBA report. Mr Matheson said that he found its

recommendations too political. Mr Combe responded that Soviet officials tended to make political judgments in respect of everything they did and that there was hardly anything that they did which ultimately did not h&ve political motivation. The problems of CBA in New South Wales were traversed again, and

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Mr Combe told Mr Matheson that Mr Fasham had enormous in fluen ce

in that State, that he should forget about New South Wal es , and that he should concentrate CBA's activities in other States . Mr Matheson told Mr Combe about the litigation in which CBA was

engaged with Mr Fasham and his companies and agreed t o gi ve Mr Combe copies of the documents filed in those proceedings s o

that he might give them to Mr Ivanov. In the conversation, Mr Combe said that he saw Mr Ivanov frequently, and that they

were good friends. They also discussed the suspended Tasmanian fishing venture, and Mr Matheson agreed to give Mr Comb e the documents which had been signed concerning it, again for him to pass on to Mr Ivanov. Mr Matheson intended that Mr I v anov shoul d

put the documents before the Soviet Ambassador, Dr Soudar ikov , who was said to favour Mr Fasham, so that he could be a cquainted with CBA's side of the dispute.

4.73 In the same conversation Mr Combe told Mr Matheso n that he should get to know Mr Ivanov, who could do a lot to h e lp h i m and

CBA. Mr Combe also asked Mr Matheson to contribute to a fund f o r

the Edinburgh University-style conferences which Mr Combe hoped to set up. Mr Combe said in evidence that he asked f o r a

donation of $10,000 whereas Mr Matheson said that he was asked for $50,000. I can see no particular reason for accepting o n e sum instead of the other. What is relevant is that a large sum

was asked for. Mr Matheson claimed, and Mr Combe denied, t h at he

rejected the proposal. In the light of all the evidence, I t h ink

it more probable than not that Mr Matheson did reject the proposal. It would have been inconsistent for Mr Matheso n t o have accepted that alone among the political or propaganda recommendations of the CBA report.

4.74 Mr Matheson gave evidence that during the discussion o f 7 March, Mr Combe said two things to him each of which Mr Co mbe

denied. The first was that he, Mr Combe, had been 'instructed t o become closely involved in Soviet-Australian trade', and t he second was that he thought that Mr Ivanov was more than he appeared to be. It was to the word 'instructed' in the first

85

sta tement attributed to him that Mr Combe took exception, c laiming that he is not one to take instructions in any relevant

sense. There is no doubt that it had been suggested to him by

Mr Ivanov a few days before, that he should become involved in

Soviet/Australian trade, as appears from the transcript of the conversation of 4 March. Mr Combe is not backward in promoting himself, and there is no reason to believe that on 7 March

Mr Combe did not allude in some way to this request when

speaking to Mr Matheson. The latter often agreed in the course o f hi s evidence that he could not remember the precise words

used in the conversation, and that some other words might hav e been used. However, he was certain that the word 'instructed' was used. I have concluded that it was used, but I do not attach

any significance to its use. I think that by this statement Mr Combe intended no more than to emphasise to Mr Matheson how

well-established was his link with the Soviet authorities. As to the second statement, there is no doubt, on Mr Combe's own ev i dence, that he thought that there was something special and unusual about Mr Ivanov, that he was 'plugged-in' and had access

to up-to-date information, and that he was flexible, a quality which Mr Combe thought to be unusual in diplomats. The transcript of 4 March confirms these perceptions by Mr Combe of Mr Ivanov. I think it more probable than not that Mr Combe did

use the expression attributed to him by Mr Matheson. That statement and Mr Combe's evidence about his perception of Mr Ivanov are relevant to a determination of what was Mr Combe's

belief about whether Mr Ivanov was a KGB officer. However, I do not think that, in itself, the statement made by Mr Combe on 7 March was intended by him, or should be construed, as a

statement that Mr Ivanov was a KGB officer.

Ivanov's visit to Combe on 15 March 4.75 On 15 March Mr Ivanov rang Mr Combe and said be wanted to

see him. On the evidence, which I accept, Mr Combe asked him to

come around to see him at 7.30 p.m. Mr Combe also asked

Mr Ivanov if he had any news. Mr Ivanov said he had. Mr Combe

asked whether the news was good or bad. Mr Ivanov said that it

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was not bad. Mr Ivanov visited Mr Combe and discussed the

replacement of Dr Soudarikov as Ambassador, the fall from grace o f Mr Suslov, the support which Mr Fasham had from the New South

Wales Government and the financial stability of CBA. Acco r ding to Mr Combe, Mr Ivanov told him that Mr Fasham had been given b lanket support from the New South Wales Government on an

o fficial level, and that Mr Fasham had come back from the Soviet

Un i o n with a letter purporting to give him exclusive rights f or

s ome period, like sixty days, to put together a consortium f o r a

joint fishing venture. Mr Combe gave evidence that he formed the v iew that the main reason for Mr Ivanov's visit was to indicate

to him that Mr Fasham was viewed more favourably than Mr Matheson by the Soviet authorities. Most of this news was bad

news for CBA, and, indirectly, Mr Combe, but Mr Combe denies that Mr Ivanov gave him any other news, although when he first gave evidence about this meeting, Mr Combe said it was then that Mr Ivanov told him that he wanted him to meet with

representatives of GKES. Mr Combe later said that this statemen t was made on 21 March. At 8.30 p.m., Mr Combe started to watch

'The Dismissal' on television. Mr Ivanov soon lost interest in that programme and left.

Mr Combe's claim to Committee

4.76 On the following day, 16 March, Mr Combe had a

conversation with Mr J. Alparslan, who was then a trade and investment adviser to the New South Wales Minister for Industrial Development and Decentralisation, the Honourable D. Day. In this capacity, Mr Alparslan had contact from time t o

time with Mr Fasham and officers of Pactra. The conversation between Mr Combe and Mr Alparslan was directed mainly to the reasons for what Mr Combe claimed was the preference shown by the New South Wales Government to Mr Fasham and Pactra. Mr Combe

told Mr Alparslan that the Soviet officials 'were not really all that interested in Pactra or in Commercial Bureau by virtue of what they considered to be the financial weaknesses of these companies' and 'they were looking for much financially stronger

companies', such as Elders or BHP. Mr Alparslan said that he

87

told Mr Combe that he apparently had not been given the full information about the matters and had only one side of the story. Mr Combe replied:

No, I have the entire story. I have been appointed as a

representative of the Soviet Central Committee and I am liaising with the political officer of the USSR Embassy here in Australia.

In cross-examination, Mr Alparslan agreed that he did not distinctly remember the word 'appointed', but asserted that he distinctly remembered the word 'representative' or 'representation'. Mr Alparslan impressed me as a witness of truth and as reliable, and I have no doubt that he was correct

in his evidence. However, I do not conclude from Mr Combe's statement to Mr Alparslan that he had, in fact, already been appointed as a representative of any Soviet organization. The statement is relevant to a determination of how Mr Combe viewed, at about 16 March, Mr Ivanov's Moscow proposal, but I think that Mr Alparslan was right in his view that Mr Combe was simply

trying to impress him. I consider that Mr Combe's denial of Mr Alparslan's evidence was deliberately false.

Meeting of Combe and Ivanov at Lakeside Hotel on 21 March 4.77 On 20 March, Mr Ivanov rang Mr Combe to arrange a meeting with him, and on the following day, 21 March, Mr Combe rang him and arranged to have lunch with him at the Lakeside Hotel. As already indicated in 2.27, at Mr Ivanov's suggestion, Mr Combe

met him in the parking area of the hotel and from there, proceeded to lunch. At the lunch, Mr Matheson's dispute with Mr Fasham was discussed again in some detail. Mr Combe said that he then expressed his concern that Mr Matheson was getting a rough deal from the Soviet officials. Mr Ivanov repeated an offer of

Soviet medical treatment for a recurrent ear ailment which Mr Combe experienced, and offered him a holiday on the Black Sea

coast. The Moscow proposal was also raised. Mr Ivanov told Mr Combe that he had sent the proposal, which had been discussed on

4 March, to Moscow and that he would arrange an opportunity for

Mr Combe to meet representatives of GKES. Mr Combe said in

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evidence that he did not ask what the terms of the proposal

were, and that he had lost interest in it, but that he di d not

tell that to Mr Ivanov.

Combe requested by CBA to provide documents to the Soviet Embass y

4.78 On 25 March, Mr Matheson and Mr Woods, a CBA executive , met Mr Combe in Canberra and had breakfast with him. Matte r s c oncerning CBA were discussed including prospective v entur es and

t he dispute with Mr Fasham. It was on this occasion that

Mr Matheson handed to Mr Combe some documents including

a ffidavits filed in the action in the Victorian Supreme Cou r t by

CBA against Mr Fasham and his companies. He also gave him

documents detailing the suspended Tasmanian fishing agreeme n t

between Sovrybflot, CBA and Henry Jones (IXL) Limited . Mr Matheson intended that Mr Combe should supply these docu me n t s

t o Mr Ivanov, to give to the Ambassador. It was hoped tha t the

d ocuments related to the fishing agreement would bring h o me to

Embassy officials its nature and importance and the fact that

Henry Jones (IXL) Limited was one of the parties. Mr Matheson said that his object in getting Mr Combe to supply the c o ur t documents was to dispel views that might be held in the Embassy

arising from documents which he understood had been given to the Embassy by Mr Fasham.

Ivanov's 'warning' to Combe on 3 April 4.79 On Friday l April, Mr Combe tried to contact Mr Ivanov at

t he Embassy by telephone. Mr Ivanov was not available and Mr

Combe visited his home unannounced in the afternoon of 3 Apr il .

His principal purpose in going there was to give Mr Ivanov the d ocuments which had been provided by Mr Matheson . That was done .

Mr Combe told Mr Ivanov that Henry Jones (IXL) Limited wa s now

part of Carlton United Breweries and referred to Mr John Elliott, one of its directors, as being 'now a much bigger fish'. Mr Combe told Mr Ivanov that the court documents had been obtained as the result of his own researches. By this sta t e ment, he intended to create the false impression that he had not

simply got the documents from Mr Matheson, thereby giving

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greater weight and credibility to them. He also told Mr Ivanov that he was getting documents on the activities of the CIA in 1975 from Brian Toohey and that he would send copies of them soon after he got them. At the end of the conversation, he told Mr Ivanov that he would find the court documents interesting

reading, and that 'the next documents I will give you will be about the CIA in 1975'. Mr Combe claimed in evidence that his reference to 'the next documents' was only to newspaper cuttings. During the conversation, according to Mr Combe, Mr

Ivanov told him again that he should meet the representative of GKES.

4.80 When Mr Combe left the house, Mr Ivanov accompanied him and outside the house, according to Mr Combe, Mr Ivanov gave him a warning and also proposed how they should meet in the future. Mr Combe's account of this warning was in these terms:

It was then that he said to me that I should be careful. He

said that, in a situation where there have been numbers of Soviet diplomats expelled from the UK and from France, it is highly likely that the Australian Government will be under pressure to expel a diplomat from Australia. He said that if

that happens, it could well be him, and implications for me could be quite serious. I asked him why he thought the implications for me could be serious, and he said that obviously, if he were to be expelled, then my association with him, could be made known to my clients and that could be commercially damaging to me. He then proceeded to tell me

that, when I had returned from Moscow I had rung the embassy and something which I had said on the telephone, had caused ASIO to re-open my file. He said that he believed my telephones were tapped and that therefore I should not use

the telephone, and that that was why he had not called me back. He said that if I wished to see him, that I should

come to his home. If he wished to see me, he would come to

my office.

What Mr Ivanov said about Mr Combe's telephone being tapped, his house being bugged, and Mr Combe himself being under surveillance, was incorrect. It was urged on behalf of Mr Combe, that evidence given before the Commission of a conversation

which a journalist had before 3 April with Mr L. Koshlyakov, the First Secretary (Press and Information) at the Soviet Embassy, provided a basis on which I could infer that Mr Ivanov genuinely

90

believed that Mr Combe had been under surveillance by ASIO since he returned from Moscow at the end of 1982. Having fully considered that submission and the evidence on which it was based, I decline to draw any such inference.

4.81 On 6 April, Mr Combe told Mr Matheson of the warning.

According to Mr Matheson, Mr Combe told him about it on two occasions. He said that on the first occasion, Mr Combe in Mr Woods' presence, told him 'that Mr Ivanov had told him that

his, Mr Combe's, house was bugged, his phone was tapped and that he was under surveillance and had been since he arrived back from the USSR'. Mr Matheson responded lightly, saying 'Join the club . Anyone that has anything to do with the Soviet Union must

expect that sort of thing. I have no doubt mine has been bugged for some time.' Later, outside the house, and in the absence of Mr Woods, Mr Combe referred to the matter again. According t o

Mr Matheson:

He repeated what had been said inside but also added that Mr Ivanov had told him that he, Mr Ivanov, was also under

surveillance, that there was an operation on to compromis e Mr Ivanov and have him expelled, and that Combe was a part of this and that it would follow operations which had been carried out in other countries and I think he mentioned

Britain, France and Italy. He also said that he, Mr Ivanov, had told him not to get in touch with him, to maintain a l o w

profile and that Mr Ivanov would contact him by other means.

Mr Matheson said that this was said in a serious tone.

Mr Matheson was closely cross-examined about his account of the

conversation of 6 April. It was also suggested that his recollection of what was said on that date was impaired by liquor which he consumed at Peaches Restaurant (see 4.88). Th ere is no doubt and, indeed, it is Mr Combe's evidence, that what Mr Combe told Mr Matheson included what Mr Ivanov had said about

any future meetings. Although there were inconsistencies in his evidence of the sequence of events on 6 April, Mr Matheson was not shaken on his recollection of what Mr Combe had said. Nor d o I find that he was so affected by liquor as to make his

recollection unreliable.

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4.82 The significant difference between the two versions of the warning is in what is attributed to Mr Ivanov about future contact between him and Mr Combe. Mr Combe's version is that Mr Ivanov said they should visit each other at home. He denied,

on a number of occasions, that Mr Ivanov had said anything to the effect that he, Ivanov, should have the initiative in making contacts. I turn now to look at other aspects of the evidence

which may assist in resolving which version I should accept.

4.83 Before Mr Combe gave evidence, Mr Matheson, Mr Barnett, the Director-General of Security, and Senator Evans, the Attorney-General, had all given evidence. Mr Matheson was cross-examined at length about the events and conversations of 6 April, but at no time was Mr Combe's version of that part of

the warning about making contact put to him. Mr Barnett, in giving evidence about what he had said to Mr Combe on 11 May, said he had told him that 'we had evidence that Mr Ivanov had s uggested that the relationship should become more discreet in

the sense that he, Mr Combe, should not telephone the Soviet Embassy but should wait until he was contacted by Mr Ivanov He said that Mr Combe's reaction was not to say much but to look

shocked. It was not suggested to Mr Barnett that he or Mr Combe mentioned Mr Combe's version of this part of the warning. Senator Evans gave evidence that on the same day in drawing Mr Combe's attention to a passage in Mr Combe's statement to the

Government on this matter, he said:

That's a very interesting account of that conversation, David, as far as it goes, but haven't you left something

out? Isn't it the case that Mr Ivanov went on after that and

said to you that you should maintain a low profile, that you

should -and further, more significantly still - that you should not initiate any contact with him, that you should not try and telephone him or see him, that any further contact between them would be initiated by Mr Ivanov himself.

According to Senator Evans, Mr Combe's response was 'something along the following lines: How in the hell could you have a record of that? That conversation was well outside the house'

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Senator Evans was cross-examined several times on the subject of the warning, and it was not suggested to him that he had n o t made the statement which he claimed to have made to Mr Combe , or

that Mr Combe had made any other response. Nor was it put t o h i m

that Mr Combe had referred to his own version of the proposa l. In his evidence, Mr Combe denied that either Mr Barnett or Senator Evans had mentioned the Matheson version of the warning , and, in particular, said that had it been mentioned he woul d have challenged it and would have protested. It is put on Mr

Combe's behalf that he was under such stress on 11 May, that n o reliance should be placed on his reaction to anything that wa s said to him. No doubt Mr Combe was very upset, but this di d not

prevent him from arguing with the Attorney-General on quite a few matters. In cross-examination, Mr Combe adhered to his c l aim that nothing of a proposal as to how his meetings with Mr I v a nov should be initiated had been mentioned by Senator Evans. He

asserted that Senator Evans had related the question of clandestinity to Mr Ivanov's statement about the tapping o f hi s , Combe's, telephone. At first he denied that he had referred t o his version of the warning on 11 May, but ultimately said he

thought that he may have made a reference to his version of i t .

The journalist referred to in 4.81 gave evidence that he thought that Mr Combe had said to him that Mr Ivanov had warned that because of the ASIO tap on his, Combe's, telephone, they should not use the telephone. The same witness also thought Mr Combe had told him of Mr Ivanov indicating something to the effect

that he would call around to see Mr Combe if necessary. However, in cross-examination, the journalist said that he thought that perhaps this latter statement was based of what he had read since the Commission had commenced receiving evidence, but that he was certain that Mr Combe referred to the matter of the

telephone. I do not think that this evidence throws any light on the matter.

4.84 A further consideration which leads me to prefer Mr Matheson's version of this part of the warning is that if a

KGB officer were suggesting to somebody that their future

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communications should be conducted so as to avoid surveillance, it is inherently unlikely that he would propose that they should visit each other at their respective houses.

4.85 I am satisfied that Mr Ivanov's proposal as to how he and

Mr Combe should meet after 3 April was substantially as

recounted by Mr Matheson. Moreover, I have no doubt that the evidence given by Mr Barnett and Senator Evans of what was said by them to Mr Combe on 11 May, and of Mr Combe's response to it,

was correct. I reject Mr Combe's contradiction of that evidence.

4.86 Mr Combe did not report Mr Ivanov's warning or proposal to any Minister or government authority, including ASIO. Nor did he complain to any such person or body about his being subjected to surveillance. The significance of this failure to report the warning or to complain about the alleged surveillance of himself

is dealt with in 4.107.

Further meeting between Combe and Matheson on 6 April 4.87 As already indicated in 4.81, Mr Matheson had several discussions on 6 April with Mr Combe. He came to Canberra with Mr Woods for a meeting with Mr Dashevsky, the senior Soviet

trade representative. Mr Matheson, Mr Woods and Mr Combe first went to Mr Combe's house and discussed business matters including the fishing agreement in connection with which Mr Combe had obtained an appointment for later that day for

Mr Matheson to see Mr Kerin, the Minister for Primary Industry.

It was at this meeting, and outside the house, that the

conversations took place in which Mr Combe told Mr Matheson about Mr Ivanov's warning and proposal as to future meetings. It was put by Counsel for Mr Combe during the hearing that, when Mr Combe was telling Mr Matheson about these matters, he thought

he was telling someone 'of or from ASIO'. However, Mr Combe's own evidence was that this was not so, and that he never had

that view of what he was doing when he spoke to Mr Matheson. Some time later, on 6 April Mr Combe told Mr Matheson that he

had been told that he was an ASIO operative. Mr Matheson denied

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it, and Mr Combe, in evidence, said that he 'was prepared t o

a ccept his denial'.

4.88 Mr Matheson and Mr Woods went off to see Mr Dashevsky and a long lunch ensued at Peaches Restaurant attended by Mr Comb e,

Mr Matheson, Mr Dashevsky and other Soviet officials. During the

luncheon, several matters were discussed including what Mr Co mbe s aid Mr Ivanov had told him about the failure of CBA to provide c onsistent supplies of Stolichnaya vodka in Canberra. A lot o f

l iquor, including vodka, was drunk at the luncheon, and ther e is

a d ispute on the evidence as to how affected Mr Matheson wa s by

l iquor. However, as I have indicated in 4.81, Mr Matheson was

not so affected as to make his recollection unreliable. The luncheon broke up and to Mr Combe's surprise, Mr Matheson proposed that they should meet over a dinner, again at Peaches , that evening. At that dinner, Mr Matheson told Mr Combe, f o r t h e

first time, that he had also retained Mr Eric Walsh to act f or

CBA.

La st contacts between Combe and Ivanov

4.89 Mr Ivanov left Canberra on 15 April to go to Melbourne f o r

the AUS national conference, and Mr Combe saw him at that conference on 16 April. Mr Combe addressed the conference uncritically on the Moscow conference, despite the views he expressed in evidence about its value. Mr Ivanov asked Mr Combe

to dine with him and Mr Rogov, but Mr Combe declined.

4 . 90 After leaving Melbourne, Mr Ivanov went to Adelaide. Fro m

there he rang Mr Combe on 21 April, about a Minister of the

South Australian Government who, he understood, desired to travel to the USSR. The Minister was, in fact, Mr Wright but Mr Ivanov mistakenly thought that it was Mr Bannon, the Premi e r.

Mr Combe made arrangements by telephone to put Mr Ivanov in

touch with Mr Wright. This was the last contact between Mr Combe and Mr Ivanov.

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Combe's attitude to Ivanov 4.91 In the course of his evidence, Mr Combe made statements about three matters which concerned his relationship with

Mr Ivanov. They were that:

(a) at some time after 6 March and before 21 March, he had

ceased to regard Mr Ivanov as a friend and had become sick of him, considering him to be no longer interested in, or able to do anything to help, CBA. He further said

that after 3 April, he regarded Mr Ivanov as a 'creep';

(b) during the same period he lost all interest in the

Moscow proposal;

(c) he took the same view of Mr Ivanov as of all Soviet

diplomats, that he might be a KGB officer, but that his belief about Mr Ivanov's position went no further.

4.92 The first statement is contrary to the evidence of what wa s said and done by Mr Combe, including what he said about his

r e lationship with Mr Ivanov after the announcement of the

e xpulsion on 22 April. Mr Combe said that he was getting 'pretty

c ranky' about what he saw to be the failure of Soviet officials

t o d o the right thing by his client. He also said that he was

f e eling under a bit of pressure from Mr Ivanov to meet him and

that, having regard to the limited time he had with his famil y , h e found Mr Ivanov's visits, and his insistence on making them,

intrusive. Then he claimed that he was getting a bit sick of Mr Ivanov. The evidence is that Mr Ivanov rang Mr Combe a t 5.48

p.m. on the evening of 15 March, and asked him what he was doing. Mr Combe replied that he was going to watch 'The

Dismissal' at 8.30 p.m., but that if Mr Ivanov wanted to come a t

7.30 for a talk, he was quite welcome. This does not suggest

that Mr Combe was objecting to what he regarded as an intrusion by Mr Ivanov. Their next meeting was on 21 March. Mr Ivanov r a ng Mr Combe at 6.48 p.m.; and Mr Combe said that he and his f a mily

were about to have dinner, and he would call Mr Ivanov at wo rk the next day. On the following day, Mr Combe rang Mr Ivanov at about midday and arranged to have lunch with him at the Lakesi d e

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Hotel. This conduct of Mr Combe, does not suggest any resentment by him of continuing contact with Mr Ivanov. It was Mr Comb e who, on l April, rang Mr Ivanov, and when he was unable to speak

t o him, went to his house, unannounced, on 3 April. Apart fr o m his own statement about his feelings, there is nothing in the e v idence to suggest that the relationship between Mr Combe and Mr Ivanov, whom Mr Combe had called his 'good friend' on 4

March, had deteriorated. The evidence discloses that, after Mr I v anov's expulsion was announced, Mr Combe asserted more than

o nce his continuing friendship with Mr Ivanov. Thus, on both 22 April and 2 May, in discussing Mr Ivanov's expulsion, he t o l d Mr

R.M. Cameron that he knew Mr Ivanov quite well, and spoke o f t he

closeness of their friendship. On 25 April, he told Mr Wrigh t t hat he had found Mr Ivanov 'quite a reasonable bloke to have

dealt with'. On 26 April, he told Mr Drysdale that he had k nown Mr Ivanov 'extremely well', and on the same day informed Mr

Hartung that Mr Ivanov was a 'mate' of his, and indicated t o Mr

Da v id Barnett that he was 'a nice man'. It appears that h e even

c onsidered inviting Mr Ivanov to a party on 26 April, but

changed his mind because 'we don't want to appear implicated ', 'we don't want to have any more lies go forward than is

absolutely essential', and 'we are reluctant to contact him'. On 15 May, Mr Combe told Mr M. Walsh, on a television programme,

that Mr Ivanov was a thoroughly charming man. It may be that Mr Combe was disappointed that Mr Ivanov had not been able to

achieve what Mr Combe wanted in relation to CBA, but, as will appear, I have no doubt that Mr Combe was still very interested in the Moscow proposal. I have concluded that the statements made by Mr Combe about the deterioration of his relationship

with Mr Ivanov were untrue, and deliberately so. Those statements, unlike other parts of his evidence, cannot be explained by lapses or imperfections of memory.

4.93 The second statement, that about his lack of interest in Mr Ivanov's Moscow proposal, is likewise contrary to the

evidence. Mr Combe said in evidence that he showed enthusiasm

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for the proposal on 4 March, and that he was looking forward to

it coming to fruition. On 4 March, Mr Combe sought Mr Ivanov's assent to him, Combe, concluding a contract with CBA on 6 March. This was a positive indication of Mr Combe's continuing interest in the Moscow proposal. Further, Mr Combe's contract with CBA was one which he could determine after three months if he wished, a delay which would not be likely to affect Mr Combe's

ability to enter into an agreement with the Soviet Union. At no time during March or April did Mr Combe tell Mr Ivanov he was no longer interested, even though his evidence is that Mr Ivanov reported progress with the matter to him on 21 March. Moreover,

it was again suggested by Mr Ivanov on 3 April, that Mr Combe should meet the representative of GKES. When Mr Combe told Mr Alparslan on 16 March that he was the representative of the

Central Committee, he must have had in mind a proposal in which he was still interested. Mr Ivanov's statement to Mr Combe on 6 March about the Soviet Government ' s preference for government

to government trading, together with the new Australian Government's preference for trading arrangements of that kind, would have indicated to Mr Combe that his proposed retainer from CBA might be shortlived, and that any arrangement which he might

make with the Soviet Union would have better long-term prospects. There was thus every inducement for Mr Combe to remain interested, quite apart from his fervent desire to improve Soviet/Australian relations, which he hoped his work for

the Soviet Union would do. Furthermore, on 29 April, he had a discussion with Mr Toohey about the Ivanov affair and his own connection with it. He gave Mr Toohey further information on 12 May. Mr Combe agreed that the relevant parts of the arti c le

written by Mr Toohey which appeared in the 'National Times', for the week 13 to 19 May, were based on what he had told Mr Toohey.

In that article, it was reported that Mr Combe had 'discussed doing work for the Russians of a trade representation nature', and that 'no specific figure was mentioned and no final arrangement was ever entered into. Nor was it clear just what

Soviet trade company Combe would be representing'. Mr Combe is also reported as saying that 'it might have been possible for

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the Americans to have picked up some draft document in which he was to have been paid for working for some Soviet trade organisation' and that 'he was not aware that any such document existed, but could not be responsible for whatever boasts Ivanov

might be making about progress in boosting trade or in getting along well with Combe on a more general basis'. There is no hin t in any part of the article that Mr Combe had lost interest in

the proposal. I do not believe Mr Combe's statements that he h ad lost interest in it, and I believe that his evidence to that

effect was deliberately false.

4.94 The third statement, that Mr Combe believed that Mr Ivanov was no more likely to be a KGB officer than any other Soviet diplomat, was staunchly adhered to by him. Thus, he said that his response, 'one has always assumed that' when Mr David

Barnett said to him on the telephone on 26 April, 'you've known he was KGB since you first met him', was no more than an

expression of this belief. After that remark to Mr Barnett, Mr Combe went on to say that 'anyone who thinks that there's

something revelatory about the fact the KGB operates in Australia believes in fucking Easter bunnies'. I do not accept Mr Combe's assertion that this statement as to Mr Ivanov's

position was his genuine belief. The matter has to be looked a t in the light of Mr Combe's extensive political experience, his considerable political perception, and his wide knowledge and experience of the Soviet Union and its diplomats. In this light, he would have seen Mr Ivanov, although only a First Secretary,

as having qualities which marked him out from other Soviet diplomats, and as having many of the characteristics which might be expected of a KGB officer. Mr Ivanov's access to informatio n, his ability to get things done, his readiness to become involved

outside his ostensible area of responsibility in matters of trade, and his relative flexibility in discussing Soviet affairs, all of which led Mr Combe to think that he was 'more

than he appeared to be', must have caused Mr Combe to consider whether he was a KGB officer. Finally, when Mr Ivanov told him that he might be (or was likely to be) expelled as Soviet

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diplomats in other countries had been expelled, Mr Combe, knowing that those diplomats had been expelled because of their intelligence activities, made no enquiry as to why he should be a candidate for expulsion. I do not accept that it did not cross

his mind that a possible reason for Mr Ivanov's expulsion, if it were to happen, would be that he was a KGB officer. I have

concluded that, at the least, Mr Combe believed that Mr Ivanov was probably a KGB officer.

Combe's Access to Ministers 4.95 Mr Combe denied that he had the degree of access to

Ministers and their staffs which ASIO assumed he had. In support o f this denial he provided evidence of what he claimed to be the

limited access which he had enjoyed up to 20 April. It must be remembered, however, that the Ministers had been appointed less than six weeks before, on ll March, and that the Economic Summit had taken place between that date and 20 April. Mr Combe does

n o t appear to have had any difficulty in contacting Ministers or

members of their staffs during that period, except when he tried to raise Mr Matheson's affairs with Mr Bowen. Thus, when, on 6 April at Peaches Restaurant, the question arose as to what the

new Government would do about the sanctions, Mr Combe immediately rang Mr Evans, the Prime Minister's Principal Private Secretary, to find out. Conversations which Mr Combe had after 21 April, including one with Mrs J. Taggart on 28 April,

show the extent of his access and what he could arrange. It is

true having regard to what is now known of the attitude of certain Ministers to lobbyists, he may have encountered difficulty in seeing those Ministers, but this was not known to him, much less Mr Ivanov, at the time. Mr Ivanov must have seen

Mr Combe as having greater potential access than any other

person with whom he was likely to become friendly. In fact, whatever particular limitations there might have been, Mr Combe's potential access was still very considerable. Indeed,

Mr Combe complains that his access was of great value to him ,

and that the Government, in taking it away, has greatly diminished his earning capacity.

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Questions to be determined in light of the facts up to 20 April

4.96 There are three important general questions to be determined by reference to the evidence described in this Chapter. They are:

(a) What were Mr Ivanov's intentions? (b) Where did Mr Combe stand? (c) What risk to the national security was involved in the relationship between Mr Ivanov and Mr Combe?

I also consider the significance of the errors made, or alleged

to have been made, by ASIO.

Ivanov's Intentions 4.97 It is clear beyond argument that Mr Ivanov was cultivating Mr Combe. What has to be resolved is the purpose of that

cultivation. Innocent purposes which suggest themselves are to make a friend, and to advance Soviet/Australian Trade by

entirely legitimate means. However the cultivation could also have had an ulterior illicit purpose.

4.98 Counsel for Mr Combe in their submissions, and Mr Combe in evidence, strongly challenged any conclusion that, although he was a KGB officer, Mr Ivanov was cultivating Mr Combe for any illicit purpose. It was further submitted that, insofar as

Mr Ivanov's expulsion was based on any such conclusion, it was

not justified. Mr Ivanov's expulsion was, in fact, based upon such a conclusion, so that the effect of that submission was that Mr Ivanov should not have been expelled, unless some other basis could be relied upon.

4.99 Despite this submission, Counsel for Mr Combe did not, in the event , challenge ASIO's bona fides. Early in the course of the hearings, it was stated that Mr Combe did propose to challenge ASIO's bona fides, and time was taken cross-examining ASIO officers to provide a basis for such a challenge. However,

it was later formally announced that this challenge would not be

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maintained, that is, that there would be no attack ASIO's

bona fides. Quite apart from this concession, the evidence established beyond doubt that ASIO's concern was with the activities of a presumed KGB officer, and that Mr Combe was the subject of any surveillance by ASIO before 21 April. He

came to ASIO's notice incidentally when he met or spoke by

not only

telephone with Mr Ivanov who was under surveillance. ASIO made no recommendation to the Government that Mr Combe should be d enied access to Ministers, and the Director-General did not

learn of the decision that he be denied such access until some days after it had been taken. ASIO had Mr Ivanov's relationship with Mr Combe under consideration well before the announcement of the election, and it was entirely coincidental that the

conversation of 4 March, which led the Director-General to seek an interview with the Prime Minister, took place on the eve of the election. Mr Combe, in evidence, stated his own position as being that he accepted that ASIO was acting bona fide in what it

did, and in reporting to the Government, but did not accept the interpretations and analyses which ASIO placed upon the information which it had. He stated that his objection was infinitely more against those who acted upon the information than those who provided it.

4.100 There were several elements in the case put against Mr Ivanov having an illicit purpose. First, Mr Ivanov was a

lonely man looking for a friend, and Mr Combe found him more compatible than other Soviet diplomats and got on well with him. It was this compatibility with Mr Ivanov, and his perception of Mr Ivanov's special qualities which led Mr Combe to deal with

Mr Ivanov in respect of CBA's affairs, although he knew that

Mr Ivanov was a political officer, and he had been asked by

Mr Smeliakov to see Mr Dashevsky. Then it was put that Soviet

authorities must have known and appreciated this compatibility and so got Mr Ivanov to put their own trade proposition to Mr Combe. It was next argued that it was sheer speculation that

Mr Ivanov had any illicit purpose in mind, and even allowing for

this possibility, such a purpose was no more likely than a

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number of other possible purposes, and hence should not be f o und to have been one of Mr Ivanov's purposes.

4.101 ASIO's assessment that Mr Ivanov had an illicit purpos e was challenged as being the result of a too rigid and inflexible

attitude to the conduct and activities of KGB officers, who, it was submitted, would try to achieve their ends by licit means

before resorting to illicit means. The assessment was also challenged on the ground that any illicit purpose could only be achieved with Mr Combe's co-operation, which, as the KGB mus t have realised, could never have been obtained. Moreover, it was

submitted that there was no real prospect of Mr Combe being ab l e t o a cquire confidential information or documents, or of

influencing the policies or decisions of the Government. A related submission was that Mr Combe's access to Ministers, their staffs and senior public servants was much less than a ssumed by ASIO.

4 . 102 The case that Mr Ivanov did have an illicit purpose h ad

t h e following elements:

(a) Mr Ivanov was a trained and active KGB officer. A legitimate function was assigned to him as a diplomatic officer, but that helped, and did not hinder, his intelligence activities. (b) Mr Combe must have appeared to Mr Ivanov to be as good a

target as he was ever likely to get for cultivation f o r

an illicit purpose. (c) Mr Ivanov was not a trade officer and had no trade

function. The Soviet Mission had a trade office which, in the ordinary course, would have handled Mr Combe's requests on behalf of CBA and the proposal that Mr Combe should work in some trade capacity for the Soviet Government. It was to this office that the Assistant Minister of Foreign Trade in Moscow, Mr Smeliakov, had

referred Mr Combe. The Soviet Government did not require

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the intervention of a KGB officer to further its legitimate trading interests. (d) The proposal that Mr Combe should work for the Soviet Union, made by a KGB officer but at a very

high level in the Soviet Union, was a bait in the

cultivation process. (e) The purpose of Mr Ivanov's false claim that Mr Combe was under ASIO surveillance, and the whole of the warning was to enable the relationship of 3 April to be carried

on in a way that could not be monitored. This was

typically part of a process of recruitment by the KGB, was done on instructions from Moscow, and was

inconsistent with a purpose which was wholly legitimate. (f) Mr Combe's confidence that he was not going to be 'sucked in' as a KGB agent, is irrelevant to a

consideration of whether Mr Ivanov had an illicit purpose. It is not suggested that Mr Combe was to be

recruited immediately. The attempt would probably have been a long process, each new step being so little different from the previous one that the process would be almost imperceptible, unless a conscious decision were taken to hasten the process, at the risk of

bringing the relationship to an end.

4.103 I have concluded that one of the purposes of Mr Ivanov's c ultivation of Mr Combe was illicit, and that to draw this

inference from the evidence is not mere speculation. No doubt Mr Ivanov intended to use Mr Combe as well for legitimate

purposes, as, for example, in the overt promotion of Sov iet/Australian trade. However, he also intended, if possible,

t o use Mr Combe to obtain and to hand over to him information

and documents illegitimately, and in the interests of the Sov i e t Union, and to act, wittingly or unwittingly, as an agent of influence. I reject the view that Mr Combe's access to Ministers and their staffs was so limited that he could not achieve any of

these objectives even if he were so minded. It is common human experience that many people who possess confidential information

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can be to disclose it to others whom they know and

trust. Events over the last decade in Australia demonstrate, if demonstration be necessary, that although confidential document s are not, or at least should not be, left lying about for a

casual visitor to read or to take, they, or copies of them, can

be obtained by somebody with the right connections and information. Mr Combe's claim to be a 'has-been' without influence cannot stand with the evidence. In particular, it is inconsistent with his recommendation in the CBA report that he be used (assuming that he told the ALP the whole story) as an

overt agent of influence, to 'upscale' relations between the ALP and the CPSU. The view that Australia has no secrets that the KGB would wish to acquire, and that the KGB would not seek to

influence those in this country who would reject an overt approach by its officers, can hardly stand with the continuous KGB presence and activity in Australia. To Mr Ivanov, it mus t

have seemed that the purposes which I have described could be achieved through Mr Combe. I do not mean by this that Mr Ivanov would have thought that Mr Combe would meet every request. I mean only that he would have thought that if Mr Combe were

willing, he could try, and was in a reasonably good position to succeed. Moreover, Mr Ivanov must have thought that, taken carefully, Mr Combe might be persuaded to try. Mr Combe's conversations in Moscow, and his discussion with Mr Ivanov on 4 March, would obviously have encouraged the KGB in this view.

Even without the events of 3 April, it would have been clear

that the KGB officer had an illicit purpose, but the disinformation given by Mr Ivanov to Mr Combe on that day, and the suggestion as to future contact, satisfy me on that matter. The disinformation was another significant step in the process of cultivation, and the obvious purpose of the suggestion as to

contact was to convert the relationship between Mr Ivanov and Mr Combe from one that was relatively open to one that was

concealed. Such concealment was to advance, not Mr Combe's interests, but those of the KGB. Counsel for Mr Combe suggested a number of equally possible explanations of a move to

clandestinity, ranging from a desire for privacy to a desire to

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terminate the relationship. I reject the alternative explanations as being untenable. Mr Ivanov was obviously c o ncerned that the relationship should become clandestine. The

pro per inference from that concern is that the KGB intended in the course of covert contacts, to attempt to effect an illicit purpose.

Co mbe's Position

4.104 It has been generally accepted that Mr Combe had committed no offence under the Act and was not a spy.

Where then did he stand in the matter? His long and honourable history in the ALP, and the evidence of people who spoke as to

his character, strongly suggest that his loyalty was not likely t o be suborned by the KGB. That suggestion is not affected by

his desire to improve Soviet/Australian relations. That is an e ntirely legitimate desire, and would be seen by many

Australians to be praiseworthy. There are, however, some aspects o f the evidence which cast a shadow of doubt over his position,

a nd make it necessary to investigate it further.

4.105 NISC dealt with the matter on the basis that Mr Combe, believing that Mr Ivanov might be a KGB officer, was content, to place himself and his future in many ways in Mr Ivanov's hands. However, it did not know, nor did ASIO know, what Mr Combe's

reaction to Mr Ivanov's suggestion as to future contact had been. The evidence throws some light on this question. After 3 April, Mr Combe did not try to get in touch with Mr Ivanov.

They saw, and spoke with, each other at the AUS conference on 16 April, and Mr Ivanov rang Mr Combe from Adelaide on 21 April.

Although I reject Mr Combe's explanation that he did not contact Mr Ivanov because he thought he was a 'creep' who could no

longer be of much help to him, this evidence is merely consistent with, and does not establish, an intention to accede to Mr Ivanov's suggestion. However, in cross-examination, Mr Combe, having re-affirmed his version of Mr Ivanov's warning

and denied the Matheson version, gave this evidence:

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MR McHUGH: When Ivanov made this statement that you have told us in your evidence in chief did you say to Iva nov

what did you say to Ivanov about how you would go abo u t

contacting him?-- I do not believe I responded to the proposition that he put to me.

Well you left Ivanov, did you not, with a clear impress ion that in future that is how you would contact each other? -­ He would have had that impression, yes.

So to all outward appearances you were agreeing to his proposal as to the method in which you would contact each other?-- Yes.

That was the fact, that was the way you intended to d o it in

future, was it not? -- Yes, if I had cause to contact hi m;

as it turned out , I did not.

4.106 This evidence is an admission that Mr Combe was pre p a r ed t o accede to a suggestion by a Soviet diplomat, who, he thought ,

might be a KGB officer, that their future contacts should be so arranged as to limit the opportunity for surveillance. On t he facts as I have found them, Mr Combe was leaving it to a p e r son

who, he believed, was probably a KGB officer, and for this

reason was likely to be expelled, to arrange their future meetings in such a way as to avoid surveillance. It may be, as

was submitted to the Commission, that it matters little whethe r or not Mr Combe's version of the warning is accepted. On his o wn statement, Mr Combe proposed to accede to Mr Ivanov's suggestion as to future contact.

4.107 Mr Combe told Mr Matheson about Mr Ivanov's warning a few days later on 6 April. It was submitted that this was

inconsistent with Mr Combe detecting anything improper in the warning. This submission has some weight. However, Mr Combe h ad to explain to Mr Matheson why he would be unable to initiate, o r would have only limited, contact with Mr Ivanov. Although he

told Mr Matheson about Mr Ivanov's warning, he did not tell Mr Cameron or Mr Farmer about it. Nor did he recount the warn i ng to

the many people to whom he spoke on the telephone on or afte r 22 April , although he did recite Mr Ivanov's claim that he, Combe, was under surveillance and his prediction about expulsion. He did not refer in the written statement which he gave to the

107

Government on 1i May to the warning. This does not establish a \

f eeling of guilt on his part, but it does justify the inference

tha t he thought that the revelation of Mr Ivanov's warning would not a ssist his cause. Again, Mr Combe's claims that he no longer regarded Mr Ivanov as a friend, but regarded him as a 'creep',

and tha t he had lost interest in the Moscow proposal, both of which c laims I regard as false, justify an inference that he was trying t o distance himself from Mr Ivanov in giving evidence to the Co mmission because of a fear that the closeness of the relatio nship would damage his case. Finally, his outrage after he came to believe that his telephone had been intercepted is ha r d t o reconcile with his failure to complain about the warning wh ich Mr Ivanov gave him. His explanations for this failure were

quite u nsa tisfactory. He said, for example, that after a few days h e c eased to take seriously what Mr Ivanov had said, and tha t his feeling of deference to Ministers inhibited him in appr oaching them. The first claim does not stand with the evidence o f his own reaction, and of the reactions in his househ o ld, after Mr Ivanov's warning. Mr Combe said that at the

ti me Mr Ivanov spoke in a way which showed no urgency or e mo tion, but, on 26 April, he told Mr Hartung that Mr Ivanov had

been 'quite emphatic'. At the same time as he said that it did

not o ccur to him to report the conversation, Mr Combe said that it s e emed to him inconceivable that a Labor Government would i nitiate or continue interception of a senior party colleague,

a n d that if ASIO had instigated an interception it might well

have been unauthorised by the Government. He further said that he thought ASIO was as likely to deceive the Government, as to ma intain an unauthorised interception. This reasoning, it might

b e thought, would have led Mr Combe to have reported the matter

r a ther than not to complain. The second claim based on deference

to Ministers, is inconsistent with his ready contact with Ministers or members of their staffs when it suited him. In my opinion, the failure to report Mr Ivanov's warning points to an

a ppreciation by him that he might be seen to have been

compromised by Mr Ivanov. I have no doubt that if, in April

198 3, Mr Ivanov had asked Mr Combe to spy for the Soviet Union,

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Mr Combe would have roundly rejected the request. However,

consid erations to which I have referred in this paragraph preserve a doubt whether Mr Combe could have withstood a l o n g a nd subtle process of cultivation, and whether he appreciated

t he dangers inherent in his relationship with Mr Ivanov.

4 .108 On the whole of the evidence, I am satisfied that

Mr Combe suspected that Mr Ivanov might have had some ulteri o r

illicit purpose, but was confident that he would recognise , a nd could handle, any danger or trap, and reject any inducement. He was extremely anxious to become involved in Soviet/ Australian

t rade which he saw as potentially lucrative, and which would

i n volve him closely in Soviet/Australian relations. His

preference was to work directly for the Soviet Government, but , until that could be arranged, he was prepared to achieve t hat

end by working for CBA. He saw the use of Mr Ivanov and a

political approach as the most effective way to ensure his o wn participation. He saw an opportunity, and went for it. His a mbition overriding his judgment, he allowed himself to be l ed

into a position where his loyalty could become suspect. The consequent danger was certainly apparent, and probably real. The

extent of the danger turned on his ability to perceive it and e xtricate himself before it was too late. Mr Combe may well h ave

done this, but there was a reasonable chance, obviously perceived by the KGB, that he might not. I add that if Mr Comb e

did not suspect that Mr Ivanov might have had an illicit purpo s e - a state of mind which I consider would show great naivety on

Mr Combe's part - the risk of his becoming compromised was as

great as, if not greater than, I believe it to have been.

