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1954-55.

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA.

REPORT

OF THE

ROYAL COMMISSION ON

ESPIONAGE.

Presented by Command, 14th September 1955; ordered to be printed, 26th October, 1955.

[Cost of P ape1· :- Preparation, not given ; 810 copies; approximate cost of pri nting nnd puh li shi ng, £ 590. ]

Printecl a nd P ublish ecl fo r th e GovERNMENT of t he C O:)Ii\I?N WEALTH A ·sTRALIA by

A . J. A RTHU R, Co mmomveaJ th Gove-rnment Prmter , C.a nber . (Printed in Austr alia. )

No. 113 [GRoup G.]-F.5686/ 55.-PRrcE:5s,

TABLE OF CONTENTS

LET'fERS pATENT

REPORT OF THE

ROYAL COMMISSION ON ESPIONAGE

INTRODUOTORY .... , .........•..•....••..•••.•.•....••..•••••••

SOHEME OF T'H:ID RE.PO• RT ..................•••••....••.....••••••

CHAPTER 1. ExPLANATION OF TERMs USED lN THE REPORT .•.••• CliAPTER 2. THE RrsTORY OF THE PE'TRovs AND OF THEIR AssoCIA-TION WITH Sovi:E:'r EsPIONAGE SERVICEs •....•..•••...••••...•

CHAPTER 3. THE 0IRCtJMSTANCES OF THE DEFECTION OF THE PF/.i:'ROVS ....•.•.•..•...••.••......•..•••....•.•..•.• ; •.•

CHAPTER 4. THE N A'l"URE OF EvmE.NTIARY MATERiAL BE:Fo:RE Us AND O u R EvALUATION oF' i'l' •......•.. .. •..••••••••••••.••

I. THE PETROV pAPERS ...•..........•...•..•......•.•..•..

Exhibit H ................................. · ·. ·. · . . .

Exhtoit J The Moscow Letters ................................. .

Figure 1 Figure 2 Figure 3 Figure 4 Figure 5

1

3

13 16

20

24

34

34

35 38 41 46 48 50 52 53

Figure 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

The G Series of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Authenticity of the Petrov PapeTs . . . . . . . . . . . . . . . . . . . . . . 59

II. 0FFIC'IAL R -ECORDS 60

IlL OTHER DocuMENTARY MATERIAL . . . • . . . . . . . . • • • . . • . . • . . . • 61

lV. TE.ST'IMO·NY OF T'HE PETROVS . • . . . . . • • • . • . . . • . . • • • . . . • . . • . 61

Credibility of the PetTovs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

·v. OTHER ORAL TES'l'IMONY • . • . . . . . . . • . • . • . . • • • • • . . . • . . . . • • 65

VI. THE ADMIS.SIBILITY AND WEIGHT OF THE EVIDENCE GENERALLY 66 CHAPTER 5. BASIC GENERAL FINDINGS FROM THE EviDENCE . ; . . . . 68 CHAPTER 6. THE G.R.D. APPARATus IN AusTRALIA . • . . . • . • . . . • 70

CRAPTER 7. THE ADMINISTRATIVE CoNTROL FROM THE Moscow CENTRE OF THE M.V.D. LEGAL APPARATUS IN AUSTRALIA AND THE WORK DONE Fon lT 'fHlJ! Moscow , , • , • • • • • • • • . . • • • • 78

(i)

189

TABLE OF CONTENTS-continued

Page

CHAPTER 8. THE ADMINISTRAT'IVE' STRUCTURE AND PRACTICE OF THE M.V.D. APPARATUS IN AusTRALIA AND IT'S PERSONNEL 85 The M.V.D. Office in the Embassy . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Methods of Communication between the Moscow Centre and the M.V.D. Resident . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

M.V.D. Personnel in Australia . . . . . . . . .. . . . . . . . . . . . . • .. . . . 87

Difficulties Affecting M.V.D. Work in Australia from 1949 onwards . . . . . . . . . . . . . . . . . . . . . • . .

. . . . . . . . . . . • . .

. . . . . . . . 95

CHAPTER 9. THE GENERAL 0PERA'l'ION S OF THE, M.V.D. IN THE DIS­ COVERY AND DEVELOPMENT OF THE ME,ANS OF OBTAINING INFORMATION, AND ITS ExPLOITATION OF CoMMUNISM . . . . . . . . . . 98

Relation of Communism to Soviet Espionage . . . . . . . . . . . . . . . 98

Soviet Financial Support of Communism in Australia . . . . . . . . 102 The Means Used to Acquire Information and to Recruit Helpers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Emigres from and Visitors tp the U.S.S.R. as a Field for

Recruitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Other Subjects of Contact and "Study" . . . . . . . . . . . . . . . . . . . . 115

Allotment of Code Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

CHAPTER 10. THE OPERATIONS OF THE M.V.D. IN RELATION TO THE DEPARTMENT OF ExTERNAL AFFAIRS . . . . . . . . . . . . . . . . . . . . . . . . 117

Petrov's Statement as to Leakages of Information . . . . . . . . . . 119

The Identity of "Klod" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Document G.4 and the Evidence of O.R. Tennant and his wife in Relation Thereto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Entry No. 6 on Document G.8 and the Evidence Relating Thereto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

Entry No. 3 on Document G.7 and the Evidence Relating Thereto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Document G.2 and the Evidence Relating Thereto . • . . . . . . . . . . 129 "(2) 'Tourist'." 130

"(3) 'Sestra'-Franciska Bernie" . . . . . . . . . . . . . . . . . . . . . . 131

"( 6) Joe-Department o:f External Affairs (Archives)" . . 132 ''(7)-Member of the Communist Party, girl, having finished the school o:f the Department o:f External Affairs, and will go over to work in the Department of External

Affairs" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

"(11) B.-Dep. Director of the Department of External Affairs'' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

"(8) Sister o:f the wi:fe o:f B." ....•.................. , • • 137

"(9) Don Woods-Secretary o£ the Adviser of Doctor E. on atomic energy'' .............. , . , .••.... , .. , • , 188

(ii)

TABLE OF CONTENTS-continued

CHAPTER 10-continued.

Page

Petrov's Statement concerning Throssell and the Evidence Relating Thereto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

Ian Frank George Milner and the Evidence Relating to Him 143 Walter Seddon Clayton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

Clayton's Activities apart from the Department of External Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

M.V.D. Interest in the Department of External Affairs-other­ wise than through Clayton-appearing from the G Series of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

M.V.D. Interest in the Department of External Affairs during Petrov's Temporary Residentship . . . . . . . . . . . . . . . . . . . . . . . 154

OHAPTER 11. THE OPERATIONS OF THE M.V.D. IN RELATION TO MEMBERS OF FORE:IGN DIPLOMATIC MISSIONS IN AUSTRAUA . . . . 167 Concerning Madame Ollier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

Concerning Officials of other Foreign Diplomatic Missions . . . . 180

CHAPTER 12'. THE OPERATIONS OF THE M.V.D. IN RELATION TO MEMBERS OF THE pARLIAMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182

CHAPTER 13. THE OPERATIONS OF THE. M.V.D. IN RELATION TO JOURNALIST'S ... -........... · · . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

Concerning Fergan O'Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

Conperning Rex Chiplin . . . . . . . . . •. . . . . . . . . . . . . . . . . . . . . . . . 202

CHAPTER 14. M.V.D. OPERATIONS IN RELATION TQ PERSONS ENGAGED IN CoMMERCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

Concerning Kosky (code name 'Priyatel") . . . . . . . . . . . . . . . . . . 208

Concerning Arup Concerning White

212 212

Concerning Milliss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213

Concerning Keesing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

Concerning Kirk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

Concerning W assilieff (code name "Kustar") . . . . . . . . . . . . . . 215

CHAPTER 15. THE OPERATIONS OF THE M.V.D. IN RELATION TO SciENTISTS ............................................. 218

CHAPTER 16. THE OPERATIONS OF THE M.V.D. IN RELATION TO CouNT·ER-EsPIONAGE AND SEoURITY 0RGANIZAT'IONS . . . . . . . . . . 225

CHAPTER 11. THE OPERATIONS OF THE M.V.D. IN RELATION TO Emigres . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241

Concerning Andrew Fridenbergs (code name "Sigma'') . . . . . . 241 Examples of "Eli'' Work of the M.V.D. in tracing "Traitors" and Persons suspected of being connected with Oounter-lp.telligence Organizations . .. .. .. .. .. . . .. . . . . .. .. . . . . . 245

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TABLE OF CONTENTS-cbrttinued

Page

CHAPTER 18. THE OPERATIONS OF THE M .V.D. TOWARDS SETTING tJ'P AN ''ILLEGAL APPARATus'' IN AusTRALIA . . . . . . . . . . . . . . . . . . 251

Advantages and Disadvantages respectively o£ the "Legal" ahd "Illegal'' Apparatus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251

The Design to set up an "Illegal Apparatus'; in Australia . . . . 252 "Plan of Work;; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253

Planting of "Illegal Vvorkers" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

1. The Case of Divisek ( code n ame "Pechek") . . . . . . . . . . . . 257

2. Collection of Information and Documents Preparatory to Plant1ng of "Illegal Workers" . . . . . . . . . . . . . . . . . . . 261

3. The Case ot Mrs. Kazanova . . . . . . . . . . . . . . . . . . . . . . . 262

4. The Case of Daghian (code name "Monakh") . . . . . . . 264

5. The Case of Dr. S andy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266

CHAPTER 19. CoNCERNING PERSONs ·wnosE NAMES oR ConE NAMEs AI>:PE.AR IN THE Moscow L:ErrTERs AND G SEmEs OF DocuMENTS

AND 'i'o W :HoM WE t-IAvE N()T ALREADY REFERRED . . . . . . . . . . . . 268

Concerning Anderson (code name "Yeger") . . . . . . . . . . . . . . . . 268

Concerning Dalziel ....................... , ...... , . . . . . . . . . 272

Concerning Miss Kent Hughes . . . . . . . . . . . . . . . . . . . . . . . • . . . 273

Concerning N. K. N ovikoff (code name "Kliment") and N. N. Novikoff (code name "Mefody") . • . . . . • . . . . . . . . . . . . . . . . . 274

Concerning Ratnavel . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . 277

Concerning Rodgers (code name "Lovky") . . . . . . . . . . . . . . . . 278

Concerning Shaker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278

Concerning Max Stephens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280

Concerning Tattersell (code name ''Artist'') . . . . . . . . . . . . . . . . 282

Concerning Tenukest (code name "Tikhon") . . . . . . . . . . . . . . 283

Concerning Yuill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284

CHAPTER 20. C6 NS1DERATION OF MATT ERS ARiSING UNDER CLAUSES (c) AND (d) OF 'fHE L ETTERS PATENT .. .. .. .. .. • • • • .. . . .. . • 286

Clause (c) of the Letters Patent . . . . . . . . . . . . . . . . . . . . . . . . . . . 286

1. "Whether any persons ... have communicated inf01·ma-tion or documents to any Soviet agent" . . . . . . . . . . . . . 287

2. "Unlawfully" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287

The Relevant Commonwealth Law Creating Off( ncEts Relating to the Communication of Information or Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288

The Relevant Law Relating to Espionage in Time of Peace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288

Unlawful Communication by Public Servants . . . . 289 Unlawful Communication by Persons Generally . .. . 289 (a) "An Enemy" ... . .... o o o o o o o. o o o o o o o o o o o o o • 290

(b) "Document or information". o o o o o o o o • o o o o o • 291

TABLE OF CONTENTS-continued

CHAPTER 20-continued.

3. Communication of information or documents to Soviet agents to the prejudice or possible prejudice of the

Page

security or defence of Australia . . . . . . . . . . . . . . . . . . . 292

Clause (d) of the Letters Patent ...... 0 0.................. 293

CHAPTER 21. GENERAL CoNcLUSIONs

APPENDIX No.1

294

Letter No. 1 of 2nd January 1952 (B.3-B.20) . . . . . . . . . . . . . . 305

Letter No. 2 of 12th March 1952 ( C.2- C.8) ... 0 0 • • • • • • • • • • • • • 323

Letter No.3 of 6th June 1952 (D.5-D.27) . . . . . . . . . . . . . . . . . . . 330

Letter No. 4 of 24th July 1952 (E.4-E.11) . . . . . . . . . . . . . . . . . . 353

Letter No. 5 of 27th September 1952 (A.6-A.32) . . . . . . . . . . . . 361

Letter No. 6 of 25th November 1952 (F.3-F.20) . . . . . . . . . . . . . 382·

G Series of Documents (G.1-G.18) . . . . . . . . . . . . . . . . . . . . . . . . . 401

APPENDIX No.2 Interim Report of the Commissioners . . . . . . . . . . . . . . . . . . . . . . 418

APPENDIX No. 3 Espionage Organizations of the U.S.S.R. between 1918 and March 195° 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . 430

APPENDIX No.4 Petrov's Espionage Experience prior to leaving for Australia . . 434

ACTS AND REGULATIONS

Royal Commissions Act 1902--1933 .. . ......... 0 0 • • • • • • • • • • • • • • • • 437

Royal Commission Act 1954 ............ . ............ · · · · ..... · 446

Royal Commission on Espionage Act 1954 .............. 0 • ••• • ••• 447

Royal Commissions Regulations ................... · · · · · · · ... · · · j56

JNJ)F,X • . • . • • • • • • . • • • • • • . • • • • . . . . • • • . • . • • . . . . . • . • . . • . . • • • • . • !57

1 9 3

Letters Patent

COMMONWEALTH OF AUSTRALIA.

ELIZABETH THE SECOND, hy t11r of nf tqt

lllnttrh Ktnghom. 1\uatralta anh iirr otqrr 1Rralmn IDrrrttorit!l <@urrn. i!rah of tqr Q!ommouturaltq. flltfrnhr1· of lqr 1J1aitl1: To Our Trusty and Well-beloved-

The Honourable WILLIAM FRANCIS LANGER OWEN, a Judge of the Supreme Court of New South Wales;

The Honourable ROSLYN FOSTER BOWIE PHILP, a Judge of the Supreme Court of Queensland; and

The Honourable GEORGE COUTTS LIGERTWOOD, a Judge of the Supreme Court of South Australia,

GREETING: f.Knnw yr tijat vVe do by these Our Letters Patent, issued in Our name by Our Governor-General in and over Our Commonwealth of Australia, acting with the advice of Our

Federal Executive Council, and in pursuance of the Constitu­ tion of Our said Commonwealth, the Royal Commission Act 1954, and all other powers him thereunto enabling, appoint you to be Commissioners to inquire into and report upon-

( a) the information given to the Commonwealth Ly Vladimir Mikhailovich Petrov as to the conduct of espionage and related activities in Australia and matters related to or arising from that information : (b) whether espionage has been conducted or attempted

in Australia by representatives or agents of the Union of Soviet Socialist Republics and, if so, by whom and by what methods; (c) whether any persons or organizations in Australia

have communicated information or documents to any such representative o-r agent unlawfully or to the prejudice cr possible prejudice of the security or defence of Australia; and (d) whether any persons or organizations in Australia

have aided or abetted any such espionage or any such communication of information or documents, and, generally, the facts relating to and the circumstances attending any such espionage or any such communication ot

information or documents :

* 78228-1 I

Letters Patent

1\ub lltb bo btd&re that, for the purposes of these Our Letters Patent, the expression "representatives or agents of the Union of Soviet Socialist Republics" includes other persons or organizations acting, directly or indirectly, for or in the interests of the Union of Soviet Socialist Republics:

1\ub 11lilt ctp.pnint !JOU the said WILLIAM FRANCIS LANGER OWEN to be the Chairman of the said

Commissioners :

1\nb Ellr r.equtr.e you with as little delay as possible, to report to Our Governor-General in and over Our said Commonwealth the result of your inquiries into the matters entrusted to you by these Our Letters Patent.

1Jn t.e.atimtTU!J mlr.er.enf We have caused these Our Letters to be made Patent and the Great Seal of Our said

Commonwealth to be hereunto affixed.

llttn.e.aa Our Trusty and Well-beloved SIR WILLIAM JOSEPH SLIM, Knight Grand Cross of the Most Honourable Order of the Bath, Knight Grand Cross of the Most Distin­ guished Order of Saint Michael a.nd Saint

George, Knight Grand Cross of the Royat Victorian Order, Knight Grand Cross of the (L.s.) Most Excellent Order of the· British Empire_. Companion of the Distinguished Service Order,

upon whom has been conferred the Decoration of the Military Cross, Knight of the Venerable Order of Saint John of Jerusalem, Governor­ General in and over Our Commonwealth of Australia, this third day of M_ ay, in the year of

our Lord One thousand nzne hundred and and in the third year of Our Reign.

W. f. SLIM Gov·ernor-General.

By His Excellency's Command, ROBERT G. MENZIES Prime Minister.

ENTERED on RECORD by me, in REGISTER OF PATENTS, No. 213, Page 222, this third day of May, One thousand nine hundred and fifty-four. ·

T. J. COLLINS.

2

REPORT OF THE ROYAL COMMISSION ON ESPIONAGE

INTRODUCTORY

To His Excellency, Field-Marshal Sir William Joseph Slim, Knight Grand Cross of the Most Honourable Order of the Bath, !(night Grand Cross of the Most Distinguishe0 Order of Saint Michael and Saint

George, Knight Grand Cross of the Royal Victorian Order, Knight Grand Cross of the Most Excellent Order of the British Empire, Companion of the Dis­ tinguished Service Orcler, who1n has been con­

ferred the Decoration of the Military Cross, Knight of the Venerable Order of Saint John of Jerusalem, Governor-General and Commander-in-Chief in and over the Commonwealth of Australia.

MAY IT PLEASE YouR ExcELLENCY:

1. On 3rd April 1954 Vladimir Mikhailovich Petrov left the service of the Soviet and sought and was granted political asylum in Australia.

2. On 20th April1954 Evdokia Alexeyevna Petrova (here­ inafter called Mrs. Petrov) sought and was granted the pro­ tection of the Acting Adn1inistrator of the Northern Terri­ tory, and she was subsequently forn1ally granted asylum by the Commonwealth Government. She was then at Darwin on her way to the U.S.S.R. in the custody of two arn1ed Soviet

couriers, together with one Kislytsin, the Second Secretary of the Soviet Embassy, who had been detailed to take her back to the U.S.S.R.

3. It was as a result of these events that we were appointed Royal Commissioners by Letters Patent under Your Excellency's hand, dated 3rd JYiay 1954, to inquire into and report upon-

(a) the information given to the Commonwealth by Vladimir Mikhailovich Petrov as to the conduct of espionage and related activities in Australia and ·matters related to or arising from that information;

197

Report of the Royal on Espionage

(b) whether espionage has been conducted or attempted in Australia by representatives or agents of the Union of Soviet Socialist Republics and, if so, by whom and by what methods; (c) whether any persons or organizations in Australia

have communicated inforn1ation or documents to any such representative or ag-ent unlawfully or to the prejudice or possible prejudice of the security or defence of Australia; and (d) whether any persons or organizations in Australia

have aided or abetted any such espionage or any such com1nunication of information or docun1ents, and, generally, the facts relating to and the circum­ stances attending any such espionage or any such com­ n1unication of information or documents.

It was declared that, "for the purposes of these Our Letters Patent, the expression 'representatives or agents of the Union of Soviet Socialist Republics' includes other per-­ sons or organizations acting, directly or indirectly, for or in the interests of the Union of Soviet

Socialist Republics''.

4. :\iVe were required by the Letters Patent to report to Your Excellency ''with as little delay as possible'' the results of our inquiries.

5. The Letters Patent were issued pursuant to Section 3 of the Royal Cornmission Act 1954 (Act No. 2 of 1954). Sub­ sequently, and in order to increase the powers conferred upon us and to re1nove certain doubts which had arisen, the Royal Com1nission on Espionage Act 1954 (Act No. 28 of 1954) was enacted, by Section 5 of which the Letters Patent hereinbefore referred to were declared to be and to have been at all times authorized by that Act. By these Acts, which were passed by the unanimous vote of the Parliament, we were statutorily required to n1ake our Inquiry and Report in terms of Your Excellency's Con1mission.

6. We opened our sittings in Canberra on 17th l\1ay 195- 1: and sat there until 19th 1954. Mr. W. J. V. vVindeyer,

Introductory

Q.C., Mr. G. A. Pape and l\1r. B. B. -Riley appeared as counsel to assist the Com1nission. At these sittings the general nature of the matters with which we were required to deal was outlined by counsel, and it became obvious that for the con­

venience of witnesses our sittings should be held principally in Sydney. Temporary accom1nodation in Sydney was afforded us by the Chief Justice of Australia at the High Court in Sydney, and we sat there on 11th June 1954.

7. Since it was at that time apparently impossible to obtain suitable permanent court accommodation in Sydney, we com­ menced the hearing of evidence on 30th June 1954 at Mel­ bourne, where the Chief Justice of Australia placed No. 1

High Court at our disposal for a limited period. We sat continuously in Melbourne until 23rd July 1954, and there heard the evidence of a number of witnesses.

8. Subsequently, the Government of the State of New South Wales placed at our disposal suitable court accommodation in Sydney, where we resumed our sittings on 16th August 1954 and concluded them on 31st March 1955. We desire to express

our indebtedness to the Chief Justice of Australia and to the Government of the State of New South \Vales for making suitable accomn1odation available to us.

9. It early became apparent that we would require the ser­ vices of an official interpreter and translator whose proficiency and integrity would be beyond question. vVith the assistance of the Government of the United Kingdom the services of

Mr. A. H. Birse, C.B.E., were made available to us. Mr. Birse, a British subject born in Russia of Scottish parents, was educated and spent the first 26 years of his life in Russia. During and after the war he acted as the official interpreter

for Sir Winston Churchill and other British leaders, both political and military, in their talks and conferences with Soviet leaders. In particular, he acted as the official British interpreter the Mo scow, Teheran, Yalta and Potsdam con­

ferences. Mr. Birse was sworn as an interpreter at our

Sydney sittings on 11th June 1954 and thereafter continuously acted in that capacity throughout our Inquiry. His services to us and to Australia have been invaluable.

5

1 9

Report of the Royal Commission on Espionage

10. Most of the tinw from the commencement of our sitting£ in Sydney on 16th August 1954 until 8th October 19·54 was occupied by the hearing of evidence relating to Exhibit J (hereinafter referred to). In the course of the hearing of

the evidence, allegations were made and persisted in by cer­ tain counsel that not only Exhibit J but also all the other docu­ ments (except E xhibit I-I) brought by Petrov were forgeries and were the products of a fraudulent conspiracy. We deemed it advisable t.o consider these allegations before proceeding with the Inquiry, since if these allegations had been estab­ lished the future course of Dur Inquiry must have been thereby fundamentally affected.

11. On 8th October 1954, when the relevant evidence relat­ ing to the matters so raised had been completed and addresses thereon had been made at length, we adjourned in order that we might prepare and submit to Your ]Jxcellency an Interim

Report. Having found that none of the allegations of c-on­ spiracy or forgery had been established, we resumed the hear­ ing of evidence on 18th October 1954. A copy of our Interim Report appears as Appendix No. 2 hereto.

12. We sat continuously from 18th Oct.ober 1954 until 11th November 1954. Late in October 1954 Petrov became seri· ously ill, and he was unable to give evidence until 13th Decem­ ber 1954, and then only for a short period. This handicapped us in the taking of other evidence. We sat intermittently, how­ ever, until 15th December 1954, and then adjourned until 17th January 1955. From 17th January 1955 until 31st March 1955 we sat continuously until the evidence was completed.

13. We examined 119 witnesses. In every case in which a witness sDught leave to be represented by counsel or soli­ citor leave was granted; and, where he so desired, each such legal representative was allowed to cross-examine every wit .. ness whose evidence appeared to affect his client.

14. Fifty-eight witnesses availed themselves of the oppor­ tunity of legal representation and 41 counsel or solicitors were given leave to appear, some of them for more than one client and one counsel for as many as 12. Before a Royal Commis­ sion a person has no right to require, but he may request.,

6

Introductory

that a particular person be called as a witness. No such

request was refused, exc8pt where it appeared that the evidence proposed to be adduced would be irrelevant or unnecessary.

15. The evidence of some of the witnesses called by us was required partly to enable us to interpret, or check the inter­ pretation of, certain coded parts of the documents before us. Others were called partly for the purpose of testing the authen­

ticity of the documents·. Others again were called because we felt that we should publish in our Report as much as possible of the documentary. material brought by Petrov from the Soviet Embassy and we deemed it right that persons whose

names would thus be made public should be given-where possible-an opportunity of knowing, before publication of their names, what references to them were contained in the documents, and an opportunity of giving evidence.

16. The subject-matter into which a Royal Commission is called upon to inquire is usually of such a nature that the whole of its proceedings and all the material upon which it reaches its conclusions can be 1nade public. A Royal Com­

mission on Espionage, however, stands in a different position. It is concerned with matters which vitally affect the security and defence of the country. Its investigations may involve, as have our investigations, an examination of evidence and of

material of a most confidential character; for example, material in the possession of the Australian Security Intelli­ gence Organization (A.S.I.O.), and some supplied by similar organizations in friendly countries. To investigate material

of this nature in public was, in the national interest, un­ desirable.

17. As far as we are aware, there has been only one other Royal Commission on Espionage-that in Canada in 1946, following the defection of Gouzenko from the Soviet espionage service. In the Canadian Inquiry the whole of the material

was examined in private and, for security reasons, little of it has ever bee11 published. By the courtesy of the Government of Canada, however, we have had the opportunity of examin­ ing the transcript of the whole of the proceedings.

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Report of the Royal ConMni ssion on Espionage

18. Despite the difficulties nece ssarily involved, and so far as it was reasonably possible so to do, we carried out our Inquiry in public, but in certain cases in which it seemed to us that the national interest dmnanded it we heard evidence in private session. These cases fall into four broad

classes:-(a) vVhere the evidence was known to be of such a nature that, for reasons of security, it should not be made public. (b) Where a witness was engaged in counter-intelligence

work and it was not desirable to disclose his identity. (c) Where it was uncertain until a matter had been

investigated whether the answers to questions would involve security considerations. (d) Where the relations of Australia with other

countries n1ade it desirable that evidence concerning their nationals either should not be published or should be 1nade known to the Governments of those countries befoi·e publication.

19. In one case we took oral evidence in private session solely on account of the health of the witness.

20. In the case of another witness-the Deputy Secretary of the Department of Defence-some of his evidence was of so confidential a nature that, at his request and for reasons which seemed valid to us, no written note was made of it.

21. With certain exceptions, the evidence which was taken in private session has been printed in the public Transcript. ThP exceptions include some or all of the evidence of certain persons who either are or have been senior servants of the Crown, such as the Director General of Security, the Deputy Secretary of the Department of Defence, certain Security officers, 1\fr. JusticeS. C. Taylor, now of theN ew South Wales Industrial Commission, who was for a period in charge of the war-time Security Service in New South Wales, and Dr. J. W. Burton, who was formerly the Permanent Head of the Deparhnent of External Affairs. We propose to publish little of this evidence, since the subjects on which these witnesses were examined concerned, for the most part, their actions

Introductory

as senior servants of the Crown and relate to 1natters occur·­ ring within their Departments, some of which were of a confidential character. Whether this evidence should be pub­ lished in the future is a matter which, in our view, should be

determined by the Crown on principles applicable to the disclosure or non-disclosure of matters of State.

22. We have, however, later in our Report stated the effect of what Dr. Burton said in denial or explanation of matters which it might be suggested carry an implication unfavourable to himself. In the case of Mr. Justice S. C. Taylor we have

directed publication of such parts of his evidence as are relevant to the references to himself in one of the documents produced by Petrov.

23. Other evidence excluded from publication, for reasons which we later express, is that co ncerning certain officials of foreign Diplomatic J\1issions.

24. Although it was not possible to adopt a completely uni­ form procedure, a person to whom reference was made in the Soviet documents brought by Petrov and who was called as a witness was usually informed of the nature of the reference

to him before he gave his evidence; and in cases where the oral evidence of a witness was thought likely to contain any allegation or implication of in1proper conduct by another person, the latter was, where reasonably possible, notified before the evidence was given and an opportunity was given

to him to question the witness and g·ive evidence in rebuttal or explanation if he wished. It was impossible, however, to apply this procedure in all cases. For example, it was inevit­ able in such a complex and involved Inquiry that names

should occasionally be introduced unexpectedly by witnesses -often because counsel assisting us refrained from interview­ ing witnesses before they were called to the witness-box, and in few cases had proofs of evidence been previously obtained.

25. In an Inquiry into espionage it was perhaps inevitable that the calling of a person as a witness, or the mere reference to a person by name, would be regarded by some as carrying a stigma. vV e, and counsel assisting us, sought on many occa­

sions to make it clear that this was not so.

20·3

Report of the Royal Commission on Espionage

26. This misconception was one of the difficulties which we felt in connection with our decision to take oral evidence in public. It is possible that we could have carried out our task more effectively had we heard all the oral evidence in private; but on the whole we considered that the disadvan­ tages of an open hearing were outweighed by the advantages. The tradition of the common law in this regard is a sound one and we thought it proper to follow it as closely as was possible having regard to the subject-matter with which we were required to deal.

27. In general we required persons whose evidence we thought would assist our Inquiry to attend and give evidence. In some cases, however, where it was impossible or it appeared unnecessary to take this course we accepted statutory declara­ tions or other forms of written statement. On a few occasions we thought it sufficient to rely upon reports furnished by Commonwealth officers who interviewed persons from whom we required information. We adopted this course, however, only in respect of unimportant aspects of the Inquiry, or when the person concerned was abroad or too ill to give his evidence otherwise.

28. The documentary material brought from the Soviet Embassy by Petrov fell into two broad classes. The first of these comprised Exhibits H and J, which we discuss in more detail later. The second comprised a number of documents of Soviet origin. In dealing· with these two classes of material we have had in mind a basic distinction between them.

29. The first class comprised material prepared in Aus­ tralia by Australians for Soviet use. The purpose for which the Soviet required this material soon became clear, and the individuals who gave it to the Soviet were identified. Whether the contents of these documents (Exhibits Hand J) were true or false was therefore of no moment. The importance of the documents lay in the circumstances of their making, which served as good illustrations of certain methods adopted by the Soviet espionage service and proved that helpers, witting or unwitting, of that service were to be found in Australia.

30. The second class comprised documents of a different category emanating from Soviet sources, and it was necessary

10

Introductory

to investigate them and thejr contents more closely in an endeavour to ascertain-(a) whether the statements made in those documents con­ cerning persons and matters referred to therein were

true; and (b) why the persons named in those documents had attracted the interest of the Soviet espionage service; and

(c) who gave that service the information about such persons.

This investigation was also necessary as an aid in testing the authenticity of the documents.

31. We that throughout the documents a nun1ber of

Australians had been allotted code names by the Soviet es­ pionage service. The allocation of a code name obviously showed that the person given it had for some reason attracted the special attention of that service, and it was necessary to discover, if we could, what was that reason. We accordingly

decided that persons to whom the Soviet espionage service had allotted code names should be called. It became clear to us, however-and we so stated on a number of occasions­ that the mere fact that a code name had been allotted to a

person did not necessarily carry any_ implication of impro­ priety.

32. Much of the material placed before us would not have been admissible in a court of law in proceedings inter partes; but the function of a Royal Commission is merely investiga­ tory and not the determination of issues between parties. It

was therefore our duty to inform our minds as to the facts frorri such sources and material as we thought fit, without being bound by the technical rules of evidence which apply in judicial proceedings between parties wherein the tribunal is

limited to a consideration of such material only as is proffered by and admissible between those parties. The only limits to our power and duty in this regard were those imposed by relevance, common sense, and fairness.

33. Another matter which differentiated our Inquiry from judicial proceedings inter partes was that we had no power

II

2 0 5

Report of the Royal Cornrnission on Espionage

to comn1it for conten1pt of court. Under the Commonwealth Constitution the judicial power can be exercised only by courts. The power to commit for contempt is part of the judicial power and it was therefore not competent for the Parliament to invest us with it, since we, sitting as a Royal Commission, did not constitute a court. The position thus created, although unavoidable, was unsatisfactory. Some wit­ nesses who obviously did not want to assist-or wanted to hinder-us in our Inquiry took advantage of the fact that we were powerless to commit forthwith for contempt if _they refused to answer questions. In some instances, however, their refusals were themselves revealing.

34. For the same reason it was not possible for us to take action against those who, in the press and in pamphlets, attacked witnesses who were called before us, counsel assist­ ing us, and the Commission itself. Nor could we punish persons who participated in the two organized demonstrations which occurred within the precincts of the court-room; our only power in these cases was to direct that the offenders be forthwith ren1oved.

35. Since the fundamental matter for our Inquiry was "'espionage and related activities", it became immediately necessary to consider the implications of that phrase.

36. In the days when wars were fought by professional armies and when international political affairs centred largely on military alliances, espionage was in the 1nain connected with military aims and objects. But war now involves not only the armed combatants but the whole political, economic, and social life of the community. The aims of espionage have likewise expanded, so that no part of the machinery of gov­ ernment, or of the organization of civil life, can be regarded -even in times of peace-as exempt from its attentions.

37. Soviet espionage activities have been much favoured in 111odern iimes by the conflict between the ideologies of the Soviet and of the countries of the Western world, which has given rise to what has come to be known as the "cold war".

The ideology of Communism has its adherents in every Western country, including Australia. Amongst such persons

12

Scheme of the Report

the Soviet can confidently seek some who, for ideological reasons, are willing to help its espionage and fifth-column activities.

38. It is with this n1odern background in mind that we interpret the meaning of the phrase ''espionage and related activities" as including:-(a) The discovery or attempted discovery, otherwise

than by legitimate means, of the secrets of one

country by another country for the purpose of fur­ thering the interests of the latter country and pre­ judicing the security or safety of the former, and all activities mediately or immediately directed to those

ends.

(b) The obtaining of information about persons who n1ay be capable of being used, with or without their knowledge, for espionage purposes. (c) Particularly so far as the Soviet is concerned, the

recruitment of espionage agents amongst adherents to or sympathizers with the ideology of Communism. (d) The penetration or attempted penetration for es­ pionage purposes of the machinery of government of

one country by the agents or sympathizers of an­ other. (e) The preparation and setting up of a local organiza­ tion or fifth-column designed to operate against the

interests of its own country in time of war or national ernergency.

SCHEME OF THE REPORT

39. One of our tasks has been to devise a form under which the vast amount of material which we have been called upon to consider can be correlated and presented in a compre­ hensible manner. The form we have adopted-and which, we hope, will least suffer from the defects of overlapping and

repetition-is to deal with the subject under the following heads and develop each of these heads seriatim. Chapter 1.-Explanation of Terms used in the Report.

13

2 0 7

Report of the Royal Commission on Espionage

Chapter 2.-The History of the Petrovs and of their Association with Soviet Espionage Services. Chapter 3.-The Circumstances of the Defection of the Petrovs. Chapter 4.-The Nature of the Evidentiary Material

fore us and our Evaluation of it. Chapter 5.-Basic General Findings from the Evidence. Chapter 6.-The G.R.U. Apparatus in Australia. Chapter 7.-The Administrative Control from the Mos-

cow Centre of the M.\T.D. Legal Apparatus in Aus­ tralia and the work done for it by the Moscow

Centre.

Chapter 8.-The Administrative Structure and Practice of the M.V.D. Legal Apparatus in Australia and its Personnel. Chapter 9.-The General Operations of the M.V.D. in

the Discovery and Development of the Means of Obtaining Information, and its Exploitation of Com­ munism. Chapter 10.-The Operations of the M.V.D. in relation

to the Department of External Affairs.

Chapter 11.-The Operations of the M.V.D. in relation to Members of Foreign Diplomatic Missions in Aus­ tralia.

Chapter 12.-The Operations of the M.V.D. in relation to Members of the Parliament.

Chapter 13.-The Operations of the M.V.D. in relation to Journalists. Chapter 14.-The Operations of the M.V.D. in relation to Persons engaged in. Commerce. Chapter 15.-The Operations of the M.V.D. in relation to

Scientists. Chapter 16.-The Operations of the M.V.D. in relation to Counter-Espionage and Security· Organizations. Chapter 17.-The Operations of the M.V.D. in relation

to Emigres.

14

Sche1ne of the Report

Chapter Operations of the M.V.D. towards

setting up an Illegal Apparatus in Australia. Chapter 19.-Concerning Persons whose names or code names appear in the Moscow Letters and G Series of Documents and to whom we have not already re-

ferred. ·

Chapter 20.-Consideration of Matters Arising under Clauses (c) and (d) of the Letters Patent. Chapter 21.-Gei1eral Conclusions.

2 9

CHAPTER 1

EXPLANATION OF TERMS USED IN THE REPORT

40. In this Chapter we provide a glossary of son1e tern1s and abbreviations which we have used in our Report.

G.R.U.-These initials stand for Glavnoe Razvedyvatelnoe U pravlenie, or Chief Military Intelligence Directorate of the Ministry of the Armed Forces. This is the organ of the Soviet Governn1ent which directs military (including naval and air) espionage in countries outside the U.S.S.R. \ TV e have used these initials throughout our Report to describe the organi­ zation concerneJ with n1ilitary espionage.

M.V.D.-These initials stand for V nutrennikh

Del, or Ministry of Internal Affairs, an organ of the Soviet Govern1nent one function of which, during the latter period with which our Report deals, was the direction of espionage, other than military espionage, in countries outside the U.S.S.R. In the exercise of that function it is the lineal

descendant of the following organs of State:-O.G.P.U.-The O.G.P.U. (Obyedinennoe Gosudarstvennoe Politicheskoe Upravlenie, or United State Political Direc­ torate);

N.K.V.D.-The N.I{.V.D. (Narodnyi K01nissariat Vnutren­ nikh Del, or People's Comn1issariat of Internal J_'i_ffairs) ;

N.K.G.B.-The N.I{.G.B. (Narodnyi Komissariat Gosudars­ tvennoi B ezopasnosti, or People's Con1missariat . of State Security); M.G.B.-The M.G.B. (Ministerstvo Gosudarstvennoi Bezo­ pasnosti, or Ministry of State Security); and

K.I.-The I{.I. (Ko1nitet Infornl/;atsyi, or Committee of In­ fonnation).

41. Generally, throughout our Report we have used the letters M.V.D. to represent the organ of the Soviet Govern­ Inent for the tin1e being directing espionage work abroad

16

Explanation of Terms used in the Report

(other than military espionage), although in fact the of Internal Affairs (M.V.D.) has directed espionage work abroad only since shortly after the death of Marshal Stalin in 1953.

42. In Appendix No. 3 we have set out in rnote detail the various changes which have taken place in the organs of the Soviet Government which have been responsible for the direction of espionage _ work abroad. This Appendix will

enable the references in our Report and in the evidence to varions Soviet organs controlling espionage, and their history, to be more fully comprehended.

43. l\!Iuch more detailed information on this and other rnatters has been supplied by the Petrovs and been made known to the appropriate authorities in Australia and else­ where.

Legal Apparatus. Resident. ''Legal Apparatus'' is the Soviet tern1 for a Soviet espion­ age organization operating in a foreign country under the control of a member of the Soviet Embassy staff in that

country who has an overt diplomatic status and enjoys the advantages and immunities of that status. Such a controller is called the ' 'Resident''.

Illegal Apparatus. Illegal Resident. "Illegal Apparatus" is the Soviet tern1 for a Soviet

espionage organization operating in a foreign country under the control of a person other than a member of the Soviet Embassy staff in that country, who is called an "Illegal Resident''. The words ''Legal'' and ''Illegal'', as used in

connection with an "Apparatus", are not intended to distinguish between lawful and unlawful activities but to distinguish an espionage organization operating under a "Resident" \vho has diplomatic status fron1 an espionage

organization operating under a person who has no diplomatic cover.

* 78228-2 I7

2 1 1

Report of the Royal Cornm,ission on Espionage

Cadre Worker. "Cadre Worker" is the description used in Soviet espion­ age parlance for a person who is permanently employed as an espionage agent of the M.V.D. or the G.R.U., as the case may be, usually trained in espionage work and, in the case of a "Legal Apparatus", frequently posted with overt diplo­ matic functions to the Soviet Embassy in the "target" country.

Collaborator. "Collaborator" is the description used in Soviet espionage parlance for a Soviet official with diplomatic or quasi­ diplomatic duties to perform, such as a Commercial or Press Attache, who is not a permanent employee of the J\1.V.D.

or the G.R.U. but has been co-opted for espionage work. Agent. ''Agent'' is the description used in Soviet espionage par­ lance for a person, other than a Soviet official, who has been

recruited or whom the Moscow Centre regards as having been recruited for espionage work in the ''target'' country.

Moscow Centre. We have used the phrase ''Moscow Centre'' throughout this Report to indicate the Headquarters for the time being of the Soviet organ or organs of State charged with the conduct of espionage work abroad.

"EM''. "EM" is the M.V.D. abbreviation for "Emigre". "EM" work is, in Soviet espionage parlance, the line of espionage work which is concerned with the investigation of the activities of emigres from Russia and other Communist-controlled countries and of their national associations and societies; the tracing of emigres regarded as traitors by the Soviet; the penetration of emigre associations and societies by Soviet espionage agents; and the recruitment and use of emigres Soviet espionage agents.

"S.K." The initials "S.I{." stand for "Soviet Kolony ". "S.K." work is, in Soviet espionage parlance, the line of espionage

18

Explanation of Terms used in the Report

work which consists of watching and reporting to the Moscow Centre on the conduct and political reliability of members of the staff of Soviet Embassies , Trade Delegations, and Mis­ sions, and of other Soviet citizens visiting or residing in the "target" country. This line of work is not directed against

the "target" country. Accordingly, we have not thought it necessary to investigate it otherwise than to discover that a number of officials and employees of the Soviet Embassy in Australia were engaged in a system of spying, one upon

another.

Tass. This is the abbreviation for Telegrafnoie Agenstvo Soviets­ kav a Soiuza (Telegraphic Agency of the Soviet Union), the organ of the Soviet Government which is concerned with th0

and dissemination of news.

19

213

CHAPTER 2

THE HISTORY OF THE PETROVS OF THEIR ASSOCIATION

WITH SOVIET ESPIONAGE SERVICES

44. The evidence of the Petrovs shows that their history is as follows.

I

45. PETROV was born in Siberia 1n 1907 of a peasant family. His real name is Shorokhov. He was christened in the Russian Orthodox Church. In 1923 he joined the Com­ munist Youth Organization (l{omsomol), and in June 1927 became a full member of Communist Party. In 1929 he adopted the name of Proletarsky in order to evidence his enthusiasm for Oon1munism.

46. In October 1930 he was called up for service in the Baltic Fleet and was trained as a cipher specialist. In 1933, after the completion of his service with the navy, he joined the cipher service of the O.G.P.U. and served in Moscow until September 1937, when he was posted as the chief of a cipher unit operating in the Sinkiang Province in Western China. In February 1938 he returned to J\{oscow and was appointed to a cipher section of the N.K.V.D. (which had taken the place of the O.G.P.U.) and later becan1e the head of that section with the rank of Major. The section comprised some 50

cipher clerks. He continued to work in this section until September 1942, when he was posted to the U.S.S.R. Embassy in Stockholn1. His overt posting was that of an Embassy cipher clerk. His principal M.V.D. tasks were:-

(a) to perform cipher duties for the M.V.D. Resident at the Embassy, whose overt post was that of Coun­ sellor; (b) to carry out '' S.K.'' work.

47. Before leaving for Sweden, Petrov was allotted the code nmne '' Moryak'' and directed to assume the name of Petrov, since it was thought that Proletarsky was an unsuit­ able nmne for an Embassy official in He took up his

20

History of the Petrovs

duties in Sweden in March 1943, after a long and adventurous journey. In 1945, while still se rving in Sweden, he was pro­ moted to the rank of Lieutenant-Colonel.

48. In October 1947 he returned to Moscow, where he carried out '' S.l{.'' duties at Headquarters in connection with the crews of Soviet ships operating in the Lower Danube area. This work involved watching and reporting on the poli6cal

reliability and conduct of the officers and crews of Soviet vessels on the Danube.

49. At the end of 1948 he became the· chief of a section responsible for '' S.K.'' work amongst the officers and crews of Soviet vessels sailing to the Anglo-American countries and amongst Soviet delegations visiting· · the Anglo-American

countries. fie continued to do this work until his departure for Au.stralia in January 1951.

50. In Appendix No. 4 to this Report will be found a more detailed account of his service with Soviet espionage organi­ :zations prior to his departure for Australia. It will be seen that most of Petrov's training and experience was in "S.K. P

and Gipher. work, and not in actu.al operational espionage duties. However, from his long official experience he gained a wide general knowledge of the M.V.D. system and methods.

51. Before leaving Moscow, Petrov was instructed by his Moscow Centre that he was to carry out "EM" work in Aus­ tralia and to take over '' S.K. '' work from an Embassy official named Gubanov (code name "Santo"). He was allotted a new

code name, ' 'Mihail' '.

52. Petrov's first overt appointment to the Soviet Embassy at Canberra was as a Referent, or Embassy clerk, but soon after his arrival he was appointed Third Secretary (a post carrying diplomatic immunity). He was also put in charge of the consular department at the Embassy and in control of the

work of Voks, the Soviet organization concerned with the pro­ pagation of Soviet culture abroad.

53. Apart from his "EM" and "S.K." duties, Petrov per­ formed no espionage work in Australia from the time of his

.21

2 ] 5

Report of the Royal Comrnission on Espionage

arrival until the end of 1951, when he was appointed tem­ porary M.V.D. Resident in circumstances hereafter to be described. His predecessors as M.V.D. Resident had been Makarov (1943-1949), Sadovnikov (April1949 to April1951), and Pakhomov (temporary Resident from April1951 until the end of 1951). Petrov remained temporary Resident until April 1954, when he left the Soviet service.

II

54. MRS. PETROV was born in 1914 and christened in the Russian Orthodox Church. From the age of 12 she was asso­ ciated with the Communist Party, first as a "Pioneer" in the children's organization, then as a member of the Komsomol

or Youth Organization; and she said that she finally became a full Party member in 1950. In 1933, having completed her secondary education and spent two years learning foreign languages at the Technical College for Foreign Languages in Moscow, she became a member of the R.U. (Military Intelli­ gence Organization; later known as the G.R. U.), and was

posted to an integrated department of the O.G.P.U. as a cipher clerk, the chief of her department at that time being Boki, who was later shot in the 1937 purge. In 1934 Mrs. Petrov was transferred from the R.U. branch to the O.G.P.U.

proper, the head of her section being Gusev, who was also executed in 1937.

55. In July 1940 she married Petrov. Subsequently she accompanied him to Sweden, where they arrived in 1943. There she worked for the M.V.D. Resident as typist, accoun­ tant, cipher clerk and technical assistant. She was allotted the code name of "Tamara". While in Sweden she also per­ formed some operational M.V.D. work as an intermediary

between the Resident and some of his agents.

56. After her return to Moscow with Petrov in 1947 she was employed on duties at Headquarters in connection with '' S.K. '' work in a number of European countries, and in 1948 was transferred to a department which controlled espionage work in Scandinavia. Her work was mainly con­ cerned with Soviet espionage activities in Sweden. She con­ tinued to work in that department until, with Petrov, she

22

History of the Petrovs

,left for Australia in January 1951. Her rank was then that of Captain. In the course of her service Mrs. Petrov acquired a knowledge of English, Swedish, and Japanese.

57. Mrs. Petrov, before leaving Moscow, had been assigned certain operational espionage duties in Australia under Sadovnikov. She retained the code name ''Tamara'' which had been allotted to her in Sweden. Her overt post was that

of Embassy accountant and secretary to the Ambassador.

58. In April 1951 the then M.V.D. Resident, Sadovnikov, was te·mporarily-as he thought-recalled to Moscow. Before his departure he was instructed that Pakhomov was to act as temporary M.V.D. Resident during his absence and that

Mrs. Petrov was to take over the M.V.D. cipher work and papers, including the cipher books. This she did. She con­ tinued as M.V.D. cipher clerk and technical assistant until April1954.

CHAPTER 3

THE CIRCUMSTANCES OF THE DEFECTION OF THE PETROVS

59. On 3rd April 1954 Petrov left the Soviet service and voluntarily sought and was granted political asylum in Australia. ·

60. On 13th April1954 the Department of External Affairs by officia) Note informed the Soviet of these facts.

The suggestion immediately made on behalf of the En1bassy on receipt of the Note was that Petrov had been kidnapped.

61. On 20th April1954 Mrs. Petrov sought and was granted political asylum. It was not until after her defection that, in a Note dated 21st April 1954, the Embassy asserted that it had discovered "by careful audit" that Petrov had stolen

Soviet funds, and den1anded his "handing over" to the Em­ bassy as a criminal. This Note also suggested that the docu­ rnents he had brought "may be only falsified, fabricated by the work of persons interested in the worsening of Soviet­ Australian relations".

62. On 23rd April1954 the Soviet Deputy Foreign Minister handed to our Embassy in Moscow a Note in which was indicated the Soviet's decision to recall its Embassy from Australia, and which reiterated the charges of embezzlement by Petrov and asserted that the documents handed over by him ''could only be forgeries concocted on orders from per­

sons interested in worsening Soviet-Australian relations''. The Note further charged that Mrs. Petrov had been kid­ napped by the Australian authorities.

63. The suggestion of forgery of the docu1nents, so straight· way conceived without even sighting them, was renewed before us, particularly on behalf of Communist witnesses, and is dealt with elsewhere in this Report.

64. As to the charge of embezzlement made in the Soviet Note, the Department of External Affairs requested detailed particulars of it, but none were supplied. This charge was not

24

Defection of the Petrovs

renewed by anyone before us; Petrov vehemently denied it and there wa:;; no evidence whatever to :?"llpport it. It is noteworthy that a similarly belated and false charge of of Embas$y funds was made by the Soviet Gov­

ernment against his defection in Canada in

(Report of the Royal Commission on ]Jspion.ag() in

Canada, at pages 645-646).

65. The Soviet suggestions that the Petrovs had been ldd­ napped received wide publicity throughout the world and supplied the baf?js for certain distorted reports. Indeed, a New York weekly having world-wide coverage stated, after

our Inqtliry had commenced, that Petrov had been ''arrested'' by the ·Australi&n authorities. At the outset of our Inquiry7 we and counsel \lS thought it proper to be assured

that the Petrovs were under no duress, since if they were their credibility would be in do1,1bt, Before our sittings comUlenced, and with. this in view, 1\fr, Windeyer arranged a visit by Petrovs to his OWII, horne, and on the opening day reported

to us that they were under no duress. To residents ·of coun­ tries such as Ai;Istralia, where proceedings securing personal liberty by way of oo:rpus are readily available, the

suggestions of kidnappin,g or duress are absurd; but we mally declare from our observations and questioning of tho Petrovs in the witness-box that they never were, since their under any form of duress.

66. Apart from the matter of duress, the circumstances of the defection throw light on the characters of Petrov and Mrs. Petrov, and are relevant in considering . the charges which were made of a conspiracy alleged to have as its object either the injury of Dr. Evatt and the Labour Party or, as the Soviet

formally charged in its Note, the worsening of Soviet­ Australian relations.

67. In view of all these matters, we think it necessary to deal at son1e length with the circumstances of the defection of the Petrovs.

68. Apart from his M.V.I). functions, Petrov filled three ofli9ial pmijitions in the Soviet in Australia. He held

the office of Third Secretary at the Embassy, which not

219

Report of the Royal Commission on Espionage

only gave him diplomatic immunity but afforded him an entree to the diplomatic and official social life of Canberra. Secondly, he was the head of the Consular Department at the Embassy, charged on the one hand with the care of the interests of Soviet citizens in Australia, and on the other hand with the supervision of applications for visas by persons who desired to visit the U.S.S.R. Thirdly, he was the repre­ sentative of Voks, an organization for propagating Soviet culture abroad.

69. In his several official capacities, Petrov enjoyed an extensive freedom of movement in the community. He did not reside at the Embassy but had a separate home in Canberra where he was able to meet and entertain his friends. He made shooting and fishing excursions into the countryside, on which his companions at times included Australians and men1-bers of other Diplomatic Missions. He made frequent, almost regular, trips to Sydney and on occasions went to Melbourne and Brisbane. He visited the Russian Social Club in Sydney and met the members of the Australia-Soviet Friendship Society in the Society's rooms. He stayed at Sydney hotels and had Jneals in Sydney restaurants, particularly in the cos· mopolitan King's Cross area. He found many attractions in life in Australia.

70. Nevertheless, it was not until the latter half of 1953 that he seriously contemplated leaving the Soviet service and seeking political asylum in Australia. His appointment as 1\LV.D. Hesident, at the end of 1951, was only temporary, and it was in contemplation throughout that he would be replaced

by a permanent Resident and would return to Moscow. He hin1self, late in 1952, applied to be relieved on the ground of ill-health. On several occasions between January and July 1953 tentative arrangements were 1nade for his return; but

each time some difficulty arose, so that his successor reached Australia only in April 1954.

71. In the meantime certain events occurred in the Embassy which changed Petrov's attitude towards the Soviet service and induced in his 1nind an ever-increasing desire to make Australia his permanent home.

Defection of the Petrovs

72. Marshal Stalin died in March . .About the middle of the year it was announced that Beria, the head of the M.V.D., had been arrested, and in December that he had been executed.

73. In July 1953 the Soviet Ambassador, Mr. Lifanov, commenced to make critical reports to Moscow concerning Petrov and Mrs. Petrov, and, among other things, he falsely accused Petrov of seeking to form a pro-Beria group among

the Embassy officials. 'Kovaliev, a Commercial Attache and the representative in the Embassy of the Central Committee of the Soviet Communist Party, made similar reports to that Committee. Petrov learned privily of these reports from

Prudnikov, the Embassy cipher clerk.

74. Late in 1953 1\{r. Lifanov was succeeded by Mr. Genera­ l.ov, and Petrov hoped that with the change things would improve. But Mr. Generalov continued the adverse reports. Mrs. Petrov was relieved of her duties as accountant and sec­

retary at the Embassy, with a consequent reduction in her salary. There were quarrels with other officials, particularly at meetings of members of the Communist Party within the Embassy, when Petrov and Mrs. Petrov were subjected to

severe criticism. These quarrels reached their peak at a meeting on 31st March 1954. Further, on 1st April 1954 an official accusation was made against Petrov by the Ambassa­ dor that he had dealt with a secret document in a manner

contrary to the administrative regulations. The charge was technical, but nevertheless serious, and, if established, could have resulted in a term of imprisonment. It is not surprising that during all these troubles Petrov should have contrasted

in his mind the conditions of life in Australia with the treat­ ment he was likely to receive on his return to Moscow.

75. The unusual freedom of Petrov's movements had at, an early date attracted the attention of our Security Service, and they had him under surveillance from time to time. For their counter-intelligence work they had used the services of

an agent named Dr. Bialoguski. He was born at Kiev in Russia of Polish parents who appear to have moved to Poland after it became an independent State. Bialoguski was edu­ cated at Vilna, where he commenced a medical course at the

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Report of the Royal on Espionage

University. When Vilna became Russian territory on the division of Poland he, being r egarded as a refugee, was per­ mitted to leave to visit a aunt in for

which place he had learned no visa was required. He got to Japan and thence made his way to Australia, arriving hero on 24th J 'une 1941. He served as an orderly with the

Australian Medical Qorps until he was allowed to complete his medical education at the Sydney University with the financial assistance o£ the Commonwealth Government. FroUl 1945 .onwards, in addition to studying and later practising his profession as a doctor, he engaged in work as a secret agent, at first for the Commonwealth Investigation Service and later for the newly created Australian Security Intelligence Organi­ zation. Publicly he rep11esented himself as a person of strong pro-Communist leanings, and he waE; in the confidence of many Communists and active in a number of ''Communist Front'' organizations.

76. Bialoguski first met Petrov at the Russian Social Club in Sydney in July 1951. He developed the acquaintance, lead­ ing· Petrov to believe that he was an ardent friend of the Soviet UnioJ1. Petrov reported him to Moscow a prospec­ tive M.V,D. agent a,u.d was given permis$ien1 t.o associate with him &nd to sta;y privately with him in his fiat in Sydney. He allotted the oode name "Grigorii". Bialoguski

visited the Petrovs' home in Canberra. at least,

he and Petrov became close friends; and they a good deal of one another.

77. }HlPt ou:r Service informed in

minute det(lil of his with Petrov and operated

under directions, ln the latter part of 1953 he became aware of Petrov's dissatisfaction with his treatment at the Ewbassy and of his growing inclination to seek a permanent home i:u Australi;;t. Bialoguski told our Security Service that Petrov was attracted to life in Australia and that he himself felt that if Petrov could be of pr.otection and a start

in life here he might leave the Soviet service. Bialoguski lost no oppo:rtun.ity of sy:mpathi:{;ing with l?etrov and of discuss­ ing life in this CQl,l;ntry, a:nd and demonstrated ways in which he conld a living here.

28

Defeotion of the Petrovs

78. With the increasing tension in. the Embassy, Petrov had guardedly broached to Petrov the question of leav­ ing the Soviet service and seeking political asylum, but she had not responded. She had an intense feeling of loyalty to

Russia and to the Russian people. Moreover, unlike Petrov, she had close relatives living in the U.S.S.R.; and she had cause to fear for their fate if she left her post.

79. On 31st January 1954 Bialogusld, at Petrov;s request, visited the Petrovs ho'me in Canberra for the purpose o£ trying to persuade Mrs. Petrov to re1nain if Petrov should decide to do so. He first led her to express her indignation

at the treatment of her husband and herself by the Embassy officials, and then he put to her the suggestion. that the two of them should seek asylum here. She not only upbraided him for tnakirtg such a proposal but also left him with the

that her influence over Petrov was considerable

and that he would defer to her views. She stressed her love o£ Russia and her £ears £or her relatives.

80. Petrov, however, secretly persisted. In February 1954 it was necessary (in accordance with the JYI.V.D. system which we shall describe later) for letters received from the Moscow Centre in 1952 to be burnt, and for a certificate of their

destruction-signed by Petrov and Mrs. be pre·

pared for dispatch to Moscow. Petrov pretended to his wife that he had burnt them, and thereby procured her signature to a false certificate that they had been destroyed. He also abstracted certain documents from an envelope marked '' N ''

which had long remained sealed. By these tneans Petrov put himself secretly in possession of documents which would not be missed in the ordinary course of 1\LV.D. work, and which could be destroyed without arousing suspicion if he should

decide not to defect.

81. Without telling Bialoguski what he had done, Petrov commenced to inquire of him the ptocedure for obtaining poli­ tical asylum, whereupon Bialoguski and a Dr. Beckett, whom Petrov had consulted p1,;ofessi.onally, were used by Richards,

the Deputy Director of Security, to arrange a meeting between himself and Petrov. At this meeting, which took place on

223

Report of the Royal Commission on Espionage

27th February 1954, the procedure was discussed and assur­ ances were given by Richards to Petrov as to his future in the event of his defection. lie was clearly told, however, that the essential pre-requisite was the signing by him of an

application f.or political asylum· in Australia. The record­ ing secretly made of this interview, which we have heard, shows that although Petrov had no documents with him and had not even mentioned documents, Richards offered to re­ ceive him then and there, and told him that there was a fund of several thousands of pounds out of which provisi.on could be made for his future. Petrov, however, was hesitant; and at subsequent interviews with Richards in Canberra and Sydney (some of which were secretly recorded), while say­ ing that he had decided to leave and indicating a date, he still showed signs of indecision and a reluctance to take the final step of signing the application f.or political asylum, even when Richards told him that he had been authorized to make £5,000 immediately available to him and actually showed hirn

the money. Petrov's final decision appears to have been made on 1st April, following the unpleasant incidents at the Enl­ bassy and the serious accusation to which we have already

82. On 2nd April Petrov, in the course of his Embassy duties, came to Sydney to be ready to meet some incoming Soviet offic-ials, including his M.V.D. successor Kovalenok, who were arriving at the Mascot Airport the next day. He met Richards and told him that he would join him at the airport as soon as he had seen the officials .on the plane to Canberra. He then, for the first time, showed to Richards the documents which he had abstracted from the Embassy- .

most of which were in the Russian language-saying that he would hand them over on 3rd April. Richards briefly looked at them and Petrov signed the application asking for political asylum . .

83. On 3rd April, having met the officials at the airport and meticulously carried out his duties relating to their reception and having seen them to their plane, Petrov entered Richards's car and was driven to a house which had been prepared for his use. he was given the £5,000 and

handed the documents to Richards and made a long written

30

Defection of the Petrovs

statement, which is marked Exhibit 8 before us. These con­ stituted the basis .of the inforn1ation given by him into which we were directed to inquire.

84. In our Interim Heport we dealt with and disposed of the allegation that all these events were part of a conspiracy between Petrov, Bialoguski, and the Security Service. It is not necessary to refer to it again. It should, however, be mentioned that, so far from there being any conspiracy, the

officers of our Security Service who were concerned with the operation were apprehensive until the last that Petrov might have been conducting a Soviet espionage operation against Australia; or, if not, they thought that when it came to point of actual defection his nerve might fail him. They were

relieved when, on 2nd April, he took the decisive step of signing the application for asylum, whereby he irrevocably committed himself.

85. The importance of the decision to Petrov personally should not be overlooked. It meant leaving a service which was his very life and in which he had risen to a comparatively high rank and was enjoying a very good salary. He was

forfeiting not .only his salary but substantial savings in cash and public bonds in Moscow. He was forsaking forever his native land, for which he had great affection. He was, he believed, breaking his marriage ties, and about to face life

alone in a new country with the certainty of being branded as a traitor and incurring the hatred of the Soviet Govern­ ment and of all Communists-a hatred which would cloud his life with the constant apprehension of retribution. Mak­

ing all allowance for the attraction of a life of freedom in Australia, the fears which caused him to take the course he did must have been strong and impelling.

86. Mrs. Petrov was not only ignorant of her husband's final decision to defect but was unaware of his meetings with Bialoguski and Richards relating to his proposed defection. Petrov had so arranged matters that he would not be expected

back in Canberra either by his wife or by the Embassy officials until 6th April. When he did not arrive on that day the

Ambassador ordered Mrs. Petrov to leave her home and reside at the Embassy. There she was placed under guard night and day and subjected to indignities and hardships.

31

225

Report of the Royal Comrnission on Espionage

87. On 16th April the Departn1ent of External Affairs sent a Note to the Ambassador enclosing a letter written to Mrs. Petrov by her husband in which he denied that he had been - forcibly sei?:ed and said that he was alive and well and was

being well. He further said that he had written to

the Art1bassador asking him to arrange a meeting with his wife as soon as possible. In its covering Note the Department o£ External Affairs offered to arrange such a meeting. The Ambassador showed Petrov's letter to Mrs. l?etrov and at least by misrepresentation-and, according to Mrs. Petrov, by compulsion-caused her to write in reply to her husband a letter refusing to see hin1 and stating as her reason ''I a1n afraid to fall into a trap".

88. On 19th April she was dtiven to JV!t:iscot Aitpol't to board a plane for Darwin en route for l\tioscow under the guard of two anned couriers. The news of het intended departure had become known and she was faced with a disturbing• demonstration by a crowd at the airport shouting

to her not to go back to Russia because she would be killed. She spent an unhappy and sleepless night on the plane> filled with £ear ai1d uncertainty.

89. Although l\1rs. Petrov was an alien and an mnployee of a foreign Embassy, she, like any other person in Australiaf was entitled to the protection of our law against unlawful restraint. The Australian Governn1ent was concerned to see that she was not being forcibly taken from Australia against her will and, in consequence, the captain of the aircraft was

asked to discover her wishes a11d Mr. Leyd_ in, the Acting Administtator of the Northern Territory, was instructed at midnight to interview her on her arrival at Darwin Airport.

90. She was spoken to on the flight and the captain radioed to Canberra that he had formed the impression that she desired to stay in Australia but was afraid; and that she had told him that her guards were armed.

91. Mr. Leydin was later advised of the captain's report. On the plane's arrival at Darwin Airport at 5 a.m. the guards were informed that it was unlawful to carry arms in an aircraft, and upon being asked if they were armed they

32

Defection of the Petrovs

assaulted their questioners. They were disarn1ed, a loaded pistol being taken from each of them. They were released immediately thereafter, and they and K_ islytsin stayed near l\tf rs. Petrov.

9:2. 1\IIr. Leydin spoke to her at leugth, but she was dis­ traught, expressed no definite desire to stay, and intin1ated that she feared for her relatives if she did. She said that

she doubted whether her husband was alive and well, and asked if she could· see him or speak to him.

