Spycatcher (21 page)

In fact, the Foreign Office was notoriously reluctant to give support. Numerous times we sent forward recommendations to expel Russians we caught recruiting or running agents, but the Foreign Office Northern Department, responsible for Anglo-Soviet relations, more often than not vetoed our case. Occasionally I attended these Northern Department meetings to give technical briefings on what the particular Russian diplomat had been doing. They always followed a set pattern. The MI6 contingent would object to expulsion, fearing a reprisal in Moscow.

Then the Foreign Office would weigh in with a sermon about the importance of not disrupting pending arms control negotiations, or jeopardizing an imminent trade deal. Courtney Young turned to me on one occasion as we emerged from the ornate committee room and muttered:

"I've never seen such a hotbed of cold feet!"

The lack of Foreign Office support meant we had to rely on less orthodox methods of warning off the Soviets. Around this time we received a spate of reports from Watchers detailing approaches to them by Russians. One Watcher described how a KGB officer came up to him in a pub and handed him an envelope containing a large quantity of money, and tried to talk him into providing information about his MI5 work.

Michael McCaul decided that direct action was needed. He telephoned the Chief KGB Resident in his office in the Soviet Embassy, and asked for an appointment, using his cover name Macauley, which was well known to the Russians. He strode into the Embassy as bold as brass, and warned the Russians against any further approaches to the Watchers, making dire threats of diplomatic interventions which, in reality, were unlikely ever to have been sanctioned. McCaul was highly amused by his trip into the lion's den. The Resident made him lavishly welcome and they took afternoon tea together under a giant aspidistra. The Russian doubted that any of his staff could be so indelicate as to engage in espionage on foreign soil, but agreed to look into the matter in case one of the staff had, perhaps, been a little overzealous.

"Perhaps the British Security authorities have made a mistake," he suggested. "The business has become so crowded these days. So many countries, so many embassies, so many diplomats. Sometimes it is difficult to be sure who is working for whom..."

There were no more approaches to the Watchers.

In the summer of 1959, just as things began to improve in D Branch, the Tisler case came alive again, clouding our minds with doubt and confusion. It began when the young male nurse, whose recruitment led to the chase for the GRUFF signal in Clapham, was suddenly reactivated.

His Russian controller handed him a suitcase, and asked him to store it at home. Inside the suitcase was an old World War II radio set, which made us immediately suspect the whole thing was another game designed to lure us out of London. But we had no definite proof that the Russians knew we had turned the nurse, so we decided to follow it up.

D1 placed continuous Watcher coverage on the nurse's house in the

Midlands, and all Watcher activity closed down in London. I arranged for Watcher headquarters to continue to transmit notification of Russians and Czechoslovakians leaving Kensington Park Gardens, so they would think we were still following them.

Thirty-six hours after the Watchers left London, the Russian receiver monitoring their communications closed down. As soon as Tony Sale told me, I was highly suspicious, remembering the inconclusiveness of the previous tests after the Tisler affair. Six weeks later we returned to London convinced the suitcase was bogus, and I mounted a special RAFTER operation to check when the Russians reactivated their receiver.

No Russians were followed on the first Monday morning, and we opened up at 2:30 in the afternoon on a Czech diplomat. Within half an hour the Russian receiver was reactivated on the Watcher frequency. I took the RAFTER printouts to Furnival Jones and Hollis. Here, for the first time, was a firm indication that a human source existed inside MI5.

Hollis and Furnival Jones were visibly shocked by the information. The recent Russian approaches to Watchers, which we thought had been terminated following McCaul's visit to the Embassy, confirmed Hollis in his view that, if a leak existed, it must be in the Watcher service.

More barium-meal tests were done to try to locate the source, but nothing was found. As 1959 drew to a close there was a growing feeling among the few officers who knew about Tisler's allegation that the issue ought to be resolved once and for all, even if it meant more extensive investigations. In December I was called in by Hollis, who told me that he intended closing down the Watcher inquiries.

"I am sure our original Tisler conclusions were correct," he told me, "and I think we should let the matter lie."

He was courteous, but firm. I thought the time had come to bring the worries into the open.

