Jock Kane's storyI LEFT GCHQ sixteen months ago. I was thenin the £7,000-a-year Supervisory Radio Of-ficer grade at an intelligence-gathering stationin Scotland. .

Much of GCHQ's work could be importantand worthwhile. But it is conducted behind awall of artificial secrecy, which protects adisgusting network of corruption, inefficiencyand security betrayal.

When I joined GCHQ in 1946, our 'indoc-trination' prescribed that the name of theorganisation, and the nature of its work -signals intelligence, or 'Sigint' for short -should never be breathed in public, because ofthe danger of alerting our targets to the ideathat Britain might be listening in. GCHQ'sSecurity Handbook is very specific:

GCHQ and its end products are known to be thetarget of (hostile intelligence) services and in factany piece of information which is accidentallyleaked may be expected to find its way into alienhands. Moreover, every member of GCHQ is apotential target. -

I still take the indoctrination oaths veryseriously indeed. But when many GCHQ per-sonnel, involved in corruption, work in areaswhere highly secret documents are missing -and other documents continue to disappear -it is in the public interest that the subjectshould be aired.

While the huge, ultimately abortive 'ABC'Official Secrets Act case was being directed in1977 against three outsiders, GCHQ wascovering up the loss of large quantities ofSecret and Top Secret information from itsmajor listening station in Hong Kong - infor-mation which was as accurate, up-to-date andhighly classified as any intelligence could be.A pile of highly important documents hadvanished by 1973, and GCHQ did not want tofind out where they had gone.

Unless action is taken, disappearance ofsensitive documents will continue. So will theannual subventions to businessmen who haveestablished corrupt relationships with GCHQ- and the institutionalised overpayment ofstaff allowances which the secret department'smanagers and operatives have turned to theirpersonal advantage.

I have raised these matters, successively,with GCHQ's own security division, its Direc-tor, with the RAF Provost and Security Ser-vice, with the Scotland Yard Special Branch,with the Director of Public Prosecutions, andwith the Cabinet Office through the help ofMembers of Parliament.. At every stage, GCHQ's great and secretbureaucratic power has been able to preventanything happening. During 1979 a CabinetOffice investigation, ordered by the PrimeMinister and conducted by Sir James Waddell,ca, ground to a halt. .

I have been threatened with disciplinarycharges and the Official Secrets Act - as haveseveral members of GCHQ who have express-ed disquiet at the state of affairs. But theywould be glad, and relieved, to set the factsout for a proper independent tribunal of in-quiry.

Documents go missingGCHQ has lost, and doesn't care to find,

dozens and dozens of highly classified Sigint740

documents. My life in the Service was madeimpossible because as soon as I became awareof the losses In 1973 I insisted on reportingthem - and on reporting other losses whichhave occurred since then.

The material went missing, at timesunknown but certainly over a lengthy period,from the Little Sai Wan station in Hong Kong,which is one of GCHQ's most importantoperations.

When I arrived there in January 1973 my'interference' in reporting that manydocuments were missing was bitterly. resented.I was expected to 'conform', and to write eachday Classified books checked correctalongside my signature. Such was thenegligence and chaos that managerial civil ser-vants were daily signing registers as correct,when many of the documents listed in themwere missing - sometimes, missing for years.

I did not 'conform'. I was so disturbed bythis that I pressed for an official muster of allclassified documents held 'at the station: aftersix months of bitter argument, this wasagreed. On 21 September 1973 the task ofassessing the losses of Secret and Top Secretdocuments from Little Sai Wan was given to amiddle-grade civil servant, Alec Crombie.

The results of his check were appalling. Somany documents were missing that, to theastonishment of myself and many others, theexisting registers were ordered. by GCHQ to bedestroyed, and new classified registersprepared for the documents that were left.

No investigation into the losses took place.No-one was asked to account for the missingpapers, or to explain why they had been sign-ing the old registers as correct.

Two "years later in 1975 another member ofthe station's junior management showed hehad learnt the lesson. He proceeded - whollyunauthorised - to destroy his new registerand replace it with yet another, after I hadreported another fourteen classifieddocuments as missing. Placed alongside theGCHQ Security Handbook's ruling that 'C:lIlY

piece of information which is accidentallyleaked may be expected to find it way intoalien hands', this behaviour is inexplicableand inexcusable.

