(BIRD SQUAWKS)
REPORTER: On a crisp Canberra day,
two senior REPORTER: On a crisp Canberra day,
two senior American intelligence officials
two senior arrive in the Australian capital
on a top-secret mission.
They're here to break some shocking news to Australia's spy agency, ASIO.
JOHN BLAXLAND: This was a grave national-security breach...
..the extent of which is hard to fathom.
..the extent of which (INDISTINCT CHATTER)
The pair from the CIA and the FBI are ushered in to ASIO headquarters
to brief the acting director-general alone.
No-one else is allowed in the room.
ASIO has been warned for years
that it's been penetrated by Russia's feared spy agency, the KGB.
But repeated inquiries have found nothing.
Now the Americans deliver a bombshell
Now the Americans provided by a KGB insider.
"Oh, we've got a spy inside ASIO."
I mean, it was kind of like, "Wow!"
Information sourced from Russian KGB defectors
Information sourced triggers the most extensive mole hunt
in the history of Australia's intelligence services.
NEIL FERGUS: Red alarm bells are going everywhere.
NEIL FERGUS: Red alarm bells This was a critical asset,
and I think when people understand This was a critical asset,
and I think when people understand just how critical
and I think when people understand it will shock many.
What those investigations find
has been kept secret for 30 years,
until now.
What was your reaction
when you learned that there was What was your reaction
when you learned that there was a traitor in your office
when you learned that there was in the team that you worked on?
Hate.
Utter frustration
at realising Utter frustration
at realising that the best years of my life
at realising were spent working for an opponent.
Sadness for Australia
and for this service that I worked for.
Now Four Corners reveals the identity of the mole
and the full extent of his betrayal
in Australia's greatest untold spy story.
It's autumn 1977.
An early chill is beginning to creep over the Australian capital...
..and a wintry pall hangs over international affairs.
ARCHIVE REPORTER: The Americans are not completely powerless
to keep an eye on the Kremlin's moves.
ARCHIVE REPORTER: The question of whether Uncle Sam
can trust them to abide...
ARCHIVE REPORTER: Critics insist that the Soviets have the desire
to circumvent halting the spread of nuclear weapons.
NEIL FERGUS: It was a very sombre, very serious time
because the Cold War was really at its apogee, at its absolute peak.
So, we had no doubt whatsoever because the Cold War was really at its apogee, at its absolute peak.
So, we had no doubt whatsoever
that, in terms of where Australia sat...
..in the global geopolitical situation,
we were, in a way, fighting to preserve democracy.
It was high stakes,
and people got hurt.
Every action had consequences.
Life or death? Life or death in some cases.
DAN MULVENNA: My own service
was in what I would call an intelligence battle with the KGB
was in what I would call at that point in time.
In Australia it was the same thing as we were getting up to in Canada. at that point in time.
In Australia it was the same thing as we were getting up to in Canada.
They were trying to first of all penetrate the intelligence service.
If you can penetrate the counter-intelligence component
If you can penetrate of an adversary service,
you can control them.
Australia is seen by the Soviets
as a back door into the secrets
shared by the Five Eyes as a back door into the secrets
shared by the Five Eyes intelligence partnership
with the US, the UK, Canada and New Zealand.
What secrets did we have that the KGB wanted at the time?
Quintessentially, our access to American secrets. What secrets did we have that the KGB wanted at the time?
Quintessentially, our access to American secrets.
Pine Gap and Nurrungar,
they were crucial to our ability to warn America of a nuclear strike.
Pine Gap was the most powerful American intelligence facility
outside of the United States.
There was the fact we would receive from the CIA
the CIA's top-secret code-word assessments,
the CIA's top-secret which I read once a year,
Soviet nuclear-threat capabilities.
There was plenty of potentially rich pickings
There was plenty for an active Soviet embassy.
And, by hell, were they active in the late '70s through the 1980s.
The Soviet embassy in Canberra
is bristling with KGB and military intelligence spies.
JOHN BLAXLAND: The overwhelming purpose
JOHN BLAXLAND: of the Soviet embassy in Canberra
and in Australia, of the Soviet embassy in Canberra
and in Australia,
its diplomatic presence in Australia,
was about intelligence.
Inside the embassy,
the KGB station chief, Gerontiy Lazovik,
the KGB station chief, is about to strike gold. Gerontiy Lazovik,
is about to strike gold.
In his daily mail delivery
he finds an anonymous letter
addressed personally to him
offering classified intelligence
in exchange for money,
to be paid into a post office box in Canberra.
DAN MULVENNA: So, the ASIO mole
wrote a letter addressed to Lazovik.
He writes it directly to Lazovik.
And he includes in this letter
a sample of the kind of information that he's able to provide.
So, he's put in there
something that is going to...
