The Princess Spy

by Larry Loftis

  Princess Agatha strolled with her party past their table and Aline caught her subtle wink to Edmundo.

  “I’ll bet anything you were in Portugal with your favorite princess,” Aline said under her breath.

  Edmundo flashed a lopsided grin. “What do you expect me to do, my pet? She pursues me, and after all it is part of my work, you know. Agatha gives me the inside track to Gestapo gossip. She may not be a Nazi, but she knows them all. The trouble is, she’s getting serious. Can you imagine—she’s thinking of marriage! That would certainly improve my seating at these Spanish dinners.”

  Aline laughed. “Edmundo, you must really be in love. Marrying Agatha won’t give you a title. German titles cannot be passed on to husbands. But if you married a Spanish woman with a title, you could become a marquis or a count or a duke.”

  “You’re right. Maybe I’d better reconsider. And I’m getting tired of waiting for a deposed queen to float into town.”

  Edmundo called for the check, saying he was taking Aline to dinner to meet an important new contact. As they waited outside for a taxi, a convertible Cord pulled into the far end of the circular drive. Aline couldn’t see the driver’s face as he got out, but she could see that he was young and well built. He was also well dressed, sporting a beige trench coat with a white silk scarf over his shoulders.

  A taxi arrived and as she and Edmundo were about to get in, she heard a man’s voice: “Aline, hold it a moment.”

  It was none other than Luis, the Count of Quintanilla, who had pulled up in the Cord. “I’m meeting Casilda. Is she inside?”

  Aline nodded. “She’s in the rotunda with Pimpinela.”

  “What a pity you’re just leaving. I always seem to miss you. Casilda tells me the Oil Mission keeps you very busy.”

  Luis invited her and Edmundo to join Casilda and him for dinner at Chipén, but Edmundo chimed in, saying that they had reservations at Horcher’s.

  Luis bid them good night, and when he had reached the top of the steps, he turned back to look at her.

  Aline waved.

  “Sorry to have spoiled your evening, Divina,” Edmundo quipped as they stepped into the taxi.

  “What’s the matter with you?”

  Edmundo shrugged. “I guess I’m worried that you’ll marry a grandee before I do.”

  “Don’t be ridiculous. I hardly know Luis Quintanilla. He’s practically engaged to Casilda, my best friend. The families are planning the wedding already, and he adores her.”

  Edmundo cracked a conspiratorial smile. “My pet, the person who should marry the count is yourself.”

  * * *

  As January came to a close, Countess von Fürstenberg surfaced again in Madrid after an absence of more than three months. Why she had left and where she had gone, no one knew. The rumors circulating after she disappeared were that she was broke and had left behind large unpaid bills at one of the major Madrid department stores.

  The rumors were in fact true, and Gloria’s track record was less than stellar. After she disappeared Gregory Thomas had X-2 investigate. Gloria had claimed to have held a Dutch passport, but when OSS agents checked with the Dutch legation, they denied it. Gloria had never presented herself to Dutch authorities in Spain or Portugal, they said. It was also true, X-2 discovered, that Gloria had left town owing 1,500 pesetas to a business known as Julio Laffittee.

  They also found out that when Gloria had arrived in Portugal on August 9, she had told customs officials that she was en route to the United States with her two children: Dolores, age six, and Francisco, age three. From there she was supposedly headed to Mexico, where she intended to join her mother, brother, and sister. She emphasized to Portuguese officials that she needed to join these relatives soon as she was “virtually penniless.”

  What was suspicious about Gloria’s story was that, while claiming to be destitute, she nonetheless managed to live in the most expensive hotel in Portugal for more than three months.

  Gloria’s Palacio Hotel registration. Note that she includes her maiden Mexican name, Rubio, and that the hotel clerk writing in the checkout date used the roman numeral for November. Cascais Archive

  Portuguese authorities didn’t exactly buy her story, and in October they demanded that she provide a written response to various questions, including where she had gained a passport, and on what means she was living. Her responses were complicated.