93. Upon the authorities at Canberra being informed of these matters a telephone call was arranged and at 7 a.m., just before the plane was due to resume its flight, Petrov spoke to her from Sydney. He told her that he was well and free; that he had been forced to leave the Embassy on account

of the lies told about him; and that when she arrived in she would not be allowed across the threshold of her home and would never see her relatives. He urged her to remain. The Soviet guards were standing by while she was at the telephone.

After speaking to her husband she asked to see Mr. Leydin away from the guards and then said to hin1 "I will stay".

94. l{islytsin was informed of her decision and a telephone call was arranged for him to speak to his Ambassador in Canberra. Thereafter the plane resun1ed its flight and 1\:islytsin and the guards went in it.

9'5. Richards came to Darwin the next day and JYirs. Petrov returned with hin1 to Sydney, wheTe she joined her husband. Rhe the11 n1Rde a formal --writ ten appJication for political asylu1n.

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CHAPTER 4

THE NATURE . OF THE EVIDENTIARY MATERIAL BEFORE US AND OUR EVALUATION OF IT

96. Before proceeding to deal with the facts as we find then1 concerning espionage and related activities, it is convenient' to describe the evidentiary material before us .and to assess in a general way its probative force. This involves . considera­ tion of such matters as the authenticity of the documents bro11ght by Petrov, the eredibility of the Petrovs and· of other witnesses, and the probative force that we should accord to · the contents of those documents and to what has been referred to as the hearsay evidence before us.

97. The material considered by . us falls into several

classes:-( 1). The documents brought fron1 the S0viet Embassy by Petrov, being Exhibit H, Exhibit J, the Moscow Letters, and the G Series . of documents: compen­

diously called "the Petrov -Papers''. · (2) Official records: being documents containing con­ temporaneous reports and records of events Inade over a long period of years in the ordinary course of

business by our Security Service other Govern­ ment Departments, and wire recordings of con­ versations. (3) Other documentary material. ( 4) ·Oral testimony of the Petrovs. ( 5) Oral testimony of other witnesses.

I. THE PETROV pAPERS.

98. On 3rd April 1954 Petrov handed to Richards, of our Security Service, a number of documents which had been in his custody at the Soviet En1bassy as temporary M.V.D. Resident.

34

Nature of the Evidentiary M erial

These documents con1prised :-·

(1) a document typewritten in English and Inarked by us Exhibit H; (2) a document typewritten in English and marked by us Exhibit J; ·

(3) a series of letters in Russian with accompanying "insertions." sent from the M.V.D. Moscow Centre to Petrov and dated from January to November 1952 -to which we as the "Moscow Letters "-and

marked by us Exhibits B, C, D, E, A and F, this

alphabetical sequence being in accordance with the ·chronological sequence of the ( 4) a miscellaneous group of documents referred to by us as the "G Series" and 1narked as Exhibits G.l

to G.18.

Exhibit H.

100. This document was composed and typed by. one Fergan 0 'Sullivan (code name "Zemliak ") in 1951 when he was an employee of the ''Sydney Morning Herald'' and of the Press Gallery, which is the body of accredited

journalists who attend the sittings of the Parliament at Canberra.

101. He was procui·ed to write . the by_ one Pak-

homov, who was-then covertly ten1porary M.V.D. Resident and overtly a journalist representing the Tass news agmJ:,G Y· The document was photograplied and the undeveloped nega­ tive sent by courier to the Moscow Centre. The original was .kept i_ n the _M.V.D. safe until · Petrov handed it to Richards

on 3rd April 1954. Exhibit H is that original.

102. The document comprises three pages of close typing and contains short reports on 45 journalists. Some of the matter consists of an appreciation of the journalistic status ·and ability of the persons reported on, but it is evident that

what was required by Pakhomov and supplied by O'Sullivan was not matter which would assist Pakhomov it1 his

·_ capacity of Tass representative. Thus, the sort of details which were supplied included the following:-

2.29

Report of the Royal Com1wission on Esp'ionage

The subject person's religion-whether it was Roman ·Catholic or Protestant; whether he was radical or con­ servative, left-wing labour or right-wing labour; whether he drank or was talkative; his financial position, his

marital status and the nun1ber of his children; and of one . it was said that he was "rro1niscuous " . .

103. It is apparent also that Pakhornov sought to be warned if.any of these journalists were connected with our Security Service.:

104. 0£ a certain pe rson whom we shall call . "X",

'O'Sullivan wrote: · ·· · .

"'Fierce Catholic, probabl y ' Cettholic Actionist', also probably helps Security''. Of another whon1 we shall call ''Y", he wrote : "Believed to be Security agent". Of another whom .we shall call '' Z' ', he wrote: ·' .. ···· "J:?elievedto carry information to 'Y', though perhaps

· ... · unwittingly''.

105. The authenticity of this docmnent is undoubted. Its nature was disclosed in counsel's opening address at Canberra in May 195±, and 0 'Sullivan, ·who had bec01ne Dr. H. V. Evatt's Press Secretary in April 1953, ad1nitted to Dr. Evatt

that he \Va s its author---'-but not until some dayf.l after the Federal election held in May 1954.

106. 0 'Sullivan, when called before u s as a witness, at first rerused to answer any questions regarding the document but next day admitted. he was its author.

107. It is not sugg·ested that any of the persons named by 0 ?Sullivan in the doctu11ent was implicated in espionage. Tho docun1ent, however, of importance and r elevant to our lJlquiry j n . three ways :-'-

. (1) It evidences tha t O'Sullivan did give to a tive of the Soviet information identifying persons

whom he believed to be agents of our Security Ser· vice. It would be naive to think -that 0 'Sullivan did ·not know that a Tass representative was a· Soviet official. ·

·(2) The fact that 0 'Sullivan gave. the document made hiln susceptible to pressure to perform further tasks for the Soviet, and. the incident is illustratiye of the Soviet method of getting a person, as J\!l:rs .. Petrov

described it, ''.on the small hook ".-a .practice with which we deal later. · It was only chance that

0 'Sullivan happened to become latei• a . n1ember of Dr. Evatt's secretariat, but had ''if not been for the chance of Petrov's defection the M.V.D. would have h·ad in its power a person of great potential use.

(3) The document instances the Soviet n1ethod of acquir· ing personal particulars of persons such as jour· nalists and especially journalists in the Press Gal­ lery, who hear mnch ''off the record'' from members of the Government and leading public servants. Such

particulars form the basis· for the · selection for of prospective agents and unwitting infor·

n1ants. The use subsequently made by the J\!Iosco-r.1 Centre of this document illustrates this fact.

·. · 108. It should be noted that the photographic copy of document was sent not to Tass headquarters for its journalig tic purposes, but to the Moscow Centre for its poses. That this did occur is clearly proved by Enclosure No.

2 to the Moscow Letter No. 5 of 27th September 1952, sent to Petrov frmn the Moscow Centre after Pakhomov had returned to the U.S.S.R. in June 1952. That Enclosure con· tains a series of reports on marty of the same persons as are :included in Exhibit H, and the· basic data contained therein

is throilg,'hout the Enclosure ascribed to 0 'Su1livan · as its source.

109 ... From this Enclosure it is apparent that it wa.s P(e.­ pared.with Exhibit Has its bas.e Rndexpanded _ by Pakhomov's ·own observations. · ·

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Report of the Royal Cornmission on Espionage

110. To give an example·:-In Exhibit H 0 'Sullivan wrote of the man to whom we have already referred as "Y"-after giving the name of his newspaper and his position thereon-

'' Believed to be Security agent. Has outside · busi­ ness interests. Studies financ·e deeply.'' Ii1 the Enclosure of 27th September 1952 the Moscow Centre wrote ofthe same man "Y;,:._ ·

''Reactionary, insolent and debauched. He has intimate relations with '' (a certain w.oman). "From the data of O'Sullivan and observations of Pakhomov it is known that 'Y' is a collaborator of the counter-intelligence, and, possibly, the leader of a group of counter-intelligence· people in the press.

He sometimes experiences financial difficulties. He willingly goes to contact with Soviet representa­ tives. He is of interest for study with a view to attracting him to our work on a material basis.''

111. Since the authenticity of E_ xhibit H and its authorship are beyond question, and its purpose is plain, the question of the truth or falsity of its contents ceases to he relevant. In these circu1nstances, as it contains scandalous matter, no good purpose would be served by its publication or by the publication of such parts of Enclosure No. 2 to the Moscow above referred to as relate to the journalists mentioned

in Exhibit H. We have, however, included this Enclosure in the A.lulextiro to our Report. ·

\Exhibit J. · ·

. 112. document was c01nposed and typed by one Rupert ·Lockwood (code name '' V or on'') in the Soviet Em·bassy Canberra over a period of 15 to 20 hours on the 23rd, 2·4th, and 25th days of May 1953.

113. Lockwood is a journalist and an ra vo_ wed 0op:lll1Ul1ist. He. was_ procured to make_ the docum_ent by Antop.ov, _who had :succeeded Pakhoinov as Tass representative but who w_ as also a cadre worker of the M.V.D. ·· · · · ··

Nature of the Evidentiary Material

114. Before making the document, Lockwood had requested that he should be sent for the purpose to China or some other Communist-controlled country, no doubt because he thought that his act might thus escape the sanctions of Australian law. The request was refused as it was thought that the Soviet Embassy would be a sufficient sanctuary for him.

115. An original and a carbon copy of the document were made by Lockwood and given by him to Antonov, who later handed them to Petrov, the then temporary Resident. Petrov sent the original by courier to the Moscow Centre and

retained the carbon copy, which is now Exhibit J.

116. The document comprises 37 pages closely typed. It is under several headings ·and sub-headings: (1) Japanese Interestin Australia. (2) Sources of the information contained in (1).

(3) An1erican Espionage in Australia. ( 4) War contracts in Australia. (5) Notes on the Australian Workers' Union. ( 6) Extra notes on various matters. (7) Dr. Evatt.

(8) Sources of the information in (3), (4), {5), (6) and (7) . .

. 117. The document was aptly described by counsel assisting the Commission as" a -farrago of 'fact, falsity and filth".

118. Amongst many other matters, the document contains · personality reports on a ·great number of persons____:politicians 'of . every colour, newspaper proprietors and journalists, busi­ ness-men, etc. Many of the reports are scurrilous and

grossly defamatory (some of the allegations are· of a filthy nature), in some cases pointlessly s'o, since · they refer to per­ sons long dead.

· ' 119. The document names a ·number of persons whom Lock­ wood described ' as being or having been agents of or .con-j ·nected with one or of the Australian security organiza-

tions.

39

233

Report of the Royal C01nrwission on F}spionag e

120. The authenticity of the document was hotly debated before us for marty weeks, it being charged that it was fabri­ cated as part of a conspiracy to injure Dr. Evatt and tho Labour Party. In our Interim Report we dealt fully with the

matter. We have found nothing in the material placed before us since then to cause us to alter our clear conclusion therein expressed that the document was wholly composed and typed by Lockwood in the circumstances we have set out.

121. The document is of importance and relevant 011 grounds similar to those expressed in relation to Exhibit H. For reasons similar to those we have given in respect of that Exhibit, we do not publish Exhibit J.

122. In the course of our proceedings it became necessary that certain witnesses, including Lockwood, should be allowed to read Exhibit J. All of them-including Lockwood-agreed that it ought not to be published.

123. Before this, however, on 19th June 1954 Lockwood had written and published a pamphlet entitled "\iVhat is in Docu­ ment J", which was n1arked Exhibit 46 before us. This pamphlet is a much bowdlerized version of Exhibit J. It omits the grossly scandalous and defamatory allegations and · dues not refer to many of the matters mentioned in Exhibit J.

124. Antonov obtained from the M.V.D. funds held by Mrs. Petrov the sum of £30 to pay Lockwood for his work-such a payment being consistent with an M.V.D. practice to which we shall later refer.

125. The document cites Fergan 0 'Sullivan and one Albert · Grundeman, another n1ember of Dr. Evatt's secretariat, as being sources of certain parts of the information contained in it. Ordinarily, in an Inquiry such as ours, a document pur-. porting to contain a contemporaneous record of events would

have some weight towards establishing the truth of its asser­ tinns, but, as we stated in our Interim Report, the nature of the document and the character of its author as disclosed in it are such that no reasonable person could regard its asser­

tions save with extreme scepticism, and in face of the sworn denials by 0 'Sullivan and Grundeman that they had provided

40

Natttre of the Evidentiary

Lockwood with the inforn1ation for which they were cited as sonrces, we were not prepared to accept its statements as true.

126. However, after cutting through the prevarication and evasion apparent in the evidence given by the three of them and by certain other witnesses who were called on the matter, we reached this clear central fact: that on one of the days

when Lockwood was typing Exhibit J in the Soviet ·Embassy he was for a long time during the afternoon and evening in the company of 0 'Sullivan and Grundeman. The circumstances of their meeting were such that we

cannot believe that it was purely fortuitous.

The Moscow Letters.

127. The M.V.D. system of com1nunication by Letter was as follows:

The Letter was typed at the :.Moscow Centre and there photographed on 35-nlm. film, each frame of the roll comprising one page of the Letter. The photographic film in an undeveloped state was sent to the Embassy

at Canberra in the diplomatic bag in charge of couriers who made periodic visits to Australia. Accompanying each Letter-but separate from jt-was a docu1nent in cipher to which we shall refer as the "enciphered Appen­

dix". The packets containing these-like all contents of the bag destined for the M.V.D. Resident at Canberra­ bore an outside marking which indicated to the Embassy cipher clerk whose special duty it was to distribute all

the bag's contents that the packets were for the M.V.D. Resident.

Upon receipt of the filn1 by the Resident it

developed by him or by his technical assistant and-from the negative-one positive only, and that an enlargement, was made of each page of the Letter. The negative was then destroyed.

128. The actual enlargements made by the Petrovs of the Letters sent by the Moscow Centre to Petrov during 1952 are the Exhibits A. and F before us.

4I

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Report of the Royal Comniission on Espionage

129. The Letters are written in Russian, but they contain a large number of code names of persons and code words · and phrases which were readily intelligible only to members of the M.V.D.

130. The text is also interspersed _ with numbers, and each of these numbers has, in reference to each particular Letter and in reference to that Letter only, a specific meaning which was discoverable only by refe-rring to the· accompanying enciphered Appendix. This Appendix could be deciphered only by a person having access to the special cipher

books and a knowledge of the M.V.D. ciphering technique.

131. Upon receipt . of each Letter, Petrov or Mrs. Petrov deciphered the enciphered Appendix and typed, or more usually wrote out, the result of their deciphering work. There was thus produced, as a complement to the photographed text

of each Letter, a document in plain Russian containing a list of numbers with its corresponding meaning set against each number. From this list Petrov learnt what words should be inserted in the Letter in place of the numbers appearing there­ In.

132. These actual documents, thus contemporaneously .· prepared by the Petrovs, are part of the Exhibits before us, and we refer . t.o them as the deciphered lists of insertions . . · Each original enciphered Appendix had been destroyed by

Petrov after he had deciphered it.

133. With their knowledge of the meanings of the code names and words and phrases, and having the deciphered lists of insertions before them, the Petrovs were able to read the Letters in full.

134. In order for us to make a final interpretation of a Letter, it was necessary to have (1) a literal translation into English of the photographed text of the Letter ;

(2) a translation into English of the deciphered list of insertions ·accoinpanying that Letter; and . , · (3) knowledge of the meanings. of the code names, _words, and phrases used in the Letter.

Nature of the Evidentiary Material. · - .

: ' The first two of these requirements merely involved

competent translation into English; The third involved : a laborious and critical checking and cross-checking of the con­ tents of the Letters.

136. The Petrovs, through long experience' of praci­ tice; had: a :wide knowledge of the _ of _ code names,

words, and phrases used in M.V.D. communications, but they did not bring with them, nor had they had for sotne time, any

of these code names, words,. and phrases. They

were tr:;tined to rely upon memory, particularly in such a matter ' as this. '

. 1 137. They_ supplied from memory a long list of these code

expressions, with their meanings, but we were not content to accept this list at its face value, and were able to subject it to critical examination. For example, the , Letters being voluminous, a particular code expression is repeated in anum­ ber 9f contexts, and an examination of those contexts does, in ·many · cases, itself indicate the real meaning of the code

expression. Such repetition occurs in respect of many code expressions.

138. Indeed, our critical examination brought to light what _were either xnistakes in the .m.emory of the Petrovs or mistakes .· in e:hco'di:ng -·or otherwise made in Moscow. Dr. Evatt pointed

out .one such mistake in a Letter in which the context showed thaf. "Washington" appeared wrongly instead of "New York". To take another example, the Petrovs' list attributed the meaning "Brisbane" t.o the code word "Azimut" and

the meaning "Perth" to the code word "Arkadia ". One of the Letters, however, described a certain man as residing ''in the town Arkadia'' at a specified address in the suburb of "Hemmant", which is in fact a subnrb of Brisbane, ·not of

Perth. Evidence was supplied that the man mentioned hRd at relevant times lived in Hemmant, Brisbane, and never in Perth. Similarly, other evidence established that "Azimut" i.s correctly interpr·eted as "Perth". We found few such · mistakes.

·. '139 :' In the· result, vve that th-e final interpretation at which we have arriYed is as cor'rect as it' can be. having regard

' 43

Report of the Roy(tl on Espion ag e

to the difficulties of translation and interpTetation of encoded material in a foreign language.

140. An example of the process of interpretation follows. (See pages 46 to 55)

Figure 1 is a reproduction of two separate consecutive pages of the Moscow Letter No. 6 of 25th November 1952, as handed by Petrov to Richards.

Figure 2 is the literal translation of those pages into English. Code names and phrases are here printed in black type.

Figure 3 is a reproduction of the deciphered list of insertions which accompanied the Lette·r, as made and written out by Petrov upon receipt of the Letter. Some of the numbers contained in the list are relevant only to parts of the same Letter not reproduced in Figure 1.

Figure 4 is the translation into English of such parts of Figure .3 as are relevant to Figure 1.

5 is a list of the meanings of the code names

and code phrases contained in the translations set out in Figure 2 and there printed in black type. Figure 6 is the final interpretation of the pages

produced by the combination of franslation, decoding the code expressions, and insertion of the meaning of the numbers contained in the translation of the deciphered list of insertions.

141. We had hoped to publish, as part of our Report,

facsimile reproductions of the original Moscow Letters. Our technical printing advisers inform us, however, that many of the Letters, although quite legible in the original, are not susceptible of satisfactory reproduction in print.

142. In Appendix No. 1 will be found the Moscow Letters and the G Series of documents as interpreted, excluding cBrtain passages which we have set out in the Annexure to our Report for reasons stated later.

41-

Nature of the Evidentiary Material

143. The J\!Ioscow Letters which Petrov brought cover only the year 1952. According to M.V.D. instructions, the Letters of 1950 were burned early in 1952, those of 1951 were burned early in 1953, and those of 1952 should have been burned early

in 1954. The actual instruction to destroy the 1950 Letters appears in the Moscow Letter No. 1 of 2nd January 1952, paragraph 13. 144. In fact- as we have already said- Petrov pretended

to his wife that he had burned the 1952 Letters, and thereby induced her to sign an "Act" (the name given to the official record of an event) in February 1954 recording their destruc­ tion.

145. The Letters for 1953 and 1954 and the ''Act" were left by Petrov in the M.V.D. safe when he quitted the Soviet service, so that its contents would seem regular to anyone (including Mrs. Petrov) inspecting them.:_an importnnt matter for Petrov if at the last moment he had decided noi

to leave the Soviet service.

146. There are in all six 1952 Letters with accompa11ying deciphered lists of insertions, dated as follows:-No. of Letter. 1

2

3

4

5

6

Dlate of Letter. 2nd January 1952 12th March 1952 6th June 1952

24th July 1952 27th September 1952 25th November 1952

Exhibit.· B c

D E A ],

147. The alphabetical marking of the Exhibits does not follow their chronological order-it follows the order in which the Letters were in the parcel of papers when it was handed by Petrov to Richards, who rightly thought it proper to have

them photographed exactly in the order in which he received · them.

148. All the L etter s are addressed to t'Mihail" .at "Hita ", wl1ielt are the code ntunes fo r P etrov aud Canberra respec­ tively. (Con tinued on page 56)

45

2 3 9

Report of ·the Royal on Espionage

FIGURE 1

·Reproduction of 11WO Pages of Original Moscow Letter ·· N 6. · 6 .of- 25th N oveniber 1952.

· :·The handwriting on the docun1ents was made by Petrov during the process of working out the meaning of the Letter.

241

Nature of the Evidentiary Mat erial

FIGURE 1-continued.

47.

Report of the Royal Cornnttission on Espionage

FIGURE 2

Literal Translation of Figure 1

Code names, code words, and code phrases appearing iu the literal translation hereunder are here printed in black type. ''was for a period of two days under the uninterrupted

deficit of No. 41.

Paragraph 10 of L etter No. 6/ 0 of '' 25" 1Vov wrnb er 1952 to Hita.

Concerning No. 42.

\Ve request you to report to us by the uext luggage all the information known to you concerning No. 42, who figures in the departmental files in connection with her No. 43, and about her No. 44 in Sparta.

As is known to you, she No. 43 house in favour of

Sparta, having lost all hope of making a trip to her chil­ dren and grandchildren in Sparta. According to her statements, her repeated pleas to her relatives to send one of her grandchildren from Sparta to look after her until her death and to receive her small inheritance, n1et \:vith a refusal on the pal't of her rela­ tives.

Depending on the availability of full particulars con­ cerning No. 42 and her No. 44 in Sparta, we shall weigh the question of No. 45 to Sudania one of our planners along No. 46 Novators, under the guise No. 44 of No. 42.

In eonnection with this we request No. 47, No. 42 and to elucidate questions which are of interest to us, especi­ ally, which of her No. 44, No. 48 in Sparta and namely · where, with whom does she No. 49, does she possess any reprintings No. 44, does she know them No. 50, when did she receive the last luggage etc.

Together with G.leb consider measures· that can be taken in this n1atter, and let us know your proposals.

Nature of the Evidentiary Material

FIGURE 2---continued.

Paragraph 11 of Letter No. 6/0 of "25" N ove·rnuer 1 D52 to Rita.

We request you to hasten the fulfilment of paragraph 4 of Letter No. 2 of 12th March 1952.

Para,graph 12 of L etter No. 6/ 0 of "25 '; N ovetnber 1952 · to Hita.

the Motor Car.

Both you and Ignat· knew the No. 51 for the purchase of the motor car. In accordance with this No. 51 all the en1ployees of the directorate, Valentin's acquaintances, and the office have every reason for considering the car to be the property of the dockyard. The authorization for the purchase of the motor car was given in an open packing in the name of the leadership of the dockyard.

Therefore" ·

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Report of the Royal Co11unission on Espiona.qe

FIGURE 3

Reproduction of Deciphered List of Insertions in Petrov's Handwriting Relating to the Whole of Letter No. 6. The list is contained in two pages; the first contains N 0:3 1-48, the other Nos. 49-51.

so

245

Nature of the Evidentiary Materwl

FIGURE 3-continued

Report of. .Royal on Espionage

' FIGURE 4

English 'Tr-anslation of Parts of Figttre 3 as Relate to Figure 1.

Nos. 1-40 relate only to other parts of the Letter.

Trctnslation of Nos. 41-51 inclusive. No. 41-:Holdcu nwtor cars S.:B-,. 527 and S.F. 529 No. 42-Kazanova. No. 43-Last will and testa1nent. No. 44-Relatives. No. 45-Sending. No. 46-Lines. No. 47-Visit under a plausible pretext. No. 48-Resides. No. 49-To correspond. No. 50-Recognize by sight. No. 51-Cover story.

Note.- lu cipher practice, a ciphered word includes all its grammatical

derivative.s and associati{)ns of meaning, and must be interpreted according to the context. Thus, the ciphered phrase "last will and testament" includes "the making of a last will and testament" and ''devised". Again, the phrase used in the Letter,

"along lines Novators", from its context means "along the lines of illegal work" (i.e. "as an illegal worker").

- N ahwe of the Evidentiary Material ·. ·

FIGURE 5

List of ]leanings of Code Narnes, Code Words, artd Code Phrases Appearing in Figure 2.

CodeN a1ne or T¥ ord. Deficit DepaJ"tmental Directorate

Dockyard Gleb Rita Ignat Leadership - Luggage ­

·Novator -Office · Open packing·

Planner Reprintings -

Sudania _ Valentin

Meaning .

. :Obse-rvation. -• > • •

.. Embassy. .. Tass -Agency. ... Kislytsin. ... Canberra.

.• Antonov; .. Directorate. .. l\f ail. -.. Illegal worker -or Illegal ·wo_rk. .. ( ·<

.. UiH?ipl1ered communicati.on,.,. (i.e. coinnuuiicatiow-- il1 Cleatj) -.. Cadre worke'i. · .. Photographs. _

.. Rn ssia or the. Soviet. .

.. Pakhomov.

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Report of the Royal Comtn,rission on Espionage

FIGURE 6

Final Interpretation of Pigure l. ''was for a period of two days under the uninterrupted observation of Holden motor cars S.F. 527 and S.F. 529. Paragraph 10 of Letter No. 6j0 of 25 November 1952

to Canberra.

Concerning Kazan ova. ( * 1) We request you to report to us py the next mail all the information known to you concerning Kazanova, who figures in the consular files in connection with her last will and testament, and about her relatives in Russia.

As is known to you, she devised her house in favour of the Soviet, having lost all hope of making a trip to her children and grandchildren in Russia. According to her statements, her repeated pleas to her relativ'es to send one of her grandchildren from Russia to look after her until her death and to receive her small inheritance met with a refusal on the part of her relatives.

Depending .on the availability of full particulars con­ cerning Kazanova (*1) and her relatives in Russia, we shall weigh the question of sending to Australia one of our cadre workers as an illegal worker, under the guise

of a relative of Kazanova. In connection with this we request you to visit Kaza­ nova (*1) under a plausible pretext ( *2) and to elucidate questions which are of interest to us, especially, which of her relatives ( *3) resides (*4) in Russia and where, with whom does she correspond ( * 5), does she possess any photographs of her relatives, does she know them so as

to recognize them by sight (*6), when did she receive the last mail, etc. Together with Kislytsin consider measures that can be taken in this matter, and let us know your proposals. The following words are written on the original at the places indicated:­

(*1) "Kazanova". (*2) "Visit under a plausible pretext". ( *3) "relatives". ( *4) "resides". (*5) "corresp". (*6) "by face".

Nature of the Evidentiary Material

FIGURE 6-continued.

Paragraph 11 of Letter No. 6j0 of 25 November 1952 to Canberra. We request you to hasten the fulfilment of paragraph 4 of Letter No. 2 of 12 March 1952. ( *7)

Paragraph 12 of Letter No. 6 ;o of 25 November 1952 to Canberra. Concerning the Motor Car. Both you and Antonov knew the cover story for the purchase of the motor car. In accordance with cover

story · all the employees of the Embassy, Pakhomov's acquaintances, and the counter-intelligence have every reason for considering the car to be the property of the Tass agency. · The authorization for the purchase of the motor car was given in an unciphered communication in the name of the directorate of the Tass agency. There­ fore" (*7) The following words are here written on the original: "(search fol'

Shirokhikh)".

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Report of the Royal on Espionage

149. The first two Letter8 at'e sig·ned by "Pavlov", which was the code name for Colonel Raina, the then Nloscow head of the Directorate under which Petrov worked, and the others by '' Vadim' ', which was the code name for G.orsky, another senior officer at the Moscow Centre.

The G Series of Documents.

150. documents forn1 a miscellany written in Russian and comprise all the documents handed over by Petrov other than the l\lfoscow Letters, Exhibit H, and Exhibit J.

151. They can be broadly divided into two classes;-(1) documents originally contained in, or copies of docu­ ments originally contained in, a sealed envelope 1narked "N" when that envelope was received from

Pakhon1ov by Petrov when he becmne temporary Resident; and (2) other documents.

152. The second class can be shortly dealt' with. It com­ prises eight pages 1narked G.ll to G.l8, both inclusive. Prior to his defection Petrov hesitated about bringing with him the Letters. He had, by deception, procured his wife

to join with him in an ''Act'' recording their destruction. Any revelation (which would probably ensue if he defected and brought the documents with him) that in fact they had not been destroyed would invoke an accusation by the Soviet authorities against Mrs. Petrov tha.t she was a conscious party to the false "Act" and to his defection.

153. In these circumstances, Petrov went through the 1952 and 1953 lVfoscow Letters and one which had arrived early in 1954. He 1nade short notes of the contents of these and cer­ tain other docu1nents, and of other n1atters, as a sort of aide-memoire to take with him should he leave the Soviet

service without taking the actual Letters and other documents. In fact he brought the 1952 Letters and some of the other documents as well as his notes. These notes, which are in Petrov's handwriting, are Exhibits G.11 to G.18.

N atu,re of the Evidentiary Mat erial .

154. A s io the fhst class:- vVhen Peti'OV took ov er the tern­ porary .Residentship fl·mn Pakhomov be was handed a sealed envelope marked "N" containing certain docu1nents which he knew related to matters not then of current interest, and

which the Moscow Centre had never instructed him to 'open or use. This sealed envelope had been handed to Pakhomov by Sadovnikov when the latter returned to the U.S.S;.R. 1n 1951.

155. The letter N · on the envelope is the initial of the

Russian word N avodki. According to Mr. Birse, N avodki is the plural of N avodka., which derives from the verb N a.vodit, n1eaning "to lead on to, to direct oii to, to aim at". In M.V.D. parlance N avodki appears to indicate notes oil persons and

matters of interest,-particularly on persons whom the ''aims'' to use.

156. Petrov did not bring the whole of the contents of '' N'' envelope. His wife knew of its existence in the 1\LV.D. safe, and a sealed envelope- containing some documents-had to be left thete in order to make the contents o( the safe seen1

regular. I-Iowever, he copied in his own handwriting on to one sheet of paper the matter contained in two of the documents he left. This copy is marked G.4; its originals were in Sadovni­ kov 's handwriting. The other documents of the first class

which Petrov had abstracted from the "N" envelope and brought with him are marked G.l to G.3 and G.5 to G.10-all inclusive. They are in Sadovnikov's handwriting.

157. It appears that Sadovnikov, who thought his absence fron1 Australia would be short, never explained to Pakhomov the nature or significance of these documents; and certainly Pakhon1ov never n1ade any such explanation to Petrov. ln

consequence, the Petrovs were able to give us little assistance a·s to the exact significance of the contents of the documents, all of ·which related to matters current before the Petrovs came to Australia . .

158. Our attempts to discover the significance of these documents consumed n1uch tin1e, and although from other evidence we have been able to discover a good deal of it, much still remains a mystery.

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Report of the Royal Commission on Espiona_qe

159. The authenticity of these documents is clear. No evidence was adduced which would support a suggestion that they were fabricated. If Petrov fabricated them he is .a fabricator, since he knows so little of their signifi­

cance.

160. Nevertheless, we had the question of the authenticity of these documents constantly in mind. We heard the dence of 1nany persons named or alluded to in them and that of others to whom the evidence gave a lead. Much of the matter in the documents is descriptive detail of many indi­ viduals, practically all of whom were quite unknown to Petrov. Many of them were unknown to our Security Service, as was a. hirge amount of the detail regarding the persons they did know. With few exceptions, the evidence. given by witnesses confirmed the substance of the _information contained in the documents.

161. Having considered the whole of the evidence, we have come to the conclusion that the documents which were con­ tained in the "N" envelope and which Petrov brought with him or copied related to Australians concerning whom the M.V.D. Resident for the time being had received .tions during the years 1945-19'49 from the Moscow Centre.

(1) G.1 and G.3 we find to oonstitute an aide-meinoire made by Sadovnikov of the code names of seven Australians mentioned in correspondence from the Moscow Centre. (2)

(3)

(4)

G.2, which is headed "Contacts K", we find to be an aide-me'moire made by Sadovnikov from informa­ tion received from the Moscow Centre concerning 11 Australians (one of whom is also named in G.1) whom that Centre had recorded as connected directly

or indirectly with· one Walter Seddon Clayton, to whom we later refer. The first part of G.4, which c9ntains the address of one Tennant (to whom we later· refer), we find to . be Petrov's copy of an aide-me'moire made by Sadovnikov of Clayton's accommodation address. The second part of G.4 we find to be Petrov's copy

of an aide-me'moire made by Sadovnikov of the code

Nature of the Evidentiary Material

names of seven Australians, two of which are

·duplicated in G.l and G.2.

( 5) G.5 and G.6 we find to be a copy made by Sadovnikov of a paragraph of Moscow Letter No. 2 of 14th June 1948 directing further reports to be made concerning the six Australians mentioned in it.

(6) G.7" to G.10 we find to be a copy made by Sadovnikov of an Enclosure to Moscow Letter No. 2 of lOth November 1949, containing for his information dos­ siers of 22 Australians in whom the Moscow Ce.ntre was interested.

162. These we think are the reasonable inferences to be drawn from the documents read in the light of the evidence of witnesses called before us. That evidence we deal with in detail later. It discloses a good deal of the activities of the in Australia prior t9 the arrival of the Petrovs.

Authenticity of the Petrov Papers.

163. Prior to the making of our Interim Report, the authen­ ticity not only of Exhibit J but also of the other Petrov Papers (except Exhibit H) was attacked. It was · eharged that they were fabricated as part of the alleged conspiracy to which

we have alluded.

164. As we pointed out in our Interin1 Report, not one tittle of credible evidence was adduced to support the charge, and we determined that the evidence of the authentieity of Exhibit .J was overwhelming.

165. After this determination certain counsel persisted in asserting that the Letters and the G Series of docu­

ments were fabrieated in whole or in part, and, as was our duty, we had the question of their· authenticity under constant scrutiny. After months of probing into the documents and after straining a torrent of evidence eoncerning persons and

events mentioned in the documents, many of whom and of which we.re ·otherwise unknown to Petrov or our Security Service, we find ourselves with not one grain of evidence which

59

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.Report of the Corn1nission on Espionage

against the authenticity of the domnnents. On the

contrary, we have found that eYery test we have heen ablo to apply confirms their authenticity.

166. It is fair to say that those counsel who questioned documents never saw them as a whole. Because we deemed it right that the names of persons 1nentioned in the documents should not be published without affording them an opportunity of being heard as soon as possible after publication, we lvere restricted to publishing the documents piecemeal.

167. No person reading the documents as a whole in the light of the evidence adduced could doubt their authenticity, and any further attack upon them could be founded solely in displeasure engendered by. their existence.

II. OFFICIAL RECORDS. •

168. \V c have demanded and obtained all official records bearing on our Inquiry. These include the relevant fi1es of several Governn1ent Departlnents and particularly those of our present Security Service, which in 1949 took -over tlw security functions and relevant files of the C01nmonwealth Investigation Service which had been operating for man:· years.

169. Some of these records are wire recordings of certai11 conversations, the relevant parts of which we have heard.

170. For reasons of security, much of the material before us cannot be published, nor can even the nature of some parts be disclosed, but we have deemed it our duty to

cognizance of this material after careful examination of it.

171. In all matters of importance we have not been content to rely upon the evaluations by Security officers of the data · in their hands, but have ourselves seen or heard the origin a 1 evidence of such data and have made our own Rssessment

of their probative value and of the vRlidity of the infr.rr.nr.cs which can he drawn from them.

172. From all this mass of contemporaneous recordR we have gleaned much relevant information and -in many stances have also been able to check by it the credibility and of witnesses. ·

Nature of the Evidentiary Material

III. OTHER DocuMENTARY MATERIAL. 173. This material comprises documents other than official documents, such as correspondence, bank records, records of airline companies, newspapers, etc.

174. Some of this material is amongst the Exhibits, but we have informed our minds on general matters from othet docun1ents, for example, reports of other Commissions, Com­ Inunist literature, etc., aud on certain· matters from material

supplied from authorities of other countries.

IV. TESTIMONY OJ<"' P BTRovs.

175. rr11c testin1ony of the Pctrovs is partly written and partly oral.

176. The n1ethod generally adopted towards adducing their evidence was for them first to be asked to make separate written statements on a particular matter. The Petrovs are independent-minded persons. Because they were spouses living in the same house we assume that there must have been

discussions between them. It is apparent from their state­ ments and their evidence that although generally they were in agreement, with regard to certain matters of detail their memories were in conflict, and in respect of then1 each adhered

to his or her own recollection.

177. Counsel assisting us refrained not only from having any part in the preparation of the statements but also from having any conference whatever with the Petrovs, whether npon the statements or otherwise. Had those counsel been appearing for the Petrovs to make a "case" for them, such conferences would have occurred as normal procedure, but

the duty of those counsel was otherwise-it was to assist us in discovering the truth, whether it told for or against the Petrovs.

178. In g-eneral, the evidence of the Petrovs \var:; elicited by questioning· them in the witness-box. But counsel 1nade aYail­ able to us all relevant statements made by the Petrovs, so that we could see whether their testimony in the box was

consistent with their statements 1nade earlier. In a few

6r

255

Report of the Royal on Espionage

instances, on relatively unin1portant matters, statements made by them were tendered without further examination, after they had been verified either by the Petrovs or by the officers by whom the statements had been taken.

179. The method adopted left counsel untrammelled in their questioning of the Petrovs and so afforded great scope for testing their credibility and accuracy. For instance, their evidence (written or oral) concerning a particular event could be and was checked by questions based on information_ con­ cerning that event known to counsel but unknown to the Petrovs. Thus, Petrov 's evidence as to his movements at various important times could be checked by questions based on contemporaneous surveillance reports, hotel registers, air­

line records, etc.

180. Moreover, when any witness desired to be represented by counsel or solicitor, permission was given for his appear­ ance . .t \_ number of such legal representatives cross-examined the Petrovs. Two of them, namely Mr. E. F. Hill and Mr. M. Julius, because they themselves are adherents to Com­

munism, cross-examined not only with a keen desire to test the Petrovs' evidence in the interests of their clients but with an added incentive to discredit them in the interests of Communism. Mr. Hill, who appeared for many witnesses, all of whom were Communists, is himself a leading official of the Communist Party, and is a lawyer of considerable forensic ability. He was present for at least half the period of the Inquiry and he cross-examined the Petrovs on no fewer than 13 occasions between July 1954 and February 1955. His cross-examination occupies more than 80 pages of the printed Transcript. Amongst the other counsel who cross-examined one or both of the Petrovs were four Queen's Counsel, one of whom had Mrs. Petrov under cross-examination on three. con­

secutive days, its record occupying 52 pages of the printed Transcript.

181. The Petrovs gave their oral evidence partly in Russian and partly in English. Their knowledge of English is reason­ ably good-it improved as our Inquiry progressed-but it was sometimes inadequate for our purposes; and it was apparent throughout that at times they had serious difficulty, both in

· Nature of the Evidentiary Material

c01nprehending questions put in English and in expressing the!flselves in English. Certain counsel endeavoured to exploit their deficiency. The only way in which we could be sure of accuracy was by having the questions and answers interpreted

by 1\IIr. Birse, which we did whenever we felt their knowledge of English was inadequate.

182. As we have said, Mr. Birse 's knowledge of the Russian and English languages i.s of a very high order : both were his languages of nurture; and he received his education in Russia, which he did not leave until he was 26. He has spent much

time in Russia since then. On several occasions Russian­ speaking persons attended the Inquiry at the request of certain witnesses to check the interpreting. Criticism was voiced in respect of one word only-and that criticism was

quickly shown to be unfounded.

Credibility of the Petrovs.

183. During the many months of our Inquiry we have had the credibility of the Petrovs under constant scrutiny. In this regard they started with a heavy handicap: they were persons who had deserted their country and its service, and were prepared to divulge its secrets, and for this purpose

Petrov had taken documents to which he had no right; both of then1 had become dependent for their protection and sub­ sistence on the Government, a fact which might induce them to invent or embellish evidence to please· that Government; the

vicious attacks upon .them by some Communists and like­ minded persons in the court-room and in a section of the press might cause them in revenge to strain their evidence; they were ostensibly recent apostates from Communism, a

creed in which-reputedly-a lie may be justified by the end to be served.

184. Such considerations made it imperative that we should scrutinize their evidence and assess their credibility with the utmost care. But during the long period in which they gave evidence we had many and extraordinary opportunities of

testing their credibility and their accuracy.

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Report of the Royal Commission on Espionage

185. Petrov was in the witness-box on 37 days for approxi­ mately 74 hours in all, and JYirs. Petrov on 21 days for

approximately 30 hours in all. During that time we had their demeanour under constant scrutiny and, as we have pointed out, their evidence was capable of being checked and was checked in a variety of ways at a multiplicity of points. We ourselves had opportunities of checking which were not avail­ able even to counsel assisting us: certain wire recordings of conversations and other 1naterial wer e available to us only.

186. It is possible that the Petrovs have information con­ cerning rnatters on which they have not touched and that they have been loth to divulge information when the establishment of its truth would depend upon their bare word unsupported by docurnentary evidence. They are intelligent people, and they n1n st have realized the importance to then1 of running no risk of having their evidence disbelieved by us.

187. In respect of only a few matters of moment did they divulge information as to which they knew of no documentary evidence to support them. We shall deal with them later. One is in relation to the activities of one Fridenbergs (code name "Sigma"). Another is in relation to a payment of

25,000 dollars said to have been 1nade through the M.V.D. to tho General Secretary of the Australian Communist Party.

188. Petrov's reputation was attacked and the suggestion was made that we should not believe him because, it was said, he occasionally drank to excess and he and Bialoguski had been concerned in black-marketing duty-free liquor got on the Soviet Embassy frank.

189. The first allegation is irrelevant: it is absurd to

suggest that a man who occasionally got drunk should not be believed.

190. As to the second allegation, both Petrov and Bialoguski r epudiated it in cro ss-examination, but one cou11sel invited us to hold, in effect, a special inquiry into it by hearing evidence generally upon it. vV e saw no reason to depart from the rule imposed by the law on courts that where an allegation de­

signed solely to discredit a witness is repudiated by him the

1Vature of the Evidentiary 1l1aterial

dourt can hear no evidence upon it. Were the rule otherwise, proceedings might never end.

191. It is a matter for the appropriate authority charged with law enforcmnent to inquire whether there is any sub­ ::;tance in the allegation. Even if the matter alleged were true. it would be a small factor in assessing Petrov's having in view the weightiness of the f,actors we have had to

consider.

192. No suggestion whatever was made against the reputa­ tion of Petrov, and on most matters her evidence was

no less important than that of Petrov.

193. vVe feel that in the final result we should find, and we do find, that the Petrovs are witnesses of truth.

194. vVe also found their accuracy to be of a high order, which is not surprising seeing that they had long training in a service which demanded accuracy.

195. rrhe volume of facts about which they were questioned before us was enormous; and meantime, during many 1nonths, they were being questioned on behalf of the counter-espionage services of other Western countries on matters not directly

relevant to our Inquiry, with results which we know to have been of the greatest value to those countries.

196. In all the circumstances, it is not surprising that occa­ sionally their memories were at fault in respect of such as dates and sequences of events, and that sometimes they differed between themselves in their recollections of such matters. Any person of judicial experience knows that such

faults of 1nemory and such divergencies are normal, even in highly intelligent witnesses-indeed the absence of them would be suspicious.

v. OTHER ORAL T ESTIMONY.

197. Most of the witnesses who appeared before us call for no special comment here, but some of the Communist

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Report of the Royal Commission on Espionage

witnesses do. These presented an extraordinary exhibition of wariness, truculence, evasion, and sometimes of deliberate lying, which followed a uniform pattern.

198. These circumstances made the evaluation of their evi­ dence dif-ficult. Their conduct and demeanour were such that there might have been danger of their evidence being rejected even though true. We have assessed their evidence with full recognition of this danger.

VI. THE ADMISSIBILITY AND WEIGHT OF THE EviDENCE GENERALLY.

199. In our Inquiry, which is merely investigative, the rules concerning the admissibility of evidence do not apply; the only barrier to admissibility is irrelevance. In consequence, we have before us relevant hearsay evidence; and we must take cognizance of it and give it its proper weight.

200. Some counsel who appeared before us attempted to make it appear that we were judicially trying a series of issues between the Petrovs on the one hand and the witnesses for whom they appeared on the other, and sought to invoke the

technical rules of evidence, not merely for the protection of their clients but sometimes also for the benefit of the Soviet.

201. Our primary duty was to discover whether the Soviet had a design of espionage in Australia, and whether and to what extent that design succeeded. Whether any and what persons assisted in the design is an important, but an inde­ pendent, matter.

202. Some evidence, such as a Letter from the Moscow Centre to Petrov directing him to perform a particular espion­ age task and to use a named person to assist therein, is of great weight as showing the Soviet's design, although it may be of little or no weight against the named individual.

203. The layman's phrase ''Hearsay is no evidence'' is not a correct statement of the law. The true legal rule accord­ ing to our common law system is that in judicial proceedings between parties hearsay, except in certain circumstances, is

6€

Nature of the Evidentiary Mat erial

not admissible in evidence. When hearsay evidence is ten­ dered by one party the other party is entitled to object to its admission and so to have it excluded from the body of evi­ dence to be considered by the tribunal of fact. The law does

not say that hearsay evidence has no weight, no probative value; it merely prevents the tribunal from considering it.

204. This rule against admissibility is a technical rule of our common law, and even at common law there are important exceptions to it. It is generally accepted that it was evolved early in our common law courts, mainly because then the only

authorized tribunal of fact was the jury and it was thought to be too dangerous to entrust to such a tribunal the evaluation of the weight of hearsay evidence.

205. But in judicial proceedings the party having the right to object to the admission of hearsay may waive his right by not objecting (Gilbert v. Endean, L.R. 9 Ch.D. 259); or the evidence, though ·hearsay, may be admissible unde'r some

£Upervening rule of procedure as in Walker v. Walker (57 C.L.R. 630), where a document, though providing only hear­ say evidence, was admitted, following the rule that if a party calls for and gets a document from his opponent the latter is entitled to have it put in evidence.

206. In such circumstances the barrier of inadmissibility has been surmounted and in fact the tribunal has before it hearsay evidence. According to law, the tribunal then has the power and the duty of giving to the hearsay evidence such

probative force as its nature and the circun1stances warrant, as was decided by the High Court in Walker v. fV alker (supra). The principle is there enunciated by Dixon J., at page 636, and by Evatt J., at page 638, and is well recognized.

(See also Wigmore on Evidence, 3rd ed., 321.) A tribunal of fact must accord to hearsay evidence before it the guarded credence which is given to it by reasonable men in dealing with substantial affairs in everyday life.

6;

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CHAPTER 5

BASIC GENERAL FINOINGS FROM THE EVIDENCE

207. The evidence before us clearly establishes the following basic findings 1. From about 1943 until at least February 1953 the Soviet had in Australia, and was operating (probably

continuously), a G.R.U. ''Legal Apparatus "-an espion­ age organization concerned with the collection of military (naval, army, and air) information. 2. Fron11943 until Petrov's defection on 3rd April1954 the Soviet had in Australia, and was operating, an

M.V.DJ. "Legal Apparatus". During that period this Apparatus was administered from Moscow by a succes­ sion of variously-named Soviet organs of government before its control finally came under the M.V.D., but at all times it was an organization concerned with espionage in

relation to matters other than military information. Each Apparatus mentioned in (1) and (2) above was, during its continuance, controlled (except for a short period) by a succession of officials of the Soviet Embassy at Canberra. Each controller was called a Resident or temporary Resident, and the Apparatus was called "Legal" solely because its Resident enjoyed diplomatic status and immunity. 3. In June 1952 the Soviet designed and directed the immediate establishment in Australia of an · M.V.D. ''Illegal Apparatus", which means in Soviet intelligence parlance an espionage organization controlled by a Resi­ dent being a person having no official connection with the

Embassy, and organized and operating so independently of the M.V.D. "Legal Apparatus" as to be able to func­ tion in time of war or other emergency.

208. We propose to deal in the following order with the material fr01n which we have made these general findings:-1. The G.R.U. Apparatus in Australia (Chapter 6).

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B a.sic General Fin clings

2. The M.V.D. Legal Apparatus in Australia and its Operations, a s under:-(a) The Administrative Control from the Moscow Centre of the M.V.D. Legal Apparatus in Aus­

tralia and the work done for it by the Moscow Centre (Chapter 7).

(b) The Administrative Structure and Practice of the Leg·al Apparatus in Australia and

its Personnel (Chapter 8). (c) The General Operations of the M.V.D. in the Discovery and Development of the Mean, of Obtaining Information, and its Exploitation of

Communism (Chapter 9).

(d) The Operations of the M.V.D. in Relation to ( i) The Department of External Affairs (Chapter 10). (ii) Members of Foreign Diplomatic Missions

in Australia (Chapter 11). (iii) Members of the Parliament (Chapter 12). ( iv) Journalists (Chapter 13). ( v) Persons Engaged in Commerce (Chapter

14).

(vi) Scientists (Chapter 15). (vii) Counter-espionage and Security Organi­ zations (Chapter 16). (viii) Emigres (Chapter 17).

(e) The Operations of the M.V.D. towards setting up an Illegal Apparatus in Au stralia (Chapter 18).

263

CHAPTER 6

THE G.R.U. APPARATUS IN AUSTRALIA

209. \Ve have been able to discover little more than the fact that a G.R.U. "Legal Apparatus" was functioning in Australia. As we have indicated in Chapter I, military espionage was the function of a Soviet organ of State (to which we refer as the G.R.U.) separate ·from the organ of State (to which we refer as the lvf.V.D.) which controlled non-military espionage.

210. Under the Soviet system it is a fundamental principle that each branch of its espionage service shall be kept insu­ lated from the others, and this has meant that the Petrovs, as M.V.D. workers, had no detailed information about G.R.U. operations in Australia. We have not been able to ascertain even the code names of the G.R.U. personnel.

211. The first G.R.U. Resident was probably Zaitsev, whose overt post at the Embassy was that of Second Secretary. He arrived in Australia in 1943 and appears to be the same Zait­ sev who played a part in the successful operations of the "Sorge" Soviet espionage network in Japan in 1941. Zaitsev left Australia in 1947.

212. It will be seen from Appendix No. 3 that military espionage work in 1947 and 1948 was under the direction of an organization known as the I{.I., and during this period (1947-1948) G.R.U. work in Australia may have been under the control of Makarov, an Embassy official and one of Petrov 's predecessors as Resident.

213. In December 1951 Gordeev, a Lieutenant-Colonel in the Red Army, arrived in Australia as G.R.U. Resident. He remained here until February 1953. Petrov was informed by his Moscow Centre of Gordeev's covert position, but neither was permitted to disclose to the other the identity of his workers.

The G.R.U. Apparatus in Australia

214. That Gordeev was engaged in military espionage work in Australia appears from the Moscow Letter No. 4 of 24th July 1952, paragraph 1, in which Petrov was directed to ''establish personal contact with the military intelligence

officer, Comrade A. A. Gordeev" for the limited purpose of ''combating the activities of foreign counter-intelligence organizations". It instructed Petrov that "when effecting contact, it is strictly forbidden for you to disclose the

identities of the personnel of your M.V.D. section, of your agents, of the plans of work and the plan-tasks set by M.V.D. Headquarters''. The Letter added that ''corresponding instructions are being sent to Comrade Gordeev through his

channels' '.

215. Gordeev was not accredited to Australia as a Military Attache. His overt post at the Embassy was in the consular department, dealing with applications by Soviet citizens to be repatriated to the U.S.S.R. That work occupied little time, since few Soviet citizens sought repatriation.

216. In August 1952 he was joined by Pavlov, a Colonel in the Red Army and a G.R.U. cadre worker, whose overt post was also in the consular department, dealing with repatria­ tion applications.

217. In February 1953, perhaps because of some lack of co­ ordination between the Directorate controlling their overt posts and the G.R.U. in Moscow, their overt postings were ter­ minated and they were recalled. We have no evidence that

any other G.R.U. worker was sent to replace them.

218. Petrov had no knowledge of any new G.R.U. appoint­ ment until the arrival of his M.V.D. successor, Kovalenok, on 3rd April1954. Kovalenok told him when they were convers­ ing at the airport that a senior G.R.U. officer, whom Kovalenok

did not name, had been selected to come to the Embassy in Australia as G.R.U. Resident, and that there had been some delay but that he would be arriving soon.

219. Having regard to the importance of developments in Australia in relation to guided missiles and the like, it would be unwise to assume that G.R.U. operations in Australia ceased when Gordeev and Pavlov left, or that since the de­

parture of the Embassy in 1954 there has not bee·n a G.R.U.

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Report of the Royal on Espionage

''Illegal Apparatus'' operating. Petrov expressed to us his firm opinion, based on his knowledge of Soviet espionage practice, that such an Apparatus is still operating in Aus­ tralia.

CHAPTER 7

THE AD-MINISTRATIVE CONTROL FROM THE MOSCOW CENTRE OF THE M.V.D. LEGAL APPARATUS IN AUSTRALIA AND THE WORK DONE FOR IT BY THE MOSCOW CENTRE

220. Administrative control from the Moscow Centre of the M.V.D. "Legal Apparatus" in Australia between 1943 and 1954 was vested in a succession of Soviet governmental organs. The administrative methods of these organs, so far

as \Ve can see, followed the same pattern.

221. Administrative control from the Moscow Centre was intensely strict and very little discretion was given to the local Resident. Instructions were required to be carried out to the letter in the manner directed and no deviation from the

directions was permitted, save with the Centre's approval. For example, the tasks for each worker on the Resident's staff were set not by him but by the · Centre, and neither the Resident nor any other member of his staff could interfere

in the performance of those tasks without its specific per­ mission.

222. The Moscow Centre recruited for its work in Aus­ tralia officials of other Departments who were being posted to the Embassy here by the Soviet Foreign Office, but when an official was so recruited even the Ambassador was not

advised of his covert M.V.D. association; only the Resident was informed of it, and that directly from the Moscow Centre, which also apparently concealed from the recruited worker, until his arrival in Australia, the identity of the M.V.D.

Resident, and gave careful instructions as to the means of identification.

223. For example, in the Moscow Letter No. 1 of 2nd January 1952, Petrov wa.s advised that one Kovaliev (code name "Grigoriev") had departed for Australia to take up a post at the Embassy as a Commercial Attache and that he had been secretly recruited as a CQllaborator for M.V.D. work.

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Report of the Royal Commission on Espionage

Petrov was informed that Kovaliev had been instructed that identifi cation would be a chieved by P etrov saying ''Regards to you from Moscow from Vladimir Pavlovich", to which Kovaliev would reply ''What progress in to which

Petrov's reply would be "Good", followed by the naming of his code name.

224. Official code names were assigned by the 1\l[osco'v Centre to all M.V.D. workers and to many of the persons in whom the M.V.D. was interested, and, as occasion required, the R esident here was advised of such assignn1ent. .

225. Basic records in relation to M.V.D. work in Australia were kept at the Moscow Centre. Few records were allowed to be preserved here, and none without permission. Cables received in, and copies of cables dispatched from, Australia had to be almost immediately destroyed. Letters from the

Centre were normally directed to be destroyed in annual batches, so that, for example, the 1950 Letters were destroyed early in 1952, those of 1951 early in 1953, and those of 1952 were due for destruction early in 1954. Copie-s of letters

dispatched from Australia were i1ormally destroyed upon acknowledgn1ent of their receipt by the Centre.

226. A most important feature of the Moscow Centre's work in relation to Australia was the compilation of dossiers concerning Australians--made up after sifting information supplied from Australia and elsewhere or gathered by the

Centre itself. From information similarly gained the Centre compiled records dealing with Australian affairs, governmen­ tal and departmental procedures, etc. These dossiers and records and the Residents ' operational reports provided the basis for the Centre's direction of operations in Australia and the setting of individual tasks for its workers. The Moscow Letters throughout deinonstrate the operation of this system.

227. Another branch of the Centre's work was the selection of suitable persons t.o be introduced into Australia for espion­ age work, particularly as part of an "Illegal Apparatus" under a "cover" outside the Embassy, and the devising of means for getting them into Australia. Such is the system of secrecy followed by the M.V.D. that it . is possible that a

Control of the M.V.D. in Australia

number of these persons have been introduced into Australia unknown to Petrov ·Or the earlier Residents. Examples of the methods employed in this regard appear from the Moscow Letters and the evidence.

228. Thus, the Moscow Letter No. 6 of 25th November 19·52, paragraph 10, reproduced in Chapter 4, refers to the case of Mrs. Kazanova. We refer to the matter in more detail

when dealing with the "Illegal It suffices to say

here that the M.oscow Centre intended to select and plant on this old Russian woman, who was living in Sydney and had not seen her Russian relatives for years, an "illegal worker, under the guise of a relative of Kazanova". What was done

following Petrov's report to the Centre on the matter he does not know-nor do we.

229. Another example emerges from the evidence in rela­ tion to one Divisek, with whose case also we deal later. He is a Czech who did much M.V.D. work for the Soviet against the Germans during the last war. The evidence shows

that he was selected by the Centre for its work here and­ with that in view-was deliberately permitted and assisted to leave Czechoslovakia to join relatives of his who had settled in Australia. The scheme failed because, soon after his arrival

here in 1949, Divisek got into touch with the Commonwealth authorities and told them what he knew of the matter.

230. Another task of workers of the Mosc.ow Centre was to spy and report upon Australians and others who were per­ mitted to visit the U.S.S.R., China, and other Communist­ controlled countries, particularly persons who made the visit

as members of delegations attending so-called "Peace Con­ gresses'' or ''Youth Rallies'' and the like organized by the Soviet. Information thus obtained was transmitted to the Resident in Australia.

231. We examined a number of Australians who had been members of such delegations and in many cases it became apparent that the whole or part of the cost of their visits was defrayed from Soviet sources.

232. Spying by the Moscow Centre upon these visitors had a · two-fold purpose-first, to discover in these presumably sympathetic groups persons who on return to Australia would

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Report of the Royal on Espionage

be worthy of "study" for attraction to active espi.onage work or for use as unwitting informants; and secondly, to discover whether any of these visitors were counter-intelligence agents.

233. That such surveillance took place is illustrated by the Moscow Letter No. 1.of 2nd January 1952, paragraph 6, which contains reports fron1 the Centre of the results of M.V.D. surveillance of thtee young Australians, Bresland, Russell,

and Isaksen, who attended the ''World Festival of Youth and Students for Peace'' at Berlin in August 1951, and later went to the U.S.S.R. Their evidence was that about 140 Austra­ lians attended the Festival and 19 of them later went at Soviet expense to the U.S.S.R. The paragraph mistakenly refers in its first part to Bresland as "Brennd'', but the latter part of

the paragraph and the evidence relating to its contents make it plain that the person referred to is Bresland. It shows that Bresland was closely observed and favourably reported on, and that Russell and Isaksen were watched and seen to act in a manner which caused suspicion that Russell-but not Isaksen-was a British counter-intelligence agent. The para­

graph-so far as it r·elates to as follows:-

''Concerning Cook and Norman Herbert Russell. Among the members of the Australian delegation which visited Russia in October 1951 were Charles Brennd (further referred to as Cook) and Norman

Herbert Russell. Cook was born in 1926 in Perth. After completing 7 classes of school he worked as a book salesman in one of the publishing firms in Perth and later in the publishing firm of the Communist Party in the same place. In 1944 he joined the Communist Party of Australia. At the

present time Cook is a committee member of the Com­ munist Party in the State of New South Wales, the secre­ tary of the executive committee of the Eureka Youth League, progressive· organization of the Australian Youth in the .same State, and a member of the national executive committee of that League. Cook's Wife is a member of the Eureka Youth League.

Cook understands the Russian language well, but speaks it with difficulty. In all, he creates a favourable impression. He likes Russian music; knows many Russian

76

Control of the M.V.D. in Australia

youth songs and shows a great interest in Russian litera­ ture. Cook at all times spoke sincerely and well of every­ thing he .saw in Russia, and he assisted other members of the delegation to understand correctly the realities of

life in Russia. Cook agreed to an exchange, not through the post, of information and literature between the Youth organiza­ tions of Russia and Australia, and he gave several

addresses at which a contact could be established with him. Here are the addresses: Chas. Bresland, 59 Peel Street, Belmore, and Eureka Youth League, 40 Market Street, Sydney.

We request you to commission Pakhomov to establish cautiously an official contact with Cook for the purpose of using him for receiving inquiries in student circles of the universities in Sydney and Canberra.''

In the above excerpt we have reproduced the para­ graph, retaining-as in the original-the code name "Cook" for "Bresland". In Letters quoted hereafter in our Report, we will substitute for the code names the

actual names of the persons referred to. But it should be noted that once a code name was allotted to a person he was thereafter in the Letters referred to by his code name only.

234. Charles 13resland was called as a witness and agreed that-except in 1ninor particulars-the biographical details concerning him set out in the Letter were correct.

235. The reason why the Moscow Centre was interested in him is plain. He is a young man, 29 years of age, who already has made three visits to Communist-controlled countries. In 1947 he went to the "World Festival of Youth and Students'' at Prague and thence to Yugoslavia-then a part of the Com­ munist bloc-where he worked as a volunteer in building a

government railway which he described as a ''Youth Rail­ way", and later returned to Australia.

236. In 1951 he went to a " ,World Festival of Youth and Students for Peace'' in Berlin and thence-at Soviet

expense--to Moscow.

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Beport of the Royal Co1nmission on Espionage

237. In 1954 he again went to Moscow, via Hong I{ong and Peking, to attend the "Twelfth Congress of the Lenin Young Communist League'', otherwise known as the ''Twelfth Con­ gress of the Komsomol". "Komsomol" is an abbreviation of

the Russian words Kommunisticheski Soyuz Molodyozhi, meaning the Communist League of Youth. The Komsomol is a Communist youth organization in the Soviet, and it paid Bresland 's fares and expenses. He later returned to Australia via Italy.

238. Until1954 Bresland was a member of the State Com­ mittee of the Communist Party of Australia; and he is now the National Secretary of the Eureka Youth League, which he told us was "organizationally" independent of the Communist

Party of Australia. The name "Eureka" has a special Com­ Inunist significance in Australia. It refers to an episode in our history which, by distortion of the facts, Australian Com­ munist literature continually attempts to aggrandize into an important landmark in the history of democracy here. The name ''Eureka Youth League'' was adopted to give an Aus­ tralian mask to an organization which is in fact the Australian counterpart of the Komsomol.

239. Bresland admitted that he knew Pakhomov. He ad1nitted also that he had some connection with University youth organizations, but not for any espionage purpose. The Moscow Centre's intent to use Bresland for some such purpose is apparent from the Letter.

240. Other evidence indicates that one of Pakhomov 's tasks was to obtain information concerning University students who were members of the Eureka Youth League, with a view to using then1 for M.V.D. purposes. From University students are selected certain officers of Government Departments, par­ ticularly cadets for the Departlnent of External Affairs.

241. The para·graph of the Moscow Letter to which we have referred is-so far as it relates to Russell-and Isaksen-as follows:-"Norman Herbert Russell was born in 1922 in Sydney;

he is non-Party, of middle school education-he completed an accountancy course. At the present time he works

Control of the M.V.D. in Australia

as a clerk in the Sydney port. He is a member of the clerks' trade union. He is financially secure, lives in his own house and has his own motor car. Russell's general outlook is that of a petit-bourgeois.

Whilst refraining from taking any active part in the fight for peace he does not, it is true, decline to carry out individual assignments to that end. Although during his sojourn in the Soviet Russell con­

ducted himself well and promised that after his arrival in Australia he would speak nothing but the truth about the Soviet, nevertheless his behaviour arouses suspicion. While in Stalingrad, Russell met, as though accidentally,

two attaches of the British Embassy, and conversed with them for some minutes. While he was in Moscow, Russell, together with N. Isaksen, another member of the delega­ tion, secretly and without t,elling anyone visited the

British Embassy, where he spent several hours. The following day they explained their absence by saying that, having gone out for a walk, they allegedly met a young Russian man who spoke English, who invited them

to a restaurant where they sat for several hours. Such behaviour on the part of Russell suggests that there may be a contact between him and the British intelligence. We are sending the information about Russell for your

orientation.' '

Russell and Isaksen were called, and gave evidence

that in fact they had accidentally met in Stalingrad two mem­ bers of the British Embassy and that later in Moscow they had paid a visit to these men at the British Embassy. Russell confirmed the substantial accuracy of the biographical details

given in the Letter. It will be noticed that the purpose of the Letter, in so far as it concerned Russell and Isaksen, was to inform Petrov of their actions in the U.S.S.R. and to give a warning to him that Russell-but not Isaksen-was suspected

of being a counter-intelligence agent.

243. The purpose of calling Isaksen, against whom nothing whatever was suggested, was merely to assist in testing the authenticity of the Letter. Although Isaksen is not a Com­ munist, the fact that he was called was used as an excuse by a

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Report of the Royal Co1nrnission on

large body of Co1n1nunist members of his union, the Workers' Federation-after a stop-work n1eeting-to st::tge both within and without the court-room an organized mob demonstration apparently designed to intin1idate and hinder the Commission.

