German Clandestine Activities in South America in World War II

German Clandestine Activities in South America in World War II

Declassified and approved for release by NSA, on 04-13-2009 pursuant to E.O.·12958, as amended MDR 53595

Classified By NSA/CSSM 123-2

Declassify On: Originating Agency's Determination Required

DECLASSIFIED

Table of Contents

                                                                                                                                    Page

Foreword                                                                                                                     v

Chapter I.  The German Intelligence Services
Perspective                                                                                                                   1
The Abwehr                                                                                                                   1
The Reich Security Administration                                                                                  3
 
Chapter II. Axis Agent Operations in Latin America
SARGO                                                                                                                            7
The Brazilian Nets                                                                                                          8
Regrouping                                                                                                                    8
The Chilean Nets                                                                                                            9
Operation JOLLE                                                                                                             9
MERCATORI and MERCATORII                                                                                         10
The Planning for Operation JOLLE                                                                                   11
The End of Operation JOLLE                                                                                           13
The Benefits Derived                                                                                                      13
 
Chapter III. Allied Organizations Concerned with the Intelligence Problem
U.S. Navy (1917-1941)                                                                                                 15
The U.S. Coast Guard (1931-1941)                                                                              17
The Federal Communications Commission (1911-1941)                                                19
The British Effort: GC&CS and the RSS (1919-1941)                                                     20
The Reorganization of the U.S. Sigint Effort (1939-1942)                                             23
Initial Operations                                                                                                          25
Security Problems                                                                                                        26
The FBI Connection                                                                                                      29
The Army Connection                                                                                                  31
The Radio Intelligence Center                                                                                      32

Chapter IV. Counterclandestine DF Operations in Latin America
Introduction                                                                                                                  35
The U.S. Navy in Colombia and Ecuador (1940-1941) 35
Other Latin American Nations before the War                                                              43
Establishment of the AIS Clandestine Radio Locator Net                                              44
Creation of the Concept: December 1941-January 1943                                              44
Implementation of the Concept: January 1943 to the War's End                                  50
Cuba - Graft and Corruption                                                                                          50
Chile-Nazis and Mountains                                                                                            50

iii

Argentina-More Nazis                                                                                                    51
Ecuador - Mañana Land                                                                                                53
Colombia-Everything in Place                                                                                        54
Brazil-Full Cooperation                                                                                                  55
The AIS Takes Over                                                                                                      56
Disposition of the AIS Net                                                                                             57
Conclusion                                                                                                                    57
 
Glossary                                                                                                                       59
Notes                                                                                                                           61

iv

Foreword

This is the first of a two-part history of German clandestine activities in South America in World War II. In this first volume, the author, Mr. David Mowry, identifies and presents a thorough account of German intelligence organizations engaged in clandestine work in South America and a well-researched, detailed report of the U.S. response to the perceived threat. This perception was, as Mr. Mowry alludes to in his conclusions, far greater than any actual danger. Mr. Mowry's conclusions, in general, are somewhat understated. It seems fairly clear from the evidence that the Germans never expected a great deal from their agents in South America or even in the United States in World War II. The lack of German espionage activity in these areas in WW II stands in stark contrast to the bombings and other activities which occurred during WWI. Perhaps these WWI experiences influenced U.S. policy makers to the extent that they overestimated the danger in WWII. In fact, it might be suggested that South America and the United States were not the major thrusts of German clandestine activity in WWII, but that Europe, England, North Africa, and the Middle East offered far more potential for beneficial results. An examination of clandestine activities in these areas might produce different conclusions. One might also comment on the extraordinary activity that took place between and among U.S. intelligence organizations in the face of so small and unsuccessful a German effort. In addition to concluding that it had little effect on the outcome of the war, one might also have noted the similarities characterizing the nature of the relationships. Specifically, this includes the interagency bickering, lack of support, and jurisdictional disputes which characterized the relationships in the broader Comint field during and after the war. Part two of this history deals with the cryptographic systems used by the various German intelligence organizations engaged in clandestine activities. It is a much more technically oriented work than this volume and an excellent companion piece.

Henry F. Schorreck

NSA Historian

v

Chapter I

The German Intelligence Services

Perspective
 
The fall of the Batista government in Cuba in 1959 and the subsequent rise of Castro's Cuba as a Soviet ally in the Western Hemisphere marked the beginning of Russian success in obtaining a foothold in an area that had been the exclusive sphere of influence of the United States.
 
The concept of carving out a piece of the Western Hemisphere did not originate with the Soviet Union. Since 1823, the year the Monroe Doctrine was enunciated, most of the major European powers tried at one time or another to subvert it. Germany tried twice. The first time, in 1917, Germany planned to attack the United States through Mexico. This plan was foiled by Britain when it provided the United States with a decrypted copy of the famous Zimmerman Telegram. Germany's second attempt was more complex, but in the end, just as unsuceessfu1.¹
 
By 1939, large groups of German nationals had settled in the various countries of Latin America, particularly Argentina, Brazil, and Chile. Germany maintained close contact with these expatriates through commerce, German diplomatic representatives, and pro-Nazi social organizations. German commercial interests in Latin America depended to a large extent on trade with Germany and various business organizations were brought into the National Socialist fold by appeals to patriotism and by threats of interruption of trade. This large pro-German, if not necessarily pro-Nazi, expatriate community provided a fertile ground for the planting of espionage organizations by the German intelligence services - the Abwehr, and later on, the Reich Security Administration. These two organizations, separately and in combination, were responsible for Germany's espionage operations before and during World War II. Latin America was probably their major theater of operations, but similar espionage organizations were established all over the world - organizations that would be the objects of considerable scrutiny by Allied intelligence and counterintelligence agencies.²
 
The Abwehr
 
After the demobilization of the German Army at the end of World War I, the Intelligence Office of the General Staff, or IIIb, became an intelligence group attached to the Foreign Armies Branch of the General Staff. Later, with the signing of the Treaty of Versailles, the General Staff itself became the Troops Department and the Foreign Armies Branch became the Third Branch, or T3, of the Troops Department. The Intelligence Group became the Abwehr Group of T3. The name "Abwehr" (literally, "defense") was the covername given to the counterintelligence group in order to disguise its espionage funetions.³
 
On 1 April 1928, the Abwehr Group and the German Navy's espionage unit were combined as the Abwehr Branch, directly subordinate to the Ministry of Defense. In March 1929, this branch was combined with several other offices into a Minister's Department which later became the High Command of the Armed Forces (OKW). Thus the Abwehr became the military espionage agency it was to be in World War II.⁴

1

After the Nazi Party came to power there was considerable friction between the Abwehr and the agencies of the Party, in particular the Security Service (SD). On 1 January 1935, German Navy Captain Wilhelm Franz Canaris became the head of the Abwehr and instituted a policy of cooperation which was reciprocated by Reinhardt Heydrich, the head of the SD. This resulted, in December 1936, in an official agreement on division of effort known as the "Ten Commandments," signed by both Canaris and Heydrich, which defined espionage abroad as an Abwehr responsibility.⁵
 
PICTURE HERE
Admiral Wilhelm Franz Canaris commanded
the Abwehr from 1935 until 1944, when its
espionage functions were transferred to the
Reich Security Administration.
 
