U.S.NEWS & WORLD REPORT

MARCH 30,1998

Pages 34-37

World Report

A vow of silence

Did gold stolen by Croatian fascists reach the Vatican?

By SUSAN HEADDEN, DANA HAWKINS, AND JASON VEST

Through the nightmare of World War II that would end with 56 members of her family perishing in concentration camps, there were two days that Eta Najfeld will never forget. The first was April 10, 1941, when Najfeld, a 25-year-old Jewish medical student, watched as exuberant crowds lined the streets of Zagreb to cheer the Ustashas - the ultranationalist fascist party that the Nazis had just installed at the helm of an "independent" Croatian state. The other was three months later, when a band of Ustasha soldiers burst into her family's shop, an elegant emporium stocked with Oriental rugs, English linens, and French silks. "They took everything," says Najfeld, now 82 and living in Belgrade.

As the Nazis and their allies sent millions of Jews and others to their deaths, they stole billions of dollars from their victims. In the postwar chaos, and the horror of their anguish, Najfeld and most other survivors cast from their mind any thought of recovering the property they had lost. Najfeld still worries that any talk about lost wealth will somehow diminish the enormity of the Holocaust.

But in recent months, new evidence has forced victims and accomplices alike to confront that nearly forgotten question: What happened to the loot? The Nazi plunder has been traced to banks in Switzerland, Sweden, Portugal, and other neutral countries that were secretly helping the Nazis stash stolen gold or launder it to buy war materiel. One state after another has opened its archives and banking records to aid the search, with one glaring exception: the Vatican.

Last week, the Vatican issued an official statement calling for repentance over the failure of some church members to do enough to aid Jews during the war. But the statement did not mention the mounting calls for an inquiry into the Vatican's financial dealings with the Nazis and their allies. So far, the Vatican has flatly refused to allow investigators access to its archives, despite repeated pleas from several nations and from Jewish groups.

The Vatican's continuing secrecy means the evidence is incomplete, but already declassified documents from the archives of the United States and other nations suggest that - with the aid of Croatian Catholic priests - Ustasha plunder made its way from Croatia to Rome, and possibly to the Vatican itself. Some of the stolen wealth was used to help Croatian war criminals flee to South America.

Next month, a task force head by Under Secretary of State Stuart Eizenstat that is investigating the role of the neutral countries is expected to issue a report that raises questions about the Vatican's wartime financial dealings. Among the documents reviewed: a declassified 1944 intelligence report noting a transfer of funds, via a Swiss bank, from Berlin's Reichsbank to the Vatican. Although there may be innocent explanations for such dealings - church assets being moved out of Germany, perhaps - the discovery of similar transactions by Swiss banks led to revelations of a huge Nazi operation to launder stolen gold with the help of neutral countries.

Church blessing. The Croatian connection, however, is the core of the new evidence that suggests the Vatican might have directly handled funds stolen from the victims of the Nazis and their allies. From 1941 to 1945, the Ustashas exterminated an estimated 500,000 Serbs, Jews, and Romany (Gypsies) and looted their property. They demanded ransom amounting to 1,000 kilograms of gold from all the Jews in Zagreb, only to ship them to concentration camps and kill them anyway. It is a matter of historical record that the Croatian Catholic Church was closely entangled with the Ustashas. In the early years of World War II, Catholic priests oversaw forced conversions of Orthodox Serbs under the aegis of the Ustasha state; Franciscan friars distributed Ustasha propaganda. Several high Catholic officials in Yugoslavia were later indicted for war crimes. They included Father Dragutin Kamber, who ordered the killing of nearly 300 Orthodox Serbs; Bishop Ivan Saric of Sarajevo, known as the "hangman of the Serbs"; and Bishop Gregory Rozman of Slovenia, a wanted Nazi collaborator. A trial held by the Yugoslav War Crimes Commission in 1946 resulted in the conviction of a half-dozen Ustasha priests, among them former Franciscan Miroslav Filipovic Majstorovic, a commandant of the Jasenovac concentration camp where the Ustashas tortured and slaughtered hundreds of thousands with a brutality that shocked even the Nazis.

