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Alister McIntosh's 'best' diplomat: Ken Ross argues that Paddy Costello was never a Soviet agent, as often alleged, but was in fact one of New Zealand's most brilliant foreign service officials.

Paddy Costello was Alister McIntosh's best-ever diplomat. Costello's intellect was too original and sceptical to be an agent for any other power than New Zealand. A communist when a student at Cambridge, his subsequent four years fighting had matured him ahead of becoming a New Zealand diplomat in 1944. Costello's misfortune from the perspective of Britain's MI5 security organisation was that he fell in love with and married a tough-minded British communist. McIntosh read Costello accurately and got him to work brilliantly, but had to let him go: while Peter Fraser had confidence in McIntosh on Costello, his successor as prime minister, Sidney Holland, aid not.

'in war and peace, he [Costello] rendered New Zealand valuable service. Whether he also served another master will remain a mystery. His intellectual brilliance has not been surpassed among his colleagues then or since' (Malcolm Templeton, 1989) (1)

In 1945 and 1950 British security officials (MI5) argued that Paddy Costello, then a New Zealand diplomat, was a security risk. When MI5's Costello file became public in April this year, it laid bare the cut-and-thrust between MI5 and Alister McIntosh, the head of New Zealand's Department of External Affairs, over Costello's security rating.

Costello's and McIntosh's correspondence displays fleet-footed insight, repartee, wit and wisdom--more so than in any of the other letters McIntosh has given us in his papers at the Alexander Turnbull Library. Perhaps these exchanges do not have the historical importance of those made public in Ian McGibbon's Undiplomatic Dialogue: Letters Between Carl Berendsen & Alister McIntosh 1943-1952 (1993) and Unofficial Channels: Letters Between Alister McIntosh and Foss Shanahan, George Laking and Frank Corner 1946-1966 (1999), but they show Costello was a shining diplomatic star for McIntosh.

The 'Paddy' left by McIntosh at the Turnbull is found in more places than the Costello folder in the McIntosh Papers. He confided to numerous others his enjoyment of having Costello in his team--'the most brilliant diplomatic officer we have', he told Jean McKenzie in 1949. (2) The correspondence between McIntosh and McKenzie, the head of New Zealand's legation throughout Costello's Paris posting, from October 1950 until 30 September 1954, is particularly illuminating on Costello. (3)

The McIntosh-Costello and McIntosh-McKenzie correspondences are my prime source for the argument made in this article. Drawing on them enables a shrewder rebuttal than has been made till now to the contention that Costello was a Soviet operative while a New Zealand diplomat. The odds that he was are substantially lengthened by this material and, as MI5 s material now public fails to nail Costello when a New Zealand diplomat, it seems a dusty file somewhere in John Le Carres Moscow Centre is the only possibility to clinch that Costello did fool McIntosh.

Yet because of MI5's concerns Costello was to be the single biggest personnel headache McIntosh handled in his 23 years at the head of New Zealand's diplomatic service. Despite MI5's strictures, McIntosh always contended that the British had misread Costello. McIntosh's correspondence at the Turnbull, when supplemented with the 29 McIntosh interviews the Turnbull holds, helps us better understand his confidence in Costello. (4)

Insightful observations

The insightful observers of Costello have been Ian McGibbon, with his entry in the Dictionary of New Zealand Biography, (5) and Malcolm Templeton, in three short contributions. (6) External Affairs Review, April 1964, contains a one-page obituary of Costello; of which two paragraphs, contributed by 'a member of the Department', give the rare quality of insight that only McIntosh could have scribbled down.

In a considered perspective of the espionage world, published in the New Zealand Herald m August 1981, Sir William Gilbert chided then Prime Minister Rob Muldoon for his comment that Costello may have been a Soviet spy. (7) Gilbert adeptly puts his finger on the wilderness of mirrors' created by zealots in Western security agencies, which gave the likes of the Daily Express's Chapman Pincher licence to contend, in his 1981 book Treachery is Their Trade, that not only Costello but also Roger Hollis, MI5's chief from 1956 to 1965, were Soviet agents. In fact, Gilbert knew Hollis well--he had been his mentor when Gilbert was establishing the New Zealand Security Service--and Gilbert and Costello had fought the war together when on General Freyberg's team in 1943, likely meeting again in Wellington in 1950 and later, in 1954 and 1955, when Gilbert was working in the New Zealand High Commission in London. Gilbert described Costello as 'swashbuckling'.

