Secrets and lies

THE admission from the Crown Prosecution Service, delivered by ashen-faced lawyer Mark Ellison, was a relief, but no surprise. "There is no longer sufficient evidence for a realistic prospect of conviction," the senior Treasury counsel said, in a belated acknowledgement of the realities of the case against Katharine Gun.

"It would not be appropriate to go into the reasons for this decision," he added, insisting the decision to drop all charges against a potential traitor was made not by politicians, but by the Director of Public Prosecutions himself.

Gun’s representatives, including civil rights group Liberty, which provided the whistleblower with legal backing, were remarkably restrained.

But few people took the Crown’s position at face value. The dramatic, symbolic walk to freedom out of the Old Bailey for someone who freely admitted breaching the Official Secrets Act (OSA) was painful for the government to behold. It was, however, seen as the option that involved the least agony; it was far more palatable than the prospect of having the government’s secrets raked over in a public trial for weeks on end.

The Gun case did not simply threaten to embarrass the government over its complicity in bugging so-called friends in the international community - and former Cabinet member Clare Short did enough damage on that front last week by alleging that UN Secretary-General Kofi Annan was spied on. It could have propelled Tony Blair’s administration into an unwelcome investigation of the decision to go to war on Saddam Hussein.

"They have gone out of their way to make sure their policy in Iraq is not scrutinised by the Hutton Inquiry, or the Butler Inquiry," said inveterate anti-war MP Peter Kilfoyle. "They are hardly likely to allow a court to pick over it for them."

Gun did not, in fact, have anything more to disclose. Unlike David Shayler, an assiduous collector of incriminating material which he ultimately used to maximum effect, her revelations were limited to the single e-mail which infuriated her so much that she was moved to smuggle it outside the walls of Government Communications Headquarters (GCHQ). When it appeared in a newspaper, she quickly owned up to breaching the OSA by passing on the e-mail, which came from a US intelligence official and revealed plans to bug members of the UN Security Council before a crucial vote on the proposed action against Iraq.

Gun’s defence was simple: she was "lawfully entitled to make the disclosure", given her opposition to what she perceived to be an illegal war. What is more, according to the confidential submission put before the court, she was acting under "necessity/duress" in making it, as she believed the proposal in the document conflicted with the government’s stated aim of ensuring any war was justified.

In fact, Scotland on Sunday understands that Gun’s defence team, led by QC Ben Emmerson, were planning to secure her freedom by forcing into the open secrets far more damning than anything collected by their client.

The defence submission, delivered to the government on the eve of the Old Bailey hearing last week, served notice that the defence would demand access to a series of crucial documents deemed crucial to fighting Gun’s corner, but also carefully chosen to heap maximum embarrassment upon Tony Blair and his ministers. Aside from the bugging e-mail that sparked the escalating crisis, Gun’s team requested details of responses from the alleged victims of the plot, notably Chile and Mexico, two of the "swing states" on the security council who are understood to have complained about the UK’s clandestine activities.

Most significantly, Gun’s defence were also demanding publication of the legal advice given to Blair on the legitimacy of a war on Iraq without the endorsement of an explicit second UN resolution. The submission, seen by Scotland on Sunday, declares: "The defence believes that the advice given by the Foreign Office legal adviser expressed serious concerns about the legality (in international law) of committing British troops in the absence of a second resolution."

Gun’s defence included the startling claim that Blair’s top legal adviser, the Attorney-General, Lord Goldsmith, also told him such a war would be illegal in December 2002. But Goldsmith allegedly performed a U-turn only weeks later after he was shown intelligence suggesting Saddam Hussein posed an imminent threat.

A senior source close to Gun’s legal team told Scotland on Sunday: "Our understanding is that Goldsmith changed his advice in January last year to say that war would be legal, but only on this basis: it was put to him that British intelligence had credible evidence that there was a serious and imminent threat. He said if it were the case that the UK was facing an imminent threat then the diplomatic niceties would be irrelevant: we would be able to argue justification."

The allegation is a serious one for Goldsmith, who last week insisted to fellow peers that "it was my own considered and honest view that military action was lawful based on the repeated failure of Saddam Hussein and his regime to comply with multiple [UN] resolutions". For Blair, however, the implications are more worrying still, as they bring into question once again the justification for war and, particularly, the threat Saddam posed.

