GCHQ. Richard Aldrich

intelligence loss of the early Cold War.

      For the British, Venona was full of irony. As a joint programme with the Americans it symbolised the highest level of trust. However, its subsequent revelations damaged the most important parts of the transatlantic relationship, including agreements on code-breaking and atomic cooperation. This was because in early 1950 Venona uncovered Klaus Fuchs, who had come to Los Alamos as part of the British contribution to the Manhattan Programme, but was in fact an agent for the KGB. Venona also raised serious doubts about the possibility of Anglo–American–Commonwealth sigint and defence cooperation because of the number of KGB agents identified in Australia. Directly or indirectly, Venona also exposed four of the KGB’s top agents inside the British establishment: Kim Philby, Donald Maclean, Guy Burgess and John Cairncross. The main problem for the KGB was that it did not know how many of its previous messages had been broken by the Venona project, and which of its agents had been exposed. This made it hard for it to warn specific agents. Venona also contributed to Soviet paranoia about double agents who might be planting disinformation. The KGB’s strange tendency not to wholly trust even its best sources, including the SIS officer Kim Philby, was one manifestation of this.³³

      In August 1949 Philby returned from a posting in Istanbul to London. He was preparing to take over from Peter Dwyer as SIS liaison officer with the CIA in Washington, and was briefed by Sir Stewart Menzies, Chief of SIS, together with two of his senior officers, James Easton and Maurice Oldfield. Oldfield, whose responsibility was counter-intelligence, explained Venona to him in detail. Philby’s blood probably ran cold as Oldfield observed that they had broken about 10 per cent of the KGB’s Washington–Moscow telegrams and were now searching for a British diplomat working for the KGB and code-named ‘Homer’.³⁴ Philby immediately requested a conference with his KGB controller, Yuri Modin. The KGB station in the Soviet Embassy in London reported the crisis that now confronted them:

      Stanley [Philby] asked to communicate that the Americans and the British had constructed a deciphering machine which in one day does ‘the work of a thousand people in a thousand years’. Work on deciphering is facilitated by three factors: (1) A one-time pad used twice; (2) our cipher resembles the cipher of our trade organisation in the USA; (3) a half-burnt codebook has been found in Finland and passed to the British and used to decrypt our communications. They will succeed within the next twelve months. The Charles [Klaus Fuchs] case has shown the counter-intelligence service the importance of knowing the past of civil servants…Stanley, Paul [Guy Burgess], and Yan [Anthony Blunt] consider that the situation is serious³⁵

      Yuri Modin recalls that Venona ‘hung over us like the sword of Damocles’.³⁶ Nevertheless, he and Philby agreed gloomily that in the short term there was nothing they could do, ‘only wait and behave with extreme care and caution’.³⁷ Arriving in Washington in November 1949, Philby was offered a ringside seat on Venona. He was given Venona summaries by the GCHQ liaison officer in Washington, and was actually taken to Arlington and briefed on the project in detail several times.³⁸ Incredibly, in July 1950 he put in a successful request for GCHQ to give him an extra copy of any Venona-related material it was sending to the Americans in Washington, so he could peruse it at leisure. In any other circumstances this would have been an espionage triumph, but it caused Philby no joy. The arrests at this time of Julius and Ethel Rosenberg, perhaps the most famous figures ever to be charged with espionage for the Soviet Union, cannot have calmed his nerves.³⁹

      Understandably, the Americans had initially refused to show the British the KGB Washington–Moscow traffic.⁴⁰ This delayed the search for the Foreign Office spy code-named ‘Homer’, who eventually turned out to be Donald Maclean. In 1947, the earliest period of good code recovery, analysts knew that several messages from late March 1944 began with a stock preamble and greeting. Such standard openings were a gift for code-breakers. In this case it read: ‘To the 8th section. Material “G”.’ The Eighth section was thought to receive political intelligence, and short breaks in other KGB messages showed that the material concerned Britain’s Ambassador in Washington, Sir Archibald Clark Kerr. By December 1948, further work by Philip Howse revealed that it seemed to originate from telegrams sent by Churchill. In January 1949, after a month of frantic night-time digging in the registry of the Foreign Office (a daytime search would have alerted the regular diplomatic staff), the originals were found. The circle of suspects was gradually narrowing. The final breakthrough came in August 1950, when the Americans recovered two short stretches of material that referred to ‘Homer’ being entrusted with decyphering a telegram from ‘Boar’ [Churchill] to ‘Captain’ [Roosevelt]. This pointed directly to someone in Britain’s wartime Washington Embassy, and the finger of suspicion began to circle over the heads of a very few people. Further work on the messages suggested that ‘Homer’ was married. However, it was only on 30 March 1951 that the code-breakers were sure that ‘G’ and ‘Homer’ were the same. This information placed him in New York in June 1944.⁴¹

      At this moment, Philby knew that Maclean had been identified. However, he also knew that MI5 would have to gather traditional evidence against him to support an arrest, so a window of opportunity existed. Philby’s friend and fellow Soviet agent, the diplomat Guy Burgess, was being sent home from Washington in disgrace after an especially embarrassing drunken episode, and Philby used him to pass a message to Yuri Modin, their KGB controller in London. On Friday, 25 May 1951, Burgess and Maclean fled from Britain on a ferry to St Malo. It was a narrow escape: MI5 had planned to confront Maclean when he turned up for work the following Monday. Once in France, a KGB contact handed them false papers which ensured that they could travel in relative safety across Europe towards Moscow. The false papers were essential, since by now every security service in Europe was looking for them. Inevitably, suspicion also fell on Philby, not least because Burgess had been lodging with him in Washington, but there was no hard evidence. Philby was recalled and forced into retirement, but no other action was taken against him.⁴²

      Venona also had ramifications in the British Commonwealth. In July 1947, Field Marshal Montgomery, now Chief of the Imperial General Staff, had held a meeting with Australia’s Minister for External Affairs, Dr H.V. Evatt, about joint weapons development in Australia. Montgomery noted that ‘good security precautions are very necessary’ because of the appearance in Australia of a spy who was connected to the Igor Gouzenkou case, in which a defecting KGB cypher clerk had revealed a major spy ring in Ottawa in 1946. But in November and December 1947 Venona revealed that despite enhanced security precautions, sensitive documents were regularly leaking from Canberra to the KGB.⁴³ These revelations soon made their way to the highest level. On 27 January 1948, Admiral Roscoe Hillenkoeter, Director of the CIA, warned President Truman: ‘Indications have appeared that there is a leak in high government circles in Australia, to Russia.’ He explained that MI5 was engaged in expansive undercover investigations to determine just where the leakages were.⁴⁴ Highly sensitive material had been passed to the KGB from the Department of External Affairs in Canberra. The Soviets considered it to be spectacular stuff, for it included copies of the ‘explosive’ future strategy papers drafted by the British Post Hostilities Planning Committee, or ‘PHP’. This was bare-faced anti-Soviet planning material, prepared with the encouragement of the British Chiefs of Staff, that had already resulted in rows in Whitehall. Anthony Eden, then Foreign Secretary, had banned its circulation abroad in late 1944, but by then it was too late, and the volatile PHP reports had already made their way via Canberra to Moscow.⁴⁵ The KGB chief in Australia considered the PHP papers to be such an important coup that he asked Moscow for permission to send them by cypher rather than courier. This was a bad mistake,