In 1934, after opening the discussion on a paper that had considered the Oxford University Exploration Club's expedition to Spitsbergen, Norway, the president of the Royal Geographical Society, Major-General Sir Percy Cox, gave the floor to the explorer, adventurer, and entrepreneur George Binney (1900–72). Cox introduced Binney as someone who knew a lot about Arctic exploration and as ‘the originator’ of the Spitsbergen expeditions from Oxford. Although Binney had not participated in the 1933 voyage, he was a member of the expedition of 1924. Looking back to that time, Binney particularly emphasized ‘the assistance from the War Office’ to the exploration club, and rejoiced that ‘it is a very satisfactory and pleasant feature of University expeditions that they should enjoy the technical support and co-operation of Army officers’.Footnote 1 This story, although not directly connected to the present case, hints at several important factors that defined Binney's work during the Second World War too: his knowledge of northern European and Arctic matters, a thorough understanding of seafaring, and his ability to collaborate with several different authorities and actors and bring them together.
Binney's activities in Scandinavia during the Second World War have attracted a fair amount of scholarly and popular attention. This writing charts his role in the three successful British blockade-running expeditions – Rubble, Performance, and Bridford – undertaken in the period from January 1941 to March 1944. From the British viewpoint, these operations became crucial after the German invasion and occupation of Denmark and Norway in April 1940 and the resulting German blockade of the Skagerrak, which obstructed British access to vital war materials, such as Swedish special steels, and particularly ball bearings.Footnote 2 Binney's biographer Ralph Barker's Blockade busters (1976) remains the most extensive account of his wartime endeavours. Although Barker used an impressive amount of different British and Scandinavian sources, he did not have access to the Swedish General Security Service's counterintelligence records.Footnote 3
In general, there is a gap in the historiography of this topic, as only a limited amount of research exists on Swedish anti-Allied (namely anti-British) counterintelligence operations. Most of the references to this subject are brief mentions rather than in-depth analyses.Footnote 4 These works do not discuss the actual counterintelligence mechanisms and their operationalization on a day-to-day level, which are the subject of discussion here. With the examination of previously untapped Swedish archival records,Footnote 5 this article thus examines the Swedish security establishment's counterintelligence measures directed against British preparations for clandestine blockade running and other economic warfare operations in Scandinavia during the nervy first months of the war in 1939–40.Footnote 6 As far as possible, the article will also explore what British officials knew of the Swedish counterintelligence techniques at the time and how they perceived these measures.
The British government established the Ministry of Economic Warfare (MEW) at the start of the war in September 1939. Economic warfare during the world wars aimed ‘to limit the enemy's war-making capabilities’ by denying access to raw materials or foodstuffs. These objectives were mainly realized through blockades and appropriation of illegal imports. In addition to these largely economic means, the methods included propaganda, legislative measures, diplomacy, and military action.Footnote 7 Undoubtedly, many of these different techniques overlap, and belligerent states also used economic warfare not only against the enemy but also against neutral countries. Although many of its characteristic techniques (such as blockades) dated from the era of the Napoleonic wars,Footnote 8 the language of ‘economic warfare’ was relatively new in the Second World War, having become established only over the course of the 1930s.Footnote 9 Whether attempting to stop Norwegian companies from selling ferrochrome and vanadium to Germany or threatening them with the prospect of post-war difficulties in trading with the British empire in an attempt to lower the prices of war materials, Binney did his utmost to enhance British war commerce and to impede that of Germany.Footnote 10 Thus, much of his work in Scandinavia merged directly into the larger British policy of economic warfare, which the MEW envisaged including – in addition to blockades – sabotage, psychological warfare, and diplomatic threats.Footnote 11 Economic warfare as a way of discussing these types of measures largely disappeared in the post-war world. After the Second World War, different varieties of economic sanctions became the most visible form of coercive commercial diplomacy.Footnote 12
Sweden's wartime position was challenging, as the country sought to stay neutral by finding a balance between Germany and the Allies. To defend the realm against security threats (including economic warfare), the country (like all other states) performed counterintelligence and counterespionage activities. Until the Battle of Stalingrad (1942–3), the Swedish security establishment was more concerned with countering Allied espionage activities than those of Germany,Footnote 13 and Swedish authorities were constantly ‘on the look-out for any infringement of their neutrality that might upset the Germans’.Footnote 14 According to a Swedish criminologist and historian, Janne Flyghed, Sweden's wartime balancing act produced a ‘foreign policy paradox’: the granting of favours to Germany opened possibilities in the country for subversion and espionage for Germany's adversaries and actually made Sweden's position more difficult.Footnote 15
The terms ‘counterintelligence' and ‘counterespionage' were not regularly used in the 1930s and the 1940s.Footnote 16 As the appellations of some of the Allied clandestine agencies suggest, the British saw covert action as ‘special operations’, the Americans as ‘strategic services’, and the Soviets as ‘active measures’. Although the terms were not widely used at the time, modern definitions of these concepts can help us to understand the phenomenon more comprehensively and to name the activity that the security officials engaged in. According to one definition, counterintelligence aims to protect the state ‘from infiltration by an adversary’ or ‘other forms of politically motivated violence’ including espionage, subversion, sabotage, and terrorism.Footnote 17 Another author defines it as ‘the study of the organization and behaviour of the intelligence services of foreign states and entities, and the application of the resulting knowledge’.Footnote 18 Counterespionage consists of ‘detection, deception, and neutralizing the effectiveness of an adversary's intelligence activities’ and is concerned with ‘the acquisition of data not from another nation's government or military, but from the opposition's intelligence service’. An additional distinguishing factor between these two terms is that counterintelligence is defensive and counterespionage offensive.Footnote 19 The Swedish security officials explored in this article performed counterintelligence rather than counterespionage: they did not seek to infiltrate Allied intelligence agencies operating in Sweden and mainly performed defensive instead of offensive duties.
