Continued research by the Seagraves has revealed that the United States did recover portions of the Golden Lily and Nazi treasure and used the treasure to clandestinely fund various right wing causes and covert operations.97 This enormously large secret slush fund became known informally as the Black Eagle Trust.
Up until September 1945, Edward Lansdale had remained an immaterial advertising copywriter, who had spent the war writing propaganda for the OSS. In September, with the disbanding of the OSS, he was offered an opportunity to transfer to the US Army’s G2 operation in the Philippines.
On transferring to the Philippines, Lansdale was placed in charge of supervising a Filipino-American intelligence officer named Severio Garcia Diaz Sanata, better known as Santy. Yamashita had surrendered and was arrested for war crimes relating to gruesome atrocities committed by Admiral Iwabuchi Kanji’s sailors while evacuating Manila. There was no mention of the Golden Lily or war loot during Yamashita’s trial. It was impossible to torture a war criminal without it being exposed in the subsequent trial. Yamashita’s driver however, fell under special scrutiny. He had driven Yamashita everywhere since Yamashita’s arrival in the Philippines.
Santy proceeded to torture the driver, Major Kojima Kashii, to find the burial sites of the Japanese treasure. Lansdale soon joined the torture sessions as an observer and participant. In October, Kojima broke down and led Santy and Lansdale to the location of a dozen sites in the mountains north of Manila. Two of the sites were easily opened and revealed a prodigious quantity of gold, precious metals, and gems.
While Santy and his teams started to open the other sites, Lansdale flew to Japan to brief MacArthur and then on to Washington to brief President Truman. After a cabinet discussion, Truman decided to proceed with the recovery. However, the recovery would be kept a state secret.
The decision was not Truman’s alone. Henry Stimson, Secretary of War, first proposed using gold recovered from the Nazis as a secret slush fund during the Roosevelt administration. The Nazis had already did the dirty work and re-smelted the gold, making it hard trace the gold's origin. Many of the owners had perished in the war and many of the pre-war governments had ceased to exist. With many of the eastern countries falling under the influence of the Soviet Union, returning any gold to these countries was out of the question with the cold warriors.
Stimson’s special assistants on this topic were John McCloy, Robert Lovett, Clark Clifford, and Robert Anderson. Both McCloy's and Lovett's backgrounds have been discussed in previous chapters. Anderson was a former Texas Republican legislator. In 1953, he was appointed Secretary of the Navy by President Eisenhower, and in 1954, Secretary of Defense. Some sources say he was appointed as Secretary of the Navy based solely on the need to move gold from the Philippines. In 1957, he was appointed Secretary of the Treasury. In 1987, he pled guilty to running an off shore bank after being caught up in the BCCI scandal. The same scandal also ensnared Clark Clifford.
The idea of the Black Eagle Trust was first discussed with the Allies in secret during July 1944, at Bretton Woods. This has been confirmed by CIA Deputy Director, Ray Cline, who as late as the 1990s has sought to control Japanese war booty sitting in the vaults of Citibank.
After briefing Truman, Stimson, Lovett, and others Lansdale returned to Tokyo with Anderson in November. From there MacArthur and Anderson accompanied Lansdale on a secret flight to Manila. Santy had by then already opened the sites and MacArthur and Anderson strolled down row after row of gold bullion stacked two meters tall. This was only the gold that had not reached Japan once the home islands were blockaded in the war.
Cline and others have confirmed that the gold recovered by Santy and Lansdale was covertly moved by ship to 176 accounts in 42 different countries. Truman had been informed that if such a large quantity of gold became public knowledge that the fixed $35 an ounce price would collapse. Other documents show large deposits of gold and platinum were made in various Swiss banks between 1945 and 1947.98
Secrecy was vital to the success of the Black Eagle Trust. The United States declared Japan was broke from the very beginning. The United States elite lead by Herbert Hoover, wanted to maintain Japan as a staunch anticommunist state in the Far East. The Japanese elites were hard-core conservatives and alarmed by the communist threat. The most ardent of the anti-communist were the indicted war criminals. As noted earlier only a few Japanese war criminals were ever punished due to a large part of the interference by MacArthur in cleansing the Emperor of all crimes.
