Intell War in the Wings

Italy entered the war on June 10, 1940, not to hasten, but to benefit from France’s collapse. Mussolini came in with Hitler’s reluctant permission. The Fuehrer was confident that, whatever mischief Il Duce could perpetrate, it would not materially affect the outcome. He recalled an impudent quip of World War I attributed to General von Falkenhayn. When, in 1915, the Kaiser was told that Italy planned to switch sides, von Falkenhayn assured the sovereign that it would not make any difference. “You see, your Majesty,” he said, “if they’re against us, we need ten divisions to beat them. If they’re on our side, we’ll still need ten divisions to help them.”

Sure enough, by the following spring Mussolini came to regard every day, when nothing unpleasant befell his forces, as a day won. May 24, 1941, appeared to be such a day. On the Pincio, the trees abandoned themselves to the balmy caresses of a glorious Roman spring. On the elegant Via Condotti, the smart ladies of Roman society paraded; nothing in their finery betrayed the austerity of a country at war. But on that day a seemingly insignificant event occurred which was destined to have a special impact on the future of Mussolini’s Italy. Admiral Franco Maugeri became director of the S.I.S., the Italian Office of Naval Intelligence.

Not yet 46 years old, Maugeri was a slight, slender figure with prematurely gray hair and keen gray eyes; he had an informal manner and was innately modest. He was an intellectual, well bred, well read, and had a preference for desk jobs, because he was inordinately susceptible to seasickness and sunburn. He had previously served in S.I.S. between 1927 and 1929. At that time, S.I.S. was an extremely small agency; its entire staff consisted of ten officers and twenty enlisted men. It maintained not a single secret agent, either at home or abroad. Its job was to collate the periodic reports of the Italian Naval Attachés and to perform the other routine duties of desk-bound intelligence.

During those years, there was an extremely intimate relationship between the Italian and British navies. When the Italian Navy was originally built up before the First World War, it was designed to fight alongside the British Navy as an auxiliary force. Many Italian naval officers became imbued with this tradition and continued to regard themselves, even when their country had drifted apart from Britain, as honorary officers of the Royal Navy. Admiral Maugeri, a determined anti-Fascist, was a member of this pro-British group. When he became director of S.I.S., it became a clandestine British agency at the very heart of the Italian military establishment, for all practical purposes functioning as the Italian branch of the British Naval Intelligence. This clandestine function was never regarded as improper or treasonable, either by Maugeri or his subordinates. On the contrary, they were firmly convinced that by aiding Britain in their own way they were saving Italy from total extinction.

When Maugeri returned to S.I.S. in 1941, it had changed radically. It consisted of three major regional organizations, with headquarters in Madrid, Istanbul and Shanghai (each under the respective Italian Naval Attachés) ; and four functional sections bearing the letters B, C, D and E. Section B was the efficient “black chamber,” monitoring foreign radio traffic and translating the codes and ciphers of others. Section D was the intelligence service proper. The material that B and D procured was fed to Section C which collated and evaluated it. Section E was exclusively counter-intelligence and counter-espionage.

Heading Section D was Commander Max Ponzo. He was short, squat and sturdy, built like a miniature bull. He had a swarthy complexion and nervous, darting eyes which gave him a shifty, sinister expression. He was brilliant and resourceful, courageous and aggressive. By the strength of his personality, Ponzo dominated the whole S.I.S.

Before Maugeri’s arrival, Ponzo had set up an intelligence and espionage network such as S.I.S. had never before possessed. He established several tight rings in neutral countries like Switzerland, Spain, Turkey and Portugal. He even established a minor ring in the United States. One of the room service waiters in the Wardman-Park Hotel in Washington, D.C., where Mrs. Dwight D. Eisenhower and Secretary of State Cordell Hull lived, was a Ponzo spy.

While considerable information flowed from his networks abroad, the best material was procured right at home. Ponzo concentrated his efforts in Rome on the American Naval Attaché, probably on the assumption that Americans, being very much like Italians, outgoing and trusting, loquacious and boastful, would make easy targets for his snoopers.

Between 1939 and 1941, Captain Thomas C. Kinkaid, USN, was American Naval Attaché in Rome. He was a gallant officer of the line, who was destined to make a great name for himself in later years. There was, however, a serious loophole in his office. The department was badly understaffed and because Washington could not send him United States personnel, Kinkaid was compelled to hire a few Italians.

At least one of those employees worked for Ponzo. He was a fairly highly-placed clerk and had occasional access to the safe. He managed to make a duplicate key to it and from then on, until the United States entered the war, S.I.S. knew the exact contents of that American safe.

