Ace of Spies: The True Story of Sidney Reilly

^ELEVEN FINAL CURTAIN

Instead of heading for New York as scheduled, the captain of the SS Olympic docked at Halifax, Nova Scotia, on 21 April, due to propeller trouble.¹ Although most Olympic passengers completed their journey by transferring to the SS Adriatic, Reilly was in no mood to wait and took a train to New York’s Pennsylvania Station via Boston.²

The object of his visit was to meet Samuel MacRoberts and as many other bankers as he could, in order to persuade them of the virtues of his latest ‘grand plan’. Working as an intermediary for Polish banker Karol Jaroszynsky,⁴ an old acquaintance from his pre-war St Petersburg days, Reilly was clearly seeking to lay the foundations for an Anglo-American syndicate to invest in a post-Bolshevik economy.

Confirmation of his intentions are to be found in a cable dated 10 May to John Picton Bagge at the Department of Overseas Trade, in which he emphasised his belief that American business was looking for new export markets and saw Russia as a place of some potential.⁵ In Reilly’s view, MacRoberts in particular was keen to form a syndicate involving American and British interests to exploit the opportunities that a Denikin victory might bring. In an echo of the rivalry over munitions contracts during the war years, MacRoberts was keen to press ahead in order to gain an advantage over J. Pierrpont Morgan. On 15 May Reilly departed for England on board the White Star Line’s SS Baltic.⁶ Arriving in Liverpool on 25 May, he stayed overnight at the Adelphi Hotel before heading back to London.

Bagge also saw the potential of the Jaroszynsky proposals, recognising that their success would not only bring about new market places for British-made goods, but might eventually lead to economic and political control of Russia. Ultimately, however, British banks like Lloyds, the London County and Westminster Bank and the National and Provincial Bank were reluctant to make major commitments while the success of the White forces was still in the balance. Indecisiveness and the snail-like progress of discussions within the Foreign Office, the Treasury and the Department of Overseas Trade meant that by the time consensus appeared to have been reached, it was a matter of ‘too little, too late’ to be of any benefit to Denikin.

Despite the fact that Reilly’s assignment to South Russia had ended in March, this did not stop him from continuing to correspond with the likes of Rex Leeper and John Picton Bagge on a personal basis, sending them a stream of memorandums and handwritten missives from his Albany apartment in London’s exclusive Piccadilly. Someone else high on Reilly’s address list was Churchill’s aide Sir Archibald Sinclair, MP, who he had first met the previous month at the Hotel Majestic in Paris. Reilly seems to have used the same tried and tested methods of achieving access and influence in British circles as he had utilised so effectively in St Petersburg a decade earlier. This was essentially done by cultivating the aides and associates of the influential, who once secured as acquaintances could then act as a pipeline to their lords and masters. By this method he had forged an association with Admiral Gregorovitch, the Minister for Marine, through his aide Lt Petr Zalessky. In like manner, he now went to considerable trouble to befriend and cultivate Archibald Sinclair.

One can only guess at how Reilly’s extra-curricular activities were viewed by SIS top brass. By October 1919, the first telltale signs that Reilly had blotted his copybook were becoming apparent. Having only recently become the recipient of the Military Cross, it would seem that Reilly felt that his ‘distinguished service’ should be further acknowledged by promotion. On enlistment in November 1917 he had been commissioned as a second lieutenant,⁷ but now, over a year later, clearly felt that he was more than due for further recognition. After all, George Hill, who had enlisted as a lieutenant, was now a captain, and to Reilly, a superior officer. Reilly therefore took his case to Maj. D.J.F. Morton, head of SIS Production Section⁸ and his immediate superior. As a consequence, Morton wrote on 3 October 1919 to Col. Stewart Menzies, head of SIS Section II, which dealt with military matters:

Replying on 16 October, Menzies wasted few words in rejecting the matter out of hand:

While Menzies’ offhand response was a correct reflection of War Office policy, it is equally the case that had he wished to assist in getting Reilly promotion, he most certainly could have done. The rebuff was a sign that while Morton might be behind him for the time being, others in SIS were most certainly not, either seeing Reilly as an overrated upstart or as a loose cannon. Never being one to accept no for an answer, Reilly seems to have opted for unilateral action. From here on it would appear that to those outside the service he referred to himself as ‘Captain Reilly’, and has been styled as such by Winfried Ludeke,¹¹ Pepita Bobadilla (later Reilly),¹² and a host of other writers down the years. By 1932, even his old adversary Norman Thwaites referred to him as ‘Captain Sidney Reilly MC’ in his autobiography.¹³