In any event, the dividing line between these two activities is not very clear. Other aspects also complicate the establishment of firm and strict definitions. While conducting counterintelligence, security officials are not necessarily aware of the nature of the opponent's activity. For example, in the present case, foreign operatives in Sweden could at the same time organize sabotage and purchase war materials. Thus, counterintelligence officers were seldom able to determine in advance the target of their activities; the target could have been the opponent's intelligence service or some other entity. Therefore, to define counterintelligence in the operational sense purely as an activity directed against an adversary's intelligence service is somewhat misleading and too narrow in scope. Of course, this depends heavily on the context. If a security situation is just beginning to change and develop (the start of the Second World War, for example), then counterintelligence activities assume a wider focus. If the conflict has continued for some time (the Cold War), then it is less difficult for security officials to determine and identify the different dimensions of the adversary's clandestine activities, be those espionage or sabotage, and, crucially, to categorize the various agencies involved in these activities. Indeed, attempts to determine accurately the true aims and objectives of an adversary, as well as the agencies involved, are at the core of counterintelligence.
Part I of the present article sets the stage for the examination of the Anglo-Swedish intelligence ‘contest’, mainly from the Swedish perspective. Part II explores the ways in which the Swedish security service began to obtain information on Binney and the challenges they encountered in information collection and in assembling trustworthy intelligence. Moreover, this part offers fresh details concerning Binney's trip to Luleå in January 1940, and the daily mechanisms of conducting economic warfare on the ground in Stockholm. Part III reinterprets the circumstances that surrounded Binney's first project related to contraband shipments: the use of a Finnish steamer, SS Lahti, in July 1940 as a vehicle for a practice run, which aimed to establish whether it was possible to penetrate the German blockade.
I
During the war, the Swedish general security service was in charge of domestic counterintelligence. It consisted of seven regional divisions. The most significant of them was the Stockholm county division (no. IV), which comprised three sections – surveillance, telephone censorship, and postal censorship. This division was directly under the command of Eric Hallgren, the chief of the security service, who had previously headed the Stockholm criminal investigation department (CID)'s anti-Nazi counterintelligence section.Footnote 20 The British, in particular, grew to suspect Hallgren of pro-German mentality.Footnote 21 In 1945, the sabotage and propaganda organization, the Special Operations Executive (SOE), described him as ‘pro-Nazi’.Footnote 22 In practice, the Stockholm CID's sixth department conducted the surveillance section's work, and this consisted of four branches. The first dealt with surveillance of suspected Soviet spies and Swedish communists; the second monitored Nazi Germany's espionage; the third focused on detecting and countering Allied espionage and sabotage activities; and the fourth managed Sweden's central surveillance register until 1943.Footnote 23 The Swedish security service was by definition an internal or domestic intelligence agency. It operated against targets within Sweden's borders, its international operations were limited, and, overall, it did not deal directly with military security threats.Footnote 24
Along with other European neutral capitals, wartime Stockholm was an intense spying location where intelligence officers from different countries ‘could not avoid each other in daily life’. The Swedish capital was ‘a market place’ for asset-spotting and exchange of intelligence and information.Footnote 25 The SOE conducted a large part of the British clandestine work in different parts of the world.Footnote 26 It was also an important covert agency operating in Sweden, where it liaised or had contact at various points during the war with Swedish, Polish, French, Czechoslovak, American, and Soviet intelligence services or individual agents. France, for example, did not have a separate organization, and collaboration with the British in this field went through the French institute in Stockholm as well as through Robert Rieffel, who worked first for the news agency Havas and later for the French Information Office (OFI),Footnote 27 which, according to Palmer and Tunstall, ‘served the news and propaganda interests of Vichy France’.Footnote 28 However, according to the SOE, Rieffel ‘worked exclusively for Allied interests under enemy cover’. It was only after the arrival of the Westfield Mission in the autumn of 1943 that the SOE began to liaise with the American Office of Strategic Services (OSS), the Central Intelligence Agency's forerunner. The SOE proved unable to uncover the modus operandi of the Soviet intelligence agencies in Sweden. By the end of 1945, it had managed to discover that Igor Spitjkin ‘was at one time responsible for subversive operations against the enemy’ in the country. As was often the case, Anglo-Soviet attempts at co-operation also had a personal dimension, as Peter Tennant, the British press attaché, was involved in discussions with Spitjkin. These overtures, however, withered when Spitjkin was ‘suddenly removed’ and ‘no subsequent replacement made any approach to proceed with joint proposals’.Footnote 29 Although British intelligence agencies’ relations with the Soviet Union ‘were extremely problematic’ between August 1939 and June 1941, in September of the latter year, the SOE ‘signed an agreement’ with the NKVD – the predecessor of the KGB – ‘to co-operate in subversive activities in all countries outside their respective spheres of influence’.Footnote 30
In anti-British counterintelligence operations, the Swedish security service employed a wide array of different information-gathering methods and various different sources.Footnote 31 These included surveillance, capture and analysis of communications, the use of information emanating from informants (hotel receptionists, telephone operators, concierges, restaurant servants, waiters and waitresses, travel agents, and so on), postal censorship, and examinations of hotel guest registers and passenger lists, as well as information from other branches of the Swedish state involved in immigration control, transport facilities, and infrastructure governance.Footnote 32 The majority of the information on Binney came from sources referred to here as ‘casual informants’ who were low-level human intelligence (HUMINT) sources. By definition, casual informants ‘have information to give about foreign targets’,Footnote 33 but they are not officially recruited ‘to conduct espionage’ on behalf of a state agency.Footnote 34 Michael Herman describes in his book Intelligence power in peace and war (1996) several different kinds of HUMINT sources, and depicts them in the shape of a pyramid, with casual informers at the bottom and proper spies engaged in ‘deep espionage’ at the top.Footnote 35 The primary sources used in this study do not give any indication about the Swedish security service's attempts to infiltrate spies in British clandestine organizations. Therefore, the security service obtained information purely from the bottom end of the HUMINT pyramid.