Early in 1941, Kinkaid was recalled and Captain Lester N. McNair, USN, replaced him. McNair decided, undoubtedly upon instructions from Washington, to hire a few spies. Freelance espionage was a favorite pastime of certain Italian ladies, and among them McNair found an attractive and charming young woman who appeared to be a splendid candidate.

She was Signorina Elena (her last name is covered by charitable anonymity). She was sufficiently well situated in Roman society to develop some useful sources and was of a romantic disposition, generous with her affections when the occasion required.

Elena found herself in something of a dilemma; she really did not know how and where to pick up the information Captain McNair expected. She solved the problem in the traditional manner by becoming a double agent. She called Ponzo, exposed herself as an American spy and volunteered to keep Ponzo posted about the affairs of the Americans and to pass on to McNair whatever information Ponzo wanted to slip into American files. The arrangement satisfied all concerned, including Captain McNair, who never found out about Elena’s double deal.

On December 11, 1941, Italy declared war on the United States and this made Elena vastly more valuable since she was virtually the only spy the U.S. Navy had left in Rome.

Before his departure, McNair arranged that the young lady was to send her material to Colonel Barwell R. Legge, the American Military Attaché at Berne, Switzerland. With Ponzo continuing to manage this minor but stimulating phase of American espionage, arrangements were made for a courier from Legge to call at Elena’s apartment on Lungotevere to pick up her information. Ponzo made his own arrangements to observe the visitor; he was anxious to find out who else was working for Legge in Rome.

Agents of S.I.S. were posted around the building and Elena was instructed to signal the arrival of her visitor by displaying a quaint assortment of laundry. If the courier was a man, she was to put a bathing suit in her window; if the visitor turned out to be a woman, she was to hang out a towel.

Ponzo’s agents did not have to wait long. In due course, a dainty bathing suit appeared in the window. An hour later a man came out of the building and Ponzo’s agents followed him along the broad, tree-lined avenue on the left bank of the Tiber, until they saw him meet a warrant officer they knew was working for Major Pontini’s Section E in S.I.S., the counter-espionage branch. They saw the two shake hands, enter a waiting car and drive away in apparently the most cordial manner.

The Ponzo agents, sent to trap a single American spy, had encountered two! And—horribile dictu—one of them was a trusted carabinieri of Major Pontini. They reported the discovery to Ponzo and Ponzo in turn tipped off the major. Pontini received the news with a burst of laughter.

“My dear Max,” he said, “that enemy agent whom you’ve been following so cleverly—he’s no more an enemy agent than you are. He’s one of my own officers. The Americans in Switzerland hired him to work for them and at a good, fat price, too ! Ah,” he sighed with mild contempt, “che stupidità americana!”

Such are the vagaries of espionage when it ambles into war from haphazard peacetime beginnings.

It took some time for American Intelligence to get adjusted to the challenge of war. It was different with British Intelligence.

Ponzo was sending a steady flow of excellent intelligence to the Italian Navy about the movements of British ships in the Mediterranean. As soon as a British vessel passed through the Straits of Gibraltar, either entering or leaving the Mediterranean, a signal advised the fleet of it. In Algeciras, the Spanish city bordering on Gibraltar, the Italian Consul was a member of Ponzo’s espionage ring. He lived in the Hotel Reina Cristina, whose owner was in sympathy with Italy and allowed him to build an observatory on the roof. It had powerful telescopes, long-range binoculars on firm tripods, chronometers, and cameras with telescopic lenses. In a room of the hotel, the consul had a clandestine transmitter on which he reported his observations to Rome every few hours. In this manner, Ponzo was told almost immediately when a British ship passed through the Straits.

That dazzling espionage coup at Algeciras was what could be called elaborate eyewash, the way S.I.S. had of giving the impression that it was in the war against the British up to its neck. Nobody seemed to notice that virtually the entire S.I.S. effort vis-à-vis the British was confined to this operation. It escaped attention that Ponzo was as conspicuous for his absence in London, for example, as he was conspicuous for his presence in Algeciras. During a visit to Rome, Admiral Canaris boasted to Count Ciano about his splendid spy net in Britain, claiming that one of his spies was sending to Hamburg up to ten signals a day. (It was actually the British carillon.) Ciano had to concede that Italy had nothing comparable to that. The S.I.S. had nothing at all in Britain. Still more remarkable was the fact that Commander Ponzo had not done to the British what he had so brilliantly done to the Americans. He neither ensnarled them with double agents nor relieved them of their secrets with aggressive espionage.

Admiral Maugeri made a startling statement after the war. “Actually,” he wrote, “I doubt that there were many British spies in Italy. There really was no need for them. The British Admiralty had plenty of friends among our high-ranking admirals and in the Ministry of Marine itself. I suspect the English were able to get authentic information straight from the source.” What he omitted to say was that his own S.I.S. did much of the necessary spadework for British Intelligence.

