Lawsuit charges that Nazi gold funded Vatican ratlines

By Muriel Fraser
“From money stolen from the gold teeth of my relatives, the Vatican enabled Nazis to escape to Argentina,” claims William Dorich.

Together with other survivors of the little-known “Croatian Holocaust”, Dorich has launched a suit against the Vatican Bank and the Franciscan order to try to prove this. His claims concern the funding of the “ratlines”, the network of escape routes for Nazis and other fascists fleeing Europe at the end of World War II. His suit claims that the Vatican Bank and the Franciscans helped members of a brutal, pro-Nazi regime in Croatia hide and launder millions of dollars worth of loot, including gold and jewellery taken from concentration camp prisoners and the proceeds of slave labour.

These Holocaust survivors charge that all or a portion of the treasury of Croatia’s government, the Ustasha, “was transferred to cooperative Roman Catholic clergymen and Franciscans for transport to Rome” where the funds eventually “found their way into the hands of the Vatican Bank, among other recipients.”

The Vatican Bank and the Franciscans have sought to have the suit dismissed on multiple grounds. This has prolonged it precisely at a time when more and more of the aged claimants are dying off. It was originally brought before a California court in November 1999, but in 2003 lawyers for the Vatican Bank and Franciscan successfully argued that the case was outside the jurisdiction of a US court because it involved issues of foreign policy. However, in 2005 an Appeal Court overturned the earlier judgement and allowed the claims for restitution to proceed. The Vatican Bank and the Franciscans then challenged this ruling, but in 2006, the Supreme Court, by declining to hear their case, has opened the way for the lawsuit go-ahead.

However, the 2005 Appeal Court decision only permitted part of the suit – the property claims – to proceed. The Holocaust survivors could continue to pursue restitution of lost and looted property, what is known as “victim gold”. Yet, the court also argued that “We are not a war crimes tribunal”. Hence it disallowed the political, human rights, and war-related claims against the Vatican Bank and the Franciscans.

This exclusion of the human rights part of the original claim has made the Holocaust survivors’ case more difficult to prove. It removes from consideration what Robert Lee Wolff, professor of History at Harvard calls "a historic fact that certain members of the Croat Catholic hierarchy […] endorsed the butchery, and some members of the Franciscan order took an active part in the forced conversions of the Serbs and also in the massacres."

Similarly firm evidence about the remaining claim of money laundering is harder to come by because, as the appeals court delicately put it, the dealings of the Vatican Bank are “murky”.

The Vatican Bank, officially known as the Institute for Religious Works, has an impenetrable organisation, with three separate boards of directors. It also boasts another curious feature: it is said to be “never audited” hence, funds deposited there may simply vanish without a trace. Furthermore, the Vatican Bank denies that it has any records from the World War period, and maintains that it too adopts the remarkable practice of destroying all of its records every ten years.

Nonetheless, other records do exist in German and American archives, and these indicate that what is being claimed for Croatia in fact happened in Germany. There, the records show Nazi transfers of funds from the Reichsbank to the Vatican Bank and further transfers of funds from the Vatican Bank to Nazi-controlled banks in Switzerland. In other words, the Vatican Bank appears to have acted as an intermediary in order to help spirit Nazi gold from Germany to the safe haven of secret Swiss bank accounts. It would then be available to fund the ratlines, without leaving any trace.

The Holocaust survivors must try to prove that the Vatican Bank laundered the proceeds of the Ustasha genocide in Croatia in a similar manner. There is only one known witness to the Vatican and Franciscan money laundering: former US Army Counter-intelligence Special Agent William Gowen. According to his deposition, Vatican official Fr. Krunoslav Draganovic admitted to Gowen that he received up to ten truckloads of loot in 1946 at the Franciscan-controlled Croatian Confraternity of San Girolamo in Rome. Gowen also testified that the leader of the treasure convoy, Ustasha Colonel Ivan Babic, boasted to Gowen of using British uniforms and trucks to move the gold from Northern Italy to Rome. As for the Ustasha Treasury’s ultimate destination, Gowen concurred that it could have gone nowhere but the Vatican Bank.

The Vatican Bank and the Franciscans have demanded that Gowen's testimony not be published, but a copy was obtained by the Israeli newspaper Haaretz which posted an online article in January 2006. It uses the evidence of this former American counterintelligence agent to accuse Montini, the future Pope Paul VI, of involvement in the laundering of money for the ratlines. According to the Gowen, a top Vatican official charged with overseeing Croatian affairs in Rome, Monsignor Draganovic, who reported directly to Montini, admitted being the mastermind behind the smuggling and deposit of the Ustasha Treasury at the Vatican bank.

However, even if the lawyers for the Holocaust survivors manage to penetrate Vatican Bank secrecy sufficiently to surmount what the Appeal Court called “daunting evidentiary obstacles” that may not be enough. For in the event that the claim proves successful, the Vatican is preparing a new defence. According to one of the victims’ lawyers, the Vatican attorneys now argue that it was all perfectly legal, anyway. Ignoring the fact that wartime Croatia was a European Axis country, which Hitler and Mussolini carved up into German and Italian occupation zones, they claim that the victims were citizens of the “Independent State of Croatia”. Naturally, this country, which has been called “one great slaughterhouse”, was not granted diplomatic recognition by anyone except the Axis powers – and the Vatican. But now it appears that the Church will try to use its recognition of this genocidal regime to argue that disposal of the “victim gold” was merely an internal Croatian financial matter, and that the Vatican Bank’s money laundering scheme violated no international law.

Cynics might be tempted to compare this to recent Vatican protestations that the Inquisition, too, was perfectly “legal”.

Further reading: The best single online source is “Vatican Bank Claims”, the website of the lawyers representing the victims of the Croatian Holocaust.

An extended version of this article is available online at Concordat Watch