When Canaris assumed command, the Abwehr consisted of six groups: (I) Army Espionage; (II) the Cipher Center; (III) Counterespionage; (IV) Sabotage and Uprisings; (V) Naval Espionage, with liaison with the Navy's intercept service; and (VI) Air Force Espionage. Canaris made the Abwehr an agency concerned purely with espionage by removing the Cipher Center from its jurisdiction. In the years 1936-38, the service espionage groups were combined as Abwehr I, Military Espionage; Sabotage and Uprisings became Abwehr II; and Counterespionage became Abwehr III. The Naval Intercept Service was added to the Foreign Branch of OKW, which was transferred to the Abwehr, retaining its branch title. In addition, the Abwehr itself was raised to the level of a division of OKW.⁶
 
Abwehr I, the largest of the branches, consisted of nine groups: Army East; Army West; Army Technical; Marine; Air Force; Technical/Air Force; Economic; Secret (document forgery and espionage paraphernalia); and Communications. Abwehr headquarters in Berlin delegated its functions extensively to AAA posts in other cities, and as it took up any job or entered a new geographical area, it expanded by creating new geographical subdivisions. Principal posts of the Abwehr in important cities were called Abwehr Posts (Ast). In the Reich there was one Ast to each Military District headquarters.
 
 
Known Asts in the Reich, designated by Roman numerals, were:

I           Koenigsberg    X                       Hamburg
II          Stettin             XI                     Hanover
III        Berlin               XII                     Wiesbaden
IV         Dresden          XIII                   Nuremberg
V          Stuttgart          XIV TO XVI        (probably did not exist)
VI         Muenster         XVII                   Vienna
VII        Munich             XVIII                  Salzburg
VIII      Breslau             XIX                    (probably did not exist)
IX         Kassel              XX                     Danzig
XXI       Posen

2

Underneath and reporting to the Asts were Branch Posts (abbreviated Nest or Anst) which were located in the less important cities. Subordinate to the Nests were the Message Centers (abbreviated MK), established in small particular Asts inside the Reich. They were given the task of controlling certain enterprises outside the Reich. Thus, the Hamburg Ast was concerned chiefly with naval activity against England and America and was active in South America, in the Iberian Peninsula, and in Greece. Muenster dealt with roads and communications in enemy territory; Dresden specialized in targets for aerial bombing. Stettin handled naval activity against Russia in the Baltic and also Group I left in Norway. Breslau handled action in Czechoslovakia, Wiesbaden in France and Belgium, and Vienna in the Balkans and the Near East. An Ast was designated an Abwehr Control Post (Alst) to take over control of Abwehr operations for specific purposes, as was Wiesbaden in 1940 for the invasion of France.
 
There were also Abwehr units called Combat Organizations (KO) which were similar to Asts but operated in neutral and unfriendly countries, including Sweden, Finland, Switzerland, Bulgaria, Turkey, Spain, Portugal, and briefly, North Africa. Personnel of the KO used embassies and legations as cover. The first of these were established in Madrid and Shanghai in 1937 and in the Netherlands in 1938. The KOs were attached to the German embassies and ran agent nets in the respective countries. By May 1942, there were KOs in Portugal, Spain, Switzerland, Sweden, Finland, Bulgaria, Spanish Morocco (Casablanca), Yugoslavia (Zagreb), China (Shanghai), and Turkey.⁷
 
The Reich Security Administration

The Security Service was originally a part of the organization called the General Protection Squad (the infamous Blackshirts or SS). Its mission was to gather intelligence about people hostile to Hitler and the Nazi Party. It was the intelligence organ of the Nazi Party. In June 1936 Himmler was made Reichsfuehrer SS and Chief of the German Police. One of his first acts was the appointment of the first important figure in the history of the Reich Security Administration (RSHA), Reinhard Heydrich, the first chief of the Sicherheitspolizei or Security Police (SiPo) and the SD. Heydrich and Himmler were responsible for combining the security services of the SS and the State Police into the RSHA in 1939. As the head of the RSHA, Heydrich concentrated almost entirely on eliminating opposition to the Third Reich. Since the "Ten Commandments" defined espionage abroad as largely the function of the Abwehr, Department VI (Foreign Intelligence) of the RSHA was an insignificant unit before 1942. Although Himmler had given orders that he must have a foreign intelligence service of his own, the RSHA did not have the right kind of personnel for this work; very few of its officers had any knowledge of foreign countries or languages.⁸
 
The character of the RSHA changed after the assassination of Heydrich in 1942 with the rise to power of two new figures, Ernst Kaltenbrunner and Walter Schellenberg. Kaltenbrunner succeeded Heydrich as head of the RSHA and Schellenberg became the chief of Department VI in the same year. Continual competition between Department VI and the Abwehr eroded the latter's authority until Schellenberg took over its espionage and sabotage sections in May 1944. At that time, Canaris was demoted to head of a special staff for economic warfare. He was arrested on 23 July 1944 for complicity in the bomb attempt on Hitler and was executed on 8 April 1945.⁹
 

3

PICTURE HERE
The headquarters of the Reich Security Administration's Coreign intelligence operations (Department VI), Berlin.

4

PICTURE HERE
Reinhard Heydrich headed the Reich Security Administration Crom its creation in 1939
until his assassination in 1942.

PICTURE HERE
Walter Schellenberg, chief of the Reich Security Administration's Department VI; assumed control of the Abwehr's espionage and sabotage sections in May 1944.