On a colorful old Roman street named after the dark little stores which lined it, the via delle Botteghe Oscure, dwelt a remarkable individual, and Max Ponzo lived under his spell. He was one of Italy’s most prominent barristers, Giovanni Serao, a man of dizzying brilliance. He was short and heavy set, but an extremely agile man, with a luxuriant beard. His eloquence was unique even for Italy. His clients included some of the country’s noblest houses and greatest corporations and a string of big foreign firms such as Paramount Pictures and the Canadian Pacific Railway as well. For many years, Signor Serao served as the legal adviser of the British Embassy in Rome and performed so effectively in that capacity that he was knighted for his services to the Crown. He was the only Roman entitled to hear himself addressed as Sir Giovanni, and he relished the title.

Serao was Ponzo’s father-in-law, and more than that, the idol of his son-in-law. Serao himself gave the British all sorts of confidential information, which he procured in the course of his practice; thanks to his intimacy with Ponzo, he could also supply military and naval intelligence of the highest order. For all practical purposes, Giovanni Serao was the clandestine chief of the British Secret Service in Rome.

Before Franco Maugeri’s arrival in S.I.S., Ponzo’s contribution had to be limited by sheer necessity. His superiors were no parties to the plot. He had to operate on his own. Serao’s Embassy connections were broken at the outbreak of the war. Serao and Ponzo had to confine their services to limited intelligence which they slipped to the British as best they could, mainly through a surreptitious contact with the British Legation that remained at the Vatican. Even this was of great value.

The British had an accurate appreciation of the Italian fleet and refused to regard it as a mortal threat to Britain’s control of the sea, but its nuisance value was recognized. There was some apprehension, in particular, about the forty-odd submarines owned by the Italians, which could have wrought havoc with British shipping in the Mediterranean if properly employed. Naval Intelligence succeeded in acquiring the special code used by the Italian submariners.

An ingenious officer on Admiral Sir Andrew Cunningham’s staff hit upon a fantastic idea. Devising signals in the Italian code, and impersonating the Italian command, he would dispatch an Italian submarine to a certain spot in the Mediterranean to attack supposed Allied merchantmen. When the hapless submarine arrived at the spot, it was met by British destroyers waiting to send it to its doom.

In this manner, the British decimated Mussolini’s submarine arm. The operation would have continued most probably to its inevitable conclusion had it not been for an accident. The British ordered a certain Italian submarine to one of those spots where the destroyers were waiting, but that particular sub happened at the time to be in drydock at La Spezia.

The blunder alerted the Italians and ended the game, but severe damage had already been done.

Rommel was hammering the British mercilessly in Africa, and he was being supplied by shipping across the Mediterranean. The conspiracy inside the S.I.S. became of essential importance. On March 25, 1941, mysterious information alerted Admiral Cunningham to an ominous stirring of the Italian Fleet. Some of its major elements, led by the battleship Vittorio Veneto, were supposed to move in the direction of the Aegean to draw off elements of the British Fleet from the route of those Italo-German convoys. That obscure message resulted in a great British naval victory on March 28, in the memorable Battle of Cape Matapan. In Churchill’s words, “This timely and welcome victory off Cape Matapan disposed of all challenge to British naval mastery in the Eastern Mediterranean at this critical time.”

By the beginning of April, the steady flow of intelligence enabled the British to intensify attacks on the shipping which had to feed Rommel’s forces in Libya on a substantial scale. So effective was this surreptitious co-operation that Commander Malcolm Wanklyn in the submarine Upholder could win the Victoria Cross for his apparently uncanny ability to track down and sink German supply ships. An outstanding victory was scored in April, when a task force of four destroyers was guided to a large convoy. In this one action, fourteen thousand tons of enemy shipping, fully loaded with war materials for Rommel, was destroyed.

As time passed, Ponzo developed better communications with the British. A sympathetic S.I.S. agent in Berne became a pipeline to British Intelligence there. And still later the British managed to plant a clandestine radio transmitter in Rome. Now Ponzo needed a go-between to take information to the operator. His eye fell on the Countess Montarini, an Englishwoman by birth, married to an Italian nobleman, the mother-in-law of a gallant young lieutenant of the Italian Navy. She worked as the direttrice of Elizabeth Arden’s beauty salon.

Each morning, on her way to the shop, the Countess stopped at the church of the Trinità dei Monti for a brief prayer. Leaving, she would stop in front of the church to look down to the elongated Piazza di Spagna below, at the bottom of a flight of steps, inhaling the beauty of the sight.

