Only a mind as supple as that of Dusko Popov could have come up with “Plan Midas,” a way to manufacture gold. His subagents, Gaertner and Metcalfe, needed payment but, as Popov explained to von Karsthoff, if he entered Britain carrying large quantities of cash, this would certainly raise suspicions. Why not find a middleman in London who could plausibly pretend to be passing money to German agents in return for reimbursement by the Germans in another country? The Germans would be reassured that their agents were being properly paid at last, and MI5 could simply pocket the cash. The enemy, believing it was financing its own agents, would end up paying for the double agents.
The chosen middleman was Eric Glass, a successful and wealthy Jewish theatrical agent. Glass would pretend to be fearful of German invasion, determined to save his skin and his fortune, and prepared to transfer funds to the United States by unscrupulous means. The Germans would be told that Glass was willing to hand over money to Wulf Schmidt, who could then finance other agents in Britain by leaving cash in prearranged places. The Germans would then reimburse Glass by transferring money to his New York bank account, which MI5 could then appropriate.
Eric Glass was a flamboyant figure, half Austrian and half British: “His delight in approaching a deal, and his inventive sagacity in clinching it, were a byword in theatre and film circles.” The part offered by MI5 appealed to him, and a deal was struck. Plan Midas was put into action. Glass, however, had developed doubts. The more he thought about what he was involved in, the more terrified he became. What if the Germans discovered the plot? Would they try to kill him? In the best theatrical tradition, Glass grandly declared he could no longer play his part and wanted to leave the stage.
In fact, he was no longer needed, as MI5 had direct access to the New York account set up in his name. The show could go on without him. But Glass knew enough about Plan Midas to jeopardize the project. Superintendent George Leanore of Special Branch, the police unit working with MI5, was deployed to put the frighteners on the theatrical agent, a job he seems to have carried out with ugly anti-Semitic relish. “He was in a complete flat spin and scared nearly out of his life,” Leanore reported, having told Glass “to keep his mouth shut” or face the consequences. “I said enough to let him feel that his life depended on that. He can be trusted not to tell anyone. This trust is based on the only thing that in this case really counts—sheer fright. Sorry to appear somewhat ruthless, but we are at war and I see no reason why the fears of a little Jew should in any way deflect us from our path.”
Midas would prove to be one of the most profitable and least known operations of the war. On the German side, the plan was approved by the Abwehr’s senior financial officer, who authorized an initial transfer of twenty thousand pounds. Money that the Abwehr believed was being used to finance espionage operations in the UK poured into a New York bank account in the name of Eric Glass, and from there directly into MI5’s coffers. Popov took a 10 percent cut. Von Karsthoff also took a commission. The Germans were overjoyed. “Heartiest congratulations,” read the message sent to Wulf Schmidt when he reported the first cash handover by Glass. “On no account spend all the money at once on drink, for that you can wait until we come. We consider ourselves invited.” The Double Cross system was now not only self-financing but profitable, to Masterman’s delight: “The actual cash supplied by the Germans to maintain their and our system between 1940 and 1945 was something in the region of £85,000”—the equivalent of more than £4.5 million today.
7. Popov Goes Shopping
On a hot afternoon in August 1941, Dusko Popov boarded a plane at Portela Airport in Lisbon, bound for the United States. He was carrying seventy thousand dollars in cash and a telegram on which were eleven microdots, barely visible to the naked eye, the latest in German espionage technology. Enlarged under a powerful microscope, these tiny specks would reveal themselves to be photographs of a new set of questionnaires drawn up by von Karsthoff. Recruited to spy on the British, Popov had spied on the Germans, and now, in yet another twist, he was being sent by the Germans to spy on the Americans, with British approval.
