Illustration: Daron Parton

The Sunday Essay: Spies like us

Twenty-five years after Nicky Hager’s groundbreaking book Secret Power, the true purpose of our foreign intelligence agencies remains as nebulous as ever, writes Danyl Mclauchlan.

The Sunday Essay is made possible thanks to the support of Creative New Zealand

Original illustrations by Daron Parton.

It’s about two hours north of Wellington: a small community surrounded by kilometres of sand dunes terminating at a vast, driftwood scattered beach. Just before you reach the town of Tangimoana you see the turnoff to the sheep station, and if you drive along this road and turn right when it forks you’ll arrive at the spy base. This is an undeniably strange sight: a squat concrete building surrounded by a double layer of electrified fences topped with razor wire, guarded with floodlights and mounted cameras. It sits opposite a hay barn, surrounded by empty vistas of farmland; rabbits scattering in every direction; magpies gliding low over the fields.

Robert Muldoon created the Government Communications Security Bureau, or GCSB in 1977. This was both a merger of existing signal intelligence organisations and an expansion of the government’s intelligence capabilities. The Tangimoana base was constructed in 1982. Both the bureau and the site remained secret until 1984 when the researcher Owen Wilkes discovered it, and described it in the April 1984 edition of Peacelink, a magazine associated with the anti-war, anti-nuclear movement. A few weeks later Nicky Hager, a 25-year-old supporter of the same movement, drove up to Tangimoana with some friends to take a look around. They inspected the site, noting the aerials, taking down the number plates of the cars parked in the car parks.

Hager was born and raised in Levin, not far from Tangimoana. His parents were migrants; his father owned a clothing factory. Hager studied physics and philosophy at university, then worked at the Department of Scientific and Industrial Research, a government science agency that was broken up in the 1990s. He taught physics part time. He worked as a builder.

Hager didn’t do anything with his notes from Tangimoana for several years, but then a trip to the post office revealed that he could look up the licence plates and discover who the vehicles were registered to. He took those names to the library and found an annual public service staff list and looked them up. They were all referenced to an obscure occupational class attached to the Ministry of Defence. When he looked back through earlier editions of the staff lists he could see the very rapid expansion of this category of public sector employees. Whatever these defense workers did, there were many more of them than there were a couple decades ago.

Another few years passed by (“I was doing other things,” Hager explained, when I asked him about these long gaps in the timeline of his book Secret Power. “Politics. Attempting another book. Building a house. Looking after my daughter.”) Somehow he obtained an internal phone directory for the Defence Ministry. By cross referencing with his previous findings he obtained a list of names and positions of all the GCSB staff in New Zealand, some of whom talked to Hager about their organisation, and what it did, and how it linked in with a vast international intelligence organisation known as UKUSA (later renamed Five Eyes), the mere existence of which was a closely guarded secret.

Secret Power was published in 1996. I was at university at the time, and I remembered it being a huge deal; a scandal. The copy of the book passed around my friends had a vaguely illicit aura about it: this was forbidden knowledge; something the powers that be didn’t want anyone to know. So I was surprised when I looked back through the media archives and saw that coverage of the book only lasted about a week. It consisted of mostly positive reviews. Much of the commentary focused on the foreword, written by David Lange, who complained that Hager had learned far more about the GCSB than Lange had been able to discover when he was prime minister.

Nicky Hager and his 1996 book Secret Power

The story Hager told in Secret Power was, in part, a pre-internet version of Edward Snowden’s 2013 revelations. There’s a secret international intelligence agreement between the US, the UK, Canada, Australia and New Zealand, with the US and UK acting as senior partners. This coalition has built a global network designed to intercept much of the world’s communications traffic, accumulating it in massive, searchable databases. Hager described how the network worked, and what it did, in extensive and specific detail, and warned that these agencies operated with little transparency, accountability or oversight.

The lack of oversight, he argued, was especially acute in New Zealand’s case because the GCSB wasn’t really a domestic intelligence operation at all. Secret Power described it as, in effect, a regional branch of the US’s National Security Agency. The head of the department was a New Zealander but the director of policy and plans was an American, his salary funded by his own government, the technology was all imported from the US, and the bulk of the work was carried out on behalf of their intelligence agencies, not our government.

