The catalogue of errors is revealed in the highly critical report of the Security Commission inquiry ordered by John Major after electronics expert Michael Smith was jailed in 1993 for selling material from the Hirst Research Centre, a subsidiary of GEC, to the Russians. Smith's spying activities netted him about pounds 20,000. What turned out to be a string of security lapses began in 1976 when Smith began work as a test engineer for EMI Defence Electronics.
Although known to the security service since 1971 as a Communist Party member, he was given clearance to work on confidential and secret material after he was confused with another Michael Smith, also a CP member, and his details misfiled."We find it surprising," said the commission.in the report. "There was no system for checking against temporary files. The matching of traces to people was thus incomplete."
Smith had worked for EMI for a year before the crucial connection was made, but it took intelligence officers an astonishing eight further months to tell the firm. The unwarranted delay, the commissioners said, was "particularly damaging to the interests of the UK; it was while Smith continued to have access ... that he acquired the especially sensitive material which was later passed to the Soviet Union".
Security clearance was withdrawn, only to be reviewed by MI5 four years later in June 1982 following repeated attempts by Smith to have it reinstated. While heavily qualified - effectively ruling out access to top secret and some secret material - it enabled him to get another job at GEC in 1986. The MoD wrote to GEC confirming that he should be allowed access to information up to the level of confidential. But the muddle was compounded by its failure to tell the company of an MI5 proviso that Smith's access should be subject to regular review, on the ground that he had proved himself a liar during earlier clearance negotiations.
The commission said of this episode: "There is no evidence of there being any system for obtaining an up-to-date assessment of his integrity and reliability ... there was no attempt to re-interview him to make a further assessment ..."
It was not proved in court what material had been passed to the Russians, but on Smith's arrest in August 1992, his car boot was found to contain documents relating to radar for Britain's Rapier missile system and Surface Acoustic Wave radar technology. He was said to have been recruited by KGB general turned defector Victor Oschenko, although Mr Oschenko was not called by the prosecution.
In an added embarrassment, the MoD was forced to apologise to the commission for supplying damage assessment material that, the report said, was "seriously incorrect". That matter only came to light as a result of an appeal by Smith last month. The appeal against conviction failed, although the court agreed to cut the sentence from 25 years to 20.
Although it was one of the last espionage cases likely to emerge from the Cold War era, the commission has made nine recommendations for tightening up clearance practices, which Mr Major said in a Commons written answer last night the Government had accepted in principle. "Work is now in hand to ensure that they are effectively implemented within government and in industry," he said.