More specifically, although the security service urged hotel receptionists, for example, to observe Binney's movements and to provide information about him, the service did not officially employ them as spies. Furthermore, casual informants did not produce intelligence but rather raw data or information. It is important to distinguish between information and intelligence: ‘to professionals in the field’, information as such ‘is not intelligence’; ‘it is what people do’ with information that gives it ‘the special quality’ that security experts ‘call “intelligence”’.Footnote 36 In some instances, the surveillance reports contain the names and occupations of the casual informants who forwarded information to the police. Security service detectives and police officers certainly knew that they were generating top-secret material, and, perhaps precisely for that reason, were not concerned about protecting the identity of their sources. Moreover, it was necessary that they identified the informants for the benefit of the investigations. (However, it is not necessary in the present study to identify every casual agent by name.)
The security service monitored the British legation in Stockholm closely and it eventually became, according to the SOE, ‘the centre of attention for the Swedish secret police’. British officials perceived Swedish agents in general as ‘somewhat clumsy’ and ‘fairly easily recognised’, but regarded Sweden's postal censorship as ‘elaborate’ and the cypher-breaking department as ‘very competent’.Footnote 37 The SOE depicted Swedish surveillance practices in the following manner:
The Swedish secret police consisted of male and female staff … Permanent observers were stationed for some time in strategic approaches to the Legation with cameras and notebooks and for a period a barn opposite the Legation offered a good observation post in all weathers and seasons of the year.Footnote 38
Over the course of the war, Swedish security service agents started to use cars in their surveillance missions.Footnote 39 However, the Allied intelligence officers soon exposed this new information-collection tool. By 1943, British officials had compiled ‘descriptions and a list of the registration numbers of no less than 15 Swedish secret police cars’.Footnote 40 British SOE agents succeeded in identifying them mainly because they ‘belonged to a small pool of petrol driven cars’ while in Sweden in general cars operated with ‘gas generators worked by wood or charcoal’.Footnote 41
II
In October 1939, Sir Andrew Duncan, chair of the British Iron and Steel Federation, appointed Binney as the association's representative in Sweden and Norway. After acquainting himself with the key personnel of the MEW, the Ministry of Supplies, and later the SOE, Binney travelled to Sweden, where his remit entailed the renewal and establishment of contacts in the Scandinavian steel industry.Footnote 42 He arrived in Stockholm in December 1939 after a visit to Oslo,Footnote 43 and started organizing meetings with high-level representatives of the Swedish industrial elite.Footnote 44 There was also a clear clandestine element to his work. A memorandum dealing with the acquisition of Norwegian ships and steel shipments described Binney's role in such operation as follows: he ‘should go backwards and forwards to Gothenburg as if in the usual course of business’, assist in ‘throwing a smoke screen’ around the projects, and ‘carry on with his enquiries as regards the loyalty of the officers and men’.Footnote 45 In terms of the mechanisms employed, these objectives closely matched those of any covert operation involving behind-the-scenes manoeuvrings and vetting of agents.
