By Brian Toohey: Pearls and Irritations.

Government ministers and senior officials are conditioning Australians to become frightened, very frightened.

The Home Affairs minister Clare O’Neil warns they face a “dystopian future” from cyber-crime, foreign interference and threats to our democracy. What she didn’t say is that Australia can no longer be called a liberal democracy because it has numerous harsh laws lacking the normal protections for liberty. Defence minister Richard Marles stresses the urgent need to spend vast sums on weapons to defeat an unnamed enemy (China) which shows no sign of wanting to invade Australia.

The head of the Australian Security Intelligence Organisation, Mike Burgess warns that Australia faces an “unprecedented threat of espionage and foreign interference”. Among other things, he said foreign intelligence services from multiple countries are aggressively seeking secrets about “medical advances”. Never mind that the national interest is best served by these advances being in the public domain where they usually are.

Fortunately, foreign spies have never had any serious successes in Australia, with the possible exception of those from America. Now Marles has given them open slather by integrating Australia’s Defence Intelligence Agency with that of the Americans. This renders the code classification “Australian Eyes Only” irrelevant.

Nest of Spies

Often spies produce nothing that matters. A good example is the so called “nest of spies” operating from near the end of World War II until shortly afterwards. The “spy master” was an energetic member of the Australian Communist Party Walter Clayton, who was keen to help the Soviet Union, which was an ally in the war against Nazi Germany. Clayton gathered numerous official documents from Australians and forwarded them to the local KGB official in Canberra.

This official, who never did any spying himself, relayed the documents to an ungrateful KGB headquarters in Moscow which send back orders to stop sending so much rubbish. Clayton persevered. The US and the UK intercepted all these cables but couldn’t read them until they later made more progress with the Venona decryption project.

Clayton gave the KGB two 1945 papers from the UK Cabinet’s Post Hostilities Planning Staff, amid many obviously useless cables. The two papers were so wildly inaccurate, or merely fatuous, to be of any use. One presumed India would still be a British possession after 1955. Britain granted it independence in 1947 and partitioned the country into Pakistan and India.

The other paper set out Britain’s desire to maintain its influence in the Mediterranean – something Churchill had already negotiated with Stalin in the October 1944.

However, the first volume of the official ASIO history stated that “several of the British documents handed over [by Clayton] would have been a great value to the Soviet Union”. When these are read, it’s hard to see how . Moreover, Stalin was rarely willing to accept foreign sourced intelligence.

Foreign Interference: History

After ASIO was established in 1949, it spent much of the next 20 years trying to work out who was in Clayton’s spy ring. The answer was he did nothing that mattered. No one was charged. But an American working on Venona, William Weisband, told the Soviets in 1948 that the US was deciphering its Top Secret cables.

They promptly switched to much more secure encryption system. ASIO only learnt what happened after the US National Security Agency disclosed Weisband’s treachery in 2000. It said he was responsible for “perhaps the most significant intelligence loss in US history”. If the alliance mattered to the Americans, Australia would’ve been informed well before 2000.

The US was also involved in a malicious case of foreign interference against Australia in the late 1940s. Its ambassador Myron Cowen and the naval attache Stephen Jurika wanted to damage the Chifley government.

Jurika told Washington there was “not one chance in 10 million of effective action against communism until the Labor government was removed”. Chifley soon proved him wrong by using the army to break a largely communist led coal miner’s strike in 1949 – an unprecedented act of strikebreaking in peacetime.

The US Navy organised a ban on the supply of any classified information to Australia in mid-1948 allegedly because the Chifley government was a security risk. The ban only lifted in mid-1950, but none of the promised supporting evidence has ever emerged.

Left in Place

ASIO was widely applauded in 1954 for facilitating the defection of the head of the KGB Vladimir Petrov in Australia, and his wife Evdokia who worked for another intelligence agency the MVD. The ensuing Royal Commission is still often considered a triumph. It was a farce. Petrov was a drunk who did no serious work, preferring to go up to Sydney and pay for prostitutes. He hadn’t recruited any agents. None were left over from Clayton’s efforts in the 1940s.

Petrov told the Royal Commission he knew nothing about that spy ring. In other words, he had nothing to contribute to Australia’s spy catching efforts, although he and his wife gave other Western counter-intelligence services the names of some Soviet intelligence officers.

From Petrov’s perspective, his defection was a great success. He had expressed fears that if he returned to Moscow he would be punished for his indolence. Evdokia feared her parents could be harmed. Her father lost his job, but they were not physically harmed. Her sister Tamara was allowed to migrate to Australia in 1990.

As the Petrov debacle faded, ASIO expelled a couple of KGB officials for supposedly trying to recruit Australians.

A Hive of Spies

The news that a “Hive of Spies” from Russia were recently expelled from Australia was greeted with misplaced concern. These days, it is highly unlikely that anyone with access to classified documents would sell them to a Russian.

However, the KGB had got lucky earlier without any effort on its part. In June, the ABC reported that George Peacock, who worked for ASIO in Sydney, began selling documents to the KGB in 1997. He wouldn’t have had access to high-level secrets such as those involving Pine Gap, but could have delivered some information of interest to those who inhabit the spy-versus-spy world.

Peacock shouldn’t have sold these documents, but it’s hard to see how he harmed Australia’s national interest. He didn’t start a war, cause a recession, or make housing unaffordable for millions of people.

The Sydney Morning Herald journalist Peter Hartcher said in November 2019 that the former ASIO boss Duncan Lewis told him the Chinese government was seeking to take over Australia political system through its “insidious” foreign interference operations. He said, “People may wake up one day and find decisions made in our country that aren’t in our interests”. Lewis said that this is not only in politics, “but also in the community and in business. It takes over, basically, pulling the strings from offshore.”

