9

CHASING SHADOWS

Investigating the Soviets, 1975–1983

Andrey Borisovich Duchkov, a 30-year-old Third Secretary at the Soviet Embassy in Canberra, arrived in Australia with his wife and son in January 1977.¹ The son of a senior official from the Soviet Ministry of Foreign Affairs, and a graduate of the Institute of International Relations in Moscow, Duchkov was seen by ASIO and other foreign intelligence services as one of the so-called ‘golden youth’—the privileged children destined, because of their family influence and education, for important government positions.² After ‘a glowing arrival’, as one ASIO officer described it, ‘with many from the Ambassador down tripping over themselves to fuss over the new golden boy’, Duchkov soon settled into a routine of heavy drinking and walking between the embassy and his flat in Stuart Street, in the suburb of Griffith.³ Like most Soviet diplomats, he was the subject of ASIO’s attention throughout his four-year posting.

Upon returning home from work one Friday evening in December 1977, Duchkov joined one of his neighbours, Geoffrey Bowcock, a boat salesman from Sydney, for a drink on the latter’s front porch.⁴ ASIO knew, from a number of sources, that Duchkov’s wife was constantly despondent about his drinking habits, that he was violent towards her and that it was a ‘stormy marriage’.⁵ By 8.30 p.m. the two men had consumed a carton of beer while discussing such innocuous topics as life in Australia and fishing.⁶ ASIO was aware that Duchkov came home each evening drunk, resulting in arguments with his wife about his insobriety and unprofessionalism.⁷ Surprisingly, Soviet officials seemed unconcerned about his condition.

The following night, 17 December, Duchkov and his wife, along with another Soviet couple, attended a Christmas party at Bowcock’s flat. From 8.00 p.m. to 1.00 a.m. they joked, danced, and drank beer and vodka. The atmosphere was fun, but more importantly for ASIO it was the start of a friendship between Duchkov and Bowcock.⁸ Little did Duchkov know that the party was part of an ASIO operation to get close to him. Nor did he realise that Bowcock was not a boat salesman but actually an undercover ASIO officer. The operation aimed to recruit Duchkov as an ‘agent in place’ and have him continue his work in the Soviet Embassy while at the same time reporting to ASIO.⁹ The results are discussed later in this chapter.

A different approach

Face-to-face operations such as that targeting Duchkov were a new ASIO tactic arising from a renewed sense of urgency.¹⁰ They signified a different and more aggressive approach to ASIO’s counterespionage investigations, spurred in part by Hope’s admonitions.

Hope, in his Royal Commission on Intelligence and Security, had identified that Soviet bloc representation in Australia was growing steadily and yet ASIO’s surveillance capability remained negligible and its radio communications were almost certainly monitored by the Soviets. Not surprisingly, then, Hope saw that significant and urgent reforms were in order.¹¹ ASIO’s counterespionage officers took these concerns to heart.

Influenced also by overseas operational methods and backed by a slow expansion in surveillance capabilities, telephone interception and technical resources, ASIO progressively developed operations with a purpose beyond collecting information solely for the sake of collecting information. Moreover, the recruitment of university graduates, improved training, a growing band of experienced officers and, most importantly, enhanced international liaison, had resulted in a more imaginative organisation, and this showed in its operational planning. Increasingly, ASIO was actively engaged in a range of operations that had a clear objective: recruitment, defection, prosecution or expulsion of a foreign intelligence officer or their agent.¹² As this chapter attests, the results were mixed.

The effects of these developments were most keenly felt during the years of the Fraser Government. It is important to recognise, however, the central role that the Whitlam Government played between 1972 and 1975 in making ASIO rethink its processes, and the benefits that flowed from its constant questioning of ASIO’s activities. Although some in ASIO saw the refusal by Whitlam Government Attorney-General Lionel Murphy to sign telephone interception warrants in 1973 and 1974 as a barrier to operational coverage, the actions of others, including the Director-General at the time, Peter Barbour, indicated that they realised this was part of something much bigger. ASIO was being forced to modernise and to be more accountable for its actions.¹³ Before it could expect a warrant to be signed, ASIO had to be able to build a strong case, based on rigorous research and analysis, and justify its actions, both intellectually and legally, to an inquisitive Attorney-General.

Although it was not apparent to most within ASIO at the time, hindsight illustrates that the actions of the Whitlam Government had three enduring positive effects on ASIO. First, the forced decrease in technical coverage saw an inverse increase in human-source recruitment and handling (an aspect of ASIO’s work the Attorney-General did not control), which was necessary experience for many of the new recruits. Secondly, there was a growing confidence in ASIO from within the ALP—as exemplified by both Whitlam and Murphy, who evidently came to appreciate the place and role of ASIO. This eventually led to bipartisan support for the Organisation’s existence. Thirdly, the increased oversight and accountability that ASIO experienced ensured that it was prepared, and able to justify its actions, when the Australian Security Intelligence Organization Act 1979 and the Telecommunications (Interception) Act 1979 came into operation in June 1980. These advances in oversight were recommended by the Royal Commission on Intelligence and Security, endorsed by the Fraser and Hawke governments in the 1970s and 1980s, and implemented by successive directors-general.

This chapter shows how ASIO built on these lessons and applied its new methods and techniques to try to combat the espionage threat posed by the Soviet intelligence services during the years of the Fraser Government. It was a period marked by the organisational restructuring that came with having three different directors-general. It was also defined by more targets and increased operational activity. Underlying all of this was the frustration that, despite its new and apparently more refined approach and an increasing number of operations, ASIO still met with little success, especially against the Soviets. Poor tradecraft was offered as one explanation for this failure, but, more importantly, for the first time ASIO was forced to consider the possibility that it and other elements of the Government had been penetrated by a hostile intelligence service.

Structural challenges

When Frank Mahony began his temporary appointment as Director-General of ASIO in September 1975, it had been more than twenty years since the Petrov defections and ASIO was in need of another success. A major obstacle to such a success, however, was the poor state of ASIO’s counterespionage capabilities.

Staff in B3 Section, tasked with countering Soviet bloc espionage, grew increasingly frustrated with what they perceived to be a dysfunctional working environment and structure, a heavy workload, a lack of prioritisation and a skewed allocation of resources. In January 1976, the section consisted of about a dozen desk officers. These officers, many of whom were relatively new to ASIO, were meant to comprehend the mass of intelligence that came in from across the country and overseas, assess that information, brief D Branch on its requirements, and repeat the cycle. The ‘most difficult desk’, according to the B3 co-ordinator, John McFarlane, was that occupied by Gerard Walsh.¹⁴ Responsible for knowing everything that happened at the Soviet Consulate-General in Sydney and the activities of all non-Soviet representatives in Sydney, Walsh also had a number of cases that by any objective standard was excessive.¹⁵ This large workload was replicated throughout the section, with one officer responsible for all cases within the Czechoslovakian, Mongolian and German Democratic Republic missions; and another for the Bulgarian, Hungarian, Polish and Romanian missions.¹⁶ It was only ‘by continuous and exceptionally long hours of overtime’, as McFarlane told his line manager, that the section was ‘able to keep abreast of its responsibilities’.¹⁷ In spite of this continuous work, which saw desk officers regularly putting in seven days’ per week, morale remained high within the section.¹⁸

