Into the Lion's Mouth: The True Story of Dusko Popov: World War II Spy, Patriot, and the Real-Life Inspiration for James Bond

by Larry Loftis

  Dr. Warnecke wanted Popov to replace the entire network: Osten, Ludwig, and the team of spies. The U.S. mission had advantages, Dusko knew, but from New York it would be harder to look after his parents—if they were alive.

  That Sunday, fretting for his family and nervous about his new assignment, Dusko remembered, he decided to take in a bullfight at Plaza de Toros de Las Ventas. It was the action here that a decade earlier had inspired Ernest Hemingway to write Death in the Afternoon. Although the stadium held over twenty thousand, it would be packed. Dusko purchased a ticket and went in. A death in the afternoon would at least transfer his tension elsewhere.

  Finding his seat, he watched the ceremony and pomp as the matadors, bandilleros, and picadors marched in procession. Moments later the bull entered and the ring erupted into a gladiatorial ballet: beast charging the horses in Act I, multicolored banderillas piercing the air and animal in Act II, matador orchestrating the symphony of death in Act III. The fight was a tragedy, slow-played and cruel, but the danger was no drama. And the analogy was unmistakable. Like the matador, Dusko had to draw the enemy bull so close that, as Hemingway said of Villalta, blood stained his belly. To do this, Popov would have to work the cape flawlessly—hiding here, turning there, flashing his counterfeit wares in centrifugal harmony. If he failed, even by inches, he would die face to the dust.

  As Dusko’s eyes and mind wandered, the crowd suddenly cheered. The torero had landed a banderilla and the bull stumbled.

  “He’s collapsing like Yugoslavia,” shouted a man behind him.

  Popov snapped. Jumping to his feet, he turned and slapped the man, knocking him backward across the bleacher. Immediately, Dusko realized his mistake. In a packed arena the odds of Gestapo being within earshot were great. He bolted for the exit.

  He would have to leave Madrid.

  Soon.

  9

  “HE’S NOT DEAD”

  Madrid, Dusko would soon learn, would have cascading consequences in two directions. On April 23 he returned to Estoril to a chilly reception. Almost overnight word had spread about the bullfight incident and von Karsthoff wasted no time in bringing up Yugoslavia.

  “Popov, are you a Serb or a Croat?”

  Dusko stirred. It had finally come. The question he feared most allowed no suitable answers. If he admitted being a Serb, it amounted to a death sentence. All Serbs were pro-Allied, most affiliated with the pro-British royalists, some fighting with Tito’s Communist Partisans. Croats, on the other hand, sympathized with Ante Pavelić’s Ustaše government in Zagreb, which had essentially become a German vassal. But if Dusko said he was Croat, even the slightest checking would reveal his true heritage and he’d be caught in the lie.

  “My city,” Popov replied, “Ragusa, or Dubrovnik as it is now known, was the bright star of Dalmatia. It was allowed by the Pope to trade with the infidel Turks, and that way it remained free and became rich and independent.” Dusko carried on with his encyclopedic answer for several minutes, until von Karsthoff stopped him.

  “Thank you for that brief and clear historical treatise. But it doesn’t answer my question. Are you a Serb or a Croat?”

  Undaunted, Dusko charged on, stating that Ragusans were neither Serb nor Croat. Von Karstoff mulled the answer a few moments, and then seemed satisfied. Who was going to debate the issue with a native Ragusan? Besides, the major just needed a believable explanation to give to Berlin. To assure that Ludovico didn’t lose his star spy, Dusko later found out, von Karsthoff wrote a fifteen-page report explaining Popov’s political indifference.

  Yet Dusko was not off the hook. The British were again questioning his loyalty. When he met with Johnny in Madrid, the two had worked on the sale of Norddeutche Lloyd ships in South America. It was a massive deal—$14 million—whereby the German ships would be sold to a Spanish consortium but registered under the flag of Peru. The funds would settle in the U.S., where they would be used to purchase NDL stock—a cash reserve to reconstitute the company after the war. While Popov had told MI5 in December of his interest in helping Johnny sell German ships in neutral ports, neither they nor MI6 knew anything of this transaction.

