MI5: British Security Service Operations, 1909–1945

The True Story of the Most Secret counter-espionage Organisation in the World

Nigel West

• Publisher: Frontline Books
• Year: 2019
• ISBN:
  9781526755711
• Topic: Politics & International Relations
• Subtopic: Intelligence & Espionage
• Index: Politics & International Relations

The author of The Kompromat Conspiracy shares the history of MI5, from its beginnings in 1909 to 1945 and its role in the Second World War. MI5 is arguably the most secret and misunderstood of all the British government departments. Its enigmatic title—much more than its proper name, the Security Service—stands in the public mind for the dark world of the secret services. In reality it has a very specific responsibility: counterintelligence. Its purpose is to combat espionage and subversion directed against the UK. Nigel West's book traces the history of MI5 from its modest beginnings in 1909 until 1945, focusing on the important role it played in World War II. This includes the story of the sixteen enemy agents rounded up in Britain who were either hanged or shot; the manipulation of the Axis espionage networks by the use of "turned" Abwehr agents (the famous Double Cross System) and the all-important check on its success provided by the intercepted German signals decoded at Bletchley; and the various deceptions practiced on the German High Command. Laced with true anecdotes as bizarre and compulsively readable as any John Le Carré novel, this book is the fruit of years of painstaking research. West has traced and interviewed more than a hundred people who figure prominently in the story: German and Soviet agents, counterintelligence officers, and even more than a dozen double agents. In this newly revised edition, Nigel West details the organizational charts which show the structure of the wartime security apparatus, in the most accurate and informative account ever written of MI5 before and during the Second World War.

PART ONE:

MI5 1909-1939

1

The Early Years

In 1887 Great Britain recognized the importance of intelligence work by creating, for the first time, the posts of Director of Military Intelligence and Director of Naval Intelligence. The Intelligence Branch of the War Office, under the leadership of the DMI, concerned itself with gathering information on foreign armies and also took charge of mobilization and home defence. Anti-invasion planning stayed with the Admiralty, as it had done since the Napoleonic Wars.

Inevitably the Royal Navy’s domination of the world’s trade routes meant that the Naval Intelligence Department became Britain’s bestfunded intelligence organization. After the Boer War the military and naval establishment came under fierce criticism. The post of DMI was abolished in 1904 and responsibility for counter-espionage was placed with the Special Duties Division of the War Office’s Military Operations Directorate. This directorate was itself a sub-division of the Intelligence and Mobilization Department, and experience proved the arrangement to be unsatisfactory. The Foreign Office were less than happy at having to depend on the War Office for information and some intensive lobbying went on in Whitehall.

The Cabinet then set up the Committee of Imperial Defence, or CID, which had two important roles. The first was to have direct civilian control over matters of service strategy and policy. The second was to encourage co-ordination between the Services and their various intelligence organizations. Locked away in the minutes of the CID lie the origins of the British Imperial Security Intelligence Service which was later to become known as MO5 and then MI5.

The CID was to include the Chiefs of Staff and meet under the chairmanship of the Prime Minister or one of his senior Cabinet colleagues. The important innovation was the granting to the CID of a permanent staff so that decisions taken by the Committee could be pursued in Whitehall. As soon as the CID was established it embarked on a lengthy study of Britain’s intelligence arrangements; the need for change was widely recognized and the CID’s recommendations were implemented quickly.

In 1907 the retiring Director of Naval Intelligence (DNI), Sir Charles Ottley, was appointed Secretary of the CID. His Assistant was a young Marine named Maurice Hankey, a man destined to become one of the most powerful in Britain. In August 1909 Ottley recommended, with the backing of the CID, that a Secret Service Bureau be created to take charge of all matters relating to intelligence gathering.

The proposal, which was approved by the Cabinet, divided the Secret Service Bureau into two parts with quite separate areas of interest: foreign and home. The Foreign Section was to be headed by Captain Mansfield Cumming RN, and it was this Section which was later to grow into the Secret Intelligence Service or MI6. The Home Section was to be organized by Captain Vernon Kell, late of the South Staffordshire Regiment.