The threat to national security from the Ivanov/Combe relationship 4.109 The danger to national security involved in Mr Combe's relationship with Mr Ivanov appears clearly enough from what I

have already said in this Chapter and elsewhere. It was, to adopt an expression used in evidence, that Mr Combe might be ' s ucked in'. If he were, he would be in a position to do

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considerable damage. Mr Ivanov, whether by a long and gradual cultivation, or by some shorter process culminating in an entrapment, might have succeeded in recruiting Mr Combe to obtain and hand over confidential information or documents of

value to the Soviet Government, to the detriment of Australia's interests, or to act as an agent of influence to try to persuade members of the ALP, and in particular Ministers, to adopt policies, or to act in a way, favourable to the Soviet

Government. Counsel for Mr Combe has trenchantly challenged the

notion of 'agents of influence' but I adhere to what was said in

the Commission on Intelligence and

Securi ty at paragraphs 44 to 49. This accords with what was said in the Report of the Commission of Inquiry Concerning

Certa in Activities of the Royal Canadian Mounted Police, page 39 (23 January 1981) that it is 'the indisputable duty of the State to protect its secrets from espionage, its information from unauthorised disclosure, its institutions from subversion and

its policies from clandestine influence'. The same notion underlies the definition of 'active measures of foreign intervention' in s.4 of the Australian Security and Intelligence Act 1979, as 'clandestine or deceptive action taken

by or on behalf of a foreign power, to promote the interests of

that power'. 'Security' is also defined in s.4 of the Act to

mean 'protection of, and of the people of, the Commonwealth and the several States and Territories, from' inter alia, 'active measures of foreign intervention' which are earlier defined, and which, as I have indicated, comprehend activities of agents of

influence. A similar definition was given to the expression 'foreign interference' in Recommendation 2(b) of the Canadian Commission of Inquiry in its Second Report, p.l067. I have already pointed out that Mr Combe recommended in the CBA Report

that he should act, in effect, as an overt agent of influence, assuming that he revealed to the ALP the source of his activities. Moreover, since the relationship between Mr Combe and Mr Ivanov might have become, and, as I have found, was about

to become, clandestine, ASIO would no longer be in a position to monitor it, either effectively or, possibly, at all. The

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implications for national security flowing from these possibilities were real and serious.

Errors or alleged errors by ASIO 4.110 I have concluded that evidence adduced before the Commission made a stronger case for action by NISC than the case presented on 21 April. The facts disclosed by the evidence would certainly have left it no less open to NISC to make the

d ecisions which it did, and, in some respects, would have

compelled it to make those decisions. The mistakes which ASIO made in presenting the case to NISC should not have been made ,

but they did not touch the main thrust of the case and we r e not

matters which NISC members relied on either at all, or to a ny significant extent. I shall deal in turn with each of the specific errors which was made, or which was claimed on beh alf of Mr Combe to have been made, by ASIO in presenting the cas e t o

the Prime Minister and to NISC. I shall also consider wheth e r any of the decisions which NISC made on 21 April should h ave b een different had the facts established by the evidence been put before the Committee.

4.111 (a) Mr Barnett stated that the Combes' fares for the

cruise on the Leonid Sobinov in 1976 had been paid for by the Soviet Government. This was wrong. The Combes paid their own fares and their accommodati o n was upgraded at the expense of the Soviet Govern me n t .

I have dealt with this error in 4.30. In my opinio n,

this mistake was irrelevant to what NISC had to consider, and a correct statement of the facts sho uld not have led to any different decision by NISC. The matter was mentioned by ASIO as illustrating a rathe r

sporadic cultivation of Mr Combe by the Soviet Uni o n, and not his cultivation by Mr Ivanov for an illi c i t purpose. (b) Mr Barnett wrongly stated that the air fares to

Moscow for Mr Combe's wife had been paid by the

Soviet Government. I have dealt with this error in

lll

4.31 to 4.32. This mistake should not have been made, but, in my opinion, evidence that her fares had been paid by Mr Combe should not have produced any difference in NISC decisions. The Moscow trip,

including Ms Blesing's participation, was organised by Mr Ivanov, and the payment of her fares was not

central to ASIO's case. ( c ) Mr Barnett was said to have made an error in saying

that a contractual arrangement was being concluded between Mr Ivanov and Mr Combe. He said, in evidence, that he told the Prime Minister that, after the conversation of 4 March, ASIO was 'concerned with the way this relationship was developing because it

appeared that some sort of contractual arrangement was being concluded between Mr Ivanov and Mr Combe

which appeared to have already been discussed in Moscow which Mr Ivanov agreed to refer back to Moscow

for further information'. In cross-examination, he assented to a proposition that he had told NISC t hat Mr Combe and Mr Ivanov were clearly 'dealing in'

political information as well as trade. However, elsewhere in cross-examination, he said that, at the meetings of 20 and 21 April he did not say, or intend

to convey, that there had been a concluded arrangement between Mr Combe and Mr Ivanov for Mr Combe to provide information to go back to Moscow.

He indicated that what he had said was that Mr Ivanov

was trying to make contractual arrangements of some sort with Mr Combe in relation to trade to hide his real purpose, which was the acquisition of political information from Mr Combe in the long term. I conclude that this last statement correctly describes what Mr Barnett told NISC, and, in my opinion, it d id

not involve any error. (d) Mr Barnett assented to a proposition that he had t o ld the Prime Minister that Mr Combe was broadly sympathetic to the aims of the USSR. It was

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submitted that this conveyed the erroneous imp r e s sion that Mr Combe was broadly sympathetic with all t h e aims of the USSR. ASIO had confused, so it was

contended, Mr Combe's intellectual interest in th e USSR with an indiscriminate enthusiasm f o r its aims

and policies. I do not uphold this submission. I n t he

first place, Mr Barnett did not suggest that Mr Co mbe was sympathetic with everything that the Soviet Government did. Secondly, whilst it is cl e ar t h at Mr Combe did not agree with a number of Soviet

policies and actions, the evidence suggests t h at h e had more than a purely intellectual enthusiasm f or its socialist ideals. This conclusion find s suppo r t in the evidence of his strong desire that the

relationship between the ALP and the CPSU shou l d be 'upscaled' and that he should involve himself i n a n attempt to achieve that result. (e) Mr Barnett was said to be in error in attributing t o

Mr Combe a bitter anti-American attitude. I have

referred to this in 4.58. Mr Barnett's view was t h at

Mr Combe had a 'bitter anti-American attitude bas ed

on his belief that the Central Intelligence Ag e n cy "destabilised" the Whitlam Labo r Government'. The r e is no doubt that Mr Combe has a bitter anti-CIA

attitude. In my opinion, a reader of the transc ript of 4 March could arguably attribute a general f eeling of anti-Americanism to Mr Combe. However, I am satisfied on the evidence that Mr Combe is not

bitterly anti-American. He approves of many aspects of American life and disapproves of others. Thus, Mr Barnett's appreciation of Mr Combe's attitude

towards America was wrong. Had this error not b een made, NISC should not have reached any decisions different from those which it reached on 21 April. Mr Combe's anti-Americanism was put to the Minist e r s

as being based on his anti-CIA attitude, and the Ministers, who must have known Mr Combe far better

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than Mr Barnett did, would have been able to make their own judgments. Any anti-American attitude on the part of Mr Combe was no doubt part of the overall

picture presented by ASIO, but it was not central to its case, and little significance was placed on it by Mr Barnett, or by the members of NISC.

(f) Mr Barnett was in error in not allowing those members of NISC who sought it, an opportunity to read the transcript from which passages were quoted. I have expressed my view about this in 3.6. In my opinion,

if the Ministers had read that transcript, their appreciation of what Mr Barnett put to them might have been enhanced and the case for their decisions would have been strengthened, and not weakened. Moreover the fuller versions of the tapes which became available after 20 and 21 April and which were available to the Commission further reinforce that case. (g) Mr Barnett was said to have been wrong in telling the

Prime Minister that Mr Combe's relationship with Mr Ivanov 'would have to become clandestine'.

Mr Barnett agreed that he put such a proposition, but

the case put by him to the Prime Minister and to NISC was essentially that ASIO did not know what

Mr Combe's response had been to Mr Ivanov's

suggestion for future contact between them. I have no doubt that had the evidence before the Commission as to Mr Combe's attitude to Mr Ivanov's suggestion been aVailable to NISC, it should not have affected any of

its decisions. The case put by ASIO would have been strengthened by that evidence. {h) Mr Barnett was said to have been in error in telling

the Prime Minister and NISC that Mr Ivanov lowered his voice from time to time on 4 March to make

electronic surveillance more difficult. I have discussed this matter in 4.54. The evidence establishes that some of the apparent lowering of his

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voice by Mr Ivanov may have been due to techni cal factors in the recording of the conversati o n. I have conclud ed that Mr Ivanov lowered his voice fr om t i me to time, but I do not think that any great e mph asis

should be placed upon this conclusion. In my opinion , the evidence adduced before the Commissi o n a bout it should not have produced any different NISC d ec i sion . (i) In that part o f the transcript of the conversation of

4 March in which Mr Combe was talk ing about the

prospect of his becoming the Australian Ambas sador t o Mo scow, the f o llowing statement was attrib uted to

Mr Ivanov:

being Ambassador to Mosco w, Davi d , you ' ll get your hands on (files?).

The word 'files' was in b r a ckets with a questi o n mark

to ind icate that the correctness of the trans c ription was d oubtful. This sta tement was included in the passages read to NISC by an ASIO officer. Th e same passage appeared in the Aide Memoire which was seen by Senator Evans and Mr Young. There the word 'files '

was shown in the same way a s a doubtful

transcription. The word should have been 'puls e ' as it appeared in later transcriptions and as the Prime Minister appreciated when he listened to the tapes on 4 May. Accordingly, the reference to the word ' fi l e s '

was an error. However, the evidence shows that n o

reliance was placed on the word by Ministers. Hav i ng regard to the context of the part of the transcript which was read to them containing the word 'file s', no different d ecisions should have been made h ad t he

correct word had been used. (j) Mr Barnett was said to have been in error in s aying

that Mr Combe and Mr Ivanov were alone for most o f the time during the d inner of 4 March. It was

submitted that Mrs Ivanov was with them quite frequently, either at or near the table. Mrs I van o v

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did not speak English. It is clear that she came to

the table from time to time and spoke with her

husband in Russian. Precisely how much of the time she was in the room cannot be calculated, but it did

amount to a considerable period. However, I do not think that Mr Barnett's statement to NISC created any false impression. Mrs Ivanov was unable to take part in any conversation, or to understand what was being said, and the conversation between Mr Combe and Mr Ivanov could correctly be said to have been

between them alone. (k) I deal with other alleged errors attributed to Mr Barnett and other ASIO officers in Appendix V. I

have concluded that the evidence which demonstrated such errors as I find occurred, should not have produced any different decisions by NISC.

4.112 I have thus far dealt separately with each of the errors

or alleged errors. The further question arises whether the whole of the evidence concerning what I have found were errors should have produced a different result. In my opinion, it should not have done so. None of the errors went to what the Prime Minister called the main thrust of ASIO's case. Whether considered separately or together, they were of peripheral significance in the case that ASIO presented, and on which I am satisfied that NISC acted.

4.113 The greatest care must be exercised when ASIO takes a matter to a responsible Minister or Cabinet Committee, particularly when its presentation may adversely affect a private citizen. Undoubtedly, intelligence officers have to draw

inferences and make assessments on the basis of primary facts which, ideally, should first be fully verified. Where verification is necessarily incomplete, the areas of possible error should be kept as small as possible, and identified in the

course of the presentation to the Minister or Committee.

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CHAPTER 5

EVENTS AFTER 22 APRIL

Surveillance of Combe 5.1 In accordance with the direction of the Prime Minister surveillance of Mr Combe commenced on 22 April. After the Pr im e Minister gave his direction, on 22 April the Director-General of

Security lodged, with the Attorney-General a request of the kind contemplated by sub.s.9 (1) of the Telecommunications Act 1979. The warrant was issued by the Atto r ney

on the same day. It was contended by Counsel for Mr Comb e t hat

the request for the warrant and its issue were not in confo r mity

with the Act because the Director-General, who ma de the

request, nor the Attorney-General, who issued the warrant, had exercised any judgment independently of the Prime Ministe r and NISC.

5.2 It was put, first, that the request did not specify, as

required by para. 9(2)(b), the facts and other grounds on which the Director-General of Security considered it necessary that the warrant should be issued, or on which the Director-Gene r al suspected Mr Combe of being likely to engage in activities prejudicial to security. It was argued that para. 9(2)(b)

required 'current actual facts and grounds' to be specified . Because, it was said, the evidence disclosed that no consideration had been given within ASIO to the interceptio n of Mr Combe's telephone, at least before 20 April, the grounds

stated in the request, which were all referable to facts aris ing before the decision on 21 April to expel Mr Ivanov, were insufficient to sustain a request for interception on and a f ter 22 April. A subsidiary argument was that no reasonable

Director-General, on the grounds specified in the request, coul d have considered that a warrant for the interception of Mr Combe's telephone was necessary, or could have had the

necessary suspicion that Mr Combe was likely to engage in

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activities prejudicial to security.

5.3 I have examined the request dated 22 April and signed by

the Director-General, and I consider that it does specify facts on which the Director-General could reasonably have considered it necessary that the warrant should be issued, although, of necessity, the facts specified had occurred before 22 April. It

must be remembered that the request was not, in terms, predicated on the Director-General's suspicion that Mr Combe alone was likely to engage in activities prejudicial to security. The request was carefully framed to indicate that the Director-General's suspicion extended to 'persons', in the plural, likely to use the telephone service to which Mr Combe was a subscriber. I consider that the Director-General could

reasonably have suspected, and did so suspect, that Mr Combe's telephone service was being, or was likely to be, used by 'persons' engaged in or likely to engage in activities prejudicial to security, as that phrase is defined in the Australian Security Intelligence Organization Act 1979.

Secondly, it would be very rare, in my view, for the request

contemplated by para 9(2)(b) to be made immediately after the occurrence of facts giving rise to the requisite suspicion. More frequently, one would expect, the suspicion would crystallise in the mind of the Director-General as a result of a combination of

facts separately becoming known over an extended period.

5.4 The alternative argument by Counsel for Mr Combe was that the Attorney-General had not exercised his own discretion in deciding to issue the warrant, but had 'abandoned it to the Prime Minister's decision'. I am not able to find that any such abandonment occurred. The request pursuant to s.9 was not in existence when the Prime Minister's decision was made and confirmed by NISC. The Attorney-General, doubtless, brought to his consideration of the request what he had learned during the

preceding days as a member of NISC. It is also undoubtedly true that he was influenced, in deciding to issue a warrant, by the Prime Minister's direction that surveillance of Mr Combe by

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all appropriate means should be commenced immediately. However, that is far short of a complete abdication by the

Attorney-General of the exercise of an independent discretion to issue a warrant. That such a discretion was exercised is indicated, to some extent, by the Attorney-General's annotation to that part of the request which recited, 'I request that, if a

Warrant be issued in respect of this Request, the said Warrant remain in force for a period of 6 months from its date of

issue.' The Attorney's note to that part of the request was ' No. 3 rnths in first instance.' It is also significant that the

Attorney-General gave evidence that, as a result of what he h ad learned on 20 and 21 April, he gave the detailed grounds set out in the request 'rather more cursory attention than I would normally when confronted with a warrant application where the written grounds are the sole source of data that I possess. I

scanned the written grounds here set out and saw that they were broadly in accordance with the the ASIO briefing and

the evidence which had emerged and issued the warrant accordingly.'

The Attorney-General was not cross-examined on that evidence , or otherwise in respect of his response to the Director-General's request, or his decision that the warrant should issue.

5.5 Pursuant to the warrant, surveillance was carried out by intercepting incoming and outgoing calls from Mr Combe's horne and office telephone. There was also some visual observation by ASIO officers of Mr Combe himself. Some 196 telephone calls were

recorded while Mr Combe's telephone was being intercepted between 22 April and 4 May. Of those, 42 were tendered in

evidence as being arguably relevant to my inquiry. Although mu ch use was sought to be made, in the course of the Royal

Commission's hearings, of transcripts or summaries of some of

the conversations so recorded, as casting light on the nature of the relationship between Mr Combe and Mr Ivanov up to 22 April, o r as indicating some attitude of mind or state of knowledge or

belief on the part of Mr Combe, the telephonic surveillance did

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no t disclose any attempted contact between Mr Combe and

Mr Ivanov or any other foreign diplomat. Nor did the

surveillance, as a whole, indicate any attempts by Mr Combe to make overt or clandestine contact directly or indirectly with any Soviet official.

5.6 On 22 April, the Soviet Ambassador, Dr Soudarikov, was summoned to attend on the Minister for Foreign Affairs, the Honourable W.G. Hayden. The circumstances in which Mr Hayden told the Ambassador that Mr Ivanov was required to leave Australia, and those surrounding the public announcement of the Government's action in respect of Mr Ivanov, are described in

3.31 and 3.32.

5.7 Although Issue No. 8 of the Issues formulated for resolution under paragraph (c) of Commission's Terms of Reference asks whether it was proper for the Government to notify and announce the expulsion of Mr Ivanov in the manner which it chose, no Counsel who appeared before me suggested that the actions detailed in 3.31 and 3.32 were not open to the

Government. The public statement appears to be similar, in its terms, to those issued recently by other Western governments when announcing that persons considered to be Soviet

intelligence officers should leave their respective countries. There was evidence that the question of who should announce the expulsion was fully canvassed by NISC in the course of its deliberations. The benefits which were seen to flow from the

announcement being made publicly, and by the Minister for Foreign Affairs, were, first, that the fact of the expulsion would ultimately become public in any event and, secondly, that NISC was concerned that the Soviet Embassy and the wider public

should be made aware of the seriousness with which the Australian Government viewed Mr Ivanov's activities. I am not able to say, on the evidence before me, that there were other considerations which ought reasonably to have led the Government

to notify and announce the expulsion of Mr Ivanov in some manner other than that which was ultimately adopted.

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Cabinet discussion of proposal that Combe be denied ac c ess t o

Ministers 5.8 On 26 April, a meeting of the Federal Cabinet was held i n

Ad elaide where there was also then in progress the Commonw ealth

Constitutional Convention. At that Cabinet meeting, the Prime

Minister proposed that the Cabinet Ministers, and other

Ministers who together with Cabinet Ministers comprised the

wi d er Ministry, should not have dealings with Mr Combe in h i s

p r o fessional capacity as a lobbyist and consultant. The Pr ime

Minister referred in support of that proposal to the policy

wh i ch had been enunciated at the recent Economic Summit, t o t h e

e ffect that Ministers' doors should be open to all who s o ught to

ma ke representations to Ministers. He touched on the adverse

political consequences which could follow if Ministers wer e seen t o be giving favourable treatment to a recently retired Pa r ty

o ffi c ial. In addition, the Prime Minister adverted to the

p r o p o sed expansion of Mr Combe's business to take in as p a r tner s

Mr Richard Farmer and Mr William Butler (an expansion which the

Prime Minister said he believed, having spoken to Mr Farme r and Mr Butler, would not come into effect). He went on to refer to

the potential for political embarrassment in Mr Combe's h o l di n g a retainer from the non-Labor Government of the Northern

Territory. The Prime Minister's r e commendation was adopted without dissent, but that does not appear in the record ed

d ecision of Cabinet (No. 235) which is in the following terms;

The Cabinet considered general and particular issues in relation to Ministers' dealings with consultant lobbyists and agreed that the Special Minister of State, consulting with the Attorney- General and other Ministers as appropriate, bring forward a Submission canvassing a

possible scheme for registration of lobbyists.

5 .9 I consistently took and expressed the view during the

h earings that the Terms of Reference did not extend to requ ire

inquiry into any actions of the Government in respect of Mr Combe in his capacity as a lobbyist. I took this course

because the opening words of paragraph (c) indicate that t he inquiry to which it is directed is 'further to the inquiry in

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relation to paragraphs (a) and (b)', and this is limited to

matters related to intelligence and national security. It is clear the Cabinet decision on 26 April did not make any reference to the expulsion of Mr Ivanov or the circumstances surrounding it. Accordingly, I make no comment on the action of the Government in taking that decision. However, the Prime Minister was concerned, as he said, 'to make it quite clear

that it was what had been disclosed to us as a Government by ASIO in respect of the matters to which I have referred which

required the immediate action in our judgment, in respect of Mr Combe ...• '

5.10 It therefore becomes necessary to consider whether it was appropriate or reasonable for the Prime Minister to seek, as a result of what had been disclosed to NISC by ASIO, the adoption of the recommendation which he made to Cabinet on 26 April. I have already considered in paragraphs 3.26 and 3.27, paragraph

(c) of Decision No. 321 (NIS), taken on 21 April that -

The Prime Minister inform other Ministers that they should not make use of the consultancy services provided by (Mr Combe) but without comment on the relationship between him and Mr Ivanov.

No direction was given by NISC as to how the Prime Minister

should so inform other Ministers, although it was made clear that he should do so without disclosing any connection between Mr Combe and Mr Ivanov. The Prime Minister chose, without

advance notice to the other members of NISC, all of whom were also members of the Cabinet, to inform other Cabinet Ministers collectively by making the recommendation which he did on 26 April. That course had the advantage of ensuring that the wishes of NISC were conveyed in the same terms to all members of the Cabinet. It had the further advantage that, if the

recommendation were adopted (as in the event it was), the direction would derive added authority from being embodied in a Cabinet decision. It must also be remembered that, had the Prime Minister chosen to inform Cabinet Ministers individually or in

smaller groups that they should not have any dealings with

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Mr Combe in h{s capacity as a lobbyist, it was open to any such

Minister to seek to have that direction reviewed by Cabinet or the Ministry. The only disadvantage inherent in the course whi ch the Prime Minister took was that the Cabinet might not have been persuaded, at least without the disclosure of the relationship between Mr Combe and Mr Ivanov, to implement the proposed action

in respect of Mr Combe as a lobbyist. However, I consider that risk to have been more than counter-balanced by the advantages which I have just mentioned.

Discussion and speculation outside Cabinet about proposed embargo on Combe 5.11 Also on 26 April, the day of the Cabinet meeting in

Adelaide, Mr J D Enfield, then a Deputy Secretary in the Department of the Prime Minister and Cabinet, was telephoned at his office in Canberra by Mr Dale Budd, a Canberra lobbyist and consultant. Mr Budd had been a Principal Private Secretary to

the former Prime Minister, the Right Honourable J.M. Fraser, and had returned briefly to the Prime Minister's personal staff in the first half of 1981 as Senior Administrator. Mr Budd is, and was since 1979, the principal of Dale Budd & Associates Pty.

Ltd., which had a loose working arrangement with Australian Public Affairs Consultants Pty. Ltd., ( 'APAC' ), another firm carrying on business as consultants and lobbyists. On the afternoon of 26 April, Mr Martin Rawlinson, one of the

principals of APAC, told Mr Budd that he had held a conversation that day with Mr David Farmer, the brother of Mr Richard Farmer who is referred to in 5.8. In the course of that conversation,

Mr Rawlinson was told that Mr Richard Farmer had received a

telephone call to the effect that it would be inadvisable for him, Mr Richard Farmer, to go into partnership with Mr Combe. In giving that hearsay account of the telephone conversation, Mr David Farmer conveyed that the telephone call had come from

the Prime Minister. It seems further that, in being passed from Mr Richard Farmer to Mr David Farmer, from Mr David Farmer to

Mr Rawlinson, and from Mr Rawlinson to Mr Budd, the information

about the telephone call from the Prime Minister became overlaid

1/.3

with a good deal of speculation about the reasons why such advice should be given in respect of Mr Combe. That speculation raised, as a reason for the warning presumed to have been given by the Prime Minister, the possibility that Mr Combe would be linked publicly with the expulsion of Mr Ivanov in a way which had implications for security.

5.12 It appears that, as at 26 April, both APAC and Dale Budd

and Associates Pty. Ltd., held, or had held retainers, from the Northern Territory Government. Both Mr Budd and Mr Rawlinson were aware that their mutual client had recently retained, as well, the services of Mr Combe. They were concerned, therefore,

that the advice which had been given to Mr Richard Farmer might import adverse consequences for the Northern Territory Government. Accordingly, it was resolved that Mr Budd should contact Mr Enfield who, as a senior career officer in the

Department of the Prime Minister and Cabinet, had been known to Mr Budd from the time when the latter had been on the personal

staff of Mr Fraser. The purpose of such contact was to try to

obtain some official confirmation of the information which had been received through Mr David Farmer.

5.13 Mr Budd arranged by telephone to see Mr Enfield forthwith. Their meeting occurred at about 3.00 p.m. on the afternoon of 26 April. In the course of it, Mr Budd indicated that he had heard that there was more to come out in connection with the Ivanov expulsion, and that the Prime Minister had rung an associate of a certain person to warn him against continuing association with

that person. Mr Budd went on to say that the unnamed person had a business association with the Northern Territory Government,

as did the consultancy firm with which he, Budd, was associated. Mr Enfield was then told that Mr Budd and his associates were

concerned that, if there were something coming out (as they understood was to happen on 28 April) to the detriment of the unnamed person, the Government of the Northern Territory should be informed. Mr Enfield replied that he would neither confirm

nor deny any connection between the expulsion of Mr Ivanov and

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an unnamed individual who might have had an association with the Northe rn Territory Government, but that Mr Budd could be assured that if there were something known to the Commonwealth

Government to the detriment of that person, it would be conveyed t o the Chief Minister, possibly at the Constitutional Conventi on which was due to take place in Adelaide that week. The

expectation thus expressed by Mr Enfield, was based on what he had h eard at the second meeting of NISC on 21 April, and on what

had been confirmed to him by Sir Geoffrey Yeend later on the same day.

5.14 After that meeting with Mr Budd, Mr Enfield relayed wh a t had been said to him to the Prime Minister's Principal Private Secretary, Mr Graham Evans, who was then in Adelaide. He then t elephoned Mr T.H. Barnett, the Director-General of Security ,

and expressed his concern about the extent of the speculation or 'go ssip' indicated by what Mr Budd had raised . Mr Barnett advised Mr Enfield that the briefing of Mr Everingham was intended to take place in Adelaide on 28 April and that h e ,

Barnett, would be present. On the basis of that advice, Mr Enfield telephoned Mr Budd and indicated, as appears fr o m the

e v idence of Mr Enfield, that 'I could now confirm to him that

t he Atto rney would brief Mr Everingham on a matter detrimental

to this unknown person. Again I stressed that I would neithe r c onfirm nor deny any connection between Ivanov and the person . '

5.15 In the light of the information thus received from Mr Enfield through Mr Budd, Mr David Barnett, anoth er princ i pal

o f APAC, on the afternoon of 26 April telephoned Mr Everingha m

who was then in Adelaide. He told Mr Everingham that someth ing

serious was happening with Mr David Combe in relation to a security matter as a result of his connection with a Soviet diplomat who had been declared persona non grata, and that it was likely that the Chief Minister would officially be briefed

or notified.

J25

Briefing of Chief Minister of Northern Territory 5.16 I have set out in some detail the events described in 5.11

to 5.15, because they explain Mr Everingham's reaction when the Attorney-General for the Commonwealth, Senator Evans, approached him on 26 April to fix a time for the giving of the advice

contemplated by paragraph (e) of the decision of NISC of 21 April. What Senator Evans told Mr Everingham on the evening of 26 April was to the following effect -

There is a national security issue which has arisen which is causing us considerable concern, and on which I would like to arrange a briefing with you from the Director-General of ASIO; if we could fix that up for later this week sometime.

Mr Everingham immediately asked, to Senator Evans' surprise,

whether the national security issue was one involving Mr David Combe. As already indicated, Senator Evans had intimated that it

was proposed that the Director-General of Security should come to Adelaide for the purpose of briefing Mr Everingham. It was therefore agreed between the Attorney and the Chief Minister that a meeting should take place at Parliament House, Adelaide, on the afternoon of 28 April, immediately after a meeting of the

Executive Committee of the Constitutional Convention which both Senator Evans and Mr Everingham were required to attend.

5.17 The meeting went ahead, as arranged, on 28 April, and was attended by Senator Evans, Mr Everingham, Mr Barnett, the Director-General of Security, Mr Brazil, the Secretary of the Commonwealth Attorney-General's Department, and Mr Martin, the Solicitor-General for the Northern Territory.

5.18 Mr Barnett, after a few introductory words by Senator Evans, sketched, by way of background for Mr Everingham, the salient features of Mr Ivanov's activities as noticed by ASIO, and ASIO's assessment of Mr Ivanov as a KGB officer. He then gave some details of Mr Combe's relationship with Mr Ivanov as ASIO perceived it and indicated, as Mr Everingham recalled, that

it was part of an ongoing cultivation process which had reached a critical stage because of Mr Ivanov's suggestion that an

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element of clandestinity be introduced. On Mr Barnett's own recollection, his contribution to the briefing of Mr Everingham occupied about 10 minutes out of the total time of the meeting which Mr Everingham estimated to have been between 30 and 45

minutes.

5.19 In the course of the briefing, Mr Everingham was told that it was not proposed to prefer any criminal charges against Mr Combe. Senator Evans also referred to the decision taken by

Federal Cabinet that Mr Combe should be denied direct access to Ministers. Attention was then given to what course should be followed by the Northern Territory Government in the light of the information which had just been given to Mr Everingham. It

was agreed that Mr Combe's retainer from the Northern Territory should be kept on foot, but some discretion should be exercised about the tasks which ought, in future, to be entrusted to Mr Combe, and, perhaps, that he should not be given any

assignment which would require him to make direct contact with Federal Ministers.

5.20 The evidence of Mr Everingham diverged to some extent from that of Senator Evans and Mr Barnett about who had initiated that suggestion as to the course to be followed by the Northern Territory Government. It is understandable, where there has been discussion of a number of options or alternative courses of

action before unanimity is reached as to what should be done, that participants in the discussion may have less than perfect recall as to which of them sponsored one or other alternative. The divergence in the evidence to which I have referred is

inconsequential and unnecessary for me to resolve in determining whether the briefing of the Chief Minister of the Northern Territory was properly carried out. I have already considered in 3.28 whether it was reasonably open to NISC to decide that

Mr Everingham should be advised of the relationship between

Mr Combe and Mr Ivanov, and of the activities of Mr Combe.

Having regard to the views which I there expressed, I consider that it was appropriate to provide Mr Everingham with as much of

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the information in the possession of ASIO, and as much indication of the actions which the Federal Government had dec ided to take in respect of Mr Combe, as would enable the Northern Territory Government to make an informed reappraisal of

its own relationship with Mr Combe and the use, if any, which it could properly make of his services in the future. Mr Everingham was permitted to bring to the briefing the Solicitor-General to

h is own Government, and there was no suggestion that anything relevant was concealed from him either by Senator Evans or Mr Barnett. There could be no suggestion that Mr Everingham was

denied an opportunity for full enquiry or explanation of the matters raised at the meeting, since the evidence is that it was te rminated at his instigation when he indicated that he had another engagement to keep. Accordingly, I find that the br iefing of the Chief Minister of the Northern Territory was

fully and properly carried out.

Discussion between Farmer, Butler and Combe of 29 April 5.21 On 24 April, the Prime Minister had conveyed to Messrs Farmer and Butler, who were prospective partners of Mr Combe in his lobbying and consultancy business, that the Prime Mi n ister

was in the process of telling Ministers that they should not have dealings with Mr Combe in his capacity as a lobbyist. I will deal in detail in 7.48 to 7.63 with that communication and the circumstances in which it was made. One of the consequences of the Prime Minister's disclosure was that Messrs Farmer and

Butler, on the morning of 29 April, called on Mr Combe at the

office which formed part of his horne in the Canberra suburb of Campbell. They then told Mr Combe that, because they believed he was to be denied access to Ministers, they no longer saw any point in joining his business as they had earlier agreed to do.

5.22 The discussion which occurred between Mr Combe and his two prospective partners on 29 April included speculation as to possible reasons for a decision being taken that he should be denied access to Ministers. In the course of that discussion,

reference was made to Mr Combe's relationship with Mr Ivanov,

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and Mr Combe recounted to Messrs Farmer and Butler the warning which Mr Ivanov had earlier given outside his, Ivanov's, home on 3 April. As Mr Farmer recalled, the version recounted by

Mr Combe on that occasion was:

As they were leaving - outside Ivanov's house - as they we r e going to get into his car, Ivanov had told him that they

were expelling a lot of Russian diplomats around the worl d and that they would probably do one in Australia next - I t

could be me, and if it is me, you David will be in some

trouble. I think that was the only reference that David made to Ivanov.

5.23 Mr Combe also mentioned his own membership of AUS, and i ndi c ated that one specific thing which he could bring to mind ,

wh ich might have been misinterpreted by the Government, was a

r e port which he had written after a trip to the Soviet Uni on and

which he had sent to CBA in December 1982. Mr Combe then prod uced a copy of that report and gave it to Mr Farmer to r ead ,

telling him that he had sent a copy of it to Mr Eric Walsh. Pa r t

o f the report which particularly excited Mr Farmer's attention

wa s that which contained the suggestion, as Mr Farmer r e a d i t ,

that Mr Combe had recommended to his client, CBA, that i t should p a y him to try to improve relations between the CPSU and the

ALP. Mr Farmer went on to indicate that he was left with the

i mpression 'that, if CBA paid Mr Combe to work in that way, the

Sov iet Government would afford CBA some form of return, perha p s

by way of 'trade favours'. The part of the CBA Report of whi ch Mr Farmer took special notice was clearly Recommendation No.4,

the terms of which are set out in 4.44. Mr Farmer passed that

part of the report to Mr Butler to read for himself.

5.24 On 2 May, at a meeting of the Ministry attended by all 2 6

Federal Ministers except the Honourable J . Kerin, the Prime Minister referred to the Cabinet decision taken in Adelaide on 26 April in respect of Mr Combe, and requested members of the Ministry to have no professional dealings with Mr Combe. The

Prime Minister sought to justify that request by referring t o the damage that would be done to the Government's image if a former Party functionary were seen to be accorded favourable

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treatment. The Prime Minister referred, as he had done earlier (see 5.8), to the 'open door' policy enunciated at the Economic Summit, and urged that such a policy would be contradicted if it were implied that better access could be obtained by paying for

the services of a lobbyist. The Prime Minister also referred to Mr Combe's belief that his business would increase substantially

as a result of the accession to office of an ALP Government, and t o his proposal to take in as partners Messrs Farmer and Butler.

The Ministry was further informed that the Prime Minister had spok en to both Mr Farmer and Mr Butler and advised them of what he thought was the Government view. A decision was taken, a pparently without dissent, that no Minister should have any

professional dealings with Mr Combe. That decision, is not reflected in the written record of Ministry Decision No. 268M, which was in the following terms:

The Ministry discussed general and particular issues in respect of Ministers' dealings with consultant lobbyists and endorsed the approach agreed to by the Cabinet at its meeting in Adelaide on 26 April 1983 and conveyed orally to

the meeting by the Prime Minister.

2. The Ministry noted that the Special Minister of State would be bringing forward a Submission canvassing a possible scheme for the registration of lobbyists.

It had been decided at the Cabinet meeting of 26 April that the endorsement of a full Ministry should be sought for the decision which had then been taken.

5.25 For the reasons indicated in 5.9 in respect of the Cabinet decision of 26 April, I do not propose to express any view about the Ministry decision of 2 May, since that decision was clearly taken for reasons arising from the Ministry's perceptions of Mr Combe's activities as a lobbyist. I have already come to t he

conclusion, in 5.10, that it was open to the Prime Minister partly to discharge the task, entrusted to him by NISC, of informing other Ministers that they should not make use of the consultancy services provided by Mr Combe, by raising the matter at a Cabinet meeting as he did on 26 April. It follows, in my

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view, that it equally open to the Prime Minister so to

inform the rest of the Ministers by raising the matter at a meeting of the whole Ministry, which was done on 2 May. Indeed , since the Cabinet meeting of 26 April had itself decided that endorsement of its decision in respect of Mr Combe should be

sought from the full Ministry, no practicable alternative way o f informing the other Ministers was left to the Prime Minister after 26 April. Having regard to the unanimity of a Cabinet of 14 Ministers on the proposal, there was little prospect that i t

wo uld be rejected by a meeting of the larger Ministry at which

all Cabinet Ministers were present.

5.26 It was clear that the Prime Minister was enjoined by the

terms of the decision of NISC (No.321 NIS), to carry out the task entrusted to him of informing other Ministers that they should not make use of the consultancy services provided by Mr Combe 'without comment on the relationship between him

(Combe) and Mr Ivanov.' Whether such an injunction was

appropriate is considered in paragraph 3.27.

5 .27 At some time, perhaps in the afternoon, on 2 May, Mr Co mbe

met in Canberra Mr R.M. Cameron, a principal of Australian

Nationwide Opinion Polls Market Research. Mr Combe then showed Mr Cameron a copy of the report which he had furnished to CBA.

In the course of discussing it, Mr Combe expressed the view that Recommendation 4 which it contained and which is set out in 4.44 might reflect badly on Mr Combe as the maker of the recommendation.

Hogg and Cameron as intermediaries between the Government and

Combe

5.28 Later on 2 May, Mr Cameron had a discussion with Mr R.D.

Hogg, a Senior Adviser to the Prime Minister. Mr Cameron had been working with Mr Hogg and some representatives of an advertising agency in formulating details of an advertising campaign which the Government proposed to mount. After dinner

with the advertising agency representatives, Mr Hogg and

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Mr Cameron were left alone. Mr Hogg then took the opportunity t o

d iscuss with Mr Cameron Mr Combe's position as hypothesized to

Mr Cameron by Mr Combe himself. In order to understand the

s ign ificance of that discussion and how it came about, it is

ne c e ssary to go back in time, to some extent, to trace Mr Hogg's

involv ement in the matter.

5 . 29 Before taking up his appointment as Senior Adviser to the Prime Minister, Mr Hogg had for nearly 7 years been the Se cretary of the Victorian Branch of the ALP. He had also held a

n u mber of advisory and honorary administrative positions both

within the Victorian Branch and at the national level of the ALP. He had known Mr Combe since about 1972, and had worked

clo sely and developed a personal friendship with him. By 22 April, Mr Hogg was still awaiting the security clearance

n ecesary for his appointment to the Prime Minster's personal s ta ff to be confirmed. Accordingly, he was at that time not made

p ri v y to what had been communicated by the Director-General of Se curity to the Prime Minister and later to NISC.

5 .30 On the evening of 25 April, Mr Hogg, who was in Adelaide

in anticipation of the Cabinet meeting which took place next day, spoke with Mr Cameron. Mr Cameron indicated that he had a question, concerning Mr Combe, about which he wanted to talk to Mr Hogg. A tentative arrangement was made to discuss it on the

next morning, 26 April, but by force of circumstances and because of pressures of work, that discussion did not take place. In seeking the discussion, Mr Cameron intimated that Mr Combe had raised with him the possibility of Mr Ivanov's

expulsion having some spin-off in terms of himself. That was a possibility which Mr Cameron, as he told ' Mr Hogg, did not take very seriously at first, but, he went on to say, Mr Combe had

been persistent in maintaining over the week-end (of 24 and 25 April) that he might have a problem arising from something in the nature of a misunderstanding.

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5.31 On 27 April, the Prime Minister told Mr Hogg and two other members of his personal staff, Mr Peter Barron and his Press Secretary, Mr Geoffrey Walsh, that Cabinet had been informed that the access of Mr Combe to Ministers, in his capacity as a

lobbyist, had been withdrawn. The Prime Minister also told Mr Hogg and the other two members of his staff that there was a

security implication, and a connection between that decision a n n the events of the previoup Friday, (referring to the announcement of Mr Ivanov's expulsion).

5.32 It appears that, on the morning of 2 May, somebody from

Mr Combe's office telephoned Mr Hogg and sought a meeting

between the two men. Mr Hogg temporized and said he would get back to Mr Combe on the following day, 3 May. Before or during his work with Mr Hogg on the advertising campaign referred t o i n 5.28, Mr Cameron then, on the afternoon of 2 May, put it

directly, as Mr Hogg recalled it, 'that David was pretty distressed and wanted to could I have dinner with them.'

Mr Hogg then asked the Prime Minister whether it was advisable

for him, Hogg, to dine with Mr Combe and Mr Cameron. The effect of the Prime Minister's response, and the course of action on which Mr Hogg determined, was indicated by Mr Hogg himself as follows:

The net result of that discussion was we reached an agreement, or an understanding, that, to assist David in perhaps having some review of his circumstances undertaken, I could not do that by any direct contact because clearly

there would be matters I could not comment on. I would have to use the euphemism of neither confirming nor denying anything and it would be of no assistance. So I preferred, therefore, to then make arrangements to meet with Cameron

overnight in private, which we did, and give advice on what I thought David should do based on his own hypotheses. I gave nothing away in terms of whether or not David's own suspicions were correct, but rather assumed his hypotheses

and worked on that and gave advice within that context.

5.33 Mr Hogg then intimated to Mr Cameron that it would be of

no assistance for him, Hogg, to have dinner with Mr Cameron and Mr Combe. As a result of that intimation, Mr Cameron telephoned

Mr Combe and, as revealed by an interception of Mr Combe's

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telephone, the following exchange took place at 9.37 p.m. on 2 May:

R.C.

D.C. R.C.

D.C. R.C.

(Mr Cameron) We are in awful strife over here. We are going to be a considerable amount of time. Can I suggest that we have an early breakfast tomorrow. (Mr Combe) Sure, is that alright with Hoggie.

I haven't even checked with him, mate. I'm not with him now, but I will be going back to the room later

on. I have got a flight at 0930 hours which I have

to be on. Can I see you at 0800 hours or 0745 hours

Fine. Why don't you come round to the Lakeside. I'll meet you downstairs, - no I'll wait for you in the room.

5.34 At some time before his discussion with Mr Cameron on the evening of 2 May, Mr Hogg had, by telephone, given certain advice to Mr Cameron to relay to Mr Combe. As Mr Hogg recalled it:

The advice in essence was : if in his own heart he thought

that perhaps he had gone a bit too far and his suspicions

was, or what he thought the problem was, had basis, that perhaps he should just gracefully find another occupation and not go out on a limb. On the other hand, if he thought

that he had been mishandled or badly dealt with, then he should prepare as full a brief as he could of all the

circumstances of his relationship with Ivanov or with the embassy, with trade officials and with Commercial Bureau and that somehow that could become the basis for a review of the

circumstance.

In explanation to Counsel assisting the Commission, Mr Hogg testified that he indicated that the 'full brief' should be a written document and that, in his opinion, whichever course Mr Combe chose to adopt, it was critical that the matter be kept

out of the public domain. He further indicated that he made to Mr Cameron an offer of his own services in trying to facilitate

a review of the whole matter. When asked what sort of review he envisaged, Mr Hogg replied:

I was very conscious of the deficiencies of the Act and that there were no provisions allowed for the protection of individuals other than those who applied for jobs and have , gone under a review process, or those within the Public

Service. I was very conscious that there did not seem to be any way around that dilemma. I just have a view that

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problems are there, you solve them and a solution would h ave to found to that. I had no clear cut idea of how that would

be d one, b ut I would suggest that what occurred on 10 - ll

May ultimately perhaps could have occurred on 4 May, for e xample, but not in the public domain.

5 .35 The a dvice described in 5.34 was reiterated to Mr Cameron

by Mr Ho gg when they were alone together on the evening on 2 May . As Mr Cameron recalled it, the advice on that occasion

wa s tha t Mr Combe should ·write a full detailed story about hi s

connectio n with Mr Ivanov 'and anything else which had the va g uest relevance to David's dealings with Mr Ivanov and the Rus s ian embassy' or 'the Russians'. Mr Cameron then told Mr Hogg

tha t h e would pass the advice on to Mr Combe at the breakfa s t

meeting which it had been arranged should take place at the

Lakesid e Hotel next morning. Mr Hogg stressed to Mr Cameron

that, if Mr Combe decided to act on the advice that he sho u ld

pre p a re a full written statement, it should be treated as a ma tter o f urgency. As Mr Cameron recalled, when he left Mr Hogg

t h a t e v ening, he was under no illusion that the situation wa s

other than serious.

5 . 36 Mr Cameron did breakfast with Mr Combe at the Lakeside

Ho t e l o n the morning of 3 May. Mr Cameron then passed on

Mr Hogg ' s suggestio n that Mr Combe should write everything down

a s fully as possible. He also indicated that the matter wa s more

s e rious than he, Cameron, had assumed up to the evening of

2 May. Mr Combe pressed Mr Cameron for details of the prec ise

nat u re of the allegations against him, but it was made clear to him that neither Mr Cameron himself, nor Mr Hogg, was aware o f such details. Mr Combe responded positively to the suggest ion

whi ch came from Mr Hogg for whom he professed respect and with

wh o m, a s indicated above, he was on terms of close friendship.

( Un d er cross-examination by Counsel assisting the Commissio n

Mr Combe accepted that Mr Hogg was acting throughout in g o o d

fa i t h i n what he thought were Mr Combe's best interests). Mr Combe's response was, in Mr Cameron's words, to say, 'Right,

I 'll get right down to it.'