  On April 19 Felix Cowgill, MI6 counterintelligence chief, notified Tar Robertson that he had received a report from a “reliable source” (ULTRA) that TRICYCLE was working with Johnny Jebsen and the Peruvian commercial attaché in Madrid—intermediary between the Spanish consortium and the Peruvian government—to consummate the deal. Germany had approved it with the condition that the ships not be resold to Great Britain. Felix had sent the report on to the Ministry of Economic Warfare, he told Tar, with the request that MEW let him know as soon as possible if TRICYCLE “is still on our side.”

  »

  When Dusko next met with von Karsthoff, Ludovico revisited the idea of having Friedl Gaertner and Dickie Metcalfe as sub-agents. Dusko parroted the Double-Cross stories and the major ran with it, saying he was recommending both to Berlin. Assuming the meeting was over, von Karsthoff gave him a few thousand pounds to take to England.

  Dusko took the money but seized the opening. As soon as he landed, he told the major, British Customs would record serial numbers of the bills he brought into the country. If Berlin approved Gaertner and Metcalfe, and Dusko had given them money, he pointed out, the money would be traceable to him if they were caught. Von Karsthoff appreciated the risk and said he’d figure something out.

  Dusko was going to help him.

  »

  While in Lisbon and Madrid, Popov never lacked for female companionship. Unfortunately, his dating life was not off-limits to German or British Intelligence, and MI5 kept tabs on two of his girlfriends, Maria Elera and Martha Castello. Elera, a beautiful Brazilian, was elegant and a dead ringer for a São Paulo model. Castello, on the other hand, MI5 believed to be a “high-class procuress.”

  Casino Estoril, 1941.

  Cascais Archive

  That Dusko often had an audience for his amorous adventures was beyond an annoyance; he better than anyone knew that a single slip might doom him. Nevertheless, he would not be denied his favorite penchants—drinks, damsels, and danger—which brooded over him as stalking clouds. Occasionally, lightning would strike.

  One night, Popov wrote, he asked a “French popsie” to join him at the Casino Estoril nightclub. Among the patrons that evening was a large contingent from London’s Daily Mail. When the band took their break, Dusko recalled, a correspondent’s companion—a drunk American girl—clambered onstage to showcase her a cappella skills. Finding the entertainment less than romantic, Dusko summoned a waiter, placed a champagne cork on his tray, and asked him to deliver it. The woman was offended and her friends were outraged. A brawl ensued and two men began pushing through the crowd to get their hands on the instigator.

  In Popov’s pocket was an envelope containing notes for the British and the Germans. If he was arrested in the melee, Dusko knew, the contents would travel from the PVDE to the Germans within hours. He jammed the packet into his date’s purse and shouted for her to run for it; he’d meet her back at the Palácio. “I had to,” he said later, “although I had never seen her before in my life.”

  View of the gardens from Casino Estoril. Hotels Parque and Palácio on the left, Estoril Castle in the distant center.

  Cascais Archives

  As his date raced away, Dusko fought off the singer’s friends and then escaped. Outside, he heard a scream and sprinted toward the voice. It was his girl, grappling with a man over her purse in the casino gardens. Without breaking stride Dusko kicked the man in the face, punting his head like a football. Spewing blood and teeth, the assailant fell unconscious.

  “He’s not dead,” someone said, rushing up. It was the Palácio manager, George Black.

  Popov helped his date up and retrieved the envelope. Black, whom Dusko had befriended, said he’d tell the police that the girl was attacked by two t
hugs. The following day he gave Dusko the full story: When the police came, Black had recited his line about thugs. Black also inadvertently confirmed that the assailant was a German operative; the man’s testimony to the police at the hospital—that his injuries were from thugs who disappeared—matched the manager’s.

  »

  At the end of April Popov returned to London. Catching up with his legitimate business, he notified MI5 that he had two pending export deals—sixty-five tons of turpentine—on behalf of Savska Bank. For an undisclosed reason, he had a shipment of fifteen tons—scheduled for transport to Yugoslavia—stopped at the Portugal–Spain border. The British asked no questions.

