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Vajda, as it turns out, was himself a fugitive from war crimes and
treason charges at the time he entered the United States. He had made a career out of extreme-right-wing politics in Hungary and had been a leading anti-Semitic propagandist for the clerical-Fascist Arrow Cross party. In the last months of the war Vajda had helped strip millions of dollars' worth of Hungarian art treasures and industrial equipment from Budapest. This booty then became one of Intermarium's primary sources of funding during the first years after the war.

Vajda had been arrested on war crimes charges in Italy in April 1947. But according to American counterintelligence records which have never before been made public, he soon escaped from Italian police custody in much the same way as Gowen's earlier informant had and fled to Pope Pius's summer estate at Castel Gandolfo, where he was given refuge. U.S. CIC Agent Gowen then helped Vajda secretly exit the country and even provided him with a reference letter that asserted that Vajda “had been of great assistance to Counterintelligence Corps in Rome [by] giving information on immigrants from Russian satellite states.”
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The Hungarian then traveled to Spain, where he succeeded in winning State Department and CIC support for his trip to the States.

Unfortunately for Vajda and Special Agent Gowen, columnist Drew Pearson was in Rome shortly after the Hungarian fled Italy. He was approached by unknown persons—”probably Communists or Communist inspired,” Gowen said—who leaked many of the details of Vajda's history and plans to him. Pearson soon discovered that the fugitive war criminal—and Intermarium representative—Ferenc Vajda had actually entered the United States at taxpayer expense and with special State Department clearance. The columnist publicized the incident, and Vajda was soon arrested and held at Ellis Island in New York Harbor. Former Hungarian Prime Minister Nagy, who had been the object of Vajda's mission, denounced the Intermarium envoy as a “Nazi.”
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There followed a brief congressional investigation, the records of which have remained sealed for more than thirty-five years. Vajda was soon deported and found his way to refuge in Colombia. He eventually ended up as Bogota correspondent for
Time
magazine (though he was fired when his past became public) and as a teacher at an international university whose board, interestingly enough, included Adolf A. Berle, Jr., who is well known today to have served as a conduit for CIA funds throughout this period.
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The Vajda affair was a disappointment for the alliance between
U.S. intelligence and Intermarium, but it certainly did not end the relationship. In case after case, a clear continuity of personnel can be established, beginning with the Vatican refugee-smuggling networks in 1945, continuing into Intermarium, and winding up in a variety of CIA-financed political warfare projects during the early 1950s. A number of Intermarium activists, including some who are war criminals by even the strictest definition of the term, followed this pipeline into the United States.

A handful of examples will have to suffice to illustrate this process. The Latvian component of Intermarium was among the most deeply compromised by its service to the Nazi war machine, yet a number of its most prominent members entered the United States. They went on to play leading roles in what are now known to have been CIA-funded émigré projects inside this country.

The Latvian Fascist Perkonkrust Führer Gustav Celmins, for example, had organized a Latvian SS unit in 1941 and served as a Nazi agent inside nationalist circles throughout the war. He went on to become an officer in the powerful Rome branch of Intermarium. Celmins entered the United States as a displaced person in 1950 and was quickly hired as a teacher in a Russian studies program at Syracuse, New York, with a history of ties to American intelligence agencies. Celmins eventually fled to Mexico following a newspaper series that exposed his efforts to organize anti-Semitic activities among Latvian exiles in the United States.
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Other Latvian émigrés in Intermarium include Alfreds Berzins and Boleslavs Maikovskis, both of whom were wanted on war crimes charges and both of whom ended up on the payroll of CIA-financed organizations during the 1950s. They served as leaders of the Committee for a Free Latvia and the International Peasant Union, respectively, which were bankrolled with agency funds laundered through RFE/RL and the related Assembly of Captive European Nations (ACEN).
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As will be seen in a later chapter, CIA money paid for the ACEN's political congresses, provided substantial personal stipends to émigré leaders like Berzins, and in some cases published transcripts of their speeches in book form. Many Intermarium activists became guests on RFE/RL broadcasts, and the radio stations aggressively promoted the organizations they represented throughout the 1950s. CIA money laundered through Radio Free Europe, it is worth noting, also financed the publication of the book
The Assembly of Captive European Nations
, which presented the proceedings
of the first ACEN congress in New York and included commentaries by Berzins and the Albanian Bloodstone émigré Hasan Dosti, among others.
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This text was distributed free of charge to virtually every library, newspaper, and radio station in the United States and Europe. The propaganda effort was so thorough that this tract continues to turn up regularly in used bookstores and garage sales to this day.