..you know, interest them,
and he's saying it's for money.
Lazovik is stunned.
An approach like this is too critical for him to handle alone.
He needs instructions from Moscow.
DAN MULVENNA: So, Lazovik does what any officer should do -
he sends the actual documents to Moscow,
he sends the actual documents and they end up in Directorate K,
which handles so-called - and they end up in Directorate K,
which handles so-called - and I use a KGB term of art here -
which handles so-called - 'precious agents'.
You know, really important agents will be handled by Directorate K.
Clearly, this individual, to them, is an important person.
Obviously, he's in ASIO,
and, obviously, he has access
to top-secret SCI material from Five Eyes.
In Moscow
the package sent by Lazovik
lands on the desk of the infamous KGB spymaster Oleg Kalugin,
who runs Directorate K. KGB spymaster Oleg Kalugin,
who runs Directorate K.
it's a trap,
Kalugin initially suspects it's a trap,
as he told Four Corners in 2004. it's a trap,
as he told Four Corners in 2004.
OLEG KALUGIN: Well, initially we had,
as it happens usually, OLEG KALUGIN: Well, initially we had,
as it happens usually,
some suspicions whether there was a plant or double agent,
someone who would get us involved in a major scandal.
Kalugin needs to verify that the top-secret material is authentic,
so, he takes it to the notorious British defector Kim Philby, Kalugin needs to verify that the top-secret material is authentic,
so, he takes it to the notorious British defector Kim Philby,
a member of the Cambridge spy ring British defector Kim Philby,
a member of the Cambridge spy ring
who fled to Moscow in 1963.
OLEG KALUGIN: We deleted all references to Australia,
and I showed this document to Kim Philby
and asked if this document was genuine.
To my amazement, he said,
"It's genuine and it comes from Australia."
At KGB headquarters
the spymasters are jubilant.
The Soviets now have a mole inside a Five Eyes intelligence service. the spymasters are jubilant.
The Soviets now have a mole inside a Five Eyes intelligence service.
For at least two years
the ASIO traitor For at least two years
the ASIO traitor will be the Russians' only insider
giving them access to American and British secrets.
giving them access Once we penetrate ASIO,
we have actually some penetration
and sometimes we have actually some penetration
and sometimes very deep penetration
and sometimes of the CIA or the FBI
and the British MI5 and MI6.
That's precisely what happened.
NEIL FERGUS: This was a critical asset,
and I think when people understand just how critical
and I think when people understand it will shock many.
How senior was this mole?
He was the supervisor of the espionage unit in Sydney.
He was the supervisor So, he had access to...
..was actually running the operations
against the KGB and satellite desk.
So, how significant was it
for the KGB to have secured the services of someone in this position?
Very significant.
Former Canadian intelligence officer Dan Mulvenna
has spent decades working with Western spy agencies
around the world.
His friends and contacts include major KGB players,
like the former spymaster General Kalugin
and the famous KGB colonel Oleg Gordievsky,
who spied for Britain's MI6 for years before defecting to the West.
Dan Mulvenna has investigated the activities of the ASIO mole
for a forthcoming book.
DAN MULVENNA: Gordievsky once told me
that he was in Moscow in his department,
a part of which was Australia,
and he went into the department one day
and he saw Kalugin coming into the department from Directorate K
and he saw Kalugin coming into and meeting with his boss
and apparently and meeting with his boss
and apparently coming in a couple of times.
And he realised immediately, "Well, Kalugin from Directorate K's here.
"These are the guys that run all the penetrations
"These are the guys "of the adversary services.
"We must have a penetration of ASIO."
And then there was kind of euphoria inside the department -
And then there was kind of euphoria "Oh, we've got a spy inside ASIO."
I mean, it was kind of like, "Wow!"
The work being done by Dan Mulvenna is breathtaking.
Neil Fergus is an international security expert
and highly respected advisor to Western intelligence agencies,
who's worked closely with Dan Mulvenna.
He has painstakingly, over many years,
spoken to some of the most senior Western counter-intelligence heads.
spoken to some of the most senior He speaks to them regularly.
He's speaking He speaks to them regularly.
He's speaking to a number of former KGB officers.
He has had access, better access than any other person I know of,
He has had access, better access to living Russian defectors.
The Soviets give their new mole a codename - Mira,
which means 'peace' in Russian. a codename - Mira,
which means 'peace' in Russian.
The mole has top-secret
security clearance,
which gives him access to many
of Australia's most prized secrets.
He works out of ASIO's New South Wales office,
located in this heritage-listed building at Kirribilli
located in this heritage-listed on the shores of Sydney Harbour.
His colleagues here suspect nothing.
You worked with the man, His colleagues here suspect nothing.
You worked with the man, he was your boss.
Can you tell me about him? What was he like?
