This work tells the inside story of the creation, rise and fall of ASIO - Australia's premier spy organization. Based on thousands of documents, and interviews with over 40 former ASIO officers, it outlines the secret dimension to Australia's politics and history since 1945. The book rewrites the known history of the Petrov Royal Commission and the role of Menzies and Evatt; it outlines actual instances of genuine espionage in Australia in the 1960s; it tells how a gigantic system of security dossiers on ordinary Australians was built up; and tells the extraordinary story of ASIO and the Whitlam Government. Australia's Spies and their Secrets By David McKnight Allen & Unwin Copyright © 1994 David McKnight All rights reserved. ISBN: 978-1-86373-661-9 Contents Acknowledgements, Dramatis personae, Abbreviations, Introduction, PART I SPECTRES AND SPIES, 1944–1957, Introduction, 1 The origins of ASIO, 2 Labor's security service, 3 The spyhunt begins, 4 Military coup, enter Colonel Spry, 5 The nest of traitors?, 6 The spy drama that gripped a nation, 7 The case of K, 8 Endless enemies, 9 Operation Pigeon, Operation Dalziel, PART II THE WAR ON SUBVERSION, 1949–1960, Introduction, 10 Peace, war and internment, 11 The invisible blacklist, 12 Nazis, aliens and foreign agents, 13 Trenchcoats and mortarboards, PART III HUBRIS, 1960–1972, Introduction, 14 Smart Sylvia and Ivan the terrible spy, 15 Reaping the whirlwind, 16 Dirty tricks, special projects, 17 Enemies and friends in the Labor Party and the unions, 18 The anti-Vietnam War movement and ASIO's counter-insurgency planning, 19 The New Left and the old moles, PART IV THE FALL, 1969–1975, Introduction, 20 The roots of the Murphy raid, 21 Murphy's law, 22 'Is Murphy a KGB agent?', 23 The beginning of the end, Epilogue 1976–1993, Endnotes, Bibliography, Index, CHAPTER 1 The origins of ASIO CANBERRA: Friday. The United States, it is understood, has in the last year shown reluctance to reveal atomic research secrets to Australian scientists. America's reason is said to be fear that leakages are likely to occur through Australian communists. Sydney Morning Herald, 24 July 1948 IN MARCH 1949 the Prime Minister of Australia's seven year old Labor government, Ben Chifley, did something totally out of character: he announced the creation of a new security service to guard Australia against subversion, sabotage and espionage. The new body, initially nameless, then called S1, then SIO, finally became known as ASIO, the Australian Security Intelligence Organization. Its origins are still shrouded in secrecy more than 40 years later. Ben Chifley, who died only two years later would never know the consequences of his decision. But Dr Evatt, his ambitious deputy and political heir, would be deeply affected. The echoes of Chifley's decision would reverberate down the years of the Cold War so loudly that when federal Labor governments were elected in 1972 and again in 1983, ASIO was the focus of major crises shortly after both elections. Even at the time Chifley's decision was highly unusual because Labor knew that their socialist ideals and trade union supporters had previously been the target of Australia's self-appointed guardians of property and privilege in the intelligence services. Throughout the 1930s and early war years the trade union movement and many of their supporters were under surveillance by military intelligence, so that when Labor came to power federally in October 1941 it soon modified the internal security arrangements which had interned aliens and banned political parties. Indeed, at the war's end, Labor had disbanded the Security Service without compunction and merged it with the Commonwealth Investigation Branch, (precursor to the Australian Federal Police) thus making it merely a subdivision of the Attorney-General's Department. In 1946 it specifically rejected a push by Australia's military establishment to set up a defence security organisation with wide powers. The following year, when Communist Party opposition to the British-Australian project to test missiles at Woomera was in full swing and the conservative Opposition demanded a Royal Commission into the possibility of Soviet spy rings, Attorney-General Evatt reaffirmed his faith in the Commonwealth Investigation Service (CIS) which was charged with security matters. A year later however, pressure for a new security service had built up and by late 1948 a new security organisation was on the way. At least part of the process involved the destabilisation of the Chifley government, probably by senior officers in the Australian armed forces. Yet the real reasons at the heart of the push for ASIO remain secret to this day. To understand the origins of ASIO we must first turn the clock back to the Second World War which saw the first federal Labor government in office since 1931. While Labor's prime task from late 1941 was to win