244. Another example of this type of work carried out by the Moscow Centre appears from the l\1oscow Letter No. 4 of 24th July 1952, paragraph 5:-"As Enclosure No. 1 we send you particulars concern­

ing two members of the Australian delegation which was in Russia for the First of May f esti vi ties-Flood and Lewis. Both of them, in our opinion, could be· used for the fulfilment of tasks which are provided for in the plan of v1ork of the Australian M.V.D. section.

Instruct Antonov to make the acquaintance of Flood and Lewis for the purpose of studying them and using them along our lines. Inform us concerning the results.''

245. The Enclosure referred to in the Letter was handed by Petrov to Antonov, who retained possession of it. The deciphered list of insertions brought by Petrov and apposite to this Letter and Enclosure gave an indication of the identity of the persons Flood and Lewis to whom the Letter itself refers. This led us to call as witnesses Dorothy Clare Wil­ liams (nee Flood) and Mary Ellen Casper Lewis. Fron1 them we learned that in April1952 a number of Australians, includ­ ing Mrs. Williams, her brother Les Flood, her brother's wife Dorothy Flood, and Miss Lewis, attended an ''International

Conference for the Protection of Children" at Vienna, and that-at the conclusion of that Conference-the party went on to Moscow at Soviet expense to attend the "First of May Festivities'' there and were given an extended tour of the U.S.S.R. Mrs. Williams returned to Australia via England, in accordance with her original plans, but her brother and sister-in-law and 1\fiss Lewis accepted an invitaw

tion to visit China as the guests of the ''Chinese W o1nen 's Democratic Federation''. They enjoyed an extensive tour of China and finally returned to Australia by air from Hong Kong-all at the expense of the ''Chinese Women's Demo­ cratic Federation".

8o

Control of the }f.V.D. in Australia

246. 1'Irs. Williams is not a Communist or a :syn1pathizer with Communism, nor is there any suggestion that she ever had any direct or connection with any Soviet official

in Australia. She attended the Vienna Conference at her own expense and solely as an incident of a trip · to Europe and England, in the course of which she accepted the invitation to visit the Soviet. Miss Lewis (who is a member of the

Australia-Soviet Friendship Society), Les Flood, and his wife Dorothy Flood are Communists.

247. While these persons were in the Soviet the M.V.D. Centre found out-amongst other things-that Mrs.

Williams was a comptometrist in the Department of Supply and a member of the Federated Clerks' Union of Australia; that J\!Iiss Lewis was a barmaid ernployed in the Elizabeth Ifotel in Elizabeth Street, Sydney, and a n1ember of the Hotel, Club, Restaurant and Caterers' Employees' Union, and that her hmne address was 60 Canterbury Road, Hurlstone Park; that 1\{rs. Dorothy Flood's maiden name was Hewitt and that her home address was 38 Mentmore Avenue, Rosebery,

Sydney. The evidence showed that all these details were correct.

248. There is no doubt that the 1\foscow Centre cmnpiled dossiers on these persons and reported the details to the M.V.D. in Australia.

249. Two other exan1ples of the interest taken by the 1fos­ cow Centre in persons visiting Con1munist countries as dele­ gates appear in Document G.18, which is a note made by Petrov from the contents of a Moscow Letter received by hin1 in 1953. These persons are Dr. Sandy and Jock Grahan1.

250. YVith regard to Dr. Sandy, the note is as follows:­ ''Dr. Clive Sandy-dentist-denture-maker, 38 Fletcher Street, Essendon, Victoria, W.5., Tel. FU7166. Mel­ bourne-on illegal workers.' '

251. Petrov stated that the Letter r eceived by hin1 directed that his 1\LV.D. section ''study'' Dr. Sandy with a view to using his house in Melbourne for conspiratorial purposes and also for accommodating M.V.D. Fourth Directorate agents.

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Report of the Royal Commission on Espionage

Sandy was also directed to be "studied" as a potential sor who could assist in the establishment of Fourth Directorate agents brought into Australia. The Fourth Directorate is the M.V.D. branch concerned with the planting of ''illegal

workers'' in foreign countries. Petrov said that no M.V.Dv contact was made with Sandy.

252. Clive Ernest Sandy was called and gave evidence. He is a Doctor of Dental Science of the University of Melbourne. He lives at 38 Fletcher Street, Essendon, and his telephone number is FU7166. He stated that he had never been a Com­ munist. In 1952 he went by air to Hong Kong, his fare being paid, he said, partly by himself and partly by a Melbourne scientific society for which he was a delegate, but whose name he failed to remember.

253. From Hong Kong he went through Peking to Prague at the expense of the "Chinese Peace Committee", and thence to Vienna to attend the "Cqngress of the Peoples for Peace". As a guest of the Soviet, he went to Moscow with 22 other Australians. In Moscow he made for the Soviet a disc for broadcasting purposes.

254. He is a member of the Australian Democratic Rights Council and of the Victorian branch of the Australian Peace Council.

255. The reason for the Moscow Centre's interest in him is clear. From the Letter it is evident that the Moscow Centre had 1nade an assessment of his potential value while he was in Communist countries, and designed to use him as a means

of introducing here ''illegal workers' '-in the manner indi­ cated by Petrov. Obviously a dentist's rooms would be good cover for conspiratorial purposes. There is no evidence that Sandy fell in with the Moscow Centre's plans or, indeed1 had any knowledge of them, and he denied it.

256. The case also illustrates one of the sources from which the Moscow Centre collects information about visitors to the Soviet. Dr. Sandy told us that on his return to Australia he had written letters of thanks, one of them to the head of the British section of Voks in Moscow and one to each of two persons who had there acted as interpreters for him. These

Control of the M.V.D. in Australia

letters were written on his professional note-paper, on the letterhead of which appears ''Dental Surgeon, 38 Fletcher Street, Essendon, W.5. Tel. FU7166". One inference is that one at least of the recipients of his letters was an M.V.D. ·

agent.

257. With regard to Graham, the note is as follows:-'' John Graham-Gonetz-seamens trade union, sailed in the capacity of .fireman. His father resides at 18 Hindley Street, Townsville, Qld. Gonetz resides at the address 54 Day St. Sydney. Tel. BU1122" Gonetz is the Russian word for "Runner".

258. Petrov had no recollection of the nature of the direc­ tive concerning Graham, but he gathered from the Letter that he had been a member of a delegation which had visited the Soviet. Petrov said that he had never contacted him and knew nothing of him.

259. Jock Graham, who is a young man of 24, was called as a witness and told us that he was a ship's fireman and a

member of the Seamen's Union of Australasia, the address of which is 54 Day Street, Sydney (which Graham said was his postal address). Its telephone nun1ber is BX 1122. His father had lived in Townsville until 1953 at the address 18

Hindley Street. Grahan1 said that in 1952 he visited the U.S.S.R. as a delegate of the Seamen's Union at the invita­ tion of the "All Union Central Council of Trade Unions" in Mosco·w. While in the Soviet he was the guest of this body

and travelled extensively. Frmn Moscow he went on to Vienna, where he attended a "World Peace Congress". He returned to Australia by air, via China and Hong Kong, his expenses in China being met by what he described as the

"Chinese Trade Union Movement". ·

260. Graham said that on his return from the Soviet he became· a member of the Communist Party.

261. In the same document (G.18) there is a further note as follows:-"Nil-John Pringle-hates the politics of the Ameri­ cans; is sympathetic to communism."

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Report of the Royal Commission. on. Espionage

262. Petrov said that this note was also made from the same Letter of 1953 which ref erred to Dr. Sandy and Graham, and that it stated that "Pringle" was also a delegate to and a guest of the "All Union Central Council of Trade Unions" in the U.S.S.R. Other than that, Petrov knew nothing of "Pringle". Graham said he was certain that there was no man named Pringle in the delegation; and we· were unable to identify him. ·

263. Examples of this aspect of the Moscow Centre's work jn spying upon and c01npiling dossiers about persons visiting or residing in the U.S.S.R. and forwarding such information to the Resident in Australia will be found elsewhe-re in this Report. The case of a man named North, who was for a period serving in the Australian E1nbassy in Moscow, is of

particular interest and is dealt with elsewhe-re.

264. It is noteworthy that, fron1 the evidence before us alone, it appears that many Australians went to Communist countries on delegations, their fares (which were often air fares) and their expenses being paid in many cases by those countries. In 1952 the single air fare from Hong Kong to :Sydney was about £160 Australian, and to Rome from Syd­

ney was about £330 Australian. Seeing that not only the fares but also the general expenses of such persons were pro­ vided, it is evident that many thousands of pounds were spent to secure these visits by Australians. No doubt much of this money was spent for propaganda purposes, but it is apparent from the evidence before us that so far as the Soviet was con· cerned, it had the espionage angle also in view.

CHAPTER 8

THE ADMINISTRATIVE STRUCTURE AND: PRACTICE OF THE M.V.D. LEGAL APPARATUS IN AUSTRALIA AND ITS PERSONNEL

265. The M.V.D. "Legal Apparatus" which operated in Australia was established in 1943 and continued to function until Petrov's defection .in April 1954. During these years it was under the local control of a succession of Residents or

temporary Residents, each of whom, except for a short period in 1951 when Pakhomov (the Tass representative) was tem­ porary Resident, had diplomatic status and enjoyed all the advantages and immunities which that status carried with it.

THE M.V.D. OFFICE IN THE EMBASSY.

266. In the Embassy building an upstairs room in the Embassy cipher section was set apart for the M.V.D. Resi­ dent and his cipher clerk. Access to the Embassy cipher section, the entrance to which was guarded, was permitted only to very few senior Embassy officials. Access to the M.V.D. room was even more restricted. It was provided with the necessary equipment for photographing documents and

developing and printing from negatives. In it was a safe used solely for M.V.D. purposes, to which there were two keys which, when not in use, were kept in the Embassy cipher clerk's safe in a container sealed with a seal held by the

M.V.D. cipher clerk. In the M.V.D. safe were deposited the M.V.D. cipher books and documents and the M.V.D. cash. This was kept entirely apart from Embassy funds and used only f.or M.V.D. purposes and accountable for only to the

Moscow Centre.

METHODS oF CoMMUNIOAT'ION BE.TWEEN THE Moscow CENTRE AND T'HE M.V.D. RESIDENT.

267. Communications between the Moscow Centre and the Resident were by cable and by Embassy diplomatic bag, all ostensibly coming from or going to the Foreign Office. In an earlier Chap-ter in which we described the "Moscow Letters'' we explained the method .of communication from

ss

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Report of the Royal Comtnission on Espionage

Moscow Centre to the Resident by means of undeveloped films. Similar methods were adopted in the case of letters from the Resident to the Moscow Centre. In such cases, however, it was normally the Resident's duty to destroy the original typed document, a photographic negative of which had been forwarded to Moscow, as soon as receipt of that negative had been acknowledged by the Moscow Centre.

268. In the case of communications by diplomatic bag, the package containing the undeveloped film or other communica­ tion, and the package containing the enciphered Appendix of insertions, bore an outside marking which indicated to the Embassy cipher clerk in Canberra or to the Foreign Office clerk in Moscow, as the case might be, that the packages were intended for the M.V.D., to whose officer they would then be handed unopened.

269. Cables passing between the Moscow Centre and the Resident bore the appearance of being ordinary cipher-cables between Foreign Office and Embassy, and were in an M.V.D. cipher of a type known to cryptographers. The enciphered cables consisted of a series of groups of five digits. The Embassy cipher clerk in Canberra or the Foreign Office clerk in Moscow, as the case might be, was able to decipher only the last group of digits appearing in the cable and from those would learn that the cable was intended for the Resident or the Moscow Centre, and would hand over the cable accord­ ingly. The remainder of the enciphered cable could be deciphered .only by a person with access to the M.V.D. cipher book and knowledge of the ciphering technique.

270. The ''One Time Pad'' cipher system was employed, which means that a particular page of the cipher book was nsed for one communication only and after use was destroyed that the breaking of the cipher used in one communication

would not enable any other communication to be read. This dpher and ciphering technique were also used for the enciphered Appendices of insertions which accompanied each Letter.

271. In Enclosure No. 1 to the Moscow Letter No. 6 of 25th November 1952 will be found a long and detailed set of instruc­ tions from the Moscow Centre laying down the procedure

86

M.V.D. Personnel in Australia

thenceforth to be followed by the M.V.D. Resident in Australia in communications with the Centre. The form .of the Enclo­ sure suggests that it was an instruction· circulated by the Moscow Centre to all M.V.D. sections abroad.

272. One interesting feature of it is that it gives a clear indication of the various types of M.V.D. activities. The third paragraph of the Enclosure divides these activities into eight lines of work:-

(a) Intelligence. (b) Counter-intelligence. (c) Scientific and technical. (d) N.L. (Nie Legalny, which means w.ork relating to an

''Illegal Apparatus''). (e) EM. (f) S.K . .

(g) Seamen. (h) Delegations.

M.V .D. PERSONNEL IN AUSTRALIA.

273. In addition to the Resident and his cipher clerk, the M.V.D. in Australia at various times employed the three classes of workers to which we have referred earlier, namely cadre workers, collaborators, and agents. The Resident and

his cipher clerk were, however, the only persons permitted to know who these workers were. The Ambassador knew, at least during Petrov's Residentship, that he was the temporary Resident, but it was forbidden for the Resident to disclose

even to the Ambassador the identity of his cadre workers, collaborators, or agents. An illustration of the importance which the Moscow Centre attached to this rule of secrecy (which was designed, amongst other things, to minimize the

risk of compromising the Ambassador or the Embassy should M.V.D. activities become known) is given in the Moscow Letter No. 6 of 25th November 1952, paragraph 12. The paragraph is in these terms :-

''Concerning the Motor Car. Both you and Antonov knew the cover story for the purchase of the motor car. In accordance with this cover $tory all the employees of the Embassy, Pakhomov's

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Report of the Royal Com/m1 :ssion on Espio nage

acquaintances, and the counter-intelligence have every reason for considering the car to be the property of the Tass agency. The authorization for the purchase of the motor car was given in an unciphered communication in the name of the directorate of the Tass agency. There­ fore, Antonov's statement to the Ambassador that he knows nothing about the motor car, that no one told him anything about it in the Tas.s agency, and that the motor car belonged personally to Pakhomov (which you like­ wise confirmed to the Ambassador),-we consider to be an infringement of the rules of secrecy, which occurred because of an oversight on your part. Your and Antonov's statement to the Ambassador caused the exposure of Pakhomov as our cadre worker,

In the situation which has now arisen, the motor car should be left in Canberra and it should be used for operational purposes after you or Kislytsin have obtained a driving licence.

Taking into consideration Antonov's statement that he refuses to take the car because he is afraid to drive a motor car in Sydney, we recommend to Antonov that, pending a final decision, he should take a course of driv­ ing lessons and that for this purpose he should use £15 out of the resources of your M.V.D. section."

27 4. Pakhomov, who held the overt post of Tass represen­ tative, was an worker who had already returned to the U.S.S.R. Antonov, who was also an lVI.V.D. worker, had relieved him as Tass representative.

275. The Letter is of interest also from other points of view. It illustrates the care taken by the Moscow Centre to preserve its activities and the identity of its workers in Aus­ tralia from the knowledge of our Security Service by pro­ curing the Moscow Directorate of the Tass Agency to send Pakhomov the "cover story" by a communication "in clear" in the belief that communications with Australia were the subject of censorship examination, and in the hope and antici­ pation that the communication would thus come to the know­ ledge of our Security Service and lull any suspicions they might have that Pakhomov, the overt Tass representative, was

88

M.V.D. Personnel in Australia

concerned with espionage activities. The Letter shows also that the M.V.D. Resident had funds at his disposal separate from the ordinary Embassy funds. ·

276. The first Resident in Australia was Makarov. His overt positions at the Embassy were those of Embassy Clerk, Third Secretary, and First Secretary successively. In 1949 he was succeeded as Resident by Sadovnikov (code name

"Said"), whose overt positions were those of Second and later First Secretary and who acted as Resident until his recall to the U.S.S.R. in April1951.

277. During Makarov's Residentship, Nosov (code name "Tekhnik") was the Tass representative in Australia. He was an M.V.D. worker under Makarov and subsequently, for a short time, under Sadovnikov. In August 1950 he returned

to the U.S.S.R.

278. Vysselsky (code name ''Vassili''), who was a Press Attache and later a Third Secretary at the Embassy, was also an M.V.D. worker under 1\!fakarov and later, for a period, under Sadovnikov. He returned to the U.S.S.R. in November

1950.

279. Krutikov, a Commercial Attache, was another M.V.D. worker under 1\{akarov and later under Sadovnikov, He arrived in Australia .in August 1948 and left in October 1950.

280. During Makarov's Residentship the M.V.D. ciphering and technical office work was done by Grtbanov (code name ''Santo''), an M.V.D. worker whose overt position was that of Embassy Clerk.. Gubanov's duties during this period

included '' S.K.'' work. He returned to the U.S.S.R. in March 1951.

281. In June 1950 Pakhomov (code name "Valentin"), another M.V.D. worker, arrived to replace N osov as Tass representative and to work under Sadovnikov.

282. It was during Sadovnikov 's Residentship that the Petrovs arrived in Australia.

283 , In April1951 Sadovnikov was recalled to Mo scow. An unfavourable report concerning his conduct as an Embassy official which had been made by the Ambassador was the

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Report of the Royal Commission on Espionage

reason for his recall. But he did not know this, and believed that he was merely going on leave and would return after a short intervaL ··Before his departure he was instructed by the Moscow Centre that Pakhomov would act as temporary Resident during his absence and that Mrs. Petrov take

over the M.V.D. cipher work and papers, including the ciphers. This she did.

284. Pakhomov, however, who had arrived in Australia only in June 1950, had had little opportunity to accustom himself to Australian ways of life or to make acquaintances. From the M.V.D1• point of view he was under the further disadvan­ tage that he lived in Sydney and had no diplomatic immunity.

285. Pakhomov remained temporary Resident until the eng_ of 1951, when Petrov was appointed temporary Resident in his place. Thereafter, Pakhomov acted as an M.V.D. worker under Petrov, who was promoted to the rank of Colonel during 1952. From the time of Petrov's appointment as temporary Resident, Mrs. Petrov, who had been Pakhomov's cipher clerk and technical assistant, acted as Petrov's cipher clerk and technical assistant.

286. Petrov remained temporary Resident until April1954, when he left the Soviet service. From early in 1953 he had known that he was to return to the U.S.S.R. and to be relieved of his position as temporary Resident. In fact he was relieved by Kovalenok (code name '' Stoun' '), an M.V.D. cadre worker who arrived in Sydney on the 3rd April 1954 as temporary Resident. It was intended that an M.V.D. worker more senior

than Kovalenok would later come to .Australia as permanent Resident. It is worthy of note that in Moscow Kovalenok had served in the Fourth Directorate of the M.V.D., which was concerned with the training of espionage agents for work in an'' Illegal Apparatus'' and procuring their entry into foreign

countries. This is significant in view of the desire of the Moscow Centre to create an "Illegal Apparatus'' in Australia.

287. Petrov's defection led to the breaking off of diplomatic relations between Australia and the Soviet and thus to the destruction of the M.V.D. "Legal Apparatus".

M.V.D. Personnel in Australia

288. During the period when Petrov was temporary Resi­ dent, three other :11:.V.D. cadre workers, namely Kislytsin, Plaitkais, and Antonov, were sent out to Australia to work in the" Apparatus", two of them being attached to the Embassy.

289. KISLYTSIN (code name "Gleb") arrived in October 1952. His overt post was that of Second Secretary. The principal M.V.D. tasks laid down for him by the Moscow Centre were-

( a) to select and· ''study'' persons who could be of assistance in procuring the entry into Australia of ''illegal workers'' to be used in the ''Illegal Appa­ ratus" which the Moscow Letter No. 3 of 6th June

1952 directed to be set up in Australia; and (b) to make the acquaintance of and to "study" Mem­ bers of the Parliament and persons in the Diplomatic Corps thought to be of interest to the M.V.D. Kislytsin appears not to have been an efficient M.V.D. worker. According to Mrs. Petrov, his knowledge of the Eng­

lish language was limited and he was "timid". He returned to the U.S.S.R. in April1954 with the couriers who had been charged to take Mrs. Petrov there.

290. PLAITKAIS (code name "Dvinsky"), a Latvian, was posted to the Embassy as an Attache. His M.V.D. task was the "EM" line of work, and the evidence shows that he was active in that field. He arrived in Australia in January 1953 and left with other members of the Embassy after Petrov's defection.

291. ANTONOV (code name "Ignat") arrived in June 1952. His overt work was that of Tass representative in succession to Pakhomov. Antonov's principal M.V.D. duties laid down by the Moscow Centre-were to make the ac­

quaintance of and'' study'' journalists, Members of the Parlia­ ment, and others who were thought to be of interest to the M.V.D. Like Kislytsin, his inadequate understanding of English handicapped him. Antonov left Australia with the members of the Embassy after Petrov 's defection.

292. During Petrov's term of office two other members of the Embassy staff, namely Kharkovetz and Kovaliev, were

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Report of the Royal Com,mission on Espionage

recruited as collaborators by the l\1oscow Centre or

under its instructions.

293. KHARKOVETZ (code name "Olia ") came to Aus­ tralia in February 1951 as a Press Attache. In the Moscow Letter No. 2 of 12th March 1952, paragraph 1, Petrov was instructed to utilize his services for M.V.D. work, and was

told that Kharkovetz 's ''efforts should be directed to the ac­ quisition of contacts among correspondents, employees of institutions of the government and diplomatic corps with the aim of studying and selecting persons suitable for attraction to our work''.

294. The Letter also shows that Kharkovetz had been set the task of collecting ''material about the organizations of the counter-intelligence", i.e. our Security Service. His inactivity caused the Moscow Centre to reprimand both Petrov and l{harkovetz (see the Moscow Letter No. 5 of 27th September

1952, paragraph 4, and the Moscow Letter No. 6 of 25th Novembe:r 1952, paragraph 4). J{harkovetz left Australia with the other members of the Embassy in April1954.

295. KOVALTEV (code name '' Grigoriev") was a Com­ Inercial Attache who arrived in Australia in January 1952. He had been recruited for 1ti.V.D. work before leaving Mos­ cow, and in the Moscow Letter No. 1 of 2nd January 1952, paragraph 1, the Moscow Centre gave a precis of his qualifica­

tions. His efforts were to be directed towards ma-king ''useful contacts in political and industrial cirQles a.nd in institutions of the government" for purposes. In the Moscow

Letter No. 5 of 27th September 1952, paragraph 3, his work was criticized by the Moscow Centre. l{ovaliev left Australia with the other members of the Embassy.

296, The successive Residents and their M.V.D. cadre workers and collaborators (together with their code names, where known) are set out

RESIDENT

1. Makarov Arrived 21.5.43 Departed 24.6.49

OADR,E WORKERS OR

COLLABORATORS

Nosov ("Tekhnik") Arrived 16.8.43 Departed 11.8.50

M.V.D. Personnel in Australia

•) Sadovnikov (''Said'')

Arrived 7.4.49 Departed 18.4.51

Vysselsky ("Vassili") Arrived 6.1.47 Departed 24.11.50

Gub.anov (''Santo'') Arrived August 1945 Departed 5.3.51

Krutikov Arrived August 1948 Departed October 1950

Nosov

Vysselsky

Krutikov

Gubanov

Pakho1nov ("Valentin") Arrived 9.6.50 Departed 20.6.52

llfrs. Petrov ("Tamara") Arrived 5.2.51 Defected Apri11954:

Galanin (' 'Babushkin' ') Arrived 11.2.50 Departed 29.2.52

3. Pakhomov ("Valentin") Mrs. Petrov (Te1nporary Resident Galanin from April 1951 until end of 1951)

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Report of the Royal Comrnission on Espionage

4. Petrov (' 'Mihail' ') (Temporary Resident from end of 1951 until .April 1954)

Mrs. Petrov

Pakhomov

J(islytsin (" Gleb") Arrived 17.10.52 Departed 19.4.54

Antonov ("!gnat") Arrived 30.6.52 Departed 29.4.54

Plaitkais (''Dvinsky'') Arrived 9.1.53 Departed 29.4.54

Kharkovetz ("Olia") Arrived 5.2.51 Departed 29.4.54

K ovaliev ('' Grigoriev' ') Arrived 15.1.52 Departed 29.4.54

297. We have generally and throughout this Chapter used the initials M.V.D. to indicate the Soviet organ for the time being controlling political espionage work, but in order properly to appreciate certain significant facts which emerge it is necessary to bear in mind the various changes which took

place during this period in the organs of the Soviet Govern­ ment which directed espionage work of this character. These changes are· set out in some detail in Appendix No. 3.

298. At the end of 1948 "S.K." and work, which

was then being directed by an organization in Moscow called the l{.I., was detached fron1 it and became a function of the M.G.B., of which Petrov was then an officer. It remained a function of the M.G.B. until 1953, when the M.G.B. was absorbed by the· whereupon Petrov became an M.V.D.

officer. Political espionage work other than "S.K." and "EM" work remained, during Hadovnikov's Residentship and Pakhomov's temporary Residentship, a function of the J{.I.; and it was only when the K.I. was dissolved in 1951 and · its political espionage work became the task of the M.G.B.

94

Difficulties of M.V.D. Work in Australia from 1949

-and later the M.V.D.-that Petrov became temporary Resi­ dent in place of Pakhomov. In other words, the Apparatus which Sadovnikov, and after him Pakhomov, controlled was a l{.I. Apparatus, whereas the "S.IC." and "EM" work

which Petrov was carrying out during their Residentships came under the direction of the M.G.B. The significance of this is that Petrov on the one hand and Sadovnikov and­ after him-Pakhomov on the other, were working not merely

in different fields but . in entirely separate compartments. Neither Sadovnikov nor Pakhomov had knowledge of the operations of Petrov 's '' S.K.'' and ''EM'' organization; and Petrov was, during this period, unacquainted with the activi­

ties of the Apparatus operated by Sadovnikov and later by Pakhomov which, as we have said, was under the direction of the K.I. Centre in Moscow. Each organization was controlled by-and had its own line of communication with-a different

Centre in Moscow.

DIFFICULTIES AFFECTING M.V.D. WoR.K IN AusTRALIA FROM 1949 ONWARD&.

299. There is, we think, no doubt that-at least from 1949 onwards-M.V.D. work in Australia became greatly handi­ capped and was largely unproductive. Some of the reasons for the decline in effectiveness may be summarized as follows:-

(a) Prior to 1949 Makarov had been Resident, with Nosov as his principal cadre worker. Both had been here since the middle of 1943 and therefore had ample opportunities of enlarging their knowledge of the

English language and of familiarizing themselves with Australian conditions and people. They arrived in Australia at a time when the U.S.S.R. was a war­ time ally which n1ost Australians regarded with

admiration and as they did for several

years until the international situation gradually developed into what has come to be called the "cold war". During this early period the M.V.D. was able to, and did, take advantage of the favourable attitude

of the Australian people and officials. (b) In the late nineteen-forties the growing international tension gradually produced in Australia a changed

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Report of the Royal Cornrr/;ission on Espionage

attitude towards the Soviet and an awareness, par­ ticularly in Australian departmental circles, of the necessity for security and safe keeping of confidential information.

(c) In 1949, owing to the suspicion that the M.V.D. was operating in Australia, our present Security Service was established, and no doubt the realization grew, at least in some quarters, that that Service was both vigilant and inquisitive concerning the activities of certain Soviet officials and of other persons suspected of aiding, or of being prepared to aid, the Soviet to the prejudice of the security of Australia. These n1atters, coupled with the increasing international tension and P.epartn1ental action taken in regard to

officers thought to have Communist syinpathies, no doubt tended to dry up sources from which infonna­ tion had previously been obtainable by the l\1.V.D.

(d) Makarov's departure and Sadovnikov's appointment as Resident were contemporaneous with the setting up of our present Security Service. Thus Sadovnikov entered upon his task in circumstances very different from those under which Makarov had worked.

(e) During Sadovnikov 's regime as Resident, Petrov was unacquainted with the work of Sadovnikov 's Apparatus.

(f) When Sadovnikov left Australia in 1951, Pakhomov, who still remained responsible for the Tass work and had been in Australia for only a few months, was suddenly called upon to take over the control of

Sadovnikov's Apparatus, and both he and Sadov­ nikov believed that this was merely a temporary expedient.

(g) At the end of 1951 Petrov was, in turn, unexpectedly called upon to take over the control of the Apparatus from Pakhomov, and to do so as a temporary n1easure only, pending the appointment by the Moscow Centre of a more senior officer as permanent Resident.

g6

Difficulties of M.V.D. Work in Australia. frorn 1949

(h) Although Petrov had a wide general knowledge of the broad lines of 1\f.V.D. work, his prior training and experience had been concerned mainly with '' S.K.'' and cipher work and not with actual opera­ tional espionage work. (i) In April1953 the Ministry which controlled Petrov's

Apparatus fell into disgrace; and when Beria, its head and Petrov's chief, was arrested and executed along with a number of his subordinates, consterna­ tion and confusion must have spread through all

ranks of the service.

300. In the light of these circun1stances as they stood in 1952, it is not surprising to find, in the Moscow Letter No. 3 of 6th June 1952, paragraph 1, the statement that M.V.D. "intelligence work in Australia in 1951-52 was actually at a standstill and has not produced any discernible results''. The general tenor of the 1952 Letters is a stressing of the necessity

for reactivating M.V.D:. work in Australia and-for this pur­ pose-the ''study'', with a view to recruitment, of persons from or through whom it was thought infor1nation might be obtained, either wittingly or unwittingly.

* 78228-7

2 9 1

CHAPTER 9

THE GENERAL OPERATIONS OF THE M.V.D. IN THE DISCOVERY AND DEVELOPMENT OF' THE MEANS OF OBTAINING INFORMA­ TION, AND ITS EXPLOITATION OF COMMUNISM

301. The final objective of all espionage is the collection of useful confidential information, and for that purpose the primary objective is the discovery and development of suit­ able persons who have, or can get, access to the information directly or indirectly.

302. It is probably true to say that no espionage service can operate effectively in a foreign country without the assis­ tance-witting or unwitting-of citizens of that country. It is certainly true of Soviet espionage organizations so far as their .operations have been disclosed in the course of our Inquiry.

RELATION OF CoMMUNISM To SoVIET EsPIONAGE.

303. Much of the espionage method employed by the Soviet in Australia is not novel, but it was and is conditioned by the existence here of a pool of persons who more or less subscribe to the doctrines of Communism. Some understanding .of the position of Communists in relation to Soviet espionage is relevant to our Inquiry.

304. The ''cold war'' restricts the antagonists to the use of such weapons as propaganda, the fomenting of industrial, political, social, and moral unrest, and espionage. Espionage is the only matter with which our Inquiry is concerned. -

305. The use of this phrase "cold warn as applying to Australia is deprecated by Communists as being fanciful, but the reality of it is well understood in Moscow. In the Moscow Letters Australia is in several places referred to as vrag-" the enemy".

306. Weapons such as espionage are of restricted value to the Western world because of the Iron Curtain, which is designed to prohibit not only the dangerous intrusion into the

Relation of Communism to Soviet Espionage

U.S.S.R. of persons or ideas but also the passage out of the U.S.S.R . .of persons who may be likely to be .infected with Western ideas. Again, in the U.S.S.R. any person or party presumptuous enough to advocate the political and social

ideals of the Western world would be immediately destroyed.

307. On the other hand the condition of "cold war" greatly favours the Soviet, since the weapons empl.oyable in it are peculiarly potent in its hands. The very freedoms which we have acquired after centuries of struggle make us vulnerable

to such weapons.

308. Above all, the Soviet has in Australia, as in other Western an auxiliary force composed of Com­

munists and like-minded persons, some of whom are ready and willing to further the Soviet cause, some even to the point of the destruction of Australian sovereignty. The Com­ munist Party supplies the fundamental organization for this force.

309. The Party pretends to be merely an Australian political party, but there is evidence before us that s.ome at least of the strings which activate it are held in Moscow.

310. Quite apart from the known Party member, the auxiliary force comprises some persons whose role it is to conceal their Communist affiliations and sympathies and to operate in the guise .of ordinary loyal Australian citizens. This

class provides the most dangerous pool of helpers in column and espionage work, and it is amongst this class that the Moscow Centre usually looks for aid.

311. ·Many functionaries of the Communist Party of Aus­ tralia gave evidence before us. They were at great pains to endeavour to persuade us that the Party-as a Party-would not countenance, let alone assist, Soviet espionage here. Like­

wise they asserted, but failed to convince us, that such organizations as the "Eureka Youth League,. are not Com­ munist Party ''Fronts''.

312. The truth in :respect of these matters is impossible to determine by direct evidence.

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313. These functionaries asserted, and indeed they boasted, that the Party has no bank account and keeps no written records-no list of members, no minutes of meetings or resolu­ tions, not even a simple financial record showing receipts and expenditure.

314. We do not believe them, since without some such records such an organization could not {)perate. Some of the reasons for this secrecy are clear. Membership records, if produced, mig·ht discover the ''under cover'' member. Finan­ cial records, if produced, would enable the testing of the truth or falsity of the assertion of these functionaries that the Party's expenditure is met entirely by its local contributions.

The fact remains, however, that we have not been able to examine any Party records.

315. Whether the Party-as a Party-was implicated in the acts of the various Communists with whom we deal in our Report is incapable of decisive determination, but the fol­ lowing circumstances are significant and suggest the existence

of some sort of organization here interested in Soviet espionage: (1) All the persons whose acts were directly or in­ directly connected with espionage were either members

of the Communist Party or ex-members or pretending ex-1nembers thereof or sympathizers with Communism, and some of them were high-ranking functionaries of the Party.

(2) The appointment of this Commission to inquire whether or not Soviet espionage had in fact been con­ ducted or attempted here to the prejudice of the security or safety of Australia was an act which would be expected

to commend itself to all loyal Australians, but the

reaction to it of Communists was most violent. They used every device to defeat or impede our investigations. Legal proceedings were taken in the name of a Com­ munist to prohibit our Inquiry. Witnesses called before us, the Security Service, counsel assisting us, and we our­ selves, were maligned and our proceedings misrepre­ sented in the Communist press and in numerous pam­ phlets. Scores of telegrams in the names of members of

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Relation of Communism to Soviet Espionage

Con1munist-controlled unions, particularly the Seamen's Union, were received by us, demanding that we should refrain from performing the statutory duty which the Parliament had laid upon us, and on occasions organized

disturbances, obviously Communist-inspired, were staged inside and outside the court-room. All these manoeuvres were in vain so far as the achieving of their purpose was concerned, but they had two important results. They

proved the existence of fear widespread amongst Com­ munists of what investigations might disclose, and they indicated by their nature that they were the result of concerted and organized action.

316. However, from the material before us we think it unlikely that the Australian Communist Party, as a Party, had any connection with Soviet espionage here. Since the real or pretended abolition of the Comintern the Soviet has

been astute to hide its connection with Communist Parties in Western countries, and the use of a local Communist Party, as such, for espionage purposes is dangerous because exposure would seriously embarrass it and possibly lead to its outlawry.

317. We have stressed these matters in this part of our Report because it is clear to us that without the element of Communism Australia would be barren soil in which Soviet espionage could not even take root, let alone flourish.

318. It is deplorable that in a country such as Australia, which has inherited and maintained the personal liberties and immunities secured by the common iaw, there should be any necessity for a Security Service, but it is a hard, cold, matter

of fact that its justification and necessity spring from the Soviet exploitation or attempted exploitation of Communism here for its espionage and fifth-column purposes.

319. Before the "cold war" the defence of Australia was entrusted to the three Armed Services, the Navy, the Anny, and the Air Force; but, as Mr. Chilton, the Deputy Secretary of the Department of Defence, put it when giving evidence,

the existence of Soviet espionage here and the fear of sabotage in time of war by a fifth column made it vital to the safety of Australia that there should be what he called a "Fourth Service'', namely the Security Service.

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SoviET IPINANCIAL SuPPORT OF CoMMUNISM IN AusTRALIA.

320. Evidence was given before us showing the interest of the Soviet in maintaining the existence in Australia of the Australian Communist Party. We entered upon the hearing of this evidence in the following circumstances.

321. On 2nd July 1954 Petrov was asked by us to write down the names of persons to whom money had been paid from M.V.D. funds, and he wrote, inter alia, that 25,000 American dollars had been paid to Sharkey, Secretary of the Central Committee of the Australian Communist Party, and that" this amount was handed over personally to Sharkey in the con­ spiratorial flat by Antonov".

322. This statement that the payment was made by the Soviet through M.V.D. channels necessitated inquiry by us to discover whether the payment had direct or indirect refer­ ence to espionage. In the result we find that the payment was made by the Soviet Government to the Australian Communist Party to recoup it for its expenditure incurred in the cam­ paign to defeat the proposal put to the electors in the 1951 Referendum that the Federal Parliament should be given power to make laws dealing with Communists and Commun­ ism. The payment thus has no direct relation to espionage and an indirect relation only in the sense that the existence of

Communism in Australia is, as we have pointed out, essential to Soviet espionage here.

323. Because of this tenuitv of the relevance of the matter to our Inquiry we doubted whether we should report upon it at any length, but we have decided to deal with it, since the credibility and accuracy of the Petrovs were called in question

in relation to it.

324. An attempt was made to make it appear as if the real issue were one between Petrov and Sharkey as to whether Antonov had paid 25,000 dollars to Sharkey at 8 p.m. on 16th October 1953. In fact, the real and substantial question involved was whether the Soviet in 1953, through M.V.D. channels, subsidized the Australian Communist Party to the extent of 25,000 dollars. A negative answer was strongly desired by the Australian Communist Party, since it asserts that it is independent of the Soviet.

l02

Soviet Financial Support of Communism in Australia

. 325. There would be nothing unlawful in the sending of the money by the Soviet, and Sharkey in receiving it on behalf of the Party would be guilty of no act involving criminality or even moral turpitude. In these circumstances, our decision

on the question is to be made without reference to any require" ment of a specially high degree of proof. In other words, we must find the facts merely according to the balance of

probabilities.

326. The matter of this payment of 25,000 dollars was first mentioned by the Petrovs to an officer of the Security Service on lOth June 1954 on the eve of their departure for ::Melbourne to attend our sittings there. Because of their heavy engage­

ments in giving evidence and in supplying information regard­ ing M.V.D. activities in countries other than Australia, it was not until some weeks later that they were asked to make state­ ments on the matter, and, although living in the same home, they made separate written statements. A perusal of these

statements shows that then neither had a clear memory of the dates of the events dealt with, and the divergence between the statements as to details negatived any suggestion of an intent to concoct a story.

327. Some weeks later, as will appear, the P etrovs were given certain dates of happenings in order to assist them in fixing the dates of the events which they had described in their statements. In the light of this information Petrov made a

second statement amending his first statement, but Mrs. Petrov made no second statement.

328. It appears £rom the evidence that in 1952 Morris John Rodwell Hughes (code name "Bask"), who had been since 1944 a member of the Central Committee of the Party, arranged a meeting with Petrov, through a Miss Jean Fergu­

son (code name "Raphael") to whom we refer later. With the Moscow Centre's approval, Petrov met Hughes, who informed him that the Communist Party and its official organ, the "Tribune" newspaper, were in financial difficulties owing

to expenditure in connection with the Referendum of 1951, and that Sharkey, the General Secretary of the Party, desired to goo to the U.S.S.R. for medical treatment.

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These matters were reported to :Moscow by both the

Ambassador and Petrov along their separate lines, the Ambassador to the Foreign Office and Petrov to the M.V.D. Moscow Centre, and shortly afterwards Petrov was advised from Moscow that Sharkey and his wife would be welcome in the U.S.S.R., and he so informed Sharkey.

330. Sharkey and his wife went to the Soviet on 30th July 1952 and later returned to Australia via China and Hong Kong. He said in evidence that the air fares to Prague and the return fares from Hong Kong to .._<\.ustralia, amounting in

all to about £1,000, were paid by the Australian Communist Party, which admittedly was then in acute financial difficulties.

331. In the U.S.S.R. Sharkey had medical treatment at the expense of the Communist Party of the Soviet Union, which also paid for his and his wife's expenses in the Soviet and their air fares from Moscow to Hong Kong.

332. While in the U.S.S.R., Sharkey attended the 19th Con­ gress of the Communist Party of the Soviet Union as a delegate from Australia, but he said that while in the U.S.S.R. he never discussed with anyone the bad financial position of the Australian Communist Party. His appointment as a dele­

gate was arranged only after his arrival in the U.S.S.R., so that the sole ostensible reason for his visit was ill-health. rw e were asked to believe that there was no ulterior purpose (such fls the raising of funds) in his visit, and that the Australian

Communist Party, though impecunious, supplied £1,000 rnerely to repair his health, although it was not suggested that any medical man had advised that the visit was necessary f.or that purpose.

333. Sharkey returned to Australia in January 1953, but Petrov heard nothing from Moscow with respect to his report that the Australian Communist Party was in financial diffi­ culty until later in 19·53 when-as he and Mrs. Petrov swore -a packet containing 25,000 dollars was sent from the Moscow

Centre to Petrov by courier with the negative of a special letter addressed to "Mihail" (Petrov's code name) which, being developed, was to the following effect:-

Soviet Financial Support of Cornmunis1n in Australia

That the money was a fund for assistance to the "trade union" and it was to be handed by Antonov to Sharkey in his office and a receipt got from him for 25,000 "lists"; that if it was found ilnpossible to hand over the m.oney

at his office Sharkey was to propose another suitable place; that all ''conversations'' about the matter were to be carried out only by the exchange of written notes; and that the operation was to be referred t.o in cables as

''purchase of The letter demanded its immediate destruction and it was so destroyed.

334. The phrase ''trade union'' used in the letter is, as the evidence shows, an M.V.D. phrase for ''Communist Party''; the word ''lists'' is merely a code word selected for the par­ ticular operation; the reference to the exchange .of written notes indicates a usual method of securing secrecy and accords with the general pattern of measures taken to avoid the real

or apprehended operations of our Security Service. Even in the Embassy, when any secret matter was discussed the tele­ phone in the room was "unplugged" lest the instrument con­ tain some c.oncealed listening device.

335. The evidence as to the date of arrival of this letter and the dates and sequence of the subsequent events is unsatis­ factory, particularly as the recollections of the Petrovs disagree in certain particulars. However, the evidence as to

the really substantial matters is clear.

336. In accordance with the instructions in the letter, Petrov went to Sydney, leaving the money in the M.V.D. safe at Canberra, and told Antonov, who lived in Sydney, of the con­ tents of the letter and instructed him to get in touch with

Sharkey. Antonov later reported that Sharkey was away in Western or South Australia (at the time he made his first statement Petrov could not remember which State Antonov had mentioned) at a Communist Party conference. Petrov

told him to see Sharkey on his return and, when he had made the necessary arrangements, to telephone Petrov at Canberra and use a certain form of words, whereupon he would bring the money to Sydney.

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337. Antonov telephoned some days later and spoke as arranged. On that day Petrov went to the Canberra railway station and booked a sleeper to Sydney on the 8.30 p.m. train, as he thought travel by train would avoid surveillance. Petrov's practice was to travel by air or car on his many trips to Sydney and the train he took was very inconvenient-it halts a long time at Goulburn and arrives in Sydney at 5.9· a.m.

338. After Petrov arrived by the train in Sydney he took the money to Antonov and later that morning went to see Miss Jean Ferguson, who handed him a note advising him that Antonov should not go that day to the Communist Party

building where Sharkey had his office, as a Security raid was anticipated. It is not suggested that Miss Jean Ferguson knew anything of the 25,000 dollar transaction.

339. Upon this warning, Petrl)v retrieved the money fr.om Antonov and took it back to Canberra by air that same morn­ ing, having told Antonov to make another arrangement with Sharkey and to let him know by telephone when to bring back the money.

340. About a week later Antonov telephoned and Petrov took the money to Sydney, where he gave it to Antonov, who told him he had arranged to hand it over to Sharkey that night at eight o'clock, at a "conspiratorial" house. Next day Antonov inf.ormed Petrov that the money had been given to

Sharkey as arranged and handed him a receipt for 25,000 "lists" signed "L. Sharkey", which Petrov sent to the Moscow Centre.

341. When he made his first statement Petrov thought that the money had arrived in July, and Mrs. Petrov apparently thought the date was earlier; but before he signed his first statement Petrov, who knew that the courier who brought the money was .one Shcherbakov, was told that official records showed that that courier had come at the end of September, and Petrov therefore fixed the date of the arrival of the money as September.

342. Apparently it was thought desirable that the Petrovs should fix the dates of the various happenings as nearly as possible1 because they were supplied-some weeks after IOO

Soviet Financial Support of Communism in AustraliCJ

Petrov made his first statement-with a list of events and dates, gained from various sources, which might assist their memory.

343. This list showed that Sharkey was, in fact, in South Australia in the first week in October and that Petrov, accord­ ing to air travel records, travelled by air from Canberra to Sydney with Antonov on 16th October.

344. Consideration of this list prompted Petrov (but not Mrs. Petrov) to make a second statement, in which the im­ portant divergence from his first statement was that he fixed his second journey with the money to Sydney as being in

company with Antonov and, as the records showed that that j.ourney had occurred on 16th October, he fixed the time when Antonov had told him the money was to be paid over as being 8 p.m. on 16th October.

345. In fact, the Security Service had in its hands, at the time Petrov made his statements, a routine contemporaneous surveillance report which indicated that at 8 p.m. on 16th October Sharkey was at a meeting of the Central Committee

of the Communist Party at 60 Sussex Street, Sydney; but this information was not given to Petrov.

346. Petrov gave evidence as to the dates of the events in accordance with his second statement and Mr. Windeyer pro­ perly disclosed the information of the Security Service con­ cerning Sharkey's whereabouts at 8 p.m. on 16th October.

347. Hughes denied having had any such meeting with Petrov as was sworn to by him, and Sharkey denied that he at any time received the money. Sharkey denied als.o that he had made any suggestion to anyone that he should go to the

U.S.S.R. for his health or had even formed any desire, and said that the first knowledge he had of his going to the U.S.S.R. was when Petrov unexpectedly informed him that he had been invited by the Central Committee of the Communist Party of the Soviet Union to go to Moscow and have medical

348. Miss Jean Ferguson denied that she had made any arrangement for Hughes and Petrov to meet or that

she had given any warning to Petrov. She has been an ardent

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Report of the Royal Commission on Espionage

Communist Party member since 1940 and many years ago was allotted the code name ''Raphael'' by the J\1oscow Centre, which, as appears from Moscow Letter No. 5 of 27th Septem­ ber 1952, paragraph 13, regarded ''Raphael'' as a willing helper. She has been for many years an unpaid official of the Australia-Soviet Friendship Society in Sydney and acted as a

sort of agent in Sydney for the Soviet Consulate (which was in Canberra) and busied herself as a go-between amongst Communist and Soviet officials. Incidentally, it should be mentioned that in her evidence Miss Ferguson admitted that during meetings with Petrov she had on occasions communi­ cated with him by handing him a typewritten note. This,

she said, was done to ensure that Petrov understood her.

349. It was argued that since the· money could not have been paid to Sharkey at the hour of 8 p.m. on 16th October, ( 1) we should find that the money was never paid to him; and (2) we should disbelieve the whole of the Petrovs' evidence on this subject.

350. If we were trying an action between Petrov and Shar­ key the first of these propositions w.ould prevail, not because 9f Sharkey's alibi for eight o'clock but because in such an action Petrov could give no admissible evidence that the money

was ever paid to Sharkey: all Petrov could say was that he was told by Antonov that the money had been paid over as arranged.

351. But our function and duty is to discover the true facts and, without reference to any issue between parties, to arrive at them after considering the credibility and accuracy of all the witnesses and all the surrounding circumstances.

352. After Petrov gave his evidence we caused inquiries to be instituted at the Canberra railway station, where the records revealed that Petrov had in fact booked a sleeper on the 8.30 p.m. train to Sydney on 8th October. Airline records revealed that he had returned by air to Canberra on 9th October, leaving Mascot at 11.40 a.m., and the records indicate a last-minute booking. These facts tend to confirm Petrov's of his unusual and inconvenient train journey from Can-

rGI

Soviet Financial Support of Communism in Australia

berra and his hurried return to Canberra on the morning of his arrival in Sydney immediately after his warning from Miss Jean Ferguson.

353. Airline and other records show that Petrov and Auto­ nov were both in Sydney on certain days including 23rd and 30th October.

354. This may be important, because ::Mrs. Petrov 's recol­ lection was that after the abortive attempt to hand the money to Sharkey (which was apparently on 9th October) a cable was sent to the Moscow Centre advising that ''the purchase of wool'' had not been completed, as Sharkey had anticipated a

raid on the premises, and the Centre thereupon approved a plan to hand over the money in a. "conspiratorial" house at ''the end of the month". She stated that accordingly, "at the end of the month'' (she could not remember the month), Petrov took the .money to Sydney and gave it to Antonov­ who later reported that he had handed it over-and that his

report and the receipt signed "Sharkey" were sent to the Moscow Centre.

355. As we have said, J\!Irs. Petrov did not alter her state­ ment when shown the list of dates above referred to.

3[)6. In his evidence Sharkey admitted that he was in Sydney during the latter part of October and particularly on 30th October, and other material confirms his presence there on that date.

357. Neither Sharkey nor Hughes nor Miss Ferguson impressed us as a reliable witness, and, they being ardent Communists, their interest to deny any suggestion that the Australian Communist Party was subsidized by the Soviet

was great.

358. We have already referred to the unavailability to us of any financial records of the Communist Party, so that we are deprived of any opportunity of comparing its financial situation-say in 1952 with that of 1953 or 1954.

359. In the light of information produced by the Security Service, we think it probable that the money was not paid to Sharkey on 16th October, but it is also probable that Petrov's

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fixing of 16th October as the crucial date was a matter not of recollection but of reconstruction based on his deductions from the list of dates supplied to him after he made his :first state­ ment. His reconstruction is at variance with his wife's memory of the time of payment.

360. Upon consideration of the whole matter, we conclude that the sum of 25,000 dollars was sent by the Soviet to Petrov with instructions that Antonov should hand it to Sharkey for the Australian Communist Party, and that Petrov handed

the money to Antonov to give to Sharkey.

361. These conclusions depend upon the evidence of the Petrovs, which we believe; and on these points there is no evidence to contradict them.

362. We conclude that the money was not paid to Sharkey at 8 p.m. on 16th October 1953. Petrov did not swear that it was so paid; he could only say that he was told by Antonov that it was paid as arranged.

363. We conclude, however, that at some date in or about October 1953 the money was paid by Antonov to Sharkey. We base this conclusion, :first, on our :finding that the money was received from the Moscow Centre for that purpose, coupled with the high probability that the instruction was car­

ried out by Antonov; and, secondly, upon the following cir­ cumstances: that Hughes mentioned to Petrov-at one and the same time-the Communist Party's acute :financial diffi­ culties and Sharkey's desire to go to the U.S.S.R.; that

Sharkey and his wife were invited to the U.S.S.R. and went ostensibly only for his health; and that the Australian Com­ munist Party, though impecunious, provided £1,000 for the visit.

364. We think that the proper inference to be drawn from all the facts is that Sharkey was not sent to the U.S.S.R. merely for his health but that he also had a mission there to get aid for the Australian Communist Party, and that his

mission succei8ded to the extent of his being sent 25,000 dollars for that Party. '

:rro

. M.V.D. Means of Recruiting Helpers

THE MEANS UsED TO .AcQUIRE INFORMATION' AND TO REcRUIT HELPERS.

365. The final objective of all espionage is the collection of useful information, and the primary objectives include:-(1) The identification of persons who have or may have or indirect access to the desired information.

(2) The gathering of personality reports on such per­ sons in order to evaluate their vulnerability to persuasion or pressure, or the likelihood of their imparting infor­ mation unwittingly.

( 3) The discovery of persons who are willing and able to make the identifications and supply the sort of par­ ticulars mentioned in (1) and (2) above. ( 4) The discovery of persons willing and able· to per­ form the operational work of contacting," studying", and using the persons indicated by the preliminary investiga­

tions as being worthwhile direct or indirect sources of or channels for information.

366. In furtherance of all those objectives and for all pur­ poses of espionage the Resident's primary task is to find willing agents, and for that purpose he needs what in another sphere are colloquially called "talent spotters" (that is to

say, persons who have knowledge of local conditions and who can indicate likely recruits.

367. The "talent spotter" and the prospective ·recruit are 1nost readily found amongst Communists, and the ''talent spotter'' must therefore be a person who knows a large num­ ber of Communists and preferably one who is a functionary

of the Communist Party acquainted, directly or indirectly, with the identity of its members and sympathizers. As will later appear, Walter Seddon Clayton, while a leading functionary of the Party, acted in the role of ''talent spotter''

as well as in operational work.

368. The procurement of Exhibit H from O'Sullivan is an example of the method of getting lists of persons who may have access to confidential information, and personality re­ ports upon them for the purpose of assessing their ''study''

value.

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Report of the Royal Commission on Espionage

369. Of course, the Resident himself and his workers would Le always on the look-out to discover sources from which to gain knowledge of persons who might be worthy of "study". Some of this information could be obtained from official docu­ nlents and some from conversations with persons of more or less importance in official positions with whom the Resident or his workers might cOine in contact.

370. Published official lists of, for exan1ple, the personnel of the Department of External Affairs were supplied

periodically to the Moscow Centre, and it is apparent from the Moscow Letters that changes in personnel were noticed by the Centre and consequent inquiries made.

371. Again, official persons were invited to receptions and sometimes the Resident or an M.V.D. worker was instructed to join in social meetings such as shooting or fishing expedi­ tions with them. On such occasions an inadvertent word Inight disclose the nature of the work performed by the official

or by one of his colleagues. The giving of language lessons to the official, his wife, or members of his family, might also afford similar occasions.

372. All the material-from whatever source gathered­ was communicated to the Moscow Centre, which from it selected the persons most likely, from its point of view, to be helpful; and the Resident or one of his workers was directed to "study" such a person. For the purpose of "study", use was made of the M.V.D. worker's overt position. Thus, the Tass worker was, in general, used to make contacts with, and to "study", journalists selected by the Centre. An M.V.D. w.orker holding an overt position as a Commercial Attache was used to contact and ''study'' persons in commercial circles. An M.V.D. worker whose overt post was a diplomatic one, such as the Resident himself, or, for example, I{islytsin, was used to contact and ''study'' persons in the Diplomatic

Corps.

373. The general pattern that emerges from the Moscow Letters is plain enough. The M.V.D. worker who could best make a particular contact and ''study'' a particular individual wHhout attracting undue attention was generally, and naturally, selected for the task.

112

M.V.D. Means of Recruiting Helpers

37 4. ''Study'' involved a very slow and guarded process; even if the subject was an av.owed Communist the greatest care in approaching and developing him was observed.

375. When the time was thought to be ripe, the subject was given some small task which might compromise him. If he performed that task he was then on what 1\!l:rs. Petrov called ''the small hook'', and the development or ''study'' would go on more confidently, but still cautiously and always

under the Centre's direction, until it felt certain of the sub­ ject's reliability, when he would be regarded as a recruited ''agent''.

376. Sometimes the subject would be persuaded to accept some small gift, not so much for the purpose of bribery as to break down his moral resistance. The whole process of ''study'' is a species of slow seduction.

377. Of course, the most likely prospects were persons with Communist sympathies; and these were to be found not only amongst Party members but also in the various Communist Party "Fronts".

378. Amongst those persons are many who are fanatical devotees of Communist ideology. The minds of some of them seem to work along the following lines:-Communism is the ideal state of society. The ideal

State is a Communist State. The Soviet is a Communist State; Australia is not. Therefore the Australian patriot should aid the Soviet not only by working for the estab­ lishment of Australia as a Communist State but in all

ways.

379. People who hold such a view may be honest, but they are none the less dangerous to Australia's security. ·

380. Generally speaking, the :NI.V.D . is disinclined to use the known and prominent C01nn1unist Party n1ember as a direct agent. His use is chiefly as a "talent spotter". The prominent Party member is likely to he known to counter­

intelligence organizations, and the risk of compromising th0 Communist Party is one not lightly to be taken. It is the secret or ''under cover'' Party member or the sympathizer

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Report of the Royal Comntission on Espionage

who is not a meinber of the Party who is preferred, because his activities are less likely to be subject to the scrutiny of counter-intelligence. There is evidence that latterly the rule against using the known Con1munist has become more strict.

381. An "under cover" Communist is a Communist who is "refused" membership of the Party, or whose membership is kept secret, because his position in the Public Service or in business or professional life is one of importance to the Party and his actual or potential usefulness to the Party might be lessened if it became publicly known that he was a member of or connected with the· Party.

382. The very way in which the Communist Party is organized and functions, at least in the English-speaking countries, makes it an excellent training ground for agents. The Party teaching tends to produce the belief that loyalty to the Party and to Communism transcends all other loyalties.

The Party has for its own purposes, within Australia, its own "Legal" and ''Illegal" Apparatus, its own intelligence and security services, its secret printing presses, and its own lines of communication outside the ordinary postal and tele­ graphic services. It operates to a considerable extent in an atmosphere which tends to develop a conspiratorial outlook and technique in the individual. It shares with the M.V.D. a hatred (born of fear) of Australia's Security Service, and is actuated by the same desire to damage and destroy its effec­ tiveness.

Emigres FRoM AND VIsiTORs To THE U.S.S.R. As A FIELD FOB RECRUITMENT.

383. Another :field for the recruitment of agents is am.ongst emigres from the U.S.S.R. and Communist-controlled coun­ tries, including the Baltic States. Amongst such emigres may be found persons prepared to assist the M.V.D. from love of their homeland, or from fear of hurt t.o their relatives, or

sometimes from mercenary motives. Later in our Report we refer in more detail to this line of M.V.D. work.

384. In an earlier Chapter we have mentioned the work of the Moscow Centre in spying upon visitors to the U.S.S.R. and selecting from them persons thought to be worthy of "study".

ll:f.V.D. Means of Acquiring Information

·OTHER SuBJECTS OF CoNTACT AND "STUDY".

385. It would be wrong to suppose that it is only the local .Communist or Communist sympathizer Qr emigre who is marked down for "study". The Petrov Papers afford a -number of illustrations of the selection for ''study'' of per­ _sons having no Communist affiliation or sympathy-persons

in all walks of life and of all shades of political belief who it was thought might ultimately be used as witting or unwit­ ting informants. Most, and probably all, of those persons would scorn to injure Australia's security or to assist a

potential enemy. The aim of the M.V.D. in relation to many of them was to acquire "in the dark" inf.ormation. This expression implies that the informant is "in the dark" in the that he unwittingly gives useful information either

through inadvertence or through ignorance Qf its value or significance to the recipient. The Moscow Centre was always interested in the official or other person having useful infor­ mation who might be likely to drop an incautious word. That

is why it sought personality details which might show whether the subjects were talkative in drink or naturally. A seemingly trivial or unimportant piece of information got from such a -person "in the dark" might be just the piece that completes

an intelligence picture of major importance.

386. Many examples are found in the Petrov Papers of the marking down f.or ''study'' of persons whose patriotism no one could question, and it is in connection with persons such as these that we have found striking illustrations of the

seeming naivety and stupidity of the M.V.D., and particularly of the Moscow Centre. Ordinary courtesies shown to a Soviet 'official, .or an interest-real or politely simulated-in Russian art or literature, or in conditions in the Soviet, were noted.

The individual concerned, apparently for this reason alone, thereupon began to figure in the M.V.D. ''books" (as the ·Moscow Letters describe them) as a potential recruit or "in the dark'' informant.

387. We are not unmindful of the possibility that some of these individuals were reported to the Centre by a Resident ·anxious to ''puff'' the work he was doing here; but if that be so he successfully deceived the Centre, since it recorded such 'individuals as being of interest to it.

IIS

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388. Other persons were marked down for" study" because the M.V.D. believed that for some reason or other they might be susceptible to pressure or blackmail. Hence the interest Qf the M.V.D. in procuring, in respect of persons thought to

have access to information, particulars of their private lives and idiosyncrasies, such as their drinking habits, financial positions, and sexual irregularities. This interest is illus­ trated by the procurement of such particulars from 0 'Sullivan and Lockwood.

ALLOTMENT oF ConE NAMES.

389. The allotment of code nan1es to individuals is common practice. Such an allotment is made by the MQscow Centre and is not usually made until the person concerned has been the subject of some "study". Occasionally, however, because the person concerned is thought to be clearly important from the espionage viewpoint, a code name may be allotted to him immediately he comes under nQtice.

390. The fact that a code name has been allotted to a

person, therefore, does not necessarily mean that he is regarded as a recruited agent. A code name is sometimes given to a person from whom it is hoped information may be got "in the dark", or to a person because he is suspected of being connected with a counter-espionage service.

391. The evidence before us disclosed that a large number of residents in Australia had-for one or other of the reasons to which we have adverted-attracted the notice of the M.V.D. as being of interest to it. Apart from other documents and the oral evidence, the Moscow Letters and the G Series of documents themselves named at least 120 such persons. Of these, more than 40 persons (apart from Soviet officials) had had code names allotted to them. None of these persons

knew that he or she bore a code name and many of them in evidence expressed a natural indignation upon learning the fact.

392. We can think of no purpose of the M.V.D. in making such a secret allotment of code names except the obvious sinister one. The very fact that code names were so allotted to residents in Australia by officials of the Government of the U.S.S.R. proves the existence here of a Soviet system of

espionage.

n6

CHAPTER 10

THE OPERATIONS OF THE M.V.D. IN RELATION THE DEPARTMENT OF EXTERNAL AFFAIRS

393. Obviously a most ilnportant objective of Soviet espionage was to collect confidential information coming into the possession of the D1 epartment of External Affairs. In that Department are to be found persons who have knowledge, or

access to knowledge, not only of Australian foreign policy but also, necessarily, of the policies of Australia's friends.

394. For the purpose of its functions the Department receives a mass of confidential material from other Australian Government fron1 Australian Embassies and

representatives abroad, and from friendly countries. We have seen some of this material and are greatly impressed with the necessity for the strictest security measures in relation to it. Failure so to keep it secret would not only directly injure the

security of Australia and her friends but would also indirectly injure Australia by making her friends reluctant to entrust secrets to her.

395. This necessity for security has hampered us, since we ourselves have had to be careful not to divulge certain matters of which we have knowledge, lest we thereby affect the safety of Australia or of her friends.

396. It will be seen that Petrov in his statement set out below said that ''between 1945 and 1948 there was a very serious situation in Australia in the Department of External Affairs'' because certain officers of the Department were

giving information, including copies of official documents, to a Communist Party member who was transmitting it to Makarov, the then M.V.D. Resident.

397. Suspicion that security measures in Australia were inadequate had arisen in the n1ind of the Australian Govern­ ment as early as 1948. By that year there had been collected by Crown officers some information confirming that that was

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the case. By ''information" we do not mean that it was such as to warrant proceedings in a court of law-in fact it was not. This information, or an assessment of it, so impressed the then Prime Minister, the Right Honourable J. B. Chifley, with the necessity for greater security in Government Depart­ ments, particularly the Departn1ent of External Affairs, that he formed the present Security Service, A.S.I.O.

398. We ourselves have examined the information as it existed in 1948 and have made our own evaluation of it. There can be no doubt that it fully warranted the deductions which led to the formation of that Service.

399. After the formation of the Security Service in 1949 further information was obtained confirming the former inadequacy of security measures in the Department, but the knowledge of it was greatly amplified by the information and the papers brought by Petrov, and the evidence of witnesses called before us.

400. Although we have ascertained that the Soviet intended and attempted to penetrate the Department right up to the time of Petrov 's defection, we can find no trace that it

attained any significant success after 1949, and we think that that lack of success largely followed from the formation of the Security Service in 1949.

401. Our knowledge of the Soviet intent and attempts to penetrate the Department comes from the following sources: ( 1) the evidence of the P etrovs ; (2) the G Series of documents;

(3) the evidence got from persons to whom we were led by the contents of these documents; ( 4) knowledge gained by the Security Service and by its predecessor, the Commonwealth Investigation Ser­

vice, and by certain high officials of the Department of Defence; and ( 5) the Moscow Letters.

402. It is only by fitting together pieces of information gained from each of these sources that we are able to present a picture of Soviet espionage in this regard, and some of the picture still remains obscure.

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Leakages from the Department of External Affairs

403 . .As will appear, Petrov had a very limited first-hand knowledge of the espionage which had been carried on in rela­ tion to the Department of External .Affairs prior to his tem­ porary Residentship, and even less knowledge of the significance of the entries in the G Series of documents.