The word that springs to mind is 'nondescript'.
He was a supervisor, so, he was running a team,
He was a supervisor, and I was part of that team.
But somehow, somewhere along the line, something happened,
something happened to him, something really big,
something happened to him, or something snapped.
And, you know, we are trained to pick these things up,
And, you know, we are trained and this guy flew under the radar.
He wouldn't be the last person I'd suspect,
He wouldn't be the last person but he wouldn't be the first.
The KGB's man in Canberra, Lazovik, returns to Moscow in July 1977.
He'll be appointed to the rank of general
and given one of the Soviet Union's highest awards.
So, Lazovik gets recalled
and goes back to Moscow as something of a hero
and he gets an award of the Red Star, which is...
Traditionally, if the order of the Red Star is given to someone,
Traditionally, if the order it was a prestigious order
given to somebody who's made a significant recruitment.
While ASIO has no idea it now harbours a traitor,
the new mole proves difficult to manage for the KGB.
He steadfastly refuses to reveal his identity to his new handlers.
DAN MULVENNA: Of course, the mole, like most moles,
would prefer to remain totally anonymous.
The KGB would prefer to know who you are and what your motivation is,
this is from many conversations with General Kalugin.
They were sending messages to Canberra saying,
"Look, we need to take control of this operation."
NEIL FERGUS: We're talking about a mole
who was an experienced operations person.
who was an experienced This person was highly skilled.
Initially, this person was running the KGB,
and General Kalugin said that was unacceptable,
and gave orders, direct orders -
"We need to determine the identity of the person
"who was seeking to maintain anonymity,
"and once we've identified the person
"we take control of the case.
"The KGB runs agents, agents don't run the KGB."
General Kalugin's words.
The KGB assigns a highly trained agent runner
to manage its precious new asset in Australia.
Yuri Shmatkov takes over handling the mole
and reports straight to Directorate K in Moscow.
DAN MULVENNA: We do know that Shmatkov,
who confided to someone that I know,
that he had some difficulties running the mole,
that there was some disagreements in who's in charge. (CHUCKLES)
The mole was a...for all intents and purposes, from what I understand,
The mole was a...for all intents and was a take-charge kind of a guy.
He was confident, he knew what he was a take-charge kind of a guy.
He was confident, he knew what he was doing, this was his territory.
So, the Soviets mount a high-risk surveillance operation
targeting their own agent. a high-risk surveillance operation
targeting their own agent.
It's a battle of spy craft.
The KGB successfully tracks the mole and establishes his identity.
The KGB successfully tracks the mole (CAMERA SHUTTERS CLICK)
Finally Moscow knows who the mole is
and that he's head of espionage in New South Wales.
and that he's head of espionage OLEG KALUGIN: He had good access.
Everything about Australia, the United States, OLEG KALUGIN: He had good access.
Everything about Australia, the United States,
mutual cooperation, political plans,
agents planted in the Soviet embassy,
surveillance squads, I mean, everything.
It's taken the Soviets months to identify their mole.
'Mira' is 54 years old.
He was an RAAF pilot during World War II
who joined ASIO soon after it was established
along with many other ex-servicemen. soon after it was established
along with many other ex-servicemen.
He is one of the earliest recruits,
the celebrated first generation known in the service as 'The Old And Bold'.
His treachery comes in the twilight of a 30-plus-year career.
NEIL FERGUS: At this particular point in time,
when this ASIO mole volunteered his services and betrayed his country,
he was of critical importance.
We know from General Kalugin's own account
that he was the first mole recruited in ASIO,
so, they were deliriously happy about THAT in Directorate K.
In his office at the Soviet embassy,
Shmatkov, the mole's KGB handler,
devises an elaborate routine for the exchange of documents and cash
using so-called 'dead letter drops'.
Shmatkov smuggles himself from Canberra to Sydney
in a hidden compartment in the boot of an embassy car
before heading to the pre-arranged drop location.
DAN MULVENNA: When they were sure that they weren't being surveilled
DAN MULVENNA: When they were sure Shmatkov would roll out of the car
and then he'd just go to Shmatkov would roll out of the car
and then he'd just go to shopping centres or movie theatres
and then he'd just go to until the evening.
And most of the dead-drop materials until the evening.
And most of the dead-drop materials
took place in the evening in parks and in wooded areas.
Sometimes Shmatkov uses diversions
like joining an early morning exercise group at Bondi Beach
with staff from the Soviet consulate.
He then peels off on what's known as a 'dry-cleaning run',
spending the day on buses and trains
to shake any possible ASIO surveillance.
As night falls,
the Russian heads to the dead-drop zone in Centennial Park
to collect the latest stash of classified documents
left in an agreed hiding place by the mole.
And what kind of material was he providing?
