Ace of Spies (32 page)

This cloak and dagger story of Pepita’s has understandably met with much cynicism over the years and is certainly typical
of the highly dramatised stories included in her book. Before dismissing the account out of hand, however, a passage from a letter written on 25 January 1924 by Pepita to her sister Alice, who was holidaying in Cannes, should be considered: ‘after yesterday’s events it would seem there are no lengths to which Sidney’s enemies will not go’.
⁵⁶

Whether the attempted kidnapping was a reality, an embellishment or a fantasy, it seems clear that something sinister occurred during their last week in England.

By the following week they had joined Pepita’s sister Alice at the Hotel de la Terrasse in Theoule, a short distance from Cannes. Despite the fact that he was supposed to be taking things easy, Reilly’s correspondence indicates that he was in almost daily communication with both political and business contacts.

In letters to Savinkov, for example, Reilly frequently refers to his perilous financial state. While his finances were indeed far from satisfactory, his repeated references to the lack of ready cash could well be a ploy, for by this stage he was more than likely tiring of his role as Savinkov’s principal coffer: ‘I am unable to send you even 500 francs. I am waiting for a few pounds from London, but have not received them yet’. After seven weeks in the south of France, Reilly was now desperate to get back to New York in pursuit of his Baldwins claim:

Made up my mind to leave this imaginary paradise and get back to the austere reality. Nothing to live upon. Staying here would be like letting grass grow under my feet… Wrote letters to a few friends who owe me about £200 in total… the situation with my creditors in London is that at any minute I can be declared insolvent. To successfully finish my lawsuit in New York, I need to be present there personally, but have not the slightest chance to go there. To buy a return ticket I need at least £200, which is similar to dreaming about mines on the moon.
⁵⁷

Despite this plea of poverty, Reilly’s mine on the moon clearly came up trumps, for after spending a month tidying up his
affairs in London, he and Pepita booked a passage on the SS
New Amsterdam,
which sailed for New York on 7 May.
⁵⁸

While Reilly was closeted with lawyers in New York, the OGPU were putting the final touches to their plan to entrap Savinkov. Having infiltrated a number of OGPU agents into Savinkov’s inner circle, moves were set in hand to persuade him to return to Russia. After several weeks of soul-searching, he finally succumbed to temptation, despite advice to the contrary from Reilly, who now travelled back across the Atlantic aboard the SS
Paris
to bid him farewell.

On 10 August Savinkov left Paris for Berlin, where he was met by Syndicate II agents Alexander Yakushev and Eduard Opperput. They provided him with a Russian passport in the name of V.I. Stepanov and arranged his passage to the Byelorussian border, which he crossed on 20 August. He was barely fifteen miles inside Soviet territory when Roman Pilar of the OGPU placed him under arrest as he sat down for breakfast in a forester’s hut just outside Minsk.

When news of Savinkov’s arrest and trial were announced by
Izvestia
on 29 August, Reilly at first refused to believe it. On 3 September
The Times
published an account of the trial, and Reilly immediately wrote a letter to the
Morning Post
(and a copy to Winston Churchill) asserting that reports of Savinkov’s capture and trial was Bolshevik propaganda, and that in all likelihood Savinkov had been killed crossing the border.
⁵⁹
His letter was published in full on 8 September, but was very shortly to be proven erroneous by new information published by
The Times.
On learning the truth, Reilly reacted angrily, sending a further letter to the
Morning Post,
which was published on 15 September:

Sir
I once more take the liberty of claiming your indulgence and your space. This time for a twofold purpose, first to express my deep appreciation of your fairness in inserting (in your issue of 8th inst.)
my letter in defence of Boris Savinkov when all the information at your disposal tended to show that I am in error; secondly, to perform a duty, in this case a most painful duty, and to acknowledge the error into which my loyalty to Savinkov has induced me.

The detailed and in many instances stenographic press reports of Savinkov’s trial, supported by the testimony of reliable and impartial eyewitnesses, have established Savinkov’s treachery beyond all possibility of doubt. He has not only betrayed his friends, his organisation, and his cause, but he has also deliberately and completely gone over to his former enemies. He has connived with his captors to deal the heaviest possible blow at the anti-Bolshevik movement and to provide them with an outstanding political triumph both for internal and external use. By this act Savinkov has erased forever his name from the scroll of honour of the anti-Communist movement.

His former friends and followers grieve over his terrible and inglorious downfall, but those amongst them who under no circumstances will practise with the enemies of mankind are dismayed. The moral suicide of their former leader is for them an added incentive to close ranks and carry on.
Yours
Sidney Reilly
⁶⁰

Churchill, on reading the
Morning Post,
sent a copy of his earlier letter to Archibald Sinclair and a word of support to Reilly:

Dear Mr Reilly
I am very interested in your letter. The event has turned out as I myself expected at the very first. I do not think that you should judge Savinkov too harshly. He was placed in a terrible position; and only those who have sustained successfully such an ordeal have a full right to pronounce censure. At any rate I shall wait to hear the end of the story before changing my view of Savinkov.
Yours very truly
W.S. Churchill
⁶¹

Sir Archibald Sinclair’s reply to Churchill on 23 September further reinforces this view in quoting the Finnish financier Brunstron, whose comments on Savinkov’s behaviour are said to be ‘more merciful, and I think, shrewder than Reilly’s, whose judgement is no doubt affected by the bitter disappointment he must have felt at the failure of his plans’.
⁶²

Despite the writing on the wall, Reilly continued to push his legal claim, which was eventually lost in the New York Supreme Court. Not unsurprisingly, Baldwin’s lawyers White and Case had done a great deal of homework on Reilly and his less than salubrious past.
^.63
The recital of this in court caused Reilly to lose his temper and was probably the final nail in the coffin of a case that was legally tenuous to say the least.