Kell was chosen for the job by Colonel James Edmonds, a member of the CID Secretariat, and Kell’s future close friend and next-door neighbour. Kell was a remarkable man who was to run MO5 – and later MI5 – for over thirty years, building up the Service from small beginnings in 1909 into the large department with its many specialist branches that it had become by 1939. To understand how MO5 grew, and how it was staffed and run, it is necessary to discover what influenced Kell and look at the events which confronted him during the Great War and the Twenties and Thirties: the pressures of international Communism and the rise of the Nazis.

He was born on 21 November 1873, the son of Major Waldegrave Kell, a regular officer in the South Staffordshires. His mother was the daughter of Count Konarska, a refugee aristocrat from Poland. He was brought up at Ruckley Grange in a small village near Shrewsbury and was educated at home. By the time he went to Sandhurst in 1892 he could speak German, Italian, French and Polish, all fluently. Two years later he joined his father’s regiment at their depot in Lichfield. During the next four years he qualified as an Army interpreter in French and German, and then began learning Russian while on leave in Moscow. He then rejoined his regiment in Cork, having passed further language exams. In Cork he met Constance Scott, the daughter of a local landowner, and they married on 5 April 1900. Later that year Kell was posted to China where he was to spend the following three years, seeing his first action during the Boxer Rebellion.

When Kell eventually returned to Britain via Moscow in 1904 he was in poor health and was therefore instructed to report for duty to the War Office. In 1907 he was transferred to the CID Secretariat where he worked under Colonel Edmonds. He had suffered from dysentery while in the Far East and now became increasingly vulnerable to the attacks of asthma which he had endured from childhood. All of this denied him a future with his regiment, so when Edmonds offered him the new post of Director of the Home Section of the Secret Service Bureau with responsibility for investigating and countering espionage in the United Kingdom, he accepted.

Kell’s new section now carried the Military Operations designation MO5, a label which was to stick until 1916. Within twelve months the Foreign Section was removed to the Admiralty and Kell achieved a clerk and his first assistant, Stanley Strong, who had been an official in the Boy Scout movement.

Kell’s initial mandate was to study Britain’s vulnerability to foreign espionage and recommend to the CID what steps should be taken to prevent the theft of secret information. Within this brief was a request to assess the dangers of home-grown subversion from those political extremists bent on undermining the established system of government. This latter area of responsibility had previously been the exclusive province of Scotland Yard’s Special Irish Branch, which had been created in 1883 to deaf with the Fenians and other Irish Nationalists. Kell turned to this forerunner of today’s Special Branch for help in compiling the information he needed. He received strong support from Superintendent Patrick Quinn, the fifty-eight-year-old Irishman from County Mayo who had led Scotland Yard’s Special Branch since 1903. Another close collaborator was to be Basil Thomson, when the latter became Deputy Commissioner of the Metropolitan Police in 1913. Before this appointment Thomson, who had trained as a barrister, had joined the Colonial Office (serving for a time as the Prime Minister of Tonga). He had also been a Governor of Dartmoor Prison and Wormwood Scrubs.

These two influential figures were to prove valuable allies for Kell as he argued for his own, independent recruitment of staff. Initially MO5 had to rely on ‘attachments’ from other departments such as Inspector Melville from Scotland Yard, Captain Reginald Drake from the North Staffordshire Regiment, William Haldane Porter from the Home Office Aliens’ Department and Captain Frederick Clark from the War Office. In 1912 Kell was joined by Eric Holt-Wilson RE, an instructor from the RMA Woolwich; he was to serve as Kell’s Chief of Staff for twenty-three years.

Kell continued to request additional staff but his pleas were turned down on the grounds of expense. He was later to joke to friends that he spent months without a secretary because the Treasury would not sanction the recruitment of one. Eventually Kell decided to use his own resources – or rather the War Office’s – to bring his department up to reasonable strength. For MO5 was nominally still under the aegis of the War Office. Whenever he met a suitable young officer he contacted his Commanding Officer and had him transferred to General Staff duties. The new recruit would then find himself being ordered to report to Kell at the War Office. All candidates were personally interviewed by him in depth until 1939. This procedure enabled the Security Service to increase its numbers without attracting unnecessary attention but it established a recruitment policy which was later to be misunderstood. Kell maintained very strict standards of ‘reliability’ for his staff which meant in short that they were all drawn from his social circle. His officers and his secretarial staff could generally be summed up as having a ‘military and county’ background.