At this famous Piazza, Rome is at its best. In the center of the square stands Bernini’s fountain, La Barcaccia. It was made in the shape of a barque of war, spouting water from its marble cannons. Leading down to it is the Scala di Spagna, a flight of one hundred and thirty-eight steps.

When the Countess Montarini descended the grand staircase, she might pass a young man who stood on one of the steps. There would be nothing unusual, apparently, in this chance encounter, but, in fact, it was an ingeniously devised means of communication. The step on which the young man waited for the passing of the signora had a special significance. Each of the one hundred and thirty-eight steps meant a specific, separate message according to an elaborate system of codes. Each step had a different meaning when counted from the top or the bottom. Additional messages were passed on by having members of the ring do something specific on individual steps, such as lighting a cigarette, blowing a nose or cupping a hand over an eye.

The Countess was not only a transmission belt; she also gathered much useful information on her own. The Arden Beauty Salon was patronized by many of the most influential women of Rome, including the wives, daughters, and mistresses of Axis diplomats and officers. They gossiped freely while having their hair done, their faces mudpacked, and their nails manicured.

The Countess hired operators who could be trusted and taught them how to listen to the conversations of their celebrated clients and how to pose loaded questions without making them even slightly suspicious. Frequently the mention of a name would start the ball rolling. An operator once reported to the Countess that one of her clients had told her she wanted to be especially attractive since she was to have a reunion with her husband she had not seen for more than a year. She was the wife of a general assigned to the African front. From this pebble of information it was possible to develop the intelligence that the general’s recall had ushered in a complete reorganization of the Italian command structure in Libya.

Meanwhile, in Africa, Rommel went on to his greatest triumphs. He reached his peak in the summer of 1942 when he defeated the Eighth Army between Gazala and Tobruk, and then chased what was left of it almost to Cairo.

The British managed to halt his advance at El Alamein. In August, however, Rommel returned to the offensive, only to be finally checked this time. He could not go beyond El Alamein and saw his chances of conquering Egypt go up in the sand dust of the Western Desert.

There were several factors that robbed him of ultimate glory: the British utilized the interval he had granted them to shake up their high command, to send General Sir Bernard Montgomery to lead the Eighth Army, and to give him adequate reinforcements. But fully as important as what Monty received was what Rommel did not get: reinforcements and supplies via Italy and especially that confounded “shprit”—his word for gasoline.

Marshal Kesselring was sending all the fuel that Rommel was asking for, but somehow only a fraction of what left Italy ever arrived in Africa. As Liddell Hart put it, the Desert Fox was “vitally crippled by the submarine sinkings of the petrol tankers crossing the Mediterranean.”

The Germans were sure there was a leak. A special detachment of the usually infallible Funkabwehr, the Abwehr’s radio monitoring service, was brought to Italy to search for outgoing messages. They failed to find a single suspicious signal. Another special detachment, this one from Abwehr III (counter-espionage) was sent into Italy, and, in close co-operation with the brave carabinieri of Section E of the S.I.S., they instituted a manhunt for the presumed spies. The source of the leak was never found. The leak itself was never plugged.

What actually happened was simplicity itself. Since wars cannot be conducted in silence, the Italians had to advise their African command about these convoys. Their routing was radioed to Africa in a naval code that nobody expected the enemy to break. But someone at the Italian end had slipped the key of that sacrosanct code to the British and also advised them promptly whenever the code was changed.

Rommel was effectively deprived of his “shprit.” In the words of Captain Liddell Hart: “That decided the issue, and once the enemy began to collapse at their extreme forward point they were not capable of any serious stand until they had reached the western end of Libya, more than a thousand miles back.”

Ponzo’s operation continued until the Italian Armistice in September, 1943. When the Germans occupied Rome, the city became too hot for him; and he was needed in Taranto, to the south, where the Italian Navy was being resurrected to a new life in a new war, this time to do exactly what most of its flag officers wanted, to fight against the Germans.

On October 10th, Max Ponzo sneaked out of Rome. Disguised as a straggler, he succeeded in making his way to Taranto where he was received with open arms. The morning after his arrival, he was named chief of the reconstituted Italian Naval Intelligence, with the wholehearted approval of the Allies.

The situation in Rome remained in excellent hands. Admiral Maugeri disappeared underground and became one of the chiefs of the resistance organization inside the Eternal City.

Countess Montarini’s position became untenable. She could no longer maintain her masquerade. Her son-in-law, the naval lieutenant who was himself on the periphery of the ring, escaped to the Allies at the first opportunity, and that tipped off the Germans to the mother-in-law’s true sentiments. With the help of friends, she vanished from sight, although she never left Rome. She disappeared into the vast palace complex of Prince Colonna, where she remained in hiding until that June day of 1944, when at long last Rome was liberated by the Allies.

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