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Preparation of Combe's statement to the Government 5 .37 On the same day, 3 May, Mr Combe started work on a draft

o f the proposed statement, and, by the afternoon of that day,

Mr Ca meron was able to telephone Mr Hogg and advise him that 20

o r 3 0 pages of the draft had been completed. On 4 May, as

r evealed by an intercepted telephone call, Mr Combe told

Mr Bria n Toohey, the editor of the 'National Times' that his

' ma gnum o pus is nearing completion', that he proposed to give it

to his s o licitor, Mr Higgins, and that 'I'm just detailing it in

abs olu t e minutiae.' Mr Combe did show Mr Higgins on 4 May a d r a f t o f some 26 pages and sought his advice about the legal

consequences of material contained in it. Mr Higgins on that occasion did not advise that any amendments should be mad e to t h e draft.

5 .38 Apparently because of secretarial difficulties and

Mr Co mb e's absence from Canberra on 5 and 6 May, the draft

sta t em e nt was not again presented to Mr Higgins until late in the a fter n o o n of 10 May. It then had appended to it a copy of

the r eport provided by Mr Combe to CBA, copies of documents filed in the Supreme Court of Victoria in the action between CBA and Mr Fasham, and a copy of an agreement and heads of agreement betwe e n CBA and Sovrybflot. Mr Higgins' advice was that the

r e p o rt was confidential and could not be appended to the

s t a t e ment without Mr Matheson's consent. The statement was then

a men d e d to delete the reference to the CBA Report as Attachmen t

1 . In its final version, Mr Combe's statement to the Government

indi c ated that he had been engaged by Mr Matheson to prepare a report of the results of inquiries which he was asked to undertake on behalf of CBA during his visit to the Soviet Uni o n a t t h e end of 1982, and that, by mid December 1982, r.e had

p repared a report which 'set out the purposes, the nature and

the consequences of the discussions which I had had in the Soviet Union . ' It did not emerge from the evidence wheth er the final version of Mr Combe's statement, which is reproduced as Appendix F, reflected any other amendments made at Mr Hi ggins '

suggestion.

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Termination of surveillance of Combe 5.39 As a result of the interception of the telephone conversation between Mr Combe and Mr Cameron which is reproduced in 5.33, an officer of ASIO attached to its Canberra Regional

Office concluded that Mr Hogg would agree to breakfast with Mr Combe and Mr Cameron at the Lakeside Hotel on the following

morning. Furthermore, the unwarranted assumption was made that Mr Hogg did attend the breakfast that morning. Without any

attempt to confirm the accuracy of the assumption, it was reported as a fact by ASIO on 3 May to Mr Enfield, who, as I

have noted, was then a Deputy Secretary to the Department of the Prime Minister and Cabinet, that Mr Hogg had breakfasted with Mr Combe and Mr Cameron that morning. That report was passed by

Mr Enfield to the Prime Minister who, after finding from Mr Hogg

that it was false, strongly castigated the Director-General of Security for the mistake made by ASIO. The Prime Minister requested that Mr Barnett and others concerned should attend in his office on the following morning 'so that I could have in

these circumstances a review of what had been put to us at this stage'.

5.40 A meeting duly took place on the morning of 4 May, in the

Prime Minister's office, attended by the Prime Minister, Mr Barnett and two other ASIO officers, Sir Geoffrey Yeend,

Mr Enfield and Mr Evans of the Prime Minister's personal staff.

5.41 At that meeting the Prime Minister reprimanded the ASIO officers 'in the strongest terms of which I am capable' for what he considered the inexcusable mistake in reporting that Mr Hogg had been at the Lakeside breakfast. That mistake, in conjuncti on

with two others made by ASIO in respect of Mr Combe's activi ties (as to which see 2.35, 3.20 and 4.30) raised a need in the Prime

Minister's mind to satisfy himself whether 'there was ground for reappraisal of the decisions that had been taken by the Government on the basis of all the other material put before us.' He then conveyed to Mr Barnett that, notwithstanding the

gravity of the mistake about Mr Hogg, 'I made the judgment that

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the basic material that was before us in regard to Ivanov and Combe was still sustained and I retained confidence in their

overall position in regard to that matter.'

5.42 The Prime Minister then had put before him a bundle of documents which included a case summary of activities of Mr Combe compiled at ASIO headquarters in April 1983 which had

appended to it a chronological list of source references, a five page profile of Mr Ivanov, and extracts from the transcript of the conversation of 4 March between Mr Ivanov and Mr Combe. The Prime Minister made himself familiar with those documents and was told that the interception of Mr Combe's telephone had

revealed nothing to indicate any communication between him and any Soviet personnel. Mr Barnett expressed a preference for maintaining surveillance of Mr Combe for another three weeks. The Prime Minister, however, instructed him that surveillance be

lifted immediately, saying that 'if through any of their (ASIO's) other observations, they believed that they would reach a point where they had a case for the reimposition, then they

could bring that to me. But as far as I was concerned, I was

directing that it be lifted forthwith.' It does not appear that Mr Barnett advanced any concrete reason for continuing the

surveillance for another three weeks.

5.43 I have already indicated, at least by implication, in 5.2 to 5.4, my conclusion that the surveillance of Mr Combe was duly authorised and was carried out by all appropriate means. It was not argued by any Counsel who appeared before me that the

surveillance should have been terminated any earlier than it was on 4 May. Counsel for Mr Combe, of course, did not concede that it was reasonable to impose surveillance on their client in the first place. Bearing in mind that Mr Ivanov did not leave Australia until 28 April and, that surveillance of Mr Combe was actually undertaken for a total of only about 12 days, I do not

believe that such surveillance could reasonably have ended earlier than 4 May. I have, moreover, considered whether the decision to end it on 4 May might have owed more to the Prime

138

Minister's understandable irritation by the erroneous ASIO report on Mr Hogg than to a dispassionate evaluation of the factors properly bearing on such a decision. However, in the light of the evidence of the circumstances as they appeared and

the professed concern of the Government and the Prime Minister that Mr Combe's civil liberties should be infringed no more than absolutely necessary, I have concluded that the decision to terminate surveillance on 4 May was properly made.

First steps towards setting up a Royal Commission and other actions of the Prime Minister 5.44 On 6 May, the Prime Minister met me by arrangement in Sydney. As he indicated in evidence, that occurred as a result

of 'an earlier policy initiative' and was accelerated by the publication in the 'National Times' of articles claimed to be based on certain classified documents asserted to be in the possession of that newspaper. In the course of that meeting, the

Prime Minister asked whether I would be available to conduct a review pursuant to a Royal Commission into Australia's Securi ty and Intelligence Agencies.

5.45 On 8 May the Prime Minister had a further meeting in

Melbourne .with certain ASIO officers in the course of which he listened to the tape recordings of the two conversations between Mr Combe and Mr Ivanov of 4 March and 3 April. That enabled him

to detect certain errors, some of them trivial and others more significant, in the transcript originally prepared by ASIO from those recordings. A mistranscription to which the Prime Minister attached particular significance was that the ASIO transcript

recorded Mr Combe as saying 'In terms of your brief talk to me .•• ' whereas correctly transcribed his words to Mr Ivanov wer e

'In terms of your brief to talk to me ••• '

Speculation in public about a connection between Combe and Ivanov 5.46 On the morning of 10 May, the following article appeared in 'The Sydney Morning Herald' under the heading 'ASIO alleges

139

Lab o r link with Ivanov' and under the by-line of that

news paper's political correspondent, Mr Paul Kelly.

CANBERRA- The Prime Minister, Mr Hawke, will be asked within the next few days to clear the name of a senior Labor

man who, ASIO has told the Government, is a potential security risk and friend of the expelled Soviet diplomat Va leriy Ivanov.

The issue is starting to cause deep tremors within the ALP and could damage the Government.

The Labor man named by ASIO has been one of the most

important and influential figures in the party over the past t wo decades. The security forces have associated his name with the Ivanov expulsion in briefings to the most senior ministers in the Government.

I t is believed ASIO has kept a close watch on the activities

o f the Labor man, particularly over the past six months.

The danger for the Government is that the figure involved is d e termined to clear his name and has prepared a lengthy document to this effect for the Prime Minister. Mr Hawke will be given the document this week.

The figure has told confidantes he believes his reputation has been damaged by the security force advice being given witho ut his having the opportunity to respond or having a nybody in the Government put the claims before him -

p r e cisely the sort of behaviour for which ASIO has been c o ndemned by the ALP for many years.

The document going to the Prime Minister is believed to detail the contact the ALP figure has had with Mr Ivanov and with any other Soviet representatives.

Some ALP people now believ e one of the reasons the security forces moved to have Ivanov expelled was that he had good relations with senior Labor figures.

If the security forces have given misleading advice to the Government this could further encourage Mr Hawke towards a new security inquiry.

He canvassed this late last week in talks with the former Royal Commissioner, Mr Justice Hope.

5.47 On the same day, Questions without Notice were asked in the House of Representatives of the Prime Minster and answers were given as follows:

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(a) (i) the Han. M. MacKellar asked whether as reported in

the Press of that day, a senior Labor man who h ad

been one of the most important and influential figures in the Australian Labor Party over the p a s t two decades had been closely associated with the recently expelled Soviet diplomat, Mr Ivanov. (ii) the Prime Minister replied that neither he nor any

member of his Government would publicly canvass issues in which questions of national security a r e so obviously involved as they were in the expulsion of Mr. Ivanov. (b) ( i) the Han. A. Peacock referred to the Prime

Minister's indication that he would not comment on the matter raised by Mr. MacKellar, and said t hat he understood from news reports that the Prime Minister had in fact discussed the matter in the

Caucus that day and told his Party that the f o rm e r

senior Australian Labor Party official was not a member of the Government. Mr Peacock asked wh y d i d the Prime Minister mislead the House.

(ii) The Prime Minister denied that he had misled the House. He indicated that at the Caucus meeting one of the members of the Government raised the po i nt that he had been approached in the light of the

article in the 'Sydney Morning Herald' and was asked whether he was the person involved. The Prime Minister went on to say that the member of the

Government making the inquiry indicated that to the best of his knowledge he was not involved. The Prime Minister then said, 'Of course, when that matter was raised what I told the member of the

Government who had raised the question and told the Caucus was that neither he nor any member of the Government was the person involved.'

(c) (i) the Han. I. Sinclair asked whether the Prime

Minister had instructed the members of his Government to dissociate themselves from the former Secretary to the Federal Australian Labor Party, Mr David Combe, and if so, why?

(ii) The Prime Minister replied, 'I have not instructed members of the Government to dissociate themselves from the person named. I have put to them - this

decision has been accepted and will be the case -that in respect of any lobbying activity there is to be no association. That is not the same thing

and, of course, I would not attempt to say that any

members of this Government should not have any association with the gentleman named'.

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5 .48 In the issue for the same day, 10 May, of the Sydney

afterno on daily newspaper 'The Daily Mirror' the following a r t i c le attribtued to a Mr Geoff Sorby, appeared under the front

page banner headline 'Russian Spy! Labor Official Named- ASIO b rie fs Ha wke.'

A senior official in the A.L.P. has been named a Soviet spy by Australia's security forces.

The n e ws has rocked the Hawke Government and the party g e ner a lly.

The Labor Caucus was expected to demand a full inquiry, p o ssibly a royal commission, into Australia's security servi c es, when it met in Canberra today.

Th e official, who has been shadowed by the Australian Security Intelligence Organisation (ASIO) for six months, h a s been linked with expelled Russian spy Valeriy Ivanov.

Prime Minister Bob Hawke was expected to be pressured to rev eal the official's name when Parliament sat today.

An d Mr Hawke was also expected to come under fire from his o wn supporters at the Caucus meeting.

ASIO has briefed Mr Hawke and senior Labor ministers a b out t h e activities of their colleague.

AS I O has told the Government it has trailed the A.L.P. o fficial constantly for six months.

Fo reign Affairs Minister Bill Hayden late last month a nnounced the expulsion of Mr Ivanov, first secretary of the Russian Embassy.

The Federal Government and the A.L.P. have been beset by security problems over the past few weeks. In unrelated security issues the Government today wa s to ask the High Court to demand the name of a 'deep throat' who

has been leaking highly sensitive security material to the press.

And the Opposition has warned it may set up a powerful Senate committee to inquire into organised crime in Australia.

This follows revelations that a secret volume of the 1977 Hope Royal Commission into Australia's security forces was suppressed.

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The secre t report reveals that ASIO had handed over d e t ailed files on prominent Australian citizens to America's CIA.

The Government's reaction to increasing public speculation 5.49 On the afternoon of 10 May, the Attorney-General, Senator Ev a ns spok e to Mr Hogg and concern was expressed about t h e

p ub licity which had been attracted by the events described in

5.46 to 5.48. Mr Hogg put to the Attorney his belief tha t s o me

form of review could be afforded to Mr Combe who, he told the Attorney, had been engaged at his, Hogg's, indirect sugges ti on i n preparing the statement referred to in 5.37 to 5.38. The

Attorney-General then suggested to the Canberra Regional Director of ASIO that he should approach the Director-Gene r a l with a view to finding out whether Mr Combe could, at t h at time,

be apprised of the nature and extent of the evidence which had been put before the Government. Mr Hogg had also spoken t o the Prime Minister about the same series of events , and at abo u t 6 .00 p.m. on 10 May, the Prime Minister, in the presence of

Mr Hogg and other members of the Prime Minister's staff, met

with the Attorney-General. The question was then raised a ga i n whether at least part of the material which had been conveyed by ASIO to NISC could be disclosed to Mr Combe. To obta i n ASI O's

a dvice, arrangements were made for the Director-General , Mr Barnett, to fly to Canberra by chartered aircraft that

evening.

5.50 Mr Barnett arrived in Canberra some time shortly before 11.00 p.m. on 10 May. He then took part in a meeting attended by

the Prime Minister, the Attorney-General, Messrs Enfield and Townsend of the Department of the Prime Minister and Cabinet a nd Mr Graham Evans of the Prime Minister's personal staff. Tha t

meeting went from about 11.30 p.m. until after 1 a.m. on 11 May . In the course of it, the Prime Minister expressed his belief that it was vital for Mr Combe to be acquainted 'with our

position and for him to have any opportunity he may want to pu t his.' The Prime Minister also went on to express his strong feeling that, once that had been done, Mr Combe would 'understand and accept the position that the Government had

143

adopted.' The alternative course open to the Government if Mr Combe did not accept its position was seen to be that of

tab ling in Parliament all the available material. The Prime Minister considered that alternative to be far more detrimental to Mr Combe's interests than the other course whereby the material would be disclosed only to Mr Combe himself.

5.51 Mr Barnett expressed the view that, as things then stood, there was no particular risk to national security in making a disclosure to Mr Combe of the kind envisaged by the Prime Minister. He also indicated that he was prepared to take a part

in putting the relevant information to Mr Combe. It was then decided that a meeting should be arranged as soon as possible for the following morning between the Attorney-General and Mr Combe, with Mr Barnett in attendance to present to Mr Combe

the details of what had been put to NISC. At the meeting that

night, Mr Barnett gave to the Prime Minister a body of material including the transcripts of the conversations of 4 March and 3 April and also gave the Attorney-General a copy of the same transcripts. Passages from those transcripts were discussed and various interpretations of parts of the material were canvassed at that meeting. The Attorney-General also took the opportunity

to take the transcripts away 'and read them for the first time

in full that night.'

5.52 A suggestion was made in cross examination, on the basis of a memorandum prepared by Mr Barnett recounting his participation in the events of 10 and 11 May, to the effect that the Prime Minister had instructed the Attorney-General that the public release of the information in the Government's possession

should be put to Mr Combe as an ultimatum if he did not agree to

a statement indicating his acceptance of the Government's

position. However, after reviewing the whole of Mr Barnett's evidence as well as that of the Prime Minister, the Attorney General and Mr Enfield, I conclude that the tabling in Parliament of all the documentary material available to the Government was regarded only as a much less attractive

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alternative to obtaining Mr Combe's agreement to a statement that he understood and accepted the Government's position. No doubt it was considered that Mr Combe would also see it in that

light, and would partly be induced by that view to co-operate with the Government. However, I am satisfied that it was not put to Senator Evans that he should raise that alternative course i n any way as a threat to compel Mr Combe's co-operation.

5.53 In the meantime, in the afternoon of 10 May, Mr Combe had

telephoned Mr Hogg and told him that his statement was ready and would be brought around to Mr Hogg by a friend. Later Mr Hogg telephoned Mr Combe and was told by his father-in-law that Mr Combe had decided to take the statement first to his

solicitor. Later still on that afternoon, Mr Combe telephoned Mr Hogg and indicated that the statement required redrafting and

that would be done overnight.

5.54 Early on the morning of 11 May, the Prime Minister met with his senior advisers including Mr Hogg. Attention was then given to ensuring that the judicial review of Australia's security and intelligence agencies which had already been put in

train (see 5.44), should look to the establishment of some mechanism to prevent, in the future, a person in Mr Combe's position being left without a right to some official review of a security assessment with adverse consequences for that person.

It was also agreed that Mr Hogg should contact Mr Combe as soon as possible to bring about a meeting between him, the Attorney-General and the Director-General ot Security.

5.55 Mr Hogg then telephoned Mr Combe, explained what had happened since their conversations of the previous afternoon, and requested him to speed up the preparation of his statement. It was then arranged that Mr Combe should pick up Mr Hogg

outside the Department of Trade and be taken by him to the Attorney-General's office. On the way there, Mr Hogg outlined the form of the proposed meeting and indicated that its purpose was essentially one of counselling. Mr Hogg stressed that there

145

were no strings attached to Mr Combe's attendance at the meeting and that 'if he wanted to abort it half way through at any

stage, he could do so with no detrimental effect to himself.' Mr Hogg also touched on the possible damage to Mr Combe of

having his activities and practice discussed in public. He indicated that it was open to Mr Combe to have a lawyer present at any stage, but that he, Hogg, thought it preferable for Mr Combe to meet alone with the Attorney and the

Director-General in the first instance. Finally, Mr Hogg counselled Mr Combe to be completely frank in what he disclosed during the discussion.

Meetings on 11 May between Combe and the Attorney-General 5.56 Mr Combe arrived at the Attorney-General's office at about 10.00 a.m. on 11 May. He there spoke for some time alone with the Attorney before they were joined by Mr Barnett. At the ou t set of the interview, Mr Combe presented the Attorney with a

typewritten statement of some 40 pages which had attached to it the documents indicated in 5.38. The statement, without those attachments, is reproduced as Appendix F. The Attorney-General quickly perused the statement making notes and turning down

corners of particular pages as he did so. He noted that Mr Combe's account differed from the information provided by

ASIO in asserting that Mr Combe himself had paid his wife's fare

to the Soviet Union. That was verified orally by Mr Combe, and the Attorney-General had it confirmed by ASIO that it had been mistaken about that matter. The Attorney also picked out other inconsistencies between Mr Combe's statement and the ASIO case, and noted, as well, what appeared to be omissions from Mr Combe's statement. After his perusal of the statement he

raised those matters in order with Mr Combe. In particular, Mr Combe vehemently denied any suggestion that, by undertaking

on 3 April to provide Mr Ivanov with documents, he proposed to supply anything other than clippings from newspapers and magazines. The Attorney then drew Mr Combe's attention to the failure in the statement to recount the full effect of the warning given by Mr Ivanov on 3 April, and received the response

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to which I have referred to in 4.83. In general, Mr Combe

stressed to the Attorney that he had at all times been in control of his relationship with Mr Ivanov and that he could not really be regarded as having been compromised in any way.

5.57 When Mr Barnett was introduced to the interview, he spent 45 minutes or so putting to Mr Combe parts of the evidence whi ch

ASIO earlier had laid before NISC. That included reading of

extracts from the transcripts of 4 March and 3 April. During part of that time, the Attorney-General was absent from the room. The resume given by Mr Barnett to Mr Combe touched on the identification of Mr Ivanov as a KGB officer, the arrangements

for Mr Combe's visit to Moscow, and what was known of Mr Combe's activities during that visit. Mr Barnett then came to the extracts from the transcripts. Mr Combe, during the reading of those transcripts, pointed out that it was. quite natural f o r him

to discuss political matters with anybody with whom he carne into contact, that he was only interested in trade matters, and had no intention of being 'sucked in' as a Soviet spy. He

acknowledged that, in the light of ASIO's knowledge, Mr Barnett had been correct in taking the matter to the Prime Ministe r. Mr Combe also indicated that he had intended to raise with the

Minister for Foreign Affairs and the Minister for Trade the matters which he had been discussing with Mr Ivanov.

5.58 Senator Evans, for part of the time during which he was absent from Mr Barnett's presentation, had occupied himself in making some notes of the points which the Government was concerned should be made in any statement which might be agreed with Mr Combe. After he returned, he maintained to Mr Combe, in Mr Barnett's absence, that the Government felt quite justified

both in its expulsion of Mr Ivanov and in dealing as it had with

Mr Combe. He commented on the undesirable consequences of the

whole of the material being placed on the public record, and adverted to the good prospects of success for Mr Combe if he were to sue for libel in respect of the 'Daily Mirror' article. He also pointed out that the decision that Mr Combe should be

l47

denied access to Ministers had been adopted by Ministers who were unaware of the national security implications and who were influenced by considerations related purely to Mr Combe's a ctivities as a lobbyist. Mr Combe's response was to indicate

that he accepted that he and the Government each had a problem which could best be resolved by issuing an agreed statement containing certain points outlined by Senator Evans. They were that Mr Combe did have a relationship with Mr Ivanov which had c a used the Government serious concern on national security

gro und s, that it was not anything which had given rise to c riminal liability, and that Mr Combe was not a spy, but the

nature of the relationship was such that Mr Combe understood and

acce pted that the Government was entitled to act as it did in

rel a tion to him. On the basis of Mr Combe's acceptance of the gene ral tenor of that outline, Senator Evans prepared a first d raft of an agreed statement which was given to Mr Combe to take

to his solicitor, as Senator Evans left shortly before noon for q uestion time in the Senate.

5.59 At about 1.30 p.m. on 11 May, Mr Combe returned to Senator Evans' office with his solicitor, Mr Higgins. The Attorney-General summarised for Mr Higgins' benefit, apparently without any intervention by Mr Combe, what had occured that morning and what had been disclosed to Mr Combe of the case presented by ASIO to NISC. The draft statement, which earlier had been provided to Mr Combe, was then worked through and

various amendments were suggested by Mr Combe or Mr Higgins, but not all were accepted by the Attorney-General. One amendment recalled by Senator Evans, to which he did agree, was to insert after the word 'compromised' occurring in some expression

suggesting that Mr Combe had been compromised by the course of events, the phrase 'or appeared to have been compromised.' One recital suggested by Mr Combe or Mr Higgins which Senator Evans rejected involved, in effect, a denial by the Prime Minister that Mr Combe's relationship with Mr Ivanov was a security risk.

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The agreed statement 5.60 The process of settling the form of the agreed state me n t proceeded on the basis that once such a statement had been made by the Prime Minister there would be no further public comm e n t by way of qualification, gloss or supplement, by either the

Government or Mr Combe, on the matters covered by the statement , except that Mr Combe could make a public announcement, in a f o r m to be approved first by the Attorney-General, of his intentio n to sue for libel in respect of the 'Daily Mirror' article.

5.61 After the Attorney-General, Mr Combe and Mr Higgins had agreed on a form of statement the draft was taken by the

Attorney-General to the Prime Minister's office. It there had added to it some introductory and concluding paragraphs trac ing the events leading up to the decision to make the statement, the considerations which underlay the Government's actions in

respect of Mr Ivanov and Mr Combe, and the determination of the Government to act in defence of the national interest withou t infringing civil liberties. At about 4.00 p.m., the Attorney-General returned to his office and showed the draft

statement with those additions to Mr Combe and Mr Higgins. Mr Combe expressed some reservations about the need for what h e

regarded as rhetorical flourishes in the introductory and concluding paragraphs which had been added in the Prime Minister's office. However, those objections were not persisted in when it was pointed out by Senator Evans that he was 'sure

that the Prime Minister would want to insist on that kind of language going in.' One further amendment was proposed by Mr Higgins to the effect that before the indication that

Mr Combe 'understands and accepts the Government's decision'

there should be inserted the phrase 'having regard to all the circumstances as they stood at the time the Government made i t s decision'. That further amendment was conveyed by telephone to the Prime Minister who agreed to incorporate it in his statement

which was made to the House of Representatives later that afternoon. The text of that statement as reported at page 450 o f Hansard for 11 May 1983 is reproduced as Appendix G.

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The agreement and the circumstances in which it was reached 5.62 There were very few discrepancies between the evidence of Senator Evans, Mr Combe and Mr Higgins on the substance of the agreement pursuant to which the Prime Minister's statement was made. Accordingly, I have no hesitation in concluding that the

substance of the agreement was as set out in 5.60. I also

conclude that Mr Combe's participation in the agreement was made after a full assessment of its advantages and disadvantages for himself, without the application of any undue pressure or the offer of any improper inducement by the Government. Of course,

Senator Evans was aware from the discussions of the previous evening that the alternative for the Government, if an agreement was not reached, was to table in Parliament all the documentary material which it possessed including the transcripts of 4 March and 3 April. It is clear that he fully and forcibly urged on

Mr Combe the detrimental consequences which such a course could

have for him, but, I am unable to conclude that anything which Senator Evans did was calculated to, or did, overbear Mr Combe's will when he came to conclude the agreement.

5.63 Some time was spent during the course of the hearing in

investigating whether, on 11 May, Senator Evans conveyed to Mr Combe, and later to Mr Higgins, that Mr Combe had not been

under surveillance by ASIO and had not had his telephone intercepted at any time, rather than (as was the fact) at any

time before 22 April. Although Mr Combe and Mr Higgins may have put the former interpretation on the Attorney's words, I am satisfied that his references to that subject were precisely expressed so as to confine them, properly understood, to surveillance and telephonic interception before 22 April. Although such precision may have been disingenuous, it was adopted to give effect to the concern expressed during the meetings on the evening of 10 May that there should be conveyed

to Mr Combe only so much information about ASIO's techniques and activities as was necessary to procure Mr Combe's understanding and acceptance of the Government's decision. In any event, any misunderstanding by Mr Combe or Mr Higgins did not influence in

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any way Mr Combe's decision to join in the a greement pursuant to which the Prime Minister's statement was made.

5 . 64 It is true that Mr Combe claimed that he wa s ' t otally

devoid of fight' on the afterno on of ll Ma y, and that he was in

a s tate of acute trauma, profoundly affected by a sense o f

s eparation from his family. Distressing as the circumstances

undoubtedly were for him, I am not able to conclude that h e did

no t fully and freely enter into the agreement which was reached

with Mr Higgi n s' advice and assistance. It was, I consider, his

perceptions of the benefits of the agreement in ensuring that 'honour was preserved for both sides' and in other wa y s f o r h imself, which led him to telephone his wife 'with some sen s e of

p rofound relief and absurd belief that the matter could be

reso lved.' It was only after the Prime Minister made the agr eed s tatement that Mr Combe came to question the view that the

agreement, on balance, was in his own best interests.

5 .65 I will indicate in 6.38 my conclusion that any desir e on

t h e part of the Government to afford to Mr Combe some s ort of

o pportunity to be heard was overtaken by the events of 9 and 10

May , and that the discussions between the Attorney-Genera l and

Mr Combe on ll May were understood by both sides to be intended

t o arriv e at an agreed basis for taking the affair once and for

a ll out of the area of public speculation and political

controversy. Seen against that background, I conclude tha t the a ction of the Government in acquainting Mr Combe, as it d i d ,

with the information provided to NISC by ASIO was appropriate . The atmosphere of the interviews between Mr Combe a nd the Attorney-General and between Mr Combe and Mr Barnett, and o f the a f t ernoon meeting between the Attorney-General, Mr Combe a nd

Mr Higgins were as free from tension and pressure as they

r easonably could have been, having regard to the circumsta nces

a n d the time constraints und er which the parties were required

t o act. Indeed, Mr Combe accepted that any statement which might

b e made on ll May had to be finalised on that day, and, as he

said, he 'saw the Attorney as acting in good faith and I h o ped

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that it would be possible, which would end the agony for me and at the same time minimise the damage to the Government.' Nor d i d he have any complaint of Mr Barnett's presentation to him, conceding that they parted on amicable terms and accepting that Mr Barnett had been 'seeking to inform me to the best of his

brief of what it was that I was supposed to have done.'

5.66 In ideal conditions, where attention was being given t o affording Mr Combe an opportunity to be heard, some outline o f the case which he was required to meet might have been provid e d to him before he was called on to furnish the Government with his written statement. Although originally sought in the context

o f providing Mr Combe an opportunity to be heard, his stateme n t

was received only on the basis that it would provide a useful introduction to a form of counselling intended to lead, if possible, to agreement on the form of statement to be made by the Prime Minister. There is no evidence to suggest that its production was contrived to entrap Mr Combe into making unguarded admissions or volunteering information for subsequent

use to his detriment. Indeed, I consider that the interviews and meetings of 11 May would have proceeded in much the same way , and have reached the same conclusion, even if no written statement had been provided by Mr Combe.

5.67 It follows from what I have set out in 5.65 and 5.66 that

Mr Combe was properly acquainted with the information which had

been presented to NISC. I also consider that he was given a proper opportunity, in the circumstances, to present his version, both by means of the written statement and orally, of his association with Soviet officials. That is not to say that

some further opportunity to supplement that material should not have been given to him had the meetings and interviews of 1 1 Ma y been intended to afford him an opportunity to be heard. Howe v e r, as I have already concluded, the combination of external pressures meant that the process which occurred on 11 May was not seen by either side as forming part of any sort of a

hearing. The opportunity given to Mr Combe to present his

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version has to be assessed against the change in the use to

which that version was intended to be put. That use was to enable him to put everything which might lead to the agr eed statement reflecting his own position in a light which was as favourable to him as he could reasonably expect. I consider that

the opportunity given to him was adequate to achieve that purpose.

Did the Government or Combe repudiate the agreement of 11 May? 5.68 It is clear that Mr Combe, during the evening of 11 May,

d id comment on the matters covered by the Prime Minister's

statement in circumstances which made it highly likely that his comments would be widely published. Mr . Combe acknowledged that, after reaching the agreement with the Attorney-General, he had conversations with his wife and some journalists, and as a

result of statements made to him during those conversations he became dissatisfied with the agreement. He claimed that between 7.30 p.m. and 8.00 p.m. on that nignt 'I became aware of the

fact that I believed the agreement had been breached'. He also agreed under cross-examination by Counsel for the Government , that on the night of 11 May he had a conversation with a group

of journalists at ' Charlies Restaurant' which included Miss Michelle Grattan and Mr Ken Haley of the Melbourne 'Age' a n d Mr Richard Carleton of the ABC current affairs programme

'Nationwide'. Mr Combe further agreed that he had 'backgrounded' a number of journalists earlier that night at about 8.30 p.m. It

is not clear which journalists received that 'backgrounding', but Mr Combe agreed, again under cross-examination by Counsel for the Government, that he gave his side of the background

concerning his relationship with Mr Ivanov to Mr Richard Carleton at about midnight on 11 May. In the course of doing so, he told Mr Carleton that he had been a guest at Mr Ivanov's

house, that conversations there had been recorded, and that earlier on 11 May he, Combe, had been confronted by the Government with parts of the transcripts of those conversations . Mr Combe also gave interviews to television journalists,

including Mr Laurie Oakes of Channel 10, as he went to his car

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on 12 May to travel to his week-end horne on the south coast of

New South Wales. Perhaps the clearest example of 'backgrounding'

by Mr Combe was that which he afforded to Mr Gregory Hywood, a journalist employed by the 'Financial Review'. Mr Hywood's evidence was that Mr Combe made certain statements to him at about 7.00 p.m. on 11 May, on the basis of which he wrote this

passage in an article published in the 'Financial Review' of 12 May:

It is understood that Mr Combe's acceptance is based on information previously not know (sic) to him - on Mr Ivanov's KGB activities.

Sources close to Mr Combe said that while he accepts that Mr Ivanov might have been attempting to use him as a source, he was in no way compromised.

5.69 As indicated in 5.68, Mr Combe claimed that between 7.30 p.m. and 8 p.m. on 11 May he carne to believe that the

agreement had been repudiated by the Government. As I understood him, he believed that repudiation to have been constituted by 'backgrounding' of journalists by 'staff members', so he presumed, 'of the Government and probably the Prime Minister.' He was unable to recall the names of any particular journalists

who claimed to have been 'backgrounded' by the Government. In

the light of what he presumed had been done by members of the staff of the Government or the Prime Minister, Mr Combe said he concluded that it was appropriate that he should explain the significance of the words in the Prime Minister's statement

'having regard to the circumstances as they stood at the time' (see 'that I understood what the Government had done,

given what they had before them, but that I asserted my innocence and did not and could not ever understand the fact that I had been denied a hearing.' Mr Combe went on to say that

'I wanted the right to have my innocence asserted. I had been denied any trial', and that he wanted the words of the Prime Minister's statement 'to be interpreted in the way they were intended to be interpreted.' Mr Combe did refer to one

journalist by name, Mr Paul Kelly of the 'Sydney Morning Herald' as having told him on the night of 11 May that the embargo on

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his, Combe's, access to Ministers extended to direct pers onal contact with Ministers and senior members of their staff. However, he conceded to Counsel for the Government, that h is conversation with Mr Kelly occurred after 8.00 p.m. by whi ch

t ime he had already formed the belief that the Government h ad

repud iated the agreement.

5.70 Mr Combe accepted that his assertion of his innocence and hi s complaint that he had not been given a hearing was a f orm of

' bac k grounding' but as he indicated in response to a que s t i on

f r om me, he did not regard it as a breach on his part of t he

agreement once he believed the agreement to have been broken a lready by the Government. He went on to say that if the

agreement had not been broken by the Government he would have regarded such 'backgrounding' as a breach on his own part. He indicated to Counsel assisting the Commission that he di d n ot t hink he needed to wait for the morning newspapers of 12 May to

see how they reflected the 'backgrounding' which he pr e sume d to h a v e been undertaken on behalf of the Government. Nor d id it

occur to him to complain on the night of 11 May about tha t

' b ackgrounding' to Mr Hogg or any other representative of the

Go v ernment.

5. 71 Before assessing Mr Combe's conduct on the night of 11 May t o see whether it amounted to a repudiation of the agreeme n t

con cluded earlier that day with the Attorney-General, it is necessary to consider the different senses in which the wo r d

' backgrounding' may be used by journalists and others who deal

with them. In one sense, it is used to refer to the provisio n of

i nformation to a journalist only for the purpose of augmenting

his background knowledge of a particular topic, but on terms that the information is not to be incorporated in any material to be written by that journalist for publication in the nea r future. Indeed, as Mr Combe indicated , 'backgrounding' in t h is

f irst sense may be used in an endeavour to dissuade a journa l ist

f rom writing a particular story which the background informati on

s o provided shows to be inaccurate or incomplete. The second

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sense in which the expression is used is to denote the provision of information to a journalist with the intention that it should be incorporated in an article shortly to be published by that journalist, but without attribution of the source of the

information. It is clear that it was in this second sense that

the word was used in each of the passages from the evidence which I have summarised in 5.68 to 5.70.

5.72 As indicated in 5.70, Mr Combe unequivocally accepted that the 'backgrounding' in which he engaged on the night of ll May was a breach of his part of the agreement unless it had been excused by some earlier breach by the Government. I consider

that no other view could be taken having regard to what I have found in 5.60 and 5.62 was the agreement, and to what was

involved in 'backgrounding' in the second sense, described in 5.71, in which Mr Combe used and understood it. Furthermore, it is clear that the 'backgrounding', however it occurred, effectively frustrated the purpose of the agreement of ll May which, as I have noted in 5.65, was to allow public speculation

and controversy about Mr Combe's relationship with Mr Ivanov, and the Government's actions in respect of it, gradually to die down in the face of continued refusal by the major participants

to comment after the Prime Minister had made the agreed statement. At some time between 8.30 p.m. and 9.00 p.m. on the evening of ll May, Mr Richard Carleton was recorded as saying in

that night's edition of 'Nationwide', after recounting certain parts of the agreed statement by the Prime Minister, 'Unfathomably Mr Combe has said he understands and accepts. Well maybe it is not unfathomable though. Mr Combe has told some of his friends here in Canberra tonight he has a wife and kids and he's got to live in this town.' Articles in the daily Press

which appeared on the next morning, 12 May, including the 'Sydney Morning Herald' the Melbourne 'Age' and the 'Canberra Times' equally clearly purported to be based on information which could only have come directly or indirectly from Mr Combe.

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5.73 It therefore remains only to consider whether there h ad been some comment on, or 'backgrounding' of, the Prime Minister's statement by or on behalf of the Government whi ch constituted a repudiation by it of the agreement of 11 Ma y . The

only evidence to suggest any such activity on behalf of the

Government was that given by Mr Kelly of the 'Sydney Morning

Herald', Mr Malone of the 'Financial Review', and Mr Geoffrey

Walsh, the Press Secretary to the Prime Minister.

5 .74 Mr Kelly in a written statement furnished to the

Commission, on which no Counsel sought to cross-examine hi m, s a id that after the Prime Minister's statement had been made , he

went to the Prime Minister's Press Office and there spo ke with e ither or both Mr Geoffrey Walsh and a Mr Colin Parkes. He was

t old that nothing could be said about the Prime Minister's

statement. After obtaining by telephone from Mr Combe his understanding of what was involved in the denial to him o f a ccess to Ministers, Mr Kelly spoke to the Attorney-Gener a l who

t o ld him that Mr Combe's access to Ministers would be more r e stricted than Mr Combe had indicated. Mr Kelly then tele phoned

Mr Walsh seeking to know 'what exactly is the degree of access

which Mr Combe as a lobbyist now has to the Government?' Mr Kelly was later advised by telephone by Senator Evans that ,

in effect, Mr Combe could not associate in his professional capacity with Ministers or senior Ministerial staff, but c o uld write letters, make appointments for his clients to see Ministers, and deal with the Public Service. That advice wa s

later confirmed either expressly or by implication in a t elephone call which Mr Kelly received from Mr Walsh.

5.75 I do not consider that any of the communications to

Mr Kelly described in 5.74 were made in breach of the agree ment

concluded between Senator Evans and Mr Combe. It is true tha t the Prime Minister's statement referred to 'the subsequent decision regarding Mr David Combe's association with the Government', to 'action relating to Mr Combe', and to Mr Comb e 's

understanding and acceptance of 'the Government's decision tha t

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Ministers not deal with him in his capacity as a consultant lobbyist.' However, it is clear that the Prime Minister was not concerned in that statement to spell out the effect of that decision. Accordingly, the access left to Mr Combe after the

decis ion was not a matter covered by the Prime Minister's statement. It was therefore open to both Mr Combe and the Government to comment as they saw fit on what Mr Combe could still do, or not do, in his capacity as a lobbyist. Indeed,

paragraph (c) of the NISC decision, No. 321 necessarily contemplated some further definition of what use could still be made of Mr Combe's consultancy services. Without such further

definition, that part of the decision would not have been workable. That both Mr Combe and the Government attempted to give such a definition to Mr Kelly on the evening of 11 May, does not indicate, in my opinion, any breach of the agreement.

5.76 Also in the evening of 11 May, Mr Malone questioned Mr Walsh about the contents of the Prime Minister's statement

saying something to the effect that 'people will still want to know what (Mr Combe) has done, what crime has he committed.'

Mr Malone's evidence was that Mr Walsh replied to this

effect: 'Well, look it has got to be serious enough for him to

accept this.' indicating the text of the Prime Minister's statement. Mr Walsh had no recollection of saying that to Mr Malone, and doubted whether he would have used phraseology of

that kind, but he was not prepared to deny having said something like that. Mr Malone conceded that he had commenced his discussion with Mr Walsh by indicating that he was not, himself, doing a story on the Prime Minister's statement. (As indicated

in 5.68, the coverage of the Prime Minister's statement and the background to it was undertaken for the 'Financial Review' by Mr Hywood.). Consequently, if, as I find likely, Mr Walsh did

say something to the effect attributed to him by Mr Malone, he was induced by the latter's disavowal of any intention to write

a story to depart from the routine response which he gave, on instructions, to other journalists that 'the Prime Minister's statement contains all that can be said on the matter'.

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5.77 It is clear from what I have just said, that Mr Wa lsh ' s

a uthority to make any public comment was expressly limited to

indicating that the Prime Minister's statement contained a ll that could be said on the matter. If Mr Walsh did make s o me public comment going beyond such an indication, he was a c t i ng outside his express authority. It is unnecessary for me to

consider whether Mr Walsh had any implied or ostensible a uthority, by reason of his appointment as Press Secretary to

the Prime Minister, because any statement made by him to Mr Malone was in the course of a private conversation. The e v i dence establishing the private nature of the conversation is suppor ted by the fact that Mr Malone did not publish anything said to hi m b y Mr Walsh. Whatever Mr Walsh said to Mr Malone was not made

with the expectation that it would be published, and wa s therefore not a 'public comment' on the Prime Minister's statement within the terms of the agreement referred to in 5. 60 .

Announcement of the Royal Commission 5 . 78 On 12 May the Prime Minister, the Attorney General and

some of their advisers discussed what had appeared in that morning's press, and Senator Evans made further contact with Mr Combe's solicitor. It was then decided by the Prime Minister, the Deputy Prime Minister and the Leader and Deputy Leader o f

the Government in the Senate that, in the Prime Minister's words, 'the whole issue of what had happened in regard to Ivanov/Combe and the actions of the Government' should be made a Term of Reference for the Royal Commission referred to in 5.44.

That decision was announced by the Prime Minister in an answer during Question Time in the House of Representatives on the afternoon of 12 May. Later that afternoon, the Prime Ministe r also announced the decision at a press conference.

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CHAPTER 6

MR COMBE'S OPPORTUNITY TO BE HEARD

6.1 On 21 April 1983 NISC decided that the Prime Minister should inform other Ministers that they should not make use of the consultancy services provided by Mr Combe, but without c omment on the relationship between him and Mr Ivanov. Mr Combe

was not given any opportunity to be heard before this decision was made. This gives rise to the important question whether he

should have been heard, either before the decision was made, or at any later time which, to avoid infringing Parliamentary privilege, should not be fixed by reference to any statement made in the Parliament.

6.2 Counsel assisting the Commission, Counsel for the Government and Counsel for Mr Combe made submissions in relation to this issue. In addition, a written submission was received from the Council for Civil Liberties (NSW) which, although it deals in part with other matters, is relevant to this issue. A

full copy of that submission constitutes Appendix H.

6.3 I shall deal first with the question whether Mr Combe had any legal right to an opportunity to be heard before the decision, or at any later time. The existence of the right relied upon by Mr Combe depends upon an application of the

important common law principle of natural justice that, in appropriate circumstances, a party who will be adversely affected by a decision must have an opportunity to be heard. 'The question whether the principles of natural justice must be applied, and if so what those principles require, depends on the

circumstances of each case': Salemi v. MacKellar (No. 2) (1977) 137 C.L.R. 396 at p.419 per Gibbs, J. Did the circumstances of the present case call, in law, for the application of the

principles?

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6 .4 It was long the accepted view that the principles o f

natural justice applied to proceedings only if they wer e of a judicia l or quasi-judicial nature. This view was given its quietus by the dec i sion of the House of Lords in Ridge v.

Baldwin (1964) A.C. 40. It is now clear that the obliga tion t o

observe the principles of natural justice may exist whethe r the authority is judicial or administrative: Bread Manufacturers of New South Wales v. Evans (1980-81) 56 A.L.J.R. 89 at p.94 p er

Gibbs, C.J. Furthermore it is not necessary for the person claiming the right to be heard to have a legal right, interest o r privilege which will be adversely affected by the dec i sion;

i t can be sufficient if he has what Lord Denning called, in a

phrase which has been accepted in Australia as well as in England, a 'legitimate expectation': Schmidt v. Secretary of

State for Home Affairs (1969) 2 Ch. 149 at p.l70; or a

'reasonable expectation ' , which may be adversely affected by the decision.

6.5 The law relating to the application of the principle is still developing. It has been discussed and applied by the High Court in recent years in a number of decisions:

Twist v. Randwick Municipal Council (1976) 136 C.L.R. 106 sareffii v. MacKellar (No. 2) (supra) Heatley v. Tasmanian Racing and Gaming Commission (1977) 137 C.L.R. 487

Forbes v. New South Wales Trotting Club Limited (1978-79 ) 143 C.L.R. 242 Bread Manufacturers of New South Wales v. Evans (supr a ) FAI Insurances Limited v. Winneke 388 .

These decisions were all concerned with the exercise of statutory powers but, as Ai ckin J. said in Heatley (supra at p.Sll):

They (the principles of natural justice) apply to the e xercise of governmental powers and particularly t o the exercise of statutory powers, and also to the powers of committees of clubs in respect of members.

6 .6 This statement of Aickin J. must be understood in the

context of the circumstances with which he was concerned. The

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principles have a wider application than would appear from his statement, although that wider application has little relevance for present purposes. The Courts have generally declined to a ttempt to state what the limits of the application of the

principles are. Three matters to be borne in mind in considering whether the principles should be applied are to be found in an o ften quoted statement in the judgment of the Privy Council in

Du rayappah v. Fernando (1967) 2 A.C. 337 at p.349:

Outside the well-known classes of cases, no general rule can be laid down as to the application of the general principle in addition to the language of the provision. In t h eir Lordships ' opinion, there are three matters which must

always be borne in mind when considering whether the principle should be applied or not. These three matters are: first, what is the nature of the property, the office held, status enjoyed or services to be performed by the complainant of injustice. Secondly, in what circumstances, or upon what occasions is the person claiming to be entitled

to exercise the measure of control entitled to intervene. Thirdly, when a right to intervene is proved, what sanctions in fact is the latter entitled to impose upon the other.

