Pathetic fantasist or Nazi spy? The mysterious Mrs O'Grady

Seaside landladies have been accused of many things down the years – overcharging for the use of the cruet, being stingy with the marmalade – but not until 1940 was one suspected of being a traitor to her country. But such was the predicament of Dorothy O'Grady, part-proprietor of Osborne Villa, Sandown, Isle of Wight, who was arrested and charged under the Treachery Act with being a Nazi spy. The neighbours thought she was a harmless middle-aged woman whose greatest pleasure was walking her Labrador. The authorities took a different view, concluding that exercising Rob was her alibi for intelligence collecting forays into restricted military areas.

And that, apparently, was not all. She made detailed maps; cut military telephone wires, and wore, on the underside of her coat lapel, a small swastika badge. How she communicated information about radar stations and gun emplacements to controllers in Berlin was never made clear, but that did not stop her being tried and convicted at Winchester of betraying her country. The judge donned a black cap, she was sentenced to death, and might very well have been executed had not her lawyer successfully won an appeal for misdirection of the jury. Instead, the mild-looking, bespectacled landlady was sent to prison for 14 years.

But, this being a spy story, nothing is entirely what it seems; and the saga of Dorothy O'Grady refused to lie down, especially after her release in 1950. She, for her part insisted in repeated interviews that her "spying" activities were something done to bring a little excitement into her hum-drum existence; a lark, as she put it, which got out of hand.

This became the prevailing view until, in 1995, the release of secret papers showed that wartime prosecutors thought the information she collected would have been vital to an invading enemy. So what was she: a sad, attention-seeking fantasist, or a dangerous threat to the security of the realm? A new book, The Spy Beside the Sea, based on hitherto unseen reports quarried from official archives by the author Adrian Searle, has at last a pretty conclusive answer to who was the real Dorothy O'Grady.

Her beginnings are a matter of mystery. Born to parents unknown in 1897 and adopted by a British Museum official and his wife, she was taken to their home in Clapham, south London. It was a comfortable childhood, but ended before her 11th birthday when her adoptive mother died. He father, George Squire, then married his housekeeper, and she readily warmed to the role of vindictive stepmother, subjecting Dorothy to various cruelties, not the least of which was informing her she was adopted. By the age of 13, she was in a home where young girls were trained for domestic service.

Events in her late teens and early twenties are unknown, but by 1918, she was becoming what was then called a thoroughly bad lot. That year brought a conviction for forging bank-notes, and she was sent to borstal and prison. By 1920, she was in service with a lady in Brighton, but not for long. Found guilty of stealing clothes, she was given two years' hard labour then moved back to London, and began collecting prostitution convictions, the fourth of which earned her three weeks in Holloway. The very day she was released, she married a London fireman, Vincent O'Grady. She was 28; he was 47.

And so began a dozen or more years of obscurity, living in London until Vincent retired, then moving to the Isle of Wight in the Thirties – ultimately to the villa in Sandown. War came, Vincent went back to London on fire-fighting duties, the guest house was closed for the duration, and Dorothy and her dog were left to their own devices on an island which was soon awash with soldiers and military installations.

To troops guarding restricted areas (which were many, especially cliffs and beaches), this 42-year-old woman and her dog were a regular nuisance, wandering where they shouldn't. Eventually, the army tired of her, took her in charge, whereupon – as if determined to arouse suspicion – she offered the arresting squaddie 10 shillings, then a tidy sum. She was also found to be wearing under her lapel a small swastika. Booked to appear before the Ryde magistrates on relatively minor charges, she failed to show up, and when police arrived at Osborne Villa they found it locked and Dorothy gone.

She was on the run for three weeks, living, it turned out, in a boarding house in Totland Bay, on the west of the island, as Pamela Arland, the name she'd used when on the game in London. Here, she had busied herself making more maps, cutting phone wires, and, unusually for an undercover agent, offering schoolboys small bribes to tell her about army gun emplacements. Once detained, she was taken to the mainland, grilled by MI5, and charged. The trial, with Dorothy kept from the witness box by her counsel, reached its expected verdict.

She served nine years, and her behaviour after her release in 1950 was as illogical as everything else to do with her. She went direct to Fleet Street and gave her story to the Daily Express, then rather more a paper of record than it is now. Her tale in this, and subsequent interviews, was that "the whole thing was a joke", and that she "looked forward to the trial as an immense thrill.... The excitement of being tried for my life was intense .... It made me feel somebody instead of being an ordinary seaside landlady."

She expressed regret for the trouble she had caused, but at other times there was a relish at giving the authorities the runaround – ascribed to the resentment she felt at her jailing for prostitution, during which a treasured puppy died. She must have gone to her grave in 1985 content that this well-aired account was widely accepted. Indeed, a low-key campaign began for the release of prosecution papers which, it was thought, would support her case.

Not a bit of it. Made public in 1995, they made plain just how serious a threat she constituted in 1940, saying that the maps she drew were "terrifyingly accurate", and "would be of very great importance to the enemy". Her erstwhile champion, the Isle of Wight MP Barry Field, was shocked. He said: "I set out to clear her name, but I am staggered by the treachery she sunk to. She could have altered the direction of the war."

Some, however, did not swallow the official line, among them the BBC journalist Peter Hill, who had taken great interest in her story, and Adrian Searle. He began digging into her past, coming to some sharp conclusions (she went on the run in 1940 because she was afraid her husband would learn, via the magistrates' court hearing, of her prostitution convictions), and a few years ago he uncovered the documents that, more than any other, supply the nearest we are ever likely to get to an explanation.

Using the Freedom of Information Act, he obtained the reports by the governor and psychologist at Aylesbury Prison where she served most of her sentence. Dorothy had sometimes, in interviews, wondered if she had a sort of "kink". What the reports made clear was that Dorothy was an intelligent (IQ: 140) but deeply troubled woman who regularly self-harmed, and had "attacks... in which she has to 'obey people' inside her who encourage her to do harmful acts to herself". She had enacted a pretend hanging by placing a chair on her cell bed, and sometimes slept naked under the bed. There was a palpable sexual dimension to her behaviour, which included tying herself in awkward positions for hours at a time. The prison medical officer Dr Violet Minster said Dorothy inserted an alarming collection of objects into her vagina: a light bulb, more than 50 pieces of broken glass, a small pot, and 100 pins.

This, then, was a disturbed woman with a long-held grudge against authority, who sought the limelight in an unusual, but effective, way. And, while there is no evidence she ever attempted to communicate her island gleanings to anyone in any way, it is not impossible that she was hedging her bets, calculating, perhaps, that if the Nazis invaded, she would be able to prove her loyalty to the new cause.

'The Spy Beside the Sea' by Adrian Searle is published on 24 May by The History Press. The e-book is now on offer at £4.99 from Amazon's Kindle Store