And what kind of material DAN MULVENNA: As far as we're aware,
almost anything that could cross his desk that he thought was useful
almost anything that could cross and especially Five Eyes material.
There was no doubt that the Five Eyes material
was of particular significance back in KGB head office.
But also in terms of any operations going on in Australia,
this person had access to the details of basically all cases,
this person had access to all current cases,
all ASIO activity around the Russian residency in Australia.
Everything they're doing is being compromised by the mole.
In Moscow
the secrets the mole is betraying are so highly valued
that the head of the KGB and later head of state, Yuri Andropov,
is given regular updates.
NEIL FERGUS: Andropov was deeply interested,
and this is, of course, not because of all of the Australian material,
and this is, of course, not because which was highly valuable,
but because the mole had access which was highly valuable,
but because the mole had access to Five Eyes material,
and it was a doorway, if you like, or a window,
and it was a doorway, if you like, into what was going on
in the United States and Canada and the United Kingdom.
For a few years this was gold for them.
For a few years Metaphorical gold.
The cash used to pay the mole
arrives at the Soviet embassy every few weeks from Moscow
arrives at the Soviet embassy in a diplomatic pouch.
It's labelled 'tobacco'
and contains fat wads of Australian 50-dollar bills.
DAN MULVENNA: It was considerable chunks of nice Australian money
DAN MULVENNA: It was considerable and nice blocks of it
and very large amounts too,
about every five or six weeks.
You know, so, that kind of indicates to you
how many times, you know, there might be meetings.
Anywhere maybe from four to five meetings a year
or six meetings a year.
But we do know that there were considerable amounts of material
But we do know that there were was passed in those meets.
How much do you think he was paid over the years?
Don't know, but they were not going to scrimp on this guy.
His colleagues will later be gutted
to realise that the secrets sold by the mole
also include personal details about his workmates
so the Soviets could assess who else might be vulnerable to recruitment.
NEIL FERGUS: There was no question that the mole was providing
all the data that he could on his work colleagues.
Not just who worked in what section,
in what area and was responsible for...
Where did they live? Photos of them.
The details of their family.
Looking for someone who's vulnerable The details of their family.
Looking for someone who's vulnerable one way or another,
whether to be blackmailed or seduced or suborned.
For me to walk into that team whether to be blackmailed or seduced or suborned.
For me to walk into that team
and to have my file in the Kremlin
expanded that far...
Because that's what this person would've been doing,
they would've been giving chapter and verse
not just on me but on my family, my friends, everything I did,
my vulnerabilities in particular, because I would've been a candidate.
"What's this guy like? Can we recruit him too?"
"What's this guy like? This sort of thing.
So, you're sure that the traitor
would've been reporting So, you're sure that the traitor
would've been reporting back to Moscow on his colleagues?
would've been reporting That's what traitors do.
That's what they do. That's why they're paid big bucks.
By the late 1970s
ASIO staff are growing suspicious
that someone on the inside might be working with the Russians.
Operations against Soviet bloc targets in Australia repeatedly fail
for no clear reason.
What they don't know
is that their colleague is giving the Russians
ASIO's surveillance priorities
as well as details of phone taps and operational targets.
MICHAEL BOYLE: We all felt and people were complaining
that operations were going down.
The expectations for a number of them that operations were going down.
The expectations for a number of them
The expectations apparently were quite promising,
and then they would peter out.
Among a number of people
were feelings they're being compromised in some way,
which meant there could have been a mole in the organisation
which meant there could have been targeting those particular areas.
In a typical case,
ASIO is bugging the home of a Russian it's identified as a military spy.
Midway through the operation
the target is suddenly relocated to the Soviet embassy compound,
beyond the reach of ASIO's eavesdroppers
beyond the reach as though he's been tipped off.
GARY MICHAEL: Very frustrating, very frustrating,
particularly when you think that you've got an operation
particularly when you think which is going to
give good pay dirt
and it just turns to dirt.
That becomes very hard.
It was getting to be the norm in the late '70s and into the '80s.
The norm was that the operations were not successful.
So, there were prolonged periods
where key Soviet officers
were going undetected where key Soviet officers
were going undetected and getting away, breaking contact,
you know, essentially getting away from ASIO's surveillance efforts.
The fears that ASIO is penetrated
reach Australia's Five Eyes allies.
The US is so concerned
it begins to restrict the flow of classified intelligence to Australia
and the CIA dispatches a new station chief to Canberra to investigate.
PAUL DIBB: Michael Sednaoui, this man was an operator.
He told me several times PAUL DIBB: Michael Sednaoui, this man was an operator.
He told me several times
his mission was to see if ASIO had been penetrated.
And towards the end of 12 months,
before he had to go home,
he said to me he believed it WAS penetrated
he said to me but he never even intimated a name.
