Foreign Relations of the United States: Diplomatic Papers, 1944, The American Republics, Volume VII

862.20210/2807

The Ambassador in Chile ( Bowers ) to the Secretary of State

[Extracts]

No. 9241

Santiago , March 25, 1944.
[Received April 11.]

Sir: With reference to the Department’s strictly confidential instruction No. 3926 of March 14, 1944,⁶⁶ I have the honor to submit herewith a report of the developments in the PQZ espionage case since the handing of the Embassy’s memorandum of February 14, 1944⁶⁷ to the Minister for Foreign Affairs.

The memorandum, dated February 14, 1944, on the PQZ spy ring was handed to Señor Fernández, the Minister for Foreign Affairs, on February 14, and at the same time on an informal and confidential basis the Legal Attaché presented data to Señor Garretón, Director General of Investigaciones. The Ministry of Foreign Affairs and the Director General of Investigaciones acted immediately. Although one of the judges concerned refused to issue a warrant for the search and detention of the persons involved, Kunsemuller and others were apprehended by agents of Investigaciones and questioned at length. (Embassy’s telegram No. 287 of February 16, 1944, 1 p.m.)⁶⁸ As a result of this questioning, Kunsemuller confessed that he was a German agent and the “Pedro” of the PYL clandestine radio case. Kunsemuller also admitted that he had transmitted messages to Germany as late as October 1943. This confession made the Law of Internal Security of January 1943 applicable to the case.

The Counselor of the Embassy had a conversation with the Minister for Foreign Affairs on February 19, and the latter agreed to make arrangements for extensive publicity in Chile regarding the discovery of the espionage ring (Embassy’s telegram No. 304 of February 19, 3 p.m.⁶⁸). The story of the discovery of the spies and of one of the radio stations having leaked out through Reuters and El Imparcial, on February 22 the Chilean Government decided to release the results of the entire investigation (Embassy’s telegram No. 322 of February 22, 10 p.m.⁶⁸). Up to that time the ten principal subjects and various others had been put in custody, and two clandestine radio transmitters and three receivers had been discovered. In his confession, Humberto Perez revealed that there had been links with German agents in Argentina. Having been given a first lead through the presentation of the Embassy’s memorandum of February 14, 1944, Investigaciones and its Chief had acted promptly and vigorously in apprehending the espionage agents and obtaining confessions and valuable information from them.

On February 23, the Chilean newspapers and periodicals comprehensively covered the PQZ arrests and also the assurance of the Minister of the Interior⁷¹ that the prosecution of the persons arrested would be vigorous. (Embassy’s telegram No. 327 of February 23, 1944.⁷²) On the same day the Embassy found out from an authoritative source that Señor Fernández had been insistently behind the police investigations which resulted in the arrests and the break-up of the Timmermann espionage ring. When it appeared that the investigation would be delayed owing to the temporary absence from Santiago of the judge appointed for the issuance of the necessary warrants, Señor Fernández insisted that the search go ahead, and asserted that he would accept full responsibility before the Chilean Congress for any complaints of illegality, explaining that the all-important obligation of national security and international commitments had made the action necessary (Embassy’s telegram No. 332 of February 23, 1944, 11 p.m.⁷²). By March 3, ten of the PQZ subjects had been released (Embassy’s telegram No. 395 of March 3, 4 p.m.⁷²). However, the Embassy was informed by a person close to the President that the latter was determined to push the case strenuously and had given orders to Señor Garretón, Director General of Investigaciones, to rearrest any of the persons released who ought to be under detention. The information concerning the instructions given to Garretón by President Ríos was confirmed to the Legal Attaché by Garretón himself. As reported in the Embassy’s telegram last referred to, it appeared that Fernández and the other executive officials of the Chilean Government concerned would not be able directly to influence the judicial proceedings in view of the strong tradition in Chile of the independence of the Judiciary.

Doubtless at the request of the Foreign Office, El Mercurio, La Nación, and other newspapers on March 8 emphatically demanded that more prompt action be taken in the investigation of the PQZ spies (Embassy’s telegram No. 455 of March 8, 1944, 3 p.m.⁷²). On March 9 President Ríos summoned the Chief Justice and asked him to urge the Judge⁷³ to act more vigorously in the PQZ case. The President warned the Chief Justice that any spy released by the Court would be immediately rearrested on his personal order and on his responsibility (Embassy’s telegram No. 462, March 9, 2 p.m.⁷²).