The policy was to be attacked at various times as arrogant and snobbish but actually its basis was financial. His officers were appallingly badly paid and the secretaries fared even worse. Whitehall restrictions prevented Kell from paying anyone more than pocketmoney but he calculated that most of them enjoyed a private income. However, as a compromise Kell negotiated a tax-free arrangement with the Inland Revenue. It was agreed that to preserve security none of his staff should pay income tax, and a system developed whereby a special code-number could be added to any tax return. This effectively exempted the recipient from further demands or enquiries.

Having fought and partially won the battle for personnel, Kell turned his attention to the political matter of changing the law. In July 1910 he joined a CID sub-committee, chaired by the then Home Secretary Winston Churchill, to make recommendations and consider the treatment of aliens in the event of war. Next Kell and the CID looked at the 1889 Official Secrets Act, which was in need of revision because it required a prosecution to show unlawful intent, which was virtually impossible to prove. A photographer found taking pictures of a Naval dockyard merely had to claim to be working for an industrial interest (as opposed to a foreign military power) and a case would collapse. Just such a case occurred during the summer of 1910 when a German lieutenant was caught redhanded sketching the harbour defences of Portsmouth. The trial of Siegfried Helm opened in Winchester on 14 November 1910 before Mr Justice Eldon Bankes. The Attorney-General, Sir Rufus Isaacs, prosecuted for the Crown and the jury returned a verdict of Guilty, the first such conviction under the Official Secrets Act of an officer in a foreign army. Helm admitted to holding the rank of Lieutenant in the 21st Battalion of the Nassau Regiment, and his offences had been witnessed by two British officers, Captain H. de C. Martelli (later Major-General Sir Horace Martelli) and Lieutenant Hugh Salmon. Their first-hand evidence persuaded the jury to convict, as did the accused’s notebook, but the judge discharged the prisoner because he had already spent four weeks in custody.

The case served to highlight the inadequacy of the law and persuaded the CID to press for new legislation. The following year a wide-reaching Bill was presented to Parliament and received the Royal Assent in August 1911. From this date the mere possession of official or sensitive information became a serious offence.

The 1911 Act was a powerful weapon but it did not apparently deter the Kaiser’s General Staff from despatching agents to Britain. In 1912 MO5 dealt with their first defector, a German named Karl Hentschel. He had been refused a pay rise by Berlin and in a fit of pique volunteered a lengthy confession concerning his activities. As a result, a Royal Navy gunner, George Parrott, was imprisoned for four years. The case was not a total success because Hentschel reappeared, having been paid off and allowed to settle in Australia. He turned up in London and successfully managed to get himself arrested by the City of London police after a volunteered confession, having failed to extract further payment from the Security Service. Hentschel was charged with offences under the Official Secrets Act but the prosecution was withdrawn once the defendant started to relate his experiences from the dock. Hentschel was quickly discharged but it was an embarrassing moment for Kell and the Director of Public Prosecutions.

Another case about this time was that of Wilhelm Klauer. A Germanborn dentist practising in Portsea, he was convicted of espionage in 1913 after paying a police nominee £30 for what he thought was test data on torpedoes. Klauer went to prison for five years. Klauer, like many of the cases handled at this time by MO5, was an example of a referral from the civil police authorities. Other intelligence originated from information volunteered from the public; as yet the infant security service hardly had the manpower to do much sleuthing in its own right.

But Kell did not always have to rely on information from others: he began to collect his own. He knew that the charter granted to him by the CID gave him responsibility for counter-espionage, counter-sabotage and counter-subversion both in the United Kingdom and in Britain’s overseas interests; the department had a preventative role as well as an investigative one. With this in mind he had initiated a card-index system on all potential subversives in conjunction with Special Branch which was to be the basis of an intelligence coup on 5 August 1914. He also had another great success the day before on 4 August.