There’s some historical context here: the Five Eyes alliance was a post-war project that had a certain strategic logic during the Cold War. For most of this era New Zealand was a staunch ally of the US and the UK, so the intelligence alliance made sense. But during and after the Vietnam War New Zealand saw the rise of a large, grassroots peace movement – of which Hager was an active member – that questioned the morality of this arrangement. Were our interests really that compatible with America’s? Were the “destroy the village in order to save it” guys really the good guys?

The peace movement gathered public support around the issue of America’s nuclear armed warships visiting New Zealand, and it was stoked by outrage towards France’s above-ground nuclear weapons tests in the South Pacific. The movement culminated in the fourth Labour government’s decision to declare New Zealand a nuclear-free zone. The US retaliated by suspending us from ANZUS, the defence treaty between the US, New Zealand and Australia, an act which seemed to signify a deep rift between us and our long term allies.

All of this happened in the mid 1980s. So why, Hager wondered a decade later, given that the Cold War was over and New Zealand was no longer in a military alliance with the United States, were we allowing them to operate spy bases on New Zealand’s soil? Why were we letting them snoop on our regional allies in the South Pacific? Hager described intelligence operations in the Falklands conflict; Vietnam; Laos. What did that have to do with us? And why were these operations getting more elaborate and intrusive during the post Cold War era, not winding down? How was any of this in New Zealand’s interest?

Hager’s answer was that during the Labour government’s very public rift with the US, a tiny handful of New Zealand officials – spies, diplomats, military officers – decided to run their own parallel foreign relations policy. And because the GCSB was such a deeply secret operation they were able to conceal their actions from the government of the day, as well as the wider public who didn’t even know they existed.

It’s a theme Hager returned to in Other People’s Wars, his 2011 book about New Zealand’s involvement in Iraq and Afghanistan based on an extensive leak of secret communications. It revealed an almost comic obsequiousness towards the US and the UK among New Zealand’s military, diplomatic and security officials; an obsession with “getting in on the game” when it comes to joining their military adventures. But ever since Vietnam there’s been deep public scepticism about helping out in America’s wars, which are almost inevitably misguided blood-soaked debacles. So, Hager observes, we have these stealth policies and interventions which are kept secret in the name of protecting the public interest – even though they have little or nothing to do with the actual interests of the public, who generally oppose them when they find out about them – or the strategic goals of New Zealand, which nominally pursues an independent foreign policy.

When I asked Hager about the reception of Secret Power he grimaced. “It felt like it got about 24 hours of publicity. A few stories and reviews and then-” he fluttered his hand, “Nothing. The government will always try and kill any story about intelligence by saying they won’t comment, and the opposition generally goes along with it. There’s a conspiracy of silence.”

Waihopai Station in the South Island, a secure communications facility for NZ’s spy agencies. (Wikipedia)

There was an additional flurry of media coverage when Hager convinced TV3 to do a story on the GCSB base down at Waihopai, and he was filmed breaking into the base alongside John Campbell. That soon died away. Hager moved onto other things. But before putting the entire project behind him he wrote a summary of the book for a US magazine called Covert Action Quarterly. It was published sometime in 1997, when it was read by a researcher for the European Parliament and then foregrounded in a report on the Five Eyes network.

This led to intense media interest, mostly from outlets in western European states that considered themselves close allies of the Five Eyes nations, so were outraged to discover they were all being spied on by them. The report triggered a year-long inquiry by the European Parliament, and Hager recalls that he spent most of 1998 doing media for the teams of international journalists flying into the country to interview him, followed by a European trip to testify before the inquiry, while New Zealand’s political discourse drifted on, blissfully untroubled by his revelations.

There are two forewords to the book: the first by Lange, the second by the US author and academic Jeffrey Richelson. “Jeffrey said in his foreword that the book was a work of investigative journalism,” Hager told me. “And when I read that I thought: Ah! That’s what I’ve been doing for the last 10 years! That’s what this is called. That’s what I want to do with my life.”

