<nettime> The Secret (Insurance) Agent Men of WWII

[Jonathan Prince <jonathan@killyourtv.com>]

Friday, September 22, 2000
The Secret (Insurance) Agent Men
http://www.latimes.com/news/front/20000922/t000089809.html

  A WWII unit gathered underwriters' data,
such as bomb plant blueprints, from warring
nations, declassified U.S. files show.

By MARK FRITZ, Times Staff Writer

      COLLEGE PARK, Md.--They knew which factories to burn, which bridges to
blow up, which cargo ships could be sunk in good conscience. They had
pothole counts for roads used for invasion and head counts for city blocks
marked for incineration.
      They weren't just secret agents. They were secret insurance agents.
These undercover underwriters gave their World War II spymasters access to a
global industry that both bankrolled and, ultimately, helped bring down
Adolf Hitler's Third Reich.
      Newly declassified U.S. intelligence files tell the remarkable story of
the ultra-secret Insurance Intelligence Unit, a component of the Office of
Strategic Services, a forerunner of the CIA, and its elite
counterintelligence branch X-2.
      Though rarely numbering more than a half dozen agents, the unit
gathered intelligence on the enemy's insurance industry, Nazi insurance
titans and suspected collaborators in the insurance business. But, more
significantly, the unit mined standard insurance records for blueprints of
bomb plants, timetables of tide changes and thousands of other details about
targets, from a brewery in Bangkok to a candy company in Bergedorf.
      "They used insurance information as a weapon of war," said Greg
Bradsher, a historian and National Archives expert on the declassified
records.
      That insurance information was critical to Allied strategists, who were
seeking to cripple the enemy's industrial base and batter morale by burning
cities.
      "Within a few days, a conference on the burning possibilities of some
important cities will be held," unit chief Robert "Lucky Luke" Rushin wrote
a colleague in February 1944, when he was sending data to an Allied
bombing-target committee. "I have reproductions of approximately 150 plans
covering Jap plants about ready to ride."
      The files, at the National Archives office in College Park, are among
the latest U.S. intelligence documents ordered declassified by President
Clinton last year to speed the identification of Nazi assets.
      Most of the research attention there has focused on what U.S.
intelligence knew about the Holocaust, the whereabouts of Nazi loot, the
migration of Nazi war criminals and how much important information never
made it to the Oval Office.
      But the documents suggest that insurance played an important, if
less-noticed, role in the war.
      The OSS insurance unit was launched in early 1943, long after it had
become alarmingly clear that the Nazis were using their insurance industry
not only to help finance the war but also to gather strategic data.
      American insurance companies had been competing furiously for overseas
business even after the United States entered the war, and the OSS files
suggest that details about U.S. factories and cities were falling into enemy
hands because of the interlocking international relationships among
insurance companies.
      Germany had 45% of the worldwide wholesale insurance industry before
the war began and managed to actually expand its business as it conquered
continental Europe. As wholesalers, or "reinsurers," these companies covered
other insurers against a catastrophic loss that could wipe out a single
company. In the process, the wholesaler learned everything about the lives
and property they were reinsuring.