6.7 The principles have been applied to a wide range of cases outside the well-known cases. Thus they may be applied where a university has terminated or limited a student's right to continue his course on grounds other than academic grounds: Glynn v. Keele University (1971) 1 W.L.R. 487; but not where it has been terminated or limited solely on academic grounds: Jackson, Natural Justice, 2nd edn., p.l57. The principles have _ often been applied in the area of employment. Here many fine distinctions are drawn, and if there is nothing more than a contract of employment, or the holding of an office at pleasure,

the employment or office can be terminated without reasons being given, or an opportunity to be heard being provided 'there is no element of public employment or service, no support by statute, nothing in the nature of an office or a status which is capable

of protection': Mallock v. Aberdeen Corporation: (1971) 1 W.L.R. 1578 at p.l596 per Lord Wilberforce.

6.8 Neither the many cases in the area outside that described by Aickin J., nor the statement of the relevant considerations

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in Durayappah v. Fernando throw much more light on the p resent case than Heatley's case. They show first that if all other conditions had been satisfied, Mr Combe, because of the potential effect of the NISC decision on his business, would

have been entitled to an opportunity to be heard. They also emphasise that the power, the exercise of which calls f o r the gi v ing of that opportunity, must be a power, der i ved fr om a

statute or something analogous to a statute , which the generality of mankind does not have. They also show tha t the principle will not be applied merely because the particular cas e contains elements falling within each of the considera tions described in Durayappah v. Fernando.

6 .9 I have not been referred to and I have not found any

decision where the circumstances were similar or eve n a n a l ogous to those confronting NISC on 21 April. The FAI Insurances Case dealt with the exercise of a power by the Victorian

Governor-in-Council, but that was a statutory power. Since NISC was part of the Government, the question to be decided is what

falls within the concept of a 'governmental power' as that expression was used by Aickin J. Governmental powers include statutory powers, and what are described as prerogative p owers . Blackstone in his Commentaries, Volume 1, p.239, (1829 e d i tion) ,

described the 'prerogative' as 'that special pre-eminence , which the king hath, over and above all other persons, and out o f the

ordinary course of the common law, in right of his regal dignity', and said that the term 'can only be applied to t h ose rights and capacities which the king enjoys alone, in contradistinction to others, and not to those which he enjoys in

common with any of his subjects'. This is an old statement , but

it still correctly describes the prerogative : Halsbury, La ws of England, 4th edn. Vol. 8, p.583, para. 889. In appropriate cases, decisions by Cabinet or by a Cabinet committee, whi ch will be made effective by the exercise of prerogative power, may

attract the application of the principles of natural justice , if they are directed to and will adversely affect the rights, interests, privileges or legitimate or reasonable expectations

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o f an identified individual. Can the principles apply to

decisions of Cabinet or of Cabinet committees which do not

invo lve the exercise of statutory or of prerogative powers? The decisions on cases outside those described by Aickin J. would

suggest not. The only indication of the meaning of the e xpression 'governmental powers'used by Aickin J., apart from

tha t d erived from the words themselves, is given in t h is

s tatement in Heatley's Case (supra at p.508):

The concept of a 'reasonable expectation' of some entitlement, i.e. an expectation that some form of right or liberty will be available, or will not be taken away without a n opportunity for the subject to put his case to the

relevant governmental authority armed with the compulsory power in question is a relatively recent development.

Th e only power with which a governmental authority can be

' a rmed'in any relevant sense, is a statutory or a prerogativ e

power, and, in my opinion, if the exercise of a power by a

gov ernmental authority is to attract the principles of natural justice, the power must be one of these kinds. The word 'statutory' is used in its widest sense, and includes powers derived from rules, regulations and other forms of delegated legislation.

6.10 In Heatley's Case the Tasmanian Racing and Gaming Act 1952, empowered the Tasmanian Racing and Gaming Commission, by notice in writing, to 'require a person to refrain from entering any racecource or racecourses specified in the notice, or from racecourses generally, on any specified day or days, or generally, while the notice is in force'. The Commission was not the owner of racecourses, and its power derived solely from the provisions of the statute. Aickin J., as did the majority of the court, held that the expectation of members of the public that

they would continue to receive the customary permission to go o n to racecourses (or football grounds or similar places) upon payment of a stated fee to the racecourse owner is a legitimate or reasonable expectation for the purposes of the appli c ation of

the principles of natural justice. He pointed out that the owner

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of a racecourse, whether a club or some other person, may lawfully refuse admission to any person at all, save a member, and subsequently may effectively rescind or terminate the licence granted and eject the person or cause him to be ejected without providing reasons, giving the person concerned any opportunity of making representations, or providing any kind of hearing. 'The principles of natural justice do not apply to t he

exercise of private rights in respect of property': Heatley's Case (supra at p.511). As appears from Forbes' Case (supra) a statute may give a racecourse owner special statutory powers which supersede his rights as owner, and he may thus be

subjected to the principles of natural justice. However in Heatley's Case, the Commission had no more than a statutory power. This confirms my conclusion that if a decision of a Cabinet or a Cabinet committee adversely affecting a parti c ula r

person is to attract the application of the principles of natural justice, the decision must at least be an exercise of a statutory or of a prerogative power. The exercise of a powe r based on some general right, such as the ownership of land, will

not attract the application of those principles. Perhaps an analogy can be drawn from the well-established principle that statutory conditions attached to the taking of proceedings against governmental bodies do not apply in respect of acts which any person can do, and which require no statutory

authorisation, as, e.g., driving a vehicle along a road: Bo a r d of Fire Commissioners of New South Wales v. Ardouin (1961) 109 C.L.R. 105: Hudson v. Venderheld (1968) 118 C.L.R. 171.

6.11 If an administrative decision attracts the application of the principles of natural justice, the nature of the hearing, and how much the person affected must be told, vary with the circumstances. In special circumstances an oral hearing may b e

required but often the receipt of written submissions will be sufficient. Generally the person to be heard must be told wh a t he has to answer, and the fact that he cannot be told may show

that he has no right to be heard: Salemi v. MacKellar No. 2

(supra at p.421 per Gibbs J.). If some kind of hearing is

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required and urgent action is needed before an opportunity can be given for a hearing, an available course of action is to make an interim decision and review the position when the opportunity arises.

6 .12 It does not follow from what I have said that every

exercis e by a Cabinet or Cabinet committee of a statutory or prerogative power will attract the application of the principles of natural justice and call for the giving of a hearing to a

person against whom a decision is directed. Thus it has been held that the principles do not apply where decisions are based on considerations of national security: v. Secretary of

State for Horne Affairs ex parte Hosenball (1977) 1 W.L.R. 7667 Salemi v. MacKellar No. 2 (supra at p.421), or to the exercise of the royal prerogative of mercy: de Freitas v. Benny (1976) A.C. 239. Again, the complainant may have no relevant rights,

interest, privilege or legitimate expectation on which to base h is claim.

6.13 Applying these principles to the decision of NISC concerning the use of Mr Combe's services, I have concluded that the Committee was not required by law to give a hearing to Mr Combe, either before it made its decision, or at any time

thereafter. The power that the Committee was exercising was neither a statutory power nor a prerogative power. It was a decision which could be made by any group of citizens whether they would allow a person who was a consultant and lobbyis t to dea l with them in that capacity. The fact that the decision was made for reasons of national security does not change its

essential nature. Indeed, presuming that the principles of natural justice were otherwise applicable, the presence of considerations of national security might have rendered them inapplicable to this decision. Likewise, again presuming that the principles were applicable, the decision that Mr Combe should be placed under surveillance by ASIO, of itself, apart

from any other consideration, might have absolved NISC from any legal obligation to hear Mr Combe before that surveillance was

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terminated and its results known. However, quite apart from these national security considerations, the decision of NISC was o f a kind that does not attract the application of the

principles of natural justice.

6 .14 It is convenient to deal, in this Chapter, with a

submission made on behalf of Mr Combe, which goes, not to t he right to be heard in the sense in which I have been dealing with

i t , but to the validity of the decision. This submission i s that

t he decision contravened the provisions of s.39 of the

Australian Security Intelligence Organization Act 1979, a n d was inva lid .

6 .15 Sub-section 39(1) provides that a Commonwealth agency

(defined to mean a Minister or an authority of the Commonw eal th )

shall not take 'prescribed administrative action' on the basis o f a ny communication in relation to a person made by ASIO not

a mo unting t o a security assessment. Sub-section 39(2) allo ws the

taking o f action of a temporary nature where, on the basis o f a

preliminary communication. by ASIO, the Commonwealth agenc y is satisfied that the requirements of security make it necessa r y to t ake that a ction as a matter of urgency pending the furnishi ng

o f a n assessment by ASIO. The NISC decision was not taken

pend ing the furnishing of an assessment by ASIO, and

c onsequently this sub-section had no application. If the

d ecision fell within the provisions of sub-s.39(l), it was

invalid .

6 .16 'Security' is defined in s.4 of the Act to mean:

(a) the protection of, and of the people of, the

Commonwealth and the several States and Territori e s fr o m­ (i)

( i i )

(iii) (iv) active measures of foreign or

( v) terror ism, whether directed from, or committed within, Austra lia o r and

(b) the carrying out of Australia's responsibilities to any foreign country in relation to a matter mentioned in a ny

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of the sub-paragraphs of paragraph (a).

'Active measures of foreign intervention' is defined to mean 'clandestine or deceptive action taken by or on behalf of a foreign power to promote the interests of that power'.

6 .17 'Prescribed administrative action' is defined in s.35 of

the Act to mean:

6.18

(a) action that relates to or affects access by a person to

any information or place access to which is controlled or limited on security grounds, including action affecting the occupancy of any office or position under the Commonwealth or an authority of the Commonwealth or

under a State or an authority of a State, or in the

service of a Commonwealth contractor, the occupant of which has or may have any such access7 (b) the exercise of any power, or the performance of any function, in relation to a person under the Migration

Act 1958 or the regulations under that Act7 or (c) the exercise of any power, or the performance of any function, in relation to a person under the Australian Citizenship Act 1948, the Passports Act 1938 or the

regulations under either of those Acts.

'Security assessment' or 'assessment' is defined in s.35 to mean:

•.• a statement in writing furnished by the Organization to a Commonwealth agency expressing any recommendation, opinion or advice on, or otherwise referring to, the question whether it would be consistent with the requirements of security for prescribed administrative action to be taken in respect of a person or the question whether the requirements of security make it necessary or desirable for prescribed administrative action to be taken in respect of a person, and includes any qualification or comment expressed in connection with any such recommendation, opinion or advice.

6.19 A security assessment is thus a statement in writing furnished by ASIO to a Commonwealth agency expressing any recommendation, opinion or advice on, or otherwise referring to, the taking of 'prescribed administrative action' having regard to the requirements of security. It is not in question that no such assessment was asked for, or was provided, in the present case.

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6.20 The submission turns on whether the decision of NISC wa s 'prescribed administrative action' within the meaning of the Act. The decision did not refer in terms either to any information or to any place. Access to Ministers is not

controlled or limited on security grounds, nor is access t o members of their staffs so controlled or limited. If the ma tte r went no further there was no room for the application of s.3 9 .

6.21 The submission made on Mr Combe's behalf is that, if the r e was no information or place, access to which was controlled or

limited on security grounds before the decision of NISC on 21 April, access to some information or place became so contro lled or limited by that decision itself. The information, acce ss t o which was controlled or limited on security grounds by the

decision, is said to be information possessed by Ministers . The places to which access is said to have been controlled or limited on those grounds were Ministers' offices, and, presumably, any place where a Minister happened to be at a

relevant time. It is submitted that by its decision NISC bot h affected Mr Combe's access to this information and to thes e places, and controlled or limited access to that information o r to those places on security grounds.

6.22 In my opinion, there is no substance in this submission. As directed to 'places', that lack of substance is obvious. Thus

Mr Combe, in his role as a lobbyist, spoke to Mr Bowen, the

Minister for Trade, on one occasion in King's Hall at Parliament House. To suggest that the NISC decision either referred to, o r affected, Mr Combe's access to King's Hall, or controlled or limited access to King's Hall on national security or any

grounds, is, in my opinion, plainly wrong. It did not control o r limit access to any place, on national security grounds with i n the meaning of the definition, or on any other grounds. Nor did the decision control or limit access to any information on

security or other grounds. However information was classified before the decision, it was classified in exactly the same wa y after the decision. If a Minister had seen Mr Combe after the

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decision, (as he could have done consistently with the decision if Mr Combe had not been acting as a consultant or lobbyist), he would have been controlled or limited in giving information to Mr Combe in exactly the same way as he was before the decision

was taken.

6.23 The NISC decision dealt only with the use of Mr Combe's consultancy services. It did not otherwise touch upon personal contact between Ministers and Mr Combe, and this limitation of the decision was intentional and not accidental. It was not a decision as to his access to information or to places; it was

limited to his dealings with Ministers in the course of his consultancy business. No doubt it was hoped that, as a result, Mr Combe's opportunities to pick up information or to influence

Ministers might be diminished, but that does not bring the decision within the definition.

6.24 The construction which I have adopted is supported by a consideration of the system of security assessments which is the basis of the relevant Part of the Act. Before ASIO can give a security assessment, it must know, amongst other things, the kind of information or place to which access might be given to

the person in question. With that knowledge it would proceed t o consider what advice it should give to the Commonwealth agency. If the information is only confidential, a lower standard of security would be applied than if the information were top secret. It may be that access by the person in question to a

whole range of classified information is involved. If that were so, ASIO would have to frame its advice accordingly. The structure of the Part assumes an existing control or limitation of access on security grounds before the taking of 'prescribed administrative action'.

6.25 There are well established systems of controlling or limiting, on security grounds, access to information and to places. Information may be classified as confidential, secret or top secret, and in various other ways, and places can be

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categorised in various ways. In my opinion, it is to t h i s

p o sition that the definition is directed. 'Prescribed

administrative action' is action which relates to or affects access by a person to any information or place which has been d ealt with in some way, so that it can be said that access to it

is controlled or limited on security grounds. Such actio n includes the appointment of a person to a position which will give him such controlled or limited access.

6. 26 In my opinion, sub-s.39(1) had no application to the NISC decision, and, accordingly, that decision was not invalidated by r eason of its provisions.

6. 27 Counsel for the Government submitted that the question whether Mr Combe should have been given an opportunity t o be

h eard should be answered in the negative if I conclude t h at

Mr Combe had no legal right to be given that opportunity . I n my

opinion, the question whether Mr Combe should have been a f forde d

an opportunity to be heard by the Government should not b e answered solely by reference to legal rights or obligatio ns. Even though there is no legal right or obligation, ordina r y fairness may, in a particular case, make it appropriate t o have

some kind of hearing. Thus, even though the owner of a f oo t ball

ground who proposes to bar somebody from entry because of alleged past behaviour, although not required by law t o give to t hat person reasons for the action or any hearing, may

n ever t heless, in some circumstances, feel it appropriate to give a hearing.

6 . 28 Support for such an approach is to be found in judgments

d iscussing cases in which there was no legal right to be heard .

Thus in Ridge v. Baldwin (1964) A. C. 40 at p.66 where a Chi ef

Cons t able of a Borough Police Force had been dismissed, Lo r d

Re i d said:

I fully accept that where an office is simply held at pleasure, the person having power of dismissal cannot b e bound to disclose his reasons. No doubt he would in many

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cases tell the officer and hear his explanation before d e c iding to dismiss him.

In Mallo ch v. Aberdeen Corporation, (supra), p.l589, Lord Morris pointed out that:

it might have been preferable if he, (the dismissed e mployee) had been heard.

Thes e statements reflect the view that, although a person may not be bound to hear another before he makes a decision which wi l l adversely effect that other, it may be appropriate, in

commo n fairness, that he should do so.

6 . 29 The paramount interest to which regard should be had by

Cab i net and Cabinet committees is the national interest, but

subj e c t to this paramount requirement and the pressures of time, me mbers of Cabinet and Cabinet committees are singularly well

p l aced to regulate their own conduct, particularly when what

they a re doing is not a 'governmental' or statutory act. Mo r e over any action which they take concerning an individual may

g r avely affect the reputation and livelihood of that individual.

Cabinet actions attract more public notice than the actions of p rivate organisations, and can have a much more adverse effect

o n the individual concerned. Did then fairness, in the presumed absence of any legal requirement, make it appropriate for the Government to give Mr Combe an opportunity to be heard? I make

i t clear that I am dealing with a decision made by NISC on 21

April. I am not dealing with the decisions of 26 April and 2 May

which, even though brought to Cabinet and the Ministry because o f the decision of 21 April, were themselves made on grounds r e lated to Mr Combe's activities as a lobbyist. I am concerned

o nly with the decision of NISC made on national security grounds, and the questions are: should NISC have made it without hearing Mr Combe, and should NISC have reconsidered it at some later time after giving Mr Combe a hearing and what form should

any hearing have taken?

6.30 When he saw the Prime Minister on 20 April, the

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Director-General of Security, having said that ASIO's reso ur ces would not allow an effective surveillance of the relatio n s h ip of Mr Ivanov and Mr Combe should that relationship become

c landestine, proposed three courses of action. The first wa s th e

calling in and counselling of Mr Combe, the second was the quiet e xpulsion of Mr Ivanov, and the third was the expulsion of

Mr Ivanov with an attendant public announcement. These we r e

proposed as alternatives. The Prime Minister opposed the f ir s t , and in my opinion was correct in this attitude. This c o urse of action, it should be noted, was designed to terminate the relationship between Mr Ivanov and Mr Combe. It was not a

proposal for the application of the principles of natura l j ustice.

6.31 The Director-General proposed the same courses of a ctio n to NISC, and it came to the same conclusion as the Prime

Minister, that the proper course of action was to expel Mr Ivanov and publicly announce the expulsion. There wa s

discussion about calling in and counselling Mr Combe but tha t course was rejected. There was some, but not much, discussion about hearing Mr Combe before taking any decision which mi ght adversely affect him. It is somewhat difficult to distinguish b etween this discussion and that directed to calling in and

counselling Mr Combe. Certainly, it was not decided to hea r Mr Combe, and his side of the story was not heard before the

decision concerning the use by Ministers of his services a s a consultant was taken.

6.32 There were several considerations supporting the givin g o f a hearing to Mr Combe. He was well known to all the members o f

NISC, and there was nothing previously known to them which would cast doubt on his loyalty. They had only heard ASIO's side of t he story, and that story could have included, and did, in fa ct ,

include, some mistakes, whatever their significance might have b een. Although suggestions were made that Mr Combe's access to

Mi nisters was not a significant aspect of his business and that

cutting it off would have little effect upon him, I have no

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doubt that he would be adversely affected, certainly in his

b usiness, and, if the decision became publicly known, in his

repu t a tion. It may be that a lobbyist can get by without seeing

Ministers or senior members of their staffs, but an awareness by ac tual or potential clients that Mr Combe's access had been cut o ff would undoubtedly have led many people not to use his

services. In this regard, it will be remembered that the Chief Mi n ister of the Northern Territory had been advised by the

At t o rney General and the Director-General of Security that the Au s tralian Government regarded Mr Combe's association with

Mr I v anov as having serious implications for national security .

Had Mr Combe been given a hearing, any doubts concerning him

might have been dispelled. The Chief Minister of the Northern Te rrito ry could then have been advised accordingly.

6 .33 There were however, many countervailing considerations

justify ing a conclusion that Mr Combe should not have been heard be f ore that decision was taken. The Director-General of Security had put before the Committee material which justified the conclusions that Mr Combe's relationship with Mr Ivanov might be

a b o ut to become clandestine, and that there was a serious risk

t o national security. It was unknown where Mr Combe stood in the

ma tter. Mr Ivanov's actions had not been taken on his own initiative. The important acts were done on directions from Mo scow. The Director-General did not make any recommendations a b o ut Mr Combe's access to Ministers, but when asked by the

Prime Minister what action should be taken in respect of Mr Combe, he recommended surveillance to see whether there woul d

be any further approaches from members of the Soviet Embassy to Mr Combe, or from Mr Combe to members of the Soviet Embassy .

This recommendation by the Director-General and its acceptance by NISC were, in my opinion, entirely justified. Obviously such a recommendation could not have been made or accepted after Mr Combe had been given a hearing. If it was not possible to

give Mr Combe a hearing on the question of surveillance, it was no t possible to give him a hearing on any decision as to his

access to Ministers. In the circumstances, NISC could have made

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no decision at all, could have made an interim decision t o be

reviewed later in the light of subsequent events, or c o uld have made the decision which it did, leaving open the possib ility of

the matter being reviewed if and when circumstances ma de it possible to give Mr Combe a hearing.

6 .34 Quite apart from any political consideration, in my

o pinion, it would be entirely inappropriate, on nationa l

security grounds, for Ministers to have allowed continued access t o themselves in their position as Ministers by a person whom

the Cabinet national security committee, and the Attorney-General, had decided should be placed under surveillance by ASIO. Furthermore, when NISC made its decision , Mr Ivanov was still in the country, and he did not lea ve u n t i l

28 April. It could not be known what Mr Combe's reaction to

ASIO's allegations would be, and it was a real possibility that he might reveal to the public anything disclosed to him i n the course of a hearing. NISC could have made an interim decision , expressly reserving reconsideration of it until Mr Ivanov h ad

l eft the country and the results of the surveillance wer e known .

If consideration were then to be given to whether the d ecis i on should continue in force, Mr Combe could have been given an opportunity to be heard. With hindsight, it seems to me that this may have been an appropriate course for NISC to have taken .

The decision which it did take was not expressed to b e limited in the time for which it was' to operate, but it was asso ciated

with a decision as to surveillance, which, in due course, woul d lead to a report of the result of that surveillance. Putting to one side the decisions of Cabinet and the Ministry on 26 Apri l and 2 May respectively, it was open to NISC to reconsider the matter which was its province to decide, that is whether, the

surveillance having come to an end, there remained any nationa l security reasons for continuing in force the NISC decision affecting Mr Combe. NISC could have decided that there were n o such national security considerations without hearing Mr Combe

or, if some doubts remained, have given Mr Combe a hearing, a n d then have decided what course should be taken.

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6 . 35 It was submitted by Counsel for the Government, that the

decisio ns of 26 April and 2 May overtook the decision of NISC of 21 April, and that, after the surveillance of Mr Combe came to

an end on 4 May, there was no room for NISC to make any decision

relevant to the access of Mr Combe to Ministers. I do not agree

with this submission. The decisions of 26 April and 2 May were

decis ions made on grounds related to Mr Combe's activities as a lobbyist, and not o n national security grounds. The decision of NISC was made on national security grounds, and it was a matter

singularly within its province to decide whether there remained any na tional security grounds for allowing the decision to stand . If there were not, then, in my opinion, in fairness to

Mr Combe, it would have been appropriate for it to have so

decl a red . If its earlier decision had become public knowledge, the l a ter declaration should also have been made known to the publi c , at least if Mr Combe wished that to be done. Whether such a declaration would or should have led to Cabinet or the Mi n istry reconsidering its decision based on Mr Combe's

act i vities as a lobbyist is a matter on which I express no

opinion. Assuming that NISC were to make such a declaration, no s tigma would attach to Mr Combe merely because the decisions of

Cab i net and the Ministry remained in force.

6.36 The surveillance of Mr Combe terminated on 4 May, and ASIO r e p orted correctly that the surveillance had not revealed any

a t t empted contact by Soviet officials with Mr Combe, or by

Mr Combe with Soviet officials. The Director-General of Security

a nd other officers of ASIO expressed various opinions on the

q uestion whether any national security problems still remained,

b ut, in my opinion, there was a residual question. Mr Ivanov had

gon e , and with that departure the risk to national security was greatly diminished. However, it was still not known where Mr Combe stood in the matter. Although there had been no

approach by Soviet officials up to 4 May, a period of less than a f o rtnight, the future was still not clear. This would have

justified NISC in postponing any final decision on the matter until Mr Combe had been heard.

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6.37 After the NISC decision had been taken and conveyed to th e Cabinet and the Ministry, there were discussions between the Prime Minister and Mr Hogg. Mr Hogg then asked Mr Cameron t o suggest to Mr Combe that he provide the Government with a

written statement, setting out in full a description of hi s relationship with Soviet officials and, in particular, with Mr Ivanov. No particulars of any allegations against Mr Co mbe

were given to him, but, in his statement, he dealt with most of

the essence of the case that ASIO had put. Obviously, if n othing more had happened, it would have been appropriate as a matt e r of fairness for someone on behalf of NISC, probably the Attorney-General, to call in Mr Combe, ask him questions abo u t

what he had written, and put to him some particular matters which formed part of ASIO's case. It would not have been possible to put to Mr Combe all the matters raised by ASIO before NISC, but it would have been possible to put the main

thrust of the case, and to have received and considered Mr Combe's side of the story.

6.38 I have already indicated that only considerations of fairness and not any legal obligation operated to suggest t hat Mr Combe should have been given a hearing. What I have described

in 6.37, was, in my opinion, the first step by way of giving

such a hearing. It would not have been sufficient merely to h ave received Mr Combe's written statement, but there is nothing i n the evidence which suggests that the receipt of that stateme nt would have been the final step in hearing Mr Combe, or that

action of the kind which I have described in 6.37 would not h ave followed. However, events overtook the parties. The massive speculation in the media, and political action, culminating in questions in Parliament and an allegation in the press that an ALP official associated with Mr Ivanov was a spy, required

immediate action. The action which was taken, the conduct of interviews between Mr Barnett and Mr Combe, and between the Attorney-General and Mr Combe, did not amount to giving Mr Co mb e a hearing in the sense that I have been considering. The

interviews were discussions to see whether an agreement could be

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r eached between the Government and Mr Combe by which the matter

could be taken out of the public arena in a way satisfactory to both sides. The agreement that was reached and the events that f o llowed are discussed elsewhere and led to the establishment of

t hi s Royal Commission. Those events put an end to the process

wh i c h had been set in train for the hearing of Mr Combe's case.

6 .3 9 It has been submitted for Mr Combe that the Government

could have taken swifter action after 4 May to give him a h earing. It was further submitted that the failure to provide

him with any particulars of the case against him meant that what t ook place was, in no sense, any part of a hearing. Although it

i s no final answer, Mr Combe's written statement shows that he

knew the essence of the case. It would have been unfair if the

course which had been initiated had come to an end without Mr Combe being given more particulars about the case. However,

if, as I have found, what occurred was the first step in a

hearing, it follows that appropriate steps were in train after the termination of surveillance to give Mr Combe a hearing. Th e re is nothing in the evidence to show that if, after Mr Combe

had provided his statement to the Government, other events had no t intervened, the hearing would not have continued in a way

that satisfied the requirements of ordinary fairness.

6 .40 If, as I have concluded, neither the legal principles of

natural justice nor the provisions of the Australian Security Intelligence Organization Act 1979 applied to the NISC decision , some amendment to the law is required. It would be far better, and more just, if the course to be followed where an individual will , or may, be adversely affected by a decision taken upon advice by ASIO , not being a decision already covered by the provisions of the Act, were clearly defined. I have no doubt

that, in some cases, a person who will be adversely affected by a Cabinet decision based on national security grounds cannot b e given a hearing. It would not have been possible or reasonabl e, as Mr Combe agreed in evidence, to have given Mr Ivanov a hearing. Likewise, I have no doubt that there are other cases

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where a hearing would be . fair and just, either before any decision is taken, or after some interim decision has bee n

t a ken. There are formidable difficulties in formulating the

precise nature and extent of the right, but the time has come wh en these difficulties must be overcome. In the course o f my

general inquiry, I will give consideration to the establi s hm ent o f an independent body. Such a body would decide wheth er a

perso n likely to be a dversely affected by a decision ma de on

ASIO's a dvice should b e given a hearing, and what he sho ul d be

t o ld if a hearing is given. It would also be required t o

supervise and to report upon the hearing.

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CHAPTER 7

DISCLOSURES

Yo ung to Walsh on 21 April 1983

7.1 The Term of Reference under which I have conducted this i nquiry requires me to inquire into and in relation to 'all the

c irc umstances, including the actions of the Government

surrounding the expulsion' of Mr Ivanov and the involvement of Mr Combe in those circumstances. During the inquiry, I took the

v i e w that the phrase 'actions of the Government' required me to

examine the conduct of individual Ministers, particularly those wh o participated in the deliberations of NISC, in relation to

the various decisions which were made concerning Mr Ivanov and Mr Co mbe. This view appeared to be accepted by those parties wh o

we re represented at the hearings.

7.2 As a member of NISC, Mr Young participated in the making of

a number of decisions concerning both Mr Ivanov and Mr Combe on

21 April 1983. In that capacity, he also became privy to a

significant amount of sensitive information which bore upon matters related to national security. The evidence indicates that on three separate occasions he disclosed to persons who were not members of NISC, the Ministry or his staff, certain

information which had come into his possession at one or more o f the meetings of NISC on 20 and 21 April. Therefore, it becomes necessary for me to examine the evidence concerning these disclosures in order to determine the precise details of what Mr Young disclosed and whether such disclosures were improper or

unauthorised. I shall deal with them in the order in which they occurred chronologically.

7.3 Some time before 21 April, arrangements had been made for Mr Young and his wife to attend a dinner party at the Canberra

home of Dr and Mrs Stephen Fitzgerald. Dr and Mrs Fitzgerald ' s other dinner guests were Mr and Mrs Clyde Cameron and Mr and Mrs

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Eric Walsh. Although the dinner began at some time shortly aft e r 6.30 p.m., Mr Young was delayed by the late sitting of the Ho u se of Representatives and did not arrive at the Fitzgerald h om e until approximately 10.00 p.m.

7.4 Mr Young has admitted that, at some time during the eveni ng and while they were still at the horne of Dr and Mrs Fitzge r ald ,

he took Mr Walsh aside and told him 'in the strictest conf iden ce that as a long-standing friend he ought to be careful - t hat the

Go v ernment had that day been looking at a problem conce r n i ng Mr

Matheson and Mr Combe'. Mr Young could not recall whethe r h e then used the name 'Ivanov' or the term 'a Russian' but h e sai d

that he went on to tell Mr Walsh 'to be careful because we had

been looking at a problem concerning Mr Matheson and Mr Combe and •.. either a Mr Ivanov or a Russian and he ought to wa t ch hi s

step.' Mr Young gave evidence that he was prompted t o t e l l

these things to Mr Walsh as he had known for some time 'that Mr

Walsh had had dealings with Commercial Bureau'.

7.5 Mr Walsh's only recollection of the conversation in t he Fitzgerald home is that, shortly before he left the hous e , Mr Young 'may have mentioned the thing that he had something to tell me about a client.'

7.6 Later that same evening, in the carpark of the mot e l at

which Mr and Mrs Young were staying, Mr Young again spoke to Mr Walsh about the matters which he had mentioned earlier. I wa s told in evidence by Mr Young that 'I reiterated what I had told

him earlier, about being careful, so I also added that in qu i te some unrelated way at the morning's discussions, Mr Bowen s eemed

to be enormously antagonistic to Mr Matheson. I did not kno w what was behind it or what was involved in it. It did not s eem

to be in any way related to what we were doing, but that Bo wen

did seem to be very antagonistic to Mr Matheson.' During cross-examination, Mr Young was asked whether he told Mr Wa lsh that tapes or transcripts had been available at the meeting. He replied- 'I am unclear on that. I do not recall it.' When

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a ske d how it would be that he was talking to Mr Walsh about

tapes or transcript, he said - ' As I say , I cannot recall making

me ntion of it.'

7.7 Mr Young further indicated in evidence, that Mr Walsh had been a friend of his for some years and that his disclosures to

Mr Wa lsh were made 'on the basis of our friendship.'

7 . 8 Mr Walsh gave evidence about the conversation in the

carpar k of the motel, saying:

I got out of the car, he got out of the car; we walked in

the carpark and he urged me - he said: ' I want to tell you,

you should be careful in deal ing with either - I am putting

in the 'either', not Mr Young- I forget whether he said

with Laurie Matheson or with Commercial Bureau, and he said wo rds which I understood to mean that he or the company got a bit of a bagging at a meeting he was at today, and he

me ntioned further that Matheson or the company had been mentioned several times at the meeting. He said it had been a n important meeting and a Russian was going to be e xpelled t he following day. He mentioned that Combe - Da v id Combe -

appeared to have had an association with the Russian who was to be expelled.

When asked if Mr Young had made reference to the nature of

ma terial that was put before the committee which had been

di scussing the matter, Mr Walsh replied - 'The only reference r e c a ll was he said something like, there were tapes and everything there, ASIO - I think he said ASIO tapes - but he

s a id there were tapes and everything. I think it was by way of

supporting his assertion that the meeting had been a serious one.' Mr Walsh told me that he had been advised by Mr Young

that his remarks were to be regarded as confidential.

I

7.9 As at 21 April 1983, CBA retained the political consulti ng services of Eric Walsh Pty Ltd. Shortly after receiving the information to which I have referred , Mr Walsh (who was a director of Eric Walsh Pty Ltd) made arrangements to meet Mr La urence Matheson (who, at that time, was the Chairman of

Directors of CBA) at a Melbourne motel on 25 April (although Mr Matheson's recollection tended to be that the meeting took

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place on 24 April). The purpose of the meeting was to enable Mr Walsh to inform Mr Matheson of the matters recounted to him by Mr Young.

7.10 Mr Matheson gave the following evidence of his meeting with Mr Walsh -At that meeting did Mr Walsh inform you of certain mattter s?

He did.

Did he tell you of a meeting he had recently had in Canberra?

He did.

What did he tell you about that?

He told me that he had been at a drinks meeting where one or

more Cabinet members and one - I gained the impression that at least one member of the NIS Committee- were present •.. Did he indicate to you that in any event it was the

Committee which had participated in the decision to declare Ivanov persona non grata?

That is correct.

Did he then make reference to what had taken place at that meeting?

He did.

Did he tell you that the director-general of ASIO had played some tapes to the sub-committee?

He did.

Did he name the Director-General?

He said Harvey Barnett.

Mr Matheson then elaborated upon his meeting with Mr Walsh in

the following terms -Mr Walsh told me that he had been present at a drinks meeting at which one, at least one, or more members of the

National Intelligence and Security Sub-committee had been present and at the drinks meeting - it was never clear to me

whether two members of the Cabinet Sub-committee were present at the drinks meeting or whether he said they were present, together with other cabinet ministers - but he said

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that they had discussed the proceedings and the decision to chuck out, to expel, Mr Ivanov. He said that my name had come up in connection with this decision and that the director-general of ASIO had played some tapes at the

meeting of the sub-committee and that my name appeared on the tapes in connection with the joint fishing venture. He told me that it was involved with the Combe thing. To my

recollection, he also told me that I should carry out my relationship with the Soviet Embassy direct and not through Mr Combe •••• To the best of my recollection, he (Mr Walsh) did not name anyone who was present at the drinks meeting. He mentioned that the members of the sub-committee were Mr Hawke, Mr Hayden, Mr Bowen, Mr Evans and Mr Young.

Were you told if your name was mentioned at all? - I was. My

name, I understand, was mentioned in connection with being either an agent provocateur for ASIO or a KGB man, that my name had also been on the tape of a conversation between Combe and Ivanov •••

In that discussion with Mr Walsh was the question raised, either by yourself or him, as to if any members of the

Committee or the Government had formed an adverse view to you? - Yes, at the drinks meeting Mr Walsh said that there

was considerable animosity towards me expressed.

In cross-examination, Mr Matheson conceded that at times he was 'in difficulty understanding when Mr Walsh spoke whether he was talking about the Cabinet in this committee meeting or the meeting at which these things were discussed.'

7.11 Both Mr Walsh and Mr Matheson were cross-examined about their recollections of the conversations in which they had participated. Mr Walsh conceded that his recollection of the conversation with Mr Young on 21 April 'would be imperfect' and

agreed that he had 'an impression of the substance of the conversation rather than a precise recollection of the words.' However, he maintained that it was in the evening of 21 April that Mr Young first told him of the proposal to kick out a

Russian (or Ivanov). When asked about his discussion with Mr Matheson on 25 April, he agreed that it was highly probable that what he passed to Mr Matheson was a combination of some things Mr Young had said to him and certain inferences or conclusions

that he would have drawn from things that had been said to him.

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7.12 Mr Walsh's account of his conversation with Mr Young contains three matters additional to those contained in Mr Young's version of the same conversation-

(i) 'it had been an important meeting and a Russian was

going to be expelled the following day';

(ii) 'David Combe appeared to have had an association wi th the Russian who was to be expelled';

(iii) 'there were tapes and everything there, ASIO - I think he said ASIO tapes'.

7.13 In order to judge accurately and fairly Mr Young's conduct, it is necessary to determine, as far as one can, wha t

was actually said by Mr Young to Mr Walsh on the evening of 21 April. That may involve the acceptance or rejection of part of the testimony of each of Mr Young and Mr Walsh. I have also to

consider what use, if any, I will make of Mr Matheson's evidence .

7.14 Mr Young gave his evidence to the Commission on 9 Augus t and Mr Walsh gave his on 9 and 10 August, some three and a half

months after the conversations had taken place on the night o f

21 April. What they were then trying to remember were the

details of conversations during and after a dinner party and , if possible, the precise words that were used. Unless a witness has an extraordinarily good memory, what he normally has, in such circumstances, is a recollection of the substance of the

conversation rather than of the precise words, although sometimes particular words will stand out in the witness's memory. Although Mr Young was not asked to make the concession about his recollection which was asked of, and made by Mr Walsh,

a careful reading of his evidence confirms my impression wh en

hearing it, that Mr Young's recollecti?n likewise was not precise. Both Mr Young and Mr Walsh were trying to recollect what was said, but the effect of the passage of time was,

largely, to leave each of them with a memory only of the

substance of the conversation or some part of it.

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7.15 The differences between the two versions are in some respects more apparent than real. Thus Mr Walsh said that Mr Yo ung had used words which he understood to mean that Mr

Matheson or CBA 'got a bit of a bagging' at a meeting he

attended that day. Mr Young's version, that he had said that Mr Bo we n seemed to be enormously antagonistic to Mr Matheson, which

wa s a description of the substance rather than of the precise

wo r d s used, could well have been treated by Mr Walsh as a

description of a 'bagging'. On the other hand, some parts of the

a c o unts are different, particularly in relation to matters

r e ferred to by Mr Walsh but not by Mr Young. In making my

findings as to what was said, I have decided that it would be

unwise to rely upon the evidence of Mr Matheson. I do .this, not b ecause of any rejection of Mr Matheson as a witness who was

h onestly trying to remember what was said to him by Mr Walsh,

bu t because it was possible both for Mr Walsh to have used info rmation which had not come from Mr Young when he spoke to Mr Ma theson on 25 April, and for Mr Matheson to have mixed what he

obtained from some source other than Mr Walsh, or from

inference, with what Mr Walsh told him. The expulsion of Ivanov had been announced on 22 April and, quite apart from material that could have been obtained from newspapers and the media generally in the next few days, the evidence in this case shows h o w readily inferences were drawn and spread around about the

matter.

7.16 In coming to my findings I have borne in mind the

submission of Counsel for Mr Young that the serious consequences o f a finding adverse to Mr Young require me to be satisfied

considerably beyond the bare balance of probabilities. I accept this submission and have applied it in coming to my findings, as I have elsewhere in this report.

7.17 Having regard to the whole of the evidence, I am satisfied that, although Mr Walsh professed to give the substance, rather than the actual words used by Mr Young , it was a substantially accurate account. I have concluded that Mr Young's version,

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except in relation to his reference to Mr Bowen, was very general, and, although he described what he remembered of the substance of the conversation, it is necessary to supplement that recollection by the evidence of Mr Walsh.

7.18 I find that the substance of what was said by Mr Young

included statements to the following effect, although not necessarily in this order:

(a) Mr Walsh should be careful in dealing with Mr Matheson . (b) The Government had had an important meeting that day ano that a Russian was going to be expelled the following day.

(c) Mr Combe appeared to have an association with the Russian who was going to be expelled. (d) There had been ASIO tapes at the meeting. (e) At the meeting Mr Bowen had been antagonistic to Mr

Matheson.

I find that Mr Young did not refer to Mr Ivanov by name, that

is, he referred only to 'a Russian'. Mr Walsh did not allege

that Mr Young had used Mr Ivanov's name, and Mr Young could not remember whether or not he had used it.

7.19 In the course of giving an opinion to the Government in

r e lation to a possible prosecution of Mr Young for any offence

under the Crimes Act 1914, Senator Evans, the Attorney-General , suggested that it was possible that Mr Walsh, in saying that Mr Young referred to a Russian being expelled, had confused wh at was said by Mr Young on 21 April with what was undoubtedl y said by him at the lunch on 22 April; (see 7.39 to 7.47). In his

evidence to the Commission, Mr Young said that at that lunch, which was attended by Mr Walsh, he had said that 'We were expelling a Russian diplomat'. Mr Walsh said that he thought h e recalled Mr Young saying something about the expulsion. I have

considered carefully this possible source of confusion by Mr Walsh, hut I am satisfied that Mr Walsh's statement that Mr

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Young had said 'A Russian was going to be expelled the following day' correctly described the substance of what Mr Young said in this regard on 21 April. It must be remembered that Mr Young was a good friend of Mr Walsh, and that was why he was talking to

him about the matter at all. He wanted to protect his friend, and, in my opinion, he wanted to impress upon him the importance of what had occurred and to emphasise why Mr Walsh should be care ful in his dealings with Mr Matheson. Mr Walsh thought that

it was for the same reason that Mr Young referred to the 'ASIO

tapes'.

7.20 On these findings, Mr Young disclosed the decision to expe l a Soviet diplomat before it was publicly announced, although he did not refer to Mr Ivanov by name. He also disclosed that Mr Combe had an association with the Soviet diplomat who was to be expelled, again without referring to Mr

I vanov by name. There are two issues relevant to these

disclosures by Mr Young. They as follows-

(16) Was there any unauthorised or improper disclosure by any and what Minister of the decision to expel Ivanov before it was publicly announced?

(17) Was there any unauthorised or improper disclosure by any and what Minister of the information made available to the NIS Committee concerning the relationship between Combe and Ivanov before 11 May?

The questions to be resolved therefore in respect of Mr Young's disclosures are whether either disclosure comes within the terms of Issue 16 or 17, and, if so, was it unauthorised or improper?

7.21 Mr Young's disclosure of a decision to expel a Russian, if

unauthorised or improper, falls within Issue 16, unless the fact that he did not name Mr Ivanov avoids this result. In my opinion it does not. The context in which the Issue must be understood, and the disclosure considered, is provided by the decision of NISC, made on the same day as the disclosure, that the Soviet

diplomat whose name was Valeriy Ivanov should be expelled. The important aspect of the decision when considering whether any

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disclosure was ·an unauthorised or improper disclosure was tha t concerning the expulsion of a Soviet diplomat. The Soviet d iplomat was, in fact, Mr Ivanov, and in substance the

disclosure fell within the terms of Issue 16.

7.22 It was submitted by Counsel for Mr Young that the

disclosure of the existence of a relationship between Mr Combe and Mr Ivanov was not a disclosure concerning that relationsh i p . It was submitted that a distinction was to be made between th e existence of a relationship and the 'specifics' of that

relationship. I do not accept this submission. The context in which Issue 17 is to be understood is that decisions had been made on that day by NISC related to the Soviet diplomat Mr Ivanov, based upon his relationship with Mr Combe. The fact that

there was any such relationship was information conveyed t o NIS C at its meetings and, while the 'specifics' of that relati o nshi p were important matters for NISC to consider, the starting p oint was the existence of any relationship relevant to the questi on

of what should be done about the Soviet diplomat. Moreov er, NISC was concerned, for reasons which are described elsewhere ,

to keep the existence of that relationship away from public knowledge in order that Mr Combe, who had committed no offenc e and was not a spy, should be protected. In my opinion, a

statement that there was a relationship between Mr Combe and Mr Ivanov which had been considered by the Government is a statement concerning that relationship for the purposes of Issu e 17. I do not consider that the fact that Mr Young did not name

the Soviet diplomat takes the disclosure outside the terms o f that Issue, or those of Issue 16.

7.23 Was either of the disclosures unauthorised? The contending views are these. On the one hand, it is submitted, the decisions of Cabinet (or of a Cabinet committee) are secret or confidential and are not to be disclosed except pursuant to

an express or implied authority. Mr Young had no express or implied authority to disclose any of the matters put before NISC or its decisions. The other view is that there is no legal

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obligation on the part of Ministers not to disclose material put before a Cabinet committee, or a decision of a Cabinet committee, and that, even if there were some duty not to disclose such material, any Minister can decide whether he

should or should not disclose any particular matter.

7.24 The confidentiality of what transpires at Cabinet meetings depends, in the first place, on constitutional convention, and may be said to have the flexibility which is common to many of

these conventions. The traditional view has been that Cabinet proceedings are confidential and should not be disclosed without authority. Various bases have been suggested for this confidentiality. One is the collective responsibility of Cabinet

for its decisions which is inconsistent with a right in any individual member of Cabinet to disclose what, in fact, went on in the Cabint room. Another is that it is a working rule which

h as been found to be necessary to permit outspoken discussion in

the Cabinet: Gordon Walker, (Revised ed. 1972 pp.