Without additional resources, McFarlane believed his section could not effectively fulfil its obligations in research, analysis, investigation and operational briefings on Soviet bloc matters. In a lengthy memorandum to the Assistant Director-General, B Branch, he outlined ASIO’s deficiencies and the impact of these shortcomings on its counterespionage effort. At that moment (January 1976) there were well over a hundred Soviet bloc officials (excluding Yugoslavs) in Australia, more than 40 of whom ASIO assessed as having an intelligence role. But with more librarians at headquarters than surveillance officers in Sydney, the effectiveness of ASIO’s countermeasures, even against the Soviet targets, was considered ‘extremely limited’. Furthermore, ASIO’s coverage of the satellite officials, including those identified in an intelligence role, was ‘virtually non-existent’. The hostile intelligence services, McFarlane noted, must have been ‘well aware of our lack of coverage of their activities’ and able to make good use of the opportunities this allowed. He concluded with a bleak precis of the state of affairs:

I do not believe that we have been active enough in recent years in drawing the attention of either the Government or the Royal Commission [on Intelligence and Security] to the parlous position we are in—I sometimes wonder whether it is even appreciated within ASIO—and to the consequences of what we are not able to do about the Sovbloc intelligence threat to this country.¹⁹

By May 1976, the staff shortage in B3 Section—which had lost its two most senior desk officers to overseas postings—meant that very little investigation and analysis were being undertaken.²⁰ The situation was not so dire in B4 Section, which covered Asian targets, but this had more to do with the lower intensity of its work and the smaller size of its target than with resource allocation.²¹

Edward Woodward, who had replaced Mahony as Director-General in March 1976, quickly realised that things needed to change if ASIO was to fulfil its obligations. It took a while, but by December 1977 Woodward had expanded the size and resources of ASIO’s surveillance unit,²² and had implemented a new organisational structure that included the creation of E Branch (Soviet bloc and Asian Affairs). Broken into two groups, then sections and then subsections (or desks), the branch was given sole responsibility for studying and analysing all hostile intelligence agencies Australia-wide, and determining the threat they posed to Australian security.²³ McFarlane, who had pushed for the reorganisation and seemed best placed to pursue the necessary changes, was appointed head of the branch as Assistant Director-General.²⁴

In addition to the structural changes, Woodward knew that he had to do a better job of keeping the Government informed of ASIO’s challenges and the significance of the Soviet threat to Australia’s national security interests.

The Soviet threat

In the years since the Soviet Union reopened its diplomatic mission in Australia in 1959, staff numbers in the Soviet Embassy had grown. Its 1963 strength was 26 staff, with an additional press representative. By 1975, the number of Soviet diplomats in Australia had increased to 60, mirroring the trend in the United States (where the number of KGB officers almost doubled between 1970 and 1975).²⁵ They were supported by a host of people with non-diplomatic status, including academics, technicians, shipping and press representatives, and 28 wives who worked at the embassy.²⁶ASIO suspected that some of these were performing intelligence roles on behalf of the Russian Intelligence Service (RIS).²⁷ In addition to the embassy, there was now a Soviet Trade Office in Canberra, a Consulate-General in Sydney and a commercial office in Sydney that for ‘all practical purposes’, ASIO noted, ‘became the [Ministry of Foreign Trade] office in Sydney’.²⁸ As we now know, thanks in part to the release of the archive collected by KGB defector Vasili Mitrokhin, the KGB was increasingly active in Australia during this period. One indicator was its budget, which increased from 4600 roubles in 1968 to 21,000 roubles by 1977.²⁹ Further significant Soviet increases in personnel and resources were anticipated—and with it an increase in the number of RIS officers working under diplomatic cover—and this growth placed an unbearably heavy strain on ASIO, especially in its surveillance efforts.³⁰

Woodward wrote to Prime Minister Fraser in August 1976 arguing that the expansion of Soviet trade representation in Australia, which was then being considered by the Government, was good for trade but ‘will provide substantially greater opportunities for RIS activity in this country’. Furthermore, any increase would make it more difficult for ASIO to contain the RIS threat. The difficulty in monitoring such a large number of well-trained intelligence professionals, Woodward told Fraser, had been a major factor in the United Kingdom’s decision to expel 105 RIS officers in September 1971.³¹ Woodward noted the trend followed developments in other Western countries, where about one-third of Soviet trade representatives were identified or suspected intelligence officers. In Australia’s case, he wrote, of the Soviet trade and shipping representatives who had served in Australia since 1960, more than a dozen had been identified or suspect intelligence officers. At the time there were more than a dozen trade or shipping representatives in Australia, of whom a small number had ‘significant intelligence traces’ (that is, indications primarily from overseas liaison pointing to possible intelligence roles).³²

Woodward recommended to Fraser that Australia retain its ceiling on Soviet representation (despite the fact that the Soviets had abolished their ceiling on Australian representatives in 1969), and told him that any increase would necessitate providing ASIO with more resources. Recognising that other departments had different views about the Soviet presence, and that security matters were just one of the issues the Government had to consider in its dealings with the Soviet Union (trade and diplomacy, for example, could and did tend to outweigh security concerns), Woodward also recommended that an interdepartmental committee be established to consider the matter of the Soviet ‘representational imbalance’.³³

The Inter-Departmental Committee on Soviet Representation (IDC-SR), chaired by Allan Griffith, a senior official in the Department of Prime Minister and Cabinet, was set up in 1977 at the direction of the Prime Minister. The committee consisted of senior representatives from the departments of Prime Minister and Cabinet, Foreign Affairs, Defence, Immigration and Overseas Trade, as well as from ASIO, with representatives from other departments called when required. The job of the committee, which met at irregular intervals, was to consider the views and concerns of each department and then provide advice to the Government about how it might approach the issue.³⁴ By September 1981 it had met 44 times.³⁵

One of the issues regularly discussed by the IDC-SR was the relative freedom of movement that Soviet officials in Australia enjoyed compared to Australian diplomats in Moscow. ASIO, aware that it was easier to monitor the movements of its targets if it had prior knowledge of where they were going, sought to reciprocate by maintaining travel restrictions in Australia. As part of these restrictions, which had been introduced in 1959, Soviet officials were required to advise the Department of Foreign Affairs in advance of any travel beyond a 45-mile (72-kilometre) radius.³⁶But ASIO knew that these restrictions were not being enforced. In the late 1970s, Woodward informed the Secretary of the Department of Foreign Affairs that one of the department’s officers in Sydney, who was responsible for the Soviet travel notification system, was being plied with free meals and occasional tickets to events such as the Moscow Circus. The Soviets repeatedly sweet-talked him, and in return he cut administrative corners to facilitate their short notice and out-of-area travel requests. Citing a number of occasions of both this officer and his Soviet counterparts ‘bending the rules’, Woodward explained how this precluded ASIO from being able to mount adequate surveillance coverage, and appealed for the travel notification system to be implemented effectively.³⁷ Even with cooperation from the Department of Foreign Affairs, however, tracking the burgeoning number of suspected RIS officers provided ASIO with significant challenges.