      Unit's Efforts Are More Than Altruistic
      The motives of the OSS unit's founders were both pragmatic and
patriotic.
      "This story is incredible because the unit begins as part of the desire
of American [insurance] interests to contribute to the war effort and
exploit it for future economic gain," said historian Timothy Naftali, a
consultant to the Nazi War Criminals Interagency Working Group that was
created by Congress last year.
      The men behind the insurance unit were OSS head William "Wild Bill"
Donovan and California-born insurance magnate Cornelius V. Starr.
      Starr had started out selling insurance to Chinese in Shanghai in 1919
and, over the next 50 years, would build what is now American International
Group, one of the biggest insurance companies in the world. He was forced to
move his operation to New York in 1939, when Japan invaded China.
      In the early years of the war, the German insurance industry expanded
its business as it conquered continental Europe. Nazi insurance brokers who
traveled with combat troops during invasions also scoured local insurance
files for strategic data.
      German-owned companies were blacklisted by the Allies, but the
Insurance Intelligence Unit found that the Nazis did business through
countries such as Switzerland and laundered transactions through South
American affiliates, particularly in Argentina.
      "The blacklist is of no good use because the firms not blacklisted are
full of Germans," one of the Insurance Intelligence Unit's reports
complained in 1943.
      Starr's people and other insurance executives had intimate knowledge of
the people involved in the global insurance business, so they were able to
track potential collaborators.
      Among those they investigated was Carl Theodore Endemann, a naturalized
American from Germany who was assigned by the American Foreign Insurance
Assn. to Paris in the 1930s. When war broke out, Endemann sided with the
Nazis. When France capitulated, Endemann contacted the Germans and gave them
exceptionally detailed blueprints, maps and other information to aid Erwin
Rommel's war in North Africa.
      The report makes a dry reference to Endemann's British wife, the mother
of their 7-year-old son, as a "staunchly pro-British" woman who, as a
result, "was interned from time to time."
      The Insurance Intelligence Unit also investigated Americans, which in
some cases included an agent's boss. One report showed that an Argentine
company owned by the American Foreign Insurance Assn. had a known Nazi
collaborator on its board and reelected him after it promised it wouldn't.
      The documents also said that two New York insurance executives, Cecil
Stewart and Stewart Hopps, also came under scrutiny for selling war
insurance to strategic U.S. industries and reselling some of the risk to
Latin American affiliates linked to Nazi insurers. The men also ran a
steamship company that chartered tankers for Royal Dutch Shell, a Nazi
collaborator that used Hitler's slave laborers.
      "It's very possible that details of American insurance properties could
reach the enemy via this sequence of reinsurance transactions," the report
said.
      Stewart and Hopps were not unknown to the unit investigators--they had
been part of the original OSS committee convened to design the Insurance
Intelligence Unit, Naftali said.
      Such convoluted business dealings were traced largely through the work
of Ernest Stiefel, a member of the intelligence unit who diagrammed the way
insurance companies pooled their risks, invested in and insured each other
and, as a result, willfully or witlessly shared data about nations at war.
      "Stiefel mapped the entire system," said Naftali, a historian at the
University of Virginia's Miller Center of Public Affairs. "Each time I take
a piece of your risk, you've got to give me information. I am not going to
reinsure your company unless you give me all the documents. That's great
intelligence information."
      Naftali came across the first evidence of the unit when the CIA began
to release OSS files in the 1980s. He interviewed some members--all now
believed dead--for his 1993 doctoral dissertation.
      Though the earlier files contained references to the insurance unit's
work, the recent release adds details about how sensitive data was gathered
and shared and how the unit operated.
      Though a wiz with records, the unit had problems in the field, where
agents operated without the knowledge of local American embassies.
Information arrived months after it was requested, particularly from the Far
East and North Africa, and in places such as Singapore and Morocco, where
expatriates of all types mingled uneasily while the war's battles crept
closer.
      "They went into the field and the State Department didn't know who they
were. The military didn't know who they were. They were largely in neutral
zones. These fellows sat in backwaters for months, collecting material and
sending it nowhere," Naftali said.
      One operative, a Starr insurance man named Bob Smith, traveled
throughout China and appeared in several local newspaper accounts as--what
else?--a traveling insurance executive named Bob Smith.