Such secrecy led to immediate abuses and the misleading of the American and Japanese people. Those most responsible for the war were left in power. The 1951, peace treaty between the Allies and Japan was greatly skewed by considerations for the Black Eagle Trust. To shield Japan from war reparations, John Foster Dulles secretly negotiated the treaty with three Japanese officials. One later became Prime Minister and served repeatedly as Minister of finance, Miyazawa Kiichi.
Article 14 of the peace treaty states as follows:
"It is recognized that Japan should pay reparations to the Allied Powers for the damage and suffering caused by it during the war. Nevertheless it is also recognized that the resources of Japan are not presently sufficient… the Allied Powers waive all reparations claims of the Allied Powers and their nationals arising out of any actions taken by Japan."99
By signing the treaty, Allied countries waived all rights to any claims, including claims by their citizens and service men forced into slave labor by the Japanese warlords.
Because the Black Eagle Trust and the political actions funds that it has spawned remain off the books and invisible, the potential for abuse by falling into unscrupulous hands remain high to this day. In 1960, Vice President Nixon gave one of the largest funds, the M Fund, to the leaders of the Japanese Liberal Party in return for kickbacks to his election campaign. The fund, then valued at $35 billion and now estimated as worth over $500 billion, has served to keep the Liberal Party in power and effectively reduce politics in Japan to a one party dictator with a block on any meaningful reforms.100 This is readily evident in the troubled economic state of Japan. Even after sliding into an economic abyss fifteen years ago, Japan has still not addressed their economic policies in any meaningful manner. In effect, Nixon’s action has left Japan with an inept, corrupt and weak regime that has not even confronted its role in starting WWII.
The immense wealth of the Japanese war loot is confirmed in a 1950 report prepared by MacArthur’s headquarters. An excerpt appears below:
"Japanese owned gold and silver…property that was acquired by Japan under duress, wrongful acts of confiscation, dispossession or spoliation…property found in Japan and identified as having been located in an Allied country and removed to Japan by fraud or coercion by the Japanese or their agents…great hoards of gold, silver, precious stones, foreign postage stamps, engraving plates…precious metals and diamonds stockpiles owned or controlled by the Japanese…30,000 carats of diamonds in one stash, and a single find of 52.5 pounds of hoarded platinum …
One of the spectacular tasks of the occupation dealt with collecting and putting under guard the great hoards of gold, silver, precious stones, foreign postage stamps, engraving plates, and all currency not legal in Japan. Even though the bulk of this wealth was collected and placed under Untied States military custody by Japanese officials, undeclared caches of these treasures were known to exist."109
MacArthur’s staff was well aware of the Japanese treasures, including the $2 billion of gold laying on the bottom of Tokyo Bay. Another large hoard, discovered in 1946 by U.S. intelligence was the $13 billion cache of underworld godfather Kodama Yoshio. Yoshio was made a rear admiral during the war and placed in charge of looting the Asian underworld. After the war Kodama was arrested for war crimes and imprisoned. To avoid trial and imprisonment, Kodama offered the CIA a $100 million dollar bribe. The money was added to the M-Fund and Kodama was freed. He later financed the creation of two political parties that later merged into the Liberal Party.102
Following the death of Santy in 1974, some of the biggest black gold accounts were placed in Lansdale’s name. Curiously, Lansdale had retired from the CIA before 1974.
Much of the information about the Black Eagle Trust has seeped to the surface in several lawsuits. Citibank CEO John Reed has been named in several of those suits. Another lawsuit initiated by Rogelio Roxas, a Filipino locksmith, sued President Marcos for seizing a one ton golden Buddha that he had found. In another legal battle, former U.S. Deputy Attorney General Norbert Schlei had to fight for his survival after being stung by the Treasury Department for asking too many questions about Japan’s secret M-Fund.
Shlei was a key lawyer during the Kennedy and Johnson administrations. Shlei was the attorney that found legal grounds for the Cuba blockade during the missile crisis. He was the principal author of the 1964 Civil Rights Act. Likewise, he was the primary author of the following landmark bills: the Economic Opportunity Act of 1964, the Voting Rights Act of 1965, and the Immigration Reform Act of 1967.
