Walter Schellenberg had few redeeming personal attributes and could easily be characterized as just another career Nazi. He owed his lofty position as head of German intelligence to the patronage of Heinrich Himmler, and he remained personally loyal to the Reichsführer until the end. Schellenberg was not a thinker. He was an enforcer, career gossip, and manipulator, and his moves were guided by self-preservation and opportunism that trumped any ideological loyalty to the Nazi Party. He backed winners, and in Nazi Germany they did not come much bigger than Himmler. Realism is not a word that can be attached to many of his fellow Nazis, but it was a characteristic ingrained in Schellenberg’s personality. While fellow Nazis puffed out their chests and talked of victory in the East or likely failure of the Allied landings in Italy, he was busy preparing for a German defeat. At heart, he was a bureaucrat, comfortable with the details. He was happiest when involved in complex intelligence operations that required precise moves and deep knowledge of his opponents, both German and Allied. The shadows were his natural home. Far from the politics of the High Command and whims of Hitler, he preferred to stay in the background pulling the strings.
He was deeply impressed by and envious of the Allied intelligence services. The British agents he respected had been drawn from the top tiers of society, whereas many of his German colleagues came from the world of gangsters and other criminal gangs. The sport of gentlemen, he was fond of saying when asked about British spying. He found the British cold, the Americans brash and easy to con, and the Italians overemotional. Psychology interested him, and his own was far from balanced. He had made a half-hearted attempt to kill himself when one of his missions during the war had gone wrong. This was all erased from his records by his boss and did not impact his ascent to the top of German intelligence.
It was, however, Schellenberg’s amazing memory for names and operational detail that made him stand out. If he did not remember something, it was because he chose not to. He became a human reference library of the work of German intelligence agencies in WWII, their agents, and enemies. He watched his rivals self-destruct, and those who did not he undermined with careful calculation and Himmler’s support. Preparing for the end of the war appeared a natural extension of the job, so he plotted to save himself from what he foresaw would be the hangman’s noose. Germany losing the war would present great difficulties but also offer opportunities to those who had prepared for the inevitable. The postwar era, he thought, could bring benefits to him personally.
However, things did not quite work out as he anticipated. The last one hundred days of World War II were characterized by intensive fighting on the Western and Eastern Fronts as German resistance crumbled after the failure of the Ardennes Offensive (December 16, 1944, to January 25, 1945). While the conflict continued, many Germans firmed up their exit plans to evade Allied justice when the inevitable defeat of Germany finally came. It was a race against time for these Nazis, with the Allies closing in on their exit networks. The German collapse came much faster than Schellenberg’s preparations had allowed for, and the peacemaker role he had imagined for himself was overtaken by events on the battlefield and the death of Himmler. Schellenberg, as a result, found himself in something of a jam. Like many senior Nazis, he wished to avoid being captured and handed over to Soviet forces. His two choices to avoid this fate were to utilize one of the ratlines operating out of Italy, Spain, or Portugal to South America, or to take his chances by staying in northern Europe.
No fan of South America, where he had undertaken several intelligence missions during the war, he thought that the best option was to remain in Europe. He believed that his relationship with Swedish officials would help him cut a deal with the British or the Americans. To this end, he was reconciled to singing for his supper by providing the Allies with a detailed account of his work in German intelligence. In his view, this testimony would serve two purposes: spare him from the death penalty and settle some scores with his rivals.
Deep down, Schellenberg believed he had done nothing wrong in the war. He had been aware of the internal decision-making processes that led to the Holocaust and of the practical efforts to exterminate Europe’s Jewish population. His involvement, however, was limited to making intelligence assessments about the consequences of the mass killing and listening to accounts about it from fellow senior Nazi colleagues. He understood that several of his peers were doomed if captured by the Allies. Whereas the Americans and the British would go through the nicety of ensuring the due legal process was followed, the Soviets would implement a swifter form of justice. Regardless of the process, the result, he believed, would be the same: death.
Betrayal seemed the better option. Snitching on old colleagues—many of whom he presumed would be in Allied custody and trying to do the same to him—would almost be a pleasure. Schellenberg was smart enough to know that the Allies were desperate for information that would lead to new investigations or confirm existing avenues of inquiry. By being both accurate and detailed about the activities of German intelligence during the war, Schellenberg hoped to buy his way out of jail. There was no topic that he would refuse to discuss.
