A Scandal is Announced

A paragraph in which our man in Paris is also their man in Paris:

In July 1983 a Soviet intelligence agent commenced his work with UNESCO in the French capital. His name was Edward Gough Whitlam and his official cover was that of Australian Ambassador to the United Nations agency. How long he had been associated with the Soviets is unknown, however in late 1975, during the election campaign, he and ALP leaders David Combe and Bill Hartley had used the services of Sydney businessmen Rueben Scarf and Henry Fischer, the latter a KGB agent as Fairfax Media revealed in 2014, to solicit a substantial bribe from sources in Baghdad. The compromising deal was finalised when Iraqi secret police chief Farouk Abdulla Yehya flew to Sydney. Over several days he discussed a money-for-information deal with ALP national secretary David Combe and the matter was finalised at a breakfast meeting with Whitlam. The bribe didn’t have strings attached—the Australians were fastened with padlocked chains held tightly by both Iraq and their close associates in the Soviet security forces. Whitlam, Combe and Hartley were completely compromised.

A time when the leader keeps secrets:

In January and February 1976 the revenants of Gough Whitlam’s Labor government were back in Canberra. The atmosphere is well described by Clyde Cameron in The Cameron Diaries (1990). The ex-cabinet minister and daily diarist was a careful and knowledgeable observer. He observes the actors and criticises performances without being aware of some of the hidden reasons for their actions.

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Publicly, Labor had been broken apart in the December 1975 election. The new year was beginning with the occupation of offices on the opposition side of Parliament House and the restructuring of what remained after being mauled by voters defending themselves from a Labor government.

Secretly, a scandal was playing out and about to be revealed. Gough Whitlam, national ALP secretary David Combe and Bill Hartley from the Victorian ALP solicited and received a half-million-US-dollar bribe from Iraqi sources for the election campaign. They were promised a further half-million and David Combe (right) splurged on advertising in the last campaign week. Whitlam lost the election, and the promised Iraqi cash had not arrived. In January the bills were overdue and Labor was broke.

There was another secret problem that must have concerned Whitlam. On the afternoon of November 11, 1975, mild-mannered David Smith was killing the Labor government on the front steps of Parliament House as removal trucks at a back entrance were carrying away Whitlam’s office files. They were taken to the party’s headquarters at John Curtin House but in late December there was a break-in and the files were disturbed: David Combe always blamed the CIA. Something unspecified was stolen from Whitlam, or perhaps recovered by its rightful owner.

After the election the position of leader was declared vacant and Whitlam pushed to have the vacancy filled immediately—he had secrets to preserve. He failed and the decision was delayed until January 27, after the Senate election vote was finalised. Cameron was surprised by his action: “I couldn’t understand the logic of Gough’s urgency of electing the Leader.”

At the beginning of 1976 canvassing for the election of leader was a priority and Cameron was surprised when he noticed an unlikely Whitlam supporter: “I cannot understand why Bill Hartley, Victorian State Secretary of the ALP, and the Socialist Left in Victoria are suddenly so deeply committed to Gough.” Hartley, a politician whose DNA was more PLO than ALP, was acting to save himself and maintain the secrecy of the Iraqi cash deal by saving Whitlam. Hartley wasn’t the only surprising supporter as Bob Hawke moved to elect a lame leader as he awaited his own turn at some point in the future after he had taken a seat in parliament. Cameron pondered:

This must be the first time ever that pro-Israel Hawke and pro-PLO Hartley have been in agreement on anything. There must be a catch in it somewhere! Either Hawke is taking Hartley up the garden path or it’s vice versa. Or perhaps Gough is taking them both into the garden bushes.

He was: “The Hartley-Hawke alliance swung almost every Victorian vote to Gough, leaving Frank [Crean] trailing the field.”

On the day Whitlam was re-elected leader he “looked uncomfortable; in fact, chastened and worried”. Cameron did not know it but the man he observed had much to be worried about. The result was also being followed closely in Baghdad and during the day Henry Fischer rang from there, where he had gone to expedite the promised cash, to find out the result from David Combe. Without Whitlam as ALP leader the Iraqis had thrown away their money: but even with his position as Australian opposition leader confirmed, was he worth an additional half-million dollars to them and their Soviet friends?  