Owing to action taken by the President through the Chief Justice, on March 9 the judge reversed himself and ordered that various prisoners who had been released from an incommunicado status be again held incommunicado (Embassy’s telegrams Nos. 472 of March 10, 3 p.m. and 484 of March 11, 2 p.m.⁷⁴).

On March 17 Juan Westermeyer and Kurt Veitl were released from custody at the order of the judge. On the following day I protested vigorously to the Minister for Foreign Affairs against the action taken by the judge. Señor Fernández said that he would speak with President Ríos and would ask him to call in the Minister of the Interior to find out the real reason for the release of these men. The Minister for Foreign Affairs added that the President’s instructions were to get to the bottom of the spy activities, no matter who might be involved.

. . . . . . . . . . . . . .

Since the submission of its memorandum dated March 9, 1944, a copy of which was furnished to the Department with the Embassy’s strictly confidential despatch No. 9093 of March 10, 1944,⁷⁵ the Legal Attaché’s office provides the following information concerning the discovery of further hidden money, new radio equipment, and interesting documents, as well as the judicial aspect of the case:

“Further investigation regarding subjects already described in the previous memorandum has disclosed important details. Among these details have been the discovery of new caches of money, new radio equipment, and interesting documents. The total of the money discovered to date is as follows:

“In American dollars bills there have been discovered $174,150.; in Chilean pesos, an approximate total of 838,000 pesos; in Chilean bonds, 90,000 pesos’ worth; in addition, 24,000 Argentine pesos have been found. All of this money appears to have originated from Bernardo Timmermann who, in turn, received it from Ludwig von Bohlen, and it all has been conclusively tied in with the operation of this espionage ring. This money has been found in various places, including behind secret walls built in the safe of Bernardo Timmermann and in a secret hiding place in his father’s summer home at Malloco, Chile, and in his father-in-law’s summer home at Tabo, Chile. Other parts of the money have been distributed to various members of the ring and were found in their homes or hidden by them in various secret places. As reported previously, two transmitters and three receivers have been discovered by the police. This total has been raised by subsequent investigation. Thus a large and powerful transmitter was found in the paint factory of Juan Moller Petersen in Santiago, which was turned over to him directly by Hans Blume and Heinrich Eeiners, who are fugitives in the PYL clandestine radio case. Another transmitter had been given to Jorge Ebensperger Grassau and had been left by him in a garage where he was working. This was destroyed on March 9th by two Germans employed at this garage and they are now in custody. The remains of the transmitter were found behind the garage.

“The documents, which were found hidden behind secret walls in Timmermann’s safe and hidden underground on San Cristobal Hill by Hans Heinke, have proved to be extremely interesting. As yet they have not been fully identified nor analyzed, but they include a list of agents at the disposal of this group with their cover names, which list widens the ramifications of this ring enormously. In addition there were found blank Chilean passports and a blank Spanish passport and various blank Chilean carnets. Also, there were found passports of various persons, some of them already in custody, which passports were to be used after alterations for movements of agents in the group. Among the documents were also found formulas for secret inks, descriptions of codes, and other technical matters used in the operation of the espionage agents in Chile. Also were found receipts signed by various members of the group which, when analyzed, will give an indication of the monetary expenditures necessary to run parts of the German espionage in Chile. Reports by various agents were found which indicate that Ludwig von Bohlen, to whom all of these documents originally belonged, was receiving information from members of the Chilean armed forces and from informants planted in the air force and police services of Chile.

“All declarations taken in this case have been made available to the Legal Attaché’s office and several of them indicate the close organization of this Chilean Division of German espionage with the Division in Argentina. This can be more fully analyzed later. At the present time it appears that the more important members of the agents so far apprehended were: Bernardo Timmermann, Hans Heinke, Guillermo Kunsemuller, Waldemar Koeser, Eugenio Ellinger Knoll, Hilde von Plate Timmermann, and Walter Thiele Bruggemann. There are, of course, several other very important agents whose activities have to a certain point been disclosed by investigation to date, which agents are now outside the custody of the Chilean authorities, most of them apparently having gone to Argentina before the start of this process.