  In 1934 she had married a Dutchman named Frank Scholtens, she wrote, thus gaining Dutch citizenship. She divorced him shortly thereafter, though, and regained her Mexican nationality. The following year she met Count von Fürstenberg in Berlin and married him in London. They lived in Germany until 1942, when she left him and moved to Spain. The German consulate in Madrid, however, confiscated her passport, and she applied for a new one with the Mexican embassy. In 1943 the Mexican consulate in Lisbon issued her a new passport.

  Her financial situation, though, remained a mystery. While she had paid off the bill to Laffittee’s and continued to live at the Palacio, she reported that she had “no funds” and no account at any Portuguese bank.

  Portuguese, Spanish, and American authorities all had unanswered questions about Gloria, but it was clear that she was cagey, crafty, and resourceful.

  * * *

  In late January, Edmundo was spending more and more time with Princess Agatha, and their relationship was becoming increasingly serious.

  “Aline,” he told her near the end of the month, “I may ask Ratibor to marry me.”

  Aline’s jaw dropped. “Edmundo, how can you do that? You put Ratibor on the blacklist. If you married her, you’d have to resign from the service.”

  Edmundo shrugged. “My dear, I ask you, what else can a man do but obey his heart? And, frankly, what is more important, I ask you: espionage or a title? Didn’t a king abdicate his throne for a woman? Well, what can I do? What is a court of law when I, Edmundo Lassalle, bow as a humble petitioner before the court of love?”

  “Are you serious? Are you really in love with her?”

  “Aline, think of my future. What does it hold for me after the war ends? Can you see me shuffling papers behind a desk in some American company? Or perhaps you would have me imprisoned in the Pentagon, working for the army. No, my darling, remember: ‘Edmundo Lassalle. He danced not in vain.’ ”

  Aline couldn’t help giggling at the lines Edmundo had said he wanted on his tombstone.

  “As Ratibor’s husband,” he went on, “consort, if you will—the world of society is mine. We’ll live between Mexico City, New York, Paris, Deauville, the Italian Riviera.”

  Edmundo continued, ranting about how espionage was no longer as exciting as it had been when he started.

  Aline found the whole thing disturbing. He was walking a fine line with Princess Agatha. What would Agatha say if she found out he was an OSS agent and had placed her on the blacklist? What would Gregory Thomas say upon hearing of an engagement? Worse, what if Agatha really was a Nazi and Edmundo had fallen in love with her? Would he switch sides?

  Aline shrugged off the notion and asked him whether Agatha was providing intelligence to pass on to Washington.

  Edmundo shrugged. “Every day I trust her less. But I make a valiant effort to keep those old fogies in Washington interested. Why, it makes their day just to receive one of PELOTA’s delicious concoctions.”

  Aline shook her head. “If ARGUS knew!”

  Edmundo grew solemn and in a voice fit for theater intoned: “My dearest, as my prized pupil who will one day undoubtedly share my firmament in the galaxy of immortal spies, I tell you from the bottom of my heart—on Judgment Day we will not be accountable to ARGUS. I, for one, intend to be accountable only to Venus.”

  Aline couldn’t help but laugh. Edmundo broke the mold. He was preparing OSS reports detailing his investigation of Princess Agatha—the very woman he had put on the Allied blacklist—and yet he was thinking of marrying her, even though he wasn’t necessarily in love.

 
There was just one minor detail Edmundo had failed to disclose.

  I. If anyone, or any company, in neutral countries like Spain, Portugal, or Sweden were found to have done business with Germany during the war, they were “blacklisted,” which meant that no Allied country would trade or do business with them. In addition, individuals on the blacklist usually would have a counterintelligence file opened on them in X-2’s office.

  CHAPTER 17 BUTCH

  February 1945

  Madrid

  Over the ensuing days Aline thought more about Pierre—his strange last comment about wanting to change things, his disappearance, and Thomas’s use of him for chicken feed. But that was the chief’s business now; after all, Thomas knew far more about Pierre than she did.

  Other strange things were happening as well. The first weekend in February, Edmundo went to a society ball with a most unusual date.

  Gloria von Fürstenberg.

  He told neither Aline nor Gregory Thomas.

