Kerney had apparently other enemies besides Joe Walshe. Colonel Dan Bryan had become head of G2, the military counter-intelligence service, in 1941 and as such was in close contact with Walshe. There are a few references which show an intriguing relationship between the two.
Bryan appears to have considered Kerney with suspicion, though on what grounds is not altogether clear. G2 were certainly successful in keeping German under-cover operations in Ireland during the war under control, though their task was made easier by the lack of mobility of the Irish population in wartime and rural conditions at that time being such that everyone practically knew everyone else. In addition to this, the German agents and their masters appear to have been particularly inept. However, it is also the case that counter-intelligence people are trained to smell a rat even where there is none. MI5 were alleged by Peter Wright to have believed that Prime Minister Harold Wilson was a communist agent.  In 1975, Irish military intelligence kept files on Minister for Posts and Telegraphs Conor Cruise O'Brien and former Minister for Health Dr. Noel Browne . Knowledge is power, and counter-intelligence agencies in various countries have sometimes been known to behave as if they were above the law, perhaps in the belief that they were the guardians of the country. Whether this was so in Ireland or not, there are some curious statements in Bryan's correspondence with Walshe.
On 16th January 1946 Bryan wrote to Walshe: ".... certain remarks Mr. Kerney had made indicated that he knew much more about German activities in Ireland than I or you had been previously aware of." This sentence raises a number of questions. The vague reference to "certain remarks" leaves us completely in the dark as to what the nature of these remarks might have been. Likewise, what was it that Kerney knew and what activities was Bryan referring to? Other than what had been published in the press or what Frank Aiken might have told him on the few occasions when they met, Kerney was unlikely to know very much, if anything, about German activities in Ireland. The only other German connection would have been Clissmann, whom he had met in Ireland before the war, and considering that Clissmann kept his intelligence identity secret, he would have been unlikely to tell Kerney much, if anything, about what was going on in his department.
The last part of the sentence implies that Bryan considered that he knew everything that Walshe knew. This does not seem to be borne out by the evidence available, as we shall see later. In the same minute, Bryan goes on to say:
"These remarks indicated that Mr. Kerney not only knew more than we did about Frank Ryan, but also had seen him in the intervening years. This information of course only confirmed previous information at my disposal which indicated that Mr. Kerney had on one occasion agreed to see Frank Ryan. The source of my information was, however, unable to confirm if they had actually met at that time." 
Again, we are left guessing as to what it was that Kerney knew about Frank Ryan that Bryan and Walshe did not. The reference to "the intervening years" is puzzling. There are only two possibilities: the years Ryan was in prison and the years he was in Germany. As regards the former, one wonders whether Bryan knew of the frequent visits of Kerney to Ryan in Burgos jail. All of these were reported to Walshe at the time and it may be that Walshe did not inform Bryan. As to the latter, Ryan was specifically precluded from ever setting foot on Spanish soil again and Kerney never went to Germany during the war. Once more, the reference to having "agreed to see Frank Ryan" does not say when or where.
Bryan had interviewed Kerney in October 1941 to get details of the Frank Ryan "escape" episode and a copy of his report, dated 20th October 1941, appears in the file.  In it he mentions that he had been unable to ascertain the name of the Spanish intermediary and in the covering memo of the same date, sending this report to Walshe, Bryan mentions as a point of particular importance to Walshe the name and address of the Spanish intermediary, although this was in fact already known to Walshe.
Another instance of Walshe failing to communicate information to Bryan concerns the 1942 report of Kerney's meeting with Veesenmayer. On the 10th March 1954, Sean Nunan, then Secretary of the Department of External Affairs, wrote to Joe Walshe who was at the time Ambassador to the Holy See, in connection with the pending libel action:
"Our file shows the lengthy account of the meeting - typed on the day it took place, according to Kerney - and no further action until June, 1946, when a copy was sent to Dan Bryan. Was a copy sent to anyone at the time of receipt or was any action taken on it?"
A reply to this letter could not be traced, but it would appear that it was indeed the case that no further action was taken and no copy sent at the time. In the month following Walsh's appointment as Ambassador to the Vatican, Boland, who had now taken over, had sent a copy of the report to Bryan on the 13th June 1946 saying "It is not clear from our file whether we sent you this report before or not." and Bryan replied on the 18th June "The note on Veesenmeyer which I had not seen previously is of very great interest."  thus confirming that Walshe had not sent him a copy at the time. Walshe is said to have been extremely secretive in all his dealings to the point of not filing some documents and not communicating information even to his own staff.  It would indeed appear that he never even showed the report to de Valera. When some time after Leopold Kerney's death, his widow, Raymonde, visited de Valera in Aras an Uachtaráin at the latter's invitation, de Valera denied the existence of such a report and Raymonde Kerney had to insist that she herself had seen it.
The same letter from Sean Nunan further asks ".... when Kerney was brought home in 1943, did he discuss the Madrid meeting with you? He did not mention it to Fred nor have we any evidence that he did to G2." This matter was indeed mentioned both by Boland and by Bryan. The curious thing is that Kerney made the exactly corresponding remark both in his notes and when dismissing Veesenmayer's approach at the second brief meeting in Biarritz, to the effect that no one had even mentioned the matter during his visit to Dublin. From his point of view he had made his report and it was not up to him to raise the matter again particularly as it was obvious that no further action was considered.
Regarding the libel action, Nunan writes in the same letter "We are remaining aloof from any participation in the matter ... it is well that the Department should be prepared for the worst!" This sums up rather well the Department's attitude not to get involved at any cost and not to reveal anything that may have happened, no matter what the consequences may be to the individuals concerned. This is reminiscent of the "appalling vista" remark by British Judge Lord Denning.
As regards Bryan's attitude to Kerney, the only rational explanation, other than that noted above, may be that having opted for the Treaty side in 1921, joined the Free State army in 1922, and been promoted Captain in 1923, he would have been on the Free State side during the Civil War. As such he would have regarded republicans with suspicion, to say the least. Animosities engendered by the Civil War have been known to last a lifetime. Kerney was known to hold republican views which indeed was why he was a follower of de Valera. It is impossible to know to what extent Kerney was aware of Bryan's background and of the degree of G2 co-operation with British intelligence, but if he had, he would have been extremely circumspect in what he said and what information he gave in case it would get to the wrong ears and put lives in danger. As an instance, there was at least one case where an assassination was said to have taken place in the British embassy in Madrid which Spanish police were unable to investigate as diplomatic privilege was claimed.