Methods of the modern spy

By GEOFF CUMMING

Terrorists - or friends of terrorists - are walking our streets, making plans with what may, or may not, be innocent intent.

And following several paces behind them, loitering on street corners, admiring their reflections in shop windows, are their watchers. "NB: Target just bought high-grade ceramics - possible raw materials for a weapon of mass destruction."

We know terrorism supporters are in our midst because our Security Intelligence Service tells us on its website: "There are individuals and groups in New Zealand with links to overseas organisations that are committed to acts of terrorism, violence and intimidation. Some have developed local structures that are dedicated to the support of their overseas parent bodies."

There is also a risk, says the SIS, that "individuals or groups may use New Zealand as a safe haven from which to plan or facilitate terrorist acts elsewhere". So we need shadows to watch them.

These spooks, we are told, are New Zealanders from all walks of life. They record who their targets talk to, where they go, what they buy, what clubs and societies they join.

They may recruit others with eyes and ears - commonly taxi drivers and parking meter attendants.

They favour clandestine meetings in smoky venues with soft lighting - nightclubs and casinos mostly. And they dutifully pass snippets of information to superiors sitting in office buildings, possibly watching CNN - or reading inaccurate French press agency reports on the internet, part of the case for keeping Ahmed Zaoui banged up in maximum security.

The Refugee Status Appeals Authority's decision on the Algerian asylum seeker has cast an unwelcome light on our security intelligence services who, with the blessing of their political masters, maintain a cone of silence over their activities.

The SIS's cover has been blown as intelligence agencies worldwide duck for cover over the quality and reliability of their work. The failure to predict September 11 and subsequent bombings in Bali and Jakarta, mixed with the ability of politicians to "spin" the intelligence they receive, have left secret services shaken and stirred. Most damning was the revelation that a postgraduate student thesis based on 12-year-old information apparently helped persuade the British Government to invade Iraq.

The Zaoui appeal finding is a jolt to those whose image of espionage comes from spy movies and novels, with their moles, codebreakers and attention to detail. That their arsenal involves weapons as mundane as the internet and newspapers is an insight into our 140-strong SIS, which routinely refuses to divulge the most innocuous detail about how it works, who it targets and why.

The cloak-and-dagger act is best summed up by former head Brigadier Lindsay Smith, who once likened the agency to an onion. "Once you have let one piece of information become a public fact, you start to peel away at the onion," he said in 1989. Foreign agencies displayed extraordinary industry and competence "and it's not my job to help them".

Which makes it hard to tell whether the SIS is doing its job properly - which is important if you believe what it says on its website.

While our operatives are not about to reveal their modus operandi, a hazy picture of how they do business can be pieced together from anonymous and public sources - rather like spies do.

"Just because they work in intelligence doesn't mean they are gifted with superior brain power," says former diplomat Terence O'Brien, a senior fellow with Victoria University's Centre for Strategic Studies. "It's very much a profession for beavering away on minutiae."

New Zealand's biggest intelligence-gathering agency is, in fact, not the SIS but the Government Communications Security Bureau (GCSB), which is responsible for signals (electronic) intelligence and runs the Waihopai satellite base near Blenheim.

Its $20 million budget is spent on intercepting foreign communications and sharing information with the US, Canada, Australia and Britain as part of the five-nation Echelon electronic snooping network.

Its 220 staff include foreign language experts, code specialists, engineers, technicians and support workers. New Zealand receives a lot more information than it supplies - although it is expected to keep tabs on the South Pacific, its immediate field of influence.

Tip-offs from Echelon partners aid the largely internal activities of the SIS, whose workforce includes surveillance officers and intelligence analysts.

"It's a strange world full of gossip and very seldom do they get any hard evidence," says an Auckland private eye who has stumbled across more than one surveillance operation.

"It's the covert way they go about it. They will build a network of friends and those friends introduce targets to them.

"I was once approached via a taxi driver to have a chat with an SIS agent and could we meet in this nightclub. Why couldn't he just ring me?"