  * * *

  On February 5 Aline submitted her first intelligence report as agent BUTCH. It was a memo to QUERES (James MacMillan) about a potential Safehaven suspect. A certain Evarista Murtra, she wrote, the general manager of a firm in Barcelona, had said to a small group two days earlier that he was moving to Cuba with all of his capital. Later that day he cabled a contact in South America, advising the man to deposit all funds in an American bank.

  It wasn’t earth-shattering news, but it did fall in line with the Safehaven objective of finding all Axis sources attempting to transfer funds out of Spain. If X-2 had a file on Murtra as a possible Nazi collaborator, Aline’s information might uncover a surreptitious chain.

  Aline’s first formal field report, submitted to James MacMillan (“QUERES”) on February 5, 1945. NARA

  In March she submitted two more reports. Together she and Edmundo then rooted out a number of Safehaven targets, and in early April Edmundo discovered a stream of illegal financial transactions going on in Portugal. Gregory Thomas thought it was significant enough to notify Washington and that afternoon sent a report to Frank Ryan.

  Ryan wasn’t surprised, though, as he had just received a cable from the US embassy in Paris stating that the German embassy in Spain was sending 50 to 100 million francs a day to Lisbon via diplomatic pouch. These francs were exchanged for Portuguese pesetas, Paris reported, and then transferred back to Madrid, again through the diplomatic bag. The Germans, it was clear, were frantic to liquidate their funds into a safe currency before their country capitulated.

  Thomas took off for Lisbon to get details, and on April 17 he sent word to MacMillan and Mellon that “there is a reported flow of material wealth into the German embassy in Madrid and the Consulates in the provincial capitals.”

  And that flow would only increase.

  Three weeks later, on May 7, General Alfred Jodl, Hitler’s chief of staff, signed Germany’s unconditional surrender at General Dwight Eisenhower’s headquarters in Reims, France. The following day Field Marshal Wilhelm Keitel signed the final terms of surrender in Berlin.

  It was exhilarating news for Aline and everyone at the American and British embassies, and celebrations and toasts rang in the newfound era of peace.

  While the end of the war in Europe might have suggested that the OSS could close its Spanish offices, Aline’s and Edmundo’s work was now needed more than ever. Millions of dollars and countless works of art had yet to be retrieved, and Safehaven pushed ahead full steam. Four days later, on May 12, Aline submitted no less than six reports, three to MacMillan, three to Larry Mellon, and a fourth memo to Mellon on May 15.

  The first memo to MacMillan indicated that Spain’s official exchange rate between the peseta and the dollar was about to change: from 10 to 1 to 18 to 1. She had heard this from three reliable sources, she wrote, including a member of the Spanish stock exchange. Not even the State Department had known this was coming. The dollar, Aline’s memo suggested, was rapidly becoming the only reliable currency in the world (other than gold).

  In a second report to MacMillan, she referenced joint work that she had been doing with Edmundo on Safehaven. For some time, Dr. Francisco Liesau—the man for whom Princess Agatha had worked—had been high on their suspect list, along with his company, Oficina Tecnica. “In May 1943,” she reported, “Dr. Liesau carefully put everything he owned including his own apartment to the last piece of furniture under the names of two of his best Spanish friends… Manuel de Bofarull y Romana Alfonso XII.” She also noted that the Spanish government had just days ago passed a resolution stating that assets of suspected Nazi collaborators could be frozen, even when in the hands of third parties.

  Given the information in X-2’s files, she wrote, combined with her and Edmundo’s findings, the only conclusion was that Liesau “has been a dangerous German agent.”

  In a sister memo to the Liesau report, she noted that she and Edmundo had a new source with inside information about Liesau’s company, Oficina Tecnica, and that she and Edmundo would provide new details soon.

  Her first memo to Larry Mellon concerned Marta Film, a company co-owned by a German named Guillermo Linhoff. The company had made Spanish films and imported German and Italian films. Because of the latter, and Germany’s well-known production of propaganda films, Marta Film had been blacklisted. Linhoff and his Spanish partner, she reported, were working to reestablish their business in another name to circumvent the blacklist. And one person who seemed to spend a fair amount of time in the Marta Film office was Hans Scheib, a German filmmaker.