By 1978, Woodward had increased his estimate of how many RIS officers were stationed in Australia. In discussing ASIO’s estimates for expenditure at the Permanent Heads Committee on Intelligence and Security, Woodward argued that

up to half [of the] official representatives of the USSR in Australia are either identified as or under suspicion of being officers of the Russian Intelligence Service (RIS). Excluding cipher clerks and guards, and making some allowance for internal mission security officers, there are still [more than a dozen] officers suspected of having specific intelligence functions.³⁸

In his pitch for additional money, Woodward told those present that ‘ASIO’s resources are inadequate to monitor closely the activities of more than a few of these officers. Even then, the sophisticated techniques employed by the Soviet officers make detection of espionage activities extremely difficult.’³⁹

Catching someone in the process of passing state secrets was indeed difficult, but ASIO had been watching the Soviets long enough to form a general view of what they were up to and in whom they were interested. In a September 1978 report drawing on counterespionage cases from the previous decade, ASIO showed that the RIS had attempted to cultivate people with access to the Australian Parliament, and that RIS officers had been instructed to identify politicians and foreign diplomats sympathetic to the Soviet cause. ASIO’s case history indicated that the GRU (Soviet Foreign Military Intelligence) was most interested in people or companies with connections to Department of Defence projects or research. The GRU was also evidently hunting around for any information it could get on the PRC. ASIO’s networks of contacts and agents made it clear that the RIS was successful in recruiting contacts within émigré communities, and was in communication with the CPA and SPA.⁴⁰ The overall conclusion was that the RIS was active, but with so many of its intelligence officers spread throughout Canberra and Sydney, there was much that ASIO did not know.

In the end, it was the Soviet invasion of Afghanistan in December 1979, rather than ASIO’s continued protests, that slowed the arrival of Soviet representatives in Australia. Malcolm Fraser, who, like many Western leaders was appalled at the Soviet Union’s actions, acted quickly to register his government’s condemnation.⁴¹ The Government participated in the grain embargo, suspended a number of commercial contracts, attempted to boycott the Olympic Games, and significantly reduced the number of official visits to the Soviet Union. The Fraser Government also placed a total ban on academic, scientific, cultural and student exchanges to the USSR.⁴² The reaction was, in the words of one prominent political correspondent, Paul Kelly, the ‘zenith’ of ‘Fraser’s Cold War crusade’.⁴³ By September 1980, ASIO noted that the Government’s actions had resulted in diminished contact between Soviet and Australian officials, and the number of Soviet officials regarded as intelligence officers had dropped to 12 per cent. While it had not detected any clandestine running of agents by RIS officers since the September 1978 report, ASIO was aware that the number of overt contacts between RIS officers and academics and the press had increased.⁴⁴ In March 1981, the Government announced a new travel notification system,⁴⁵ and an ‘indicative ceiling’ was instituted.⁴⁶ All of these measures helped ASIO.

Another measure that ASIO and the Government used to restrict the number of RIS officers was to deny entry visas to those with a previous intelligence trace. This tactic had been used sparingly in the past: only three visas were refused before Fraser became Prime Minister.⁴⁷ News of visa refusals first appeared in the press in July 1976, but this did not deter the Fraser Government.⁴⁸ Aware of the effect it had had on RIS networks overseas, and less concerned about Soviet reprisals, the Fraser Government refused another eleven visas—on ASIO’s advice—between July 1976 and April 1981.⁴⁹ Harvey Barnett, who succeeded Woodward as Director-General in September 1981, later told the Secretary of the Department of Foreign Affairs that ‘the refusal of visas to Soviet [intelligence officers] had materially assisted, we believed, our coverage of Sovbloc intelligence activity in Australia’. Such refusals, he added, ‘had hampered intelligence operations and made life difficult for the Moscow Centre’.⁵⁰

The Department of Foreign Affairs and its minister, Andrew Peacock, did not have to accept ASIO’s advice. Indeed, in one spectacular example of the sometimes strained relationship between the two agencies and the different views each took on these issues, in December 1982 the Department of Foreign Affairs did not consult ASIO about a visa extension for Lev Koshlyakov, First Secretary at the Soviet Embassy. Perturbed at this failure of communication, Barnett reminded the Secretary of the Department of Foreign Affairs that Koshlyakov was the KGB Resident—the most senior KGB officer in Australia—and ‘has been named even in some sectors of the Press as such’. Barnett noted that visa refusals had been successful ‘in containing Soviet intelligence activities on Australian soil’. He further noted that Moscow regards it ‘as one of the most disruptive countermeasures in frustrating Soviet intelligence operations’. He then pointed out that the decision by the Department of Foreign Affairs ‘to extend Mr. Koshlyakov’s visa undercuts the hitherto successful strategy maintained jointly by us, and gratuitously extends the operational “life” of Mr. Koshlyakov in Australia for a further two years’. Barnett attached a summary of Koshlyakov’s activities, noting that his actions were ‘not consistent with the normal behaviour of a diplomat’. In closing, Barnett pointed out that had he been consulted, he would have recommended a different course of action:

In fact, I had intended to put to you [this week] that a suggestion by your Department to Mr. Koshlyakov that he might like to return home quietly would not have been inappropriate. This would be a little less than declaring him persona non grata but would make the point firmly to the Soviet authorities that his unusual activity had been noted by the Australian Government and viewed with disfavour.⁵¹

Koshlyakov remained in Australia until March 1984.⁵² When he appeared on 60 Minutes twelve years later, Koshlyakov openly discussed his stint as the KGB Resident in Canberra.⁵³ Time would confirm the implications of Peacock’s decision, and the potential impact that it had on Australia’s national security. Relations between the Department of Foreign Affairs and ASIO would continue along these lines until April 1983, when they worsened following the expulsion of Valeriy Ivanov, a case that took the Department of Foreign Affairs and many in ASIO completely by surprise.⁵⁴

It had taken a long time, and a lot of work, however, to get to the point that ASIO could again confirm, with confidence, the intelligence standing of a Soviet diplomat. A combination of Woodward’s structural reform, an increase in resources, and some strategic direction, had resulted in improved counterespionage capabilities. The main ingredient in ASIO’s changed fortunes, however, was the influence of overseas services on its modus operandi.

Origins of the offensive approach

ASIO’s operations fell into two categories: offensive and defensive. The latter required time and resources to sit, watch and develop a picture of what a particular target was up to. ASIO could then use this information to inform its judgements, or it could take measures to disrupt or thwart the actions of its target. Such work was a fundamental element of what ASIO did on a daily basis, and this defensive work, and the paperwork it generated, fills the majority of ASIO’s files. ASIO’s offensive operations, however, had a more specific objective than merely collecting information. As discussed at the beginning of this chapter, rather than simply watching its targets, ASIO began to approach them. The aim, according to Woodward, was to see ‘if any of them’, from intelligence officers to ‘other embassy employees in sensitive positions’, could be recruited—‘like the Petrovs’.⁵⁵

This tactic was not isolated to Australia.⁵⁶ The lessons drawn from experiences overseas and this offensive modus operandi made their way into ASIO through a variety of channels including through normal liaison. Another was through the transmission of research papers on various topics of interest.

