___ SEC~RITV "" GCHQ: the cover-up continues

Last week the New Statesman revealed evidence of widespread corrup- Mirror or Granada Television's World in Action has damaged, or tion security failure and foreign espionage inside Britain's largest and could damage 'national security': all the evidence suggests that the pro- least-known secret intelligence agency, Government Communications gramme's real offence is to contain further and later research which Headquarters (GCHQ). Similar facts, based on a joint inquiry, were demolishes the government's pretence that GCHQ's failures and cor- published in the Daily Mirror. The government's initial strategy was to ruptions are in the past, and have been dealt with. On the contrary, pretend that the (admittedly complex) allegations were of no sig- they continue unchecked: 'national security', as presently defined by nificance to 'national security' - the cause in which Whitehall has. Whitehall, is simply a device which enables the secret agencies of the attacked so many liberties, and suppressed so many disclosures. This state to place themselves above the law, whiJe repressing the statements strategy auto-destructed on Monday, when IBA banned a World of anyone who dares to criticise them. Here DUNCAN CAMPBELL in Action programme based on the same material, and prepared in con- produces further evidence of GCHQ's corruption, and on another page junction with the New Statesman. The IBA said that the programme JOCK KANE, the former civil servant whose revelations began the 'could be prejudicial to national security'. Nothing done by the NS, the whole story, shows how corruption relates to dangerous incompetence ..

JOCK KANE'S STORY, published last week done. THE GOVERNMENT ASSERTION that all with details of Our own investigations, has When we enquired into the Ascot House is now well in Hong Kong does not fit at all provoked a response from the government. Hotel in conjunction with the Daily Mirror, with our discoveries in Hong Kong. Numerous Their case is based on two propositions: that we discovered within ten days that Kane's and Chinese traders are still offering GCHQ staff Kane's revelations are out of date and don't others' allegations of a conspiracy were very tempting and irregular deals with the full bless- amount to much; and that remedial action has well founded. Our evidence for this was sent ing of GCHQ administrative staff. We asked already been taken. to the Director of Public Prosecutions, Sir one senior official, who served in Little Sai That case is false. When Mrs Thatcher even- Thomas Hetherington, last Friday. Almost in- Wan during 1979, whether the traders referred tually prepares a new statement on this matter, cidentally, we discovered evidence of several to by Kane (below) were still in business then: there are many grounds for grave public con- other possible corruption offences by one of They're stillin the sameold lineof business cern that will have to be dealt with. Chief the two men, former Defence Land Agent Eric he commmented wearily. One of those both amongst these is the question of the ultimate Garland. As a direct result, Garland has been Kane and the official we spoke to singled out fate of something over 200 highly classified questioned by Hong Kong's Independent Secret and Top Secret documents which were Commission Against Corruption, and charges was one of the packing and moving companies established to have disappeared by 1973, when prepared for submission to the Colony's At- in Kowloon, Shangai Packer Koo, now on Kane's instigations a 'muster' was held at torney General. operating under the name Dah. Yeung the Little Sai Wan GCHQ base in Hong Kong. During our enquiries, we discovered that Packers. I rang the manager of Dah Yeung to By 1975, another 14 documents were missing. GCHQ had finally taken some action over this put to her Kane's allegation that the business Another serving GCHQ official, of Kane's matter. Specifically, they had used their in- provided GCHQ staff with fake estimates of