Wally Clayton, a senior member of the CPA during and after World War II, briefly became one of Australia’s most notorious communists when he was the subject of an unsuccessful manhunt to bring him before the Royal Commission into Espionage in 1954–55.
Clayton ultimately appeared voluntarily at the Royal Commission and was questioned about his links with Soviet officials. In its report, the Commission found that during the war secret documents from the Department of External Affairs had been given to Soviet intelligence and that Clayton had been the conduit for passing them. He strenuously denied these charges until a few years before he died.
Walter Seddon Clayton was born on 24 March 1906 in the small town of Ashburton on New Zealand’s South Island. After working as a shop assistant, he travelled to Melbourne in the midst of the Great Depression to follow the singer, Hilda Lane, who had been on an opera tour of New Zealand. Hilda was also the niece of early Australian socialist, William Lane, whose followers tried to set up a socialist utopia in Paraguay in South America. Wally and Hilda married in Prahran, Melbourne in 1931. Wally soon joined the CPA and became a tireless activist, speaking on the Yarra Bank and being arrested at an anti-Nazi protest in 1938. In 1939 the Party asked him move to Sydney to organise the sales of its newspaper, the Workers’ Weekly.
In 1940, with a ban on the CPA looming, Wally Clayton was asked to prepare an underground organisation that would allow the Party to continue to produce its publications and to meet secretly under conditions of illegality. By all accounts this succeeded and regular editions of the Party’s newly re-named newspaper, Tribune, were printed on home-made printing machines hidden in safe houses, until the CPA was made legal by the Curtin Labor Government in 1942.
During the war Clayton was elected to the CPA Central Committee where he was a member of the Control Commission, a secretive body which dealt with what were seen as attacks on the Party, whether from police informants or from scandalous or disreputable behavior by Party members.
Clayton’s underground work also meant that he was responsible for undercover CPA members, some of whom worked in sensitive positions such as the Department of External Affairs in Canberra. At some point during the war’s latter years, Clayton was recruited by the Soviet intelligence service. This led to the leaking of a number of secret British documents and diplomatic cables that had been shared with Australia by its allies.
This would have remained a secret, except that Soviet cables sent from Canberra to Moscow were partially decoded by Allied intelligence, which gave intriguing clues to the identity of those involved, including Clayton, and to the nature of the classified documents leaked by Clayton and his contacts.
By 1948, because of the rapid advance of anti-communism after the war, the CPA again feared that it would be banned and Clayton was asked to develop a second underground organisation. This time the operation was more elaborate, involving many safe houses, illegal print-shops, a detailed network of distribution for Tribune and the building of a parallel Party structure with hideouts, a fleet of cars and dead letter boxes for secure communication. All of this was ready to go into operation after the Menzies Government was elected in 1949 and when Parliament later passed laws banning the CPA. Even after the defeat of the 1951 referendum to change the Constitution so that the CPA could be banned, the ‘illegal apparatus’ was kept in readiness.
A separate strand involving Wally Clayton also began in 1948, when British intelligence informed the Chifley Labor government that they had evidence of a leakage of secret documents from Australia to Russian intelligence. This led the government to set up the Australian Security Intelligence Organisation (ASIO) in 1949. For its first few years ASIO tried unsuccessfully to identify the source of the leakage. At the same time, a separate ASIO operation was cultivating a dissolute Soviet diplomat, Vladimir Petrov, whom ASIO convinced to defect in early 1954. At his debriefing, Petrov could tell ASIO nothing directly about Wally Clayton, but he brought with him a number of purloined embassy documents which referred to a group of sources in the Department of External Affairs who were associated with a person codenamed ‘K’.
The Menzies government’s response to Petrov’s defection was to set up a Royal Commission into Espionage. This inquiry was highly controversial, not just because it began sitting on the eve of the 1954 federal election but also because some of Petrov’s documents named advisers to Labor leader Dr H. V. Evatt as sources for political information to the CPA.
The Royal Commission and ASIO also probed the identity of the mysterious ‘K’, who was in contact with many highly placed sources, and concluded that ‘K’ was Wally Clayton. In spite of a subpoena to force him to give evidence before the Royal Commission and a manhunt by ASIO, Clayton could not be found. When he eventually made himself available to the inquiry his performance in the witness box was a masterpiece of denial, steely self-assurance and vagueness. However, when asked whether he had ever met any members of the Russian embassy, he unequivocally denied he had ever done so. Neither the Royal Commission nor ASIO had the hard evidence to prove otherwise, so Clayton left the witness box tarred by accusations but unable to be charged with espionage. The Royal Commission did not believe Clayton’s evidence and concluded that he was the ‘principal channel’ for the damaging leakage of documents from the Department of External Affairs to Soviet intelligence.
ASIO’s scrutiny of Wally Clayton continued after the Royal Commission. By 1957, he and his second wife, Peace (whose 1956 marriage had been watched secretly by ASIO), had decided to move to the Soviet Union. ASIO moved to stop this and ensured that the Claytons’ applications for passports were rejected. More aggressively, ASIO tried to ‘break’ Clayton by overt day and night surveillance of his house in Baulkham Hills and by physically confronting him with questions whenever he left the house. After months of this ASIO failed to loosen Clayton’s tongue, but it led him to leave Sydney and set himself up as a professional fisherman near Port Stephens, north of Newcastle. There, ASIO covert surveillance continued, with two local people being recruited as informants and told that, as a fisherman, Clayton might one day be spirited away by a Russian submarine.
In subsequent years, Wally Clayton occasionally spoke about his achievements as an organiser of the CPA underground, but steadfastly refused to talk about anything connected with the espionage allegations that were raised by the Royal Commission. This remained his position until a few years before his death. Among others, the former CPA national secretary, Laurie Aarons, interviewed him about these issues. While Clayton’s memory was erratic, he was prepared to admit for the first time that he had been in contact with Soviet embassy personnel and had provided them with highly classified information and the names of some of his highly placed Australian contacts.
Wally Clayton retired near his fishing grounds at Port Stephens to a simple house surrounded by banksias and other native plants that he had cultivated with care after destructive bushfires. He was a rigid, secretive man who took great pride in his work in twice building underground organisations to protect the CPA when it was in danger of being banned. After the Royal Commission, he came to accept that his actions in passing documents to the Soviet Union had caused damage to the CPA’s reputation. Until he died on 22 October 1997, he remained an unusual and controversial figure in the CPA’s history.
David McKnight is a journalist and academic at the University of NSW. He is the co-author of Big Coal: Australia’s Dirtiest Habit, and the author of Rupert Murdoch: An Investigation of Political Power, as well as Beyond Right and Left: New Politics and the Culture War, and Australia’s Spies and Their Secrets. He worked as a journalist on Tribune, the Sydney Morning Herald and ABC TV’s Four Corners.
Aarons, Mark, The Family File (Melbourne: Black Inc., 2010).
Manne, Robert, The Petrov Affair: politics and espionage (Rushcutters Bay, NSW: Pergamon Press, 1987).
McKnight, David, Australia’s Spies and their Secrets (St Leonards, NSW: Allen & Unwin, 1994).
National Archives of Australia, Clayton, Walter Seddon, Vol 1 Part 3, Series A6119, Control Symbol 953.
Wally Clayton, interviews with David McKnight in 1993 and 1994.