In the same month as the battle of Kursk, the Western Allies made the first invasion of Europe by amphibious landings in Sicily; Operation Husky cleared the island of German troops by late August, opening the way to the Italian mainland. Reichsleiter Martin Bormann recognized that while the war would continue, these military defeats sounded the death knell of the Third Reich. It was time to plan for the formerly unthinkable—how to save something from the eventual defeat of Nazi Germany. The first requirement was money.
SINCE HE HAD JOINED THE PARTY in 1926, Bormann had raised many millions of reichsmarks for the NSDAP and for the various funds that supported the lavish lifestyle of the Führer. It was a skill he never lost in all his many years of service to Adolf Hitler. His business acumen was legendary and he was quick to recognize any moneymaking opportunity. It was Bormann who organized some of the sales of “degenerate art,” of which one was an auction held on June 30, 1939, at the Grand Hotel National in the Swiss lakeside town of Lucerne. Some 126 paintings and sculptures were on offer, including works by Georges Braque, Paul Klee, Vincent van Gogh, Henri Matisse, and Pablo Picasso that had been stripped from museums in Berlin, Bremen, Cologne, Dresden, Essen, Frankfurt, and other collections. Pablo Picasso’s masterpiece from his Blue Period, The Absinthe Drinker, which had been looted from the Jewish Schoeps family, was auctioned for just 12,000 Swiss francs (equal to US$2,700 in 1939, equivalent to about $42,000 today; in June 2010, the Andrew Lloyd Webber Art Foundation sold it for $52.5 million). All the proceeds from this Swiss auction, about 500,000 Swiss francs, were converted into pounds sterling and deposited in the J. Henry Schröder & Co. bank in London for Bormann’s exclusive use; the German art museums did not receive a single pfennig.
With the outbreak of war, Bormann was determined that the Nazi Party should receive its fair share of any plunder from the occupied countries. Following the invasion of the Low Countries, the diamond district of Amsterdam fell into the hands of the Wehrmacht. Some 940,000 carats of cut and industrial diamonds, with a further 290,000 carats of diamonds from Belgium, were confiscated and processed through Johann Urbanek & Co. of Nuremberg. Such high-value, low-volume items were especially useful for Bormann’s plans to spread the party’s tentacles around the world. In particular, they allowed him to exert complete control over the NSDAP Auslands-Organisation (Foreign Organization) of party members living in countries outside the German Reich, such as the Iberian Peninsula and Latin America. The Foreign Organization also provided excellent cover for intelligence-gathering and the means to manipulate or bribe foreign politicians to support the Nazi cause.
To this end, Bormann acquired his own air and shipping lines to disperse his peddlers of influence and financial assets around the world. These included the previously mentioned Spanish shipping line Compañia Naviera Levantina and the Italian airline Linee Aeree Transcontinentali Italiane (LATI). The latter had run a prewar service to South America from Rome, via Seville in Spain to Villa Cisneros in the Spanish Sahara, then on to Sal in the Portuguese Cape Verde islands, and across the Atlantic to Natal or Recife in Brazil, with final legs to Rio de Janeiro and Buenos Aires. By these means, Bormann acquired a regular pipeline for people and freight to Iberia and South America without using Luftwaffe aircraft or compromising the national airline, Lufthansa. The aircraft of choice was the trimotor Savoia-Marchetti 75 GA (for grande autonomia or “long range”), with a payload of a little over one ton and a range of 4,350 miles. This made it an ideal carrier for such items as artworks, gemstones, or large consignments of cash for the German embassies and consulates in South America. On their return flights the aircraft carried high-value minerals and other resources.
Much of the money sent to German embassies around the world to underwrite Bormann’s conspiracies was, in fact, in the form of counterfeit British five-, ten-, twenty-, and fifty-pound notes that were less likely to be identified as fakes when circulated in far-flung places. The counterfeit notes were produced from December 1942 to February 1945 during Operation Andreas by 142 Jewish prisoners in Blocks 18 and 19 at the Sachsenhausen concentration camp near Berlin. The program was also known as Operation Bernhard after the man in charge of the scheme, SS Maj. Bernhard Krueger. Once the requisite type of paper was finally obtained, various denomination pound notes were forged, with a face value of £134,609,945, equivalent to $377 million in 1944 or $4.6 billion today, representing some 10 percent of all British banknotes in circulation. The original scheme was to drop bundles of counterfeit notes from aircraft over the British Isles in order to destabilize the British economy, but from 1943 Germany had insufficient aircraft available for the operation. Instead, the notes were laundered through Swiss banks or foreign companies, particularly in Holland, Italy, and Hungary.