rank, told me during our enquiry that, since telligence information to tip off Garland and moving costs in order to win the business, and 1976, when Kane left Hong Kong: his colleague, former GCHQ Operations Of- that in return staff received free metal trunks. Documentshavegonemissingallthe time ficer Frank Wilks, about our visit to Hong Before I asked the question about the three The losses have continued to the present day. Kong. Part of this shabby cover-up has now fake estimates, which Kane mentions below, World in Action established, from a senior been acknowledged by the Foreign Office, in a official with a detailed knowledge of Little Sai parliamentary reply. They were asked if Wan, that since last summer at least one fur- GCHQ's chief in Hong Kong, Mr Don Cook, ther Top Secret document has gone missing had been 'authorised to release classified in- from Little Sai Wan; specifically, a map con- formation to Mr Frank Wilks and Mr Eric taining intelligence obtained from monitored Garland': communications. When enquiriesare known to be beingmade into The same senior official describes the Wad- Government CommunicationsHeadquarters' ac- dell enquiry into Kane's allegations, con- tivities, some of which are secret, it is normal to ducted by three men on a visit to Hong Kong remind staff who may be concerned, including last year, as a farce. 'They looked at internal former staff where appropriate, of their obliga- security checkpoints, but little else'. And no tions under the OfficialSecretsAct. Mr Wilkswas so reminded. No classified information was in- action has been taken to tighten up security, volved. he says. Chinese staff, employed as cleaners on the base, are still allowed to come and go This ingenious answer acknowledges, without being searched for secret papers. somewhat indirectly, that GCHQ was aware New proof of the inadequacy of the alleged of our enquiries from its secret surveillance ac- government investigations is a major feature tivities, and that contact was then made with of the World in Action report, which was sup- former official Wilks. However, the purpose of our approach, as GCHQ well knew, was to pressed on Monday. Besides that, its general question. Wilks on the propriety of his private character resembles last week's report in the business dealings in hotels and furnishings, in NEW STATESMAN. the course of which he became very wealthy through trading with GCHQ staff. These mat- BESIDES THE continuing leakage of ters did not touch on 'secret' activities or documents from Hong Kong, there is clear 'obligations under the Official Secrets Act'. evidence that Kane's most serious complaints Nor does the Foreign Office explain why have never been investigated - or, if in- Garland, who never worked for GCHQ, has vestigated, in a manner intended to avoid ge- had a phone call from 'the chief bloke (at) Lit- nuine discovery. Last week, we detailed the af- tle Sai Wan'. fair of the Ascot House Hotel, operated by a It is worth briefly restating the evidence serving Defence Ministry official and a former against these men whom the Foreign Office ap- GCHQ official, which corruptly won its parently asserts may reasonably be forewarned business from GCHQ. This affair was first of journalistic enquiries, based on GCHQ in- reported to GCHQ ten years ago in 1970. telligence. Wilks has admitted complicity in a The Lee Gardens Hotel: GCHQ's temporary accommodation for its top security employees Nothing was done. Kane has repeatedly refer- scheme to induce GCHQ civil servants to hire in Hong Kong. and the site of the most blatant red to the affair, including in his statement to his furniture, by making gifts of refrigerators call glrl racket among the colony's luxury the Waddell enquiry in 1979. Nothing was and other goodies. hotels. 774 .the manager said: We're only allowed to give one estimate now From the rest of our conversation it became clear that part of the 'evasive action' which CGHQ had taken to block our enquiries in Hong Kong was warning the Dah Yeung com- pany.

