Moscow Rules

‘MOSCOW RULES’:
Soviet intelligence
and New Zealand
during
the Cold War
Dr Aaron Fox
Independent Cold War Historian
Invercargill
New Zealand
‘MOSCOW RULES’:
Introduction
I would like, today, to examine the alternative history of New

Zealand – Soviet relations – the history of Soviet Espionage and
New Zealand. My presentation is based upon the declassified
archives of western intelligence agencies, notably the National
Security Agency and the Federal Bureau of Investigation, the
Australian Security Intelligence Organisation, and the New
Zealand Security Intelligence Service. These western sources
provide a glimpse into the workings of Soviet intelligence during
the Cold War period, but the equivalent Soviet archives, and with
them the full story of Soviet espionage, remained firmly closed to
all comers.
The title ‘Moscow Rules’ refers to the spy craft employed by

Soviet intelligence agencies throughout the Cold War, for I will
examine a variety of case studies which illustrate the Soviet way
of spying.
‘MOSCOW RULES’:
The KGB crest used on the first slide is to be found on wall of the
Lubyanka in Moscow, which remains the headquarters of the
Russian Intelligence Service.
‘MOSCOW RULES’:
Introduction
• A short pre-history of Soviet
espionage and New Zealand
• Their Trade is Treachery – how
to become a Soviet spy!
• Moscow Rules – Soviet
Intelligence and New Zealand
• A short tour of Wellington’s
top espionage spots
‘MOSCOW RULES’:
My talk will cover four main topics which, I consider, provide a broad survey
of the history of Soviet intelligence and New Zealand:
- A short pre-history of Soviet espionage and New Zealand

- Their Trade is Treachery – how to become a Soviet spy!
- Moscow Rules – Soviet Intelligence and New Zealand during the Cold War
- A short tour of Wellington’s top espionage spots
At this point I must make a short disclaimer: this presentation is based on

some interim findings of a research project which has been based at the
Department of History, University of Otago, since 1997. The views expressed
today are therefore completely independent from my current work here in
Southland, or indeed my previous position with the New Zealand Defence
Force. Similarly nothing should be concluded from the fact that a great uncle
of mine helped to found the Communist Party of New Zealand in Wellington in
1921.
Which leads me neatly on to a very short pre-history of Soviet espionage and

New Zealand – how, in the 1930s, New Zealanders were involved, either
wittingly or unwittingly, with the Soviet Intelligence Service.
Moscow Rules:
The Metropolitan-
Vickers (Metrovick)
show trial, Moscow
1933
The New Zealander and
the James Bond
connection
The Metropolitan-Vickers
(Metrovick) show trial, Moscow 1933
The New Zealander and the
James Bond connection
The earliest case which I can find dates from 11 March 1933,
when a large detachment of O.G.P.U. agents, charged with
combating counter-revolutionary activities, raided the company
Dacha of Metropolitan-Vickers Electrical Company Limited,
located at Perlovka, near Moscow. Amongst those arrested early
the following morning was ‘confident, good-looking New
Zealander’ Alan Monkhouse, the company's chief electrical
engineer in the Soviet Union. Monkhouse had worked in Russia
since before the Bolshevik Revolution, and now managed
Metrovick’s contracts with the Soviet Union to construct hydro-
electric generating capacity to power Stalin’s Five-Year Plan.
Metrovick accused
Moscow 1933
Breakdowns in four big power stations, and the Soviet Union’s
troubled trading relations with the United Kingdom prompted the
arrests of six Metrovick engineers, who were charged with
wrecking, espionage and bribery. News of the forthcoming show
trial in Moscow prompted Reuters to send a journalist - ‘one of
our ablest young men’ - to cover the event – one twenty-five year
old Ian Fleming.
Monkhouse was found guilty and deported from the USSR, and by
July 1933 all of the British accused had been released. However
the trial had another, unexpected outcome for the Soviet Union –
Commander Ian Fleming
the future creator of James Bond and the author of From Russia,
With Love, had now witnessed the workings of the Soviet
intelligence service at first hand.
Dr William Sutch
(1907-1975)
The Sutch Case
No discussion of Soviet intelligence and New Zealand would be

complete without mention of Dr William Ball Sutch, who was
arrested on 26 September 1974 while meeting with Dimitri
Razgovorov of the Soviet Embassy, and who was subsequently
tried and acquitted under the Official Secrets Act. I will say more
about the events of 1974 shortly.
The Sutch Case commenced well before the Cold War, as he first
came to the attention of the Director of the Investigative Branch
of the Attorney-General’s Department in Canberra in 1934, who
enquired if Sutch, then returning to New Zealand from a trip
through Finland, the Soviet Union and India, was known to an
Australian who was under investigation for his alleged
Communist Party of Australia (CPA) activities.
The case against Sutch further alleges that, having embarked on

