The AIB was a multinational espionage organization that collected intelligence data; it was also effective in committing wholesale sabotage and creating impressive propaganda during World War II. Under the direction of U.S. General Douglas MacArthur, this agency was headquartered in Melbourne, Australia, and made up of five departments, including British and Dutch espionage, sabotage, propaganda, and the Australian Coast Watchers who operated in front of and behind Japanese lines.

MacArthur left the Philippines in the spring of 1942, ordered to Australia by President Franklin D. Roosevelt. His men on Bataan and Corregidor eventually surrendered to overwhelming Japanese forces but by that time MacArthur was building another Allied army in Australia in preparation of taking back from the Japanese the huge island-dotted area of the South Pacific they had engulfed in the first six months of the war.

To accomplish this goal, MacArthur relied heavily on the AIB which was commanded by Colonel C.G. Roberts, head of Australian intelligence. Thousands of special volunteers served as Coast Watchers. They infiltrated Japanese-held islands and sent back reports to AIB visa short-wave radios. Using these reports, AIB commandos mounted devastating sabotage raids preceding MacArthur's northern advance from Australia to New Guinea and the many islands conquered by U.S. and Australian troops from 1942 to 1945.

During MacArthur's brilliantly conceived island hopping campaigns, AIB maintained constant propaganda through radio programs, clandestine presses behind enemy lines and leaflets dropped by airplane to discourage Japanese troops and inspire the conquered island peoples to conduct savage guerrilla activities against their Japanese foes.

The AIB-directed guerrilla movement in the Philippines was particularly effective in disrupting Japanese communication, destroying ammunition depots, ambushing small Japanese contingents, and gathering intelligence on troop dispositions and available landing areas which helped MacArthur immensely in mounting his 1944 invasion of the Philippine Islands at Leyte. Once the Philippines were secure, the AIB went out of existence.

What would someday become the ASIO, started out in 1942 as the Allied Intelligence Bureau. the AIB was a conglomeration of the American and Australian military intelligence agencies who banded together to garner intelligence against Imperial Japan. The AIB operated under the auspices of Col. Charles Willoboughy, Mac Arthur’s chief Intelligence Officer, and Col. C.G. Roberts, of Australian Military Intelligence. Its mission:

"to obtain and report information on the Southwest Pacific Area... Weaken the enemy by sabotage and destruction of morale... Render aid and assistance to local (guerrilla) efforts in enemy occupied territories." 

The AIB operated a group called the Coast Watchers, whose mission it was to fight off Japanese influence in New Guinea, Solomon Islands and the Philippines. The Coast watchers would watch and report Japanese movements in their area. They would also drop behind enemy lines to collect intelligence and sabotage Japanese activities. The AIB continued its work until the end of World War II, when it was disbanded.

After the war, Sir Charles Spry, the head of Australian Military Intelligence, and several other individuals in the Australian Government felt there was a need for an Australian post-war intelligence service. Taking men and resources from the now defunct AIB, they began to create their Intelligence service. In 1949, the ASIO (Australian Security and Intelligence Organization) was born. The organization was divided into two sections, the first was the ASIS (Australian Secret Intelligence Service), responsible for the garnering of intelligence, and for foreign operations abroad. The other section was responsible for counter-intelligence.

In April of 1954, Vladimir Petrov, a Soviet legal, and KGB intelligence office was recalled to the Soviet Union for “Consultations". Petrov, who knew that in light of Stalin's death he would be purged, had to make a split second decision, return to Moscow and almost certainly face execution, or defect. He chose the latter. Packing whatever intelligence he could fit into his briefcase, he left the embassy and defected, leaving his wife to follow later.

When the KGB realized that Petrov had defected, the KGB had Mrs. Petrov seized in the hopes that holding her hostage would reduce Vladimir's revelations to the west. The KGB operatives in the embassy then received instructions from Moscow that they were to return to Moscow with Mrs. Petrov at all costs, and to use force if necessary.

ASIS intelligence officers knew that the plane taking Mrs. Petrov back to the USSR would have to land in Darwin, on the north coast of Australia, before continuing on across the China Sea. When the plane landed in Darwin, the ASIS ordered the KGB operatives and Mrs. Petrov off the plane. The ASIS then ordered them inside where, in front of the media, Mrs. Petrov was handed a phone with her husband on the other end who told her to ask for political asylum. "I do not want to return to Moscow" she announced. The guards, who had been ordered to return with her, and realizing what was happening seized Mrs. Petrov. The ASIO field agents intervened, and ordered the KGB intelligence officers out of the country without Mrs. Petrov, while, during the entire time, the cameras were rolling. Suffice it to say, for the KGB, it was a public relations nightmare. To add insult to injury, the Petrov’s had been keeping copies of Vladimir’s reports to Moscow.

Petrov subsequently named two officials in the Australian Department of External Affairs as Soviet moles. He further divulged an extensive spy network that was interested in Australia’s Uranium Production. The Petrov’s were then given new identities, and wrote a book about their experiences. The Soviets ended relations with the Australians, leaving the care of their embassy to the Swiss.

In 1959, the ASIS was partaking in Operation Mole with MI-5. The Soviets were talking about returning to Canberra. With the help of MI-5, the Australians bugged the soon-to-be Soviet embassy. The ASIS then waited a year to activate the listening devices in case the Soviets were monitoring the embassy for microwaves in the first few months of their reoccupation. The operation was an abysmal failure. While every sound was recorded, there was only one hitch: the person being monitored never said a word.

In 1983, the ASIS exposed soviet legal Valery Ivanov and expelled him. It was learned that he had been trying to recruit agents of influence, one of whom was Labor Party leader David Combe, friend to Prime Minister Robert Hawke. Fearful of a scandal, Hawke ordered the Labor party to disassociate themselves from Combe.

The same year, the ASIS decided to run a mock hostage rescue operation. They failed to inform either the hotel or the police department that they were running the operation. When ASIS intelligence officers stormed the hotel, they roughed up the hotel manager, and scared the guests. When the police arrived, they arrested five ASIS officers, all of whom were drunk.

In light of these fiascos, the government set up a Royal Commission to look into the ASIO and its activities. As a result, all future major intelligence operations required the consent of the Prime Minister, and a cabinet level committee was formed to oversee all ASIO activities, the equivalent of the American Senate committee on intelligence oversight.

In 1990, it was learned, that the ASIS, along with the help of 30 NSA technicians, had bugged the Chinese embassy. The story had originally been picked up by an Australian paper, but the ASIS asked them to sit on the story. Shortly thereafter, the Associated Press also picked up the story, but the ASIS also got them to sit on the story. However, the story somehow made its way to Time magazine, where it was published, compromising the operation.