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On Tuesday the ministry fisheries official Leach telephoned MI5, announcing that he had received a signal from the
Barbados
saying that she was returning to Grimsby and that ‘she had important information.’ On arrival, the crew was paid off, MI5 asked the owner if he would mind going out again and he agreed.

Meanwhile Owens, who had been detained aboard HMS
Corunia
, was challenged with having double-crossed MI5, a charge he denied. He claimed that he was never going to let the meeting take place because he thought that B
ISCUIT
was a German agent who was leading him into a trap. Owens was then asked about the Important Persons’ Club list, and why he had been taking notes during the train journey. He claimed that he had been given the list by Rolph who did not hold MI5 in very high regard, and had confided to Owens that he wanted to go to Germany as an agent because he was short of money. Apparently, when he had shared this ambition with MI5, he had been told that he could not go because he was a Jew, which had made him very angry and prompted him to produce papers that proved he was not Jewish. Rolph had given Owens the I. P. Club document to sell to the Germans for £2,000. Regarding the notes he had taken on the train,
Owens reminded his MI5 interrogator that he had previously been told by them that he should make notes of anything he saw that might be of interest.

Based on Owens’ responses during the interview, and his explanation for his suspicious behaviour, MI5 concluded:

Despite these doubts about S
NOW
’s reliability, it was decided to continue with the operation in the hope of seizing Dr Rantzau. A conference was held to discuss the plan at the Royal Hotel in Grimsby, attended by B
ISCUIT
, his MI5 handlers and Captain Cowan, representing the Royal Navy’s flag officer for the Humber estuary. Owens was told that MI5 was convinced that he had tried to double-cross his handlers, but nevertheless he was going to be given one more chance. He would be accompanied on his new mission by seventeen naval ratings, the
Barbados
was to be fitted with a concealed Oerlikon, and Owens was warned that if there was any sign of duplicity on his part when they reached the rendezvous he would probably never come back to England. The captain was told that he was not to trust Owens for one moment; if he thought Owens was trying to double-cross them he could take any action he thought suitable. However, MI5 agreed to reconsider S
NOW
’s case if he proved instrumental in persuading Rantzau to come aboard the
Barbados
where he could be captured.

The
Barbados
returned to Grimsby from its second voyage at 6.20 p.m. on 24 May. It was met by MI5 officers who had been alerted by a message transmitted as the ship approached the port, declaring that ‘the action had been completed and there was one cot case.’ The cot case was Owens who had experienced a rough passage and, complaining of a duodenal ulcer, looked desperately ill. According to Lieutenant-Commander Argles, Owens had appeared most anxious to get hold of Rantzau, alive or dead, but when he was questioned Owens said nothing new, apart from his claim that he had been living in fear for many years as a result of some photographs he had taken of Kiel Harbour in the mid-1930s. He revealed that he had been confronted with this evidence some years later in Germany and, under duress, had revealed that he had been acting on behalf of British Intelligence. According to Owens, the person who had confronted him had been Dr
Rantzau, and he had discovered that Owens was working for the Admiralty in the mid-thirties and had used this against Owens in order to get him to work for Germany.

Owens, however, denied that he had ever betrayed MI5, insisting that he had never given any details of individuals who worked for MI5 to the Germans. He also claimed that he was unsure about Sam McCarthy and suspected that he was working for the Germans, and was leading him into a trap. When he asked why a German agent would want to be taken to Germany to become a German agent, Owens had no answer. MI5 also pointed out that if he truly believed this scenario, he should have reported his suspicions. Owens begged to be given one last chance, asserting that he had drawn Rantzau out and was confident that he could help MI5 capture him.

After this incident MI5 requested the Home Office for a new Detention Order for Owens, but his interrogation had not elicited enough evidence to justify his arrest. The real issue was whether MI5’s best link to the Abwehr should be sacrificed, putting at risk all that had been achieved thus far. Accordingly, with some reluctance, MI5 decided that if Owens was going to be released from custody then it had to be done quickly so as to give him enough time to return to London and send a message to Rantzau. Back in his flat, and under strict MI5 supervision, Owens sent a wireless message to Germany asking why Rantzau had not been at the rendezvous, and
demanding
money to pay the captain’s wages. The message was acknowledged, but there was no immediate reply. In these inconclusive circumstances Owens’ telephone was disconnected and he was banned from leaving his flat without permission, his career as a double agent now hanging in the balance.