Schlei was acquitted of eight counts, including wire and bank fraud and money laundering, but was convicted by a jury of conspiracy and securities fraud. The charges stem from Shlei negotiating a settlement for a client based on a gold certificate backed by the M Fund. In 1998, The 11th Circuit Court of Appeals vacated the judgment, in effect admitting that Shlei was innocent of the charges and a victim of partisan politics.
While Shlei was being indicted, prosecuted, and forced into bankruptcy, former Secretary of State, Alexander Haig went to Japan and negotiated a certificate based on the M-Fund. This was the very same action that led to Shlei's arrest. Haig carried with him a personal letter from then President George H.W. Bush.
Haig was the ideal choice to negotiate the certificate. In 1947, Haig was assigned as an aide to General MacArthur and undoubtedly had firsthand knowledge of the Golden Lily and the various secret funds created from it. While in Japan, Haig married the daughter of General Alonzo Fox, MacArthur’s deputy chief of staff.
While many aspects of WWII still remain partially shrouded in fog due to censorship and government secrecy, the financial treachery and extortion surrounding the Golden Lily and the financial dealings with post-war Japan are confined to a black hole of government secrecy. Western archives and databases have been purged of records of Japan’s looting and economic treachery. Such reports still remain classified and hidden from the public. Moreover, the reports that do exist will not be made public for another half century. Recent efforts by Congress to force the release of documents from WWII has met with only limited success, as the CIA still retains the right to filter out documents that may reveal an unsavory American collusion with the Japanese warlords. However, bits and pieces of the puzzle have emerged in recent years to present a partial view.
At the time the Philippines fell to the Japanese, the Philippine National Treasure consisted of over 51 metric tons of gold, 32 metric tons of silver bullion, 140, ton of silver coins, and $27 million in U.S. Treasury notes. These were evacuated to Corregidor in December 1941, and stored in the tunnel complex there. General Willoughby’s wife helped inventory the gold. Willoughby will figure prominently later on. On February 3, 1942, a submarine, the USS Trout, arrived at Corregidor delivering munitions, food, and medical supplies. Before departing, the skipper requested that he needed ballast. The sub was loaded with the private gold, and 16 tons of silver pesos, along with other paper securities including some Treasury notes. The USS Trout then continued its patrol, sinking two Japanese vessels before returning to Pearl Harbor. There the gold and securities were turned over to the San Francisco Mint. It never occurred to the defenders of Corregidor to hide or conceal the remaining treasure in the tunnel complex. When the Japanese captured Corregidor, the treasure was still there in plain view.103
Japan used the same tactics that the Nazis did in laundering looted gold. Japan moved looted gold through Swiss banks in Tokyo, Portuguese banks in Maco, and banks in Chile and Argentina. The gold was moved to South America in large cargo submarines. The Portuguese cleverly omitted Maco in the Bretton Woods agreement.
Journalist Paul Manning had an opportunity to see Emperor Hirohito’s financial records when they were still in the custody of the occupation authorities. The records indicated that the Japanese advisors to the Emperor began moving his gold out of Japan in 1943, about the same time Bormann began moving Nazi loot out of Germany. Historian James Mackay concludes that the Emperor's accounts included $35 million in South America banks, $20 million in Swiss accounts, and $45 million in Portuguese, Spain, and Vatican accounts.104
Any account of the Golden Lily and Japanese
war loot is incomplete
without a look at Japan’s use of slave labor. All of the various
treasure sites in the Philippines were built with slave labor,
including Allied POWs. Once a site was complete and ready to be sealed,
the slaves would be herded into the tunnels. The tunnel was then blown
shut, leaving the prisoners to die a slow agonizing death from
The Japanese were especially brutal with their POWs, even more so than the Nazis. Over thirty percent of the Allied POWs died in captivity at the hands of their tormentors. In comparison, only three percent of Allied POWs died in Nazi camps. Allied POWs were deliberately left to die untreated from beriberi and other tropical diseases. In a prisoner of war camp on Hainan Island, the camp commandant, Captian Kikuchi Ichiro, withheld Vitamin B capsules to prevent beriberi and calculated the minimum amount of food to keep the POWs barely alive.