The more influential method for learning from overseas experience, however, was through exchange programs. One such exchange officer gained first-hand operational experience in cultivating Soviet officials and recruiting and running agents to ‘build up our knowledge’ of a KGB or GRU officer and thus ‘develop an operation to surround him and try and recruit him’. When he returned to Australia to head a related section, the officer was convinced that ASIO needed to be more aggressive in its counterespionage efforts.⁵⁷

This counterespionage officer was ably assisted in pursuing this approach by a reciprocal exchange officer to ASIO.⁵⁸ Upon arriving in Australia, this officer supervised the RIS Legal Residency desk (the main Soviet desk in ASIO). Throughout his posting, this exchange officer regularly attempted to introduce a philosophy of target recruitment, and was later credited as the main proponent of using undercover officers in other operations.⁵⁹ An ASIO colleague later recalled: ‘We felt that we had the right sort of philosophy, we had the energy, and we had the knowledge to come back [to ASIO] and to actually do something really constructive and positive.’⁶⁰

Another ASIO exchange officer was not as optimistic about ASIO’s ability to change its counterespionage philosophy. The aggressive rhetoric, despite the best intentions and much hard work, did not transform into reality. Operations did not occur in a vacuum. They required a backing of good intelligence and sound assessment, and ASIO was not strong in those fields. Indeed, reflecting on his experiences overseas, this ASIO officer was convinced that ‘ASIO did not know what intelligence analysis was’.⁶¹

Moreover, adept analysis and operational targeting required adequate resources. Thus, while ASIO was launching operations, they stood little chance of success because they did not have a sound foundation nor the resources. Upon his return to Australia, this officer was also posted to the Soviet Section. His experience had been fundamentally different from that of his predecessor—who was now his boss—and the newly returned ASIO officer was frustrated with what he perceived to be a lack of understanding of what actually lay behind the successes of the overseas offensive approach. There was no point, he said, in simply replicating the tactics of overseas agencies—as ASIO was attempting to do. By itself, a replica group ‘would achieve nothing’: it required resources and strong analysis and investigation to work.⁶² Nonetheless, the experience he brought back to ASIO was another step towards improved counterespionage efforts. Slowly, ASIO was rebuilding the counterespionage expertise it had largely lost through the retirement of those with experience of the Petrov defections and ASIO’s early operations.

Another ASIO exchange officer was not as pessimistic about ASIO’s capabilities or approach, and noted that while its progress was slow, ASIO was beginning to understand the value of movement analysis before he left for overseas. He quickly gained an appreciation of how different ASIO was from its overseas counterparts. Operations, resources and budgets were on a different scale. Throughout his posting, he gained valuable experience in working undercover and attempting to cultivate Soviet officials.⁶³

When he returned to Australia in the late 1970s, imbued with confidence and new skills, this officer finally understood why ASIO needed to change its operational philosophy. For years, ASIO had been ‘essentially using counter-subversion approaches and tactics against counterespionage targets’. But the two were inherently different problems: counter-subversion targets were entities, or organisations; they were easier to see and therefore easier to target and penetrate. This relative ease of access was due to the fact that the counter-subversion targets usually had far less security awareness or training than the Soviet and other counterespionage targets. The latter were not organisations, but individuals, and to target them officers had to get close to an individual ‘to build trust’. The experience overseas confirmed to him that ‘until you build trust you can’t share confidences, and until you can share confidences you can’t start to move it [the operation] to where you want to’.⁶⁴ His posting to deal with counterespionage in the New South Wales office upon his return was strongly supported by the Director of E Branch, who noted at the time that his presence would:

inject new life and techniques into an area which will, in the immediate future, be under considerable pressure to achieve results. In particular, if we are to recruit a Sovbloc official, as we must, we will need people with the intelligence experience and motivation of [the officer] … to be successful.⁶⁵

It was not long before he ‘started putting into practice some of the things learnt’ overseas.⁶⁶ Indeed, throughout his eighteen months in Sydney, the officer made more face-to-face contacts, sometimes with cover and sometimes using his real name, than any other ASIO officer during the entire time covered by this chapter.⁶⁷ The offensive philosophy pushed by his predecessors, and enabled by Woodward’s organisational restructure, was starting to take hold.

Foreign influence was strong, but it was not the only factor. At the same time that ASIO officers were gaining invaluable experience overseas, or learning from exchange officers in Australia, they were also learning from other foreign colleagues. Another ASIO officer, who served overseas in the late 1970s, spent a large portion of his time actually being trained in how to recruit Soviet officials.⁶⁸ He wrote up his lessons, which made their way back to Headquarters ASIO, and the message was clear: ‘the only way to recruit’ Soviets is through a face-to-face approach.⁶⁹

Operations on Yuriy Podogov

One of the earlier ASIO face-to-face contact operations was conducted in Sydney. Its aim, in keeping with the overseas-inspired philosophy, was to place an ASIO officer alongside a Soviet target, Yuriy Podogov, to assess his character and personality with a view towards recruitment.⁷⁰ In December 1976, ASIO received intelligence that Podogov, the assistant to the Trade Representative at the Soviet Trade Office in Sydney, had been involved in a car accident and that the Soviet Embassy in Canberra was considering taking money from his wages to pay for the repairs to the car.⁷¹ NSW office, which had been interested in Podogov for a while, saw an opportunity.⁷² At a meeting on 6 December, senior NSW officers decided to launch an operation with the aim of recruiting Podogov. Although he was considered unlikely to be an intelligence officer, he was seen as someone who could provide ASIO with a ‘window’ into the Soviet consular and trade offices in Sydney.⁷³ To assist with the planning process, two Sydney officers travelled to Headquarters ASIO, where they studied the operational lessons from the Petrov defections.⁷⁴ On 9 December a meeting of senior NSW and headquarters officers, including the Director-General, agreed that the operation should begin at once, and that Roger Riley, a Sydney-based officer who had followed his father into ASIO, would be the undercover officer.⁷⁵ Updated plans were submitted to headquarters in January 1977, and the Deputy Director-General, Barnett, who had experienced these types of operations elsewhere, offered some useful tips.⁷⁶ A background story was then organised for the purposes of Riley’s cover.⁷⁷ He was given the necessary documentation to back this cover story up, and a lease on a flat was organised under his assumed name.⁷⁸

Riley first met Podogov at a dinner on 10 February 1977, but nothing transpired.⁷⁹ ASIO continued to monitor the situation, using telephone interception, surveillance and technical operations to assist with its planning.⁸⁰ The two next met at the Wentworth Hotel for drinks on 24 February.⁸¹While a rapport was being developed, headquarters was concerned by the lack of communication from Sydney, and felt compelled to remind NSW office that the aim of the operation was to assess whether Podogov could be recruited—and nothing more.⁸² After two more social meetings, ASIO was no closer to assessing Podogov’s vulnerability, and the operation was therefore dropped.⁸³ Shortly after Podogov departed Australia in July 1977, the NSW officers involved in the operation travelled to Canberra to brief the ACT counterespionage staff on the lessons that could be learned. Above all else, they concluded that the experience with Podogov had at least proven that undercover ‘operations can be contemplated and carried out by ASIO’.⁸⁴ Throughout 1977, ASIO officers around the country pursued a number of face-to-face operations of varying intensity with foreign officials.⁸⁵

The pace at which the Podogov and similar operations unfolded meant that ASIO had to develop relevant policy on the run. In February 1977, McFarlane presented a summary of the British and American views on the value of face-to-face operations to his branch head.⁸⁶ This formed the basis of a policy paper that the Deputy Director-General, Barnett, sent in March to the regional directors’ in Canberra, Sydney and Melbourne. Acknowledging that such operations were already underway, the memorandum gave ‘in principle’ approval for future undercover operations and defined their purpose as ‘to obtain a first-hand professional assessment of the target by [directly] using an ASIO officer’.⁸⁷ The regional directors were advised that ‘knowledge of the technique and ASIO’s use of it, should be strictly limited on the “need to know” basis’ and that ‘any breach of the “need to know” principle will be regarded as a serious lapse in security and discipline’. Moreover, because of the ‘number of very real political and operational risks’ associated with making direct approaches to foreign officials, Headquarters ASIO would control every aspect of any operation, and the Director-General would ‘almost certainly be required to obtain the agreement of the Department of Foreign Affairs to the proposed action’.⁸⁸ The importance of this policy, and the reasons behind ASIO’s concerns, were to be seen in practice in the next, and much larger, operation involving face-to-face contact.