Five months after his New York trip, Reilly was still working hard to push his Russian banking scheme. It is clear from a memorandum to Picton Bagge, dated 10 October, that he had now set his sights on enticing French bankers and had been sufficiently encouraged by their response:

Resolutions were passed urging the necessity of resuming trade relations on a large scale with Russia, and the dispatch of an Economic Mission to Russia was welcomed. Furthermore, the formation of the above named company with a capital of 50 million francs, was approved and government support in the matter of credits and tonnage was promised. Of the 50 million francs, 20 million francs are being subscribed by French banks, and 15 million francs by French industrialists, and 15 million francs are reserved for Russian banks, and the Russian banks and Russian industrialists. It is stated that a credit of 400 million francs will be accorded to this company by the French banks. The Russian banks have stipulated that although they are participating in the formation of this company they reserve to themselves the liberty of action and participation in similar combinations formed in other countries.¹⁴

Three days after the memorandum’s composition, the city of Orel finally fell to Denikin’s forces. Now only 200 miles south of Moscow, the Whites and their sympathisers could be forgiven for seeing victory within their grasp. The territory Denikin controlled had gradually inflated over the past months to total some 600,000 square miles. However, within a week the Red Army had turned the tables and had retaken Orel. Having overstretched his supply lines to breaking point, Denikin was now forced into an unbroken retreat that would ultimately lead all the way back to the Black Sea where his campaign started. Along with the collapse of Denikin’s offensive went Reilly’s ambition of playing a pivotal role in the rebuilding of Russia’s economy. Had Denikin succeeded in ultimately taking Moscow and ousting the Bolsheviks, Reilly would no doubt have played a major role in the economic recon-struction of the country. The money he had made to date from munitions deals would have been a mere drop in the ocean compared to the rewards that would have been his for the taking in a Bolshevik free Russia.

Not one to be discouraged for long, Reilly set about composing a nineteen-page memorandum entitled The Russian Problem,¹⁵ in which he set out his views on bringing about the downfall of the Bolsheviks. In conclusion he stated that:

As a self-appointed expert on Russia and one of the few people in intelligence circles who had actually been there during this critical period, Reilly took every opportunity he could to hawk his views to anyone of influence who might be receptive. An indication of his success in this direction can be seen from a note sent by Sir Archibald Sinclair to Winston Churchill on 15 December 1919.¹⁶ Reilly had apparently met Sinclair some days previously in order to give him a copy of The Russian Problem. While discussing it, he had allowed Sinclair sight of a letter recently received from the Daily Mail proprietor Lord Northcliffe, to whom he had also sent a copy. This resulted, as Reilly had hoped, in Sinclair sending the memorandum to Churchill with a covering note in which he remarked, ‘I have seen a very cordial note to Reilly from Northcliffe saying that he had “read every word” of the memorandum “to the end”’.¹⁷ This again exemplifies another of Reilly’s tactics, namely establishing influence by association. Despite the mutual suspicion that existed between Northcliffe and Churchill, Reilly knew that Churchill would be keen to see anything that Northcliffe had expressed an interest in.

While Reilly’s mind was clearly fixed on grandiose schemes, SIS was far more concerned with bread-and-butter issues, namely intrigues between pro-German Russians and German militarist elements in Berlin. As a result of information volunteered to the Foreign Office by the daughter of Chaikovsky, a member of the White Russian delegation in Paris, SIS in London sent a cable on 30 January to the SIS station in Paris:

The report stated that:

The report asserts that:

Investigations ensued and cables passed back and forth between London and Paris. In a detailed report from Paris on 23 March, Reilly perceptively told C that:

The report is also noteworthy in drawing attention to a prophetic view expressed by Nicolai Koreivo that:

This is more or less what came to pass two years later in April 1922 when Germany and Russia signed the Rapallo Treaty, recognising each other’s regimes and giving up all financial claims against each other. It was an inevitable recognition by the two nations of their mutual self interest.

