Edwin Pauley's Role in American Fascism

Excerpt (pps. 356-376) from:

The Secret War Against the Jews
by John Loftus & Mark Aarons ©1994

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New York, NY: St. Martin’s Press

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CHAPTER 16--THE MEXICAN CONNECTION

The history books say that George Bush was a war hero, a Texas entrepreneur, then a senior figure in several Republican administrations. As president, he worked for a kinder, gentler nation. Our sources in the intelligence community said that the American public knows more about Kurt Waldheim's background than they do about President Bush's. George was himself one of the "old spies."[1]

The American voters who read Bush's 1987 autobiography, Looking Forward, certainly would have had no idea about many of the seamier sides to his family background, his business and espionage activities, and his political career. It was a thoroughly sanitized version of history. But does that make him a bad man?

According to a recent history, Spider's Web, by Alan Friedman, George Bush
was certainly a devious man. The American arms sales to Egypt and Saudi Arabia begun by Carter were illegally diverted to Iraq soon after Reagan and Bush took office. Once American arms started going to the Arabs, only a few regimes, such as Gadhafi's Libya, could not obtain shipments. It was Bush himself who arranged the financing, established the policy, and created the covert arms network that backed Saddam Hussein .[2]

As discussed in the last chapter, when Bush was director of the CIA in the 1970s, the Agency published false oil data to justify the arming of the Arab nations. After Bush returned to office in the 1980s, his arms-for-oil agenda became clear. According to Friedman's analysis of CIA files, U.S. purchases of Iraqi oil increased twelvefold to over 1 million barrels a day, which helped finance Iraq's war machine .[3]
From the beginning, Bush's policy was clearly tilted toward the Arabs and away from Israel. In 1981, when the Israelis destroyed Saddam Hussein's nuclear reactor at Osirak, Bush was the first world leader to say that Israel needed to be punished.[4] Even after Iraq turned American weapons against Israel in the Gulf War in 1991, Bush refused to permit Israeli pilots to defend their country for fear it would irritate the other Arab nations. The Israeli intelligence officers we spoke to regard Bush as their most vicious American opponent since Allen Dulles.[5]

There is, however, no consensus among the Western intelligence community. Some of our sources agree with the Israelis that George Bush was the last, and the worst, of the Dulles clique that brought the CIA into discredit.[6] Others say that George Bush is a good man with bad friends. His only major character flaw was an excessive personal loyalty to friends and family. Bush himself was ignorant of the plotting that went on around him.[7]

Although it is true that your friends will do you more damage than your enemies, at some point Bush's defense of ignorance wears a bit thin. A joke going around during the Iran-Contra scandal said that "The two biggest lies in Washington are that Ronald Reagan was in the loop and George Bush was out of it." Because of the importance of Bush's role in the history of covert operations against Israel, we discuss his background in some detail. It is a history that has never been revealed fully before.

In this chapter we consider the following allegations:

• Bush's father and grandfather worked with Allen Dulles to finance the Third Reich and then, when war broke out, cloaked their activities under the cover of intelligence operations.
• George Bush established an oil leasing business in Texas, the biggest client of which was Edwin Pauley, Dulles's confidant, Nixon's bagman, and a front man for CIA money laundering. Bush himself played a minor role in CIA covert operations from the early 1960s.
• Through Pauley, Nixon recruited Bush to handle a variety of sensitive assignments. Bush later asked Nixon to resign for fear that the Watergate investigations might uncover further scandals.
• While not anti-Semitic, Bush was definitely anti-Israeli and pro-Arab, abias that colored American oil and arms policy in the Middle East.

The real story of George Bush starts well before he launched his own career. It goes back to the 1920s, when the Dulles brothers and the other pirates of  Wall Street were first making their deals with the Nazis. To understand Bush's role as a senior official of the Republican party, as head of the CIA, as U.S. vice president, and then, ultimately, in the White House, it is important to trace the Bush family roots right back to the beginning of the secret espionage war against the Jews.

Bush's family, say many of the former intelligence officers we interviewed for this chapter, was nothing to be proud of. The family, and especially his grandfather and father, dragged him into some dirty business, and he stayed with it too long, trying to make a bad thing good.[8]

George Bush's problems were inherited from his namesake and maternal grandfather, George Herbert "Bert" Walker, a native of St. Louis, who founded the banking and investment firm of G. H. Walker and Company in 1900. Later the company shifted from St. Louis to the prestigious address of 1 Wall Street. The obituary in The New York Times, which recorded Walker's death in 1953, mainly highlighted his sporting achievements, in both golf and horse racing, and his role in financing the "new" Madison Square Garden in the mid-1920s.[9]

Apart from disclosing that "Grandfather Walker" came from "a devout Catholic family," was named after the poet George Herbert, and formed his own investment firm, George Bush revealed practically nothing about his grandfather in his autobiography.[10] However, there was another, far seamier side to George Walker. Walker was one of Hitler's most powerful financial supporters in the United States. The relationship went all the way back to 1924, when Fritz Thyssen, the German industrialist, was financing Hitler's infant Nazi party. As mentioned in earlier chapters, there were American contributors as well.

Some Americans were just bigots and made their connections to Germany through Allen Dulles's firm of Sullivan & Cromwell because they supported fascism. The Dulles brothers, who were in it for profit more than ideology, arranged American investments in Nazi Germany in the 1930s to ensure that their clients did well out of the German economic recovery. "Dulles clearly emphasized projects for Germany ... and for Mussolini's fascist state . . .All told, these and more than a dozen similar transactions had a combined value in excess of a billion dollars."[11]

Sullivan & Cromwell was not the only firm engaged in funding Germany.  According to The Splendid Blond Beast, Christopher Simpson's seminal history of the politics of genocide and profit, Brown Brothers, Harriman was another bank that specialized in investments in Germany. The key figure in the firm was Averell Harriman, a dominating figure in the American establishment, who for almost half a century helped form many of Washington's major foreign policies. Some of his allies in this latter endeavor who also served on the firm's board included Robert Lovett [married to the daughter of the senior partner of Brown Brothers, the investment bank W.Averell Harriman and his brother merged their investment banking firms with in 1931 to form Brown Brothers Harriman], who as previously discussed worked closely with James Forrestal to lead the State Department's revolt against Truman's pro-Zionist policy during the UN debate on the partition of Palestine, and George Bush's father, Prescott, who later became a U.S. Senator.[12]