Geoff Bowcock and Andrey Duchkov

ASIO was interested in Andrey Duchkov, the ‘golden youth’ who began this chapter, well before his arrival in Australia. Overseas checks in 1976 uncovered that he had shown himself during previous postings to be a playboy and heavy drinker.⁸⁹ While there was no evidence that he was an intelligence officer, ASIO concluded that he was at least a ‘co-opted worker for the KGB’ and that he had many characteristics that made him vulnerable to recruitment.⁹⁰ On 2 February 1977, shortly after his arrival in Australia, the Special Team in ASIO’s ACT office—which had been established during Peter Barbour’s reign to undertake a close study of selected Soviet diplomats—chose Duchkov as its top-priority subject.⁹¹ The operation targeting him was born.⁹²

The two-man Special Team began work straight away. By the end of the month they had photographs of both Duchkov and his flat.⁹³ More importantly, they also gained access to the flat and were already considering the feasibility of mounting a technical operation.⁹⁴ On 1 March, they submitted a ‘position paper’ to their Regional Director, which concluded that Duchkov was showing signs of vulnerability and therefore offered ‘significant potential for a recruitment/defection attack’. Attached to the paper was a two-phase operational plan. First, the Special Team would conduct an intensive assessment using all available means to create a portrait of Duchkov. If this phase confirmed his vulnerability, ASIO would then place one of its officers undercover and in touch with Duchkov to provide a professional assessment of ASIO’s chances of recruiting him.⁹⁵ In June, Headquarters ASIO agreed to proceed with the undercover operation.⁹⁶

Geoff Bowcock, who had only been in the Special Team since September 1976, was chosen as the undercover officer. A former infantry platoon commander who had been mentioned in despatches in Vietnam, Bowcock joined ASIO in 1969.⁹⁷ The same age as Duchkov and capable of holding his drink (important given Duchkov’s heavy drinking), Bowcock was a perfect choice for the undercover role. His only problem, like most ASIO officers at the time, was a complete lack of experience in this type of operation. Much work went into ‘backstopping’ his cover story so that it could withstand scrutiny. A Sydney businessman agreed to provide business cover and an elderly woman agreed to act as his mother and provide accommodation cover. The scenario eventually settled upon was that Bowcock, who sold boats for a Sydney firm, stayed in Canberra during the week, returning to his wife in Sydney on weekends.⁹⁸ It was a full-time role, and Bowcock and his family sacrificed much throughout its duration. To maintain his cover, Bowcock was forced to live away from his wife and young children. The only time he saw them was on select weekends, when an ASIO photographic van would take him—using circuitous routes—home to his family in the outer suburbs of Canberra.⁹⁹

ASIO secured a lease on a vacant flat in the same block as Duchkov, and Bowcock moved in on 23 August 1977. He met Duchkov for the first time that weekend, just before Duchkov departed for the Soviet Union on home leave.¹⁰⁰ Duchkov returned to Canberra on 22 October and, despite some brief meetings between the two, it was not until the Christmas drinks described at the start of this chapter that Duchkov and Bowcock developed a friendship.¹⁰¹ ASIO’s ACT office reviewed the case in January 1978, noting that while it was making good progress, it was prepared to abandon the operation if it became clear that the initial objective—recruitment or defection—was ‘unobtainable’.¹⁰² Headquarters agreed, but added that Bowcock’s cover story had stood up to questioning and he should henceforth be more aggressive in his role.¹⁰³ On 1 February, Bowcock collected a 6-metre boat from Ulladulla on the NSW south coast, which he then parked at the flat.¹⁰⁴ This increased the validity of his cover story, as well as improved his relationship with Duchkov’s son, who was interested in the boat.¹⁰⁵

Bowcock continued to get closer to his target. In May 1978, however, just before Duchkov again went on home leave, ASIO learned that the embassy had decided to move Duchkov from his flat, where he lived away from other Soviet personalities, into the Stuart Flats, immediately behind the embassy, where he would be surrounded by his colleagues.¹⁰⁶ This had two lasting implications. First, ASIO would lose its technical operation, which had been instrumental in assisting Bowcock’s work; and secondly, it would make it more difficult to monitor Duchkov’s mindset and movements. There was no contact between Bowcock and Duchkov, who returned to Canberra on 29 July (on promotion to Second Secretary), until 4 September, when Duchkov visited Bowcock.¹⁰⁷

On 22 September, Duchkov went to Bowcock’s flat to apologise for not being able to attend a dinner that Bowcock was to host that night. Recognising that he had to be more aggressive, Bowcock replied that it was unfortunate because he wished to talk to Duchkov about something: he then proceeded to tell Duchkov that someone from ‘intelligence’ had been to see him. Without wishing to push it too much, he left the next move to Duchkov.¹⁰⁸ From that date, ASIO found it difficult to gain access to Duchkov. He made regular commitments to meet Bowcock but continually failed to arrive. On 11 October, Bowcock ‘bumped’ into Duchkov at a ‘chance’ meeting, and told him that the same person had been to see him again and suggested that Duchkov might be in trouble. Duchkov asked if the person was from ASIO, and when Bowcock confirmed this, Duchkov said he did not understand why ASIO was interested in him. Duchkov promised to see Bowcock that weekend.¹⁰⁹ Once again, he did not show.¹¹⁰

In an attempt to close the case, Bowcock actually visited Duchkov’s flat on 6 November (giving both Duchkov and his wife quite a surprise) and asked them to dinner that Friday.¹¹¹ When they did not turn up, Bowcock ‘bumped’ Duchkov in a car park in Manuka on the Saturday, saying that he was worried about Duchkov and asking to speak to him alone. Again, Duchkov did not show up as planned.¹¹² On 13 November the Operational Base Establishment, ASIO’s surveillance unit, which had been watching Duchkov, noticed him putting a bottle of sherry under a bush in a churchyard. Upon checking the bush they found a number of bottles, and they observed Duchkov coming back to drink from them. The Special Team concluded that they were dealing with an alcoholic and that this was ‘a factor we cannot ignore in future planning’.¹¹³ ASIO’s psychologist then examined the case and assessed Duchkov as a ‘chronic’ alcoholic, which made him ‘useless as a source of information’, and therefore recommended that the operation be closed down.¹¹⁴ Harvey Barnett, who was Acting Director-General, agreed: the operation was to cease, but the door left open—and Bowcock’s cover maintained—in case Duchkov wished to make contact of his own accord.¹¹⁵

One last ‘bump’ was made on the night of 30 November, near Duchkov’s ‘grog cache’, and the meeting was videoed from a photographic van.¹¹⁶ Bowcock told Duchkov, who ‘trembled like a leaf’, that ASIO knew of his drinking problems and were prepared to help him. Duchkov said that he did not want to talk to ASIO, but would come to Bowcock’s flat that Friday.¹¹⁷ This time he did turn up. When Duchkov asked what the ASIO man wanted, Bowcock said ‘to help him I suppose’. Duchkov was worried and replied, ‘I am not a spy, I am not a spy,’ and repeated that he did not want to see anyone from ASIO. Upon hearing a knock at Bowcock’s back door, Duchkov ran out the front door. Bowcock chased him. When he caught up to him, Duchkov repeated that he was not a spy and that if the ASIO man ‘had any brains, he would realize that this could upset Soviet/Australian relations’. He then walked off.¹¹⁸ This possibility had already been considered by ASIO, and the Department of Foreign Affairs, which had been told of the operation in September, raised no objections.¹¹⁹