 5

After taking over the Abwehr, the RSHA was divided into eight departments, only two of which, Department VI (Foreign Intelligence) and Military Intelligence, ran espionage agents in the field. Military Intelligence assumed responsibility for espionage in the front line combat areas, formerly the responsibility of Abwehr I, while Department VI absorbed the Asts' responsibilities for espionage in foreign countries. The following was the organization of Department VI as late as January 1945:
 
 
 
 
Department                                         Function
 
Amt VIA                                                Organization
Amt VIB                                                West Europe (neutral, allied, and occupied countries)
Amt VIC                                                Russia, Near East, Far East (including Japan)
Amt VID                                                Western Hemisphere, Great Britain, Scandinavia
Amt VIE                                                Southeast Europe (including allied and occupied areas)
Amt VIF                                                Technical Support
Amt VIG                                                Scientific-Methodic Research Service
Amt VI Wi/T                                          Economics and Technology
Amt VIS                                                Sabotage
Amt VI Kult                                           Nonscientific Domestic Acquisition Service
Amt VIZ                                                Military Counterespionage and Personnel Checks
Abwehr                                                Civilian Counterespionage and Personnel Checks¹⁰

This was the opposition. Its story and the story of the Allied organizations involved in counterespionage Sigint in World War II follows.

6

Chapter II
 
Axis Agent Operations in Latin America

In his report on his trip to England in 1943, Colonel Alfred McCormack stated that the Coast Guard had abdicated to the British Government Code & Cipher School (GC&CS) its responsibility for all clandestine communications other than those concerning the Western Hemisphere. While McCormack was certainly overstating the case, with equal certainty the Coast Guard's primary interest was in agent communications between Germany and Latin America. These communications were primarily the responsibility of Operation BOLIVAR,11 the code name for an espionage project carried out by Department VI D 4 of the SD. It was active in Brazil, Paraguay, and Argentina, with ramifications reaching into the official circles of those countries.¹²
 
SARGO
 
Johannes Siegfried Becker (SARGO) was the main figure in the project and the person responsible for most of the organizing of espionage operations in South America. Becker was first sent to Buenos Aires by the SD in May 1940. His original mission, and that of Heinz Lange (JANSEN) who followed him shortly after, was sabotage. In August, because of protests by the German embassy, this was revised to one of espionage only. Becker and Lange were soon identified by the authorities as agents, and in September 1940, moved to Brazil where Becker made contact with Gustav Albrecht Engels.

PICTURE HERE

Johannes Siegfried Becker, codenamed SARGO, organized
Nazi Espionage operations in South America.
 
Gustav Albrecht Engels (ALFREDO) had originally been recruited by Jobst Raven of Abwehr I W in 1939 to provide economic intelligence on the Western Hemisphere to the Abwehr. He had established an economic espionage organization, reporting to Germany via the radio transmitter owned by his company, the Allgemeine Elektrizitaets Gesellschaft (General Electric Company), headquartered in Krefeld. Becker transformed Engels's organization into an espionage organization reporting on all subjects of interest to German intelligence. By mid-1941, Engels's radio station, CEL, which was located in Sao Paulo, Brazil, was functioning smoothly with agents both in Brazil and the United States. It provided information on shipping, economic and industrial affairs, war production and military movements in the United States, and political and military developments in Brazil. One of the agents in the United States who frequently came to Brazil to talk to Engels was Dusko

7

Popov (IVAN), known to the British as TRICYCLE - one of the most successful double agents of World War II.¹³
 
Operation BOLIVAR agents included the naval and air attache in Chile, Ludwig von Bohlen (BACH); the naval attache in Rio de Janeiro, Hermann Bohny (UNCLE ERNEST); the military attaché in Buenos Aires and Rio de Janeiro, General Niedefuhr; and the naval attaché in Buenos Aires, Captain Dietrich Niebuhr (DIEGO), who headed the espionage organization in Argentina. In mid-1941, Herbert von Heyer (HUMBERTO) joined the organization, providing maritime intelligence.¹⁴
 
The Brazilian Nets
 
Engels's organization was not the only one operating in Brazil. Three other clandestine radio stations, each serving a different spy net, had started operating in 1941. Radio station LIR, in Rio de Janeiro, had started communications with MAX, in Germany in May. The LIRMAX group operated in Brazil, Argentina, Uruguay, and Ecuador and was centered around a commercial information service, the Informadora Rapida Limitada (RITA), run by Heribert O. J. Muller (PRINZ). The radio station was run by Friedrich Kempter (KOENIG). Von Heyer, HUMBERTO in the CELALD organization, was VESTA in the LIRMAX group. There were other overlaps in personnel, with the two groups cooperating extensively. Von Heyer was an employee of the Theodor Wille Company, several of whose employees were involved in another net centered around station CIT in Recife, Brazil. The CIT net began operation in June 1941 and was entirely located in Brazil. A third group, consisting of only two agents, Fritz Noak and Herbert Winterstein, was located between Santos and Rio de Janeiro and communicated with LFS in Germany from September 1941 to January 1942. It was not connected with the CELALD-LIRMAX-CIT group.¹⁵
 
Regrouping
 
At the end of November 1941, Becker had returned to Germany for a conference with his superiors and was thus out of harm's way when Brazilian police rounded up enemy agents on 18 March 1942. During this conference it was decided that Becker would be in charge of South American operations (all of which were to be connected by radio) with Buenos Aires acting as the control station for the net and reporting directly to Berlin. Lange was to organize an espionage net in Chile, and Johnny Hartmuth (GUAPO), a Department VI D 2 agent who had elected to remain in South America, would organize a net in Paraguay. An agent named Franczok (LUNA) would control the radio network which was to be established. Lange, Hartmuth, and Franczok were all in Paraguay, having fled from Brazil in March.¹⁶
 
In February 1943, after considerable difficulty, Becker managed to return to Buenos Aires as a stowaway on a ship traveling from Spain to Argentina. Lange, Hartmuth, and Franczok had managed to airmail one transmitter to Paraguay before they left Brazil, and setting up a temporary headquarters near Asuncion, had reestablished contact with Berlin. Upon Becker's orders, this station was transferred to Buenos Aires in May, leaving Hartmuth in Paraguay. Lange proceeded to Chile.
 