The firm originally was known as W. A. Harriman & Company. The link between Harriman & Company's American investors and Thyssen started in the 1920s, through the Union Banking Corporation, which began trading in 1924. In just one three-year period, the Harriman firm sold more than $50 million of German bonds to American investors.[13] "Bert" Walker was Union Banking's president, and the firm was located in the offices of Averill Harriman's company at 39 Broadway in New York.[14]

In 1926 Bert Walker did a favor for his new son-in-law, Prescott Bush. It was the sort of favor families do to help their children make a start in life, but Prescott came to regret it bitterly. Walker made Prescott vice president of W. A. Harriman. The problem was that Walker's specialty was companies that traded with Germany. As Thyssen and the other German industrialists consolidated Hitler's political power in the 1930s, an American financial connection was needed. According to our sources, Union Banking became an out-and-out Nazi money-laundering machine.[15] As we shall see, there is substantial evidence to support this charge.

While the United States languished in the Depression, Walker made millions for his clients by investing in Germany's economic revival. He decided to quit W. A. Harriman in 1931, to concentrate on his own firm, G. H. Walker, while his son-in-law stayed behind to run the show for Harriman. Some say that Walker left George Bush's father holding the bag. Others say that Bush specialized in British investors in Nazi Germany, while Walker handled the Americans.[16]

In that same year Harriman & Company merged with a British-American investment company to become Brown Brothers, Harriman. Prescott Bush became one of the senior partners of the new company, which relocated to 59 Broadway, while Union Banking remained at 39 Broadway. But in 1934 Walker arranged to put his son-in-law on the board of directors of Union Banking.

Walker also set up a deal to take over the North American operations of the Hamburg-Amerika Line, a cover for I. G. Farben's Nazi espionage unit in the United States.[17] The shipping line smuggled in German agents, propaganda, and money for bribing American politicians to see things Hitler's way. The holding company was Walker's American Shipping & Commerce, which shared the offices at 39 Broadway with Union Banking. In an elaborate corporate paper trail, Harriman's stock in American Shipping & Commerce was controlled by yet another holding company, the Harriman Fifteen Corporation, run out of Walker's office. The directors of this company were Averell Harriman, Bert Walker, and Prescott Bush.[18]

In order to understand the character of the firm, it should be recalled that
Brown Brothers, Harriman had a bad reputation, even among international
bankers, as hard-nosed capitalists who exploited every opportunity for profit
in a harsh and ruthless manner. In a November 1935 article in Common Sense,

By Gen. Smedley Butler

retired marine general Smedley D. Butler blamed Brown Brothers, Harriman for having the U.S. marines act like "racketeers" and "gangsters" in order to exploit financially the peasants of Nicaragua.[19]

At some point, Prescott Bush must have realized that his father-in-law was, to put it mildly, a very shady character. A 1934 congressional investigation alleged that Walker's "Hamburg-Amerika Line subsidized a wide range of pro-Nazi propaganda efforts both in Germany and the United States."[20] Walker did not know it, but one of his American employees, Dan Harkins, had blown the whistle on the spy apparatus to Congress. Harkins, one of our best sources, became Roosevelt's first double agent. As previously mentioned, Harkins kept up the pretense of being an ardent Nazi sympathizer, while reporting to Naval Intelligence on the shipping company's deals with Nazi intelligence.[21]

To this day, we do not know if Prescott Bush stayed on board out of loyalty to his father-in-law or because the money was so good. Instead of divesting the Nazi money, Bush hired a lawyer to hide the assets. The lawyer he hired had considerable expertise in such underhanded schemes. It was Allen Dulles. According to Dulles's client list at Sullivan & Cromwell, his first relationship with Brown Brothers, Harriman was on June 18, 1936. In January 1937 Dulles listed his work for the firm as "Disposal of Stan [Standard Oil] Investing stock."
As discussed in Chapter 3, Standard Oil of New Jersey had completed a major stock transaction with Dulles's Nazi client, I. G. Farben. By the end of January 1937 Dulles had merged all his cloaking activities into one client account: "Brown Brothers Harriman-Schroeder Rock." Schroder, of course, was the Nazi bank on whose board Dulles sat. The "Rock" were the Rockefellers of Standard Oil, who were already coming under scrutiny for their Nazi deals. By May 1939 Dulles handled another problem for Brown Brothers, Harriman, their "Securities Custodian Accounts."[23]

If Dulles was trying to conceal how many Nazi holding companies Brown Brothers, Harriman was connected with, he did not do a very good job. Shortly after Pearl Harbor, word leaked from Washington that affiliates of Prescott Bush's company were under investigation for aiding the Nazis in time of war. In February 1942 George Bush's father, who was by then the senior managing partner of Brown Brothers, Harriman, tried to wrap himself in the American flag. He became the national chairman of the United Service Organization's
annual fund campaign, which raised $33 million that year to provide entertainment for Allied troops.[24]

The cover story did not work. The government investigation against Prescott Bush continued. just before the storm broke, his son, George, abandoned his plans to enter Yale and enlisted in the U.S. Army. It was, say our sources among the former intelligence officers, a valiant attempt by an eighteen-year-old boy to save the family's honor.[25]

Young George was in flight school in October 1942, when the U.S. government charged his father with running Nazi front groups in the United States. Under the Trading with the Enemy Act, all the shares of the Union Banking Corporation were seized, including those held by Prescott Bush as being in effect held for enemy nationals. Union Banking, of course, was an affiliate of Brown Brothers, Harriman, and Bush handled the Hairrimans' investments as well.[26]