In Tomorrow Comes the Song: a Life of Peter Fraser (2000), which they dedicate to Alister McIntosh, Michael King and Michael Bassett state on page 261 that Costello was 'confirmed as, a Russian spy without explaining, let alone sourcing, their conclusion. In The Sixth Man: the extraordinary life of Paddy Costello (2007) James McNeish is an outsider looking through glass darkly at the diplomatic and espionage worlds. Official papers released to him by the New Zealand foreign ministry (in 2005) and the New Zealand Security Intelligence Service (in 2007), enable him to walk us through, in his chapter 'The Passport affair', the fact that Jean McKenzie issued two Soviet spies, the Cohen couple, New Zealand passports under the names of Peter and Helen Kroger. At least New Zealand officialdom was prepared to quash publicly the presumption that Costello had done so.

Unfounded contention

McNeish does not get the full import of that material given him. Just as he fails to put to bed Chapman Pinchers 1984 story of Costello's 'New Zealand friend' who, in the mid-1960s, 'was still an active secret Communist and MI5 was able to prevent his appointment to a very important position where he could have wielded damaging influence'. (8) In a recent issue of this journal, I have shown that contention to be unfounded. (9) It is a spurious story spun by MI5 zealots that they derailed Alister McIntosh's expectation of becoming the first Commonwealth secretary-general. Pinchers claim that McIntosh was 'an active secret Communist' tails back to Reuel Lochore, McIntosh's long-time colleague, who became deeply embittered with McIntosh for failing to promote him sufficiently during his diplomatic career and earlier stint as McIntosh's security official in the Prime Minister's Department. (10) Lochore became a Kiwi security zealot, supplying the SIS with a paper in 1981 that portrayed McIntosh and most of his senior staff in the Department of External Affairs as communist agents. Lochore's ramblings regarding McIntosh seemingly reached Pincher. (11)

In Beyond the Battlefield: New Zealand and its Allies 1939-45 (2009), Gerald Hensley gives a harder assessment of the possibility that Costello was a Soviet agent, invoking Christopher Andrew, Cambridge academic and MI5's official historian. (12) Andrew's evidence for Costello being a spy is that the KGB gave Costello a code name ('Long') and that he issued the Cohen couple their Kroger passports. (13) Hensley considers 'a conclusive verdict must await the possibility of more information'. (14) Aware of the Mitrokhin Archive material Andrew relies on, McGibbon is of a similar mind--'confirmation of such claims must await scrutiny of records presumably still held in Moscow'. (15)

Moscow mission

Costello had a good war as one of Freyberg's intelligence team, which also included Geoffrey Cox and Dan Davin. Costello, an intellectual 'General', mixed easily with war-time top brass. In December 1943 the Dominion, Wellington's morning paper, carried a story of Costello joking in Russian with a quartet of Soviet generals, with Lieutenant-General Freyberg present.

In April 1944 Costello, now aged 32, was recruited by McIntosh to set up and serve at the New Zealand Legation in Moscow. A month later, when he had his first meeting with Prime Minister Peter Fraser in London, Costello is reputed to have said, 'I am afraid I am a bit left-wing, Sir' with Fraser responding 'Oh well, it won't hurt us to have one or two Communists in Moscow'. Fraser made his call 'green-lighting' Costello for Moscow.

Fraser was on firm ground. McIntosh had consulted Freyberg and Brigadiers Kippenberger and Stevens as well as Geoffrey Cox on Costello's suitability for the Moscow assignment. (16) (Stevens provided the formal clearance for Costello.) Cox had informed McIntosh, when turning down McIntosh's invitation to undertake the Moscow assignment, that Costello was suitable. Freyberg's high regard for Costello was common knowledge to the general's team at that time--Costello was Freyberg's favourite among those close to him.

Nonetheless, soon after Costello arrived in Moscow in July 1944 the British Foreign Office, prompted by MI5, informed their ambassador in Moscow that MI5 regarded Costello as being a security concern (his wife and her brother were British Communist Party members). But none of the three British ambassadors in Moscow during Costello's six years there found it necessary to report any security concerns about Costello, nor to place any restriction on Costello's frequent access to their embassy. In fact, Costello was not under MI5 surveillance in Moscow--the only surveillance was by McIntosh and, of course, the Soviet authorities. (17)

Far from keeping a wary eye on him, the British Embassy in Moscow saw Costello as one of the elite among Western diplomats there--his insights were top currency. Costello's extensive diplomatic reporting from Moscow became the most-valued New Zealand 'coinage' for McIntosh and Fraser in their dealings with the Americans, British, Canadians and Australians as the Five Eyes 'club' was coming together. (18)

McIntosh was vigilant--undoubtedly a prudent approach after the British attempt to derail Costello. Between April 1947 and February 1950 he had the observations of Alan Watt, a close friend and Canberra's man in Moscow. Watt, who had much to do with Costello, described him as
   untrained in the ways and responsibilities of governments,
   with something of the academics scorn regarding the need
   for strict security measures, always ready to argue with anyone
   about anything, often for the fun of the thing. (19)


Sir David Kelly, the third British ambassador in Moscow during Costello's time there, also threw cold water on Costello being a security risk--he reported highly of him, having engaged him extensively for Costello's final three years in Moscow. (20)

In early 1950 New Zealand's recently elected National Party government closed the Moscow Legation. McIntosh was dispirited as the legation by then was 'beginning to pay a useful dividend' --high praise coming from him. (21) When the legation shut its doors, Costello's future was unclear. McIntosh required him, without his family, to travel to Wellington, a place he had never been to, to discuss his future in McIntosh's plans. Costello reached Wellington in late July 1950.