Once the transfer to Buenos Aires had taken place, Becker and Franczok immediately began establishing the planned radio network. Becker wanted to establish a transmitter in every South American republic, but was successful only in Paraguay, Chile, and Argentina, where he was at this time establishing an espionage organization.¹⁷

8

The Chilean Nets
 
When Lange went to Chile, there was already an agent organization and radio station in operation and Lange fitted himself into it as an independent operator with his own sources. The station, using callsign PYL to communicate with REW in Germany, had been established in April or May 1941, apparently by Ludwig von Bohlen and Friedrich von Schulz Hausman (CASERO). By February 1942, reports were being passed from agents in Chile, Peru, Colombia, Ecuador, Guatemala, Mexico, and the United States. The major figures in the organization were von Bohlen in Santiago; Bruno Dittman (DINTERIN), the actual head of the net, in Valparaiso; Friedrich von Schulz Hausman, who had relocated to Buenos Aires; and George Nicolaus (MAX) in Mexico.¹⁸
 
The PYLREW net's tie with Project BOLIVAR was revealed through intercept, particularly in July 1941, when von Bohlen was instructed by radio to contact von Heyer in Rio de Janeiro to obtain a supply of secret inks and developers which von Bohlen had ordered from Germany.
 
The PYLREW organization was centered around the Compania Transportes Maritimos (COTRAS), formerly a branch of Norddeutscher Lloyd. Von Schulz Hausman had been the manager of the Norddeutscher Lloyd Shipping Agency in Chile before moving to Argentina, and had been succeeded in that job by Dittman. Other PYLREW personnel who had been associated with Norddeutscher Lloyd were Hans Blume (FLOR), a radio technician at PYL, and Heinrich Reiners (TOM), who had worked for Norddeutscher Lloyd in Panama before opening a maritime freight office in Valparaiso. Reiners's sister was married to Blume, and Reiners's wife was the drop for the agents of the net.¹⁹
 
Operation JOLLE
 
The first traffic passed from Buenos Aires concerned finances, the organization of the South American net, Argentine politics, and the establishment of a courier system between Argentina and Spain using crewmen aboard Spanish merchant vessels. Once the network got into full operation, traffic volume increased to as much as 15 messages a day. In January 1944, the Argentine government arrested a number of German and Spanish espionage agents and Becker and Franczok were forced into hiding. Communications were interrupted for about a month and never again resumed the former level. When communications were reestablished, Becker asked Berlin for radio equipment, money, and secret ink materials. This request resulted in Operation JOLLE.²⁰
 
It had become increasingly difficult to keep the agent organizations in South America supplied with funds and cryptomaterial. As with Comintern agents between the wars, a primary method of financing agent operations was through the smuggling of precious gems which could then be sold to obtain operating funds. To this the Germans added the smuggling of expensive pharmaceuticals which could readily be sold on the black market. The gems and the pharmaceuticals could be transmitted via couriers ("wolves") who travelled as crewmen aboard Spanish ships. This was not, however, a satisfactory method for transporting crypto-equipment and keying materials, for moving agents in and out of target countries, or for shipping bulky reports back to Germany. Up to that time, the normal method used by Department VI to introduce agents into neutral or hostile countries had been to land them from submarines. This had not been particularly successful, and with increasing Allied dominance of the sea was becoming an even more problematical method of transport. Likewise, the courier system was in danger because of Spanish awareness that Germany was losing the war. It was as a result of

9

Brazil. Wilhelm Heinrich Koepff was a German small-businessman who had settled in Peru after World War I, in which he had served in the infantry. He was an ardent Nazi, and his reputation as a Nazi activist resulted in his firm being blacklisted by the British and the Americans in 1941. This had a disastrous effect on his finances, and he took to drink. When the countries of the Western Hemisphere broke off relations with Germany in 1942, he arranged to have himself repatriated, and in Germany, volunteered for service in the Abwehr as an espionage agent. After intensive training he reported aboard Passim on 15 May 1943 to meet his partner, William Marcus Baarn. Baarn was a black from Dutch Guiana with a reputation as a trouble maker. During the thirties he had worked as a merchant seaman in American waters and then went to Amsterdam as a stowaway on a Dutch ship. He had worked at various jobs in Holland and for some reason had made no attempt to get out when Germany invaded the Low Countries. He was recruited by the Abwehr, whom he was in no position to refuse, and trained in radio operation and cryptography for four months.²⁵
 
Passim sailed from Arcachon on 23 May 1943. The two agents were put ashore on Gargahu Beach, near Sao Joao da Barra, Brazil, on the night of 9/10 August 1943. Despite the high hopes of the Abwehr, both men surrendered to Brazilian police within 24 hours. The Brazilian authorities "turned" Koepff and used him as a controlled agent until March 1944. He and Baarn were tried in March 1945 and sentenced to 25 years in prison.²⁸
 
The Planning for Operation JOLLE
 
Gross had determined that Passim was still in Arcachon and that naval captain Heinz Garbers, who had commanded her on her first two voyages, was available. Garbers was a well-known sportsman who had crossed the Atlantic in a sailboat in 1938. The justification for using a vessel such as Passim was that although slower than submarines or merchant vessels, a regular route could be established and such a boat could easily be mistaken for a Portuguese, Spanish, or South American fishing lugger, and thus be ignored by Allied patrol vessels. Arrangements were made and Hansen and Schroell sailed aboard Passim on 27 April 1944 with quite a large cargo, the bulk of which consisted of items sent for resale. Siemens, Telefunken, Merck Chemical, and a pharmaceutical company (probably Bayer) had sent orders through Franczok for radio and other electrical equipment, as well as for chemical and medical supplies. In this way, these companies would be aided and the money received from them would contribute considerably to the finances of the spy ring. The latter purpose was also served by the shipment of a stock of needles used in the weaving or mending of silk stockings to be resold by the agency. Berlin also sent along plans for a device to make wood gas generators. An attempt was to be made to sell a license for the manufacture of these generators.
 
In all, they took some 50 tons of material with them, including complete radio sets, parts for use by Becker and for the new project, a microdot camera, and a supply of diamonds which had been obtained in Holland. Hansen and Schroell also took with them foreign currency in the form of Argentine pesos, British pounds, and American dollars which totaled some $100,000 in value. This money was to be shared with Becker. It was meant that Hansen and Schroell would remain in the Western Hemisphere indefinitely, and the money given to them was to last over a two-year period.²⁷

11

PICTURE HERE
Microdots taped inside the label of an envelope sent by German agents in Mexico to Lisbon.