  After his debriefing, Dusko presented Bill Luke with another idea. It started with a problem faced by all spymasters: paying agents on enemy soil. At Customs, all currency had to be converted to pounds, and someone exchanging German marks would be suspect. Even if the courier was traveling with sterling or dollars, any sizeable amounts would draw attention.

  About this time, Guy Liddell recorded in his MI5 diary two accounts of how the Germans were desperately trying to pass money to their man, British double agent TATE. On May 15 Liddell wrote: “The man from the Phoenix who was to bring TATE his money has been picked up by a War Reserve policeman at Colney.” The man was carrying £500 and $1,400. “The Supt.,” Liddell added, “having had his instructions from our R.S.L.O. about suspicious persons carrying large sums of money, immediately came to the conclusion that the man was a spy.”

  On May 23 Liddell described another attempt: “He [TATE] is to take a bus No. 16 at 4 o’clock on a certain date from Victoria Station. There will be on board a Jap. TATE and the Jap would get off at the first stop and get into the next 16 bus. The Jap would carry the Times and a book in his left hand. TATE would get alongside him and ask whether there is any news in the paper. The Jap will then hand him the paper which will contain the money.”

  On the date of the rendezvous, however, the “Jap” didn’t show. Intercepts revealed that he had received the message late. The Germans then decided to have him hide money inside four hollowed birch branches, follow behind the explosions of two 200-pound bombs to be dropped in a certain area, and place the branches amid the debris. But on the night of the planned bombing, the plane was unavailable.

  On May 29 the Germans finally passed £200 to TATE, but that transfer too almost failed. Returning to the original plan, the two men had boarded bus No. 16, but before the first stop policemen abruptly held it. The Japanese agent exited, TATE followed, and the men made their exchange.

  Still worse for the Germans, as Popov had mentioned to von Karsthoff, was that serial numbers of all bills over one pound were recorded at Customs. Even later in the war, when Schellenberg was counterfeiting currency, the Abwehr ran the risk of censors, serials, and transfers. Since the Double-Cross Committee was running a large number of turned spies, often more than ten, it was impossible for the Abwehr to effectively disburse funds. If the committee would approve it, Dusko told Bill Luke, he had a scheme to steal the Germans blind.

  Money laundering.

  Luke was intrigued and they presented it to Tar, who thought it worth a try. Naming the plot Plan Midas, Robertson pitched it to the Double-Cross Committee. They rejected it. Too far-fetched, they said. Tar and Bill were flummoxed; it was a case officer’s dream, Luke thought, tricking the Nazis into funding their enemy. The MI5 officers pressed the committee again the following week, explaining the benefits and how they already had an intermediary in place, a London theatrical agent. This time the committee approved, authorizing £20,000 for priming the laundering pump.

  Before Dusko’s departure, MI6 gave him a code for contacting British Intelligence in Lisbon: From a public telephone he was to call 52346. If the Germans suspected nothing and everything was fine, he was to mention that it was a lovely day and he was enjoying the sunshine. If he thought the Germans suspected him and he was unhappy about his position, he was to say that he thought a storm was breaking and it was likely to rain. If the Germans had found him out and he was blown, he was to say “the party is over.” And if he wanted to meet, he would make an appointment for the following day. He would rendezvous at the tennis pavilion on Tapada Ajuda an hour before the time stated. The appointments were only to be made during the week and he was advised to speak over the telephone in French.

  »

  On June 28, 1941, Popov returned to Lisbon to pitch Midas and went directly to the Estoril villa. Von Karsthoff was in a jovial mood and happily announced that Berlin had approved Gaertner and Metcalfe as sub-agents. As they spoke, Dusko uncovered the bait, telling von Karsthoff that he had a wealthy business associate in London who wanted to get some money out of England. The man was a theatrical agent, Dusko said, and had asked about a bank or exchange agent abroad who would be willing to accept pounds in England for U.S. dollars deposited in New York. The man was willing to lose some money on the exchange rate, of course. Did the major know of such a bank or agent?

  Von Karsthoff nibbled at the edge of the idea. As SD Lisbon chief Erich Schroeder testified after the war, Ludovico enjoyed the pleasures of money and was known to skim off the top whatever Berlin sent for agent IVAN. All of this boded well for Popov’s plan; the opportunity to make a commission was too appealing for von Karsthoff to miss.

