Canberra acts to keep an eye on its spies

As a political storm swirled over allegations that Australia has bugged the embassies of China, Malaysia and other Asian countries, the Labor government yesterday announced sweeping reforms in its foreign espionage agency to make it more publicly accountable.

For the first time since its founding in 1952, the Australian Secret Intelligence Service (Asis), the equivalent of MI6, will be formally recognised in an Act of Parliament with a specific charter.

Its activities will also be monitored by a six-member parliamentary committee. Gareth Evans, the Foreign Minister, said the changes were designed to establish "a more relevant and publicly acceptable basis for Asis's existence in the post-Cold war world".

The announcement came after almost a week of controversy over allegations in a television report by the Australian Broadcasting Corporation (ABC) that Australia's intelligence agencies had installed secret bugging devices in the Chinese embassy in Canberra, with ministerial approval, and that information from the spying operation had been passed on to the United States.

The report suggested the operation had been controlled by Washington, that the fibre optic devices used for the bugs had been installed while the Chinese embassy was being built in the 1980s, and that signals from the devices were relayed to Washington through the British High Commission next door. While Australia had set up the plant, it had been kept in the dark about most of the results.

Over the past few days, Australian newspapers have reported that Asis agents have also installed listening devices in the Malaysian, Indonesian and Japanese embassies in Canberra.

Japan is Australia's leading trading partner, China is one of its prime export markets for food and raw materials and Indonesia is its closest neighbour, with whom Canberra has gone out of its way in recent years to promote good relations.

Australia has undergone a rocky relationship with Malaysia under Mahathir Mohamad, its Prime Minister, who lashed out at the bugging allegations on Wednesday: "Australia is like that. It's all right for them to do such a thing, but it's definitely wrong if we do it."

He said Malaysian embassy officials had once warned him during a visit to Australia his hotel room was bugged. "I did not complain. That is how they normally treat their guests."

Ali Alatas, Indonesia's Foreign Minister, gave Canberra the benefit of the doubt by saying the allegations had not been proved. "Spying is natural and is one part of diplomatic life."

Like most aspects of the espionage world, the reports are difficult to substantiate and raise as many questions as they answer, particularly over motives for the alleged bugging.

The Asis reforms announced yesterday suggest that the bugging reports hold substance.

Paul Keating, the Prime Minister, Mr Evans and other Australian ministers have steadfastly refused to comment.

One suggestion is that the United States may have been using Australia as a back door to glean sensitive trade intelligence on China and Japan.

Officials in Canberra have been alarmed at the possible conflict of interest given that Australia competes directly with the US as a seller of agricultural produce to Asia.

However yesterday's reforms stem from allegations made last year on another ABC programme in which two former, unidentified Asis spies made sweeping claims that Asis had become an organisation out of control.

They alleged that Asis had planted bugs used for MI6 intelligence-gathering in Hong Kong and had spied for Britain in Kuwait and Argentina.