Thousands of POWs were transported to Japan on the Hell Ships, sealed in the cargo holds under conditions so grim that it was not uncommon for ten percent of the POWs to die before reaching Japan. Ships carrying POWs were supposed to have been marked as such, but Japan refused to mark its Hell Ships, so when they were attacked and sunk, the POWs still locked in the cargo holds would drown. At least 16 Hell Ships were sunk mistakenly by the Allies. A total of 17,036 Allied POWs were lost aboard these 16 Hell Ships.
By mid-1942, Japan held 140,000 Allied POWs, about a half-million western civilians, and over a million overseas Chinese. The Chinese were singled out for exceptional brutality. Prisoners were forced into slave labor for a variety of uses. Besides being used to bury the stolen gold, prisoners were used to mine gold and coal. Others were used to operate factories including Mitsui, Kawasaki Heavy Industries, Mitsubishi, Nippon Steel, Showa, Denko, and others. Mitsui was by far the largest employer of slave labor. Operators of the Hell Ships include the following corporations: NYK Line, KKK Line, and Mitsui. These corporations have never been obligated to pay compensation to their victims. Tokyo and Washington have blocked all attempts at compensation.
Japan dragooned about a million Chinese and another million Koreans to work in mines. The Japanese forced Korean women and young girls into prostitution. Known as comfort girls they were slaves to the military. After the Philippines the Japanese rounded up wealthy women and young girls and raped them as much as fifty times in a day. Held for ransom, the rapes would continue until the family came up with the ransom.
When Japan was liberated, the U.S POWs were taken to Guam where they were browbeaten until they signed papers agreeing they would tell no one of their experiences. 105 For some unknown reason, Tokyo and Washington both wanted total silence surrounding the abuse of POWs. Further documentation supporting this comes from the files captured by the British Royal Marines in 1945. In the files is a revealing document written by a commander of a POW camp at Taihoku, in Tawain. He had just received emergency instructions from the 11th Unit of Formosa. His instructions read as follows:
"Whether they are destroyed individually or in groups, or however it is done, with mass bombing, poisonous smoke, drowning, decapitation or what… it is the aim not to allow the escape of a single one, to annihilate them all and not to leave any traces."106
Obviously, Tokyo was adamant on silencing all aspects of their abuse of POWs. Washington’s concurrence however, is perplexing. The war was over, and Japan had been vanquished, what cities that didn’t lie in ruins from the massive fire bombing lay in ashes from the two atomic bombings. The only possible motives for Washington’s agreement are bribery or blackmail. Meanwhile, those American GIs that suffered in brutal slave labor camps and those that were murdered in those camps were betrayed by the leaders in Washington and left no means of recourse.
It is almost impossible to keep something the size of the Golden Lily secret. Periodically reports of stolen loot have surfaced. One of the first reports concerned Dutch silver. In 1946, American sources informed the Dutch military mission that 110 cases of Dutch coins was known to have been transferred from Yokosuka Bank to the Bank of Japan. In 1947, Lieutenant General Schilling of the Dutch military mission reported to his government that thirty tons of Dutch silver had been recovered from Tokyo Bay. The Japanese 16th Army on Java seized this silver and shipped it aboard fake hospital ships to the Osaka Mint. Additional Dutch ingots were recovered from Etchugina Bay.
Due to post-war detective work by the former Dutch POW, Lieutenant A. Looijen, 187 tons of Dutch silver was eventually returned to the Netherlands. Looijen had traced the silver bullion from Java to the Bank of Japan. Another Dutch POW, C. Broekhuizen, was forced into slave labor and reported that it was the Japanese government’s intention to conceal the gold and silver until after the war and then to melt it down and recast it in order to launder it. Other Dutch and American POWs have attested to seeing a warehouse full of coins from the various countries of Asia and the South Pacific. The warehouse had previously been owned by Standard Oil. Still other POWs reported seeing copper coins re-smelted at a Hitachi factory.107.
Along with the gold and silver coinage, POWs reported seeing copious amounts of diamonds and other precious gems. The finest were culled and set aside. The smallest were consigned for industrial use. The remainders were poured back into oil drums for storage in private vaults. Almost all of the loot was hidden in either private vaults or tunnels and bunkers in the Japanese Alps. Little was deposited in Japanese banks, as the elite was not about to share the wealth with the lower classes.