Popov’s mission for MI5 was to create an American counterpart to Double Cross by building up a network of fake double agents. MI5 had already sent the FBI a glowing character reference: “Popov is a clever, attractive and courageous young man of whose sincerity and loyalty we are satisfied. He has an excellent brain, but dislikes work. He is fond of women, and yachting is his principal pastime. He has personality and charm and would be at home in society anywhere. He has refused payment from us of any kind, as he has received adequate payment from the German secret service and we are hoping that this happy state of affairs will continue.” Tar Robertson had been reluctant to see Popov go west. “For the moment we can spare you,” he said, but “we shall probably ask you to come back in the not-too-distant future.” Tar knew the opportunity to replicate the Double Cross system stateside was too good to pass up. Popov’s American mission should have been a triumph. It was an unmitigated disaster.
The problem was partly cultural. The FBI, under the dictatorial and dynamic leadership of J. Edgar Hoover, took a very different approach to counterespionage. The foreign spy, in Hoover’s mind, was just another species of criminal, to be caught, tried, and then executed with maximum publicity. The bureau had achieved a breakthrough success in 1941 with the capture of no fewer than thirty-three German spies, using one of their number as bait, in what Hoover proclaimed to be the “greatest spy round-up in US history.” With time, the FBI would come to appreciate the value of double agents, but the immediate effect of that success was to convince Hoover that the only use for a captured spy was to capture more spies. As usual, MI5 reached for a cricket analogy: “His first innings was too easy and he imagined apparently that the Huns would not learn the lesson.” The FBI was not equipped, psychologically or practically, to run double agents. “It is a great pity,” wrote Masterman. Dusko Popov was exactly the sort of person Hoover loathed: dissolute, extravagant, sexually voracious, and foreign. As Ewen Montagu observed: “Hoover obviously only regarded Tricycle as potential fly-paper,” useful to trap more pests but rather disgusting to handle. Relations between Popov and his new FBI handlers started badly and grew steadily worse.
The questionnaires in the microdots Popov had brought to the United States furnished an important insight into German thinking: Popov was instructed to set up a network to gather information on atomic energy, military preparations, convoys, industrial production, politics, and morale. In hindsight, the most crucial part of Popov’s questionnaire asked for intelligence on Pearl Harbor, the Hawaiian naval base: its anchorages, submarine port, floating docks, and mine defenses. Popov later claimed that he (and, for that matter, Johnny Jebsen) had realized from the start that this questionnaire pointed to a looming Japanese attack on Pearl Harbor. This is unlikely. There is nothing in Popov’s file to indicate that he understood, let alone warned anyone about, the significance of the questions. Four months after Popov’s arrival, the Japanese attacked, catapulting America into war. Had the Allies missed a vital tip-off that might have changed history?
Certainly some in MI5 believed so and blamed the FBI for failing to spot the clues. “The mistake we made was not to take the Pearl Harbor information and send it separately to Roosevelt,” Tar Robertson said many years later. “No one ever dreamed Hoover would be such a bloody fool.” Masterman was similarly critical: “The questionnaire indicated very clearly that in the event of the United States being at war, Pearl Harbor would be the first point to be attacked, and that plans for this attack had reached an advanced stage by August 1941.” Actually, the questionnaire showed no such thing: it did not indicate that an air assault was planned, and still less that a Japanese attack was imminent. It merely demonstrated that the Germans were acutely interested in Pearl Harbor, which, given that the U.S. Pacific Fleet was based there, was hardly surprising. The simple truth is that no one—neither Popov, nor Jebsen, nor MI5, nor the FBI—saw the ques
tionnaire as a harbinger of the attack on Pearl Harbor until after it happened.
Popov expected to be welcomed by the FBI, just as MI5 had embraced him, but in place of Tar’s clubby congeniality he found only deep suspicion. From the moment he checked into the Waldorf Astoria, Popov was put under surveillance, which the FBI’s “G-men” made little effort to disguise. Under FBI control, he began sending secret letters back to von Karsthoff in Lisbon, but the U.S. military authorities declined to provide any genuine information to put in these. He was told he could not visit Hawaii to investigate the defenses there. Popov had been instructed to establish a radio link with Lisbon and Rio de Janeiro (home to an active Abwehr spy cell), but when the FBI did finally establish a radio transmitter, based on the north shore of Long Island, Popov was not permitted to know what information was being sent in his name. The FBI did not go in for jocular code names: Popov was “Confidential Informant ND 63,” an austere title that aptly reflects the bureau’s chilly attitude.