165-168). In England, where the tradition of confidentiality ma y be much stronger than in Australia, breaches have occurred from time to time. In Australia, as appears from Professor Encel's Cabinet Government in Australia, lst ed., pp. 285-293; 2nd ed., Chapter while the principle is recognised, there has been a

stream of breaches. In the first edition of his book, Professor Encel's conclusion was (at p.293) that cabinet secrecy, like o ther conventions of cabinet government, will almost invariably

yield to considerations of political advantage.

7.25 The question of any legal obligation of Cabinet confidentiality, which applies to former Ministers as well as to serving Ministers, was considered in proceedings in England to restrain the publication of the Crossman Papers: v. Cape Limited (1975) 3 W.L.R. 606.

There Lord Widgery C.J. concluded that the equitable principle applied by courts in respect of confidential information would entitle a court, in appropriate circumstances, to restrain a present Minister or a former Minister from discussing what took

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place at Cabinet meetings. On the facts of that case, his Lordship declined to grant the injunction which was sought. Put shortly, the equitable principle is that the court will restra i n the use or disclosure of information or other matter which h as been obtained in circumstances of confidentiality, that is, in

circumstances in which the recipient ought not to make any unauthorised use or disclosure of what he has received.

7.26 It is not necessary to deal with the whole question o f the

confidentiality of Cabinet proceedings for the purposes of my inquiry. The important factor in any conclusion relevant t o the inquiry is that the NISC meeting was dealing with a matter concerning national security, and the question is whether proceedings of that nature are confidential, and whether any disclosure concerning the proceedings requires authorisation

and, if so, by whom.

7.27 Whether the matter is approached in a legal or non-lega l way, I have no doubt that the nature of the information which the members of NISC received, and the circumstances in which they received it, inevitably lead to the conclusion that no

member ought to have made any disclosure of the proceedings , unless expressly or impliedly authorised to do so. Some express authorities were given by the Committee. Mr Hayden was authorised to disclose, and give effect to, the decision t o

expel Ivanov. The Attorney-General was authorised to obtain a legal opinion from his officers as to whether Mr Combe had committed any offence under the Crimes Act 1914, and thus was given implied authority to disclose what was necessary for tha t purpose. The Prime Minister is generally considered to have an

overriding authority which extends to matters of national security, but it is not relevant to consider that authority f o r present purposes. However, Mr Young was in no way required to do anything to implement any of the NISC decisions by reason of his

Ministerial responsibility or otherwise. He had no express authority to disclose any part of the proceedings, and, in my opinion, none can be implied.

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7.2 8 I cannot accept the view that every Minister has general a uthority himself to decide that information which he has

received in confidence in Cabinet is no longer confidential, and to make disclosures accordingly. This view can be tested by reference to Cabinet discussions on the Budget. These d iscussions are obviously confidential. No Minister ought to

make any disclosures concerning them except those which Cabinet

might authorise. The Budget system would not work if every Cabinet Minister were free to decide that he was entitled to

declare any part of the proceedings in Cabinet no longer con fidential, and to make what disclosures he thought fit.

7.29 Practically the whole system of Cabinet government, including restraints placed upon members of Cabinet, is based on convention. I have no doubt that, whatever limits there may be t o the convention of confidentiality of Cabinet proceedings, the

convent ion extends at least to impose an obligation to keep con fidential proceedings concerning a matter of national security, such as was before NISC on 21 April. Except for the special position of the Prime Minister, no member of NISC was

free to make disclosures concerning the proceedings before the Committee without authority, and certainly not while the matter which it had considered was still current. On any view, the matter which NISC considered was current on the night of 21 April.

7.30 The question may be approached as one of law rather than convention. In v. Limited (supra)

the Attorney-General contended that all Cabinet papers and discussions were prima facie confidential, and that a court should restrain any disclosure of them if the public interest in concealment outweighed the public interest in a right to free publication. In his judgment Lord Widgery C.J. indicated some of

the difficulties which would face the Attorney-General when he relied simply upon public interest as a ground for proceedings of this kind, but went on to say (1975) 3 W.L.R. 606 (at p.617):

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That such ground is enough in extreme cases is sho wn hy the universal agreement that publication affecting nati o n a l security can be restrained in this way.

Reliance seems to have been placed by Counsel for Mr Young o n the fact that the principle applied in that case by Lord Wi dgery wa s an equitable principle and not a common law one. I d o not

t hink that anything turns upon this distinction. The effect of

what Lord Widgery said is that Cabinet discussions and pro ceedings on a national security matter undoubtedly fall within the principle, and are confidential, and that the con fidentiality will be protected by the courts. In other wo r ds ,

the law does give a protection to the confidentiality of Cabinet pro ceedings on a national security matter, based on the nat ur e o f the information and the circumstances in which it had b een

received by the

7.31 Another question of legal restraint arises from the p r ov isions of s.79 of the Crimes Act 1914. During the course of

the hearings of the Commission, both the Attorney-General and the Solicitor-General gave opinions to the Government on whether the evidence established that Mr Young had committed any offe n ce under this section. The effect of the opinions was that Mr Young's liability would depend upon what facts were established . However, the Attorney-General, whose consent must be obtained

f o r any prosecution under the section, decided, in the exer c i se

of his discretion, that there should be no prosecution. It h as b een submitted that, in these circumstances, since Mr Young is

not required to defend himself in criminal proceedings against a charge that he committed an offence under the section, I should not express any view as to whether or not he has committed such an offence. I agree with this submission. I think that, in th e

circumstances, it would be oppressive for me to record a finding (if that were the conclusion to which I came) that Mr Young h ad

committed an offence under the section.

7.32 Notwithstanding the view which I have just expressed, the provisions of s.79 are relevant in considering the type of duty

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which a Ministe r may have in relation to confidential information. Sub-section 79(3) makes it an offence for a person to communicate prescribed information, as far as relevant for present purposes, to a person other than a person to whom he is a uthorised to communicate it. 'Prescribed information' is

de fined in sub-s. 79(1) to include information which a perso n has obtained owing to his position as a person who holds office under the Queen, and, by reason of its nature and the

c ircumstances under which the information was obtained by him,

it is his duty to keep it as secret. In my opinion, a Minister

i s, for the purposes of this provision, a person who holds

o ffi c e under the Queen. The duty to which the definition refers need not be a legal duty. It was submitted by Counsel for Mr

Yo ung that the duty must be a legal duty as is, in my opinion,

the duty referred to in s.70. In that section there is no

context which would justify giving the word 'duty' a meaning other than 'legal duty'. However sub-s.79(l) provides its own c riteria for determining whether the the duty exists. Those

c rit e ria are the nature of the information and the circumstances

under which it was obtained. In my opinion, that duty may b e a

legal duty but it may also be a duty not otherwise impo sed by

t h e law. On this construction of the provision, there has been a

r e cognition by the legislature of a non-legal duty to which Ministers may be subject.

7.33 It follows from what I have said that the disclosures ma de

by Mr Young were unauthorised. Were they, or any of them, improper? It is clear that, although an act may involve a

breach of duty, the breach may be so minimal that the act c o uld

not be regarded as improper. On the other hand, it is equally c lear that the breach may have a seriousness tha t brings it

wi t hin the concept of impropriety. The difficulty is in d rawi n g the line between these two positions. As often happens, when a line of this kind has to be drawn, there is a grey area between

what, by general agreement, falls short of impropriety and wh a t, on any reasonable vi ew, is clearly improper. I approach the

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matter on the basis that I will not characterise as improper a disclosure which I consider to be within that grey area.

7.34 It has been submitted that if Mr Young's disclosures we r e unauthorised, the circumstances in which they were made and the consequences of having made them were such as not to justify any finding of impropriety. It was put that the statements were made o n a basis of confidence to help a friend, they were not

intended to be passed on, their character was fairly general, they were not related to national security, and if they did, they had no adverse effect on national security. I cannot accept these submissions.

7.35 In my opinion, each of the disclosures was related to a matter of national security. It may be that such an inference could be drawn from a mere disclosure that a Russian was going to be expelled, but, on my findings, the matter was not left

there. Each disclosure went to one element of a single event. The expulsion of the Russian was said by Mr Young to have b e en c o nsidered at an important meeting of the Government which h ad

been concerned, amongst other things, with ASIO tapes. Thes e d isclosures pointed directly to a matter of national security,

and were reinforced by Mr Young's warning to Mr Walsh that h e should be careful in his relations with Mr Matheson.

7.36 I am also of the view that the potential, rather than the

actual, damage to the national security is what must be considered in determining impropriety. If an unauthorised disclosure by a Cabinet Minister gives rise to a real risk o f d amage to national security, then the fact that little or no

damage results does not diminish any impropriety in the disclosure. In the present case there is no evidence that national security was damaged by what Mr Young said to Mr Walsh. However, there was, in my opinion, a real risk that significant

damage could have resulted from the disclosures. Although given in confidence, there was clearly a risk that the information might be repeated, as it was in fact repeated. It is a common

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fact of life that many people regard information given to them in confidence as something which they are entitled to pass on in confidence. As with all such disclosures, once the confidence had been broken, the information could have reached members of

the So viet Mission, including Mr Ivanov. It could also have made public the involvement of Mr Combe and Mr Matheson in the c ircumstances leading to the expulsion, and have revealed the

ex istence of ASIO tapes as part of the material relied upon for the expulsion. In my opinion, these potential consequences gave rise to a real danger of significant damage to national security. Furthermore, having regard to the content of the disclosures, I do not think it is relevant for this purpose that

the expulsion of Mr Ivanov was to be announced the next day, or that, in the event, speculation, and Mr Combe's own statements, a ssociated him with the expulsion.

7.37 It is relevant to consider the circumstances under which Mr Young made the disclosures. However, while those

circumstances justify his view that he was simply helping an old friend, they do not, in my opinion, diminish what I regard as

the impropriety of the disclosures. It is also relevant that Mr Young had been a Minister for a period of less than six weeks

and that this was his first experience of such a case. I have

concluded that, notwithstanding this short Ministerial experience, it should have been apparent to Mr Young that he should not make the disclosures.

7.38 It has been submitted that the question of impropriety is a political one, and that it should be left to politicians to

deal with, as, indeed, they have. However, I regard it as my

duty under the Term of Reference to report upon the matter, and my conclusion is that the disclosures by Mr Young to Mr Walsh on

21 April 1983 were both unauthorised and improper. It is not for

me to make any recommendation consequent upon this conclusion.

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'£oung Cameron and others on 22 April

7.39 I turn now to deal with 22 April, the day of the expulsion

of Mr Ivanov, and to certain disclosures made by Mr Young on that day. It will be remembered (see Chapter 3) that on 21 April, 1983 it had been decided by NISC to request the

Minister for Foreign Affairs to summon the Soviet Ambassado r at 2.00 p.m. on 22 April to request him to arrange for the

departure from Australia of Mr Ivanov and his family within seven days. Mr Hayden was due publicly to announce the expulsion at a press conference to be held at 3.00 p.m. that same

afternoon.

7.40 For some days before 22 April, Mr R.M. Cameron, a

principal of ANOP, had been attempting unsuccessfully to obtain an appointment to see Mr Yoting. Mr Young was aware of this a nd , as the two men were leaving Mr Young's office at 12.30 p.m. on 22 April to attend a luncheon, Mr . Young apologised for not

having seen him in the last couple of days and explained tha t he had been very busy- 'that he would understand because that afternoon we were kicking out a Russian.' Mr Cameron's recollection of this conversation substantially accords with

that of Mr Young.

7.41 After leaving Mr Young's office, the two men went to a Canberra restaurant where, together with a number of other persons (including Mr Eric Walsh), they lunched. The luncheon lasted until some time after 4.00 p.m. Mr Young gave evidence of

the luncheon. in these terms:

.•.• when I arrived at the lunch someone inquired of me as t o why I was in Canberra on the Friday,and I told them that I

would tell them later in the afternoon the reason, arid as I

said earlier, my understanding was that Mr Hayden was to make the announcement at 2 o'clock. After 2 o'clock I mentioned to someone that we were expelling a Russian diplomat at the table, and it was not until some time later

that I rang my office that I found that Mr Hayden - that

someone from Mr Hayden's office had been to my office with a press release which was going to be issued by Mr Hayden at 3 o'clock, so in fact somewhere between shortly after 2 and 3,

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the remaining members of the people that had lunch with me we re also informed that we were expelling a Russian dipl o ma t .

7 .42 Although two other participants in the luncheo n we re

c a lle d as witnesses, their evidence on Mr Young's c o mm e nts t o

the l unch grou p is not helpful. Mr Walsh thought that h e

recalled Mr Young say ing s o mething about an imminent e xpulsion o f a Russian. Mr Cameron believed 'Mr Yo ung repeated wh at h e h ad

sa i d t o me, words to the effect that the gov ernme nt wa s go i n g t o

k i c k out a Russian', but claimed that 'I was not listening at

the t i me, I was talking to somebody els e ••.• I paid n o a tten t i on

to it b ecause I had already heard it earlier on.'

7.43 I n the course o f the hearings o f the Commissio n, t h ere was

some suggestion that Mr Young revea·led mo re ttl Mr Cameron a nd t h o s e who attended the luncheon than either Mr Young o r Mr

Ca mero n have admitted in their evidence. That suggestion see ms

t o be b a sed upon two separate pieces of evidence - (1) In a

t e l e phone conversation between Mr Combe and Mr Camero n at 5. 34

p . m. o n 22 April (which was intercepted und er warrant b y ASIO )

aft e r Mr Combe referred to 'the announcement of the expulsion o f Sov i e t d iplomat today', Mr Cameron said- 'Yeah, I'll t e ll you a ll about that'. Later in the conversation, Mr Camer o n is

r ecorded as saying- 'I heard the news at about midda y ... ! don ' t

have a huge amount of information about it. Some of it might be

o f interest.' When questioned about this conversa ti o n, Mr

Came ron denied having any more info rmation than 'the fa c t that

t h e g overnment was to expel a Russi a n ... '. (2) In a n

i n t ervi e w with Mr Brian Toohey which was published in the

'Na ti onal Times' for the week 13 to 19 May, it was r e p o rted that

Mr Combe said, amongst other things, that he had met Mr Ca me r on

in the Press Club on Friday, 22 April and that, at the Pres s

Club, 'Cameron told him that he had been t alking that afternoon

t o the Special Minister of State, Mick Yo ung, wh o had sugges t e d

that Ivanov had been expelled because he wa s getting t oo c l ose t o a Labor Party person with influence on the Governme nt.' The publication of the article in the 'National Times' pro mpted Mr Young t o issue a press statement which asse rted that the

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'allegations concerning myself in this week's issue of The National Times newspaper are wrong in every respect. The attached statement by Mr Rod Cameron of Australian National Opinion Polls confirms this.' The 'attached statement' to whi ch

Mr Young referred was made by Mr Cameron when Mr Combe's

a llegation contained in the newspaper article were drawn t o his attention. That statement by Mr Cameron contained this passage -'We returned from lunch and later that day at about 5.30 p.m. I met David Combe at the Press Club and mentioned to him what wa s

by then public knowledge - namely that the Government was expelling a Russian named Ivanov. Nothing else was said to Da v i d Combe. I did not say to David Combe what has been attributed t o me in The National Times, namely that 'Mick Young ••.. suggested

that Ivanov had been expelled because he was getting too clos e to a Labor Party person with influence on government.' With some emendations, Mr Combe gave evidence before the Commission to the same effect. He told me that Mr Cameron had said that he

believed Ivanov's expulsion 'had something to do with Ivanov getting too close to people who could influence the government. He suggested to me that I should contact - he told me that I

should perhaps contact Mick Young with whom he believed I was on good terms because his understanding was that Mick Young wa s a member of the committee which had made the decision, and that it

may be possible that I could get some information as to the

background from Mick Young.' When asked, in cross-examination, to repeat what Mr Cameron told him, Mr Combe said - ''rhat a

possible major reason for Ivanov's expulsion was that he got too close to people who could influence the new government.'

7.44 Mr Young and Mr Cameron.have denied both in evidence to the Commission and in public statements made before the hearings of the Commission began that Mr Young said any more to Mr Cameron than words to the effect that the Government was going

'to kick out a Russian.'

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7.45 The importance of determining the extent of Mr Young's d i scl o sures on 22 April lies in the need to make a fair

asse ssment of his conduct. Mr Young, himself, conceded in a pub l ic statement made on 13 May that the comment made to Mr Came r o n as they were leaving his office was 'unwise'. Whe t h e r

or not it was more than 'unwise' now has t o be d etermined.

7.46 After carefully considering the e v idence and submissi o ns on t h i s matter, I am unable to find that Mr Young told either

Mr Cam e ron or others at the luncheon any more than he has

adm i tted , in evidence, telling them. I reach this c o nclusion after conside ring the conduct of the major protagonists from 22 Apri l t o 13 May, the reliability of the various accounts of the

conversation and the credibility of the witnesses involv ed. Accor d ingly, Mr Young's conduct must now be assessed in the light o f the finding that on two separate occasions on 22 April, before the e xpulsion of I vano v was announced b y the Governme n t , h e t o l d persons that the Government was, on that day, going to

expe l a Russian.

7 . 47 For the reasons which I have discussed in relation to Mr

Young's d isclosures on 21 April, his statements on 22 April we re

each unauthorised disclosures. However, I have concluded tha t al tho ugh they were unwise or indiscreet they were not improper. The f i rst of the statements was made to Mr Cameron at about

1 2 .30 p.m. when Mr Young wa s on his way to lunch with Mr Cameron

a n d others. The second itatement was made at the lunch eon

shortly after 2.00 p.m. Mr Young thought that Mr Hayden was t o

ma ke the public announcement of the expulsion at 2 .00 p.m.,

a lthough the agreed time was 3.00 p.m. However, the p o tential

f or d a mage to national secur ity in either case was minimal, if there was any risk of damage at all. Mr Cameron could conceivably have gone away and communi c ated the informa tion to a nother person, as could those present at the luncheon who heard

wh a t Mr Young said. However, the expulsion was t o be a nnounced

pub li c ly within a very short time, and any risk of damage to

nationa l security, merely by pre-empting this announcement b y a n

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hour or two, could not be regarded as real. Mr Young's belief , which I accept, that the expulsion was to be announced at 2 p .m.

is also relevant in considering impropriety. I have, a ccordingly, concluded that, although each of the statements wa s

an unauthorised disclosure, neither was improper.

Prime Minister to Butler and Farmer on 24 April 7 .48 On the morning of Sunday 24 April 1983, the Prime Mi nist e r

t elephoned from Melbourne to Mr William Butler in Canberra . He

t old Mr Butler that he had a difficult matter to raise wi th him .

He told Mr Butler that he understood that Mr Butler and Mr

Richard Farmer contemplated going into business with Mr Co mbe . He ask ed Mr Butler not to go ahead with the proposal. He t o l d

Mr Butler that he believed the Government would be making a

decisio n in the near future not to deal with Mr Combe. Mr

Bu tler, without seeking reasons for that decision, said that h e

wo uld not go ahead with the proposal. Later on the same mo r ning ,

the Prime Minister telephoned Mr Richard Farmer. He ma d e t he same request to Mr Farmer as he had made to Mr Butler, and

received the same response.

7.49 Mr Butler had been a public servant of long standing and s eniority before joining Farmer Bros., the Canberra wine a n d t ea

merchants, as a consultant in 1980. Because of his previ o us experience in government, and in the Public Service Board i n particular, he was selected by the Government to sit on a Ministerial Staff Advisory Panel of three people whose r o l e was

to advise the Government on the selection of Ministerial sta f f , particularly at the levels of principal private secretary, assistant principal private secretary and private secretary. I n fact, Mr Butler acted as chairman of the panel. The panel

c ommenced work on 7 March 1983. By the time when Mr Butle r h ad

c o mmenced negotiations with Mr Combe on 21 April 1983, its wo r k

was coming to an end.

7.50 Mr Richard Farmer is a wine and tea merchant, a partne r i n

the Canberra business Farmer Bros and a journalist, currentl y

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the Canberra correspondent for 'The Bulletin'. Since 1970 he has b een a political correspondent for various newspapers. He worked

f o r the ALP in the 1977, 1980 and 1983 election campaigns.

7 . 5 1 Negotiations between Mr Combe, Mr Farmer and Mr Butler

continued on 22 April 1983, when it was agreed, in principle, to f o rm a partnership which would undertake a consultancy and

l o bbying practice in Canberra.

7.52 Later that day, Mr Butler and Mr Farmer agreed that the

proposed partnership gave rise to a conflict of interests for Mr Butler, because of his position on the Ministerial Staff Advisory Panel, and, for that reason, Mr Butler telephoned

Mr Graham Evans, the Prime Minister's Principal Private

Secretary, and advised him of the proposed partnership. Mr Evans said that he thought there was a conflict of interests, but that he would speak to the Prime Minister about it and ring Mr Butler b a ck.

7.53 When Mr Evans told the Prime Minister of this telephone conversation, the Prime Minister was deeply concerned about the situation which had thus arisen. He has said in evidence that the Prime Minister has the responsibility of protecting the

integrity of the Government, which he felt would be in jeopardy if, on the one hand, Mr Combe was under surveillance and was being denied access to the Government while, on the other, he was in partnership with two people whose connection with the

Labor Party and with individual members of the Government would give them precisely the sort of access being denied to Mr Combe. The proposed partnership would therefore give Mr Combe indirect access to Ministers, something which was contrary to the

intention of NISC.

7.54 This threat, as he saw it, to the integrity of the

Government, led the Prime Minister to take the action described in 7.48.

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7.55 After Mr Farmer received the telephone call from the Prime Minister he went to see Mr Butler and they discussed the Prime Minister's request. Mr Farmer wanted to tell Mr Combe straight away that they would not be able to proceed with the propos ed partnership, but Mr Butler had gained the impression from the

Prime Minister that he did not want them to tell anyone abo ut it. In order to resolve the matter, Mr Farmer rang the Prime

Minister who suggested that it might be easier for Mr Farmer if they waited until later in the week. Mr Farmer agreed to th i s

suggestion.

7.56 The Prime Minister, Mr Farmer and Mr Butler were unanimous in their evidence that in none of the three telephone calls wa s any reason given for the Prime Minister's request other t han that the Government would be making a decision in the near

future not to deal with Mr Combe. Nor was there any suggestio n to the contrary. In particular, no reference was made by the Prime Minister to any matters related to national security or to the decision of NISC that Ministers should not make use of the

consultancy services provided by Mr Combe.

7.57 Issue No. lB(a) asked whether there was any unauthoris e d or disclosure by any Minister of the decision of NISC

that Ministers should not make use of the consultancy serv i ces provided by Mr Combe. The Prime Minister's telephone conversations with Mr Butler and Mr Farmer on 24 April 1983 are the only disclosures by any Minister which could be cover ed by

this Issue.

7.58 I consider that the findings set out above are sufficient to provide a negative answer to Issue lB(a). However, it was submitted by Counsel for Mr Combe that not only was the Prime Minister's communication with Mr Butler and Mr Farmer not authorised by NISC, but that, in the climate in which it occurred, it was tantamount to telling them that the denial of

access to Mr Combe was connected with Mr Ivanov. It was furth er

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submi t ted that the communication would have compromised the surveillance of Mr Combe.

7 . 59 The possibility of speculation leading people to make a

connect ion between the denial to Mr Combe of access to Ministers and Mr Ivanov's expulsion cannot be gainsaid, for such a connection was made before 11 May. However, the same specula tion wou l d h a ve occurred once the consequences of the implementation

of the NISC decision became known as was inevitable. If such specu l a ti o n about a connection between Mr Combe and Mr I vanov might h a v e limited the effectiveness of surveillance of Mr Combe , a n d there is no evidence that it did, it would have had

tha t e ff e ct whether or not the Prime Minister h ad communicated as he d i d with Messrs Butler and Farmer. Thus, neither of the cons i der at i ons examined in this p a ragraph operates to make those commun i cations improper if they were otherwise authorised and

justified .

7.60 The ev i dence of the Prime Minister, Mr Bowen, Mr Hayden, Mr Schol e s, Mr Youn g and Senator Evans is clear and unanimous

that NISC authorised the Prime Minister to info rm other Mini s ters that they should not make use of the consultancy serv i ces pro vided by Mr Combe. It is equally clear from that evidence that when and how the Prime Minister might choose to

inform o the r Ministers was left to his discretion. As well a s t ha t express authority, such a discretion was impliedly given to

the Prime Minister by long standing c o nvention. Sir Geoffrey Yeend g a ve evidence of his opinion that 'there is a conven tiona l

p r actice accepted by Cabinets as f a r back as I can remember that

would a ccord a Prime Minister the running and handling of

Governme nt business, Government image, the whole .•. '. This conventional practice appears from the literature genera lly to be f o llowed wherever c a binet government is modelled on the We stmin ster system.

7. 6 1 The purpose of the Prime Minister in c ommuni c ating with Mr Butler and Mr Farmer was to prevent Mr Combe obtaining the

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indirect access to Ministers which the proposed partnership, i f it succeeded, would have given him. The prevention of this indirect access to Mr Combe would have limited the effective n ess o f the decision and would have been contrary to the intenti o n of

NISC.

7.62 It is therefore open to find, and I do find, that th e

Prime Minister had implied authority to communicate with Mr Butler and Mr Farmer. The communications were, in fact, justified by the need to ensure that, as far as practicable , the

purposes of the NISC decision were achieved. Moreover, wh a t t he Prime Minister had done was, in effect, confirmed hy both the Cabinet and the Ministry, for he told each of these bodies about his communications on 26 April and 2 May respectively.

7.63 The disclosures made by the Prime Minister were neither unauthorised or improper.

Bowen to Combe on 5 April and Bowen to Walsh on 28 April

7.64 On 5 April 1983, Mr Bowen had a conversation with Mr Co mbe in King's Hall, Parliament House. This conversation antedated the matters into which I am required to inquire by paragraph (c ) o f the Terms of Reference and in no way impinges upon them. Mr

Bowen had a further conversation with Mr E. Walsh at the Sydney

Kingsford Smith Airport on 28 April 1983. These conversatio ns are dealt with in Appendix VI. I have concluded that they involved no impropriety on the part of Mr Bowen.

on 2 May 1983

7.65 On 2 May 1983 Mr Richard Farmer visited the offices o f APAC. There he had a conversation with Mr David Barnett, Mr

Martin Rawlinson and Mr Alister Drysdale, principals of APAC, informing them that the proposed partnership between himself Mr Butler and Mr Combe would not proceed. Whilst in the APAC offices, Mr Farmer telephoned Mr Hurford, the Minister for Housing and Construction and Minister Assisting the Treasurer,

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who i n f o rmed him that the Ministry had been told that day not t o

have dealings with Mr Combe as a lobbyist.

7 . 66 There was no evidence to suggest that any matters of

nat i o n a l security were mentioned during this telephone con ver sation, and there was no submission by any Counsel that t his was an unauthorised or improper disclosure of the decision

taken b y the Ministry on 2 May 1983. Issue No. 18(c) was

concer n e d with the question of an unauthorised o r improper d i scl o sure by any Minister of that decision.

7 . 6 7 The Prime Minister gave evidence that once a decision had

been taken by the Cabinet, and, impliedly, later by the Mi nistry , he e xpected and would require that Ministers woul d

start t o give effect to those decisions. Mr Hurford's communication to Mr Farmer of the effect of the Ministry dec i s i o n should be viewed in this light. I consider that it was

me r e ly part of the process of implementing the decision and not

an unauthorised or improper disclosure.

/

/

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CHAPTER 8

WHAT ACTION, IF ANY, .J::_OW

BY THE GOVERNMENT IN RELATION TO MR COMBE BY REFERENCE TO

NATIONAL SECURITY CONSIDERATIONS

8.1 I have already considered whether Mr Combe's relationsh ip with Mr Ivanov was, in fact, such as to give rise to seri ous

implications for national security when NISC met on 20 a nd 21 April 1983. I have concluded that it did, and I have des c ribed

what those implications were. Because of evidence given b y witnesses, including that of ASIO officers, I have decided , after hearing submissions, that I should consider whether there are now any, and if so, what, national security considerations

which should be taken into account in deciding whether Mr Combe's access to Ministers should be limited in any way .

8.2 This question is to be distinguished from the questions which ASIO has to consider in exercising its functions under Division 2 of Part IV of the Australian Security Intelligence Organization Act 1979 in relation to the furnishing of s ecur ity

assessments. Those assessments are relevant to the taking o f 'prescribed administrative action' as defined in s.35 of the Act. I have already concluded that the denying or limiting o f access to Ministers is not the taking of 'prescribed

administrative action'. It is a limitation on Mr Combe's access to Ministers which I am now considering, and nothing I say about this question is intended to suggest any view on the questio n whether, if an application were duly made, ASIO should or shoul d not give any particular type of security assessment of Mr Combe .

Since this statement may be thought to suggest some reserva ti o n s on my part about whether such an assessment should be given, I emphasise that nothing in this Chapter is intended to indi cate any suggestion by me that, if an application were duly made ,

Mr Combe should not be given a favourable assessment.

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8 . 3 I h a ve concluded that Mr Combe's relationship with

Mr Iva n ov gave rise to serious implications for national

s ecurity b ecause of the cultivation of Mr Combe by Mr I v anov .

Mr Ivanov was the KGB officer involved, but he was acting on

instr uct i o ns which others might have been a b le to carry o ut.

8 .4 Mr I vanov is now out of the country, and the evid ence

b efo r e the Commission is that no other Soviet agent has

a tte mpted to take up the association which Mr Ivano v ha d

developed with Mr Combe.

8 . 5 The matter which remains to be considered is whether any

p r obl em is likely to arise in the future giving rise t o na ti ona l

securi ty considerations relevant t o Mr Combe's access t o Mi n i ster s . The evidence of the Director-General and the oth er

ASIO o fficers confirms my view that all the circumstance s

ass o ciated with the expulsion of Mr Ivanov, i ncluding the p ublicity given t o that e xpulsion, and the establishment of this Roya l Commission and the publicity given to it and to its

hear i n gs, make it quite unlikely that any further attempt wo uld be mad e t o cultivate Mr Combe, and would also alert Mr Combe t o the da nge rs of any apparent attempt at cultivat ion. Mr Combe coul d no t now be regarded as a potential asset by the KGB.

8 . 6 It may be that there are no limits to what the KGB ma y t r y

to achieve, but this makes a possible target of any perso n who is i n government or who has, or may have, access to those wh o

a r e i n government. That possibility is no reason to deny any of

them access to Ministers. Indeed, in the opinion of the ASIO o ffi cers, Mr Combe would now be less likely to be a targe t for

t h e KGB than other persons in, or having access to persons in, g overnment.

8 .7 I have acco rdingly concluded that the national security

considerations which led NISC to decide that Ministers sho uld not ma ke use of Mr Combe's consultancy services n o longe r apply a nd do not now call for, or justify, a limita tion on his a c c ess

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to Ministers.

8.8 The decision of NISC of 21 April in respect of Mr Comb e ' s

access based on national security grounds still stands and i s publicly known. While it stands, it is a stigma on Mr Comb e ' s

reputation and an impediment to his livelihood. In the ligh t of the evidence which has been adduced before this Commission a nd my findings on that evidence, it is my opinion that it wo u l d be

appropriate for that stigma and that impediment to be removed . One way to remove them would be for NISC formally to make a

declaration in terms of 8.7, but there may be other equally appropriate ways of achieving this end. I make it clear, i f it

is not clear enough already, that I am expressing no opinio n whatsoever about any action by the Government in relation t o i ts attitude to Mr Combe or any other person as a lobbyist, and, in

particular, as to whether Ministers should or should not s ee Mr Combe in his capacity as a lobbyist or consultant.

8.9 Counsel for Mr Combe submitted that I should recommend t o the Government that it pay compensation to Mr Combe in respec t of any loss which he may have suffered as a result of the

decision of NISC. I have concluded that I should not recommend the payment of compensation. I have no doubt that Mr Combe suffered loss, both in his business and in his reputation. However, on my findings on the evidence, that loss did not fl ow

from any wrongful act by ASIO or NISC, from any failure by NIS C to hear Mr Combe when it should have heard him, or from any

breach by the Government of the agreement that was reached between Mr Combe and the Government on 11 May because:

(a) NISC was justified in making the decision it did concerning Mr Combe's access to Ministers; (b) Although there was no legal requirement to give Mr Combe an opportunity to be heard, steps had been put in train

on 2 May to hear Mr Combe's side of the case; and

(c) Events having overtaken the process of that hearing and the agreement having been reached on 11 May, the

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breaking down of that agreement is to be attributed to Mr Combe.

The suff e ring of injury by individuals as a consequence of act i o n by the Government, or a government authority, taken in the nat i onal interest, is often an unhappy result. However, what the Gov ernment did in the present case was to act bona fide for

val i d natio nal security reasons, and Mr Combe contributed to his own in jury t o a significant extent. In my opinion, no occasion

for compe nsation arises.

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CHAPTER 9

ANSWERS TO ISSUES AND RECOMMENDATIONS

ISSUES

1. In the light of the evidence and my findings and

con cl usions, I give the following answers to the Issues :

Issue 1

Answer

Issue 2

Answer

Issue 2A

Answer

Issue 3

Answer

On the evidence available to ASIO on 20th Apr i l ,

1983, was ASIO's assessment of Ivanov as a Sov i et intelligence officer -(a) correct; or

(b) reasonably open to it?

l(a) Yes

On the evidence which was available to ASIO on 20th

April, 1983, was ASIO's conclusion that Ivanov ' s relationship with Combe was such as to h ave serious implications for national security -(a) correct; or

(b) reasonably open to it?

2(a) Yes

Was Combe's relationship with Ivanov in fac t s u ch

as to give rise to serious implications for national security as at 20th April, 1983?

2A Yes

If Yes to 2(a) or 2(b), what were the implicatio n s

for national security?

(i) Mr Ivanov might have succeeded in recruiting Mr Combe clandestinely to obtain and to hand over

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Issue 4

Answe r

I ssue 5

Answe r

I s su e 6

Answer

Issue 7

confidential information or confidential documents of value to the Soviet Government t o the detriment of Australian interests. (ii) Mr Ivanov might have succeeded in recruiting Mr

Combe to act clandestinely as an agent of influ ence

to try to persuade members of the ALP, including Ministers, to adopt policies or to act in a way

favourable to the Soviet Government. (iii) the relationship between Mr Ivanov and Mr Co mb e wa s about to become clandestine and ASIO wo u ld no longer be in a position to monitor it, either

effectively or at all.

If Yes to 2(a) or 2(b), should ASIO have attempted to acquaint Combe with its conclusion befo re communicating with the Prime Minister?

No

Did the Director-General of ASIO act properly in communicating with the Prime Minister?

Yes - although it would have been appropriate, because of the delay involved in securing an appointment with the Prime Minister, for the Director-General to have communicated earlier with the Attorney-General.

Did the Prime Minister act properly in convening the meetings of the National and International Security Committee which were held on 20th and 21st April, 1983?

Yes

Did the NIS Committee decide, and was it reasonably open to the NIS Committee to decide:

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Answer

Issue 8

Answer

Issue 9

.(a) to request the Soviet Ambassador to ma ke

arrangements for Ivanov to leave Australia within seven days? (b) that the Prime Minister should inform other Ministers that they should not mak e use of th e

Consultancy services provided by Combe? (c) that the Leader of the Opposition sho uld be briefed on the expulsion of Ivanov and the background thereto?

(d) that the Chief Minister of the Northern Territory should be advised of the r e l ationshi p between Combe and Ivanov and of the activities of Combe? {e) that the Director-General of ASIO arrange f or

immediate surveillance of Combe by all appropriate means?

(a) Yes

(b) Yes

(c) Yes

(d) Yes

(e) Yes

If Yes to 7(a), was it proper for the Government to

notify and announce the expulsion of Ivanov in the manner which it chose?

Yes.

If Yes to 7{b), should Combe have been afforded an opportunity to be heard by the Government:

(a) before the NIS Committee decided that the Prime Minister should inform other Ministers; (b) at any and what time after the decision o f the

NIS Committee, not being a time fixed by or by

reference to the making of any statement in

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Answer

I ssue 10

Answe r

Issue 11

Answer

Issue 12

Answer

Issue 13

either House of the Parliament.

(a) No

(b) Although not required by law, it would have been appropriate for the Government to have provided such an opportunity after 4 May. The occasion for providing such an opportunity n o

longer existed after 12 May. (Steps to provide such an opportunity began on 2 May).

If Yes to 7(b), were the reasons of the NIS

Committee in deciding that the Prime Minister should so inform other Ministers wholly or partly­ (a) the Committee's perception of the activities of lobbyists in general?

(b) Combe's position as a lobbyist having regard to the official position formerly occupied by him within the Australian Labor Party? (c) the implications for national security of the

relationship between Combe and Ivanov?

(a) No

(b) No - although the matter was discussed. (c) Yes.

If Yes to 7(c), was the briefing of the Leader of

the Opposition properly carried out?

Yes.

If Yes to 7(d), was the briefing of the Chief

Minister of the Northern Territory properly carried out?

Yes

Was it proper for the NIS Committee , if it decided

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Answer

Issue 14

Answer

Issue 15

Answer

Issue 16

that the Prime Minister should inform other Ministers that they should not make use of the consultancy services provided by Combe, to requi re that such information be given without comment on

the relationship between Combe and Ivanov?

Yes.

Was the surveillance of Combe:

(a) duly authorised? (b) carried out by all appropriate means? (c) terminated as soon as it reasonably should have been in all the circumstances?

(a) Yes

(b) Yes

(c) Yes

Did the Prime Minister inform, and if so was it

proper for him to inform, other Ministers that they should not make use of the consultancy services provided by Combe: (a) by raising the matter at a Cabinet meeting on

26th April? (b) by raising the matter at a Ministry meeting on 2nd May? (c) without informing Ministers of the relationship

between Combe and Ivanov?

(a) Yes

(b) Yes

(c) Yes

Was there any unauthorised or improper disclosure by any and what Minister of the decision to expel Ivanov before it was publicly announced?

215

Answer

Issue 17

An swe r

I s sue 18

Answer

Issue 19

Answer

(i) As part of the disclosure referred to in the

answer to Issue 17, Mr Young made an unauthorised and improper disclosure on 21 April 1983; (ii) Mr Young made two unauthorised disclosures

which were not improper on 22 April 1983.

Was there any unauthorised or improper disclosure

by any and what Minister of the information made available to the NIS Committee concerning the relationship between Combe and Ivanov before 11th May?

Mr Young made an unauthorised and improper

disclosure on 21 April 1983.

Was there any unauthorised or improper disclosure

by and and what Minister of: (a) the decision of the NIS Committee that Ministers should not make use of the Consultancy services provided by Combe? (b) the decision (if any) taken by Cabinet on 26th

April in respect of Combe? (c) the decision (if any) taken by the Ministry on

2nd May in respect of Combe?

(a) No

(b) No

(c) No

Was it proper for the Government to acquaint Combe on 11th May with the information which had been presented to the NIS Committee and to receive a statement from him of his version of his association with Soviet officials?

Yes

216

Issue 20

Answer

Issue 21

Answer

Issue 22

Answer

Lf Yes to (19), was Combe, on 11th May:

(a) properly acquainted with the information wh ich had been presented to the NIS Committee; (b) given a proper opportunity to present his version of his association with Soviet

officials?

(a) Yes - to the extent that it was appropriate to

do so.

(b) Yes

Was any and what agreement or arrangement concluded

on 11th May between Combe and the Attorney-General or any other member or members of the Government as to subsequent disclosure of or comment upon Co mbe ' s connexion with Ivanov and the Government's actions

in respect thereof.

Yes. An agreement that the Prime Minister woul d make an agreed statement to the House of Representatives on 11 May 1983 and that neithe r the Government nor Mr Combe would make any pub li c comment on the statement or its subject matter

except that a statement (to be approved by the Attorney-General) might be made by Mr Combe, about his proposed defamation action in respect of an article published in the Daily Mirror.

If Yes to 21, did:

(a) the Government (otherwise than by actio n or statement in Parliament); (b) Combe; (c) any other relevant person; resile in any and what way from such agreement o r

understanding?

(a) No

217

Issue 23

Answer

Issue 24

Answer

(b) Yes -by making public statements on the matter . (c) No

Should any of the answers to 7(a), (b), (c), (d) or (e) have been different, and if so, in what way, if

all the facts relevant to that answer or to those

answers had been available to the NIS Committee on 20th and 21st April, 1983?

No

If Yes to 2A, are there now any and if so what

national security considerations which should be taken into account in deciding whether Combe's access to Ministers should be limited in any way?

The national security considerations which led NISC to make the decision referred to in Issue 7(b) no longer apply and are not now relevant to Mr Combe's access to Ministers.

RECOMMENDATIONS

2. The evidence reveals a need for legislative or other action in respect of several matters. However, it is not appropriate that I make recommendations for such action in my report on Term of Reference (c). I shall make recommendations on these matters

in my report on Terms of Reference (a) and (b). They include:

(a) The need for ASIO to review its practices and procedures in order to reduce the possibility of error and to reveal, when reporting in the exercise of its functions, the existence of any such possibility. (b) The need for ASIO to review its practices and procedures

when reporting matters to Ministers, and particularly

when a report will or may result in action by Ministers.

(c) The need for the establishment of a statutory procedure

218

enabling an independent body to decide, in appropriat e cases, whether, and, if so, how an Australian citizen o r resident should be provided with an opportunity to be heard when a report by ASIO may result in actio n advers e

to the interests of that citizen or resident.

3. In terms of my conclusions in 8.8, I recommend that:

the Government should publicly affirm that the national security considerations which led to the decision that the Prime Minister should inform other Ministers tha t they should not make use of the consultancy services provided by Mr Combe, but without comment on the

relationship between him and Mr Ivanov, no longer apply and are not now relevant to Mr Combe's access to Ministers.

219

APPENDIX A

TERMS OF REFERENCE

COMMONWEALTH OF AUSTRALIA

ELIZABETH THE SECOND, by the Grace of God Queen of Australia and

Her other Realms and Territories, Head of the Commonwealth:

To :

THE HONOURABLE MR JUSTICE ROBERT MARSDEN HOPE, C.M.G., Judge

of Appeal, Supreme Court of New South Wales

GREETING:

WHEREAS it is desired to have a judicial review of the

activities of Australia's security and intelligence agencies, n a mely , the Australian Security Intelligence Organization, the

Au s tralian Secret Intelligence Service, the Defence Signals

Directorate, the Joint Intelligence Organisation and the Office

of National Assessments (hereinafter called "the agencies"):

NOW THEREFORE We do by these Our Letters Patent issued in Our

n a me by Our Governor-General of the Commonwealth of Australia on

the advice of the Federal Executive Council and in pursuance of the Constitution of the Commonwealth of Australia, the Royal Commissions Act 1902 and other enabling powers, appoint you to be a Commissioner to inquire into, and in relation to -

(a) the activities of the agencies, especially since the completion of the inquiry made by the Royal Commission appointed on 21 August 1974 to inquire into matters relating to the intelligence and security services of

the Australian Government (hereinafter called the Royal Commission on Intelligence and Security), with particular reference to -220

( i) -the progress made in implementing Government

decisions on the recommendations of the Roya l Commission on Intelligence and Security and of th e Protective Security Review; (ii) whether the agencies have efficiently, effective l y

and properly served the interests of the Australian people and Government, includ i n g whether effective arrangements exist for t he establishment of policies and priorities, f or the

co-ordination of their activities and for the oversight of their work; (iii) whether any changes in existing law and practices are required or desirable -

(A) to ensure that the agencies are prope rly

accountable to Ministers and the Parlia ment ; (B) in relation to keeping the Leader of the Opposition informed on matters relating to security and intelligence; (C) to provide for proper safeguarding, including

safeguarding against unauthorised publicatio n , of intelligence, including informati o n provided by foreign governments in confidence ; (iv) whether there is adequate provision for e ffective

redress for any persons who may be unjustifi ab l y disadvantaged by actions of the agencies; (v) whether existing law enables effective over s i ght by the Auditor-General of the Australian Securi ty

Intelligence Organization and the Australian Secret Intelligence Service in financial matt e r s ; (b) whether the activities of the Australian Security Intelligence Organization, especially since the

completion of the inquiry made by the Royal Commission on Intelligence and Security, have been _carried out i n compliance with the law, in particular the Austral ian

221

Intelligence O!ganization Act 1956, the

Australian Security Intelligence Organization Act 1979, the Telephonic Communications (Interception) Act 1960 and the Telecommunications (Interception) Act 1979; (c) further 'to the inquiry in relation to paragraphs (a) and

(b) above, all the circumstances, including the actions of the Government, surrounding the expulsion from Australia of Mr Valeriy Nikolayevich Ivanov, First Secretary, Embassy of the Union of Soviet Socialist

Republics, and the involvement of Mr Harvey David Mathew Combe in those circumstances; and

(d) any other related matters to which the attention of the Commission is directed by the Prime Minister in the course of the inquiry:

AND We require you as expeditiously as possible to make your

inquiry and to furnish to Our Governor-General of the Commo nwealth of Australia -

(e) first and as soon as possible, a report of the results

of your inquiry and recommendations in relation to the matters specified in paragraph (c); and (f) a report or reports as soon as possible, and in any

event not later than 30 June 1984, of the results of

your inquiry and recommendations in relation to the matters specified, or referred to, in paragraphs (a), (b) and (d).

