Cold war continuities

Between November 1945 and March 1946, two officers of the Australian Department of External Affairs (DEA), Ian Frank George Milner and James Frederick Hill, were among a group of Australian civilian and military officials who handled copies of a top secret document entitled 'Security in the Western Mediterranean and Eastern Atlantic'^[1] and a related document^[2] which the United Kingdom government had supplied to Sir Frederick Shedden, the Secretary of the Australian Department of Defence, in September 1945.^[3] By mid-March 1946, the contents of both documents had, it seems, been transmitted to Moscow by the Embassy of the Union of Soviet Socialist Republics in Canberra.^[4]

     Here commences a pivotal episode in twentieth century Australian history: the defection in April 1954 of Vladimir Mikhailovich Petrov, who, under cover of being Third Secretary and Consul, was the chief resident of the then Russian security and intelligence service, the MVD,^[5] at the Soviet Embassy. The events of 1945-1946 and 1954 were directly connected by the inability of the victorious wartime powers to agree on a plan for European reconstruction, the emergence of the Cold War as the dominant geo-political fact of the post-war era, and the controversial struggle against the threat (real and imagined) of Soviet espionage and communist subversion in Australia.

     One of Petrov's post-defection claims ­ that 'between 1945 and 1948 there was a very serious [espionage] situation in Australia in the [DEA]'^[6] ­ was not a revelation to the coalition Liberal-Country Party government led by Robert Gordon Menzies. If credible, it corroborated what the Australian Labor Party (ALP) government led by Joseph Benedict Chifley had been told in early 1948 soon after Anglo-US cryptanalysts had successfully commenced decoding intercepted Soviet diplomatic cables ­ the so-called Venona decrypts.^[7]

     Concerned that the apparent leakage of information in Canberra would adversely affect its relations with Washington, the UK government promptly despatched Sir Percy Sillitoe, the Director General of its internal security agency, MI5, to Canberra for discussions with Chifley about the resulting investigation (labelled 'The Case') and generally about the effectiveness of Australian internal security arrangements. With the Cold War worsening and anti-communism dominating political debate, Australia-US relations were ruptured in June 1948 (and Australia-UK relations consequently deteriorated) when Washington suspended the flow of classified military information to Australia.^[8] Milner, who had resigned from the DEA in 1947 to work for the United Nations, and Hill, who remained a DEA officer, were the prime suspects chiefly because of their close contacts with the Australian Communist Party (CPA). The so-called 'spymaster' was identified as Walter Seddon Clayton, a CPA official. There was, however, an enduring obstacle to the vigorous investigation of The Case, namely, the prime necessity to conceal from the Soviets the fact that their intercepted diplomatic traffic had been decoded.^[9]

     If, so far as the ALP was concerned, the 'Petrov Affair' can fairly be called a political tragedy, then Herbert Vere Evatt, Chifley's Minister for External Affairs and Attorney-General, and successor as Leader of the Opposition after Chifley's death in June 1951, was the central tragedian. Evatt and his stewardship of the DEA in the evolving Cold War years provided a personal constant in the chain of events which culminated in Australia's notorious espionage drama.

     Evatt's determination to pursue an independent Australian foreign policy emphasising the peaceful resolution of international disputes under the aegis of the UN, his pragmatic attitude to Soviet foreign policy, a stance which infuriated US and UK (and Soviet) officialdom, the installation of the 32-year old John Wear Burton as Secretary of the DEA in March 1947, the ensuing conflict between Burton and Shedden and their departments over foreign policy and internal security, and the security establishment's anxiety about what it perceived to be Evatt and Burton's reluctance to face up to communist penetration and subversion combined to strain relations between Canberra, London and Washington beyond endurance.

     In early 1948, Chifley stated that his government was going to fight Australian communism in the open,^[10] a commitment most convincingly manifested in the unequivocal crushing of the communist-inspired national coal strike in mid-1949, and the Commonwealth Investigation Service-led raid on the Marx House, the CPA headquarters in Sydney, on 8 July 1949.^[11] Calling communism an alien and destructive pest, Opposition leader Menzies promised the Australian people that he would outlaw it.^[12]

     Chifley sent Shedden to Washington and London in early 1949 on a prolonged one-man diplomatic salvage mission, but Shedden's meticulous presentations of the Chifley government's comprehensive, albeit pragmatic, record of anti-communist exertions failed to have the US embargo lifted.^[13] Unrelenting pressure by Westminster and Washington had culminated in the establishment of the Australian Security Intelligence Organisation (ASIO) in March 1949.^[14] However, in a substantive departure from the MI5 model, Chifley (guided by Evatt) installed a judge, Mr Justice Geoffrey Sandford Reed of the Supreme Court of South Australia as the inaugural director general. The creation of ASIO occurred without any detailed parliamentary scrutiny, with almost no public commentary, and with Chifley's operating directive to Mr Justice Reed being kept secret for more than 20 years.^[15] More than half a century later, the limited surviving archival record remains subject to national security-related exemption from public access in part attributable to the unwillingness of the UK government to permit public scrutiny of MI5's role in the birth of its antipodean offspring.^[16]