Once the government had its hands on Bush's books, the whole story of the intricate web of Nazi front corporations began to unravel. A few days later two of Union Banking's subsidiaries-the Holland American Trading Corporation and the Seamless Steel Equipment Corporationalso were seized. Then the government went after the Harriman Fifteen Holding Company, which Bush shared with his father-in-law, Bert Walker, the Hamburg-Amerika Line, and the Silesian-American Corporation. The U.S. government found that huge sections of Prescott Bush's empire had been operated on behalf of Nazi Germany and had greatly assisted the German war effort.[27]

In the midst of the patriotic fervor over the war, it must have been a crushing experience for young George to know that his father and grandfather were among the men who helped finance Hitler's war machine. Little wonder that Bush made no mention of the whole affair in his autobiography. Still, his relatives were very lucky not to have gone to jail. Like Dulles, they volunteered to become spies for the war effort. George's grandfather, Bert Walker, went to Supreme Allied Headquarters in London to advise on covert "psychological operations." Prescott Bush's clients, including the Thyssens, fled to Switzerland, where they joined Dulles's anti-Hitler underground.[28]

Prescott himself had served in Military Intelligence during World War I, liaising with the British. According to our sources, he was trained by Stewart Menzies, later head of the British secret service during World War II.[29] Menzies knew that there were too many British investors in Brown Brothers, Harriman to make an issue out of their aid to Nazi Germany. It was better to bury the scandal.

By 1945 young George was a bona fide war hero, a fact that his father later used to good advantage in his successful run for the U.S. Senate. Like another naval hero, Jack Kennedy, who was also the son of an infamous Nazi supporter, George's war experience changed him, even as it redeemed the family's good name. The man who came back from the war was very different from the boy who had left.

George had grown up in Greenwich, Connecticut, an upper-class New York bedroom community. Greenwich was such a notorious hotbed of anti-Semitism that it became the site for the film A Gentleman's Agreement, which graphically exposed the prejudice against Jews held by many members of the nation's elite.


After the war, when George returned to Yale University, the school openly acknowledged that it had a policy to restrict the number of Jewish students in each class. Prescott Bush was a trustee at the time. The 1945 Annual Report of the Board of Admissions mentions a "Jewish problem" at Yale and publicly states that "the proportion of Jews . . . has somewhat in-creased and remains too large for comfort."[30] Apparently, Jews were good enough to fight for the United States, but Jewish veterans need not apply to Yale.
Such bigotry was appalling to young George. Our sources obtained access to George Bush's private files in Yale's most exclusive secret society, the Skull and Bones Club. George was in favor of admitting both blacks and Jews to this venerable institution.[31] The sources we interviewed on George's early life say it was a dig at his father, who was not the most racially progressive member in the history of the club.[32]

In 1949 the Skull and Bones class, which George Bush helped to select, finally succeeded in voting away all racial and religious barriers to membership. George's vote in 1948 for admitting Jews to the next Skull and Bones club was not his only act of rebellion against his father's generation. After graduation he shunned a seat with Brown Brothers, Harriman and asked for a job in China, as far away from Wall Street as he could get.

His father, who was also on the board of Dresser Industries, arranged it. There have been rumors that George's trip to China was somehow connected with espionage. True, Dresser has provided cover for CIA operatives over the years, but George's trip was strictly business.[33] it should be noted, however, that among George's classmates were a number of people who left college to work on intelligence operations with his father's friend, Allen Dulles.[34]

Try as he did, George Bush could not get away from Dulles's crooked corporate network, which his grandfather and father had joined in the 1920s. Wherever he turned, George found that the influence of the Dulles brothers was already there. Even when he fled to Texas to become a successful businessman on his
own, he ran into the pirates of Wall Street.

One of Allen Dulles's secret spies inside the Democratic party later became George Bush's partner in the Mexican oil business. Edwin Pauley, a California oil man, was, like James Forrestal, one of Dulles's covert agents in the Roosevelt and Truman administrations. Like Forrestal, Pauley was a "big business" Democrat. The parallels didn't end there.[35]

During Roosevelt's presidency, Pauley was a major Democrat fundraiser and held a series of top posts, including treasurer of the Democratic party's National Committee.[36] He was also director of the Democratic convention in 1944 and had an unrivaled reputation as a man who could shake a great deal of money out of the oil companies, which were notoriously right-wing and pro-Republican. Pauley also had the loyalty of President Truman, especially for his role in getting him the delegate numbers to replace Henry Wallace as vice president in 1944, which ultimately took Truman to the White House when Roosevelt died in 1945.[37] Unfortu-nately, Truman's gratitude was not enough to sweep Pauley's dirt under the carpet.

The truth is that Pauley was committed to profit and, like the Dulles brothers, could not distinguish between his own interests and his public duties. During World War II he was in the perfect position to assist the Dulles clique in their Nazi oil deals. it was Pauley who recommended that Roosevelt appoint Interior Secretary Harold Ickes to the post of Petroleum Administrator for War, although Pauley later came to regret that action bitterly. Ickes, in turn, made Pauley his special adviser.[38]

Ickes Diary

Ickes's choice of Pauley, and several other top oil men, to hold key positions puzzled many liberals in the Roosevelt administration. Ickes believed that unless the oil companies were part of wartime policyrnaking,
they "would take the bit in their teeth and run away with it given any chance."[39] Pauley and Ickes made a good team, at least while the war still hung in the balance. They worked to organize the Petroleum Administration for War, and more important for Allen Dulles, Pauley also held the key position of Petroleum Coordinator of Lend-Lease Supplies for the Soviet Union and Britain.[40]

There is some evidence that Ickes used Pauley, an independent oil man, as a counterbalance to the major oil corporations. For example, during the war Pauley had several run-ins with the foreign petroleum coordinator, Max Thornburg. He just happened to be a senior executive of Standard Oil of New Jersey, which, as previously discussed, was owned by Rockefeller and I. G. Farben and was secretly sending oil to Hitler. While the war raged, Pauley and Thornburg fell to squabbling about Mexican oil, which had been nationalized in the 1930s, when the U.S. giants were thrown out.

In this particular fight, Pauley was supported by Ickes, who believed that the major companies were more interested in ensuring their profitable reentry into Mexico than they were in exploiting Mexican oil for the war effort. Pauley, then working for the Petroleum Administration while he pushed his own private interests in Mexico, could not have put it better himself.[41] Pauley's real concern, however, was not to help the war effort but to gain a share of Mexican oil profits. After the war he did so, in partnership with a young independent oil producer by the name of George Bush.