Another inevitable recognition of mutual self interest was the decision by Sidney and Nadine Reilly to seek a divorce. Although they were not legally married, Nadine did not know this, and they had therefore to go through the motions of divorce in order that he could keep up the pretence. As such, they journeyed to Paris on 4 March 1920 in order to start the legal process. Reilly and Nadine called into the SIS office in Adam Street to be issued with a passport and travel tickets, although no prior arrangement seems to have been made. This was made apparent the following day when C received a note from Section H: ‘Reilly and wife No. 2 called at Adam Street yesterday for passport and passage to Paris. As you were away, I told Crowley verbally to get on with it, but I know nothing about the journey nor whether it is to be at our expense or not’.²²

Not for the first time Reilly was combining his private business with that of SIS. Having made contact with the lawyers who were to attend to the divorce, he wrote two letters to Sir Robert Nathan at the Foreign Office from the Hotel Lotti in Rue de Castiglione, where he and Nadine were staying. From these letters dated 13 and 14 March it is clear that he had met Baranoff and Burtsev²³ in connection with the unrest in Germany.²⁴ On returning to London, Reilly wasted little time in typing up two more memorandums on Russian policy, sending copies to Archibald Sinclair, to ask for his view on them, before submitting them to the Foreign Office and the Department of Overseas Trade. Sinclair, as Reilly had hoped, immediately sent them on to Churchill, along with a brief letter dated 24 June:

Reilly’s proposals hinged on three points of attack from within Russia: persuading the Red Army leaders to make a deal with Denikin to overthrow the Bolsheviks; positively enrolling the help and support of the Orthodox Church; and persuading the Ukrainians to link up with Denikin against the Bolsheviks. Although Reilly’s memorandum was favourably received by Rex Leeper in the Political Intelligence Department, Sir Ronald Graham of the Russian Department was distinctly cool about it. The Foreign Secretary, Lord Curzon, was more inclined to back Graham’s view than Leeper’s and the proposals were therefore scotched.

That same month Nadine and Reilly parted for the last time when she returned to New York.²⁶ Within a year, Reilly was to strike up a new relationship, this time with a girl nearly thirty years his junior. Caryll Houselander²⁷ had recently left St John’s Wood Art School, and was introduced to Reilly by another former student, Della Clifford, who had met him through friends in the Russian émigré community. Della showed Reilly Caryll’s sketches as she was ‘too shy, and despised her drawings too much to take them to him herself’.²⁸ Caryll was fascinated by religion, art, mysticism and Russia, and found herself immediately attracted to a man who seemed to embody all these. Being a devout Catholic, she found herself struggling to reconcile her feelings and her religious beliefs. In her 1955 autobiography she recalled this inner turmoil:

Eventually Caryll succumbed to temptation and began a two-year affair with Reilly:

As with Beatrice Tremaine, Reilly was content to support Caryll and have her at his beck and call. Unlike Beatrice and the other women he had known, however, she had comparatively simple tastes. As Dermot Morrah recalled, ‘I myself knew Caryll from 1919 and saw her constantly… she was living as the mistress of a man… who made her a weekly allowance, small but quite adequate to her simple manner of life’.³¹ True to form he seems to have regaled her with his usual ‘Master Spy’ stories, including an account of his ‘friend’ Rasputin. In 1950 Caryll recalled that:

While Reilly certainly had connections and contacts with Rasputin and his circle, his claim to have lived and travelled with him for a year is easily refuted by Ochrana records. Rasputin’s activities and associations were probably the best documented of anyone in Russia bar the Tsar himself. Reilly’s name is nowhere to be found in the Ochrana’s vast record of Rasputin and his movements.