The attitude of Judge Baquedano Lira in this case has been the occasion of much comment, as you realize. It appears to us that there is no basis for an allegation that the Judge is influenced by pro-Nazi sentiments, but it is quite evident that, either through the failure of proper judicial procedure for this type of case or the failure of the Judge intelligently to appreciate the scope of such a case, investigation and prosecution of the case may not reach the maximum results that we wish. However, it is believed that judicial action will be taken against the majority of the important agents involved up to the present time. It is true that the Judge has released a great many people connected with the case who, because of their connection with the case, should it is believed receive some punishment. Most prominent of these is the wife of Guillermo Kunsemuller because through declarations of Kunsemuller and documentary evidence seized in Timmermann’s house, it is known that she played an active part in this espionage group. However, we are again faced with the characteristic attitude of Chilean authorities regarding female espionage agents. The Judge has tacitly admitted that prosecution against women involved in this case probably won’t be severe.”

I wish to emphasize the point brought out by the Legal Attaché’s office to the effect that all the principal agents of the PQZ spy ring are still in custody. Furthermore, I believe that President Ríos and the Minister for Foreign Affairs are interested in the prosecution of the civilian spies already apprehended in so far as they are able to effect this in the face of all the legal encumbrances which prevail. It is interesting to note that a reliable contact of the Naval Attaché’s office was told on March 22 by Osvaldo Koch, attorney for the Nazis in both the Valdivia (Mewes) and PYL cases, that in his (Koch’s) opinion most of the persons apprehended were guilty beyond a doubt and would be punished. Osvaldo Koch has apparently undergone a change in sympathies, for he also stated to the Naval Attaché’s informant that he expected the crack-up of Germany at any moment.

With reference to my telegram No. 568 of March 25, 2 p.m.,⁷⁶ two of the Legal Attaché’s assistants were informed yesterday by Chilean officials who are close to the case that so many high ranking Chilean Army officers were involved that the case would not be pursued publicly against them, but that they would be turned over to a military court. There is documentary evidence that one of the army officers (who is named in the evidence only by a pseudonym) actually engaged in espionage activities against his own country, furnishing information to the Germans concerning the strength of the armed forces in men and matériel, patrol routes of the Chilean Navy, and other vital matters. Furthermore, a reliable informant of the Naval Attaché’s office was told several days ago by a well known Radical Deputy that not only were many army officers implicated but certain Radical Party leaders. Thus, it may be gathered that the Chilean authorities, and particularly President Ríos, will be loath to push the case much further for fear of the resultant scandal in the army and even in the Radical Party. The President has demonstrated time and again that one of his basic policies is to remain on friendly terms with the Army in order that he may have its support, which is essential to him.

Nevertheless, there is as yet no indication that the judge will drop the case against the German and Chilean civilians who have already been arrested and are the principal agents of the Nazis in the PQZ case. As stated in my telegram No. 568 of March 25, 2 p.m., Señor Fernàndez told me today the case against the civilians would be prosecuted to the limit. In confirmation of the information received by the Legal and Naval Attachés, the Minister for Foreign Affairs admitted that high ranking Army officers were involved in the affair and that the Chilean Government wanted no publicity concerning this aspect of the matter. He asserted, however, that these Army officers would be inconspicuously and gradually dismissed from the Army within the next three months.

The Embassy, as in the past, will follow the investigation closely and will keep the Minister for Foreign Affairs and the Sección [Dirección?] General de Investigaciones aware of its continuing interest.

In reaffirmation of my telegram No. 287 of February 16, 1944, 1 p.m., I want to state that the Legal Attaché, and in particular his assistants, Messrs. A. Kimball Dacy and William Shea, are to be highly commended with regard to the discovery of the PQZ spy ring, the apprehension through the Dirección General de Investigaciones of the Nazi agents and the furnishing of prompt and thorough information to me on the whole affair. Messrs. Dacy and Shea have been tireless in their efforts and have on many occasions worked the better part of the night with agents of Investigaciones in the development of the PQZ case.

Respectfully yours,

Claude G. Bowers

66. Not printed.
67. Not printed; copy transmitted to the Department in despatch 8890, February 17, 1944, from Santiago.
68. Telegram not printed.
68. Telegram not printed.
68. Telegram not printed.
71. Oswaldo Hiriart.
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73. Judge Baquedano Lira.
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74. Latter not printed.
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