Person interviewed: Michael John Smith
Place of interview: Paddington Green Police Station
Date of interview: 10th August 1992
Time commenced: 16:57 Time concluded: 17:24
Other persons present: Detective Superintendent Malcolm MacLeod
Detective Sergeant Stephen John Beels
Richard Jefferies (Duty Solicitor)
Beels: This interview is being tape-recorded. I am Detective Sergeant Stephen Beels, Special Branch, New Scotland Yard. The other officer present is …
MacLeod: I am Detective Superintendent Malcolm MacLeod, from Special Branch at New Scotland Yard.
Beels: And you are sir …
Smith: Michael Smith.
Beels: And you are sir …
Jefferies: My name is Richard Jefferies, a solicitor from Tuckers Solicitors.
Beels: We are in Interview Room No. 2, at Paddington Green Police Station. At the end of this interview, Mr Smith, I will give you a form explaining your rights of access of a copy of this tape. The date is the 10th August, and the time is 4:57 pm by my watch. I must caution you, Mr Smith, you do not have to say anything unless you wish to do so, but what you say may be given in evidence.
Beels: Do you understand?
Smith: Yes I do.
Beels: Do you agree that the tapes were unsealed in your presence?
Smith: Yes I do.
Beels: You are entitled to free legal advice, and your solicitor is present with you. Is that correct?
Smith: That’s correct.
Beels: I understand you have been given the opportunity to exercise recently and you declined, is that correct?
Smith: I’ve declined yes.
Beels: You are also continuing to refuse to take any food whilst in detention, is that correct?
Smith: That’s correct, yes.
Beels: But you are taking liquids?
Smith: I am taking liquids, yes.
Beels: I understand you have been examined by a doctor as well, is that correct sir?
Smith: I have been examined by a doctor on three occasions, I believe.
Beels: And you are fit to be interviewed?
Smith: I think I am at this point, yes.
Beels: Thank you. Ok sir.
MacLeod: Right, thank you Mr Smith. I’d like to begin, first of all, by clarifying certain points that I raised in the previous interview, before I come on to the main subject of this particular interview, and I want to go back over the KGB contacts that we believe you to have had over the years. You deny knowing a man called Victor Oshchenko?
Smith: Yes, I deny knowing that man.
MacLeod: You deny knowing a man Victor Lazin?
Smith: Yes, I don’t know the name, I deny knowing them. The pictures you showed me, if that’s the people, I deny knowing those people, yes.
MacLeod: And you deny knowing Anatoliy Chernyayev?
Smith: Anatoliy? Yes, definitely. I could never pronounce the name, even if I’d met him, I think.
MacLeod: So, you deny ever having had any contact with the Russians, or the Russian Embassy?
Smith: What, the Russian Embassy. Yes, I deny that, yes.
MacLeod: You deny ever having any contacts with any Russian Intelligence Officer?
Smith: I deny that, yes.
MacLeod: You deny ever having contacts with any persons who were Russians, who may have had an intelligence role?
Smith: That’s a bit more difficult, because I, as I said before in the earlier interviews, I had met some Russians, in a social context. I had no way of knowing if those people were, so-called KGB agents, or who worked for the Russian Embassy. It’s possible, but my involvement with them was so brief, and purely social, that I feel there could have been no consequence, calling it a KGB encounter.
MacLeod: So you deny ever having been a KGB agent?
Smith: Yes I do.
MacLeod: I am going to show you another photograph, a black and white photograph of a man, I’ll spell it … Oleg Krasakov. Have you seen that man before?
Smith: I certainly don’t recognise that man at all.
Beels: The exhibit …
Smith: Oleg, did you say?
MacLeod: Have you seen that man before?
Smith: I don’t think so, no.
MacLeod: I am going to enter this as exhibit MM/5.
Smith: Again, and I asked you before, could you give me some specific time or place?
MacLeod: Yes, I’ll tell you that that man was your KGB controller up to September 1985.
Smith: No, that’s a lie. I do not know that man, and I ...
MacLeod: You’ve never seen that man before?
Smith: I’ve never seen that man before.
MacLeod: Right, I am going to change the subject now. I am going to talk about your hobbies, or one of your hobbies, computers.
Smith: I’ve worked on it, yes. I wouldn’t call it a hobby as such. It’s a, it’s something that I find interesting.
MacLeod: And what do you use your computer for?
Smith: I’ve used it for typing letters, minutes of meetings at work. I have used it for playing games with. I’ve got some musical equipment that goes with it. Is this relevant?
MacLeod: Yes, well it’s relevant to the point I am going to try to establish. How much did you pay for your computer?
Smith: I can’t remember the exact figure, but I think it was about £4,000 I think.
MacLeod: £4,000. Is that not an awful lot of money for a home computer?