I raised the question of the missing papersthrough successive levels of the GCHQ hierar-ehy, In March 1974 I had an unproductive in-terview with the Head of Establishment Divi-sion in Cheltenham (where GCHQ is based).He said I was right to draw attention to thebreaches of security. The culprits, he said, hadbeen disciplined. I -know of ;'0 culprits havingbeen sought, let alone identified and disciplin-ed. The interview was a substitute for action.

When I tried to raise the issue with theForeign Office, which is formally in charge ofGCHQ - although, as in the case of its other'subsidiary', MI6, it has no effective control- I was improperly blocked from contactingthe FO's Permanent Secretary.

The story of the missing documents must beput into context. The context is the corruptionand inefficiency inside GCHQ's secret worldwhich is so widespread - and so in-stitutionalised - as to make any sort of in-vestigation officially unthinkable. If an in-vestigation into security risks were to begin,they fear, would it ever end?

Fiddles and fraudLarge sums of money disappear annually

into the hands pf businessmen who haveestablished corrupt relationships with GCHQ.Its operations are secret and un-supervised,and some of its officials have been long ac-customed to the abuse of public trust in serviceof their own financial advancement. Routinecorrupt practices involve false subsistence andtravel claims, false overtime payments, false/accommodation and furniture allowances a(overseas stations - together with oversizedpayments for transport of property and in-surance, and much unnecessary travelling. Iestimate that such pilfering from the publicpurse exceeded at least £1 million during 1976.

The fiddles are practised everywhere. Butground level corruption is worst in GCHQ'soverseas 'posts. And Hong Kong, which hasbeen the principal doorway into corruptionfor many British institutions, is the placewhere dishonesty is most thoroughly routine.Fraud which was prevalent in the UK wasalmost compulsory in Hong Kong.

All G<::HQemployees enjoy highly generousforeign' allowances in addition to the enviedadvantages of the Hong Kong posting. An or-dinary Radio Officer, taking all allowances in-to account, was receiving £12-14,000 a year inthe mid-seventies. In addition to salary atLondon rates, there was £1,500 Foreign Ser-vice Allowance (tax free) and £5,000 accom-modation allowance, together with movementallowances, school fees and lesser perks..Around this centre of secret government

munificence there long ago grew up a networkof camp-followers, expert in the ins and outsof every fiddle. Far from resisting such traffic,GCHQ administrators recommended newstaff at Little Sai Wan to the local traders withthe best in dishonest deals.. Issuing of false receipts by hotels andlandlords was a standard feature of HongKong life. A flat worth £300 a month would berented for a nominal £400 and a receipt issuedto that effect. The difference would be splitbetween landlord and tenant. The same hap-pened with hotel bills.

Even without fiddling, of course, very largesums were being dispensed, because a family

John' Jock' Kane worked for Britain's largestsecret intelligence agency, Government Com-munications Headquarters, for 32 years beforetaking voluntary early retirement during 1978.He joined as a radio operator after the war andretired as a Supervisor at a Scottish in-telligence station. He now lives in England.

could get as much as £5,000 rent allowance inHong Kong, plus another £600 to hire fur-niture. Deals were struck with furniture hirersso that civil servants were able to illegally hirepurchase some of the furniture for shipmenthome.

Payoffs at the social clubLittle Sai Wan must cost at least £10 million

a year to run. In the last year I was there,outright waste and pilferage absorbed£500,000 - perhaps even £1 million - of thistotal.

Opportunities for corruption, and thusblackmail, existed in other ways. In HongKong a social club, Ariel House, is maintainedfor the large staff of Little Sai Wan within thestation perimeter: this might be a sensible ex-ercise for a government anxious to keephighly secret personnel segregated as far aspossible from the outside community. In prac-tice the opposite effect is achieved. Althoughcivil service rules specifically forbid the accep-tance of gifts, a steady flow of gold watches,camphorwood chests, embossed brief cases,leather coats and the like found their way to anumber of GCHQ staff in return for com-pliance and favours. One senior GCHQofficial, Brian Watson, who expressed disquietabout this traffic, was called in for 'a chat'with the Officer-in-charge, George Hopkins.He was asked: 'What's a few gold watches hereor there?'The economics of Ariel House were puzzl-

ing, profits bearing little relation to the highand steady level of trade. During the summerof 1975, Watson asked why low sales were be-ing recorded during the busy summer holidayperiod. He got an evasive reply, but nextmonth the sales figures trebled from$25,000HK (about £2,500) to reach$75,OOOHK(about £7,5(0).