     Due mostly to Evatt's courtroom and other public advocacy, Menzies' promised programmatic assault on Australian communism following the conservative coalition's decisive election victory on 10 December 1949 was not a success. It produced a failed attempt to proscribe the CPA,^[17] and ensuing failed attempts to amend the Australian Constitution to confer express power on the Commonwealth Parliament to proscribe the CPA,^[18] and to have the States refer the necessary legislative power to the Commonwealth.^[19] It was otherwise with the new government's covert assault on Australian communism. In July 1950, Menzies reverted to the original MI5 model. Henceforth, ASIO was to be run in a disciplined military way following the appointment of the Director of Military Intelligence, Colonel Charles Chambers Fowell Spry, a committed anti-communist,^[20] to succeed the judge. Menzies revised the directive given to Mr Justice Reed and Spry's revised directive was also a closely guarded secret for more than 20 years.^[21]

     The restoration of the flow of classified US military information in 1950, the signature of the ANZSUS Treaty and the arrival of R G Casey as Minister for External Affairs, were indicators of the shift in Australian foreign policy ushered in following Evatt's departure. From time to time, most notably in Casey's 'Nest of Traitors' speech in the House of Representatives in 1952, there was a hint that Evatt's ministerial record would be cast in an unfavourable light.

The Petrovs in Australia

Vladimir Petrov and his wife, Evdokia (an MVD cypher clerk), arrived in Canberra in 1951 the year in which the Menzies government was re-elected. Petrov soon became a promising target of the continuing ASIO investigation of 'The Case' because of his taste for la dolce vita and his overall indiscipline which attracted his superiors' displeasure.^[22]

     By July 1953, ASIO had sounded out Petrov on whether he was prepared to defect.^[23] Coincidentally, in return for promised immunity from prosecution, ASIO had secured a confession from Frances Bernie, a former CPA member who had worked as a stenographer in Evatt's Sydney office in 1944-1946, that at that time she had passed government documents to Clayton.^[24] By September 1953, Menzies knew from Spry's reports of the ongoing investigation of 'The Case' about the roles allegedly played by Milner, Hill, Bernie and Clayton (and others), about ongoing surveillance of them, about secret government documents that had been found in the execution of a search warrant at the home of Clayton's CPA successor in mid-1953, about suspicious close contacts between serving DEA officers and Petrov (whom Spry identified by name to Menzies more than once), and about a possible defection.^[25]

A cold war defection

On the evening of Tuesday, 13 April 1954 ­ with Evatt absent from Canberra and a federal election six weeks away^[26] ­ Menzies told the House of Representatives that Petrov had recently applied for and been granted political asylum and had supplied information about Soviet espionage in Australia.^[27] The next day Evatt telephoned Spry who was in Canberra and asked to see him regarding the Petrov affair. Spry told Evatt that, in keeping with a direction which Menzies had given him, he was not empowered to speak to Evatt and that Evatt should communicate his queries directly to Menzies.^[28] One of Evatt's later specific charges (denied by Menzies) was that, in the handling of the defection announcement, Menzies (and Spry for that matter) had shabbily contravened the convention requiring consultation on security matters with the Leader of the Opposition which Evatt said had been a feature of the Mr Justice Reed's stewardship of ASIO during the last stages of the Chifley Government.

     Also on 14 April 1954, the last sitting day before the federal election, the ALP supported the expedited passage of legislation establishing the Royal Commission on Espionage (RCE),^[29] but even at that stage there were clear signs that Evatt's suspicious cast of mind was beginning to get the better of him. Angry that Menzies had omitted to forewarn him of the defection announcement^[30] and before he had the slightest inkling of what Petrov's claims were or how he had come to defect, Evatt soon formed a belief, never to be shaken, that Menzies had concealed the truth of the defection from him and the Australian people and that the defection was a finely calibrated politico-commercial transaction designed to injure him and the ALP.

