According to some accounts, the seemingly indubitable William J. Donovan was on the verge of losing all credibility. His dreams of establishing a department of central intelligence nearly shattered by the inventive survival skills of Virgilio Scattolini, a reportedly repentant Italian pornographer turned journalist, who decided to enter the niche, but lucrative market of fake papal intelligence after getting fired from Vatican City’s daily publication, L’Osservatore Romano, due to his lurid past.
Donovan had recently returned from an audience with Pope Pius XII, who decorated the patrician dean of American intelligence with the Grand Cross of the Order of Saint Sylvester, the Church’s highest commendation for the laity. The war was just then entering the critical final stage when Scattolini’s bogus transcripts of the Pope’s meetings with foreign envoys to the Vatican started crossing his desk, which he in turn, forwarded to President Roosevelt as the commander in chief was preparing to discuss the partition of Europe with Churchill and Stalin at Yalta.
Years later, Scattolini’s fabricated reports were deemed by the CIA to have contributed to “informing, misinforming, and thoroughly confusing those individuals responsible for analyzing Vatican foreign policy during the period involved”. Among those individuals was none other than superspook James Jesus Angleton, who was passing the faked intelligence on through a middleman codenamed VESSEL.
As Angleton went on to become the CIA’s counterintelligence chief, presiding over some of the most enduring myths of the Cold War and the Kennedy assassination, the VESSEL debacle was studiously ignored by the American intelligence community and the truth of the matter was never made entirely clear beyond one undeniable fact: The most powerful religious institution on earth does not divulge its secrets so easily, and cracking the locks of the Vatican’s vaults would require an existential threat to the Catholic Church.
– Bastard Lineage –
BUDAPEST, HUNGARY – Erno Pajtás had grown up with Ferenc Szálasi, the besieged genocidal leader of the Arrow Cross party of Hungary, whose short and bloody reign – courtesy of the Wehrmacht –, was quickly coming to an end as the Red Army advanced on Budapest in the waning days of World War II. Before fleeing, Szálasi instructed his childhood friend and recently appointed Crown Guard commander to prepare the Holy Crown of Saint Stephen for its furtive journey to German territory.
First gifted by the Emperor of Byzantium to an early Hungarian king seeking official recognition for his domains, the relic would become the object of myth and legend when the first notions of the Holy Crown Doctrine emerged during the 14th century. Sacra Corona doctrine centered on the physical crown as the fulcrum of divine authority to rule over the kingdom of Hungary, bestowed by the Papacy as the ultimate intercessor between man and God, determining political power in the Marian nation for centuries.
Just two days after Szálasi’s puppet Nazi regime was inaugurated at the Royal Palace in an induction ceremony featuring the Holy Crown, clandestine arrangements were made to transport the bejeweled headpiece to the Sigmaringen Castle in Baden-Württemberg for safekeeping, bypassing the previous government’s plan to hand the crown over to the papal nuntius and hide it in a Benedictine monastery east of the Hungarian capital.
As Allied forces overwhelmed Hungary’s fascist army in April, 1945, Szálasi called an emergency meeting to set the plans in motion. Pajtás, in his capacity as Crown Guard commander, placed the Holy Crown, orb, scepter, and mantle in a strongbox, and loaded it onto a truck, which departed under the protection of twelve Crown Guards in a convoy that included members of the Arrow Cross government on their way to Germany and Switzerland.
Three days before the German High Command signed the terms of their unconditional surrender on May 7 in Reims, Pajtás and Szálasi’s Deputy Prime Minister, Jeno Szöllosi, were captured near the German border in Austria. Loyal to the bitter end, Pajtás had managed to transfer the strongbox’s contents into an army oil barrel and buried it before the Americans caught up with the convoy.
When the U.S. Seventh Army finally opened the coffer in July, they found it as empty as a wildcat bank vault. Dr. Andor Klay of the Office of Strategic Services (OSS) was brought in to interrogate the prisoners, and leaned on his own Hungarian heritage to tease out the whereabouts of the Crown Jewels’ from Pajtás, who eventually revealed their location.
Now firmly in possession of what Klay described as “the legal seat of Hungarian sovereignty, the literal possessor…”, the U.S. State Department would continue the Catholic Church’s tradition of fictionalizing history to serve political ends by falsely asserting that the Holy Crown was “not removed by force from Hungary but was surrendered to United States authorities for safekeeping and is being held in trust.”