The largest tunnel complex is at Matsushiro near Nagano, the site of the 1998 Winter Olympics. The tunnel complex is ten kilometers long with over 60,000 cubic feet of underground space. It was originally built to house the imperial family, members of the aristocracy, and all government agencies. The tunnel complex was dug with slave labor from Korea. The slaves were never seen after the complex was completed, an all too frequent occurrence with the Japanese treasure sites. They were probably buried alive in a side tunnel. The complex was also used to hide treasure from the Golden Lily.
After the war, allied investigators learned that on August 2, 1945, just days before Japan’s surrender, 387 allied POWs were buried alive on the Japanese island of Sado. They had been forced to work in a gold and coal mine. Lieutenant Tsuda Yoshiro described the event to investigators. The mine was operated by Mitsubishi, which had a notorious reputation for brutal treatment of their slave labor. In another gold mine on Sado, also operated by Mitsubishi, one-thousand Korean slave workers were buried alive. Their fate was uncovered from company records released in 1991, covering the Mitsubishi’s distribution of cigarette rations to its slave labor.108
In 1947, General MacArthur brought a number of gemologists to Japan. Edward Henderson was one of the gemologists. He was invited to appraise some $50 million in gems that the U.S. Army had recovered. According to journalist Robert Whiting, roughly 800,000 karats of diamonds were transferred from the Bank of Japan to MacArthur’s command. No record of the fate of these diamonds has ever been found. 110
To better understand how such a large treasure as the Golden Lily has been suppressed and how the Black Eagle Trust came into being, a closer look at the liberation of the Philippines is required. While only part of the Nazi gold was ever officially recovered and returned to its rightful owners, almost none of the Emperor’s loot has been recovered and returned.
The primary difference between the Asian and European theaters during the war, was the OSS, was Eisenhower allowed to operate in Europe. The recovered Nazi loot was due largely to the efforts of the OSS and the gold teams in Europe. Once the initial gold teams were displaced, what gold that was found in Europe seems to have disappeared into a black hole.
MacArthur, however, would not allow any OSS agent to operate within his theater of command. When Lansdale arrived, the OSS was being disbanded and Lansdale had been officially transferred to the army.
MacArthur’s intelligence operation was under the formal command of General Charles Willoughby. MacArthur referred to Willoughby has his "little fascist." Willoughby had been born in Germany. He was a love child between Baron T. Scheppe-Weindenbach and Emma Willoughby of Baltimore, Maryland. When MacArthur was promoted to the U.S. Far Eastern Command, Willoughby chose to follow his idol. Both had been assigned to the Philippine command. Impressed by Willoughby’s loyalty MacArthur appointed him as his assistant chief of intelligence.
After Japan attacked the Philippines, Willoughby moved to Corregidaor with MacArthur and then was evacuated with MacArthur to Australia. Willoughby was generally inept and not even remotely prepared for many of the assignments. However, MacArthur demanded absolute control over intelligence and special operations, and Willoghby was ready and able to deliver MacArthur total control and loyalty. Willoughby was also clever at hiding his blunders and promoting his successes. In later years after the war, Willoughby became a member of just about every fringe far right-wing group that came into existence.
In Australia, Willoughby set up the Allied Intelligence Bureau to run guerilla operations in the Philippines. He also set up the Allied Translator and Interpreter Section. However, Willoughby’s incompetence in guerilla warfare was too much, even for MacArthur. MacArthur appointed his personal lawyer and crony Courtney Whitney to take over the special operations and guerilla warfare. Whitney was a very rich man and well connected in the Philippines. He proved an adept officer in managing guerilla operations in the Philippines. To sooth Willoughby’s hurt feelings MacArthur promoted Willoughby to a general.
Severio Garcia Diaz Sanata or "Santy" was born in Luzon and educated in California. While in California, Santy married the wealthy heiress Evangeline Compton. In 1930, the couple returned to the Philippines. During this time, Santy became a fringe member of the social click around MacArthur and Whitney. During the war, Santy became one of Whitney’s most effective agents inside the Philippines.