Held at arm’s length by the FBI and prevented from conducting any active espionage, Popov went on a spending binge of epic proportions. Hoover was already worried that the spy’s playboy habits could “embarrass the bureau,” and the scale of his expenses seemed calculated to do just that. Within a short time he had acquired an apartment on Park Avenue, a summer house in fashionable Locust Valley on Long Island, a red Buick convertible, and another girlfriend, the French film star Simone Simon, whom he had met before the war. When challenged over his wild expenditure, Popov blandly insisted that he needed to maintain his cover as a wealthy roué. Among the accoutrements he considered necessary for this purpose were a butler called Brooks, a half-deaf Chinese manservant called Chen-Yen, and a team of gardeners; he had his apartment refurbished by an interior designer and spent twelve thousand dollars on furniture, antiques, and several hundred gramophone records; he drank and danced at the Stork Club, skied in Sun Valley, Idaho, and motored south for a sunny vacation in Florida. He also began an affair with an expensive Englishwoman, soon to be divorced, named Terry Richardson and set off a fresh spasm of disapproval within the FBI when he took her on holiday, since transporting a woman across state lines for “immoral purposes” was illegal under the ludicrous Mann Act. The FBI suspected Mrs. Richardson might be a German spy but finally concluded she was merely a “gold-digger.”
Popov’s gold supplies, however, were dwindling. He had kept half the money brought from Lisbon but swiftly spent it. The Abwehr handed over another ten thousand dollars, and he spent that too. When the Germans failed to send more money, he demanded a loan from the FBI in order to pay his tailor, shirtmaker, florist, and staff. Popov treated the FBI as his private bank, and although the bureau, with extreme reluctance, began to subsidize his high living, relations deteriorated still further. Popov’s Plan Midas was bringing in a steady stream of cash, but even MI5 expressed astonishment at Popov’s spending. “His financial behaviour in the US cannot be justified,” wrote John Marriott, noting that Popov was burning through more than five thousand dollars a month. “I cannot distinguish his handling of this money from embezzlement.” The man with the tricky job of reining in Popov’s profligacy was Colonel Walter “Freckles” Wren of MI6. “Tricycle should have a good talking-to,” he was told, “so that he should adjust his expenditure to a more reasonable basis.” It was a vain hope.
Popov was living a Gatsbyesque life, but he was far from happy. Ewen Montagu, on a visit to the United States to solidify intelligence relations between the Allies, “found him depressed and worried, with all the gaiety which exudes from him completely gone.” Popov’s family was in Yugoslavia, under Nazi rule, and by handling him so ineptly and undermining his credibility with the Germans, the FBI was placing them in extreme danger. “Hoover’s management of Tricycle could not have been more calculated to blow him if Hoover had sat down to devise and plan a method of doing so,” said Montagu, who tried to lift Popov’s spirits by telling him “that there were people who still believed in him, that we were ready to go to real trouble to keep him ‘alive’ as a double agent [and] continue the work against the Nazis for which he had risked his life.”
Popov’s fear that the Germans would lose faith in him was fully justified. In March 1942, Bletchley Park deciphered an Abwehr message revealing just how far Popov had fallen in German estimation. “Berlin suspected Tricycle to be working for both sides and recommended extreme caution when dealing with him.” Popov was not told of the Germans’ suspicions. Intriguingly, the intercepts also showed that “a larger sum in dollars ought to have been paid to him” in the United States, but his handlers in Lisbon had not passed it on: von Karsthoff and Johnny Jebsen, it seemed, were skimming off funds intended for Popov. His spymaster and friends were using him to rip off their own bosses.