In 1909 Quinn of the Special Branch had identified the main German Intelligence ‘post office’ in Britain. It was run from a barber’s shop at 402A Caledonian Road, London, by Karl Gustav Ernst, the forty-fiveyear-old son of a German surgical instrument maker who had come to live in Britain in the 1860s. Kell obtained a warrant from the Home Secretary to intercept all the mail to and from the barber’s shop and was soon able to identify every member of Ernst’s spy ring. Early in the morning of 4 August 1914 the shop was raided by Special Branch and Ernst was arrested. At the same time other raids were taking place and twenty suspected agents were taken into custody. The Kaiser’s network was in ruins and the reputation of MO5 was made. Ernst was charged with ‘conspiring with Parrott, Graves, Gould, Grosse and others to obtain information on the movements, armament and disposition of Naval ships’. After a two-day trial at the Old Bailey in November 1914 Ernst was sentenced to seven years’ imprisonment.

On 5 August 1914 the Aliens Restriction Act which Kell and Churchill had discussed in 1910 came into force, requiring every alien in the country to register with their local police station. But even as these regulations were being enforced Special Branch detectives were rounding up some two hundred suspected German agents. They in fact were the first of more than 32,000 internees who were to be taken into custody on the orders of the Home Secretary, Reginald McKenna. By the end of 1915 the country’s Chief Constables received instructions to detain all Germans between the ages of seventeen and fifty-five. Those over military age were repatriated.

The controversial round-up lent the Security Service a reputation for quiet and mysterious efficiency, and many of the principles created in the early Great War investigations became accepted standards for the department. For the first time records were kept of the entry of foreigners and their addresses were registered with the Home Office.

The Security Service expanded greatly following the declaration of war and the influx of new talent helped to develop unusual techniques. One innovative officer was Edward Hinchley-Cooke who became, in 1915, the first MO5 ‘stool pigeon’, masquerading with considerable success as a German prisoner of war and mixing with genuine prisoners.

All the services now tightened up on their gathering of intelligence both in those countries where the Crown had possessions to defend and in the rest of the world, where Britain could gather information with or without the consent of the government concerned. At home MO5 hunted for spies, traitors and saboteurs; intelligence gathering elsewhere was divided between SIS and the NID, who also encompassed the code-breakers in Room 40 of the Admiralty, under Alastair Denniston.

In January 1917 the Room 40 decrypters unravelled a secret telegram from the Kaiser’s Foreign Minister Arthur Zimmermann, to the German ambassador in Mexico. The 155 coded groups announced that the German navy was about to begin ‘unrestricted warfare’ which would mean the sinking of neutral vessels in the war zone. Admiral Reginald (‘Blinker’) Hall provided the Americans with the text of the message ‘in clear’ and gave them the key for them to decipher their own intercepted copy. One passage, which President Wilson found disgraceful, contained Germany’s promise to help Mexico ‘to regain by conquest her lost territory in Texas, Arizona and New Mexico’. The United States joined the war on 21 March 1917.

Altogether eleven German spies were executed in Britain during the Great War, the majority of whom were bona fide soldiers and thus tried by court martial. Their individual cases have been well documented but in contrast to the Second World War, only one Briton was prosecuted for treason, Sir Roger Casement, arrested in Ireland in 1916. Nine of the Great War spies were shot in the Tower of London whereas, as shall be seen, only one such execution took place there between 1939 and 1945.

Sabotage of Royal Navy ships was suspected thrice but not proven. On 26 November 1914 the battleship HMS Bulwark blew up at Sheerness with the loss of 700 officers and men. The following year an auxiliary cruiser exploded at the same place killing both the crew and some seventy dockyard workers who were carrying out repairs on board. HMS Natal blew up on 30 December 1916 at Cromarty in Scotland. On 9 July 1917 the battleship HMS Vanguard blew up with the loss of 700. No explanations were ever found for these disasters so sabotage was presumed and precedents of what to look out for were established to be acted upon during the next year.

In 1916 the Directorate of Military Intelligence was formed and MO5, which had been answerable to Major-General Spencer Ewart, became MI5, a bureaucratic change which did not affect status, activity or personnel. Although officially a department of the War Office still, and answerable to the Secretary of State for War, MI5 had now achieved independence, with direct access to the Prime Minister. In practice Kell rarely came into personal contact with the Prime Minister of the day or any of his ministers, but in the post-war years he slowly began to develop closer relations with those at the most senior level of government, the Secretary ...