Despite the obvious conflict of interests, in April 1945 Truman appointed Pauley as the U.S. representative to the Allied Reparations Committee, with the rank of ambassador. Simultaneously, he was made industrial and commercial adviser to the Potsdam Conference, "where his chief task was to renegotiate the reparations agreements formulated at Yalta." As one historian noted, the "oil industry has always watched repa rations activities carefully."[42] There was a lot of money involved, and much of it belonged to the Dulles brothers' clients.

As previously discussed, the Dulles brothers were still shifting Nazi assets out of Europe for their clients as well as for their own profit. They didn't want the Soviets to get their hands on these assets or even know they had existed. Pauley played a significant role in solving this problem for the Dulles brothers. The major part of Nazi Germany's industrial assets was located in the zones occupied by the West's forces. As Washington's man on the ground, Pauley managed to deceive the Soviets for long enough to allow Allen Dulles to spirit much of the remaining Nazi assets out to safety. Although Pauley knew that the Soviet zone contained less than one-third of Germany's industrial assets, as official U.S. representative he insisted to his colleagues on the Reparations Committee it controlled 50 percent.[43]

Pauley, a key player in the plan to hide the Dulles brothers' Nazi assets, then moved into another post where he could help them further. After successfully keeping German assets in Fascist hands, Pauley was given the job of "surveying Japan's assets and determining the amount of its war debt."[44] Again, it was another job that was crucial to the Dulles clique's secret financial and intelligence operations.[45]

In January 1946 Truman nominated Pauley as undersecretary of the navy. The move was "intended by ... Truman as a steppingstone to his succeeding James Forrestal as [Navy] Secretary."[46] It also was designed to balance U.S. oil interests against the Zionists and their wealthy American-Jewish backers. Despite the strength of his support for the Jews, Truman was signaling that there was room for a strong oil voice in his administration. Pauley's nomination, however, ignited considerable political controversy, which eventually helped force him out of political life in 1947.[47]

Finally, the liberal Ickes had had enough of Pauley's machinations. Ickes decided that he would not lie to get Pauley's nomination endorsed by the Senate.[48] When his nomination came up before Senator Charles Tobey's Naval Affairs Committee for ratification, Pauley met his match, as evidence of his political bribes and "black bag" fund-raising operations for the Democrats began to seep out. Although the oil lobby, supported by President Truman, pulled out all stops to frustrate Tobey and make him abandon the hearings, Pauley finally had to retreat. But at least the coverup was safe for a few more years yet, as the most damaging parts of Pauley's work for the oil companies did not emerge during the hearings.[49]

The most explosive allegations about Pauley's political bribes came from Ickes himself. it cost both men their jobs, prompting Ickes's resignation and, a short while later, Pauley's withdrawal from the navy job.[50] Despite pressure from Truman, Ickes was only too eager to tell Tobey's committee exactly the sort of scandal in which Pauley had been involved.
When he testified, Ickes claimed that Pauley had promised to raise $300,000 for the Democratic party from among Californian oil men, if the federal government would drop a court case to establish that offshore oil title belonged to Washington and not to the state of California.[51]


At the time, Pauley was treasurer of the Democratic National Committee. Like Forrestal, he hated the fact that the Democrats were dependent on Jewish financial contributions. Large bribes from the oil companies, which happened also to suit their business interests, could tip the party away from the Zionists. Pauley also just happened to hold two key government oil posts at the time of his bribe offer. His arm-twisting tactics on the federal suit had been widely noted in the Washington bureaucracy. Evidence emerged at the Senate hearings that confirmed Ickes's claims and contradicted Pauley's own statement, made under oath, that he had never made such bribery attempts.[52]

Red Flag to a Bull

If the hearings went on, the whole corrupt business eventually might seep out. When Pauley denied the bribery charge, it was like a red rag to the bull called Harold Ickes. No one was going to call him a liar and get away with it. Invited to reappear at the hearings, this time Ickes gave the committee chapter and verse. But if he had hoped for Truman's backing, he miscalculated.[53]

Indeed, despite Truman's support for the Zionists, the president was playing a careful balancing game with the oil companies. This time the oil companies won. Truman strongly and publicly supported Pauley and "questioned the accuracy and loyalty of Ickes's charges." The president had Ickes's resignation a few days later and promptly accepted it, "with alacrity and delight."[54] But the damage was done, and in "the face of further embarrassment to the Administration and certain rejection by the Senate Naval Affairs Committee, Pauley reluctantly requested that his nomination be withdrawn."[55]

It may have worked out for the best for Truman, who had enough trouble in 1948 convincing the American electorate that his administration wasn't toeing the oil companies' line about Israel, without having Edwin Pauley around his neck. Yet another scandal erupted around Pauley in 1947, which finally ended his political career and forced his retirement from public life. He now strictly worked behind the scenes, although, as we shall see, he continued as a secret Republican agent inside the Democratic party.[56]

Pauley went back to the oil business and, some years later, became an important factor in the secret war against the Jews. In fact, Pauley had a significant influence on George Bush's business career in Texas. In 1958 he founded Pauley Petroleum, which:  ... teamed up with Howard Hughes to expand oil production in the Gulf of Mexico.

Pauley Petroleum discovered a highly productive offshore petroleum reserve and in 1959 became involved in a dispute with the Mexican Government, which considered the royalties from the wells to be too low.[57]

According to our sources in the intelligence community, the oil dispute was really a shakedown of the CIA by Mexican politicians. Hughes and Pauley were working for the CIA from time to time, while advancing their own financial interests in the lucrative Mexican oil fields. Pauley, say several of our sources, was the man who invented an intelligence money-laundering system in Mexico, which was refined in the 1970s as part of Nixon's Watergate scandal. At one point CIA agents used Pemex, the Mexican government's oil monopoly, as a business cover at the same time Pemex was being used as a money laundry for Pauley's campaign contributions;[58] As we shall see, the Mexican-CIA connection played an important part in the  development of George Bush's political and intelligence career.

