Hitler's Spy Chief (7 page)

The naval intelligence officer in the embassy in Madrid,
Korvettenkapitän
Hans von Krohn, was well connected with Portuguese
businessmen thanks to his marriage to a daughter of a wealthy Portuguese industrialist. But he also was rather unenthused by Spain. British intelligence noted that he had a French mistress. He lacked energy and imagination in the eyes of his superiors in Berlin, who felt that Canaris, with his fluent Spanish and Latin American experience, was the right man to inject some ginger into the Madrid operation. Spanish society was pro-German and then, as now, appreciative of excellent manners. After all, the mother of the queen was an Austrian princess.

Thus, by the spring of 1916, the slight but confident figure of Señor Reed Rosas took possession of a flat not far from the German embassy, where he would meet with Krohn and Eberhard von Stohrer, a first secretary, later to become ambassador, to discuss Allied shipping movements and other ways in which Germany's position could be strengthened. Reed Rosas, or rather Canaris, was never invited to the German embassy and the few operatives in the mission who were aware of his existence only knew him by his code-name ‘Kika', his childhood nickname, meaning ‘peeper', although, as was later to have fateful consequences for Canaris, the name Reed Rosas was not unknown at the embassy.

With the intuitive brilliance of a born networker, ‘Kika' set about gathering agents and informants to track Allied shipping. Soon his web embraced all the principal Spanish ports. In Valencia, he secured the services of the vice-consul, Carlos Fricke. In Cadiz, a friendly businessman offered his services, while German captains of Spanish merchant ships, such as Captain Meyer, of the
Roma
, also supplied information. Soon, ‘Kika' had acquired the services of several Spaniards who worked each day in Gibraltar, returning to the Spanish mainland at dusk.

Any useful intelligence gleaned from these sources was given to Krohn, who would then signal Cattaro, where the information could be passed onto the U-boats. In this way Allied shipping began to come under more pressure. As yet, however, the U-boat fleet still did not have the luxury of supplies beyond their bases in the Adriatic. This situation was about to
change. Canaris was now going to build for Germany a fleet of ships that would provision the imperial submarines under the very noses of the Allies.

In any country, wealth and power are the preserve of a small minority.
8
In war, it is the task of the professional spymaster to secure access to these personalities. In wartime Spain it was a small group of financiers who pulled many of the strings that could assist Canaris, and these men had close links with German banks. Indeed, some were descended from that culturally rich bourgeois environment of nineteenth century
Haut-Banque
Germany, whose sons were to become such an influence in the financial capitals of the world as the century progressed. Such men were the target of all senior diplomats on both sides, but Prince Ratibor, the German ambassador and scion of the Metternich family, was at some advantage when dealing with the likes of men such as Ullmann or Echevarrieta, to name but two of the most powerful financiers in Spain.

Ullmann was descended from a wealthy assimilated German Jewish family that had migrated to Spain. Introduced to Canaris via Ratibor, he was destined to play an important role in Canaris' life and be the bridge between Canaris and Spanish industry. Horacio Echevarrieta, a Basque, was the wealthiest man in Spain, owning newspapers and banks but, more interestingly from the point of Canaris' immediate needs, the proprietor of a number of shipyards. Ullmann and Echevarrieta were hard men. Whatever their sympathy for the German cause, they were according to a German diplomatic telegram ‘not people especially interested in supporting Germany. Primarily they are interested in making money.' And in wartime even more than peace, that meant armaments. The sympathy of such men towards Germany was indicative of the dependence of the Spanish armed forces on German weapons, much to the chagrin of the great English arms companies of Vickers and Armstrong.

Here Canaris, equipped with a wartime budget, could influence events. He needed ships which could resupply submarines. Moreover, he needed
Spanish crews that could disguise the true purpose of the ships' missions. So it came about that the ships were commissioned by Reed Rosas, a Latin American, for use in South America to where they would eventually sail, although it was noted that their sea-going trials often took them to the bay of Cadiz. Here, under the cloak of darkness, they would rendezvous with the U-boats, supplying much needed fuel and provisions.

