The SIS agent and the KGB: Uninvited guests at Sutch's secret rendezvous with KGB man

Detective Senior Sergeant Colin Lines leads Dr Sutch to a waiting car after the sting operation.

At the height of the Cold War, one of New Zealand's most renowned public officials, William Ball Sutch, was found to be in clandestine contact with a Soviet agent. In a book published today, a former SIS officer, Kit Bennetts, has disclosed for the first time how Sutch was tailed. This is the first of two edited extracts:

In the early days of Operation Kitbag, the obvious questions that were on all of our minds were: "If Sutch is meeting clandestinely with the Russians, which he is, what is he giving them and where is he getting it from?" or alternatively, "What are the Russians giving him and who is he passing it on to?"

Inquiries were under way to determine what, if any, access he might still have to sensitive information, such as international negotiation bottom lines, commerce and trade information, insights into government policies and strategies. However, given the fact that he was semi-retired, it seemed more likely that Dr Sutch's role was now, whatever it had been once, that of an agent of influence.

To succeed at this game, one needed to be exceedingly well-connected and Dr Sutch was well-connected indeed. The circles in which he moved included people such as the economist Jack Lewin and Ronald Smith and Geoffrey Datson, all with the Department of Trade and Industry; Sir Guy Powles, Chief Ombudsman; Sir Robert Falla, retired director of the Dominion Museum; Jack Shallcrass, educator; and Professor John Roberts, of Victoria University. And the list went on.

Dr Sutch had had a long and distinguished career at the apex of government bureaucracy and his list of friends, associates and contacts was spectacular.

And then there were the politicians: Philip Holloway, former minister and diplomat; Warren Freer, the Minister of Trade and Industry; Dr Martyn Finlay, Minister of Justice; Gerald O'Brien MP; Sir Arnold Nordmeyer, retired Labour Party leader; Bob Tizard, Minister of State Services and Minister of Health; Margaret Hayward, secretary to the Prime Minister, and, indeed, the man himself, Prime Minister Norman Kirk.

Any number of the people he knew would or could have had access to information that would have been of interest to the Soviets. Not all information of importance was stamped Top Secret. Many of Dr Sutch's hundreds of contacts were in a position to a greater or lesser extent to influence the policies of the Government.

However, there was a catch. If he was acting as an agent of influence, Dr Sutch would have required frequent briefing and debriefing. But how was this being conducted? His KGB handling officer would be receiving instructions from the International Department via the KGB with pressure to act on a regular basis.

We knew, of course, that Thursday was spy night, but we now had to try to determine whether it was every Thursday or just certain Thursdays. We also needed to know if the pair communicated in any other way between meetings and, if they did, how did they do it? This required us to understand their movements between times. In this endeavour, I established a source that would prove to be of considerable value.

At about 5pm on the day after we had seen Dr Sutch and Razgovorov meeting outside the bowling club in Karori, I had an appointment with the taxi driver who picked up Dr Sutch in Karori Rd and drove him home. I fully grasped the secrecy of the operation and, by then, was beginning to grasp the delicacy of the case. When I spoke to the taxi driver at a drycleaners at the top of Bowen St, I was ready to play the whole thing down; and it was just as well that I was.

He came straight out with, "Oh, that was Dr Sutch." I tried to look disappointed and must have succeeded because he replied, "Ah, that was not what you were hoping for." I agreed it was not and told him that clearly it was just another dead end. I should have won an Oscar for that one. I then asked him how he knew it was Sutch and he said, "He's a regular, I don't think he drives. He has an account and uses taxi chits to charge all his cab rides."

I stared at him in amazement, which I hoped he took to be disappointment. I thanked him for his help and took my leave with an "Oh well, back to the drawing board" look on my face. But my mind was racing. If Dr Sutch didn't drive, if he always used taxis, and if he paid using chits, rather than cash, there would be a record of his movements.

This record might well include all or at least some of his taxi trips to and from his clandestine meetings. It followed, therefore, that in some taxi company's dingy accounts department there would be a record of his meetings with his KGB controller. I could not believe my luck.

Fairly quickly I was able to determine that, each month, the taxi chits were collected and attached to the monthly account sent out to Dr Sutch. A clandestine operation resulted in the development of a source code-named Andromeda, who would arrange that I would see the chits after they had been collected and before they were sent to Dr Sutch. We would then pore over the photocopies looking for patterns or unusual trips.

In early May 1974, Razgovorov moved out of the embassy and into a small flat in nearby Homewood Ave, also in Karori. This meant locating and arranging new observation posts (OPs), places to park our vehicles where we could see but not be seen by the Soviet target and without, of course, arousing too much curiosity from neighbours.

This was not particularly difficult. It was rare that we would be turned down when we asked for assistance to set up OPs. In general, we told people as much as we could but often cover stories had to be used. More often than not, people wanted minimal explanation; they understood and appreciated the need for security and discretion. All that arranged, we would then show up and park in the driveway for the evening, darting off from time to time in pursuit of our quarry and then returning. Most of the time, however, we spent waiting; waiting for something ... anything, to happen. And surveillance could be boring beyond belief. Sitting in a car sometimes for six hours or more, we'd listen to the music on 2ZM and the news and comment on 2YA. We'd discuss the job, politics, our lives and everybody else's lives. Meanwhile, our target was cosy at home, scotch (or maybe vodka) in hand and planning an early night.

No matter how quiet the surveillance shift, the target could always be relied upon to appear just when an officer went to answer a call of nature or had just poured a cup of coffee from the thermos. The coffee would be thrown out the window and we would be off.