Another friend of Caryll’s from her days at the St John’s Wood Art School was Eleanor Toye.³³ Eleanor became Reilly’s secretary for approximately two years, and later confided to Jean Bruce Lockhart (Robert Bruce Lockhart’s wife) her experiences of the darker side of his compelling personality. Reilly, she said, ‘suffered from severe mental crises amounting to mental delusions. Once he thought he was Jesus Christ’.³⁴

On the business front, Reilly was far from idle. Recognising a kindred spirit in Leonid Krasin, the corrupt head of the newly established Soviet Economic Mission in London, he suggested a scheme of mutual benefit, whereby the Soviet government and Marconi signed a deal for the supply of a wireless service in Russia.³⁵ Reilly and Krasin were to work together on a number of other deals from which they were to line their own pockets. Some months after the Marconi deal, for example, Krasin was involved in smuggling a hoard of diamonds out of Russia to be secretly sold in the West. Lenin’s government was in dire need of foreign currency and such covert deals were one of the ways in which foreign trade missions obtained it. This was, however, to be a deal with a difference. According to Georgi Solomon, a Russian colleague of Krasin’s, the diamonds were sold by Krasin at below the best obtainable market price to a third party, the proceeds of which went back to Moscow. The third party then had them recut and resold in Paris for a significantly higher price with Moscow none the wiser. This windfall was then, no doubt, shared with Krasin. In 1930, Solomon recalled that the third party with the Parisian connections was a British officer of the rank of captain who was an Anglicised Russian Jew.³⁶

According to Reilly’s SIS file, other allegations about his conduct were also coming out of Paris at this time. On 3 September SIS received a note from the Naval Intelligence Division:

C replied to the DNI on 7 September in his usual bluff manner:

The DNI replied that the source was a Russian who had left Paris two weeks previously and had stated that Reilly had been boasting of being in close touch with the Secretary of State for War, and confirmed that Reilly had indeed been wearing naval uniform.³⁹ C wrote a dismissive note boldly across the bottom of the page – ‘The further information does not give anything sufficiently definite to bear out the original accusation’.⁴⁰ This incident, while a minor one, was no doubt remembered unfavourably by the Director of Naval Intelligence, Admiral Sir Hugh Sinclair. Within three years he would suceed Cumming as chief of MI1c, and would not prove to be so tolerant of Reilly and his antics as Cumming had been.

After a brief respite in London following his return from Paris, Reilly was called in by C to be briefed about a new mission. While the Treaty of Versailles had redrawn the map of Europe, there was still a good deal of unfinished business to be settled in Paris. Poland’s frontier with Russia was a prime case in point. The Poles themselves favoured the frontier of 1772, while the Council of Ambassadors in Paris proposed on 8 December 1919 a border closely resembling the old eastern frontier of Poland when she had been part of the Russian Empire.

The matter was ultimately settled not by negotiation in Paris, but by the Russo-Polish War which broke out in April 1920, following Polish incursions into the Ukraine. While the war initially ran in the Russians’ favour, the Poles took the upper hand following their victory at the Battle of Vistula in August 1920.

With talk of an armistice between the Poles and Russians in the air, first-hand intelligence was required about the possible outcome of a settlement and the implications this might have for Gen. Wrangel, Denikin’s successor as commander-in-chief of the White Volunteer Army in the south.

On 21 October 1920 Reilly left for Poland⁴¹ where he and ST25 (Sir Paul Dukes) linked up. On 29 October Reilly was able to send a cable through the British First Secretary in Warsaw, Sir Percy Loraine:

By sending the cable through Sir Percy, Reilly had clearly ruffled feathers at the Foreign Office. As a result of a Foreign Office letter to SIS on 3 November,⁴³ a rather terse but polite cable was sent to Reilly by Section G2 on 8 November, pointing out that while ‘no real harm has been done in the matter’ he should not in future use this open means of communication.⁴⁴ Reilly’s papers also show that this was not the only example of his misusing embassy facilities, for included in his correspondence are a number of letters written on embassy notepaper.

Although these minor transgressions hardly endeared him to senior SIS officers, it was his growing association with Boris Savinkov, whom he regarded as Russia’s Napoleonic saviour, which would ultimately put the most strain on his relationship with the Service.

A perfect case in point was Reilly’s visit to Savinkov’s headquarters in Warsaw. From here Col. Sergei Pavlovsky was leading regular guerrilla raids into Soviet territory, attacking Red Army camps and derailing troop trains. Not content with gathering intelligence, Reilly (not for the first or last time) exceeded his remit by becoming actively involved:

Whether Reilly actually bore arms or was merely observing the attack is unknown. Whatever role he ultimately played, he certainly had no authority to cross the Soviet border or become involved, hence C’s order for him to return.