Smith: No, it’s not, a friend of mine has got a computer that’s worth more than that. No, it was a big decision, I thought about it for about 2 years before I finally purchased it.
MacLeod: And you bought it when?
Smith: It was the beginning of last year, I think.
MacLeod: And you paid how much, £4,000?
Smith: I don’t remember the exact figure, it may have been less than that, I can’t remember.
MacLeod: Did you not send off for a, or did you not ask for a quotation from the company TSC for …?
Smith: Yes, yes, that was one of the companies I discussed it with.
MacLeod: And they gave you a quotation for £10,033.75?
Smith: That wasn’t for the computer. That was a package deal that they were offering me.
MacLeod: I see. I’m going to show you exhibit JS/39, it contains 2 pieces of paper, one of which is the quotation from the company TSC. Is that the quotation that the company gave you for the computer, and the computer equipment?
Smith: I think that’s it, yes. I don’t think that’s what I actually bought, not exactly, I don’t think.
MacLeod: You can remember making that enquiry and you can remember, …?
Smith: I made that enquiry, yes.
MacLeod: I would like you to just reflect again on that answer you gave me.
Smith: Which answer was that?
MacLeod: The amount of money you paid for your actual computer.
Smith: For the actual computer? We are talking about which part of the computer, the CPU, the monitor, keyboard?
MacLeod: Well, yes. You tell me what you bought, in terms of, in relation to the computer?
Smith: I am sorry, but is this relevant? I mean …
MacLeod: It is relevant. I’ll explain …
Smith: I bought a monitor, I bought a CPU, and I bought a keyboard. I think that was, comprised what you could call a computer.
MacLeod: Yes, and how much did that come to?
Smith: I can’t be specific, I think it was around, around £4,000 I believe.
MacLeod: Well, I am going to show you an exhibit now, RR/1, which contains an invoice from the company TSC, a statement of account from the company TSC, which shows that you paid over £10,000.
Smith: I did not pay over ... I did not receive that.
MacLeod: It’s made out to you, it is addressed to you, is it not?
Smith: I did not receive that bit of paper. That is not, I have never received that document.
MacLeod: This document was found at your home address.
Smith: I dispute that. Can I see that again.
MacLeod: You’re most welcome to.
Smith: There’s no date on that. No, I didn’t, well actually ...
MacLeod: Well, I can show you the date, the dates on which the payments were made, the 5th February 1991.
Smith: Sorry, the lights in the way, I can’t see. I am convinced that I did not receive that document. They did send me invoices, but it was not, not that piece of paper.
MacLeod: So, we wouldn’t expect to find your fingerprints on it then?
Smith: Well, I, let’s put it this way. I do not remember receiving that document. If I did, and it got bundled away with other paperwork, maybe I did, but I do not remember receiving that document. I did receive other documents, which were not in that format, they were in an invoice format. That document is not the one I remember receiving.
MacLeod: Well, if you can’t remember receiving ...
Smith: Maybe I did receive it, but I am not going to be, I am not going to deny it, but on the other hand, I am not going to say I definitely received it, because to my knowledge I don’t remember that particular piece of paper.
MacLeod: But you agree it’s addressed to you?
Smith: I agree it’s addressed to me. Yes.
MacLeod: Do you agree, that that’s the amount that you paid for your computer equipment?
Smith: I think that was about it, yes.
MacLeod: It is right?
Smith: Well, roughly, I mean, I can’t …
MacLeod: That’s over £10,000.
Smith: What, what …?
MacLeod: You told me you paid just £4,000, or perhaps less.
Smith: We are not talking about a computer here, we are talking about extra equipment.
MacLeod: But my question to you is, what computer and related equipment did you actually buy?
Smith: Related equipment?
MacLeod: Computer equipment.
Smith: It’s not all computer equipment.
MacLeod: Well, can you explain to me what it is?
Smith: It’s a mixture of a computer and some other equipment, which is useful for musical reproduction, which …
MacLeod: Ok.
Smith: … is what this company specialises in. I mean, I went to this company to see if they could provide me with the sort of equipment I was looking for.
MacLeod: Right, Ok. Fair enough. The main point of my asking you this, is that I want to establish how you paid for this equipment, whatever the equipment might have been. Whether it was a computer, or other component parts, in connection with this music hobby of yours. I see that it included a cheque for £4,000.
Smith: Yes.
MacLeod: Paid on 5th February 1991.
Smith: Mmm.
MacLeod: You paid £1,262.50 by credit card, and you paid £4,800 in cash.
Smith: Mmm.
MacLeod: Do you agree?
Smith: Well, that’s what it says, I think.
MacLeod: Yes.
Smith: That might be a fair ...
