Australia's Most Embarrassing Spy Secret

By Neil Landers

Delayed tremors from an explosion at a local weekly newspaper threaten secrecy about US-British deciphering of messages to Moscow. An untold story about human frailties, Cold War politics and an anti-espionage chief spying for the Russians.

• Language: English
• Publisher: booksunleashed
• Release date: Oct 8, 2014
• ISBN: 9780992592110

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Australia's Most Embarrassing Spy Secret

Published by Books Unleashed at Smashwords

Copyright 2014 Neil Landers

Neil Landers_Resized

The author, above, retired in 2013 after 57 years in journalism. More than 30 of the last of those were spent as a sub-editor at a national daily, The Australian.

He has been intermittently researching details in this story for much of his life. Some matters in this are dealt with much more fully in From the Somme to 'Sydney's Little Chicago', a biography of his father, an accountant who had connections with some key people in this book. The biography is available for free on the internet.

On the front cover is Australia's Parliament House from 1927 to 1988, where much of the story took place, and where secrets were stored.

All rights reserved. No part of this book may be reproduced or transmitted by any person or entity, including internet search engines or retailers, in any form or by any means, electronic or mechanical, including photocopying (except under the statutory exceptions provisions of the Australian Copyright Act 1968), recording, scanning or by any information storage and retrieval system without the prior written permission of the copyright owner.

The fact that this book is published online does not mean that any part of it can be reproduced without first obtaining written permission: copyright laws do still apply. Inquiries should be directed to the author.

The author asserts his/her moral right to be identified as the author of this book.

Table of Contents

CHAPTER ONE - Mysterious Explosion

CHAPTER TWO - Lurid Headlines

CHAPTER THREE - Scourge of Politicians

CHAPTER FOUR - Browne Starts Punching

CHAPTER FIVE - Federal Police Act

CHAPTER SIX - Wartime Allegations

CHAPTER SEVEN - Damaging Admissions

CHAPTER EIGHT - Wheels of Justice

CHAPTER NINE - Drama in Parliament

CHAPTER TEN - Thumbs Down for Browne

CHAPTER ELEVEN - Jailings Condemned

CHAPTER TWELVE - Rum and Law Lords

CHAPTER THIRTEEN - Denials, Surprises and Vapour

CHAPTER FOURTEEN - More Court Surprises

CHAPTER FIFTEEN - Clouds over Labor

CHAPTER SIXTEEN - Jubilation at Jail Departures

CHAPTER SEVENTEEN - Menzies Breaks Promise

CHAPTER EIGHTEEN - Mixed Fortunes

CHAPTER NINETEEN - Explosion Theories

CHAPTER TWENTY - What Probably Happened

CHAPTER TWENTY-ONE - Evidence Released

CHAPTER TWENTY-TWO - Royal Commission Questions Taylor

CHAPTER TWENTY-THREE - Friendship and International Secrecy

CHAPTER TWENTY-FOUR - A Russian Spy Codenamed Ben

CHAPTER TWENTY-FIVE - Political Dangers

CHAPTER ONE

Mysterious Explosion

Just after nightfall on Easter Monday, 1955, two boys returning home from a Sydney newspaper delivery round reached the scene of an event that led to an extraordinary chain of only slightly connected events in the Australian Parliament. Those events included the only ever jailings by the parliament. They ended in September 1955 with a high-level veil of bipartisan secrecy, which was lifted partly at the start of this century.

Street lights were shining in Fetherstone Street, just north of Bankstown railway station, but commercial buildings were closed. At the silent and dark office of a local weekly newspaper, the Torch, the boys noticed what one thought was smoke and the other fog. They also smelled what seemed like burning rubber.

Reports in the Torch for several years had been alleging wrongdoing in the administration of the municipality, which had a troubled history going back much further. The claims had been attacked, but not always denied, in an opposition weekly newspaper, the Bankstown Observer. A year earlier the claims had led to the Labor state government sacking the Labor-dominated local council. However, despite a detailed government report that had supported the claims, very little legal action had followed them.

Sydney’s daily newspapers, after brief headlines, had lost interest in the affairs of the fast-growing municipality on the city’s south-west outskirts. In the rest of Australia there had been no interest. There, as in Sydney, the biggest story remained a savage war about espionage allegations between the conservative government led by Robert Menzies, who was in the sixth year of a reign that was to last a decade more, and supporters of opposition Labor leader Dr H.V. Evatt.