a career as a New Zealand public servant, he ran foul of MI5 in
1937 during a meeting of the Committee of Imperial Defence in
London. Sutch had accompanied Walter Nash, the Minister of
Finance, to the meeting, from which confidential material was
leaked to a journalist. The investigation of the leak by MI5 ‘fell
short’, according to former Prime Minister Sir John Marshall, ‘of
direct evidence that he [Sutch] had passed on secret
information’. Nonetheless suspicion alone apparently sufficed
for subsequent British governments to demand that Sutch not
have access to secret material. And, it has to be said, these
suspicions continued, and deepened, in the course of Bill Sutch’s
career.
‘MOSCOW RULES’:
Their Trade is Treachery
‘MOSCOW RULES’:
Moving from the pre-history to the history of Soviet espionage

and New Zealand, I thought it timely to remind ourselves of what
it was like, in the West, at least, when it was thought that spies,
traitors and enemies of the state were everywhere. The following
short briefing is taken from a Cold War period publication by the
British Central Office of Information – Their Trade is Treachery.
So, let’s assume that we’ve all signed the Official Secrets Act,
and be warned!
‘MOSCOW RULES’:
• GRU and KGB
• Legal and Illegal
Spying
• Talent Spotting
• Recruiting
‘MOSCOW RULES’:
Spies are with us all the time. They are interested in everything,
defence secrets, scientific secrets, political decisions, economic
facts; even people’s characters – in order to recruit yet more
spies.
This booklet tells you about the great hostile spy machine that
tries to suborn our citizens and turn them into traitors. It shows
you how sometimes it succeeds, and sometimes it fails.
This booklet tells you how to recognise at once certain espionage
techniques, and how to avoid pitfalls, which could lead to a
national catastrophe or a personal disaster – or both.
Finally, if you are in possession of information useful to a spy –
and that covers a field much wider than you can, perhaps,
imagine – or if you are likely to be entrusted with such
information, either now or even in the seemingly remote future,
this booklet tells you how to foil the spy who will certainly be
seeking it.
He may be closer than you think.
‘MOSCOW RULES’:
There are two main branches of the Russian Intelligence Service.
The GRU – directs military, naval and air espionage in all foreign
countries
The KGB – attends to all other Intelligence needs of the Soviet
Government.
Legal and Illegal Spying.
Russian spy networks are of two types, the legal apparatus and
the illegal apparatus. The legal apparatus is under the control of
a member of the Soviet Embassy staff known as The Resident.
This individual enjoys diplomatic immunity until declared
personal non grata or he is recalled to Moscow. The Rezident
may also have workers, intelligence officers working in
diplomatic or official Soviet establishments such as TASS or
Amtorg. The illegal apparatus has no connection with any official
Soviet organisation in the country in which it is operating, and
the illegal Resident has no diplomatic immunity.
‘MOSCOW RULES’:
Talent Spotting: Soviet intelligence agents first must identify

individuals who can obtain secret information, in a process
known as talent spotting. Their targets fall into three categories –
the ideological spy (the committed communist), the mercenary
spy (motivated by greed), and the spy under pressure (under
pressure of blackmail, or in some cases an émigré with family
still behind the Iron Curtain). Of the three, the ideological spy
can be the most difficult to identify.
‘MOSCOW RULES’:
Recruiting: The standard technique is the social approach,
whereby the Soviet agent makes personal contact with a potential
agent, whether by chance or by cautious machinations. Four
aspects of the social approach have been noted:
The innocent first contact.
The innocent friendship which is then fostered
The incredible patience employed. Friendships can be
developed over years before any further progress in the
relationship is attempted.
The extraordinarily detailed control exercised over the operation
by Moscow Centre. Instructions issued by the Centre are carried
out to the letter.
In cultivating a potential asset, the Soviet Agent can praise and
flatter, pander to the target’s conceit, vanity or love or intrigue,
imbue the target with feelings of importance or even power, and
deploy the time-honoured (should that be dis-honoured) weapon –
sex.
‘MOSCOW RULES’:
Here endeth the lesson. So, forewarned and forearmed, now let us
see how the Soviet spy trade worked in practice, in the New
Zealand context:
Soviet Intelligence and
New Zealand
Three Case Studies
• The Leader - the Christ’s
College Spymaster.
• The Illegals – a New Zealand
legend
• The Double-Agent – ‘Sylvia’,
the SIS, ASIO and the KGB
Case Study #1
The Leader
(or the Christ’s College
Spymaster)
Walter Seddon (‘Wally’)

