Editor’s note: the following story has no relationship to softball, but is too long for Facebook. It concerns people who play a different kind of hardball.
STOLEN BONDS, THE Gestapo, and the KGB
Among the many penalties imposed on the Weimar Republic were reparations sought by France and Germany for the costs of WWI. Lacking the millions in the Bundesbank sought by the Allies, the Bundesbank issued millions of dollars in bearer bonds, which were sold to investors in Germany and elsewhere in 1928. The offering raised enough money to pay the underwriting costs borne by J,P. Morgran.
In 30 years, the investors could redeem the bonds at face value. A major purchaser of the bonds was the bundesbank itself, bonds which lay in storage in Berlin throughout WWII.
The amount sought by Britain and France, who had not only carved up the oil bearing lands in the Middle East – British Petroleum and ELF were major negotiators at Versailles when the diplomats sought peace in our time (Chamberlain) but lay the groundwork for a second world war – were excessive and a major factor in the rise of the National Socialist Workers Party – Nazi.
This potboiler came to light in 1968 when investors began redeeming bearer bonds, which did not require proof of ownership.
But some bonds being submitted for redemption had supposedly never been issued by the bundesbank. The simmering pot boiled over when it was discovered that a number of bonds had been used as collateral for loans made by certain banks in Eastern Europe. When the Bundesbank balked, the creditors sued and the German courts ruled the Bundesbank had to pay because the bonds were made payable by the German government to bearer.
An investigation led German intelligence to conclude that the Soviet Army, when not raping every female from 6 to 90, and stealing all possible scientific and industrial machinery, had stolen all manner of financial instruments, including millions in bearer bonds. Investigaton revealed that some of the new entrepreneurs financing business in Eastern Europe were former KGB officers.
In due course, the West German government presented a demand in Moscow, The denials included “what Soviet Army; there is no longer a Soviet Union or Soviet army.”
Germany was able to thwart some of the East European deals and deny payment on some of the bonds.
The investigation also revealed that officials in Hitler’s Third Reich had also capitalized on the bonds. I have copies of three such bonds approved for payment with the Third Reich stamp. Given to me by a Bundesbank officials during a vodka-hued night at the old Adlon in Berlin, once a favorite of Nazis. I first heard the story from a retired official at his chateau in the south of France. And confirmed it through discussions with banking and intelligence people in Warsaw and Geneva, as well as Berlin and Moscow, where some discussions were held in an old dacha outside Moscow – you never know who is listening when meetings are held in ministry buildings, a Russian foreign service officer told me.
I thought of this matter and one other this past week reading in the Wall St Journal that the large US and European banks had declined to bid on bonds being offered by the Russian Cantral Bank. The publicly expressed concern was that the Putin government would use the funds to support actions in violation of US sanctions.
But I wondered whether some of this reluctance reflected a long-term reticence to get involved with Russian bonds.
There was an incident in the mid-90s when a Russian bank offered financial assistance to a South American country, which was widely hailed in that nation’s capitol – and by the US Ambassador. He was furious when I told bankers from that country that the Russian bank did not have the assets to perform. Our Ambassador flew to Washington, and stormed through the State Department accusing me of undermining the economy of a key ally. But, when I was challenged by the Under Secretary, I provided the secret financial data on the Russian bank. I refused to name my source but did inform the CIA of the identity of the Russian banking source who was known to them. We had one meeting at a hotel in McLean VA near CIA headquarters. We also met in the Lubyanka, KGB headquarters in Moscow. The Russians joked that I had been deeper inside the former Czarist prison than any American who was not in chains.