The war had begun a year earlier when Russia’s spy chief in Australia, Vladimir Petrov, had defected to officials of the national security organisation, ASIO. Concurrent with that war was an internal one about espionage allegations, even more savage, that was tearing apart the Labor Party. The rest of the world, like Australia, was still in the grip of a Cold War that had reached a nadir just before the death of Russian leader Joseph Stalin in 1953.

The shopping centre was almost deserted. Just south of the station an 11-year-old named Paul Keating, a school friend of one of the boys, was about to leave a newsagency, probably the only shop still open. But among the buildings on the edge of the shopping centre there were still bungalows where people lived. The evening was mild and windows of these were open. From some came sounds of people starting dinner. From others drifted aromas of cooking. From most came sounds of radios. The early evening serials were ending and the stations were entering a lull with advertisements before the 7pm news broadcasts.

The Torch premises had been closed since lunch-time on Thursday as workers hurried to get away ahead of Easter holiday traffic already starting to pour out of Sydney. In the police station across the road, a converted bungalow, there was desultory activity. Outside that a constable sat in a police van waiting for a sergeant to go with him on a job.

After discussing what they smelled, the two boys, the only pedestrians in the street, continued on and a short distance ahead turned a corner. Suddenly there was an explosion in the Torch premises so loud it was heard in neighbouring suburbs. Nearby houses reportedly shook and windows even blocks away rattled. Debris flew upwards and flames shot above the building.

The constable in the van shouted to the sergeant emerging from the station to call the fire brigade. Then he ran across the road and pulled a motor cycle away from a loading ramp at the side of the office. When he looked through an intact window he saw flames appearing to run along a passageway connecting the front office with the main printing section further back, where the fire was spreading. Other police ran up to join him as he tried to force open a door.

Mr A. Watson, who lived next to the police station, said he had been having his evening meal when the blast almost knocked him to the floor. ‘Crockery flew off the table and the whole house shook under my feet,’ the Sydney Daily Telegraph quoted him the next morning as saying. ‘I thought a bomb had exploded under the house. I rushed into the street with my wife and we saw flames leaping 30 feet from the newspaper office. Debris was falling from the air back into the blazing building. I was showered with dust falling from the sky. The police were very brave because they rushed right up to the flames. Suddenly, a wall of flames shot through the front of the building and the police dived back, just in time.’

Paul Keating’s friend remained near the building while the other boy rode his bicycle to the nearby home of Torch editor Phil Engisch, who lived in the same street as him. There he shouted out that the Torch was on fire.

Meanwhile, a train had arrived from the city and was disgorging passengers returning from the Royal Easter Show or sporting events. As many hurried towards the flames a man running from the street almost knocked some of them over as he shouted excitedly that the Torch had been bombed. Five minutes later the first of more than 50 firemen from four stations arrived. However it was already too late.

Engisch drove there quickly. But by the time he arrived the front office and much of the main printing section were fully alight. The flames were spreading to a section at the side that contained an expensive new rotary press that had been recently installed with the help of a large bank overdraft. Desperately he told the firemen to direct their hoses towards that. A few minutes later he hurried off to make a phone call.

As the blaze lit up the evening sky the news spread quickly by telephone or across fences. People headed there in carloads from all over Bankstown. They included more than a few sacked aldermen and officials of the former Bankstown Council.

Not long after Engisch returned to the scene the roof of the main section of the building collapsed in a shower of sparks. By now the street was crowded with hundreds of people being kept at a distance by police. As the firemen struggled without success to stop the blaze taking over the section that contained the new press the flames were reflected in their faces. Engisch, clearly agitated, turned and looked at the crowd.

In one group stood Ray Fitzpatrick, a former accountancy client of my father. A local businessman and racehorse owner, Fitzpatrick owned the Bankstown Observer, which was engaged in a continuing war of words with the Torch. In 1944 Fitzpatrick had been the subject of serious corruption allegations in the federal parliament. The allegations, however, had resulted during the war only in Fitzpatrick paying £62,000 in back taxes.

From early 1945 the federal Labor government had conducted a civil action against Fitzpatrick in the High Court of Australia alleging a wartime conspiracy to defraud the government. That had been settled out of court by the Menzies government soon after it returned to power in late 1949. During and after those years Fitzpatrick had continued to go about his trucking, excavating and other business in much the same way as he always had.

