Surely Varys must have known.........

[AdoraKitty]

When Catelyn heads to Kings Landing and is brought before Littlefinger, she shows Varys and Littlefinger the valerian dagger. Littlefinger explains how he lost it to Tyrion in a bet. Littlefinger claims Tyrion bet AGAINST Jaime. Surely Varys must have known that Tyrion didn't bet against his own brother. Surely Varys must have known Littlefingers entire story was a lie. Why did he go along with the lie? Why did he never tell Eddard during one of his cryptic warnings to Eddard, that everything he thought he knew about the ownership of the dagger was a lie?

One a side note: Will we ever find out what Littlefinger wrote to Catelyn shortly after his duel with Brandon? The letter that Catelyn burned and never bothered to read. Could it's contents have prevented her from confiding in Littlefinger and thus preventing her from kidnapping/arresting Tyrion at the inn?

[TMIFairy]

1 - contrary to what large segments of fandom believe, Varys does NOT know everything about everything and everybody

2 - and even if he DOES, he is only human (?) and can forget information. Maybe in this case he did not remember and then he did not check his notes for subject's no. 12,003W/34L "betting patterns"

3 - and even if he DOES and he REMEMBERED the "betting patterns" of subject no. 12,003W/34L he did not disclose it as his agenda is for the Seven Kingdoms to go up in flames

[AdoraKitty]

Hmmmm.....ok. You certainly make a good point

[Seams]

I'm sure it would be well-known that Tyrion is a loyal Jaime fan-boy and would not bet against him. Even though Tyrion hadn't been at King's Landing his whole life, he stands out and he's a son of the Hand of the King, so people would have been curious about him and noticed his habits and his likes and dislikes and the bond between him and Jaime. The highborn people at tournaments seem to shout out their willingness to bet money, so it would not have been a secret to anyone if Tyrion had made such a bet - if he needed or wanted to, Varys probably could have followed up later to find out whether anyone remembered a bet involving a Valyrian steel dagger. Even if Varys didn't have a little bird report on the specific details of betting during the tournament, he would have known that Lannisters stick together and would be highly unlikely to bet against one of their own.

In other words, I agree that Varys would have been highly suspicious about Littlefinger's claim of the knife's origin, even if he did not have reliable intel about that specific wager.

Your good catch on this detail may provide evidence that Varys does not want to undermine Littlefinger. Although they appear to be rivals, I have a suspicion that the two are secret allies and that their common goals will be a twist revealed late in the series.

Your side note also raises a good question. I wonder whether the letter to Catelyn was actually a suicide note. Baelish went to Braavos, right? It's possible that the Littlefinger who rose to power after his return to Westeros is not the Petyr that Catelyn knew and loved. I know it's a cliche and possibly too easy of an excuse in this forum, but I really wonder whether the Littlefinger we have seen is a Faceless Man. I saw zero hint of a wistful love in the interaction between Petyr and Catelyn, yet he tells Lysa that Catelyn is the only woman he has ever loved. Wouldn't we have seen a flicker of eye contact or a lingering touch of Catelyn's hand or some tiny hint in their interaction at the brothel, if Petyr still genuinely carried a torch for her?

If it was a suicide note and Catelyn had read it, she definitely would not have trusted and confided in the Littlefinger that presents himself to her at King's Landing, and she probably would not have taken Tyrion prisoner.

[Manderly's Rat Cook]

I expect he might have guessed it was a lie.

He said he didn't know who's dagger it was, which can mean 2 things :

1. He had never seen it before, and didn't know who's it was 

2. He knew it was Robert's, and he didn't want to create friction or distrust between Robert and Ned at this point.

So if he did know or guessed it was a lie, there can be plenty of reasons to not disclose this knowledge.

1. He knew Cat (and possibly even Ned) would be more inclined to believe LF, and instead of convincing the Starks, he would only be disclosing to LF that he knew more about the dagger, and lied about it. 

2. If he only suspected LF was lying, he'd do better to first find some evidence to support this, and disclose this to Ned later in private, instead of blurting it out in front of LF on the spot. This would take time, even for Varys. 

3. Varys clearly wanted to create tension between Lannisters and Starks, if LF tells a lie that suits his purpose, he's fine with that. 

4. He didn't expect Cat to run into, and arrest Tyrion. He probably expected her to travel back the way she came (by ship), and once she left, it was too late to give her reason to doubt LF's testimony. He also doesn't know Cat personally, so he may not know how impulsive she can act, and she seems rather composed in general. 

5. He clearly didn't want things to escalate so quickly, but after Cat has left and arrested Tyrion,  there's really no point in telling Ned, because there's very little Ned can do about it. Besides, Robert already orders Ned to have Cat release Tyrion (upon arrival in WF). Varys probably didn't expect her to take the dangerous road to the Vale, to unpredictable Lysa. So he would've expected Cat to follow Ned's /Robert's orders to release Tyrion. Again making it unnecessary to warn Ned about LF's lie.