"What it rests on is that Lord Goldsmith, like the rest of the nation, was sold a pup," the source close to Gun’s defence added. "It looks very much like he wrote the advice that he was asked to write. He did it in such a way that he covered his own back. That is what we were seeking to have disclosed."

In just six neat, tightly-argued pages, Emmerson was in effect challenging the government to risk everything in an attempt to see a minor civil servant punished by the courts. The high-risk strategy succeeded dramatically: The case was dropped after Goldsmith discussed the quandary with Foreign Secretary Jack Straw last week - and, it is believed, after hurried trans-Atlantic consultations.

"It’s pretty clear that what would have been exposed in the course of cross-examination was that there were major doubts about the legality of the war, and at the end of it the jury would have thrown the case out," Kilfoyle added. "But this is not going to go away just because it’s not going to court."

Kilfoyle, an ex-minister who remains a persistent thorn in Blair’s side on a number of issues, can at least be relied upon to maintain a dignified silence over the privileged information that passed his desk while in government - notably within the Ministry of Defence. Not so Clare Short. The former International Development Secretary, who eventually resigned from the Cabinet over Iraq, seized on the developing confusion over Gun’s release.

Her Annan allegation, casually dropped into an interview about the Gun case, duly sent the crisis tumbling in another direction. While Blair limited himself to describing Short’s outburst as "totally irresponsible and entirely consistent", his closest aides were less restrained. "This is just spiteful and destructive," one said last night. "She couldn’t complain if we got her under the OSA."

The most immediate effect of Short’s attack has been to increase the acute embarrassment felt by the government as a succession of international statesmen, past and present, have cheerfully volunteered that they were also bugged by the US and the UK. "From the first day I entered my office they told me: beware, your office is bugged, your residence is bugged," former UN secretary-general Boutros Boutros-Ghali said. "It is a tradition that member states that have the technical capacity to bug will do it without hesitation."

Yet the succession of allegations has left the intelligence community, and senior politicians, demonstrably underwhelmed. "This is standard operating practice for intelligence agencies that use signals and communications intelligence," said Melvin Goodman, a former CIA analyst. "The two agencies with the most sophisticated of these systems are the National Security Agency (NSA) in the US, and GCHQ in Britain. This is what they do."

What they do, in the case of GCHQ, is mount one of the world’s largest electronic surveillance operations. Gun was one of almost 6,500 civilians working at the Gloucestershire base, which collects, translates and analyses millions of e-mails, telephone conversations and faxes every year, using sophisticated methods including wire-taps and satellite technology.

Two developments have increased the agency’s workload and powers: the enhanced terrorist threat and the boom in technology, including mobile phones. "After September 11 there was a lot of complaining about the lack of agents on the ground picking up information about threats to national security," said Mike Smith, an intelligence expert at King’s College, London. "But sweeping for information through signals intelligence has become more important. Legislative changes have given GCHQ more powers to intercept communications at home and abroad."

Although GCHQ was in the past banned from trawling through domestic communications, recent legislation governing internet traffic has effectively granted the organisation free rein over the web. British law allows GCHQ trackers full rights to listen in to any communications outside this country, making it likely that any listening devices planted within the UN would have been managed from this country. Moreover, as the agency works in close partnership with the NSA it is guaranteed access to domestic communications through an "exchange deal" with the US.

"The two agencies simply swap each other’s dirty work," said Phillip Knightley, an authority on international espionage. "GCHQ eavesdrops on calls made by American citizens and the NSA monitors calls made by British citizens, thus allowing each government plausibly to deny it has tapped its own citizens’ calls, as they do."

GCHQ spies can also apply to the Foreign Secretary for permission to bug criminal suspects on home soil. It is understood that Straw has sanctioned at least 200 intercept warrants in the last year alone, and latest figures show that the Home Secretary allowed 1,466 surveillance warrants in 2002, and the Scottish Executive issued 139.

It is an area of government that Blair and most of the Establishment would prefer to keep under wraps. But a rare combination of Katharine Gun, Clare Short and Kofi Annan have confounded such hopes in the last few days.

GCHQ will eventually slide back into the shadows; Blair’s defence of his war on Iraq may prove a more lasting casualty.