At this point, the plans for the landing in Argentina were extremely confused. The original plans had been cancelled, and Becker did not understand what Berlin wanted. Finally, three possible landing points had been picked: Necochea, Miramar, and Mar del Plata. Berlin considered Necochea to be the preferable one, particularly since Becker had reported that both sea and coast were unacceptable at Miramar. Becker was insisting on four weeks advance notice of the landing; three days forewarning from Passim; a communications plan for contacting Passim; and instructions on loading and unloading.²⁸
 
The communications plan was sent on 6 June. Becker complained on 9 June about the short notice and about the lack of internal serialization on Berlin's messages, which sometimes made it difficult to understand references. As a consequence of the latter, apparently, several of Berlin's messages went unanswered, and Becker was instructed to contact Passim on his own and set up a communications plan.²⁹
 
At this point, it would seem that Franczok (who was in charge of communications at the Argentine end) complained about the preparations, or lack thereof, because Berlin responded:
 
SAVE YOUR CRITICISM FOR YOURSELVES WHEN YOU DO NOT KNOW FULL DETAILS; IT ONLY INDICATES THAT THROUGH YOUR CLEVER CONDUCT THE ORGINALLY CONTEMPLATED LANDING HAS ALREADY BEEN DISCOVERED. JOLLE HAS RECEIVED YOUR INSTRUCTIONS ON MIRAMAR PREPARATIONS AND WILL, IF POSSIBLE, CARRY THEM OUT. [THE] MATTER WILL BE SETTLED BY RED [BERLIN] CENTER.³⁰

12

Franczok sent communications and landing instructions to Passim on 21 June, setting Mogotes as the place and 0200 as the time of day for the landing. Garbers preferred Punta Indio, but Becker would not accept the suggestion, insisting on Mogotes. After some further delays, the operation was finally carried out on the night of 30 June/1 July, and Passim set sail for Europe, taking Philip Imhoff (BIENE), Heinz Lange, and Juergen Sievers (SANTOS) as passengers.31
Shortly after Hansen and Schroell arrived in Argentina, most of the members of Operation BOLIVAR were arrested, breaking up the ring once and for all, and effective espionage activity by Department VI D4 in the Western Hemisphere was ended.³²
 
The End of Operation JOLLE
 
Garbers had intended to put into port at Bordeaux upon Passim's return to France, but the Normandy invasion had made that inadvisable. Lange wanted the boat to return to South America and succeeded in convincing some of the crew to agree with him, but Garbers threatened to have him prosecuted for incitement to mutiny and treason. Berlin ordered Passim to Vigo, Spain, where she docked the night of 17 September, posing as the French ship St. Barbara, a name she had carried on her voyage to Brazil in 1943. Garbers, accompanied by Lange, went ashore the next day to visit the German Consulate. Garbers returned later, alone and wearing civilian clothes. He had found that Karl Arnold had been advised of their coming and had made some preparations to care for them. For the next three or four days all the men remained aboard Passim with a Spanish police boat alongside. They were then issued passes giving them freedom of movement in Vigo. They were allowed to move to the Hotel Central, but both Captain and crew had to report every morning aboard the Spanish cruiser Navarra which was lying in the harbor. When the cruiser sailed, they then reported to the Spanish police each morning.
 
After a month under loose arrest, the men were released by the Spanish and traveled to Madrid, leaving Passim lying at Vigo under Spanish guard. In Madrid they stayed at the German-owned Hotel Aragon for four to six days. From Madrid, Garbers went on to Barcelona, followed by the others, who arrived on 7-8 November. They then left Barcelona by air in groups of two or three. It took ten days for the entire party to reach Berlin. Garbers did attempt to have Lange prosecuted, but Gross arranged for the charges to be dropped.³³
 
The Benefits Derived
 
Commander L.T. Jones, the head of the Coast Guard cryptologic operation, wrote an evaluation of the Allied Sigint effort against BOLIVAR in 1944. He pointed out that basically, the type of information transmitted by an enemy agent depends largely on what happens to be available where he is located. BOLIVAR agents were able to provide reports on the movements of merchant shipping and on local political developments. The traffic was probably more useful to the Allies than it was to the Germans, because it did reveal the identities of collaborators in the South American countries, including a former Argentine Minister of Marine and the head of the Paraguayan Air Force. The Allies also were able to obtain from clandestine traffic the details of planning for the 20 December 1943 revolution in Bolivia and another in Chile which was nipped in the bud. Both of these were backed by Germans working through the Argentine Government.
 
In addition, the intercept of clandestine traffic allowed the Allies to maintain continuity on the agents operating in the Western Hemisphere. This information led to a

13

number of arrests, the most celebrated at the time being that of Osmar Alberto Hellmuth on 4 November 1943.34 An Argentine naval officer, Hellmuth, unbeknownst to Argentina, was a German collaborator. His control, Hans Harnisch (BOSS), claimed to be the personal representative of Heinrich Himmler and had extensive contacts in the highest reaches of the Argentine government. As a result of negotiations between Harnisch and various Argentine officials, including President Ramirez and various cabinet ministers, Hellmuth was appointed Argentine consul in Barcelona. This appointment served to cover his actual mission: to proceed to Germany to assure that country that Argentina had no intention of severing relations with her. He was also to confer with the SD and other German officials on matters of mutual interest and was to obtain German permission for the return to Argentina from Sweden of the Argentine tanker, Buenos Aires, carrying a load of German-supplied arms.³⁵
 
Most of the details of this planning were known to the Allies through BOLIVAR traffic. As a consequence, when the Cabo de Hornos, aboard which Hellmuth was traveling to Spain, made a routine stop at Trinidad, British authorities removed him from the ship and placed him under arrest. Argentina made a formal protest to Britain. When the ramifications of the affair were learned, however, there was a change in position. The Argentine Minister of Foreign Affairs instructed his ambassador in London on 17 December to inform Great Britain that Hellmuth's appointment had been cancelled and that if the British would release Hellmuth, his letters patent would also be cancelled and the British could then do with him as they saw fit.³⁶
 