Paris posting

On 19 September 1950, McIntosh, then in London, informed Jean McKenzie that Costello was to be posted to the Paris legation: he noted 'Paddy is very browned off at being kept in New Zealand for two months not knowing what the hell is going to happen'. (22)

After Moscow, Paris was to be humdrum for Costello. But, in any case, by the time he arrived he appreciated that his days as a New Zealand diplomat were limited. When MI5 found that Costello was heading for Paris that was too much for them given their concerns about him: MI5 ensured that Sidney Holland, the new prime minister, was told so. McIntosh's own possible vulnerability to MI5 stricture following an 'appalling episode' in Singapore in January 1950 complicated his position vis-a-vis standing strong for Costello. (23)

In sending him to Paris, McIntosh reached an understanding with Costello that he should move on from External Affairs as his future was too uncertain--McIntosh could not employ him in Wellington because he was not engaged in 1944 as a permanent employee of the New Zealand Public Service. Costello had informed McIntosh, on 24 December 1949, when it became evident the new government would close the Moscow post
   I am thinking of resigning and returning to academic life,
   preferably at Cambridge. I really am more interested in books
   than diplomacy, and I can imagine nothing better than a job
   which gave the opportunity to get down to some research
   work. I have been able to do some here, but I suspect that at
   Wellington or at any other post one would be too busy with
   current business. (24)


McIntosh sensed enough ambivalence on the part of the new prime minister not to rush the matter. Moreover, quite unexpectedly, Holland had personally enjoyed 'hanging about' with Costello in Paris in January 1951, and in January 1952, when Costello interpreted for him. Then, immediately after attending the Queen's coronation, Holland and his wife embarked on a month-long tour on the continent and Costello spent all of July 1953 touring with them. The Paris legation's annual report noted that 'Mr Holland and his party was accompanied on its visit to five other European countries by Mr Costello'. Costello turned the assignment to his advantage, getting the party to visit numerous sites of scholarly interest to himself. (25)

Final resolution

But the situation could not continue indefinitely. In September 1953 McIntosh informed R.M. Campbell, a long-time confidant, that he had written
   to Paddy and told him that we could not allow the situation
   to drift and that for various reasons I would have to remind
   him of the arrangement that he would have to get another job
   eventually and that he should therefore increase the tempo of
   his search. He wrote back very decently and explained what he
   had been doing and agreed to push along. He offered to get
   out immediately but I said that there was no need for anything
   precipitate but if things got difficult I would let him know. (26)


There is no evidence once Costello was in Paris that the British acted on the threat made in late 1950 to cut-off classified contact with the New Zealand Legation. The claim that Costello issued passports to the Cohens has been conclusively disproved--they were in fact issued by McKenzie herself. And indeed there is no certainty that MI 5 had Costello under surveillance in Paris, even though another New Zealand Legation diplomat was under British surveillance and was observed meeting a Russian official of concern to London. (27)

As the saga ended, with Costello's 30 September 1954 resignation, McIntosh wrote to McKenzie that 'The Paddy situation has been more difficult to handle than you may have imagined, especially as there is really not a scrap of reason why it should be handled the way it has been.' (28)

Costello was too extraordinary, his brilliant mind was too swift to crawl at the pace skilful spies score their trophies. He had too much lust for a life full of scholarly and diplomatic action to have fitted spying in as well. The irony of MI5's pursuit of Costello is that by having him forced out of diplomatic life he got what he most wanted--to be a scholar.

Ken Ross was an analyst with the External Assessments Bureau, Department of the Prime Minister and Cabinet from 1976 until 2012. He has been a research associate at the International Institute for Strategic Studies, London and the Strategic and Defence Studies Centre, Canberra. He is writing a book evaluating New Zealand and Australian prime ministers' engagement in global diplomacy since 1945.

NOTES

(1.) Malcolm Templeton, Top Hats are not being Taken: a short history of the New Zealand legation in Moscow, 1944--1950 (Wellington, 1989), p.24.

(2.) Alexander Turnbull Library (ATL), MS-Papers-6759-313, folio 22. This letter, dated 22 December 1949, is the final paper in that folder. MS-Papers-6759-314 has their correspondence when Costello was at the legation in Paris, and the exchanges between McKenzie and McIntosh while the Costellos remained in Paris for the following eleven months until they moved to Britain, where he became professor of Slavonic studies at Victoria University of Manchester. Even then, Costello was being mentioned in their letters, which continued until McKenzies death in Christchurch in July 1964.

