48 Lloyd to Bailey

Memorandum CANBERRA, 7 May 1947



The attached Most Secret report received from Sydney Office is forwarded for your perusal and suggested reference, through you, to the Department of External Affairs and the Department of Commerce and Agriculture. [1]

Any further information received will be at once forwarded for your information.


SYDNEY, 5 May 1947

I have been informed from a most reliable source that following the recent announcement over the Djokjakarta radio by Mr. C. [H].

Campbell regarding representatives of a Trade Union Conference in the N.E.I. [2], that certain developments are now being considered and negotiations conducted by Campbell and members of the Indonesian Republican Government to form an Indonesian Trading Company in Australia. My information indicates that Campbell, in conjunction with Sjahrir, Hatta (called Hutta), with the possibility of Soekarno being involved, have agreed on the formation of a Trading Company to exploit the trade of Australia.

it would appear that a company will be registered, probably in Singapore, with a capital, it is suggested, of between 10- 20,000,000 guilders and that such capital will be provided by the Indonesian Republican Government through the Java Bank; that this company will grant to Campbell the exclusive rights of trade in Australia for the Republican Government.

It is said that the Australian representative of the Company will form a Company to be registered as the Australian Company with capital in a foreign country and that the Directors will consist of Campbell, [M]. Healy of the Waterside Workers Federation in Brisbane, E. Thornton of the Ironworkers Federation, and J. J.

Brown of the Victorian Australian Railways Union. [3] It will be remembered in this connection, that these persons were mentioned by Campbell in a previous broadcast, as the representatives of Australian Trade Unions at the Trade Union Conference to be held in Java.

I understand that it is proposed that all requirements for the Republic of Indonesia will be purchased from this Australian Company and the trader to trader business will be discouraged by various import restrictions to be imposed by the Republican Government. Exporters desiring to export to Australia from Indonesia will receive permits only if they are trading with this Australian Company representing the Indonesian Republican Government. I am further informed that the reason that the embargo on the shipping from Australia to the N.E.I. has not been lifted is that the informed persons in Australia are awaiting finalisation of the formation of this Company and that, as soon as it is formed, a request from the Indonesian Republic will be made to the Waterside Workers to lift the embargo on Dutch shipping and this will be acceded to.

It is said that any Dutch or other national in Indonesia endeavouring to obtain an import permit for goods from Australia will meet with obstruction from the Republican Government, but, should any import licence be obtained, such information will be passed to Australia when the Company being formed by Campbell and others will take such steps to see that any cargoes covering these imports do not get loaded, whilst at the same time, cargoes from the Indonesian Republican Company will be handled with care and alacrity.

On the financial side, it is proposed that there should be a division of profits between the principal members of both the Indonesian and Australian Companies and that a percentage of the profits will be utilised for propaganda purposes on behalf of the Indonesian Republican Government.

It is further stated that the charter of certain freight-carrying 'planes or flying boats to pick up goods immediately the ban is lifted, has already been obtained and that such flying boats or 'planes will move any medical or similar goods lying in Australia awaiting shipment, the idea behind it being that an appeal from the N.E.I. Red Cross for urgently needed supplies will be made and they will request the N.E.I. authorities in Australia to release these stores. A condition will be laid down that the supplies shall not be handled by Dutch personnel on arrival in the N.E.I., but shall be handed to the Republican Government for distribution and used exclusively for the benefit of Indonesians.

It is expected that large profits will be realised from this and I am informed that it is not intended to distribute such medical stores etc. freely but to dispose of them sparingly.

It would appear from the foregoing that a very serious effort is being made to exploit the Australia-Indonesia situation to the detriment of Australian free traders but it is difficult to assess at the moment what the ultimate result will be.

Further inquiries indicate that the aircraft to be used has already been formed into a Company called the Singapore Air Traders, whose Office and agency in Australia is Bruce & Tobin, 25 Rowe Street, Sydney. I understand that the person in charge of the Singapore Air Traders in Australia, who is at present in Sydney and, I believe, endeavouring to purchase flying boats of the Catalina type, is one named BURGOYNE, who was a member of Lord Killearn's staff in the N.E.I.

This information has just been given to me and a further report will be forwarded when inquiries, which I propose instituting, are completed. This confirms my telephone conversation of even date.

F. G. GALLEGHAN Deputy Director Commonwealth Investigation Service

1 The report was not forwarded to the Department of External Affairs until 20 May. Following the disclosure of its contents to the press, it was the subject of questions in the House of Representatives on 21 and 22 May. Evatt described the alleged Communist plot to monopolise trade between Australia and Indonesia as 'utterly fantastic' and 'almost certainly part of a pretty elaborate hoax'. See Commonwealth Parliamentary Debates, vol.192, pp.2649-50, 2773-4.

2 See Document 42, note 5.

3 The three union leaders named were well-known as members of the Australian Communist party (ACP). Campbell publicly stated that he was not a Communist, but the Commonwealth Investigation Service was satisfied 'beyond reasonable doubt' that he was a covert member of the ACP. Healy was in fact the Secretary of the Queensland Trades and Labour Council.

[AA:A1838/278, 401/3/10/4]