All the King's Men (4 page)

As the Passport Control Officer in Rome, Dansey quickly appreciated that the resources available to him were completely inadequate to fund any sort of professional intelligence operation, so he established an unofficial network of informers from his contacts in the business world.
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These businessmen, most of whom had dealings in Germany, supplied him with information on Germany’s re-armament programmes and, more significantly, on the clandestine flow of currency loans to Germany through the Swiss banking system.

During 1936, MI6 discovered that its continental networks had been penetrated by German intelligence. ‘Quex’ Sinclair decided to tackle his problems of failing resources and German penetration by exploiting Dansey’s unofficial links with the business world. During the autumn the PCO Rome was summoned to London on the pretext that some financial irregularities had been discovered in the Rome accounts. (This was in fact quite true.) Nothing was said officially, but it was tacitly understood that Dansey had been caught with his hands in the till and had been cashiered. It was generally thought that ultimately he had gone abroad, which in a sense was also true.
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In fact it was a typical piece of deception, the kind of thing Dansey made a speciality. Rather than scrap the
PCO network, which would have signalled to German intelligence that MI6 knew it was compromised, it was decided to leave everything as it was – and create a completely new network from scratch. The Z Organization was constructed by Dansey around his well-established business contacts and through these gradually spread across Europe with its operational headquarters in Switzerland and Holland. The cashiered Dansey became ‘Z–1’, the controller of the network, and apart from Sinclair virtually no one else at MI6 knew of its existence.
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From his headquarters in a suite of offices on the eighth floor of Bush House, Dansey’s network had the added advantage of being virtually self-financing, thanks to the benevolence of patriotic businessmen.

This network of ‘Z men’ extended right across the commercial spectrum: Rex Pearson from Unilever, Basil Fenwick from Royal Dutch Shell, William Stephenson of the Pressed Steel Company, even the film producer Alexander Korda who established London Film Productions. Being in sole charge, Dansey ran the network as his own personal fiefdom, far from the gaze of his colleagues. He took advantage of the Z Organization’s anonymity to employ a number of irregular operatives. Petty criminals, forgers, brothel keepers and embezzlers all took Dansey’s shilling. He acknowledged that criminals, perhaps more than any other social type, were naturally suited to employment in an undercover operation. Dansey had created in a very short space of time an extremely sophisticated and flexible organization that spanned the breadth of Europe. Impressive though this was, the quality of the intelligence it gathered was, for some reason, very inconsistent.
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On 1 September 1939, Hitler’s troops crossed the Polish frontier. Inside the British intelligence community, events moved almost as swiftly as the German Panzer divisions across the Polish countryside. The sudden reappearance of Claude Dansey at MI6 headquarters in London was a
stunning shock to those who had presumed him to be in disgrace ‘living abroad’. They were equally surprised by the revelation that he was the head of an extensive network of agents. There was no time for explanations.

As the Prime Minister, Neville Chamberlain, was preparing to announce to the nation that ‘Britain is at war with Germany’, Dansey and his assistant Kenneth Cohen (Z–2) were hurriedly preparing for a lightning dash across the Continent to their advance action stations. With code-books and other material, Cohen travelled to Paris, where he set up shop alongside the PCO man there, Commander Wilfred (Biffy) Dunderdale. Meanwhile Dansey made for Zurich in Switzerland. Just before his departure, he signalled to his Z man in Holland to drop previous security precautions and proceed to liaise with the PCO man in The Hague. It was a critical error.

When back in 1936 MI6 first received evidence that its PCO networks had been penetrated by German intelligence, that evidence had come from Holland. Up to September 1939 the Z man in Holland, Sigismund Payne Best, had operated with complete anonymity beside the PCO man, Major Richard Stevens. MI6 had no reliable evidence that the PCO network was any more secure in 1939 than it had been in 1936, so the decision to open the curtains was an odd one. Dansey’s orders were for Stevens to supply Best with finance and communications facilities with London. This link inevitably compromised all MI6’s operations in Europe.