While the verdict was a bitter blow, Reilly resolved to remain in New York and rebuild his fortunes. In December 1924 he, Upton Dale Thomas and several other old associates from his muni-tions days, set up Trading Ventures Incorporated at 25 Broadway, New York City.
⁶⁴
In a letter to Edward Spears dated 22 January 1925 Reilly explained that:

I am now permanently established in New York. I am president of the above company [Trading Ventures Inc.], which I have formed and in which I own a large interest. I have unfortunately lost my big lawsuit and as the times seem to be extremely prosperous here I thought it is the wisest thing to make use of my very extended connections here.

Reilly went on to disclose the main activities of his new company:

…generally speaking the type of business which I am doing here is the same as we were doing in our former association with Brunstrom. The most fashionable business here at the present moment is bond issues for foreign municipalities and foreign industries.
⁶⁵

Finally getting to the point of his letter, Reilly remarked that if Spears ‘should come across anything of this kind’ he would be
‘very glad to undertake it’. ‘I would’, he goes on, ‘also be very much interested in anything in the way of export and import between Great Britain and the United States, as well as in the placing and financing of British inventions and processes here’.
⁶⁶

From company records
⁶⁷
it is clear that major injections of capital were going to be necessary if his ambitions for Trading Ventures were to amount to anything. To this end Reilly was clearly hunting for new business opportunities that might bring this about. However, he was also only too keenly aware that hunting of another kind was being conducted in New York and that he was more than likely the prey.

D
espite the Syndicate II operation and the controversy surrounding Savinkov's arrest, the good intentions of ‘The Trust' had not been questioned in the West. The organisation's support, influence and capability were, however, very much the talking point of Western intelligence agencies. Cmdr Ernest Boyce, head of the SIS station in Helsingfors, from where Russian operations were now directed, apparently wished to establish whether the Trust had, or was likely to have, the capability to take power in Russia. Boyce therefore resolved that the best way of finding out was to send his former colleague Reilly. To send one of his own agents would have involved risk, and in all likelihood would not have been sanctioned by C.

Without any consultation with SIS in London, he wrote to Reilly on 24 January 1925:

Dear Sidney
There may call on you in Paris from me two persons named Krasnoshtanov, man and wife, they will say they have a communication from California and hand you a note consisting of a verse from Omar Kahyam which you will remember. If you wish to go further into their business you must ask them to remain. If the business is of no interest you will say ‘thank you very much, good day'.

Now as to their business. They are representatives of a concern which in all probability has a big influence in the future on the European and American markets. They do not anticipate that their business will fully develop for two years, but circumstances may arise which will give them the desired impetus in the near future. It is a very big business and one which it does not do to talk about as others who have a suspicion that the concession is obtainable, would give their ears to know all about who is at the back of it and why they themselves cannot make any headway. There are especially two parties very much interested. One, a strong international group, would like to upset the whole concern as they fear their own financial interest in the event of the enterprise being brought to a satisfactory conclusion. The other, a German group, would like very much to come in, but originators represented by the two persons mentioned above, through whom it is important that arrangements for future communication be made, and who have worked hard on the preliminary work ever since they left Russia, will have nothing to do with them as they fear this particular group would want to take too much into their own hands. They have therefore connected up with a smaller, French, group consisting of less ambitious persons. The undertaking is so large, however, that they fear this group will not be able to handle it alone. They are therefore wanting to enter into negotiations with an English group who would be willing to work in with the French group. It is to be thoroughly understood, however, by anyone coming in that when the enterprise is firmly established the board will be composed from those who have done the spade work. They refuse at present to disclose to anyone the name of the man at the back of this enterprise. I can tell you this much – that some of the chief persons interested are members of the opposition groups. You can therefore fully understand the necessity for secrecy.

A talk with the representatives will enable you to form your own judgement as to the feasibility of their ideas.

I am introducing this scheme to you thinking it might perhaps replace the other big scheme you were working on but which fell through in such disastrous manner. Incidentally, you would help me
considerably by taking the matter up. The only thing I ask is that you keep our connection with this business from the knowledge of my department as, being a government official, I am not supposed to be connected with any such enterprise. I know your interest in such business where patience and perseverance against all sorts of intrigues and opposition are required and I know also you will look after my interests without my having to make some special agreement with you.
Please let me know where to address letters to you in the future.
Kindest regards and best of luck. Please also remember me to your wife.
¹

‘California', according to Pepita Reilly, ‘stands for Russia, the verse from Omar Kahyam (sic) for a cipher message: the big scheme which fell through disastrously was the Savinkov affair. The letter means in fact that there is in operation a strong anti-Bolshevik group, having at its head some of the members of the Bolshevik government'.

Clearly intrigued by this unexpected letter, Reilly replied to Boyce from his office at 25 Broadway, New York:

I am kicking myself for not being in Paris, and thereby missing the Californian couple. You must understand that although I am here I am not losing touch with the situation at all and am in constant correspondence with the different manufacturing groups in the various countries.

I fully realise the possible importance of the scheme which the Californian promoters have in hand. Since the failure of the big scheme on which I was working, and especially since the recent fight for share control which has been going on in the board of directors, I have finally convinced myself that the initiative must come direct from the present minority interests. I believe that the time is gradually getting ripe for the minority interests to realise that the whole business will go to wreck and ruin unless they make up their minds to sacrifice a good portion of their original ideas and come down to earth in a manner which will be acceptable both to the internal and international market. Whether minority interests have already reached this mental
attitude or not it has been impossible for me to discover in any definite form, and, therefore, I regret so intensely missing the Californians.