The new Federal Executive met on the following day to review the running of the election campaign. There were questions about the cost and especially the spending for the “enormous amount of advertising over the last week” and they were not told of the first half of the Iraqi donation: washed clean and probably deposited into the secretive leader’s fund controlled solely by Whitlam. The expectation and necessity of even more Arab money was hidden by Combe in an evasive comment that could have been authored by Whitlam: “most of the costs were covered by donations already made or promised”. He didn’t say who had made the promises. At this point towards the end of January, Combe was still telling Whitlam that he was confident the money would arrive.

It was several weeks later when Cameron’s diary again closely examines Whitlam. A Caucus meeting was held on Monday, February 16, the day before the opening of the new Parliament:

There was something ominous about this morning’s Caucus meeting. It was like a meeting of mourners sitting around a coffin. Gough looked uncomfortable and somehow or other gave the impression of a man haunted by a fear too fearful to mention. I can’t remember seeing such a sombre scene!

Cameron was astute, for Whitlam was under enormous pressure. A few days before, the secret of the Iraqi money had been shared and was spreading. David Combe, on holidays on a Russian cruise liner, had been forced to leave the ship in Cairns and fly south. The advertising agency was set to go into receivership unless the ALP paid its bills. Combe wrote to the Commonwealth Bank requesting bridging finance and explained they were awaiting a donation from Iraq. To approach the bank it had been necessary to advise other senior ALP officeholders. They, of course, shared their outrage with Bob Hawke, the Federal President of the party. The letter was urgently reclaimed from the bank and replaced with another request which did not refer to Iraq. The original letter has disappeared; as has a letter Whitlam had earlier written for Henry Fischer (left) to carry to Baghdad when the initial request for money was made.

On that Sunday, the day before Cameron described Whitlam’s demeanour, a meeting of senior Labor leaders had been held at Hawke’s Melbourne home to discuss the affair. Whitlam was not present. There was anger at what had been done and it was resolved not to accept any Iraqi money—even as Combe revealed he was expecting Iraqi representatives to arrive in Sydney the following morning. Bill Hartley’s secretary Gail Cotton flew from Melbourne to meet the QF2 flight from London and Singapore. There were no Iraqis and no money. In that Monday morning Caucus, Whitlam would have known all this.

Now the secret has been shared it is no longer a secret. During the same week a colleague calls Cameron and speaks about “rumblings around the corridors of Canberra of some kind of scandal involving Iraqi money”. This means nothing to Cameron and he only makes a diary entry recalling the matter at the weekend after fellow parliamentarian Mick Young comes to see him in Adelaide and he learns the first details of the scandal.

A season of lies, in which the leader tells some whoppers:

By Tuesday, February 24, knowledge of the scandal is widely shared in Parliament House and Cameron observes his leader: “This story is dynamite! And yet Gough is carrying on as though nothing has happened.” The next morning the scandal is front-page news.

Whitlam lies to Caucus. In the morning Caucus meeting Whitlam is grilled on the reports written by Laurie Oakes in the Melbourne Sun and Rupert Murdoch in the Australian: “Gough vehemently denied any involvement.” Individuals were led astray and given inaccurate responses:

[Jim] McAuliffe’s question was sharp and to the point: “I want to ask the Leader what advances were made and on whose behalf they were made?” Gough’s reply was short and specific! He answered: “None. Nobody.” [Richard] Klugman asked whether any approaches had been made to the Iraqis by anyone else, but Gough said he wasn’t able to say what approaches, if any, were made by anyone else.

Kim Beazley Snr was unsatisfied:

he didn’t believe him [Whitlam] when he asserted that he didn’t know whether David Combe had discussed a donation with the Iraqis, that he was unaware of Bill Hartley’s involvement in the deal, or that the breakfast at McMahon’s Point was to discuss the question of beef exports to the Middle East.

That afternoon in Parliament, Whitlam was superbly beyond criticism: “Gough strode into the Chamber this afternoon with the confidence of a Norman knight on a white charger.” When he spoke he made no reference to the scandal even as Malcolm Fraser answered a question, from one of his own members, which dealt with the two Iraqi representatives Whitlam had met at the home of Henry Fischer. When Fraser suggested the matter deserved further official inquiries, Cameron noticed a change in his leader: “Gough became thoughtful for a few minutes but quickly recovered to ask three more questions—two about napalm and one about industrial relations.”

Whitlam lied to party colleagues, as Cameron noted: “During the evening Martin Nicholls, the Whip, went to see Whitlam and was told ‘he did not know about the Arab money before he met the Iraqis in Fischer’s flat in Sydney’.”