The German military intelligence organization, the
Abwehr
, had identified a succession of MI6 station chiefs in Holland. Ever since Stevens’s arrival in 1937, his headquarters, his movements and those of his operatives had been carefully monitored and catalogued. In a move that was to be repeated throughout the war, the Nazi Party’s own security service, the Sicherheitsdienst, or SD, assumed control of German counter-espionage operations in Holland, with devastating results.

In 1938 a Dr Franz Fischer, an SD informer who was keeping an eye on German refugees in Holland, succeeded in winning the confidence of one of Claude Dansey’s operatives. Dr Fischer was engaged in much the same kind of work as Karl Boemelburg, though Fischer had so far evaded detection. Dansey subsequently recommended Dr Fischer to his Z man, Best, insisting that he would lead them to some valuable contacts in the German air force. Best was suspicious of this Dr Fischer, but was encouraged by ‘C’s’ deputy Stewart Menzies to maintain contact. Dr Fischer claimed to be in contact with a dissident Luftwaffe officer who was involved in a military plot against Hitler. If there was such a plot, then it may prove an avenue towards peace. By October, Best had met this officer, a Major Solms, at a small hotel in the Dutch border town of Venlo. Solms was in fact a German counter-intelligence officer by the name of Johannes Traviglio. With Best and Stevens working together as a team and the two of them being led further up the path by their German contacts, everything now depended on how Whitehall interpreted the signals from Venlo. By 19 October a meeting had been held between Best and Stevens and two other ‘dissident officers’ where they discussed the sort of terms under which Britain would consider peace.

But in the meantime, back in London, a battle for succession caused a certain amount of distraction at a point when no one in MI6 could afford to take their eye off the ball. Admiral Hugh Sinclair, ‘C’, died on 4 November. Claude Dansey dropped everything and returned to London to declare his candidacy for the new head of MI6. His main rivals were Stewart Menzies and Rear Admiral Godfrey, the Director of Naval Intelligence. But on this occasion both the Navy and Dansey were out-manoeuvred when Menzies produced a sealed envelope containing a letter from Sinclair which recommended his deputy for the post. Dansey quickly appreciated that his own cause was lost and threw his support behind Menzies. As they waited
for the Cabinet to make up its mind, attention switched back to the town of Venlo.

Best and Stevens had arranged to meet the key figures in the anti-Hitler conspiracy on 7 November. Further meetings were arranged for the 8th and again for the 9th at a small café situated between the frontier gates, though still officially on Dutch soil. On the 9th, Best and Stevens went to the café and watched as a black Mercedes proceeded from the German gates. Before they realized what was happening, the doors of the Mercedes swung open and an SD snatch squad leapt out and bundled Best and Stevens into the back of the car.
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At first, reports from Holland led Dansey to presume that Best and Stevens were dead. Long before the 9th, MI6 had established radio contact with the ‘conspirators’, and as these contacts continued and seemed to give no mention of any arrests, they concluded that the dissident officers were still safe and were proceeding with their plot against Hitler. But then on 22 November, MI6 received another message informing them that they had been duped from the beginning. What became known as the Venlo incident had been a brilliant piece of counter-espionage work that had a major psychological effect on both sides.

The effect on MI6 and on Claude Dansey in particular was to highlight the gradual emergence of the SD as a serious intelligence adversary when up till then they had been seen as little more than a particularly obnoxious secret police force.