There was a substantial CIA presence in Mexico since at least the 1950s. Pemex was a perfect place to recruit agents of influence inside the Mexican government. Mexico became part of the "revolving door" between the oil industry and the intelligence community. One of the famous oil men-turned-agents was William F. Buckley, Jr., like Bush, a Skull and Bones alumnus, whose boss in Mexico was [E.] Howard Hunt, later of Watergate fame.[59]

According to Regardie's magazine, the CIA-Mexican oil connection lasted for many years.[60] In the early 1980s, Pemex was listed as employer for another Bill Buckley, before he returned to the Middle East as CIA station chief. This Bill Buckley was to play a major role with George Bush in the Iran-Contra scandal and became a key figure in money laundering through the Bank of Commerce and Credit International, which played an important part in the anti-Israeli intelligence operations of the 1980s.

Pauley, say the "old spies," was the man who brought all the threads of the Mexican connection together. He was Bush's business associate, a front man for Dulles's CIA, and originator of the use of Mexican oil fronts to create a slush fund for Richard Nixon's various campaigns.[61]

There is clear evidence that Pauley, the conservative Democrat, played on both sides of the political fence. In 1972, after Nixon promised "a favorable climate for oil," the Campaign to Reelect the President (CREEP), together with Attorney General John Mitchell's secret "Finance Committee," collected at least $5 million in illegal cash donations from the oil companies. Some of Nixon's political bribe money came directly from Edwin Pauley himself.[62]

Although it is not widely known, Pauley, in fact, had been a committed, if "secret," Nixon supporter since 1960. It should be recalled that Nixon tried to conceal his Mexican slush fund during the Watergate affair by pressuring the CIA into a "national security" cover-up. The CIA, to its credit, declined to participate. Unfortunately, others were so enmeshed in Pauley's work for Nixon that they could never extricate themselves. According to a number of our intelligence sources, the deals Bush cut with Pauley in Mexico catapulted him into political life. In 1960 Bush became a protege of Richard Nixon, who was then running for president of the United States.[63]

 Bush's road to Mexico had begun innocently enough. After working in the oil equipment leasing business for Dresser Industries for several years, George Bush went out on his own. He
 "packed up his red 1947 Studebaker and set off for Texas," ending up in Midland, which soon became the "oil capital of west Texas." Bush began at the bottom, as a trainee painting pumping equipment, but didn't stay there for very long. He soon "caught the fever" and "formed an independent oil company in partnership with other ambitious young men no less eager to make money."[64]

In the mid-1950s, in partnership with such friends as Hugh Liedtke, Bush established Zapata Petroleum. Bush had energy and ambition, but he also had some family connections. One such contact led to a very lucrative deal with Eugene Meyer, the Jewish publisher of The Washington Post, whom he had met
previously because Brown Brothers, Harriman "managed a lot of his accounts."[65] But Zapata had a much more powerful friend than Meyer.  George Bush's company leased oil rigs to Edwin Pauley and took a commission from all the oil Pauley pumped out of the Gulf of Mexico. Pauley was, according to a lengthy article in Barron's, George Bush's most important customer.[66] The "old spies" say Bush lost his virginity in the oil business to Edwin Pauley.[67]

In those days, Bush's business manager, Wayne H. Dean, owned a ranch extending across the international border into Mexico, thus qualifying Zapata as a "Mexican resident" corporation. In 1959 the Mexican government changed the rules and said that oil companies had to be run by Mexican nationals. It looked as if Bush's company would lose its most lucrative account, Pauley's Pan-American Petroleum Company. Instead, Bush, Pauley, and Dean met with their Mexican contact, Diaz Serrano, and worked out a deal.[68]

According to Barron's, Serrano was not above bending a few rules for his American friend George Bush, who apparently felt the same way about Serrano. Without telling his own shareholders in Zapata, Bush set up a new joint venture, Permargo, with Serrano at the helm, but with Bush associates holding secret control of a hidden 50 percent American share through a Mexican lawyer. Bush later sold Zapata's rig, the Nola 1, to Permargo, which took over the lucrative Pauley drilling contract.[69]

The only losers, said Barron's, appear to have been Bush's shareholders in Zapata. It is hard to know for sure, since the Securities Exchange Commission "inadvertently" destroyed all of the records for Permargo and Zapata for the period between 1960 and 1966. The destruction occurred shortly after Bush was
sworn in as vice president in 1981.[70]

The Zapata-Permargo deal also caught the attention of Allen Dulles, who, the "old spies" allege, was the man who recruited Bush's company as a part-time purchasing front for the CIA. Zapata provided commercial supplies for one of Dulles's most notorious operations, the Bay of Pigs invasion. It was nothing terribly dramatic: Bush's company leased a few cargo vessels and shipped some CIA cargo as oil drilling equipment.[71] Coincidentally, all of Zapata's Securities Exchange Commission files for this period were "inadvertently destroyed" as well.[72]

Mandatory Reading

Fletcher Prouty, a former U.S. intelligence official who worked on CIA support activities, says some circumstantial evidence implicates President George H. W. Bush as a contract agent supplying the CIA team for the Bay of Pigs invasion. According to Prouty, two of the CIA supply ships were named the Houston and the Barbara J., in honor of Bush's home and wife. As further evidence, Prouty asserts that the Cuban resupply mission was code named "Operation Zapata," the name of Bush's oil company in Texas. Prouty's
credibility, however, has been widely attacked because of his consultancy to Oliver Stone's film JFK.[73]

In 1988 The Nation magazine stumbled across an FBI memorandum dated November 29, 1963, reporting that "Mr. George Bush of the Central Intelligence Agency" had been briefed about the reaction of the Cuban exile community to the assassination of President Kennedy. The Nation added that a "source with close connections to the intelligence community confirms that Bush started working for the agency in 1960 or 1961, using his oil business as a cover for clandestine activities."[74]