404. Some of these entries became significant to us when we examined the information known to our Security Service, and more of it became significant when we got, from witnesses called by us, facts wholly unknown to the Petrovs or to the

Security Service. The significance of some of the entries still remains unknown to us.

PETROV'S STATEMENT AS TO LEAKAGES OF INFORMATION.

405. In his statement made to and taken down by Richards on 3rd .April1954, the day of his defection, Petrov said: "Before I came here the N.K.V.D. agent in the Embassy at Canberra was Mr. Simeon Makarov, and his contact

man was Fedor N osov, the Tass Representative in Australia. Nosov was a secret agent of the N.K.V.D.-he obtained his infonnation from one man-this man operated a

group of agents in Australia, who reported information to him. I did not see any of this information but I know about it from Pakhomov.

I have never seen Mr. N osov. I do not know this man he contacted, but I know that he was in close contact with Jean Ferguson of the Aus­ tralia-Russia Society and Rex Chiplin of the Tribune ...

Between 1945 and 1948 there was a very serious situa­ tion in Australia in the Dept. of External Affairs. The Communist Party here had a group of External Affairs officers who were giving them official information.

The members of the group were bringing out copies of official documents, which they gave to a Communist Party member. This Party man gave the· documents to Mr. Makarov at

the Soviet Embassy.

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Report of the Royal Commission on Espionage

The documents described the Australian foreign policy and also contained a lot of information about American and English foreign policy. I do not know the name of the Party man who at that time reported to Makarov-but his code name was

'Clode '- this is Claude).

One of Clode's group was Ric Throssell, an officer of the Dept. of External Affairs. Throssell had a code name 'Ferro'. Throssell is the son of Katherine Susannah Pritchard­ the Australian writer.

He has served abroad for External Affairs in the Soviet and also in South America. He is not active now-he is very still-! think he is afraid.

Moscow sent me a cable to me during 1953-it was in June-instructing me that he was a very important man, and that I had to arrange personal contact with him for Mr. Kislytsin.

Kislytsin invited him to the Soviet 7th November reception in Canberra in 1953-he attended but did not stay long-we also invited him to a film night at the Embassy, but he did not answer and did not attend.

I do not know how many reports he made but Moscow regarded him as very important to them-I know his information was regarded as important. In my opinion the Party contact of Throssell was Rex Chiplin-but I am not sure of this.'' 406. This statement was written by Richards at Petrov 's dictation and Richar ds spelt as" Clode" the code name which is the Russian word for the English Christian name ''Claude''.

In fact in the Russian alphabet the letter C has no hard sound, and the actual code name in Russian is '' Klod'' when

r endered into English script.

407. Bef or e leaving J\1oscow Petrov had learned the bare fact that there had been leakages from the Department; and he had seen, in a fil e, cuttings from Australian newspapers

.JI Nvti!.-This explanation was written by Richards whilst t aking do wn P etrov's

statement.

Leakages from the Department of External Affairs

relating to the establishment of the Security Service and the reasons therefor. In 1953 he had received-as temporary Resident-a cable relating to Throssell. The rest of his infor­ mation came fron1 Pakhomov. Thus, his knowledge-including

that relating to Throssell-was based on hearsay. He did not know the identity of the person whose code name was "Klod", nor could he supply, even from hearsay, any particulars of "Klod's" alleged group other than what the Moscow Centre's

cable said about Throssell.

THE IDENTITY OF "KLOD".

408. An important problem was to ascertain the identity of '' Klod' '. In this respect the G Series of documents affords some cogent evidence.

409'. V\T e have already mentioned that Petrov, although knowing of the existence of some documents sealed in the "N" envelope, knew nothing of their contents until a short time before he defected, when (as we have said) he opened

the '' N'' envelope, abstracted some of the documents from it, and copied others that were in it.

410. These documents in several places refer to a person '' K'' as being or having been in some sort of association with various individuals. We sought to discover by exmnina­ tion of these individuals and other witnesses the person who

was the ''common factor'' in the '' K'' references in documents. Since it is apparent from the documents that "K" had been giving information to the M.V.D. and that <' K'' was a group leader or chief contact agent, the indications

were that "I{" was the "Klod" of whom Petrov spoke.

DocuMENT G.4 AND THE EviDENCE OF C. R. TENNANT AND HIS WIFE IN RELATION THERETO.

411. The first portion of Document G.4, which is in Petrov's handwriting but was copied by him from a men1orandum in Sadovnikov's handwriting, is as ''Mr. C. R. Tennant 'K'

50 Bundarra Road, Bellview Hill, Sydney. Tel. FW .1267''

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Report of the Royal Commission on Espionage

412. Neither of the Petrovs knew anything of Mr. C. R. Tennant. Upon considering the document after their defec­ tion, they thought that the entry was a memorandum of "K's" address and they inferred from it that "K" was ''Klod" and that '' KJod'' was Tennant. The Security Service knew nothing of Tennant or his wife but, solely because . of this

entry, the Tennants were interviewed and subsequently gave evidence before us.

413. Tennant's story was as follows. She was horn in 1910 in Victoria. She holds the Diploma in Commerce of the University of Melbourne. In 1939 she married and went to live with her husband at 50 Bundarra Road, Bellevue Hill, Sydney, and continued to live there until February 1951. The tele­ phone nun1ber at 50 Bundarra Road, Bellevue Hill, was FW 1267. About 1942 Mrs. Tennant joined the Communist Party and, she said, remained a member until about 19·45. In the Communist Party she heard of a man named Walter

Seddon Clayton as being a Party functionary. One day Clayton, whom she had not previously met, arrived at her house and asked her if she would receive mail for him

addressed in the name of "Sutherland, c/o C. R. Tennant". She agreed to do so and gave Clayton the telephone number FW 1267. She was vague as to the year in which this occurred, but she thought it was in 1942 or 19·43. She said that there­ after Clayton from time to time telephoned to ask if there was any mail for him, and when there was he called to pick it up. She thought that he called for this purpose on only one or two occasions, the last being in 1945. She said that although her husband knew she was a Communist, he did not know anything of the arrangements with Clayton or that any letters had arrived at the house for "Sutherland".

414. Tennant himself gave evidence. He said that he had never been a Communist and had disapproved of his wife being a n1ember of the Party, and had finally persuaded her in 1945 to give up her membership. He said that he first heard about Clayton only a few days before he gave his evidence. when his wife confessed to him that she had secretly received mail for Clayton under the name of "Sutherland".

415. The evidence of these two witnesses had some factory features, but it indicates that ''K" mentioned in the

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Leakages from the Department of External Affairs

original document in Sadovnikov's handwriting· was Clayton, and not Tennant, as the Petrovs inferred.

416. Clayton himself in evidence admitted making the arrangement with Mrs. Tennant and that, under the false name of "Sutherland", he had used the address of "Suther­ land, cjo C. R. Tennant" as an accommodation address, but

said that this was so only during the years 1940 to 1942 when the Communist Party was under a ban. As against Clayton we accept Mrs. Tennant's evidence that the years when the address was used were from 1942 or 1943 until at least as

late as 1945.

417. Clayton supplied no explanation of the curious cir­ cumstance of the Tennant address-thus secretly used by him-being found in an M.V.D. document in an M.V.D. Resident's handwriting, kept in a sealed envelope in the M.V.D. safe at the Soviet Embassy.

ENTRY No. 6 ON DocuMENT G.8 AND THE EVIDENCE THERETO.

418. Another indication that "K" is Clayton is contained in Docun1ent G.8, which reads: , '' (6) Bernie Franciska-born 1923, Australian, worked as a secretary-typist in the Secretariat of the Department

of External Affairs in Sydney. Under-cover member of the Communist Party since 1943. 'K' was in contact with her personally and received interesting information from her.'' 419. Frances Bernie (code name "Sestra") gave evidence before us. She was employed by the Department of External

Affairs from 20th November 1944 to 12th April 1946 as a stenographer in the Sydney office of the Minister, who at that time was Dr. Evatt. She was born in 1922. In 1941 she joined the Communist Party. At the direction of the Party

she became a member of the Federated Clerks' Union of Australia and a committee mernber of the Clerks' Union Youth Section. In this capacity she helped in the formation of the Eureka Youth League, of which she became the full-time paid

administrative secretary. Her health broke down and she had to give up the Eureka Youth League work, but she still re­ mained a member of the Communist Party. She said that

12 3

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Report of the Royal Commission on Espionage

in 1944 she answered an advertisement calling for applications for a clerical position in the office of a lVIember of Parliament. In response to her application she was interviewed by Dalziel, one of Dr. Evatt's secretaries, to whom she did not disclose

her Party affiliation, and she was appointed to a temporary position as a stenographer in the Sydney office of the Depart­ ment of External Affairs. She informed the Communist Party headquarters of her appointment and volunteered to report anything she came across which might be of interest to the Party. She was told to take any such information to Clayton.

420. Thereafter, throughout her period in the Department, she made copies of departmental documents which she thought might be interesting to the Communist Party and took them to Clayton and to Clayton only. For much of the period she had a room to herself which adjoined the Minister's room with a connecting door. She said she took documents to

Clayton on a number of occasions. She professed to be able to remember very little of their nature.

421. Clayton did not tell her that the information would go to the Soviet. She regarded herself as giving it to the Com­ munist Party, and did not concern herself with the use that might be made of it.

422. Whatever was the nature of the information given, the entry shows that the M.V.D. regarded it as "interesting".

423. It is not surprising, in these circumstances, that-as appears from two other documents ( G.1 and G.2 )-the Moscow Centre allotted to Miss Bernie a code name.

424. Miss Bernie's evidence made it quite clear that she was the "Franciska Bernie" mentioned in Sadovnikov's entry which we have quoted and also strongly indicated that the "K" therein referred to was Clayton, since he was the only person to whom she gave information. It shows that between 1944 and 1946 Clayton was receiving information from the Department of External Affairs through Miss Bernie and­ what is even more important-that this fact was made known to the M.V .. D.

425. Clayton admitted in evidence that he knew Miss Bernie and had had interviews with her, but he denied that she had €Ver given him any documents or any confidential information.

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Leakages from the Department of External Affairs

The only explanation he could offer for her giving the evidence was the fantastic one that-while he believed that she thought she was telling the truth-in fact not only had her story been manufactured for her by Security officers but also those

officers had induced her to believe in its truth.

426. The fact is that Miss Bernie was · a person who had come under suspicion before Petrov's defection. She had been interviewed by Security officers in 1953. She had signed a document as referee .for a person applying for naturaliza­

tion, and as she was known to have had Communist affiliations she, in the usual course in such cases, was so interviewed. During the interview the names of a number of leading Com­ munists were put to her to see if she had had any association

·with them. Amongst these names the name of Clayton was . mentioned and Miss Bernie said that she .had known him, and commenced to tell the story she told us. When she reached a stage where continuance of her story would have implicated her as having given information to Clayton she stopped, but upon being promised immunity from prosecution she con­ tinued and completed the story substantially as she· told it

to us.

427. Miss Bernie told us that she had had a religious

upbringing but had embraced C01nmunisn1 in 1941 at the age of 19, and had forsaken it in 1946.

ENTRY No.· 3 ON DocuMENT G.7 AND THE EviDENCE RELATING THERETO.

428. Another indication that '' K'' is Clayton is contained in Entry No. 3 in Document G.7, which is as follows: "(K) (3) Legge, Jack-Chemistry scientist. Member of the Communist Party since 1936. In 1939 worked in

a Troskyist Group on an assignment of the Communist Party. When the Communist Party was in an illegal situation, 'K' used the house of Legge J. for the publica­ tion of the newspaper 'Tribune'. He carried out missions

of the Communist Party when he visited Scandinavia. L's. wife is now engaged on scientific work in Melbourne. 'K' considers that N5 (L) inspires confidence. A relative of L works in the political intelligence department of the Ministry of Foreign Affairs.''

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Report of the Royal Commission on Espionage

429. John Williamson L·egge gave evidence before us and it became clear that in almost every respect the description of "Legge, Jack" applied to him. There can be no doubt that he is the- person to whom the entry refers. He has been a member of the Communist Party since 1935. He had held office as President of a branch and as a section committeeman. He said that he · had argued amongst ''Trotskyists'' in an endeavour to convert them to true Communism. He- agreed that during the period when the Communist Party was under a ban his house was used for the distribution of the

''Tribune'', which was one of Clayton's Party tasks. He said that when in Denmark between 1946 and 1948 he made contact with the Communist Party there. 430. Legge is a Senior Lecturer in the Department of Biochemistry in the University of Melbourne. He is a man

of impressive bearing, and no doubt is influential amongst the staff and undergraduates of his University. Before he gave evidence we received a telegram purporting to be signed by seven of his colleagues protesting (unjustifiably, as will appear later) against his name being mentioned before us.

431. In 1942 he joined the Munitions Department and was engaged in secret research work related to defence against chemical warfare. He remained in the Department until · the war ended, when he secured a W ellcome Scholarship which

took him abroad for two years. He returned in June 1948. He said his view was that the interests of science and the advancement of scientific knowledge were a cause which trans­ c(mded national barriers. He said he believed that the Com­ munist Party was a Party which represented the best interests

of humanity at this particular historical period, and that his allegiance was to humanity and (because the Communist Party would be best for Australia) to the Communist Party. He knew of Clayton before the war as a Communist Party functionary.

During the war he came to know him personally, and when in Sydney he frequently visited Clayton and discussed Marxist problems with him, particularly the relation of Marxism and capitalism to science. All this tends to show that the "K" who considered that Jack Legge "inspires confidence'' was Clayton.

432. Added confirmation comes from the passage in the entry we have quoted that ''A relative of L works in the

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Leakages from the Department of External Affairs

. . department of the Ministry of Foreign Affairs'' and the evidence called in consequence thereof. (In several places in the Petrov Papers the Department of External Affairs is referred to as the "Ministry of Foreign Affairs".) It was

not difficult to deduce that the relative was Jack Legge's cousin, George Legge. 433. George Williamson Legge was called and said that he joined the Defence Department in May 1940. From May 1942

to February 1944 he was with the military forces. In JYiay 1944 he rejoined the Defence Department and acted as Secre­ tary to the Defence Post-Hostilities Planning Committee, which con1prised representatives from the three Armed Ser­

vices, the Defence Department, and the Department of External Affairs. On 26th November 1945 he was transferred from the Defence Department to the Department of External Affairs as a Third Secretary. In April 1947 he became a

Second Secretary in the European, American, Middle East Division, and remained with that Division until 1949, when he was transferred elsewhere in the Department. During his service with the Department of External Affairs he had

several periods of official duty abroad. He is no longer in the Commonwealth Service. 434. George Legge said he is not and never has been a Com­ munist. However, his relationship to Jack Legge and his

position-first in the Defence Department and then in the Department of External Affairs-would probably be sufficient to explain the interest of the Moscow Centre in him.

435. But more emerged. George Legge was asked in the witness-box if he knew Clayton and he said that he had met him once and once only, when his cousin, J -ack Legge, brought Clayton to his room at the Hotel Acton, Canberra, where he

was living. Clayton was introduced to him as a Communist Party man engaged on work in relation to foreign policy. In the conversation which ensued, he said, Clayton suggested to him that from his experience and background in the Depart­

ment he might be able to offer the Communist Party ''some good advice'' on foreign policy and affairs. George Legge said that he understood that if he agreed to the proposal it would have meant him using his official knowledge improperly for

the benefit of the Communist Party. He said that he told Clayton and his cousin that he would have none of it.

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436. This evidence from George Legge involving Jack Legge was quite unexpected by counsel assisting us, who, as Jack Legge had not yet been summoned to appear before us, had been careful not to mention the part of the entry in

Document G.7 which related to Jack Legge, and not to ask any question concerning him. The evidence was g·iven on 26th October 1954 and a summons was forthwith issued for Jack Legge to appear, which he did on 29th October, when for the first time counsel mentioned the reference to him in the entry.

437. Although George Legge, at our direction, was present while Jack Legge gave his evidence, Jack Legge's counsel made no request to cross-examine George Legge. 438. Both Jack Legge and Clayton gave evidence as to this

incident. They admitted the interview but denied that any improper approach had been made to George Legge. Jack Legge fixed the interview as having occurred about the end of June 1948. He and Clayton told a confusing and unacceptable

story-and on Clayton's part a most evasive one-as to how they happened to visit Canberra together and there call on George Legge. They said that all that occurred at the inter­ view was that Jack Legge had a friendly argument with George Legge on Communisn1; and that no approach, direct or indirect, was made to the latter for information.

439. We prefer George Legge's account of the incident, and we believe that Jack Legge accompanied Clayton on the jour­ ney to Canberra for the purpose of sounding out George Legge to see whether he would supply to Clayton confidential information acquired in the course of his official duties.

440. George Legge never disclosed to any of his superior officers the improper approach which had been made to him by his cousin and by Clayton.

441. There is nothing to suggest that Jack Legge had any knowledge that Clayton was passing information to a Soviet official. When it was pointed out to him that the information concerning him had been sent to the Moscow Centre and thence back to Sadovnikov in a Letter dated lOth November 1949, he

said "It is a shocking situation". 442. The interest of the IvLV.D. in George Legge continued after this incident. About November or December 1952 Petrov was one of a party who went on a fishing trip or picnic from

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Leakages from the Departrnent of External Affairs

Canberra to Brindabella. He was introduced to George Legge, who was also in the party. George Legge at that time was still in the Departn1ent of External Affairs. Petrov reported the incident to the Nioscow Centre, which replied that

Legge, being employed in the Political Section of the Depart­ ment of External Affairs, was a very important man and that Petrov must" study" him. It supplied Petrov with the code name '' Ribak'' which had been allotted to Legge and by which

he was to be known in the future. From this, Petrov, who did not then know of the entry in G.7 concerning Legge, imme­ diately deduced that the Centre must already have had some information about him. Petrov kept up his acquaintanceship

with Legge but it was never more than a social one and he never obtained, or even sought to obtain, any information from him either "in the dark" or otherwise.

DocuMENT G.2 AND THE EvrDENCE RELATING THERETO.

443. Document G.2 is a document in Sadovnikov's hand­ writing and reads as follows:

(1) 'Master' (2) 'Tourist'

' 'Contacts K

( 3) 'Sestra '__,....Franciska Bernie (4) 'Podruga' (5) 'Ben'-Hughes (6) Joe-Department of External Affairs (Archives)

(7) -Member of the Co:rnmunist Party, girl, having finished the school of the Departn1ent of External Affairs, and will go over to work in the Department of External Affairs. (8) -Sister of the wife of B.

(9) Don Woods-Secretary of the adviser of Doctor E. on atomic energy. (10) 'Moryak':-Macnamara George. (11) B.-Dep. Director of the Department of External

Affairs.''

444. The matters to which we have referred earlier suffi­ ciently indicate that the '' K'' of the G Series of docu1nents is Clayton, and we approach this document with that in mind.

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Report of the Royal Commission on Espionage

445. We think that G.2 is an aide-memoire made by nikov, from information supplied from the Moscow Centre, relating- to persons whom Clayton had recommended or with whom Ola.yton had, or had had, direct or indirect contact, and to some of whom code names had been allotted by the Centre.

446. There are eleven entries. Five of them, namely those numbered (2), (3), {6), (7), and (11), relate to persons who were or had been employed in the Departn1ent of External Affairs; No. (8) relates to a person indirectly connected with an officer of the Department; and No. ( 9) to a person directly connected with a temporary adviser of the Department.

447. We deal with these seven entries seriatim. "(2) 'Tourist'/' 448. We believe ''Tourist'' to be the code name of ,James Frederick Hill, a former officer of the Department of External Affairs. The word ''Tourist'' appears also in an entry in Document G.3, which is also in Sadovnikov's handwriting.

449. The entry reads: "Wilbur Christinson-'Master'. (husband of the sister of Tourist)" We were able to identify ''Wilbur Ohristinson'' as one Wilbur Norman Christiansen, whose wife has two brothers, J. F. Hill and E. ],. Hill. There is good reason for our belief that

''Tourist'' was the code name for J. F. Hill. 450. J. F. Hill gave evidence before us. He is a graduate in arts and law of the University of Melbourne. In 19·37 or 1938 he joined the Communist Party and became the Secretary of the Moonee Ponds branch; but, he said, he dropped out of the Party during the war while he was in the Army and did not renew his association with it thereafter. In June 1945 he was appointed to a temporary position as a

Research Officer in the Post-Hostilities Planning Division of the Department of External Affairs. Frorri March 1945 until June 1946 one Ian Milner (to whom we refer later) acted as the head of that Division. In 1947 Hill became a permanent officer and was promoted to Third Secretary in the United Nations Division of the Department. Later he rose to Second Secretary and at times acted as First Secretary.

Leakages from the Department of External Affairs

451. We were told by Dr. Burton, who was the Secretary of the Department of External Affairs when the Security Service was established on account of the suspicion of depart­ mental insecurity to which we have referred earlier, that

some of the suspicion fell on Milner and Hill, but Dr. Burton said he had always regarded Hill as a very reliable officer.

452. Dr. Burton at the time had acquired, in his official capacity, a partial knowledge of the causes of the suspicionR, and told us that he thou.ght the lack of security related to unimportant matters. Our fuller knowledge, gained from

material which we have examined, leads us to the conclusion that he \vas quite wrong in his evaluation of the importance of the relevant matters.

453. Whatever substance there was then thought to be 1n the suspicion against Hill, it was, after much consideratior1, deemed advisable to question him. This was done in 1950 in London, where Hill was then serving. It was put to Hill that

leakages had occurred through him. He denied this.

454. The fact that he was interviewed in London became well known among the officers of the Department and Hill himself made no secret of it.

455. In his evidence before us Hill repeated his denial and said that he had first heard of leakages when he was ques­ tioned in London. He said he had never known and had never met Clayton, and had never improperly disclosed to

anyone information or documents which he had acquired iu the course of his duties.

456. In February 1951 Hill was transferred from the De­ partment of External Affairs to the Legal Service Bureau of the Attorney-General's Department, and later he ·left the Commonwealth Public Service to engage in private practice.

' ' ( 3) 'Sestra '-Franciska Bernie' ' 457. "Sestra" is the code name of Frances Bernie, with whom we have already dealt. She was an employee of the Department during 1945 and 1946. She was clearly a direct

contact of Clayton.

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Report of the Royal Commission on Espionage

"(6) Joe-Department of External Affairs (Archives),; 458. There is a further entry as to "Joe" in G.7, the Enclo­ sure to the Moscow Letter No. 2 of lOth November 1949 copied in Sadovnikov's handwriting, where this appears:

''Joe-born 1921, works in the archives of the Depart­ ment of External Affairs. Lives in Canberra". 459. ·vve were unable to identify "Joe", but the indication from the entries is that Clayton was in some way connected, either directly or indirectly, with a person whose name or code name was ''Joe'' and who worked in the ''archives'' of

the Department of External Affairs.

460. ''Archives'' refers to the records section of the Depart­ n1ent, and the evidence shows that a person working there would have access to confidential documents. '' (7) -Member of the Comrilunist Party, girl, having

finished the school of the Department of External Affairs, and will go over to work in the Department of External Affairs.'' 461. The entry refers to a "girl" and names no person. In fact, Ivliss June Barnett, an officer of the Department of External Affairs who was then being considered for an over­

seas posting, had been interviewed by the Security Service in 19·53 because it had learned of her former connection with Co1nn1unism, but she was able to explain satisfactorily that she had forsaken Communism and was therefore deemed not to be a seeuri ty risk.

462. After the Document G.2 came into the hands of the Security Service following P etrov's defection she was again interviewed and, on 25th June 1954, made a written statement in which for the first time she told of meeting a Communist functionary who had endeavoured to suborn her and stated that this meeting had been arranged by a leading Communist at Canberra named Frederick George Godfrey Rose.

463. Miss Barnett was born in 1920. Between 1939 and 1942 she was at the University of Melbourne taking courses first in commerce and then in science. In 1942 she enlisted in the Women's Australian Auxiliary Air Force without hav­ ing completed either course at the University; She remained in the Air Force until 1945, when she returned to her studies

Leakages from the Departnr'"ent of External Affairs

in Melbourne and took a B.A. degree. In 1948 she was selected as a cadet for the Departn1ent of External Affairs and was required to undergo a cadet training course at the Canberra University College.· She completed that course in November

1949 and on 4th January 1950 she was appointed a proba­ tionary Third Secretary in the United Nations Division of the Department. She is still a Third Secretary, and is attached to the Australian High Com1nissioner's Office in New Zealand.

464. Miss Barnett, while in the Air Force, served for a period in Perth. There she joined the Communist Party early in 1944, and attended Party discussion groups at the home of a University lecturer. On her discharge from the Air Force

in 1945 she joined the Camberwell branch of the Communist Party, but she said that she resigned in 1948 when her candi­ dature for the Department of External Affairs was accepted, and had never since engaged in any Communist activities.

She said she made her resignation from the Party through one Ric Oke, then a Communist Party functionary, and told hin1 that she was going as a cadet to the Departme·nt of External Affairs.

465. From the above facts it can be seen that Miss Barnett answers the description of the ''girl'' in the entry in DocU·· ment G.2, in that she was or had been a Communist, had attended school of the Department of External Affairs",

a,nd had gone nover to workP in that Department. It was for this reason that she was called to give evidence.

466. The questions arose :· How did Miss Barnett come to be included in the list marked "Oontacts K ''? Was there any c.onnection ·between her and Clayton? 467. The evidence shows that on the probabilities the link

was through Rose. He is a scientist with an M.A. degree of Cambridge University. He came to Australia in 1937 and entered the Oommonwealth Public Service as a meteorolo­ gist. In 1946 he was appointed to the D8partment of Post­ War Reconstruction in Canberra and r

in that or other Departments until1954, when he resigned and took over a property on King Island, Bass Strait. 468. He joined the Communist Party in 1943 and during the whole of the time he was in Canberra he was an active member

of the Canberra branch. Among other activities, he collected

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moneys from 'Party members and, as far as we could gather from his prevarications, he was the treasurer .of the branch. He was known to many of the witnesses who gave evidence before us ; and piecing their evidence together we think it plain that his home was a meeting place for persons of Com­ munistic or ''progressive'' views. He himself said that when

Communist functionaries came to Canberra they almost invariably called on him and frequently stayed with him. Am.ong these functionaries was Clayton. Rose said that he saw a good deal of Clayton. During the years 1948 to 19·50 Clayton, he said, came to Canberra ''two or three times a year,

or three or four times, or something of that order", and invariably called on him to collect any moneys he had in hand and t.o give him Communist literature for distribution.

469. Miss Barnett was introduced to Rose early in 1948 by George Legge, and thereafter she was a frequent visitor to Rose's home. She said she did not know at any time that Rose was a member of the Communist Party, but she admitted that she told him she had at one time been a member and that they discussed politics together. She said that about Easter 1950 Rose asked her if she would meet a C.ommunist official from Sydney in order to discuss with him her rejoining the

Communist Party or helping it in some way, and that after some hesitation she agreed to the meeting, although she admitted that she presumed she was going to be asked to help the .official in relation to her work in the Department of External Affairs.

470. She said that a little later, by appointment, she had the evening meal at Rose's home and after dinner, in response to a knock, Rose took her to the front door and introduced her to a man by a name which she could not remember. She and the man, she said, went for a walk round the block which occupied about 20 minutes and, in the course of it, the man suggested that she might be in a position from time to time to have interesting information for the Communist Party, and asked whether she would be willing to supply it. She t.old him that she was far too junior in the Department to have any such information and that if she did have it she would not give it to him. They returned to the house and the man went away without going inside.

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Leakages from the Department of External Affairs

471. Miss Barnett gave a vague description of the man which, vague as it was, would have fitted Clayton. Later she was in the court-r.oom while Clayton was giving his evidence but, on being called back into the witness-box, she said she was unable to say one way or the other whether Clayton was

the man. She would not say he was, nor would she say he was not.

472. Rose stated that the incident to which Miss Barnett deposed did not take place at all; that it was entirely a fabri­ cation on her part designed to curry favour with the

authorities and to assist her own advancement in the Depart­ ment. He said: ''. . . the pimp, the perjurer, and the liar can get a l.ong way in the Public Service providing he plays along with

people such as Security;".

He admitted that Miss Barnett visited his home frequently during 1948, 1949, 1950 and 1951. 1When asked whether he had ever introduced Miss Barnett to Clayton he said: "Well, as I say, Clayton would probably call at our

door.and I would ask him in, and possibly if we had people there-as we very frequently did-I would possibly intro­ duce him to the people there. Whether Miss Barnett was there or not I do not know. It is possible that she may

have been, but I would not know if she would be there or not.'' 473. Rose was one of the most unsatisfactory witnesses called before us. At our sittings in Melbourne he refused to answer any questions and the evidence he gave in . Sydney was so full of prevarications and evasions that, on critical matters, no reliance could be placed upon it.

474. In the witness-box he falsely asserted that while he was in the Commonwealth Public Service he, a Communist, had in 1952 ''actually handled the security of Rum Jungle­ the issuing of passes". He thereby intended to imply that it was f.or him to decide what persons were to be permitted to visit Rum Jungle, an important uranium field in process of

development by the Commonwealth. We believe he did this deliberately in order to create the impression amongst Aus­ tralia's friends that Australia's security arrangements were

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Report of the Royal Cmn nn'ssion on Espionage

defective. An official witness showed that his assertion was quite untrue. Incidentally, the desire to create a similar false impression was apparent in the evidence of at least one other Communist witness.

475. Clayton denied that he had ever interviewed Miss Barnett and sa1d he was not in Canberra at all during 1950. 476. In spite of the denials of Rose and Clayton, and in spite of Barnett's failure to Clayton positively, we

are satisfied on the whole of the evidence, and particularly having regard to the description of Miss Barnett appearing under the heading "Contacts K", that, on the probabilities, Clayton was the person who interviewed her in April 1950 and that he did attempt to suborn her as an officer of the

Department of External Affairs. 477. It will be noticed that the entry refers to the time when Barnett had finished her ''school'' and was awaiting

appointment to the Department, that is, December 1949·. The probability is that Rose, with whom she was very friendly, mentioned her to Clayton as a "girl" who would be a likely prospect and that Clayton passed this information to the M.V.D.

478. At the time r0f the approach to her, Miss Barnett was an experienced intelligent woman of 30. She made no dis­ closure to any of her superior officers of the improper approach to her, and she continued to visit Rose's home there­ after.

479. We should point out that such a non-disclr0sure by a public servant is no offence against Australian law, as it now stands. ·

'' (11) B.-Dep. Director of the Department of External Affairs." 480. This entry clearly refers to Dr. John Wear Burton. Dr. Burton entered the Department of External Affairs in June 1941 and later acted intermittently as Secretary of the Department until March 1947, when he was appointed Secretary and Permanent Head. He held that post until June 1950. In February 1951 he was appointed Australian High Commissioner in Ceylon. In 1951 he resigned from

this position and from the Commonwealth Public Service.

Leakages from the Department of External .Affairs

481. An explanation of the reference to him as a ''Contact l{" is, we think, to be found in the entry with which we deal next.

'' (8)-Sister of the wife of B.'' 482. This_ entry led to Mrs. P. I-I. Beasley being called to give evidence. She is a sister-in-law of Dr. Burton and a graduate in anthropology of the University of Sydney. She

joined the Communist Party in 1945 and is still a member of it. She told us that her husband is a Communist and is on the Committee of the Sydney Metropolitan District of the Party. She knew Clayton, and knew that he was a func­

tionary of the Party and a full-time organizer. She met him, she said, casually with other Party members. Nevertheless, he called on occasions at her home, but not, she said, very often. She knew Rose but did not think he had ever mentioned

Clayton to her. She said she could not remember meeting anybody in the Department of External Affairs except her brother-in-law, Dr. Burton.

483. These facts seem to us to explain why 1\!l:rs. Beasley should come into ''Contacts K' '. She was a contact of Clayton and he probably hoped that through her he would have an indirect contact with Dr. Burton.

484. We have found nothing to suggest, nor is it anywhere alleged, that Clayton ever contacted Dr. Burton, or that he ever obtained any information, either directly or indirectly, from him. Dr. Burton's important position in the Department was in itself sufficient to account for the M.V.D. interest in him, if only for the purpose of endeavouring to obtain

information "in the dark'; from him.

485. In fairness to Dr. Burton we should here Inention two matters to which he rightly took exception. One was a suggestion contained in a question in Parliament that he migh't have been responsible for the leakage of an excerpt from

a confidential document headed ''Draft Treaty of Friendship, Commerce and Navigation Between United States and Australia", a garbled version of which was published in the Communist newspaper ''Tribune'' in November 1951. We are

satisfied that Dr. Burton was in no -vvay responsible for the leakage and in no way concerned with it.

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486. 1The other matter was a statement made in evidence hy a Communist, Miss N ewbigin, that in November 1945 Dr. Burton had secured her appointment to the Archives Section of the Department of External Affairs, where she had charge of confidential do cuments. We satisfied ourselves that Dr. Burton had nothing to do with her appointment.

487. N ewbigin ceased to be a member of the Common­ wealth Public Service in April 1946.

"(9) Don Woods-Secretary of the Adviser of Doctor E. on atomic energy.''

488. There is another entry under the same nan1e in the copy of the Letter of 14th June 1948 ( G.5 and 6),

which contained a direction to the Resident to ''communicate the additional materials and the well-founded conclusions in relation to the following persons: ..... (6) Don Woods­ former secretary of the adviser of Dr. E. on atomic energy of

Brigg.s' '. The code word which we have interpreted in these entries as" atomic energy" is "Enormaz". In Chapter 15 make further reference to it.

489. In an endeavour to find a meaning for these entries Dr. George Henry Briggs and Donald Stewart Francis Wood­ ward were called .to give evidence before us. 490. Dr. Briggs is a Doctor of Physics and is Chief of the Division of Physics of the National Standards Laboratory of the Commonwealth Scientific and Industrial Research Organization (the C.S.I.R.O.). He has been an officer in that organization since 1939. In 1946, and again in 1947, he was seconded to the Department of External Affairs in order to accompany and give technical advice to an Australian delega­ tion to the United Nations Atomic Energy Commission. Dr.

Evatt, then the Minister for External Affairs, led the dele­ gation for part of the time. Dr. Briggs was selected as

adviser because he had some knowledge of the early research into nuclear physics.

491. Some of the information which he acquired while abroad with the d,elegation was at the time secret, although it has long since been made public. Dr. Briggs kept notes of what he learned, and when he returned to Australia he

Leaka.ges from the Department of External .Affairs

locked them in his safe at the Division of Physics. Dr. Briggs is a man of high integrity and there is nothing to suggest that there was a leakage of any of the information.

492. The Secretary of the Division of Physics was and is Woodward. He was called the Technical Secretary but was concerned mainly with the details of the day-to-day running of the Division.

493. There is no doubt that he is the "Don Woods" to whom the entries refer. He had some education in physics at the London University but did not take a degree. In 1932 he came to Australia. In December 1943 he joined the

C.S.I.R.O. in the Division of Radio Physics and in 1945 became the Secretary to Dr. Briggs's Division.

494. He joined the Communist Party in 1944 or 1945 and became the chairman of the Woolwich branch. . He did not tell Dr. Briggs that he was a Communist. He said he remained a member of the Party for only about two years. He said that he had never n1et Clayton but had known one Greenfield,

who was a paid organizer of the Communist Party in Sydney, where Clayton was, at the same time, also a paid organizer.

495. Woodward was an unsatisfactory witness. The references to him and to his position contained in the entries quoted above, coupled with the circumstances we have detailed, cause us to believe that Clayton had brought his

particulars to the notice of the M.V.D.

PETRov's STATEMENT CoNCERNING THROSSELL AND THE Evi­ DENCE RELATING THERETO.

496. We next consider the statement made by Petrov that he believed that Ric Throssell, an officer of the Department of External Affairs, was "one of Klod 's group" and "had the code name Ferro''. Neither Throssell 's name nor his

code name appears in the Petrov Papers except in Docun1ent G.14, which is merely part of an aide-memoire made by Petrov where Throssell 's code name appears.

497. Throssell, because of his associations: had been a subject of interest to the Security Service before Petrov's defection. He was called and gave evidence.

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498. Throssell was born in 1922. He served. in the Army from 1941 to June 1943, when he left to join the Department of External Affairs. For the remaining six months of that year he trained as a departmental cadet at the University of

Sydney. On completing his course he was posted to the Post­ Hostilities Division of the Department at Canberra. In October 1945 he went to Moscow as a Third Secretary in the Australian Legation, and served there until October 1946. His first wife, whom he married shortly before leaving Aus­ tralia, died while he was in Moscow.

499. On returning· to Australia he was posted to the United Nations Division of the Department in Canberra. Early in 1949 he was appointed Second Secretary of the Australian Legation at Rio de Janeiro, which post he occupied until May 1952. He then returned to the United Nations Division of

the Department at Canberra, where he is still serving. In 1947 he remarried, his second wife being Eileen Dorothy Jordan, who was employed at that time as a librarian in the Department of External Affairs but had formerly been in the Department of Post-War Reconstruction and later in the Department of External Affairs as a records clerk. She left the Public Service upon her marriage to Throssell.

500. Petrov stated that he first heard of Throssell from Pakhomov when Pakhomov handed over the temporary Resi­ dentship to him at the end of 1951. Pakhomov mentioned Throssell's name, saying that he was in Brazil and that he, Pakhomov, thought that Throssell was acting as an agent for the M.V.D.

501. The next mention of Throssell to Petrov was shortly after the arrival of Kislytsin in October 1952. Kislytsin noticed in the ''Canberra Times'' a reference to Throssell as having returned to Canberra from Brazil. He then told Petrov that Throssell was an agent of the M.V.D. and, at his sugges­

tion, Throssell 's return to Canberra was reported to the Moscow Centre. 502. This brought forth a response from the Centre in the form of a cable directing that Kislytsin s·hauld get in touch with Throssell and saying that during the war Throssell,

whose code name was also mentioned, had given

important inform-ation to "Klod", but without knowing that the information was for the Soviet. The cable also asked for

l40

Leakages from the Department of External .A.Ifairs

a suggestion from Petrov and l{islytsin as to a plan for getting in touch with Throssell. Petrov suggested that it might be done through Miss Jean Ferguson because Throssell was acquainted with Miss Ferguson. The Centre, however,

did not approve of the plan and suggested that the contact should be made at one of the En1bassy receptions.

503. Throssell was accordingly invited to _ a "film evening" at the Embassy in May 1953. He did not, however, accept the invitation and nothing more was done until November, when he was invited to the National Day celebration at the

Embassy. He this invitation and apparently

attended, but neither Petrov nor Kislytsin got in touch with because it was Kislytsin 's task and l{islytsin

because his knowledge of the English language was very meagre and he did not know how to make the approach. Petrov never in fact met Throssell and never learned to know him even by sight; nor did Kislytsin. However, when Kova­

lenok arrived in April1954 to take over the Residentship from Petrov he had a discussion with l\IIrs. Petrov and told her­ amongst other things-that he had instructions from the Moscow Centre that Kislytsin was still to pursue the task of

getting in touch with Throssell.

504. Throssell said in evidence that he had never known or met Clayton. He had met Chiplin once, but that was before he had taken up his duties in the Department. He said there were no circumstances that he could remember in which he might have given information, even unwittingly, to any

Communist. ·

505. There are only remote hearsay assertions that, without his knowledge, information said to have come from Throssell reached the Soviet. There are no particulars of the nature of the information, except that the Moscow Centre regarded it

as important or valuable; and there is nothing to show why the Centre so regarded it. It is true that it was said to have been given to "Klod", but whether directly or indirectly or unwittingly is left in the air. There are no particulars as to when it is said to have been given, that it was during

the war. Having regard to the inadequacy of the probative force of these indefinite hearsay assertions, and in face of Throssell 's denial, it would be wrong to hold that he had

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been a member of "Klod's Group" or that he had wittingly given any information. 506. It remains, however, to consider why it was that the Moscow Centre should have been so interested in Throssell after his return from Brazil.

507. We think the answer is probably to be found in his association with persons who were or had been Communists, or were sympathetic to Communism. Throssell said that he is not and never has been a member of the Communist Party. But his mother, Mrs. Katharine Susannah Throssell, who is

a well-known authoress and writes under the name of Katharine Susannah Prichard, and with whom he had lived in Canberra prior to his second marriage, was, as he himself said, reputed to be a prominent Communist. Moreover,

Throssell 's second wife, who is a graduate in arts of the University of Melbourne, was a member of the University branch of the Communist Party during her University days. When she left the University and joined the Commonwealth Public Service she did not resign her membership of the Party, but, as a number of other witnesses said of themselves,

she said she merely allowed her membership to lapse. She added-' 'I retained my beliefs with reservations, but I had really begun to lose interest mainly". Nevertheless, she retained also her C01nmunist associations, and before her marriage was a frequent visitor at the Canberra flat of a Miss Beeby, where Communists or Communist sympathizers congregated. Miss Beeby was an avowed Communist and the then Canberra representative of the newspaper "Tribune".

508. Again, Throssell and his wife, while in Canberra, were acquainted with Rose and visited his home, and Rose on at least one occasion visited the Throssells' flat. Throssell was a close friend of James Frederick Hill, and also knew Ian

Milner, mentioned below. 509. While it is necessary to be wary of taking account of mere associations, we nevertheless think that we should draw attention to the following answers which Throssell gave in his evidence. He had admitted that he associated with many

persons of advanced views and the Transcript then proceeds: "PHILP, J.-So far as I can see, what you are saying is that although you are a member of ·the staff of the Departn1ent of External Affairs, it is of no interest to you

Leakages from the Department of External Affairs

whether the people you meet or associate with are

Communists or not Comrnuuists.

THE WITNESS.-! do not consider it my concern. PHILP, J.-I say you are not interested, you are not concerned, whether they are or are not?-Well, I can only say it seems to me to be their own business.

You think it is no concern of yours?-Yes, that is so."

510. It is quite possible that in the circle in which Throssell lived at Canberra he may have let drop information which he himself did not regard as important and may not even have been conscious of giving, but which was regarded a s important

by a Communist group which included '' Klod' ', and through him was passed to the Moscow Centre. There can be no doubt that the Moscow Centre was interested in Throssell, that they thought he had been a source of valuable information, and that they wanted him to be cultivated by Petrov and I\::islytsin.

IAN FRANK GEORGE MILNER AND THE. EVIDENCE RELATING TO HIM.

511. Neither Milner's name nor his code name is mentioned in the Petrov Papers. His departmental history had been the subject of interest to our Security Service before Petrov's defection, although he had left Australia and the Common­

wealth Public Service long before the Security Service was formed. 512. Petrov said that about October 1953 he received a cable from the Moscow Centre concerning Milner and giving certain particulars about him. The cable referred to him by the name of Milner and mentioned his code name "Bur". It

said that he was a diplomat from the Australian Deparhnent of External' Affairs, that he had gone to New York to the United Nations Organization and while serving it had gone to Korea, and that later he had gone to Czechoslovakia, where he was still living. The cable directed Petrov to make inquiries as

to how the Australian Government was likely to react if Milner returned to New Zealand for permanent residence. 513. Mrs. Petrov stated that the cable also said that while working in the Department of External Affairs Milner had

given information to the M.V.D. through "Klod". Petrov'e

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recollection, however, was that '' Klod 's'' name was not men­ tioned in connection with Milner. Be that as it may, Petrov requested from the Moscow Centre permission to interview Chiplin in connection with Milner, and on this being given he arranged to meet Chip lin through Miss Jean Ferguson.

514. Chiplin (code name "Charlie"), a well-known Com­ munist journalist, appears in the Moscow Letters in several places and was r egarded by the Moscow Centre as an agent.

515. Petrov met Chiplin at an appointed time and place (it was a F'riday at King's Cross in Sydney) and told him the contents of the cable. Chiplin said he did not know of Milner but would find out what he could. He arranged to meet Petrov a week later.

516. They met at King's Cross on the next Friday and 0hiplin told Petrov that he had been able to verify the par­ ticulars as to Milner's career which Petrov had supplied from the cable, but had been unable to ascertain what the Austra­ lian authorities' attitude would be to Milner if he went to New Zealand for permanent residence. Chiplin incidentally men­

tioned to Petrov that he had ascertained that Milner's father was a clergyman in New Zealand. Inquiries subsequently made by us disclosed that Milner's father had in fact been the Rector of a Church of England school in New Zealand and that that fact was known in the Department of External Affairs.

517. Petrov reported the result of his inquiry to the Moscow Ce ntre and heard nothing further about the matter.

518. r.rhe Security Service had, in fact, no knowledge of these meetings between Petrov and Chiplin or of Milner's intention to go to New Zealand.

519. In his evidence before us, Chiplin was examined on this subject. He admitted the two interviews with Petrov. Probably he was afraid to deny them because he thought he might have been under Security surveillance at the time. He said that the first meeting was by chance and that the second, though by arrangement, was merely for a social drink. He admitted that Petrov had told him "that Milner had worked in External Affairs and-I think I have the sequence right -that Milner had gone to Czechoslovakia, or that he had

gone to Korea and then gone to Czechoslovakia", and

Leakages from the Department of External .Affairs

''that he was interested in finding out what the Government reaction would be if Milner came back to Australia or New Zealand". Having made these significant admissions, Chip lin then went on to say that Petrov had not made any request to

him to make inquiries and that he had not done so. 520. We have no doubt that Chiplin's denial that he was asked to make and did make inquiries was a lie and that Petrov's version of the interview was true.

521. As Milner is at present in Czechoslovakia, he could not be examined; but we have ascertained the following par­ ticulars from the departmental files. Milner was born · in New Zealand and was a Rhodes Scholar from 1934 to 1937.

From 1940 to 1944 he was Lecturer in Political Science at the University of Melbourne. On 1st November 1944 he was appointed to the Department of External Affairs as Special Investigation Officer in the Post-Hostilities Planning Division of that Department. The files show that strong protests were made to the authorities by two responsible persons against

the appointment of Milner, on the ground of his pro-Soviet sympathies as evidenced by certain of his writings. However, Milner was well recommended elsewhere and commenced duty ort 12st February 1945.

522. IProm March 1945-that is, only a few weeks after his appointment to the Department-until June 1946, while his superior officer was attending a conference overseas, Milner acted as the Head of the Division and in that capacity he

represented the Department of External Affairs on the Defence Post-Hostilities Planning Committee, which com­ prised representatives fr.om the three Armed Services, the Defence Department and the Department of External Affairs.

As we have assured ourselves, that Committee dealt with highly secret material, some of it supplied by Australia's friends. 523. On 3rd January 1947 Milner left the Department of

External Affairs to become a Political Affairs Officer in the Security Council Secretariat of the United Nations Organiza­ tion in New York. In the course of his duties he spent some time in Korea.

524. In July 1950 he resigned from the United Nations Organization and left the United States to go to Czechoslo­ vakia, where he is on the staff of the Charles University in Prague.

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525. When investigations into the inadequacy of security measures in the Department of External Affairs came to be made in 1948-1949, Milner, while acting as Head of his Divi­ sion and as the departmental representative on the Defence Post-Hostilities Planning Committee, was found to have been in possession of secret documents in circumstances which gave rise to grave suspicion as to the use he had made of them.

526. All these matters, particularly the Moscow Centre's evident fear (apparent from the cable sent to Petrov about Milner) that the Australian Government might have know­ ledge of something to his detriment, indicate the probability

of the correctness of Petrov 's recollecti.on that the Centre had mentioned in the .cable that Milner had given information to the M.V.D. through "Klod". That he did so is supported by other material which we have seen.

wALTER SEDDON CLAYTON.

527. Since we c.onclude that Clayton is the "K" mentioned in the G documents and that "K" was evidently mostly con­ cerned with the penetration of the Department of External Affairs, we deal with him in this Chapter. He is not referred to by his real name in the Petrov Papers. He had attracted the attention of the Security Service before Petrov's

defection. 528. Walter Seddon Clayton was born in New Zealand in 1906. He came to Melbourne in 1931 and joined the Com­ munist Party in 1933. About 19B5 he became a full-time Party functionary and organizer. He moved to Sydney in 1939. During the war he was very active in what he called "organi­ zational work" for the Party which took him "all over Australia''.

529. In 1943, in addition to being a full-time Party

organizer, he became a member of the Central Committee, which is the Party's governing body. In 1944 he was appointed by the Central Committee to be a member of the Control Commission, a body consisting of four Party members which exercised important disciplinary functi.ons.

530. He continued to be a member of the Central Committee and of the Control Commission until August 1951. At the Party convention held in that month he was due to stand for

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Leakages from the Department of External Affairs

re-election to the Central Committee, but according to certain documents placed before us it would seem that he did not nominate. He certainly did not attend the convention. The reasons for this did not emerge and attempts to get at them from Clayton· and other Communist witnesses met with

evasions and lies. The most we could learn was that he did not attend the convention because he was engaged in important work for the Party. This work, we believe, was in part con­ nected with the building·of a house at Baulkham Hills for some

secret purpose of the Party's "Illegal Apparatus". Com­ munist Party documents which we have seen indicate that the scheme miscarried and the house was let and later sold.

531. What Clayton did on behalf .of the Party during 1953 and the first half of 1954 we . do not know. He said he ceased to be a member of the Party at the end of 1953, but the circum­ stances of his leaving the Party-if he did leave it-are

wrapped in mystery. Indeed, wherever our inquiries led we found him to be a man of mystery.

532. Very early in the Inquiry it became apparent that Clayton was a person wh.o would be required for ·examination. A subpoena was issued for his attendance, but he could not be found. On 21st July 1954 counsel publicly stated to the Com­

mission that the circumstances suggested that Clayton did not wish to be found. Counsel asked that any person who could give the Commission information as to Clayton's whereabouts should communicate with the Commonwealth

Crown Solicitor. This announcement was given great pub­ licity in the press and over the air and a photograph of

Clayton was published in many newspapers.

533. Clayton, who subsequently admitted that he was aware of counsel's announcement at the time it was made, did not respond. In an endeavour to trace him, a number of witnesses who might be expected to know where he was were called

before us.

534. One of these witnesses was the manager of a Sydney suburban branch of a well-known bank, who, called on sub­ poena, gave us every assistance. Clayton had opened an account at the bank in July 1951 and was granted an over­ draft limit of £500 for the purpose of purchasing a block of

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land at Baulkham Hills on which the house to which we have referred above was to be erected. The manager knew nothing o£ Clayton's history___._._to him Clayton was an ordinary cus­ tomer. He t.old us that Clayton had called on him with reference to the overdraft at the end of June 1954 and that as -from that date he could not help us. He gave us four succes-­ sive addresses of Clayton which appeared in the bank's records; the last three being subsequent to April 1954. At none of them could Clayton he found.

535. The other witnesses included the foHowing seven persons: (a) J. Skolnik, a Melbourne businessman who was the guarantor of Clayton's overdraft with the bank. Ris

story as to how he came to guarantee the account was strange and incredible.

(b) Mrs. Edwards, whose address at 5 Mons Street, Vaucluse, was given by Clayton as his own address when .opening the bank account. This, it emerged, was an ''accommodation address'', since he never lived there. It remained his address with the hank until 3rd May 19'54. l\{rs. Edwards admitted that

she received letters from the bank and elsewhere addressed to Clayton and said that she destroyetl one such letter unopened in 1954 after she had been inter­ viewed by Security officers and had denied to them that she knew Clayton. (c) R. J. Williams, a Parramatta land agent who man­

aged the letting of the Baulkham Hills house after its erection. He held a full Power of Attorney from Clayton, given in August 19·53 in mysteri.ous circum­ stances. It was he who, on 3rd May 1954, changed Clayton's address with the bank from Vaucluse te Bexley and later to 1148 Rocky Point Road, Rams­ gate. These also turned out to be mere "accommo­ dation addresses". A letter written by Williams to the bank on 13th July 1954 showed that he was personally in touch with Clayton up to that date. Williams subsequently sold and transferred the Baulkham Hills property and dealt with the purchase moneys in an exttaordinary fashion.

Leaka,ge$ from the DerJartment of External Affairs

(d) Miss Joy Roberts, who occupied a flat at 15A Awaba Street, Mosman, held by Clayton under a tenancy. Clayton said that the flat was his home and that the furniture was his. Miss R·oberts occupied it from

1949 until 13th August 1954, and on vacating it under pressure from the landlord she stored Clayton's furniture at a repository in the name of "Mr.

Eoberts '' whiGh, she said, was a name under which Clayton went . . She received letters and other com­ rnuniGations for Clayton. She received one such letter relating to the as late as July 1954: and dealt

with it on Clayton'$ behalt ·

(e) R.. Dixon, the President .of the Communist Party, who said he had been in touch with Clayton

", but only up to about October 19'53.

(f) L. L. Sharkey, the General Secretary of the Party, who also was in touch with Clayton "socially", but only up to and during 1953.

(g) M. J. E. Hughes, a member of the Control O.om111is­ sion of the Com111unist Party, ·who also was in touch with Clayton "socially'', bu·t only up to and during 1953. '

536. The examination of these seven witnesses, all of whom (with the qf Skolnik, who

denied that he was) did not e;nable us to find .. Every

one of them denied all knowledge of his whereabouts.

5?7. It th-qs appeared that after the beginning of July 1954 (Jlf\ytgJJ, 4;J,d. dii?&ppeared and and

former assoo.iates did not k:p_ow he was.

538. On 4th March 1955, when it was clear that the evidence was coming to a close, Clayton suddenly appeared. We have no doubt that he deliberat'ely hid himself, or was hidden, in order to avoid appearing before us until it was confidently felt

that all the evidence concerning him . had been given and he had had full opportunity of shaping his story to n1eet it. He said that he had heard over the air a suggestion that he was with. Soviet espionage anq that he had therefore

come before the Commissio n to clear his nq,rne. In this he signally failed.

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Report of the Royal on Espionage

539. From a person who desired to clear his name one would have expected the utmost candour. Instead, we were met with evasions, equivocations, refusals to answer ques­ tions, and lies. He refused to tell us anything of what he

had been doing since August 1951, asserting that he had given up his work in the Communist Party on account of ill-health. This we did not believe. In particular, he refused to say where he had been since June 1954, and gave no valid explana­ tion why he had avoided examination before the Commission

although he well knew that his attendance was desired. 540. From certain of his answers it appeared that he had considerable knowledge of the Commission's proceedings; yet he asked us to believe that, except occasionally, he had not

read the newspapers or listened to the wireless reports of those proceedings. In every respect he was a most unsatis­ factory witness; and his demeanour, and 'the manner in which he answered questions, or refused to answer or evaded answering questions, added still more to the mystery surrounding him.

541. However, he could not avoid confirming certain vital evidence of other witnesses which identified him as the "K" referred to in the G Series of documents; namely, the evidence of Mrs. Tennant, Miss Bernie, Jack Legge, and George Legge, to which we have referred.

542. After hearing him we had no doubt that he is the "K" referred to in those documents. 543. Clayton was an important functionary of the Com­ munist Party and we find his name, through the letter '' K'' or the code name "KI.od", linked with no fewer than 19 people in M.V.D. communications, eight of whom we;re at one time or another officers of the Department of External Affairs. From three of these (namely Miss Bernie, Milner, and Throssell), the evidence showed, the M.V.D. had claimed that information had been obtained through Clayton. A fourth, namely J. F. Hill, fell under suspicion in the Department itself as supplying information.

544. From all the material to which we have alluded and other material which we have examined we are satisfied that, as Petrov said in his statement of 3rd April 1954, "between 1945 and 1948 there was a very serious situation in Australia

Leakages from the Department of External

in the Department of External Affairs", and that there were serious leakages of information from that Department to the M.V.D. We believe that Clayton, who bore the code name "Klod", was the principal channel through which it was supplied.

545. If, as we conclude, Clayton was the Party functionary who approached Miss Barnett, he was active as late as Easter 1950; but we find no trace thereafter of any activity which produced results for the M.V.D. The Moscow Letter of

6th June 1952 indicates that there was no fruitful activity in 1951 or 1952. 546. We deal later in this Chapter with the operations of the M.V.D. in respect of the Department of External Affairs

otherwise than through Clayton, and with the operations which occurred during Petrov's temporary Residentship.

CLAYTON's AcTIVITIES APART FROM THE DEPARTMENT OF ExTERNAL AFFAIRS.

547. The G Series of documents indicates that in addition to penetrating or attempting to penetrate the Department of External Affairs, Clayton was active in other directions, and we think it convenient to deal here with other entries in the

G Series which link him with certain people by means of the letter K, but which do not appear to relate to the Department of External Affairs. Four of these entries are in Document G.2 ("Contacts K") and the remaining two in Document G.7. They seem to disclose Clayton in his capacity of ''talent

spotter'' for the M.V.D·.

548. In Document G.2 there are the following entries: "(1) Master' " This entry, as appears from Document G.3, ·refers to a scientist named Wilbur Norman Christiansen, to whom

we have earlier referred as being a brother-in-law of J. F. Hill and whom we mention later in Chapter 15. What his connection, if any, was with Clayton we were unable to ascertain. He himself knew of none. It may be

that Clayton, in his capacity of "talent spotter", merely supplied his name and particulars. Christiansen had pothing to do with the Department of External Affairs.

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Report of the Royal Corwntission on Espionage

"(4) 'Podruga' " This is obviously a code name, and fron1 its form probably refers to a female. We were una,ble to ascertain to whom it referred.

'' (5) Ben-Hughes''' "Ben" is evidently the code name for someone na:rned Hughes. At first it was thought that it might apply to Morris John Rodwell Hughes, a prominent member of the Communist Party, but his code name was "Bask".

There was no person named Hughes in the Department of External Affairs.

'' (10) 'Moryak' -Macnamara George.'' A certain George lYicN amara was interviewed because it was thought that he might possibly be the person to whom this entry refers. Consideration of all the material fails to satisfy us that he is person referred to. In

the result we have been unable to identify the subject of the entry. There was no Macnam.ara in the Departrpent of External Affairs. 549. Entry No. (2) on Document G.7 relates to Mr. Justice S. C. Taylor of the New South Wales Industrial Commission. We deal with the entry in Chapter 16. The last wo;rds of the entry are "K describes him favourably", showing that Clayton must have advised the M.V.D. upop. him.

550. Entry No. (4) on Document G.7 reads: '' ( 4) Hook, Jack-President of t:he Sydney Trade Union of the Labour Council, labour supporter, one of the of the Labour. Party. Collaborates

with the Communist Party. Holds progressive views. 'K' considers H to be a man who deserves to be trusted.'' This apparently refers to one Jack Hooke, who is at present in England and was interviewed and made a statutory declara­ tion. Hooke stated that he has been an officer of the

Department of Immigration since 1949. He is, and always has been, an ardent supporter of the Labour Party and has never been a member of the Communist Party; in fact, he refused an invitation to join it. For many years prior to his appointment to the Department of Immigration he was actively associated with, and held office in, the Labour Council

M.V.D. in the Department of External Affairs

of New South Wales; and he stated that he has always been strongly &nti-Oomrn-qnist. l-Ie ser.ved in both vVorld Wars. He stated that in about 1943 he became Chairman of the Services Committee of the Labour Council and later acting­

Secretary of that Council, and tbat in his work on it he necessarily was associated with many trade union officials who were Communists, including M. J. R , Hughes. He stated that he had never known or known of Clayton, and had never 1net

any Soviet officials. So far from collaborating with the Com­ munist Party, he stated that he had always opposed Com­ rr:rup.ist poli<;ies. lie no other person to whom the

entry might have been intended to W have no reason

to doubt Hooke's statements, and there is nothing to suggest any impropriety on his part. The. entry indicates that Clayton, in his capacity of spotter''; had passed on to the

M.V.D. an inaccurate evaluation of Booke from the point of view.

M.V.D. INTEREST IN THE DEPARTMENT OF EXTERNAL AFFAIRs­ OTHERWISE THAN THROUGH FROM THE

G SERIES OF DocuMENTS.

551. 'There is still another entry in the G Series of docu­ ments which discloses the interest of the M.V.D. in an officer of the Department of External Affairs. It is in Document G.10 and reads as

'' (19) Westcott-,-Former worker in the department of communications of the Ministry of Foreign Affairs, his work was secret. Very cautious. Was acquainted with ';Lipsky'. Resiqed in Circle, Canberra;

B.172." This entry refers to George Albert Westcott, who gave evidence berore us, and it contains no reference to any con­ nection between Westcott and Clayton.

552. Westcott was born in 1909 and entered the Common­ wealth Public Service in 1925. He is at present an officer in the Prime l\!Iinister 's Department. From 1938 to 1948 he was employed in the Department of External Affairs as Officer­ in-charge of Records. In the records department and under his control there was a cmnmunications section, which dealt with the filing of cables and overseas and local corres­

pondence, including confidential material. He lives at

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Report of the Royal Commission on Espionage

37 Manuka Circle, Canberra, and his telephone number is B712. Thus the M.V.D. dossier upon him was substantially accurate. 553. In 1943 or 1944 he became acquainted with an Attache at the Soviet Embassy named Alexeev. Westcott in his spare time was secretary of the local Sheepdog Trial Association. Alexeev was introduced to him as a man who was interested in sheepdog trials and who desired to know how they were conducted in Australia. They met with this common interest on three or four occasions.

554. Alexeev is the "Lipsky" referred to in the entry. There is nothing to show whether Alexeev was an M.V.D. worker or not. 555. Westcott gave his evidence frankly. I-Ie has no Com­ munist associations and there is no suggestion that he divulged any confidential information. The entry is an illustration of the technique of the Moscow Centre in compil­ ing a dossier on persons who have access to confidential information, and of the M.V.D. 's reaction to signs of mere friendliness towards a Soviet official.

M.V.D. INTEREST IN THE DEPARTMENT OF EXTERNAL AFFAIRS DURING PE.TROV 's TEMPORARY REsiDENT5HIP.

556. So far we have dealt with the interest of the M.V.D. in the Department of External Affairs as it appears from the G Series of documents and the evidence relating thereto. That evidence covers the period from 1943 to 1950, but it is apparent that M.V.D. interest in the Department continued.

557. The 1952 Moscow Letters show that-in that year the Moscow Centre was very anxious that M.V.D. work in Aus­ tralia should be reactivated. They also show that the Centre continued to regard the Department of External Affairs as

a most important target for the M.V.D. The Moscow Letter No. 1 of 2nd January 1952, paragraph 5, is devoted to this It reads:

''Concerning the study of the Department of External Affairs. One of the most important aspects of the work of the foreign political intelligence consists of the study and

survey of the- Department of External Affairs of the foreign country.

I 54

M.V.D. Interest in the Department of E xternal Affairs

Up to the present moment the Australian section of the M.V.D. has not been conducting such .survey, and in consequence M.V.D. Headquarters has in effect no information concerning the Australian Department of

External Affairs. Taking note of the importance of this question, we request you to set about the study and survey of the Department of External Affairs.

For a start, compile and send to M.V.D. Headquarters a report in maximum detail concerning the Department, including official and agent information. Beside other information, this report should refer to

the following questions: brief historical data concerning the organization of the Department, its structure, its location, from whom is the personnel recruited, informa­ tion about the leadership, about educational institutions where diplomatic cadres are trained, which departments

actually deal with matters affecting the Soviet, America, England, and as detailed information as possible· concern­ ing the heads and personnel of these departments. Do the employees . of the Department of External Affairs

join together in any trade unions organizations or clubs, what do these organizations repre,sent in themselves, what are their addresses. Further, it is desirable to obtain information regarding procedure for the safeguarding and use of secret docu­ ments which exist in the Department, is the association of employees with the people around them controlled and in what manner, in what places is a non-official contact

possible with them. Mobilize all workers of the Australian section of the M.V.D. and recruited persons to participate in the pre­ paration of this report, allocating among them the

collection of material on separate concrete questions." 558. The Moscow Letter No. 4 of 24th July 1952, paragraph 2, directs attention to a particular activity of the Department of External Affairs, namely the Australian delegation to a forthcoming meeting of the General Assembly of the United Nations Organization. It reads :

"On the 17th October this year, in New York, the 7th Session of the General Assembly of the United Nations

ISS

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Report of the Royal Commission on Espionage

opens. For the purposef$ of successfully carrying out the work for the organizing of operational cover

of the Session, a,..nd for uncovering the plans of the American-British bloc relating to the conduct of it, M.V.D. Headquarters is interested in the collection and timely a,cquisition of authentic information concern­ ing the fallowing q ues.tions :

(1) Concerning the attitude of the governments con­ on the questions of the provisional

of the Sessio:p and concerning the intention of the tQ table particular questions for

by the Session.

