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By Root 2575 0

Service’s Japanese and Formosan port-watching organisation had moved to Singapore, but here it ran into security difficulties when members of the local Jewish community denounced Drage’s South African-born assistant to the police as a Nazi agent. In January 1940 Drage moved back to Hong Kong, but seems not to have been able to maintain the flow of reports, many of which had been marked in London as ‘of considerable value’. Additional efforts to penetrate Japan were uniformly unsuccessful. Drage attempted to work up a network based in the Japanese community on the United States Pacific coast, but it produced no more than a few preliminary reports. Further evidence of how vigilant and suspicious the Japanese security services were of British residents was the arrest in January 1940 of one Vincent Peters, and his subsequent eight-year prison sentence ‘for military and economic espionage’.21

In July 1940 the Chief of the Intelligence Staff on the Far East Combined Bureau, Captain Wylie, delivered an extremely critical review of SIS’s work in the region. Not only was the information the Service provided poor, but the SIS representatives themselves barely co-operated with each other. Wylie suggested that a regional director be appointed to sort out these problems.22 Menzies accepted the criticism and asked Godfrey Denham to review the position. Denham, a very experienced former head of station at Shanghai and Inspector-General of the Straits Settlements Police who had gone into business after retiring from the public service, visited Singapore in February 1941, agreed with Wylie that a regional controller was required to sort out the situation and, pressed by Menzies, took on the job himself. By August he was established within the Far East Combined Bureau (FECB) in Singapore with the station number ‘69000’ and had been directed by London to ‘control all the representatives in the Far East’, receive ‘the Bureau’s criticisms on their work’ and ‘obtain questionnaires’ for SIS.

While Denham was able to improve SIS’s general relations with the FECB, he was unable to do much about the dearth of Japanese military information. In October 1941 an FECB review of ‘sources of intelligence’ reported very unfavourably about the Service. There was the inevitable tension between the armed services’ urgent operational needs and the more reflective political intelligence which was SIS’s stock-in-trade. There was also a problem about the integration of SIS work with the intelligence effort as a whole, a difficulty exacerbated by the absence of any SIS representative on the FECB itself. The original idea had been for Denham to be a member of the Bureau, but this ‘had not been fully implemented’. The FECB view, however, was that naval and air officers ‘with up-to-date technical qualifications’ could usefully replace SIS personnel and, this being the case, it would actually neither be necessary nor desirable for SIS to be represented. The absence of SIS on the FECB may in turn have facilitated the sweeping criticisms of the Service in the review. SIS was seen as far too independent: ‘A great number of telegrams sent home to London direct from S.I.S. without previous reference to the F.E.C.B. seem far from the truth and wasteful of public money.’ It would be better if the ‘majority of S.I.S. reports’ were submitted to the FECB for comment prior to despatch to London.

The review went on to make specific criticisms of SIS coverage of the region. The ‘Northern Area – including Manchukuo’ (Manchuria) was ‘the least satisfactory of all. There is no doubt that the present Peking representative is incapable of carrying on the service, still less of developing it. In view of the importance of this station in event of a Russo-Japanese war, the appointment of a first-class man to Peking is of urgent importance.’ The situation in Japan and Japanese territories was a little more satisfactory. They were ‘being penetrated on a very small scale from Manila’, a slow process but one which ‘shows promise’. It was suggested that more information ‘could probably be