Illustration: Daron Parton

In the final chapter of Secret Power, Hager concluded that New Zealand should withdraw from Five Eyes. It didn’t deliver anything of value to New Zealand, he argued: it failed to detect or prevent the bombing of the Rainbow Warrior by French intelligence agents and provided no useful intelligence about the coups that took place in Fiji during the 1980s. And our allies have never seemed especially grateful for our contribution: both the US and UK refused to condemn France for the Rainbow Warrior attack, even though both Reagan and Thatcher were running campaigns condemning international terrorism at the time. Instead, Hager argued, our involvement in Five Eyes just compromised New Zealand’s integrity because it suited the ambitions of a handful of public servants.

Hager believes that we need a foreign intelligence capability. He lobbies for more diplomatic staff tasked with research and analysis and an expanded External Assessments Bureau (this is now called the National Assessments Bureau) which is part of the Department of Prime Minister and Cabinet. It provides analysis and advice on foreign and domestic intelligence. “We do the stuff you’d think the GCSB does, but doesn’t,” one of their analysts told me a few years back, “Even though their budget is about 50 times the size of ours.” Which gets to the heart of Hager’s argument, that the main reason for the secrecy around this operation is that it doesn’t really deliver anything of value to the nation. “The secrecy is not for the Russians,” one GCSB officer admitted to him, “It is for the general public. If they knew what the bureau does it would not be allowed to continue.”

The bureau was expanded after 9/11 to accommodate the new demands of America’s War on Terror, a conflict in which New Zealand was an enthusiastic, albeit somewhat covert supporter. In 2005 the US secretary of state, Condoleezza Rice, visited Wellington and announced that New Zealand was “both a friend and an ally”, signalling that the relationship between the countries had moved on from the Anzus dispute. The Five Eyes relationship was seen as a crucial component in sealing the diplomatic breach during the 2000s. But the bureau itself experienced a very controversial, very high-profile period under the Key government in the 2010s.

First there was the Kim Dotcom revelation. Dotcom was a wealthy German tech entrepreneur with a previous conviction for fraud and a host of lawsuits and criminal allegations swirling around his online file-sharing business. He qualified for New Zealand residency in 2010 under the Key government’s “investor plus” category, in which the government waived its requirement that new residents must be “of good character”, in exchange for a 10 million dollar investment in New Zealand.

Kim Dotcom at his 2014 ‘Moment of Truth’ event in Auckland featuring video-link appearances by Edward Snowden, Glenn Greenwald and Julian Assange. (Photo: Getty Images)

In January of 2012 the US government filed indictments against Dotcom and his associates alleging they were involved in a criminal conspiracy to pirate copyrighted material and launder the profits. New Zealand police raided Dotcom’s mansion and arrested him so he could be deported to the US. Dotcom hired a team of lawyers to fight the deportation, and during the litigation it emerged that the GCSB had been spying on him. Which was against the law: when it was expanded in 2003 the GCSB was explicitly restricted to foreign intelligence gathering, prohibited from spying on New Zealand citizens or residents.

Then there was the Ian Fletcher affair. In mid 2010 the director of the bureau, Air Marshal Sir Bruce Ferguson, announced his retirement. The organisation then ran through five different directors or acting directors in two years, until in 2012, shortly after the Kim Dotcom revelations, Ian Fletcher, a former diplomat, was appointed to the post.

Fletcher’s name wasn’t on the short list of recommended nominees, which was odd. But he had gone to school with John Key, the prime minister and minister for security and intelligence. This was just a coincidence, Key explained, adding that he hadn’t talked to Fletcher in years. The media were able to establish that Key had phoned Fletcher and advised him to apply for the job, and that they’d met for breakfast shortly after Key signed off on the appointment process for the role. And both of these scandals got mixed up together: the perception was that the prime minister was interfering in the appointment of the head of his spy agency, then lying about it, at the same time that agency had been caught breaking the law on behalf of the US.