As more secret documents become public, however, one priest emerges as the most significant player of all. The Rev. Krunoslav Draganovic, a Franciscan, had been a senior official of the Ustasha committee that handled the forced conversion of Orthodox Serbs. In 1943, the Ustasha arranged with the Croatian Catholic Church to send Father Draganovic to Rome. There he served as secretary of the Istituto San Girolamo, a seminary for Croatian monks that was in fact a center of clandestine Ustasha activity. Draganovic also became Ustasha leader Ante Pavelic's unofficial emissary to the Vatican, and de facto liaison to the Pontifical Relief Commission, a Vatican organization that aided refugees during and after the war.

The ratline. According to secret reports from the U.S. Army's Counterintelligence Corps (CIC), written just after World War II and since declassified, Draganovic and his collaborators at San Girolamo provided money, food, housing, and forged Red Cross passports for a number of Ustasha war criminals seeking to escape justice. Through an underground railroad of sympathetic priests, known as the "ratline," the Ustashas could move from Trieste, to Rome, to Genoa, and on to neutral countries - primarily Argentina - where they could live out their days unpunished and unnoticed. Along the ratline, virtually the entire Ustasha leadership went free. "All these people were escaping - and this at a time when just getting a meal in Rome was a major accomplishment," recalls William Gowen, a CIC officer in Rome after the war.

The copies of memos filed by Gowen and other members of the counterintelligence corps, now stored in U.S. Army archives at Fort Belvoir, Va., contain a wealth of detail on suspicious comings and goings at San Girolamo. The dispatches leave little doubt that the ancient walled compound at Via Tomacelli 132 was more than an ordinary monastery. "San Girolamo is honeycombed with cells of Ustasha operatives," Gowen wrote on Feb. 12, 1947. "In order to enter this monastery, one must submit to a personal search for weapons and identification.... The whole area is guarded by armed Ustasha youths in civilian clothes, and the Ustasha salute is exchanged constantly." From a source inside the compound, Gowen even managed to obtain Draganovic's secret files, which, Gowen reported on Sept. 5, 1947, "indicate clearly [Draganovic's] involvement in aiding and abetting the Ustasha to escape into South America."

Another Croatian priest living at San Girolamo was also active in smuggling war criminals, documents show. A recently declassified memo, believed to have been written in 1946 by an agent of the Office of Strategic Services (OSS) - the precursor of the CIA - reports that a priest called Father Golik was supplying false passports and money to members of the Ustasha. Golik, the memo says, was alleged to be "chief sponsor of all Croats resident in Rome, with special attention to the needs of former Ustasha members." The memo reports allegations that the Ustashas "are given a monthly allowance of 6,000 lire per person [the equivalent of $2,700 today], in addition to the privilege of cheap meals at the San Girolamo mess."

Croatian Catholic officials were funneling money to war criminals even after they escaped to Argentina, documents show.

According to cable intercepts cited in a 1947 U.S. diplomatic report, Pavelic escaped in November 1947 to Buenos Aires, where he was said to have been met by a retinue of Catholic priests. Newly declassified documents also show that Bishop Rozman was funneling money to South America from a Swiss bank account set up "to aid refugees of the Catholic religion." U.S. military attache Davis Harrington reported on March 9, 1948, that Rozman "is going to Bern to take care of these finances. The money is in a Swiss bank, and he plans to have most of it sent through to Italy and from there sent to the Ustashas in Argentina."

Further clues about the path of Ustasha gold are provided by Croatian National Bank records uncovered last fall by an American historian of Croatian descent. According to Jere Jareb, author of Gold and Money of the Independent State of Croatia Moved Abroad, the documents show that 288 kilograms of gold was removed from the Croatian National Bank and the state treasury on May 7,1945 - the day that Germany capitulated. By Draganovic's own testimony, part of that treasure landed in his hands. The "Golden Priest," as Draganovic was known, acknowledged to the Yugoslav War Crimes Commission that he doled the money out to Ustasha soldiers and Croatian civilian refugees. (Though called to testify, Draganovic was never charged. He later returned to Yugoslavia and died there in 1983.)

When in Rome. But does any of the evidence implicate the Vatican itself? The strongest indication so far is a memo that first prompted the State Department's interest. The memo, dated Oct. 21,1946, was discovered last summer in the declassified files of the U.S. Treasury Department. Written by OSS agent Emerson Bigelow, it reports that money sent by Ustasha from Croatia to Rome after the war had been partly intercepted by the British, but that 200 million Swiss francs - the equivalent of $170 million today - were being held in the Vatican for safekeeping. According to "rumor," the memo says, the money was being used to finance Croatian war criminals in exile.