     That Menzies' decision to announce the defection and establish the RCE before the election was, to some degree, a conscious exploitation of a windfall political and electoral advantage. This is borne out by the fact that he turned for assistance to a man who loathed Evatt, Menzies' friend and former mentor at the Victorian Bar the Chief Justice of the High Court of Australia, Sir Owen Dixon. Menzies informed the House of Representatives that he had asked Dixon to be a sole Royal Commissioner.^[31] But Dixon's involvement has passed almost unnoticed. Dixon's biographer has missed his subject's detailed contemporaneous account of his active anti-Evatt inspired (and improper) participation in the inception of the RCE.^[32]

     Rather than simply declining Menzies' request that he act as Royal Commissioner, Dixon, a long-time political confidant of Menzies, Shedden,^[33] US diplomats^[34] and others ill-disposed to Evatt, felt impelled to travel to Canberra on 17 April 1954 to help Menzies choose the three Royal Commissioners^[35]and counsel assisting the Commission.^[36] Dixon's willingness to engage in secret political scheming against Evatt was motivated by his apprehension (an apprehension which Dixon also attributed to the Royal Commissioners) that Evatt was poised to become Prime Minister and might attempt to frustrate the RCE.^[37]

The Petrovs' allegations

At its inaugural public sitting in Canberra on 17 May 1954, the RCE was told by W J V Windeyer QC, senior counsel assisting it, that Petrov had handed to ASIO a collection of Russian and English language documents claiming to have removed them from the Soviet Embassy.^[38] Of these, the two English language documents soon dominated the RCE.

     Document H, three pages of anonymous gossip concerning members of the Parliament House press gallery, was shown to have been composed and typed for the Soviet Embassy in 1951 by Fergan O'Sullivan a newspaper journalist. In hiring O'Sullivan as his press secretary in April 1953, Evatt unwittingly took a step along the path of political self-destruction.^[39] The much longer English language item, Document J, was also an anonymous compilation of gossip, much of it scurrilous. Had Document J not referred explicitly to Evatt and to O'Sullivan and two other Evatt staffers, Albert Grundeman and Alan Dalziel, the course of the RCE and Australian Cold War history may well have been radically different. Had Evatt not succumbed to a paranoid fixation with the provenance of Document J, his downward personal trajectory may have been less meteoric. Fifty years after the event, few would quarrel with the RCE's finding - not dependent on the Petrovs' evidence - that Document J was composed and typed by the communist journalist, Rupert Lockwood, in the Soviet Embassy in Canberra in May 1953.^[40]

     On the second day of the RCE hearing, Windeyer, in an enduring alliteration, referred to Document J as 'a farrago of facts, falsities and filth'.^[41] Withholding the names of Australians mentioned in Petrov's documents, Windeyer stressed that Petrov's credibility was central to the RCE's task, that its obligation was to conduct the inquiry in a judicial manner in public hearings, that the evidence would establish that Australian communism was a fanatical menace, that ASIO had curbed Soviet espionage, and that the Commonwealth had nothing to hide.^[42]

The Leader of the Opposition is undone

Devastated by the re-election of the Menzies Government on 29 May 1954, Evatt became convinced that he had been robbed of victory by what he labelled the villainy of the Petrov defection.^[43] Six days later, an event occurred which conclusively established the truth of one of the Petrovs' claims about the documents. O'Sullivan admitted to Evatt that he had authored Document H (an admission he repeated on oath at the RCE)^[44] and was sacked.^[45] O'Sullivan was named as a source in Document J and it emerged from his RCE evidence that when Document J was being typed, he had met Lockwood in Canberra, together with Grundeman, who was also one of Lockwood's named sources as was Dalziel.

     Evatt's inability or unwillingness to heed the fact that the authenticity of Document H made any uninformed attack on the provenance of Document J perilous in the extreme was a sure sign that his judgment, both personal and professional, was impaired. What were the facts? There was nothing in either Document H or Document J for which Evatt was answerable; he was not implicated in the production of either document; his sacking of the hopelessly compromised O'Sullivan was beyond criticism; Grundeman and Dalziel would each deny on oath being a source for Document J;^[46] and Document J had been publicly discredited by Windeyer at the inaugural RCE sitting.

     If that was not enough to alert even a novice lawyer to tread carefully, Lockwood's repeated prevarications undermined his own credibility. In mid-June 1954, Lockwood published a pamphlet entitled What is in Document J?^[47] identifying himself as the author of a similar document, but when he was called as a witness and was shown and read Document J in the witness box, he refused to answer any questions concerning it or its authorship. ^[48] It is little wonder that in its interim report the RCE (October 1954) found that Lockwood was not a witness of truth.^[49]

     After the election, the RCE began receiving evidence and the Petrovs were in the witness box on and off for months and were cross-examined at length. The public revelation that Petrov had been paid £5,000 by ASIO and had been enticed by Michael Bialoguski, a Russian-born Polish émigré doctor and contract secret agent masquerading as a pro-communist,^[50] reinforced Evatt's paranoia.

