In addition to his labyrinthine business web with Volpi, Nogara’s other wartime safe haven had been gold. Bullion was the first hard asset Nogara had protected at the brink of war when he transferred much of the Vatican’s British and Italian gold reserves to America. The metal had a stable value (then about $35 an ounce), was not as volatile as national currencies, was universally accepted, and could be transformed easily to disguise its origin. By the middle of the war, the Allies had recognized that the Axis powers were not only looting the gold reserves of occupied countries, but that the metal was critical in financing their war effort.1 The vast amount of plundered bullion and the shady ways it was often disposed of meant that Nogara’s concentration on it proved as morally problematic for the church as the Vatican’s insurance stakes.
The gold reserves of most Nazi-occupied countries were relocated during the war, often with the crucial help of the Swiss-based Bank for International Settlements (BIS). BIS was almost as much a financial outlier as the IOR. Formed in 1930 through an intergovernmental arrangement between the Rothschilds and eight countries, BIS was a facilitator between Western central banks, an analogous predecessor to the IMF. It was the one organization on whose board British and German directors served together throughout the war.2 As a multinational consortium, BIS, like the Vatican Bank, had no accountability to any national government. Notwithstanding its mix of international delegates, and even though it boasted an American president, it was firmly under Nazi control from 1940 on.3
The German BIS representatives were Baron Kurt von Schröder, a leading banker and Gestapo officer; Hermann Schmitz, the chief of the industrial conglomerate I. G. Farben; Walter Funk, Reichsbank president; and Emil Puhl, an economist and vice president of the Reichsbank.4 Under their influence, BIS became a central clearinghouse for emptying gold reserves from countries such as Austria, Belgium, and Czechoslovakia.5
“Washing gold” was the euphemism for how BIS described bringing bullion covertly into Switzerland and converting it into untraceable cash, usually Swiss francs.6 About 80 percent of all Reichsbank gold sent abroad was laundered through Switzerland.7 In early 1942, Puhl—who oversaw BIS’s gold program—shared with Funk that the Gestapo had begun depositing gold from concentration camps into the Reichsbank.8 By that November, an internal Reichsbank report noted that it had received an “unusually great” amount of smelted dental gold.9 In 1943, the Reichsbank received the first packets of gold stamped “Auschwitz” (it is impossible to determine precisely how much gold the SS sent to the Reichsbank since the records of those shipments that were seized by the U.S. military later disappeared; the United States failed to make copies before returning the documents to the predecessor of the Bundesbank, where the files were destroyed, allegedly as part of routine maintenance).10,I
BIS was involved in far more than washing gold. Once it purchased $4 billion in gold from the Nazis, a fair amount of which was looted from the national reserves of Belgium and the Netherlands.12 And in 1942 it received advance intelligence about the November 8 Allied invasion of North Africa.13 That information proved profitable. BIS bet on a Nazi defeat and used Vichy-controlled banks to pledge billions in gold reserves to Algeria’s Central Bank. BIS used its gold as collateral to take an enormous stake against the Reichsmark. After the invasion and the Allied battlefield successes, BIS pocketed $175 million (the 2014 equivalent of $2.4 billion).14 The leaked intelligence about the Allied invasion came from the Vatican’s espionage unit, clerics working under the cover of a peace delegation.15
It is little wonder that the Vatican played an intelligence role with BIS.16 The glue between the two was Allen Dulles, a senior partner in the Wall Street law firm of Sullivan and Cromwell, who had moved to Switzerland during the war to run the OSS. Dulles employed a network of agents, including Hans Bernd Gisevius, a Nazi operative who worked at the Reichsbank.17,II An integral part of Dulles’s wartime financial operations involved the Vatican Bank. Clerics protected by diplomatic immunity and a bank that answered only to Pius and Nogara was tailor-made for Dulles. Allen’s brother, John Foster, who remained in the United States, was the American lawyer for BIS.