The United States became ensnarled in Intermarium's large-scale underground railroads for Nazis when the CIC hired Croatian Intermarium leader Monsignor Krunoslav Dragonovic to run special ratlines out of Europe for U.S.-sponsored intelligence assets who were too “hot” to have any official connection with the U.S. government. Dragonovic, a high-ranking prelate within the Croatian Catholic Church, was running one of the largest and single most important Nazi escape services at the time the United States hired him. According to a later U.S. Justice Department report, Dragonovic himself was a war criminal who had been a “relocation” official involved in the deportation of Serbians and Jews by the Croatian Fascist Ustachi regime that had been set up inside Yugoslavia during the war. In 1944 he had fled to the Vatican, where he used the auspices of the church to create underground escape routes out of his home country for thousands of senior Ustachi leaders. According to Ivo Omrcanin, a former Ustachi government emissary and senior aide to Dragonovic now living in Washington, D.C., his mentor used church resources to arrange safe passage for “many thousands of our people,” as Omrcanin puts it. “He helped as much of the government as he could, not excepting the security officials.” These “refugees” included men such as Ustachi chieftain Ante Pavelic and his police minister, Andrija Artukovic, who between them had organized the murder of at least 400,000 Serbians and Jews.
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The later U.S. Justice Department investigation into the escape of Gestapo officer Klaus Barbie made public dozens of pages of official records concerning Dragonovic's work for U.S. intelligence that would have otherwise probably never seen the light of day. The Justice Department directly admits that Dragonovic went to work for the Americans in smuggling U.S.-sponsored fugitives, and that—whether the United States liked it or not—this provided a source of financing and shield of protection, in effect, for the priest's independent Nazi smuggling work.
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The deal with Dragonovic was a product of the perceived intelligence needs of the period. According to CIC Agent Paul Lyon, the senior officer of the 430th CIC in Vienna, Major James Milano, ordered him to “establish a means of disposition of visitors”—Lyon means exiles from Eastern Europe—in the summer of 1947. These “visitors” were men and women “who had been in the custody of the 430th CIC,” Lyon writes, “and whose continued residence in Austria constituted a security threat as well as a source of possible embarrassment to the Commanding General.” The CIC man traveled to Rome, where, with the assistance of an exiled Slovakian diplomat, he struck a deal for mutual assistance with Monsignor Dragonovic, who already had “several clandestine evacuation channels to the various South American countries for various types of European refugees” in operation.

Under the agreement the priest obtained false identifications, visas, secret safe houses, and transportation for émigrés whose flights were sponsored by the CIC. Lyon and CIC Special Agent Charles Crawford, in exchange, helped special refugees
selected by Dragonovic
to escape from the U.S.-occupied zone of Germany. These were almost certainly fugitive Ustachi (Croatian Fascist) war criminals, even according to the Justice Department's version of events.
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Officially, of course, the United States was still committed to the capture and punishment of Ustachi criminals. But the CIC-Dragonovic agreement inevitably entailed providing de facto protection not only to the fugitives sponsored by the United States but to the Croatian criminals known to be in the monsignor's care as well. The CIC knew that its arrangement with Dragonovic was facilitating the escape of Fascist fugitives. CIC Special Agent Robert Mudd, for example, reported at the time of the first CIC-Dragonovic contacts that “many of the more prominent Ustachi war criminals and Quislings are living in Rome illegally.… Their cells are still maintained, their papers still published, and their intelligence agencies still in operation. Chief among the intelligence operatives … appear to be Dragonovic and Monsignor Madjerec,” he wrote. “Ustachi Ministers are either living in [Dragonovic's] monastery, or living in the Vatican and attending meetings several times a week at San Geronimo [i.e., the Istituto di St. Jeronimos, of which Dragonovic was in charge.]”
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Agent Mudd went on to name ten major Ustachi leaders then in Dragonovic's keeping, several of whom had appeared on Allied lists of war crimes suspects. Despite Mudd's report,
however, the CIC did not arrest any of the Ustachis in Dragonovic's care, nor did it report where they were hiding to the United Nations War Crimes Commission or the Yugoslav government.