6. He did expect the Lannisters to be "at each other's throats", but he may not have foreseen (on time), that LF was going to take Ned to a brothel where he would be attacked by Jaime, and ALSO be severely wounded. In fact he would've expected Ned to leave KL, which he was about to do. LF taking him to the brothel was unexpected, and Ned's decision to go with him, was an impulsive one. At this point, there was also no chance to warn Ned not to trust LF. On top of that, even hot-headed Jaime was bright enough to order his men not to harm Ned. The only reason Ned was (physically) harmed was because he tried to defend his men/guards, and his horse fell on his leg.

7. After Ned was injured, there basically was little chance to reduce the damage. Varys may have expected Ned not to trust LF again. He likely also didn't foresee Ned telling Cersei what he found out about her children, and Cersei killing Robert at that point. He also may not have cared which war would ensue. If Ned told Robert, there'd be war between the Lannisters and the IT, now there was war between Starks and Lannisters, both having virtually the same effect on the country. At this point, the only difference in motive between LF and Varys, was that LF wanted war asap, where Varys was trying to postpone it. 

[Lost Melnibonean]

As to the conversation among Catelyn, Petyr, and Varys, we learn that neither Petyr nor Varys have any knowledge of the assassination attempt on Bran. Petyr does not even know about the dagger, but Varys has learned that Catelyn wants to know who owns it. When Varys fails to respond, Petyr claims the dagger was his until he lost it to Tyrion betting that Jaime would beat Loras during Prince Joffrey’s Tourney, meaning that Tyrion bet against his family. Although such a bet surely would have been noted by the Master of Whispers, I do not believe we ever get any real indication that Varys knew that Petyr was lying. 

[AdoraKitty]

2 hours ago, Seams said:

I'm sure it would be well-known that Tyrion is a loyal Jaime fan-boy and would not bet against him. Even though Tyrion hadn't been at King's Landing his whole life, he stands out and he's a son of the Hand of the King, so people would have been curious about him and noticed his habits and his likes and dislikes and the bond between him and Jaime. The highborn people at tournaments seem to shout out their willingness to bet money, so it would not have been a secret to anyone if Tyrion had made such a bet - if he needed or wanted to, Varys probably could have followed up later to find out whether anyone remembered a bet involving a Valyrian steel dagger. Even if Varys didn't have a little bird report on the specific details of betting during the tournament, he would have known that Lannisters stick together and would be highly unlikely to bet against one of their own.

In other words, I agree that Varys would have been highly suspicious about Littlefinger's claim of the knife's origin, even if he did not have reliable intel about that specific wager.

Your good catch on this detail may provide evidence that Varys does not want to undermine Littlefinger. Although they appear to be rivals, I have a suspicion that the two are secret allies and that their common goals will be a twist revealed late in the series.

Your side note also raises a good question. I wonder whether the letter to Catelyn was actually a suicide note. Baelish went to Braavos, right? It's possible that the Littlefinger who rose to power after his return to Westeros is not the Petyr that Catelyn knew and loved. I know it's a cliche and possibly too easy of an excuse in this forum, but I really wonder whether the Littlefinger we have seen is a Faceless Man. I saw zero hint of a wistful love in the interaction between Petyr and Catelyn, yet he tells Lysa that Catelyn is the only woman he has ever loved. Wouldn't we have seen a flicker of eye contact or a lingering touch of Catelyn's hand or some tiny hint in their interaction at the brothel, if Petyr still genuinely carried a torch for her?

If it was a suicide note and Catelyn had read it, she definitely would not have trusted and confided in the Littlefinger that presents himself to her at King's Landing, and she probably would not have taken Tyrion prisoner.

I hope we get a Littlefinger epilogue where  he reminisces about the letter and shortly after gets killed somehow. I super WANT to know what he wrote to her especially after he just "lost her" to Brandon. 

[Damon_Tor]

6 hours ago, AdoraKitty said:

When Catelyn heads to Kings Landing and is brought before Littlefinger, she shows Varys and Littlefinger the valerian dagger. Littlefinger explains how he lost it to Tyrion in a bet. Littlefinger claims Tyrion bet AGAINST Jaime. Surely Varys must have known that Tyrion didn't bet against his own brother. Surely Varys must have known Littlefingers entire story was a lie. Why did he go along with the lie? Why did he never tell Eddard during one of his cryptic warnings to Eddard, that everything he thought he knew about the ownership of the dagger was a lie?

I don't think it's reasonable to think that Varys knew the particulars of any given bet.

But even if he did know, Vary's plans are furthered by a fued between the Starks and Lannisters. Why wouldn't he go along with it?

Quote

One a side note: Will we ever find out what Littlefinger wrote to Catelyn shortly after his duel with Brandon? The letter that Catelyn burned and never bothered to read. Could it's contents have prevented her from confiding in Littlefinger and thus preventing her from kidnapping/arresting Tyrion at the inn?

I don't see how we would, unless for some reason Littlefinger himself exposits the contents, and even then we'd have no way to know if he was lying or not.

[Ygrain]

Varys is a successful master of whisperers not only because he has a network of little birds, but because he is good at reading people and their desires. It is highly unlikely that he wouldn't know that Tyrion never bets against Jaime, but letting LF play his games served his purpose, and that was to weaken the realm, so that Aegon could sweep in. What better means than to let the two Houses which would be staunch supporters of the Baratheon rule at each other's throats? It is perfectly in line with feeding Ned's suspicion about the Lannister involvement in Jon Arryn's death.