Headquarters concluded that ASIO had done all it could. Duchkov knew how to contact them, and there should be no more attempts to contact him.¹²⁰ Bowcock gave up the lease on the flat, in accordance with his cover story that he had conveyed to Duchkov, and ‘moved’ back to Sydney.¹²¹From the formal end of the operation, Duchkov occasionally came to notice through telephone interception of the embassy, or through ASIO sources who met him at various functions, but ASIO never again paid special attention to him.¹²² His posting ended in May 1981.¹²³ ASIO later ascertained that Duchkov died in Moscow of a heart attack, aged 36, in May 1983.¹²⁴

The operation on Duchkov, which failed to recruit the ‘golden youth’, had cost ASIO, excluding salaries, in excess of $100,000. One E Branch officer who reviewed the operation concluded that the ‘return for this expenditure appears to have been little’. A small number of presentations were given to specially selected staff, but the two main officers involved—Bowcock and his senior Special Team colleague—were posted overseas soon after, taking the experience gained from the Special Team’s first recruitment operation in Canberra with them. Some lessons, however, were reported to have been drawn from it. First, operations like this placed a huge burden on the officer under cover. Bowcock had lived away from his family for more than a year, and the Organisation decided that in future more consideration should be given to the impact on families. Second, it was acknowledged that the officer under cover should have the ability to make decisions on the spot without reference to headquarters. In addition, the officer must have studied the Soviet mentality, and there should be frequent meetings between headquarters and the region concerned, despite the distance between them.¹²⁵

ASIO continued to examine its policy as operational experience dictated. Several more face-to-face operations were conducted between 1978 and 1980, from which a number of lessons were derived.¹²⁶ In these types of operations, where an ASIO officer essentially became a temporary ASIO agent, there had to be some consideration of the impact on an officer’s career, as well as the legality of operating under cover. Additionally, there was the possibility that an officer ‘might be compromised and turned back against the ASIO’ [sic].¹²⁷

On top of these issues, regional directors were reminded that given their expense, the time required and the need for adequate supporting intelligence, undercover operations had to be carefully considered before being implemented.¹²⁸ Regional officers were encouraged to work on new cover stories, assess their security and risks and, in Canberra especially, determine safe means of operating among a small population.¹²⁹ To increase accountability, headquarters developed a reporting mechanism for such operations. Thus, from October 1980, ASIO’s regional offices were forced to fulfil the planning requirements before submitting operational proposals to headquarters.¹³⁰

By 1981, however, ASIO’s liaison partners began to question the validity of the face-to-face tactic. One agency concluded that the KGB now took ‘active countermeasures against’ face-to-face operations. ASIO also became aware that the Soviets were examining contact reports from diplomatic missions around the world, and if they suspected that a Soviet official was being approached for cultivation, they preferred to play along in an attempt to draw the undercover officer into an official Soviet establishment, such as an embassy, where they would try and recruit the officer.¹³¹

Rather than abandoning the tactic, ASIO kept using it, but with increased caution. By August 1981, the E Branch policy was that such operations needed to be well planned and would not be launched unless there was a prior indication that they stood a good chance of success. Regional directors were reminded that face-to-face operations ‘are in fact just one of the weapons in the ASIO armoury’.¹³² Another ‘weapon’ was the proven deep study of espionage targets and their contacts.

Surveillance of Yuriy Ivanovich Stepanenko

As discussed in Volume II of this history, Yuriy Ivanovich Stepanenko, the Soviet Embassy’s First Secretary, Cultural, Scientific and Technical, had been the subject of a Special Team operation since March 1975. ASIO placed Stepanenko, a suspected GRU officer, under detailed study and monitored his movements and contacts. Yet despite the close attention paid to him, the operation ‘produced minimal intelligence dividend’ and, realising that he could not be recruited, the Special Team dropped him as a target in July 1976, only to replace him with Duchkov.¹³³ But this was not the end of ASIO’s interest in Stepanenko. Throughout its investigations, ASIO had noted his frequent contact with a specific journalist. Using surveillance, telephone interception and agent coverage, ASIO aimed to establish the nature of the relationship between the two men.¹³⁴

Surveillance of Stepanenko showed that he was ‘quite friendly’ with the journalist.¹³⁵ By January 1976, ASIO was convinced that Stepanenko was cultivating the journalist, possibly to influence the articles appearing in his newspaper, but more particularly to foster anti-ASIO views. More significant, though, was the possibility that the journalist was being cultivated for espionage purposes. This led to a proposal to intercept the journalist’s telephone—to determine the extent of cultivation and to aid in briefing contacts who were to report on his movements.¹³⁶

In February 1976, with the expectation that the journalist and Stepanenko would travel together, ASIO sought to cover their movements while they were away.¹³⁷ The journalist also had contact with Nikolay Markov, the TASS (Soviet news agency) representative, in November 1976, so ASIO sought to cover this relationship too.¹³⁸ ASIO later learned that someone with whom ASIO had contact had told the journalist of ASIO’s interest in him, and that the journalist had informed Stepanenko.¹³⁹ At that point ASIO changed tack and decided to try to mitigate the journalist’s usefulness to the Soviets by interviewing him.¹⁴⁰ An ASIO summary of the operation, which the Deputy Director-General described as ‘a thorough and valuable report’, concluded that ‘the intelligence dividend from the operation was nil’.¹⁴¹ The story demonstrates the tenuous risk–dividend nexus in such sensitive and difficult operations. Sometimes there simply was no intelligence pay-off.

Technical operations

Apart from face-to-face operations, ASIO also spent considerable resources conducting technical operations. The technical operation carried out against Duchkov was just one of many such operations against Soviet officials in the ACT. Until the introduction of the ASIO Act 1979, ASIO did not need a warrant to install a listening device. Rather, technical operations were carried out at the discretion of the Director-General. The Attorney-General was told of these operations as a matter of courtesy and openness, but it was not a requirement, nor was his approval. As mentioned earlier, the Whitlam Government had nonetheless put a stop to a number of ASIO’s telephone interceptions and technical operations, including those against Soviet diplomats. Following Whitlam’s dismissal, however, ASIO increased its technical coverage of its primary target, the RIS. Of the large number of technical operations between December 1975 and August 1977, for example, several dozen were against Soviet officials.¹⁴² Like face-to-face tactics, these were another ‘weapon’ in the ASIO ‘armoury’.