Once Schellenberg indicated via the Swedes his willingness to share what he knew, he found himself quickly put on a plane out of Sweden. On the morning of June 17, 1945, he was flown to Frankfurt, where he was handed over to the Allied authorities, and on July 7, he was put on an aircraft bound for London. As it flew over London, he stared out of the window. When the plane descended, he could see people going about their daily business. London looked like a city that had begun to bounce back from the war. How different it looked from Germany, from where he had set out. “I cannot understand, no destruction at all,” he told his guards. He was very much a man in demand on his arrival: the Allies had argued over who would have first chance at questioning him. As often happened with senior Nazis in the aftermath of the war, a compromise was reached between the British and the Americans. Schellenberg was to be interrogated by British officials, who were responsible for questioning and breaking German intelligence agents operating in Europe, mainly in the neutral countries of Portugal, Spain, Sweden, and Turkey. They would put to Schellenberg a jointly prepared list of questions. It was a race against time— time to interrogate (or break) Schellenberg probably limited by the likely requirement for him to attend the Nuremberg trials as a defendant and a potential witness.
In London, Schellenberg might have allowed himself a nostalgic look back at the handbook he had authored for the German troops in planning for the invasion of Britain in 1940. At that point, he had favored a softly, softly approach, believing that the strong pro-German sentiments among the British aristocracy would trump any anti-German sentiments held by the rabble-rousing Winston Churchill and his small group of victory-at-all-costs mavericks. It was then that Schellenberg found himself at the center of one of the most curious German intelligence operations in preparation for the occupation of Britain, and despite its failure, it made Schellenberg a very sensitive prisoner to the British.
Schellenberg had been tasked with preparing a sympathetic alternative to the royal family—finding a pro-Nazi King of England. Over the boiling hot summer month of July 1940, the Germans hatched a plan to persuade Edward, Duke of Windsor, to return to the throne as a German-appointed king following a successful invasion of England. The Germans believed the duke to be partial to this move because of his apparent Nazi sympathies, which he regularly blurted out when intoxicated. The duke’s distaste for Churchill’s policy toward Nazi Germany was also well-known. Churchill, a warmonger and a man who would demand the total and unconditional surrender of Germany, held views that were certainly far from the duke’s own. The final German calculation was that Edward had been left deeply wounded by his abdication and wanted to get back at the royal family. This interpretation was not as far-fetched as it might first appear. His abdication and subsequent exile had created a schism between him and key members of the royal family. The duke barely spoke to any of them, and the alienation was mutual. Both sides went out of their way to avoid one another, such as when Edward’s arrival in Lisbon in July 1940 had to be delayed because Prince George, the Duke of Kent, was on an official visit to Portugal. When Edward was asked if he wanted to meet his brother, the Duke of Kent, who had been Edward’s closest sibling in the late 1920s and early 1930s, he simply said no.
To carry out the mission that was labeled Operation Willi, Schellenberg traveled to Lisbon on the orders of the foreign minister, Joachim von Ribbentrop, who in 1940 had highly antagonistic relations with Schellenberg’s boss, Reinhard Heydrich. It was a difficult balancing act for Schellenberg to manage. He did not want to secure Ribbentrop a major victory over Heydrich but wanted to be seen as having tried to pursue every avenue to persuade or coerce the duke to comply with German wishes. Soon after his arrival in Portugal, however, Schellenberg realized that the prospects of success for the operation were virtually nil.
Spending his days wandering around Lisbon, Schellenberg gave a great deal of thought to how he was going to break the news of the operation’s impossibility to Ribbentrop. He shared his concerns with the German ambassador Oswald von Hoyningen-Huene, who concurred and hoped that Ribbentrop would see sense before attempting any clumsy move that could undo the ambassador’s long-term work in fostering trade and political ties between Berlin and Lisbon. While giving the appearance of working on Ribbentrop’s project, Schellenberg carefully cultivated ties with local Portuguese and Brazilians that helped cement the presence of German intelligence in the city.
Many of his evenings were spent along the Lisbon coastline near the towns of Estoril and
, towns favored by the Portuguese elite. It was in Cascais that the Duke and Duchess of Windsor were staying, at the weekend house of Ricardo Espírito Santo, the head of Banco Espírito Santo. The banker, a leading socialite, liked to give extravagant parties that were attended by both Allied and Axis diplomats and spies. Personally close to the Portuguese leader António de Oliveira Salazar, Espírito Santo operated as his eyes and ears in local society. Much of the gossip that was fed to Hoyningen-Huene and then to Ribbentrop came either directly from or through Espírito Santo. Like many leading Portuguese businessmen, Espírito Santo viewed the war as a golden opportunity to make money for his family’s bank. The lucrative trade between Lisbon and Berlin provided great potential for Espírito Santo and others to achieve their financial aims.