In January 1940, some three weeks after his arrival, Swedish security officials began to take note of Binney, when monitoring another British citizen, Margareta Hook. It is not clear if this was her real name nor why the security service was tracking her movements, but she certainly seemed well connected. In mid-January, in addition to consulting Binney on at least two separate occasions, Hook met a representative of a Gothenburg industrial firm and had numerous meetings with two Russian-speaking individuals. She also communicated by telephone with the Italian legation, two unidentified Swedish persons, and a ‘Dr Pollak’, with whom Hook also spoke Russian. The contents of the discussions remain unknown because they took place mainly in hotel rooms, which (apparently) were not bugged at this time. Sometimes, as in the case of ‘Dr Pollak’, the person eavesdropping the telephone conversation was unaware of the contents because of their inability to understand the Russian language.Footnote 46
In the spring of 1940, the Swedish security service relied mostly on imprecise assessments of Binney's activities, which originated from casual informants. According to these evaluations, Binney was not an ordinary businessman (as he claimed) because he was in close contact with the British legation in Stockholm, spent many hours in his hotel room typing, and made night-time telephone calls to Helsinki.Footnote 47 The sounds of typing emanating from Binney's hotel room were perhaps due to the numerous letters he was writing in January to Swedish and Norwegian companies informing them that he was at their disposal in matters of iron and steel.Footnote 48 The telephone calls went possibly to Eric Lingeman, commercial secretary at the British legation in Helsinki, and related to Binney's proposed visit to Finland, which materialized in May 1940. The purpose of the visit was ‘to discuss … the practical possibilities of exporting Swedish special steels to the United Kingdom through Finland and to make a thorough investigation of the route’. The idea was to export the steels through Petsamo,Footnote 49 but the British never used this export route.Footnote 50
Overall, the Swedish security service's casual informants regarded Binney's activities in Stockholm as ‘somewhat peculiar’ and ‘suspicious’.Footnote 51 They paid attention to the ‘unusually high number of foreigners’ living and visiting the building where Binney lived and depicted the visitors to his apartment as ‘peculiar characters’ wearing ‘dirty and scruffy clothing’.Footnote 52 The reliance on casual informants created some challenges to the security service concerning the quality of information received. For example, an informant falsely stated that Binney was an American citizen. Another indication of the security service's want of proper intelligence on Binney was the fact that one of the detectives conducting surveillance had to check his full name in the Strand Hotel's day-book.Footnote 53 As late as April 1940, the security service continued to complain about their failure to identify Binney from other sources excepting the Strand's guest register.Footnote 54
Swedish surveillance reports show that, in addition to Hook, Binney established contact with various groups in Sweden in the period from January 1940 to May 1942, particularly during the spring and early summer of 1940. He met not only local industrialists and shipping companies’ representatives, but also officials of the French legation in Stockholm.Footnote 55 One of the French officials was a Swede, Raoul Nordling, who lived in Paris, but during the summer of 1940 worked for the French chamber of commerce in Stockholm.Footnote 56 He became famous at the end of the war when he negotiated with German occupation authorities the release of thousands of French prisoners of war (POWs).Footnote 57 Binney was on good terms with Nordling and urged him to make contact ‘in any matter where the British Iron and Steel Federation can be of help’.Footnote 58 Other British officials had more reservations about Nordling. In May 1940, the British minister in Stockholm, Victor Mallet, suspected that Nordling reported everything he knew to the Germans. Binney did not believe that to be the case and defended Nordling vehemently, contending that he was ‘heart and soul for the Allies’ and useful as a communication channel between the French cabinet and the Swedish legation in Paris. The rumours of Nordling's German sympathies, Binney argued, were the work of his enemies in France and Sweden.Footnote 59 It appears that Mallet accepted Binney's explanation.
This case illustrates a wider concern for British officials: they regularly suspected various Scandinavian consuls and shipping agents whom they dealt with of ‘Nazi sympathies’.Footnote 60 With the benefit of hindsight, Mallet's misgivings were not necessarily far-fetched, as loyalties and allegiances sometimes shift easily during wars. Nordling belonged to a ‘small band of businessmen and intelligence agents’ which included, for example, three Paris bankers, a dissident German intelligence officer, the founder of a champagne dynasty, and a representative of the British Secret Intelligence Service (SIS).Footnote 61 As well as acting as the Swedish consul in the French capital, Nordling worked as the president of Banque de Suède et de Paris and as managing director of the Svenska Kullagerfabriken (SKF)'s subsidiary in France. Under the occupation, the SKF's factories produced ball bearings in Paris for the benefit of the German war effort. Significantly, Hermann Göring and agents of Heinrich Himmler used Nordling ‘as a trusted intermediary for secret political overtures to the Western powers from 1940 to 1944’.Footnote 62 Thus, it is entirely possible that Nordling reported to the Germans details of his association with British interests (namely Binney) in Sweden.
Perhaps in order to combat these sorts of imminent or potential uncertainties, on most occasions Binney discussed nothing of substance over the telephone, and the meetings he held with local contacts were short (usually lasting less than an hour), and typically organized at hotel restaurants.Footnote 63 The British recognized that the Swedish security service tapped phones and recorded conversations, and thus ‘the use of the telephone for operational purposes was completely insecure’.Footnote 64 Indeed, the SOE sought to utilize phone tapping as a counter-deception measure ‘in order to draw red herrings across the trail of the Swedish police’.Footnote 65 Thus, although phone tapping was widely used as a counterintelligence technique, it was not necessarily as efficient as might be assumed. Just as in the case of establishing Binney's identity and the true nature of his activities in Sweden, the security service had to rely on imprecise information when attempting to construct proper intelligence on the individuals he met, their backgrounds, and the contents of the discussions. Once again, they depended largely on casual informants. Through these sources, the service generally managed to establish the individuals’ identities and professions, but not the contents of the discussions they had with Binney.
