The Defence of the Realm (101 page)

The Security Service was unaware, at the time when Floud committed suicide, that two other Labour MPs, one of them a minister, were agents of the Czech StB. As the Centre seems to have recognized, until the suppression of the Prague Spring by the tanks of the Warsaw Pact in August 1968 the StB residency in London was often more successful than the KGB in approaching British politicians and trade unionists, who tended to be both less suspicious of Czechoslovaks than of Russians and sympathetic to a people betrayed by the West at Munich in 1938.
¹¹⁵
The most worrying intelligence of StB penetration of parliament concerned the case of John Stonehouse, successively Parliamentary Secretary at the Ministry of Aviation, Parliamentary Under Secretary of State for the Colonies, Minister of Aviation, Minister of State for Technology, Postmaster General and Minister of Posts and Telecommunications in the Wilson government. In July 1969 US liaison reported that Josef Frolik had said during debriefing that, though he had never seen any StB report on Stonehouse, he was ‘90 per cent sure' that he was a Czech agent. When questioned by the Security Service in the United States on 1 August, Frolik no longer seemed ‘90 per cent sure'. He told his debriefers he was ‘not sure that Stonehouse
is
an agent' – only that one of his StB colleagues had been ordered to make an approach to him. When Security Service investigators interviewed Stonehouse on 4 August, they found him ‘as calm and assured as anyone in his position could be expected to be in the circumstances'. He dismissed any suggestion that he had ever assisted Czech intelligence in any way. The Service reported to the Prime Minister that ‘There is no evidence that Mr Stonehouse gave the Czechs any information he should not have given them, much less that he consciously acted as an agent for the [StB].'
¹¹⁶
On the evidence available in 1969, that was a reasonable conclusion. It was, however, incorrect. A decade later another StB defector provided convincing evidence that Stonehouse had indeed been a Czech agent.
¹¹⁷
Had that information been available in 1969, Wilson would have been faced with an intelligence scandal worse than the Profumo affair.

Frolik's evidence in 1969 against another Labour politician, Will Owen, MP for Morpeth, was much more convincing. Though Owen's official StB codename was LEE, he was also known by its London residency as ‘Greedy Bastard'. Frolik had seen some of Owen's product while stationed in London in the mid-1960s:

‘Lee' was interested solely in the five hundred pounds a month retainer which we gave him . . . In spite of the obvious danger, he was always demanding free holidays in Czechoslovakia so that he might save the expense of having to pay for the vacation himself. He even went as far as pocketing as many cigars as possible whenever he came to the Embassy for a party.
¹¹⁸

It may well have been Owen's close relations with the Czechoslovak embassy which had led the previous Labour leadership to place him at the top of its list of suspected crypto-Communists in 1961.
¹¹⁹
What neither the Labour leadership nor the Security Service had realized before Frolik's revelations, however, was that Owen was a long-serving Czechoslovak agent, recruited soon after his election in 1954 to the Commons by an StB officer working under diplomatic cover. Since then Owen had had regular meetings with successive case officers while taking his dog for an early-morning walk in London parks. Though only a backbencher, Owen became a member of the Commons Estimates Committee and provided what Frolik described as ‘top-secret material of the highest value' on the British Army of the Rhine and the British contribution to NATO.
¹²⁰

When FJ informed the Prime Minister on 29 July 1969 of Frolik's evidence that Owen was an StB agent: ‘[Wilson] described Owen as “a drip” . . . saying that he was an ineffective member of the House, moderately intelligent but very naive. It would not in the least surprise him to learn that Owen would pass on to anyone any information that came his way.'
¹²¹
Telephone and letter checks combined with surveillance would have increased, probably greatly, the prospect of a successful prosecution – particularly in view of Owen's regular early-morning meetings with an StB officer in a London park. Over the next few months, however, ‘The Prime Minister was emphatic that he would not authorise a telephone check at this stage.' Though Wilson conceded that he might authorize one after Owen had been questioned,
¹²²
a telecheck then would inevitably have been less productive because Owen would have realized he was under suspicion. Wilson's motives for thus diminishing the chances of a successful prosecution were probably twofold. First, as in the case of union leaders, he feared the potential for political embarrassment in what was expected to be an election year. Secondly, he had given an assurance to the Commons that ‘there was to be no tapping of the telephones of Members of Parliament' and that, if developments required a change in this policy, he would make a statement to the House when the security of the country permitted. Wilson therefore feared that he would have to tell the House, possibly before the election, that he had authorized the tapping of an MP's phone.
¹²³