      Strategic Data Welcomed Back Home
      The cables he sent back--still heavily censored by the CIA--showed a
man who was under heavy suspicion, often anxious to leave his post and
uncertain of how to deliver his information. At one point, posing as an
insurance man on a humanitarian visit to a leper colony, he stumbled on
Japanese positions in South China. He speculated that he wasn't shot at
because the enemy was too busy laughing at Smith's pratfall-plagued attempts
to flee through the thicket on a bicycle.
      The strategic information was welcomed back at headquarters.
      "Our thanks . . . for the gradient profile of the Chinese section of
the Canton/Kowloon Railway," chirped the chatty but highly secret OSS
newsletter ("Extra! Extra! It's twins for Al Booth!").
      "Thank you for the Tokyo Water Supply data! We appreciate it very
much," raved yet another edition.
      Much information came from unit chief Rushin, a Home Insurance Co.
executive who rose to U.S. Army major because of his work. Rushin was sent
to London in late 1943 after it became clear that OSS and British
intelligence had failed to tap London-based insurers for information about
the Pacific theater.
      In fact, Rushin found that a U.S. Embassy official assigned to collect
such data had set up shop at Swiss Re, an insurance wholesaler still in
business with the Nazis. But, through inexperience or incompetence, the
embassy official had learned little of value.
      Rushin was able to gather material that was even in demand by the
British. It ranged from Chinese railway inspection reports to photos of the
Mitsukoshi department store in downtown Tokyo to blueprints of the chemical
company that made the poison gas Hitler used to kill Jews.
      Rushin's biggest obstacle appeared to have been the war's own
bureaucracy. "I don't have but two legs, no one to help and the job of
reproducing is terrific," he complained in a March 1944 memo. "I have
material now which has been in the hands of reproduction for six weeks."
      Insurance unit spies also came across bits of juicy data that had
nothing to do with insurance. They passed along news, for example, that the
desperate Nazis had banned the "mourning ribbons" worn by families of the
growing numbers of dead. They found a German newspaper obituary of "a
collaborator" killed in a "cowardly" attempt by some of Hitler's men to blow
up der Fuehrer.
      When the tide of the war began to turn and German insurers began losing
money, the U.S. insurance agents learned that Nazi insurers were pleading
for peace. A source in Stockholm revealed in late 1943 that insurers advised
Hitler's people that "ruin threatens all life and fire insurance companies
in Germany."
      As Germany was heavily bombed and casualties mounted, the Nazis
prohibited insurance companies from selling new policies--a drastic measure
that even prompted complaints in the newspapers. Life insurance and the
interest it earned had been viewed as stable investments for Germans who
still remembered the hyperinflation that followed World War I.
      With the Axis defeat imminent, U.S. intelligence officials focused
greater attention on ways the Nazis would try to use insurance to hide and
launder their assets so they could be used to rebuild the war machine. It's
a task that continues today.

      Panel Investigates Life Insurance Claims
      A commission headed by former U.S. Secretary of State Lawrence S.
Eagleburger is investigating whether five mostly German-owned insurance
companies operating today ever paid off all the life insurance policies they
sold to Jews, a target market as the Nazis were ascendant.
      The insurance unit's reports gave at least one chilling glimpse of how
Jewish policies were processed: "You might be interested in the enclosed
Dutch Decree of June 11, 1943 ordering the reporting and liquidating of all
insurance policies on behalf of the Jews. . . ."
      The newly released OSS files show just how hard it is to track a paper
trail through 50 years of mergers, acquisitions, secret deals and silent
partnerships. The files show that American insurance premiums almost
certainly wound up in Nazi banks, and German brokers were secretly covering
London establishments under attack by the Luftwaffe.
      "It makes you wonder if a German insurer insuring an American ship went
to the German military and said: 'Don't bomb this ship!' " Bradsher said.

      Axis Insurance Firms Resumed After the War
      Though the Treasury Department wanted to keep harsh economic
restrictions on the defeated Axis powers, the State Department prevailed,
and German and Japanese insurance industries resumed operations after the
war. Today, for example, Munich Re and Swiss Re are, once again, the two
biggest insurance wholesalers in the world.
      Rushin was promoted to the X-2 branch in Washington after his London
mission and then returned to Home Insurance after the war. He retired from
the company, which eventually was crushed by asbestos claims from cancer
victims in the 1970s. In the end, Home itself didn't have enough insurance
to cover its losses.
      Starr sent insurance agents into Asia and Europe even before the bombs
stopped falling and built what eventually became AIG, which today has its
world headquarters in the same downtown New York building where the tiny OSS
unit toiled in the deepest secrecy.
      Starr died in 1968, but his empire endures. AIG is the biggest foreign
insurance company in Japan. More than a third of its $40 billion in revenue
last year came from the Far East theater that Starr helped carpet bomb and
liberate.
      Though the OSS files shed light on a little-known operation, there is
no good way to fully read the moods and motivations of the people who were
part of it. By all accounts, though, Rushin was proud of his spy service.
      "He was delighted to talk about this," said Naftali, who talked with
Rushin before he died. "He was in his 80s. I was lucky. This latest release
[of documents] comes too late. These people are no longer alive."
-- 
- - -
jonathan prince
   web editor/designer
   washington dc
   jonathan@USoutofColombia.org
http://www.USoutofColombia.org

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