As a result, even as early as the summer of 1940, Lisbon was booming, a hive of activity, with the British and Germans competing to gain greater influence with the Portuguese police. Schellenberg would have seen the thousands of refugees wandering the streets, many from France. Among the refugees in 1940 was the famous art dealer Paul Rosenberg and his extended family, who were waiting for passage to New York on an ocean liner. Rosenberg was close to Pablo Picasso, whose works he collected and sold. Rosenberg was one of the lucky ones who was able to get his family out of Europe and into the United States, where he continued the work he had started in Paris. Most were not as fortunate.
On one of his walks around the city, Schellenberg went to the docks where ocean liners were moored and preparing to leave for the United States and Brazil. He watched as the Portuguese customs officials overzealously inspected passenger baggage while crates of cargo appeared not to be inspected at all. The German ambassador had alerted him to the arbitrary nature of the export process and that the Germans had local officers in the export departments on their payroll. Making a note to increase his efforts to recruit Brazilian agents based in Portugal, Schellenberg watched as an ocean liner slipped its anchor and sailed down the calm River Tagus and out into the Atlantic Ocean. It all appeared effortless. Although in the summer of 1940 defeat was far from the thoughts of any German, Schellenberg was impressed by the easy connection between Lisbon and North and South America. Later, back in Germany, he sought additional funding to further increase the number of Portuguese police officers and customs officials on the German payroll.
Despite his useful reconnaissance in the city, Schellenberg grew tired of the fantasy plot of luring the Duke of Windsor into becoming a pro-Nazi king. Looking for a way out of the situation, he dined with a Portuguese friend who was a leading German agent in Lisbon and outlined his frustrations. Together they came up with a way to gently sabotage the whole improbable enterprise. Schellenberg asked for an increase in the number of Portuguese police officers guarding the Duke and Duchess of Windsor. An additional twenty officers assigned to the duke’s protection prompted a matching increase in the number of British security personnel assigned to the duke, making any attempt to kidnap the duke almost impossible without a major armed confrontation. For Schellenberg, this was the perfect way to stall the mission, though he made one last attempt to speak to the duke directly, using Portuguese channels. When this failed to produce the one-on-one meeting he wanted, he gave up. The duke left unimpeded to take up his new position as the governor of the Bahamas. Schellenberg watched the duke’s ship depart from the tower room of the German embassy atop one of Lisbon’s seven hills. The daft scheme had finally unraveled, but he had put in place a new network of agents that would be of great use five years later.
All that remained was to explain the failure of Operation Willi to Ribbentrop. Schellenberg concocted a number of justifications of the failure, including a report that the British Secret Service had planned to bomb the duke’s ship a couple of hours before its departure. Other false alarms had been raised to further increase the attention from the Portuguese police, and together they had made it impossible for Schellenberg to get near the duke and duchess. Ribbentrop accepted the assessment and ultimately commended Schellenberg’s decision not to kidnap the duke. Even Heydrich called it an “excellent failure” and congratulated Schellenberg on his careful management of the mission.
Once he was back in Berlin, Schellenberg continued to work on developing a new network of informants and useful contacts in the neutral countries. The opportunity for moving goods out of Portugal would increase by the end of 1942 with the opening of a new airport on October 15 located in the Portela district of Lisbon, not far from the city center. Soon a daily flight to Berlin was operating that stopped in either Barcelona or Madrid en route. The cargo on these flights was not subjected to searches by local customs officials, whom Schellenberg had arranged to be paid by the Germans. The Lisbon run would become a favored smuggling route even before the war turned decisively against the Axis powers in 1943. But in 1940, what transited through Lisbon were mainly the products of black-market auctions held in private houses specializing in the sale of stolen artworks, silver, and gold. These auctions were used by several diplomats as a means of topping up their salaries or “putting in place their pension plans,” as one dealer put it. The Portuguese Secret Police appeared to be aware of much of the activity, but did not intervene.