On some occasions, the security service managed to obtain important details of Binney's activities, including in the case of his excursion to Luleå on 29 January 1940, discussed in a memorandum of early May.Footnote 66 An engineer, Axel Folke Westerberg, was used as a casual informant. Although this visit had some significance for British preparations for economic warfare in Scandinavia as well as serving as an example of Swedish counterintelligence practices, it has not attracted much attention in existing literature. Barker mentions briefly that Binney travelled to Luleå to ‘gain first-hand knowledge of the Swedish steel industry’. Cruickshank and the British naval attaché Henry Denham's memoir both refer to the town's industrial and geostrategic significance, but they do not discuss Binney's activities there.Footnote 67 According to Binney, the purpose of his visit to Luleå was to persuade British industry ‘to supply steel to the Finns in the spring’, to uncover ‘a reliable agent’ to handle the consignments, and to find engineers to discuss certain ‘technical points’.Footnote 68
British clandestine operations relating to Luleå and other strategic locations in Sweden had commenced in the spring of 1938, when the SIS's sabotage department (section D) recruited Alfred Rickman to work as a secret agent in Scandinavia. Initially without him knowing that this dimension to his work existed, the SIS chose Rickman to author a book on Swedish iron ore, a subject that was completely out of his area of expertise. The idea behind the book project was to give Rickman long-term cover as a journalist for covert work in Sweden. The SIS picked him virtually by chance. The head of section D, Major Lawrence Grand, was on the lookout for ‘a bright young man’ and Rickman's father ‘nominated his son, whose export/import business had just failed’.Footnote 69 At the start, Rickman was clearly an ‘“unconscious” source’, as the SIS led him to believe that he was ‘providing information for journalistic or commercial use’, which he clearly was not.Footnote 70 Towards the end of 1939, section D in Scandinavia had conceived three plans aiming to sabotage the iron-ore installations in Oxelösund (Operation Lumps) and Luleå (Sub-arctic) in Sweden, and Narvik (Arctic) in Norway. The aim of Operation Sub-arctic was ‘to mine the approaches’ to the port or to ‘scuttle a ship on [the port's] fairway’. The first lord of the Admiralty, Winston Churchill, was the most vocal advocate of sabotage operations in Sweden. On 2 January 1940, Churchill sanctioned section D to undertake sabotage in Öxelösund, but the prime minister, Neville Chamberlain, disallowed the project because, in his view, it was potentially excessively harmful to Anglo-Swedish relations. However, Chamberlain ‘agreed to further reconnaissance at the port’, which commenced immediately.Footnote 71
In order to provide context for Binney's trip, the first part of the Swedish security service's memorandum considered Rickman's visit in September 1938.Footnote 72 A reference to Rickman in early May 1940 is hardly a surprise, given the very public exposure of his sabotage organization a mere month earlier. The sentencing of Rickman and the members of his sabotage ring occurred on camera and (rather remarkably) the prosecution gave the summary of the case in full in open court.Footnote 73 In 1938, Westerberg had chaperoned Rickman around the industrial installations in Luleå. Contradicting later historical judgement, Westerberg believed that Rickman was ‘very knowledgeable’, asking in-depth questions about different mineral types, transportation capacities, and details of shipping companies in order to obtain as full a picture as possible about the iron-ore business.Footnote 74 Although Rickman did actually author a volume, Swedish iron ore (1939), possibly with the help of a ‘ghost writer’,Footnote 75 his visit related more directly to British sabotage preparations.
Westerberg also supervised Binney's visit at the end of January 1940. At the start, he mentioned Rickman's book to Binney, who ‘showed no interest towards it’. Binney seemed keener on Luleå's harbour facilities (storage, rail tracks, and jetties) than on iron ore. This was only natural given the purpose of his visit. However, Binney's curiosity concerning the infrastructure at the port can also be interpreted as a form of the reconnaissance work that Chamberlain had called for. In any case, Westerberg was alarmed about Binney and immediately after his departure he telephoned the director of a Luleå coal company and warned him about Binney in case he paid a visit. Rather vaguely, Westerberg also stated that, in addition to Rickman and Binney, ‘another English journalist’ had stopped at Luleå, but he could not remember his name nor the date of the visit.Footnote 76
The memorandum also mentions ‘a sudden fire’ at the port the night before Binney's arrival, which partly destroyed one of the ore presses. These were instrumental in melting the minerals, and thus enabling their loading to the ships.Footnote 77 Although the memorandum appeared in the context of the Rickman affair, and a sudden fire in a strategic port might have raised questions, there is no evidence at all about Binney's involvement in sabotage. In April 1941, sabotage in Luleå returned briefly to the agenda of the British Scandinavian policy. Cruickshank argues in his official history of the SOE that the British legation in Stockholm proposed to use a Finnish vessel to block German iron-ore shipments from Luleå. Captain Alfred Merry, a commercial diplomat, began to develop the scheme, but the ‘proposal vanished without a trace’ and ‘Merry was told to destroy his records on 12 June 1941’.Footnote 78 Indeed, revelations about the existence of Rickman's organization (April 1940), the Krylbo train explosion (July 1941), and the explosion of three Swedish ships at anchor in Hårsfjärden near Stockholm (September 1941) illustrated to the Swedish security establishment that threats from sabotage and subversion were real.Footnote 79
One of the aims of Binney's work in Sweden was to organize the procurement and supply of ball bearings and special steels.Footnote 80 Current literature has noted the British reliance on Swedish ball bearings and has explained the devices through which Britain sought to obtain war materials despite the German blockade.Footnote 81 Yet, some of the daily mechanisms that Binney used on the ground in Sweden to acquire them have gone unnoticed. Swedish sources illustrate a way in which Binney attempted to obtain these vital war materials: he simply walked into a car dealership in central Stockholm and ordered ball bearings. During an eavesdropped telephone conversation, the company's representative told Binney that under Swedish law it was illegal to sell ball bearings for export. Binney replied that ‘we will arrange this through the English legation’ and advised the car dealers to ‘send them directly to the Legation’.Footnote 82 This was micro-level economic warfare: a representative of a belligerent state coerced a private company located in a neutral state to trade war materials illegally.