The imperative for Bormann was now to transfer monies in every shape and form—counterfeit, stolen, or even legitimate government funds—to safe havens abroad. This was achieved as part of an operation code-named Aktion Adlerflug—Project Eagle Flight—which involved setting up innumerable foreign bank accounts and investing funds in foreign companies that were controlled by hidden German interests. For example, between 1943 and 1945 more than two hundred German companies set up subsidiaries in Argentina. Money and other assets, such as industrial patents, were transferred through shell companies in Switzerland, Spain, and Portugal to the Argentine branches of German banks such as the Banco Alemán Transatlántico. The funds were then channeled to the German companies operating in Argentina, such as the automobile manufacturer Mercedes Benz—the first Mercedes Benz factory to be built outside Germany. These companies were in turn charged by their German head office higher production costs for products made in Argentina; for instance, the true production cost of a Mercedes truck might be $5,000, but Mercedes Benz Argentina was required to pay Mercedes Benz Germany $6,000 for the components. The difference between the actual cost and the prices paid was then secreted in Argentine bank accounts to be drawn upon after the war, without any fear of scrutiny by the Argentine authorities, let alone the Allies. These same companies became a source of employment for fleeing Nazi war criminals after 1945. For example, Adolf Eichmann worked in the Mercedes Benz factory at González Catán in the suburbs of Buenos Aires under the name of Riccardo Klement from 1959 until agents from Mossad, the Israeli national intelligence agency, abducted him on May 11, 1960.
Bormann’s money-laundering process was repeated with companies in Portugal, Spain, Sweden, and Turkey as well. By 1945, he had amassed some $18 million in Swedish kroner and $12 million in Turkish lira, with major deposits in the Stockholms Enskilda Bank and in the Deutsche Bank and the Deutsche Orientbank, both in Istanbul.
Another major aspect of Project Eagle Flight was the acquisition of shares or equity in foreign companies, especially in North America. For this, Bormann turned to the past master of the game, IG Farben. Since the time of its formation in 1926, IG Farben had acquired numerous American companies as part of its worldwide cartel. By the time Germany declared war on the United States shortly after Pearl Harbor, IG Farben held a voting majority in 170 American companies and minority holdings in another 108. Bormann turned for advice to its president, Hermann Schmitz, and to the former Reich economics minister, Dr. Hjalmar Schacht. Together they were able to coordinate the transfer of Nazi funds through Swiss banks, via the Bank for International Settlements, or through third parties and companies. As a case in point, through their Stockholms Enskilda Bank (SEB), the Swedish brothers Jacob and Marcus Wallenberg purchased the American Bosch Corporation, the U.S. subsidiary of Robert Bosch GmbH of Stuttgart, on behalf of the Bormann “Organization” but with the Wallenbergs as nominal owners. For their pains, they were paid with 2,350 pounds of gold bullion deposited in a Swiss numbered account on behalf of SEB. This Stockholm bank also bought stocks and bonds for Bormann on the New York Stock Exchange and made substantial loans to the Norsk Hydro ASA plant in Rjukan, Norway, which was crucial in the manufacture of “heavy water” for the Nazi atomic weapons program. Ne
edless to say, IG Farben was the majority shareholder in Norsk Hydro ASA.