  “Don’t do anything for a few days,” he said. “I’m sure I can have a better deal for you than any bank.”

  Seeds planted, Popov returned to the Palácio. It was a lovely day and he was enjoying the Lisbon sunshine.

  10

  TARANTO AND THE TARGET

  A few days later Johnny arrived and updated Dusko on his family. Part of their Belgrade home had been destoyed by bombing, he said, but Dusko’s parents were safe in Dubrovnik. Ivo had a close call as well, going to ground when the Germans arrived.

  Jebsen didn’t know the half of it. In early July, Ivo had been condemned to death by Ante Pavelić’s Ustaše. A Croat lawyer and former member of Parliament, Dr. Ante Pavelić was a psychopath who had been arrested for organizing the assassination of Yugoslav king Alexander in Marseilles in 1934. Pavelić somehow escaped and slipped into Italy, where he was protected by Mussolini. There he founded the Ustaše, with the goal of creating an independent Croatian state. When Germany invaded Yugoslavia in April 1941, Pavelić assumed power as head of Croatia and began a campaign of genocide. In his first year alone, the Ustaše murdered some three hundred thousand Serbs, Jews, and Gypsies.

  As a Serb, a Nationalist, and the official doctor charged with overseeing Dubrovnik health matters, Dr. Popov was high on their list. Because Ivo treated countless patients free of charge, however, he was beloved in the community. When the death warrant was announced, Ivo’s friends warned him. Disguised as a monk, he slipped away to Belgrade.

  The atrocities reported across Yugoslavia were so outrageous that they seemed hard to believe. But they were true. British SAS operative Fitzroy Maclean, who had parachuted into Bosnia to assist the group most effectively fighting the Germans—the Partisans—saw with his own eyes the anarchy that was the Balkans. Four groups, he explained, vied for control of the country: the occupying Germans, Tito’s Partisans, Mihailović’s Četniks, and Pavelić’s Ustaše. While the Partisans and Četniks had originally fought the Germans side by side, in short order each claimed the other had betrayed them to their occupiers, and by the end of 1941 they would be fighting each other.

  In Bosnia, Maclean explained:

  Pavelić’s accession to power had been followed by a reign of terror unprecedented even in the Balkans. . . . There were widespread massacres and atrocities. . . . Racial and political persecution was accompanied by equally ferocious religious persecution. The Ustaše were fervent Roman Catholics . . . [and] set about liquidating the Greek Orthodox church in their domains. Orthodox villages were sacked and pillaged and their inhabitants massacred, old and young, men, women and childre
n alike. Orthodox clergy were tortured and killed, Orthodox churches were desecrated and destroyed, or burned down with the screaming congregation inside them (an Ustaše specialty, this). The Bosnian Moslems, equally fanatical and organized in special units by Pavelić and the Germans . . . joined in with gusto and a refined cruelty all of their own, delighted at the opportunity of massacring Christians of whatever denomination.

  In Serbia, Maclean went on, the Germans had installed a puppet government, which sent large numbers of Serbs to concentration camps and massacred untold thousands of others.

  The mayhem would hit the Popov family soon enough.

  »

  Johnny went on to say that he had been in Taranto, Italy, working with Baron Wolfgang von Gronau, Germany’s air attaché in Tokyo. Jebsen’s assignment—unknown to him or anyone—would later affect the lives of thousands.

  In March Japan’s foreign minister, Yosuke Matsuoka, had gone to Berlin with a contingent of army and navy officers to flesh out the Tripartite Pact. Months before, Japan had requested that Germany supply details of a British raid at Taranto, Italy, but little had come forth. Matsuoka repeated the request during the Tripartite meetings, and someone figured Johann Jebsen would be ideal for the assignment.

  The Jebsen shipping empire was well known, even in Japan. By 1941 the family had offices throughout much of the world, and the Jebsen & Co. Shanghai office had been providing Abwehr agents cover in the Far East. The tandem of Gronau and the shipping magnate would, Japan hoped, finally provide a comprehensive report on Taranto. Their instructions, presumably from Hermann Goering and in concert with Japanese intelligence, were to ascertain attack procedures and damage results.