(INDISTINCT CHATTER)
Still no-one suspects the ASIO mole.
His behaviour gives nothing away.
He joins his colleagues for Friday night drinks after work
He joins his colleagues at the office bar.
He's remembered as being affable at the office bar.
He's remembered as being affable and well-liked by his workmates.
But he rarely stays late, saying he has to go home to his wife.
JOHN BLAXLAND: ASIO was a bit of a club back in the day.
You got recruited based on not what you know but who you knew.
(INDISTINCT CHATTER)
So, once you were in, you were good.
There was very little by the way of double-checking or vetting
There was very little by the way or reviewing of security clearances
or checking of bank accounts
or checking for any personal factors
that might point to you having lost your morale
or your sense of raison d'etre, your confidence in the cause,
and people would excuse behaviour
because there was for quite a while
a fairly boozy culture in the organisation,
a blokey culture in the organisation,
where everybody knew each other
and everybody kind of gave each other
and everybody a degree of benefit of the doubt.
The first concrete lead that ASIO is penetrated comes in mid-1980.
The source is KGB colonel Oleg Gordievsky,
who's been secretly working for Britain's MI6.
Gordievsky is regarded for Britain's MI6.
Gordievsky is regarded
intelligence out of the Soviet Union
as the most critical source of intelligence out of the Soviet Union
during the Cold War. intelligence out of the Soviet Union
during the Cold War.
DAN MULVENNA: The information that flowed from Gordievsky -
and there were three times that he provided information -
and there were three times he was the jewel in the crown.
Gordievsky tells his British handlers
about the medal given to the former Gordievsky tells his British handlers
about the medal given to the former Canberra station chief Lazovik
for recruiting an Australian intelligence officer.
ASIO launches an investigation,
but, when they go to review ASIO launches an investigation,
but, when they go to review their Lazovik files,
but, when they go to review they're in for a shock.
DAN MULVENNA: Apparently 19 volumes of Lazovik's files in ASIO
had literally disappeared from the registry.
And nobody would come up or could come up, at least publicly,
with an explanation as to why these files had been removed or destroyed
so soon after he'd just gone back home.
This is really unsettling, so soon after he'd just gone back home.
This is really unsettling,
when they go to check the Lazovik files
and whole segments are just not there,
completely missing and not signed out.
So, basically, they've been destroyed
by...you know, in evidently a malevolent manner
by somebody who's got access to the files.
For information to just vaporise like that,
it's outrageous, it's seriously outrageous.
The investigation into the Gordievsky lead goes nowhere.
Inexplicably, ASIO concludes that the mole is not within its own ranks.
JOHN BLAXLAND: So, the problem
was that our principal, national,
counter-espionage, counter-intelligence agency
was dropping the ball
on counter-espionage and counter-intelligence.
on counter-espionage They weren't good at their job.
The fundamental task
that ASIO had been set up for - The fundamental task
that ASIO had been set up for - as spy catchers -
that ASIO had been set up for - they were failing in.
After six years of treachery,
the end of his career in 1983.
the mole reaches the end of his career in 1983.
His workmates turn out for a drinks party
His workmates at the ASIO office in Sydney.
(INDISTINCT CHATTER)
The mole bids farewell (INDISTINCT CHATTER)
The mole bids farewell to his colleagues
after more than three decades in the service.
Cheers, everyone. Thank you so much.
How do you Cheers, everyone. Thank you so much.
How do you and the others who worked with him
How do you feel about him now?
Hate.
Utter frustration
at realising that the best years of my life
at realising were spent working for an opponent.
Sadness for Australia
and for this service Sadness for Australia
and for this service that I worked for,
and for this service which was a good service.
There's immense amount of loyalty and trust.
At the age of 60
the mole leaves ASIO on a full government pension.
He's looking forward to a long retirement
playing golf at his club at Balgowlah on Sydney's Northern Beaches,
where he becomes a director.
He must believe he's gotten away
with the most damaging betrayal of ASIO's secrets in its history.
with the most damaging betrayal What kind of damage did this mole do?
They would've been able to give away
incredibly significant information
about Australian technology,
Australian plans,
Australian relations with British and UK counterparts
that would've been useful for the Soviets
to corroborate leads for them,
for exploiting potential defectors in the UK and the United States.
They would've gained access to a wealth of hard-won information
about operatives in Australia and abroad
that would undoubtedly have compromised
the operations that they're involved in,
if not the lives of the people involved as well.
(CHEERING) if not the lives of the people involved as well.
(CHEERING)
Then the Cold War ends,
the Soviet Union collapses
and former KGB officers are giving up long-held secrets.
HARRY P RUSSELL: As you know, there's been a rash of defectors,
particularly when the KGB was being re-badged
particularly when the KGB and the Berlin Wall came down.
There was chaos.