(L.S.) WITNESS His Excellency the Right Honourable Sir Ninian Martin Stephen, a member of Her Majesty's Most Honourable Privy Council, Knight of the Order of Australia, Knight Grand Cross of The Most Distinguished Order of Saint Michael and Saint George, Knight Grand

222

Cross of The Royal Victorian Order, Knight Comma nder of The Most Excellent Order of the British Empire, Kn i ght of the Most Venerable Order of the Hospital of Sa i nt John of Jerusalem, Governor-General of the Commonwealth of Australia and Commander-in-Chief of the Defence For ce .

Dated this seventeenth day of May 1983.

By His Excellency's Command,

BOB HAWKE

Prime Minister

223

N.M. STEPHEN ,

Governor-General

APPENDIX B

REPRESENTATION BY COUNSEL

Party or Witness

Ha r vey David Mathew Combe

The Government

ASIO

Laurence Matheson

Michael Jerome Young

Eric John Walsh

Richard Lindsay Farmer

Dr. Harry Alfred Jenkins

Paul Anthony Edward Everingham

Jay Alparslan

A Journalist

Counsel Date Appearance

F1rst Announcea

I. McC. Barker Q.C. 1 June

R.N. Madgwick

M.H. McHugh Q.C.

N. Young

S.P. Charles Q.C. A.C. Archibald

J. Sher Q.C.

P. Dunn

A.M. Gleeson Q.C.

A. Whitlam

F.S. McAlary Q.C. R. Williams

A.B. Shand Q.C. I. Cur lewis

T.E.F. Hughes QC I. Wales S.L. Walmsley

L.F. Wyvil

T. Kelly

s. Littlemore

224

1 June

14 June

20 July

9 August

18 July

1 August

1 August

18 August

15 September

4 October

APPENDI X C

SUBMISSION BY COUNSEL ASSISTING THE ROYAL COMMISSION IN RESPE CT

OF PARLIAMENTARY PRIVILEGE AFFECTING CERTAIN OF THE ISSUES

DEFINED FOR INVESTIGATION IN THE CONTEXT OF PARAGRAPH (c) OF THE

TERMS OF REFERENCE

A question has arisen as to whether the investigation by t he

Royal Commission of certain of the issues identified as be ing f o r resolution in respect of paragraph (c) of the Terms o f

Reference would constitute an infringement of parliamentary privilege. It is proposed to deal separately in this submi ssion with each of the two issues in respect of which that question has been raised.

A. Paragraph 19 of the issues identified by the Royal

Commissioner in his statement of 11th July 1983 is as f o llo ws :

19(a) Was the disclosure by the Prime Minister in answer to a question in the House of Representatives on lOth Ma y 1983 of Combe as a person with whom Ministers sho uld not associate in respect of lobbying, proper?

(b) Should Combe have been given an opportunity to b e heard by the Government before that answer was gi ven ?

By s.49 of the Constitution it is provided that until the

powers, privileges and immunities of the House of Representatives are declared by Act of Parliament, the powe rs, privileges and immunities of the House shall be those of the Commons House of Parliament of the United Kingdom, and of i ts

members and committees, at the establishment of the Commonwealth. The High Court in v. Richards ex parte

and (1955) 92 C.L.R. 157 declined to give a

restricted meaning to the words of s.49. Accordingly, the

225

privileges of the House of Representatives must be taken to include that set forth in the Bill of Rights, 1688 (1 Will &

Mar. sess 2 c.2) which by Art. 9 of s.l declares that 'the

freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament'.

In Finnane v. Australian Consolidated Press Ltd (1978)2 N.S.W.L.R.435 Needham J observed, at 438, that 'the rationale of the rule (that evidence is not admissable of what takes place in Parliament) I think, at least originally, was that it was not open in the courts to question the conduct of any member of Parliament'.

In giving effect to the privilege which he identified in Finnane v. Consolidated Press, Needham J followed the conclusion of Browne J in Church of Scientology of California v. Johnson-Smith (1972) 1 Q.B.522. In that case a question arose as to whether

what the defendant had said in Parliament could be received in evidence as going to the issue of whether he had spoken and published with actual malice certain words which he said outside Parliament. His Lordship, after hearing argument from the Attorney-General as amicus curiae, as well as from Counsel for

the parties, concluded, at 529 that the relevant sub-paragraphs of the reply:

must involve a suggestion that the defendant was, in one way or another, acting improperly or with an improper motive when he did and said in Parliament the things referred to in those sub-paragraphs. I accept the Attorney-General's argument that the scope of Parliamentary privilege extends beyond excluding any cause of action in respect of what is

said or done in the House itself.

His Lordship went on, at 530, to cite Blackstone, Commentaries 17th Ed. (1830) Vol 1. p. 163 in support of the proposition that:

anything arising concerning the House ought to be examined discussed and adjudged in that House and not elsewhere. The House must have complete control over its own proceedings and its own members. I also accept the other basis for this

226

privilege which the Attorney-General suggested, which i s , that a member must have a complete right of free speech in

the House without any fear that his motives or int en t i ons o r

reaso ning will be questioned or held against him the r eafter .

See also Dingle v. Associated Newspapers Ltd (1960) 2 Q. B. 405 wh ere it was held that to impugn the validity of the repo r t o f a

sel e ct committee of the House of Commons on the gr o und o f some de fect of procedure would be contrary to section 1 of th e Bill o f Rights. However, it was indicated in a footnote to that case

t hat the Solicitor-General who had there appeared as ami cu s

curiae, had conceded that the plaintiff's proposal to cal l ev i dence whi ch was the same a s that gi v en before t he s e l ect

committee would not be a breach of privilege.

It may seem curious that a Royal Commissioner command e d to inq uire into the 'actions of the Government' in a certain respect, is precluded by the doctrine of parliamentary privilege from examining what is said or done in that respect in one or

o ther House by members of the Government. However, it must be

r e membered that the privilege is that of the Parliament as a

whole and not that of individual members or of the collection of me mbers who for the time being constitute 'the Government'

howev er defined. (See e.g. Church of Scientology v. Johnson-Smith (supra) at 528; v. Whitlam 142 C.L.R. 1 per

Gibbs A.C.J. at 36.

I n the light of the principles which can be extracted from the

authorities reviewed above, we consider that it is not ope n to

the Royal Commission to inquire into the propriety of a d isclosure by the Prime Minister in answer to a question in t h e

House. Since paragraph 19(a) of the statement of issues clea r ly requires such an inquiry we submit that it should be deleted .

The question of whether Mr Combe should have been given an opportunity of being heard on the question of whether or n o t

Ministers should make use of his consultancy services is earlie r raised by paragraph 9 of the statement of issues. To inquire

227

into whether such an opportunity should have been afforded b efore the Prime Minister answered a question in the House

necessarily involves a consideration of the propriety of the Prime Minister answering the question as and when he did. For the reasons already indicated such an inquiry is not open to the Roya l Commission and paragraph 19(b) should also be deleted.

Howe ver, in our opinion the substance of the issue which Mr

Co mbe wishes to have resolved can legitimately be examined

without infringing parliamentary privilege if paragraph 9 is

recast in some such form as the following:

9 . If yes to 7(b), should Combe have been afforded an

opportunity to be heard:

(a) before the NIS Committee decided that the Prime Minister should inform other Ministers;

(b) at any and what time after the decision of the NIS

Committee?

B. Paragra phs 22 and 23 of the issues identified in the

statement of 11 July 1983 are as follows:

(22) Was the statement made in the House of Representatives by the Prime Minister on 11th May, made pursuant to any agreement or understanding between the Attorney -General and Combe?

(23) If Yes to (22):

(a) was the statement by the Prime Minister in conformity with this agreement or understanding?

(b) did Combe or any other relevant person resile in any and what way from the agreement or understanding?

An inquiry into whether a statement made in the House was ma d e

pursuant to, or was in conformity with, an agreement or understanding, whether reached inside or outside the House, a l s o seems to us to call into question the reasons for making the

statement, and the propriety of making it in the form in which it was made. That view compels the conclusion that paragraphs 22 a nd 23(a) of the issues in their present form should be d eleted.

228

However, we co.nsider that such a deletion would not unduly restrict an examination of issues of concern to the Governme n t and Mr. Combe, if paragraphs 22 and 23 were amended to read as

follows:

22. 'Was any and what agreement or arrangement concluded on 11th May between Combe and the Attorney-General or a n y other member or members of the Government as to subsequent disclosure of or comment upon Combe's

connexion with Ivanov and the Government's actions in respect thereof?

23. If yes to 22 did

(a) the Government; (b) Mr Combe;

(c) any other relevant person;

resile in any what way from such agreement or understanding?'

DATED the 27 July 1983

D.M. Ryan

...........................

J. W. Rapl

229

APPENDIX D

PROCEEDINGS IN CABINET AND COMMITTEES OF CABINET

1. On 28 June I ruled on a claim by Counsel for the Government

that the deliberations of Ministers (whether members of NISC, the Cabinet or the Ministry) were privileged from scrutiny by the Commission. That claim invoked what was called 'Crown privilege' or 'public interest privilege'.

2. In giving my ruling I referred to the recorded decision of

NISC of 21 April and concluded that the claim of privilege

sho uld be upheld in respect of the Ministers' discussions l e ading to those decisions. I said of that conclusion:

I have reached this conclusion upon the basis that the recorded decision is the collective decision of the committee. Part of that record is already in evidence. However, the first part of the decision, which sets out the basis for making it, is not, and I should expect that the

Secretary of the Cabinet who signed the minute, or some other person present at the meeting, would be called to establish the whole of the decision. If it is not

established I will reconsider my decision.

3. In respect of the minutes of the decisions of Cabinet and

the Ministry on 26 April and 2 May, I took the view that since

neither of those recorded decisions referred in terms to Mr Combe -

It is therefore necessary, if those decisions are to be before me as, in the light of my conclusions as to the Terms

of Reference they should, that other evidence, if necessary oral evidence, be adduced to establish what those decisions were. It will also be necessary to establish the reasons for the decisions and the material placed before the cabinet and

the ministry upon which the decisions were made.

If the decisions included collective reasons, as in the case of the decision of 21 April 1983, evidence should be adduced as to those reasons and the claim of privilege disallowed to that If, however, the decisions did not incorporate

230

collective reasons, the question arises whether or t o what extent the claim for privilege should be disallo wed t o enable me to conclude what the reasons were.

4. After balancing the competing public interests raised by the c laims of privilege in respect of the deliberations of Cab i net

on 26 April a nd the Ministry on 2 May I ruled as f o llo ws :

In the circumstances I have concluded that if the dec i sions affecting Mr Combe made on 26 April 1983 and 2 May 19 83 did not state collective reasons I will disallow the claim f or privilege made by the government in respect of state ments

made by ministers in the course of discussion at the meetings on those days, which indicated matters they we r e considering in coming to their conclusions on the matter s put to them, provided that access to that material be g iven

only to counsel assisting the Commission and to counse l for Mr Combe.

5. Cabinet has, as a matter of conventional usage, bee n t he

body responsible for effectively taking decisions on which are b a s ed the formal a dvi c e tendered to the Crown and the a ctions of

the Executive. In order to understand what has to be investigated to identify the terms of a Cabinet dec isio n, r egard must be had to one specific convention and to the prac tice

go verning the deliberations of Cabinet and Committees of Cabinet .

(i) Unanimity or Collective Responsibility of Cabinet

Once a decision has been taken it is necessary that all individual Ministers should support what has been determined by the majority of the Cabinet. A Minister who is unable in conscience to give that support usually tenders his resignat i on

i mmediately to prevent any appearance of Cabinet disunity. (See e.g. Halsbury, Laws of England 3rd edn, Vol. 7 p.360, Qui c k and Garran, Annotated Constitution of Australia p.705; F.A.I. Limited v Winneke (1982) 56 A.L.J.R. 388 per Murphy

J., at 401; Jennings, Cabinet Government 3rd edn, p.277, and Gordon Walker, The Cabinet, Revised edn, pp26-27).

231

The principle of collective responsibility is not invariably f o llowed or applied by all administrations. However, it seems

cle ar that the present Government from its accession to office d etermined that this convention should be binding on Cabinet

Ministers. Decision No. l of the Ministry taken on 11 March which was tendered in evidence contained the following s ub-paragraphs:

(g) the success of the system as developed depends on the concept of collective responsibility within the Ministry - it is designed, through the circulation of Cabinet agendas, submissions and decisions, to keep all

Ministers abreast of what is going on and contains ample opportunities for Ministers to resolve differences within the overall Cabinet process;

(h) the principle of Cabinet solidarity will be observed by Members of the Cabinet within the FPLP - any Cabinet Minister who finds this unacceptable will be asked to stand down from the Cabinet.

Reference is also made to the following passage from paragraph 12 of a statutory declaration made on 25 June by the Prime Minister, which was received in evidence:

It is a complementary convention of Cabinet government that decisions arrived at by the Cabinet are supported by all Ministers whatever their personal views. This principle of collective responsibility of members of Cabinet for decisions taken is a longstanding and integral part of the Australian system of government. Whatever range of private

views Ministers may put in Cabinet discussions, it is necessary so as to ensure effective and efficient government that there be finality of decision making and that decisions once arrived at, and announced, are clear and unequivocal and supported by all Ministers.

The Secretary to the Department of the Prime Minister and

Cabinet, Sir Geoffrey Yeend also testified to the adherence by the present Government to this convention.

(ii) Practice in Reaching and Recording Decisions

Practice may vary from government to government but the general practice, including that of the present Government is for

232

d ecisions to ·be arrived at without any motion being pro p osed o r

voted on. This practice was followed at the NISC me etings .

Minutes of Decisions of Cabinet and Committees of Cab i net such as that recorded as No. 321 (NIS) are intended to be no mo r e

than a clear and concise record of what is concluded and sometimes the grounds on which the conclusions are rea ch ed . Jennings, Cabinet 3rd edn, p. 271 describes t he

practice in the United Kingdom in these terms:

The note is known officially as the Cabinet 'Concl us ions ', though more popularly as the Cabinet 'minutes'. Un de r the War Cabinet of 1916-19, the minutes contained a f ul l summary of the discussion; but this practice is no longer f o llo wed ,

and the minutes contain only enough information t o enable the reader to understand the nature of the concl usions. It is, in fact, said to be an instruction to the Secre t a r y in

drafting Cabinet minutes to avoid any reference t o opinions expressed by any individual and to limit the minutes as narrowly as possible to the actual decisions agreed t o .

A similar practice obtains in Australia. Sir Geoffrey Yeend in

describing the system of writing the decisions of Cabinet a n d Cabinet Committees deposed that two senior officers of t he Department of the Prime Minister and Cabinet who act as note-takers, together with the Secretary to that Department wh o

is the Secretary to Cabinet, attend each meeting of Cabinet or a Cabinet Committee. After the meeting the note-takers in consultation and by reference to their own notes prepare a draft minute of each decision. (Occasionally there is only one

note-taker, and in that event, he alone prepares the draf t .) The draft is then settled by the Secretary to Cabinet who signs the final version, which becomes the only record of the decisio n.

All decisions so recorded are circulated to an extent det e rmi ned by the Secretary, usually to all Ministers, but on a much mo r e restricted basis where they concern matters of special sensitivity, like those concerning national security or the

exchange rate. It is rare that any suggestion is made that t he

written record as settled and circulated does not accurately reflect the decision actually taken at a meeting. It seems t hat

233

if any such suggestion were made the minute would be reviewed a nd, if necessary, amended.

6 . The combined effect of the convention of collective

responsibility and the practice governing the making of records is, in my opinion, that the formal Cabinet Minute conclusively e stablishes what was, in fact, decided by Cabinet or a Committee

o f Cabinet. I therefore concluded that it was neither necessary

n o r appropriate, in determining what was decided on 21 April, to

examine what was said by individual Ministers in the course of coming to the decision.

234

APPENDI X E

EDITED TRANSCRIPT OF CONVERSATION

BETWEEN MR IVANOV AND MR COMBE

AT DINNER IN MR IVANOV'S HOUSE

ON 4 MARCH 1983

C: Hello, how are you, good to see you.

I: Would you like a drink?

C: Thank you.

I: We usually do not keep on the diplomatic protoco l because we are peasants. C: It looks very beautiful.

I: It's salad.

(IVANOV and his wife, IVANOVA, now offer food and drinks .

IVANOV talks a bit about vodka, whiskey and wine and

d iscusses the Russian vodka 'Stolichnaya' At o ne p o int C. says thank you in Russian) C: I wouldn't mind a beer actually. A good Australia n drink. I: International I would say.

C: Sorry I'm late. I explained to you, I am earning some money

tomorrow night by being an expert commentator on Rad i o 2UE and I had to go around there tonight but the crazy part

about it is I went out there tonight to learn how t o operate

the computer and would you believe the compute r didn't work; So we literally wasted our time. We stayed in there an

waited and waited and tried to get the computer up and it

didn't work so we finally gave it away and I said 'look I'v e

got a dinner commitment. I'm not waiting around a ny longer . So we agreed to wait until tomorrow afternoon.

I: So such kind of things also happen to you.

C: Oh, yeah.

I: Usually. We got some unexpected things, it usually h appens in our country ... Oh, era very important event ···

C: It's pretty common I think

235

I : That't right ••• or maybe it's just one sort of (bungle?) ...

C : What's it look like for tomorrow?

I : Well as for me I've no doubt that Bob Hawke will win.

C : How's Moscow feel about that?

I : I don't know how Moscow feels about it but to my mind, well

today we uh so to speak we had a sort of a lottery, bets, we

but in our predictions and tomorrow or say Sunday morning the winner will get a big prize, a large bottle of champagne with which we are planning to celebrate the Labor victory. Well, I hope, to my mind, I analysed all the newspapers

recently and to my mind Bob Hawke will win. C : Oh, he'll win and tonight's poll, taken mid-week, has come

b a c k a bit as is to be expected. I don't think it's been

published but the Liberal Party's own research which shows 53 to 47% vote for Labor which is about a 3 l/2% swing which

if it holds at that will give him a very comfortable

majority of about 15 to 20. If it continues to come back of

course ••.• (I & C discuss food. IVANOVA is also there, the television is on, it has been on since the beginning of this tape. They

discuss the weather and International Women's Day coming up.) C : International Women's Day is actually the 8th.

I : That's why we have certain long weekends •.•

C : When does the Ambassador's term end.

I: I hope at the end of this month. Well, with my full respect

in his personal achievements in such kind of country as Australia we need a strong, young man. I think that our (new man) will suit Australia quite well. C: Who's been nominated?

I: Well between me and you, you know, it will be Mr Samoteykin.

C: Sorry?

I: Mr Samoteykin. He was a personal aide to the late Mr

Brezhnev. He is also very experienced in international affairs. He was the •..

C: Sorry, what was the position he had with Mr Brezhnev?

I: He was head of a group in international relations. He was

Second Secretary in Foreign Affairs

236

C: What age man is he?

I: Uh?

C: What age would he be?

I: Just in his early fifties. 53 or 54.

C: It's a lot of difference, isn't it. (An apparent refe r ence

by C. to the current Soviet Ambassador to Australia , Nikolay Georgiyevich SUDARIKOV, who is 70 years of age). He ' d be the same age as the Prime Minister. Now tell me, will the , in

the event that there's a change of Government and a change of policy, will the Soviet Government resume c onsi der ation o f developing the Embassy site at Deakin. Apparently ther e

was a site set aside there that an Embassy compo und .

I: Well I just arrived in Canberra. I was told by my fri ends

that there were some negotiations with the Australi a n Government concerning the building of the new Emb assy in Deakin. Then it was dependent if ••• to my mind, I don' t know

exactly, to my mind, this building we have now was '

previously a small hotel with no places for the diplo matic staff because the building is too small and, according to the diplomatic rules each diplomat must have his own s tudy and we have now two (or: too?) small rooms like this in

which three or two diplomats must sit .....•• terribly

small ... if the Labor Government gives us •.. to build •.. but in a certain period of time because by 1979 we were give n a

certain sum of money, then those monies were, say , transferred to some other country and we have now (persuaded?) to, well, say, to grant us a certain sum o f

money again. And you know we have a planning system in our country, so next time it will be approved at the ne xt

session of the Supreme Soviet and after that C: Another 5 years?

I: No, not 5 years, the next 2 years. And in some year a n d a

half maybe we'll get ..• well it's much cheaper to build t he new Embassy using the Australian building companies. We have a practice when in some countries we build the Ernbassy ... you

know the Brits are (familiar?) .•. C: Oh really?

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I: .•. You may know, in London two years ago, our Trade

Representation, after the tech ..• they found such kind ... of things there, and the building was constructed by a British firm (reference here is apparently being made to the inspection of the Soviet Trade Office in London by Soviet sweepers and the consequent discovery of hugs or other devices). As for Australia •.. ! think that we've go to, say,

have some kind of agreement with Australian firms. C : I think we'd have the companies here who could handle it on

a purely trustworthy basis, particularly if (Australian

citizen named) was supervising it (laughter). No, the reason I ask is ••• one of the companies ... for which I have an

e n o rmously high regard is the (Australian Company named). I : He re in Canberra?

C : Well, nationally and in Canherra. They have made availahle, they always do make available Central Sydney business facilities for the Labor Party campaign. They built our building (location named) and they were telling me that they had , through (Australian citizens named) in Sydney, been

talking with the Embassy some years ago •.• I : ... very soon we'll begin conversations ••• (this phrase may also mean discussions) C : Well you do need it don't you, I mean ideally if you could

have an Embassy compound where all the diplomats could be housed. I: •.. as far as I know.

(I. now continues in a very quiet voice speaking about the building of a new Embassy. He mentions 'my friends in the Consultate-General' and he then says 'I am separated from my c o lle agues, they are good friends'. He says he hates the

idea and he laughs. 'Of course in our country', he says, 'I

don't know my neighbours on the same floor, I never met them, maybe twice a year that's all, but here we can afford to live separately a family life •.• very important'. C. compliments the home cooking that he's getting at the moment as 'better than any salad I've ever had'.

IVANOV translates this for his wife IVANOVA. He tells C:

238

'you know, we have been living a simple life here'. C . raises the question of IVANOV going to horse rac ing and IVANOV says that he's done some attendance of h o rs e r acing

or he's going to do so with diplomats from Great Britain and New Zealand.

C. asks him how he can know anything about horse r acing and

I. says that he'd had a chance in Moscow some t imes to watch

races. The two then discuss some of the food they a r e

eating). C: What we really should do is the next time we have d i nner we

should get Bill Hayden and his wife to join us.

I: Oh, really?

C: Because he'll be Foreign Minister. I: Great.

C: And he'll be making a lot of those decisions.

I: Great. Well I'll be glad to join him because, well, the

first time I met him in Melbourne it was 1981.

c: '81.

I: At a conference, we were there together, my frien d , another First Secretary Karasin and I saw you at the table. By the

way you know I got a congratulation. C: A congratulation? in respect of? I: Of the future Labor victory.

C: Dr Igor'?

I: No •.•

C: Oh.

I: (Inaudible) C: They sent congratulations to you? I: We knew quite well each other. We've been in every

diplomatic function. C: Who was this?

I: I don't think you know him personally, there are s o ma ny

different diplomats ••• American diplomats. C : When you said that, I thought you meant that you had a

congratulatory message from one of your embassies overseas . I: No, no, no, no, here in Canberra.

C: And I was thinking of Yuriy Pavlov being Ambassador in Cos t a

239

Ri c a.

I : Of course he'll be very glad when he hears about the Labor

v i c tory .

C : Of course, because he was here, wasn't he?

I: But nevertheless, nevertheless, they are worried here in Canberra with this fact, that Labor will win.

C : The Americans are?

I: ... a l o t of problems for them. I can tell you frankly. Here

in Australia, to my mind, during all these 7 years they felt

tha t we are, how to say, bastards, but now after a Labor

Government comes to power they will have to worry. C : Oh , they're more worried about the ... than they were about

the Prime Minister? I : Yes .

C : Well, you'll be interested to know then how I spent my last

Sunday afternoon, doing an interview for a film which is

being made about US/Australian relations since 1945 by the same people who made that film 'On Company Business'. Remember there was a film came out a couple of years ago

which was very controversial called 'On Company Business' about the CIA in, particularly in the Third World, particularly Chile and Cuba, a devastatingly powerful film made by a man called Alan Frankevich. Frankevich, when he

showed it in Australia, I talked to him about the

possibility of making a film on CIA activities here, so they're doing it in the context of talking about US/Australian relations since 1945. I had a lot of fun. I spent about an hour on interview ... of my beliefs that CIA's p e netration of the Australian Government from l972-1975 •.• in

bringing down the Whitlam Government and my dissatisfaction that my own Party had not pressed the American Congressional authorities for some satisfactory enquiry and explanation for what happened, because this meant that the incoming Labor Government will inevitably be subjected to similar penetration or that the suspicion would remain that that

sort of penetration and that sort of destabilisation could recur.

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I: Well some article in the recent issue of Foreign ... Am erican

journal ... it was said that nobody from the Labor P a rty

believes that it was the American •.. C: I've seen photographs of Bob Hawke arm in arm with Ru pert

Murdoch and I say how naive have we become and I think t o

myself, well, I was part of the, I was right in the centr e

of it. I guess I feel more bitter than most but it just t o

me is inconceivable that we as a Party could come back in to

government and we would forget those bastards who did us in . I hear people in my own Party talking about (Australian

citizen named) becoming a senior bureaucrat under a Labo r Government. He's the same guy, the day we were removed fr o m office by the Governor-General's decree, slunk away t o the Prime Minister's lodge. Now I don't forget those things . I

suppose I'm a very bitter, I'm a very bitter hater. (IVANOV's wife is now serving food and the two men di scu ss

seafood). I: Last year, last summer we were in Sochi and I used t o d i ve

for crabs, you know, just for collection (There is n o w

further discussion of crabs etc).

C: In places in the Soviet Union they tend to drink German

Democratic Republic beer, do they not? I: Yes, that's right

(There is further discussion of beers in the Soviet Union, mostly by IVANOV). C: Tell me, did you get on to (Australian citizen named) af te r

our last discussion. I: Pardon?

C: Did you get on to (Australian citizen named)?

I: Er well, actually, actually, first of all, I thought that

well ..• that it wasn't at all the time for such discussio n and I'll be in Melbourne on the 19th and next I'll be in

Adelaide .••. (I is speaking quietly). C: You understand diplomatic niceties better than I do .•. I say, you understand diplomatic niceties better than I do. But I'm one of those people who sees an opportunity and goes f o r

241

it straight away. I: Well, we also see opportunities but we should take into acc o unt the situation because if we want to ••• we, er, cannot (IVANOV here is very quiet in his speech).

C : (laughs) I'm sure it will be fine.

I : I don't know whether it will be such kind of (IVANOVA says

something making IVANOV's comment inaudible). C : We ll, I think, ah, I think the truth is that Australians

must, ah, must know what happened, ah, if they're going to

e nsure it never happens again.

I: But, er,

C : Bu t t here is a big difference this time. I mean what you're

go ing to have is a Labor Government which will have the

capaci t y to pass its legislation through the Senate which will have four State governments, which will have a much

mo re accommodating so life will be much easier for Hawke and his Labor Government than it ever was for the Whitlam Labor Go vernment, but nevertheless that won't always be the case you know, that we have so many state governments etc. and,

yo u k now, it's important that the incoming Labor Government presses to know what really did happen. I: Bu t er. I don't .•• whether we can trust those people

because, er, there are some suspicions. C: Sorry, which people do you mean? I: Er, those who are now(two or three words inaudible) C : Oh, I see.

I: (In a very low voice) In Australia these people ..•

C: Do you think it's the same film?

I: Uh?

C : Do you think it's the same film that, ah?

I: No I don't, er, it seems to me (inaudible 15 seconds)

C : If they're any good they wouldn't be coming to you to do

their work for them, would they? I: Well, I,

C: If they were any good, they'd be doing their own research

and (paying? or finding?) their own people I: (I.'s comments here are quite inaudible and go on for quite

242

a while) .•.• He asked us .•.•

C: Oh really.

I: (Again for about l l/2 minutes here IVANOV has a very l o w

voice and is quite inaudible) C: And you don't know the group, I mean you don't know them

well?

I: \vell ... (IVANOV is here inaudible for 30 seconds)

C : Do they, are they known to the Society? Are they peopl e

that are known to the Society? I: Well, to my mind, they are well known to the ..•.

C : Are they?

I: (In a low voice, inaudible 30 seconds)

C: Oh it's probably the same group (Australian citizen named ) 'The National Times' I: (inaudible) C: Yeah (Australian citizen named) Yeah, yeah, yeah

I: (Australian citizen named) C : (Australian citizen named) yeah, yep. They're fine, they'r e fine. I: So we can trust them?

C: Yep, you can trust them, absolutely.

named) is the man who, ah,

I: I d on't know him, I, er ••

(Australian citizen

C: Well, (Australian citizen named), I'll tell you how g ood

(Australian citizen named) is. In 1974 I: Would you like a glass of white wine?

C: Yeah, that would be lovely, thank you.

(Discusses wine or a snack which they are now eating. Thi s goes on for about 4 minutes. There is some walking around

the room). I: So David, you think we could help you?

C: If there's one journalist in Australia who is going t o ever

get to the bottom of what the CIA did in Australia, it

deserves to be (Australian Citizen named). (Australian citizen named), back in 1974. (IVANOV's wife asks about some wine here, whether or not they want champagne.) C: (Australian citizen named), in 1974, I reckon it was, late

243

1973, came to me one day and said 'how good are your sources

in Adelaide for finding something out and where somebody lives?' I said 'oh, I think they're pretty good, you know,

I said 'I've got a fairly good •.. with the Premier of South

Australia' and I said 'why?' He then told me that a fellow

called Victor Marchetti of whom I'd never heard, had released this book on the CIA, in London, and had given a

press conference ahout CIA activities in Chile and that at the question time which followed an unnamed Australian j o urnalist had asked him whether these sorts of things could

happen in Australia, the sorts of things ... in Chile, to

which Marchetti then said, 'why yes, only the other day I heard from my good friend (USA Diplomat named) who was in charge of things then down under- that's Australia- and who said that he was a bit disgusted about the sorts of

things that he had been required to do.' This was reported t o (Australian citizen named), and (Australian citizen

named) pursued that relentlessly. I found out that

(Australian citizen named) discovered that (USA diplomat named) had been through Adelaide to Pine Gap and we tracked (USA diplomat named) down, we tracked his addresses down, we

tracked his friends down, we tracked his social movements down, but through other areas (Australian citizen named) tracked down (USA diplomat named) entries into Australia and his exits, the fact that he was using 3 passports and he

proved conclusively that (USA diplomat named) was a CIA operative. And it was based on the information which (Australian citizen named) had got that Whitlam in 1975 at the height of the crisis made his disclosures about, or made his comments off the cuff in South Australia ahout how,

unlike Mr Anthony, 'I've never accepted money from the CIA'. That set the whole thing going. Now after that, (Austrnlian citizen named) wrote what he knew and his then editor of (Australian Company named), (Austral ian citizen named), was going to send him to America to try and interview (USA diplomat named). (Austrnlian citizen named) got cold feet and said oh, no, (Australian citizen named) wouldn't send

244

(Australian citizen named). So in fact at one stage - this

is one of the things, one of the stories I told in thi s film

-at one stage what happened was that· I personally, because I was so convinced by what (Australian citizen named ) had done, I personally paid (Australian citizen named) 's air ticket to go to Maui and I arranged to, through contacts of

mine in Washington, for (Australian citizen named) a nd myself to meet up one particular Sunday in November 1 975 , which in fact turned out to be the Sunday before the coup ,

with the three progressive members of the Senate tempo r a r y committee on intelligence activities namely (3 USA Se nator s named). The meeting was all set up and was all pred i cated

on the assumption that we got from Marchetti a letter which we undertsood that he had, he had received from (USA

Diplomat named). And of course what happened was, there wasn't a letter. When he said 'only the other day I h ear d

from' which we assumed to be in written form, was in fact a

conversation. There was no letter, so in truth I coul dn' t justify going along and seeing these 3 senior members o f the United States Congress on the basis of a conversatio n. Had we had a piece of paper it would have been terrific, you

know, we could have set the old US Congressional, Senatorial Committee enquiring into Australia at a time when that Senatorial Committee was still straight. Shortly aft erwa r ds it was corrupted and became undoubtedly a stooge of th e

Agency. But that's (Australian citizen named) background . (Australian citizen named) was the guy who did all the investigative stuff on the CIA in Australia (he's) d ead straight I: (Inaudible for 15 seconds) So (we'll?) er •••. (Australian

citizen named) C: (Australian citizen named) who's doing the interviewing -who's very close to (Australian citizen named) and is completely trustworthy. Alan Frankovich, who's the Ameri can

consultant for the project, is totally reliable - a terribl e foe of the CIA) -his film called 'On Company Business' which they tried to get banned, - marvellous - stunning.

245

I : It was made in?

C : 1979 or 80, or was it 1981? No it was later than that,

beca use it was shown in Australia at the Sydney film festival probably in 19 •. , it was shown first in Sydney at

the film festival, I reckon it was probably 1981, '80 or

' 8 1. The film came to Australia about the time that the

'Falcon and the Snowman' by the guy who covered the (Boyce?) t rial, about the time that book was released, 'On Company

Bus iness' came to Australia.

I : Well I don't remember, but .•..

C : Well if it's that group, Valeriy, I'd say you can rely on

them completely. I : Good, I believe you.

C : You can rely on the fact that they're not interested in

do ing a job on the Soviet Union. They want to really nail

the Americans. I : Well, er of course we in the Embassy, we analyse the

si tuation here in Australia •••. we don't ..•. (IVANOV's comments here are very quiet, inaudible for approximately 15 seconds). C : If you've got a cigar, I might have a cigar.

I : We ll

C : (laughs)

I: Well unfortunately the last couple of cigars were smoked by my friend who was here, we were just smoking, drinking ..•• er,

C : Boozing on.

I: No, no, just after shopping (IVANOV refers here to a

shopping trip some short time ago that he had gone on and returned from with his friend, and that they had done some washing up in the kitchen and a few drinking glasses had been broken and had been replaced). Next time I promise you

I'll try and do my best .•• So we came to the conclusion that

Mr. Reagan will be elected and with the Labor Government here in Australia there will, might be, I'm sure will be a

change in the situation in Australia. Your concern about Afghanistan and soforth, that's another thing. Afghanistan is our nearest neighbour with which we have a common border

246

and, well · I hate the idea that ••• about Afghanistan, a nd I k now it sure, if there is no, the er limited contingent of

Soviet forces in Afghanistan, we'll have there the Am e r ican nuclear rocket bases near Soviet territory. We can't, we couldn't afford it because we know, well actually jus t imagine - American nuclear submarines in the Indian Ocean -

Soviet territory, with the Australian er, the American ••. sending the information from satellites, American. Well, it's very peculiar. I like to explai n and t o show you, to see the globe through my own eyes.

C: Still it would be good if you could get out of Afghanistan .

I: Well, of course. Nevertheless, I believe, it's my p e r sonal

point, really, that in two or three years in Afghanistan everything will be OK, everything. I believe that we just er that with Afghanistan we have er kind of you know we' v e damaged our international position but there was no wa y out of that situation. It's not, say, from the American p o int of

view that the Soviet Union was aiming C: The real problem with Afghanistan was (IVANOV talks o ver him now and says 'to occupy the, say, the Persian Gulf, to put

its hands on the oil fields of Iran and Iraq'.)

C: What nonsense. (C seems to accept IVANOV's reasoning f o r the

Soviet presence in Afghanistan and dismisses the 'Am e rican argument' that the USSR was trying to get its hands on the oil fields of Iran and Iraq.)

I: That ' s right. They were, they were, er, ••• I don't know t he

sources of that (IVANOV gives a three to four minute justification of Soviet involvement in Afghanistan, pointin g out the early treaty relationships between the USSR and Afghanistan going back to the 1920s and C responds as

follows below). C: With the mad Mullahs running Iran. I can understand you

feeling fairly edgy. I: Yes.

C: That was the Kennan analysis in America you know, really, Kennan very early said, you know that really it's explicab l e in terms of er concern about what 25 million Moslems near

247

the Soviet Union's borders might do rather than about any e xternal threat and I think that's right, to me that's

utterly credible. These lunatic Iranians. If I was a Soviet c itizen I would be feeling very unomfortable.

I : Yo u know, after the change in government, after the April

coup in Afghanistan, the Soviet Union did so much for this country, not only, say, sending troops to protect its borde rs but we built there a big number of big industrial enterprises, factories. We rebuilt - we built there 3 huge

plants producing parts for the building of houses, and so f o rth, but the main thing is that there are nearly a million

a n d a half nomads in this country which got to cross the

bord e r from Iran in the spring to Afghanistan and during the winte rtime, no border, borderguards and so forth. And when the border was closed, because with those nomads a lot tried to bring arms - put them under clothes and so on, tried to

pene t r ate the Afghanistan territory, very, very compl i cated questio n. It ' s simple for us, simple for us, for us you

know, it's very simple. It's very complicated to explain to

the wo rld, to explain all that kind of thing happening t here. It's very complicated. Of course we recognise that

we have some problems now, but I believe that with our new

l ead e rship it will be settled .••

C : I f it takes as long as that, Valeriy, there'll be another

Liberal Government back in Australia reimposing sanctions. I: .. . (speaks inaudibly)

C : They what?

I: (inaudib le) especially Reagan. You know Reagan, so to speak, he is not .•• well .•• theCIA •.. (for about 30 to 40 seconds inaudible here) So, to my mind, we have with Australia, Sov iet Union, we have a lot of common things. First of all

e conomic and trade relations. We would be glad .to see a kind o f strengthening - but to do these things we must be sure

that we, to my mind - we are ready, we are prepared - we

must know to what degree the Australian Government will be ready . (IVANOV now discusses, in comparative terms, trade matters concerning agriculture and raw materials insofar as

248

the trading relationships between the USSR and Canada , United States, Argentine and other countries are c o nce r ned . He also discusses poor weather conditions in USSR at the

moment) Australia has a great potential to develop trade with the Soviet Union. So, I know that you are consul t i ng

some firms, correct? C: I'm consulting a firm potentially.

I : Potentially; maybe you'll, you ' ll, er

C: No, I need your advice. On Mon day I'm going to be asked to

enter into an agreement to work for that firm for a 1 2 month

period.

I : Well maybe we'll need in future your advice we don't k n ow

with which companies we should try, with what people we should deal, sincere people who really ••. it's ah, of cour se , of course it's a political question. C: Can I come back to this, because we're getting to the

business end of the discussion, which is very importa n t to me. In view of the advice I gave my client (there is a puas e

for about 4 minutes. It seems that C. is out of the r oom.

IVANOV and IVANOVA are talking in Russian then c. r e - enters

the room and IVANOV makes some comments to him about t he 2nd World War and says:) I: There is no single Soviet family which hasn't lost s o mebody . In my family three brothers of my mother were killed (in the

2nd World War). (C then thanks IVANOVA for the fish di n n e r and IVANOV says that his family, that is, his wife and child, usually eat the biggest part of their meal during t h e day. He then discusses food preparations and the fact that

IVANOVA is having English lessons. This goes on for about

two to three minutes. Then Irina, the IVANOV's daught e r arrives). C: What's your name?

Irina: Irina

C: How are you Irina?

Irina: Good. C : My name's David.

Irina: Uh?

249

C: My name is David. I understand that you speak English very

well. Your proud dad has told me how well you speak English. (The child speaks to C about having just been to the circus and tells him her age.) C: I've got a little boy of six and he's a lot smaller than you

and I've got another boy 9 and he's not much bigger than

you. (IVANOVA and IVANOV talk to the child) I: She has a lot of friends in Australian school, but she's a

bit shy. C: Well, getting back to what we were talking about before, urn,

what sort of attitudes does the Embassy have to the various companies which are trading with the Soviet Union? I: Well, I wouldn't say it's the additude of the Embassy, I

would say (there appears to be some comment here about Moscow's attitude) C: Right.

I: It will depend on ••• how serious the Australian •.• (IVANOV speaks quite inaudibly here for about 45 seconds) C: Well, let's wait then.

I: (inaudible) C: The new government will not be against the development of closer economic relations. I: As far as the sum of money goes in Australia/USSR trade

relationships? C: 600 million this year.

I: (He discusses with C. sums of money, in an evaluation of the

economic relations between Australia at the moment in terms of imports and exports and so on, and the imbalance between the two countries in trade matters.) I: You know our policy is in general that we are eager to

develop trade and economic relations between the Soviet Union and Australia. C: But I mean also with Australia you have a massive trade

imbalance, something like a billion dollars of exports to 15 millions imports. I: •.• Moscow Narodny Bank. C: I know of the Moscow Narodny

250

I; (inaudible) I can speak only from the political point of

view •..

C: Well, as concerns the role I can play, Valeriy, let me s eek

your advice. I have discussions on Monday in Melbourne with (Australian Company named), with whom I've had some association, and they are proposing to discuss with me th e report which I gave them when I came back from Moscow and also an ongoing relationship between myself and them whi c h

if I enter into it, it would bind me to work exclusively f o r

them in that area of Soviet/Australia trade relations. I s ee no reason why I shouldn't work for them, as far as I can

tell from the discussions which I had with Mr Smel'yakov in Moscow. They may have been a bit unwise at times but they

are still held in reasonably good regard as far as Sov i et

Australian relations are concerned. Now that's really wh at I seek your guidance on.

I: Well actually, in Moscow it will depend on what things could be done here in Australia. (IVANOV now goes on to discus s raw materials, machinery, manufacture, import, export, t ools for making huge parts for Japanese super tankers and trade

in general terms.IVANOV also discusses in comparative t e rms the relationships between the USSR and the United States and Britain on the one hand and between the USSR and Australia on the other, making the point that trade relations with the United States and Britain have been historically quite

strong.) In Australia, what we have now, is a very poor

political relationship, imbalance in our trade, so we must •.• a relationship between two civilised .•• C: Yes, well let's talk of those two propositions. Let's assume that very quickly - a normalisation of political

relationships which leads to all intents and purposes a s ort of market relationship in respect of trade. Does it then become a factor of the extent to which Australia buys from the Soviet Union, that you buy from us, or is it a factor of

your needs? As you say obviously the lack of snow is going to create a crisis situation. (This is a reference to the

weather variable adduced earlier by IVANOV in discussing

251

Soviet agricultural production.) Now insofar as that affects meat, does the decision by the Soviet authorities whether to buy the meat from Australia as distinct from say Argentina depend upon our level of imports from the Soviet Union or does it depend upon the price at which you buy from Australia, or does it depend upon the political relationship that exists between our two countries? I: (refers to the Falklands war, mentioning that the Soviet

Union bought certain goods from Argentina around about that time) • C: (jokingly) Of course I think you're mad because you're supporting a bloody fascist right-wing dictatorship in

Argentina. (laughs) I: Well, Moscow is quite aware that Argentina junta ••. C: As compared with those lovely nice democratic ... in Britain (laughs)

I: I've met a lot of Argentinians here in Australia who came

from that regime. (he discusses Argentine situation in Moscow's view). OK, it's far from USSR/Australian relationships but ... C: (interjecting) It shows the political motivations I: Yes

C: OK, well now let me say that in the report which I submitten

to (Australian citizen named) when I came back from Moscow, what I essentially said to them was that they had to

(provide for? or find? or vie for?) political opportunities, they had to be prepared. They couldn't just go into the market place ••• in Moscow and say 'well we're an incredible trade agency and we're terrific and you know we've made a

fortune selling Australian products to the Soviet Union, therefore you should trust us', but they have to get involved in some pretty tough political decisions. They have, for example, to be prepared to back things which are

likely to improve Soviet/Australian political relations. If they're in a competitive situation and they are, you know, a, and their competitors b, c and d, what I argued was that

judgements would be made in Moscow based upon the level of

252

political compatibility with each of those competing companies. So they need to get themselves into a situat ion where they are seen by Moscow to be doing things whi ch are politically compatible and helpful to the USSR/Australi a

relationship. And it seems to have caused a storm? The c o mpany is sort of saying well we should see ourselv es as

being a commercial outfit and we should be respected f or ou r commercial professionalism. Now on Monday I'm going t o be saying to them that you have to understand that decisions are not taken on the basis of pure market forces, you know ,

they're taken on the basis of a whole range of

considerations. So if you are competing with this fell o w (Australian citizen named), who is a main competitor, f o r a share of the Soviet trade, then you have to be able to

convince the Soviet authorities that you are a better company to deal with from their point of view, y o u are going to be more politically helpful in terms of USSR/Australian relations. Now does that seem to you to be proper a dvi ce ? I: Of course, of course but such k ind of decisions?

C: Well, basically what I'm doing is giving advice to companies

about how to get on with the Labor Government. There is o nly one firm which has asked me for advice in the area of

Australia / USSR trade relations I : Of course. I believe that after March there will be mor e

firms applying. Well maybe er if it's possible- we'll a s k you to assist us.

C: Sure, sure.