One of ASIO’s targets was Anatoliy Borisovich Mikhaylov, assistant to the Trade Representative.¹⁴³ Mikhaylov had arrived in Australia in August 1975 as the replacement for Vladimir Dobrogorskiy, an identified GRU officer who had been the subject of close study by the Special Team (discussed in Volume II).¹⁴⁴ It was Mikhaylov’s first posting to the West. While there was no concrete indication that Mikhaylov was an intelligence officer, given who he was replacing and the fact that his father was a senior GRU naval officer, ASIO suspected that Mikhaylov also belonged to the GRU.¹⁴⁵ Upon his arrival he moved into the Stuart Flats and worked out of the Soviet Trade Office at 5 Arkana Street, Yarralumla. By February 1976, ASIO still knew little about Mikhaylov. As before, he was assessed as possibly RIS and GRU.¹⁴⁶ To boost its knowledge of his background, ASIO issued a ‘short term brief’ for increased coverage of his activities.¹⁴⁷

In March 1977, ASIO learned that Mikhaylov was moving from the Stuart Flats to a flat in Nuyts Street, Red Hill. D Branch at headquarters asked the ACT office to complete an urgent feasibility study for a technical operation.¹⁴⁸ Within days, ASIO had excellent coverage.¹⁴⁹ Given its close proximity to the Yugoslav Embassy, which was in the same street, the study concluded that it would not be safe to use a radio microphone, as this could be intercepted by the Yugoslavs and reported to the Soviets. Instead, the recordings would have to be transferred via cable to a nearby location. Satisfied with this, the Deputy Director-General approved the operation.¹⁵⁰ In late May a conference was held at headquarters at which the urgency of the installation was stressed: ‘What we are seeking urgently is collateral for agent reports and final resolution as to whether target is recruitable’ before Mikhaylov went on home leave in August.¹⁵¹ But the technical difficulties remained the same: radio transmission was too insecure, and it was not until late November that ASIO gained access to a suitable listening post.¹⁵²

While all of this had been occurring, ASIO had been monitoring Mikhaylov’s activities through a wide range of contacts and agents. This led ASIO to assess that both Mikhaylov and his wife worked as a team to collect intelligence, and that Mikhaylov was another one of the ‘golden youth’.¹⁵³ASIO’s intelligence collection also showed that Mikhaylov had some ‘weaknesses’. He was a gambler, heavy drinker and drink driver. Both he and his wife enjoyed living in the West, and were known to be involved in ‘wife swapping’, and ASIO briefly considered an operation to take advantage of this proclivity.¹⁵⁴ It also discussed the feasibility of using one of its officers and his wife in face-to-face contact, but all of these options were later dropped after an assessment indicated that Mikhaylov was not vulnerable to recruitment and the effort would therefore be wasted.¹⁵⁵

Upon securing a suitable listening post, the ACT office wrote to headquarters again, highlighting the importance of the operation for providing a final assessment of Mikhaylov’s role in Australia, and stressed that it was ‘a vital operation worthy of our immediate attention’.¹⁵⁶ Barnett, however, who had to sign off on all operations, was not convinced ‘that this would produce any new information about the Mikhaylovs that we do not have already from our two-legged sources’. The operation, he wrote, had been going on for a long time without a proper assessment. There were only three options available to ASIO: to recruit, disrupt or ignore Mikhaylov.¹⁵⁷ After being pressed, however, in November 1977 Barnett agreed to another feasibility study.¹⁵⁸ Eventually, coverage was achieved by technical means in mid-1978.¹⁵⁹ The first conversation was recorded on 16 June—more than a year after the initial feasibility study.¹⁶⁰ But in August 1978, with only a month remaining before his posting ended, Mikhaylov unexpectedly moved from Red Hill into a flat left vacant by a colleague in the suburb of Hughes—which created additional operational challenges for ASIO.

When Mikhaylov moved out of the Red Hill flat, Aleksandr Petrovich Ivlev, another Soviet Trade Officer, moved in. E Branch at headquarters requested that the technical operation already underway be continued for two months, thus allowing it to assess Ivlev’s role and gain an initial assessment.¹⁶¹ The operation continued for several weeks, but in the end it proved too onerous from a resource perspective.¹⁶² In reviewing the operation, ASIO later concluded that while it provided information about Ivlev’s family situation, it did not yield any evidence of espionage activity. This led to the conclusion that he was not an intelligence officer.¹⁶³ In view of reports of the imminent arrival of a Soviet technical team in December 1978, ASIO took a number of precautionary countermeasures to protect its technical and other sources.¹⁶⁴

Operation Bushfowl

The succession of technical operations against the Soviets during the years of the Fraser Government all had one thing in common: each installation—a success in its own right, technically speaking—had failed to produce the counterespionage victory ASIO longed for. That would soon change with Operation Bushfowl—the technical penetration of Valeriy Nikolayevich Ivanov’s house in James Street, Curtin. Although it began as just another technical operation against a suspected KGB officer, its results made it ASIO’s most successful operation since the expulsion of Ivan Skripov in 1963. Any internal flattery or public acclaim that followed as a result of the operation, which led to Ivanov’s expulsion, was quickly overshadowed by political events, criticisms of ASIO’s poor attention to detail, and another royal commission. But that was still nearly two years away.

When Ivanov, a First Secretary at the Soviet Embassy, arrived in Australia with his wife and daughter in June 1981, he did so with a clean slate. He was an unknown entity among Western intelligence agencies.¹⁶⁵ Even more in his favour was the fact that unlike Mikhaylov and others, ASIO had assessed Ivanov’s predecessor to be a bona fide diplomat. Nonetheless, given he was a Soviet official, ASIO treated Ivanov with some suspicion and quietly collected what information it could. The first real effort ASIO made to assess him was in August 1981, when a desk officer in E Branch requested that surveillance be placed on Ivanov. As the officer noted, ‘little is known’ about Ivanov. The aim of the surveillance was to obtain a clear picture of Ivanov and an understanding of his activities and intentions. The results of the surveillance would help ASIO determine ‘whether he should be subjected to further concentrated coverage’.¹⁶⁶

It was not long before ASIO’s suspicions about Ivanov’s activities grew. He was observed providing counter-surveillance for the KGB Resident, Lev Koshlyakov, and ASIO had received reports that Ivanov was attempting to cultivate foreign diplomats in Canberra. Combined with information from its telephone interception of the Soviet Embassy and the titbits of information that filtered in from its human sources, ASIO slowly built up a picture of Ivanov as ‘suspect KGB’.¹⁶⁷ Apart from his contacts with diplomats and members of the Australian–USSR Society, ASIO also noticed Ivanov’s intermittent contact with ALP figures, including its former national secretary turned lobbyist David Combe.¹⁶⁸ ASIO wanted to know more, and it did not have to wait long before an opportunity arose.

Telephone interception in mid-May 1982 indicated that Ivanov would return to Russia on leave the following month. Acting quickly, on 20 May ASIO’s ACT office proposed installing a technical device in Ivanov’s house while he was overseas. In addition to assisting with its coverage of this important target, such an operation might also provide intelligence on any KGB visitors to Ivanov’s house.¹⁶⁹ Headquarters replied just as fast. The potential operation was endorsed and the ACT office was asked whether it could cope with the translation demands the operation would involve.¹⁷⁰ The stretched resources of the Canberra office, which was processing calls to and from the Soviet Embassy, meant that not everything could be covered. Bushfowl, however, was too good an opportunity to let slip: ‘It is our judgement that Bushfowl, because every known, suspect and possible member of the KGB Residency down to the code clerk has visited [Ivanov’s house] at some time or other, offers the greatest potential of any existing or planned technical operation against the Soviets in Canberra.’ If they had to choose, ACT’s counterespionage officers were prepared to end their technical operations elsewhere ‘in favour of Bushfowl’. They added that if Bushfowl was carried out, it should be done properly: with several microphones installed to ensure proper coverage of conversations.¹⁷¹

Operational planning continued, and by 19 June the ACT office had a key to Ivanov’s house and headquarters had obtained a warrant to begin intercepting Ivanov’s private telephone line upon his return to Australia.¹⁷² With the paperwork in place, the Director-General, Harvey Barnett, put the case for Operation Bushfowl to the Acting Attorney-General, Neil Brown. The warrant, signed on 2 July 1982, gave ASIO the necessary legal approval to enter Ivanov’s house and carry out the installation.¹⁷³ An ASIO technical team entered the house on the morning of 5 July. During their stay they inspected each room.¹⁷⁴

At 9.30 a.m. on 8 July, ASIO officers again gained access to the premises and got to work.¹⁷⁵ While this was occurring, a surveillance team kept a close watch on all Soviets in Canberra, just in case any of them travelled towards Ivanov’s house. Surveillance, using a number of vehicles, reported on the movement of Soviet officials.¹⁷⁶ This support, part of ASIO’s contingency plan, was essential for the security of those officers working inside the residence. When the ASIO officers left, all installed devices were hidden and working.¹⁷⁷ The manager responsible commented that it had been ‘another commendable installation’, adding ‘I only hope the product justifies the endeavour’.¹⁷⁸ Little did he know how significant the consequences would be.