And where there's chaos there's opportunity,
and the Western services took that opportunity
and people were snapped up.
This is when the CIA and the FBI travel to Canberra
to break the news that a second KGB insider
to break the news confirms ASIO has been penetrated.
(BIRDS SQUAWK)
NEIL FERGUS: So, the key comes with some information from the Americans,
NEIL FERGUS: So, the key comes with which is specific.
Not to the identity of a person.
No, no, no.
(LAUGHS)
Wouldn't that have been helpful?
But the fact that there HAD been a penetration
But the fact of Australian intelligence.
ASIO sets up a top-secret mole hunt in March 1992.
ASIO sets up a top-secret mole hunt To ensure maximum secrecy
it's located outside ASIO headquarters.
Investigators start identifying a list of possible suspects
Investigators start identifying among their colleagues.
And then some information comes in from the British. among their colleagues.
And then some information comes in from the British.
That is where things can finally get started in earnest
because there are some coordinates
in the material that is passed to the Australian intelligence services
in the material that is passed to by the British.
This crucial breakthrough comes from another Russian defector. by the British.
This crucial breakthrough comes from another Russian defector.
KGB archivist Vasili Mitrokhin arrives in the West
with 11,000 pages of notes copied from the KGB archive.
They include a copy of a document about the ASIO mole
written after his retirement by his KGB handler and sent to Moscow.
What was the critical information?
It was two pieces of information that were critical,
but the most critical one was the fact that he revealed It was two pieces of information that were critical,
but the most critical one was the fact that he revealed
that the mole was a supervisor of the espionage section in Sydney -
a supervisor, SE, supervisor espionage -
a supervisor, SE, and that he retired in 1983.
But just as ASIO is on the brink and that he retired in 1983.
But just as ASIO is on the brink of uncovering the mole's identity,
the investigation takes a dramatic detour.
The focus switches to an ASIO translator, George Sadil.
He's been spotted at the Russian Orthodox Church in Canberra
with a diplomat suspected of being KGB.
Sadil is then caught on a hidden camera
stuffing classified documents into his jacket.
Well, it was late at night,
it would've been about half past eight, perhaps even later.
There was a banging on the door.
My wife became very, very upset.
I opened the door,
and then this burly bloke,
he just slammed the door open
and he showed me the warrant card
and first thing he said, "Where are the documents?"
Sadil is charged with espionage.
But it turns out the documents relate mostly to his looming retirement,
But it turns out the documents relate and the case collapses.
He pleads guilty to removing documents,
He pleads guilty and receives a suspended sentence.
Was Sadil a mole?
No.
No. No way.
No way, there was no evidence whatsoever.
NEIL FERGUS: It's not fair to call it a wild goose chase.
That's not fair to George Sadil and the people who worked on it.
But there was no intelligence ever obtained
and no evidence ever presented in a court
that George Sadil passed material to a foreign power.
No evidence of espionage.
Do you think they owe you an apology?
(LAUGHS)
They wouldn't know what it is.
So, did the Sadil case
derail the mole hunt, effectively?
It would've, except the deputy director-general of ASIO
was determined, as I understand it, to look under every stone.
So, other ASIO operational activities, I understand,
So, other ASIO operational were proceeding, or did proceed,
because, remember, there was still the important task
of identifying that original mole.
After losing valuable time and resources,
ASIO investigators are now determined not to rest
until they unmask the real mole.
The critical information in the Mitrokhin archive enables them
to cut down their list of suspects from more than a dozen to just two.
DAN MULVENNA: There were two individuals
DAN MULVENNA: who had very similar profiles
in as much as they each had at one time or the other
in as much as they each had been supervisor subversive
or supervisor espionage,
and that they both had been in Rome,
but not at the same time,
and that they had wives that worked for ASIO.
Piecing together the clues provided by the Russian defectors,
investigators establish
that the mole was supervisor of espionage in New South Wales
when he first sold out to the Russians in 1977.
At last ASIO identifies the mole.
Finally they have their man.
The mole is Ian George Peacock,
a senior operations manager in ASIO's Sydney office,
where he was the head of counter-espionage
against the Soviets.
Here he is in plain sight
in a photograph featured in ASIO's official history.
So, we now know that the mole was Ian Peacock,
former RAAF pilot, supervisor of espionage in Sydney.
What have you learned about him and his behaviour
and the extent to which he fits the profile?
and the extent He fits the profile
of an individual who was disappointed with his career
of an individual and what...
..how it had unfolded for him,
and he was, to a certain extent,
somewhat bitter about that
and felt that he had been not served well.
And...
..I think that was a combination of the money and that reason.
Is there any doubt in your mind that he was the mole?
No.
None.
What's it been like for the people who worked with this man
to have to live with the knowledge that he betrayed them
to have to live with the knowledge and betrayed his country?