(2) Detailed bjographical particulars concefnipg the members of the delegation, the employees on the technical staff and correspondents who to atte:p,d the Session. (3) Helpful particulars concerning all persons on the

staff ef the delegation and of the technical staff establishment who are of operational interest to us. (4) Concernjng correspondence of members of the to the ·Session with the appropriate

of affairs, and cci:t1ce.rning

instructions to the members. during the course of the Session for the whole duration· of the sittings of the General Assembly. ( 5) Concerni:pg the reaction.s of the rullng cjrcle.s of

the cou:n.try where you sojourn to the speeches a:nd proposals of the Soviet delegation.

It is desirable that you should take all in YPll-r pow(}r and enqe{l.voijr to inforPlation of tq For this we a(ivi3e you to

mage use o( the Qf

QUie.r, o <1tnd Qhiplill,. a1l9.. a.tso to. the

exploitation of Body 'in the dark'." 559. two paragraphs speak for as. to the

Moscow 's coi'ltil}ued espion;:tge interest in the Depart­ ment of External Aff?-irs ;:ts to tge methods it directed for penetrating it. In pursuance of dire<;tions Petrov fliq supply from time to ti!lle of persons

t!w who had

rs6

M.V.D. Interest in the Department of External Affairs

for entrance to the Department. He also gave it such infor­ mation as he could get concerning the unions to which depart­ mental officers belonged, and reported that it was impossible to find a person from whom to discover the departmental

procedure for the safegnardihg and use of secret documents. He also reported such material as he was able to ascertain in pursuance of the directions concerning the Australian delega­ tion t.o the General Assembly of the United Nations Organiza­

tion. Petrov was, however, able to do little in making actual contacts with officials of the Department. As will appear later, the Centre recognized the necessity for caution, particu­ larly in view of the establishment and activities of our

Security Service. However, the little that was done or sought to be ·a.one in relation to certain officers of the Department provides revealing evidence of M.V.D. methods.

560. We have already mentioned the interest which the 1\1oscow Centre took in George Legge and Throssell immedi­ ately upon their names being reported by Petrov in 1952 and 1953 respectively. This interest arose from what the Centre

had learned of them prior to 1949. 561. The names of other departmental officers in whonL the Centre showed interest come from the Moscow Letters. 562. Frederick James Maclean (which is the correct spelling

of his surname), a former officer of the Department, is referred to in two of the Moscow Letters. The :first is Letter N.o. 1 of 2nd January 1952, paragraph 4, which reads:

''Concerning McLean.

In the Political Intelligence department of the Depart­ ment of External Affairs of Australia there works, with the rank of First Secretary, F. J. McLean, further ref erred to as Lot.

According to Sadovnikov's description, McLean has access to secret knows well many workers

in the Department of External Affairs, attends diplomatic receptions and consorts with members of the diplomatic corps. He treated our representatives in Canberra with respeet,

willingly accepted invitations, and attended receptions arranged by our diplomats in private apartments.

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Report of the Royal Comrnission on Espionage

During discussions he expressed his dissatisfaction with the Menzies government, with internal conditions in the Department of External Affairs, with the Minister for External Affairs, Spender, the chief of his department. He once related that the Public Relations department, in which he formerly worked, is engaged on the processing of all reports of a political character, which are received from Australian representatives abroad, and prepares comments and proposals concerning them. Furthermore, he is more talkative and frank when he is at a .small gathering at private receptions.

According to unconfirmed data, McLean was formerly a n1ember of the Australian Communist Party, which he left at his own wish. One of our trustworthy agents describes McLean favourably and considers that he could supply valuable information, but for this purpose he should be skilfully and tactfully handled and be convinced that nothing that he will say will come to the knowledge of any Australians

or will reflect on his service career. It should also be taken into account that McLean has a large family and is badly off materially. Bearing in mind that McLean is of interest to us, you must study and cultivate him as a prospective agent.

We request you to keep us informed regularly about progress in the study of McLean.'' 563. The second reference is in Letter No. 6 of 25th N ovem­ ber 1952, paragraph 8, which reads:

''Concerning F. J. McLean. In the last post you informed us about the taking of measures with regard to increasing the activities of F. J. McLean. At the same time you sent us a list of respon­ sible employees of the Department of External Affairs, on which McLean's name did not appear, despite the fact that for a period of several years he did figure on the list.

In this connection we request you to clarify, in a cauti­ ous manner, whether McLean is working in the Depart­ ment of External Affairs at the present time, in what

M.V.D. Interest in the Department of External Affairs

capacity, and what is the reason for his exclusion from the list. If he does not work there, then endeavour to ascertain his new place of work, the reason for his transfer, and other questions of interest to us concerning him, and especially whether this is connected with measures taken in the Department of External Affairs

after the article which Chiplin published. Inform us by the next mail concerning the results and also your proposals for increasing the activities of McLean. We request you to report also whether he attended the last big Reception in our Embassy.'' 564. There is also a reference to Maclean in one of the G Series of documents, namely the Enclosure to the Letter of lOth November 1949 (G.8). It reads:

"Maclean - journalist, sympathetically disposed towards us, a very well informed man. In 'T 's' opinion, he will give information.'' "T" stands for "Tekhnik", the code name of Nosov, a Tass representative and an M.V.D. worker under Makarov and later under Sadovnikov.

565. Maclean was formerly an officer of the Department of External Affairs. He suffers from a serious chronic illness and for this reason could not be called as a witness. We were informed that he was too ill to make a declaration or a written

statement, and we theref.ore had to rely for much of the infor­ mation concerning him on an oral statement which he made to two Commonwealth officers on lOth November 1954. 566. The following are the particulars of his service in the Department as supplied by it. He was born in 1912. In May 1947 he was appointed a temporary First Secretary to work on documentation and assembly of data for the then Minister. On 11th July 1947 he left for Japan with the Minist er, as a member of his staff. On 28th Augu st 194 7 he took up duty in the Department in Canberra as Press Officer in the Political Intelligence and Information Centre. On 11th F ebruary 1953 he reported sick and was continuously on sick leave until 6th February 1953, when, his leave having expired, his appoint­ ment was terminated.

567. Maclean is by training a journalist. Prior to the

warhe worked on various newspapers in Sydney. During the

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Report of the Royal Commission on Espionage

war he sought to enlist but was rejected for active service on account of a physical disability. Later he was employed in the Finance Section of the Arn1y. During this period he con­ tracted the illness from which he is still suffering. While in the Army he joined the Communist Party and paid sub­ scriptions for two or three months, but he said that he never attended any meetings and that he dropped out because he disapproved of the Party's pamphlets.

568. After the war he returned to his newspaper work. He said that he was selected by a group of newspapers to accompany Dr. Evatt on his election campaign of 1946 and to report that campaign; that Dr. Evatt was pleased with his work and later suggested that he aecept the appointment in the Department of External Affairs to which we have referred above. He said that his principal work was to main­ tain liaison between the Deparhnent and the newspapers, and that in the course of his duties he had access to secret informa­ tion. Maclean said that he had never attempted to disguise his political views; that he had always been a Labour sup­ porter; and that no doubt he had at times criticized the Menzies Government, but not Mr. Spender personally, for whon1 he had a high regard.

569. He said he had met N osov officially and also on a few social t>ccasions, and that he and his wife once had lunch or din:ner with the N osovs at the Hotel Kingston, Canberra. Nosov had been once to his home at Coogee and on another occasion he and his wife had visited the N osovs' fiat at King's Cross for a cup of tea. These two visits were casual. did not remember otherwise meeting N osov except at cock­ tail parties and sometimes casually at the airport and at the Journalists' Club in Sydney.

570. Maclean knew another Soviet Embassy official named Vysseisky, to whom N osov had introduced him at an Embassy party. l\1aclean and his wife had been to dinner at Vyssel­ sky's home just prior to his return to Russia. Vysselsky, he said, was easy to get on with. Vysselsky was, as we have earlier said, an M.V.D. worker under Makarov and later Sadovnikov.

571. Maclean said he had 1net Sadovnikov but not Pakhomov or Petrov.

r6o

M.V.D. Interest in the Department of External Affairs

572. Petrov, in fact, never got into touch with Maclean. He ascertained that Maclean was in hospital and took no further steps in the matter. 573. It is obvious that from an early date a dossier on

Maclean was kept at the J\!Ioscow Centre containing informa­ tion supplied by Makarov, Sadovnikov, and Nosov. His official position and his whilom association with the Com­ n1unist Party are sufficient reason for the Centre's interest

in hin1. None of the entries assert that any information was obtained from him. He himself said that he never gave any, and there is no evidence that he did.

57 4. Three other officers of the Department were selected for ''study'' in the Moscow Letters. The references to them show how the Moscow Centre aimed at obtaining information from reputable officers who-as the evidence shows-were

quite unlikely to be either co-operative or incautious.

575. The first of them is Alfred Herbert Body, who is referred to in the Moscow Letter of 24th July 1952 quoted above as a possible subject for exploitation "in the dark".

576. Body is at present an External Affairs Officer, Grade III, in the Legal and Treaty Division of the Department, and is a man of character and integrity. He was for a number of years head of the Consular and Protocol Section. In that

capacity he was deseribed by the Secretary of the Department as occupying "a unique position in the Department". His contacts with the Diplomatic Corps are greater ''than those of any other officer of the Deparbnent .... It is part of his

duties to maintain an official and personal contact with every member of the diplmnatic and consular corps and at all times to treat them with courtesy, and to assist them in their

contacts with Australian Government officers''.

577. In the course of his duties he met and showed cour­ tesies to both Sadovnikov and Petrov. Mrs. Petrov, who was for a time an operational worker of the M.V.D., suggested to the Moscow Centre that if she could get Mrs. Body to join

her in mutual Russian-English lessons, the official contact with Body might be developed on personal lines. The Centre approved and Mrs. Petrov invited the Bodys to her home to dinner. The Bodys reciprocated. Mrs. Petrov suggested the

language lessons to Mrs. Body, who, however, after

* 782 28-11 161

3,55

Report of the Royal Commission on Espionage

with her husband, did not entertain the proposal. Mrs. Petrov reported this to the Centre, which in the Moscow Letter No. 3 of 6th June 19'52, paragraph 2, instructed that:' "Mrs. Petrov should not insist on an exchange of

lessons with the wife of Body, since such persistence might alert the Body couple and might frighten them off from the continuation of your acquaintanceship with them.'' 578. Thereafter there was no further social contact between them. Petrov never obtained any information from Body or Mrs. Body, either "in the dark" or otherwise, and reported his lack of success to the Moscow Centre. Notwithstanding this, the Centre allotted Body the code name "Goit" and instructed Petrov to withhold contact for the time being but to try at some future time to develop the acquaintance. All this is reflected in the Moscow Letter No. 5 of 27th September 1952, paragraph 9, which reads:

"Concerning Body (in future Gost) Taking into consideration the guarded attitude of Body and the conditions which have arisen in the Department of External Affairs, we consider that you should not now for the time being insist on unofficial meetings with him. However, with the opening of the fishing season, try to invite Body again for a fishing trip with the object of promoting a closer contact with him. In conversation with Body you should elucidate in a cautious manner ques­

tions of interest to us concerning conditions in the Depart­ ment of External Affairs, personality reports about Australian delegates in international organizations and at conferences, etc.

Keep us informed about the development of your con­ tact with Body. Please also send us information about meetings with him.'' 579. In fact, Body had never gone on, or been invited to go on, a fishing trip with Petrov. The Moscow Centre appears to have confused Body with someone else, probably George Legge.

580. The reference in the above Letter to ''the conditions which have arisen in the Department of External Affairs'',

M.V.D. Interest in the Department of External Affairs

and the reference in the Moscow Letter No. 6 of 25th N ovenl­ ber 1952, paragraph 8 (set out earlier in connection with Maclean), to "measures taken in the Department of Exter­ nal Affairs after the article which Chiplin published",

relate to the tightening of departmental security measures consequent upon the publication by Chip lin, in the ''Tribune'' in November 1951, of garbled extracts from a confidential Draft Treaty of Friendship, Commerce and Navigation be­ tween Australia and the . United States, to which we have

earlier referred and shall refer again.

581. The references to Body illustrate what we have said again and again-that the mere mention of a name in a Soviet document, or the allotting of a code name, does not in itself reflect adversely on the person concerned. They illustrate

also M.V.D. methods of oontact and" study", and the degree of control and supervision exercised by the Moscow Centre.

582. The second of these three External Affairs officers is Herbert Stanley North, whose name appears in the Moscow Letter No. 3 of 6th June 1952, paragraph 8, which reads:

' 'Concerning Herbert Stanley North. (born in 1920)

In 1947-1951, Herbert Stanley North (born in 1920), a native· of Australia, worked in the Australian Embassy in Moscow in the capacity of cipher clerk and adminis­ trative clerk.

From September 1939 until November 1945 North served in the Australian navy as a wireless operator. After demobilization he worked in the Taxation Depart­ ment in the city of Perth.

According to agent information dated 1947-1948, North was described as ill-disposed to the Soviet.

North was on terms of friendship with a technician of the British Embassy, Gilmore, with clerks of the Ameri­ can Embassy, Powers and Crawford, in whose company he regularly visited restaurants and imbibed large quan­

tities of alcoholic liquor.

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Report of the Royal Commission on Espionage

After his marriage in 1949 to an employee of the New Zealand Consulate, Healy Ketlin, he ceased to visit res­ taurants, began to display an interest in Russian litera­ ture and art. According to the words of North's wife, his anti-Soviet utterances were the result of the negative influence exerted on him by the employees of the Ameri­ can Embas.sy, and after terminating his friendship with them he began to interest himself in Russian culture, and to study the Russian language.

In July 1951, North left Russia with his wife for Aus­ tralia. Bearing in mind that, during the latter part of North's stay in Russia he began to change his attitude towards the Soviet, and also that he worked in an institution of interest to us, we request you to try, through the means at your disposal, to locate him, to ascertain his employ­ ment and financial situation, and whether he comes out iu public with his impressions concerning the Soviet, what is his present attitude to the Soviet, and also how to approach him.

Communicate to us any information that you may col­ lect in relation to North as well as your proposals con­ cerning the feasibility of .studying and cultivating him.'' 583. North's evidence shows that he was horn in 1920. He commenced his Public Service career in the C01nmonwealth Taxation Department in Perth. He enlisted in the Royal Aus­ tralian Navy in September 1939· and served as a wireless operator until November 1945. After the war he returned to the Taxation Department in Perth for a short period and then joined the Department of External Affairs. In 1947 he was posted to lVIosc.ow as a consular clerk at the Australian Embassy and remained there until July 1951, when he re­ turned to the Department in Australia. ·While in Moscow he performed some cipher duties but was not designated a cipher clerk.

584. Thus the account of his service career given in the IYfoscow Letter is strikingly accurate. 585. The brief references to his social life in Moscow, although they contain items which are not wholly accurate, are in the main correct. In 1949 he married in Moscow Miss

M.V.D. Interest in the Department of External Affairs

Kathleen Healy, an officer of the New Zealand Legation. The name "Healy I{.etlin" which appears in the Letter is obviously the Russian rendering of "Kathleen Healy". He commenced to take lessons in Russian as soon as he arrived in 11oscow

in 1947 and became fairly fluent in speech and was able to and did read the Russian classical novelists. 586. He knew Gilmore of the British Embassy very well and Powers and Crawford of the American Embassy slightly. He visited restaurants frequently with Gilmore, and sometimes

with Powers and Crawford. When giving his evidence he expressed amusement that any Russian should think his capacity for absorbing liquor was great. 587. There can be no doubt that while North was in J\!Ioscow

he was kept under close observati.on by the Moscow from the moment of his arrival there in 1947. As to its

knowledge of his service career, North explained that it was almost certainly obtained by a searching of his Moscow hotel bedroom in his absence. He had amongst his effects not only a c.opy of his application for transfer from the Taxation De­

partment to the Department of External Affairs, but also a notebook in which he had entered particulars of his service in the Navy. The notebook was missing for a period of three months until it was surreptitiously returned.

588. It only remains to say that Petrov never met North, who is a man .of integrity, and was unable to collect any information in relation to him or to communicate to the Mos­ cow Centre any proposals concerning the feasibility of ''study­ ing'' and cultivating him. Petrov so advised Moscow.

589. We have dealt with the evidence relating to this para­ graph at smne length for two reasons: (a) It proves that close surveillance by the Moscow Centre of even a junior officer in the Australian

Embassy in Moscow did occur. (b) It shows the flimsy ground on which the Centre some­ times deemed a person worthy of ''study' '-a mere interest in the Russian language, literature, and

people-combined, of c.ourse, with his official position in the Department. 590. The third of these three External Affairs officers is referred to in the Mo scow Letter No. 5 of 27th September

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1952, paragraph 10. The paragraph refers to an official of a foreign Diplomatic Mission as well as to this External Affairs officer. We publish this paragraph and our report there.on in the Annexure to our Report for reasons set out in Chapter 11.

591. It is apparent from all the material to which we have adverted in this Chapter that throughout the period during which its Embassy was in Australia the Soviet, through its political espionage organ, the M.V.D., intended and attempted to obtain confidential information in the possession of the Department of External Affairs.

592. It is also apparent fr.om that material (confirmed as it is at many points by all the other material examined by us, the details of which are known to appropriate senior servants of the Crown) that Soviet espionage operations in this direc­ tion met with substantial success in certain years between 1943 and 1949 during the Residentship of Makarov.

593. \Ve are pleased to be able to report t.o Your Excellency that since l\1akarov's departure such espionage operations, although persisted in, were, so far as we can learn, unfruitful.

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CHAPTER 11

THE OPERATIONS OF THE M.V.D. IN RELATION TO MEMBERS OF FOREIGN DIPLOMATIC MISSIONS IN AUSTRALIA

594. The Moscow Letters disclose that the M.V.D. had as an important espionage aim in Australia the obtaining of secret information from members of the staffs of foreign Diplomatic Missions in Australia. Such persons may be in

possession of confidential information not only relating to the country which they represent but also affecting the security or safety of Australia.

CoNCERNING MADAME 0LLIER.

595. The evidence placed before us concerning Madame Oilier, an official of the French Embassy in Canberra, is rele­ vant to our Inquiry because it is illustrative of a Soviet espionage design to suborn an official of a foreign Embassy

accredited to Australia, to the prejudice not only of the official's country but also of Australia. 596. It is evident that the M.V.D. had a basic design to obtain through Madame Oilier the ciphers and the ciphering

technique used by the French Embassy, and such other secret information to which she had access as might be useful to the Soviet. 597. Whether the acts of Madame Ollier constituted breaches of French law is a matter for determination by

French courts and not by us; our duty is to report upon the nature of the M.V.D. design and the methods employed or attempted for its fulfilment, and whether her acts were con­ trary to the law of Australia or prejudicial to the security of

Australia. 598. At the time of Petrov's defection, 1J:adame Oilier was a Second Secretary at the French Embassy in Canberra and enjoyed diplomatic immunity. She was employed on cipher work and so had access to the cipher books and to secret com­ munications, many of which no doubt related to the hostilities

in Indo-China, in which France was directly, and Australia. was indirectly, then involved.

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599. In view of these circumstances, shortly after the defection and before our first sittings the Department of External Affairs confidentially notified the French Ambas­ sador of the reference to Madame Oilier contained in the Moscow Letters, and she was sent by her Ambassador to

N oumea, where she would be cut off not only from access to secret communications and ciphers but also from any dangerous associations she might possibly have formed.

600. The evidence concerning Madame Oilier was heard by us in private session in Melbourne on 20th July 1954. Be­ cause of diplomatic immunity and later her absence from Aus­ . tralia, she could not be subpoenaed to attend and she did not

attend the session. · Opportunity was afforded the French Ambassador to be represented at the session, but this was not availed of. \V e agreed to supply him with the transcript of the proceedings and to withhold its immediate publication in

order to give the French Government an opportunity of studying it and of making such arrangements as it considered appropriate. Later, the French Ambassador having agreed to the date of publication, the transcript was published-on 4th September 1954.

601. VV e assume that the transfer of Madame OJlier to Noumea and the abstention of the French Government from :wailing itself of the opportunity afforded it to be represented at our Inquiry were partly because of its desire that any

proceedings in connection with her should take place on French soil and in accordance with French legal procedure, and partly because it would not be in accordance with diplo­ matic practice for her Government to waive its immunity and rights under international law and permit her to give evidence. We were, of course, willing to hear her if her Government had ·waived its immunity, and this we made known.

602. In fact the French Government, after receiving the transcript, made its own interrogation of her in Noumea, and in consequence Madame Oilier was arrested there and sent to F'rance for further interrogation.

603. She has been charged with offences against the law of France. It has been repeatedly reported in certain Aus­ tralian newspaper s that she has been entirely cleared in

M.V.D. Operations conce1-ning Fore·ign Diplomats

France by the French courts of these charges, but according to official advices from the French Government she still stands charged and her trial may not take place for some time. 604. We assume that under French law only such part of

the evidence given by the Petrovs before us as may be

admitted by Madame Ollier to be true can be used against her; but whether that assumption be right or wrong our duty requires us to evaluate their evidence as best we can, having always in mind that the Petrovs were not cross­

examined by anyone on behalf of Madame Oilier, and that we had no opportunity of hearing any evidence from her. 605. We have no doubt as to the veracity of the Petrovs in this matter, but they differ in their recollections of the

sequence of certain events. Material received by us many months ago, and which we feel should not be published at present, so confirmed the evidence of the Petrovs on this aspect of our Inquiry that we instructed counsel assisting us that further investigations contemplated by them were unnecessary.

606. It appears that it was Sadovnikov who first made contact with Madame Oilier and commenced the "study" of her. He returned to the U.S.S.R. in April1951 and his suc­ cessor, Pakhomov, continued the "study" until he left in

June 1952. Petrov was instructed by the Moscow Centre (in the Moscow Letter No. 3 of 6th June 1952) to continue her ''study", and thereafter he had first-hand knowledge of the matter.

607. Since Petrov brought the Moscow Letters for 1952 only, there is no documentary evidence of the happenings of earlier or later years; but Mrs. Petrov had some knowledge of the association of Sadovnikov with Madame Ollier and a good knowledge of Pakhomov's association with her, Pakhomov's

reports to the Moscow Centre having passed through Mrs. Petrov's hands. 608. According to her, from the outset the Moscow Centre's instructions were to get from ''Olga'' (which was the code name assigned to Madame Oilier in Sadovnikov 's time) full information about the French cipher system and also any information which passed through her hands as cipher clerk.

Mrs. Petrov said that Sadovnikov and Pakhomov, although

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Report of the Royal Commission on Espionage

they had meetings with Madame Oilier in 1950 and 1951, were unsuccessful in getting any such information from her. This evidence is supported by the terms of the Moscow Letter No. 1 of 2nd January 19·52, paragraph 2, written to Petrov, who had then become the temporary :1'\LV.D. Resident.

609. Prior to the date of that Letter Pakhomov had had a number of secret meetings with J\fadame Oilier in a manner which (as appears in the Letter) incurred the Moscow Centre's disapproval. Thereafter, Pakhomov used to meet J\fadan1e Oilier at a rendezvous in Canberra when each drove in a separate car to a side:.track off the Canberra-Queanbeyan

road where Pakhomov would park his car and ride in Madame Oilier's along the side-track. The evidence of the Petrovs regarding these meetings is supported by the Letter. · 610. It appears also from the evidence that some time prior to Pakhomov's departure from Australia in June 19'52 he had, on behalf of the M.V.D., given Madame Oilier a watch costing £35. Mrs. Petrov and Pakhomov selected the watch at a shop in Canberra; Pakhomov took the watch and later reported

that he had given it to Madame Oilier. Mrs. Petrov paid the £35 purchase price from the M.V.D. funds and accounted for it to the Moscow Centre, which did not question the payment. Neither of the Petrovs could fix the date of the purchase of the watch, nor could they swear whether or when Pakhomov­ had in fact handed it to Madame Oilier.

611. The incident exemplifies the M.V.D. technique of mak­ ing small presents to persons being "studied" in order to compromise them. Madame Oilier may have regarded the gift as a 1nere gesture of goodwill. With the propriety of her acceptance of the gift from such a source we have no concern.

612. The Moscow Letter No. 1 of 2nd January 1952, paragraph 2, reads : ''Concerning Mme Ollier. A secret contact with Mme Oilier has already been

maintained by us for a period of more than two years; however, we do not have any positive results from work with this prospective agent. Analy.sis of information concerning meetings with Mme Oilier shows that the cadre workers maintaining contact

M.V.D. Operations concerning Foreign Diploma.ts

with her carried out their work in an insufficiently expert way, in consequence of which she has not so far become an agent of full value. The basic mistake lay in the fact that, having received Mme Oilier's consent to give us

assistance, Sadovnikov in the first instance and now also Pakhomov failed to obtain a regular yield from her of important information to which she has access, and they did not teach her the ways and means of agent work.

During meetings with Mme Oilier, Pakhomov discusses mainly international events and questions with her, which Mme Oilier herself raises, but questions of our work are not deeply broached. Pakhomov sets her almost no task

and does not succeed in seeing that she executes fully and punctually the tasks which have been .set her.

In order that we should be able to make a maximum use of Mme Oilier's agent capacities, Pakhomov must in the first place ascertain what type of work she carries out at the Embassy, her daily work routine: when she

starts work, when is the lunch-hour break, where she lunche.s, when she finishes work, etc. It is particularly necessary to elucidate all the details connected with the fulfilment of her duties as cipher clerk, namely: in what

room she is engaged on cipher work, where the ciphered documents are kept, does she have access to the safe where the cipher books are kept, and does she carry on her person the keys to this safe, etc.

It is also absolutely essential to elucidate, at first orally, the actual technique of the enciphering and deciphering of cables. The elucidation of all these details is necessary to enable us to determine what would be the best way,

least liable to exposure, of effecting the acquisition of deposits of ciphers of her Embassy.

It is desirable that the meetings, at which Pakhomov will be elucidating the questions mentioned above, should be carried out at places which would allow discussions in quiet .surroundings. For this purpose it appears to

us that places might be suitable, located at a distance of 40 to 70 miles from Canberra. In such a place Pakhomov could at first have a discussion in a cafe or restaurant

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a:qd then discuss with Mme Oilier the most important questions for our work during a walk in the park or along quiet streets. It is also necessary to prevail upon Mme Ollier that she should, at first orally and later in written form, give information about the contents of all incoming and out­ going cables.

Draw Pakhomov's attention t.o the necessity of a more secret. way of conducting meetings with Mme Oilier, and not to allow that he should select places for establish­ ing contact with her in localities where she could meet her fellow workers or acquaintances. (From Pakhomov's information of l j xii/ 51 it is apparent that he met her and put her in the car near the place where the building of her Embassy is.)

In the event of Mme Ollier being granted permission to go to her native country on leave, of which she would wish to take advantage, she must be advised not to insist on a posting to some other country, but to return to Australia. However, taking into account the possibility of her transfer to another country, it is essential that before she departs on leave to France some arrangement should be arrived at with her concerning the conditions of contact in Paris, on .such a basis that the first meeting should be appointed for a month and a half after her arrival in her native country, having also made provision for control meetings once a month.

In the next mail inform us concerning the existing conditions with regard to contact with Mme Oilier. We request you to pay special attention to work with Mme Oilier and to give Pakhomov assistance in making a thorough preparation for conducting meetings with her.

We ask you to inform us about meetings with Mme Oilier and about your proposals for improving work with her." 613. There can be no doubt that the basic design was tv obtain the F rench ciphers, either by persuading Madame Oilier to give copies of or access to then1 or possibly by getting acce ss to the safe in which they were kept by ''borrow­ ing'' the key from Madarne Oilier. The t ask was to obtain

I'f2

M.V.D. Operations concerning Foreign Diplomats

information to enable the Moscow Centre to determine the way of-getting the ciphers best calculated to preYent expo­ sure to the French that the Soviet had got them. 614. We, of course, know nothing of the French systmn

in relation to ciphers, but it can be well imagined that the system is universal throughout all organs of their Foreign Office. If then the M.V.D. could, unknown to the French, get the key to their comn1unications, the security not only

of France but of the whole Western world might well be in jeopardy. The prize sought by the M.V.D. was indeed great. 615. Apart from having unfruitful secret meetings with Madame Ollier, little progress was made by Pakhomov before

he was recalled in June 1952. One of the reasons for his recall, according to Mrs. Petrov, was his lack of success in this task. 616. By the Moscow Letter No. 3 of 6th June 1g.52, para­ graph 5, Petrov was instructed to take over the ''study'' of

Madame Oilier. This paragraph reads: ''As you yourself have now become convinced, Pak­ homov conducted his work with Mme Oilier incorrectly: he did not set 'her intelligence tasks, and did not attain

their fulfilment, in consequence of which he was not able to obtain from her secret information to which she has access. His discussions with her were conducted in a purposeless manner and their meetings brought us no

profit. Pakhomov stubbornly refused to carry out our instructions to obtain from her clarification concerning the ciphers. Also, he failed to come to an arrangement with her. concerning permanent conditions of contact.

In entrusting you with work with Mme Oilier, we request you to bear in mind the errors committed by Pakhomov in work with her, and to direct your main attention and efforts to the receipt from Mme Ollier of

information about the ciphers on which she works, and also of other secret information which passes through her hands. In order to establish contact with her, exploit any suitable opportunity to become acquainted with her by

making use of Pakhomov's name, and to come to an arrangement concerning a meeting in secret conditions.

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At the first meeting explain to Mme Oilier that in con­ nection with Pakhomov 's departure from the country, you would like to continue to maintain a contact with her, and express the hope that she will go on helping us as before, and that we need this help. Tell her that, in so far as she has access to secret documents, she can render a considerable service to the cause of peace by giving us information _concerning _the _machinations, _behind _the scenes, of the ruling circles of Britain, America, France, and Australia, directed against the Soviet and the Peoples' Democracies.

Come to an arrangement concerning subsequent meet­ ings, which we recommend to be conducted not oftener than once in three or four weeks. From the very first meeting with her, endeavour to establish good relations with her; since much will depend upon this in your further work with her. Prepare your­ self well for the meeting.

We agree with your proposal to pay her a certain sum of money. We authorize you, at the opportune moment, to hand to Mme Oilier £75-0-0, using the justification that Pakhomov had told you about her financial difficulties and that you, having taken into account her good attitude towards us and the services she has rendered, decided to assist her financially. Give her to understand that, if she collaborates with us actively, she can always count on our help. At your first meeting with Mme Oilier explain to ·

her that we are interested in the development of her contacts in the diplomatic corps, and in particular ask her to deepen her acquaintanceship with . . .. " (Here follow the names of fo ur persons on the staffs of Diplomatic Missions of other countries which, for reasons of comity, w e think it proper not to publish here. The names will be fo und in the A nnexure to this Report.)

"We request you to display maximum caution in your work with Mme Oilier. You should select, in advance, the places most suitable for conducting meetings, and thoroughly check when pro­ ceeding to the meetings and after meetings.

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M.V.D. Operations concerning Foreign Diplomat$

We request you to inform us briefly by cipher concern­ ing the establishment of contact with her and concern­ ing the results of the first meeting, and to send us a de­ tailed report by mail.

Send us your proposals about work with Mme Oilier in every mail.' ' ·

617. There are differences in the recollection of Petrov and Mrs. Petrov as to the time at which Petrov made his first contact with Madame Oilier, and as to the dates of his earlier meetings with her thereafter.

618. In fact, Madame Oilier went to France on leave in August 1952 and returned in January 1953. The Moscow Centre had been advised of her intended visit to France and in the Moscow Letter of 2nd January 1952 Pakhmnov, through

Petrov, had been instructed to advise her to seek to be re­ posted to Australia and to make arrangements for contact by the M.V.D. with her in Paris while she was there on leave.

619. Petrov probably first made contact with Madame Oilier at a reception given by the Indonesian Embassy in 1952 on their National Day, which was on 17th August, but nothing of importance occurred until after Mada1ne Oilier's return

from Paris in January 1953. 620. In April 1953 Petrov made an arrangement with Madame Oilier by which they could meet secretly every month from then onwards. The fixed rendezvous was outside Young's

store at Queanbeyan (a town eight miles from Canberra) at 8 p.m. The day of the month appointed for the meeting was fixed by adding 5 to the number of the month-thus the meet­ ing in June would be on the 11th ( 5 + 6), and in July on the

12th, and so on. This sort of arrangement is an M.V.D. prac­ tice, as the evidence before us shows. Its object is to provide an easily remembered series of rendezvous at which the ''con­ tact'' knows he can find the M.V.D. worker if he so desires;

and it obviates the necessity of communication for the pur­ of making appointments.

621. Petrov went to hospital on 22nd May 1953 and, it appears, had his first secret meeting with Madame Oilier on 11th June at Queanbeyan. Thereafter he met her at the rendezvous on four or five occasions-she did not attend on

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Report of the Royal Commission on Espionage

some of the appointed days. Each 'vent to the rendezvous in a separate car, and conversations took place in a car or in the street. 622. At meetings held in the latter half of 1953 Madame Oilier told Petrov that as a cipher clerk she worked on what the Russians call the second floor of the French Embassy

(that is, the first floor above the ground floor) ; that the ciphers were kept in a safe on that floor; that she had access to that safe but did not carry the keys of it on her person; that she con1menced work at 8.30 a.m., that lunch was from 12.30 to 1.30 p.m., and that she worked till 5.30 p.n1. All this informa­ tion was reported to the Moscow Centre.

623. Petrov questioned Madame Oilier as to the contents of cables passing between the Embassy and the French Foreign Office coded and decoded by her, and she informed him that they were of no interest to him as they dealt only with protocol matters.

624. Neither Pakhomov nor Petrov ever asked Madame Oilier for the French ciphers or for information about the ciphering technique, which were of course the vital secrets sought by the Moscow Centre. Petrov said he did not ask her because he thought ''she was not ready to give such informa­ tion"; it appears also that there was a lurking doubt whether Madame Oilier may not have been ''studying'' Petrov.

625. Some time before December 1953 the Australian Gov­ ernment had made an arrahgement to send arms to the French forces in Indo-China. In December 1953-presumably on 17th December (12 + 5)-Petrov sought infonnation from Madame Oilier as to the types of arms which Australia proposed to send and the na1nes of the ships by which they would be carried. Madame Oilier told Petrov that she hoped to be able to supply a list of the types of arms, and she agreed to 1neet Petrov at Cooma (a town some 70 miles from Canberra) on 24th .December at 8 a.m. This rendezvous was fixed because Madame Oilier intended to pass through Cooma on that date en route to Melbourne.

626. On 24th December, while driving to Cooma, Petrov had a serious car accident; he was taken to Cooma-unhurt but dazed-by a passing car. l\fadame Oilier did not arrive in Cooma at the appointed time but later in the day. Possibly

V.D. ·Operations concerning Fa reign Diploma-ts

she had deliberately avoided the rendezvous. Petrov had remained in Cooma, because there was no train to Canberra until the afternoon, and met her by chance. She told him that she had seen his burnt-out car; and that she could not give him the particulars of the arn1s because the list was locked in the

Ambassador's safe. We have good reason to be satisfied­ from 1naterial quite apart fron1 Petrov's evidence-that this 1neeting did occur. 627. From the evidence it is certain that the meeting

between Petrov and Madan1e Oilier fixed for 8th March 1954 at Queanbeyan took place. That was the last meeting Petrov had with Madan1e Ollier before his defection on 3rd April 1954. It is not certain that both of the meetings fixed for

January and February 1954 took place_ . 628. Mrs. Petrov stated: "In January or February, 1954, 'Olga' told Petrov that an Australian ship was going to New Zealand to load

armaments which the New .Zealand Government had given to the French Government for use in Indo-China. I think that it was in the middle of February that this ship went to New Zeal&nd. It had to return to Australia and then

with another ship loaded with the armaments from the Australian Government was to proceed to Indo-China. There was no mention .of any possible escort. All this inforn1ation was sent by cable to M.oscow. '' 629. Petrov $aid that Mad.ame Oilier told hin1 (possibly not until 8th March, but certainly no later) that a ship- the "Radnor"-had gone to New Zealand to load arn1s fo1: Indo­

China and would oome to Australia to load arms for the Saine place. He said that about a fortnight before the news about the ''Radnor'' carrying anna to Indo-China appeared in the press she gave him this information as information learnt in her Embassy. ·

630. As far as we have been able to learn from our inquiries, the first mention in the press that the ''Radnor'' was to carry arms' from Australia to Ind.o-China was not until near the end of but the 1natter may have been widely known

before it was so mentioned. 631. For our purposes, the question whether J\!Iadame Ollier improperly-supplied to Petrov inforn1ation concerning

·)f 78228-12 t'17

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Report of the Royal Commission on Espionage

the "Radnor" is of small moment. In fact, the results

obtained from these laborious and persistent efforts of the M.V.D. were almost negligible. Probably Mrs. Petrov was correct when she stated her opinion that Madame Oilier had no real desire to help the Soviet but pretended an intention to do so because ''she wanted some Soviet friends in the case of an outbreak of war".

632. But the important matters from our point of view which emerge from the evidence are : ( 1) the design of the Moscow Centre to get from Madame Oilier the French ciphers, their ciphering technique,

and any secret information she might "in the cause of peace" be able to give .of the anti-Soviet "machina­ tions'' of ''Britain, America, France, and Austra­ lia"; (2) the careful instructions given by the Centre for

carrying the design into effect; ( 3) the Centre's desire to ensure her return to Australia, where the progress of the M.V.D. task of getting the F 'rench ciphers could be most readily resumed; ( 4) the methods employed by Sadovnikov, Pakhomov,

and Petr.ov in furtherance of this design, particularly the .manner of the ''conspiratorial'' meetings they had with her and the arrangements therefor and the making of a small gift; ( 5) the authorization of payment of £75 to her in re­

sponse to her complaints of financial difficulty and the authorization of a promise to her of further financial help in return f.or her active collaboration; ( 6) the design to use her to develop her contacts in the

Diplomatic Corps for M.V.D. purposes.

633. All these matters put beyond any doubt that the M.v.n: is an organization engaged in espionage and not, as some counsel argued, merely carrying out legitimate diplomatic functions in the collection of information.

634. J\1adame Oilier is mentioned elsewhere in the Moscow Letters: (1) In Enclosure No.2 to Letter No.5 of 27th September 1952 (which, for reasons stated, we publish in full

178

M.V.D. Operations concerning Foreign Diplomats

in the Annexure to our Report) the Centre supplied Petrov with personality reports on many Australians and wrote of one influential Australian journalist-"In Mme Ollier's opinion he is connected with

the counter-intelligence ... In response to Pak­ homov's questions about the Government's economic policy, he gave reserved but objective answers.''

As we have previously mentioned, these reports were compiled by the Moscow Centre partly from informa­ tion supplied to it by Pakhomov after his return to Moscow. The inference is that Madame Ollier

expressed the opinion to him.

( 2) In the Moscow Letter No. 4 of 24th July 1952, para­ graph 2, Petrov was asked to obtain information con­ cerning Australian policy, etc., in relation to the Seventh Session of the General Assembly of the United Nations, to be held in October 1952, and was instructed for this purpose "to make appropriate use

of the potentialities of Olga, Zemliak, Charlie ... '' (i.e. of Madame Ollier, O'Sullivan, and Chiplin). Petrov made no attempt to obtain from JYiadame Ollier the information requested. Apparently his first contact with her was made on 17th August 1952,

and later in that month she left for France on leave.

635. As we have said, whether Madame Ollier has committed any breach of the law of France is no concern of ours. Not­ withstanding that she stands charged and untried for breach of that law, we report upon this matter now because our

statutory duty is to report ''with as little delay as possible'' the result of our inquiries under the heads set out in the Letters Patent.

636. The evidence clearly establishes that in respect of Madame Oilier espionage was conducted by two members of the Soviet Embassy in Australia, namely Sadovnikov and Petrov, and a Tass representative, namely Pakhomov, all

acting as espionage agents under the specific direction of the Soviet Government.

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Report of the Royal Cornmission on Espionag•

CoNCERNING OFFICIALS OF oTHER FoREIGN DIPLOMATIC MissioNs.

637. The Moscow Letters contain references to two other officials of different fQreign Diplomatic Missions in Australia about whom evidence was given. 638. As in the case of Madame Ollier, we took the evidence concerning these references in private sessions, and later each of the Missions concerned was handed a oopy of the transcript of the evidence relating to its official.

639. The reference to one of these Q[ficials is contained in the Nloscow Letter No. 5 of 27th September 1952, paragraph 10, to which we have referred in Chapter 10. The reference and the relevant evidence show that Petrov met this official on social occasions in co1npany with one of our External Affairs officers. Merely friendly conversations took place; but it is interesting to note that, as we learned, the External Affairs officer reported his meetings with Petrov to his superiors, one of whom commented on the singularity of a Soviet diplomat having Petrov 's freedom of movement and of association with foreigners, and consequently advised

caution. The foreign official likewise reported his me etings to his Mission. 640. Petrov reported these meetings to the :Moscow Centre, with the result that it advised him that neither the foreign official nor the External Affairs officer was "on its books" but that they were of "operational interest" and that he

should to study them''.

64L In the Letter and the evidence, the 1natters concerning the External Affairs office r and the foreign official are so intermixed that we are unable to publish separately the Inaterial concerning the fonner.

642. The references to the other foreign official are con· tained in the Nloscow Letter No. 5 of 27th September 1952, paragraph 12, and in Enclosure No. 3 to that Letter. These references set out a long history, provided by the Moscow Centre, concerning only the official's life and activities be­ fore his cm:ning to Australia, and they directed Petrov to instruct Antonov to " study " him. Some of the details of

the history, as set out in the Letter, were confirmed by the evidence of an E xternal Affairs office r 'lvlto had known the foreign official abroad. The r eferences in the Letter and the

ISO

V.D. Operations concern'tng F orei.gn Di plomats

Enclosure are a st riking exan1ple. of the lengths to ·which the l\1oscow Centre goes in compiling dossiers on· diplomatic personnel, and of its unscrupulous methods of attaining its espionage ends.

643. The Petrovs met this foreign official only socially at diplon1atic receptions, and neither they nor Antonov ''studied'' him. 644. There is no evidence or suggestion that either of the foreign officials or the officer of the Department of External

Affairs to whom we have here referred was in any. way directly or indirectly concerned in espionage in Australia. rrhe cases of these two foreign officials therefore are entirely different from that of Madame Ollier.

645. Representations were made to us, through and by the Department of External Affairs, that in the circumstances; for reasons o£ international comity, we should not publish these references in the Letters or the evidence relating ·to them.

646. Because we have a statutory duty to report to Your Excellency in terms of our Co1nn1ission, we acceded to this request only to the extent that we do not publish the relevant evidence, and we include the references and our Report there­

on in the Annexure hereto, in which, as will appear, we have for convenience collected some other references in the Petrov Papers the evidence concerning which we do not publish. 647. Whether the contents of the Annexure (like any other part of our Report) should be -printed and published is, we apprehend, a matter for consideration by Your Excellency's advisers.

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CHAPTER 12

THE OPERATIONS OF THE M.V.D. IN RELATION TO OF THE PARLIAMENT

648. The "study" of :Members of the Parliament with a view to their ultimate use as witting- or unwitting informants, and of the political organizations to which they belong, was a task on which the Moscow Centre laid emphasis. The reason for this is plain.

649. As will be seen, even a natural interest shown by a Member in anything Russian, or an ordinary courtesy -dis­ played by him towards a Soviet official, might cause his name to be reported to the Moscow Centre and there recorded in what the Centre called its ''books".

650. It is appropriate that we should emphasize that the evidence before us negat!ves any suggestion that any of the persons mentioned in the entries dealt with in this Chapter was in any way connected with Soviet espionage or related activities in Australia, or wittingly or unwittingly gave to any Russian any information that he should not have given. The references to them illustrate the JYLV.D. practice of collecting information (which often was inaccurate) about Members of the Parliament and _ others and reporting it to the Moscow Centre for its ''books''.

651. The G Series of documents shows that the 8entre's interest in such matters existed prior to 1949, and the Moscow Letters show that it continued thereafter.

652. The part of the G Series of documents to which we refer is a copy made by Sadovnikov of an Enclosure to a Letter No. 2 of lOth November 1949 from the Moscow Centre. Since we have not got the letter, and Petrov knows nothing of it, we cannot say exactly what purpose the Centre had in

sending to Sadovnikov the list of names and the details con­ tained in the Enclosure. It is evident, however, that the Centre regarded them as being of interest.

M.V.D. Operations concerning Members of Parliament

653. In Document which is part of the copy of the

Enclosure mentioned above, there appear the following entries:

'' of parliament, former correspon­

dent, labour supporter, very close to Evatt. Likes to drink and on such an occasion he becomes very voluble. 'A' used him for obtaining information from Evatt.''

''Cal well-Minister. for Information, interested in our country. Has expressed a desire to meet 'A'.' '

"Falstein-aged about 40, Jew, former member of parliament, noted for his leftist speeches, very much wanted to go to the Soviet Union.''

654. In Document G.10, which is a continuation of the Enclosure, there is an entry relating to a person who is con­ nected with the Parliament although not a Member of it. That en try reads :

"Fitzhardinge-librarian of the National library, knows quite a lot and can give useful advice. Has access to the library of the parliament. Was acquainted with 'Lip'."

655. In the light of the date of the .Enclosure (November 1949) and of the phrase "former correspondent", the entry "Frazer" seemed to refer to Mr. A. D. Fraser, M.P. He stated, and we accept his statement, that the references to

drink and that" 'A' used him for obtaining information from Evatt" are entirely without foundation. He and Mr. A. A. Calwell, M.P., who in 1949 was Minister for Information, and Mr. S. M. Falstein, a former M.P., informed us that their only contacts with Soviet officials were on official and formal

occasions. This we believe.

656. It will be noticed that in two of the entries quoted above a reference is made to ''A''. vVe endeavoured, out success, to ascertain who that person was. There are two other entries in the same Enclosure containing references to and it is convenient to quote them here although neither

of the persons mentioned comes within the Qategory of of the Parliament.

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Report of th& Royal Ccnnm'ission on Espionagt:

The first is-'' Finnard-lawyer, graduate of Sydney University, interested in questions of Marxist philosophy. Makes very harsh remarks about the labour people. Offered to give 'A' interesting information. Was friendly with Withall, director of the federal chamber of industry." __

second is-

'' McKell_._f ormer prime minister, was on ,good terms with Simonov, the first U.S.S.R. representative in Australia. Asked 'A' to turn to him for assistance." 657. \V' e were able to identify '' Finnard'' as Stanley Rayn1ond Phippard, a solicitor of repute practising in Can­ berra, whose only contact with officials of the Soviet Embassy arose fron1 the fact that he did $Orne legal business with which some of them were concerned. He said he was friendly witll Withall, the ''Director of the Chamber of Manufactures of Australia". He could not assist us to identify" A" .

. 658. The entry '' Mci{ell'' refers to The Right Honourable Sir William Mc!{ell, G.C.M.G., Q.C., the Governor-General of the Commonwealth from 11th March 19'47 until 8th May 1953. Prior to 1947 he had been the Premier of New South Wales. Sir William McKell inforn1ed us, through counsel assisting us, that many years ago he had known a Russian named Simonov, who appears to have been some kind of unofficial representative of the So-viet in New South Wales before the establishment of the Embassy. The statement in the entry relating to Sir William that he had

"asked 'A' to turn to him for assistance" at first gave rise to a suggestion that ''A'' may have stood for ·An1bassador, since Sir William McKell, in his capacity as Governor-General, may well have formally addressed such a remark to a Soviet Ambassador. But '' P'' is the initial letter of the Russian word for "Ambassador", and it is very unlikely that the M.V.D. would have used as a reference the initial letter o£. the English word ''Ambassador''.

659. We took steps, through the Solicitor-General, to ascer­ tain from Mr. Calwell whether he could throw any light on the identity of "A". He could not do so, but in a statement which he prepared for our assistance he pointed out that as a Minister of the Crown he had no need to express a desire

M.V.D .. concennng of Parliament

to n1eet any Arnbassador and did in fact, in his official capacity, meet both Mr. Lifanov and Mr. Generalov, the

Ambassadors. In these circumstances, he pointed out-and we that it is unlikely that "A" referred to the Soviet

Ambassador. 660. We quoted earlier an entry relating to Fitzhardinge. Laurence Frederic Fitzhardinge told us that from 1934 until early in 1945 he was "technically an officer of the Parlia­

mentary Library". He said that on occasions officials of the Soviet Embassy had sought his assistance to use the facili­ ties of the library; that he and his wife had met a number of them socially; and that his wife-who had on occasions

attended the Russian Social Club in Sydney and knew a number of Russians-had given English lessons to some members of the Soviet Embassy. These facts could account for the M.V.D. interest in Intzhardinge.

661. His evidence and that of another witness, Westcott (to whom we have referred earlier), enabled us to identify "Lip" or "Lipsky" as Alexeev, who was lmown to both of them and who was at one period an Attache at the Embassy.

662. It is clear that, as in so many other cases, the M.V.D. interest in Phippard and Sir William McKell arose solely from the fact that each of them had shown ordinary courtesies to Soviet representatives .

. 663. As we have said, the interest of the M.V.D. in

Members of the Parliament continued after 1949, as is shown by the Moscow Letters. 664. In the Moscow Letter No. 1 of 2nd January 1952, paragraph 8, the following appears:

''Concerning Morrow and 0 'Byrne. Morrow and O'Byrne are of unquestionable interest to us, and therefore it is necessary for Pakhomov to estab­ lish and maintain an official contact with them. An association with Morrow and 0 'Byrne should be exploited for the purpose of studying them and of obtaining the necessary 'in the dark' information from them." 665. Mr. Morrow is no longer a Member of the Parliament, but in 1952 he was a Senator. The reason why the Moscow

Centre took an interest in him seems to be fairly clear.

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Report of the Royal Commission on Espionage

He was, and is, a man of strong pro-Soviet sympathies and an ardent supporter-and at the present time an executive member-of the "World Peace Council". Since that Letter was written he has, travelling via Peking and Moscow, attended a "World Peace Council" meeting in Budapest and a "World Youth Festival" in Bucharest.

666. While a Senator he visited the Soviet Embassy on a number of occasions and both Ambassador Lifanov and Ambassador Generalov, according to Petrov, showed particular interest in him.

667. Up to the time when Pakhomov left Australia in June 1952 he does not seem to have taken steps to" study" Morrow. There is no evidence that any information was obtained from him by the M.V.D., and Petrov has said that none was. The

reference in the Letter does not contain any suggestion to the contrary.

668. Senator 0 'Byrne was elected a Member of the Senate in 1946 and is still a Senator. He and other members of his family have fine records of service to Australia in the last war. He served as a Pilot Officer in the Royal Australian Air Force and in 1941 was shot down over France and captured. He was imprisoned in prisoner-of-war camps in Germany and

Poland, and made several unsuccessful attempts to escape. He learned some Russian while a prisoner.

669. His only association with the Soviet Embassy or its officials consisted of attending, along with many other guests, two official Embassy receptions. At the second, in November 1951, he spoke a few words of greeting and thanks in Russian to one of the Embassy employees who served him with refresh­ ments. Possibly this is an explanation of the fact that his name was reported to the Moscow Centre. As we have men­ tioned elsewhere in this Report, the mentality of the M.V.D. is such that even a slight sign of interest in anything Russian, particularly_ when displayed by a man in public life, appears to have been sufficient to make him the subject of a report to the Moscow Centre and to arouse its interest. The direction to Pakhomov to "study" Senator O'Byrne was not carried

out and he gave no information, witting-ly- or llnwittingly, to the M.V.D. -

t86

M. V.D. Operations concerning Members of Parliament

670. The Moscow Letter No. 2 of 12th March 1952, para­ graph 3, is the next reference which deals with this subject­ matter. It reads:

''Concerning Political Parties. In the matter of exposing the foreign political plans of capitalist states ·by means of .agent penetration into the institutions of governments and the leading circles

of these governments, one of the most important priorities is the study of politfcal parties. The study of political parties has not so far been carried out by the Australian section of the M.V.D. For the pur­

pose of studying the problem and determining definite ways and means for the effecting of the study of political parties, we request you to commence collecting material and preparing short reports about each of the political parties existing in Australia, and in the first place those participating in the coalition of the go-vernment.

In reports concerning political partie.s it is desirable to portray the history of their origin and development, what classes of the population they bring together, the conditions of membership of political parties, their politi­

cal tendencies, information regarding their leadership,. their influence on the political life of the country and the activities of the government, about foreign influence exerted on any of these political parties, the activities

of their clubs and printing organs, information about members of political parties who may be of .some interest to us, and also your proposals concerning ways of study­ ing them.

Employ all the personnel of the M.V.D. section and of recruited persons on the execution of this work.'' 671. The collection of much-but not all-of the informa­ tion for which this Letter called would be part of the normal work of any Embassy. The significant feature, giving it its espionage character, is the opening paragraph, which shows that the information sought was required for the purpose of

assisting in the work of "agent penetration into the institu­ tions of governments and the leading circles'' of the Govern· ment.

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Report of the Royal Commission on Espionage

672. The. Moscow Letter No. 3 of 6th June 1952, paragraph 1, makes further reference to this subject: ''. . . it is essential . . . to concentrate attention on the· study and recruitment of persons engaged on secret work

of the government and occupying leading po.sts in politi­ cal parties and organizations, capable of supplying us with valuable information.''

673. Later in the same Letter, paragraph 11 reads: ''In connection with the necessity of stirring up the work of compiling dossiers on governments and public and political persons of capitalist countries, you should systematically collect and dispatch to M.V.D. Head­ quarters both agent and official information on the follow­ ing persons:

Menzies-Prime Minister-Leader of the Liberal Party. Casey---Minister for External Affairs. McDonald--Minister for Defence. ·Francis-Minister for the Army and the Navy.

Fadden-Minister for Finance, leader of the National Party. McKell-Governor General. ..

Williams--High Commissioner of Britain in Aus-tralia. Evatt--Leader of the Labour Party.''

67 4. In the original of this Letter the names and offices of these persons are enciphered. The reference to "Mcl>onald" as the Minister for Defence is probably a mistake of fact or enciphering made in Moscow. So also is the reference to the

''leader of the National Party' '.

675. In reply to this request for information, Petrov sent to Moscow details given about these persons in standard works such as Who's Who, and from time to time sent reports of speeches made by them.

676. The next reference of significance is in the Moscow Letter No. 5 of 27th September 1952, paragraph 2, which

M. V.D. Operations eoncernzng M ·of Parliament

that Antonov (who had arrived in June 1952 to

replace Pakhom.ov as Tass representative)

'' ... continue to extend his contacts, in the first instance among the political correspondents and among members of the parliament, ignoring any embarrassment through temporary difficulties in the spoken language.''

677. Later in the Letter (paragraph 11), the Moscow Centre said: -

''Concerning information about persons who might be of use to the M.V.D. As Enclosure No. 2 to this Letter we are sending you information about persons who might be of use to the M.V.D. taken from Pakhomov's report.

Please acquaint Antonov and with them. W.e consider that the basic work in the study of parliamen­ tary correspondents and members of the parliament, indicated in the Enclosure, should be conducted by An­

tonov.'' 678. Pakhomov had by this time returned to the U.S.S.R. and reported in person to the Moscow Centre.

679, Enclosure No. 2 consists, in the Jnain, of personality reports about members of the Parliamentary Press Gallery af Canberra. They are based upon Exhibit FI, which Pak­ homov had obtained from O'Sullivan, but contain added de­ tails provid.ed by Pakhomov himself.

680 .. For reasons which we have stated, we have not pub­ lished Exhibit H; and it would therefore not be right to pub­ lish so much of this Enclosure as reflects Exhibit H. The Enclosure does, however, include the names of two Members

of the Parliament who are n.ot mentioned in Exhibit H. The first reference is in the following "Russell is a member of the Parliament, a labour sup­ porter. In conversations with Pakhomov he di11played

an interest in the life of and expressed a -desire

to visit the Soviet. He once listened attentively to Root, who expressed himself favourably about the changes in Russia, in the upbringing of the new generation and in

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Report of the Royal Commission on Espionage

the building projects. He is critical of the internal and foreign policy of the Australian Government. Russell is of interest for further study.'' 681. "R.oot" (to whom there is another, and equally innoc­ uous, reference in the Enclosure) proved to be the code name for a well-known and reputable journalist named Hogue, who was at one time President .of the Press Gallery at Canberra and who in that capacity met and showed ordinary courtesies to some of the Soviet Embassy officials, including Vysselsky

(an M.V.D. worker), to whom he expressed an intelligent interest in life in the U.S.S.R. In the result, Hogue was allotted a code name and was, no doubt, marked down for "study".

682. As a Parliamentary j.ournalist, Hogue knew and had conversed on occasions with Mr. Russell, M.P., who was­ and is-a Member of the Parliament for a South Australian constituency, with a record in public life in which he takes pride. Hogue, however, has no recollection of ever discussing the U.S.S.R. with Mr. Russell, and the latter-told us that he has never discussed the subject with any journalist.

683. Mr. Russell is a man who holds strong anti-Communist views. He stated that as far as he is aware, he never met Pakhomov. He stated also that on one occasion only did he co1ne into contact with Soviet officials, and that that was when he, with many others, attended an official reception at the Embassy. He may have met Pakhomov there along with other officials without knowing who he was; and may have made polite remarks, appropriate to such an occasion, which have since passed entirely from his 1nind. It may be that Pakhomov, in his reports to the Centre, attributed to Mr. Russell matters which properly should have been attributed to some other individual.

684. As we have said elsewhere in this Report, it would be wrong to assume that all the information appearing in an M.V.D. dossier about an individual in Australia is accurate. The Letter does not suggest that the M.V.D. obtained any information from Mr. Russell, and in fact it did not do so. We know of no reason which, at least to the Western mind, could have caused the J\foscow Centre to think that he was worthy of "study" with a view to using him as a witting or unwitting informant.

M.V.D. Operations concerning Members of Parliament

685. The other Member of the Parliament mentioned in the Enclosure is Senator McCallum. It is said of him:

''Senator McCallum is a member of the parliamentary Foreign Affairs Committee. He is a member of the Liberal Party, a reactionary. He is sociable, but at the same time haughty. As a result of discussions with him,

Pakhomov formed the opinion that Senator McCallum has a poor knowledge of international policy, despite the fact that he is an adviser on international policy. He knows practically nothing about the Soviet and about

the Peoples' Democracies. In conversation with Pakhomov, Senator McCallum asked many questions about the Soviet, the state struc­ ture, constitution, the legal system, elections, etc., which

demonstrates his desire to know more about the Soviet. In reply to Pakhomov's questions he sometimes gave answers which threw light on the position of the Aus­ tralian government in international affairs.

It would be expedient to establish a contact with him with a view to obtaining from him 'in the dark' informa­ tion on questions of foreign policy.'' 686. Senator McCallum stated that in June and July 1952 he travelled from Fremantle to Marseilles on the liner

"Orion". Pakhomov also was a passenger on the ship, then being on his way back to the U.S.S.R. after his relief by Antonov.

687. In the course of the voyage Senator McCallum was introduced to Pakhomov and conversed with him on interna­ tional affairs and on the Soviet. He stated that he asked many questions of Pakhomov on these subjects and may thus

have given an impression of ignorance on such matters. He stated-and we believe him-that he gave no information that could be regarded as secret or confidential or which could not have been from the newspapers. Pakhomov repre­

sented himself as being interested solely in gathering news about Australia for publication in the Soviet newspapers and in persuading Australian newspapers to publish correct infor­ mation about the Soviet. He seemed to Senator McCallum to

be not very intelligent.

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Report of the Royal Commission on Espionage

688. The entry relating to Senator McCallum is of interest in that it affords, along with many other entries, striking evi­ dence of the authenticity of the Moscow Letters. The only conversations between Senator McCallum and Pakhomov took place while Pakhomov was on his way back to the U.S.S.R., where he made his report to the Moscow Centre. By no rational process of thought is it possible to see howthe infor­ mation contained in the Letter concerning these conversations, which occurred only on the ship, could have come to Petrov from anywhere save Moscow.

689. We repeat that the evidence before us negatives any suggestion that at any time any of the persons mentioned in the entries dealt with in this Chapter either wittingly or un­ wittingly provided the M.V.D, with any information of the kind which it wished to get. But it is clearly established that the M.V.D. designed to penetrate the Parliament and political parties and to use those persons for the purpose of getting

confidential information fro1n or through them.

CHAPTER 13

THE OPERATIONS OF THE M.V.D. IN RELATION TO JOURNALISTS

690. The interest of the 1\LV.D. in journalists, and in par­ ticular in members of the Parliamentary Press Gallery at Canberra, appears clearly fron1 the material before us. The principal reason for that interest is obvious. Parliamentary

journalists are in constant touch with Ministers and with highly placed officials. They frequently receive ''off the record'' and background information, sometimes of an im­ portant nature.

691. It is apparently the world-wide Soviet practice for Tass representatives to be recruited espionage agents. It .certainly was so in Australia, where N osov, Pakho1nov, and ·Antonov-in succession the Tass men here---were all active

lvi.V.D. cadre workers.

· 692. The "study" of journalists for the JYLV.D. was pri­ marily the task of the Tass representative, who could without exciting attention mix freely with journalists and would be naturally accepted by them as one of themselves. lie is thus in the way of gainirig access to such infonnation as they have and may be able to use then1 as at least unwitting infon11ants.

693. The M.V.D. interest in journalists is sho,vn by the G Series of documents to have existed prior to 1949, and by the Moscow Letters to have continued thereafter.

694. The Enclosure to Letter No. 2 of lOth November 1949, the origin and nature of which we have described in the pre­ ceding Chapter, contains also entries concerning a number of journalists who had attracted the attention of the 1\LV.D . This Enclosure should not be confused with the Enclosure to the Moscow Letter N-o. 5 of 27th September 1952 which reflects ·0 'Sullivan's personality reports contained in Exhibit If.

-·- 78228- 13

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Report of the Royal Commission on Espionage

695. The first entry in the Enclosure to the 1949 Letter is in Document G.B. That entry is in these terms: ''Miller Forbes-born 1912, a native of Australia, deputy editor of the 'Daily Telegraph'. Expressed a

desire to inform 'T' systematically concerning material prepared for the press. Both he and his wife are fav­ ourably disposed towards us.''

696. The entry refers to Forbes Keith Miller, a Sydney j.ournalist. In 1943 or 1944 he became chief sub-editor of the "Daily Telegraph" newspaper, and he held that position until 1952. I-Ie later became chief sub-editor of the magazine ''A.M.''.

697. Niiller told us that in 1943 he had-with the consent of his employer-made an arrangement with N osov, whom he believed to be merely a Tass representative, to supply Nosov with news which might be of interest for·him to cable

to Tass. For these services, Miller said, Nosov, with the knowledge and approval of the proprietor of the "Daily Tele­ graph", paid him a weekly sum of £2. Miller told us that he had earlier been a member of the Communist Party but

had ceased to belong to it in 1942 because he disagreed with its policies. There was, he said, nothing improper in the arrangement made by him with Nosov, and such an arrange­ ment to supply information of interest to correspondents of overseas newspapers is, we were told, a common practice in newspaper offices. "T" stands for "Tekhnik", Nosov's M.V.D. code name, and doubtless Nosov originally supplied the Moscow Centre with the information contained in the entry and it was later sent .out to the Resident here.

698. The next entry in Document G.8 is as follows: "Mclnnes-about 40 year.s of age, journalist. Has wide connections among press workers and in political and business circles. In his convictions he appears to be a man inclined to the left.''

699. Despite an inaccuracy as to the age mentioned, this entry relates to Ian Gray Macinnes, who was a member and, for a period, an office-bearer of a branch of the Communist Party. He told us that he allowed his membership to lapse in 1950 or 1951. Fron1 1945 until 1947 he was the editor of

M. V.D. Operations concerning Journalists

"Labour News" and before that had been on the staff of the "Daily Telegraph" and later of the "A.B.C. Weekly" . . In 1947 he joined the Department of Commerce in a journalistic capacity. He was for a period an office-bearer of the Aus­

tralian Journalists' Association, and he knew N.osov. 700. The next entry in Docun1ent G.8 is as follows: '' Birtles B.-about 48 years· of age, prominent jour­ nalist, has contacts among writers and artists. Has

travelled in Europe, ·knows Greece well.''

701. This refers to Herbert Victor Birtles, a journalist and writer with-so he told us-"leftish" views, who had travelled in Europe and particularly in Greece, where he had collected material for a book, which he subsequently published,

about Greek politics and travel. He knew N.osov.

702. The next entry in Document G.8 is as follows: ''Maclean-journalist, sympathetically disposed to­ wards us, a very well informed man. In 'T 's' opinion, he will give information.'' 703. This is the same Maclean who became a member of the Department of External Affairs in 1947 and to whom

reference is made in Chapter 10. He was at one period a mem­ ber of the Communist Party, and he knew N osov.