"I do think, sir, we would be advised to widen our inquiries. The leak may be higher up in the Service."

Hollis made no obvious reaction.

"It's a very delicate issue, Peter," he replied smoothly. "It would have a terrible effect on morale in the Service."

"Not necessarily, sir. I think you would find that most officers would welcome something being done. After all, if we have a penetration, particularly one at a relatively high level, most people have been wasting their time."

"It's simply not practical," he replied, his tone hardening.

I pointed out that there was already an investigations section of D1, which could quite easily accommodate the work. Hollis finally bridled.

"I am not prepared to debate the issue," he snapped, "and I simply cannot accept any course of action which would lead to the establishment of a privileged Gestapo in the office."

He scrawled "No further action" on the file and initialed it off, signaling our meeting was over. The cancer was left to grow.

- 10 -

"Sniper says the Russians have got two very important spies in Britain: one in British Intelligence, the other somewhere in the Navy."

It was April 1959, and a CIA officer, Harry Roman, was briefing a group of MI5 and MI6 officers in the fourth-floor conference room of MI6's Broadway headquarters about a high-grade defector. Sniper was an anonymous source who earlier in the year began sending letters to the CIA, written in German, detailing information about Polish and Soviet intelligence operations.

"He's almost certainly in the UB [the Polish Intelligence Service]," said Roman. "His German's odd, and the Polish stuff is Grade 1 from the inside."

Sniper (who was given the MI5 code name LAVINIA) christened his spies Lambda 1 and Lambda 2. There was little to go on with Lambda 2, beyond the fact that he served in Warsaw in 1952 and was blackmailed into espionage after the UB discovered his activities in the black market. Lambda 1, however, looked more hopeful. Sniper gave enough details in one of his letters to enable us to identify three MI6 documents he had seen.

The first was the "Watch List" for Poland, detailing Polish nationals the Warsaw MI6 station considered possible or desirable targets for recruitment approaches. The second document was the Polish section of the MI6 "R6," an annual report circulated to MI6 stations, summarizing, country by country and region by region, the straight intelligence received by MI6. The third document was a part of the "RB," the annual MI6 report circulated to stations abroad, detailing the latest MI6 scientific and technical research and operations.

Berlin and Warsaw were the most probable MI6 stations where the leak of this vital intelligence had taken place, and we drew up a list of the ten people at these stations who had access to all three documents. The records of all ten were investigated, and all were exonerated, including one named George Blake, a rising young MI6 officer who had played a key role in the Berlin Tunnel. Blake, MI5 and MI6 concluded, could not possibly be a spy. The best explanation for the leak, in the absence of any credible human candidate, was a burglary of an MI6 station safe in Brussels, which had taken place two years before.

Unfortunately, there was no accurate record of the contents of the safe before the burglary. There was evidence that one, and possibly two, of the documents seen by Sniper had been in the safe, but no certainty that all three had been there. In spring 1960, when all ten MI6 officers had been cleared, MI5 and MI6 officially told the Americans that the burglary was the source of Sniper's Lambda 1.

In March 1960, Sniper suddenly sent further information about Lambda 2. His name was something like Huiton, and Sniper thought he had been taken over and run illegally by the Russians when he returned to London

to work in Naval Intelligence. Only one man fitted Sniper's description: Harry Houghton, who was working in the Underwater Weapons Establishment at Portland, Dorset, and had served in Warsaw in 1952 before joining Naval Intelligence. When Houghton was checked in the MI5 Registry, D Branch found, to their consternation, that he was already listed. Some years before, Houghton's wife had approached the security officer at Portland and told him that her husband had deserted her for a girl who worked at the base. She had claimed that Houghton was meeting with foreigners, went regularly to London to meet a foreigner whom she could not identify, and had large amounts of money stored in a tin in the garden shed.

The security officer forwarded the report to the Admiralty Security Division, advising that it was probably a malicious accusation by a deserted wife. The Admiralty passed it on to MI5's C Branch, where it landed on the desk of a young officer named Duncum Wagh. He looked up Houghton in the Registry, found no entry, and concluded that the original security officer's assessment had been right. He decided to dismiss the allegation. He minuted the file to his C Branch section head, who sent a suitable reply to Portland, and the matter was put to rest.