Clayton
Soviet codename
‘KLOD’ [Claude]
Case Study #1
The Leader
(or the Christ’s College Spymaster)
Case study number one concerns Walter Seddon Clayton, known as

Wally Clayton or, by his Soviet masters by the code-name ‘Claude’.
I have termed him ‘The Leader’, which was the Soviet term for a
KGB officer or an experienced local agent who handled and
supervised a network or sub-network of assets. In many cases where
the KGB gained control of older Comintern or GRU networks, the
existing leader was left in charge for months or even years.
Case Study #1
The Leader
Case study number one concerns Walter Seddon Clayton,

known as Wally Clayton or, by his Soviet masters by the
code-name ‘Claude’. I have termed him ‘The Leader’,
which was the Soviet term for a KGB officer or an
experienced local agent who handled and supervised a
network or sub-network of assets. In many cases where
the KGB gained control of older Comintern or GRU
networks, the existing leader was left in charge for
months or even years.
Case Study #1
The Leader
According to the brief biography provided by the New Zealand Security
Intelligence Service, Wally Clayton was born in Ashburton on 24 March
1906, the son of Thomas Ernest Clayton, an Ironmonger from Sheffield,
and Alice Maud Clayton (nee Bean), from Kaiapoi. Wally had two
brothers, Arthur (who died of tuberculosis in 1930) and Charles. The
family moved to Christchurch in 1911. Wally was educated for a year at
Christ’s College, and is reported to have worked at Tisdall’s Sports Shop
in Christchurch before moving to Australia, where he married Hilda
Mary Lane in Melbourne in 1931. He joined the Communist Party of
Australia in 1933, and frustratingly scattered references in the papers of
the Communist International (the Comintern) relating to the Australian
and New Zealand Communist Parties to a ‘Clayton’ having been present
at the International Lenin School, Moscow, in the 1930s. He became
active in public Australian communist party activities from the mid-
1930s, and moved with his wife to Sydney in 1939, where he rose to the
top of the New South Wales branch of the party and continued to be
actively engaged in party activities.
Case Study #1
The Leader
Following the declaration of the Communist Party of Australia as an illegal
organisation in June 1940, Clayton ceased his public activities in 1941,
becoming, instead, an underground party member. He developed a network
of alternative identities, false addresses and dead letter drops for the
exchange of communist party information. In 1944, he joined the five-
member Central Control Commission of the party, charged with ensuring
the security, unity and ideological correctness of the party, and to operate
the party’s clandestine activities. With the dissolution of the Comintern in
1943, the responsibility for continued contact with communist parties
passed to Soviet embassies, while control of communist illegal
organisations passed to Soviet intelligence. It is thought that Clayton first
collected information for the NKVD in 1943, becoming one of several CPA
informants to NKVD officers Makarov in Canberra and Nosov, the TASS
agency representative, in Sydney. From September 1943 Clayton was
considered a ‘special reliable undercover contact… not suspected by the…
local authorities’, and by late 1944 was supplying classified official material
from a variety of sources. He was given the code name ‘Claude’ or KLOD in
April 1945. His growing network of both witting and unwitting informers
included officers of the Department of External Affairs, the Commonwealth
Scientific and Industrial Organisation, the Security Police and Journalists.
Case Study #1
The Leader (or the Christ’s College
Spymaster)
Clayton’s spy ring first came to the attention of western intelligence

due to what is now known as the VENONA operation, the joint US-
British Commonwealth interception and decryption of Soviet
intelligence service communications between Moscow and Soviet
embassies. VENONA was a remarkable epic of cryptographic
genius and ingenuity, comparable to the Allied decryption of the
German ENIGMA codes and the US Japanese PURPLE codes during
the Second World War. This is, in fact, a classic example of Cold
War counter-espionage – the painstaking collection and evaluation
of intelligence to build a picture of the covert world of Soviet
clandestine operations. Amongst the Soviet scalps which the
VENONA operation can justifiably claim are nuclear spies Klaus
Fuchs and Ethel and Julius Rosenberg, and HOMER, otherwise
known as the British diplomat Donald Maclean.
Case Study #1
The Leader
Equally, however, given that the VENONA operation commenced in
1943, here can be observed classic Cold War paranoia in its infancy,
with nominal wartime allies actively spying on each other. Certainly
the use to which the information obtained from VENONA decrypts was
put remains contentious, as the decoded messages were often
fragmentary, while the bulk of the intercepts have never been
decrypted. The coded cable traffic between the Soviet Embassy in
Canberra and the Headquarters of the MVD and GRU in Moscow had
proved the easiest to crack by American cryptanalysts and by 1948 the
decrypts had revealed Soviet codenames, names in clear, and details of
the KLOD spy network operating in Australia. From 1948, first words,
and then identifiable names began to emerge in clear text from the
baffling banks of numbers which were the Soviet code. What most
alarmed security organisations in America, the UK and Australia was
that secret documents had clearly been passed to the Soviets, that the
Australian operation was clearly funded from Moscow, and that
informants had been cultivated in government circles in Canberra –
particularly in ‘The Nook’ – the Department of External Affairs.
Case Study #1
The Leader
Continuing the New Zealand theme of today’s talk, here is a