By November, ASIO had deemed the operation a success. In recommending its continuation, and the renewal of the warrant, the ACT office wrote: ‘This operation has provided valuable information concerning Ivanov’s domestic relationships, visits to his home by other Soviets’ and their ensuing conversations.¹⁷⁹ Added to this was intelligence from other sources, which reported Ivanov’s participation in what appeared to be agent servicing operations; his cultivation of foreign diplomats; his range of contacts in the ALP; and his involvement with the Australia–USSR Society. ASIO’s assessment was now firm: Ivanov was definitely KGB. This was given weight in January 1983 when Redwood, the codename allotted to Major Vladimir Kuzichkin, a KGB officer who had defected to MI6 in June 1982, confirmed that Ivanov was a KGB officer (the two had undergone KGB training together).¹⁸⁰ Satisfied with ASIO’s case, in December the Acting Attorney-General authorised a six-month extension of both the telephone interception and technical operation warrants.¹⁸¹

Given the potential diplomatic stir that the operation could create if exposed, in January 1983 ASIO informed the Department of Foreign Affairs of its actions. According to one ASIO officer, ‘although it was somewhat post facto, [the Department of Foreign Affairs] has no objection to the action we have taken’.¹⁸² The Attorney-General, Senator Durack, was briefed on KGB activities on 3 February 1983, and while Ivanov was referred to, there was no mention of his contact with David Combe.¹⁸³ The reason was simple: ASIO was not actively targeting Combe. He was one of a number of people, including other ALP personalities, with whom Ivanov was known to speak.

In an interesting aside that would have reverberations when Bob Hawke became Prime Minister in 1983, Gough Whitlam as Opposition Leader in 1977 had raised the question of David Combe’s trip on a Russian cruise ship. Woodward told him ‘we knew that at least once he had proffered advice on desirable Russian reaction to an Australian Government action, to a Russian diplomat who we believed to be an intelligence officer’. Whitlam’s response was to declare Combe’s actions ‘both very foolish and very wrong’.¹⁸⁴ Whitlam’s successor as Opposition Leader, Bill Hayden, was similarly critical of Combe’s judgement.¹⁸⁵

As the 1983 Federal elections approached, little did any of those involved anticipate the attention their actions would receive. That story is told in Chapter 11.

The curious case of a would-be spy

Early in 1983, ASIO became aware of a man approaching the Soviet Embassy in Canberra to say he was leaving a parcel in a phone box in Civic. The Soviets took no action, so eventually ASIO retrieved the parcel and discovered it to be microfiche relating to an unclassified commercial computer. ASIO left a message for the caller at the phone box, pretending to be from the Soviet Embassy and then identified him. He was now a senior computer operator for a government utilities company. When ASIO interviewed him, he ‘spilled the full story’, telling them he had been contemplating contacting the Soviets for three years and was hoping for a long-term association. The man said ideology was not a strong motive. Rather, he wanted money. He claimed, however, to believe in nuclear disarmament and supported the Soviet stance on this.¹⁸⁶

The ASIO interviewer arranged to meet him again. Before then, however, ASIO discussed the matter with the AFP and were told there was no point seeking to lay charges, as it could only be for the petty offence of possible theft of the microfiche. Barnett wrote to Attorney-General Durack to say ASIO planned to reinterview the man and to pass on ‘our total knowledge of his offer of services to the Soviets’ in order to neutralise him as a potential security threat.¹⁸⁷ At the second interview he made a full confession. Barnett wrote to Durack again, advising that ASIO had now neutralised the man and thankfully had not overreacted following the interview.¹⁸⁸ Section 18 of the ASIO Act 1979 prohibited Barnett from communicating intelligence regarding the man’s action to his employer. Nor was he allowed to tell the man that his employer or the police knew of his activities. This was due to the fact that no offence involving classified material had been committed and the Crimes Act 1914 was irrelevant in this instance. Barnett was clearly frustrated, admitting ‘all we have is a man willing to betray his country’s interests voluntarily to the Soviet Union. It is galling, to say the least, to allow such a man to continue his employment without his employer knowing.’¹⁸⁹ If nothing else, the case demonstrated the enduring importance of vigilance over vetting those seeking to work for the Government in positions requiring a security clearance. It also demonstrated how, under the new terms of the ASIO Act 1979, ASIO was constrained to operate with greater probity than hitherto.

Reflections

As mentioned earlier, each of ASIO’s numerous technical installations in this period were operational successes in the sense that ASIO was able to gain access to the target premises and then install devices. Despite this, no single technical operation against a Soviet target during the Fraser years provided evidence of espionage activity. This was a disconcerting fact that raised more questions than it answered. Although Operation Bushfowl gave ASIO the public recognition it valued, it was no exception. The meetings it recorded between Ivanov and Combe, which are discussed in detail in Chapter 11, would act as confirmation—in ASIO’s eyes—that Combe was being cultivated by the KGB. But there was no indication of espionage, as the Hawke Government was told, and nothing that could have led to charges against Combe.¹⁹⁰

There are a number of explanations for this lack of evidence. The first is that technical operations were rarely the sole source of intelligence against a particular target. Rather than an attempt to obtain evidence that could be used in legal proceedings (which was not ASIO’s job), their purpose was to provide another—although unique—insight into that target’s life. In so doing, these technical operations were intended to keep ASIO and the Government informed about the activities of those in whom they were interested. Combined with its other sources, ASIO used the product of its technical operations to build a picture of what a target was really up to. In some cases, the technical operation was of most use in providing leads for further targeting by human sources. Yet this was an unsatisfying explanation, leaving lingering doubts about why more direct links did not emerge from the hours and hours of recorded and translated conversations.

Another explanation, and one that is exemplified in those operations conducted against confirmed RIS officers, is that ASIO was dealing with professional intelligence officers who expected their houses and telephones to be bugged, and acted accordingly. In this way, technical operations, like any intelligence collection method, were hindered by the realities of the limitations of intelligence. No matter how good a source, or how impressive an operation, they were limited by what the target did or said. If the target did not speak, for instance, the result of the technical operation would be null. Similarly, a target might employ countermeasures, such as turning on the television or radio to mask their conversations; or, assuming that they were being recorded, would say things to confuse or influence ASIO—known as disinformation. But there might have been the occasional slip-up that would have made this clear to ASIO’s eavesdroppers.

One more explanation was that some of the targets were not intelligence officers at all and were not engaged in espionage of any kind. In some cases, ASIO’s technical operations confirmed a target’s diplomatic status and removed them from security suspicion. A much more sinister explanation offered by some ASIO officers was that ASIO’s operations against the RIS were compromised by a mole, or moles, operating within its ranks. One of the arguments used to justify this explanation was ASIO’s relative success against other, non-Soviet targets. The contrast between Soviet and non-Soviet targets is telling, and it is to the latter we now turn.