In early 1946, when the State Department was preparing a case against the Peronista government of Argentina regarding its wartime support of the Axis, it requested permission to use clandestine intercept as part of its evidence. Although the Navy refused to give blanket approval for such usage, an accomodation was reached and information from clandestine communications was fused with information from other sources in preparing the indictment. This was Operation BOLIVAR's final contribution to the Allied war effort.³⁷

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Chapter III
 
Allied Organizations Concerned with the Clandestine Problem

U.S. Navy (1917-1941)
 
During World War I, the U.S. Navy had built up an integrated organization (the Code and Signal Section of the Office of Naval Communications) for the compilation, production, distribution, and accounting of codes and ciphers. This section, also known as OP-58, was established as a part of the Division of Operations sometime between 2 January and 1 April 1917. Its first head was Lieutenant Russell Willson (USN), who was ordered to Washington, D.C., on the former date. The Confidential Publications Section (as the Code and Signal Section was called before October 1917) had originally been intended to centralize the Navy's storage, accounting, and distribution of confidential publications, while the Bureau of Navigation (BUNAV) was responsible for the preparation of codes and ciphers. BUNAV's Signal Office had published the Telegraphic Dictionaries since at least 1848 and the Navy General Signal Books since the Civil War. By 1894, the dictionaries and the signal books had been combined, and in 1913 there was a section in the General Signal Book providing five-letter code groups that were used for secret communications until the Navy "A-Code" was constructed by the Code and Signal Section.³⁸
 
By 1 December 1917, the OIC of the Code and Signal Section, Lieutenant Commander Milo F. Draemel, had been made Assistant to the Director of Naval Communications (DNC) for Codes and Signals. The section had been made a part of the Naval Communication Service, but since it was not performing a staff function, it was not part of the Director's Office. The section was redesignated OP-18 on or about January 1920 but remained in the same command status until July 1922, when it became OP-20-G.³⁹
 
The Registered Publications Section was created on 31 March 1923 to standardize and centralize the issuance of and accounting for classified publications. As originally conceived in May 1921, this section was to be a part of OP-20-G, but there is no record of its OP-number until 1 July 1926, when it was listed as OP-20-P, with Lieutenant E.K. Jett, later Chief Engineer of the Federal Communications Commission (FCC), as OIC.⁴⁰
 
In January 1924, Lieutenant Laurance F. Safford was ordered to OP-20-G to take over the newly established Research Desk in that section. "Research Desk" was the covername for the newly formed communications intelligence activity. This marked the entry of the Navy into the communications intelligence field, aside from an interim effort begun by the Office of Naval Intelligence (ONI) in 1917, when a Cipher Room was established to decrypt enemy messages. The Cipher Room was absorbed by the War Department's Bureau of Military Intelligence in 1918. The initial staff of the Research Desk consisted of Lieutenant Safford and four civilians, later supplemented by two enlisted radiomen.⁴¹
 
According to U.S. Navy Captain Joseph N. Wenger, there were two factors that governed the placing of communications intelligence activities in the Office of Naval Communications (ONC) rather than in ONI. First of all, the Director of Naval Communications (DNC) showed interest and initiative in getting them placed under his jurisdiction. Secondly, over a period of time, the cognizant naval authorities recognized that this was the proper location, as they realized that the highly technical business of

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intercept and direction finding would be most effectively and economically operated in conjunction with other technical activities. The collection and production of Sigint involved the same skills, training, equipment, and techniques as communications, and thus belonged in that branch of the Navy. In addition, from both a security and a budgetary viewpoint, it made sense to collocate Sigint sites with communications stations.
 
Eventually OP-20-G would have control over communications intelligence, communications security, and registered publications. The Registered Publications Section continued to carry the designation OP-20-P, but by 1932 it was included as a subunit of the Code and Signal Section. Letters were assigned to the subordinate desks by 1926, the year in which Lieutenant Safford was relieved by Lieutenant Joseph J. Rochefort as head of the Research Desk. In June 1932, OP-20-G consisted of the OIC and his office staff; OP-20-P, Registered Publications; OP-20-GC, the Codes and Ciphers Desk; OP-20-GS, the Visual Signals Desk; and OP-20-GX, the Research Desk.⁴²
 
The Research Desk was renamed the Research and Radio Intelligence Desk in 1933. In June 1934, these functions were split between two desks: the Research Desk, OP-20GY, and the Radio Intercept Desk, OP-20-GX; and OP-20-P was removed from OP-20-G cognizance and supervision. A new section, the Language Section, was created in October 1934, with the designation OP-20-GZ. On 11 March 1935, OP-20-G was reorganized to consist of the Cryptographic Section (GC), headed by Lieutenant Chester C. Wood; the Security Section (GS), headed by Lieutenant Lee W. Parke; the Intercept and Tracking Section (GX), headed by Lieutenant Commander John S. Harper; the Cryptanalytic Section (GY), headed by Lieutenant Commander Joseph N. Wenger; and the Translation Section (GZ), headed by Lieutenant Commander Thomas B. Birtley, Jr. In this reorganization, OP-20-G was renamed the Communications Security Group, with Lieutenant Commander Laurance F. Safford in command after March 1936.⁴³

In the early days the Navy's Sigint activity in Washington was so small that no formal organization other than that mentioned above was necessary. However, with the beginning of Navy success against the Japanese naval ciphers in the early 1930s and the production of operational intelligence on Japanese naval maneuvers, it became obvious that expansion was necessary to exploit the possibilities that had appeared. Even so, in 1936 the total strength of the Communications Security Group was only 11 officers, 88 enlisted men, and 15 civilians: a total of 147. Lieutenant Joseph N. Wenger's 1937 planning study, "Military Study - Communications Intelligence Research Activities," was the first serious attempt at defining the course to be pursued. The organization conceptualized by this paper consisted of a main analysis, administration, and coordinating center in Washington, D.C., with subordinate area analysis centers, advance' processing units at intercept sites, and mobile units for close support of major operating commanders. The study also defined the need for fast and secure communications within the naval organization and for liaison with the Army and the Coast Guard. All of these ideas would eventually be implemented.⁴⁴

OP-20-G underwent two more renamings before the beginning of World War II. On 15 March 1939, it became the Radio Intelligence Section of the Office of Naval Communications, and on 1 October 1939, it became the Communications Security Section. The Cryptanalytic Section was relieved of its responsibility for training and research in 1939 and these functions were combined in the Research and Training Section, OP-20-GR. By January 1941, OP-20-G consisted of some 60 persons plus a few small field activities. On 7 December 1941 the strength was 75 officers, 645 enlisted men, and 10 civilians: a total of730. It continued to be headed by Commander Safford, who,