VENONA document which details a meeting in September 1945
between Clayton and two officers of the Department of External
Affairs, Canberra – Ian Milner, a former New Zealand Rhodes
Scholar and academic, and Jim Hill, a former student of Milner’s
from Melbourne University, who now worked with Milner in the
Department of External Affairs:
Ian Milner [Bur] and Jim Hill [Tourist]
Case Study #1
The Leader
Milner was stated as having met twice with KLOD, when ‘many
interesting things’ were said, while Hill passed copies of several
official telegrams and a secret report to Clayton.
Case Study #1
The Leader
The message further indicated the extend of his network, with

people in Sydney, Melbourne and Canberra. Dzhon, the other
contact mentioned in the message, was Eileen Dorothy Jordan, a
records clerk in External Affairs, whose work gave her access to the
entire range of Australian diplomatic correspondence.
A second mention of Ian Milner on 6 October 1945 was a request

from Moscow for biographical details of Milner and Hill, in order
that they could be vetted by Soviet intelligence.
Case Study #1
Spymaster)
This message also warned the Soviet Embassy in Canberra of the

dangers of Clayton’s work in recruiting new sources of intelligence,
particularly if the quality of the information this obtained was low-
grade, and instructed that he ‘concentrate his attention on essential
materials of an intelligence and operational nature’.
Case Study #1
The Leader
The Soviet Embassy in Canberra was further admonished to keep

tighter control of Clayton, to ensure that he no longer employed
sources without first obtaining clearance from Moscow.
The third and last VENONA message which mentions Milner merely
corrects the wording of the 6 October 1945 cable.
Details of some of the most significant classified documents which
were obtained by KLOD were revealed in the VENONA decrypt of a
cable from Canberra to Moscow of 19 March 1946.
Case Study #1
Spymaster)
As you can see, KLOD was passed copies of two secret British Post-
Hostilities Planning documents dated 19 May 1945, and Semen
Ivanovich MAKAROV, here code-named EFIM, who was the MVD
Resident in Canberra, reported that these documents ‘were handed
over to us for 35 minutes’ during which time they were copied and
returned to KLOD, who then handed them back to his un-named
contact in The Nook.
Case Study #1
The Leader
The source of these documents has long since thought to have been
fellow New Zealander Ian Milner, for he had been issued these very
documents only days before. The 1954 Australian Royal Commission on
Espionage concluded that Milner’s access to classified documents while
in Canberra ‘gave rise to grave suspicions as to the use he made of
them’. Milner was never interviewed about his appearance in the Venona
decrypts. In 1947, he had moved from Canberra to New York to become a
Political Affairs Officer with the United Nations, and in July 1950, he
crossed to Czechoslovakia with his wife, defending his reputation from
behind the ‘Iron Curtain’ until his death in 1991.
The Australian response to the concerns of the British and Australian
governments at the security breach which was revealed by the VENONA
decrypts, the Australian Security Intelligence Organisation was formed
in March 1949. The existence of the KLOD spy ring became public
knowledge in 1954, in the most dramatic way possible, following the
defection of the Petrovs, the Soviet husband and wife MVD team in the
Soviet Embassy, Canberra, who defected to Australia in April.
Evdokia and Vladimir
Petrov
Case Study #1
The Leader
Full details of the activities of Clayton and his informants were

revealed at the subsequent Royal Commission on Espionage, and the
public were enthralled at the nationwide manhunt for Wally Clayton,
who had gone to ground. He finally appeared before the
Commissioners, but during his four days in the witness box denied
all involvement with espionage. ASIO continued to monitor Clayton’s
activities into the 1960s, but the surveillance tailed off when it
became clear that his career in espionage was well and truly over.
Case Study #2
The Illegals
– a New Zealand
‘legend’
Peter and Helen Kroger