Two attempts by club members to have theaccounts audited by chartered accountantswere vetoed - first on the implausible basisthat the club could not afford it, and then on'security grounds'.In 1975, Radio Officer Chris Smith finally

got an investigation' started by the RAF Pro-vost and Security Services (PSS).

But union officials at Little Sai Wan weretold by Senior Administrative Officer DouglasRobertson that if the PSS team stepped out ofline they would 'get their bloody arses kicked' .One dissatisfied senior officer was abused infront of his staff by Hopkins, the Officer-in-charge - for having given an analysis of fouryears of Ariel House accounts to the PSS. Itwas all a clear warning that any co-operationwith the PSS inquiry would incur officialdispleasure. The RAF team were soondemoralised by the wall of omerta erectedagain them.

The RAF team confided some of their dif-ficulties in myself and others. They told methat they 'couldn't trust anyone in that bloodyplace (Little Sai Wan)'. To another, they leak-ed the fact that the Ariel. House accountsbooks had been conveniently lost. They fearedthat their report wouldn't get off the groundbecause 'there were too many big names in-volved'.

Indeed it didn't get off the ground. The bignames it should have contained were those ofa clutch of senior GCHQ intelligence officials.Nobody could expect that staff encouraged

to fiddle public money in such ways would re-main proof .against the temptations of HongKong. The fiddles are not required as an in-New Statesman 16 May 1980

Composite Signal Organisation Station Hawklaw. near Cupar in Fife, is one of GCHQ's lessattractive and exotic postings. After persistent complaints about lax security and corruptionoverseas, Kane was posted here and told he wouldn't go abroad again. His high standards were'liable to cause difficulties in an overseas environment. '

centive, for the lists of volunteers to gooverseas are always weighty.

Although the big fiddles involve overseasoperations, there have always been plenty oflesser fiddles in Britain - enough, certainly,to build up lax attitudes. One of the most cost-ly centred on the Central Training School atBletchley Park, Buckinghamshire.

Numerous GCHQ staff attend CTS forrefresher courses, training in new methods andso on. Bletchley is easy to reach from most ofour stations in the UK, yet staff training therewould claim full subsistence (£11.50 a night in1976: now rathermore than £15). Most wouldgo home for the weekend, falsely claimweekend subsistence, and end a six-weekcourse with a profit of £200 from publicfunds. Supervising officials, who did the samein their time, have long been accustomed topassing such fraudulent claims.

A Scottish station at Bower, near Wick, af-forded an even pricier fiddle. Insufficientvolunteers to man this important station full-time could be found; GCHQ preferring tomeet requirements by detaching staff formonth-long tours from a larger UK in-telligence monitoring station 50 miles away. Inmany cases, staff would register at a local ad-dress of convenience, travel to Bower by car,and fraudulently claim allowance for 30 nightsaway from home. this, on a rotating basis,could net a tax-free £1,300 yearly.

GCHQ - above the law?When the RAF inquiry in Hong Kong fail-

ed, I tried to raise the corruption cases andsecurity breaches with other authorities. InApril 1976 I contacted the Director of PublicProsecutions' office and met the Deputy DPP,Mr Jardine. He expressed interest and con-cern. After a number of questions, he said thatone of his investigators would contact me forfull details. When I told him of the powerGCHQ could wield, he said: 'I'll take thathurdle if I have to' .

But the 'investigator' never appeared, andfurther efforts to contact the DPP producedonly a series of printed postcards. Then, inOctober 1976 I received a reply saying that theDPP could do nothing; the matter was out ofthe department's jurisdiction.

No government department, supposedly" isabove the law. But this was not the first time I

discovered that the rule does not apply toGCI-iQ. The year before I had contacted theScotland Yard Special Branch, to be told thatthey were prohibited from investigatingGCHQ.

On returning from Hong Kong, GCHQtucked me away at Hawklaw, a station nearCupar in Fife. When I asked for anotheroverseas posting, I was turned down in une-quivocal terms:

The department is not prepared to accept you forfurther overseas service on the grounds of youruncompromising attitude (on a number of sub-jects) which are particularly liable to cause dif-ficulties in an overseas environment.

Difficulties for whom? Those involved in thelosses of secret material, and subsequentcover-ups? Difficulties for those involved inforeign service fiddles, anxious to return forsecond, and third tours with still more pro-fitable know-how each time?