The British were also aware of the activities, and several of the dealers were on the payroll of the British to provide information about what was bought and sold by whom and for how much. Many auctions featured the sale of artworks and family treasures that Jewish refugees transiting through Lisbon to the New World had been forced to sell to local dealers at rates well below market value. Money laundering was an additional feature of the trade. The Germans had been importing large numbers of forged Portuguese escudos printed in the Low Countries. Schellenberg had used this money to help set up his spy networks in Lisbon, and the counterfeit notes were in general circulation until late 1941, when the Bank of Portugal actively tried to eradicate the forgeries. After the Bank of Portugal informed Prime Minister Salazar of the widespread use of forged currency by the Germans, Berlin was compelled to make payments in gold.
Schellenberg would try forgery later in the war, too. His most ambitious scheme involved flooding the market with fake British pounds that were distributed through Lisbon. The bank notes were flown into Lisbon marked as diplomatic baggage with the intent of transporting them to London by sea using a locally recruited sailor on a Portuguese ship bound for England. The idea was to make the British currency worthless. This plan failed for several reasons, not the least being the poor quality of the forgeries.
When the Germans flew in gold on the Berlin–Lisbon route, the planes landing at Portela airport were swiftly unloaded. British spies watching the airport reported that the heavy crates were loaded into trucks that pulled up next to the plane without any interference from the customs officials. When the British followed the trucks into Lisbon, agents noticed that one truck went to the Baixa area of the city. In the heart of Baixa lay the Bank of Portugal, nestled among the other commercial banks headquartered there. Deliveries to the Bank of Portugal usually took place at night, with trucks backing into the secure compound and gold carefully unloaded and placed in the deep underground vaults.
A second truck following the lead one would peel off to the left before reaching the Bank of Portugal, instead heading up the hill to the German embassy, where it disappeared behind the high gates. British sources had bought information from local builders confirming that the embassy had installed a new large, secure vault that had room to store several tons of gold. As the war developed over the course of 1943, gold continued to arrive at the embassy. The frequency of the flights from Berlin increased and the operation moving the gold became more complicated given the larger amounts involved. British agents operating in Lisbon attempted to buy information from local Portuguese employees of the German embassy regarding the volume of gold being delivered and for what purpose it was being sent to Portugal. Evidence supplied by a female administrator confirmed that the gold had not left Portugal and was being stored in the embassy, but there was little information about its purpose.
The gold trade became further complicated by the scale of the operation and the increasing signs that the gold was not legitimate. “Ill-gotten gains” the British charged, and the Americans soon followed with the same assessment. Tracking the gold became a major Allied operation that soon produced compelling evidence supporting the view that this was stolen gold. The first wave of gold had been looted from the central banks of the Low Countries, Holland and Belgium. Gold was also stolen from the central bank of occupied France. When, by 1943, it was clear that a large portion of the gold had come from the Jewish victims of the Holocaust, the Portuguese deemed the trade too risky. The Bank of Portugal’s vault was nearly full, and new, much more discreet ways were needed to import gold. A complex arrangement was put in place with Swiss banks acting as middlemen for the exchange of gold, depositing the value into Portuguese accounts in Switzerland for later transfer to Lisbon.
By 1943, with the help of Schellenberg, Lisbon was a major trading partner with Germany for legitimate commercial activities as well as black market goods. Hundreds of Germans worked in the embassy in Lisbon, the vast majority of whom were spies or employed in trade sections linked to import-export activities in Portugal. Funded by the stolen gold, the web of locally recruited agents increased tenfold as the Nazis further entrenched ties among the Portuguese Secret Police, corrupt government officials, and gossip networks of Portuguese society. Everybody in Lisbon wanted a piece of the German action.
Many payments were made as credit for future information or use. For example, a bribe would be offered to a customs official on the condition that at some point in the future he would be approached for a favor—such as overlooking paperwork on a specific shipment arriving in the country. It became customary for officials to take money from different countries in the war. The Italians, with over five hundred people in their embassy in Lisbon (the largest of all diplomatic representation in the city), were known to be good payers. The British were viewed as more careful in how they spent their money. After the United States joined the war in December 1941, it quickly staffed up its embassy with spies and soon became the most popular payer among the local population. One shady local informant commented that the Americans did not even appear to care if the information they were buying was true.
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Featured image: Riksarkivet, image no. Fo30141711030060.tif,
author NTB; via Wikipedia, Creative Common license 4.0