Whitlam lied to the shadow cabinet. With Beazley publicly referring to the matter as the “Iraqi scandal”, the shadow cabinet met on Tuesday, March 2. Cameron was not present but was told that during the meeting, “John Wheeldon demanded an unequivocal assurance that he [Whitlam] did not discuss money with the Iraqis and that he knew nothing about the money, saying that unless this assurance was given he, Wheeldon, would resign from the shadow cabinet.” Whitlam gave the assurance and Wheeldon accepted his reply “as a categorical denial of any knowledge that money was to be donated or that any mention of money had been made during his talk with the Iraqis”.

Caucus records are modified to shield Whitlam. When Caucus again met, Cameron noted that in the minutes of the previous meeting:

the references to Whitlam’s Iraqi report had been recorded in carefully chosen language. For instance it was recorded that there had been no discussions on foreign policy with the Iraqis “other than those that are on public record”. This was designed to indicate there had been no discussions on foreign policy at all; and yet the report is worded in such a way as to allow Gough to later admit that discussions were held on foreign policy. This would leave plenty of room for amplification of those statements if discussion were called for.

Whitlam remakes the past. On the same evening, Cameron was astounded as Whitlam changed his story:

Gough made one of his rare visits to the Members’ dining room and sat down with other Members and, while there, made the casual observation that “of course he had known about the Iraqi deal”. But he said it in such a way to suggest he had never attempted to deny it—a situation that doesn’t correspond with what he told the Parliamentary Executive the previous morning when he categorically denied any knowledge of the approach made by Hartley and Combe for financial assistance from the Arabs.

Whitlam threw dirt at Fraser to muddy the waters. In the parliament next day Cameron noted that Whitlam read much of his speech, and observed that he was “missing Graham Freudenberg who is a magnificent speech writer. In a very real way, Whitlam was Freudenberg’s ‘Charlie McCarthy’ [a ventriloquist’s dummy].” It was an interesting performance:

The material was excellent but he sounded flat and looked uneasy. He was devastating in his criticism of Fraser, especially at the personal level. He made another thinly veiled reference to his earlier allegations that Malcolm had visited a Singapore brothel on one of his overseas trips and chided him about his pronunciation of the word “grandiose”.

What Whitlam had said was, “It would bring no shame on my country, my party or my family if it became known to what places and persons, by what means or at what hours, I had made visits in Singapore or Manila or in Sydney or Melbourne.” What glorious hypocrisy. His own actions with Iraq brought shame on Australia, his party and his family.

The full truth has never emerged. Only some of it did when a ten-hour Executive meeting was held specifically to discuss the Iraqi affair. The plotters were shielded and no decision was taken. Cameron was on the phone the following day to find out what had happened:

Combe revealed details of how Hartley had suggested the possibility of getting financial assistance from the Arabs and of the meetings with Fischer, including a resumé of what happened at the breakfast meeting. He told of how Hartley had arranged for a telex machine to be installed in Frank Crean’s Melbourne office. It was a long, frank and startling report, which covered details that had hitherto been smothered up. When he finished, an incredulous Hawke looked across the room and asked, “Gough, is that right?” Gough had no option now but to reply, “Yes.” Hawke glared at him and shouted, “You fucking bastard.”

Hawke did not maintain the rage. Shortly after he became Prime Minister he appointed Whitlam to UNESCO in Paris. The offer was made at the beginning of May 1983 just as the Combe–Ivanov affair was getting under way.

The author confesses:

That Whitlam was a Soviet agent in UNESCO is my supposition but it is based on the fact that he had compromised himself with Iraqi intelligence and surely with the Soviets. He, Combe and Hartley were suitable targets for agent recruitment—presupposing that none of the three were already Soviet sources. Whitlam arrived in Paris during the warmest phase of the Cold War. The Soviets believed they were about to be attacked by America. Paul Dibb in “The Nuclear War Scare of 1983: How Serious Was It?” (2013) explores the extreme tensions of the time and notes the KGB’s activation of “a top-priority classified intelligence collection program against the West called RYAN”. Christopher Andrew and Oleg Gordievsky revealed in Instructions from the Centre (1991) that at the period the first priority of KGB officers involved in RYAN was “acquiring valuable agents”. UNESCO in Paris was familiar and useful territory for Soviet recruiters. In the Cold War, Whitlam was a valuable soldier—for the other side.

Michael Connor has also written “The Iraqi Money Scandal, 40 Years on” (Quadrant, March 2016) and “Coming to Dinner, Comrade?” (May 2017)