By 1977 I felt I must leave GCHQ beforebeing driven out. The start of the ABC 'Of-ficial Secrets' case disturbed me, because of itscontrast with the scandals which I knew werebeing suppressed. I threatened to blow thegaff in the Sunday Times, whereupon GCHQbecame alarmed, and I received a letter fromthe Establishment and Personnel Officer,which threatened unspecified disciplinary ac-tion if I were to communicate with the SundayTimes or other outside bodies.I contacted MPs instead. Cheltenham MP

Henry Irving, was easily fobbed off by theForeign Office. But Ken Warren, then runningthe Freedom of Information Campaign, pur-sued the matter more vigorously, and achievedthe appointment, by the Prime Minister, of SirJames Waddell CB as a special investigatorfor the Cabinet Office.

Waddell took statements from a number ofpeople, including myself, but nothing wasdone by way of correction or elimination ofsecurity breaches and corruption. Waddell, Iam told, did report back to the PrimeMinister. But I do not know what was said.

Evidence of the institutionalisation of cor-ruption also comes from another source - aletter which the Civil Service Union's Assis-tant Secretary dealing with GCHQ wrote tomy station after two GCHQ employees hadbeen apprehended on fraud charges. FredPhillips of the CSU implied something of the,

741

scale of corruption - and the official collu-sion - when he wrote in September 1976 tothe branch official at Cupar:

I sawPaddyMahon (a seniorGCHQ official) ...to ensure that there was not going to be any'witch-hunting' as a result of the fraudulent claimwhichcame to light. We are fearful that if an ex-amination were made of all the other subsistenceclaims for staff on detached duty, particularlyoverweekendperiods, a very large number of ourmembers would be at risk (our emphasis).

Mahon's assurance that there would be no'witch-hunt' indicates the readiness of GCHQto cover-up. This is despite the fact that the -obviously correct - doctrine of its own securi-ty branch is that any civil servant involved incorrupt practices is a potential blackmailtarget.

A staff vulnerable to 'witch-hunts' by theBritish police is obviously vulnerable toforeign intelligence agencies. During the six-ties, the lesson of Vassall's entrapment by theRussians was held out as an awful warning tous all. But it seems that GCHQ fear leakage toFleet Street more than leakage to the Kremlin.If GCHQ 'moles' haven't sold out to the Rus-sians or Chinese, they have certainly sold outto their own greed.

A clear case to answerThe failure of each initiative for reform

shows that GCHQ is a law entirely unto itself.The tradition goes back a long time, of course:it took the Treasury almost twenty years afterthe war to realise that in addition to its ownbudget GCHQ was running substantial opera-tions inside the Post Office and the ServiceMinistries - with the successful aim of con-cealing the extent of its empire. In 1964 theTreasury finally caught on, and insisted on therationalisation of radio-intelligence stations.

But since then, the power of the departmenthas become more entrenched, and its controlof hundreds of millions of pounds of secretmoney still more absolute. Any attempt atsupervision or at inquiry is repulsed with theincantation of 'national security': the sugges-tion being that material of priceless impor-tance will fall into enemy hands unless GCHQis left entirely to its own devices.The great irony is that what shelters behind

this wall of secrecy is an organisation whosesecurity is utterly and completely deficient. Ihave mentioned the obvious dangers of cor-ruption and of blackmail, but the truth is thatforeign intelligence services would scarcelyneed to go so far to help themselves to thesecrets ofGCHQ.

My aim is not to demand numerous pro-secutions under the Act, but rather to pointout that a double standard is at work. The Actis not used against those who cause genuinebreaches of security. It is used as a deterrentagainst those whose words might set in motioncriticism of the privileges, inefficiency and ar-bitrary power of the secret securitybureaucracy.

If the government and GCHQ ignores cor-ruption in its own midst, it does so at its ownperil. By the standards of its own security doc-trine, the assumption must be that GCHQ iswide open to penetration: it must be treated asthough the KGB's and other 'moles' havereached its inner secrets. Until the nation'sbiggest intelligence department is investigated,cleansed and reformed, then the hundreds ofmillions of pounds which it consumes arespent in activities which may be useless to thenation which foots the bill. •742

Defence Land Agent Eric H Garland sits in the hotel he ran for profit and supervised for a civilservice salary, in 1971; (inset) hi1>partner, former GCHQ Operations Officer Frank Henry Wilks.