When the Bigelow memo was released last year, the Vatican swiftly dismissed it, insisting that the charges could not be true. But some researchers who have studied World War II intelligence matters note that other archival documents counter the notion that a Vatican-Ustasha link is implausible on its face. One is a British diplomatic memo from Oct. 17, 1947, cited in the 1991 book Unholy Trinity by journalist Mark Aarons and former Justice Department Nazi-hunter John Loftus. According to the memo, a San Giralomo priest named Father Mandic was a "liaison to the Vatican" who was involved in converting Ustasha gold, jewelry, and foreign exchange into Italian lire.

Other reports mention Ustashas meeting with Vatican officials or even living in the Vatican. The British Foreign Office reported in January 1947 that Pavelic himself, by that time a wanted war criminal, was living "within the Vatican City." An earlier report by Gowen, in October 1946, noted that Pavelic was in Rome and in contact with Draganovic.

Documents include accounts of Ustashas being hidden at the pope's summer residence at Castel Gandolfo and being seen driving in Rome in cars with Vatican license plates. The recently declassified Golik memo reports that Ustashas ate at the papal mess and that Father Golik was "declared to be in close contact with the Vatican."

The Vatican's tolerance of the Ustasha during the war was no secret. On the recommendation of Zagreb Archbishop Alojzije Stepinac - who had blessed Pavelic at the opening of the Croatian parliament - the pope established informal diplomatic relations with the independent state of Croatia, and his envoy made regular rounds of Ustasha headquarters. In 1941 and in 1943, at a time when his excesses were known, Pavelic was granted two private audiences with Pius XII. The pope explained that he received the Ustasha leader simply as a Catholic, not as head of the Croatian state. The pontiff's decision was widely reported - and widely deplored - at the time. In July 1941, Francis D'Arcy Osborne, the British ambassador to the Vatican, wrote: "[Pius's] reception of Pavelic ... has done more to damage his reputation in this country than any other act since the war began."

Bound to silence. What all this intelligence means is at the heart of the State Department-led investigation. Vatican officials insist they are hiding nothing because they have nothing to hide. But they say they cannot allow outside researchers free access to their archives because the collection contains sensitive personnel files. As a general rule, the Vatican releases church documents only after about 75 years. "I am bound to silence," said the Rev. Marcel Chappin of the Vatican Secretariat of State, when pressed to comment. Chappin said that the Vatican has already published a voluminous account of its role in World War II, including a discussion of the controversy surrounding Pius XII, who kept silent on the Nazi atrocities because he believed provocation of the Nazis would lead to more persecution and because he considered the greater enemy to be atheistic communism. Vatican defenders note that the church saved tens of thousands of Jews during the war, and they urge that current suspicions be viewed in the context of the chaotic times: Refugees were streaming into Vatican City after the war, and it is quite possible that funds intended for these refugees were used to help war criminals without the pope's knowledge.

"The question is what did the Vatican's own leadership know?" says William Slaney, the State Department's historian and author of the Nazi gold reports. "We want the Vatican ... to deal with [its] share of this dreadful event."

Picture [of PIUS XII] caption: PIUS XII. Defended by Vatican

Diagram [map of Europe and Rome] caption: The Rome connection Istituto San Girolamo - a Roman Catholic seminary on Via Tomacelli about 1 mile from the Vatican - served as a safe house where fleeing Croatian war criminals received money, shelter, and forged passports immediately after World War II.

Picture [of RC clerics and Ustasha military officers] caption: CHURCH AND STATE. Zagreb Archbishop Alojzije Stepinac (right), at an official Croatian ceremony in 1941

Picture [ of Ustasha soldiers posing with corpses of Serb victims] caption: GENOCIDE. Ustasha soldiers pose with the corpses of five Serbs. By war's end, they would slaughter hundreds of thousands more.

Picture [ of RC priest "converting" Serbs] caption: FORCED CONVERSION. The Ustashas promised Serbs that they would be spared death if they converted from Eastern Orthodoxy to Roman Catholicism. Thousands converted, only to be killed anyway.

Picture caption : WAITING FOR RESTITUTION. Elderly Holocaust survivors, many of whom lost entire families in concentration camps, listen as Jewish leaders in Zagreb explain the process for filing claims for restitution from Swiss banks that received Nazi gold.

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