At the other end of the spectrum of economic warfare tactics, with regard to the scale of the operation, was the strategy of ‘control at the source’ or ‘pre-emption’. The Allies sought to use this mechanism in efforts to purchase the entire available future supply of a commodity of ‘strategic value to the enemy’, such as chrome ore from Turkey and wolfram from Portugal. According to Milward, pre-emption became ‘a private activity conducted by paid intelligence agents’ but it also involved ‘attempts to coerce neutral governments by official diplomatic means’.Footnote 83 Binney fitted well in this pattern. He was employed by the British Iron and Steel Federation (a private body), worked in close contact with British officials in Sweden and London (especially the MEW, which controlled the SOE), and was involved in purchasing war materials, as well as in attempts to obstruct Scandinavian supplies to Germany. Sweden was vital in this context mainly because of the country's pre-eminence in the global ball-bearing industry and specialized engineering.Footnote 84 The role of Binney and other similar operatives illustrates well the situation discussed at the beginning of the article with regard to the knowledge that counterintelligence officers have about their adversaries. In these types of situation, it is not at all clear who the target is: is he or she an intelligence officer, a HUMINT operative, a regular businessperson, or a saboteur? Security service personnel conduct counterintelligence although they are not certain that their targets are intelligence officers or intelligence agents. In many cases, this is precisely what they strive to uncover.
III
The prevention and obstruction of the Germans ‘through a campaign of economic warfare’ were central to Binney's activities, laying the groundwork for British Scandinavian war-trade policy.Footnote 85 In practice, this policy was implemented via the blockade-running expeditions (Rubble, Performance, and Bridford) mentioned above.Footnote 86 Prior to these operations, Binney organized a practice run to test the prospects of penetrating the German blockade. For this purpose, he travelled to Gothenburg to meet a ‘Captain Fuchs’, commander of the Finnish steamer SS Lahti, who, according to Barker, ‘had signified his readiness to attempt a trial run’. Barker argues that Binney realized that the captain was after financial rewards, enjoyed a drink or two, and was ‘a bad security risk’. (The Swedish police had apparently warned Binney about the captain.) Nevertheless, the captain was suitable because ‘no one but an adventurer could be expected to take on the job’. Besides, ‘the staunchest of Binney's Swedish allies’, Captain Ivar Blücker of the Gothenburg harbour police, had contended that as far as he knew Captain Fuchs was not employed by the Germans. On 5 July 1940, the Lahti departed from Gothenburg harbour, but was soon spotted by the German air patrol and escorted to the Norwegian port of Kristiansand. Barker argues that, although Captain Fuchs did not break through the blockade, Binney was satisfied with the experiment, as it paved the way for the subsequent, more extensive, expeditions.Footnote 87 Cruickshank similarly states that the SIS's section D authorized Binney ‘to charter a Finnish ship (the Lahti) to carry 300 tons of steel for the aircraft industry – but she was spotted by a German plane and meekly allowed herself to be shepherded into Kristiansand’.Footnote 88
Neither Barker nor Cruickshank give references in their books in the section discussing the Lahti incident. This makes it rather difficult to determine where they obtained information about the matter.Footnote 89 Nevertheless, the picture that emerges from the Swedish security service's archival records concerning the identity of the Lahti's captain, the date of the ship's departure from Gothenburg, the manner in which it ended up in the German naval authorities’ hands, and the events leading up to its surrender differs noticeably from Barker's and Cruickshank's interpretations. Swedish sources clearly show that the captain of the Lahti was not Captain Fuchs, but a Finnish citizen, Johan Aholainen; the Lahti did not depart from Gothenburg on 5 July but two days later;Footnote 90 and the German navy ‘spotted’ the vessel on 12 July because they had received an advance notice of its departure in the form of an anonymous telephone call. Aholainen's name first appeared in a security service reportFootnote 91 dealing with the investigation into this telephone call made on 4 July 1940 at 11.18 a.m. to the German legation in Stockholm, informing German officials about the Lahti's imminent departure. The caller first asked to speak to the German commercial attaché and then the military attaché, but neither of them was available. The caller then spoke with an official to whom he said ‘Do you know that a Finnish vessel sits in Gothenburg and loads for England?’ The caller (when asked) gave the ship's name and stated that it was a ‘small vessel’ being dealt with (as it later emerged) by the Finnish consul in Gothenburg, William Gibson Kjellberg.Footnote 92