Case Study #2
The Illegals – a New Zealand ‘legend’
Case study number two concerns the activities of two American

citizens who operated in the United Kingdom under false New
Zealand identities in the late 1950s and early 1960s at the centre of
what became known as the Portland Naval Spy Ring. The KGB term
‘illegal’ referred to agents who worked abroad under aliases, with
no diplomatic cover or visible connection to legal Soviet
establishments. The term ‘Legend’ in this context meant the cover
story for an individual illegal.
Case Study #2
Here they are, Peter and Helen Kroger, who lived at Ruislip,
England, where Peter Kroger operated a rare book business from
home. Neighbours described them as nice, friendly people and
enthusiastic party-givers, with somewhat larger than life Helen
Kroger leaving a more lasting impression than her husband.
Dustman Ernie Lavender recalled that Mrs Kroger always invited
the dustmen in for a beer – the only household in the area to
extend such hospitality – while a local shopkeeper recalled that
she lavished chocolate and sweets on the neighbourhood
children. Others complained of the nightly interference with
their television reception, but thought nothing of it until the
Krogers were arrested. Many were puzzled when a failed
burglary attempt on the bungalow left Helen Kroger looking like
death for days, yet she did not report the incident to the local
police.
Case Study #2
On the face of it, Peter Kroger was a New Zealander, who had
lived for many years in the United States, and his wife, Helen
Kroger, was from Alberta Canada.
Case Study #2
They had married while in the United States in 1936.

45 Carnley Drive, Ruislip,
London
Case Study #2
The Kroger’s bungalow in Ruislip was as unprepossessing as its

owners. Appearances were, as ever, deceptive. In 1961, as part of
an investigation by British intelligence into a Soviet spy ring
operating out of the Underwater Weapons Establishment at
Portland, Peter and Helen Kroger were arrested and their house
searched.
Case Study #2
Incidentally, former Petty Officer Harry Houghton, pictured

here, would have done well to have read Their Trade is Treachery.
Lured by financial inducements, and with a grudge against the
Royal Navy, Houghton willingly seduced a fellow civilian clerk at
the Underwater Weapons Establishment to gain access to top
secret information on submarine technology, which he passed to
the spymaster, Russian Konan Molody, operating in Britain
under the false identity of Canadian Gordon Lonsdale.
Case Study #2
Here is what MI5 found in the Krogers’ house – a secret trapdoor

which led to a cache of sophisticated radio equipment concealed
underneath the house.
Case Study #2
Here is the radio transmitter, coupled with a wireless message

sender, capable of recording a message and transmitting it in a
burst to minimise the possibility of detection by locater units.
Case Study #2
And here is the code book, a prime example of the five number
codes used in Soviet one time pads, a system which is notoriously
difficult to decrypt.
In the roof of the house was discovered the radio aerial and a
cache of photographic equipment – evidently the Krogers had
despatched microfilm or microdot copies of classified
documents from the Portland naval base concealed in rare books.
Radio equipment was still being discovered in the house ten
years later!
Morris Cohen
Born New York
2 July 1910
Leontina (Lona)
Cohen nee Petka
Born Adams
Massachusetts
11 January 1913
Case Study #2
So who were the Krogers? An investigation by MI5 revealed that
they were wanted by the FBI under the names of Morris Cohen,
born in New York in 1910, and Lona Cohen (nee Petka), born in
Adams, Massachusetts, in 1913. Morris Cohen had fought with
the Lincoln Brigade during the Spanish Civil War, and married
Leontina Petka in 1941. That same year Morris Cohen was
recruited for clandestine work while working for AMTORG, the
Soviet trading organisation, and he soon converted Lona to the
cause. The husband and wife team was soon at the centre of the
Soviet nuclear spy ring in the United States, couriering secrets
from Los Alamos. When it was clear that the VENONA operation
had compromised the nuclear spy ring, Morris and Lona Cohen
were given sufficient warning to disappear, while less fortune
members of the ring, including Julius and Ethel Rosenberg, were
arrested. They vanished from New York in July 1950, before
reappearing as Peter and Helen Kroger in Austria four years
later.
Case Study #2
In 1954, Peter Kroger, writing from Semmering, Austria, on 16

April 1954 to the New Zealand Consul in Paris, noted that the
British Consul had advised him that the British family passport
under which they had been travelling should now be replaced by
two individual New Zealand passports. The language of the letter
was very stilted – almost as if it was composed in Moscow for
Peter Kroger to copy out and post –
Case Study #2
note the phrase ‘realisation of the above-mentioned purpose’.
And Kroger’s heart condition meant, of course, that he and his

wife could not travel to Paris for the passports to be issued in
person. Nothing about the application raised any alarm bells in
the New Zealand legation – neither the archaic phrasing, nor the
fact that nobody by the name of Kroger had been born in New
Zealand, let alone Gisborne, in 1910.
Case Study #2
What is interesting is the use to which the Krogers put their new
identities – their New Zealand legends, in fact – once the
passports were issued.
Case Study #2
As you can see from the following pages of Peter Kroger’s

passport, they were now able to travel with ease within Europe –
note the stamps for Austria, Switzerland and the Netherlands,
Case Study #2
and elsewhere – I note stamps for Bombay, Calcutta and Hong