(3.) Marie-Louise Siddle, '"Dear Jean": Understanding Jean McKenzie, New Zealand Diplomat 1901-1964 though her correspondence with Sir Joseph Heenan and Sir Alister McIntosh', in The European Connection (2009), pp.61-70. External Affairs Review, Oct 1964, p.68, is a tribute to McKenzie, which McIntosh most likely wrote.

(4.) ATL, MS-Papers-11090 has the transcripts of the five McIntosh interviews the Turnbull Library commissioned Professor Fred Wood and Mary Boyd to do in late 1975 and July 1976. In 1978, McIntosh did 24 interviews with Michael King that the Turnbull subsequently purchased. Those transcripts are in MS-Papers-2096-01, MS-Papers-2096-02, and 77-107-12 to 77-107-14 The last interview was three days prior to McIntosh's death on 30 November 1978.

(5.) Ian McGibbon, 'Costello, Desmond Patrick', in Dictionary of New Zealand Biography. Te Ara--the Encyclopedia of New Zealand.

(6.) Templeton, pp.20-4, Templeton, 'Mac's Team--J.V Wilson and Paddy Costello', in Brian Lynch (ed), Celebrating New Zealand's Emergence: A Tribute to Sir George Laking and Frank Corner (Wellington, 2005); and Templeton's review of James McNeish's The Sixth Man, the extraordinary life of Paddy Costello (2007) in this journal, vol 33, no 4 (2008).

(7.) Sir William Gilbert, 'Exposure of "Ring of Five" spies and zealots', NZ Herald Weekend Magazine, 29 Aug 1981.

(8.) Chapman Pincher, Too Secret, Too Long (London, 1984), p.387.

(9.) Ken Ross, 'A very complicated business', NZ International Review, vol 42, no 4 (2017), pp. 8-11.

(10.) ATL, MS-Papers-6759-303 to 306 has Lochore's many registrations of disgruntlement.

(11.) ATL, MS-Papers-8752-206 has Lochore's report.

(12.) Gerald Hensley, Beyond the Battlefield New Zealand and its Allies 1939-45(Auckland, 2009), pp.232-3.

(13.) Christopher Andrew, The Sword and Shield The Mitrokhin Archive and the secret history of the KGB (London, 1999), p.409.

(14.) Hensley, personal communication, Aug 2017.

(15.) McGibbon, op cit.

(16.) Kippenberger's Infantry Brigadier (London, 1949) and Denis McLean, Howard Kippenberger: dauntless spirit (Auckland, 2008) each have numerous mentions of the Costello-Kippenberger dynamics during the three years they served at close quarters.

(17.) In October 1950, when MI5 informed the Foreign Office that Costello was about to appear in Paris as a New Zealand diplomat, it became evident that the British in Moscow had not had Costello under surveillance.

(18.) Templeton, Top Hats, pp.42-60, for Costello's diplomatic re porting from Moscow.

(19.) Alan Watt, Australian diplomat: memoirs of Alan Watt (Sydney, 1972), p. 177. On p. 105 Watt portrays McIntosh astutely.

(20.) ATL, MS-Papers-11322-05.

(21.) ATL, MS-Papers-6759-351. McIntosh made the comment, in a letter to Major-General 'Bill' Stevens, the number two at New Zealand House, London, on 13 December 1949--the day Sidney Holland became prime minister.

(22.) ATL, MS-Papers-6759-314.

(23.) Ian McGibbon (ed), Undiplomatic Dialogue: Letters Between Carl Berendsen & Alister McIntosh 1943-1952 (Auckland, 1993), pp.204,212.

(24.) ATL, MS-Papers-6759-260.

(25.) Ibid., Costello to McIntosh, letter dated 27 Aug 1953.

(26.) ATL, MS-Papers-6759-242.

(27.) ATL, MS-Papers-6759-384 and MS-Papers-6759-314. Doug Zohrab was still being 'shaken about' by the New Zealand Police three years later, in their final days of handling the vetting of public servants.

(28.) ATL, MS-Papers-6759-314, McIntosh's 11 Oct 1954 letter. Appointees under the 1943 External Affairs Act, which enabled non-civil servants to hold diplomatic positions, McKenzie and Costello were never permanent employees of the Department of External Affairs. Thus, neither had an automatic entry right to the New Zealand Public Service. This explains why neither ever appeared in any annual edition of List of persons employed in the Public Service on the 31st day of March.

Caption: Paddy Castello
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Title Annotation:PADDY COSTELLO
Author:Ross, Ken
Publication:New Zealand International Review
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Date:Nov 1, 2017
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