The Nation's allegation that Bush's oil business worked for the CIA in 1960 matches Barron's description of the timeframe for Bush's creation of Permargo. When The Nation article appeared, Bush refused to be quoted directly on the Mexican-CIA connection, although his spokesman denied that he had anything to do with the CIA until he became its head in 1975. The CIA response to the article was both prompt and deceptive: It claimed the CIA agent working with the Cuban exiles in 1963 was in fact named George William Bush, clearly not the man running for president in 1988.[75] The CIA had thrown a red herring to the press. When The Nation tracked down George William Bush, it discovered that in 1963, he was a social work trainee in Hawaii and had nothing whatsoever to do with J. Edgar Hoover's briefing of the other George Bush of the CIA on the Cuban exiles' reaction to the Kennedy assassination. Even after he joined the CIA George William didn't even know anyone involved with the Bay of Pigs.[76] On the other hand, President George Bush had a wide assortment of Bay of Pigs' veterans among his close friends and associates, among them Felix Rodriguez, who later worked for Bush and Oliver North on the Iran-Contra program.[77]

Another intelligence agent with ties to Bush was George de Mohrenschildt.[77]
He had the names of all Zapata team members in his address book, including
Pauley, Dean, and even the home address of "Bush, George H. W. (Poppy) 1412
W. Ohio also Zapata Petroleum, Midland 4--6355."[79]There is some reason to suspect that de Mohrenschildt was still working on both oil and intelligence matters at the time he was dealing with George Bush and Zapata.[80]

The most intriguing of Bush's early connections was to Richard Nixon, who as vice president had supervised Allen Dulles's covert planning for the Bay of Pigs. For years it has been rumored that Dulles's client, George Bush's father, was one of the Republican leaders who recruited Nixon to run for Congress and later convinced Eisenhower to take him on as vice president.[81] There is no doubt that the two families were close. George Bush described Nixon as his "mentor." Nixon was a Bush supporter in his very first tilt at
politics, during his unsuccessful run for the Senate in 1964, and turned out again when he entered the House two years later.[82]

After Nixon's landslide victory in 1972, he ordered a general house cleaning on the basis of loyalty. "Eliminate everyone," he told John Ehrlichman about reappointments, "except George Bush. Bush will do anything for our cause."[83] Nixon knew what he was talking about. At the time, Bush had already been offered a senior post in the Treasury Department, under George Shultz, but Nixon wanted him elsewhere. According to Bush's account, the president told him that "the place I really need you is over at the National Committee running things."[84] So, in 1972, Nixon appointed George Bush as head of the Republican National Committee.

It was Bush who fulfilled Nixon's promise to make the "ethnic" emigres a permanent part of Republican politics. In 1972 Nixon's State Department spokesman confirmed to his Australian counterpart that the ethnic groups were very useful to get out the vote in several key states. Bush's tenure as head of the Republican National Committee exactly coincided with Laszlo Pasztor's 1972 drive to transform the Heritage Groups Council into the party's official ethnic arm. The groups Pasztor chose as Bush's campaign allies were the
emigre Fascists whom Dulles had brought to the United States.[85]

It seems clear that George Bush, as head of the Republican National Committee in 1972, must have known who these "ethnics" really were.[86] Columns by Jack Anderson and others had already made it clear, in 1971, that Nixon was a little too close to the Fascist groups. The Nazis for Nixon problem was one of those scandals that Bush inherited when he took over the Republican National Committee.

Although our intelligence sources are not unanimous on this point, several say that George Bush was included among the handful of people who knew about Nixon's deal to bring the Fascist groups into the Republican party in 1972.[87] Indeed, since Bush was the head of the National Committee, he was in the best position to supervise the transfer of the campaign staff's ethnic Fascists into the Republican party's own organization. A 1976 memo to Republican National Committee co-chairman Robert Carter contains an even more
damning implication.

During Bush's time as Republican National Committee chairman, he appointed
Colonel Jay Niemczyk as director of the party's ethnic Heritage Groups.
Niemczyk's memo, to Robert Carter praised Bush as having "added needed
strength and impetus" to the Republicans' ethnic recruitment effort. Niemczyk
reported that Bush "had full knowledge of" and, in the words of the memo, provided 'total support' for the party's ethnic Heritage Groups" (emphasis added).[88]

As head of the Republican National Committee, it seems likely that Bush did have "full knowledge," as did Richard Johnson of the State Department, that the ethnic Fascists were being coddled because the ethnic groups were useful to get out the vote in several key states. As previously outlined, in 1972 Johnson told the Australians that a selected group of American politicians had been briefed about the sensitivity of certain Fascist groups, such as the Croatian Ustashis.

If a lower-level State Department official like Johnson knew what was going on, it is likely that the head of the party-George Bush-would have been advised about the true background of the Croatians and the other emigres in the party. As Johnson noted, the American government was advising Republican leaders not to attend Croatian gatherings on April 10—the memorial day for Hitler's creation of the Fascist Croatian state.[89]

When taken in conjunction with the earlier Australian report, and the Washington Post revelation that Nazis were being used for U.S. campaign purposes, the Republican memo confirming Bush's "full knowledge" of the ethnic campaign looks like a "smoking gun" as far as Bush's personal complicity is concerned. Nearly twenty years later, and after exposes in several respectable newspapers, Bush continued to recruit most of the same ethnic Fascists, including Pasztor, for his own 1988 ethnic outreach program when he first ran for president.

According to a number of our sources in the intelligence community, it was Bush who told Nixon that the Watergate investigations might start uncovering the Fascist skeletons in the Republican party's closet.[90] Bush himself acknowledges that he wrote Nixon a letter asking him to step down.[91] The day after Bush did so, Nixon resigned.

Bush had hoped to become Gerald Ford's vice president upon Nixon's resignation, but he was appointed U.S. ambassador to the UN. Nelson Rockefeller became vice president and chief damage controller. He formed a special commission in an attempt to preempt the Senate's investigation of the intelligence community. The Rockefeller Commission into CIA abuses was filled with old OPC hands like Ronald Reagan, who had been the front man back in the 1950s for the money-laundering organization, the Crusade for Freedom, which was part of Dulles's Fascist "freedom fighters" program.[92]

Although Governor Reagan may have been out of the loop in 1975, Rockefeller certainly knew all about the old Nazi connection, having counter-blackmailed Ben-Gurion at the time of the UN debate about the partition of Palestine. In 1947 Rockefeller had been able to keep the Nazi scandal under control, and
except for the occasional leak, it had stood up ever since. But by 1975 his damage control operation was floundering. In December Bush was brought back to become head of the CIA. After all, he had previous experience with protecting the Agency from the Watergate investigation.