Immediately after the interview with Owens, MI5 crashed in on his business partner in London, William Rolph. He was known to be short of money and had already approached MI5 for cash, so Owens’ story that he had been asked to sell the list of members of the Important Persons Club to Germany for £2,000 was considered highly likely. Owens had also claimed that Rolph had developed a code with which he could communicate with the Abwehr, and that Rolph had shown Owens a blueprint of MI5’s internal structure and organisation. Rolph was also said to have voiced his
dissatisfaction
about the way that MI5 was being run by Colonel Hinchley-Cooke and Captain Robertson. Until Owens had offered this information, MI5 had not entertained any inkling that Rolph could be anything other than loyal. However, the detail of Owens’ confession was supported by what MI5
now knew about Rolph. As soon as the list of I.P. Club members had been mentioned by B
ISCUIT
, MI5 instantly considered Rolph as a likely culprit for the leak. MI5 also knew that Owens had met Rolph on 18 May, just before his departure for Grimsby, which lent further credence to his allegations.

When Robertson and Stopford confronted Rolph with the charges he expressed astonishment, but was asked to turn out his drawer and open his safe, where Owens had told MI5 he kept his organisational chart of MI5’s structure. In the safe were several old I.P. Club lists, but the 1939 version, found on Owens, was missing. At this discovery Rolph became evasive and flatly denied having met Owens on Saturday 18 May at seven o’clock. MI5 knew that the two of them had been together in his office at this time because they had been under observation by watchers. When confronted with this surveillance detail, Rolph changed his story and remembered that Owens had visited him that evening with Lily. MI5 then threatened to bring Owens to the Sackville Street offices for a confrontation, and at this development Rolph became agitated and paced from room to room.

Also present in the offices was a cleaner named Stokes, and Robertson saw Rolph trying to pass something to him. Then Rolph was spotted taking something out of his drawer, ripping it up, and concealing it in his hand. As he walked out of the office, he was then seen to throw something into the bin. Stopford asked if he had thrown anything of importance in the bin but Rolph denied it. Stopford then took Rolph to the bin and asked him to turn it over, while Rolph insisted there was nothing there. Stopford put it to Rolph that he had thrown his code in the bin, and at this point, with the torn pieces of code staring him in the face, he admitted it.

Rolph was questioned for several hours during which he conceded that he had met Owens before he went away and, in an attempt to prove his credentials, had shown him the I.P. Club lists from his safe. However,
Robertson
remained sceptical about this as Rolph and Owens had been working together for the past two months. Rolph said that he had left the 1939 list on his desk and that Owens must have picked it up when they had left the room with Lily. However, at a later point in his statement he claimed that the list was still on the desk when they had all come back into the room. Rolph then speculated that Owens must have returned to the office after he had left, but the steel gates that guarded the office would have made this impossible. Robertson and Stopford were unimpressed by Rolph’s testimony and believed that he had changed his story on countless occasions and had lied to them. They came to the conclusion that Rolph probably had given
the list to Owens in the hope that he could extract some money out of Rantzau for him.

On 30 May 1940 Robertson visited Owens at his home and told him that he was unsure whether Owens had already betrayed him, or was just about to. Owens protested his innocence and Robertson told him that, against his better judgment, he had been persuaded by B
ISCUIT
to give Owens another chance. Robertson professed his faith in B
ISCUIT
who, he declared, would henceforth be reporting on Owens. Robertson also warned that if he suspected that Owens was double-crossing him or B
ISCUIT
, he would not be responsible for the consequences. Owens asked if he could have
protection
but Robertson told him that he wanted to have nothing further to do with him personally, and that in future he should only contact him through B
ISCUIT
. Robertson also informed Owens that he had a complete statement from Rolph, but he was not going to read from it. As he left the room, Robertson informed him that Rolph was dead. In his subsequent report Robertson noted that ‘I left before he had any chance to question me or show any surprise.’