By these means, Bormann was able to create some 980 front companies, with 770 of these in neutral countries, including 98 in Argentina, 58 in Portugal, 112 in Spain, 233 in Sweden, 234 in Switzerland, and 35 in Turkey—no doubt there were others whose existence has never been revealed. Every single one was a conduit for the flight of capital from Germany, just waiting for Bormann to give the order when the time was right. In the best IG Farben tradition, ultimate title to the companies was a closely guarded secret maintained through a number of subterfuges, as described succinctly by the celebrated CBS Radio journalist Paul Manning, author of Martin Bormann: Nazi in Exile: “Bormann utilized every known device to disguise their ownership and their patterns of operations: use of nominees, option agreements, pool agreements, endorsements in blank, escrow deposits, pledges, collateral loans, rights of first refusal, management contracts, service contracts, patent agreements, cartels, and withholding procedures.” The most important of these instruments were bearer bonds. These are securities issued by banks, companies, or even by governments, often in times of crisis, in any given value. They are unregistered; no records are kept of the owners or of any transactions involved, so they are highly attractive to investors who wish to remain anonymous. Whoever physically held the paper on which the bond was issued owned the investment security, so a bearer bond issued in Zurich could be cashed in Buenos Aires or elsewhere with impunity. As Hitler declared to Bormann: “Bury your treasure deep, as you will need it to begin the Fourth Reich.”
INSEPARABLE FROM SECURING THE FINANCIAL ASSETS of the Third Reich was the need to preserve the Nazi leadership, in particular Adolf Hitler and his immediate entourage. Any refuge for Hitler had to be chosen with care. When the British were faced with a similar situation in the summer of 1940, it had been a relatively simple matter; if the threat of invasion from across the Channel had become a reality and the plans for containing the German beachhead had failed, then the powerful Royal Navy would have transported the royal family and the government to Canada, to continue the war from the dominions and colonies. Germany, on the other hand, no longer had an overseas empire, since the Treaty of Versailles had stripped her of her few colonies in Africa and the Pacific in 1919.
However, there was still a kind of de facto German overseas colony in Latin America, where many thousands of Germans had emigrated in previous generations. These communities were cohesive and commercially active, and Bormann had access to them through the NSDAP Auslands-Organisation. A file was brought to his attention that had been written during World War I by the young naval intelligence officer Wilhelm Canaris, describing his escape in 1915 from internment in Chile via Patagonia—the vast, sparsely inhabited region of southern Chile and Argentina that had a predominantly German settler population.
Lt. Canaris had been sheltered by the German community around a small town in the foothills of the Argentine Andes. Its isolation and the strongly patriotic German influence among the local population were significant factors. However, if this place was to be selected for such an all-important and top-secret project, then the attitude of the Argentine national government would be equally important. Fortunately, a military coup d’état in Buenos Aires in June 1943 brought to power a regime sympathetic to Nazi Germany—indeed, a highly placed member of the new government, Col. Juan Domingo Perón, had already been on the German intelligence payroll for two years. With massive funds already deposited in Argentina, a cooperative regime in power, and a significant part of the nation’s industry and commerce owned by people of German extraction, the pieces were now in place for the execution of a concerted plan.
Bormann’s scheme was code-named Aktion Feuerland (Project Land of Fire) in reference to Patagonia’s southern tip, the archipelago Tierra del Fuego (Spanish for “Land of Fire”). The plan’s object was to create a secret, self-contained refuge for Hitler in the heart of a sympathetic German community, at a chosen site near the town of San Carlos de Bariloche in the far west of Argentina’s Río Negro province. Here the Führer could be provided with complete protection from outsiders since all routes in by road, rail, or air were in the hands of Germans. In mid-1943, Bormann’s chief agent in Buenos Aires, a banking millionaire named Ludwig Freude, put the work in hand.
PART II
THE HUNTERS
In April 1945, the U.S. 90th Infantry Division discovered a trove of Nazi loot and art in a salt mine in Merkers, Germany.
Chapter 7
RED INDIANS AND PRIVATE ARMIES
AMONG THE BRITISH FORCES that landed in French North Africa during Operation Torch in November 1942 was a new unit on its first major operation—30 Commando Unit (CU). Primarily, 30 CU was tasked with gathering military intelligence documents and items of enemy weapons technology before they could be hidden or destroyed. The unit had been conceived in the British Admiralty, and the Royal Navy was particularly anxious to gather any intelligence concerning the sophisticated Enigma encryption machines that were used to communicate with Adm. Dönitz’s U-boats at sea. The Naval Intelligence Commando Unit was the brainchild of Lt. Cdr. Ian Fleming of the Royal Naval Volunteer Reserve (RNVR)—the future creator of the quintessential fictional spy James Bond. Fleming was recruited in 1939 by Vice Adm. John Godfrey, director of naval intelligence, as his personal assistant. On March 24, 1942, Fleming’s proposal for the new unit landed on the admiral’s desk.
