In May 1979, only days after Britain ’s new Conservative government came to power, the yellow box that contains the daily report from MI6 to the Prime Minister was delivered to her by a deputy secretary in the Cabinet Office. He was the PM’s liaison with the intelligence services.

Although the contents of the yellow box are never graded into secret, top secret and so on-because all MI6 documents are in the ultra secret category-one rather hastily handwritten report was ‘flagged’. The PM noted with some surprise that it was the handwriting of Sir Sydney Ryden, the director general of MI6, and selected that document for immediate attention. Attached to the corner of it there was an advertisement, clipped from a film journal published in California the previous week.

A film producer, unlisted in any of the department’s reference books, announced that he was preparing what the advert described as ‘A major motion picture with a budget of fifteen million plus!’ It was a Second World War story about plundering German gold in the final days of the fighting. The cutting bore the rubber stamp of ‘Desk 32 Research’ and was signed by the clerk who had found it. ‘What is the final secret of the Kaiseroda mine?’ asked the advertisement. Kaiseroda had been underlined in red pencil to show the word which had alerted the Secret Intelligence Service clerk to the advert’s possible importance.

Normally the space the blue rubber-stamp mark provided for reference would have been filled with a file number but, to his considerable surprise, the research clerk had been referred to no file under the Kaiseroda reference. Instead the Kaiseroda card was marked, ‘To director general only. IMMEDIATE.’

The Prime Minister read carefully through Sir Sydney Ryden’s note, baffled more than once by the handwriting. Then she picked up a telephone and changed her day’s appointments to make a time to see him.

The elderly police constable on duty that afternoon inside the entrance lobby of 10 Downing Street recognized that the man accompanying Sir Sydney was the senior archivist from the Foreign Office documents centre. He was puzzled that he should be here at a time when the PM was so busy settling in but he soon forgot about it. During the installation of a newly elected government there are many such surprises.

The Foreign Office archivist did not attend the meeting between the PM and Sir Sydney, but remained downstairs in the waiting room in case he was required. In the event, he was not.

This was the new Prime Minister’s first official meeting with the chief of the espionage service. She found him uncommonly difficult to talk to: he was distant in manner and overpowering in appearance, a tall man with overlong hair and bushy eyebrows. At the end of the briefing she stood up to indicate that the meeting must end, but Sir Sydney seemed in no hurry to depart. ‘I’m quite certain that there is no truth in these terrible allegations, Prime Minister,’ he said.

He wondered if madam would be a more suitable form of address or perhaps ma’am, as one called the Queen. She looked at him hard and he shifted uncomfortably. Sir Sydney was not an addicted smoker, in the way that his predecessor had been, but now he found the new Prime Minister’s strictures about smoking something of a strain, and longed for a cigarette. In the old days, with Callaghan and before him Wilson, these rooms had seldom been without clouds of tobacco smoke.

‘We’ll discover that,’ said the Prime Minister curtly.

‘I’ll get one of my people out to California within twenty-four hours.’

‘You’ll not inform the Americans?’

‘It would not be wise, Prime Minister.’ He pressed a hand against his ear and flicked back errant strands of his long hair.

‘I quite agree,’ she said. She picked up the newspaper cutting again. ‘For the time being all we need is a straight, simple answer from this film producer man.’

‘That might be rather a difficult task, if my experience of Hollywood film producers is anything to go by.’

The PM looked up from the cutting to see if Sir Sydney was making a joke to which she should respond. She decided not to smile. Sir Sydney did not appear to be a man much given to jesting.

The exact details of the way in which the Soviet Union’s intelligence services were alerted to the activities which had so troubled Britain ’s Prime Minister is more difficult to piece together. Soviet involvement had begun many weeks earlier and certainly it was the reason behind a long two-part radio message beamed in the early evening of Easter Sunday, April 15, 1979, to the USSR embassy main building on the east side of 16th Street, Washington DC. This unexpected radio transmission required the services of the senior Russian cipher clerk who was enjoying an Easter dinner with Russian friends in a private room at the Pier 7 restaurant on Maine Avenue waterfront near the Capital Yacht Club, He was collected from there by an embassy car.

Intercepted by the National Security Agency, and decoded by its ATLAS computer at Fort George Meade, Maryland, that Sunday evening radio traffic provided the first recorded use of the code name that Moscow had given this operation-Task Pogoni. The written instructions issued in 1962 by the GRU, and later given to the KGB and armed forces, order that the choice of such code names must be such that they do not reveal either the assignment or the government’s intention or attitude, and adds a supplementary warning that the code names must not be trivial or of such grandeur that they would attract ridicule should the operation go wrong. And yet, as the NSA translators pointed out in their ‘pink flimsy’ supplementary, Moscow ’s choice of code word was revealing.

Literally pogoni means epaulette, but for a citizen of the USSR its implications go deeper than that. Not only can it be used to mean a senior personage or ‘top brass’; it is a symbol of the hated reactionary. ‘Smert zolotopogonnikam!’ cried the revolutionaries, ‘Death to the men who wear gold epaulettes!’ And yet the possible overtones in this choice of the KGB code name can be taken further than that; for nowadays the senior Russian military men who control one of the USSR ’s rival intelligence organizations (the GRU) again wear gold epaulettes.

How Yuriy Grechko interpreted the code name assigned to this new operation is not recorded. Grechko-a senior KGB officer-was at the time the USSR ’s ‘legal resident’. Using diplomatic cover, it was his job to keep himself, and Moscow, informed on all Soviet espionage activities in the USA. In seniority Grechko ranked a close second to the ambassador himself, and he was there solely to keep all the covert operations and ‘dirty tricks’ entirely separated from official diplomatic business. This made it easier for the ambassador to deny all knowledge of such activities when they were detected by the US authorities.

Grechko was shown in the diplomatic listings as a naval captain third rank, working in the capacity of assistant naval attaché. He was a short man with dry curly hair, blue shiny eyes and a large mouth. His only memorable feature was a gold front tooth which was revealed whenever he smiled. But Grechko did not smile frequently enough for this to compromise his clandestine operations. Grechko was a man who exemplified the Russians’ infinite capacity for melancholy.