The investigation into the identity of the caller (which inherently linked to the investigation of the Lahti in general) went on for much of the summer and autumn of 1940. It involved security service personnel from Gothenburg and Stockholm and reached the highest echelons of Sweden's security establishment. During the investigation, the security service obtained information through surveillance, questioning, and interrogation, and suspected several different individuals. The suspects were an unnamed official from the Statens Sjöfartsnämnd (state maritime administration), two Germans (especially Hugo Rothenberg but also Hans Peter Lassen), the Finnish consul in Gothenburg (Kjellberg), the director of the Statens Industrikommission (state industry commission, referred to in the sources only as ‘Algulin’); a Finnish sea captain (Torsten Fock); the captain of the Lahti (Aholainen); and the ship's Finnish owner (Otto Brunila). With the exception of Rothenberg and Lassen, the suspects had a connection with either the Finnish consulate in Gothenburg or the Lahti. Suspicion fell on Rothenberg because he claimed that he was Danish. This was significant because, according to the official eavesdropping the conversation, the person who had telephoned the German legation ‘spoke Swedish with an accent that was probably Danish or Norwegian, but definitely not Finnish’.Footnote 93
All lines of inquiry produced zero results excepting that concerning sea captain Torsten Fock. Indeed, information from him decisively influenced the security service's perceptions of the case. The security service had investigated Fock since May 1940, when his former business partner informed the police of his suspicions concerning Fock's possible involvement in espionage. Fock had claimed in a private conversation that he had ‘snooped information’ about conditions in Hamburg and exposed to the Germans details of British ships’ positions in the North Sea.Footnote 94 Significantly, a surveillance report shows that he met Binney at the Strand Hotel on 3 July 1940.Footnote 95 Fock also claimed in another interrogation in Stockholm that the former British naval attaché, John Poland, had paid for his trip from Finland to Stockholm and that Binney had asked him to start working as his adviser in purchasing ships in Sweden.Footnote 96 Just like Raoul Nordling, Fock was potentially a rather dangerous liaison for Binney and the British legation. Security sources from different countries indicated later in the war, as well as during the post-war POW interrogations at the Combined Services Detailed Interrogation Centre (CSDIC) in Bad Nenndorf in the British occupation zone, that Fock was a German agent. He worked for the German military intelligence service, the Abwehr (in naval intelligence), and for Büro Cellarius, the German intelligence agency in Finland.Footnote 97
In connection with the present case, Fock's endeavours surfaced in September 1940 when he spent time in Gothenburg's harbour visiting several shipping companies and looking for a ‘cargo of ammunition he could transport to England’. The Gothenburg police started to investigate him because his activities bore a close resemblance to the comings and goings around the Lahti.Footnote 98 It later emerged that Fock had been active in Hamburg's shipping circles for several years and was known there as ‘an adventurer and a very suspicious gentleman’. The sources suggest that the Gothenburg police obtained information about him from an individual named Ahlrichs, who had contended that he possibly ‘had told the German intelligence service about the Lahti's departure’.Footnote 99 This individual was Heinrich Ahlrichs, Fock's Abwehr handler.Footnote 100
On 7 October 1940, it also surfaced that, in mid-August of that year, Fock had disclosed to Ahlrichs that the British will ‘blockade the Luleå harbour from German ships’, then drawn ‘four jetties on a piece of paper’, and said that ‘the English will cordon the entire entrance to the harbour by sinking three mid-sized vessels’.Footnote 101 This seems significant when viewed against the backdrop of British sabotage plans in Luleå (discussed above). How did Fock manage to describe a British sabotage plan in such detail only four months after Churchill had discussed a very similar idea in a private letter to General Hastings Ismay?Footnote 102 While this question is unsolvable with the primary sources used in this study, the case nevertheless shows that the Swedish domestic security service received information from a German military intelligence officer. The sources do not confirm or refute whether Nils Trägårdh (who was in contact with Ahlrichs) knew of his acquaintance's background; it is clear, however, that Ahlrichs was already working for the Abwehr when discussing Fock with the Swedish police. The Abwehr had recruited Ahlrichs in the late autumn of 1939.Footnote 103 On a larger level, the military intelligence co-operation between Sweden and Germany had commenced properly in September 1940, when the Abwehr's commander, Admiral Wilhelm Canaris, travelled to Stockholm to meet with his Swedish counterpart, Carlos Adelcreutz. Before the meeting, Hans Wagner had arrived in Sweden with the aim of creating a new intelligence organization, the Büro Wagner, which was intended to oversee every aspect of German intelligence in the country,Footnote 104 and was similar to the equivalent agency in Finland.