The other scourge of working in a residential area was the observant householder. If approached, we would assure people we had a legitimate reason for being there but would say no more. They would sometimes ask, "Are you the police?" and we would helpfully reply, "No."

We would, if pressed, however, suggest that if they were concerned, they should call the police. I was to learn while on surveillance that many people neglect to pull their curtains when modesty might dictate otherwise. This occasionally provided a fascinating distraction when nothing impacting on the security of the realm was happening.

Our surveillance in the early days of Operation Kitbag notwithstanding, over May and June 1974, the operation went nowhere. We continued to mount low-key surveillance of numerous Soviet targets including Razgovorov and the other suspect and known KGB officers. Our objective was to maintain our routine to avoid alerting the KGB to the fact that something had happened. If they had twigged to the fact that something had changed, they would have immediately reviewed their security on all operations. They could have shifted to Plan B. Possibly, they would have taken operations underground by deferring meetings and contacts, switching to pre-arranged emergency alternatives or electing third-country meeting arrangements. (A third country meeting is one that takes place in a less hostile or less suspicious environment, outside New Zealand in our case.) We also had to protect the integrity of the operation just in case we had a mole in the service. The existence of Soviet penetration in any Western intelligence service could never be ruled out, as the British and later American experience showed.

Opponents of the SIS had often argued the service made extensive use of telephone taps and listening devices to gather information. They were wrong, at least in the 1970s. Technical operations were mounted but only in select cases. There were two reasons they were rare.

First, they were resource-hungry; they required monitoring, transcribing, interpreting, analysing and often translating. Second, if you were working against a sophisticated target, he or she would never use the telephone for anything remotely operational.

The interpretation of an intercepted conversation is complex and problematic. Conversations between people who know each other and where there is some contextual link often not known to the listener are difficult to understand. The discussions we have with each other in real life are not as you may think. They are rather stilted affairs, punctuated with ums, ahs, grunts and silences. There are colloquialisms, euphemisms, obscenities and nuances that the casual listener does not pick up. Complicate the situation by adding another language with its peculiar cultural idiosyncrasies and many conversations are all but unintelligible to the uninitiated.

I was always amused when would-be revolutionaries and radicals claimed to the media and to their friends that they heard clicks on the line or that their phones were always noisy, concluding that the SIS must have been tapping their phone. The simple fact is that if professionals did the job, there would be no noise on the line. A transcriptionist would not tolerate a bad line so it would have to be fixed.

The fact that we had observed only one clandestine meeting meant that we were really no further ahead than we were before the meeting - that is, we knew Thursday was spy night and something happened at 8.30pm. It seemed reasonable to assume meetings would take place monthly and, looking at Thursday 18 April, we noted that it was the penultimate Thursday of the month.

The penultimate Thursday of May was the 23rd and, accordingly, we carried out surveillance on Dr Sutch and Razgovorov. We agonised over how we would carry out this particular exercise but concluded that we needed to continue to follow Razgovorov in spite of the risk.

Our surveillance was static and mobile and we were able to place both men in Kelburn at about 8.30pm. Razgovorov drove from his new home to the nearby embassy and, when he emerged a short time later, he had Pertsev as his operational driver. DC409 swept down the Chaytor St hill and through the short road tunnel towards Kelburn. As you drive out of this short tunnel from Karori, the road takes a tight and narrow right curve between two ridges and emerges into a complex little junction. This junction was the bane of a surveillant's life. As you come out of the tunnel, the road sweeps around to the left with steep hills either side and you are faced with a choice of four routes.

First choice is to take a hard left and wind into Northland. Second choice is to dive down a steep, narrow, one-way, sealed goat track named the Rigi and then on to Glenmore Street. The third choice turns sharply in a right-hand hairpin and leads over a viaduct into Kelburn. Fourth, you stay with the main road and pass under the viaduct down Glenmore St. Just after the viaduct, the Rigi joins as a side street from the left.

Marketing experts say everyone loves choices. Well, I can assure you surveillants do not, especially when it is the target making the choice and they can't see a damned thing that is going on.

When the team in pursuit of DC409 emerged from the tunnel, they were too far back to see which way the Mercedes had gone. When Pertsev and Razgovorov had made their counter-surveillance moves in the city on 18 April - the night we had observed the Sutch contact - they had taken the Rigi route on the way in. Perhaps with that in mind, the surveillants made their decision, taking the Rigi.

The logic was sound enough. Even if Pertsev had not chosen the Rigi, we had a second chance to pick up the quarry if he came down Glenmore St.

But we guessed wrong. Moments before, Pertsev had accelerated hard out of the tunnel and headed straight across the viaduct towards Kelburn. We had lost them.

Had there been a meeting that we had missed? It was not until a fortnight later that we were able to say with some certainty that a second meeting had indeed taken place.

By now, Andromeda was providing the taxi chits. The taxi chits confirmed Dr Sutch had been in Kelburn at the time we lost DC409 even though we had failed to spot him. He had taken a cab home at about 7.30pm and then continued on in the same taxi back to Kelburn where he was dropped in Upland Rd near the Kelburn shops.

We concluded he and Razgovorov had met in the vicinity of St Michaels Cres and Upland Rd at 8.30pm. Afterwards, he had walked down the steep hilly streets at the back of Kelburn to the Aro Valley, where he hailed a cab that took him home a little after 9pm.

A meeting had taken place and although we hadn't seen it and we did not know what, if anything, had passed between them, we were confident about three things. First, there was a clandestine relationship between the two men. Second, it was a KGB-directed operation of long standing. And third, the meetings were taking place at 8.30pm on the penultimate Thursday of the month or the Thursday of the penultimate week of the month. The night's efforts had not been entirely wasted.

* Published by Random House New Zealand, $37.