By March 1916, British intelligence in Madrid could ominously write: ‘The situation with German U-boats is especially serious. They do what they want in the Mediterranean.' By this time, Canaris had achieved most of what he had set out to do. German submarines could supply tribesmen in North Africa more or less at will and sink Allied shipping even in convoy.

But successful though his intelligence work was, Canaris was keen to see active service again and return to Berlin. Perhaps he found the constant clandestine activity wearing on his nerves: both British and French agents had begun to home in on Reed Rosas. Perhaps he felt the residual distaste of a conservative regular officer for espionage work. Perhaps he felt that the war was now entering a more desperate stage. His friends Ullmann and Echevarrieta would have had no doubt realistic views on the outcome of the war, the imminence of America's entry into it and the equation of commercial power that implied.

One of their contacts, one of the most influential British allies of the war, had also in the course of the winter of 1916 surfaced in Madrid. He was the man who more than anyone else may have ‘spotted' Canaris as a personality to be reckoned with by the British military-industrial elite. He was also the most powerful arms King the world had ever seen: Basil Zaharoff, Director of Vickers, partner and confidant of every arms company in Europe, the most notorious of the ‘merchants of death', had ambitions in Spain.

Zaharoff, barely eight months into the war, had said he would put ‘a strong spoke into the German wheel
in Spain.' His plan was to form an organisation to oppose the AEG-Siemens monopoly of hydro-electric plant in Spain. His visit to Spain was to prepare all the elements so ‘that the moment peace is signed we can form the Spanish company and begin working.' This would be the prelude to arming the Spanish navy with Vickers (Whitehead) torpedoes as opposed to the existing German Schwarzkopf torpedo and generally filling the vacuum a defeated Germany would leave. Significantly, he never entertained the slightest doubt that the Allies would win, and said as much to his Spanish friends.
9

There is no evidence that Zaharoff and Canaris ever met. Yet there is no doubt that they had many friends in common including Juan March, the Mallorquin banker who was later to be Canaris' main conduit to Franco. Zaharoff and Ullmann knew each other and perhaps, if for no other reason than that both Canaris and Zaharoff were proud of their – in both cases far from transparent – Greek connections, they might have remembered each other's names. In any event, it is a fact that at the end of the war, Zaharoff sought Canaris out in Berlin for the most delicate of missions, something which suggests more than a passing acquaintance.
10

Nor should it be forgotten that, although a firm ally of the British, Zaharoff was not beyond keeping in with all sides. Admiral Hall, chief of the Naval Intelligence Division, never trusted Zaharoff (with reason, for Zaharoff detested Hall and persuaded Clemenceau to ban him from Lloyd George's delegation to Versaillles after the war) and while the arms merchant remained on the British side, it was still the task of the British secret service to keep him within their own orbit.

At times, his activities must have puzzled London, for it was never clear what subtle long-term game he was playing: ‘Often it seemed as though he saw the war as something to be run in his own interests first and those of the Allies second.'
11
Zaharoff had persuaded the Allies that it was important for them that he should maintain underground links with enemy firms. This resulted in some extraordinary anomalies, the most famous being the withdrawal of French troops to a distance of twenty-two kilometres behind their frontier to leave the blast furnaces and arms
factories at Briey and Thionville in German hands. Throughout the war, no action was ever taken against these works, which were of vital importance to the Germans for key mineral supplies.