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at his own request, was redesignated from "General Line" to "Engineering (i.e., cryptographic) Duty Only" on 12 September 1941. He was promoted to Captain on 1 December 1941.⁴⁵
 
The U.S. Coast Guard (1931-1941)
 
The Coast Guard Communications Intelligence Section was established in 1931 to solve the illicit shortwave radio traffic exchanged between groups of smugglers and other criminals violating the laws enforced by the six enforcement bureaus of the Treasury Department. Through the monitoring of illegal radio networks during the time when smuggling was at its height, Coast Guard intercept operators developed a specialized technique which proved most effective in identifying and following illicit stations.⁴⁶
 
Until late 1935, 80 percent of the work done by the Cryptanalytic Unit had been cryptanalytic in nature. After October of that year there was a heavy increase in cryptographic duties when the Secretary of the Treasury tasked the Unit with creating a Treasury Department cryptosystem. At that time, he also tasked the Unit with cooperating with the Bureau of Customs and Narcotics to suppress the smuggling of illegal drugs into the United States and with certain responsibilities in the field of foreign exchange.⁴⁷
 
As a result of these tasks, the end of prohibition did not reduce to any appreciable degree the duties of the Intelligence Division. The Division remained the assembly and distribution agent for information of every kind pertaining to the phases of law enforcement with which the entire Treasury Department was charged and in which State, Justice, Commerce, and other departments of the government were interested. In spite of this, its strength decreased by a third between March 1936 and March 1937 because of budget restrictions brought on by the depression. In 1937 there were only five persons left:
 
Mrs. Elizebeth S. Friedman, P-4, Cryptanalyst in Charge
Mr. Vernon E. Cooley, P-2. Assistant Cryptanalyst
Mr. Robert E. Gordon, P-2. Assistant Cryptanalyst
Mr. Robert J. Fenn, P-1, Junior Cryptanalyst
Mr. Charles H. Withers, CAF-3, Cryptographic Clerk
 
According to Lieutenant Frank E. Pollio, the Acting Chief of the Intelligence Division at the time, similar organizations in the Army and Navy were composed of 12 to 25 persons and were considered a necessary adjunct to national security. In the Treasury Department, cryptanalytic personnel were necessary both for military security as it pertained to the Coast Guard and for law enforcement as it pertained to the Department. The strength of five was maintained through 1940. At the end of that year, two billets were added to bring the strength up to seven: four professional grade cryptanalysts, one IBM operator, and two typists.⁴⁸
 
After the establishment of the Money Stabilization Board under the Treasury Department, the Cryptanalytic Unit provided this Board with information in connection with foreign exchange control; and after 1938 it maintained a close watch for any clues in radio traffic pointing to sudden changes in the international situation. In August 1939, the Unit was transferred to the Communications Division of the Coast Guard, where it operated in response to requests from the Intelligence Division and other Treasury bureaus.⁴⁹

Smuggling on an organized basis had practically disappeared by 1939, and for several months before the German invasion of Poland, the Coast Guard had been given

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assignments monitoring the shipborne communications of potential belligerents and watching for, among other things, indications of possible entry into a war by other nations. This was done to forewarn Treasury, which could then take appropriate actions concerning the freezing of funds.⁵⁰
 
With the outbreak of war in Europe, the Treasury Department's statutory responsibility for enforcement of U.S. neutrality brought on a number of new responsibilities for the Coast Guard. Among these were the sealing of communications equipment on all belligerent vessels entering U.S. ports and the prevention of unneutral communications concerning shipping or the movement of belligerent ships.
 
In monitoring communications pursuant to this latter responsibility, USCG monitoring stations reported late in 1940 that they were intercepting traffic similar to that of the old rum-runner transmissions. When these messages were solved, they proved to contain military information from somewhere in England (apparently the transmissions of agent SNOW, see following). These solutions were sent to ONI, G-2, State Department, and the FBI; and work was continued on additional related circuits which were found while monitoring the first one. Intercept and analysis of these communications was to constitute a major part of the Coast Guard's contribution to intelligence during World War II.⁵¹
 
In late 1940, Lieutenant Commander Pollio, by then Intelligence Officer of the Coast Guard, and Lieutenant L.T. Jones, who as a Lieutenant Commander and then Commander would be in charge of the wartime Cryptanalytic Unit, had submitted their recommendations for improving the communications and intelligence postures of the Coast Guard. Among other things, they had recommended the establishment of permanent radio intercept stations in the New York, Jacksonville, New Orleans, San Francisco, and Honolulu Districts. These stations would be organized along the lines of regular Coast Guard radio stations but for technical reasons would be kept totally separate from regular communications stations. Pollio and Jones also recommended that the officers in charge of these stations have a knowledge of cryptanalysis. The stations would copy traffic from known illicit stations and search for new ones. By having officers qualified in cryptanalysis in charge, it was expected that there would be little difficulty in distinguishing illicit transmissions from other traffic of no interest.⁵²
 
The Coast Guard (and the Navy) considered the term "clandestine radio intelligence" to include transmissions from all stations operating on radio nets which handled communications for enemy agents. Often these nets included stations within Axis or Axis-occupied territory, where they were certainly not clandestine. For the most part, these nets passed Abwehr and SD traffic, but they also sometimes passed diplomatic or even military communications. However, agent traffic could be, and often was, passed over commercial or diplomatic facilities. As a consequence, Commander L.T. Jones considered the cryptosystem used to be the only valid standard for discrimination.⁵³
 
On 26 June 1939, a memorandum from President Franklin D. Roosevelt to the members of his cabinet ordered the investigation of all espionage, counterespionage, and sabotage matters centralized in ONI, the Military Intelligence Division (MID) of the War Department, and the FBI. On that date all government agencies other than the Army and Navy intelligence organizations had been ordered to turn over to the FBI all "data, information, or material bearing directly or indirectly on espionage, counterespionage, or sabotage." Since the Coast Guard was a Treasury agency until late 1941, all clandestine material intercepted was thus forwarded to the FBI. In January 1941, the FBI began requesting Coast Guard assistance in the solution of this traffic. In the spring of the same year, the Coast Guard asked for and received permission from the Secretary of the Treasury to distribute information to the Treasury Department, State Department, ONI, and Army Intelligence in addition to the FBI. It thus developed more or less by a