“Sullivan and Cromwell’s investors [clients] needed the Vatican bank to launder their profits under the watchful eyes of both the Nazis and their own governments,” according to John Loftus, a former Justice Department prosecutor in the Office of Special Investigations, “while the Vatican needed the Dulles brothers to protect its own investments in Hitler’s Germany.”19
Was this nebulous juncture of intelligence and business—where espionage was utilized as much for outsized profits as it was for strategic military or political advantages—the Vatican domain of Bernardino Nogara? Historians have mostly judged Nogara as an apolitical financial manager who did not choose sides during the war. However, a 1945 OSS intelligence report discovered by this author in the National Archives suggests for the first time that Nogara might have been more partisan than widely accepted. James Jesus Angleton, then chief of the Rome desk for the OSS’s elite X-2 Counter Espionage Branch, compiled the intel report, which is marked Secret on every page. It raises the startling possibility that Nogara was a wartime spy for the Germans.20
Angleton, the report’s author, would become one of America’s most storied spymasters. At the time he was responsible for eradicating foreign intelligence agents in Italy and recruiting the better ones for the Allies.21 The looming Cold War with the Soviet Union meant that any Italians or Germans who had valuable information, or themselves might prove useful, were a priority for Angleton and other OSS warriors. Germany had surrendered just weeks before Angleton wrote his report. Many Nazi officers, including top intelligence agents, were still underground. Angleton and X-2 agents unsparingly believed that Allied interests trumped justice for wartime crimes.
The possibility that Nogara was more than a political spectator is revealed in an attached one-page appendix to a summary of an interrogation of Reinhard Karl Wilhelm Reme, a German intelligence (Abwehr) officer who disguised his wartime spying under a cover job as a partner at the German insurer Jauch and Hübener.22 Angleton included a chart displaying the Abwehr hierarchy in Italy as of October 1944. By that time, the Allies had liberated most of the country. The Nazis, still entrenched in the north, were desperate to slow the war’s momentum by directing sabotage cells in Allied-occupied central Italy.23 The Abwehr used Vicenza as its headquarters and ran four divisions from other cities, including one from Slovenia. Beneath Reme’s Milan-based außenstelle (remote branch) was a cell under the control of someone named Nogara.24 Angleton did not include a first name.
Reme admitted to being an Abwehr recruiter. He tried downplaying his role, averring that he had been drafted into the army only in the spring of 1943 and after some basic training sent to Milan for German intelligence. Angleton was skeptical, noting that Reme had a law degree, spoke German, English, and Italian, and had traveled extensively before the war to Spain, Greece, and England.25 To Angleton, that meant it was “possible Reme was working for the Abwehr before the war.”26
After his first interrogation Angleton concluded that Reme was “head of the recruiting center in Milan for [the] Abwehr.”27 Reme had arrived in Milan pretending to be simply a supply officer for the German army, when in fact he ran the local intelligence effort from his Piazzale Cadorna office.28
Angleton realized Reme’s position meant he was familiar with the identity not only of German agents in the country but also the civilian informant network still in place. Through Abwehr surveillance on partisans in Italy, Reme might even be able to identify many of the Soviet agents operating there.
Reme’s 1943 arrival in Milan coincided with the height of a brutal internal power struggle between the Abwehr and the SD (Sicherheitsdienst), the SS’s intelligence service. Hitler had sided with the SS and began to dissolve the Abwehr in February 1944.29 By July, its operations and agents had been transferred almost entirely to the control of the SD’s Ämter VI (Group 6), SD-Ausland (intelligence outside of Germany) division.30 The only exceptions to this transfer of power were the Abwehr’s Italian operations.31 Those cells, such as Reme’s unit, retained their independence and operated covertly, since they did not want to risk any intercept of their communications to SD’s German headquarters.32 After the war, the chief of Ämter VI, SS-Brigadeführer Walther Schellenberg, bemoaned to his British captors that his own office had “sparse” contacts in the Vatican. But Schellenberg admitted that the Abwehr “had many men in the Vatican.”33
Reme gave his interrogators the names of fifty-eight agents he and his Italian-based spy unit had recruited during the war. Nogara is not among them.34 But he provided the name to Angleton on the supplementary Abwehr chart, meaning the Nogara on that chart was almost certainly recruited before 1943, and likely before the war.