There are people who have...
..suffered clinical depression and require ongoing medical care.
Is it solely because of this? Well, I don't know,
but I would hazard a guess it's a lot to do with this.
Some people who were aware of the assessed identity of this person
are still in disbelief.
They can't believe it.
But the material which has been obtained from three defectors
is overwhelming.
What would you say to the traitor now if you could say something?
Probably hit him before I said anyth...
No, seriously.
I'm extremely passionate No, seriously.
I'm extremely passionate about this sort of situation
I'm extremely passionate and I want it to end.
Do you believe he was the only mole in ASIO at the time?
Do you believe he was the only mole Yeah, I think so.
People have talked about Yeah, I think so.
People have talked about there being...
I know... ..three, four, five,
I know... even a nest of moles.
Oh, yeah, I read that. That's nonsense.
Nonsense? Yes.
Nonsense? Just nonsense.
So, who was Ian George Peacock?
He was born in 1923 in Hobart
into a life of privilege.
His father was commodore
of the Royal Yacht Club of Tasmania.
private school, Geelong Grammar.
He went to Australia's most expensive private school, Geelong Grammar.
In 1941 he enlisted in the RAAF, aged 18, to become a fighter pilot.
Evidently a risk-taker,
military records show he was court-martialled
for reckless flying endangering life
while training in Victoria.
He was sentenced to three months in a military jail.
Tragically, his father died by suicide in 1949
after battling mental illness.
Shortly after, Peacock joined ASIO.
How would you describe that initial generation that came into ASIO?
All the ones I met - and I met a great number of them - How would you describe that initial generation that came into ASIO?
All the ones I met - and I met a great number of them -
All the ones I met - were very dedicated.
They'd had a military or police background.
Many of them had gone through The Depression as well.
They were very loyal to Australia,
and they were very determined to see the job done.
But there's no real guidance at that stage either,
so, they wrote the books as they went along
to a large extent in this country.
Initially Peacock's career blossomed.
He was appointed to a crack new surveillance team,
the Operational Base Establishment, or OBE,
the Operational Base Establishment, to track Russian spies.
Then there was a posting in Rome
before returning to Sydney with his family.
GROUP: (CHANTS) Equal pay now!
Sisterhood is powerful!
(GROUP SINGS INDISTINCTLY)
But by the 1970s
ASIO was in turmoil and out of step with social change.
A hostile Labor Attorney-General, Lionel Murphy,
raided the ASIO headquarters.
Do you hear about phone tapping from ASIO?
It's the great number of unauthorised ones Do you hear about phone tapping from ASIO?
It's the great number of unauthorised ones
It's the great number which are the concern.
It's been going on for years.
ARCHIVE REPORTER: Prime Minister Whitlam said later
the raid was the worst mistake in Labor's first year of government.
MICHAEL BOYLE: Well, the Murphy raid was a disaster
not only for morale within the organisation
but also because it interfered extensively
with what the organisation was doing.
So, it was a very backward step.
For those people So, it was a very backward step.
For those people who had been working very hard
and taking the risks and doing the hard work,
they were furious, but there was very little they could do about it.
The military-style leadership of 'The Old And Bold' was out.
A judge, Edward Woodward, was now in charge.
MICHAEL BOYLE: The organisation almost went into hiatus.
We lost leadership, we lost direction, we became confused.
Many of the things that people had done
Many of the things and regarded as a major threat
were told and regarded as a major threat
were told were not so important anymore.
were told I knew a number of people
who subsequently for a while lost their enthusiasm.
They were moving towards retirement. They were a bit fed up.
1977 was a tipping point.
A Royal Commission delivered a scathing report
criticising ASIO for illegal operations.
ARCHIVE REPORTER: These public reports make it clear
that his Royal Commission was no whitewash.
Morale was shattered
and Peacock's career had stalled.
This was the year he offered his services to the enemy.
What do you think was his motivation?
HARRY P RUSSELL: In his case, it could have been money,
HARRY P RUSSELL: In his case, it could also have been resentment
because he plateaued at a middle-management level.
And, I could understand why
because I don't believe he was a particularly talented manager.
Well, this individual is no longer with us,
and, so, we're never going to hear the true answer,
if the traitor could even confront the reality himself.
A combination of ego and certainly money.
Certainly, what we're aware of
from the personalities Certainly, what we're aware of
from the personalities that have been speaking about this,
and I'm talking about General Kalugin, Oleg Gordievsky and others,
and I'm talking about General large sums of money were being paid.
Here's how General Kalugin described
what he'd say to the mole if he met him.
I would shake his hand and say, "Thank you. Do you need more money?"
I would shake his hand and say, He was, after all, after money.
ASIO spends years trying to get Peacock to confess.