     On 12 August, Evatt publicly likened what he called 'the Petrov-Menzies Letters case' to the burning of the Reichstag that had ushered in Hitler's regime in 1933.^[51] That night in the parliament, and not for the last time, Menzies employed language imputing that Evatt was beset by a clinical mental disorder. When Evatt responded and complained that he did not hear about the O'Sullivan matter until the day before he dismissed O'Sullivan, the ever alert Menzies twice contented himself with the in terrorem interjection, 'Be careful'.^[52] Evatt seems to have entirely forgotten that in August 1953 Spry himself had spoken to Evatt about ASIO's interest in O'Sullivan's^[53] (and Dalziel's) alleged communist connections.^[54] In scoffing at the suggestion that the date of Petrov's defection was selected chiefly in order to maximise the government's re-election prospects, Menzies stated falsely that he first heard of Petrov's name in early April 1954^[55], a claim he repeated. Yet the archival evidence makes plain that, on at least three occasions, Spry reported in writing to Menzies about events involving Petrov.^[56]

     The Prime Minister's unexplained false assertions about the timing of forewarnings of ASIO's interest in Petrov and a possible defection do not, of course, amount to evidence of the plot which soon came to dominate Evatt's thinking, but it suggests that Menzies was acting in a very calculated way ­ and was trifling with the truth ­ in dealing with Evatt's heated responses to the defection and the 1954 election.^[57] Given that Evatt was such an easy target for Menzies, it would be naïve in the extreme to deny that Menzies exploited the prevailing Cold War anti-communist fears to maximum advantage following the defection. Time and time again, Menzies mocked Evatt's professed concern for justice and, adopting the guilt by association rhetorical device of the time, accused Evatt of siding with and advocating the communist line.^[58] And the more Evatt sprayed his 'villainous conspiracy' allegations about, the more he set himself up for a catastrophic dénouement.

     Further proof that Evatt's personal and professional judgment had deserted him was supplied when he appeared before the RCE on 16 August 1954 and obtained leave to appear as counsel, ostensibly to protect the interests of Dalziel and Grundeman, but chiefly to voice concern about his alleged involuntary personal involvement in the unfolding Petrov story.^[59] The Royal Commissioners were immediately alive to what any experienced advocate should have realised, namely, that Evatt was skating on thin ice ­ he had an obvious conflict of personal and professional interest.

     In the ensuing spectacle, Evatt levelled charges of blackmail, forgery, uttering, fabrication, fraud and conspiracy. The Royal Commissioners persevered with Evatt longer than was to be expected in normal circumstances: what else were they to do?

     The culmination of Evatt's confrontational approach to the RCE was his fantastic allegation that Document J had been fabricated by the Petrovs in part by blackmailing O'Sullivan into falsely inserting his own name and the names of Grundeman and Dalziel as sources of gossip so as to enable the Petrovs to have the document published on the eve of the 1954 election.^[60] That allegation only has to be stated for it to become crystal clear that Evatt's grip on reality ­ at least in matters Petrovian ­ had become tragically impaired.

     The inevitable occurred. Exasperated by Evatt's conduct in and outside the RCE, on 7 September 1954 the commissioners withdrew Evatt's leave to appear as counsel.^[61] Undeterred by this unprecedented public humiliation of him as a former Justice of the High Court of Australia, Evatt later unsuccessfully sought leave to appear for himself.^[62] Evatt's response to the damning RCE interim report^[63] was to publish a statement simultaneously denouncing the commissioners for perpetrating a miscarriage of justice unprecedented in the annals of Australian or British justice and applauding them for approving his sacking of O'Sullivan.^[64]

     If Chief Justice Dixon is to be believed, there was a poignant element in Evatt's Petrov imbroglio deriving from the child-like component of his psyche. It now emerges that despite being gripped by deep suspicions, Evatt reposed a specific trust in Dixon with whom he had had close dealings for more than two decades. Four days before the RCE withdrew his leave to appear as counsel, in a chance street encounter with Dixon in Sydney, Evatt trustingly told Dixon that he wished Dixon was handling the RCE!^[65] This was the same Chief Justice of the High Court who soon after confided to his friend, Viscount Simonds, 'All that ultimately matters is the decreased probability of [Evatt] ever becoming Prime Minister'.^[66] Evatt seems not to have imagined that his former judicial colleague had stooped to political scheming against him in the establishment of the RCE.