Bernardino Nogara had two prewar opportunities to strike up a relationship with German spies. When he was with BCI before World War I, he lived in Constantinople. The Turkish capital swarmed with spies, informants, and double agents working for European powers and their spy agencies.35 Nogara had directed a loose-knit web of informers that helped Italian companies gain an upper hand in the race against Germany and the Austro-Hungarian Empire to capture some of the enormous business opportunities in the crumbling Ottoman Empire.36 Moreover, Schellenberg told Angleton that he knew the Abwehr had recruited a network of foreigners from Constantinople—including the butler to the British ambassador—during the years Nogara lived there. An unnamed Italian was a key “link” during World War II. But Schellenberg was adamant he did not know his name.37
Another opportunity for the Germans to have recruited Nogara was during the late 1920s, just before he began working at the Vatican. As the Italian representative running the division of the Inter-Allied Commission charged with rebuilding German industry, he spent considerable time in Germany over a five-year stretch beginning in 1924.
Schellenberg, as did Reme, gave up the names of his foreign agents. No one, especially Angleton, believed that someone as ambitious and calculating as Schellenberg would divulge all his prime connections. In defeat, Schellenberg and other Nazis knew that information was their only bargaining leverage. They needed ways to trade intelligence for leniency. Angleton and other OSS agents realized that operatives like Schellenberg and Reme were reliable only when it suited their interests.38
Could the Nogara listed as running a cell for German intelligence be one of Bernardino’s relatives? His siblings did not have intelligence value for the Abwehr. One was a museum superintendent at the Vatican. Two were provincial archbishops. None would have been as important a coup for the Germans as Bernardino. And none had such clear prewar opportunities for connecting to German intelligence. As for unrelated Nogaras, it is not a common surname in Italy. The author has not found any reference to an unrelated Italian with that name in U.S. and British wartime archives.39,III
Still, even if the Nogara listed on Reme’s chart was Bernardino, it does not mean he was helping the Nazis. That is because of the unusual nature of the Abwehr. Admiral Wilhelm Canaris, a devout Catholic, was its passionately pro-German but anti-Nazi wartime chief. Diehard Nazis like SS chief Heinrich Himmler challenged Canaris’s commitment to National Socialism. Canaris provided false data to Hitler to persuade the Führer not to invade Switzerland, and he did the same with Generalissimo Francisco Franco so the Spanish dictator would not allow the Nazis to use Spain for transit. To Hitler’s great rage, Canaris occasionally used Jews as agents and other times helped some escape from Germany. He appreciated the importance of recruiting agents at the Vatican, men capable of traveling with sacrosanct consular pouches, using the diplomatic passports of their own sovereign state. Canaris had appointed Munich lawyer Josef Müller to run Rome’s Abwehr office largely because Müller was good friends with Pius’s personal secretary, Father Robert Leiber.41 Vatican agents, in conjunction with a handful of German cardinals and bishops, could be useful to Canaris’s sub-rosa plans to undermine Hitler. It was Canaris’s support of the unsuccessful July 20, 1944, assassination attempt on Hitler that ended in the spy chief’s arrest, trial, and execution.
U.S. and British intelligence knew by the late stages of the war that the Abwehr included anti-Nazi agents. Some had even passed information to the Allies. Angleton had cultivated his own low-level OSS agents inside the Vatican and had kept abreast of the city-state’s political intrigue.42 And the Yale-trained Angleton likely had a more personal understanding for what was transpiring in Italy than most of his OSS colleagues. He had been partly raised in Milan, where his father owned the Italian franchise for National Cash Register.
In the world of realpolitik in which Angleton excelled, it was understandable that the layperson responsible for the church’s purse strings might watch out for the Vatican’s interests by being in touch with German intelligence. As a spymaster he would also have recognized the ramifications. What could a German spy at Nogara’s level do to sabotage the Allied war effort and at the same time find ways to help finance the Axis powers? Or what could he have done to sabotage the Nazi war effort by supplying the Germans false information?