Fleming had been influenced by the exploits of the Abwehr-kommando—German clandestine special forces, often disguised in Allied or neutral uniforms. The Abwehrkommando had performed most effectively against the Allies during the invasions of Holland, Yugoslavia, Greece, Crete, and the USSR. Formed on October 15, 1939, as part of Adm. Canaris’s Abwehr, the obscurely titled Lehr und Bau Kompanie zbV 800 (Special Duty Training and Construction Company No. 800) was commanded by Capt. Theodor von Hippel and based at the Generalfeldzeugmeister-Kaserne barracks in Brandenburg, Prussia. Thereafter the unit adopted the name of that town as its informal title—the Brandenburgers. On May 20, during the initial German paratroop drop at Maleme airfield during Germany’s airborne invasion of the island of Crete, a special forces unit led the assault on the British headquarters, with the specific task of capturing military intelligence documents and codebooks—fortunately, it found nothing related to Ultra intelligence (see Chapter 1). It was reports of this mission that prompted Ian Fleming to write his missive to Godfrey proposing a similar raiding force.
At the outset, Fleming’s “Red Indians,” as he liked to call them, were given the cover name of the Special Engineering Unit of the Special Service Brigade, which was under the operational control of the Chief of Combined Operations, Adm. Lord Louis Mountbatten. Accordingly, after completing training, its personnel were entitled to wear the coveted green beret, as well as drawing a daily special-service allowance to enhance their pay. Subsequently, the group’s title was changed to 30 Commando Unit; the “30” related to the room number at the Admiralty in Whitehall, London, occupied by Fleming’s legendary secretary Miss Margaret Priestley, a history don from Leeds University and the inspiration for Miss Moneypenny in his James Bond novels.
The unit comprised three elements: No. 33 Royal Marine Troop, which provided the fighting element during operations; No. 34 Army Troop; and No. 36 Royal Navy Troop. Originally there was to have been a No. 35 RAF Troop, but the Royal Air Force never seconded the necessary personnel. Like all such special forces units, 30 CU attracted some extraordinary characters. Its first commanding officer was Cdr. Robert “Red” Ryder, Royal Navy, who had just been awarded the Victoria Cross, Britain’s supreme decoration for gallantry in battle, for his exceptional valor and leadership in the destruction of the vital lock gates of the Normandie dock at St. Nazaire during Operation Chariot earlier in the year. This brilliant but costly raid denied the Kriegsmarine any docking facilities on the Atlantic coast for its capital ships such as the Tirpitz.
Despite coming under Combined Op
erations, 30 CU reported directly to Fleming in his capacity as personal assistant to the director of naval intelligence. The unit was first deployed during Operation Jubilee, the ill-fated Dieppe raid on August 12, 1942, but their gunboat HMS Locust was struck several times by gunfire on entering the harbor and was forced out to sea before any troops could be landed. One of the primary reasons for the failure of Operation Jubilee was the fact that German signals intelligence had broken Royal Navy codes and had full knowledge of the planned raid some five days before it was launched.
FOR OPERATION TORCH, 30 Commando Unit landed from HMS Malcolm on November 8, 1942, at Sidi Ferruch in the Bay of Algiers, together with an assault force of American troops from the U.S. 34th Infantry Division. Advancing with the leading infantry, No. 33 Troop, commanded by Lt. Dunstan Curtis, RNVR, captured several buildings in their quest for intelligence. Because of the peculiar terms of the armistice that was soon concluded with the Vichy French authorities, Curtis and his men needed all their ingenuity to uncover material from places guarded by the French police. In addition, 30 CU captured an Abwehr officer named Maj. Wurmann, who, already disillusioned by the war, provided a mass of information on the structure and organization of the Abwehr, as well as character assessments of its key personnel. This intelligence was rapidly disseminated throughout MI6 and the OSS. In all, some two tons of documentation were collected and shipped back to London. Most importantly, another Enigma encryption machine was captured, which proved immensely helpful to Station X at Bletchley Park in the long task of cracking the Shark U-boat cipher.
Grey Wolf: The Escape of Adolf Hitler Page 9