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sequence of events rather than by any definite plan that the Coast Guard worked more closely with ONI than with ONC from June 1941 to February 1942.⁵⁴
 
During 1940 and 1941, the Coast Guard also received miscellaneous intercepted traffic from the Federal Communications Commission (FCC). The FCC, in addition to performing its statutory regulatory duties, began in 1940 to be active in providing the armed forces with copy of the traffic of "suspect" transmitters. In late July of that year, Commander J.F. Farley, the Communications Officer of the Coast Guard, requested FCC monitoring of certain unidentified transmitters operating on the high frequency band; those using callsigns with the pattern "1TLE," "2TLE," etc., and possibly sending five-letter encrypted traffic. The tasking was implemented and in October, Farley expressed the Coast Guard's appreciation and requested that the assignment be continued.⁵⁵
 
The Federal Communications Commission (1911-1941)
 
The earliest known attempts by the United States to monitor radio communications had their inception in 1911. Under the Radio Act of 24 June 1910, radio jurisdiction was placed in the Department of Commerce and Labor, and a Radio Service was organized in that Department on 1 July 1911. When the Department was split in 1913, supervision of the provisions of the Radio Acts of 1910 and 1912 went to the Department of Commerce. The duties of the Radio Division included inspecting radio stations, examining radio operators, determining the power of radio stations, and conducting investigations of interstation interference. The Radio Division maintained a central monitoring station at Grand Island, Nebraska; nine secondary monitoring stations; and six mobile units, mounted on trucks, for field investigations. These mobile units were capable of acting as mobile direction finding (DF) units.
 
In 1932, Congress proposed that the President be authorized to transfer the duties, powers, and functions of the Radio Division of the Department of Commerce to the Federal Radio Commission, where it became the Division of Field Operations. When the Federal Communications Commission assumed the property of the Federal Radio Commission in 1934, the Division of Field Operations became the Field Division. Under the FCC, radio monitoring activities were expanded. The number of mobile monitoring stations designed primarily for measuring the field strength of stations but adaptable for DF and other field work, was raised to nine. Monitoring transmissions, identifying stations, and supplying intercepts to interested government agencies continued. Various changes, extensions, and improvements in FCC radio monitoring activities were made in ensuing years, and the Department of Justice, the Coast Guard, the State Department, and the Army and Navy came to place varying degrees of reliance upon the FCC in matters involving illicit use of radio.⁵⁶
 
In September 1940, J. Edgar Hoover queried the possibility of the FCC monitoring all long-distance telephone calls between New York and Germany, France, and Italy. He also suggested that since Japanese, French, Italian, German, and Soviet officials were sending both foreign language and encrypted communications via cable, it might be well for the FCC to obtain copies of all encrypted and unencrypted communications which might have a bearing on our national defense problems. These suggestions created legal and administrative problems for the FCC, and at Chairman James L. Fly's request, a meeting was held in January 1941 between the FBI and the FCC's Chief Engineer and General Counsel to iron out the problems.⁵⁷
 
The FBI was interested in all communications between the Western Hemisphere and Germany, and in December 1940 requested that the FCC cover the Chapultepec, Mexico, commercial transmitter for ten days as "information [had] been received from a confiden-

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tial source that the station [was] communicating with Germany." Fly apparently wanted to drop the assignment after ten days, but Hoover informed him that "the continued submission of this material is important to the national defense investigations being pursued by this Bureau." The FCC continued the assignment, and on 8 February 1941, Hoover requested another 60-day extension of the mission. On 28 February, Hoover informed Fly that collection of Chapultepec could be limited to its communications with Germany, New York, and Rocky Point, Long Island. In April, the Coast Guard requested that the FCC collect the communications between Chapultepec and Nauen, Germany. This was later expanded to include all Chapultepec-Germany communications, an assignment modification in which the FBI concurred.⁵⁸
 
In January 1941, the FCC, which had been tasked by the Defense Communications Board with monitoring foreign press and propaganda broadcasts, sought an additional fund allotment of$304,120 for the remainder of fiscal year 1941. These funds were to be used by the FCC's National Defense Organization (NDO) to establish the Foreign Broadcast Monitoring Service (FBMS), including the purchase of additional technical equipment and the hiring of translators and political analysts.⁵⁹
 
The additional appropriation was approved and the FBMS was established. The FCC appropriation request for fiscal year 1942 exceeded the total fiscal year 1941 request by $300,000. Of this increase, $150,000 was requested for modernization of monitoring equipment and $150,000 was requested for additional personnel. In modern terms such an increase is infinitesimal, but in 1941, $300,000 represented a 16 percent increase in the FCC appropriation.⁶⁰
 
The British Effort: GC&CS and the RSS (1919 - 1941)
 
The British cryptanalytic effort in World War II was centralized in the Government Code and Cipher School (GC&CS) which had been established by the British government in 1919 to study foreign cryptosystems and to advise on the security of British cryptosystems. It was originally made up of 25 officers recruited from the remnants of the World War I Admiralty and War Office cryptanalytic sections and was placed administratively under the Admiralty. In 1922, GC&CS, together with the Special Intelligence Service (SIS), was transferred to the Foreign Office, and in 1923 the head of the SIS was redesignated "Chief of the Secret Service and Director of GC&CS."⁶¹
 
When GC&CS was established, the War Office and the Admiralty reserved the right to remove their personnel at need to man their own Sigint centers. By 1935, however, it was realized that the production of Sigint was a continuum of processes which could not be separated. This, together with the earlier decisions to centralize peacetime cryptanalysis, was a strong argument in favor of maintaining the same organizational structure in wartime. The Cryptography and Interception Committee of GC&CS, which included representatives of the three services, had a standing subcommittee, the Y Subcommittee, which coordinated the services' radio intercept activities.⁶²
 
During World War II, the British intercept effort against Axis clandestine communications was conducted by the Radio Security Service (RSS). This organization was tasked with identifying and performing the initial intercept of Axis illicit stations communicating with Germany. The original intention was that the intercept organizations of the various services would assume the burden of intercept after the nets had been identified by the RSS. In practice, because of the intercept load already being carried by the services, the RSS became the organization responsible for the intercept of Abwehr communications, by far the most extensive of the illicit nets.⁶³
 

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