PERHAPS THE MOST REMARKABLE ex- ample of continuing security laxity in Hong Kong is the manner in which GCHQ has taken out permanent lettings (for temporary accom- modation of staff) in a new hotel closely con- nected with Triad prostitution rackets - and in turn connected with the Kuomintang, a na- tionalist Chinese subversive and intelligence Alec Crombie, his superior and Duty Officer at the organisation. station; whose basic salary is over £10,000 per The Lee Gardens Hotel, in Hysan Avenue annum. (A Radio Supervisor gets £7,900.) Hong Kong, was built in 1972. Its first public THESE DISPARATE dwellings are occupied by It would be remarkable for such evidently GCHQ officials Who work at the Irton Moor Sta- lucrative private enterprise to be allowed by any relations manager was the remarkable and tion near Scarborough. The differehce between civil service department, let alone one like GCHQ ubiquitous Mr Eric Garland, whose first job it the two is that the opulent mansion (left) out in the solely concerned with secret intelligence. Despite was after leaving the employment of the country is owned by the junior employee of the these private activities however, Shaw was one of Ministry of Defence. GCHQ now permanently two. That's because GCHQ allows the occupier, GCHQ's more efficient operatives in Hong Kong, Radio Supervisor Derek Shaw, to run his own according to Jock Kane. But Kane was disturbed leases 20-30 suites for visiting intelligence private security business in Hong Kong, and in Bri- by GCHQ's practice of allowing Shaw to bring a staff. The Lee Gardens has the most forward tain where he is a consultant on electronic security personal radio into the top security operations area call-girl racket of all the Colony's luxury to a major private security concern. at the Little Sai Wan monitoring station, in order hotels. Most other quality hotels employ The absurdity of the situation is that Shaw's to keep in touch with his business customers. If a private security sidelines have been allowed by his call came through he would leave his post and call security guards to prevent prostitutes visiting civil service bosses in GCHQ, not that he has on or telephone the customer.' Monitoring of guests in their rooms. At the Lee Gardens, the broken any orders. signals from communist China and Vietnam would reverse is the case: special arrangements are The modest semi in Scarborough is owned bv- have to wait. provided to get prostitutes into guests' rooms. A card placed by every bedside invites the . The Waddell enquiry did not look into this In a meeting with Foreign Office Permanent guest to dial a hotel extension number for a remarkable choice of accommodation for Secretary Sir Michael Palliser two weeks ago, massage service with a difference. The hotel GCHQ staff. Yet, according to a hotel he was given repeated vague assurances that then calls in the girl from an outside gency, manager, GCHQ staff from Little Sai Wan disciplinary action had been taken. This claim and puts the initial basic charge for a massage .have been booked in there since the Lee seems to rely on the fact that some officials (about £11 for 45 minutes) on the hotel bill. Gardens opened in 1972. have been punished for a few security breaches On arrival, the girl negotiates a 'tip' for and a few financial fiddles. But none of these having sex. During our enquiries, both Daily OFFICIAL INSISTENCE that there is little or cases arise directly from Kane's revelations. Mirror reporter John Penrose and World in no public interest in these enquiries will have GCHQ employed a neat mechanism of ob- Action journalist Paul Greengrass booked the to overcome some considerable handicaps, fuscation to block enquiry into Kane's 1976 massage service and established that the pro- notably the mounting evidence of a determin- allegations: the GCHQ Security Office in stitute's sexual services were available for £25 ed cover-up. Kane's first parliamentary con- Hong Kong prohibited Kane from including upwards. Greengrass asked whether the call- tact was Charles lrving, MP for .Cheltenham, any substantive information - even the fact girl ring. regularly serviced expatriates or to whom he wrote from Hong Kong. Irving that he was in Hong Kong - in his letters to security personnel. His visitor agreed that approached then Foreign Office' minister lrving. Armed with such vague documents, she called on 'quite a few' English clients in David Ennals with a series of letters from neither Irving or Ennals could dispute GCHQ the hotel. She soon left to visit yet another' Kane. The letters set out many of the allega- officials' claim that Kane's allegations had English client. tions which have now surfaced, and Ennals, been dealt with; nor could they realise the full The guest is issued with a bizarre receipt with .GCHQ guidance, drafted a reply to Ir- seriousness of what had happened. from the 'Tropamare Executive Fitness Club'; ving in January 1976. He acknowledged that: Another MP who became involved with from officials in the Special Branch and the ... Technically speaking, cases occur in which Kane was Kenneth Warren, who in 1977 led vice squad of the Hong Kong police, we it could be argued that individuals (inside the Freedom of Information campaign, and is GCHQ) are in breach of the Official Secrets Act now