704. The next entry is in Document G.9 and reads as fol­ lows: "Olsen 0.-promised 'T' assistance in the study of the country and in obtaining information passing through

the newspaper.'' 705. C.ounsel assisting us informed us that investigations had disclosed two journalists of this name but it seemed probable that neither of them was the person mentioned in

the entry. 706. The final entry in Document G.9 relating to journalists is:

"Simpson Colin-favourably disposed towards us." 707. This entry relates to Colin Simpson, a writer who has produced a number of well-known bo.oks and who was a jour­ nalist. He stated that his views in his earlier days had been

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Report of the Royal Co1nrnission on Espionage

radical but had changed with the years, and that now he is in no 'vay pro-Communist in his outlook. A letter fron1 him, written in 1952 to the Secretary of the "Youth Carnival £or Peace and Friendship'', dissociating hirnself from that organi­ zation because of its Communist inspiration, fully supported this last statement. He knew Nosov as a fellow 1nember of the Journalists' Club.

708. Two other journalists are mentioned in Docu1nent G.4, the second part of which consists merely of a list of seven names with a code nmne against each. The entries arc in Petrov 's handwriting and were copied by hin1 fron1 a list in Sadovnikov's handwriting. There is nothing in the docu­ ment itself to indicate the exact nature of the M.V.D. interest in the persons listed or why they 'vere grouped together.

709. The entries relevant for the present purpose are: "Christisen, S.B. 'Crab' " "Turnbull, K.-'Teodor'" 710. The entry' 'Christisen, S. B.'' refers to Clement Byrne Christesen, who has been for many years the editor of "Mean­ jin", a literary magazine published in Melbourne. He and his wife knew N osov, and he t.old us that he took some interest

in the activities of Australia-Soviet House in Melbourne and in its professed ain1 of fostering peaceful relations with the Soviet, and in the work of Voks. He has never been a mem­ ber of the Communist Party. His wife was born in Russia, the daughter of a Hussian n1onarchist wh.o left Russia after the 1917 Revolution. She has lived in Australia since 1925. Since 1946 she has been teaching Russian in the University of 1\felbourne, and she had some social contact with 1nembers of the Soviet E1nbassy. Christesen was for a period a

member of Australia-Soviet House, mainly, she said, so that she might be able to use its library. Her name also appears in D.ocument G.4, the entry being:

''Chris tis en, N. M. 'Eva''' 711. There is nothing to suggest that either Christesen or his wife ever participated in any way in espionage. It is possible that Mrs. Christesen was allotted a code name be­

cause of her position as a teacher of Russian at the University of Melbourne and because of her consequent social contacts with 1nmnbers of the Soviet E1nbassy. Tt seems probable that

M. V.D. Op crcttions concerning Journalists .

the interest of the 1\LV.D. was attract ed to her. husba;nd because of his wife's position as a teacher of Russian, and his interest in Voks and in good Australia-Soviet relations in respect of cultural rna tters generally.

712. The entry relating to "Turnbull, K." refers to Stanley Clive Perry Turnbull, a well-known Melbourne journalist. The letter I{ in the Russian alphabet is the equivalent in our alphabet of the hard C which is the initial letter of the word ''Clive".

710. Turnbull · met and had son1e business and social coll­ tacts with several members of the Soviet Embassy and with Nosov. During the war he was associated with Soviet House, with which his wife was n1ore actively

associated. He told us that at some time between August and October 1950 he had had discussions, on behalf of paper organizations, with Krutikov .in an endeavour to pro­ cure tho in1portation of newsprint from the TJ.S.S.R. J{rutikov was overtly a 001nrnercial Attache but was also an M.V.D. worker.

714. There is nothing to suggest that Turnbull ever engaged in any activities on behalf of the Soviet. He has never been a member of the Comm.unist Party. In 1936 he visited Russia as a representative of a number of well-known ne'wspapers;

and in 1953 he applied for, but the Soviet refused him, a visa to visit the Soviet as a representative of the Melbourne newg .. paper '' '.

715. Turnbull's position as a journalist, his war-time association with Australia-Soviet House, and his wife's interest in that organization, probably attracted the interest of N osov and led to the allocation of a code name to him hy

the M.V.D . .716. There is nothing to suggest that any of the journalists whose names appear in the G Series of documents were in fact in nny way associated with espionage activities.

CoNCEENING FERoAN O'SuLLIVAN.

717. That the interest of the M.V.D. in journalists continued after 1949 appears first from the evidence relating to Fergan O'Sullivan.

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Report of the Royal Commiss-ion on Espionage

718. We have already mentioned in Chapter 4 that, late in 1951, Pakhomov procured O'Sullivan to write Exhibit H, he being then a journalist employed by the "Sydney Morning Herald" and a member of the Press Gallery, and we have described the g·eneral nature of the contents of the document.

719. According to Pakhomov 's statement to Petrov, 0 'Sullivan had been recommended to him as a "progressive" by Chiplin, the Canberra correspondent of the ''Tribune''. The Moscow Centre was advised of Chiplin's recommenda­ tion and it directed that O'Sullivan should be "studied". It allotted him the code name of "Zemliak".

720. Although, as we have previously pointed out, 0 'Sulli­ van must have known that the Tass representative was an official of a Soviet Government organ, he said that he had no knowledge that Pakhomov was an M.V.D. worker. He

said that he gave Exhibit H to Pakhomov with the purpose solely of assisting the latter to influence journalists to publish Soviet news.

721. 1¥ e think it is most improbable that Pakhomov would have disclosed to 0 'Sullivan that he was an M.V.D. worker, or that O'Sullivan would have known it, but O'Sullivan's excuse for giving Pakhomov Exhibit H does not explain what appears to be a design to hide the fact that he was its author. Writing in the third person, he inserted some

particulars about himself-including an indefinite statement of his age. Nor does his excuse seem to afford an explana­ tion of the references in it to persons believed by O'Sullivan to be connected with our Security Service.

722. Whatever O'Sullivan's purpose may have been in Exhibit H, it is clear from the Moscow Letters

that the document was by Pakhomov for M.V.D. pur­ poses, and that after its dispatch to Moscow the Centre took a keen interest in 0 'Sullivan and regarded him as a promising prospective agent who as a result of his secret meetings with Pakhomov and of his supplying Exhibit It was "on the

small hook". That interest became intensified after 0 'Sulli. van became Press Secretary to the Leader of the Oppositiott in April 1953.

M. V .D. Operations concerning Journalists

723. In the Moscow Letter No. 4 of 24th July 1952, para­ graph 2, which asks for information concerning the members of the Australian delegation to the General Assembly of the United Nations, O'Sullivan is mentioned, along with

Madame Oilier and Chiplin, as a person who might be used for the purpose of obtaining the information. 724. Paragraph 4 of the same Letter is even more

significant :

"Concerning 0 'Sullivan.

In reply to your paragraph 3 of Letter No. 3 of 7.7.52. We regard the study and cultivation of O'Sullivan as very full of promise, and therefore, with the object of enforcing it, we request you to include Antonov in this

work as soon as possible. It is essential to verify the data supplied by O'Sullivan about himself and about his father. In so far as this is feasible, try to do this through Ohiplin. A verification is being carried out by us in

England; we shall inform you of the outcome. In order not to draw the attention of the counter­ intelligence to him, we advise that O'Sullivan should not be invited any more to the Embassy and that meetings

with him should be transferred to the city, all the more so as he has already secretly met Pakhomov. We consider that, by continuing to study and verify O'Sullivan, you can already draw him gradually into our work by way of putting before him concrete tasks which he is in a position to fulfil.

It is desirable that, when a suitable opportunity offers, you should ask him to compile for us a survey concerning the economic, political, and military penetration of Australia by America, with the inclusion of unofficial

data. Warn O'Sullivan that his survey will not be pub­ lished in the press and that it is required by you for your personal use. Promise him that the time spent by him on the preparation of this survey will be compensated by you.

Ascertain also whether 0 'Sullivan has contacts with circles pertaining to the government, the parliament, and business, and also in Liberal Party, Oountry Party, and Labour Party circles.

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1'

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R eport of the Royal Co1nm'ission on Espionage

We request you to infortn us in detail in every letter concerning progress in the study and cultivation of 0 'Sullivan.''

725. 0 'Sullivan and his father had in fact been engaged in journalistic work in England; and this accounts for the Moscow Centre's reference in the paragraph to inquiries in England.

726. In the Moscow Letter No. 5 of 27th September 1952, paragraph 2, Petrov was directed to-'' Advise Antonov to continue to extend his contacts, in the first instance among the political correspondents

and among members of the parliament, ignoring any embarrassment through temporary difficulties in the spoken language. With the object of the successful execution of this task we recommend that Antonov should take measures to establish contact with --'' (a nmned ,journalist),

"with O'Sullivan,-- arid--" (two other named ,jour­ nalists) ''whose personality reports, with the exception of O'Sullivan who is known to you, we send in Enclosure No. 2." 727. The Enclosure No. 2 above referred to is based upon Exhibit H and is set out in the Annexure.

728. Pursuant to this instruction, and probably in October or November 1952, Petrov, who had earlier been introduced to 0 'Sullivan by Pakhomov, introduced Antonov to hi1n, and this was duly reported to the Moscow Centre. Later, the Centre directed that the contact between Antonov and 0 'Sulli­ van should be developed as a matter of urgency. Antonov, however, informed Petrov that it was difficult for him to maintain contact with 0 'Sullivan, because he was living in

Sydney and 0 'Sullivan in Canberra. When this difficulty was reported to the Centre Petrov was instructed to take the ''study'' of 0 'Sullivan himself. 729. In April 1953 0 'Sullivan was appointed Press Secre­ tary to the Leader of the Opposition. This was duly reported to the Moscow Centre. Later in 1953 Petrov and 0 'Sullivan travelled to Sydney together in the same aeroplane and on

the following day by pre-arrangement had lunch together in

M. V.D. OperatiMis concerning J

a Sydiwy restaurant According to Petrov, they conversed only on general matters and 0 'Sullivan gave Petrov his Canberra telephone number, which Petrov recorded in a note­ book which was produced before us.

730. Subsequently Petrov received a Letter from the l\1os­ covv Centre complaining of the delay in the ''study'' of 0 'Sullivan; stating that. he was a very promising person oc­ cupying the position of -<'information secretary" to Dr. Evatt; and pointing out "r -1ce more" that he had already given

written informatior to Pakhon1ov, with whom he had had secret meetings. '{he !..Jetter directed that the "study" of O'Sullivan should be actively pursued, but Petrov remained inactive in this respect.

731. Kovalenok-after his arrival in Canberra on 3rd April 1954, and before Petrov's defection was known at the Embassy -discussed with Mrs. Petrov M.V.D. affairs in Australia. Amongst other things, he stated that he ''wished to discus8 certain matters with l\!Ir. Petrov, among then1 being the 1natter

affecting 0 'Sullivan''. He told hei· that '' 0 'Sullivan was never so important to the M.·v.D. as he is now in view of his position and the coming· elections which may result in Dr. Evatt becoming Prime Minister".

732. 0 'Sullivan did not meet Kovalenok, who left Australia with the other Embassy officials shortly after Petrov's defec­ tion. 733. In the Moscow Letter No. 4 of 24th July 1952, para­

graph 4, the Centre had suggested that 0 'Sullivan should be asked to compile a ''survey concerning economic, political, and military penetration of Australia by America''. In fact 0 'Sullivan

1 Was not procured by either Petrov or Antonov to compile this survey. He was a. young n1an who had not been long in Australia and would have had little knowledge of the

subjects. It 'vould seem that Antonov approached Rupert Lockwood to prepare the survey, because part of Exhibit J, which was written by Lockwood, is such a compilation as was asked for in the Letter. Both 0 'Sullivan and Lockwood

kiww Antonov; and 0 'Sullivan, who knew Lockwood, n1et him at Canberra during the period when Lockwood was writ­ ing Exhibit J for Antonov at the Soviet Embassy in 1fay 1.953.

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Report of the Royal Commission on Espionage

734. Exhibit J covers a much wider field than that of American "penetration of Australia". In the course of it Lockwood included 1nuch material, some of it of a scurrilous nature, about a nun1ber of journalists with whom he had ·worked over many years. Such information, while irrelevant

to the subject-matter of the survey, was no doubt added by the Moscow Centre to the entries on Australian journalists in its "books".

CoNCER.NING REx CHIPLIN.

735. Chiplin 's name appears in several paragraphs of the Moscow Letters, of which we have previously mentioned some and later refer to others. Because he is a journalist, we think it convenient to deal with him generally in this Chapter.

736. He is a Communist and is employed by the ''Tribune'' as a political roundsman. 737. According to Petrov, it was Chip lin who introduced 0 'Sullivan to Pakhomov; and Chip lin himself said that this was quite possible. Pakhomov also told Petrov that it was

Chiplin who recommended O'Sullivan as a "progressive", which led to Pakhomov procuring Exhibit H from 0 'Sullivan. Chiplin denied this. 738. Petrov also said that Chiplin claimed to have contacts in Government Departments from whom it might be possible to obtain information, and that early in 1954 Chiplin had. told him that he had a "few friends in External Affairs"­ "two chaps".

739. The ''Tribune'' is a newspaper which is violently opposed to any Governmental policy designed to strengthen friendship between Australia and the United States of America; and Chiplin was consequently anxious to collect what information he could for the purpose of attacking any

policy. He himself said that, as a journalist, he would

approach Government officials in an endeavour to acquire information and, even if he knew that information thus acquired was secret or confidential, would use it. He had the hardihood to claim that all journalists were entitled to do so.

740. On 14th November 1951 Chiplin published an article in the "Tribune", under the heading "Secret treaty sells us

202

M. V.D. Operations concerning Journalists

to U.S.'', which purported to set out an analysis of the con­ tents of what he described as a ''top secret'' Treaty of Friend­ ship between Australia and the United States of America. There was considerable political stir when the article was published, because it claimed that Chiplin had obtained his .information from a "highly-placed government official".

7 41. Chip lin's article was a piece of dishonest journalism. There was, as he well knew, no such concluded Treaty. The Commonwealth Government had been considering for some years a proposed Treaty of Friendship, Co1nmerce and N avi­

gation with the United States, and part of the proposed Treaty had been sent to the Department of National Development for its consideration. In that Department a minute had been prepared dealing with the part sent to it. In fact, the Treaty

has not yet been concluded and is still under departmental consideration.

742. On 29th August 1952 a search under warrant was made in the "Tribune" office and also in Chip lin's home. In the course of the search there was found a document which appeared to be closely copied from the above-mentioned

departmental minute. Chiplin's article was in substance a ·distorted reproduction of the minute, with certain alterations which made it falsely appear that the items comprised in the minute were part of a concluded Treaty which, the article said,

had been hidden from Parliament and the public.

7 43. The relevance of these facts to our Inquiry arises from certain passages in the Moscow Letters. Antonov was in the habit of going to the ''Tribune'' office in order to hand Chiplin certain journalistic material supplied by Tass. On 29th

August he had gone there for that purpose, but was told that a search was in progress and left immediately. · Petrov reported this to the Moscow Centre and suggested that it would be advisable for Antonov to discontinue going to the

''Tribune'' office. This brought forth the Moscow Letter No. 5 of 27th September 1952, paragraph 7, in which the Moscow Centre _ agreed ''that Antonov should not go any more to the editorial oftlce of the 'Tribune' " and that a "technical

worker" from that office should be asked to visit Antonov to collect any press material which might be required,

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7 44. The incident of the search was .mentioned in the Mos­ cow Letter No. 6 of 25th November 1952, paragraph 8, con­ cerning in which the Centre referred to "measures

taken in the Department of External Affairs after the article which Chip lin published''. 745. Similarly, in relation to Body, in paragraph 9 of the 1Ioscow Letter No. 5 of 27th September 1952 the Centre re­

ferred to ''conditions which have arisen in the Department of External Affairs'', 'vhich the Petrovs explained as being a reference to additional security measures taken in that Department as a result of the publication of the article and the

in the ''Tribune'' office.

7 46. It is apparent that the Centre had for some

time- regarded Chiplin as a person who was willing to give inforn1ation to Soviet officials. He had been allotted his code name "Charlie" at some time before Petrov's Residentship. When the Centre wanted information about the Australian de-legation to the General Assembly of the United Nations Organization in New York, it suggested that the information should be sought from J\!Iadame Oilier, 0 'Sullivan, and Chip lin.

747. There is also the statement in the Moscow Letter No. 6 of 25th November 1952, paragraph 7, that "when receiving information you should ascertain and inform us about the source from whom Chiplin receives information, and not merely its contents, as you did when dealing with the question of exchange of enciphered material between the governments of Australia and America.'' It is evident from this that it had been earlier reported to the Moscow Centre that Chiplin had been acquiring information fron1 Governmental .sources and passing it directly or indirectly to Soviet officials.

7 48. Finally, when Petrov received the instructions to in­ quire about (with which we have already dealt in

Chapter 10) he suggested Chiplin to the Centre as a means of obtaining the required information, and the Centre approved. 749. Having regard to all these matters, we thought it proper to inquire as to the manner in which Chiplin acquired the document upon which he based his article of 14th N ovem­ . ber 1951, in an endeavour to discover the nature of Chiplin 's · aources of information.- Chiplin was therefore examined on

the matter.

M.V.D. Operations Journalists

750. l-Ie gave a most circumstantial account of having been in the library at Parliament House at Canberra in a l'oom set apart for the press ona day between 4th and 14th Novem­ ber 1951. He said that a "highly-placed Government official" came to him with a document and told hin1 that he thought it might be of interest of him. He said that he there and then

sat down and made a copy of it in pencil, writing on the arm of a leather armchair. This occupied about 20 minutes. vVhen he had finished the copy .he handed the original back to the · official. He said that he went back to Sydney and made a

typewritten copy of his pencilled note, and that the document found in the ''Tribune'' office during the search in August 1952 was that typed copy. l-Ie refused to say who the "highly­ placed G9vernrnent official'' was. · Certain names were sub­

rnitted to hin1, including the nan1e of a 1VIrs. ''A''. He denied that any one of then1 was the person who gave him the docu­ ment, but still refused to give the name of the person. It was quite obvious from his evidence that he was asserting that it . was a male officer who had shown hin1 the document .

. 751. J\{rs. "A" was then called as a witness. Chiplin had known her for many years and had regarded her as a pro­ Con1n1unist friend and an ''under-cover'' agent of the Com­ n1unist Party. To his obvious surprise, it en1erged that Mrs.

''A'' had for rnany years been an agent for various Australian intelligence organizations. She was in ,June 1951 temporarily attached to the Department of National Develop1nent at request of its permanent head for the purpose of detecting whether suspected leakages from the Department were in fact

occurring, and, if so, in what manner.

752. While she was in that Departn1ent Chiplin endeavoured to use her as an ''under-cover'' agent to get confidential infor­ mation; and on occasions, on instructions from a Security officer, she passed out to Chiplin innocuous information.

753. After her true role was disclosed in the witness-box, Chiplin shifted his ground and his counsel, under instructions, cross-examined Mrs. "A" to suggest that it was she who had handed Chiplin the document to copy in Parliament House.

This she de.nied. Chiplin returned to the witness-box and affirmed that Mrs. " .. A ." was the "highly-placed Government official'' who had handed hiin the document.

Report of the Royal Commission on Espionage

754. Unfortunately for Chiplin, departmental records, a hotel register, and travel records, which we examined, showed beyond question-and quite apart from any evidence from Mrs. "A "-that, as she herself had sworn, she could not have been at Canberra at any relevant time. Faced with this, Chiplin sought to modify his second version of the incident by saying that while his firm impression was that it was at Parliament House in Canberra that he had been shown the document, the incident might have occurred in Sydney.

755. It is certain that Chiplin lied in telling one or other of his inconsistent stories and we have no doubt that he lied in saying that he was shown the departmental minute by Mrs. "A". We believe that he had some other source in depart­ mental circles from which he was able to obtain confidential

information. 756. The obtaining by Chiplin of this particular confidential information is not directly connected with Soviet espionage. Its relevance is that it discloses Chiplin as a person willing

and able to obtain confidential departmental information, and shows that the Moscow Centre's opinion of him-as disclosed in the Moseow Letters-was well founded.

2t>6

CHAPTER 14.

THE M.V.D. OPERATIONS IN RELATION TO PERSONS ENGAGED IN COMMERCE

757. The Moscow Letters afford a number of illustrations of the fact that it was the M.V.D. practice to use the services of persons who had the "cover" of being Commercial Attaches at the Embassy to ''study'' persons engaged in trade

with the U.S.S.R. and other Communist-controlled countries, with a view to their possible recruitment and use for M.V.D. purposes.

758. Krutikov-a Commercial Attache, who was attached to the Embassy from August 1948 until October 1950- was an M.V.D. collaborator. So also was Galanin (code name "Babushkin"), who was a Commercial Attache from Feb­

ruary 1950 until February 1952. Galanin was succeeded by Kovaliev (code name "Grigoriev"), who arrived in Aus­ tralia in 1952 and had been co-opted as an M.V.D. collaborator by the Moscow Centre before his departure.

759. The Moscow Letter No. 1 of 2nd January 1952, para­ graph 1, affords a good illustration of the M.V.D. practice mentioned above. By that Letter P etrov was informed that Kovaliev had left Moscow for Australia-

". . . to work in the capacity of commercial attache, recruited before departure to our work under the code name Grigoriev. Kovaliev has a higher education, knows the English

language. He has had experience of work abroad, in 1949-51 he worked as senior economist in the Soviet Ministry of Foreign Trade .in Denmark, and is described favourably.

He entered into collaboration with us willingly, declar­ ing that he would be very glad and satisfied if he could render us assistance. Kovaliev was thoroughly instructed as regards study­

ing foreigners and acquisition of information of interest

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to the Soviet intelligence, as regards the observance of secrecy in work, and also as regards the conduct of Soviet citizens abroad. For establishing contact with him the following pattern has been agreed:

Our worker turns to him: 'Regards to you from Mos­ cow from Vladimir Pavlovich.' Kovaliev's reply: 'What progress in studies?' Our worker replies: 'Good', and names his code name. We instruct you to establish contact with Kovaliev, to acquaint him with the situation and to direct his efforts towards the obtaining of useful contacts in political and industrial circles and in institutions of the government.

In view of the fact that Kovaliev has no experience of intelligence work, it is essential that you should hold discussions with him for the purpose of teaching · him ways and means of conducting intelligence work and that you should render him timely assistance in the purpose­ ful study of the acquired contacts.'' 760. The identification signals mentioned in the Letter illus­ trate an M.V.D. practice to which we have referred elsewhere.

761. At first it seen1ed to us curious that the Mosc.ow Centre should have thought it necessary that Kovaliev and Petrov should thus eaeh be required to identify himself to the other, but as our understanding of the M.V.D. system developed the reason became clear enough. Kovaliev was merely co-opted f.or M.V.D. work, and was not a. cadre worker. Aecordingly

(lest he should defect or disclose the secret en route to Aus­ tralia) the identity of the M.V.D. Resident at the Embassy was not disclosed to him in Moscow before he set forth on his journey to Australia, and it· was only when he reached Australia that he could by this means learn which member of the Embassy staff was the M.V.D. Resident.

CoNCERNING I{osr\:Y ( CODE NAME ''PRrYATEL'').

762. The Letter n1entioned ab.ove instructed Petrov that: "After you have established contact with Kovaliev, direct him to arrange official contact with Kosky with the object of studying the latter. For the time being

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M.V.D. Operations concerning P er·sons in Commerce

Kovaliev should not be informed that Kosky is our agent. We warn you that you may establish an agent connection with Kosky only with the permission of the M.V.D. Headquarters, Moscow.

In three months time after the arrival of Kovaliev in the country, we request you to send us information as to how he is engaging in our work.'' 763. It is to be noticed that K.ovaliev was merely to make official contact (i.e. in his capacity of Commercial Attache') with I{ osky, and that the local M.V.D. section was not to establish a direct "agent connection" with the latter without further instructions from the l\!Ioscow Centre.

764. This was not the first intimation that Petrov had been given that Kosky was regarded as an agent by the Moscow Centre. Pakhomov, when handing over the temporary Resi­ dentship to Petrov, told him that Kosky was "our agent" but that nobody fr.om the local M.V.D. section had yet made contact with hiln. Pakhomov also told Petrov that Kosky had

attended the Leningrad fur auctions and had been there recruited by the M.V.D. and had been allotted the code name of "Priyatel". It is under this code name that Kosky is mentioned in the Letter. It is clear from one of the G Series

of documents ( that this code name had been allotted to Kosky during Sadovnikov's Residentship or earlier, since his surname with "Priyatel" against it appears in Document GA. 765. The continued interest taken in Kosky by the Mo scow

Centre appears frmn two later references in the Moscow L(:ltters-as does the fact that Kovaliev's work for the 1LV.D. earned the Centre's displeasure. 766. The Moscow Letter No. 3 of 6th June 1952, paragraph-3? said:

''Concerning Kovaliev.

The information you have communicated concerning the behaviour of Kovaliev shows him in an unfavourable light. Warn Kovaliev once again about the inadmissi­ bility of repeating such actions. It is evident from

your report that you regard Kovaliev, basically, as an agent for S.K. work, which is completely wrong. You must draw him actively into the work of fulfilling the

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intelligence tasks. Compel him to draw up detailed re· ports concerning his contact along official lines and constantly assist him to study and select people who might be of interest to us.

Press for the establishment of an official contact be­ tween Kovaliev and Kosky for the purpose of studying the latter. After several meetings with Kosky we shall examine the question of establishing an agent relation.

ship with him." 767. Again, in the Moscow Letter No. 5 of 27th September 1952, paragraph 3, the Centre stated:

''Concerning Kovaliev.

The personality reports submitted by Kovaliev con­ cerning persons with whom he has established contact testify that he is beginning to engage in our work. How-· ever, apparently as a res11lt of the absence of positive

guidance on your part, Kovaliev has dealt perfunctorily with the production of the personality reports, since he has omitted essential data which were known to him about those persons. In particular, he did not mention the bankruptcy of the firm of Arup and the legal case connected with it, and also the connection of White and Keesing with the Communist Party.

You should instruct Kovaliev in detail how he is to conduct the study of contacts and to extend contacts. In our opinion, among his contacts R. Kirk represents the greatest interest. Help Kovaliev to study the potentiali­ ties of R. Kirk for work along our lines, and his personal

qualities, with the aim of determining the expediency of his recruitment. Kovaliev's contacts, about which you notified us in Enclosure to Letter No. 4, do go through our books.

It would be desirable to obtain copies of the next issues of the periodical 'Technical Review'. Please keep us informed about the work and conduct of Kovaliev.

At the same time we request you to let us know what measures you have taken 'to establish official contact of Kovaliev with Kosky.'' 2!0

M.V.D. Operat·ions concerning Persons in Com1nerce

768. The "behaviour" of Kovaliev which "shows him in an unfavourable light'', to hich the first of these Letters refers, relates to the fact that Petrov had reported to the Moscow Centre that Kovaliev talked too much and boasted

that he was closely related to Malenkov. 769. Kovaliev ultimately established an official contact with l{osky and reported to Petrov-who in turn reported to the Moscow Centre-that l{osky discussed only business affairs

with him. 770. The Kosky referred to in the Letters is Solomon Kosky, a member of the firm of Kosky Bros. of Melbourne, and he was called before us as a witness. He was born in

Russia in 1894 and left there for England in 1907. He came to Melbourne in. 1912 and has since resided there. His prin­ cipal business is that of a fur importer, nearly all his furs coming fr01n the U.S.S.R. Since about 19·50 he has acted also as an agent for the Soviet Government in connection with sales of timber and fur in Australia, and has also pur-·

chased plywood from, and sold wool on commission to, the U.S.S.R. 771. He said that his first visit to the U.S.S.R. since 190·7 was in 1950, when he attended the annual Leningrad fur

auctions, and that he attended those sales again in 1953. These auctions are conducted by an organ of the Soviet Governn1ent. He said he had not visited Moscow.

772. He told us that he had never been approached by any person to act as an M.V.D. agent, and he denied that he had ever been such an agent. He said that he had met l{ovaliev and had known Galanin and Krutikov, and had attended social functions with some of them and asked some of them to his

house. He also knew N osov and had entertained him socially.

773. He said that the prosperity of his business as a

furrier depended upon him, or his authorized agent, being permitted to obtain Soviet visas to attend the Leningrad fur auctions.

774. He was not a satisfactory witness and when examined about his association (which seems to have been a close and friendly one) with John Rodgers, the Secretary of the Australia-Soviet Friendship Society in Melbourne, whose

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Report of the Royal on Espionage

name and code name "Lovky" appear, along with that of "l(osky-Priyatel", in Docun1ent G.4, he was obviously not telling the truth. 775. We have not been able t o ascertain whqt were the

events which led the l\!Io scow Centre to regard Kosky as its agent. There is no evidence that he gave any information to the M.V.D. Apparatus in Australia. · 776. As will be seen fr01n the Moscow Letter No. 5 of 27th September 1952 quoted above, I{ovaliev had submitted reports concerning the "firm of Arup" and three other persons-

White, Keesing·, and Kirk. .

777. It is interesting to notice that the Moscow Centre­ as appears frorn the Letter No. 5 quoted above,-,-was ing Kovaliev 's reports by reference to information already in its possession. In other words, the Centre seems to have been endeavouring to assess the espionage worth of its new apprentice.

CoNCERNING ARUP.

778. The Moscow Centre's c01nplaint was that Kovaliev had omitted to notify it that Arup 's firm had become bank­ rupt and that there had been some litigation in connection with it.

779. John Dahl Arup made a statutory declaration. He stated that he was a director of Arup & Bruhn Pty. Ltd., an in1porting con1pany trading with the U.S.S.R., a country which he had visited in 1949. In July 1950 a petition for the winding up of the c01npany was presented to the Supren1e

Court of New South \Vales, and in October 1950 it was wound up. Arup deposed that in the course of trade he had known Krutikov, Galanin, and l(ovaliev, who were successively Soviet Con1mercial Attaches. He stated that he had known

Kovaliev well and had entertained him socially, but that his only contact with these persons was in connection with trade matters. It was probably from Galanin or from

Krutikov that the Moscow Centre had earlier learnt of the winding up of "the firm of Arup".

C o NCERNING vV HITB.

780. The ''White'' rnentioned in the Letter IS one Alfred \Vhite, who \vas called a s a \vitness.

2T2

M.V.D. Op erations Persons 'in Cornvmerce

781. The criticis1n made by the 1\!Ioscow Centre of Kova­ liev's report about White was that it omitted to 1nention that he was connected with the Communist Party, a fact which the Centre had obviously already recorded about him.

782. White, who was born in New York of Lithuanian parents, is a director of Australian Merchandise & Enterprise Pty. Ltd., a company which, amongst other activities, exports Wool tops to China. Some at least of its directors are Cmn­

munists. 783. ln 1952 White went to Hong Kong and thence, by in­ vitation of a commercial agency of the Chinese Government and at its expense, visited Canton, Hankow, and Peking. His

account of the way in which he entered China from Hong Kong; and of his meeting there with a Chinese official was a curious one. He knew Pakhomov, Antonov, Galanin, Krutikov, and Kovaliev. It was probably Krutikov or Galanin who had

earlier reported to the Moscow Centre that he was connected with the Communist Party. White, Who was not a satisfactory witness, denied that he was a member of the Party. Whether his evidence on that point was true or false, he knew and

with some membets of the Com1nurtist Party.

CoNCERNING MrLLrss.

784. In the course of his evidence White said that a man named Milliss had done work on commission for Australian Merchandise & Enterprise Pty. Ltd. 785. Milliss is to in one of the G Series of docu-­

ments ( G.5), along with a number of others, about whom the Moscow Centre asked (in Letter No.2 of 14th June 1948) for '' additiona;l materials and well founded conclusions''. 786. The entry is as follows:

'' (1) Bruce Milis-progTessive labour supporter, secretly assisted the Communis.t Party. Enjoyed the confidence of Chifl.ey. Resided and had a trading com­ pany in the town of Katoomba." 781. , Bruce Joseph Milliss was called as a witness. He had been a businessman in Katoomba. He said that he' had been expeiled from the Labour Party in 1946 and had joined the

Communist Party in 1947. He denied that he had "secretly assisted the Communist Party" or had had any association

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Report of the Royal Commission en Espionage

with it before 19·47 . . In the course of his evidence it emerged that in 1943, when the Party was under a ban, he had-jointly with one Simpson (the treasurer of the Communist Party)­ signed a contract to purchase the Newsletter Printery for over £14,000. The Printery was bought for Communist Party purposes and is still used by it. said he merely lent

his name to oblige a friend. \V e do not believe him. 788. Whilst covertly a member of the Communist Party and before his expulsion from the Labour Party, took part in electoral cmnpaigns in the electorate in which he lived, which \vas represented by the late Mr. J. B. Chifley. It may he that up to the date of his expulsion from the Labour Party Milliss enjoyed Mr. Chifley's confidence in electoral matters.

789. Some time after Milliss had given his evidence a wit­ ness named John Michael Mullane was called. His evidence showed that Milliss had been a member of the Communist Party from 1941; and this was confirmed by certain Com­ munist Party documents intercepted by the censorship authorities during the war, which we have seen. Mullane's

evidence showed further that Milliss knew that the News­ letter Printery was being· purchased for the Communist Party. An opportunity was given to Milliss 's solicitor to cross­ examine Mullane and for Milliss to give evidence in contra­ diction of what Mullane had said. But we were informed that he did not desire this.

790. It appears also that in 1953 Milliss sought-through Kovaliev-to borrow £135,000 (secured by second mortgage) from Sovexportfilm, a Soviet Government agency, to buy a picture theatre in Sydney for the sum of £265,000. The transaction had not been completed at the time of Petrov's defection.

791. The inference is clear that the information regarding Milliss in Document G.5 reached the M.V.D. from a Com­ munist Party source-evidently from a "talent spotter".

CoNCERNING KEESING.

792. The Centre's criticism of Kovaliev 's personality re·­ port in its Letter No. 5 of 27th September 1952, paragraph 3, was that it failed to mention that I{eesing was connected with the Communist Party-a fact which was already entered jn its "books ".

M.V.D. Operations concerning Persons in Commerce

793. Albert Keesing gave evidence. He is a member of the Party and the manager of its Sydney newspaper ''Tribune''. He is also a publisher and importer of books and periodicals, trading as Current Book Distributors. He knew White, but

was not connected with White's company.

CoNCERNING KIRK.

794. The same Letter directed Kovaliev's attention to the "study" of Kirk, who was said by the Moscow Centre to represent the greatest int'erest among Kovaliev's contacts.

795. The reference is apparently to one vValter Thomas Kirk, although his initial is not "R". He gave evidence before us and said that he assumed that he was the "Kirk" referred to, because he had had considerable commercial transactions

with the U.S.S.R. and had known Kovaliev and also Galanin and Krutikov, two of the earlier Commercial Attaches. There is nothing to suggest that I{irk is or has been in any way con­ nected with the Communist Party, or that he had done any­

thing to cause the Moscow Centre to be interested in him.

CoNCERNING WAS SILIEFF (conE NAME '' K u s TAR'').

796. The remaining reference to persons engaged in trade is in the Moscow Letter No. 6 of 25th November 1952, para­ graph 9:

''Concerning A. Y. Vasiliev

(further referred to as Kustar). As is known to you, Vasiliev repeatedly told a num­ ber of Soviet official representatives about the possession of the secret of producing hard-wearing aviation bearings.

According to his statement the limit of the wear of aviation bearings produced at his factory was three to four times greater than that of the English and American ones. He allegedly declined to hand this secret on to the

British ·and the Americans, despite repeated proposals, and. he expressed a desire to pass it on to Russia.

It is difficult for us at the present time to decide whether the technology of manufacture of these aviation bearings is of interest to us. In order to be able to come to a final

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Report of the Royal oh Espionage

decision on this matter, we request you to obtain from Vasiliev and dispatch to us the technology of manufacture, and one or two samples, of the bearings.

In order to carry out the above measures and to deter­ mine the expediency of further work with Vasiliev, we request that it should be ascertained from. him in a cautious manner whether he is the subject of the data, relat,ing to the activities of a certain A. Y. Vasiliev in fascist organizations in :Manchuria, about wh.ich you were informed in the EM line of work.

We ask you to bear in mind that, as a result of his frequent association with Russians, Vasiliev is evidently under the surveillance of the counter-intelligence. This can be particularly judged by the fact that the meeting of Pakhomov and Vasiliev in Melbourne in June of this year was for a period of two days under the uninterrupted

observation of Holden motor cars S.F.527 and S.F.529.''

797 . ..c\.rkadie Yakovlevitch \V assilieff was called as a wit­ ness. He had been a manufacturer of bearings for aircraft engines. He is of Russian birth and has been in Australia since 1911, becoming a naturalized British subject in 1924. He had a strong desire to visit the U.S.S.R. artd, if possible, sell his products there. He knew a number of Embassy offi­ cials, including Sadovnikov, Petrov, Pakhomov, Galanin, and Kislytsin; and in an endeavour to procure Embassy assistance in obtaining permission to visit the U.S.S.R. he pressed upon them the excellence of his bearings. He had no ''secret'' pro­ cess of Inanufacture, but his ''sales talk'' was reported to the Mosuow Centre and samples of some of his work were for­ warded to it by Petrov.

798. The meetings with Pakhomov to which the last para­ graph of the Letter refers took place when Pakhomov was in Melbourne in June 1952 en route for the U.S.S.R. On his arrival in Moscow he reported it to the Centre.

799. The "Vasiliev" who is said in the Letter to have been concerned with "fascist organizations" ih Manchuria is not t.he W assilieff who made Petrov discovered and

reported to the Mos·cow Centre.

M. V.D. Operations concerning Persons in Commerce

800. There is no suggestion in the Moscow Letters or else­ where that Arup, White, Keesing, Kirk, or vV assilieff engaged in any espionage activities. The relevance of the evidence relating to them and to Kosky is that it shows:

(a) the interest taken by the M.V.D. in persons engaged in trnde who, either for ideological reasons or because they trade with the U.S.S.R. or other Communist­ controlled countries and may therefore be susceptible

to Soviet pressure, are regarded as worthy of

"study'; with a view to possible recruitment or lise as Soviet agents; (b) the practice of the M.V.D. · of using Commercial Attaches in its work.

801. Apart from other possible uses to which they might be put, persons engaged in trade with the Soviet or other Communist-controlled countries could lend valuable aid to the M.V.D. in the establishment and. maintenance of an

"Illegal Apparatus", as by providing a commercial coVer for the transmission of funds and for communications.

411

CHAPTER 15

THE OPERATIONS OF THE M.V.D. IN RELATION TO SCIENTISTS

802. There is no indication in the Moscow Letters or in the Petrovs' evidence of any interest taken by the Moscow Centre in particular Australian scientific workers. It may be that at some time prior to 1951 the task of "studying" scientific workers had become the function of another branch of the Soviet espionage system, namely the G.R.U. But it would appear from Enclosure No. 1 to the Moscow Letter No. 6 of 25th November 1952, which lays down "the procedure for the formulation of letters", that at least some "scientific and technical" matters still remained part of M.V.D. work.

803. From the G Series of documents, however, it appears that a number of scientists had, prior to 1951, attracted the Centre's attention.

804. In Document G.3 there is an entry­ "Wilbur Christinson-'Master'. (husband of the sister of Tourist)"; and in G.2 "Master" appears under the heading "Contacts K".

805 . These entries refer to Wilbur Norman Christiansen. who was called as a witness. He is a graduate in science of the University of Melbourne and a Radio Astronomer employed by the Commonwealth Scientific and Industrial Research Organization. From 1936 until the end of 1947 he was the Supervising Engineer in the Beam Wireless Development Laboratory of Amalgamated Wireless Limited. At the end of 1947 he became a Research Officer in the Radio

Astronomy Section of the Division of Radio Physics of the C.S.I.R.O. and later he became the Principal Research Officer. His scientific work is in no sense secret.

806. He told us that he had never been a member of the Communist Party, but he said ''the materialist concept of history is the one which fits in best with scientific thinking, and it is the one that I favour". His wife is the sister of

M.V.D. OpeTations concerning Scientists

J. F. Hill, who was an officer of the External Affairs Depart­ ment and to whom we have referred in Chapter 10, and of Edward Fowler Hill, who has been for many years a promi­ nent member and an official of the Communist Party.

807. Christiansen told us that he had been associated with the Australian Association of Scientific Workers, a body in which Communists were active. He said that he had never met any Soviet officials. His scientific attainments, his philosophy,

and his relationship to J. F. and E. F. Hill would doubtless be sufficient to attract the attention of the M.V.D. to him and could account for his being given a code name. He said that he did not know Clayton but knew J. W. Legge, a scientist

who-as we have said elsewhere-was a friend of Clayton. Ho also knew Woodward and knew of Hibbard, both of whom figure in the G Series of documents.

808. In Document G.2 there is an entry-" Don Woods-Secretary of the adviser of Doctor E. on 'Enormaz'.", and in Document G.6 another entry relating to the same person-

Don WOODS (Don WOODS)-former secretary of the adviser of Dr. E. on 'Enormaz' of BRIGGS." 809. As we have said earlier, these entries refer to Donald Stewart Francis Woodward, an employee of the Division of Physics of the C.S.I.R.O., who told us that he had once been, but had ceased to be, a member of the Communist Party. We heard evidence from him and also from Dr. Briggs in private

session. Mrs. Petrov had explained that '' 'Enormaz' was the code word standing for the interest which the M.V.D. had in the r esearch and testing work on the atom bomb in Australia. For instance, we

received instructions to collect information about the latest tests of the atomic bomb in Australia and also about the persons attending these tests''.

810. We should here say that there is nothing in the

material before us which suggests that any secret information relating to these matters was obtained by the M.V.D. But, having no knowledge of what the evidence concerning these entries might reveal, we thought it wise to hear it in private.

41 3

Report of the Royal Connnission on Espi'Qnage

811. Having heard the evidence, the reason for the entries became clear to tls; Since 1945 Woodward has b@ert the Secretary of the Divisiort of Radio Physics o£ the CJSJ .R.O; of which Dr. Briggs, an e·minent physidist; was the Ohief. In 1946, and again in 1947, Dr. Briggs, a man of high character and integrity, was a technical adviser to the Australian tion to the United Nations Atomic Energy Oommissrgn. The conferences which the deleg·ation attended were concerned

with ways artd means for the international control of atomic energy, and similar matters. The M.V.D. may have thought that Woodward might be able to get access to secret tion concerning atomic weapons. But such an idea, if it was entertained, was mistaken, since Woodward ;s secretarial duties were, and are, or a routine administrative character. lie did not accompany br. Briggs abroad. In Chapter 10 we

have set out his history and our conclusions as to how his and Dr. Briggs's names became known to the M.V.D.

812. In Document G.5, which-with Document G.6 "'"""'-is a copy of a letter from the Centre of 14th June 1948 asking for "additional materials'; and conclusions''

relating to the persons named in the Letter, there are refer­ ences to other persons with scientific qualincations. Two of the·m ate absent from Australia. We have no evidence from thetn and the Petrovs know nothing 6f them. Accord­ ingly, we do not publish their names or the entries relating

to them, except in the Annexure to this Report.

813. The entry relating to the third of these persons is as follows: ''Dave Morris_._borrt 1910, major, bachelot of science, under-cover member of the Communist Party. After

finishing the University studied in Eiigla.nd. During the second world war he worked as a technical expert attached to the General Staff in Melbourne. Studied tank matters in England.

In 1946 was sent to England to work in sphere of military research.''

814. This refers to David J ohrt MorriS; wlio Was called as a witness.

.-·""

Operations concerning Scientists

\H5, He is a graduate in soienoe and After

the war he ;received a Master's degree in engineering at the University of Queensland as the result of a thesi$ written by him on Armoured Fighting Vehicles. rr'his was based upon material which he had gathered while in the Army and which,

it seems, he was permitted to use for his thesis.

816. He has been an active member of the Communist Party 1931. As to whether he was an ''under-cover member",

the facts seem to be that" when in company which he thought suitable he acknowledged himself to be a Party member but that when it suited his purpose he eithtH denied or sought by prevarication and evasion to escape admitting his Party

membership and activities, as, for example, on the occasion or an inquiry which followed a proposal to expel him from an ex-servicen1en 's organization.

817. He was in England on post-graduate study in1936 and while there took part in Communist activity. He returned to Australia before: the outbreak of war, and was active in Bris­ bane in the Grange branch of the Oomn1unist Party.

818 . . At the end of 1941 he joined the Army and was com­ missioned as an Ordnance Mechanical Engineer, and in 1942 was posted to Army Headquarters in the Directorate of Mechanical Engineering in the branch of the Master-General

of the Ordnanoe. -

819, In ·December 1943 he wa$ sent to the United Kingdom to atte:nd the Military College of Science. He was then a t<:•mporary Major. At the- College of Science he studied of new weapo1.1s and arn1oured fighting vehicles.

On completion of his COllrse at the College he had various in the United Kingdom in which he had acce·ss to

technical departments o£ the War Office.

820. In 1945 he returned to through the U.S.A.,

where he was permitted to ce:rtain tank

After his return to Australia he was, for period, attached to the Mechanical Experimental Et?tablish1nent and po$ted to the Division in the of the of

the Ordnance at Army Headquarters. After war he con­ tinued in the Army a.:ud il1 J Ul1e 1946 was appointed to the Australian Army Staff in the U :uited Kingdom as Teohnioal

415

Report of the Royal Commission on Espionage

Staff Officer, a position involving liaison duties on technical matters with officers of the British Army and so kee-ping in touch with secret technical developments in armaments.

821. He arrived in England to take up this appointment but was almost immediately sent back to Australia, having been told that the post to which he- had been appointed had been declared redundant. It is clear from confidential Army docu­

ments which we have read that the real reason why he was returned to Australia was that the Australian military autho­ rities had come to the conclusion that he was not a proper person to have access to secret technical information. After his return to Australia he was, at his own request, transferred to the Reserve of Officers.

822. Morris was a most unsatisfactory and evasive witness, and lied on a number of matters. He stated in evidence that he was not desirous of helping the Commission, a fact which was very obvious.

823. Document G.7 contains the entry relating to "Legge, Jack" which we have already quoted in Chapter 10. This refers to John Williamson Legge, to whom and to whose association with Clayton we have referred in that Chapter.

824. The final entry relating to scientific workers is in Document G.10: ''Hibbard L. U.-Representative of N.S.W. State in the federal council, member of the Communist Party.''

825. This entry refers to Leonard Ulysses Hibbard, who gave evidence-. He is a physicist and engineer now on the staff of the Australian National University as a Senior Research Engineer in the School of Physical Science. He holds the degrees of Bachelor of Science, Bachelor of Engineering, and Master of Engineering, of the University of Sydney. In 1939 he was appointed a Scientific Research Officer in the C.S.I.R.O. Radio Physics Laboratory. He remained with the C.S.I.R.O. until 1947, when he went to England on a travelling fellow­ ship which enabled him to attend the Birmingham University from 1947 until the end of 19·49, when he was appointed a Research Fellow of the Australian National University. He then did research work at the Birmingham University until December 1953. He returned to Australia in January 1954 and was then appointed to his present post.

222

M.V.D. Operations concerning Scientists

826. He said that about 1942 he became interested in the Australian Association of Scientific Workers and became a member of the Con1munist Party. In 1946 he was a repre­ sentative of the New South Wales Division of the Australian Association of Scientific Workers to the Federal Council of

that organization. He told us that during his period of mem­ bership of the Communist Party-"! did not have any job inside the Communist Party, and the reason was that I had extraneous activities which

were considered by the Communist Party to be desirable and sufficient justification for not acting in a more direct role in connection with the Communist Party.''

These extraneous activities were, he said,

"activities in connection with the Australian Association of Scientific vVorkers, the policies of which w·ere approved by the Communist Party.''

827. It is clear from his evidence that this Association, to which he said at least one hundred Communist Party members belonged, was used for the purposes of attracting scientists to Communism.

828. I-Ie said also that while he was a member of the Party his branch was the "Labs" or "Laboratories" branch, con­ sisting of persons who had some connection with laboratories in and around the University of Sydney. He told us that at the end of the war he had been active in ''organizing and

addressing" meetings of the Australian Association of Scien­ tific Workers on the subjects

''of radar and atom bomb technique and of the unde­ sirability of secrecy, and incorporating motions protest­ ing against the nature of Dr. Nunn May's prosecution".

He said that he had prepared articles on nuclear energy and the aton1 bomb, one of which was published in 1945 in a magazine called ''Progress'', the editor of which was Chip lin.

829. He said that he had ceased to be a member of the Com­ munist Party at the end of 19'46 or early in 1947, one of the reasons being that at a meeting of scientist members of the Party in 1946, at which he was present, a Party functionary

223

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Report of the Royal Oo1nmi.ssion on Espionage

had stated that members ''should be prepared to accept re­ direction to other places of employment if considered by the Party to be very important".

830. Hibbard's frankness and demeanour impressed us favourably. His scientific attainments and his past activities for the Communist Party in the Australian Association of Scientific Workers no doubt accounted for the fact that he attracted the attention of the M.V.D. It is probable that the information about him contained in the entry was supplied to the 1\tl.V.D. by a member of the Communist Party.

831. There is nothing in the p.s to suggest

that any of the scientific workers with whom we have dealt gave any information to the M.V.D. One significant matter which emerge$ is the clear inferenGe that some, at least, of the infor:rrtation in the possession of the M.V.D. about these persons reached it from Communist Party sources, evidently from a "talent spotter".

224

CHAPTER 16

THE OPERATIONS, OF THE M.V.D. IN RELATION TO COUNTER-ESPIONAGE AND SECURITY ORGANIZATIONS

832. A number of passages in the Petrov Papers evidence the interest of the Moscow Centre in the work of our Security Service and similar counter-intelligence organizations in other parts of the world.

833. The Moscow Letters contain three n1ain directives deal­ ing with this subject-matter. Each is in a form which suggests that it was circulated by the Centre to all M.V.D. sections abroad.

834. The Moscow Letter No. 3 of 6th June 1952, paragraph 1, after dealing with the necessity to set up an "Illegal Appa­ ratus'' in Australia, goes on: ''We draw your attention to the necessity of developing

work with regard to the counter-intelligence, this being a new but exceptionally important line for us. In connection with this it is essential: (1) To take measures for the recruitment of valuable

agents who have access to enemy intelligence and counter-intelligence organizations and who have possibilities of supplying us with information con­ cerning plans about subversive activities of the

British-American bloc against the Soviet and the Peoples' Democracies. (2) To put into effect active agent manoeuvres for the exposure of the channels of transmission of enemy

agents, and also for the substitution of trusted agents to the Australian and British intelligence in order to intercept and to unmask enemy agents who are being, or have already been, sent to the

Soviet and the Peoples' Democracies.''

•* 78228-15 225

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Report of the Royal Commission on Espionage

835. The second general directive is contained in the cow Letter No. 5 of 27th September 1952, paragraph 5: ''In order to expose and suppress the subversive activi­ ties of the American intelligence and counter-intelligence

organizations against the Soviet, we request you to begin the systematic collection of information in accordance with the following specimen questionnaire: 1. Location and names of the intelligence or counter­

intelligence organizations of the American intelli­ gence and schools, their functions, structure, per­ sonnel, and practical activities. 2. Form and methods of work of the intelligence

organization (agent cadres, methods of recruit­ ment and training of agents, equipment, cover stories, tasks, documentation of cover stories, places and means of transferring of agents, chan­ nels of penetration into the Soviet and the Peoples' Democracies, methods of contacts with agents, etc.). 3. Co-ordination of activities of the intelligence and

counter-intelligence organizations, names and functions of the co-ordinating organization, and its personnel. 4. Training of cadre intelligence workers (schools, their

names, addresses, procedure for enrolment, train­ ing programme). 5. Training of agent cadres in America and in other capitalist countries, the availability of schools for

training saboteurs and terrorists, methods of trans­ ferring agents into the Soviet and the Peoples' Democracies. 6. Data about the use made by the American intelli­

gence of 'displaced persons', emigre organizations, former cadres of German and Japanese intelligence services, Trotskyists, and Titoites, in intelligence work against the Soviet and the Peoples' Demo­ cracies. 7. Data concerning official collaborators and technical

workers of intelligence and counter-intelligence organizations and schools (the position occupied,

226

M.V.D. Operations Security Organizations

the nature of the work carried out, nationality, citizenship, family status, financial standing, home address, way of life, personal qualities and inclina­ tions, traits of character, political views, connec­

tions, distinguishing marks, etc.). 8. Locations of intelligence organizations and schools (exact address and description of location), lay-out of rooms, entrances, windows, tables, safes and

other depositories of secret documents in buildings occupied by an intelligence organization. (It is desirable for a plan to ·be drawn.) 9. The security system of the buildings of the intelli­

gence organization (plan of disposition of guard posts), means of communication of the intelligence organization (numbers and disposition of tele­ phones, presence of special signalling apparatus, radio stations, etc.), types and numbers of motor cars used by intelligence workers. 10. Data concerning secret meeting houses (addresses,

description of location, internal lay-out) and their proprietors. 11. Data concerning drivers, boilermen, office cleaners, waiters,· and other staff serving the intelligence

organization and its employees. 12. Data concerning the principal foreign centres and secret sections of intelligence organizations of America, names and personality details of their

chiefs, staff and personnel of these intelligence centres. 13. Data concerning the organization of contacts with intelligence sections and agents · (n1ail, storage, use

of agent ciphers, methods of protection, personal and impersonal contact, secret hiding places for documents, etc.). 14. Data concerning ta.sks set by American intelligence

organizations to their secret sections and agents abroad as regards the acquisition of information concerning the Soviet and the Peoples' Demo­ cracies.

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Report of the Royal Co1ntnission on Espionage

15. Data concerning the co-ordination of the activities of the American intelligence with the intelligence organizations of other countries. Notify us about the information acquired by you.''

836. The third directive is contained in the same Letter, paragraph 6: ''According to agent information in our possession, the Canadian counter-intelligence has worked out and sent to

the counter-intelligence of the participating countries of the so-called 'special information committee' (S.I.C.) a plan of control over the purchases of strategic materials by trade representatives of the Soviet and the Peoples' Democracies, for the exploitation of these representatives and for undertaking economic sabotage against the Soviet and the Peoples' Democracies.

The plan provides for recruitment of the directors of trading companies or the creation of fictitious trading companies from among the employees of the counter­ intelligence. These companies will have the task of gaining the confidence of the representatives of the Soviet and the Peoples' Democracies, and of beco1ning inter­ mediaries in trade transactions so as to be informed regarding all purchases of strategic materials.

The Canadian counter-intelligence considers that the creation of this type of intelligence agent will enable it not only to discover the methods of work of the trade representatives of the Soviet and the Peoples' Demo­ cracies, but also to improve the exploitation of these representatives, and to be informed of the attitude of their · employees, bearing in mind their recruitment, the possi­ bility of compromising them, or any tendency on their part not to return home.

It would appear that the Canadian counter-intelligence has already begun to put its plan into effect in relation to Poland. For the purpose of co-ordinating these sorts of activi­ ties of the counter-intelligences of the countries partici­ pating in the S.I.C., the Canadian counter-intelligence

228

M.V.D. Operations Sec1rrity Organizations

suggests the organization of a -special Bureau. Nothing is yet known about the attitude of other countries towards this project.

We request you to take this information into account in the course of your work, and to take possible measures for its verification. Please inform us if you should receive data confirming the information given above.''

837. Petrov told us that he was unable to find out anything about the work of An1erican and Canadian counter-intelligence organizations.

838. As to the operations of our own Security Service, he said that early in 1952 Pakhomov reported to him that he and Chiplin had met by pre-arrangement in Kingston Park at Canberra, where Chiplin had told him that our Security Ser­

vice was inferested in two persons in the Soviet Embassy­ Mrs. Petrov and a Miss Kozlova, who worked in the Commer­ cial Attache's office. Pakhomov had also reported that during this meeting some person had taken a photograph of them and

he feared that they might have been under observation by our Security Service. Petrov reported this incident by cable to the Moscow Centre, and in reply was told to warn Mrs. Petrov to be careful in her movements and to ask the Ambassador to warn Miss Kozlova. ·

839. Chiplin in evidence denied that he had any such con­ versation with Pakhomov. When asked whether he had ever met Pakhomov in Kingston Park he said:

''I have met Pakhomov many times in Canberra and Canberra is full of parks. I don't know specifically whether it would be Kingston Park.

Q. Do you know l{ingston A. I do not know if it is called I\:ingston Park. Atl around Kingston are open spaces. Q. Well, you might have 1net Pakhon1ov there?

A. Yes.''

840. The mention of the possible existence in the hands of our Security Service of a photograph of him and Pakhomov together probably accounted for his cautious replies.

423

Report of the Royal Commission on Espionage

841. We believe that Pakhon1ov did make to Petrov the report which Petrov says he made, and that the report was true.

842. Petrov told us also that in the cable from the Centre in reply to his report about the meeting between Chiplin and Pakhomov he was instructed to try to find out from M. J. R. Hughes (code name ''Bask'') whether the Communist Party had any agents working in our Security Service and, if so, whether it would be possible for the M.V.D. section to make

direct contact with them. Petrov already knew Hughes, a Communist Party functionary who evinced a strong dislike of our Security Service and had a Party interest in destroying its effectiveness.

843. Petrov stated that following this instruction he met Hughes in Sydney by appointment made through Miss Jean Ferguson. He told Hughes of the report which he had

received concerning J\frs. Petrov and Miss I\::ozlova, and asked Hughes whether the Communist Party had any persons work­ ing for them in the Security Service and, if so, whether flughes could recommend them as " contacts". Hughes in reply had

informed Petrov to the effect that the Party had a man in the Post Office who was able to "listen in" to conversations and warn the Party of Security operations, and that a girl who had earlier worked in the Security Service and was in love with a Communist Party member had mentioned to her lover the fact that Mrs. Petrov and :I\fiss Kozlova had attracted that Service's interest. Hughes had not given the name of either of these· persons, and had said that he could not recommend them to Petrov.

844. Hughes denied all these allegations and J\ifiss Ferguson denied that she had made any arrangement for Hughes and Petrov to meet. Neither of them was an in1pressive witness. Hughes was most evasive and prevaricating. We believe that Petrov 's account of these incidents is true. Petrov reported

the results of this interview with I-Iughes to the Moscow Centre.

845. That the Con1munist Party had-at least at one period -some source of information concerning the activities of the Security Service was made apparent from a document which was produced before us.

'.230

M.V.D. Operations concerning Seettrity Organizations

846. On 17th July 1953 officers of the Commonwealth Inves­ tigation Service, acting under a warrant, ente-red and searched the house of one Herbert Bovyll Chandler, a member of the Central Committee and of the Control Commission of the

Communist Party, and the printer of the "Tribune". The officers there found and seized a number of documents, some of which were produced before us.

847. One of the documents found in Chandler's house is directly relevant to the matters dealt with in this Chapter. It contains a list of motor-car numbers with a description of the motor-car set against each number. Twenty-one numbers are

given; thirteen of them are the numbers of cars which, between February and November 1950, had in fact belonged to or been used by our Security Service. Seven others of them are the numbers of vehicles which, during that period, had been cus­ tomarily parked in or near an area which-unknown to the public-had been used by the Security Service for parking its vehicles. The document contains a note that ''All these are

subject to change, as cars are, being sold and new ones bought". Against one of the numbers is the statement that the car is ''Used during day by some fi.rm-in King and Sussex Sts. ".

848. The document contains also a list of thirteen named persons under the heading "Personnel", with addresses against them, and in some cases a description of the appear­ ance of the individual. Against four of the names is noted

"outdoor man", against two others "outside work", and against one "inside work". Many, but not all, of these par­ ticulars are correct descriptions of persons who at the time were working in our Security Service.

849. The conclusion which we draw from the document and the evidence which we heard relating to it is that some, but not all, of the information in it probably came from a person who worked in the Security Service but had not a wide or

exact knowledge of its activities. It is proper that we should say that a person suspected of divulging the question ceased to be a member of the Secunty Servwe 1n 1950.

850. When shown the document, Chandler denied all know­ ledge of it, Its significance is that it shows that the Communist

425

Report of the Royal Commission on Espionage

Party at one stage had someone in the Security Service who was passing out information, and that there was some basis in fact for the statement which Petrov told us had been made to him by Hughes.

851. Another document found in Chandler's house, although only indirectly relevant to this Chapter, contains a number of verbatim extracts made-apparently for Communist Party purposes-from a confidential Australian memorandum relat­ ing to external affairs, and having a very limited circulation. By what channels the document reached Chandler's house we do not know, and Chandler denied all knowledge of the document. Petrov said that the information contained in it and in the balance of the original memorandum from which the extracts had been taken did not reach the M.V.D. at the Embassy. \Vhether the Moscow Centre received it through some other channel we do not know.

852. The Moscow Letters contain also a number of specific references to our Security Service in Australia and to persons il1 Australia who were suspected by the M.V.D. of being con­ nected with counter-intelligence work. One instance of the latter has already been quoted by us in Chapter 7 as showing the work done by the Moscow Centre in watching the move­ ments of Australian visitors to the U.S.S.R., as a result of which Petrov was warned that Russell's conduct had aroused

suspicions that he might be connected with the British coun­ ter-intelligence service. Other examples of this are to be found in the passages in the Letters relating to

"traitors", which we quote in Chapter 17. 853. The Letter· No. 4 of 24th July 1952, paragraph 1, which we mention in Chapter 6, required Petrov to estab­ lish contact with Gordeev, the G.R. U. Resident, for the pur­ pose of '' combating the activities of foreign counter-intelli­ gence organizations, which are aimed at impeding the work of Soviet intelligence workers'' and ''to take measures to elucidate the activities of the counter-intelligence organiza­ tions of the adversary in Australia".

854. This instruction resulted from earlier reports by Petrov to the Moscow Centre that our Security Service had been an increasing interest in the movements of Soviet

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otficials, including Pakhmnov and sorne of the E1nbassy staff. Petrov told us that he discussed these matters with Gordeev and warned hin1 of the possibility-of which Gordeev was already aware-that his movements were under surveillance. Petrov told him also of the precautions which he himself took

to avoid surveillance and in respect of other n1atters.

855. Another r eference in the Moscow Letters to the subject of counter-intelligence is of interest as illustrating the wide­ spread sources of the ' l\1oscow Centre's information and the way in which it followed up the movements of persons in

whom it was interested.

356. The l\1oscow Letter No. 4 of 24th July 1952, paragraph 6, reads: ''On suspicion of contact with the American counter­ intelligence, M. V.D. Headquarters had under surveillance

an _immigrant _Galina _Mikhailovna _Pop ova _(formerly Egupova), a woman born in 1911 in the town of T'omsk1 and residing until the year 1949 in Japan. At the end of 1945 Popova became the pretended wife of a white emigre, Alexandr Vasilievich Grey (real name

Serapinin). He arrived in Japan in 1945 among the per­ sonnel of the British-American Armies, with the rank of Captain of the Australian Army. In 1947 he was demobi­ lized from the Australian Army, and he transferred to service in the American counter-int.elligence in Japan.

Despite the fact that Grey has a wife and grown-up son in Australia, he cohabited for a long time with Popova and proposed to her to transfer to Australia, whither Popova travelled at the end of 1949.

The address of Popova in Aust.ralia is not known. It is possible that she is staying at the house of Grey, who was living at Sydney at the address: In Endeavour Street, West Road.

We request that, if it should prove possible, you should establish the whereabouts of Popova in Australia and inform us of the result.s of your inquiries by mail.''

857. The P etrovs had no knowledge of any of the n1atters stated in this paragrar h. The reference in it to a person

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named Grey living in "Endeavour Street, West Road" led to inquiries being made in Endeavour Street, West Ryde, a Sydney suburb, where it was found that a son of Alexander Serapinin (later Grey) was living. This led to the tracing of Mrs. Popova, and statutory declarations were obtained from her and the son. We were informed that Alexander Serapinin was abroad when this matter was being investi­ gated, and that he has since died.

858. The statutory declarations mentioned above showed that Alexander Serapinin had served as a Naval Attache at the Soviet Embassy in Japan from 1920 to 1922 and had then gone to Harbin, where he had been in business until 1925. In that year he and his wife and son came to Australia, where he adopted the name of Grey and was naturalized in 19·30 or 1931. Grey lived in Endeavour Street, West Ryde, from 1927 until about 1930 and again for a period from 1941. In 1945 he went to Japan as an intelligence officer with the Australian Forces, and later' served with the American Army Adminis­

tration.

859. Galina Popova was born at Tomsk and n1arried a man named Egupoff, from whom she was later divorced. In 1944, in Harbin, she was arrested by the Japanese on a charge of espionage and taken to Japan, where she was imprisoned untiJ released on the termination of hostilities in 19'45. Thereafter Popova met Grey and associated with him in Japan for smnc years. She came to Australia in 1949.