Rolph had taken his own life by gassing himself in his Dover Street flat, but MI5 could not let his suicide become general knowledge in case the news aroused the Abwehr’s suspicions, so the local coroner was persuaded to record the cause of death as a heart attack.

Once again, Owens had survived a situation that could have seen his career come to an end. On 13 July 1940 Guy Liddell recorded in his diary that people seemed to think that Owens was ‘on the straight and narrow path’. However, Liddell also mentioned that he still had his doubts about Owens, although he had to admit that some of the information that Owens had provided had ‘proved to be reliable.’ He was referring to the
City of Sydney
, a ship which Owens had previously told MI5 had two bombs planted on it in Amsterdam. MI5 had checked up on the veracity of this claim only to find that the ship had never been to Amsterdam.
Nevertheless
, when the ship docked in Mauritius it was searched and the bombs were duly discovered.

Because of the failure to hold a rendezvous in the North Sea, at which Sam McCarthy was to be introduced to the Abwehr as J
OHNNY
’s successor, a new meeting was arranged in Lisbon for 24 July. Across much of Europe,
the military situation had deteriorated dramatically over the previous weeks, with the British Expeditionary Force evacuated from Dunkirk, and the Nazis in occupation of Paris. With German troops in control of Belgium, travel to the continent from Britain was severely restricted. Ostend, Antwerp and Brussels were now in the hands of the Nazis, thus denying them as convenient locations for a
tref
with Abwehr agents.

It was in these circumstances that McCarthy, codenamed B
ISCUIT
, flew to Portugal and checked into his prearranged room at the Grande Hotel Duas Nacoes. Here, of course, he was under constant scrutiny by enemy agents, by the PVDE secret police and even the hotel’s proprietor who routinely passed on information about guests to the Germans.

McCarthy had hardly arrived before the proprietor offered him a share of 30,000 escudos to help two Jews escape to America, but he did not trust the man, suspecting that he would probably double–cross both McCarthy and the Jews. Accordingly, he turned down the offer but did manage to profit from it by reporting the incident to Henri Doebler, his Abwehr contact and link to Dr Rantzau.

According to B
ISCUIT
’s report, Doebler was about forty years old and had been born in Hamburg. He was six foot tall, with blue eyes and grey hair, held an Argentine passport and spoke Spanish, French and German, but his English was not very good. Doebler’s flat was in the Rue Santa Maria, and McCarthy and Doebler were to become very friendly.

Doebler often visited the bars and hotels frequented by the British and American residents, and his espionage duties involved sending explosives to America and recruiting agents. McCarthy’s standing with Doebler was greatly enhanced by his recruitment of Rene Emmanuel Mezanin, a steward on the
American Clipper
whom he met in a bar one night. Doebler had
suggested
that McCarthy should approach the man, Mezanin was eager to make some easy money, and McCarthy found that he had recruited a German spy.

B
ISCUIT
also reported that as they were driving through Lisbon, Doebler had pointed out the head of British Intelligence and claimed to know where he lived and ate. Apparently Doebler’s lady friend, who accompanied him everywhere, moved in very elevated Lisbon society and was in contact with President António de Oliveira Salazar who, she had claimed, was becoming very pro-German.

McCarthy and Doebler spent a whole week together before Rantzau arrived and as they had got on so well he put in a good word for B
ISCUIT
. When they met Rantzau, he was posing as a diplomat under the alias ‘von
Jorgensen’ and although he was only in Lisbon for twelve hours, he had a series of questions ready for McCarthy about his relationship with Owens. McCarthy gave Rantzau fake details about British defences, information which was designed to give the impression that the British were ready for a German attack. Rantzau was interested in J
OHNNY
as, he said, his work was falling off, and McCarthy pointed out that Owens was worried about his wife and troubled by the need to remain close to his transmitter, thus preventing him from leaving his flat. Rantzau seemed to have a high opinion of Owens’ son Robert and knew that he was a good draughtsman with an extensive knowledge of aircraft. The Doctor thought that it would be a good idea for Owens to find him a job in an aircraft factory where he might prove useful. He also questioned McCarthy about the North Sea trawler incident, explaining that he had been at the rendezvous and that it had been his seaplane that had circled the trawler two days before the agreed date.