a member of the government. By late established that this and other call girl rings (Section 2 (i) (c». are run by two Chinese of the 14K Triad gang, 1977, Warren was able to say publicly that But a lenient view was being taken: there had been a 'long cover-up'. one of them himself an ex-policeman. The 14~ GCHQ have investigated those cases to which Triad, apart from involvement in opium Kane has drawn attention but in their view pro- smuggling and organised crime, is closely con- secution ... was 'certainly never warranted. Ap- WE HAVE ESTABLISHED that since 1975 nected to the Taiwan based Kuomintang, one propriate action, including disciplinary action, there have been at least five prosecutions of of the numerous hostile intelligence agencies under Departmental procedures was taken where GCHQ employees in Britain for fraud and operating within Hong Kong. All are in- necessary. related offences. All but one were convicted. terested in the work done at Little Sai Wan if This is more bureaucratic gobbledegook. Apart These prosecutions owed nothing to Kane; but only because of the intelligence it gathers and from Kane, we have spoken to more than a they support his claim that they represent the handles concerning China and south east Asia. dozen past and present GCHQ officials whose tip of an iceberg of fiddling and fraud. experience covers the whole period since then, GCHQ's security indoctrination makes it In February 1976, a higher executive officer perfectly clear that the possibility of sexual in Britain and in Hong Kong. No-one we have at GCHQ Cheltenham, Michael Armstrong- compromise is a circumstance that enormous- spoken to knows anything of such Buisseret, was sentenced to one' month's im- ly threatens security. Indeed in 1964, an ap- 'disciplinary action'; it appears as mythical as prionment for fiddling £800 worth of overtime parently firmer management sent six Little Sai Mrs Thatcher's 'improvements' to security claims. The sentence was suspended for two Wan staff home and cancelled their security after the Waddell enquiry. years. In 1978, two Radio Officers who had Ennals now takes a different view. After clearances for having married Chinese women worked at the remote listening post at Bower looking for reassurances from the Foreign Of- who had relatives in the People's Republic. near Wick, Desmond Quinn and Derek The Lee Gardens Hotel itself is partially fice that serious action was taken in 1976, he Crawshaw, were prosecuted for several. financed out of the proceeds of opium traf- now feels uneasy. On Monday, he led a Com- 'charges of alleged fraud. Quinn was acquitted mons move to gather 70 signatures for an ear- ficking earlier this century. The land on but Crawshaw was convicted and fined; ly day motion demanding a fresh 'top level en- which it stands, in Hysan Avenue, was remarkably, he was nevertheless permitted to originally bought by Lee Hysan, Hong Kong's quiry'. He said: ' The decision to censor World in Action gives continue on top secret work at the Irton Moor 'Opium Prince' of the 1920s. His son R C Lee weight to the allegations that a cover-up is going listening station near Scarborough. The Quinn is now the owner. on. Continued on p. 777 775 Continued/romp. 775 they could see it, were made to Waddell and at confirmed that Kane's allegations are true. & Crawshaw cases concerned allegations that earlier times. One former Hong Kong serviceman recounted the officials had put in simultaneous claims Last month, World in Action interviewed a how the operations area was at one time for both travelling and night subsistence Little Sai Wan cleaner who said that she'd guarded by an MoD policeman, a Chinese allowances (which would be a clear fraud, never been searched on leaving the station - whom officers had apparently forgotten was a since one couldn't be doing both). We know of and still wasn't. She added (through an inter- known Communist. two similar prosecutions, which led to two preter) that she had never been told that Little The government's lighthearted treatment of qCHQ employees being fined during last year. Sai Wan was a secret place, nor that she the GCHQ scandal compares poorly with the A further part of Jock Kane's allegations of shouldn't talk about it. serious view taken by the Oppositon; four lax security at the Little Sai Wan base con- We also confirmed from two other British former ministers-have each asked the Prime cerns the minimal and sometimes nonexistent Little Sai Wan employees that while slightly Minister to make a full and early statement supervision of the activities of locally more rigorous control of Chinese cleaners' about the matter. Until Waddell's report is employed Chinese cleaning staff, some of movements may have been almost the only out- published, or a more detailed explanation of whom are specially selected because they are come of Kane's complaints, no-one was ever the official response to Kane's allegations is deaf and dumb. Kane's allegations, that searched coming or going from the base. given, Mrs Thatcher's hand waving allusions Chinese cleaners were never properly escorted Since last week's NEw STATESMAN article, to 'requisite improvements' in GCHQ security and that secret material was left out where other past and present GCHQ employees have and standards have no credibility.