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By Root 2909 0

The Rio head of station argued that sabotage would only temporarily interfere with the service, and might, moreover, give the Germans in Brazil, who were ‘in a position [to] do more damage to our interests here than we are to theirs’, an excuse to indulge in reciprocal sabotage. After SOE agreed to drop this project, BSC in New York came up with another scheme to forge a letter from the airline’s president in Italy to an Italian executive in Brazil. At BSC (using a genuine letter acquired by SIS in Brazil) much work was put into getting paper and other details absolutely right. By November 1941 a letter had been produced insulting the Brazilian President (the ‘little fat man’) and aligning LATI behind Brazilian opposition groups. After the letter was leaked to the Brazilians through the American embassy in Rio (the Americans being completely fooled into thinking it genuine) the desired result was obtained.19 LATI was closed down in Brazil and all its assets seized.

In early 1942 when Brazil broke off relations with the Axis powers, SIS in Rio reported the American embassy’s opinion that the ‘LATI letter’ had ‘been one of the main factors in persuading President Vargas to turn against the enemy’. SIS, which never came clean to the Americans about its role in the affair, took some quiet satisfaction in bamboozling their diplomats in Brazil as (according to the Rio head of station) the US ambassador, Jefferson Caffery, and some of his staff were strongly anglophobic Irish-Americans who indulged in constant anti-British activities, even after the USA had entered the war. Despite this local Anglo-American tension, the position throughout the region, even before Pearl Harbor, was one of close co-operation. In November 1940 London had laid down ‘as a general principle’ that ‘all information of interest to Americans should be shown to them’. At the end of January 1942 the SIS representative in Rio again complained about SOE agents being sent to Brazil who ‘know too much about us; nor have they shown sufficient discretion. I consider that here at least S.I.S. is far more important than S.O. which must depend on S.I.S.’ By March SOE was pushing to extend its activities generally in South America, but the US State Department objected, and with South American governments beginning to line up on the Allied side, by late 1942 the Axis threat in the region was ebbing away. On 30 October Stephenson in New York wired Menzies that in view of improving coverage of SIS in South America ‘am proposing to close down SOE there’. Menzies telegraphed back: ‘Am convinced eminently sound proposal.’

SIS in the Far East 1939-41

Although Britain’s strategic priorities during the first two years of the war were naturally concentrated first on the threat to the United Kingdom itself and subsequently on its interests in the Middle East, Mediterranean and North Africa, the possibility of a direct Japanese challenge in the Far East remained a worry. But there were few enough resources to deploy in the region. At the start of the European war SIS had five main stations across the Far East. In Shanghai the veteran Harry Steptoe produced mostly political and economic information on China. Frank Hill at Peking (Beijing) was working mainly on military information from North China. At Hong Kong the responsibilities of a one-man station run by Alex Summers extended from northern French Indo-China in the west across southern China to Formosa (Taiwan) island in the east.20 A separate station was run by Lieutenant Commander Charles Drage, who had been based in Hong Kong since 1933 and had primary responsibility for Japanese military intelligence. By 1939 there was a rapidly growing demand for this, but one which SIS was ill equipped to meet. In the summer of 1940 Drage relocated to Singapore, whither the regional inter-service intelligence organisation, the Far East Combined Bureau, had moved the previous year. The Singapore station itself was headed by Major J. H. Green, an army officer with twenty years’ intelligence experience in Burma who had been appointed