The Legal Adviser, Bernard Sheldon, however, obtained the consent of the Attorney General, Sir Elwyn Jones, to a search warrant and police interrogation of Owen. When Owen was questioned in January 1970, he made a partial admission – acknowledging that he had been paid by Czech officials for information he had provided over a period of years, but claiming that he had only done so under pressure and denying that he had ever handed over classified information. When examination of his bank account revealed large sums on which he had never paid tax, he decided not to fight the next election and resigned his seat in April – thus greatly diminishing the political embarrassment to the Labour Party. Frolik was flown over from the United States with a CIA escort to give evidence at Owen's trial on official secrets charges in May under the pseudonym ‘Mr A'. Though Frolik feared he might be poisoned while in London by his former StB or KGB colleagues, the Service considered that he performed well in the witness box. Since, however, he had seen none of the classified documents allegedly handed over by Owen, the judge dismissed this crucial part of his evidence as hearsay and therefore inadmissible. The defence successfully maintained that Owen was a foolish old man who, under pressure, had given information to the Czechs but had never betrayed classified information. Though Owen was acquitted, he emerged discredited from a case which both judge and defence counsel said had been properly brought.
¹²⁴

Section E

The Later Cold War

Introduction

The Security Service and its Staff in the Later Cold War

The aloof management style of two successive DGs, Sir Martin Furnival Jones, and his predecessor, Sir Roger Hollis, combined with the unprecedented investigations of Hollis and Mitchell on suspicion of being Soviet agents, built up strong support within the Home Office in favour of an outside appointment following FJ's retirement in 1972. The PUS, Sir Philip Allen, told the Home Secretary, Reggie Maudling, in January 1972, ‘My own view is that the Service would benefit from a breath of fresh air, and that it would particularly benefit from someone who had some political nous.'
¹
The case for a DG with ‘political nous' was reinforced by the fact that the Prime Minister, Edward Heath, had taken a personal dislike to FJ at their first meeting after his election victory in June 1970.
²
Allen's candidate for the succession was a senior Home Office official, J. H. Waddell, who was considered unlucky not to have become a PUS.
³
The main argument against an outsider, as Allen acknowledged, was the malign precedent set a quarter of a century earlier by Sir Percy Sillitoe, who ‘had a distinguished record as a Chief Constable, but was pretty disastrous as Director General of the Security Service'.
⁴

At a meeting with Maudling on 5 January 1972 FJ argued against an outside appointment with some passion and ‘at very considerable length'. ‘Members of the Service', he insisted, ‘were not civil servants . . . They were a professional body who ought to be professionally led – just like the Army or the Police.' In addition to the effect on Service morale:

To appoint an amateur at this stage would have a bad effect on our allies . . . At the moment, MI5 was regarded in the USA, Western Europe and the old British Commonwealth as being the best Security Service in the Free World, and arguably better than the KGB. This was because it was professionally staffed and had been professionally led for the last 18 years. It was the Service which was the most favoured by the CIA (the Israeli secret service being next). All this would be badly affected if an appointment were now made from outside, and the head of CIA
would regard such an appointment as showing that the powers that be in this country thought there was something wrong with MI5.