Kong. As New Zealanders, they were clearly able to travel about
the Western Bloc – both Europe and the Commonwealth alike –
and to settle in Ruislip, all without suspicion. In 1959, Helen
Kroger, who just happened to then be staying in Paris, made a
further successful application for the renewal of their passports
until 1964.
Case Study #2
Obviously, with their arrest, trial and conviction in 1961, the

Krogers had no further use for their New Zealand identities. They
both served only eight years of their 20 year sentences, for they
were returned to the Soviet Bloc as part of a spy exchange. Helen
Kroger died in 1992, and Peter Kroger died in Moscow in 1995 –
heroes of the Soviet Union!
Case Study #3
The Double-Agent –
‘Sylvia’, the SIS, ASIO
and the KGB
Case Study #3
‘Sylvia’, the SIS, ASIO and the KGB
Case study number 3 is a classic story of counter-espionage,

played out on both sides of the Tasman. At the centre of the story
is British-born Kay Marshall, who came to New Zealand after
the Second World War as a war bride.
The Double Agent:
Kay Marshall [Sylvia]
Case Study #3
Already a war widow, whose first husband had disappeared while
flying with the Royal Air Force in Singapore during the Japanese
invasion, Marshall married a New Zealand officer whom she met
in London. After the war, Marshall by her own account found life
and marriage in Wellington to be intolerable. The capital was a
‘small shoddy country town and I grew to hate it more every day’.
By 1956 she was a divorcee and solo mother, working in the
passport office of the British High Commission in Wellington. It
was here, from at least November 1956, that she came to the
attention of Soviet intelligence. A chance conversation in the High
Commission with Ervili Lustkij, the third secretary of the Soviet
Embassy, appeared innocent enough, for Lutskij was well known
in Wellington circles as the Soviet press attaché, with a family
back in Russia, and he was a favourite at social gatherings.
However, when Lutskij’s approach persisted, first with the offer of
concert tickets, and then with Lutskij’s surprise appearance at Kay
Marshall’s Tinakori Flat…
Kay Marshall’s flat
14 Upton Terrace
Tinakori
WELLINGTON
… one winter’s night in 1958, complete with chocolates, vodka

and violin records, Marshall immediately reported to the
security officer at the High Commission
Case Study #3
In liaison with the fledgling New Zealand Security Service, it was
decided to permit Lutskij’s approaches to continue, to see what
might develop.
Lutskij’s attentions continued throughout 1958, with picnics, and
other similarly innocent outings. His questions, however, became
gradually more pointed, as he inquired about the workings of the
passport office at the High Commission, and requested copies of
paperwork and other documentation. It was decided to provide
Lutskij with ‘chickenfeed’ – low grade material which, while it
would not compromise the security of the passport office, would
also maintain the pretence that Marshall was being won over as a
Soviet asset. Lutskij returned to the Soviet Union, and his
replacement Nikolai Shtykov demanded that Marshall undertake
clandestine courier work for him. Meetings were to be indicated
by a system of marks on a telegraph post close to the mouth of the
Karori Road Tunnel.
Telegraph pole
Karori side of the
Karori Road Tunnel
WELLINGTON
Case Study #3
Marshall was alarmed by Shtykov’s brutal manner, and advised

him of her plans to relocate to Australia. In December 1960,
Shtykov provided Marshall with instructions on how to contact a
third Soviet agent at Sydney’s Taronga Park Zoo.
Marshall departed Wellington, together with her young son Tony,

in 1961, and in February she kept the Taronga Park rendezvous in
an attempt to identify the Soviet agent for ASIO, to whose control
she had been passed by the NZ Security Service. While the first
meeting did not take place, on 4 March 1961 she met with:
Ivan Fedorovich
Skripov –
First Secretary
Soviet Embassy
CANBERRA
[KGB Rezident]
Case Study #3
Ivan Feydorovich Skripov, the First Secretary of the Soviet

Embassy, Canberra, who had re-opened the embassy in 1959, as it
had been closed in the wake of the Petrov affair. Incidentally,
Marshall was informed by Skripov that, in the event of the closure
of the Soviet Embassy, she would be instructed to re-establish
contact with Shtykov in Wellington the following week.
Here are two ASIO surveillance photographs of the Marshall-