The claim is fanciful. Taking over the government would require gaining control of the parliament, the executive government, and probably the judiciary and the military. Hartcher simultaneously published a quarterly essay Red Flag: waking up to China’s challenge that expressed the same views as Lewis.

In this context, the mainstream media gave extensive publicity to the implausible claim that a Chinese intelligence official paid $1 million to convince a Melbourne car dealer Bo “Nick” Zhao to run for the Liberal party seat of Chisholm at the 2019 federal election. The basic facts made clear this would never happen. Zhao was facing bankruptcy and had been charged with very serious financial fraud allegations. He was found dead in a Melbourne motel at the time he was due to face trial.

The coroner found there was nothing suspicious about the death. A Victorian federal Liberal member told me the party was fully aware what was happening and there was no way Zhao would have become a candidate.


The then Liberal chairman of the Parliamentary Intelligence and Security Committee Andrew Hastie fell into the same trap. He said, “This is a state- sponsored attempt to infiltrate our parliament, using an Australian citizen, and basically run them as an of agent of influence in our democratic system”.

To his credit, Burgess introduced a note of reason. In an ABC television interview in February 2022, the ASIO head said, “We don’t believe that a foreign government could change the outcome of our election. Our election process and system of government is robust. I’m very confident, the politicians we deal with are thoroughly resistant to that type of foreign interference.”

People who are eager to catch spies don’t seem to realise spying can be a stabilising force between countries. A former head of the Australian Secret Intelligence Service (ASIS), Ralph Harry says détente between West and East Germany – initiated by former Chancellor Willy Brandt – was greatly facilitated by the presence of senior Soviet bloc agent in his office. He told Bill Pinwill, “That way the Communists knew he was sincere”.

Spies even prevented a nuclear calamity happening in 1983 when NATO conducted a realistic exercise called Able Archer to practise a nuclear bombing attack on the Soviet bloc. It did not look like an exercise. Fortunately, an East German spy in NATO headquarters warned Moscow that it was not a genuine attack. So did a Russian spy in the process of defecting to Britain. Had these spies been caught a nuclear war could’ve followed.


Although you would never guess it from those who constantly urge ASIO to catch more spies, ASIS was established to post spies overseas and not get caught. In one of its more disreputable operations cases, it bugged the cabinet offices of the newly independent Timor Leste in Dili to obtain information about its plans for its offshore petroleum resources. The motive was to obtain information to help to a multinational company Woodside Petroleum which wanted exploit some of the same resources. The subsequent use of ASIO and the courts to cover up and punish the innocent players has been well documented elsewhere.

The treatment of some alleged perpetrators in national security cases is extreme. A businessman Alex Csergo, who had worked for many years as a marketing executive in China, was arrested in April and charged with “reckless foreign interference”.

His defence is that is that while in China he was approached by two people whom he assumed were intelligence officials seeking information. His lawyer Bernard Collaery told the court Csergo only provided open source information to the Chinese. His aim was to placate them until he left China. The AFP reportedly told the court he had not undertaken any work to fulfil the shopping list of information requested by the Chinese.

He is being held on remand in a maximum security prison which leaves the lights on in his room all night. The Guardian reported on August 11 that Collaery told the court he had not received the full brief of evidence from the prosecution which was due to be served by June 14. The magistrate, Mark Whelan said, ‘Mr Csergo’s in prison … we need to move this matter along”. However, the crown prosecution’s barrister said, “There is anticipated to be further evidence obtained from overseas: we don’t have a time frame for when that will be served.”

Secret Custody

In Australia’s justice system, defendant’s lawyers are supposed to be supplied with the evidence against their clients shortly after they are arrested.

When Clare O’Neil warns about threats to Australia’s democracy, she is presiding over national security laws that prevent Australia from being a liberal democracy any more. In 2003, the Howard government passed an Act that gave ASIO the power to hold people in secret custody and force them to answer questions, including requests that could lead to people being subjected to extra judicial execution overseas. No other western government has such a system.

While Peter Dutton was Minister for Home Affairs in 2020, he approached the US Attorney General to allow Australian law enforcement and intelligence organisations to force American communications companies to hand over information on Australian citizens as well as Americans. The US would be allowed to do the same thing in Australia. Dutton failed because the US Cloud Act prohibits the US from entering into a reciprocal agreement with countries which have weaker privacy or civil liberties protections than the US. Australia, to our shame, does not pass this test.

Other laws reverse the onus proof, so defendants must prove their innocence. One law makes it a criminal offence to engage in reporting or commentary that harms relations with another country. No such law could exist in the US.


In 2018, the Assistance and Access Bill became law, making Australia the first country in the world where police, border force and other officials can “add, copy, delete and alter data” after people are forced to handover their phones and mobile devices without any suggestion they have committed a crime. Twelve government agencies “can now issue notices to make tech companies remove encryption and build in new technology to conduct covert surveillance of their customers”.

When answering concerns that a warrant may not be needed for such a drastic use of government power, the head of the Home Affairs department, Michael Pezzullo told a parliamentary committee in October 2018, “If we were to say to you, a notice is a warrant and through an incarnation and the sprinkling of some magic powder dust on it, all of a sudden greater oversight is achieved – it’s the same person. It’s the attorney general of the Commonwealth rigorously discharging their ministerial responsibility.” The then Inspector General of Intelligence and Security, Margaret Stone, criticised Pezzullo for his flippant dismissal of the problem.

However, Clare O’Neil says she is working closely with Pezzullo to focus more resources on challenges around democracy, so Australia will be ready when the “crisis comes”. Instead of provoking fear of ‘foreign interference, more resources are needed for tackling the genuine crises now: the cost of living, housing affordability, public schools and climate change.