Rogue German spies set MI6 cats among Kohl's pigeons

MI6 HAS lost a large wad of taxpayers' cash in a scam that would make James Bond's Moneypenny reach for the redundancy forms in her ring- backed files. Funds earmarked for recruiting Russian spies have been plundered by rogue officers of the German secret service, BND, provoking a confrontation between the two allied agencies.

The cash, amounting to millions of pounds, according to the German weekly Focus, was embezzled by BND operatives in Nuremberg from a joint MI6-BND slush fund. Three BND agents, led by the Nuremberg resident code-named "Assinger", transferred money destined for Russian turncoats to their own accounts.

London never spotted the shortfall, and nor did the Germans. There was nothing surprising in six-figure sums flowing into the Cayman Islands. Her Majesty's agents in Germany were on an authorised spending spree, licensed to buy the cream of the Russian army's top brass as they left Germany last year.

The scam only came to light last summer when the Nuremberg trio tried to extend their operations to BND's headquarters in Pullach, a little town south of Munich. But they approached the wrong man. The contact went directly to Volger Foertsch, the BND's head of security, who opened an investigation.

London still had no inkling of the goings-on in Bavaria, but was about to find out. The BND's probe turned up an unexpected culprit: the MI6 man working with the Nuremberg trio. It seems that "Assinger" and his cohorts managed to persuade their bosses that the missing cash had been taken by the British agent and used for setting up a British spy ring. According to Focus, Konrad Porzner, President of the BND, then flew to London for a showdown with MI6 bosses, accusing them of sanctioning "James Bond-type" operations in Bavaria.

He apparently returned with egg on his face, having discovered in London that the only freelancers in Nuremberg were his own men. A fall guy had to be found quickly, and poor Mr Foertsch, the bearer of bad news and long-standing enemy of the BND President, fitted the bill perfectly. The Nuremberg Three, meanwhile, are still at liberty.

At this point, the plot must take a detour, into the hall of mirrors that is the German security service, and the power struggles that go on behind the closed gates of the Pullach HQ, affectionately known to insiders as "Sniper's alley". The BND is in a state of civil war, with salvoes flying mostly in Mr Porzner's direction. The BND President is a Social Democrat, while most of his deputies are Bavarian Christian Socialists. This faction's mentor is Bernd Schmidbauer, co-ordinator of security policy in Chancellor Helmut Kohl's office. Mr Kohl, with the help of Mr Schmidbauer, has been trying to oust Mr Porzner for years.

German press stories casting doubt on the BND President's competence are unlikely to be unconnected with this game plan, just as the leaks incriminating Mr Schmidbauer serve a political purpose. Two weeks before the revelations in Focus, Mr Porzner was ahead on points in this bout that is destined to culminate in both combatants dropping on to the canvas punch-drunk. The BND President was about to make a move against two of Mr Schmidbauer's proteges at Pullach HQ.

Now that he has been thwarted, the score is about even, so expect revelations soon about a recent plutonium smuggling fiasco - a sting that Mr Schmidbauer would very much like to forget about. While this game goes on, nobody of course has any time for recruiting spies, let alone discovering what happened to MI6's money.