Juan March, Zaharoff's and Canaris' friend, played a similar deep game. He first appeared on the radar screen of the British vice consul in Palma at the beginning of the war: ‘An extremely wealthy native named March, whose enormous revenue is derived from tobacco-smuggling, is strongly pro-German and is a personal friend of the German consul.'
12
Moreover, as the vice-consul noted in his dispatch: ‘These smugglers through Juan March have already been working for Germany even though many of their boats are registered at Gibraltar and fly the British flag.'
13

These boats had even been employed running German agents across to Italian territory. ‘The further step of the supply of submarines would,' the consul ruefully noted, ‘arouse no scruples, for agent, master and crew of these boats are Majorcan men, Spanish subjects who owe no allegiance to Great Britain and merely use our flag as a defence against Spanish supervision.'
14

Canaris worked closely with March and another Mallorquin, Jaume Sabra. As the British noted: ‘The configuration of the Balearics, especially of the islands of Cabrera and Espardell, are excellently suited for the surreptitious supply of submarines. The population includes a section of lawless smugglers, uncontrolled by the authorities.' These men were ruled by Juan March and Sabra and while both were cordial with the British authorities, Consul-General Smith realistically noted: ‘I have not much faith in Mr Sabra's profession of friendship for either side. He is no doubt strictly neutral in the sense that he would be prepared to serve both sides alike for a consideration.'
15

These reports elicited a demand from London for more information on March and his oil trading concerns. The reply was terse: ‘March is in touch with all the owners of importance and his power for good or evil in connection with liquid fuel running is unquestionable.'
16
March was
‘largely responsible for furnishing submarines with supplies of all sorts.'
17

London could not oppose March directly. They therefore sought to neutralise him by offering an inducement to collaborate. Smith was instructed to point out that March's ships registered in Gibraltar would lose their flagging and be impounded unless March proved more sympathetic. Financial sweeteners were also offered with the result that towards the end of 1915, London was telegraphed that ‘March is in general in agreement with our proposals for cooperation and offers unconditional support.'
18

With March being forced to collaborate more and more with the British, his involvement with Reed Rosas would have to become more circumspect, though he continued to help Canaris with submarine refuelling, perhaps for a higher price. It is more than likely that Canaris may have believed it imperative to report in person to Berlin the pressure under which the British were putting March. The embassy ciphers were not secure and if March was playing both sides, it would require careful explanation to Berlin, who would want to ensure their money was not being wasted.

In any event, whatever the reason, Canaris left Madrid suddenly on 21 February 1917 to return to Berlin overland. He did not get far. On 24 February he was arrested by the Italians in Genoa. Canaris had constructed the not implausible disguise of travelling to Switzerland because his health needed recuperation at a clinic in the Alps. But this was not proof against a tip-off from French intelligence that Reed Rosas was a German agent. The tip-off had come from a French spy within the German embassy in Madrid. This mole had heard the name Reed Rosas on the careless lips of the ambassador a couple of times, but not in any context and with no clue as to who he was. Nevertheless, he had diligently told his handler the name and it had been put on file. Canaris wriggled out of the Genoan interrogation, but at the border station at Domodossola, the frontier guards took him off the train and he was locked up.

To this day the events in Domodossola remain shrouded in mystery. One rather sensational version maintains that Canaris escaped by murdering a priest and making off in his cassock, a dramatic but implausible event even by the cloak and dagger standards of the times. Another version maintains the priest was a travelling companion and that they were both arrested.
19

More likely is that through the priest Canaris was able to get word to his friends in Spain and they appear, at the highest level, to have intervened with the Italian authorities, possibly even through the Vatican, to get Canaris released. This version is supported by a telegram sent by the German Admiralty on 3 March, noting his arrest but pointing out that ‘his release appears probable'. His release by the Italians, in the teeth of objections by French and by now British intelligence, suggests that Canaris could call on some powerful friends in Spain whose links with Italy went through some unusual channels. The Italians predictably compromised. They released the German, but put him on a ship bound for Marseilles and a no doubt well-prepared reception committee from the French authorities. The ship's captain, however, was Spanish and no doubt open to a serious bribe which Canaris would have no difficulty in procuring if the Spaniard took him to a Spanish port rather than a French one. The captain was also most probably convinced by the sincerity of this charming, fluent Spanish-speaking man who explained that a call at Marseilles might well be fatal to him. Canaris was landed at Cartagena, feverish with malaria, and by 15 March was back in Madrid re-applying for an active service posting.