Skripov meeting at Taronga Park Zoo:
Taronga Park Zoo,
SYDNEY
Taronga Park Zoo,
SYDNEY
Sydney, 1962
Case Study #3
The ASIO report on the Skripov Case described Marshall as ‘a

woman of considerable resourcefulness, courage and charm’.
She proceeded to demonstrate all of these attributes in her

dealings with Skripov from March 1961 until February 1963, for
reported on all of her activities to ASIO agents who kept her under
close surveillance. Skripov was anxious that she obtain
employment in the Department of Immigration or with a
diplomatic mission in Canberra, but Marshall explained that her
applications had been unsuccessful. Skripov did not press the
matter, stating that ‘Then I have some other important things for
you to do’.
Secret Writing on
reverse of 17 September
1962 letter
Case Study #3
Marshall now commenced work as a courier for Skripov’s

Australian network. Messages were sent to her by Skripov in the
form of secret writing on the reverse of otherwise innocuous letters
– this example from September 1962 directed her to a Dead Letter
Box in the base of an iron post which part of the railing of the
McElhone stars in Woollomooloo,Sydney.
Dead Letter Box,
Woolloomooloo, Sydney
Case Study #3
Inside the box was a small, green, cylindrical container, with a

spring-loaded trap to protect the contents.
Parcel collected from
dead letter box
Case Study #3
A second dead letter box, located at the Waverly Cemetery, one of

the largest in the Sydney area, revealed a parcel which contained a
red leather wallet and a Canadian Passport in favour of one Andrew
Huha, born in 1903 at Lince, Czechoslovakia.
Case Study #3
Inside the passport was another, loose photograph of an

unidentified man. ASIO officers concluded that the passport was to
be doctored to transfer Huha’s identity to the mystery man. Thanks
to the miracles of modern technology, we can gain some idea of
what the faked passport might have looked like.
Case Study #3
At Kay Marshall’s sixteenth meeting with Spripov in December

1962, she was handed a small package for delivery to a contact in
Adelaide.
Soviet Wireless
Message Sender
Case Study #3
ASIO officers discovered that the parcel contained a small self-powered
tape recording device designed to send pre-set messages, which, when
used together with a transmitting unit, was capable of sending
approximately 270 words a minute – presumably in the form of 5 number
code groups. The unit was identical to that found in the Kroger’s house at
Ruislip the previous year – the Kroger unit was numbered 557079, while
the Skripov unit was numbered 557087. It’s interesting to speculate where
units numbered 557080 to 557086 might have gone!
The Adelaide contact did not appear at the December 1962 meeting, and
Skripov was surprised and very upset at this news. A proposed eighteenth
meeting between Marshall and Skripov on 26 January 1963 did not place.
Instead, on Thursday, 7 February 1963, the Australian Minister for
External Affairs announced that Skripov was no longer acceptable as an
accredited representative of the Soviet Union in Australia. On 10 February,
Skripov and his wife and son flew back to Moscow. Previously in New
Zealand, on 10 July 1962, Prime Minister Keith Holyoake announced to
Parliament that Andreev and Shtykov had been given two days to leave the
country because they had ‘engaged in espionage… affecting New
Zealand’s defence and external relations’.
Case Study #3
Kay Marshall remarried – ASIO had had to quickly brief her

fiancée on the Skripov operation to reassure him that her
clandestine meetings with another man were nothing more than
legitimate counter-espionage work – and thereafter enjoyed a
largely uneventful life. She died in 1992.
MOSCOW RULES’:
A short tour of
Wellington’s top
espionage spots
I would like to conclude today’s talk with a whistle-stop tour of
Wellington’s top espionage spots, particularly those sites
around Wellington where Dr William Sutch met with Dimitri
Razgovorov of the Soviet Embassy in 1974.
The Legation of the
Union of Soviet
Socialist Republics
57 Messines Road
Karori
Security Intelligence
Service Headquarters
175 Taranaki Street
‘Streaker’ sites:
The locations of Thursday
meetings between
Dr Willam Sutch
[code-name ‘Streaker’] and
Dimitri Razgovorov as observed
by the NZSIS
in 1974
I must here acknowledge the assistance of Kit Bennett’s book