Continued from p. 739

highly profitable business renting furniture toLittle Sai Wan personnel. Having started with£20,000 worth of bank credit, it was sold in1978 for £300,000 to a large British-based con-glomerate, Anglo-Thai. Wilks remains on theboard, and Dolfra still furnishes at least oneblock of flats used by staff from a GCHQ out-station.Dolfra had several devices for ensuring a

good flow of GCHQ business, and one ofwhich we have proof involved large numbersof people-with access to ultra-secret intelli-gence-in small-scale, but systematic fraud.Wilks' company had reduced to a fine art theprocess of offering its customers the oppor-tunity to provide themselves with 'gifts' of allsorts-furniture, art-works and consumerdurables of various kinds-at the taxpayers'expense. The 'fridge fiddle' can be documentedexactly.

Each GCHQ expatriate receives two separateallowances, one for furniture hire, and onefor capital purchases. The regulations prohibitanyone from claiming a refund of rental for arefrigerator.

Staff from GCHQ who promised to dobusiness with Dolfra would be offered, secret-ly, the hire of a refrigerator - with the furtherpromise that it would be presented after theend of the contract as a gift. The customerwould then get two contracts: one, for presen-tation to GCHQ, which would comply withregulations, and another secret one, whichwould not.

We have examples of such double contracts,signed by Dorothy Fok in her maiden name ofLeung Yin Fun. Company lists of hirings dospecify that the refrigerator will 'become theproperty of the hirer on completion of (the)contract.'Their customers would return eventually to

the UK, richer by possession of the object itselfand also by the cost of its purchase (which wasautomatically included in the Foreign ServiceAllowance). To judge by the specimens wehaveseen in British GCHQ homes, the modelschosen were often quite luxurious, but thevalue of the deal is not the significant point:what is remarkable is that it should have beensystematically operated by a company underthe control of the former Operations Officerof asuper-secret base.

Jock Kane's evidence is that Dolfra had a'virtual monopoly over GCHQ business. Hewas offered a similar deal when hiringfurniture for his stay in Hong Kong. Hepretended to accept, in order to obtain

evidence of the fraud, but paid for it out ofhis salary, indicating this in a quarterly cer-tificate submitted to GCHQ administration.

The only discernible supervision over accom-modation for Little Sai Wan staff _. all, ac-cording to doctrine, 'targets' for espionage ina notoriously corrupt city - comes from theDefence Land Agent for Hong Kong. Duringthe growth years of Wilks' company, theDefence Land Agent was a close friend andbusiness associate of his named Eric Garland(see picture).

Garland would appear not to have baulkedat combining with Wilks to abuse his officialposition - for in 1968 they got together totake over the Ascot House Hotel and profit byits continuing business with GCHQ's newarrivals. On 10 July that year Wilks, Garlandand Major Tony Grimshaw, starter to theHong Kong Jockey Club, formed KirbyWilshaw & Co to take over the lease of theAscot House. At first Garland was both a,one-third shareholder and a director, but in Oc-tober 1968 he installed his wife, Ida Garland,as a director in his place. Mrs Garland, nowseparated from her husband, saysHe never allowedme to know anything about thebusiness, and I was never allowed to go tomeetings.When I suggested that I should go to ameeting,he told me that it wasn't necessary.By 1971 the Ascot House was netting Mr

Garland about £400 a month on top of hisCivil Service salary, and when the lease wassold in March 1973 it realised $HK1 million:roughly £100,000. Wilks has said privatelythat each of the three partners in fact made£100,000 each overall from the deal.

In 1971 the Ministry of Defence postedGarland back to Britain, but he took earlyretirement and went into business in HongKong - some of it, highly questionable. Heremains, however, a favoured citizen inGCHQ's eyes, so fnuch so that its officials afew weeks ago were prepared to use secretfacilities to assist him in avoiding some highly-legitimate questions from the New Statesmanand the Daily Mirror. These incidents,reported below, make a curious contrast withthe treatment received by Jock Kane when heattempted to get obvious malpractices in-vestigated - but they form part of a patternof GCHQ behaviour extending over the pastten years.

As early as 1970 a GCHQ-Radio Officer atLittle Sai Wan investigated the Ascot Hoteland Dolfra Services. He reported his findingsto the Security Office, GCHQ, at a time whena simple check of Hong Kong business recordswould have exposed the Ascot House Hotel