Angleton must have wondered why Nogara was still in touch with the Germans as late as October 1944, when the Axis defeat was a certainty to all but fanatics. Unless, of course, Nogara was working with the Abwehr’s Milan cell as an intermediary between the Germans and neutral governments in Madrid and Lisbon. Spain and Portugal were still trying to broker a peace deal that did not require an unconditional Axis surrender. And Nogara had financial interests to protect for the Vatican there since his interlocking joint ventures ran through Madrid and Lisbon on the way to Buenos Aires.
Angleton’s response to Reme’s extraordinary information was to recommend that Reme be sent to the Combined Services Detailed Interrogation Centre (CSDIC) for “further interrogation.”43 CSDIC was a secret prison in Bad Nenndorf in Germany run by British military intelligence, MI5. Reme’s disclosure to Angleton that one of the most important financial men in Europe might have worked with the enemy would have kicked off a frenzied probe, or at least a flurry of paperwork documenting concerns about how any fallout might affect the Vatican. But this author has found no follow-up in the files of the OSS, Counter Intelligence Corps, or Military Intelligence.44 And although there are other references to Bernardino Nogara in other declassified U.S. and British government documents, aside from the Angleton/Reme document, none of those allude to Nogara possibly being a Nazi spy.
The absence of any paper trail is an indication that Angleton or another intelligence officer took the matter “off-shelf.” A counterintelligence savant like Angleton would have had no incentive in exposing Nogara. Whether or not Bernardino was protecting the Vatican’s commercial and political interests—and those of clients or joint venture partners—by collaborating with the Nazis, any public disclosure would end in disgrace. How much more effective would it be to use the information to flip Nogara into an American asset? Angleton, who later became the head of the CIA’s Vatican Desk, was the ideal person to make the deal.45
If Bernardino Nogara worked at all with Nazi intelligence, he likely had a wartime or postwar relationship with U.S. intelligence. By the account of his contemporaries, Nogara was a shrewd businessman who approached war as he did his investments: diversify and reduce the risk. During World War II that would have meant not banking on only one side to prevail, but instead developing relationships with both that facilitated the church’s ventures during the hostilities and bought it goodwill from the victors after the conflict. It is the only reasonable explanation why Angleton could have stumbled across the report pointing to Nogara and then buried the information. Short of revelations about an Allied connection in still unsealed government files, all that can be derived definitively from the Reme/Angleton memo is that the business of the Vatican during World War II ends with the question: was the church’s long-serving financial wizard, Bernardino Nogara, a Nazi spy?46
I. In 1997, the World Jewish Conference released a study that some five tons of central bank gold recovered by the Allies was from concentration camp victims and had never been redistributed to the victims or their families.11
II. In 1945, the Treasury Department charged that Gisevius—who worked for the Reich Security Main Office—had laundered German money to Switzerland, and that Dulles was instrumental in moving much of the Hungarian Treasury through Nazi banks to Switzerland. Dulles denied the charges and the Treasury probe stalled amidst the confusion of the war’s aftermath.18
III. While serving as the OSS chief of the Rome desk, Angleton forged several documents purporting to be secret Vatican telegrams. He planted them inside government files under the code name JVX. The “Vatican telegrams”—shifting responsibility away from the OSS for later helping Nazi fugitives—landed in the National Archives and journalists and historians sometimes relied on them before they were unmasked as fakes forty years later. Did Angleton insert Nogara onto Reme’s command chart to realize some unknown intelligence aim? It is highly unlikely. Although Angleton knew few boundaries when it came to what he thought were the best interests of the United States, he survived for decades in the CIA, serving under four presidents. Concocting information that could be easily disproved would have imperiled him. If Nogara was Angleton’s invention, the fabrication would be unmasked by only a single question to Reme from another American or British interrogator. Not even an intelligence school recruit would be so reckless.40