‘Spy’ for the preparation of the following sequence of
photographs, for his account of the Sutch Case is the most
complete yet published, including details of the locations of the
clandestine meetings in 1974 between Dr Bill Sutch and Dimiti
Razgovorov, the KGB Rezident in New Zealand.
‘Streaker’ sites
Karori Bowling Club

entrance
Lewer Street, Karori
First observed meeting
18 April 1974
Intersection of
St Michael’s Crescent and
Upland Road, Kelburn
Meeting 23 May 1974 was
not observed
Karori Post Office –

meeting 20 June 1974
was aborted
Carport 20 metres from
intersection of Glen
Road and Upland
Road
– Meeting observed
25 July 1974
24-30 Hopper Street
Meeting observed in a
darkened doorway beside
a telephone booth outside
the commercial building
at 24 Hopper Street
28 August 1974
(Razgovorov brought his
wife along!)
Intersection of Holloway
Road and Aro Street
Aro Valley
Final meeting and arrest
of Dr William Sutch
26 September 1975
Aro Street from Holloway Road – approximate site of
final meeting between Sutch and Razgovorov
Intersection of Aro Street and Holloway
Road, from site of public toilets
Public Toilets, Aro Street
Holloway Road
Aro Valley
26 September 1974
Detective Senior Sergeant Colin Lines
and Dr William Ball Sutch
Dimitri Razgovorov and
a New Zealand SIS officer
26 September 1974
Sutch was arrested on 26 September 1974, and charged under the
Official Secrets Act of passing to the Soviets information ‘which
might be useful to the enemy’. The trial was unique in New
Zealand’s legal – and espionage – history, and he was acquitted,
on the basis that no evidence concerning the information which
he may have passed was ever produced in court. What really
happened that night in the Aro Valley remains a mystery.
I will leave you with a final Cold War Caution – the warning
delivered by British Prime Minister Harold Macmillan in the
wake of the Portland Naval Secrets trial – and, ironically, just
before the Profumo Affair. But that is another story. Thank you.
… I feel it right to warn the
House that hostile
intrigue and espionage
are being relentlessly
maintained on a large
scale.
Prime Minister Harold

Macmillan to the House of
Commons, London,
14 November 1962.

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What are the main topics covered in the talk?

What are the main topics covered in the talk?

How did Soviet intelligence agencies operate during the Cold War?

How did Soviet intelligence agencies operate during the Cold War?

‘MOSCOW RULES’:

I would like, today, to examine the alternative history of New

The title ‘Moscow Rules’ refers to the spy craft employed by

- A short pre-history of Soviet espionage and New Zealand

At this point I must make a short disclaimer: this presentation is based on

Which leads me neatly on to a very short pre-history of Soviet espionage and

No discussion of Soviet intelligence and New Zealand would be

The case against Sutch further alleges that, having embarked on

Moving from the pre-history to the history of Soviet espionage

Talent Spotting: Soviet intelligence agents first must identify

Walter Seddon (‘Wally’)

Case study number one concerns Walter Seddon Clayton, known as

Case study number one concerns Walter Seddon Clayton,

Clayton’s spy ring first came to the attention of western intelligence

Continuing the New Zealand theme of today’s talk, here is a

The message further indicated the extend of his network, with

A second mention of Ian Milner on 6 October 1945 was a request

This message also warned the Soviet Embassy in Canberra of the

The Soviet Embassy in Canberra was further admonished to keep

Full details of the activities of Clayton and his informants were

Peter and Helen Kroger

Case study number two concerns the activities of two American

They had married while in the United States in 1936.

The Kroger’s bungalow in Ruislip was as unprepossessing as its

Incidentally, former Petty Officer Harry Houghton, pictured

Here is what MI5 found in the Krogers’ house – a secret trapdoor

Here is the radio transmitter, coupled with a wireless message

In 1954, Peter Kroger, writing from Semmering, Austria, on 16

note the phrase ‘realisation of the above-mentioned purpose’.

And Kroger’s heart condition meant, of course, that he and his

As you can see from the following pages of Peter Kroger’s

and elsewhere – I note stamps for Bombay, Calcutta and Hong

Obviously, with their arrest, trial and conviction in 1961, the

Case study number 3 is a classic story of counter-espionage,

… one winter’s night in 1958, complete with chocolates, vodka

Marshall was alarmed by Shtykov’s brutal manner, and advised

Marshall departed Wellington, together with her young son Tony,

Ivan Feydorovich Skripov, the First Secretary of the Soviet

Here are two ASIO surveillance photographs of the Marshall-

The ASIO report on the Skripov Case described Marshall as ‘a

She proceeded to demonstrate all of these attributes in her

Marshall now commenced work as a courier for Skripov’s

Inside the box was a small, green, cylindrical container, with a

A second dead letter box, located at the Waverly Cemetery, one of

Inside the passport was another, loose photograph of an

At Kay Marshall’s sixteenth meeting with Spripov in December

Kay Marshall remarried – ASIO had had to quickly brief her

I must here acknowledge the assistance of Kit Bennett’s book

Karori Bowling Club

Karori Post Office –

Prime Minister Harold

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