  Aline’s second memo to Mellon was about a German woman he had asked her to investigate, Countess Hexe Podevils. She was married to a German named Herr Schubach, Aline reported, but was separated and living in Madrid under her maiden name. Without question, Podevils had been a liaison officer for the Germans, a “full-fledged Gestapo agent,” she wrote, and a war criminal.

  Her third report to Mellon was lengthy and a bit off the espionage track. It involved Edmundo, Walt Disney Productions, Roy Disney, and an Italian named Pierre de Beneducci. Aline included excerpts from two February 23, 1944, letters that Edmundo had given her. One was from Roy, the other from Disney’s legal counsel, giving Edmundo last-minute information and instructions before leaving for Madrid.

  Edmundo was replacing Beneducci, their former Spanish and Italian representative, and it turned out that his predecessor had not been entirely ethical. From what Edmundo and Aline surmised, the man had been licensing Disney’s products but keeping all the proceeds for himself. He disappeared during the Spanish Civil War, they said, and Disney had no idea if he was still selling, or attempting to sell, their licensing.

  Roy Disney concluded: “We want you to investigate the status of the present activities in Spain of de Beneducci and report to us what he is doing.”

  It was a delicate situation for the OSS. While they wanted and needed Disney’s cover for Edmundo, Disney wasn’t paying for his services and agent PELOTA had little time to chase Disney’s private business affairs. If de Beneducci had been blacklisted or was a suspect under investigation by X-2, that would be a different matter. Edmundo had not previously said anything about the Disney assignment though, probably because he had no intention of carrying it out. Pursuing de Beneducci would only have distracted him from his real quarry: an aristocratic wife with an impressive title and bank account.

  * * *

  The State Department, meanwhile, had been doing its own reporting. Two weeks earlier, on May 2, it had taken the unusual step of issuing a formal report stating that Gloria von Fürstenberg was not a German operative. At least not at the present time. Though her connections to various Nazis were undeniable, her choice of friends seemed to have been determined on the basis of wealth rather than ideology. In a carefully worded statement, the report announced: “Subject is not actually considered suspect although known to have had various German connections in the German embassy in Madrid (HANS VON STUDNITZ), German agent in the S.D.”


  The embassy’s insertion of “actually,” together with a notation that she had ties to a Nazi intelligence agent, suggested that it was something of a surprise that she was not directly fingered as a German informant or agent. The statement had noted that Gloria was planning to divorce her current spouse, Count Franz Egon Graf von Fürstenberg, and marry Prince Ahmed Fakhry, son of the Egyptian minister to France and Spain. And as if to highlight Gloria’s motives and establish her reputation as a gold digger, the statement noted that Fakhry was five foot six and twenty-four, while Gloria was five foot nine and thirty-two.I

  Aline wasn’t convinced that Gloria was innocent. She had too many close ties to ardent Nazis or their collaborators, including Hans Lazar, Prince Max, and Ana de Pombo, for it to be a coincidence. The source of the statement also struck her as peculiar. The report came not from the OSS’s X-2 office, which investigated and tracked all potential enemies, but from the State Department’s Foreign Service. Ambassador Carlton Hayes had already returned to the United States by this point, but ever since his arrival in Madrid in 1942, the State Department had not masked its animosity toward the OSS.II As far as Hayes had been concerned, the OSS was a threat to cordial relations with the Spanish government. All along he had felt that spying on a “friendly” neutral country was anathema to effective diplomacy. And while the report noted that Gloria had been friendly with Pepe Mamal, the Spanish ambassador to Germany, it drew no connection between that and her numerous other dubious contacts.

  The timing, too, was curious. When the report about Gloria was issued, the war in Europe was essentially over and Germany had been expected to capitulate any day. Why issue a report then? Was State saying, “See, we don’t need the OSS anymore; these so-called suspects aren’t really dangerous to our interests.”III It seemed to coincide with recent events back home; President Roosevelt had died on April 12 and his successor, President Harry Truman, had been open from his first days in office about his disdain for American espionage. While FDR, like Churchill, saw the vital importance that intelligence played in the war, Truman, it seemed, couldn’t dismantle it fast enough. Aline could only wonder if State was issuing other reports like this one, taking X-2 subjects like Gloria off the table, and reinforcing the notion that the OSS wasn’t needed in Spain.