     One reason why Menzies did not need to concoct the Petrovian plot of Byzantine complexity essayed by Evatt was Petrov's fear, before defecting, that if he returned to the Soviet Union he would be swept up in the murderous purge of members of the faction of Soviet security Chief Lavrenti Beria which followed the death of Joseph Stalin in March 1953.^[67] Among additional reasons why Menzies could simply allow events to unfold were his advance knowledge of 'The Case', of Petrov's allegations, of Spry's concerns about Evatt's connections with Australian communism, and his own acute awareness of Evatt's psychological fragility.

     Underlying all this was the unresolved fundamental struggle within the Australian labour movement about communism. For more than a decade, Evatt's pragmatism had clashed with the right wing's anti-communist ideology. In the two years after his triumphs of 1951 in curbing Menzies' anti-communist enthusiasms, Evatt, ever the opportunist, had courted the right wing including the Catholic Action forces of Bartholomew Augustine Santamaria whose disciplined anti-communist crusade was directed from outside the party. Evatt's conduct in the RCE helped provoke a right wing challenge to his leadership. The simmering sectarian antipathies burst forth on 5 October 1954 when Evatt publicly attacked Victorian factional elements whose organ he alleged was Santamaria's News-Weekly. In less than six months, the anti-communist forces loyal to Santamaria had been excised and the federal ALP was destined to remain in opposition until 1972.^[68]

The espionage trail

With the Document J diversion completed, the RCE turned its attention to allegations of Soviet espionage in Australia. It took evidence in camera from Burton and others about the 1948 investigation of 'The Case' and events leading to the establishment of ASIO,^[69] and spent several months conducting public hearings in relation to events and persons named in the Petrov documents. Hill^[70] and Clayton^[71] denied complicity in espionage, but they were not cross-examined about the secret decrypted Soviet cables. It remained unthinkable that either man could be confronted (even in an in camera hearing) with what the Venona decrypts were said to reveal about their alleged complicity in the transmission of secret UK/Australian Government documents to Moscow.

     Tabled in the House of Representatives on 14 September 1955, the RCE report accepted the Petrovs as witnesses of truth thus vindicating the charge that the DEA had been penetrated. The fact that there were no criminal prosecutions mattered little since the RCE had effectively endorsed ASIO's investigation of The Case, its covert anti-communist activities, and its (and the government's) handling of the Petrovs' defection.^[72]

     Sadly, Evatt's capacity for naïveté and self-deception reached a new peak on 19 October 1955 when, as a part of his detailed response to the RCE Report, Evatt told the House of Representatives that he had written to the Soviet Foreign Minister, V M Molotov, and that Molotov had denounced the Petrov documents and allegations as concoctions.^[73] In his riposte in the parliament a week later, Menzies flayed Evatt mercilessly.^[74] The post-split ALP was defeated at the election held on 10 December 1955.

A parting comment on the aftermath-the national security state ascendant

Apart from providing a stage for propelling Evatt's self-inflicted downfall, the RCE, in effect, approved the covert campaign of surveillance of the CPA and its adherents (real and imagined) which Spry had developed.

     As the surviving ASIO archive continues to be declassified and publicly released, the case becomes clearer that despite the 1951 referendum result, ASIO's policy was that communism was an impermissible form of political dissent. Large amounts of public money were lavished on spying on communists (and suspected communists), ALP members, trade union officials and members, parliamentarians, university and other teachers, peace organisations and peace activists, 'radicals', 'left wingers', and miscellaneous individuals and organisations thought to be 'subversives'. Information, including that which was scandalously inaccurate, was collected and kept about tens of thousands of citizens where there was no justification for such surveillance. In its unrelenting anti-communist crusade, ASIO found willing partners in the state police special branches which had been long spying on 'radicals', 'left wingers', and 'subversives'.^[75]

     The Petrov affair poisoned the relationship between ASIO and the ALP and Evatt's conspiracy theory became a left wing article of faith.^[76] Incensed by Evatt's attacks, which included likened ASIO under his stewardship to the Gestapo,^[77] Spry persuaded Menzies to effect administrative and legislative change to secure ASIO's position in its anti-communist crusade.^[78] By the early 1980s, however, as documented by State and Commonwealth inquiries, the concerns which Chifley and Evatt had entertained in 1948-1949 and later about the need to guard against the inevitable tendency of the national security apparatus to operate in an anti-democratic way were largely vindicated and the Parliament was forced to intervene to impose a system of accountability on ASIO. The debate about that system is a continuing one.^[79]

     More than half a century after Evatt's Petrovian dénouement, the concerns about the role of an unaccountable national security establishment for a free and open society which Evatt is believed to have voiced in 1948-1949 and which he harped on from 1954 onwards are shown to have been well-founded.