SECURITY OF SECRET DEFENCE INFORMATION I would refer to the visit of Sir Percy Sillitoe and Mr. Hollis of M.I.5. As you are aware, Sir Percy was unable to return to Australia from Malaya for a final discussion on the matters raised by him, and I informed Mr. Hollis that I would furnish a report to you direct.
2. I was naturally concerned about the information conveyed to me by Sir Percy Sillitoe on your behalf that a copy of United Kingdom Paper PHP(45)6(0) Final, entitled 'Security in Western Mediterranean and the Eastern Atlantic' was stated to have come into the possession of the Government of the U.S.S.R. through an agent in Australia. As this document had been transmitted by the Australian Defence Representative at the United Kingdom Cabinet Office to the Defence Department in Australia, and circulated to certain officers in that Department and to representatives of the Service and External Affairs Departments on the Joint Service Machinery, I also brought the Ministers for Defence and External Affairs into my confidence, and they have shared my concern in this matter.
3. I must say that, in the absence of full particulars to enable me to study the specific information that came into the possession of the United Kingdom Government and to assess the credibility of the informant, we were placed at some disadvantage in dealing with the matter. For example, the Russians, in disclosing the source of information to the informer, may have doubted his reliability and have purposely mentioned Australia to cover up the true source. Nevertheless, we proceeded to make the most thorough investigation of the report.
4. Three copies of the document were received by the Defence Department on 11th September 1945, and none of the copies is missing. It was handled by certain officers of the Defence Department concerned in the receipt, circulation and custody of documents of this class, and it was circulated to the members of the Joint Planning Committee and to the External Affairs representative on the Post Hostilities Planning Committee between September 1945 and March 1946.
5. As soon as Sir Percy Sillitoe made his report to me, the Secretary of the Defence Department arranged for the Controller of Joint Intelligence to make an investigation from the security aspect, of the system of control, circulation and custody of security documents received from the United Kingdom Government. It was directed that special attention be paid to document PHP(45)6(0). The following report was submitted by the Secretary:-
'The report of the Controller of Joint Intelligence indicates that, in so far as the Defence Department is concerned, the system of transmission to Australia by High Commissioner's bag, handling on receipt, registration, and circulation, are satisfactory.
The report of the Controller of Joint Intelligence shows that the circulation of documents to Service Officers who are members of the Joint Service Machinery of the Defence Department is confined to the recipients, who are mainly the Chiefs of Staff, Directors of Operations, and Directors of Intelligence, and to such other officers concerned in the particular subject whom the recipients consider should see it.
The final custody of documents held in the Defence Department after return from circulation is, according to their nature, the responsibility of the Senior Assistant Secretary or the Senior Clerk, who is under my personal supervision. In a few special cases, copies of documents are retained by the Chiefs of Staff. Some documents on which departmental action (other than circulation) is necessary, are retained with the relevant departmental file, which then comes within the scope of the Secret Section of the Registry.
The officers in the Defence Department who handle these documents in any way, are all considered to be highly trustworthy. The Controller of Joint Intelligence was not able to check personally the control exercised by the Service Officers on the Joint Services Machinery, but they are senior and responsible officers, and they are presumably satisfied with the reliability of the officers to whom they may give a wider but limited circulation of the documents received by them.' The procedure was also explained to Mr. Hollis, and it is understood that he considered it to be satisfactory.
6. The particular document (PHP(45)6(0)) was circulated to the following members of the Joint Planning Committee. Captain D. Harries, R.A.N., Brigadier A. Wardell, and Air Commodore F. Bladin, and to the Secretary of the Committee, Commander G.C. Oldham. As far as can be ascertained, no further circulation was given to the document by those officers, all of whom are considered to be of unquestioned reliability. This document was also circulated to the External Affairs representative on the Post Hostilities Planning Committee. The Secretary of that Department was also requested to investigate the matter, and he submitted the following report:-
Mr. Milner was formerly an officer of the Department of External Affairs and is at present a member of the staff of the United Nations.
7. If a leakage occurred in Australia in respect of this document, it would appear that it must have happened as far back as early 1946. Though every effort has been made to discover any possible source of leakage, our enquiries have met with no success.
8. On the general question of Communists in Government employment who may have access to secret information, I would refer to the following statement made by me in Parliament on 7th April:-
'I have been asked to explain what action the Government is taking against the Communists. The Government has not waited for this clamour and for what I may describe as this wave of hysteria which is sweeping through the world and which could lead to the grave consequences of war, when a little cool-headedness may avoid it. The Government has always considered that, in matters involving security, all persons entering the public service, should be checked; and all members of the public service, even though they may not have been engaged in security work, have been subject to close scrutiny. I give to the country a complete assurance that so far as the Commonwealth Investigation Service and the State police forces can detect, no person whom Mr. Attlee's description fits, is engaged in vital security work. The Government did not wait for the present clamour, which has been raised in the press, or any other agitation before taking steps to safeguard the country.' The position in regard to the Public Service is as follows:-
(i) New appointees to the permanent Service are referred to the Commonwealth Investigation Service for report.
(ii) The Director of Security has a list of known Communists in the Public Service. The list is a very small one, but none of the officers concerned is considered to be in any position of danger.
(iii) It is proposed to extend the security check in respect of persons employed in dangerous Sections, but this has not yet been fully developed.
Action has been taken in the Department of Supply and Development to create special machinery for security purposes in connection with the Guided Weapons Project. The Intelligence Sections of Service Departments also have records and sources of information. Consideration is being given to any additional measures that may be considered necessary for strengthening the check of all Civilian and Service personnel in the group of Departments dealing with Defence information of a secret nature.