The best known of the U.S.-sponsored passengers on Dragonovic's ratline to come to light so far is Klaus Barbie, the wartime chief of the Gestapo in Lyons, France, who later went to work for U.S. intelligence in Germany. During the war, Barbie had deported Jews to death camps, tortured and murdered the resistance fighters who fell into his hands, and served as the political police in Nazi-occupied Lyons. At war's end Barbie fled back to Germany, where he first came to the attention of the U.S. Army CIC as a target in a hunt. He happened to fall into the sights of Operation Selection Board, a series of joint U.S.-British raids in February 1947, which were designed to round up about seventy Germans who had organized an underground pro-Nazi political party. Barbie was believed to be in charge of intelligence for the group—obtaining false papers and printing equipment, smuggling fugitives, and the like—and as such was high on the arrest list.

He escaped apprehension, however, by climbing out the bathroom window as CIC agents were kicking in the front door. Barbie fled to Memmingen, a small town west of Munich, and there his relationship with the CIC began in earnest. The CIC in Region IV (which included Memmingen) knew that the CIC in Stuttgart, Heidelberg, and Frankfurt (Regions I, II, and III) had arrest warrants out for Barbie in connection with his escape from Operation Selection Board. But Barbie went to his friend Kurt Merk—a former Abwehr officer who was running his own spy network for CIC Region IV—and volunteered for service in the CIC, the same organization that was attempting to capture him. Merk, himself a fugitive from French war crimes charges, convinced his American controller, Robert Taylor, that Barbie could be useful. CIC Region IV then hired Barbie and kept him hidden from the
rest
of the CIC.
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Agent Taylor and the CIC in Region IV had every opportunity to know before they recruited Klaus Barbie that he had been chief of the Gestapo in Lyons, France, during the war. The CIC's “Central Personalities Index Card” identifying him as such had been distributed throughout the agency during Operation Selection Board. Barbie's name, moreover, had been listed in the CROWCASS directories since 1945 as a suspect in the murder and torture of civilians. Barbie himself admitted to his handlers, furthermore, that he had been an SD and a Gestapo officer (though he claimed
he had not been involved in torture or crimes against humanity), and passing references to Barbie's background and rank in the Nazi intelligence service are found scattered throughout his CIC file. This self-admitted status as a former SD and SS officer placed Barbie in the “automatic arrest” category under occupation law in Germany at the time. The CIC, if it had felt itself bound by the written laws, should have arrested Barbie without further ado. It was not necessary for the CIC to know the specific crimes Barbie may have committed when it made the arrest, though obviously a full investigation should follow. It was enough that Barbie was an SD man.
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Instead, however, Agent Taylor and his successors went out of their way to keep Barbie on the payroll. Barbie's “value as an informant infinitely outweighs any use he may have in prison,” Taylor noted in one of several internal CIC recommendations on behalf of his agent, and CIC headquarters in Germany eventually officially approved his recruitment of the former SS officer. Barbie was soon running several separate spy networks that penetrated the French intelligence service and stretched into Romania and into right-wing Ukrainian émigré organizations in Germany. Barbie's subagents also performed undercover work inside the KPD (German Communist party) in Region IV and enjoyed a bonus of 100 deutsche marks when he came up with the “complete KPD membership list of Stadt Augsburg,” his security file indicates.
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