This slice of Machiavellian diplomacy served to distinguish the Holy Crown from other looted plunder, often used as trading pawns during post-war negotiations in Europe. More akin to a knight, or even a queen on the metaphorical chess board of geopolitics, the Hungarian Crown Jewels represented several opportunities to buttress the ideological foundations of the Cold War, but also provided a unique point of leverage in the battle to control the oil and gas reserves of Central Europe.
Six days after the Nazi occupation of Hungary had begun, József Mindszenty, an outspoken parish priest known as the “Pope of Zalaegerzeg”, was consecrated as Bishop of Veszprém against the wishes of both the Hungarian government and the Prince Primate Jusztinián Serédi, who thought the clergyman too confrontational and acerbic for the position.
However, Pope Pius XII’s selection to lead one of the largest dioceses in Hungary had been informed by postwar considerations, in which Mindszenty’s inflexible, but demonstrated leadership abilities would serve the challenges of reconstruction well, and critically, his legitimist beliefs met the Vatican’s desire for a candidate who would facilitate the Holy See’s plan to establish a “Hapsburg-led Danube monarchy” across Central Eastern Europe after the war.
Mindszenty’s reputation preceded him. Harsh, demanding and a Royalist who had supported the Hungarian government’s compromises with the Third Reich in the lead up to the war, sanitized biographies paint him as a staunch enemy of Nazism, but he was a fervent anti-Communist at heart, and most of his political activism – for which he was already well-known by the 1930s – revolved around the latter.
His parish was located on the banks of the Zala River, in the westernmost part of Hungary close to the Austrian, Slovenian and Croatian borders, as these were drawn up following the dissolution of the Austro-Hungarian empire. As a result, all the major oil and gas fields that were once part of the Hungarian Hapsburg domains, fell outside of the new country’s demarcations.
During the interwar years, the Anglo-Persian Oil Company (British Petroleum), along with Rockefeller’s Standard Oil of New Jersey exploited the hapless state of the Hungarian economy to gain multiple exploration concessions throughout the country, though none would match the potential of the lost fields now located in the eastern parts of Croatia and Slovenia, just west of Zala County.
After Hitler came to power in Germany, the chance to recover these territories led to a series of compromises between the Hungarian government of Pál Teleki, with whom Mindszenty had worked closely by organizing local Catholic clerics to monitor propaganda put out by rivals of the ruling party – particularly the far-right Arrow Cross party, which was gaining traction in the largely rural nation through its radical land reform platform.
Still known as Abbot Pehm, his real surname, Mindszenty lent his considerable influence to lead a propaganda campaign aimed at the re-annexation of disputed territory between Hungary and Croatia in 1941. With the war already in full swing, the priest held massive rallies consisting of tens of thousands of Catholics in the heart of the contested region, many of them stirred into a frenzy and ready to take up arms to re-integrate the oil-rich territories, as he would report via telegram directly to Hungary’s Regent, Miklós Horthy, Hitler and Mussolini.
Joining the Axis powers in Operation Barbarossa, the restoration of Hungary’s former borders continued apace and the Hungarian-American Oil Industry (MOART), a subsidiary of Standard Oil operating since 1937, and which was producing 100 percent of the nation’s crude, was requisitioned by Teleki’s government to meet Hungary’s oil supply demand. Notably, the government takeover of MAORT did not intrude in the company’s ownership. American Director, Paul Ruedemann, simply handed over MAORT’s management duties to his Hungarian deputy, Simon Sapp, temporarily.
Only a year after Mindszenty’s appointment as the Bishop of Veszprém, the sudden passing of Prince Primate Serédi weeks before Germany’s defeat, left Rome with a strategic vacancy, further complicated by the suzerainty of the Soviet Union over postwar Hungary through the Allied Command Center (ACC).
The selection of the top spiritual authority in a majority Catholic Central European country had important geopolitical implications, and just as the Soviets had their preferred candidate, factions within the Vatican and the Hungarian religious establishment all jockeyed to put their own choice forward. Ultimately, Mindszenty’s unapologetic Legitimist views and Hapsburg favoritism swayed Pope Pius XII, who secretly appointed him Cardinal in August, 1945, just as the first atomic bombs were dropped on Hiroshima and Nagasaki.