860. Petrov did not locate Popova or Serapinin.

861. of the information contained in the entry must

have been collected in the Far East and sent from there to the Moscow Centre, but we do not know from what source or by what line of communication the Centre learned of Grey's address in Australia. Since the subject of the matter in the entry concerned military intelligence, it may have reached Moscow along· the G.R.U. line.

862. The next reference in the Letters to the subject of counter-intelligence is in the Moscow Letter No. 5 of 27th September 1952, paragraph 2, which contains a warning to Antonov that one of his acquaintances might be connected with our Security Service.

M.V.D. Operations concerning Security Organizations

·''Concerning Antonov.

Antonov acted correctly in sending information about his first acquaintances and in notifying us about the diffi­ culties encountered. Both we and you must deal atten­ tively and tactfully with his first independent steps in

practical intelligence work, since upon the correct be­ ginning of this work depends its further success. Antonov is going through a difficult time now, and our task and yours consists in helping him to assess correctly his first

acquaintances, among whom there may prove to be not a few local counter-intelligence agents and importunate 'friends' of the type of Stanley. About Stanley (in future referred to as Stepan): it is

known that he is a drunkard and that he has contacts in the counter-intelligence. In the past he associated with Nosov, but he avoided association with Pakhomov. Con­ sequently the appearance of Stanley in Antonov's

quarters as from the first days of his stay in the country, and also Stanley's obtrusiveness cause suspicion and com­ pel us to treat him with special caution. We share your and Antonov's opinion that Stanley is

apparently engaged in the study of Antonov. Warn An­ tonov once again that he should be cautious with Stanley, but that he should not avoid such association as is neces­ sary within the compass of his official position.'' 863. Because it was known that he had been an associate of N osov, a journalist named Massey Stanley was called as a witness; and he agreed that the Letter must refer to him.

864. The Moscow Centre had allotted him the code name "Stepan" and so r eferr ed to him in this Letter. From one of the G Series of documents (G.l) it seems that that code had been allotted t o him at an earlier period.

865. Stanley had known and been friendly with N osov, and had visited his flat on occasions. He told us that h e did nol meet Pakhomov but that after Antonov arrived in Australia he met him and entertained him and frequently visited his

fiat. He said that he was ''sorry for Antonov. He was a timid man, and seemed lost. He was a foreigner, a member of my own trade. who seemed to be a timid) rather lost , soul, and I felt a hit sorry for him".

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lie denied the statement in the Letter that he was a drunkard, and said that he had never had any association with our Security Service. 866. There is no suggestion in the Letter that Stanley ever assisted the M.V.D. in any way, although it appears that in Nosov's time he was regarded by the Moscow Centre as worthy of "study". The Centre's suspicion-as expressed in the Letter-that he might be connected with counter-intelli­

gence, and its consequent warning to Antonov, no doubt arose from the following circumstances, as the Centre saw them:­ Although he had freely associated with Nosov he had seem­ ingly avoided Pakhomov, but soon after Antonov's arrival in Australia had got into touch with him and shown a friendly

interest in him, in a manner which the Centre regarded as ''importunate''. 867. In the Moscow Letter No. 6 of 25th November 1952, paragraph 7, there is a further reference to counter-intelli-gence.

''Concerning Rex Chip lin.

In connection with the measures which you know to have been taken by the counter-intelligence against Rex Chiplin, we request you to exercise maximum caution in further work with him.

We consider that, apart from Antonov, none of our cadre workers should have meetings with Chiplin. Antonov should reduce to a minimum his meetings with Chiplin in the press gallery and other places, and should only accept information from him in fully advantageous conditions.

When receiving information you should ascertain and inform us about the source from whom Chiplin receives information, and not merely its contents, as you did when dealing with the question of exchange of enciphered material between the governments of Australia and America.'' And in the same Letter in paragraph 8 the Moscow Centre said:

"In this connection we request you to clarify, in a cautious manner, whether McLean is working . in the De­ paxtmP.n.t of External Affairs at the present time, in what

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M.V.D. Operations con.cerning Security Organizations

capacity, and what is the reason for his exclusion from the list. If he does not work there, then endeavour to ascertain his new place of work, the reason for his trans­ fer, and other questions of interest to us concerning him,

and especially whether this is connected with measures taken in the Department of External Affairs after the article which Chiplin published.''

868. These references should be read with the earlier l\!Ios­ cow Letter No. 5 of 27th September 1952, paragTaph 7, in which the Moscow Centre said: "The information set out in para. 7 of your Letter No.

4 of 28.8.52, should have been notified to us by you by cable. Please take this into consideration and in future inform us immediately about similar happenings. We agree that Antonov should not go any more to the editorial office of the 'Tribune'. In so far as materials

supplied by the Information Bureau and Photo Chronicle through Tass, intended for the Australian press, are official and are examined by censorship upon receipt, it appears expedient to us that Antonov should come to an

arrangement with the editorial office of the 'Tribune' that a technical worker should be sent to him for such material when necessary." 869. The references to the measures taken against Chiplin and in the Deparbnent of External Affairs, and the warning to Antonov, relate to the fact-which Petrov had reported to

the Centre in his letter dated "28.8.52"-that C01nmonwealth officers, acting under warrants, had entered and searched Chip lin's house and the ''Tribune'' office on 29th August 1952. In this connection it will be noticed that Petrov's letter report­

ing the incident bore the date "28.8.52"-the day before the search took place. This, we thought at first, indicated that Petrov had received from some source advance informatioXl that search warrants had been obtained. It became clear, however, fr01n the evidence on this and other aspects of the Inquiry that Letters-whether to or fron1 the Centre-wen'

not wholly written on the dates which they bear. The prac­ tice was to date the Letter with the date on which it was

first commenced, and additions were made to it, whenever further matter required to be communicated, up to the time

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when the next set of couriers left with the diplomatic bag. In the case of Petrov's letter of "28.8.52" the couriers did not leave Australia for the U.S.S.R. until 2nd September 1952.

870. Some of the entries in the G Series of documents indi­ cate the interest taken by the Moscow Centre in Australian Security organizations before Petrov's term as temporary Resident. The entries relate to a period before our present

Security Service was set up. One of them we have already mentioned in connection with Massey Stanley.

871. In Document G.5 there appears this entry: ''Geoffrey Powell ( Geoffry Powell), photographer, under-cover member of the Communist Party. Proposed that he should transfer to work in the security service. Did he accept the invitation and where does he work now?''

872. Geoffrey Bruce St. Aubyn Powell was called before us as a witness. He told us that in 1944 he had made an

arrangement with the "Tribune" newspaper to do photo­ graphic work for it and had joined the Communist Party. He was given the use of a dark-room at Party headquarters. He said that at about the end of 1945 he had met two officers of the Commonwealth Investigation Service who asked him if he would supply them with copies of photographs of Party functionaries and Party meetings. Powell said that he re­ ported this to Chandler, who referred him to Clayton, and that he was told by Clayton that he would have to make his own decision on the matter. Powell said that soon afterwards

he sensed a general "cooling off" in the Party attitude towards him and he ceased to do photographic work for the "Tribune" and to associate with the Party. He said that during the period of his Party membership he made no secret of the fact that he was a member, and he was unable to explain the reference in Document G.5 to ''under-cover'' member.

873. The inference is obvious that the information about Powell which is contained in Document G.5, that it had been "proposed that he should transfer to work in the security service", must have been supplied originally by a member the Communist Party who knew that Powell had been

M.V.D. Operations concerning Security Organizations

approached by officers of the Commonwealth Investigation Service. It is significant that Clayton was one of the only two persons to whom Powell reported the approach.

87 4. The other relevant entries in the G Series of documents appear in Documents G.7 and G.8.

875. The first of them is: "Taylor-judge and representative of the Arbitration Commission, labour supporter, up to 1943 was at the head of the security service in Sydney; at that time handed to the Communist Party a document ·which made possible

the exposure of an agent provocateur in one of the regions of the Communist Party. President of the Industrial Commission of N.S.W. 'K' describes him favourably."

876. Mr. Justice Stanley Cassin Taylor, who has been the President of the New South Wales Industrial Commission since the end of 19'42, was for the twelve months prior to his appointment to the Industrial Commission in charge of the

war-time Security organization in New South Wales. He gave evidence, and since the matters on which he was examined concerned some of the work of that organization, we heard his evidence in private session.

877. J\1r. Justice Taylor denied that he had ever handed any document to the Communist Party. He told us that in the course of his security duties he sometimes had to require the transfer to other employment of persons employed, for

example, in factories engaged on defence work. To avoid pos­ sible stoppages of production, he used to discuss such transfers with officials of the unions concerned (some of ·whom he knew to be Communists) and, so far as possible, explain the rea,sons

which rendered the transfers necessary. Sometimes these reasons were based upon confidential information received from Security sources.

878. He expressed the view that during some such discus­ sion he might unwittingly have said something, or possibly read something from a document, which might have provided a clue to the source from which his organization had derived its information. This could account for the reference in the

entry to ''a document which made possible the exposure of an agent provocateur".

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879. It will be noticed that according to the entry, '' 'K' describes him favourably''. We have shown elsewhere that "I{" is Clayton. ::Mr. Justice Taylor said that he did not know Clayton personally; but Clayton ·would naturally be interested in him as the head of the South Wales branch of the then Security organization, and may have supplied the informa­

tion contained in the entry. Apart from what is said in the entry, we know of no reason why Clayton should have made a favourable evaluation of him.

880. The ,second relevant entry is in Docun1ent G.8: "Borras-doctor of Economics, an official fellow worker of the security service, and expert on languages, a Greek. Is engaged on the instruction of Italians, Greeks, and others. Among the men1bers of the security

service he is regarded as a leftist. Lives in Canberra.''

881. This entry refers to Kyrikos Kyriakakis Barris, who gave evidence. He was born on one of the Dodecanese Islands and gained a doctorate of political and social science in Athens. He is a fluent linguist. Between 1943 and 19·45 he worked in our war-time Security organization. Later he

taught languages at a school in Sydney, and for a long time he has taken part in organizing classes for and teaching English to Italian and Greek migrants. He has never had Communist affiliations or views.

882. He was living in Canberra between May and N ovem­ ber 1945, and it must have been during this period that the information in the entry was obtained by the M.V.D., since it states "Lives in Canberra". There is nothing which enables

us to determine who supplied the information about him to the M.V.D. No doubt he attracted the attention of the Moscow Centre because of his connection with the war-time Security organization.

CHAPTER 17

THE OPERATIONS OF THE M.V.D. IN RELATION TO EMIGRES

883. As we have explained elsewhere, what is called in TvLV.D. parlance '' EJ\1:'' work is concerned with the investi­ gation of the activities of Russian emigres and emigre associa­ tions, the tracing of emigres who are regarded by the Soviet

as traitors, the penetration of emigre associations by Soviet agents, and the use of emigres as Soviet agents.

884. Before leaving Moscow, Petrov was directed by the Soviet organ at the Moscow Centre at that time controlling "EM" work that he was to carry out "EM" operations in Australia. In January 1953, Plaitkais (code name

"Dvinsky"), a Latvian, arrived in Australia with instruc­ tions to carry out ''EM'' work under Petrov 's control. Plaitkais was overtly an Attache at the Embassy, but the evidence showed that he was active in this line of work.

885. The nature of the "EM" work is well illustrated, first by the case of a man named Fridenbergs and secondly by certain passages in the M.oscow Letters and the G Series of documents, and the evidence relating to them.

CoNCERNING ANDREW FRIDENBERGs (coDE NAME "SIGMA n ).

886. Petrov told us that before he left Moscow the Centre showed him the dossier of a man named Fridenbergs. The dossier-so Petrov said-stated that Fridenbergs was a Latvian lawyer who had given information to the Soviet when Latvia was occupied by the Red Army and later, when the

German Army invaded that country, had given information to the German authorities. When the Germans retreated from Latvia, Fridenbergs had gone first to Germany and thence to Denmark, and had returned to Germany in 1948 and remained there until 1949.

887. According to the dossier, the first knowledge the 11:oscow Centre had that Fridenbergs had gone to Australia had come from a letter, intercepted by the Soviet censorship,

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from Fridenbergs to his sister in the U.S.S.R., written from the address of a school in South Yarra, a suburb of Melbourne.

888. Petrov said that he had been instructed by the Moscow Centre to make contact with Fridenbergs (who had been allotted the code name ''Sigma''). After his arrival in Aus­ tralia, Petrov had accordingly called at the school in South Yarra, where he was inf.ormed that Fridenbergs was no longer employed there and was given his address in Collingwood, another Melbourne suburb. Petrov went to this address and there met and identified himself to Fridenbergs, who agreed to supply him with information about Latvians living in Australia.

889. Thereafter Petrov met Fridenbergs on a ;number of occasions and obtained from him information about Latvians. In particular, he obtained from him the addresses of two Latvians living in Australia whom the Moscow Centre was anxious to trace. One of these was a Latvian colonel whom the Soviet had sentenced to death in absentia because he had fought with the Latvian Army against the S.oviet. The other was a Latvian woman who was also regarded by the Moscow Centre as a ''traitor''. The addresses thus obtained were communicated by Petrov to the Moscow Centre.

890. Fridenbergs, Petrov said, was paid in all the sum of £30 out of funds for information supplied by him.

891. Petrov said that in June or July 1953-he could not ·fix the exact date-he took Plaitkais with him to Fridenbergs' house at night and there introduced Plaitkais to him, a;n.d that Plaitkais thereafter had a number of meetings with

Fridenbergs.

892. Petrov said that Plaitkais, after the last of these meet­ ings, reported to hiln as follows : Fridenbergs had told him that two police officers had called at his house and inquired whether he was in touch with members of the Soviet Embassy, and he was afraid that Petrov or Plaitkais might have been followed to his house.

893. The occasion in June or July 1953 when-according to Petrov-he had introduced Plaitkais to F'ridenbergs was fixed

M. V.D. Operations concerning Emigres

by Petrov as occurring on the night of the third day of a visit to Melbourne by hin1self, P laitkais, and l{islytsin, when they had stayed at the New Treasury Hotel. The records of the hotel were produced t.o us and they showed that these three

stayed at the hotel on 25th, 26th, and 27th June 1953, indicating that the 27th June must have been the date to which Petrov was referring. The records showed also that on 5th Sep­ tember 1953-a date to which we refer later-Plaitkais had

again stayed at the hotel. . .

894. Fridenbergs was called as a witness. He is a Latvian lawyer with a sister living in the U.S.S.R.. His account of his movements from Latvia to Germany, thence to Denmark and later back to Germany, acc.orded substantially with

Petrov's account of what was stated in the dossier.

895. Fridenbergs said that he was a person of anti-Soviet views and had publicly professed these views in both Denmark and Germany; that he had never given any information to the Soviet either in Australia or abroad; that he had never met either Petrov .or Plaitkais; and that neither of them

had ever been in his house. He said that on 27th and 28th June 1953 he was not in Melbourne but was at the Eildon Weir, where he was employed by the State Rivers and Water Supply Commission and living in a construction can1p. The Eildon Weir is about 87 1niles from Melbourne.

896. The date-27th June 1953-thus assumed considerable importance. The records kept at the Eildon Weir were accord­ ingly produced to and examined by us. From them and from the evidence of the officer who kept them it emerged that

Fridenbergs had been dismissed for insubordination on the morning .of 27th June and had ceased work at noon; that he had been credited in the camp accounts as being absent from meals at the construction camp for the evening meal on 27th

June and for all three meals on 28th June. The records show that he was at the camp again on 29th June to draw his pay. It was proved also that a bus had left the Weir soon after lunch on 27th June carrying men fr01n the camp t.o Melbourne.

897. We are satisfied that Fridenbergs ' evidence that he was at the Eildon Weir on the night of 27th J nne was untrue.

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898. This, of course, did not establish the truth of Petrov 's evidence relating to Fridenbergs. It merely showed that Fridenbergs' alibi was a false one. But we found striking confirmation of Petrov 's story in .other respects.

899. First, an official of the Latvian Association told us that Fridenbergs had during the relevant period asked him for and obtained from him the addresses of the Latvian colonel and the Latvian won1an which Petrov said he supplied to the Centre.

900. Secondly, in answer to some unexpected questions from us and from counsel assisting us, Petrov gave a description of Fridenbergs' house, its living-room, and the position in it of certain furniture, which later proved from Fridenbergs' evidence to be accurate.

901. Thirdly, an officer of our Security Service gave evidence, supported by a contemporaneous report, that on the night of 5th September 1953 (when Plajtkais was shown by the hotel records to have been booked in at the New

Treasury Hotel) he had kept Plaitkais under surveillance; that Plaitkais had gone, by a circuitous route and in a clan­ destine manner, to a lane behind Fridenbergs' house where, a few yards from the house, he disappeared in the darkness; and that a light was immediately thereafter turned on in Fridenbergs' living-room. Plaitkais had not reappeared when the surveillance ended some considerable time later. This Security officer knew Plaitkais by sight and had in the course of his duty met the ship on which Plaitkais arrived in Aus­ tralia for the purpose of acquainting himself with Plaitkais 's appearance.

902. Fourthly, Fridenbergs admitted that he had been visited by two officer·s some time after June 1953 and said that they had merely questioned him about other members of the Latvian c-ommunity.

903. \Ve are satisfied that Petrov 's evidence relating to Fridenbergs is true.

904. The incident supplies a good illustration of one aspect of ''EM'' work. It shows how a Soviet agent can be used to

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penettate an emigre a ssociation here in or der to get infor ­ mation about its members and also to keep under surveillance ernigres whom the Soviet regar ds as ''traitors ''.

905. We devoted much time to our investigation of the Fridenbergs episode, principally because it afforded us an early opportunity of testing Petrov's credibility by r eference to other independent evidence and records. He himself had

no document to support his story.

ExAMPLES OF "EM" WORK OF THE M.V.D. IN TRACING

''TRAITORS'' AND PERSONS SU SPECTE D OF BEING CONNECTED WITH COUNTER-INTELLIGENCE OR-GANIZATIONS.

906. The earliest evidence in the Petrov Papers of "EM n work of the M.V.D. in tracing persons deemed by the Soviet to be "traitors" or suspected of a connection with counter­ intelligence organizations is in the G Series of documents. An entry of 1949 in Document G.10 reads:

'' Gutwach, Al-dr Mihailovich, born in Odessa, in 1923 he went to the U.S.A. and then to Australia. Had rela­ tives in the U.S.S.R. with whom he maintains correspond­ ence.''

907. We were able to identify the person to whom the entry .refers as "Gutwach", and that p erson made a statutory declaration in which he supplied the following particulars. He was born in Odessa in 1902. In 1924 he left the U.S.S.R. "illegally" because, not being a Communist, he could see no possibility of advancement in life under the Soviet regime. He travelled to Canada and took up his r esidence in Montreal, where he remained for ten years. He paid three visits to the United States of America, during one of which he · attended

a school in New York for about six months. He came to

Australia in 1936. In 1945, through the Soviet Consul in Australia, he got into touch with two brothers of his who lived in Odessa, a·nd sent food parcels to them. This no doubt led to his name being entered in the M.V.D. ''books'' and to

particulars of him as set out in the entry being sent to Sadov­ nikov, the then M.V.D. Resident. Neither Sadovnikov nor any other M.V.D. worker ever approached "Gutwach".

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908. The next '' ElVI'' reference is contained in the Moscow Letter No. 2 of 12th March 1952, paragraph 4, which reads: "We are seeking the traitor to our native land: Efi.m Feoktistovich Shirokhih, born in 1914 in Zalojnee, in

the Mostov area of the Kurgan district. According to information in our possession, Shirokhih is at present living with his wife in Sydney, Australia, at the postal address La Perouse.

·We request you to take measures to locate Shirokhih and to inform us by mail whether he really does reside in Australia.''

909. We were able to identify the person to whom the Letter refers as "Shirokhih", and that person made a statu­ tory declaration. He is a Ukrainian and was captured by the Germans during the war and .put to forced labour in Germany. After the armistice the British authorities gave him the option

of returning to Russia or of remaining in the occupied zone. He heard that prisoners who had done even forced work in foreign countries were on their return to the Soviet regarded as ''traitors'' and subject to punishment. He electe.d to stay in the British zone. Soviet officials tried to coerce him to return to the U.S.S.R. and made threats against his life if he refused to do so. He came to Australia in 1949. Petrov made some endeavours to find "Shirokhih", but without success. His case seems in some respects to be analogous to that of the Latvian colonel to whom we referred when dealing with Fridenbergs.

910. Another "EM" entry is contained in the Moscow Letter No. 3 of 6th June 1952, paragraph 9, which reads: "There live in Australia a series of displaced persons and traitors of our native land, who conduct suspicious

correspondence with their relatives and friends in the Soviet. In their letters they show an interest in the fate of their relatives, and in the material situation of Russian people and their participation in the political life of the country; they check the correctness of their relatives' addresses, express hope of a swift meeting with them, and ask that

correspondence should be maintained in secret,

M. V.D. Operations concerning Emigres

Such a correspondence is conducted by a certain John Rosser from Ben ova, Queensland; by Nicolai Vassilievich Klenov, born in 1918, residing in the town of Albany, who signed a letter under the name Volovik; Vladimir

Baskovsky, residing at the address Newport Hostel, Vic­ toria (using this name is Vladimir Andreevich Krasil­ nikov, born in 1928, who deserted from the Russian Army, and fled to the British zone of occupation in Germany.

We presume that · this correspondence is being con­ ducted not without the knowledge of intelligence organi­ zations. It is also po.ssible that these people are being specially prepared for transmission to Russia.

We request you to collect information about these per­ sons through means at your disposal, and in the event of receiving data concerning the departure of any of them from Australia, please notify us by cable.' '

911. We were able to identify the three persons mentioned in this entry from evidence placed before us. Petrov knew nothing of them. ·

912. Rosser is not an emigre. He is an Australian who had written to persons in the U.S.S.R. on at least three occasidns since the war, principally on the subjects of bee-farming and architecture.

913. "Klenov" is in a mental hospital in Western Australia. He stated to a Security officer that he had never written from Australia to any person in the U.S.S.R. He was born in Poland in 1919 and came to Australia in 1948. He stated

that he had never used the name "Volovik" in any letter but knew a man of that name in Albany. Volovik was inter­ viewed and stated that he had written letters to his mother in the U.S.S.R. and had received replies from her. It would

seem that the Moscow Centre or the :Moscow censor had conJ fused '' Klenov'' with V olovik. 914. Baskovsky stated that he left the Soviet in 1945 and joined the French Foreign Legion. He came to Australia in

1951. He had written one letter to the U.S.S.R. as an

amanuensis for a man named Krasilnikov and had signed that man's name to the letter. Here again there is a confusion jn the Letter.

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915. Needless to say, none of these persons wrote their letters under fron1 the Security Service.

916. Four points in relation to these cases are worthy of note: firstly, that letters sent by persons in Australia who seek to communicate with relatives or others in the U.S.S.R. are intercepted by the Soviet censorship; secondly, that the censorship authorities report the facts to the Moscow Centre;

thirdly, that such persons may be, in consequence, suspected by the Centre of conducting· their correspondence on instruc­ tions from a counter-intelligence organization in preparation for their being planted in the U.S.S.R.; and fourthly, that the

Centre instructs the M.V.D. Resident to watch the movements of such persons and to report by cable if they leave Australia. 917. Still another "E1f" direction is contained in the Moscow Letter No. 3 of 6th June 1952, paragraph 10, which reads:

' 'At the present time there resides in the town of Brisbane at the address Ragner Rd., Hemmant, a certain A. I. Galeznik (Antony Chalesnik), who in April 1952 wrote a letter which he addressed to our government. In this letter Galeznik expressed a wish to hand himself over to the Soviet legal institutions as a criminal of the second world war. _At the same time there is nothing said in the letter about the crimes committed or about the motives which prompted him to take this decision.

Galeznik is not in our books. Please inform the Ambassador about this and send an official letter, as from the Embassy, to the stated address, in which letter you advise Galeznik to approach the Embassy direct in the matter which is of interest to him. If he agrees to visit the Embassy, then receive him in the capacity of an employee of the consular department and ascertain the basic facts of the case. In conversation try to ascertain information as to his whereabouts and also the reasons which have caused him to refer to Russia, by-passing the Soviet Embassy in Australia. At the same time it is necessary to observe caution and not to resort to any measures which might expose you as an intelligence worker.

Inform us by mail concerning the outcome.''

M. V.D. Operations concerning Emigres

918. From evidence placed before us we were able to identify "Galeznik". He was born in Poland in 1923 and came to Australia in 1949. He is at present in a mental hon1e and no statement could be obtained from hhn in explanation of

the references to him.

919. Petrov's knowledge of hin1 was as follows. Before the Letter of 6th June 1952 reached Petrov, Gordeev had reported to Petrov, in his consular capacity, that Galeznik had called at the Soviet E1nbassy arid had told Gordeev that during the

occupation of White Russia by the Germans he had given them assistance, and that he had written to Voroshilov, Chief of the Supreme Council of the Soviet Union, confessing his crime and saying that he wished to return to the U.S.S.R. and stand

his trial as a traitor. Upon receipt of the Letter of 6th June 1952 Petrov reported this interview to the Moscow Centre. Arrangements were made for Galeznik's repatriation, but when interviewed by Gordeev for this purpose he refused to return to the U.S.S.R. because lre had not received a personal letter from V oroshilov giving him permission to

do so.

920. The last reference to "EM" work is contained in the Moscow Letter No.4 of 24th July 1952, paragraph 3, in which the Centre complained that Petrov had not notified "any particulars concerning Kastalsky, which were promised in your cable''.

921. Petrov never obtained any particulars about "Kastal­ sky''.

922. We wert. able to identify him and he made a statutory declaration. He was born in Russia, and when he was eight years of age he migrated to Grodno, in Poland, with his parents. He was able to remain in Grodno throughout the

war, first under the Russians and then under the Gennans. He was anti-Communist and was befriended by a German engineer. When the Germans retreated he moved into Ger­ many, where the authorities placed him in a labour camp.

After the armistice he lived in Bavaria until he came to Australia in 1949.

922. The references to emigres with which we have dealt show clearly that persons who leave the U.S.S.R. without the

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permission of the Soviet are regarded as ''traitors'' and are placed under the surveillance of the ''EM'' section of the Moscow Centre, and that the local M.V.D. Resident is set the task of tracing them and of supplying up-to-date particulars of them for the Centre's "books".

923. The references in the documents to all the persons mentioned in this Chapter and the evidence relating to them strikingly confirm the authenticity of the documents.

,

CHAPTE,R 18

THE OPERATIONS OF THE M.V.n. TOWARDS SETTING UP AN "ILLEGAL AP'P ARATUS" IN AUSTRALIA

924. As we have said earlier, an "Illegal Apparatus" (as opposed to a "Legal Apparatus") is the Soviet name for an espionage organization designed to operate under a Resident having no Embassy ''cover'', so that its work will not be

disrupted by war or the breaking off of diplomatic relations.

ADVANTAGES AND DISADVANTAGES RESPECTIVELY OF THE ''LEGAL'' AND ''ILLEGAL'' APPARATUS.

925. Each type of organization has its advantages and dis­ advantages. The "Legal Apparatus" operates from a base (the Embassy) which is immune from visitation and search by officials of the country in which it is situated; its communi­ cations with its Moscow Centre enjoy the cover of a diplo­

matic bag and are thus both safe and quick; and its Resident and such of its cadre workers or collaborators as enjoy diplo­ matic status are immune from arrest and search. Also, they have wide opportunities of meeting and associating with

fellow diplomats and persons holding high positions who may be in possession of confidential information. On the other hand, an Embassy official may attract the attention of counter­ espionage services.

926. An ''Illegal Apparatus" has not the advantages which diplomatic cover gives to a "Legal Apparatus", but those who work in it are less likely to attract the attention of

counter-espionage services and its operations will not be auto­ matically disrupted by war or by the breaking off of diplo­ matic relations.

927. , An ''Illegal Apparatus'' and its Illegal Resident may work under the control of the Legal Resident but otherwise as an entirely independent organization with its own lines of communication with the Moscow Centre.

9'28. Whether the "Illegal Apparatus" operates under the control of the Legal Resident or not, care is taken to keep the "Legal" and "Illegal" organizations separate as far as

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Report of the RoJJ(7l Com1nissr ion on Espionage

possible from one another. The general pattern to which al! Soviet espionage services conform provides for insulation between one organization and another, and between one indi­ vidual in an organization and others in the same or in a different organization. The purpose of this is, of course, to minimize the risk that the exposure of one organization or of one individual in it will compromi$e another organization or other individuals.

929. The Legal Resident and his Apparatus may be called upon to assist, however, in setting up an "Illegal Appar atus", more especially by assisting the entry of ''illegal workers'' into the "target" country.

THE DESI GN TO SET UP AN "ILLEGAL APPARATUS" AVSTRALIA.

930. That the Government of the U.S.S.R. designed and directed the creation of an ''Illegal Apparatus'' in Australia is established beyond doubt by the contents of the Moscow Letter No. 3 of 6th June 1952, paragraph 1, which we set out in full hereunder. It warrants most careful reading.

931. In May and June 1952 international tension, owing to the situation in Korea and Indo-China, was such that war involving the U.S.S.R. and Australia was by no means im­ probable. That the Soviet Government thought so is apparent in the Letter, which sounds a note of urgency in its directions

to set up in Australia what is known in modern times as a fifth column.

932. We do not doubt that, as Petrov indicated, such a letter was sent at that time to M.V.D. Residents in all Western countries in terms appropriate to the conditions prevailing in each country. -

933. Apart from its general tenor showing the Soviet's the Letter affords important evidence of the ineffec­

tive state into which Soviet espionage in Australia had sunk in 1951 and 1952, and in it the Moscow Centre recognizes that this is due to the under-staffing of the local M.V.D. section so that the "whole burden of the work" had fallen on Petrov alone;

it promises to rectify matters by sending two new cadre workers, and indeed Antonov and later Kislytsin were sent.

Plan to set up an "Illegal Apparatus" in Australia

As appears from the Moscow Letter No.5 of 27th September 1952, paragraph 1, one of the tasks for Kislytsin, who was then on his way to Australia, was to ''engage in the selection and study of persons who could assist the entry and settling of

our illegal workers in the country''.

9·34. As the later Letters show, little progress was n1ade under the ''Plan of Work'' directed to be carried out in tho Letter of 6th June 1952; and when the Centre recalled Petrov it had decided to send to Australia in his place two senior

trained workers, one of whom, Kovalenok, can1e from the M.V.D. Directorate concerned with "illegal work". He arrived on the day of Petrov 's defection, which frustrated the whole Plan.

935. The Moscow Letter No. 3 of 6th June 1952, paragraph 1, follows. Because of its importance, we have, for purposes of clarification and emphasis, sub-paragraphed it and added headings to denote the various sections of the instructions.

''Plan of Work''

Introductory ''Intelligence work in Australia in 1951-52 was actually at a standstill and has not produced any discernible results. This is explained by the fact that the Australian section of the M. V .D. was not fully staffed, and you and P--akhomov were not working to a definite aim. The absence of a plan of work on the part of the M.V.D.

section also had an adverse effect on the state of affairs.

The aggravation of the international situation and the pressing necessity for the timely expo.sure and preven­ tion of cunning designs of the enemy, call imperatively for''

(a) ''a radical reorganization· of all our intelligence work and''

(b) "the urgent creation of an illegal apparatus in Australia, which could function uninterruptedly and effectively under any conditions.''

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Preparation for Illegal Apparatus and Planting of Illegal Workers "In this connection the workers of the Australian sec­ . tion of the M. V .D. should devote .special attention to the

taking of measures for the preparation of conditions for illegal work (in future referred to as Novators) . . The putting into effect of measures. relating to illegal work is at the present moment one of the top-priority tasks, on the fulfilment of which should be engaged all the workers of the Australian M.V.D. section, including persons who have been drawn in. ·

Workers of the M.V.D. section must take into account that the success of the operations in preparation will in large measure depend on'' (a) ' 'the timely collection of data concerning the

situation pertaining to agents,'' (b) "the acquisition of various documents and" (c) ''the preparation of conditions for the entry and settling of illegal workers. The M.V.D. section must therefore instantly begin col­ lecting the necessary data and compiling reports, without observing any fixed time limits, and send them in instal­ ments to M.V.D. Headquarters. For this work you may at your discretion use any cadre worker, recruited col­ laborator, and also the most reliable agents. For the collection of some of the data you may also exploit official possibilities open to you (lawyers of your acquaintance, members of the Australia-Russia Society, etc., without disclosing our intentions to them).''

C ounter-1 ntelligence ''We draw your attention to the necessity of developing work with regard to the counter-intelligence, this being a new but exceptionally important line for us.

In connection with this it is essential: (1) To take measures for the recruitment of valuable agents who have access to enemy intelligence and counter-intelligence organizations and who

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Plan to set up an ''Illegal Apparatus" in Australia

have possibilities of supplying us with informa­ tion concerning plans about subversive activities of the British-American bloc against the Soviet and the Peoples' Democracies.

(2) To put into effect active agent manoeuvres for the exposure of the channels of transmission of enemy agents, and also for the substitution of trusted agents to the Australian and British

intelligence in order to intercept and to unmask enemy agents who are being, or have already been, sent to the Soviet and the Peoples' Demo­ cracies.''

Training of Agents for Extraordinary Circumstances

''The Australian M.V.D. section must here and now take practical measures for the training of agents for work in extraordinary circumstances.

In the event of extraordinary circumstances each agent should have concrete tasks allotted in advance and firm conditions should be worked out for contact with our illegal or group leader. However, the cadre workers of

the M.V.D. section should carry out this work gradually and in such a manner that, when these or other questions are discussed with agents, no panic should spread among them, and so that they should not interpret our prepara­ tions as a sign of inevitable war in the near future.''

Work of Agents

''Side by side with the fulfilment of new tasks, more attention should be devoted to the improvement of the direction of the work of all active agents so as to secure the most effective exploitation of their capabilities and opportunities. For this purpose it is necessary to study deeply the personal qualities of agents and to prepare thoroughly for the carrying out of meetings with them. Work must go on continuously on the improvement of ways and means of contact with agents. You should strive

especially to attain a. reduction in personal meetings with an agent in the street.

255 ·

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Report of the Royal Co mmission on Espionage

For these purposes it is necessary to utilize not only secret hiding places for docu1nents but also reception and t,ransmission points, the organization of which is a pressing task for the M.V.D. section."

Recruitment of Agents ''Taking into account the fact that the agents available to you cannot, according to their qualities and opportuni­ ties, execute the ilnportant tasks facing the M.V.D. sec­ tion, you must now (at last) begin recruitment work. In the first place it is essential to avoid the recruitment of persons whose progressive activity is known to the counter-intelligence, and to concentrate attention on the study and recruitment of persons engaged on secret work of the government and occupying leading posts in poli­ tical parties and organizations, capable of supplying us

with valuable information. The work of recruitment should be carried out boldly, with forethought and inventiveness.''

Exhortation ''The work of carrying into effect the tasks that have been set should be conducted with active, aggressive methods. All cadre workers should be imbued with a sense of responsibility for the work entrusted to them, and should manifest a maximum of creative inventive­

ness, perseverance, and also boldness and decision in carrying out tasks which face the M.V.D. section. You must render timely assistance to cadre workers and at the same time you must resolutely combat any signs of a negligent attitude towards the work, of indecision, or of cowardice.''

Plan for N ew Cadre Wo rk ers "We understand that in the conditions now obtaining, when the whole burden of the work has fallen on you alone, it has been very difficult for you to conduct active intelligence work. Having take.n this into consideration, we have arranged to direct to your M.V.D. office two new cadre workers, one of whom, Antonov, is going out to you · in the month of June to replace Pakhomov.''

Plan to set up an" Illegal Apparatus" in Australia

Enclosures "As Enclosure I'io. 3 we send you the plan task for Antonov. We hope that, by the efforts of all the workers of the

M.V.D. section u11der your correct guidance, you will fulfil the tasks set before the Th'I.V.D. section. As Enclosure No. 1 we send you the approved plan of work of the M.V.D . . section for the period July 1952 to

July 1953, which has been compiled ·with due regard for your proposals. When putting the plan into effect it is essential to direct workers of the M.V.D. section to acquire agents capable of performing our most important tasks.

For the purpose of effecting a daily and thorough con­ trol over the fulfilment of the plan, we authorize its retention in the M.V.D. section on t he same terms as the ciphers. ' '

936. Petrov did not bring the Enclosures with hin1.

Antonov 's plan (Enclosure No. 3) was handed to and retained by hin1. Petrov's plan (Enclosure No. 1) was required to be kept in the J\!LV.D. section and, in the circumstances in which he left, was not a document which he could prudently abstract from the safe.

937. The Letter, having dir ected Petrov to set up the

"Illegal Apparatus", exhorts him to recruit agents for that purpose, but in such a way as not to " panic" them into think­ ing that immediate war was inevitable, and particularly to prepare the way for the planting of ''illegal workers'' in

Australia. In the Petrov is warned not to seek his

agents amongst persons of known "progressive activity" (i.e. known Communist"s).

PLANTING OF "ILLEGAL 1VORKERS"

1. The Case of Divisek (code na1n e "Pechek").

938. Although it appears fr01n the Mo scow L etter that an M.V.D. ''Illegal Apparatus '' was not in existence in 1952, the evidence shows that the planting in Australia as an ''illegal

* 78228-17

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Report of the Royal Co 1nm.ission on Espionage

worker'' of a man named Divisek had been designed in 1949, and that in 1952 a further attempt was made to contact Divisek, who came to Australia in 1949, for the purpose of using him in an "Illegal Apparatus".

939. Mrs. Petrov expressed the view that the Moscow Centre had great hopes of making Divisek the ''Illegal'' Resident here.

940. Petrov knew of him because of the contents of Letters concerning him held by the M.V.D. section in Canberra, and from cables received from the Moscow Centre concerning him. Petrov brought with him a note contained in Documents G.11 and G:12, which he had c.ompiled from the Letters. As will

be seen later, the Security Service knew smnething of Divisek's story before Petrov's defection, but did not know of the M.V.D. 's attempts, during Pet rov's Residentship, to get in touch with him in Australia.

941. Document G.12 is as follows:

Divishek Vintsess PECHEK Vintsesovich his wife Frantishka Veler. 16 Holt Street, Stanmore, Sydney, Australia.' '

9·42. Document G.11 is as follows: Frantishka Peter, born 1911, 2/ Xl-Verner-nitsa, Czech, c01npleted 8 classes of a middle school. From 1928 to 1931 worked as a salesman in the town of Beneshov.

From 1932 to 1937 he lived in· French Morocco. In 1937 returned to Czechoslovakia. In 1941 was conscripted into the German army. In January 1942 he voluntarily surrendered as a prisoner.

In 1944 was sent into Czech territory, and gave a good account of himself. From 1945 to 1948 he worked as director of a hotel in the Sudeten area. He was refused citizenship. He got in touch with his wife's sister living in Sydney, who asked him to come out and settle and he left in February 1949.

2j8

Plan to set up an "Illegal Apparatus" in Australia

Wife Frantishka and son Peter.''

943. These writings were on the front and back of the one piece of paper.

944. Vincenc Divisek was called and, having confirmed the accuracy of the details concerning him set out in the docu­ ments, gave evidence to the following effect. He is a Czech ·who had been conscriptedinto the German Army during the

war. He regarded the Gern1ans as the enemies of his country, and took the first opportunity t.o surrender himself to the Red Army. Whilst h e was in a prisoner-of-war camp, the Soviet authorities recruited him as an intelligence agent and after

training him for some months in that capacity parachuted him into Czechoslovakia, vrhere he gained much experience as the head of a group of agents working for the S.oviet. His code name was "Pechek".

945. In 1948 he wished to migrate to Australia, where he had relatives, but encountered difficulty in obtaining the necessary papers f rorn the authorities in Czechoslovakia, which by this time h ad becon1e a Com1nunist-controlled State.

946. A Soviet M.V.D. official named Medvedyev, who had been r esponsible for his original recruitment as a Soviet agent and who, apparently through official channels, had heard of Divisek 's desire to go to Australia, approached him in Czecho­

slovakia and assisted him to obtain his migration papers in return f.or a promise by Divisek that he would act as an M.V.D. agent in Australia. Medvedyev made detailed arrangements with him for meeting an M.V.D. representative in Sydney

after his arrival there, the rendezvous being in the Botanic Gardens near Governor Phillip's statue.

94 7. Almost immediately after his arrival in Australia in 1949, Divisek reported what had occurred between himself and Medvedyev to the Commonwealth Investigation Service, which at that time was carrying out some counter-espionage

functions. Whether by accident or design, however, he gave dates for his pr.oposed meeting with the M.V.D. representative different from those arranged with Medvedyev and, under surveillance by officers of the Commonwealth Investigation

Service, attended at the meeting place on the incorrect dates.

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Report of the Royal Commission on Espionage

Divisek said that, in the result, no meeting took place with any Soviet representative, and this is confirmed by contempor­ aneous reports of the Commonwealth Investigation Service.

948. \Vhen Petrov beeame the temporary Resident he found amongst the paper s in t he M.V.D. section the correspondence from the Moscow Centre relating to Divisek; and from it, just before his defection, he took the particulars about Divisek which appear in D:ocuments G.ll and G.l2.

949. During Petrov 's ten1porary Residentship he received a number of cables from the Moscow Centre about Divisek. One such cable asked if Petrov still had the Moscow Letters relating to him. Petrov sent an affirmative reply. A later cable directed Petr ov to n1eet Divisek at the meeting place

set out in the Letters, and stated that a letter had been sent to Divisek directing him to attend at the meeting place. Petrov went to the meeting place, hut failed to meet Divisek. Divisek himself denied receiving any such letter fr;om the Moscow

Centre. \Vhether he was truthful in his denial, or whether the letter had not been forwarded to him from the address which the Moscow Centre had and which he had then left, -vve do not know.

950. Anothet instruction from the Moscow Centre directed Pakhomov to make inquiries at a restaurant in Sydney where it was believed that Divisek was working. Pakhom.ov reported to Petrov that he had 1nade such inquiries but that Divisek did not work at that restaurant. In fact, he had only worked there fo r a few weeks and had left long before Pakhomov 's visit.

951. Mrs. P etrov told us that when she was handing ovet the M.V.D. documents to I{ovalenok after Petr.ov's defection handed him the Divisek letters, which were contained in

a separate envelope. Kovalenok said "I know all about him", which indicated to her that Kovalenok had been given full particulars about Divisek before leaving Moscow.

952. The imptession which we formed of Divisek was that the arrange1nent which he made with Medvedyev to act as a Soviet agent in Australia was made solely so that he might obtain the necessary papers to enable him to to

Plan to set tt.p an" Illegal Apparatus" in Australia

Australia, and that in fact he had no intention of acting as an 1\LV.D. agent after his arrival here. We think he desired to cut himself off entirely froril the M.V.D. and his earlier association with it.

2. Collection of Infonnation an d Docun1 ents P r eparatory to Plan ting of ((Illegal Wo rk ers''.

953. Petrov says that in. addition to the Moscow Letter N.o. 3 of 6th June 1952 he received from the Moscow Centre a questionnaire asking for information about immigration procedures and the like, and that he n1ade a report on these

matters and forwarded to the Centre a number .of blank forms, which Bialoguski had obtained for him from the Department of Immigration. He asked Bialoguski to obtain also some Australian ''passport blanks'' for him, but failed to get them.

Bialoguski in evidence confirmed Petrov's statement about his connection with these matters. In fact, he had informed our SeclJrity Service of them as they occurred. Petrov's report, however, was not regarded as satisfactory and drew

a reproof from the Centre in the Moscow Letter No. 6 of g5th November 1952, paragraph 3:

'*Concerning your report about the situation.

In the fir$t place we draw your attention to the fact that the report was drawn up sketchily and superficially, and does not contain the detailed information about the situation in Australia which is really to us.

The individual questions were not separated in the report. The fundamental questions, to which you devoted attention, questions concerning citizenship and procedure entry, were set out unsystematically,

We draw your attention to the fact that it is impossible to the situation in any count,ry on six pages. When compiling a report you should be guided by the list of Sl.lbjects which you have in your M.V.D. section.

We cannot accept the :report sent by you as t}le execu­ tion by your M.V.D. section of the task set by l\i.V.D. for making such a r eport, the time limit

for which expired in October of this year.

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Report of the Royal Comrnission on Espionage

We request you to comrnence the systematic collection of material concerning the situation, and to send us a report in instalments, as and when the separate sections are ready.' '

3. The C_ ase of Mrs. Kazanovao

954. In paragraph 10 of the Moscow Letter last referred to, Petrov and l{islytsin were directed to make certain in­ quiries concerning an old woman nmned I(azanova, and this Letter affords a good illustration of one of the means whereby

the Moscow Centre conten1plated procuring the entry into Australia of an ''illegal worker''.

955. The paragraph reads: ' 'Concerning Kazan ova. We request you to report to us by the next mail all the information known to you concerning Ka.zanova, who figures in the consular files in connection with her last

will and testa.ment, and about her relatives in Russia. As is known to you, she devised her house in favour of the Soviet, having lost all hope of making a trip to her children and grandchildren in Russia.

According to her statements, her repeated pleas to her relatives to send one of her grandchildren from Russia to look after her until her death and to receive her small inheritance met with a refusal on the part of her relatives.

Depending on the availability of full particulars con. cerning Kazan ova and her relatives in Russia, we shall weigh the question of sending to Australia one of our cadre workers as an illegal worker, under the guise of a relative of Kazanova.

In connection with this we request you to visit Kazanova. under a plausible pretext and to elucidate questions which are of interest to us, especially, which of her relatives resides in Russia and where, with whom

does she correspond, does she possess any photographs of her relatives, does she know them so as to recognize them by sight, when did she receive the last mail, etc. Together with Kislytsin consider measures that can be taken in this 1natter, and let us know your proposals.''

Plan to set up an u Illegal Apparatus" in Australia

956. It appears from the evidence that Petrov knew from his consular files that Mrs. ICazanova had been in touch with Sadovnikov, that she had made a will in favour of her son living in the U.S.S.R., and that fact and particulars about

her had been sent to the Moscow Centre.

957. Petrov said that his first contact with Mrs. Kazanova was early in 1952 in consequence of a cmn plaint made on her behalf to the Embassy that some person had endeavoured to get her to sign some paper which she feared might affP.d

her will.

958. Petrov, in his consular capacity, got in touch with her solicitor and arranged to see her with him. He took Dr. Bialoguski with him, as she was old and in bad health. At this visit the solicitor allayed her fears; and Petrov heard nothing

further of her until the Moscow Letter of 25th N ovemhf'r 1952 arrived.

959. Petrov could not remember the date of the visit or the name of the solicitor, but said that it was a F r ench name. In consequence (as there are few solicitors in Sydney with French names) Mr. Camille Dezarnaulds, a solicitor, was

interviewed and later gave evidence that he act ed for 1\1:rs. Kazanova and had made a will for her on 8th December 1950 (i.e. in Sadovnikov 's time), and that on 7th April1952 he was at her home with Petrov and Dr. Bialogu ski, as stated by

them.

960. It appears that the Mo scow Centre, being de sirous in 1952 of setting up here an "Illegal Apparatus " , decided to use the information it had gained in 1950 concerning Mrs. Kazanova and to plant upon her a spurious relative who,

under cover of having a seemingly valid reason for coming to Australia, would operate here as an "illegal worker".

961. With this design the Moscow Letter of 25th November 1952, paragraph 10, was written. Petrov, pursuant to its instructions, again visited Mrs. Kazanova in December 1952, taking with him Dr. Bialoguski (who knew nothing of the design), apparently as a "plausible pretext" for his visit.

962. Petrov discovered that Mrs. Kazanova had a graph of her son and would recognize him, but that she would not be able to recognize her grandchildren. He suggested to

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Report of the Royal Com,mission on Espionage

the Moscow Centre that it should send out an "illegal worker" in the guise of a grandchild, if it could ensure that Kazanova's son, who was in the Soviet, would not reveal the true identity of the worker sent. ·

963. Petrov heard no more of the matter.

4. The Case of Daghian (code name "Monakh").

964. According to the "Plan of Work", the finding of suit­ able persons to sponsor the entry of ''illegal workers'' or to find employment for them on arrival was one of the pre­ liminary conditions to which attention was to be paid.

965. One of the persons whon1 the Moscow Centre possibly had in n1ind to use in setting up an ''Illegal Apparatus'' was a man named Daghian, who had been allotted the eode name of '' l\tfonakh'' at some time before 1952.

966. The Moscow Centre's interest in him in 1951 and e;:trly 1952 is shown by the l\t'foscow Letter No. 1 of 2nd January 1952, paragraph 7, which reads:

' 'Concerning Daghian,

With reference paragraph No. 10 of Let.ter No. 6 Qf 1/ xii/ 51. In view of the fa.ct that Daghian has not closed his laboratory and continues to work in it, meetings should be continued with him with the same aims about which we informed you in paragraph No. 4 of Letter No. 5 of 15/ x/ 51.

We explain that, in those cases where as a result of a changed situation there arises a need to the aima of the study, the local section of the M.V.D. should itself come forward with its proposals, and not merely limit itself to a request for directions from M.V.D. Head­ quarters, as was done by Pakhomov in this case."

967. The Centre's interest in Daghian became intensified when it gave instructions to Petrov in the of Work"

of the 6th June 1952 to set up th@ ''Illegal Apparatus'' here and to 1nake preparation for the entry and settling of "ill(]g?.l workers''.

Plan to set an "Illegal in Australia

968. In the same Letter which contains the • •Plan o·! Work", paragraph 6 reads:

• • Concerning Daghian.

Notwithstanding the fact that Daghian is of great operational interest to us in the matter of obtaining auxiliary agents, study and cultivation of him has been conducted in a very weak manner. You should not limit

yourself to simply having talks, as Pakhomov did in his meetings \Vith Daghian. He must be gradually led up to the execution of separate assignments. For instance, he should be asked for information about conditions in

the port, what is required for the opening of some small commercial enterprise, etc. Detailed reports must be compiled concerning meetings with Daghian, in which should be included, alongside all

the questions discussed at the meeting, an account of his behaviour, his reactions to the questions discussed, and also your conclusion concerning the meeting which has been transacted. The meetings should be carried out in accordance with the prepared plan, in which a term

should be set for the completion of the study. The study of Daghian should be entrusted to a new cadre worker, who i.s to arrive soon in your M,.V.D. section."

969. The ''new cadre worker" mentioned in the Letter refers to Antonov, who arrived in Australia at the end of June 1952. 970, It will be seen from this paragraph that one of the

matters in which the Moscow Centre wa,s interested was the obtaining of information . about what it called ''conditions in theport, what is required fo:r the opening of some small commercial enterprise, etc.''.

971. In fact, at this time Daghian was working on the waterfront, a matter which had been reported to the Moscow Centre by Pakhonwv in December 1951. Petrov told us that the intention behind these was to obtain informa­

tion from Daghian as to whether permits were required for persons to enter or leave the dock ·areas and as to the possi­ bility o£ opening a cafe or shop in those for use

"for conspiratorial ". Jie told ns also that he had

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learned from Pakhomov that Daghian was well disposed towards the ''progressive'' n1o ven1ent and that during the war Daghian had served on an Australian warship. Petrov said that after Antonov's arrival he gave all the information in his possession about Daghian to Antonov and directed him

to try to meet Daghian at the Russian Social Club. Antonov reported later that he had been unable to make contact with Daghian, who appeared to have ceased to frequent the Club.

972. Nicholas Daghian was called as a witness. He told us that he was born in Armenia and after living in China and Hong I\::ong for son1e years came to Australia in 1939. He said that from 1948 to 1951 he had done photographic work and since 1951 he had worked as a wat erside worker. He had what he described as a photographic "laboratory" at his place of residence. _

973. The evidence produced before us showed that he and his brother had been active in sponsoring applications for the admission into Australia of Russian migrants from the East. Although Daghian at first denied it, he later admitted that his practice was to describe himself in documents used for such purposes as "Commander N. Daghian (retired)", an entirely false description of himself. He admitted that he had never served in the Navy and that the highest nautical rank he had ever attained was that of n1ate on a Chinese ship trading along the China coast.

974. He knew Antonov, Nosov, Pakhomov, and Petrov; and he was a frequenter of the Russian Social Club, where Pakhomov had introduced him to Petrov. Pakhomov, he said, was interested in his photographic "laboratory" and in 1951 had come to his flat to inspect it.

975. We thought Daghian was a curious character and a most unsatisfactory witness.

5. The Case of Dr. Sandy.

976. That the design of the Moscow Centre to plant "illegal workers'' continued into 1953 is shown by the evidence relat­ ing to Dr. Sandy, to which we have referred in Chapter 7. As we there pointed out, the Centre's instructions were that he should be ''studied'' with a view to using him to assist

Plan to set up an u Illegal Apparatus" in Australia

1n establishing an "Illegal Apparatus". We repeat what we there said-that Petrov did not make any contact with Dr. Sandy, who was unaware of the Centre's design.

977. The design of the Moscow Centre to set up an "Illegal Apparatus'' in Australia is clear. We have no evidence that up to the time of Petrov's defection the task of setting up that "Illegal Apparatus" had progressed further than is

indicated in this Chapter, or that such an ''Apparatus'' had operated since diplomatic relations with the U.S.S.R. were broken off following upon Petrov's defection.

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CHAPTER 19

CONCERNING PERSONS WHOSE NA-MES OR CODE NAMES APPEAR IN

THE MOSCOW LETTERS AND' G. SERIES OF DOCUMENTS AND TO WHOM WE HAVE NOT ALREADY REFERRED

978. ln the Moscow L etter s and the G Series of documents there- are referenceE; to various persons with whom we have not previouely dealt in our Report because the references t0 them do not conveniently fit ii).to the previous Chapters. They comprise a miscellany of persons in whom the· Moscow Centre, for one reason or another, was interested.

CoNcERNING ANDERSON (coDE NAME '' Y EGER' ').

979. There are three references in the Moscow Letters to man named Anderson to whom the code name '' Y eger'' had been allotted at some period pr ior to 1952. The Anderson to whom the Letters refer is one Geoff rey Ronald Anderson, who was called as a witness before us. Throughout the three refer­

ences he is, in the literal translation, called by his code name ''Yeger''.

980. Petrov's first knowledge of his interest to the M.V.D. came· from Pakhomov at the time when Pakhomov was handing over to him the temporary Residentship. Pakhomov told him that Anderson, who was then an official of the Federated

Clerks' Union of A-q.stralia, had warned Nosov in 1950 that he had attracted the attention of our Security Service. Pak­ homov said that this had been reported to the Moscow Centre and that N osov, who had no diplomatic immunity, had in

consequence been ordered to leave immediately for the U.S.S.R. by aeroplane and not wait for the ship on which he was proposing to travel.

981. Anderson, while stating that he knew Nosov "quite well", denied that he had given any such warning to Nosov; and since the assertions that he had done so are remote hear­ say, it would not be proper to base on them a finding that Anderson had informed N osov that he was under Security

surveillance.

Miscellaneous Persons in whom Moscow was interested

982. The first reference to Anderson in the Moscow Letters is in the Moscow Letter No. 1 of 2nd January 1952, paragraph 3, which reads:

''Concerning Anderson.

With reference to paragraph No. 6 of Letter No. 6 of 1jxiijl951. Pakhomov 1nust not cease his work with Anderson. On the contrary he should make this work more active,

but on a more secret basis, as we have already indicated to him. Pakhomov should strive insistently to carry out our instructions regarding work with Anderson, as set out in

paragraph 3 of Letter No. 5 of 15 /X/51. ·

We are especially interested in getting Anderson to elucidate the information indicated in the 2nd clause of the mentioned paragraph. We request you to take the control of Anderson under your personal control and to assist Pakhomov to carry it out effectively." It is obvious that Pakhomov had succeeded N osov in the -

''study'' of Anderson.

983. The interest which the 1foscow Centre took in Ander­ son probably originated in the fact that he, along with M. J. R. Hughes, was an official of the Federated Clerks' Union. From the point of view of the M.V.D. the Clerks' Union is a key

union, since many of its n1embers-both in private and in Crown employment-hold positions in which they have access to confidential information.

984. The information which the J\1oscow Centre was anxious to get Anderson to "elucidate", as mentioned in the Letter quoted above, was, so Petrov told us, to find out to "what union the employees of the Ministry of Foreign Affairs belonged, and ... whether the Security Service had not got its

own union''.

985. In the first half o£ 1952 Anderson stood for election to a position in the Federal organization of the Union and was defeated. Petrov reported these facts to the Centre

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and recommended that the" study and cultivation" of A·nder­ son should, on this account, be terminated. The Moscow Centre disagreed and directed that the ''study and cultiva­ tion" of Anderson should be continued because "he has friends among workers in institutions of the government". This appears from the Moscow Letter No. 3 of 6th J nne 1952,

paragraph 7, which reads:

''Concerning Anderson.

We cannot agree with your opinion that the study ·and cultivation of Anderson should be terminated merely he was not elected in the trade union and wa.s

left without work. Anderson is of undoubted interest, as , he has friends among workers in institutions of the gov­ ernment. In our opinion, the study of Anderson should be continued, instead of merely observing and recording the changes in his situation, as you propose. This study will likewise be entrusted to a new cadre worker of the Australian M.V.D. section.

We request you to collect through the facilities at your disposal, and to transmit to us, information concerning the changes which have occurred in the leadership of the trade union in which Anderson worked.''

986. The ''new cadre worker'' mentioned in the paragraph who was to undertake the "study" of Anderson was Antonov, and in the Moscow Letter No.5 of 27th September 1952, para­ graph 8, the Centre instructed Petrov as follows:

''Concerning Anderson.

(Reply to para. 2 of your Letter No. 4 of 28j8j52.) The bringing about of an acquaintanceship between Antonov and Anderson should not be postponed. You must take measures to ensure that this acquaint­ anceship comes into being in the immediate future and that Antonov actively engages himself in the study of Anderson.' ' 987. Petrov told us that he met Anderson on three occa­ sions, the first of which was at Pakhomov's flat in 1951. He said that he personally "had no dealings with him on the M.V.D. line". He instructed Antonov to make contact with Anderson but Antonov reported that he was unable to do so.

Miscellaneous Persons in Moscow was interested

988. Anderson, who served with the Royal Australian Air Force during the war and was awarded the Distinguished Flying Cross, said in evidence that until about the middle of 1952 he had held office in and been employed by the State branch of the Feder ated Clerks ' Union of Australia, and that during the first half of that y ear he had stood for election to a post in the Federal organization of the Union but had been defeated, and, following this defeat, had lost both his State office and his employment.

989. He told us that he had been connected with a number of ''Peace'' movements, including the ''Asian and Pacific Peace Conference", the "Committee for Peace in the Pacific", the "Peace Convention Bureau" (by which he is at present

employed), and the ''Australian Convention on Peace and War". He said that he had been connected also with the ''Society for the Non-ratifi cation of the Japanese Peace Treaty" and the "League for Democracy in Greece".

990. He said that he held radical left-wing views but was not a member of the Communist Party. He told us that he knew Nosov and Pakhomov "quite well" and had met Sadov­ nikov on several occa sions. He said t hat he had met Petrov,

by arrangement made through Miss J ean Ferguson, in order to give Petrov some information in connection with the "Aus­ tralian Convention on Peace and War", to which a Russian composer had been invited. Petrov had already told us of

this incident.

991. In connection with Anderson, evidence was given by an air pilot named Howitt, who said that in 1952 he had sold an aeroplane to a company in Indo-China and was proposing to fly it to Saigon for delivery. Howitt said that he was

approached by Ander son with a proposal that for a payment of £10,000 to £12,000 he should fly a party of persons to China so that they might attend a "Peace Conference" at Peking. According to Howitt, the proposal was that the plane should be r epresented to the authorities as fl ying empty to Saigon and that he should obtain its clearance, without passengers

on board, at Darwin Airport and then fly to and pick up the party at an unused war-time airstrip somewhere in the Northern Territory of Australia.

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992. As :Howitt understood it, the scheme apparently was that after leaving Australia he should land the passengers at an isolated airstrip on Timor, fly to the official airport and obtain a clearance as at Darwin, and repeat this procedure

throughout the flight to China, using airstrips en route at which Anderson said ''they had their own men and it would not be r eported". Howitt said that Anderson produced maps of the route and t old hirn that protection for the aircraft and a safe return to Saigon fron1 China would be g;uaranteed. Howitt refused to accede to the proposal.

993. Anderson in evidence agreed that he had asked Howitt if an arrangement could be n1ade to fly a party of persons (some of whom had been refused passports) to China. But he said that the matter was no more than mentioned, because Howitt demanded an absurd price; and he flatly denied the rest of Howitt's story.

994. The is that Howitt shortly after his meeting with Anderson delivered the aeroplane at Saigon. He reported details of the incident to the Australian Government represen­ tative there and later, on his r eturn to Australia, to our

Security Service. These contemporaneous reports clearly show that Howitt's version is the true one.

995. The sig·nificance of ths evidence from the point of view of our Inquiry is that it points to the existence of a possible secret line of communication betwee n Australia and China, by which persons and materiel could travel without the know­ ledge of the authorities. The amount of £10,000 or £12,000

offered to be paid excites no wonder in view of the magnitude of the amounts which we have found elsewhere to have been expended to enable Australians to attend similar conferences or conventions in Communist-controlled countries.

CoN'C:ERNING DA:LZrB:L.

996. In Document G.l there is an entry : l' 'Denis' '

997. ''Denis'' was the code name allotted so1ne ti1ne prior to 1952 to Allan John Dalziel, who is, and has been for many years, private se cretary to Dr. Evatt.

Persons in who1n Moscow was interested

9'98. During the· period when Dr. Evatt was Minister for External Affairs, Dalziel in the course of his duties met a number of Soviet officials, including Zaitsev, N osov, Pak­ homov, and Antonov, and was a frequent visitor to the flat which the three last-named p ersons occupied in succession.

999. Dalziel was called as a witness and told us that h(3 be came very friendly with N osov and had many discussions with him on political and so cial matters. His association with all these persons was· open.

1000. Petrov said that he did not meet Dalziel and that during Antonov's p eriod in Australia Antonov had reported to the.Moscow Centre on his meetings with Dalziel. He said that in 1953 the code name "Sluga" was suggested by

Antonov as a code name for Dalziel, Petrov and Antonov being unaware of the previons code name " Denis' ; contained in Docnment G.1, which was contained in the sealed envelope marked "N". The Moscow Centre approved of the new code

name.

1001 . Dalziel was undoubtedly of interest to the M.V.D. His p osition as Dr. Evatt's pr ivate secretary would have n1ade hiln a valuable source of information if he had been prepared to a ssist the 1\LV.D., and this, no doubt, provides

the reason for the Centre's interest in him.

1002. There is no evidence that Dalziel improperly gave any information of a sem·et or confidential char acter to any Soviet official, either wittingly or unwittingly. Petrov said in evidence that Pakhomov reported to him that "he himself

felt that Dalziel was sympathetically disposed t.owards the Soviet Union, although Dalziel was always very careful and reserved in what he said at his meetings with him."

CoNCERNING Mrss KENT H U GHE S.

1003. The Moscow Letter No. 5 of 27th Sept ember 1952 , paragraph 2, after referring to r eports made by Antonov about several of his first acquaintances in Australia, goes on-" With r eference t o other persons among Antonov's first

acquaintance, with the exception of M. Kent Hughes, it is not yet possible to say anything definite in the absence

* 78228-18

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Report of the Royal Commission on Espionage

of adequate information about them. M. Kent Hughes behaved in friendly fashion towards Pakhomov, and she is appraised favourably by him. It seems to us that she might be useful for acquiring 'in the dark' acquaintances and necessary information. Conversations with her on subjects of interest to us should not be held in Antonov's quarters. "

1004. This r eference is to a Miss Margaret Kent Hughes, a school teacher, who was called as a witness. She told us that she had given English lesson s to Mrs. Pakhomov at the request of Miss Jean Ferguson and had visited Pakhomov's flat for that purpose, and later had given English lessons to

the Antonovs, again at the request of Miss Jean F erguson, and had frequently visited their flat for that purpose.

1005. She said that she preferred not to state whether she was a member of the Communist Party, but agreed that she had "been interested in left-wing activities". She said that as far as she could see, neither P akhomov nor Antonov had ever attempted to obtain information from her. The Moscow

Letter does not suggest that they had.

1006. It is obvious from the terms of the Letter that

Pakhomov must have appraised her favourably in a report made by him to the Centre after his return to the U.S.S.R., and that as a result the Centre considered that she might be useful for acquiring acquaintances from whom "in the dark" information might be got.