In Zaoui's case, the SIS would have "backgrounded" anyone he was in contact with, monitored telephone and cellphone calls and checked overseas databases for matches. "But they wouldn't have any direct information - everything would be second or third or fourth hand."

Although SIS liaison people are positioned in Britain, Australia and the US, and New Zealand embassies pass on what they pick up, these networks do not extend as far as the Middle East and Africa.

It would have depended totally on foreign sources - and robust independent analysis of 12-year-old events in Algeria is lacking.

New Zealand is unusual in having one agency covering internal and external security threats - and the SIS focus is largely internal. It watches individuals with alleged links to international terrorist groups who may try to raise money, obtain false documentation, buy weapons or recruit others. According to its last annual report, 60 per cent of its $12 million budget was spent on such "security intelligence advice" in 2001-2002. It investigated individuals with possible links to al Qaeda and weapons of mass destruction programmes and informants for foreign agencies. It helped police counter-intelligence to investigate people-smugglers and gathered intelligence against foreign companies involved in money laundering.

SIS staff are not allowed to carry guns and have no powers to arrest or prosecute. Nearly half the workforce is female. Two staff last year took parental leave; four resigned. There is even a spies' union - a staff association which enjoys a "co-operative and constructive" relationship with management.

The agency admits to using secret or intrusive methods to gain information, but claims much of it comes from interviews and "public or open sources". A warrant is required to intercept private communications. During the year 21 domestic interception warrants were in force; action was taken under 19. Foreign interception warrants allowing agents to listen overseas were also issued; the report doesn't say how many.

Ten per cent of the budget was spent on gathering foreign intelligence and 7 per cent on "overseas liaison", including counter-terrorism meetings.

The SIS also advises government departments on security. In 1996, the Social Welfare Department was embarrassed by revelations that it sought SIS help to plug leaks to politicians. The advice was to sweep income support offices for bugs; none was found.

The service says only a small proportion of its resources are devoted to monitoring "subversive activity", but fears that it takes its brief too seriously have been raised by the bugging of offices of MPs and Maori activists, including Moana Jackson and Ken Mair.

In 1996, Christchurch lecturer David Small found two SIS agents illegally searching the house of his friend, free trade opponent Aziz Chaudry. Days later, his own house was searched by police and Small later won $20,000 compensation for unreasonable search. Chaudry sued for trespass (and was eventually compensated) but Small recalls the agency's determination to withhold documented evidence on the grounds of national security.

One "classified" item turned out to be a map of Christchurch with Xs marked on certain streets. "Their definition of what sort of documents constitute threats to national security is so broad."

In his own case, Small encountered the SIS mantra that "nothing is written down". But in court, two police witnesses produced "classified" documents tracking his movements, including an old photo of him at a Waitangi Day demonstration, attendances at peace group fundraisers and monthly quiz night visits to an Irish pub.

"When you think how all this information swishes around you really feel there needs to be some checks and balances in place. They act as though they have licence to do whatever they want, safe in the knowledge that if they get caught somebody will sort it out for them."

It worries civil libertarians, and some politicians, that our security services will soon gain more powers to hack into the internet and eavesdrop on conversations.

Green MP Keith Locke recounts a Lower Hutt woman's submission to a select committee about an email she sent to a friend in the US, which mentioned she had missed the US presidential election on TV because she was at a funeral. Her American friend received a visit from the FBI because three words - president, election and funeral - triggered an alarm in an email interception system.

Researcher Nicky Hager, whose 1996 book Secret Power concerned the workings of the GCSB, says the SIS is mainly a conduit for information from British and American intelligence agencies, the usual source of information about people entering the country. It may be third or fourth hand by the time it reaches New Zealand, but it is often incontestable and may lead to people being turned away.

"Since September 11 there are very long lists of people around the world branded as terrorists. Zaoui's name would have come up and they would have grabbed him.

"New Zealand people will not have undertaken any independent analysis of him. We don't have the staff or the capability on the other side of the world."