FJ countered Home Office claims that the Service ‘would benefit from a breath of fresh air' by linking them to similar statements by the discredited Sillitoe:

Sir Percy Sillitoe had said in his memoirs that the Security Service were ‘a bunch of introverts', and other people had said that they would benefit from a breath of fresh air. Furnival Jones refuted both statements which he thought were nonsense. Their recruits tended to be fairly mature, with experience of the outside world; a good many of them were extroverts.
⁵

The DG's arguments failed to make any impression on the Home Secretary, who wrote to the Prime Minister recommending the Home Office candidate as the next DG. Heath, however, after speaking to FJ, ‘saw some force in the argument that the Service be professionally led'.
⁶
At interview, Heath found Waddell ‘if anything too balanced and careful' to make a good DG and preferred the internal candidate, Michael Hanley, currently DDG: ‘It had been suggested that he might be a little heavyfooted; but I must say that was not the judgement I formed in our admittedly short talk.'
⁷
Hanley was a large, powerfully built man who had acquired the nickname ‘Jumbo' early in his career, and was ‘amazed' to discover how small Heath was: ‘He sized me up. Asked me a few personal questions. I hit it off with him, always did.'
⁸
On discovering that he had been overruled by the Prime Minister and that Hanley was to be the next DG, Maudling simply ‘shrugged his shoulders'.
⁹

Hanley was a less remote DG than his two immediate predecessors (or his two immediate successors). When Stella Rimington returned to work in 1971 from maternity leave, she ‘was surprised to be called into [Hanley's] office to be welcomed back to work and to the counterespionage branch. His kindly interest was unusual in those days when personal contact between directors and junior staff was rare.'
¹⁰
As DG, Hanley said later, ‘I made a point of circulating but I did not do enough.'
¹¹
Director B had noted in 1971: ‘We are committed to a significant expansion in the size of the Service, primarily in K Branch and our operational resources.' Because of numerous retirements of wartime and post-war recruits and the drying up of some traditional sources of staff, particularly from the colonial administration of the now nearly defunct British Empire, Director B argued that the Service ‘could be required to make a major change in recruitment by seeking officer candidates among graduates
leaving university'.
¹²
Some continued to oppose direct entry from university, among them B2, who argued that ‘Officers require qualities of maturity, common sense and knowledge of the world, which are rarely to be found in young men.'
¹³
From 1975 to 1979, however, an average of fifteen staff officers a year were recruited direct from university.
¹⁴

In 1976 testing was introduced to assess applicants' potential. The tests were a curious mixture of current business practice and occasional throwbacks to a bygone era. Candidates were subjected to the American ‘Wonderlic' test: fifty questions to be answered in only twelve minutes, which purported to measure verbal ability, numeracy and analytical skill. Though Kell would probably have been appalled by Wonderlic, he would have had more sympathy with a drafting exercise in which candidates were asked to imagine that they were the personal assistant to a wealthy landowner and had been instructed to write a letter designed to return to his possession ‘a beautifully inlaid desk which had been given to one of his ancestors by George IV'.
¹⁵
After preliminary sifting and testing, officer selection was by interview and final selection board.
¹⁶

Training section moved from B Branch to the newly formed S Branch in 1976. The first step towards structured training was taken with the introduction of a four-week induction course under the direction until 1980 of an extrovert K Branch investigator, who was seldom without a black cigarette holder which she used for dramatic gestures as well as for smoking brown More cigarettes. ‘Her performance in training section', it was noted, ‘won huge praise from the start.'
¹⁷
One of her former pupils describes the use of the word ‘performance' as unusually apt.
¹⁸
Those taking her course arrived at Grosvenor Street, next door to the Estée Lauder salon, where they were given lectures on the ‘Threat of Espionage' and ‘Counter-Espionage', illustrated with slides of Philby, Burgess and Maclean, and were shown a film entitled
Sweetie Pie
, depicting a lonely secretary being cultivated by a scheming Soviet agent. They also went on a surveillance exercise, and were introduced to letter checks by being taken to see the Post Office Investigation Department steaming open envelopes with giant kettles. Agent-running courses for new entrants started in 1975 and rudimentary management training began in 1977.
¹⁹