Goulash and Cowboy Boots
Immediately after the war, Hungary was administered by Soviet Marshal, Kliment Y. Voroshilov, chairman of the Allied Command, Major General Oliver P. Edgcumbe, of the British military mission, and Major General William S. Key, head of the U.S. military mission and an oil man from Oklahoma City. Working directly under Key as his executive officer, was another oil man who also hailed originally from Oklahoma, but had built a fortune through his business partnerships just south of the Sooner State in Amarillo, Texas.
Army Air Corps Lt. Col. Lawrence R. Hagy was already a wealthy man by the time he was helping Key negotiate with Voroshilov the future of the Hungarian economy. Moving to the Texas panhandle in 1926 at the start of the oil boom, Hagy established a business venture with Donald D. Harrington and Stanley Marsh, Jr. to develop major oil and gas properties in the area. Hagy, Harrington & Marsh grew into a highly profitable endeavor, which was among just a handful of similar concerns in the panhandle that survived the Dust Bowl years and the Great Depression.
The company’s success was no doubt aided by Hagy’s banking connections, which traced back to Oklahoma and his step-father Thomas C. Thatcher’s directorships at Fidelity National Bank of Oklahoma City. A member of Oklahoma City’s Masonic India Temple and the Blue Lodge in Texas, Thatcher was part of a Midwestern freemasonic elite, which included thirty-third degree mason, Maj. Gen. Key, who in addition to owning the Keyokla Oil Company and holding public office, was a director in several banks, including the Mutual Savings and Loan Company, where Thatcher had been a long-time director.
Both Hagy and Key were close to Franklin D. Roosevelt; the latter appointed by FDR to administer WPA funds for the state of Oklahoma. Later, Hagy would host the former president and his wife in Amarillo on multiple occasions. After their deployment overseas, the pair worked together in the Allied Command Center to protect American energy interests in Central Europe from Soviet encroachment, and in some cases, from the American intelligence community as well.
Allied bombing had destroyed much of Hungary’s oil and gas infrastructure, and Hagy was in charge of assessing the damage and ostensibly helping to restore them to working order. In addition to Standard Oil’s MAORT operation, a U.S. company, Vacuum Oil, also operated Hungary’s largest refinery, which had also been sequestered during the war but with no change in management or ownership. Hagy and Key’s mission was to avoid the nationalization of either company.
By 1945, Standard Oil’s Ruedemann had resumed managing MAORT’s operations, but as the momentum shifted towards the reality of Soviet occupation, tensions were brewing at ACC headquarters in Budapest. While Major General Key assured Voroshilov that Red Army patrols on MAORT facilities was not a problem, the Secret Intelligence (SI) of the Office of Strategic Services (OSS), was looking to establish its largest unit in the Hungarian capital – a 56-man operation, that was part of a broader initiative to relocate OSS’ SI and X-2 (UK- liaison) groups to different cities in Central Europe, which had been authorized by the Joint Chiefs of Staff in December of 1944.
The plan called for arriving OSS agents to be attached to ACC personnel to form “ACC/OSS Units”, but the Soviet ACC leadership found ways to stall arrivals, such as requesting detailed information about each asset. More surprisingly, however, was Maj. General Key’s outright refusal to have any OSS personnel attached to his command.
In a 1946 report prepared by X-2 OSS officer Robinson O. Bellin, Key is said to be “opposed to intelligence work of anyIn a 1946 report prepared by X-2 OSS officer Robinson O. Bellin, Key is said to be “opposed to intelligence work of any nature, in addition to removing SSU [a wartime holding operation intended to preserve OSS assets], he had sent away two ONI [Office of Naval Intelligence] officers both of whom had been briefed to secure info from the Russians”. Bellin suspected the Major General’s reticence was due to the potential exposure of “intelligence [that] might embarrass his mission.”
Bellin may have been on to something. Key, like many others in the U.S. Military establishment, was suspicious of Donovan’s OSS and preferred to keep him as far away as possible from the ACC’s ongoing military (G-2) intelligence activities. Hagy, whose field trips around Hungary’s oil fields involved helping “Hungarian agents of imperialism”, in the words of the Supreme Economic Council, engage in acts of sabotage to hinder Hungary’s Three Year Plan, also had another very important assignment during the year he spent in the Hungarian nation: Cardinal Mindszenty.