As the investigation progressed, it emerged that Fock was under surveillance during the time of the telephone call to the German legation. This meant that he was not the caller.Footnote 105 Information from Fock finally settled the matter for the Swedish security service and Gothenburg's police, although the case seemingly never went to court. Trägårdh accepted Fock's statement that ‘Brunila and Aholainen – possibly in agreement with the Finnish consulate in Gothenburg – themselves kept the Germans up to date about the ship's journey to England’.Footnote 106 The Swedish police's final assessment of Aholainen's activities was the following. His ship was loading a mixed cargo at Gothenburg harbour and left for Hull on 7 July 1940 with the intention of running the German blockade. According to Aholainen's own statement, he was the only one on board who knew the ship's destination. On 12 July, the ship received a stop signal from a German aircraft and orders to change course towards Kristiansand in Norway. After analysing Aholainen's notes in the Lahti's logbook, Trägårdh suggested that ‘Aholainen did not steer the vessel to the zone indicated by the English’; it rather seemed that he ‘navigated the ship alongside the German-occupied Jutland's western coastline’; his conclusion was that ‘Aholainen had sought to come into contact with German naval forces’ on purpose.Footnote 107
IV
Swedish casual informants continued to report to the security service about Binney's undertakings up to at least July 1942 (which is as far as the file on him goes). This information disclosed that he had begun to acquire large boxes and stored them in his apartment and that a large number of ‘English persons’ visited him there. A distressed countess suspected that Binney was a spy because he ‘travelled a lot and used a taxi’. She believed that his job at the British legation was ‘bluff’ and that in reality he worked for the British secret service.Footnote 108 In this type of informational environment, the Swedish security service faced considerable difficulties in obtaining detailed data about Binney's activities and his contacts, which would have led to the construction of concrete intelligence, even though the service employed a wide range of different information-gathering tools, such as surveillance and phone tapping. However, the problem was that they had to rely heavily on casual informants.
The present case study has shown that several factors contributed to the security service's problems. Linguistic limitations of officials intercepting telephone conversations led to the inability to comprehend the information obtained via communication monitoring. The imprecise nature of the information that casual informants provided (which often emerged from hearsay and partially overheard conversations) led to misunderstandings, and potentially thereby to severe operational mistakes. In general, information from human sources is often largely perceptional rather than strictly factual, a characteristic that opens significant room for error. The inability for security officials to obtain official documentation on individuals in a situation where they were not under suspicion of a crime also hindered the security service's capability to officially identify Binney (they had to rely on the Strand's guest register). The exposure of counterintelligence techniques (such as phone tapping) to adversaries could result in the use of those techniques by opponents for counter-deception or disinformation campaigns. Indeed, this was the case when the SOE managed to discover that the Swedes intercepted and recorded telephone conversations; consequently, the Allies started feeding fabricated information (or ‘red herrings’) via telephone lines.
The so-called ‘espionage entrepreneurs’Footnote 109 working in neutral capitals to sell services and information to all interested parties were useful but also potentially extremely dangerous for both the Swedish security service and British officials posted in the country. In the context of this case, a French journalist, a British woman, two Swedish consuls, two Finnish sea captains, and a German military intelligence officer were in a position to forward information in several different directions. The journalist Rieffel was in the employ of the Vichy regime, but doubled for the Allies. Hook was in contact with several foreign legations in Stockholm. Consul Nordling, a confidant of Binney, had close and prominent contacts (and close and prominent enemies) in France in particular, but also in Germany and Sweden. Consul Kjellberg worked in the shipping business and had connections in Sweden, Germany, Britain, and Finland. The sea captain Fock was a German agent, who bragged to his friends about his ‘espionage missions’ and had contact with a British diplomat (John Poland) and Binney. The intelligence officer Ahlrichs fed information to the Gothenburg police and handled Fock's work for the Abwehr. This list of just one case illustrates well the enormous challenges that the Swedish security service faced in investigating different espionage, sabotage, and subversion cases, as well as similar difficulties for British officials who attempted to find trustworthy local contacts in organizing economic warfare operations. If economic warfare denotes the obstruction of the adversary's economic base for conducting war and augmenting that of one's own side, then Binney's job in Scandinavia certainly qualifies. He sought to find ways of obstructing German supplies from Scandinavia; he administered (subtle but firm) threats to Scandinavian companies trading with Germany; he created a local business network with the intention of acquiring war materials; he undertook clandestine recruitment of local seamen for expeditions; he reconnoitred port facilities in a strategic location of a neutral country; and he organized successful blockade-running missions.
The discussion of the Lahti incident shows the importance of multi-archival research, especially in historical topics that have international and transnational dimensions. With Swedish sources, it has been possible to add new fundamental details on a significant case that preceded one of the most important British economic warfare policies and campaigns of the Second World War. The naval historian N. A. M. Rodger recently argued in the London Review of Books that a large part of research on the Second World War is still ‘based on sources in one language alone’.Footnote 110 Indeed, the whole area of wartime Swedish counterintelligence is in need of a revision, one that is rooted in archival research not only in Sweden but also in several other countries, including the UK, the Nordic countries, Germany, France, and, as far as possible, Russia. Writing about the need for multi-archival analysis to fully understand the Cold War confrontation, a prominent Finnish historian argues that
the full significance of the … evidence unfolds only after it is compared to and contrasted with corresponding evidence from the other side and from several other actors. In many cases, the [contemporary] authors of the documents remained unaware of the consequences to which the actions or ideas described by them led.Footnote 111
The same argument holds true for histories of the Second World War, and, indeed, of any other period.