By the summer of 1942, Popov and the FBI had had enough of each other. “I cannot continue under this strain,” Popov wrote. The bureau had even begun interfering in his love life—the ultimate offense—by intercepting his telegrams to Simone Simon. “Tricycle suspects the evil hand of the FBI in everything,” MI5 noted. He wanted out, and the FBI wanted him out. By July, he had racked up a debt to the FBI of $17,500, and the bureau declared it was no longer prepared “to maintain him in his present state of living.” The Germans also failed to send any more money, despite Popov’s urgent appeals—yet another indication of their waning confidence. An internal FBI report stated: “Popov has been totally unproductive so far as developing any German espionage or other subversive activities in the United States is concerned, and has been a continuous source of annoyance in connection with his lavish expenditures.… It is therefore recommended that he be turned back to the British for use by them in London.”
Tar Robertson was only too happy to bring Tricycle back into the fold, but reintegrating him into the Double Cross system would be tricky. The Germans were mistrustful, and Popov would face an uphill task in regaining their trust. If he failed to do so, then his subagents, and all the other connected double agents being paid through Plan Midas, would fall under suspicion: “I need not repeat the importance to us of preserving the Germans’ faith in Tricycle because of his linkup with other B1A agents,” wrote Tar. A choice was put to Popov: “He could end his double-agent work with our gratitude, or he could come back via Lisbon and try to explain away his failure in America and rehabilitate himself with his Abwehr masters.” He chose to go back to Lisbon.
There was still the matter of Popov’s debts. MI5 calculated he had managed to spend $86,000 in just nine months, including $26,000 on “entertaining, social life, etc.” Ian David Wilson, the thirty-eight-year-old London solicitor who had taken over from Billy Luke as Popov’s case officer, was sent to New York to try to extricate him from the mess and prepare Popov for what was likely to be his toughest test so far. Wilson was an intriguing figure. With prominent ears, an awkward manner, and a “razor-keen mind,” he was fiercely conventional and set in his ways: he worked in the same law firm all his life, never moved house, and avoided all forms of small talk. “Quiet and introverted, he contributed very little to conversations.” Yet he had a truly remarkable capacity for concentration and absorbing detail. He completed the Times crossword, every morning, in a few minutes, never missing a clue. Happiest immersed in minutiae, he memorized every aspect of the case: he lived through Popov.
Wilson needed to find out what information Popov was supposed to have sent to the Germans and explain where he had gotten it; he would also need an explanation for his lack of productivity in the United States and some juicy new intelligence to convince von Karsthoff that he was still to be trusted. All of this required American cooperation, but the FBI, in Wilson’s words, “failed to produce any worthwhile information for Tricycle to take with him.” So Wilson and Popov simply invented a slew of American informants to explain “how he had come into possession of certain information in the USA.” These fake informants were real people, including a Russian journalist named Igor Cassini as well as Sol Bloom
, “a very pro-British Congressman and chairman of the House Foreign Affairs Committee,” who had never exchanged a word with Popov. Hoover was outraged and denounced the subterfuge as “extremely objectionable.”
Wilson compiled a caustic report on the American handling of the case: “The FBI have lost all interest in Tricycle. The FBI were either through incompetence, lack of power, lack of interest or lack of goodwill, of no assistance, and let us down badly.” Popov’s debts to the bureau should be paid off, he recommended, “to prevent any further deterioration in relations … in spite of the fact that the FBI have handled the case in such a way that they do not deserve to be repaid.” Tar Robertson read Ian Wilson’s tirade with relish: “It is a very outspoken document, but I do not see any object in mincing matters with such an organisation as the FBI.”
Now that Popov was back on the Double Cross team, his old ebullience returned: after weeks of coaching by Wilson and Wren, he felt sure he could tell von Karsthoff a convincing tale. But Wilson was anxious. To repurchase German confidence, Popov would have to describe information he had never obtained from people he had never met. “Tricycle himself showed great confidence in his ability to survive his meetings in Lisbon. His story is thin and cannot expect to survive searching interrogation, but he is satisfied that his personal relations with Johnny Jebsen and Von Karsthoff will pull him through.”
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