I: To research some field (or: fields) of Australia products. C: That's. for Soviet goods in Australia? I: Soviet goods in Australia and Australian goods for the USSR ••• it's official business, business is business, your

work will pay, because we need such kind of research. It' s very important, very important. We have three trade representations here in Australia .•. C: ••. Well I'm more than happy to .•• You've been asked to speak

to me by the Ambassador or by Moscow? I: Weller believe me, Ambassador knows that er ••

253

•

C : My question really is, you ask me to work in a professional

capacity by Moscow or •.• ? I: Juster, if you need to go to Moscow •.• you can rely on

us .•. we'll do everything to improve our relationship ... organise meeting with the person(s) in charge of Soviet ..• the new Ambassador will come soon •.• C: The Ambassador is probably not as important to us as the

officials in Moscow. I: (appears to agree with this)

C: So really what we need to do is to wait until next Thursday

when the Ministry is chosen then have discussions - with

Hayden, the Foreign Minister, and whoever is made the Trade Minister, probably Bowen, to work out what the parameters are and then, I guess you're right, go to Moscow and find

out what the position is. (IVANOV's wife enters.)

C: Well that would be very good, Valeriy. I mean I'd love to

work on your behalf because I believe very fervently in Soviet/Australian relations. I: Well, besides there is a small special conference of the

USSR/Australia Friendship Society in Melbourne which I'm going to attend. C: And I. So we're driving from here.

I: Yes, we also.

C: Are you?

I: I can't afford to leave my wife here- so we'll go together.

C: No. What we should do is drive in convoy.

I: That's from here?

C: Yes, drive in convoy. Drive in separate cars. Stop at places

on the way, you know.

I: You know, to go to Melbourne I should notify the Ministry of

Foreign Affairs that at a certain time I start from here by

a certain route.

C: What, you have to tell them that?

I: Yes.

C: Bloody nonsense.

I: The number of the road, then the time of arrival, the place

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of my stay there, then the time of departure, and the time

of arrivig back here. Well, once I was caught by the p o lice

beause there was a sort of trap, and I was driving at a

speed of 178 kph because I was ••. hours late, and the policeman stopped me. He followed, he stopped me, and asked me 'would you like to - I hate the idea of risking my li fe

following you' • C: (laughs)

I: ••. three hours late. They helped us when we lost our r oad,

say, Melbourne, Adelaide. They helped us to find t h e ri ght place - the Australian police, but nevertheless going t o Melbourne I should do my application to travel forty-ei ght hours before. Nevertheless here in Australia I can t e ll you

we find quite a number of very nice, pleasant people wh o

would like to understand, at least to understand, the reasons of this confrontation. Well, we are not going t o prepare a socialist revolution in (any) country because Lenin in his works ••• but to establish real, well, norma l

relationships between countries. C: Oh, of course. You've seen in this last election campaign

how utterly hopeless it would be to try and get any s ort of

ideological persuasion across to the Australian people. I mean Hawke is going to win because ••. I: Well I would say, I would say that, sort of, election

tactics. C: .•• tactics, absolutely necessary. I: Yes.

C: In a country like this which is relatively wealthy you a r e

not going to persuade them despite terrible economic circumstances that they should make a significant shift t o the left, and so you have to go out there and you have to

say to them that nothing is really going to change. You ar e

just as conservative and just as right wing as those whom you seek to replace , and if they believe you, you get

elected. Now if you go out there and say, you know, we sta n d

for a real, principled socialist alternative they send you down the tube. It's a terrible reflection on the sort of

255

society in which we live, it's terribly depressing to me, I can tell you. I said before the campaign started, I said it

would be a campaign about style, they'd be no substance to the campaign at all and so it proved to be. Whitlam summed it up in his inimitable style when he said to one of his

former colleagues (mimicking Whitlam) 'You know comrade, we've tried winning with policies and no leader and we failed, but now we're trying to win with a leader and no

policies.' I: You'll win. I believe it, I believe it.

C: And we'll win. God knows what the leader will be like. Well

I say he's got to be better than Fraser. Whitlam would he

better than Fraser, that's the bottom line you know, that's the worst bottom line you can find, it's got to be better

than Fraser (laughing). Pretty bloody frightening. I: To my mind er he'll be like er, he'll be just Prime Minister

and if er, Australia, to my mind, his, the, main, his main

role will be just to show the main direction and let the

Ministers develop and work out .•. (IVANOV here seems to be suggesting that the new Australian Prime Minister will have something of a Presidential role and that the effective decisions will be made by individual Ministers.) C: It won't work that way. Hawke will have an enormous

influence over all areas of policy. I: Really?

C: Yeah.

I: Well, I don't know Bob Hawke personally. I er, I read the

book written by his biographer. Well it's a very impressive work, piece of literature, describing C: And you read all my quotes? They are very friendly, very

supportive of him (laughs) I: Egoistic, you know, egocentric kind of person. I don't know what was the reason, whether there was some- I don't know but to my mind he will try to suppress the (feelings? or

failings?) .•• that he did, it was his credit. But to my mind,

he'll be a very strong personality, person with a strong character.

256

C : I was going to put in my list of requests on, you know,

about Thursday or Friday. I thought I'd ask to be Chairman of Qantas for first choice, and then Ambassador to Mos cow , something like that, you know. I: Being Ambassador to Moscow, David, you'll keep your h a n d on

the pulse. C: No, quite seriously, I thought I'd wait until after th e

first couple of years of his term, making a lot of mo ney ,

which I will do.

I : What will happen in a couple of years?

C : When I've got a couple of years down the track, when they ' re

getting towards the end of their term, you know, then I'll .•• say, right, I'm entitled to something, I want my job for the boys, Ambassadorship, Moscow will suit me thank you v e ry much ... (C. then explains to I. the meaning of the ter m

'jobs for the boys', drawing the analogy with the Ameri can term 'patronage'). As a former Party secretary er, I'm one of the boys, I'm entitled to a job, and that will be

accepted, but it's a question of what job I ask for, o r what

jobs I ask for, and what I get. And what I propose to do is

not to ask for anything early but •.. a bit further down the

t rack to ask f o r, perhaps ask for an Ambassadorial p o s t .

I: (I. discusses the responsibilities involved with a high p o sition such as an Ambassador)

C : Oh you'll be an Ambassador one day.

I: You know our Marshal Suvorov. He once said: 'It is the b est

s o ldier which does not have the marshal's baton'.

C: (Australian citizen named) once said that no-one went t o Canberra without believing that they had the field-marshal ' s baton in their hip pocket, or in their handbag. I: That's right, that's right.

C: And he's right you know. All the women in Parliament.

(Australian citizen named) thinks she's a future Prime Minister. All the blokes who go there think they're futur e Prime Ministers. I : In our world nothing is impossible for politicians. C: Well let's face it. Six months ago Bob Hawke being Prime

257

Minister of Australia within six months would have been an absolute impossibility. I: You know, well I can tell you frankly, he mentioned

something. Two small articles were published in the British 'Financial Times' about Soviet activity. Well, at that time I thought it was just another, say attempt by Bob Hawke.

C: That story, that story was clearly written on the basis of

what (Australian citizen named). I: Well it was just accepted at the Embassy. Something is going on in the diplomatic bargaining. C: The Central Committee man Kudinov was quite shocked when I

was in Moscow and I had a meeting with him and he said you

must be feeling very pleased about the likely outcome of the Flinders by-election, and I said why? The Labor Party is going to lose it badly, and he said oh well, that's not our

report, that's not what we think. I said well I'm sorry what

you think. That's the fact and he said why and I said

because the Labor Party isn't going well enough and he said what will that mean? I said, well it may come as bad news to

you, but unless the Labor Party changes its leadership and goes to Hawke it won't win the next election. I: That just proves the fact that Moscow is too far from

Australia. Unfortunately, so, it usually happens so that information reaches Moscow through .•. C: I was impressed that someone on the Central Committee even knew that there was a Flinders by-election on ... In

Washington they wouldn't, like the equivalent in the State Department wouldn't even fucking well know there was a by-election. I: That's only due to the fact that we send each month

information by diplomatic post to Moscow what is happening now in Australia.

C: You send it to the Foreign Ministry (I. interjects: Foreign

Ministry) who would pass it back to the Central Committee? I: Well, after some sort of er processing I would say ..• the

facts ••. sent to the Central Committee, the Politburo members who are in charge foreign policy.

258

C: Well the Politburo surely wouldn't be all that concerned about Australia would it? I: No, no I don't think so.

C: In terms of your brief to talk to me ahout making an

assessment of Australian trading possibilities, where woul d that originate, would that have come from the Central Committee or from the Foreign Ministry, or? I: Oh well, it's signed by the Foreign Minister C: That would be what, Suslov's offsider?

I: Yes, but the idea .•• (this section is very quiet)

C: Came out of the Central Committee? I: (inaudible) C: So that would probably come from, in fact, speaking

realities, that would come from Kudinov through Shevrygin (ph)? I: Oh, well Shevrygin

C: Through the Foreign Ministry? I: (inaudible) C: What er •.• Boris Ponomarev? I: (inaudible)

C: He's an alternate in the Politburo.

I: I think so.

C: And he spoke at the conference, I think he opened the

conference I was at, would that be right? He's an alternate rather than a member of the Politburo? I: Yes, very pleasant, very experienced man in international affairs. C: Now how would he come to know of me, or would he just make a

judgement on the basis of these things put up to him from ... ?

I: Well, er, such kind of people. On the basis of this

information he's working out several propositions for the Politburo .• C: OK now, let's look at the situation where I take this on

board, let's say we agree that the first thing is for me to

go to Moscow and assess what the various trade possibilities are, having spoken to the Foreign Minister here and the Minister for Foreign Trade.

259

I: Yes, well first of all what I can tell you, we have a

practice that we should send our say, er offi c ial proposition to Moscow ••• then we receive a reply and then we work out ••. (c. takes a cigarette now). C: Don't tell my wife that I smoke (laughs)

I: No .•.. well, I consider our meeting .• • friendly getting together ••• (you and me?) would (you?) like to speak seriously, discuss seriously these (or : this) kind of (questions? or question?). I think we should meet in a serious, say atmosphere (discuss it?) ..• and then, C: Having to do it (on this basis is?)

I: Yes, yes.

C : But the point I'm exploring with you is because I, one of

the things I'm very concerned about is that I don't get into

a c onflict of interest situation. You know I intend to hav e

a great deal of integrity about er, er not working for

clients who have a (competing?) interests. Let me gi v e y o u an example. I had to decide today whether to accept to work

f o r the Mitsui company

I : Yeah, the ••.

C : and, things I had to consider were that Mitsui is a ver y

l a rge company with a very wide range of activities, ah, wer e

those activities in conflict with activities of companies that I work for or would I by working f0r Mitsui limit

myself from being able to work for other companies? I: So it, will limit your capabilities?

C : Of course it must, it must, I mean I can't work in areas

where there's any conflict. I mean other people wil l , I me an

other people will work two, three, four companies in the same area. I won't do that. I mean my view is, you know , one

c o mpany in one area and that's it. If I accept their brief,

if I support what they're about I work for them and I giv e

them exclusive advice, er in that field. Now I have (haven't) decided to work for them but I'm seeing Mazda in Melbourne on Tuesday and Mazda want me to work for them. Now that means once I lock myself into Mazda then that precludes

me from working for any foreign, I mean if I do agree to

260

work for that would preclude me from working for any

foreign motor vehicle importer and you know, it's the s ort of decision one has to make. Now, in terms of your area,

which brings me to a situation of, if I agree to work f o r

(Australian Company named), well that means I would have t o give them an undertaking that I would work exclusively f o r them in respect of trade with the Soviet Union. Now the alternative is that I don't do that and I work for, ah, f o r

you which leaves me open to deal with any (trader?) or potential (trader?) or indeed to organise trade deals myself .•• So that whole area needs to be explored you see. I: Well it's not easy decision •..

C: So that's why I'm pursuing it, that's why I'm saying it's

not just a friendly discussion, because it has got to the stage of being terribly serious. I'm putting myself in a situation where, I'll level with you because you're a friend, I regard you as a good friend, Valeriy, I'm going t o

make the next two years, they're going to be the two most economically fruitful years of my life. I've worked a long while for the Labor movement. I: I know.

C: I've got nothing for it; in financial terms the next two

years with a Federal Government and four State Governments, I'm in enormous demand, I mean I'm in a situation where I

can say to Esso, you know, IBM, and all these companies, well, you know, I'll listen to your proposition and I'll make a decision in due course whether I'm going to work for

you. If I work for you, well, I'll do certain things for you

but I might decide not to work for you and, in the next few

weeks they're the decisions I have to make. Whom do I work for and on what basis, and I'm going to charge very big

money.

I: Yes, yes.

C: Because the buggers are going to be paying. If they want my

knowledge about the Labor Party and my contacts with the Ministers of the Labor Government, then they're going to pay for it. Now, I would be delighted er, you know, quite

261

obviously because I've a great belief in (building? or doing?) Soviet-Australian trade. I: Yes. But can you tell me,

C: But you have to make the decision whether I can work for

(Australian Company named) and work for you, bearing in mind that you'll know I'm actually representing them and I'm going to be trying to find the best opportunities for them, or whether you want me to remain separate from them and find opportunities for you with whoever can trade with the Soviet Union. There is a difference. I: Yes. A complicated question. You know, you understand that I

came to you? Me personally, well, I think, a lot of factors,

how long a Labor Government will be in Australia.

Hawke ... only three years ..• whether it will .•. whether the

Labor Government will be in power for a long period, do you

know we also are interested er, we also interested whether a

Labor Government successfully ••. should we just •.. should the Labor Government be replaced by some sort of coalition, it would be a disaster for our country as well as for Australia. C: That's true.

I: Whether there's a guarantee that the Labor Government will be in power.

C: And I'll tell you what, I think this government - I worked

for Hawke for five or six years when he was President of the

Party in the 1970s and through that period the frustrations that we had were with a Party which didn't know how to work towards a second term. The Party's learnt a hell of a lot

since then. We've had Wran, who does no bloody thing at all but he stays in office, but people like Cain, you know, Cain's doing extraordinarily well in Victoria, he's making changes, he's also guaranteeing a second term. Now I think Hawke's going to do that and I hope he is, and every bit of

influence I've got is going to be directed towards saying to Hawke and his advisers that from day one they not only sit

down and say what do we do in this parliamentary term but they also sit down and say what do we do from today to

secure our re-election at the next election.

262

I: In 198(4?) .

C: Correct, correct. For a four year term.

I: (inaudible) C: A four year fixed term in Parliament

I: ..• Australian Democrats. C: Oh, they don't worry me because they'll pass our legislation and I don't care what the composition of the Senate is

I (inaudible)

C: (Australian citizen named) I had the experience in Adelaide

last week, sorry the week before last, where I was speaking at a . businessman's meeting, and a young fellow got up and he said oh, you know, they all had to state their names and the

company they worked for and he said oh, my name is (Australian citizen named), and he said in the analysis in which you've given you haven't said very much about how you think the Australian Democrats will go. But I was very

careful to stroke the guy so that he went back to

(Australian citizen named) and said, you know, they were saying nice things about the Australian Democrats, becaus e from my point of view there's no future for the Labor Party in abusing the Democrats. We want those buggers to pass our bills •.. legislation goes up to the Senate. If they have the

balance of power, we want them to pass our legislation. I: Do you think that the Democrats will have some members in

the House of Representatives or seats in the Senate? C: I think you're wrong.

I: Wrong?

C: I think you are, I'll tell you why. Two reasons. I think

that while the polls are showing that the Democrat vote is down to four per cent, the polls only record how people are going to vote. The polls don't record how people are going to vote for the Senate. And so, if people are going to vote

for a change of Government in the Lower House, there's every reason to believe that they'll vote for, you know a 'keep the bastards honest' approach to the Senate. Point two is that in the last two elections, to get elected to the Senate

the Democrats had to ultimately get 16.7% in any one State

263

because there have only been five Senators elected at normal Senate elections, and, to get a quota in such an election represents 16.7%. Now this is a double dissolution, ten Senators, and the quota is reduced to 9.1%, so if you get 6%

primary vote, which I think the Democrats will get, in four (or all?) mainland states and Tasmania, to get a quota you only need to pick up (3?) percent. My guess is that the

Demo crats will get 5 or 6.

I: That will been enough?

C : Oh, certainly. The balance of power, absolutely.

I: So the Labor Party will not be in power in the Senate?

C: No . There's no-one in the Labor Party who seriously expects to win the Senate. I : Well, and what about the House of Representatives, because I er? C : What did you put on your piece of paper?

I: Put 71

C : 71-54? Yeah, you're in the ball park. I reckon the majority

will be about 19 or 20.

I: You know what I put on the paper for the Senate? The

Democrats will ••. have 7 Senators. C: Could be right.

I: So, my figure is 71.

C : I reckon that 71 looks pretty bloody good.

I : I'll get that enormous bottle of champagne.

C : (laughs) I reckon you're looking pretty good.

I: (laughs) Well, actually, you know it's very hard to predict . I believe that the result of voting could depend upon such

unexpected things like, judging by the United States elections, whether the weather, whether it's running, raining, sorry, or the sun is shining. Then, the mood of

population and so forth. Very simple, small things, but when gathered together its say may be, can have ... the main

influence on the decisions of the voters. C: I think that the Labor Party will win, as of mid-week the

Labor Party will get a three and a half per cent swing.

I: Three and a half

264

C: It may come down to 3 per cent. If it comes down to 3 p e r

cent your predictions are dead right. I: My predictions were 4.5 to 6 per cent swing.

C: No, a 4.5 percent swing would give the Labo r Party a

majority of about 40 and a 6 per cent swing would give th e

Labor Party a majority of about, oh I don't know, about 45-50. I: Just one moment, Vera: (calls to his wife). Where is my

wine? (IVANOV and C. and IVANOV's wife discuss the d e ss e r t , having some coffee or tea. C. wants coffee. Possibly C. wil l also have a little liqueur). C: But you must promise you won't let me have more than o ne and

a half glasses.

I: One and a half?

C: One and a half.

I: What size of glasses?

C: Small glasses (laughs) I: Well, after coffee, it will be, well forgive me but usua lly

we drink, er.

C: No, I'll have a bit more vodka, there you are.

I: (inaudible) C: (Asks about vodka in general. I. answers about the kinds o f

vodka there are in the USSR etc. IVANOVA is moving about i n the background. I. is doing most of the talking. This discussion goes on for about five minutes. Then I. and C. talk briefly about watching the results of the electio n o n TV the following night.)

I: One friend of mine, Grigoriy Karasin, will be delega t ed . C: At the tally room?

I: Maybe I'll arrive to replace him.

C: You mean he might get too excited when Labor wins, and he 'll

need to be replaced? (The two men then continue discuss ion of food and drink.) C: I remember the night, the night that I, it was my last day

as Secretary of the Labor Party (IVANOVA interrupts thi s with an offer of coffee) •..

I: In the morning we .••

265

C : And how far do you run each day?

I: Oh well, you know, that place not far from the

Governor-General's palace, not far from the Governor-General's palace. Not far from there, there's a forest .•• frorn 7 to 8 each morning. C: So you run there?

I: No, no, no. I drive there. I drive there. By car.

C: (laughs)

I: Then we run about 3 kilometres. About 40 minutes of

exercises, then running again, jogging again, then at 9 I have to be at the Embassy starting at 9.

C : And you do all of that? You do 6 kilometres plus 40 minutes

of exercises in an hour? I: It's very good, very good.

C: Every day?

I: Nearly; except the weekends, Saturday and Sunday, because I have a lot of jobs to do here (he's referring to his horne)

(IVANOV and his wife discuss food for a short while)

I: David, would you like to have some jelly and whipped cream? C: Thank you, did you make this?

I: No, no, it was bought.

C: So you'll be waiting here tomorrow night, watching the results on television will you? I: Yes.

C: Have you seen, you haven't seen an Australian election count before? I: No, I arrived here in 1981 so I missed the previous

election, but I remember the election campaign, the election that was in 1973.

C : Labor won •

I: Yes I remember. Mr .•• a great (leader?)

C: (Laughs)

I: Both of them (Australian citizen named) and (Australian citizen named) are very active members of the Friendship Society. Each of them belong to the previous USSR Friendship Society.

266

C: I was talking to (Australian citizen named) tonight in the

party room. He used to be a very heavy drinker and in 1977

he gave up drinking and he said that he would have hi s next

drink when the Labor Government was elected. I: Oh really?

C: And then, so I said to him, where are you breaking o ut

tomorrow? He said I'm not. I said, but you've always promised that you'd have a drink when the next Labor Government was elected. He said, oh yes, but that was only on condition that it was a Hayden Labor Government. ( C. and

I. laugh) I: That's good. Well, I, er, you know, to my mind after the

Labor Party wins tomorrow, Fraser will not be leader of C: Oh, he won't, he won't.

I: Arid to my mind, he'll have to leave his seat in Parliament .

C: He probably will, he'll probably return to the farm. Yes, I

can't imagine he'd be prepared to remain on the Opposi tion back benches. I: Yes, the real candidate for the Leader of Opposition will he

to my mind Mr Peacock. C: Peacock.

I: Maybe.

C: Yes.

I: But judging by the ... (quite soft). (They discuss the

Opposition parties for about 30 to 40 seconds. IVANOV thinks that Hawke is 43 years of age, C says no, he's much

older than that 'he's three years older than I'. IVANOV continues, to say) 'really, we are very glad, we'll be very glad if the Labor Party can win. We have great hope, great

hope that after •.• C: My God, who knows, we might have the cruise ships again in

Australian waters next summer. I: Oh ... promise .•• my next holiday we'll spend together on this cruise ship, and it will be just unbelievable, because I know that New Zealand, New Zealand, they have, in spite o f

the fact that they

C: The cruise ships are still going to New Zealand, are they?

267

I : Yes. Despite the fact that they expelled our Ambassador,

the silliest thing in our work could be to expel the

Ambassador without breaking the political relations. Despite that fact, Muldoon did not suspend the cultural •.• and in our mission we ••. I was there and saw that Hobart Harbour was empty, no ships, no work, but when the Premier of Tasmania, the Tasmanian Premier nearly bought

that dock. You remember it, yes? C : I remember it well.

I : Urn, it would be marvellous, much easier for us to have a

base in Tasmania, or say in Adelaide or Melbourne, that we are sending our ships for fresh water and .•. New Zealand, another say, thousand miles. We have other base in Singapore, long, long distance so the tankers must go with ou r fleet with our, say, trawlers to New Zealand .•. water. It would be much easier to have such handy .•• and er besides the New Zealanders •.• so, you see, a lot of possibilities.

C : My word, no doubt about that, so long as the Prime Minister

whe n he next goes to Moscow doesn't try and release

refusniks or seek to see his erstwhile colleague Comrad Shelepin. I: Com rad?

C : You heard about the Hawke, you heard about the last Hawke visit to Moscow? I : In 1979.

C : Yeah, yeah

I: Well, there was some fuss about •.• the Jews and so forth.

C: Oh, it was when he was at the height of his (drinking?) .••

I: I heard (or have?) something, what can I tell you. Those who

a re considered as political prisoners, under Soviet law are

c riminals. Take for example the well known person Shcharanskiy, who was, really, an American spy selling secret and top secret information to the American Embassy, who is now in gaol for subversive activity.

C: Course, I think that a lot of these characters who are, I

mean you'd disagree with me, but I think what you do with

268

them is what happened to urn, urn, who was the Gulag

Archipalego man? What's his name? Er Solzhenitsyn. I: Solzhenitsyn, what's wrong with this Solzhenitsyn? C : Stick them outside the country -piss off.

I: Well it was his will to leave the country; he was permi tted .

C : But all these people want to ostensibly, want to l eave the

country ... take (or bung?) them out, leave them in a stat e l ess

situation, let them fend for themselves. So that's wh a t do with Shcharanskiy and a lot of those characters wh o ge t publicity, those who get publicity then, piss them o f f o ut of the country. I: Urn, well, er, you know, as for Schcharanskiy,

C: They wouldn't be any use, I mean whoever hears of

Solzhenitsyn now? Never. Now, if he was still in the Sovi e t Union in prison, I: Yes

C: A Nobel Prize Winner, he'd get enormous publicity, but th e

fact that he's been taken outside, relocated I: But, but .•. Schcharanskiy, you know, he was judged ... h e ' s no w

in prison, he's there for another ll or 12 years so.

C: But it's really a, I mean it's really a political qu e s t i on .

I: As for those refusniks there in Moscow was working in s o me

association. Well a lot of those, well, actually got visas to go to Israel, not to Israel really but the United States

C: The United States and Canada.

I But they worked in such kinds of institutes that they

... occupation ... that during five or (three?) years they can't leave the country. Some defence developments and s o forth. So after five years they er say, they left their

previous work, they working at that institute just fillin g in time themselves. No problem at all. Well it's er, to my mind in Moscow, it was decreed that (IVANOV goes on to deny that there is prejudiced treatment of certain nationaliti es

in the USSR, with particular reference to Jews. IVANOV t hen says there is a Jewish member of the S.A.L.T. negotiating team in Vienna. He says that 'we have a Jewish national

region in the USSR with its own administration, a certain

269

kind of autonomy' where there are 'thousands of Jews' working as 'real citizens of their country, no problems at all'. IVANOV goes on to say that there are a lot of Jews

living and working in Moscow, and gives a figure of something like 300,000, and he says that 'most of them do not think of leaving the USSR. There is no Jewish question in the USSR after the Revolution, it's quite an artificial problem'. IVANOV offers c. some more spirits. C. declines

a nd says he'd better be going, but accepts a little more

co ffee. They then discuss breath testing. IVANOV asks

whether it still exists here in Canberra and C. says yes and then IVANOV says the same thing applies in Moscow). C : Is that right? Of course in Moscow you can't drink at all,

can yo u? If there's any alcohol at all on your breath you're go ne.

I : Yo u'll be charged. It's quite impossible.

C: I think that's probably a better solution, it's harsher, but

it's more absolute and a bit like Singapore you know, Singapore is also very repressive in terms of its, sort of, absolute, neo-fascist laws. I: Why fascist?

C : Well, neo-fascist

I: Very strict, but to my mind you know

C : Very repressive.

I: I mean in Moscow, living, the urn, the traffic is, ah, in

rush hour we take to reach my work from home by metro 25

minutes, by car nearly an hour. And besides, C : They told me while I was there that there was serious

consideration being given to abolishing fares on the underground, on the metro (I. discusses Moscow public transport and, briefly, taxis) C: The interesting thing we found about the taxi drivers, cab

drivers, was that they all wanted to buy American dollars. When they heard us speaking English they asked whether we

had American dollars (IVANOV translates this to IVANOVA). Every cab, every taxi, a big difference from 1974, I mean when I was there in 1974 I heard these stories and didn't

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ever experience it, so it was very interesting when we went to the Embassy and spoke to (Australian citizen n a me d ) who I've known for years. I went to the same school, at

different times, he's a Tory and I'm a Democratic Soci alist but er, what he said made a lot of sense, and that was

basically about the level of corruption and black marketeering within the Soviet society, because that r eally was the big difference that I saw from 9 years befo re, 8

years before, 8 1/2 years before. I: Yes, well it's a very unpleasant thing to hear such a n

event •.• C: But the thing about it is Andropov got up on the b a sis of

saying you know, 'one of the biggest problems is corrupt ion and I'm going to stamp it out'.

I: You will see in a couple of years it will be good

C: Well he's done it in Azerbaydzhan you know, the bloke wh o

got up to the Politburo from Azerbaydzhan, I mean h e 's got the record on the, he's got the runs on the board. He got

prominence, apparently, as Head of the KGB in Azerbayd zhan and, as I understand it, you know, was reporting t o Br ezhnev about the level of corruption in the Communist Party and was assigned to stamp it out, was given a brief to stamp it out ,

which he did, became 1st Secretary of the Communist Pa r ty in Azerbaydzhan, and you know, really stamped it out and h as been rewarded for his efforts. I: About that event in the Moscow taxi, I think you will h ave a

good chance to speak directly to the Chairman of the Executive Council of Moscow, Mr Promyslov, when you're the r e next time. He was here in 197(5?) C: Was he?

I: At the invitation of (Australian citizen named). C: Sydney, right (Australian citizen named)

I: He was here and er I believe as far as I know he had s o me

conversations with our Ambassador. You can tell him tha t 'you should give more to your taxi drivers', you know .•• (IVANOV laughing)

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C : It's pretty easy, we had three taxi drivers and they all

asked us to, ah

I : An o ther thing is that Moscow, with its huge population,

nea rly 8 million now, there is still a lack of labour. We

need about 600,000 of workers, metal workers, transport

workers, say some kind of services. The same thing is in

o the r cities large and small, the circumstances are the

same. We need labour now, badly. We must explore our Siberian regions. We need it badly. C : About the taxi drivers was that they, you know, when we said

t hat we don't have American dollars, we've only got

Au s tra lian dollars, 'that'll do' they said., '3 roubles to a

dollar'; sorry, 2 roubles to a dollar which is about 3 to

one , it was about 310.

I : J ust a small maybe part of population.

C : Well that's right, you know, I mean the same thing with ta x

cheats. When you have people ripping off the system, it's an

ind ica tion that something's wrong, and I think Andropov is quite right to have a campaign to eliminate black ma rketeering and,

I: Of course, should I be in his place. (facetious) (C. laughs)

I : Maybe I'll take some more, so to say

C : Yo u'd be a b it tougher? Yeah, but isn't he really about

c arro t and stick solutions?

I : What?

C : Isn't he currently about what we in the west call carrot and

stick solutions? I: Carro t and stick solutions? C : At the moment he's holding out the carrot and he's saying

right, if you do the right thing then here's the carrot, if

you don't do the right thing I'm going to beat you o n the

backside with a stick ann I think that's probably better than what you're saying, I mean I t h ink you' d probab l y be

better to try to get people's cooperation. I: Oh, no, no, I think that the best thing will be t o e s tabli s h

more discipline in the country. You know, und er the soci a list government, under socialist regime, the

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people •.• no responsibility. It's the State which will decide everything which will give you a house, the medical, s ay , care, the education, some other things, very importa nt things and the people now feel no responsibility so we need work discipline. It's not for nothing when the milita men

and some volunteers now are patrolling the streets a n d asking the people ••• 'why are you not at your work place n ow , just now, why?' C: Well, ah, sir, it's like this, Val •.• (laughs)

I: Well, maybe it's simple, but on the other hand it's no t so

simple to make people to think, to feel some responsib i lity C: Try and encourage them first and prosecute them later.

I: In the USSR we live, well, very simply. We live a very

simple life. No care about our future, no worry about whether we'll have work tomorrow. They are expelled fr o m one work immediately, they find another work because of th e

problems with the worker shortage. We need engineers, meta l workers C: Yeah, yeah

I: So many needs, needs, needs

C: There's a lot of inefficient work of course, there's a l ot

of inefficient work, I mean for example in the shops, terribly inefficient in terms of people handling. I me a n i t was an absolute revelation. These huge crowds (this discussion about the labour shortage in the Soviet Uni on and

related problems continues for about another minute) C: Well listen, I'd better go, get myself fit for polling d ay .

Thank you very much indeed. I: Thank you very much for coming.

C: (To IVANOVA) Thank you very much indeed. I'm sorry my wife couldn't come. I: Oh no, next time we'll get together.

C: You have one child , and we have four. (IVANOV translates this information for IVANOVA) I: David I've got film projector and I've got a very nice

Russian cartoon, beautiful, and we'll show the children these films.

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C : OK, we'll do that, excellent. Well , we'd better pursue that

d is c us s ion about trade very soon, early next week .

I : To mo rrow everybody will be at the Embassy.

C : W e ll, I 'l l be either, ah

I : An d we' ll discuss this approach, immediately . We'll send to Mo s cow.

C : OK, thank you. Good bye.

I : Thank you. Good bye.

IVANO VA: Bye Bye

C : Thank you very much .

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APPENDIX F

STATEMENT BY MR COMBE TO THE ATTORNEY-GENERAL ON 11 MAY 1 983

From the time I became National Secretary of the Australia n

Labor Party in 1973 the re-establishment of a Secretariat in Canberra made it far more possible for representatives of

f o reign missions in Australia to make contact on a regular basis

with the Party office. In the first six months I was in the job

my wife, Meena Blesing, and I accepted invitations for as many

f u nctions at embassies as we were able to attend. Amongst t h ose

which we accepted regularly were invitations from the US Embassy

a nd its officers, the British High Commission and its o ff icer s ,

and the Embassy of the USSR and its officers. From then o n I

maintained regular contact with people from those foreign missions to which I gave a priority because of their impo r tance t o Australia or in world affairs. Throughout my period of o ff ice

as National Secretary of the ALP I continued to maintain relations with people from those missions, the extent of contact dependent on the personal rapport which existed with indivi d u a l

diplomats. Over the years in the Party office I had relation s with the following Soviet diplomats whose names I can reca ll: former Ambassador Basov and to a much lesser extent former Ambassador Soudarikov, Minister Counsellors Smirnov and P a vlov ,

and to a lesser extent the present Counsellor Rogov and less e r (in status) figures Poseliagin, Saprykin, Rodionov and Raina wh o at various times were the officers from the USSR Embassy supposedly charged with the responsibility for relations between

the Embassy and the p o litical parties.

In 1974 after the re-election of the Whitlam Government at t he Double Dissolution of that year I received an inv itation fr o m the Institute for World Economy and International Relations o f the USSR to visit that country. As I recall the invitation came

through Poseliagin. At the time I indicated my preparedness t o

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accept that invitation, then Party President Hawke expressed the v i ew tha t I should not visit the Soviet Union largely because of

his con c ern about the treatment by the USSR of its Jewish citi z e ns who wished to emigrate. I expressed to the then Presiden t the view that for him to oppose my visit t o the Sovie t

Union wa s to imply that in s o me wa y I would be suborned by the

propa gand a of that country and that this was as offensive to me as any suggestion by other people in the Party that to visit the Unite d Sta tes would make one susceptible to acceptance without questi o n of the propaganda of that country. Accordingl y I

embar ked upon the visit and thereafter visited Swe d en and the

United Kingdom before returning to Australia.

When in t h e Soviet Union I visited Moscow, Leningra d and

Vi ln ius , the capital of Lithuania. Most of my stay in Moscow was

involve d with discussions with officials of the government, the host I nstitute and the Central Committee. I was and am in n o

doub t tha t anyo ne visiting the Soviet Union in an official capac i ty d oes s o effectively as a guest of the Central Committee Commu nis t Party of the Soviet Union irrespective of the 'stated '

host . In Leningrad my visit of three days was largely taken up wi th sightseeing in a city which had alway s fascinated me sinc e

my da y s a s a student of modern European history, and in my

Vilnius my visit was shared between sightseeing and some di s cussions with officials in that republic.

In Mo sco w I met with the then Australian Ambassador Sir J a mes Plims oll who expressed to me his b e lief that relations between

the Austra lian Government and the Soviet Union would be improved by Australia recognising in toto the incorpo ration of the Baltic Repub lics of Latvia, Estonia and Lithuania into t he Soviet

Un i o n, and that this recognition could be effected by him as

Ambassado r making a formal visit. Upon my return to Australia I

r e p o rted this view to Prime Minister Whitlam and expressed my

support for the Ambassador's proposition in view of wh a t wa s expressed to me repeatedly that the Australian Labor government wa s seen by the Soviets to have gone overboard for China. I make

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no apology for having found my visit to the Soviet Union a fascinating experience and I had no doubt that at some time in the future I would revisit that country, not because of any admiration for or support of the system but because of the vast

land mass and variety of peoples and places contained within it . In that same year I also visited Rumania as the leader of an

official ALP delegation invited by the Communist Party of Rumania, the United States of America, and early the foll owing year Iran. None of these visits was private - all were in my

capacity as National Secretary of the ALP.

I should say that two of the ambitions I had as Secretary of the

Party were to make the Party more national in its operations and to make it more international both through its greater participation in the London-based Socialist International and through direct bilateral relations with individual politica l parties - not exclusively those which were members parties of

the S.I. - including some of the major communist parties in Comecon countries.

At some point after my visit to the Soviet Union I joined the

Australia-USSR Society for no other reason than a firm belief that a peaceful future for my children depended upon a greater level of knowledge about those who were perceived as a thr eat to the security to our country and through a greater level of

dialogue between peoples of different countries. I joined that organisation only after satisfying myself that it was not the exclusive preserve of people who supported the Moscow system of government but included as well people who were engaged in

dealing with the USSR in cultural and commercial relations. Over the ensuing years I continued to have relations with diplomats from the USSR, having meetings with them and on occasions having

dinner or lunch with them either alone or accompanied by my wife.

Shortly after the change of government sometime during 1976 I was invited to the Embassy of the USSR to meet with the Head of the Second European Department of the Foreign Ministry, Mr

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Sus l o v, whom I had found in Moscow to be an urbane, intelligent

a n d sophisticated man, capable of presenting a more articulate,

less propagandist view of Soviet foreign policy than most di p l o mats. The invitation was issued by then Ambassador

Basov wh o m I had got to know in 1975 when during the Socialist

Interna ti o nal Bureau meeting he met with the Leader of the Chi l e an Radical Party (the S.I. member party from that country), Senator Anselmo Sule, who had just recently been released fr o m deten tion to which he had been confined following the overthrow o f the Allende government by Pinochet. Basov had been

Ambas sador in Santiago when the coup occurred and his reunion

with Sul e was an emotional experience.

My r e l a ti o ns with the USSR were minimal from the time that Basov

ceased t o be Ambassador although it was traditional for Soviet r epr es entatives to leave a couple of bottles of vodka at the

Par ty o ffice for myself and I think the Assistant National Secr e tary each Christmas time.

F r om the time Raina left Australia I had little contact with

anyon e from the Embassy until about early 1982 when the Aust r a lia -USSR Society held a council meeting in Canberra at the Canberra Labor Club of which I was President. Although I did not

atten d the Council meeting I did attend the cocktail party held in conjunction with it at which, along with the Member for F r a s e r, Mr Ken Fry (the President of the Canberra Branch of the

Australia-USSR Society) and Ambasssador Soudarikov, I made a s peech of welcome to council members and to the 100-odd guests.

During the course of the evening I conversed with various me mb ers of the Embassy staff who were present and have a clear

r e c o llection of Ivanov introducing me to his wife who spoke no

Engl i sh. I recalled having met Ivanov previously, possib ly when

I wa s still Party Secretary although I have no recollection of

whe t her or not he represented the Embassy at the 1981 National

Conference in Melbourne. I vaguely recall that he may have

visited the ALP Secretariat at some stage when I was t h ere.

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I do now recall that, prior to the reception at the Labor Club,

he came to see me at my then office at 5 Towns Crescent, Turner,

to ask me for suggestions who should be invited from the Labor Party to the reception. I indicated to him that my knowledge of Labor Party personnel in the ACT was scant and suggested that Mrs Joan Taggart who was the immediate Past President of the

Club and a well-known and active identity within the ACT branch would be the best person to give advice on names. Subsequently Joan Taggart together with the Secretary of the Society in the ACT, Don McHugh, met to draw up a list of invitees. I recall

that on a subsequent occasion some month or so later Ivanov contacted me requesting to see me. I was extremely busy at the time but he assured me that he only wanted a couple of minutes to drop off some statements. He came by and left with me some copies of statements made by President Brezhnev. I can recall

glancing cursorily at the statements but have no recollection of the subject matter and had no interest in reading them.

I next heard from Ivanov I recall in September because I was in

the midst of a domestic crisis. I indicated that I was too busy

to see him on that day and he said that he had just returned

from Moscow and wished to drop by to leave something with me. I agreed to him dropping by which he did shortly thereafter and brought with him as I recall 2 half bottles of vodka and a badly

hand-crafted cigarette box which he said was a present he had got while on home leave. He stayed no more than 3 minutes and I

must say at the time my wife and I found it curious that he

should have found it necessary to bring us a present considering that I scarcely knew him and to the best of my knowledge she had not met him.

Shortly thereafter my wife received a telephone call from the Secretary of the Australia-USSR Society Bill Mountier advising that a conference of friendship societies was to be held in Moscow in November at which the Australia-USSR Society was to be

represented. He informed her that if I was available to attend the officers of the Society proposed to nominate me as the

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Australian representative. I should say I had upscaled my i n v o lvement in the Society to agreeing to serve as one of the

numerous Vice Presidents but more importantly as an Executive me mber about the time I left the Party office. I did so largely

because of my total opposition to what I regarded as the impo sition of excessive sanctions by the Fraser Government in r e sponse to indefensible Soviet activity in Afghanistan

mo ti vated perhaps naively by the belief that if anyone was going to p o se a threat to my children in nuclear war it was obviously

t h e USSR and that at times of tension it was important to be

hav ing dialogue with them when others had ceased such dialogue.

Wh e n I got back to talk to Mountier he indicated that I had been

cho sen because I was the only member of the Executive to have n o t visited the Soviet Union on behalf of the Society. I

regarded this as a strange decision because I had not attended a ny meetings of the Executive and did not know many of the

me mbers of it. My view of the Soviets is that every decision has

a p o litical motivation and I immediately assumed that the

sugge stion that I be the representative had in fact come from th e Embassy. This caused wry amusement but gave me no concern b ecause I had long assumed that such decisions were made at an

Embassy level. I indicated to Mountier that such was the pr e ssure of my commitments that it was difficult for me to go but that in view of the fact that time was long overdue for

Me e na and I to have a holiday together, I would be prepared to

g o providing it was acceptable for her to accompany me. I

emphasise that although I was in no doubt that my visit would be funded by the Society there was never any suggestion that should my wife go also, her fare would be paid for her by anyone other

than ourselves. Mountier indicated that the question of whether Meena could accompany me was one which would have to be sorted

out with the Embassy and accordingly I contacted Ivanov with a view to discussing it with him. My recollection is that he carne around to the office, we talked about the nature of the conference and about the possibility of visiting other parts of the Soviet Union in connection with the conference and we

280

discussed the possibility of Meena accompanying me. He suggesteo that we should have dinner together to discuss it and in concert with her it was agreed that the three of us should eat at

Albert's Restaurant. It was not unusual for us to dine with diplomats. It was in fact a very pleasant dinner, most of th e conversation being between Ivanov and Meena, but we both f ound him rather more engaging company than many of his present

colleagues and predecessors whom we had met. In particular he seemed to have more flexible attitudes on questions such as disarmament than we had identified in most other Soviet

officials whom we had met. Ivanov seemed to enjoy our company also and was at pains to emphasise how he would like us to be

friends. It is my continuing belief that Ivanov had found the going tough in Australia in making friendships because of the coolness in relations between the two countries in the aftermath of Afghanistan and because he regarded his capacity for

socialising to be limited by his wife's inability to speak English. In any event he suggested that we should dine together again soon at his home. Independently Meena and I did not fin d this an attractive proposition because of the difficulties which

in our experience non-English speaking people created at dinner parties. However as he had paid for that dinner we expressed our desire to reciprocate his hospitality at some future occasion. I

was left in no doubt that he would be recommending to his

government that Meena be accorded a visa and that the normal inflexibilities of the Soviet system be adjusted to allow her to accompany me to the conference and to activities associated with it.

Some weeks passed before I heard from him again but we planned

on the assumption that we would be travelling together and ma de suitable arrangements for the care of our children. However with little time to pass before I was due to depart we had still

received no clear affirmation that Meena's visit had been approved and accordingly no flight bookings were made. It was a little over a week before departure that formal approval was given for Meena's visit and tickets were booked and purchased on

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Saturday 13 November. The Australia-USSR Society had provided to me the value of a return economy ticket from Sydney to Singapore

and the value of the accommodation in Singapore which it was necessary for me to undertake. In Singapore, I was issued with a Singapore/Moscow/Singapore ticket. The ticketing for my wife was based on payment for Sydney/Singapore return by American Express

and for Singapore/Moscow return by cheque No. 161 from CTB Account No. 108-562 cheque being made payable to Allied Travel. During the following week we made preparations for a Saturday departure from Canberra, made application for visas and were

issued with visas on the Friday before departure. We had met briefly with Ivanov at the Consular section of the Embassy on either the Thursday or Friday before departure at which we indicated those parts of the country which we wished to visit after the conference.

After I had been asked to visit the Soviet Union and prior to

finalisation of arrangements I received a telephone call from Mr Derek Amos, a former Member of the Victorian State Parliament and now a consultant working out of Melbourne, asking me whether I would be prepared to meet with a client of his, a Mr Laurie

Matheson to discuss Mr Matheson's trading relationship with the USSR. I agreed to meet Mr Matheson who came to Canberra and briefed me about difficulties which his company had experienced in trade with the USSR since the imposition by the Australian Government of sanctions, many of which affected Mr Matheson's trading arrangements. Mr Matheson asked me to obtain information

for him on where the Australian Labor Party stood in respect of trade with the Soviet Union. He was particularly concerned about major trading projects involving the employment of Soviet technology which had been aborted as a consequence of the Australian Government's sanctions; he was also deeply concerned about the entry into competition with him of a former employee Mr Bruce Fasham and the apparent support which Mr Fasham was

receiving from the New South Wales Government. He expressed deep concern also about his standing with the Soviet Union as the sole accredited trading agency, and the possible inroads into

282

Soviet trade which Mr Fasham's firm Pactra was making. He expressed concern about the standing of his company in comparison with that of his competitor in the eyes of Soviet officials. I indicated to him that as I was shortly to visit the

Soviet Union I could if he wished undertake enquiries on his behalf with contacts which I had established in 1974 and through an attempt to meet with the Deputy Minister for Foreign Trade who appeared crucial to his future prospects. He agreed that

this should happen and engaged me to prepare for him a report on my findings. He also arranged for me to receive a detailed

briefing on the specific areas of problem from the manager of his NSW operation, Mr Malcolm Yell. This briefing took place about a week or so before my departure for Moscow.