We do some very sound intelligence work, he says, "but we have no way of assessing the quality of work from other countries".

Hager says modern intelligence gathering includes scanning the internet and reading newspapers and reports from researchers and academics.

"When something interesting happens they have surveillance teams on short-term contracts. They park outside places, tail cars, watch particular buildings and tap telephones. But their main source of intelligence is the foreign stuff."

It is estimated that 80 per cent of intelligence gathering is now electronic - through email interception, bugging devices and listening to phone conversations.

Former US defence analyst Paul Buchanan says America's National Security Agency has 150,000 employees who listen to "pretty much every electronic communication around the globe".

"Then someone reviews what you've heard for the last 30 days on a particular issue," says Buchanan, who lectures in international relations at Auckland University. "It's tedious but you find those nuggets, polish them up and suddenly you're listening to Osama bin Laden."

Buchanan is one of many observers who believes espionage is now too reliant on technology. "You can listen to toilets flush for as long as you want but it doesn't tell you about the motivation of the individual sitting on it."

The electronic information deluge is threatening to swamp security services. Australian Security Intelligence Organisation director general Dennis Richardson complained to a counter-terrorism conference last week that the amount of intelligence received from foreign agencies had tripled since September 11.

"A sharp increase in available information requires a capacity to discard the rubbish. All too often there is the temptation to have a bet each way and to seek to say all things to all people for fear of being wrong."

Based on the unclassified information released on Zaoui, some observers suspect the SIS may have lost the ability to distinguish "the wheat from the chaff". Others suggest it could do little to prove or disprove Zaoui's story, given its resources and the priorities of New Zealand's Echelon friends. And it could not release traceable intelligence which might compromise sources and threaten operations.

But Buchanan, who provided defence analysis in central America as a consultant to the US Defense Department and CIA, doubts there's any objective information linking Zaoui to terrorism.

"If it came from the Algerians it's obviously bogus. If it was from France or Belgium it's compromised [because of their support for the Algerian military]."

Although Nigeria had included Zaoui's name on a list of al Qaeda suspects supplied to the US, the information was unreliable and the Americans had taken it at face value.

If the SIS had classified information which the Americans and French did not have, it had ways of indicating that it was right.

"If they have an incredible smoking gun, I want to see it. It had better be a blunderbuss."

The trouble with modern intelligence, says former Prime Minister David Lange, is that it's basically hearsay. "No one's going to stand up and say: 'I am 'X' and I am a mole and I'm waiting for you to put a bullet in my head."'

But Lange says information is thoroughly weighed up, and checks and balances exist in the form of committees of defence and foreign affairs officials and the PM's department.

"It's the most boring, boring, boring business you ever met in your life. They don't wander around in mackintoshes and long noses. They just gather material, they're just endlessly swamped with material.

"They're the sort of people that make good stamp collectors - boring as all hell."

But it's simplistic to portray modern spies as internet-addicted desk jockeys cocooned in Wellington and Auckland office towers.

"The officers I have met are personable, quick-witted and probably have a masters degree, they are more broadminded than the stereotype may have it," said former Army officer and defence analyst Jim Rolfe, who lectures at the Asia-Pacific Centre for Security Studies in Honolulu.

But because they keep their own company, agents tend towards a narrow view of the world. And September 11 has lowered the threshold of proof, particularly among American agencies on whom New Zealand relies.

"These days if you are a known associate of people who are terrorists or supporters of terrorism you are likely to be labelled one even if you aren't."

Rolfe says the more startling the information, the greater the need to question the reliability of the source.

"There's a tendency to get mesmerised by the classified stamp. Analysts need to maintain a healthy scepticism. Does it pass the smell test?"

Terence O'Brien, a former Ambassador to the United Nations, says September 11 demonstrated that intelligence was no protection "even for the most technically equipped nation in history".

"We live with this blizzard of information. The real trick in modern intelligence is to sift the wheat from the chaff - to judge what's relevant and discount what's irrelevant.

"It's vital that New Zealand retains the ability to analyse critically other country's conclusions."