CoNCERNING N. K. Novm.oFF (CODE NAME "KLIMENT" ) AND N. N. NoviKOFF (cODE NAME "MEFODY").

1007. There are two references to these persons in the Moscow Letters. The first is in the Moscow Letter No . 2 of 12th March 1952, paragraph 2, which reads:

''Concerning Nicolai Kirillovich N ovikoff. As is known to you, our agent Kliment (Nicolai Kirillovich Novikoff) lived in 1949 in Sydney at the address Cricket House, 254 George Street. Instruct Pak­ homov to locate him and to collect a personality report about him, in a cautious manner.

Miscell ane ous P erso ns in whom Moscow was intere stea

Living with N. K. Novikoff was his .son Nicolai Nico­ laevich Novikoff, born in 1919, who in 1949 had a photo studio. We are now interested in this son of N. K. Novi­ koff ; therefo re try also to collect information as to his

whereabouts, to ascertain his ideological views, his financia.I situation, his circle of friends, etc. An acquaintance between Pakhomov and Nicolai Nico­ laevich Novikoff could be established on a business basis, for instance through a visit to his photo studio under the pretext of negotiations for an order of a portrait of

himself or his wife. We request you t o communicate in the next mail such information as h as been collected, as well as your pro­ posals concerning the study of Nicolai Nicolaevich Novi­

koff."

1008. The second is in the Mos cow Let te r No. 6 of 25th November 1952, paragraph 6, which reads :

''Concerning Nicolai Kirillovich N ovikoff and Nicolai Nicolaevich Novikoff. In February 1951 and March 1952 you were given assignments _to collect _personality _r eports _on Nicolai Kirillovich Novikoff and Nicolai Nicolaevich Novikoff.

During the intervening time we have received from you only one brief report concerning N. N. Novikoff, compiled by Pakhomov. From Pakhomov's account it is evident that you know N. K. Novikoff and N. N. Novikoff, and that you had meetings comparatively often with N. K.

Novikoff. Pakhomov informed you about t he statement of I. A. Smirnoff concerning the fa,ct that he sawN. K. Novikoff in the Central Building of the Criminal Investigation De­ partment.

Up till now you have not sent one single report about meetings with N. K. Novikoff, and it is not clear to us what you are doing in relation to him and N. N. Novikoff, and particularly what you have undertaken for re-check­

ing information conc Jrning the contact of N. K. Novikoff with the Criminal Investigation De partment.

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We req nest you to hasten the fulfiln1ent of the instruc­ tions of Letter No. 2 of 12 March of this year concerning the collection of full personality reports about N. K. Novikoff and N. N. Novikoff. In the first place, ascertain the existence and nature of N. K. Noviko:ff's contact with the _Criminal _Investigation _Department, _and _also the circle of N. N. Novikoff's acquaintances, and his past.

We ask you to communicate by the next mail the infor­ mation collected and your concrete proposals concerning work with them.''

1009. The references are to Nicolai Kirillovich N ovikoff and Nicolai Nicolaevich N ovikoff his son, and they were called as witnesses.

1010. N. I\:. N ovikoff had been allotted the code name '' Klin1ent'' at some time prior to 1952. N. N. N ovikoff, the son, was allotted the code name "Mefody" at some time be­ tween 12th March and 30th June 1952.

1011. N. K. Novikoff was born in Russia and can1e to Aus­ tralia in 1939 from l\1:anchuria, where he had been en1ployed by the Soviet on the Chinese Eastern Railway. He told us that he is still a Soviet citizen. He said that he was a teacher of the Russian and Chinese languages at 254 George Street, Sydney. He knew Makarov, Sadovnikov, Pakhon1ov, N osov, and Petrov.

1012. N. N. Novikoff said that at all relevant ti1nes he has had two photographic studios, one at 762 George Street and the other at 254 George Street, Sydney. l-Ie is a British sub­ ject. He knew Nosov, l\1:akarov, Sadovnikov, Pakhomov, Petrov, and Antonov, all of whom, he said, had at one time or another visited his studio.

1013. His first contact was N osov, who recommended Makarov to him. Makarov in turn brought Sadovnikov to his photographic studio and introduced him. Sadovnikov later brought Pakhomov and Petrov and introduced them, and finally Petrov introduced Antonov.

1014. According to Petrov, the M.V.D. purpose was to "study" N. N. N ovikoff with a view to recruiting hi1n and

Miscellaneous Person s in w hom, 111 oscow was interested

using his studio as a meeting place for JYI.V.D . workers and agents. The evidence doe s not suggest that the plan pro­ ceeded further than the stage of ''study''.

1015. We have been unable to ascertain what caused the Centre to regard N. K. N ovikoff (the father) as its agent. There is no evidence that he ever acted as such in Australia. Petrov expressed the opinion that he may have been recruited and may have worked for the Soviet in I-Iarbin during the

occupation of Manchuria by the Japanese in the nineteen­ thirties, but there is no evidence that this is the fact.

1016. The reference (in the seeond of the Letters quoted above) to a man named Smirnoff relates to one Ivan Alexan­ der Smirnoff, who was called as a witness. From his evidence it emerged that he had on one occasion visited the police

barracks in Sydney in company with a man whose real name was Kliment (that is, the same as N. K. N ovikoff 's code name). Smirnoff knew Pakhomov, but denied knowing either of the N ovikoffs. It may be that by some means or other

Pakhomov learned of Smirnoff's visit to the barracks with Mr. KJiment and mistakenly reported to the Moscow Centre, or was n1istakenly understood by the Centre to have reported, that the man whose code name was "Kliment" (that is, N. K.

N ovikoff) had visited the barracks.

CoNCER.NING RAT'NAVEL.

1017. The Moscow Letter No. 5 of 27th September 1952, paragraph 14, reads: "In answer to your request we inform you that Rat­ navel does not appear in our books."

1018, The evidence shows that Ratnavel was an Asian student at the University of Melbourne. Petrov said that he met hin1 on a social occasion in company with a friend of Sadovnikov in Melbourne, and thought that he might be of

interest to the l\1:oseow Centre. I-Iis report about this to the Centre produced the above entry. Petrov did not see Ratnavel again.

1019. In these circumstances we did not think it necessary to call Ratnavel as a witness.

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CoNCERNING RoDGERS (coDE NAME "LovKY").

1020. Document G.4 contains the entry:

''Rogers 'Lovky' ''

1021. Petrov told us that this referred to one John Rodgers, the Secretary of the Australia-Soviet Friendship Society in Victoria. Petrov said that he knew of Rodgers's code name but that his many meetings with him were in connection only

with Voks activities. He said that he never approached Rodgers on M.V.D. matters, as he had no instructions from the Moscow Centre so to do.

1022. Rodgers was called to give evidence. He did not answer the question whether he was a Communist, but it was plain fr01n the evidence that he had wide Communist and pro­ Soviet affiliations, and this fact no doubt accounted for the M.V.D. interest in ·him as shown by the entry.

1023. The evidence shows that Rodgers-along with others -immediately after the announcement of Petrov's defection busied himself in a search for material with which to discredit Petrov. vVith this design he aproached Bialoguski, whom he then believed to be a Communist sympathizer and whom he knew had been associated with Petrov in the past, and tried to bring pressure on him to give false evidence for the purpose of discrediting Petrov.

1024. Rodgers was a most unsatisfactory witness, but there is no evidence that he ever participated in any espionage activities. ·

CoNCERNING SHAKER.

1025. The Moscow Letter No. 5 of 27th September 1952, paragraph 13, reads: "H. Shaker lives in Australia at the address: Foots­ cray, Melbourne. According to data in our possession,

Shaker, a member of the Communist Party, whilst living in Egypt, conducted Communist Party propaganda among the \Vorkers, and at one time he was manager of the 'Sabahi' factory. In 1948, as a result of persecution by the Egyptian authorities, he left on a false passport

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Miscellaneous Persons in whom Moscow was interested

for Australia, where he is working in a factory in the town of Melbourne. At the present time there 'has arisen the necessity to locate him.

Without revealing Shaker's Communist Party member­ ship, please ask Jean Ferguson, by making use of avail­ able possibilities in Melbourne, to locate Shaker on the first suitable occasion, and to collect personality data

about him and, if possible, about his relatives resident in Egypt. .

If this scheme proves unsuitable, think of some other way of acquiring information of interest to us concerning Shaker. However, our cadre workers should not travel to Melbourne specially for the execution of this task.

Notify the results of the search by mail.''

1026. The reference is to one Hamid Shaker, who resides at an address in Footscray, Melbourne; and he was called a·s a witness.

1027. He said that he was born in Egypt and came to

Australia in October 1949, having obtained a visa therefor in 1948. Whilst in Egypt he had, for a period, worked in the "Spahi" textile factory. He told us that there were in Egypt two other textile factories-one called '' Shabaki'' and

the other "Shorbaki". He denied that he had been a member of the Communist Party and that he had ever conducted Com­ munist propaganda in Egypt. He denied also that he had left Egypt as a result of persecution by the Egyptian authorities

and that he had travelled to Australia on a false passport.

1028. An examination of his evidence and of his passport supplied a possible reason for the report which appears to llave been made to the Moscow Centre that his passport was a false one. In fact it was not.

1029. Petrov said that he did not, as the Letter suggested, approach Miss Jean Ferguson to ascertain Shaker's where­ abouts, because she was living in Sydney whereas Shaker was said to have been resident in Petrov told us

that he searched through telephone directories for Shaker's name but could not find it,

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1030. The interesting feature of this paragraph in the 11oscow Letter is that it aff ords yet another illustration of the widespread sources from which the Cent r e collects its inforrnation. Obviously, son1e person in Egypt rnust have supplied the data, whether accurate or inaccurate, about Shaker's history and his passport. H ow the Centre discovered that he was living in Footscray, Melbourne, we do not know. Petrov had never heard of Shaker before the arrival of this Letter.

1031. We formed the view that Shaker was a truthful wit­ ness, and there is no evidence that he ever engaged in any espionage activities.

CoNCER.N ING MAx STEPHENS.

1032. The Moscow Letter No. 5 of 27th September 1952, paragraph 11, reads: ''Concerning information about persons who might be of use to the M.V.D.

As Enclosure No. 2 to this letter we are sending you information about persons who might be of use to the M.V.D. taken from Pakhomov's report. Please acquaint Antonov and Kislytsin with them. We consider _that, _the _basic _work _in _the _study _of _parlia­ mentary correspondents and members of the parliament, indicated in the Enclosure, should be conducted by Antonov.

We recommend that you should personally undertake the study of Doctor Max Stephens. You yourself may become acquainted with him by approaching him for a medical consultation.''

1033. Pakhomov 's repo1•t to which the Letter refers is the one which he made to the Moscow Centre after his return to the U.S.S.R. The relevant entry in the Enclosure is: ' 'Max Stephens is a doctor of a :Polish Jew,

.Australian citiz;en. He llves in Syqney, }las q, surgery in an outer suburb of the city. lle is easy going, especially when intoxicated. He asked to approach him

for help if Pakhomov should need any·

Evidently .this .was caused .by .Stephens's .fears .that

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Miscellaneous Persons in oscow was interested

Pakhomov knew that Stephens had issued a fictitious medical certifica.t.e to Ncsov in return for a bribe. As a doctor he enjoys a good reputation. He is of operational interest to us. It is expedient that study should be con­ ducted with a view to recruit ment in the capacity of owner of a secret meeting house.

His address is 54 Lions Road, Drummoyne.' '

1034. These references relate to a Dr. l\1:ax Stephens who practises medicine at 54 Lyons Road, Drummoyne. l-Ie was called as a witness.

1035. Petrov told us that he had never met Stephens but that Pakhomov, when handing over the temporary Residentship, had reported to him that Dr. Stephens was ''progressive, and that he had several meetings with him,

and that he was also acquainted with l\1:r. N osov too. And that he had a surgery outside of Sydney; and he also had interest for us.''

1036. Petrov also said that Pakhomov had t old hiln that ''the doctor had issued prescriptions for medicines which di

1037. Petrov told us that the M.V.D. design with regard to Dr. Stephens was that he should be '' studied'' with a view to using his house as a meeting place for Soviet agents.

1038. Dr. Stephens, in evidence, told us that he is a n1ember of the Jewish faith and was born in Warsaw. H e came to Australia in 1937. H e became a naturalized British subject in 1941 or 1942. His name, he said, was Moriski Szput, but

that in Australia he had adopted the n ame of l\1:ax Stephens. He said that he rightly described as "easy going" but had never been intoxicated. \Vhen asked whether he knew Pakhomov he said; ''No, I cannot recollect hir:n, I do not think I hirn. " ,and said that he had never told

to him for help if P akhomov $llo'Uld need a,ny

assbtance". IIe said he thought he might have rn et Nosov in connection with a "Sheepskins for Russia" Appeal during

Report of the Royal Commission on

the war; or possibly at the Russian Social Club, which he visited on occasions. He denied that he had ever given N osov a "fictitious medical certificate in return for a bribe".

1039. It emerged from his evidence that Mrs. Pakhomov had been a patient of his in 1951 and had visited his surgery three times; but he insisted that he had not met Pakhomov. Accord­ ing to him, Mrs. Pakhomov can1e to his surgery for treatment for some minor ailment, unexpectedly and without recommen­ dation. This see1ns curious seeing that he was a general

practitioner practising in a suburb remote from Mrs. Pak­ homov 's residence.

1040. Dr. Stephens said that he was not a member of the Communist Party but agreed that he knew a number of its members. Later in his evidence he said that it was possible that he might have assisted N osov to obtain, at wholesale prices, "medicaments" which were unobtainable in the Soviet, but could not remember whether this was so or not.

1041. Dr. Stephens was a most unsatisfactory witness, but there is no evidence that he engaged in any espionage activity.

1042. We believe that he was-as the Letter says-of interest to the M.V.D. for possible recruitment and use as the "owner of a secret meeting house" for Soviet agents.

1043. It appears from the evidence that dental consulting 1 rooms, photographic studios, small shops and cafes, and doc­ tors' surgeries are of special interest to the M.V.D. as secret meeting places. An agent can resort to such places without his visit attracting attention.

CoNCERNING TATTERSELL (conE NAME "ARTIST").

1044. In Document G.3 there is an entry:

''Hebert William Tattersell-Artist.''

1045. This entry refers to one Herbert William Tattersall, to whom the Moscow Centre had allotted the code name "Artist" long before 1952. Petrov knew nothing of him or of his code name until he opened the sealed envelope marked '' N'' in March 1954.

Miscellaneous Persons in whom Moscow was interested

1046. Tattersell was called as a witness. He told us that he was born in England and came to · Australia in 1913. Throughout the first war he served with the Australian Imperial Forces. He is now a foreman builder. In 1946 he

joined the Commonwealth Public Service as a temporary employee in the Department of Post-War Reconstruction, and in 1949 was transferred to the Repatriation Commission. He said that he left the Repatriation Commission in 1952 and was given employment a.t the Royal Agricultural Showground in Sydney by C. R. Tennant, with whom he had worked prior to 1946. This is the same Tennant whose address was used by

Clayton as an accommodation address in the circumstances we have described in Chapter 10.

1047. Tattersell has been a member of the Communist Party for many years. He lived in Sydney as a member of a house­ hold which comprised Miss Beeby, who was for a period the Oanberra correspondent of the ''Tribune'', and other Communists.

1048. Tattersell said that he had long known Clayton and had met him on a number of occasions up to 1950. Clayton, he said, used to visit him and the other members of the household. Tattersell's work in the Commonwealth Public Service some­ times took him to Canberra, where he knew and used to visit

Frederick George Godfrey Rose, to whom we have referred earlier. Tatters ell denied· that he had ever engaged in any espionage activities.

1049. The evidence does not enable us to say what led the M.V.D. to allot him the code name" Artist", but it seems prob­ able that it was through the recommendation of Clayton, who knew him and his Communist associates.

CoNCERNING TENUKEST (conE NAME '' TIKHON '').

1050. Document G.1 contains the following entry: '' 'Tikhon '-Tennekuist'' 1051. This entry refers to one Constantine Tenukest, who was called as a witness. He told us that he is a naturalized British subject of Estonian origin living in Sydney. He came

to Australia in 1938. He is at the present time a lens and prism maker employed at the Sydney Technical College.

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Report of the Royal on Espionage

1052. He told us that from 1943 to 1946 he was employed by Dr. Solansky, who was then the representative in Sydney of the provisional government of Czechoslovakia. After 1946 he sometimes helped his successor at the. Consulate. He said that there he met Nosov, who came to call on Dr. Solansky.

1053. In his work with Dr. Solansky, Tenukest had access to confidential documents, including the ciphers. This might well have accounted for the fact that the l\1oscow Centre became interested in him and allotted him the code name of ''Tikhon''.

1054. There is no evidence that Tenukest ever engaged in any espionage activities or improperly gave any information to N osov, who was, he said, the only Soviet official whom he met. N osov's interest in Tenukest appears to have waned when the latter ceased his connection with Dr. Solansky.

CoNCERNING YuiLL.

1055. The Moscow Letter No. 6 of 25th November 1952, paragraph 4, under the heading "Concerning Kharkovetz", says: "In further work recommend to him" (i.e. Kharko­

vetz) ''that he should deepen cultivation of contacts, especially in the American and British Embassies, and should begin a more thorough study of Yuill.''

1056. This reference is to one Bruce Ford Yuill, who is in the United Kingdom.

1057. His name was first mentioned before us in the course of the examination of Fergan 0 'Sullivan, who had for a period shared a fiat with Yuill at Canberra. Yuill had come under the notice of the Security Service, which intimated to Dr. Evatt that it was undesirable that a member of his tariat should be living with Yuill. Dr. Evatt thereupon asked

0 'Sullivan to cease association with Yuill, but 0 'Sullivan failed for a considerable time to comply with this request. In the examination of 0 'Sullivan it was suggested to him that he knew that Yuill was a Oommunist, 0 'Sullivan replied that he was not. In consequence of this mention of his name, Yuill made a lengthy statutory declaration. Later he made another,

after being interviewed in London on a statement made by Petrov relating to the passage in the Moscow Letter quoted above.

Miscellaneous Persons in whom Moscow was interested

1058. Petrov stated that he did not know Yuill personally but n1ight possibly have met him. He said that Kharkovetz had 1net Yuill and had made a short report on him which was sent to the Moscow Centre, and that the Moscow Letter quoted

above had arrived in reply directing that Yuill should be subjected to a "more thorough study".

1059. According to Petrov, l(harkovetz's report was to the effect that he had met Yuill in 1952; that he was of interest from an M.V.D. point of view; that he considered that Yuill was pro-Soviet, held progressive vjews, and was favourably

disposed to Soviet officials, whom he was willing to meet; and also that Yuill "opposed the views of the Australian Govern­ ment and that he criticized the Government openly".

1060. Kharkovetz told Petrov that Yuill worked in the Ministry of the Interior. Petrov stated that after the

receipt of the Moscow Letter No. 6 of 25th November 1952 Kharkovetz met Yuill, but ''not often-very seldom, in fact­ but got no information fr01n him".

1061. From Yuill's statutory declarations it appears that he is a graduate in economics of the University of Sydney and that he entered the C01nn1onwealth Public Service in the Department of Immigration in 1950. He stated that while

stationed in Canberra he became the President of the

Australian Capital Territory Trades and Labour Council and in that capacity, although still a public servant, had made a broadcast criticizing certain aetivities of officers of the Security Service in Canberra, and also that he had on

occasions been openly critical of the actions of the Common­ wealth Government. He stated also that he had 1net KharkoJ vetz on three occasions but had had practically no conversation with him. lie denied that he had ever been a Communist.

1062. There is nothing to suggest, in the Moscow Letters or elsewhere, that Yuill ever engaged in any espionage activiJ ties. The M.\T.D. interest in him may have been due to the faet that he was a public servant who had openly criticized

the Comn1onwea1th Governn1ent and the Security Service.

CHAPTER 20

CONSIDERATION OF MATTERS ARISING UN.DER CLAUSES (c) AND (d) OF THE LETTERS PATENT

CLAUSE (c) OF THE LETTERS PATENT

1063.. This Clause requires us to report''' whether any per­ sons or organizations in Australia have communicated infor­ mation or documents to any such representative or agent unlawfully or to the prejudice or possible prejudice of the

security or defence of Australia".

1064. The words ''any such representative or agent'' refer back to Clause (b) of the Letters Patent. They mean "any representative or agent of the Union of Soviet Socialist Republics'' and, by virtue of the declaration in the Letters Patent, include any "other persons ... acting, directly or

indirectly, for or in the interests of the Union of Soviet

Socialist Republics''.

1065. Hereafter in this Chapter we shall use the compen­ dious expression "Soviet agent" to indicate the expanded meaning of "such representative or agent". vVe do not find it · necessary for this purpose of our Report to draw any distinction between a "representative" and an "agent" of the U.S.S.R.

1066. Subject to what we have reported in Chapter 9, we find no organization to have been implicated in improper communications; and therefore in dealing with Clause (c) we will confine our consideration to communications by

''persons''. There is thus left to consider under Clause (c) 1. ''whether any persons have communicated information or documents to any Soviet agent", either 2. "unlawfully", or

3. ''to the prejudice or possible prejudice of the security or defence of Australia". Each of the expressions used under these heads 1, 2, and 3 requires consideration.

Matters under Clauses (c) and (d) of the Letters Patent

1. "WHETHER ANY PERSONS ••• HAVE COMMUNICATED INFOR-· MATION OR DOCUMENTS TO ANY SOVIET AGENT''

1067. These words show that the Letters Patent, which direct an inquiry into espionage, do not require us to report whether any person has made a con1munication simpliciter. They postulate con1munication to a Soviet agent; and we have assumed that they imply the existence of knowledge in tho communicator to a Soviet agent that it is in fact a Soviet

agent to whom he n1akes the communication.

1068. The pattern of secrecy followed by the M.V.D. is such that seldom is a communication made directly to a known Soviet agent. The communication is usually made to a person who appears not to be ·a Soviet agent but who in fact is a con­

duit of the information to the Soviet. Clayton we think was such a conduit.

2. ''UNLAWFULLY''

1069. Whether or not an act is unlawful is a matter to be determined by reference to the substantive law. Whether an act alleged to be unlawful can be proved in a prosecution in a court of law is an entirely different question, the solu­

tion of which depends upon the law of evidence.

1070. As we have pointed out earlier, the t_echnical rules of the law of evidence do not apply in an investigative inquiry such as ours, with the result that all relevant material is admissible before us, and it is our duty to consider it, although

much of it would be inadmissible upon a prosecution.

1071. Particularly is this so because Section 14 (1) of the Royal Commission on Espionage Act 1954 requires a witness to answer questions even though the answers may incriminate him, but Section 14 (2) provides generally that the answers

cannot be used in any civil or criminal proceedings against him. Accordingly, even a clear confession by a person before us that he had done acts which amounted to a criminal offence would be inadmissible in a prosecution of him for that offence.

1072. It is thus apparent that we might ·conclude upon material before us that a particular person has, in fact, com­ mitted an offence, although it would be impossible to produce in a court of law admissible evidence to convict him.

Report of the Royal Cornmission on Espionage

1073. Apart from the diffi culties arising fron1 the law of' evidence, it seems that the law of Australia is inadequate to combat espionage, particularly in tinw of peace. It is beyond our power and duty under the Letters Patent to make recom­ mendations regarding alteration of the law, but it is our duty to consider the law in order to report whether there has been any unlawful comrnunication of inforn1ation or docu­ ments to Soviet agents. That is the only head of illegality with which we are concerned under the Letters Patent.

1074. We therefore turn now to a consideration of the relevant law.

The Relevant Con1,monwealth Law Creating Offences Relating to the Con1,n1,unication of lnforma.tion or Docun1,ents.

1075. The relevarit Cmnn1onwealth law creating offences relating to the cornrnunication of information or documents is contained in the Cri1nes Act 1914-1950.

1076. Section 24 of that Act rnakes it an offence punishable . by death if any person ''assists by any means whatever any public enemy". This Section corresponds to a branch of the law of treason, and the use of the phrase ''assists . . .

any public enmny'' indicates that this offence, like treason, can be conrmitted only in tinre of declared war, or perhaps in a tirne of actual hostilities occurring without a for1nal declaration of war (I-Iale, Pleas of the Crown, 162). ·

1077. Since Australia has in law been at peace with the U.S.S.R. during the relevant period, this Section has no appli­ cation in our Inquiry.

The Relevant Law Relating to Espionage in Time of Peace.

1078. Espionage by that narne is not an offence known to the law. Under the common law, if a person obtained a

secret document from an official he could be charged only with larceny of the paper [Reg. v. Guernsey (1858), 1 F. & F. 394].

1079. In the United I{ingdom, the Official Secrets Act was passed in 1911. That Act operated in Australia until the Commonwealth Parlian1ent enacted, in the Crim.es Act of 1914, the provisions of the Act of the United Kingdom. In 1920

the Parliament of the United Kingdom amended the Act of

:288

Matters under Clauses (c) and (d) of the Letters Patent

1911, making, inter alia, drastic changes as to the onus of proof in respect of offences under the principal Act. None of the amendments made in the United l(ingdom Act of 1920

have been adopted in Australia.

1080. The Con1monwealth law relevant to unlawful com­ munication of information and documents is contained in Sections 70, 78, and 79 of the Crimes Act 1914-1950. Sections 70 and 79 refer especially to such c01nmunications by public

servants; Section 78 refers to such communications made by persons generally.

Unlaw/ttl Cornmunication by Public Servants. 1081. Section 70 relates only to ''Commonwealth officers'', which term is broadly defined in Section 3. Section 70 has no special relationship to espionage: it provides generally that any Commonwealth officer who, without authority, communi­

cates to any person any fact or document which comes to bis knowledge or possession by virtue of his office and which it is his duty to keep secret is guilty of an offence.

1082. Section 79 for our purposes covers much of the same ground as is covered by Section 70 in so far as it prohibits the communication of confidential documents or information by public servants.

Unlawful by Persons Generally.

1083. The Section principally directed against unlawful communications-in the espionage sense-by persons generally is Section 78. 1084. That Section appears in Part VII of the Act. That Part is headed "Breach of Official Secrets", and the side-note to the Section reads "Unlawful spying". The only other

reference to ''spies'' is in Section 81, which is irrelevant to our Inquiry. 1085. Broadly stated for our purposes, Section 78 makes it an offence if any person ''for any purpose prejudicial to the

safety or interest" of Australia "obtains or communicates to any other person any sketch, plan, photograph, model, article, or note, or other document or information, which is likely to he or might be or is intended to be directly or indirectly

useful to an enemy".

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Report of the Royal Cornrnission on Espionage

1086. Difficulties are caused in the interpretation of this Section by the words ''an enemy'' and by the words '' docu­ ment or information".

(a) "An enerny".

1087. Section 78 was copied (with unimportant variations) from Section 1 of the Official S ecrets Act 1911 of the United Kingdom. Before its enactment in Australia, the words "an enemy" in that Section had been interpreted by the Court of

Criminal Appeal [in R. v. Parrott (1913), 8 C.A.R. 186] as meaning not "necessarily someone with whom this country is at war but a potential enemy with whom we might some day be at war".

1088. If the court meant that every foreign power was for the purpose of the Section an enemy, the decision is under­ standable. But if the foreign power must be a potential enemy, it is difficult to see upon what evidence a court could

decide which foreign powers were, and which were not, potential enemies. In the corresponding legislation in Canada (the Official Secrets Act of 1939-1951), the words "foreign power" are substituted for "enemy"; and likewise in cor­ responding United States legislation the expression "foreign nation" is used.

1089. It seems to us that the phrase used in Section 78-"which is likely to be ... useful to an enemy"-is an adjectival one, descriptive of the type of document or information the communication of which to any person is forbidden. We think

that the words "an enemy" contemplate no specific enemy or potential enemy but merely an enemy in the abstract. This, probably, is what the Court of Criminal Appeal intended to convey.

1090. It would thus appear that so far as this limb of the Section is concerned, a jury, on a prosecution for communi­ cating information to any person, would be required to con­ Rider not whether the information was of such a kind that it

would be likely to be useful to a foreign power but ·whether it was of such a kind as would be likely to be useful in waging war against the Crown. A particular piece of information might be very useful to a foreign power without being useful to a foreign power qtta "enemy".

:l§o

Matters under Clauses (c) and (d) of the Letters Patent

(b) "Document or information".

1091. It seems also that Ow Section must be subject to a further limitation respecting the nature of the documents and information the communication of ·which it prohibits.

1092. In the light of the heading of Part VII of the Crimes .Act-" Breach of Official Secr ets " - and of the context in which the words "document or information" appear, the documents and information which the legislature had

primarily in mind would seem to be official documents and official information. All the reported cases which we have seen under the corresponding English Section relate to docu­ ments and information of that nature. But the words as used

are literally wide enough to embrace any document or infor­ mation, whether official or not.

1093. Thus, although the information given by 0 'Sullivan and Lockwood (got by them from no official source) con­ cerning certain journalists "might be indirectly useful to" the U.S.S.R. for purposes of hostilities, and might have been

given for a "purpose prejudicial to the safety or interest of" Australia, yet we do not think that that was the sort of

information which the legislature had in mind in enacting Section 78. This sort of preliminary information given by 0 'Sullivan and Lockwood forms, as has become apparent to us, the basic material for the selection of M.V.D. agents who

are to be used to get the type of information which seems to us to be contemplated by the Section.

1094. Moreover, the type of document which the Section seems to contemplate is one which had an existence before it was obtained or communicated. The effect of Section 78, as extended by Section 77, is to prohibit the communication of

such an existing document or ''the substance, effect, or description thereof"; the Section seems not to include a writ­ ing which is made by the communicator and not compiled from a previously existing document.

1095. From what we have just said it is apparent that the true interpretation of Section 78 (which contains the relevant law relating to the communication of information and docu­ ments by persons generally ) is not settled, and cannot be

said to be certain.

485

Report of the Royal Corn/rn/iss·ion on Espionage

109'6. Reverting then to the question posed in Clause (c) whether there has been unlawful con1munication of infonna­ tion or documents to Soviet agents, we are satisfied that com­ munications were made between 1945 and 1948 in breach or Sections 70 and 79. The interpretation of those Sections, for our purposes, is not in doubt. But we cannot say whether any of those communications were made to a person known

by the communicator to be a Soviet agent. 1097. Because of the uncertainty of the meaning of Section 78 we prefer not to say whether any communication was made in breach of that Section. Our reluctance is fortified by the fact

that even if breaches of Section 78 did occur there is no evidence legally admissible in a court of law which would be sufficient to warrant a prosecution in respect thereof. 1098. Likewise, although the 1n aterial which we have examined satisfies us that breaches of Sections 70 and 79 have been committed, there is in relation to them a similar dearth of admissible evidence. 3. CoMMUNICATION oF INFORMATION OR DOCUMENTS TO SoVIET

AGENTS TO THE PREJUDICE OR POSSIBLE PREJUDICE OF THE

SECURITY OR DEFENCE OF AUSTRALIA

1099·. In addition to the matters dealt with above, Clause (c) of the Letters Patent requires us to report whether there has been communication of "infonnation or documents to anv representative or agent of the U.S.S.R. . . . to the or possible prejudice of the security or defence of Australia''.

1100. Here again we assu1ne that these words imply the existence of knowledge in the con1municator that the recipient of the infonnation or document was a Soviet agent.

1101. Vve are satisfied that, apart fr01n any element of illegality, much material was cmn1nunicated to Soviet agents to the prejudice or possible prejudice of the security or defence of Australia and that in so1ne cases the communicator knew that the recipient was a Soviet agent. We have dealt with the circumstances of these con1n1unications elsewhere in our Report.

1102. Some of these comn1unications were (because of the nature of the infonna.tion comn1unicated) directly prejudicial to the security or defence of Australia, and many were indirectly prejudicial.

Matters under Clauses (c) and (d) of the Letters Patent

1103. The following exemplifies cases of indirect prejudice. The Petrov Papers themselves disclose that during the last decade a mass of information comprising personality reports . on Australian residents had been communicated to Soviet agents for use in espionage. vV e know that information of this type was supplied by Clayton, 0 'Sullivan, and Lockwood; but

it is plain frmn the Petrov Papers that over the years there must have been many other similar informants of whose identity we are unaware.

1104. Such communications as these are not obviouslv prejudicial to the security or defence of Australia. But th.e type of information so supplied constitutes part of the general material from which the.Moscow Centre fashions its espionage networks, and in consequence the cmnmunication of it was, in that indirect but nevertheless real sense, "to the prejudice

or possible prejudice of the security or defence of Australia''.

CLAUSE (d) OF THE LETTERS PATENT

1105. Clause (d) of the Letters Patent requires us to

report "whether any persons or organizations in Australia have aided or abetted any such espionage or any such conl­ munication of information or documents".

1106. We assume that a conscious aiding· and abetting is conten1pJated bv the Clause, but throughout our Report we have sufficientlv indicated in respect of the various acts of certain that sonie of them amounted to conscious

and some to unconscious aiding and abetting of espionag-(\ or of information or documents.

487

; I

; !

:'

CHAPTER 21 GENERAL CONCLUSIONS

1107. We state the following general conclusions; but, each of these conclusions being necessarily in an abbreviated form, it must be read subject to what we have written elsewhere in our Report.

1. On 3rd April 1954 Petrov and on 20th April 1954 Mrs. Petrov voluntarily sought, and they were granted, political asylum in Australia. 2. On 3rd April 1954 Petrov handed to Richards of the

Security Service (A.S.I.O.) documents which we have compendiously called the Petrov Papers. 3. These documents con1prised: (a) The Moscow Letters, being photographic prints

of all letters written in 1952 by the M.V.D. Moscow Centre to Petrov as temporary Resident or Chief of the J\1.V.D. espionage section in Australia. The originals of these letters are in the Russian language and are partly in code and partly in cipher. Our fin al interpretation of them is contained in Appendix No. 1. (b) A series of miscellaneous documents in Russian,

which we call the G Series of documents, contain­ ing a large amount of data collected by the

M.V.D. for espionage purpose s. Our final inter­ pretation of these do cuments appears 111

Appendix No. 1. (c) A document in English marked E xhibit H, being a document made by Fergan 0 'Sullivan and handed by him to Pakhomov, an M.V.D. agent,

who sent a copy of it to the M.V.D. Moscow Centre. The document contains personality reports on journalists and names three of them whom 0 'Sullivan suspected of being Australian Security agents. We do not publish this docu­ ment, for reasons stated elsewhere in our

Report.

294

General Conclusions

(d) A document in English marked Exhibit J, the carbon copy of a document typed in the

Soviet Embassy at Canberra by Rupert Lock­ wood upon the procurement of Antonov, an M.V.D. agent. The original of this document was sent to the M.V.D. Moscow Centre. It con­

tains a large number of personality reports on persons in Australia and it names a number of persons whom Lockwood believed to be or to have been connected with our Security organiza­ tions. The document contains much other matter,

some· of which was intended to be and may have been useful to the M.V.D. We do not publish this docum.ent, for reasons stated elsewhere 111 our Report.

4. All the Petrov Papers are authentic documents.

5. From these documents alone it plainly appears that for many years the Government of the U.S.S.R. had been using its Embassy at Canberra as a cloak under which to control and operate espionage organizations in Aus­

tralia.

6. Each of these organizations was called in Soviet

espionage parlance a "Legal Apparatus " and was con­ trolled directly from a special Mo scow Centre which conducted its operational work secretly, and indepenJ dently of the Soviet Foreign Office and of the

sad or. The word "legal" has in this context no relation to "lawfulness "-it merely implies that the "Legal Apparatus" is locally controlled by a chief, called a "Resident", who is a per son enjoying diplomatic im­

munity as an official of the Embassy. An ''Illegal Apparatus'' is one in which the R esident has no diplo­ n1atic cover.

7. The Soviet espionage organizations operating- in Aus­ tralia comprised what we have called a G.R.U. "Legal Apparatus", i.e. an organization concerned with military (including naval and air) espionage, and what

we have called an M.V.D. "Legal Apparatus", i.e. an organization concerned with all espionage other than military espionage! ·

RepMt of the Royal Contrnission on Espionage

8. The G.R.U. "Legal Apparatus" operated from about 1943 until at le ast February 1953, but as the G.R.U. apparatus in Australia was kept carefully insulated from the lVLV.D. apparatus Petrov was able to tell us

little about it. \Ve have reported on this G.R.U. "Legal Apparatus'' in Chapter 6. We have no knowledge whether a G.R.U. ''Illegal Apparatus'' was or is still operating in Australia.

9. The M.V.D. "Legal Apparatus" operated in Australia from 1943 until, by causing the withdrawal from Australia of the Soviet Embassy, Petrov's defection in April 1954 destroyed it. It was locally controlled by a succession of Residents or temporary Residents,

each of ·whom (except one, Pakhomov, who was tem­ porary Resident for a few months in 1951) had an overt diplomatic posting at the Soviet Embassy but was in fact covertly an M.V.D. officer. The Residents or temporary Residents in succession were:

( i) Makarov ( 1943-1949) (ii) Sadovnikov ("Said", 1949-1951) (iii) Pakhomov ("Valentin", 1951) (iv) Petrov ("Mihail", 1951-1954)

(v) Kovalenok (" Stoun "), who arrived i;n Australia . on 3rd April1954 to relieve Petrov as temporary Resident.

At least the following other lfiembers of the Sovid Embassy staff were at one time or another covertly M.V.D. cadre workers or collaborator::;:

(i) Vysselsky ("Vassili") ( ii) Gubanov ("Santo") (iii) Krutikov (iv) Mrs. Petrov ("Tamara"')

( v) Galan in (" Babushldn ") (vi) Kislytsin ("Gleb") (vii) Phtitk&is ("J)yin1)ky") (viii) ("Olia")

(ix) Kovaliev ("Grigoriev")

General Conclusions

In addition to these M.V.D. workers or collaborators on the Embassy staff, the following Tass representa­ tives in Australia were M.V.D. workers: (i) Nosov ("Teklmik")

(ii) Pakhomov ("Valentin") (iii) Antonov ("Ignat")

10. The Resident was rigidly controlled from Moscow by a succession of variously-named organs of the Soviet Government to which we refer as the M.V.D. Moscow Centre. This Centre collected dossiers and information

from world-wide sources and this material formed the basis for its minute instructions to Residents in

countries abroad, including Australia.

11. The ultimate aim of the M.V.D. was the collection of confidential information useful to the U.S.S.R. Its preliminary task was to discover pen!lons who had a ccess directly or indirectly to such information and from whom or through whom such information might

be obtained either by inducement or pressure or by unwitting ("in the dark") disclosure.

Personality reports, or dossiers, were obtained from various sources in Australia and other parts of the world concerning persons in Australia who might be of assistance in this task. From these dossiers the Moscow Centre selected persons whom it thought worthy of " study", i.e. those whom it thought

worthy of being cultivated and developed towards their employment as witting agents or unwitting helpers or unwitting informants.

To many such persons the Moscow Centre allotted code names. The Moscow Letters and the G Series of documents alone record that, out of the many nameH submitted to the Centre, it selected at ]east 120

Australians as being of interest to it, and it allotted code names to 4:0 of them.

Ap;:trt from its role q,s Cflntral controller1 the Moscow kep t unqer surveillance the many

491

Report of the Royal Commission on Espionage

Australians who visited the U.S.S.R. and other Com­ munist-controlled countries, particularly members of delegations to the various "Peace" and "Youth" congresses, in respect of whose visits the Soviet contributed very large sums of money. The object of the surveillance was twofold-to select possible helpers and to detect possible counter-intelligence agents.

13. The work of the Resident assisted by his cadre workers and collaborators was: (a) to report to the Moscow Centre upon persons in Australia who might be of M.V.D. interest;

(b) to "study" such persons as the Centre selected, with a view to using them witting agents or unwitting helpers or unwitting informants; (c) to obtain useful confidential information through

such agents, helpers, or informants.

14. The evidence clearly shows that it was only amongst Communists (in which term we include Communist sympathizers) that the M.V.D. could expect to find in Australia willing helpers. The only Australians who,

so far as the evidence shows, knowingly assisted Soviet espionage, directly or indirectly, were Communists.

We believe that the Soviet deliberately refrained from using the Australian Communist Party, as a Party, for espionage purposes lest exposure should lead to its serious political embarrassment and, possibly, to its outlawry.

15. Without Communism Soviet espionage could have no hope of success in this country, and the existence here of Communists who were and are willing to act to the prejudice of Australia was the fundamental cause of the formation of our Security Service and necessi· tates its retention in its present role as a "Fourth Service", essential to the security and defence of Australia.

16. In the hope of finding witting or unwitting helpers or unwitting informants, the M.V.D. sought to make ''contacts'' amongst persons in all walks of life, parti­ cularly amongst public servants, members of foreign

General Con elusions

Diplomatic Missions, Members of the Parliament, journalists, persons in commerce, scientists, and emigres from the U.S.S.R. or other Communist­ controlled countries.

17. A principal target of the M.V.D. was confidential information in the hands of the Department of External Affairs, because that Department holds not only vital information concerning Australia's defence and foreign

policy but also much other confidential information entrusted to Australia by her friends in full expecta­ tion that it will be kept secure.

18. In 1948 information then in the hands of the Crown gave rise to suspicions that Security measures in Australia, particularly in the Department of External Affairs, were inadequate. In consequence, Mr.

Chifley, the then Prime Minister, formed the present Security Service.

19. Petrov knew only the bare facts that leakages of con­ fidential information from the Department of External Affairs had occurred between 1945 and 1948 and that '' Klod'' was the code name of the Australian agent

involved; but the information which the Crown had in 1948 has been confirmed and much amplified by the Moscow Letters and the G Series of documents and the evidence to which they have led us.

20. The material before us clearly shows that the suspicions held in 1948 were well founded and that "Klod'' is Walter Seddon Clayton, who during the relevant years was a functionary of the Australian Communist Party

and an active agent of the M.V.D. Clayton continued his agent activities at least into 1950, but apparently with no success in the later years.

21. Our Inquiry discloses no trace of any significan.t leakage of information from the Department of External Affairs since 1949, although it is evident from the Moscow Letters that penetration of that Department

remained throughout a principal aim of the M.V.D.

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Report of the Royal Co1ninission on Espionage

22. So far as we can learn, after 1949· the M.V.D. had no success in gaining any information directly involving· the security or defence of Australia, but it pursued its operations and had some success in matters indirectly

affecting the security of Australia, particularly in building up its network. Examples are the procuring of Exhibit H in 1951 and Exhibit J in 1953 frOin

0 'Sullivan and Lockwood respectively. The acts of these men were indirectly prejudicial to the security of Australia, not only because of the information they gave but also, and Inore importantly, because by giving it 0 'Sullivan was on ''the small hook'' (i.e. he had taken

the first compromising step which made him vulnerable to future pressure), and Lockwood had more deeply compromised himself.

23. Before and after Petrov's arrival in Australia a most important design of the M.V.D. was to obtain through Madame Oilier, a French Embassy cipher clerk, French cipher books and a knowledge of French cipher nique. In pursuance of this design Pakhomov, and later Petrov, had a number of secret meetings with Madame Oilier, the last being in March 1954, but they failed to attain their object. Petrov's defection

exposed and frustrated the design.

24. The failure of the M.V.D. in Australia to produce nificant results after 1949 was due, we think, to the matters referred to in Chapter 8. Petrov 'became temporary Resident at the end of 1951. In the Moscow Letter dated 6th June 1952, which contained a ''Plan

of Work", the Moscow Centre recognized that the ineffectiveness of the Australian M.V.D. section during the immediately preceding years had been due to under­ staffing and staff inefficiency.

25. In June 1952 international tension was such that war involving Australia and the U.S.S.R. was not im­ probable. The '{Plan of Workn directed Petrov to enliven the general M.V.D. activities here and

immediately to set about the establishment in Australis of an "Illegal Apparatus "-an espionage organization

General Conclusions

or fifth column which could operate in Australia if war destroyed the "Legal Apparatus" by causing the withdrawal of the Soviet Ernbassy.

26. The "Plan of Work" involved preparation for the planting in Australia of M.V.D. ''illegal workers'' who would come here unsuspected in the guise of ordinary imn1igrants. Some work was performed by the lVI.V.D.

in this regard, but otherwise little of the "Plan of Work" was carried out.

27. Late in 1952 or early in 1953 the Moscow Centre decided to replace Petrovby appointing a permanent Resident, but in fact he was not replaced until April 1954, when Kovalenok arrived. Kovalenok 's overt posting at the

Embassy was as a Third Secretary but he was in fact an M.V.D. officer of the Fourth Directorate-an M.V.D. section specially concerned with the planting of "illegal workers". The intention was that later an

officer more senior than Kovalenok would come to Australia as permanent Resident. Petrov 's defection intervened and destroyed not only the "Legal Appa­ ratus" but also the design to establish an "Illegal

Apparatus''.

28. So far as we are aware, no G.R.-U. "Illegal Apparatus'·' or 1\II.V.D. "Illegal Apparatus" has operated in Aus­ tralia since Petrov's defection.

29. In Chapter 20 we have dealt with the law in Australia relevant to the matters set out in the Letters Patent. The substantive law is such that, when considered in conjunction with the technical legal rules governing the admissibility of evidence in courts of law, it would

appear that prosecution of none of the persons whose acts we have considered in our Report would be

warranted.

' '

I'" .,

; ' :

....

::.

• ,

· ....

'' . ,

··.

i ! t

,I''

"'

.,,

Report of the Royal Commission on Espionage

1108. Before concluding our Report we wish to record our Hppre{'.illtion of the services of the many persons who have assisted us, and in particular those of Mr. W. J. V. Windeyer, Q.C., and Mr. G. A. Pape and Mr. B. B. Riley of counsel; Mr. K. H. H erde our Secretary; Mr. C. P. Alpen our Acting other members of the staff of the Commission; and

the Commonwealth Court Reporters who have reported our proceedings .

We have the honour to be, Sir, Your Excellency's most obedient servants,

W. F. L. OwEN (Chairman)/ R. F . B. PHILP ( Commissioners

G. C. LIGERTW OOD I

C. P. ALPEN (Acting Sec retary) Sydney, 22nd A ugm;t 1955.

302

APPENDICES to the REPORT

APPENDIX No. I.-Moscow Letters and G Series of Documents.

APPENDIX No. 2.-Interim Report of the Commissioners.

APPENDIX No. 3.-Espionage Organizations of the U.S.S.R. betweea 1918 and March 1954.

APPENDIX No. 4.-Petrov's Espionage Experience prior to Leninr for Australia.

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APPENDIX No. I.

MOSCO\i\T LETTERS AND G SERIES OF DOCUMENTS.

r. In this Appendix we set out our interpretations of the Moscow Letters and of the G Series of documents.

2. The text here published of these interpretations is the result of a constant process of examination and checking to which we have subjected the documents. We have continued that process not only throughout our sittings, but up to the present time. In consequence, the text here published will be found to differ occasionally in minor respects from the text of some passages read during our sittings and recorded in the Transcript.

3· vVe have been able to identify all the persons referred to by code names, except in the very fe w instances to which we have adverted in our Report.

4· The Moscow Letters in literal translation, when referring to a person to whom a code name had been allotted before 1952, always refer to that person by that code name only. For instance, in the literal translations Mrs. Petrov and Anderson are never referred to by their real names, but are always referred to as "Tamara" and "Yeger'' respectively. In our interpretations published in this Appendix, we have in such cases replaced the code name by the real name.

5· Our interpretations here published retain code names only in phrases which indicate the initial allotment of those code names; for instance, in B.ro we have r etained the phrase "F. ]. 1\!fcLean, further referred to as 'Lot", but thereafter we have interpreted "Lot" as "McLean".

6. Throughout both the Letters and the G Series of documents, we have interpreted code names of places and all other code words and code phrases, so that, for instance, "Arkadia", "Azimut", "luggage", and "planner" here become respectively " Brisbane", "Perth", "mail" and "cadre worker". vVe have interpreted "Sparta" simply as "the

Soviet" or "Russia", though this popular usage is perhaps not as accurate in some contexts as would be "the U.S.S.R.".

7· Some of the original documents here interpreted bear handwritten annotations, all of which appear to be in Petrov's hand. We have indicated the existence of these annotations in footnotes.

4 99

A ppcndix No. 1

CANBERRA

TO PETROV

LETTER NO. 1

of 2 January 1952

sos

Report of the Royal Commission on Espionage

• Paragraph I of Letter No. 1 of .2 January I95.2 to Canberra. CONCERNING KOVALIEV. (01) Nicolai Grigorievich Kovaliev has departed for No. I (0 2) to you to work in the capacity of commercial attache, recruited before departure to our work under the code name Grigoriev.

Kovaliev has a higher education, knows the English language. He has had experience of work abroad, in 1949-51 he worked as senior economist in the Soviet 1V1inistry of Foreign Trade in Denmark, and is described favourably.

He entered into collaboration with us willingly, declaring that he would be very glad and satisfied if he could render us assistance. Kovaliev was thoroughly instructed as regards studying foreigners and acquisition of information of interest to the Soviet intelligence, as

regards the observance of secrecy in work, and also as regards the conduct of Soviet citizens abroad. For establishing contact with him the following pattern has been agreed:

Our worker turns to him : "Regards to you from Moscow from Vladimir Pavlovich." Kovaliev' s reply : "What progress in studies ?" Our worker replies: "Good", and names his code name.

(

0

I) The following is handwritten on the original: "contacted him 4/II-52 personally M". "M" refers to Petrov's code name "Mihail". ( 0

2) The meaning of "No. 1" was not reproduced in the deciphered list of insertions, and is not definitely known, but probably is "Australia" or "Canberra".

Appendix No. 1

3

We instruct you to establish contact with Kovaliev, to acquaint him with the situation and to direct his efforts towards the obtaining of useful contacts in political and industrial circles and in institutions of the government.

In view of the fact that Kovaliev has no experience of intelligence work, it is essential that you should hold discussions with him for the purpose of teaching him ways and means of conducting intelligence work and that you should render him timely assistance in the purposeful study of the acquired contacts.

After you have established contact with Kovaliev, direct him to arrange official contact with Kosky with the object of studying the latter. For the time being Kovaliev should not be informed that Kosky is our agent. We warn you that you may establish an agent connection

with Kosky only with the permission of the M.V.D. Headquarters, Moscow. In three months time after the arrival of Kovaliev in the country, we request you to send us information as to how he is engaging in our

work.

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B.6

Paragraph 2 of Letter No. I of 2 January 1952 to Canberra.

CONCERNING Mme OLLIER.

A secret contact with Mme Oilier has already been maintained by us

-4

for a period of more than two years; however, we do not have any positive results from work with this prospective agent. Analysis of information concerning meetings with Mme Ollier shows that the cadre workers maintaining contact with her carried out their

work in an insufficiently expert way, in consequence of which she has not so far become an agent of full value. The basic mistake lay in the fact that, having received Mme Ollier's consent to give us assistance, Sadovnikov in the first instance and now also Pakhomov failed to obtain a

regular yield from her of important information to which she has access, and they did not teach her the ways and means of agent work. During meetings with Mme Ollier, Pakhomov discusses mainly international events and questions with her, which Mme Ollier herself

raises, but questions of our work are not deeply broached. Pakhomov sets her almost no task and does not succeed in seeing that she executes fully and punctually the tasks which have been set her. In order that we should be able to make a maximum use of Mme

Ollier's agent capacities, Pakhoinov must in the first place ascertain what type of work she carries out at the Embassy, her daily work routine: when she starts work, when is the lunch-hour break, where she lunches, when she finishes work, etc. It is particularly necessary to elucidate all the details connected with the fulfilment of her duties as cipher clerk, namely: in what room she is engaged on cipher work, where the ciphered documents are kept,

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does she have access to the safe where the cipher books are kept, and does she carry on her person the keys to this safe, etc. It is also absolutely essential to elucidate, at first orally, the actual technique of the enciphering and deciphering of cables. The elucidation of all these details is necessary to enable us to determine what would be the best way, least liable to exposure, of effecting the acquisition of deposits of ciphers of her Embassy.

It is desirable that the meetings, at which Pakhomov will be elucidat­ ing the questions mentioned above, should be carried out at places which would allow discussions in quiet surroundings. For this purpose it appears to us that places might be suitable, located at a distance of 40 to 70 miles from Canberra. In such a place Pakhomov could at first have a discussion in a cafe or restaurant and then discuss with Mme Oilier the most important questions for . our work during a walk in the park or along quiet streets.

It is also necessary to prevail upon Mme Ollier that she should, at first orally and later in written form, give information about the contents of all incoming and outgoing cables. Draw Pakhomov's attention to the necessity of a more secret way of conducting meetings with Mme Ollier, and not to allow that he should

select places for establishing contact with her in localities where she could meet her fellow workers or acquaintances.

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6

(From Pakhomov's information of r/xii/SI it is apparent that he met her and put her in the car near the place where the building of her Embassy is.) In the event of Mme Ollier being granted permission to go to her

native country on leave, of which she would wish to take advantage, she must be advised not to insist on a posting-to some other country, but to return to Australia. However, taking into account the possibility of her transfer to another country, it is essential that before she departs on leave to France some arrangement should be arrived at with her concerning the conditions of contact ( o I) in Paris, on such a basis that the first meeting should be appointed for a month and a half after

her arrival in her native country, having also made provision for control meetings once a month. In the next mail inform tis concerning the existing conditions with regard to contact with Mme Oilier.

We request you to pay special attention to work with Mme Oilier and to give Pakhomov assistance in making a thorough preparation for conducting meetings with her. We ask you to inform us about meetings with Mme Oliier and about

your proposals for improving work with her. _

(

0

I) In the original, literally translated, the passage reads "conditions of agreement", and the Russian word for "contact" is handwritten above the Russian word for "agreement".

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Paragraph 3 of Letter No. 1 of 2 January 1952 to Canberra. Cr) CONCERNING ANDERSON.

With reference to paragraph No. 6 of Letter No. 6 of .rjxii/1951.

Pakhomov must not cease his work with Anderson. On the contrary he should make this work more active, but on a more secret basis, as we have already indicated to him. Pakhomov should strive insistently to carry out our instructions re .... gar ding work with Anderson, as set out in paragraph 3 of Letter No. 5 of r5/x/51. .

We are especially interested in getting Anderson to elucidate the information indicated in the 2nd clause of the mentiorted paragraph. We request you to take the control of Anderson tinder your persona] control and to assist Pakhomov to carry it out effectively.

Paragraph 4 of Letter No. I of 2 January 19_ 52 to Canberra. (02) .

CONCERNING McLEAN.

In the Political Intelligence department of the Department of External Affairs of there works, with the rank of First Secretary,

F. J. McLean, further referred to as Lot. According to Sadovnikov's description, McLean has access to secret

( o I) The following is the interpretation of a note handwritten on the original:

"To Comrade Pakhomov Prepare a reply together with your proposals 5/II Petrov." (

0

2) The following is the interpretation of a note handwritten on the original: "To Comrade Pakhomov Prepare a reply ( ?) 5/II Petrov."

Appendix No.1

B.n

s

documents, knows well many workers in the Department of External Affairs, attends diplomatic receptions and consorts with members of the diplomatic corps. He treated our representatives in Canberra with respect, willingly

accepted invitations, and attended receptions arranged by our diplo­ mats in private apartments. During discussions he expressed his dissatisfaction with the Menzies government, with internal conditions in the Department of External Affairs, with the Minister for External Affairs, Spender, the chief of his department. He once related that the Public Relations depart­ ment, in which he formerly worked, is engaged on the processing of all

reports of a political character, which are received from Australian representatives abroad, arid prepares comments and proposals concern­ ing them. Furthermore, he is more talkative and frank when he is at a small gathering at private receptions.

According to unconfirmed data, McLean was formerly a member of the Australian Communist Party, which he left at his own wish. One of our trustworthy agents describes McLean favourably and considers that he could supply valuable information, but for this purpose

he should be skilfully and tactfully handled and be convinced that nothing that he will say will come to the knowledge of any Australians or will reflect on his service career. It should also be taken into account that McLean has a large family and is badly off materially.

Bearing in mind that McLean is of interest to us, you must study · and cultivate him as a prospective agent.

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We request you to keep us informed regularly about progress in the study of McLean.

Paragraph 5 of Letter No. I of 2 January I952 to Canberra. (oi) CONCERNING THE STUDY OF THE DEPARTMENT OF EXTERNAL AFFAIRS.

One of the most important aspects of the work of the foreign politi­ cal ·intelligence consists of the study and survey of the Department of External Affairs of the foreign country. ·

Up to the present moment the Australian section of the M.V.D. has not been conducting such survey, and in consequence M.V.D. Head­ quarters has in effect no information concerning the Australian Depart­ ment of External Affairs.

Taking note of the importance of this question, we request you to set about the study and survey of the Department of External Affairs. For a start, compile and send to M.V.D. Headquarters a report in maximum detail concerning the Department, including official and agent information.

Beside other information, this report should refer to the following questions : brief historical data concerning the organization of the Department, its structure, its location, from whom is the personnel recruited, information about the leadership, about educational institu­ tions where diplomatic cadres are trained, which departments actually deal ·

(

0

I) The following is the interpretation of a note handwritten on "To Pakhomov Perhaps Mme Ollier can on

Petrov,"

Appendix No.1

B ;I3

10

with matters affecting . the Soviet, America, England, and as detailed information as possible concerning the heads and personnel of these departments. , Do the employees of the Department of External Affairs join together in any trade unions organizations or clubs, what do these organizations represent in themselves, what are their addresses.

Further, it is desirable to obtain information regarding procedure for. the safeguarding and use of secret documents which exist in the Department, is the association of employees with the people around them controlled and in what manner, in what places is a non-official contact possible with them.

Mobilize all workers of the Australian section of the M.V.D. and recruited persons to participate in the preparation of this report, allocating among them the collection of material on separate concrete questions.

Paragraph 6 of Letter No. I of 2 January 1952 to Canberra. (01)

CONCERNING BRESLAND AND NORMAN HERBERT RUSSELL.

Among the members of the Australian delegation which visited Russia in October 1951 were Charles Bresland C2) (further referred to as Cook) and Norman Herbert Russell. Bresland was born in 1926 in Perth. After completing 7 classes of

school he worked as a book salesman in one of the publishing firms in Perth

(

0

I) The following is the interpretation of a note handwritten on the original: "To Pakhomov Petrov." (

0

2) As explained in Chapter 7 of our Report, the name "Brennd" her" appears in the deciphered list of insertions, in mistake for "Bresland".

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Report of the Royal Commission on Espionage

II

and later in the publishing firm of the Communist Party in the same place. In 1944 he joined the Communist Party of Australia. At the present time Bresland is a committee member of tb,e Communist Party in the State of New South Wales, the secretary of the executive committee of the Eureka Youth League, progressive organization of the Australian youth in the same State, and a member of the national executive committee oJ that League. Bresland's wife is a member of the Eureka Youth League.

Bresland understands the Russian language well, but speaks it with difficulty. In all, he creates a favourable impression. He likes Russian music, knows many Russian youth songs and shows a great interest in Russian literature. He at all times spoke sincerely and well of every .. thing he saw in Russia, and he assisted other members of the delega· tion to understand correctly the realities of life in Russia.

Bresland agreed to an exchange, not through the post, of informa­ tion and literature between the Youth organizations of Russia and Australia, and he gave several addresses at which a contact could be established with him. Here are the addresses : Chas. Bresland, 59 Peel Street, Belmore, and Eureka Youth League, 40 Market Street, Sydney.

We request you to commission Pakhomov to establish cautiously an official contact with Bresland for the purpose of using him for receiving inquiries in student circles of the universities in Sydney and Canberra.

Norman Herbert Russell was born in 1922 in Sydney; he is non­ Party; of middle school education-he completed an accountancy course. At the present

Appendix No. 1

:6.1 s

12

time he works as a clerk in the Sydney port. He is a member of the clerks' trade union. is fmancia,lly se<;ure, lives in his own house and has his own motor car. ,Russell's general is that of a petit,.bourgeois. Whilst

£raining from any part in the fight for peace he does

not, it -is true, decline to carry out individual al)sjgnments to that end. Although during his sojourn in the Soviet Russell condueted him­ self well and promised that after his arrival in Australia he would speak nothing but the truth about the nevertheless his be­

haviour arouses suspicion. While in Stalingrad, Russell 1,11et, as though accidentally, two attaches of the British Embassy, and con­ versed with them for some minutes. While he was in Moscow, Russell, together with N. Isaksen, another member of the delegation, secretly

and without telling anyone visited the British Embassy, where he spent several hours. The following day they explained their absence by saying that, having gone out for a walk, they allegedly met a young Russian man who spoke English, who invited them to a

restaurant where they sat for several ho\lrs. Such behaviour on the part of Russell suggests that rpay be a contact between him

and the British intelligence. We are sending the jnfo:rmation ahotlt Russell for your orientation.

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Report of the Royal Commission on

13

Paragraph No. 7 of Letter No . .I oj-2 January 1952 to Canberra.

CONCERNING DAGHIAN.

With reference paragraph No. ro of Letter No. 6 of rjxii/5I. In view of the fact that Daghian has not closed his laboratory and continues to work in it, meetings should be continued with him with the same aims about which we informed you in paragraph No. 4 of Letter No. 5 of rs/x/sr.

We explain that, in those cases where as a result of a changed situation there arises a need to alter the aims of the study, the local section of the M.V.D. should itself come forward with its proposals, and not merely limit itself to a request for directions from M.V.D. Headquarters, as was done by Pakhomov in this case.

Paragraph No. 8 of Letter No. r of 2 January 1952 to· Canberra.

CONCERNING MORROW AND O'BYRNE.

Morrow and O'Byrne are of unquestionable interest to us, and therefore it is necessary for Pakhomov to establish and maintain an official contact with them. An association with Morrow and O'Byrne should be exploited for the purpose of studying them and of obtaining the necessary "in the dark" information from them.

Appendix No. 1

14

Paragraph No. 9 of Letter No. I of 2 January I952 to Canberra.

CONCERNING SLAVIANIN.CI)

It is clear from material received that Slavianin is attempting too obtrusively to establish close relations with Pakhomov. Taking heed of this, warn Pakhomov that he must be cautious in conversations with him, as it is not to be excluded that he might be an agent of the counter-intelligence.

-Paragraph No. 10 of Letter No. I of 2 January 1952 to Canberra.

CONCERNING SEVERIANIN.(0 I)

Taking into consideration the fact that Severianin is a prominent member of the Communist Party, he cannot be used in our work. Discontinue the study of him.

Paragraph No. II of Letter No. I of 2 January 1952 to Canberra.

In response to paragraph No. 3 of Letter No. 6 of I/xii/51. In case of operational necessity, Pakhomov must of course come to Canberra, but this should be done in such a way that the Tass agency work will not suffer harm.

CI) This is apparently a code name, and we are unable to identify tho person to whom it refers.

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IS

We authorize that part of the expenses for trjps &hould be

paid out of the operation budget of the Australian section of the M.V.D. We agree that Pakhomov should prolong in the Department of Immigration for a f1.1:rther year the term of his sojourn in the country.

Paragraph No. 12 of Letter No. I of 2 January I952 to Canberra.

CONCERNING THE FULFILMENT OF OUR TASKS.

In our paragraphs 2 and 8 of Letter No. 4 of I 7 August of this year Pakhomov and Mrs. Petrov were set definite tasks regarding the selection of secret hiding places for documents and places for meetings with agents which were to be used in further operational work, and also regarding the compilation of a series of reports concerning public and political leaders of the country.

So far we have no news concerning progress in the execution of these tasks. We request you to participate in this work and to take steps to ensure that the above mentioned tasks should be executed in the near future.

Paragraph No. I3 of Letter No. I of 2 January 1952 to Canberra.

ORGANIZATIONAL QUESTIONS. ( 1) The operational letters for 1950 received and kept by you in the Australian section of the M.V.D. must be destroyed in accordance with the act.

Appendix No. 1

B.Ig

16

( 2) We request you to communicate to us in the next a brief

description of the motor car which has been acquired, under what cover story it has been purchased, what is the cover story for its presence in the garage of the Embassy, and what are your proposals concerning its further use.

Point out to Pakhomov that he failed to observe our directions concerning maintenance of the motor car.

We authorize Pakhomov to use the car for operational purposes only · in Canberra. He must not travel in this car to Sydney.

?aragraph 14 of Letter No. I of 2 January I952 to Canberra.

CONCERNING MAKING AN INVENTORY OF PROPERTY.

In order to establish the actual presence of property which is to be found in your M.V.D. section, you and Mrs. Petrov must carry out a complete stock-taking of property and an inventory as at Ist January I952, namely:

(I) To carry out stock-taking of the valuable property which is actually present, in accordance with form no. I ; ( 2) You must estimate the approximate value, at local market prices, of such property in the M.V.D. section as has not yet

been valued at the time of the taking of the inventory.

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