According to our sources, it was Bush who, as head of the Republican National Committee from 1972 to 1974, told Nixon that he could not shift the blame for the Mexican slush fund to the CIA without wrecking the intelligence community. The "old spies" say that legitimate CIA operations in Mexico would have been hopelessly compromised if they were tarred with the brush of Nixon's money laundering.[93]

To Bush's credit, he did not allow Nixon to trash the CIA to save himself. On the other hand, Bush may have had his own reasons for blocking any investigation of the Mexican connection; after all, it involved his own
business associate Ed Pauley.[94] In any event, Nixon resigned, and Bush became a hero for standing up for the CIA.

It was this action, and not his peripheral role in the Bay of Pigs or his company's minor role as a cover for CIA supply operations, that endeared George Bush to the Agency. His appointment as director of Central
Intelligence was a big morale boost to an institution that had been severely tarnished by Senate and media exposes of some of its more bizarre practices during the Dulles-Angleton years. Though the practices had been concealed from the employees of the CIA, they were the ones who had taken the blame instead of their political superiors.

According to our sources, the rank and file viewed George Bush as the one man who would stand up to the White House if it ever again tried to politicize the CIA.[95] What these CIA staff did not know was that George Bush was appointed precisely to fend off any more congressional investigations. The nosy investigators had come perilously close to the heart of one of the many Dulles scandals: the recruitment of Nazi money and emigres by the leading lights of the Republican party.[96]

Although many readers will not believe this, our sources insist the regular CIA staff were almost entirely ignorant of the true background of the ethnic Fascists and remain so to this day.[97] During the Eisenhower years, Allen Dulles merged the State Department's Office of Policy Coordination into the CIA, but kept the OPC's emigre operations separate from the CIA's geographical sections. The "freedom fighters" had their own files in the program branch that could be accessed only by a special set of cryptonyms. Before Allen Dulles was fired, he took the cryptonym cross-index with him. To this day, not even the director of Central Intelligence can retrieve an individual's record from the mass of files on Dulles's projects with the Fascist emigres.[98]

After Dulles left, the CIA files on Fascist emigres were a permanent shambles. Angleton remained to put out the occasional fire when someone requested a security check on a suspected Nazi. When Angleton was fired in December 1974, only a handful of people knew where the bodies were buried.[99] Then along came the new CIA director, George Bush, in December
1975, who inherited Dulles's dirty secrets.

Dulles's Nazis kept popping out of the woodwork, and it was getting harder and harder to keep the rest of the CIA in the dark. Ironically, the Vatican itself almost uncovered the story. As previously discussed, Father Robert Graham, the American-born Vatican historian, triggered Angleton's cover-up of the Vessel forgeries. In 1976 Graham had a conversation with Martin Quigley, an Irish-American Catholic from New York. Quigley had served with the Office of Strategic Services in Rome, before Angleton arrived on the scene and took over the Vatican connection. According to our intelligence source on this issue, Quigley told Father Graham an interesting but fairly minor piece of history.[100]

Monsignor Egidio Vagnozzi, from the Japanese desk of the Vatican Secretariat
of State, had given the OSS some information about Japanese peace feelers. Quigley assigned the code name Vessel to Vagnozzi, who later became apostolic delegate to Washington and one of the most powerful cardinals in Rome.

This interesting and innocent bit of trivia intrigued Father Graham, who had written extensively on the Vatican's peace-making efforts during world War II. Graham promptly filed a request for Quigley's OSS reports under the new American Freedom of Information Act. What neither Quigley nor Graham knew was
that Angleton had continued to use the "Vessel" code name after Quigley left. As previously discussed, Angleton had signed cover letters forwarding thousands of forged Vessel reports as part of Dulles's deception program against Roosevelt and Truman.

Father Graham had no idea that Vessel was only one of Angleton's covert operations in postwar Rome. During his takeover of the BritishVatican Ratline to smuggle fugitive Nazis, Angleton also had employed the very same Croatian and Eastern European Fascist organizations whose members Dulles and Nixon later brought into the Republican party in the 1950s and to which Bush had given a permanent home in the early 1970s. Vessel, the Vatican Ratlines, and the Republicans' Heritage Groups were all pieces of the same scandal. The Vatican request for documents threatened to open a very large can of worms.

When the CIA received Father Graham's request for all Vessel reports, the clerks retrieved not just Quigley's innocuous documents, but trunkfuls of highly sensitive intercepts of top-secret Vatican cables. The CIA, of course, did not know that the Vessel cables were forgeries, and Graham's request was brought to the attention of the highest levels of the Agency in 1976. According to our source the most sensitive material could not be released to Father Graham:

By this time, George Bush had become CIA director, and because of the delicate nature of Graham's "semiofficial" request-which was viewed by the CIA, that is, as "a Vatican request"—that apparently would lead him, Graham,to conclude that the OSS had "spied successfully on the pope," it was decided by Bush and others that the Vessel files would have to be carefully reviewed and sanitized.[101]

None of our sources has personal knowledge of whether Bush was aware of the extent to which the Vessel files would reveal the old Nazi smuggling scandal in the Vatican, although they wondered whether Bush's  previous campaign association gave him special knowledge of the ethnic Fascists' background. They do assert that a decision was made "at the highest levels" that the man who made the mess should clean it up.[102]

"Angleton, though publicly disgraced and officially retired on pension, was asked to do the job. He was undoubtedly the most familiar with the material and the 'most responsible'--as he had long dealt directly 'with the Vatican' for the CIA. He was, apparently, paid a fee for reviewing the files, based on his recognized 'expertise.'"[103]