From the outside, the Sicherheitsdienst and the Gestapo appeared identical. In fact the SD was far more ruthless and effective. It had begun life as the security section of Himmler’s SS, with the responsibility for ensuring that no political influence, other than National Socialism, established a presence in the new Reich. During the early Thirties it was concerned with the business of monitoring the mood and thoughts of the population, which it did by controlling an army of informers from the countryside to
the universities, and processing a vast archive of secret information on millions of German citizens. By 1936–7, under the influence of its head of counter-intelligence, Walter Schellenberg (the architect of the Venlo incident), the SD adopted a new role as guardian of the nation’s moral wellbeing and conducted a number of investigations into corruption within the Party. In this new guise the SD began to attract a large number of young intellectuals, doctors, philosophers and lawyers who saw it as an opportunity to correct unnatural faults in German society. In truth they were attracted by a more fundamental instinct – power. Nevertheless, as a result of this influx of intelligentsia, the SD became almost overnight a creature with two personalities.
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It was at once the secret tool of the Party and at the same time an intelligence organization. It was described by Schellenberg as ‘The versatile instrument for use against all opposition circles and in all spheres of life, the people’s sense of touch and feel.’ In the grand scheme of things, ‘the SD was destined to become the Intelligence Service of the Great German Reich’.
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Oberfuhrer Reinhard Heydrich, the head of the SD, even began to identify himself on his correspondence as ‘C’.
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In August 1938, five months after Hitler’s troops had occupied Austria, the SD tracked down and arrested the head of the MI6 station in Vienna, Captain Thomas Kend-rick. In spring 1939 the Czech network collapsed. Then there was Venlo, which subsequently compromised all the Continental networks. Schellenberg’s ambitions were fast coming to fruition and the new secret service was proving to be a most deadly adversary. To Dansey, the full import of these developments was only just beginning to sink in.

Despite the Venlo débâcle, Menzies was confirmed as the new head of MI6 and, surprisingly, Claude Dansey was made assistant chief. They moved into offices on the fourth floor of MI6 headquarters at Broadway Buildings, 54 Broadway, just opposite St James’s Park tube station. The sign at the entrance announced ‘The Minimaz
Fire Extinguisher Company’. Menzies inherited all the trappings of his post: a beautifully appointed house at 21 St Anne’s Gate which was connected by a secret corridor to the rear of Broadway Buildings and then by private staircase to his elegantly furnished office. Inside was a vast antique desk that Mansfield Cumming had brought with him from the Admiralty, a full-length portrait of the original ‘C’, and copious quantities of a green ink with which he signed all his documents. (The portrait still hangs in the present-day ‘C’s’ office and he still employs the green ink.)

Dansey’s office was next door to ‘C’s’, but he rarely occupied it. He preferred to operate away from Broadway, either from his own flat at 3 Albemarle Street or at one of MI6’s addresses such as the flat at 5 St James’s Street. The first priority was to amalgamate the Z Organization and the PCO networks and then get down to examining the damage. However, as the phoney war slowly ticked away, the SD’s interrogation of Best and Stevens was gradually opening up the inner workings of MI6.

By the end of 1939, Dansey still stood at the head of an extensive organization, though its effectiveness was diminishing each day. He had been given responsibility for all network operations, while Menzies had overall control of the service and specific responsibility for the relatively new field of signals intelligence. The relationship between the two men was close but not friendly. Menzies had links with the landed gentry and divided his private life between riding to hounds, the Turf and White’s. Dansey on the other hand was something of a loner. Though blessed with great quantities of charm he could not disguise a cold hard centre which discouraged admiration or sentiment. He seemed to harbour a brooding resentment for something – though precisely what, no one knew – which he often vented through the most vitriolic and withering criticisms of his colleagues. He preferred the society of Boodle’s and the Savoy, where he would hold court before terrified young recruits.
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For the first few years Menzies was
somewhat in awe of Dansey, who at 63 was four years older than his chief. It became impossible for anyone to see Menzies without Dansey’s intimidating presence, causing visiting intelligence officers from Poland and France to comment on how ‘C’ seemed to defer to his deputy.
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But the MI6 to which Dansey had returned was not the same outfit he had known five years before, the domain of ex-Indian policemen and naval types. There had been a vast influx of new recruits, mostly graduates and intellectuals, a breed he particularly disliked. He once wrote: ‘I have less fear of Bolshies and Fascists than I have of some pedantic but vocal university professor.’
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He was a man who had a passionate dislike of many things. He distrusted women agents and was convinced they were a liability rather than an asset; he disliked counter-intelligence officers, positively hated the French and utterly despised Americans.
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He held a very cynical, though some would say pragmatic, view of humanity, claiming, ‘Every man has his price and every woman is seducible.’