They give him their own codename - Regatta -
They give him their own codename - and meet with him dozens of times.
In a last-ditch effort
over lunch at a waterfront restaurant In a last-ditch effort
over lunch at a waterfront restaurant at Sydney's Middle Harbour,
over lunch at a waterfront restaurant ASIO offers him a deal.
They have no admissible evidence, and Peacock has denied everything.
They offer him immunity from prosecution
and a generous cash payment.
DAN MULVENNA: Well, I understand
that in a somewhat desperate attempt to entice him to confess
they showed him a briefcase with a certain amount of money in it,
they showed him a briefcase with I don't have an idea how much,
and legend has it
that he grabbed all the money and threw it up in the air
and stomped out of the restaurant.
I mean, nice try, guys,
but, you know, it just didn't work.
Is that legend or is that a true story?
(LAUGHS)
In the world of intelligence, they blend at times.
That's the story that I've been told.
Ian Peacock dies in 2006,
taking his secrets to the grave.
HARRY P RUSSELL: The betrayal is a sad story,
a story of sadness
because it's a story of human frailty.
So, as a Christian, I look at the 30 pieces of silver - betrayal -
So, as a Christian, I look at and the despair that comes from it.
The only winner is your opponent, and the despair that comes from it.
The only winner is your opponent, the enemy, as I call them.
We all want it to end.
My colleagues, my former colleagues want an end to it.
My colleagues, my former colleagues We don't want this to happen again.
But it doesn't end there.
There's an excruciating twist to the story
revealed in the Mitrokhin archive
and never publicly reported before.
The mole was paid by the KGB to find a replacement.
The other key piece of information
was that he was given $50,000 to recruit a replacement.
Now, that is SOP - standard operating procedure.
Now, that is SOP - If you're losing an asset,
they paid HIM If you're losing an asset,
they paid HIM to identify a successor.
On the one hand, it's great news that the mole has retired.
On the other hand, red alarm bells are going everywhere
that he was, clearly, a competent operational person,
that's to say he had tradecraft and capabilities,
and he was working to find a replacement.
The Mitrokhin archive named a younger ASIO officer
who the mole approached to take his place.
who the mole approached DAN MULVENNA: When he retires
and they offer him $50,000 to find a replacement,
he goes out and approaches a young individual
who had worked with him at one point in time,
who had worked with him who we call Ken,
and approached him.
And Ken did not buy that at all
and did not agree to that,
but never reported the approach.
(KNOCK AT DOOR)
When ASIO goes to interview the younger officer named Ken,
When ASIO goes to interview they learn he's recently died.
But the mole told the KGB he had others in mind.
So, the burning question remains - is there still a mole in ASIO?
Do you still fear that the mole found a replacement?
Well, I think that's the...
The holy grail of these Australian counter-intelligence operations
was to definitively resolve that question,
and one day hopefully it will be definitively resolved.
It's now almost 50 years since one of ASIO's longest serving officers
first betrayed Australian secrets to the KGB.
Decades of secrecy have seen rumours and suspicion flourish,
tarnishing the reputations of innocent officers.
NEIL FERGUS: It's extremely harmful to a number of people,
NEIL FERGUS: It's extremely harmful and it really is shameless.
A number of these people, these personalities,
who are banding around names
have no primary information who are banding around names
have no primary information to corroborate their allegations.
And in some cases, unfortunately,
it appears that names have been thrown around
it appears because somebody disliked someone
or someone thought because somebody disliked someone
or someone thought someone hadn't helped their career.
But it's not right.
And the people who have done this should hang their heads in shame,
And the people who have done this individually and collectively.
Details of ASIO's mole hunt are still closely guarded.
A government review of the affair known as the Cook Report
A government review of the affair delivered in the 1990s
has never been released.
It's never been resolved,
there's never been any official clarity around it.
there's never been Cook Report, Mitrokhin Archives,
anything to do Cook Report, Mitrokhin Archives,
anything to do with this is still suppressed.
Do you think it's time now
to give clarity to what happened
so that we can learn from it?
The answer to your question so that we can learn from it?
The answer to your question is yes, I think it is about time.
JOHN BLAXLAND: This was a grave national-security breach,
the extent of which is hard to fathom.
I think we Australians are owed an explanation.
NEIL FERGUS: If we don't learn lessons from the past,
NEIL FERGUS: If we we're doomed to repeat them.
The point we're doomed to repeat them.
The point is we have an extremely aggressive
The point Russian intelligence service
operating to the same old rules, or lack of rules, if you prefer.
operating to the same old rules, It's alive and it's happening,
and that's why It's alive and it's happening,
and that's why ASIO needs to be on its game.
The mole hunt is never over.
(THEME MUSIC PLAYS)
Captions by Red Bee Media
Copyright Australian Broadcasting Corporation