A peace treaty was signed between Russia and Poland on 18 March 1921, which resulted in the Poles eventually succumbing to Russian pressure to withdraw the facility for Savinkov to use Warsaw as a base for his operations. In the autumn of that year he was forced to leave and go to Prague, where he found a less than enthusiastic welcome from the Czech government. Funding was another major problem as his main benefactor was Reilly, whose finances were now somewhat stretched.

Despite filing a law suit against the Baldwin Locomotive Company for an unpaid munitions commission of $542,825, Reilly no doubt realised that the claim could take a considerable time to get to court (as indeed it did). Confronted with the additional pressure of having to prop up Savinkov, he now faced the very real prospect of financial ruin. As unpalatable as it was, there seemed only one way out of the rut – selling the treasured Napoleonic collection that had taken some twenty-five years to build up. He therefore made the momentous decision to put the collection up for sale in New York, where he sensed he would get the best return. Not unsurprisingly, the sale attracted great attention. It was not everyday that such a major collection was put on the open market. The New York Times reported that the:

The proceeds of the sale, a little under $100,000, do not appear to have lasted long. In June 1921 Savinkov convened the first meeting of the Anti-Bolshevik Congress, which met in Warsaw between 13 and 16 June. The initiative was one more attempt to try and weld together the disparate groups opposed to Lenin’s regime. Apart from overcoming the mutual suspicion of the various groups, it was obvious that lack of funds was the main obstacle to putting their plans into action. After the congress had ended, Reilly received a letter from Savinkov’s aide Dmitry Filosofoff:

With renewed energy Reilly responded to Filosofoff’s call for funds, pulling out all the stops he could think of. A letter to the Air Board, written on Reilly’s behalf by one H.F. Pougher, is indicative of the lengths Reilly went to:

When the letter was referred to SIS for their comments, Reilly was clearly embarrassed at being seen to be chasing money, and with mock disdain claimed that ‘Pougher is a small clerk at Holt’s [Bank] whom I have assisted financially from time to time. I promised him any arrears of pay or gratuity he can recover’.⁴⁹

He also continued lobbying through all channels in Savinkov’s favour and began to put plans in place to bring Savinkov over to England to drum up support for his cause. In submitting a report on Savinkov to SIS, he asked that it be gone over and polished up:

His plans for Savinkov’s visit very quickly ran into the opposition of the Foreign Office, however, when it refused to grant him an entry visa. Not to be deterred by this, Reilly approached C directly and requested that he ignore the Foreign Office and instruct the Paris Passport Control Officer⁵¹ to issue a visa regardless. Not unsurprisingly, C refused. Never able to accept no for an answer, Reilly went straight back to Paris to appeal to the Passport Control Office to issue the visa directly. Maj. Thomas Langton was the Passport Control Officer in Paris, but it is more likely that Reilly made a beeline for his deputy, Maj. William ‘Robbie’ Field Robinson, who was a close friend of his. Whatever persuasion he used, the upshot was that a British entry visa was issued to Savinkov by the Paris PCO.⁵² Not surprisingly, this incident caused major fallout within SIS and indeed in wider government circles. It is perhaps no coincidence that by early 1922 SIS had, to all intents and purposes, officially severed its links with Reilly.

In a revealing letter to an SIS colleague dated 23 January 1922, Reilly ends by saying, ‘I am not calling at the office; as Morton may perhaps have told you, just now it is healthier for me to keep out of the way for a while’.⁵³

C’s position is made even clearer by a cable from SIS headquarters in London to the Vienna station, dated 1 February 1922, who were clearly seeking clarification about Reilly’s status:

If Reilly’s position was in any doubt, an SIS cable to the New York Passport Control Officer the following July was even more succinct:

Reilly’s departure from SIS was not, of course, an isolated one. SIS were at this time shedding a good number of operatives who had initially been recruited during the war. George Hill and William Field Robinson also left SIS in 1922. With the onset of peace, rapprochement with Russia, and government budget cuts, the service could no longer maintain its establishment at previous levels. Reilly apparently took the decision to dispense with his services rather badly and appealed to C to reconsider.

The appeals evidently fell on deaf ears. For Reilly there were to be no more second chances – the final curtain had indeed fallen on his brief but highly eventful SIS career.