MacLeod: and you paid a small amount of £138, that was on 26th February 1992. What I am interested in is this cash payment of £4,800. Do you agree that that’s how that was paid?
Smith: It’s my recollection it was. I, it’s going back a while, I don’t remember all the transactions I make.
MacLeod: So, can you tell me where you found the money, that £4,800?
Smith: Well, it’s money that I had saved up.
MacLeod: In which account?
Smith: Well, I have a number of accounts. I have 2 cheque book accounts, and I have an Abbey National account.
MacLeod: Can you tell me what, so you have got 2 cheque book accounts, with which bank?
Smith: With the NatWest.
MacLeod: With the NatWest, and the building society?
Smith: It’s the Abbey National.
MacLeod: Abbey National. Now, I have to make it absolutely clear to you, we will have access to your bank statements and building society statements within the next 24 hours. Can I expect to see a withdrawal for that amount of £4,800, from one of your accounts?
Smith: I can’t say it would come out of one account. I collected the money from sources, and had savings. I always like to keep a certain amount of cash at home.
MacLeod: Yes, well, when you say sources, you also get some money from sources, what sources?
Smith: What do you mean in the way of sources?
MacLeod: Can we ask you that question again. That amount £4,800, where did you find that money?
Smith: That money is mine. I mean, I …
MacLeod: Yes, well, you tell me it’s yours, but you paid £4,800 in cash. That’s a lot of money, by any standards, to pay in a lump sum?
Smith: I am sorry, but I don’t think that’s a lot of money.
MacLeod: Don’t you?
Smith: People spend a lot more than that on cars, and I don’t lead a particularly, how do you say, a riotous lifestyle. I don’t go out very much, I don’t spend a lot of money on clothes, or the sort of things that other people do.
Beels: Why did you choose to pay in cash on that particular occasion?
Smith: I felt that paying cash was a better way of sorting out quickly, that I could get the goods as soon as possible.
Beels: Even though you paid on previous occasions by cheque and credit card, and on this particular occasion …?
Smith: I found it was the only way of quickly organising my affairs to, because they wanted a payment up front. I, …
Beels: But you’ve already said, that you had to get that money from various sources?
Smith: That’s right, otherwise it means selling shares, and the sort of things that involve time and problems for me. So, I decided to pay for it in a way that would quickly achieve the result.
Beels: We are just looking, what about 18 months ago, that payment, about 18 months?
Smith: A bit longer than that.
Beels: A bit longer, Ok. You must remember paying out that much in cash. I mean, it’s not the sort of thing you do every week, or every month, is it?
Smith: I don’t remember the exact, it was one evening I believe.
Beels: So, you remember it was an evening?
Smith: Yes, that’s what I remember, it was one evening.
Beels: And so you went along to this particular premises, The Synthesizer Company …
Smith: Yes.
Beels: … and paid it actually at the premises?
Smith: Yes, I remember that.
Beels: Can you remember where you, exactly, got the cash from?
Smith: I’d collected it over a period of a couple of weeks, from the sources I had. We, I mean …
MacLeod: But tell me the sources. This is what I am asking you, tell me what the sources are that you’ve got, or you had at that time?
Smith: Well, it’s difficult to say isn’t it. I mean, everybody keeps accounts in their own way. I mean, I like to have a reasonable amount of cash available to me at all times, for emergencies. I’ve also found that keeping cash aside, for those sort of purchases, always is a better way of getting a better discount, and these people did offer me a better discount for putting the money up front. That’s the reason I discussed it with them, and another company, to see who could come up with the best deal.
MacLeod: I can’t see that there would be any difference, in the discount that you’d be given, between cheque and cash
Smith: Well, the people I was dealing with wanted the money before they would undertake any work.
MacLeod: Was that because they gave it to you minus VAT?
Smith: I don’t know, that’s between them and the tax man, I guess.
MacLeod: £4,800. If we go to this company, and it’s not that long back and they will probably remember, and we will be going to this company. We will want to know just exactly what it was that you purchased for that, and what special arrangements …
Smith: I am quite happy for you to do that.
MacLeod: … or what discount they gave you.
Smith: If you will discuss it with that company TSC. I am quite happy for you to do that.
MacLeod: I am putting it to you, that that money, that money was given to you in a lump sum, as a cash payment.
Smith: Cash payment?
MacLeod: Yes. That was part of the monies that had been given to you, over a period of time by the KGB?
Smith: I don’t think that’s true.
MacLeod: Well, I think your bank statements, or particularly your building society statements, might reveal one or two interesting transactions.
Smith: Well, I’m quite, I have nothing to hide in my bank statements, if you want to look back over them. I’d like to add, I am not a particularly organised person when it comes to finances, and I occasionally find I’ve got more money in my account than I should have, because I don’t check it every week. But as far as I am concerned, if I’ve got the money, I spend it, and ...