Hollis and Furnival Jones (who was head of C Branch at the appropriate time) were desperately embarrassed by the revelation that Houghton was the likely spy. But there was little time for recrimination, as the case swiftly gathered momentum. The investigation was handled by the Polish section, D2, and they soon discovered that Houghton visited London once a month with his girlfriend, Ethel Gee. The Watchers were detailed to cover Houghton's July visit, and they saw him meet a man in the Waterloo Road, hand over a carrier bag, and receive an envelope in return. All attention immediately focused on the man Houghton had met. He was followed back to his car, a white Studebaker, and visually identified by the Watchers as a Polish intelligence officer stationed in London. But checks on the car registration number showed it to belong to a Canadian named Gordon Arnold Lonsdale, who ran a business leasing jukebox machines. The Watchers were sent around to the Polish Embassy to recheck on the Polish officer, and returned sheepishly, saying they had made a mistake.

Lonsdale was put under intensive surveillance. He had an office in Wardour Street, and a flat in the White House, near Regent's Park. Both were bugged, and visual observation posts established nearby. To all intents and purposes, he lived the life of a London playboy, traveling abroad frequently and pursuing a succession of glamorous girls attracted by his easy money and good looks.

Houghton and Gee next visited London at the beginning of August, and again met Lonsdale, this time in a cafe near the Old Vic theater. The Watchers monitored them closely, even slipping into a table next to them. Lonsdale told Houghton and Gee that there would be no meeting in September, as he was visiting the USA on business, but that he was confident he would return in time to meet them on the first Sunday in October. If he did not appear, someone else they knew would come in his place.

On August 27 Lonsdale was followed from his flat on the sixth floor of the White House to the Midland Bank in Great Portland Street, where he

deposited a suitcase and a brown paper parcel. Shortly after, he disappeared. The DG approached the Chairman of the Midland Bank, and obtained permission to open Lonsdale's safety deposit box. On the evening of Monday, September 5, the suitcase and package were removed from the bank and taken over to the MI5 laboratory at St. Paul's. The contents were spread out on a trestle table and carefully examined by Hugh Winterborn and me. After years of trying, we had stumbled across the real thing - the complete toolbag of the professional spy. There were a Minox and a Praktina, specialist miniature cameras for document copying. The Minox contained an exposed film, which we developed and recopied before replacing in the camera. The photographs seemed innocuous enough: snaps of Lonsdale and a smiling woman taken in a city which, after considerable analysis, we concluded was probably Prague.

There was also a book on how to learn typewriting, which I knew at once must be connected with secret writing. By shining a narrow beam of horizontal light along the edges of each page, I picked out the minute indentations, where Lonsdale had used the pages as a carbon for his invisible secret messages. The typewriting book was sent down to Dr.

Frank Morgan at AWRE, and became invaluable in boosting his research program into new methods of detecting secret writing.

The most interesting object was a Ronson cigarette lighter set in a wooden bowl. We X-rayed the lighter using Morgan's method, which showed the base to be hollow, containing several small items. They were removed with a rubber suction cup and tweezers, and were found to be two sets of miniature onetime code pads, one of which was clearly in current use. There was also a list of map references on a folded piece of paper, based on the London map book used by our Watchers.

Ever since RAFTER began, I had studied everything I could find about Soviet clandestine radio communications, and as soon as I saw Lonsdale's cipher pads, I could identify them as Soviet issue. This was no Polish intelligence officer - this was a full-blown KGB operation.

With Lonsdale in radio communication with Moscow, we knew that if we could copy his pads and trace his signals, we would be able to decrypt them as they came in. Unfortunately, there were in Lonsdale's suitcase no signal plans giving a schedule of when and at what frequency to listen to his broadcasts among the thousands of messages which were pouring out every week from Moscow. RAFTER gave us the vital breakthrough. We decided to set up in the flat next door to Lonsdale in the White House, and by using active RAFTER, we would be able to tell when and at what frequency he was listening to his receiver.