On the evening of Friday November 19 my wife and I had a drink

with Ivanov at the National Press Club at which he farewelled us and returned to us our passports with completed visas. I indicated to him my interest in having meetings in Moscow with the Deputy Minister of Foreign Trade, Mr Smelyakov and the head of the Second Europen Department in the Foreign Ministry, Mr

Suslov. I asked if he could cable Moscow to set up the

appointments, explaining that I wished to see Mr Suslov to renew my early acquaintanceship and Mr Smelyakov to discuss trade

matters between the two countries. I had no confidence that the appointments would be requested which doubts were confirmed after arrival in the Soviet Union when it became obvious that no meetings had been sought.

On Saturday November 20 we left Canberra and stayed overnight in

Sydney before flying Singapore Airlines to Singapore the next day. We stayed overnight in Singapore and on Monday 22 November t ravelled by Aeroflot to Moscow where we arrived on the morning

of Tuesday November 23, the day the conference was to begin. On arrival in Moscow we were met by the Secretary of the USSR-Australia Society, Mr V. Jarkov. We quickly realised that our stay in the Soviet Union was to be less than we had

anticipated, that apart from Moscow we had been allocated a 2

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day visit to Leningrad, and that we would have no opportunity to visit any other part of the country. From the outset I e xpressed our desire to visit other places and indicated that we had been misled as to the duration of our stay because to return to

Singapo re within less than 10 days of departure which was what the So viet authorities proposed would cost us a substantial add i t ional impost on our air tickets. I also indicated my desir e t o h av e meetings in Moscow before returning to Australia and

adv i sed Jarkov of those with whom I wished to meet including th e Austra lian Ambassador Mr Evans, who is a friend from Adelaide.

We immed iately became victims of Soviet bureaucracy with the

flight arrangements for returning to Australia taking days to f i x up, being left in uncertainty about the appointments which I

h a d requested, and being advised that it would be impossible f o r

us t o visit any other part of the Soviet Union except Moscow and Leningrad.

The internal visa system within the Soviet Union makes breaking

down of the bureaucracy impossible. We attended the conference o f friendship societies which was largely a propaganda exercise

f o r internal consumption with only those who could be relied

up o n to acceptable attitudes on peace and disarmament

b eing allowed to address the conference. Far more worthwhile was

the opportunity outside of the conference hall to meet other foreign visitors and to meet Soviet citizens in attendance at the conference some of whom had previously been in Australia. Associated with the conference was a visit to the Bolshoi Ballet and a couple of receptions one of which was for english speak ing representatives and to which the english speaking representatives of the International Affairs Department of the Central Committee of the Communist Party of the Soviet Union whom I had met in 1974 were invited. At the conclusion of the

conference we went with other nominated visitors on the midnight train to Leningrad departing on the evening of November 25. We had two days of sight seeing in Leningrad as part o f a group and

used the opportunity to meet a number of visitors from other

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countries who like ourselves had no association with communis t parties in their countries.

On returning to Moscow on the morning of Sunday November 28 we

were informed by Jarkov that although it would be possible f o r me to meet with the Deputy Foreign Minister no formal

arrangements had been made for the meeting with Suslov. During the next three days in addition to meetings with the Deputy Minister of Foreign Trade I renewed acquaintanceship with Saprykin and Raina, both of whom were in Moscow and had meeti n g s

with representatives of the Union of Friendship Societies, and with the Australian desk officer in the International Affairs Department of the Central Committee. These discussions were unexceptional except insofar as those with whom I met were

surprised at my certainty that the ALP would fail to win the Flinders By-election. Perhaps one unusual aspect was that in informing the group of the continuing ear problems which I had suffered since the collapse of my upper respiratory system during and after the 1980 election campaign and how my ear

specialist had advised me against making the trip to the Soviet Union, I was invited to take advantage of Soviet medicine at any time - an offer for which I expressed gratitude and one which would most certainly not be taken up. My experience of hospitalisation in Federal Germany in 1978 was bad enough:

The meetings also involved discussions about possible

normalisation of relations in the event of a Labor Government being returned in Australia, the likely timing of the next general election, the possibility of a change of leadership in the ALP and the perceived deterioration in relations between the

CPSU and the ALP based largely on the declining by the ALP National Executive of an invitation to send a delegation to the Soviet Union. The refusal of the invitation and the possible implications of that refusal were regarded very seriously hy

Moscow. In all of those discussions nothing was said by me which would not have been said to any diplomat seeking my views in Australia and my advice on the invitation. I explained that a

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majority of the National Executive members believed that the constant prospect of an election at any time made it impossible for the Party to accept the invitation lest there should be further developments in Afghanistan or Poland while the delegation was in the Soviet Union. There was also offence taken

that in discussions about the invitations the ALP had been seen to be using a visit to the Soviet Union as a financial

assistance to attend the Socialist International Meeting in - I think -Helsinki. My advice in Moscow as in Australia was that in any event delegations are usually comprised of people whose turn it is to have a trip rather than people who might most

usefully represent the Party in the host country and most productively take advantage of the experience gained.

Upon my return to Australia I prepared by mid-December 1982 a

report for my client, Commercial Bureau of Australia, in which I set out the purposes, the nature and the consequences of the discussions which I had had in the Soviet Union.

There is nothing that wittingly I did or said within the Soviet Union which could be viewed as an impropriety or which could be seen by any reasonable person to reflect any discredit or embarrassment upon either my country or the Party to which I have belonged for 20 years and for which I worked in a full-time

capacity for 16 of those years. I am aware of nothing which unwittingly I said or did which could likewise be the source of embarrassment or discredit.

I can assert that my visit to the Soviet ·union convinced me of

the damage which Australia had suffered in all areas of understanding and particularly in loss of export earnings as a direct result of the unique sanctions imposed against the Soviet Union by our government. I was left in no doubt that the Soviets played politics with trade, and that it suited them whilst we made hostile noises to them to shift some of their purchases to

countries which although run by undemocratic governments of the

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extreme right were not as bellicose against the USSR as Australia.

It was entirely understandable following our return to Australia that we should be invited to attend the celebrations for the 60th Anniversary of the establishment of the USSR at the Ambassador's residence at some time later in December. At that

function, which was attended by a number of other political figures , we spoke with Ivanov as well as other Soviet diploma t s and diplomats from other countries and we were introduced t o his wife whom I had met previously at the Canberra Labor Club. We

spoke only briefly at that time about our visit and agreed that we should get together over dinner soon to continue the

discussion . On about Christmas Eve Ivanov visited our horne then at No. 10 Quinn Street, O'Connor, and left with Meena some Stolichnaya vodka. There was nothing unusual about this; indeed I have always regarded it as amusing that for all the allegiance

to state atheism, Soviet diplomats pay so much regard to the distribution of presents to coincide with christian holidays. I was not horne when he called and he stayed only briefly to talk to my wife. I am not aware of any telephone conversation which

occurred with Ivanov between our return from Moscow in early December and the remainder of that month, but I assume one must have taken place because I am informed that it was in December that intercepts were applied to my phones.

In early January we shifted our horne from Quinn Street, O'Connor to 46 Jacka Place, Campbell, and went to our holiday horne at the South Coast on or about Saturday 8 January. On I think Friday 7 January the long-promised reciprocal dinner with Ivanov took

place at Chats Restaurant at Kingston. He carne to our horne for drinks before dinner and we travelled to the restaurant and back to our horne in his car because as he put it random breath

testing could be less of a problem for him than for me - very

considerate of him I thought. Dinner was a rather dull affair, highlighted by my falling asleep at the table - something which is not uncommon since I had hepatitis - and by a quite firm and

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a lmost heated disagreement between Ivanov and my wife over the

peace movement and the one-sided view of the Sov iet Union on the q u e stio n of disarmament. When we returned to our home I invited

Ivan ov to visit us at the coast if he wanted to do so not

e xp ecting that he would and indeed the invitation was not taken

up . My wife indicated that she had no desire to dine with him a ga i n because she found him d ull and inflexible, contrary t o her

init i a l impressions.

I recall that that night before going to the restaurant he a nd I

had d isa greed about the likely timing of the next Australian gen e ral election, he arguing that he expected the Parliament t o r un i t s full term and I stating my conviction that Prime

Min ister Fraser, having failed to capitalise on his best

prospects in late 1982, would have an early dissolution o f the Parliament for a March election. (I seem to recall that a s imila r discussion with the British High Commissioner resulted

in him having delivered to my office at a later stage some bottl e s of white wine- the result of a bet).

W e returned from the c oast on Sunday 30 January and on the ni gh t

o f Tuesday 1 February I addressed a meeting of the Committ e e f o r

the Economic Development of Australia at which I stated my views abou t what would happen politically in this country over t he ensuing 5 or 6 months. I stated my convinction that the a nno uncement of an election date was imminent, that a cha nge i n

t h e leadership of the ALP was also imminent, and that the

e l ectio n would be won by the coalition if the election were

called before the Labor Party's leadership change could be e ff e cted, and by the Labo r Party in the event that the

l eadership change took place before the dissolution of the

Parliament. What I said I had written for an economic newsle tte r s everal weeks before and it was based on no inside informat i o n

at all, simply on e xperience and supposition. I suspect that t h e h ypothetical terms in which I spoke were translated in the t elling in the light of specific events into b eing firm pred ictions.

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The next day I travelled to Adelaide for a series of meetings,

one of which was between a client and the Deputy Premier Jack Wright and Party Secretary Chris Schacht. Much of the lunch wa s taken up with discussion about whether the Federal Labor Party could change its leadership before an election was announced b ut

in the course of the discussion I mentioned that I had been t o

t he Soviet Union in November/December. Wright asked me whether I

h a d contacts in the Embassy who could assist him to visit the

USSR. He indicated that he had been to the Peoples Republic o f

China, that he wished to visit the Soviet Union but that he f e lt

that because of some indiscreet remarks he had made at a f unction at the Adelaide Trades Hall after his return from Chi na and in the presence of a Soviet Consul he would not be

acceptable as a visitor to the Soviet Union. I informed him tha t I doubted that that was the case and that when I returned t o

Canberra I would speak to my contacts about the possibility of him visiting. I did not return to Canberra until the day aft e r

the election had been announced and I think it was probably during the following week that I received a call from Ivanov wh o wanted to see me to discuss the likely outcome. He came to my office and we discussed my perceptions of the political

situation which had arisen as a result of the events of February 3. I am confident that nothing was said in that discussion whi ch was in any way privileged because I was in receipt of no

privileged information. There was nothing which I would have said to Ivanov that I would not have said to other diplomats a nd indeed which I was constantly saying to my clients. It was either at that meeting with Ivanov or at a meeting with Joan

Taggart at about the same time, that I learned that Joan Taggar t was to be invited to visit the Soviet Union. This was hardly surprising as she was National Senior Vice President of the Labor Party and had been intended as one of the members of the

aborted delegation the previous year. I advised Ivanov of the desire of the South Australian Deputy Premier to visit the

Soviet Union. I do not believe that passed on to him the story

which Wright had told me about the supposed indiscretion and I suggested that Ivanov contact Wright by telephone to discuss it

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with him. My motivation in so doing was self interest - if

Wright perceived me as having acted promptly in response to his r e quest to me then he would feel some sense of good will. In any

event he had been a good friend for many many years. Ivanov i n d icated that he would be visiting Adelaide in April and that

he would see Wright then. I expressed to him my firm view that h e should make contact forthwith but he insisted that he would

p r e fer to discuss it with Wright in person. I naively overlooked

t wo considerations. First the justifiably paranoic avoi dance b y

Sov iet diplomats of telephones and the need to clear with Moscow

Wr ight's 'suitability' for entry prior to an invitation being

is sued .

Duri ng the course of the election campaign I received contact

fr o m Laurie Matheson, the principal of Commercial Bureau of Australia. In anticipation of a Labor win he suggested that it wa s time for us to talk about an on-going relationship. A

t en t a tive arrangement was made for a meeting one day in February

b ut that meeting had to be postponed because of Matheson's

i n vol v ement in the bush fires at Mount Macedon. As I was due in

Me lbo urne to address a post-election meeting of CEDA on Monday

March 7 it was agreed that we should meet and lunch together tha t day .

Fo llowing the setting of the date for my meeting with Matheson

a n d prior to it taking place I had two meetings with Ivanov. The

f i rst occurred on either Friday February 25 or the eve of the

e l ection - March 4. I am almost certain that it was the latter

date. It was originally intended that Meena and I should both g o t o his horne but such were her memories of the previous occasion

we had dined together and her fears of the dullness of the

e vening being exacerbated by the presence of a non-english

s p e a king hostess that she refused to go. I thought of canc ellin g

the engagement but felt the need to make a token visit to his

h o rne so pressing had he been about us accepting hospitality there. I am now clear that it was Friday March 4 because I got

there very late having first been obligated to go to the Tally

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Room in connection with my commitments to radio station 2UE the

following night. My recollections of the dinner are that the food presented was excellent - far better than anything I had eaten in the Soviet Union - and that the conversation was predicated on the assumption of an easy Labor win the followin g day. I suspect that at this stage he had received some advice

from Moscow about the discussions which I had had there on trade and in particular on the future of Commercial Bureau. I vaguely recall that this was probably the first occasion that Ivanov emphasised the preference of the Soviet Union for trading on a

government to government basis and avoiding entrepreneurs or agencies such as Commercial Bureau. The other subject on which we were expansive was our anticipation of a significant

improvement in Soviet/Australian relations under the new government. I doubtless would have expressed the view that although the new Prime Minister was known to have an antagonistic attitude towards the USSR not improved by his much

publicised but unsuccessful attempts to secure the release of some refuseniks some years ago, I confidently expected Foreign

Minister Hayden to be a force for reason in Soviet/Australia n relations. I was aware that Hayden had visited the USSR as Leader of the Opposition in 1979 and had enjoyed that visit - I had in fact given to him in advance of it a copy of a

magnificant coffee table book on Leningrad which I owned. I told Hayden that I would have enjoyed Leningrad far more had I had with me information about the buildings of the city contained in that book. Certainly believing Hayden's attitude to

Australian/Soviet relations to be an intelligent one and believing also my relations with Hayden to be excellent in view of the closeness with which we had worked together I suggested to Ivanov that at some appropriate stage I could arrange for he

and Hayden and myself to meet socially - hardly the stuff of which high treason is made!

As I was leaving, Ivanov asked me whether I knew of a group of

film-makers which included Brian Toohey and Marion Wilkinson which wanted to go to the Soviet Union. I told him that I had

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myself done an interview for the film about my views on intelligence involvement in the sacking of the Whitlam Government, I told him that the director of the film was Alan

Frankovich who made the brilliant documentary on the C.I.A. -'On Company Business'. He asked me if I could give him some

newspaper clippings on the role of intelligence organisations in 1 9 75. I undertook to obtain some, but never passed them on.

The second meeting with Ivanov, prior to my meeting with Matheson, took place on Sunday 6 March. On that day, the day

a fter the election I arranged for my successor as National

Se cretary of the Party, Bob McMullan, and his family to visit

o ur home for a swim and a talk. Prior to the McMullans arriving,

I vanov, his wife and daughter came unannounced. Ivanov brought 2

bottles of champagne, a box of chocolates for my wife and I think a box of Havana cigars for me. I recall that it was about

tea-time because Meena was pre-occupied with preparing food for our children and I can remember thinking her rude to not join us

with her glass of champagne. I explained to Ivanov that Bob McMullan and his family were due soon and suggested he stay to c ongratulate Bob on his successful direction -of the Labor

campaign. However, Ivanov said they could not stay and in fact we drank one bottle of champagne between four of us before he

and family departed. They in fact departed as Bob McMullan and his family arrived.

I believe that in that conversation Ivanov certainly made

disparaging comments about trading agencies and suggested that under the new government there might be an opportunity for me to play a much more direct role in the promotion of Soviet/Australian trade. I think it was probably then that for

the first time he suggested that the had received some feelers from Moscow as to whether I might be interested in working directly in trade. It was all quite non-specific but I agreed that it was an area of interest to me, it was an area of

tremendous potential and that I would be interested in listening to any suggestions that might be made about a direct

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involvement. I specifically recall telling him that I would be meeting with Commercial Bureau the following day and was he telling me that Commercial Bureau's future was such that I s h ould not enter into a retained relationship. He assured me

that was not the case and accordingly I was clear that the n e xt

d a y I would accept a retained arrangement with Commercial Bu r eau .

The mystery of the second bottle of champagne is easily solved -it was shared between Bob McMullan, his wife Robyn Joyce, h e r daughter Fleur, Meena and

On March 7 I lunched with Matheson in Melbourne.

Need less to say as a consequence of the results of the previo u s

Sa turday it was a happy luncheon - on my part because of the

outstanding victory of the ALP, on Matheson's because he saw t h at victory as opening the way to a normalisation of relatio n s

with the Soviet Union and therefore to a new growth phase i n h i s

bus iness. Also present at the meeting and the lunch which t ook place at Matheson's South Yarra home was the Managing Directo r of his company, Ian Woods. During the lunch Matheson and Wo ods spoke expansively of the opportunities which they saw for a

significant growth in exports of Soviet technology and heavy e n gineering equipment to Australia with an attendant prospect

f o r Australia to enjoy a huge growth in exports to the USSR.

I was always mindful that the USSR had been Australia's second

largest trading partner until diversion of purchases from Australia, but was still ranked number three. My visit to the Sov iet Union had left me in no doubt that the potential growth in Australian exports (particularly in primary products given

fa i rly constant food shortages and a succession of had seasons) wa s extraordinary. Matheson and Woods talked about the sorts of

things which the Soviets di.d well and in particular they referred to prospects for the provision of power generating equipment in the new Darwin Power Station, the prospects for providing hydro-electric power generating for the Ord

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River, and brown coal gasification for Leigh Creek in South Australia. We also talked about prospects for power generation in Tasmania as an alternative to the Gordon below Franklin scheme. All of these proposals were discussed as ideas which may o r may not be appropriate but associated with all of which were

the prospects of low-cost finance, extended credit terms and payment in exchange rather than money and with a substantial multiple of Soviet purchases from Australia for all sales ma de to Australia. After Woods left to return to the office, Mathes on and I agreed that I should work as a consultant to Commercial

Bu reau for 3 months initially at a fee of $2,000 a month. He

aga in demonstrated his obsession with his former employee and now competitor, Bruce Fasham. It was a common theme in all

discussions I had with Matheson that he saw Fasham as the enemy and as receiving support from unlikely quarters such as the New South Wales Labor Government, the Soviet authorities and later Deputy Prime Minister Bowen. I have two other recollections of

the lunch. It was the first time that we discussed in detail the

joint fishing venture in Tasmania which was specifically suspended by the sanctions of 1980 (that was a joint venture of Commercial Bureau, Henry Jones IXL and Sovrybflot. It seems that negotiations were conducted and the Agreements and Hea d s of Agreement signed by Bruce Fasham in his former capacity as an e mployee of Commercial Bureau). The other was advice given that

Matheson had held a secret lunch or dinner at his home with Ambassador Soudarikov and Andrew Peacock. It was real cloak and dagger stuff with the holding of the meeting not to become known to former Prime Minister Fraser.

The next meeting with Ivanov occurred I think on the evening of Tuesday March 15 when he arrived unannounced at my home.

I can remember the occasion because I was anxious to watch the

first episode of 'The Dismissal' on CTC7 and I was rude to him

to the point of saying during the conversation that I must watch the television programme. I recall that on that occasion he aga in made noises about direct government to government trade

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being preferable but he seemed particularly excited about the appointment of a new Ambassador. I think he also informed that departing Ambassador Soudarikov had met with Foreign Minister Hayden. I can recall my main reaction being to interpret what he

told me about the new Ambassador as further evidence that und e r Andropov there had been a shift in power to the Central

Co mmittee of the CPSU. That was further confirmed in my mind in

a subsequent meeting when he spoke of Suslov's early retirement

from the Second European Department of the Foreign Ministry.

Again I took that and the implied criticism of Suslov as an indication of a considerable shift in responsibility for poli cy dev elopment to the bureaucracy of the Central Committee and away from the bureaucracy of the government.

By this stage I was finding the visits tiresome and intrusive.

Two other meetings that I recall took place with Ivanov. One wa s

on a public holiday, March 21, when he invited me to have lunch with him which took place in the Coffee Pot at the Lakeside Ho tel. Nothing of substance or memorable was discussed then,

except that he indicated to me that Soviet medicine was available for my ear problems, and that we were welcome to holiday at the Black Sea coast. I politely thanked him.

The final meeting in Canberra occurred on the evening of Sunday , April 3, and resulted from my exasperation with what seemed to me to be Russian duplicity in respect of my client Commercial

Bureau's interests concerning a joint fishing venture. I had s o ught to contact Ivanov at the Embassy during the preceding week. Having received no response I visited his home at about 5.00 pm on Sunday the 3rd and delivered to him documents

relating to the Heads of Agreement and the Agreement for the joint fishing venture, and relating to the conflict between Mr Matheson and Mr Fasham. Copies of those documents delivered t o Ivanov are attached as attachments 1 & 2.

Ivanov seemed mainly concerned about the lack of supply by Commercial Bureau of russian vodka to Canberra. He indicated

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that Mr Matheson had done himself no good by failing even to deliver vodka to the city where most Soviet diplomats were loca ted. He said that 'in the great marathon Mr Fasham is in

fron t because he is the official representative of the New South Wales Government'. The other reference made to trade was a

suggest ion that I meet with the representati v e in Australia o f GEKE S, which I think is the shorthand f o r the State Trading

Cor porati o n of the Soviet Union. By this point in time I was

angr y at the rough deal I saw Mr Matheson and Commercial Bureau receiv i n g and had come to despair of achiev ing anything through the Emb assy. It seemed clear that the biggest problem for Mathes o n was within the NSW gover nment but I was uncertain

whethe r the Soviets were telling the NSW government that they preferred to deal with Fasham or whether the position was t h e other wa y round. As I left, Ivanov exited from his home with me,

and o utside the door informed me that I should be careful. He sa i d that my phones had been tapped since just before Christmas. He sa i d that it was all c onnected with the expulsion of Soviet

d i p l o ma ts which had taken place in London and Paris, and that

the Au stralian Government would be under great pressure to expel a d i p lomat, which could be him. He said that should he be

expelled, given that I had been placed under surveillance, the comm e rcial implications for me could be considerable.

I fe lt a justifiable sense of outrage and realised that if he

knew then it was because the KGB had penetrated ASIO's sur ve illance of himself and of me. However I found the whole t h i ng s o fanciful that, having told my wife and having explain e d

i n simple terms what it was about to our children, we then

trea ted the whole matter in a cavalier fashion, even to the

po int of my informing clients and us informing friends. To us it was a joke until Friday 22 April.

The last time I saw Ivanov was on the Saturday before his

expulsion when both of us were in attendance at the Bienni a l or Triennial Conference of the Australia-USSR Society. We b oth s p ok e on the morning session - he on behalf of the Embassy, I as

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the most recent official Society visitor to the Soviet Uni on.

It was the first conference of the Society I had a ftended . 1

so with Joan Taggart. Both of us were elected to the Executive and I was elected as a Vice President, along with a number o f

other Labor luminaries including Mr Justice Enderby, Ma urie Keen MP, former MHR for Hunter Bert James etc. Much of the morning

was taken up with tributes to the late Jack Ginifer (former

Commonwealth Government Minister and Society activist). A posthumous life membership was presented to his widow.

My conversation that day with Ivanov was brief but he did

indicate that he was on his way to Adelaide and wanted me to

arrange a meeting with Jack Wright, at which he woul d issue an invitation to Wright to visit the Soviet Union. I told him th e

notice was short but said that he should ring me when he got t o

Adelaide which he expected to do the following Tuesday a nd I would see what I could do. It was not until the Thursday mo r ning

that he rang. As ASIO taps of my phone will show, the

'spymaster's' control of events was such that he asked for a meeting with Bannon. I pointed out to him that it was in fa ct

Wright, the Deputy Premier who had expressed the desire to vis it the Soviet Union, that the prospects for a meeting were dim given that he wanted it that day. I endeavoured to make contact with Jack Wright through his office and explained the posi tion

to Ann McMahon there - I had known her when she was personal

stenographer to Don Dunstan .

Ivanov called back to see what arrangements had been made. I informed him that he should make contact with Ann because Jack Wright was away on sick leave. My office rang Ann McMahon and/or Margo Paterson, Wright's Appointments secretary, and left it i n

their hands to see if a meeting could be effected and to tictac

with Ivanov. That was the last I heard from Valery Ivanov.

On Wednesday, April 6, Matheson and Woods visited Canberra to

see the representatives of the Soviet Department of Foreign

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Trade . I a ttempted to arrange a meeting for them with Primary Industry Minister Kerin to discuss the joint fishing venture, but t ha t meeting did not take place until Friday April 8. They

did , howe ver, see the relevant officials of the Department during the afternoon of April 6.

Mathes o n suggested that he and Woods would take the Soviet trade repr e s en t a tives to lunch and invited me to be present. I booked lunch at Pea ches restaurant at Campbell, and as directed by

Mathes o n e nsured that Stolichnaya vodka was on ice there. Lunch was a guarded but pleasant gathering with all attention

focus s i ng on the First Secretary, Trade, Mr Dashevsky, whom Mathe s o n obviously regarded as vital to his future business. The most si gnificant disclosure during lunch was that in future

trade with Australia, the Soviets would accept an imbalance no wo rs e t han 1:10 - still a huge advantage to Australian

We also d iscu ssed whether or not there had been a normalisation

of r e l at ions with the USSR. From the restaurant, I rang the PM's

office , s e paking to Graeme Evans and John Bowan there in orde r to a sce rta in the fa c tual position.

Matheson was delighted with the way the lunch went and clea rly bel i eved my presence on his side in the great Fasham-Matheson debate had made an important impact on Dashevsky whom I had met f o r the first time.

Wh e n their appointment with DPI officials made it impossible for

them to return to Melbourne that night, Matheson suggested di n i ng at Twice in one day seemed a bit much but I

s u ggested inviting Robert Hogg from the PM's office to whom I

had spok en about the joint fishing venture, and who knew of Math e son through Mike Selvaris, Matheson's brother-in-law. Ho gg

agr eed to d ine with us, and subsequently ALP Assis t ant Nati o nal Secretary Ken Bennett who wanted to see me that night was a dded t o the party.

At l unch Matheson had informed me for the first time that he

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also had on a retainer in Canberra Eric Walsh. I had k n o wn that

Walsh had worked for Commercial Bureau for many years, but h ad previously assumed that the association had been discontinued prior to my engagement by Matheson. At dinner I asked Math eson whether there was anything else he hadn't told me. I was q u i te

cross that he had not told me about Walsh, because given t hat his problems appeared to be in NSW, Walsh was the obvious p e r son to sort out those difficulties because of his intimate relationship with the leadership of the majority right wing

faction which dominates the NSW government. I pointed o ut to Matheson that in not knowing of Walsh's involvement I was operating in the NSW context with one hand tied behind my back.

Early the following week, I rang Walsh and suggested we shoul d work together on Commercial Bureau's problems. I told him o f my understanding that there had been a directive issued in NSW that all government trade with the Soviet Union was to be thro ugh

Fasham and his company PACTRA. I asked whether he could check it out. He agreed to do so, and we arranged to meet later that week .

We met at Walsh's office in the late afternoon of Tuesday Ap r il

19. He informed me that he had ascertained there was no o ffi cial preference for Fasham in the NSW government and that he had arranged a lunch for Thursday May 5 between himself and Fa sha m with Industrial Development and Decentralisation Minister Don

Day, and his adviser on trade matters, Jay Alparsland.

Walsh and I discussed prospects for Soviet trade with the States. He indicated that he had been engaged to do some wo rk for WA Premier Brian Burke, and that he would attempt to s ec ur e some deals for Matheson in that State. I informed him of the

meeting with NT Chief Minister, Paul Everingham, which had taken place.

We concluded that the apparent preference for Fasham in NSW was

probably the result of kickbacks, and we also discussed the political naivety of our joint client. I explained to Walsh my

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belie f that Commercial Bureau's problems in Moscow required a lar ge ly political solution and undertook to send him a copy of my r eport to Matheson of December 1982. I also ascertained that

although Walsh did have copies of the fishing venture Agreement and Heads of Agreement (attachment 1) he did not have copies of the Ma t heson/Fasharn legal battle documents (Attachment 2). I undertook to send these to him also. These various documents were deliv ered to Walsh's Office under cover of letter dated April 20th 3), on that date, or early the following

day , ie . 2 d a ys before the expulsion order against Ivanov was issued .

On the night of Wednesday April 13, I flew to Melbourne with the

Chief Minister of the Northern Territory, Paul Everingham, and the Territory's Treasurer, Marshall Perron. I had previously informed them that I had a client who traded with the USSR, and

that t h e y might look at Soviet power generators for the new Darwin p ower station which could provide substantial trade offsets f o r the NT. We met at Matheson's horne with Matheson and Wood s over d inner, and the discussion ranged over a wide field

o f trad i n g possibilities. We returned to Canberra by charter

ver y early the next morning, as Everingham had to attend a 7.00 am meet ing of the Economic Summit Communique Drafting Committee.

I am c e rtain that both the NT Ministers and the Commercial

Burea u representatives were well pleased with the discussions about some quite exciting trade possibilities for both sides.

The mo s t recent contact I had have from Matheson was when he rang me on the night of April 22 - the day of the expulsion - to

te l l me that Eric Walsh had informed him that the PM had told

the Chi n ese Premier that a State Trading Corporation would be set up t o handle all trade with 'socialist'countries, Comecon and other. He said that if this happened, he was out of

bus i ness. I told him I would discuss it with Walsh. I was a bit

sur p rise d that I had not heard from Walsh earlier that week after he received the documents I had sent him. As it was a long

weekend (Anzac Day) I delayed contacting Walsh until Tuesday

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April 26 when . I was told by his office that he was interstate . I

requested that he call me on his return, expected to b e p.m. April 28. I have not heard from him since.

On Thursday and Friday April 21 and 22, I had reached agr eement

with Richard Farmer and Bill Butler that they would join my company. Given the enormous growth of my client list and th e b lue chip nature of those clients, I saw the need to prov i oe

proper backup. Farmer and Butler saw the potential for fur ther dramatic growth in the business. We were all pretty exc i ted

a b out the whole thing.

On Friday April 29 they visited me unannounced, indicated t hey

wished to speak outside, and told me they could no longer j oin me. Farmer, who appeared quite shaken, told me that he had been

sought out by someone whom he refused to identify, on Saturday April 23, the day after Ivanov's expulsion, and told that i t would be a big mistake for he and Butler to join Combe because

Combe was to be denied access to the government. Farmer s a i d he

believed his home had been broken into on the night of Satur day April 23, although nothing was taken. They asked whether I h ad yet had any indications of being frozen from access. I said I

had not. We discussed what it could possibly be about, the possible commercial consequences for me, and the implicatio ns of someone who had worked for the ALP for 20 years, 16 of them in a

full-time capacity, being convicted of charges unknown without notification or trial by an ALP Government, and presumably on the word of spies, Australian and other.

The weekend which followed was one of considerable anguish.

On Monday May 2 in the early evening, David Barnett, Malco lm

Fraser's former Press Secretary, rang me to tell me that h e had received a leak from the Cabinet Room that I had been decl a r ed by the Prime Minister off-limits to Ministers. I thought it impressive that Barnett had established a Cabinet source s o

quickly!

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My inquiries since have produced scant information. I gather I

have been convicted of some or all of the following:

(a ) being a major pawn in the establishment by Ivanov of a

spy network involving amongst others, Joan Taggart and Jack Wright; (b) having been in receipt of huge sums of money from the Russians in respect of trade negotiations, but

presumably as payment for my role in (a) above; as evidence by ( c ) my being wholly or partly in ownership of a substantial

property portfolio, the funding of which is a mystery; all of which;

Pr oposition (a) is patently absurd. The facts are evident that

any initiatives for Mrs Taggart and Mr Wright to visit the USSR d i d n o t come from me.

I find the suggestions in proposition (b) objectionable and

repugnant. The facts are that no monies have ever been received by me directly or indirectly from the Soviet Union. The only payment which I have received for work done on Soviet trade was $ 2 ,500 from Commercial Bureau of Australia in respect of my

invo ice dated 21/12/82 and paid on 7/3/83. That was for work done on behalf of C.B.A. in Australia and Moscow. I am about to

submit to C.B.A. an invoice for the first 2 months of the agreed

3 month contract period.

Tha t I should have an interest in real property should hardly

come a s a surprise to any senior member of the A.L.P. Property i n itiatives taken during my tenure as National Secretary have s een the Party's asset position improve from nil to

a ppro ximately $4 million today, and a likely $5-6 million

f o llowing rent reviews next year. It was this asset position

which enabled my successor to negotiate substantial overdraft f ac ilities for the National Executive and all State Branches for

t he last election campaign.

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That Parliamentarians should be surprised at my persona l r ea l property interests probably reflects ignorance that, unl ike themselves, Party officials do not retire after 16 years s ervi ce with substantial superannuation benefits. My real property

interests are my superannuation and for the benefit of my family. Those properties in which I have an interest ar e heavil y mortgaged and that equity which my wife and I have is the d irect

and indirect result of the proceeds of defamation settl e men t s and of the estates of my deceased parents - not of secre t

payments from some mythical Soviet slush fund!

For me to be considered some sort of major security risk wo uld be farcical were it not tragic. I appear to be an Australian

Alger Hiss of the 1980's, but at least he had the right t o say

his piece before the Un-American Activities Committee!

I am certain that wittingly I have committed no offenc e a n d i n

no sense acted inimically to the interests of my country and my

Party. I am confident that neither have I unwittingly transgressed.

That is, of course, unless one regards it as an offence t o

believe that relations between Australia and the USSR a re best served by dialogue directly and indirectly through trade. I n all of my discussions on trade, whether with Ivanov or with Ministers and Government officials, I believe I have always advanced the interests of my client, Commercial Bureau o f

Australia.

I can account and am responsible for what I have said and d one .

I cannot account for what is contained in A.S.I.O. versions of

same, nor for anything which may have been communicated by Ivanov. I am happy to have my probity and integrity tested against those of the people who have convicted me without cha rge or trial and on evidence supplied by the shadowy figures of A.S.I.O., A.S.I.S. and, presumably, the C.I.A.

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APPENDIX G

MINISTERIAL STATEMENT BY THE PRIME MINISTER,

THE HONOURABLE R.J.L. HAWKE, IN THE HOUSE OF REPRESENTATIVES,

11 MAY 1983.

MR DAV ID COMBE - MINISTERIAL STATEMENT

MR HAWKE (Wills-Prime Minister)-by leave- Events of the last few

weeks r e lating to the expulsion of the Soviet KGB officer Ivanov invol ve fundamental issues of national security and individual civil l i b erties. My Government's approach to this matter has invol v e d placing these issues above all other considerations,

includ ing political party or personal associations. For my part I have sought to ensure that because the issues of national

securi ty e xtend beyond which political party holds office the Leade r o f the Opposition (Mr Peacock) was fully briefed. He expr essed c omplete support for the Government's proposed course o f act i o n. I am appalled that the endorsement by the Leader of

the Opposition of the Government's approach was of insufficient in fl u ence to prevent members of the Opposition making efforts to expl o it for political purposes a matter in which issues of nat i o n a l security and individual civil liherties are concerned .

The d ecision relating to the expulsion of Ivanov had the

unanimo us support of all members of the Cabinet Sub-committee o n Nat i onal and International Security, comprising myself, the

De pu t y Prime Minister (Mr Lionel Bowen), the Special Minister o f Sta t e (Mr Young), the Minister for Foreign Affairs (Mr Hayden), t h e At torney-General (Senator Gareth Evans) and the Minister f o r

De fence (Mr Scholes). The subsequent decision regarding Mr David

Comb e 's association with the Government had the full support of

bo th my Cabinet and my full Ministry. The basis for the expulsion of Ivanov is not in question, and remains as set out in the Foreign Minister's statement of 22 April. As regards the acti o n relating to Mr Combe, the Government has never been in

a n y doubt ahout the validity of its decision. At the same time

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it was concerned that he should not become the object of public censure without some opportunity to defend himself. From the t ime that the Opposition used his name in the House yesterday,

it was essential that he be given this opportunity.

Mr Combe's association with Ivanov, and the subsequent decision

made by my Government in regard to his contact with it, have

been the subject of several hours of discussions today between Mr Combe and the Attorney-General, Senator Gareth Evans, during

part of which time the Director-General of the Australian Se curity Intelligence Organization, Mr Harvey Barnett, was present. During these discussions Mr Comhe gave his detailed account of his professional activities as a public affairs

consultant and his past relationship with the Soviet Uni on and the Soviet Embassy, and the Attorney-General set out, in the terms summarised in the following paragraphs, the considerations which have determined the Government's course of action.

Fo llowing those discussions Mr Combe has now advised the

Go vernment that, having regard to all the circumstances as they

stood at the time the Government made its decision, he ' understands and accepts' the Government's decision that

Ministers not deal with him in his capacity as a consultant lobbyist.

The Government's decisi o n, which was made in the first insta nce by Cabinet in Adelaide on 26 April and endorsed by the full Ministry in Canberra on 2 May, followed a recommendation made hy

me explicitly based dn the following considerations:

Ministers' doors should be, and be seen to be, open without the need for leverage by a party insider; and it was not

appropriate that a former party official, by virtue of that status, have special advantages or access to government den ied to others.

The Ministry, at its meeting on 2 May, agreed that the Special Minister of State should bring forward a submission canvassing a possible scheme for the registration of Government lobbyists generally, not just those with Labor Party connections.

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I now make i t clear that there was a further consideration

unde r l y i ng my recommendation to the Cabinet and Ministry which was no t e xplicitly raised with either body at the time, but which h ad b een the subject of prior discussion and agreement by the Cab i ne t Sub -committee on National and International Security . Th e information and advice then available to the Government suggested that Mr Combe's relationship with Ivanov had developed t o the point that it gave rise to serious security

concern . Th e v iew of the National and International Security Sub-committee was that, as events had developed, Mr Combe either had been , o r appeared to have been, compromised by Ivanov to the exten t that it was no longer appropriate for Government

Minister s t o d eal with him. The deliberate cultivation b y Ivanov of the r elationship with Mr Combe, and the stage that process had reach ed on Labor's assumption to office, was one of the reasons- but by no means the only reason-which led to the Government 's decision to expel Mr Ivanov from Australia on 22 April .

It is the view of the Attorney-General and his Department that, on all the information available to them, no criminal offence has been committed by Mr Combe. There is certainly, in the Government 's belief, no foundation for any allegation or

imputation that Mr Combe is, or ever was, in any sense a Soviet

spy . I r e peat that the Leader of the Opposition has b een full y

b riefed o n all aspects of the Ivanov matter-including the

p osition o f Mr Combe and the advice of the Attorney-Genera l and

his Depa r t ment-both on 21 April, the day the decision to expel Mr Ivanov wa s taken, and subsequently. He has expressed complete

suppor t f o r the Go vernment's actions in this matter.

Let me s tr es s what I said to the House at the outset of this

statement . When issues of national security are at stake, wheth e r the y be manifested in terms of foreign espionage

activities or by such means as the articles p ublished i n the 'National r imes' last week, which are prejudicial to the national interest, this Government will not be deter red from

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resolutely de!ending that interest, whatever attempt ma y be made to misrepresent this principled position. Nor shall we atte mpt to exploit such issues for our own political gains. We will remain committed at the same time to ensuring that in defence of

the national interest, there are no transgressions of ind i v idual civil liberties.

It is perhaps inevitable that there will always be elements o f doubt and suspicion in the minds of all Australians in c ircumstances where there can be less than full disclosur e o f

information. That is a responsibility which a government must a ccept, and for my part I accept it. But I trust this statement

will put to rest the uncertainty of the last few days, and

convince all Australians, of whatever political persuasion, o f the correctness and fairness of our handling of the matter. A climate of innuendo and deceit, which some have attempted t o introduce into this matter, is not one which my Government wil l b e guilty of creating or permitting to flourish. Finally, I a m

sure that our actions in respect of this matter, and of the

'National Times' articles, will have made it clear to all o the r governments that in no way will my Government be compromised when matters of our national security are at stake.

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APPENDIX H

22nd September, 1983

Mr . Just i ce R.M. Hope,

Commis si oner,

Royal Com mi s si o n on Australia's Security and Intel l igen c e Agencies. PO Box E3 4 9

Queen Vi ctoria Terrace ACT 2600

Dear Com mi s sioner,

I encl o se submission of the Council for Civil Liberties as to

term o f r e f e rence (c) of your Commission.

Your decisio n not to hear the Council's submission orally is reg r ettabl e . Oral presentation and discussion woul d have given the submis s i o n added force. Nevertheless, this Council is conf i den t that your findings will be in accordance with the essenti a l thrust of the submission.

Yours s incerely,

IAN DO DD

Pr e s i den t

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SUBMISSION OF ' THE COUNCIL FOR CIVIL LIBERTIES ON TERM OF

REFERENCE (c) OF THE ROYAL COMMISSION ON AUSTRALIA'S SECURITY

AND INTELLIGENCE AGENCIES

The Commission has produced a statement of issues t o be r esolved in respect o f paragraph (c) of the Commission's terms of reference. The C.C.L. does not concene that the statement covers a ll matters relevant to the term of reference, but this

submiss ion will be restricted to it. The submission will not address all of the items in the statement of issues as s o me d o

n o t directly raise civil liberty issues and a great many are p e ripheral to the great matters at stake.

The Commission's central finding should be that Mr. Combe has

been wrongly and shamefully treated by the Government whi ch has a ligned itself with inept judgments and unacceptable

philosophies of ASIO. To do otherwise than to reverse ASI O ' s and the Go v ernment's assessment of Mr. Combe would be to endo r se McCarthy ist sentiment and practice.

The plain unmistakeable fact is that Mr. Combe has not i n any wa y whatsoever endangered Australian security or national

interest, however perceived. Indeed, except for unacceptab l e ASIO views on critics of it and other security agencies, n o

person is prepared to say how Mr. Combe has been a threat to

Australian security. It is significant that from start to f i nish of the Commission's deliberations no specific allegations a s to breach of security are made against Mr. Combe. He has bee n branded because he associated with someone else who is sai d to be a spy. Would an Un-Australian Activities Committee b e l o n g i n

coming if this branding were endorsed?

Unfortunately, the Commission's investigations under its term s of reference have resulted in putting the cart before the h o r se . A general examina tion of the extent to which ASIO should be

permitted surveillance and the activities which can properly be said to come within any reasonable notion of threats to

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Aust r a l i an security would have ruled out ASIO's activities and judgme nts in Mr. Combe's case. Nevertheless, the evidence on wh i ch ASIO and the Government relied against Mr. Combe now being

publi c ly available, it is clear that the action taken against hi m wa s unwarranted.

The CCL sub mits that items in the statement of issues should be answe red as follows:

2 (a )

(h )

( 2A )

( 7 )

( b )

( e )

( 2 4)

No .

No.

No .

As s uming the NIS Committee decided as set out.

Not reasonably open. Not reasonably open. There are none.

The basic judgments to be made about this item of reference are politi cal , not legal. It is unacceptable in a supposedly free and democratic society for Mr. Combe to have been so pilloried .

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ALP

ANOP

APAC

ASIO

AUS

GLOSSARY

The Australian Labor Party

Australian Nationwide Opinion Polls Market Research

Australian Public Affairs Consultants Pty Limited

Australian Security Intelligence Organiza tio n

Australia - USSR Society

Blesing(Ms Meena) The wife of Mr Combe

CIA

CBA

CBA Report

Central Intelligence Agency (USA)

Commercial Bureau (Australia) Pty Limited

The 'Report for Mr Laurie Matheson, Comm e r c i a l Bureau (Aust) Pty Ltd, from Davi d Combe on Discussions Held in Moscow, November 23 -December 2, 1982'. The report consists o f 7

pages and was sent by Mr Combe to CBA with a

covering letter dated 20 December 1982 and an invoice dated 21 December 1982

CPSU Communist Party of the Soviet Union

Director-General The statutory office of the Head of ASIO, of Security created by sub-s.7(l) of the Australian

Security Intelligence Organization Act 1979. The position is presently occupied by Mr T.H. Barnett

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GKES

GRU

Ivanov (Mrs)

KGB

NISC

Pactra

Sovryb fl o t

UK SS

USA

US SR

Gosudarstvenniy Komitet Po Vneshnim Ekonomicheskim Svyazyam. State Committee for External Economic Relations (USSR)

Glavnoye Razvedyvatel'noye Upravleniye Main Intelligence Directorate of the Soviet Ministry of Defence

The wife of Valeriy Nikolayevich Ivanov. The Department of Foreign Affairs practice is to use the Russian feminine suffix (Ivanova) in conjunction with the English title 'Mrs' when referring to the wife of a Soviet diplomat. In

this report 'Mrs Ivanov' is used.

Komitet Gosudarstvennoy Bezopasnosti. State Security Committee of the USSR

National and International Security Committee

Pacific Commerce and Traders Co Pty Limited

All-Union Organisation 'Sovrybflot', a Soviet enterprise, dealing with fish and fish products, which was a party to the 1978 agreement to set up a joint Soviet-Australian

fishing company

United Kingdom Security Service

United States of America

Union of Soviet Socialist Republics

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