MacLeod: Yes, well, you’ve got £4,800. If you’ve got it, you spend it, and yet you didn’t on this occasion, you must have saved up for some considerable time to get £4,800 in cash. So, you weren’t really spending your money as it was coming in.
Smith: I told you, I explained before, I thought, that I’m not extravagant in other things.
MacLeod: That’s because you were told not to be extravagant …
Smith: No.
MacLeod: … in your lifestyle.
Smith: That’s not it at all. The reason I’m not extravagant is because I’ve always been quite thrifty throughout my life. You can ask my mother, we used to have arguments when I was a child about spending money, and I’ve always been very careful about money, I hoard it more than most people, and ...
MacLeod: So, can we expect to find any more money in your flat?
Smith: You probably can, yes.
MacLeod: So you hoard money?
Smith: People hoard different things. Well, why shouldn’t I have my own peculiarities. Look at Ken Dodd, it speaks for itself, that. It’s just, I am just saying that …
MacLeod: I don’t believe you, I don’t believe you when you say that you keep this kind of money lying around the house.
Smith: I didn’t say I kept that sort of money lying around. I said I accumulated it.
MacLeod: What in a building society. Did you have …?
Smith: Some of it. Well, you’ll have to, I cannot, as I say, I am not particularly good at accounting for the way I work on my bank statements. They tend to be rather haphazard, and I, about 2 or 3 years, I
work it out and say: “Ah, I’ve got a thousand pounds too much in my bank account” and I’ve done that a couple of times in the last 5 years. That’s just the way I am. As long as my statements come through, and show I am in the black, then I don’t give a damn.
MacLeod: You know, as well as I do, that this was a payment from the KGB, and in line with their instructions, for you to use the money that they paid you in an unobvious way. This would be consistent with that advice.
Smith: How on earth is that consistent? I mean, if I …
MacLeod: Because you’ve bought a large item here, and you’ve spent far more than the average individual in the street would spend on a computer.
Smith: I am not an average individual, I earn a lot more than the average individual.
MacLeod: Are you saying then, even for somebody who’s earning perhaps more than the average individual, that would go out and spend £10,000 on computer equipment?
Smith: Why not? I’ve been saving up over a period of years for that. It’s something I wanted a long time ago. It’s just at that particular point in time, it was a technological breakthrough in this music field, and I was quite excited to get in at the beginning. And when I went for a demonstration of the equipment, I was quite impressed by it and I thought, “yes this is
what I want, and this is what I am prepared to spend that amount of money on”. I mean, people go and buy Porsches, which are far more expensive. I think the enjoyment I can get from that piece of equipment is worth that amount of money to me.
MacLeod: I come back to the point I am making. If you had accumulated money over a period of time, from sources as you describe it, I am yet to be convinced what the sources are? You would have …
Smith: Well, I’ve had other work. I’ve done some evening work.
MacLeod: But you would expect that money to be put into a building society, or into the bank …?
Smith: I don’t keep all my money in building societies.
MacLeod: So, you are saying that you kept £4,800 in the house, just by the way?
Smith: No, I didn’t say that, no, I didn’t say that.
MacLeod: Right, tell me what you’re saying then, make it clear so that there’s no ...
Smith: Well, some of that money would have been in the house, some of the money I would have withdrawn from the building society.
MacLeod: Can you remember how much you withdrew from the building society?
Smith: You’d have to check my accounts, because I, as I say, I don’t look at it every day. In fact, if I think can make a point in time when I think “yes, I’ve got that amount of money that I need”. I withdraw it, and I spend it.
MacLeod: I put it to you, that is one of the lump payments that the KGB paid you, for information that you were passing on to them?
Smith: Look, if I had anything to hide, why would I spend that amount of money in that way? I mean, it’s just …
MacLeod: Because you were flush. You were flush with money. And that was one of the reasons that you decided, or agreed to work for them. You were receiving regular payments over a period of time.
Smith: That’s not true.
MacLeod: That is absolutely true, and you know it to be true.
Smith: I do not know it to be true.
MacLeod: You know that to be true. £4,800, £4,800 for the average individual is a lot of money.
But apparently not to you.
Smith: I think we have got to go back, and look at my situation. I live in a one bedroom flat with a low mortgage. I have an old car. My wife works, and has a fairly good job, and she’s self-supporting, and I don’t have to buy her anything. I don’t spend much money on myself, and this is my perk to myself, if you like. I mean, what’s the point of me saving the money for a rainy day only, I mean, I need to spend money on things that I want to do, and this is one of the things that I decided to buy. Now, I can’t believe that you could accuse anybody, who has a specialist hobby that might cost some money, that they should not pursue their hobbies to the extent that they feel able. I felt able.
MacLeod: I am not saying that.