 Thus Angleton, who had been fired in December 1974, was put back on the CIA payroll in 1976. He took one look at the huge pile of Vessel papers and realized it would take months to read and analyze them all. According to one source, Angleton went directly to Bush and explained just how sensitive the Vessel papers were.[104] According to another source, it is not certain that Angleton ever told Bush the whole story.[105] It seems, however, that someone in the CIA gave Angleton permission to violate the Freedom of Information Act and shred many of the Vatican files.[106] But not all the records could be destroyed:

'Eventually, some material would have to be released to Graham, but that material, [Angleton] was apparently informed, could be heavily censored. Moreover, he was given to understand that if other reports really could not be censored, they could be removed from the Vessel files and destroyed. Apparently, Angleton destroyed hundreds of such reports (as he himself reported to certain people). He seemed to have been given a completely free hand.'[107]

No matter how much censorship or shredding took place, Angleton knew that Father Graham would immediately, and correctly, identify some of the Vessel papers as Scattolini forgeries. Angleton contacted his sister Carmen in Rome and obtained Graham's phone number. Then Angleton asked Graham to drop his
Freedom of information request, but Graham refused.[108] He still thought that Vessel meant only the Quigley-Vagnozzi reports.

When, in 1978, Graham finally saw the little that had escaped the shredder, he was astounded to discover Scattolini forgeries. In 1979 Graham tried repeatedly to interview Angleton, who ducked every meeting. Angleton kept denying through intermediaries that he even knew Scattolini. While Father Graham did not know it, the lie could have been easily discredited by a number of people who served in Rome at the time.[109] Keeping the lid on the Angleton-Dulles scandals was becoming harder and harder.

Problems kept popping up for George Bush. In 1976 a militant splinter group of Croatian Fascists hijacked an American airliner, an act that sent all the other intelligence agencies scurrying for background files. As already mentioned, Croatian Ustashis operated the Vatican Ratline for Angleton and then went on to establish the Croatian Heritage Group for the Republican National Committee. The Australian report on Nixon's Nazis had mentioned this very group. Both the hijackers and the Croatian Republican group proclaimed loyalty to Ante Pavelic's Fascist government. Were there more Croatian Fascist terrorists running around in the United States? Somehow the link to the Croatian GOP had escaped the notice of the CIA.[110]

Some people in government, at least, were curious. In 1976, Congresswoman Elizabeth Holtzmann specifically asked if any Nazis had ever immigrated to the United States under the CIA's "100 Persons Act," which allows the Agency to bring in up to one hundred agents a year without going through normal immigration procedures."' The true answer was a bit of a problem. Back in the late 1940s and early 1950s, Dulles's cronies at the State Department had conned the CIA into sponsoring a handful of VIP emigres for special entry, as a favor to Dulles's Office of Policy Coordination. The CIA did not know that the "emigres" were, in fact, Nazi intelligence officers. But Bush's CIA told Holtzmann that "no war criminals, or terrorists, or persons of that ilk" had ever been admitted by the CIA.[112]

Some of our sources say that it is unfair to accuse Bush of personal knowledge of the Nazi cover-up, insisting that he was brought into the CIA precisely because he was ignorant and could plausibly deny any knowledge of some of the older, darker Dulles scandals.[113] But even if everybody in the U.S. government who knew about the Nazis conspired to keep Bush ignorant of past scandals, the "bumbling Bush" explanation does not explain why the CIA director was not aware of current ones. Somebody in the CIA had to know exactly what was going on in 1976, in order to keep the Nazi cover-up going:

As late as 1976 the agency's practices in this regard were still so blatant that the CIA actually wrote an-unclassified letter to a former CIA contract agent, Edgar Laipenieks, who was then facing deportation from the United States in connection with allegations that he had committed multiple murders, torture and other crimes against humanity at the Central Prison in Riga, Latvia, during the war. "We have been corresponding with the Immigration and Naturalization Service about your status," agency spokesman Charles Savage wrote to Laipenieks on official CIA letterhead. "It is our understanding that INS has advised their San Diego office to cease any action against you. If this does not prove [to be] the case, please let us know immediately. Thank you once again for ... your past assistance to the Agency. Sincerely,"[114]

Laipenieks promptly released this CIA letter to the press. The whole war criminal cover-up was very much a current issue while Bush was CIA director. In fact, some of the Nazis were still working on covert operations in 1976. The Ukrainian groups openly fought with each other over who was receiving the most CIA money. Dimitri Kasmovich, the Nazi police chief in Belarus during World War II, boasted to his fellow collaborators that he was running guns to a new generation of anti-Communist "freedom fighters" in Angola.[115]

But, apart from a spot of gunrunning and occasional propaganda from Kasmovich and other Fascists in the World Anti-Communist League, the old Nazis were just too elderly for covert operations. Now they were far more valuable to the Republican National Committee than they were to the CIA. Yet every time the CIA tried to get rid of the tainted emigre groups, someone kept bringing them back. Even when the CIA forced the transfer of Radio Liberty to the State Department, someone on Bush's staff agreed to bring the Dulles era
files on Radio Liberty back to the CIA, where they remain to this day.[116] As a practical matter, the CIA had no operational use for the elderly emigres in Angola. Young agents were needed to fight in the jungle. There had to be another solution. just before Congress ordered a halt to all CIA activities in Angola in 1977, the agency found the answer. Behind the back of Congress and of most of the CIA, U.S. intelligence turned to a little-known firm in London to recruit a private army for the Angolan civil war. Instead of hiring Nazi mercenaries, the CIA hired British mercenaries to evade the congressional ban.

Unfortunately, as we shall see in Chapter 17, the British mercenaries were also working with the Arabs. During Bush's twelve months as CIA director, the secret war against the Jews was entering a particularly nasty phase. British intelligence had replaced its Nazi agents with PLO terrorists. The Angolan operation would lead to a number of other scandals in the 1980s, especially Iran-Contra and the Bank of Credit and Commerce International. George Bush may not have realized it, but he was acting more like Allen Dulles all the time.

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THANKS TO JOHN LOFTUS AND MARK AARONS for their amazing research. The remainder of the book must be read to fully appreciate their massive effort and success in explaining what really happened during this era of our history.

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