Malcolm spoke about the British national character (not the character of the British government) and from this he arbitrarily leaped to thinking that it binds the actions of the British government; as if the British government is somehow a random or representative sample of the British population.

Such an absurd assumption is not necessary. It is sufficient that the way government officials are selected from the British population doesn't specifically select for traits contrary to the "national character," or that their behavior is constrained by what the general public would be outraged at, even when they act in secret. (Note also that this isn't necessarily due to rational fear of being caught -- people are normally afraid and reluctant to do outrageous things even when rational calculations tell them the probability of getting caught is negligible. With the exception of certain things where hypocrisy is the unspoken de facto norm, of course, but that's not the case here.)

Malcolm was not saying anything more intelligent or subtle or deep than "Our monkey tribe good! Therefore nobody from our monkey tribe ever do bad thing!"

Malcolm may well have been guilty of such thinking, but at the same time, Wittgenstein clearly had a fit of irrational anger at the suggestion that probabilities of monkey behaviors are not independent of their tribe. (I won't speculate on what part his own residues of tribal feelings might have played here.)

And nobody here is claiming that Malcolm was correct -- merely that Wittgenstein's reaction was hardly the paragon of rationality it's presented to be.