Next there was the Kitteridge report. Still in his role despite the controversy, Ian Fletcher assured the public that Dotcom was the only person his agency had spied on illegally. But Key appointed Rebecca Kitteridge, an experienced lawyer and senior public servant, to investigate further. When a draft of her report was leaked to the media it revealed a deeply dysfunctional organisation that may have broken the law by spying on 88 New Zealanders or permanent residents (we never found out who they were) between 2003 and 2012.

Kitteridge also complained that the bureau had failed to make “basic files” available to her investigation. Her report found that the GCSB didn’t understand their own legal framework. It was both under-resourced and “top heavy” with too many managers and an overly complex structure. Poorly performing staff were tolerated and “problematic” staff were redeployed  instead of being held accountable, because disgruntled former staff were seen as a security risk. Unlike other intelligence organisations in peer democracies, she noted, the GCSB was siloed off from the rest of the public service.

There’s a 17 year gap between the publication of Secret Power and the leaking of the Kitteridge report, but both texts paint similar pictures of a lawless and not particularly competent organisation concealing both defects behind a culture of secrecy. Kitteridge, unlike Hager, did not want to get rid of the GCSB. It had vital work to do, she explained, protecting the nation’s IT infrastructure from cybercriminals and cyberespionage (as I write this, parts of Waikato’s District Health Board’s IT infrastructure are still shut down in the wake of a ransomware attack one month ago). She also insisted that the signals intelligence was valuable, pointing out that every other democracy had a similar capability, and that the GCSB was well regarded by other intelligence agencies – less of a compliment if you accept Hager’s critique that it was, essentially, a domestic branch for our allies’ operations.

The GCSB and its fellow security agency, the SIS, had always reported solely to the prime minister, and these briefings often took place without any advisors – or lawyers – present, because of the classified nature of the discussions. This, also, was different to the ways other democracies did things: prime minister and presidents have the least capacity for direct oversight of anyone in the cabinet, so other democracies built in additional reporting to politicians in the defence and justice portfolios. After the Kitteridge report Key transferred the ministerial warrant for security and intelligence to his attorney general, Chris Finlayson (while creating a new warrant for national intelligence, which he kept). The security agencies were needed, Key explained, because they kept us safe.

Ian Fletcher stood down as GCSB director in early 2015. Finlayson rewrote the laws and strengthened the oversight mechanisms for the intelligence agencies. I asked someone with knowledge of New Zealand’s intelligence community if this had any effect, and they replied, “Finlayson bought the spies under domestic, civilian control. They’d never had that before.”

In May of 2013 Edward Snowden, a 30 year old intelligence analyst, took a leave of absence from his Hawaii-based job as a subcontractor for the National Security Agency and flew to Hong Kong, where he gave a vast trove of classified documents to the journalist Glenn Greenwald. The Snowden revelations, as they became known, were published simultaneously by the Washington Post and the Guardian. And they revealed to the world what Secret Power had revealed 17 years earlier: the existence of the Five Eyes network, the fact that an intelligence alliance headed by the US and the UK were spying on everyone. But the implications of Snowden’s leak felt more profound: the decades after the release of Secret Power saw the rise of the internet, the migration of our social lives to online spaces, the planetary scale harvesting of private data by the big platforms, the rise of surveillance capitalism. Almost all of this, Snowden revealed, was accessible to Five Eyes. They could see anything about anyone.

In March of 2015 Nicky Hager began publishing stories based on Snowden’s documents, and they revealed that the GCSB was spying on its neighbours in the South Pacific and relaying all the data to the US National Security Agency. Hager described the intercepted traffic as “emails, phone calls, social media messages”. We were helping the Australians spy on Indonesia and assisting the US with their surveillance of India, Vietnam, China and Pakistan.

But what were we getting in return? On March 22 that year Hager and the New Zealand Herald reporter David Fisher revealed that New Zealand’s trade minister, Tim Groser, was applying for the position of director general of the World Trade Organization, and that the GCSB was spying on his rivals for the position, monitoring the emails of diplomats from Brazil, Costa Rica, Ghana, Jordan, Indonesia, Kenya, Mexico, and South Korea. Both Groser and John Key refused to comment on the allegation, explaining that the government did not comment on security and intelligence issues. Groser did not get the job.