Alongside Fitzpatrick was Blanche Barkl, a former strong opponent of him, who had been mayor of the council when it was sacked. The first woman to head any Australian government body with a constituency of more than 100,000 people, Barkl was an attractive and youthful-looking woman in her mid-forties. Usually she dressed smartly in public but was now a little untidy. With them was former alderman Cecil Pyers, one of their friends on the sacked council.

Engisch alleged they were laughing when, accompanied by two young men who worked in his printing section, he walked across the street to them.

As was to occur many times, there was more than one version of what was then said. Engisch later told a court inquiry into the fire that he asked Barkl: ‘What do you think about it, Blanche?’ She had replied: ‘You brought it on yourself. You cannot expect to go on caning people like you do and get away with it.’ Engisch told the inquiry he had replied: ‘That is not a very sensible statement to make on such an occasion.’

Barkl told the inquiry she had arrived at the fire with her husband at about 7.30 after hearing fire engines. She was in a group that included Fitzpatrick and Pyers when Engisch, previously a strong supporter of her, had approached and said: ‘They tell me it was a good fire, Blanche.’ She said she had thought his remark had ‘a little tang of sarcasm’ and had replied: ‘I do not know, Phil. I have just arrived.’ When Engisch had said something about her laughing she had said: ‘I am not laughing, I have nothing to laugh about. Look Phil, I don’t know why you keep picking on me. I have never done anything to you. You can’t keep whipping people across the legs all the time.’ Engisch had replied, she said, ‘oh, we haven’t started yet.’

Thirty-five years later, at the age of 80, Barkl’s recollection of everything differed in some respects from what she told the court. Actually, she told me, she was under the shower at home when Pyers rang and told her husband someone had just blown up the Torch. After saying ‘you bloody beaut’ when he passed on the message, she dressed quickly and hurried to the scene with him by car.

They had just arrived and were standing with Pyers when Fitzpatrick, a tall, heavily-built man who had long had a reputation for being quick with his fists, but also for being generous to charities and people down on their luck, walked across. Fitzpatrick suggested to her husband that they go behind the building and ‘piss on the flames to put them out’. It was at that point, Barkl claimed, that Engisch walked across to her, coming through a crowd now so thick she did not see him until he was about two metres away, and making straight for her.

CHAPTER TWO

Lurid Headlines

Soon after dawn the next morning, April 12, a telephone in our living room rang with a call for my father George, who was still in bed. Then 16, I answered it. The caller, who I told to hang on, was Gus Kelly, the powerful Chief Secretary of NSW, whose miscellaneous duties covered police matters. Kelly was also the Minister for Co-operative Societies. George was then involved mainly in running a group of co-operative building societies. Both men were World War I veterans and knew each other also through their involvement in veterans’ affairs. After the call, George told my mother Olive that Kelly was trying to find out ‘what in the name of hell’ was going on in Bankstown.

Pro-Labor George had stopped doing accountancy work for Fitzpatrick after the parliamentary allegations against him in 1944, but still had connections and a fairly good relationship with him. Anti-Labor Olive did not like Fitzpatrick. She did not like Phil Engisch either, who lived up the street from us. But she was a good friend of Phil’s wife Jean, and also of Phil’s father Les, who started the Torch in 1920 and who lived with other relatives next door to Phil and his wife.

A stream of calls followed. From what George said, nearly all for him were from people in the Labor Party, some in its federal branch. Most were also trying to find out what was going on in Bankstown. Some calls were for Olive.

During breakfast my parents between the calls discussed the fire and rumours about its cause, which appeared to be spreading almost as fast as the flames had done. One main rumour was that Phil Engisch started it for insurance money, something for which Bankstown residents had a reputation. George thought that was probably correct. Olive thought it far more likely that the other main rumour was correct and that Ray Fitzpatrick was behind the fire.

That Tuesday Bankstown became front page reading throughout Australia. Even in Europe it got some coverage. The Sydney Morning Herald’s front page story quoted Engisch as saying: ‘This looks like sabotage. Over the years this newspaper has made quite a few enemies. During the last 12 months I have received a number of threats. Only a few months ago I was threatened by an anonymous telephone caller. It appears that someone tried to blow us up − and succeeded.’ The afternoon Daily Mirror quoted Engisch as saying that he had left the building 40 minutes before the explosion and that had he still been anywhere