Illustration: Daron Parton

Neither the GCSB or its fellow security agency the SIS detected or prevented the 2019 March 15 terror attack in Christchurch. The Royal Commission found that New Zealand’s security agencies were overly focused on the threat of Islamic terrorism rather than the threat of white supremacists, because that’s what the agency’s international partners prioritised. It seemed disconnected from other domestic law enforcement agencies. Out of 500 GCSB staff only a tiny handful of GCSB operatives – as few as two – were involved in counter-terrorism work, and a Treasury assessment found that the bureau’s internet operations were five years behind those of the other Five Eyes partners. The bureau told the commission it felt counter-terrorism was best handled by other agencies.

The primary reason for New Zealand’s involvement in Five Eyes seems to be diplomatic rather than security-based. We spy for our allies and that keeps them happy. Although it’s still not obvious what we get for that happiness. What, exactly is the return on the $170 million a year the government spends to keep the GCSB running? Groser devoted much of his career to securing a free trade deal with the US, a goal which still seems hopelessly remote. Australia has not been notably indulgent towards us over extending rights to New Zealand citizens working across the Tasman, or suspending their 501 exportation policy. But maybe the realpolitik is that if there’s going to be a global surveillance network it’s better to be inside it than out?

One of the senior officials Hager interviewed in Secret Power had a more sophisticated justification for the operation: most of the time the GCSB is like the police force on a quiet Monday night, he explained. “If you look at its use in peacetime it is not cost effective. But you need it to be prepared for contingencies.”

It’s not an argument Hager accepted. No one seriously considered the prospects of another global war. Instead our obligations to our allies just dragged us into their seemingly endless, morally indefensible regional wars. It was more like being a member of a gang on Monday night, he argued, with no voice on who the gang will attack on Friday but still going along for the ride.

But the geopolitical climate of the early 2020s feels scarier than the end-of-history 1990s. I asked Hager about this and he replied: “The answer is that, as in the Cold War, the current posturing is not about a military threat to New Zealand. China is closer to Europe than to New Zealand. At most, and as usual, it is about New Zealand being called on to go and join a conflict elsewhere that isn’t our conflict.”

The media spokesperson for the GCSB advised me that the agency is now a very different agency to the one Hager wrote about all those years ago, insisting that they’re as transparent as they can be. Its website now hosts speeches by the directors general, statements to parliament’s intelligence and security committee, annual reports. They also advised me that they were involved in the international operation against drug dealers and money launderers that went public a few weeks ago. Which the police acknowledged at the time but, they pointed out – somewhat plaintively – the media didn’t report.

The day I met with Hager to talk about Secret Power, the political journalist Richard Harman reported that our two main political parties, Labour and National, had conspired to quietly stand down two of their long serving MPs, Jian Yang and Raymond Huo “with a minimum of fuss”, after an intelligence briefing raised security concerns over their ties to the Chinese Communist Party.

Huo first entered Parliament in 2008, and Yang entered in 2011. Yang’s links to China’s foreign intelligence services were revealed by New Zealand media in 2017, the same year a New Zealand political scientist named Huo as a “pro-China influencer”. In 2019, Huo prevented that same academic from testifying to a parliamentary select committee he chaired on the subject of foreign influence in New Zealand’s elections. And Yang arranged a meeting between the leader of the National party and the head of China’s secret police. Both politicians were well regarded within their parties because of their prolific fundraising.

If Harman’s allegation is true it points to an appalling breach of security by our largest political parties, a breach which took 12 years for the intelligence agencies to close. And it was allowed to continue, despite widespread media coverage, because both politicians helped their parties fundraise against each other! The level of corruption and incompetence suggested is astounding. But we’re unlikely to ever find out what really happened. After a few days the story quietly died, because the leaders of both parties refused to comment on security matters.




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