Another key figure in MacArthur’s Manila circle was Joseph McKickling, a law partner of Courtney Whitney. After the Japanese invasion of the Philippines, McKickling was made an officer of G2 under the command of Willoughby. He was also evacuated with MacArthur to Australia. During the torture of Major Kojima, McKickling was Santy’s immediate superior. About the time Santy was uncovering the treasure from the Golden Lily, McKickling became fabulously wealthy. He married the wealthy heiress Mercedes Zobel. McKickling masterminded the Zobel-Ayala acquisition of global real estate, creating one of the world’s great fortunes. While the Zobel-Ayala clan was far from poor, the real money in launching their world-class fortune came from McKickling.
The first detection of the Golden Lily came from a team of guerillas smuggled into the Philippines. Disguised as a fisherman, U.S. Navy Warrant Officer John Ballinger observed a heavily laden Japanese hospital ship heading for Subic Bay. He photographed the ship and identified it as the Hazi Maru, a fast liner. Guerilla hero, Captain Medina, led Ballinger's unit. The unit then observed the crew unloading heavy crates from the ship onto truck convoy.
Ballinger’s team then followed the convoy and observed the Japanese unloading the cargo and storing it in a mountain cave. Once they had finished unloading the trucks, the Japanese blew the entrance to the cave shut. It took the guerillas several days to reopen the cave, where they found rows upon rows of boxes filled with 75-kilo gold bars. They resealed the cave and reported their findings to MacArthur’s headquarters in Australia.
After the American landing of troops on Leyte, Medina’s guerrillas watched the Japanese hurriedly unloading heavy boxes into a tunnel near a hospital. Media’s guerrillas attacked the Japanese soon routed them, blowing the tunnel shut with many of the Japanese still trapped inside the tunnel. A report of this action was sent to MacArthur’s headquarters.111
Thus, it seems certain that MacArthur and his command staff were well aware of the existence of the Golden Lily treasure long before the Japanese surrender. What is not known due to the extreme secrecy surrounding the treasure was if MacArthur had been privy to Stimpson’s plan to use recovered treasure to finance a global political action fund before the surrender. The extreme secrecy over the POW issue from the very beginning of the surrender seems to suggest he was.
MacArthur’s knowledge of Japanese treasury surely played a part in the war crimes trial of General Yamashita. Yamashita was innocent of the charges as stated earlier. However, MacArthur and his staff were eager to see the trial proceed and badgered the trial tribunal, urging that hearsay evidence be allowed and to quicken the proceedings. Yamashita's defense team appealed the death sentence to the Supreme Court. His sentence was not overturned, but two justices dissented. Dissenting Justice Murphy’s words follows.
The Petitioner was rushed to trial under an improper charge, given insufficient time to prepare an adequate defense, and there was no serious attempt to prove that he committed a recognized violation of the laws of war. He was not charged with personally participating in the acts of atrocity or with ordering or condoning their commission. Not even knowledge of these crimes was attributed to him."112
Judge Rutledge, the other dissenting judge, was equally critical of the conviction. Following a failed appeal to President Truman, Yamashita was hung. Obviously Yamashita's knowledge of the treasure provided a hidden motive for MacArthur to dispose of the wrongly charged general. Being charged with war crimes, Yamashita could not be tortured without it being exposed in his trial. However, his driver Major Kojima Kashii was brutally tortured.
It is unknown how McCloy, Anderson, Clifford, and Lovett administered the Black Eagle Trust in the years following the war. However, the rest of the world was battered and bankrupt at the end of the war. It seems certain that from the work of the Seagraves that Britain’s re-entry into the world gold market must have been based on the trust. At the end of the war the Untied States held 60 percent of the world’s official gold reserves. Thus, Washington was in a position to manipulate and force other countries to go follow the Washington line.
By 1960, it was clear to European central
banks that they soon
would be holding dollars in excess of the official U.S. gold reserves.
Until the 1960s the U.S. gold reserves and the secret Black Eagle Trust
allowed the United States to browbeat any nation into complying with
U.S. wishes and desires. By 1960, the printing of fiat money nearly
equaled the U.S. gold reserves. The dwindling ratio of the U.S. gold
reserves to the money supply allowed other nations to escape from under
Uncle Sam’s heavy hand. As a result starting around 1960 various
nations began striking out on their own course, most notably France.
The role of gold in the Cold War is perhaps one of the most
unrecognized factors in the entire Cold War era. While the Black Eagle
Trust still could fix election globally, the U.S. was forced by their
dwindling gold stocks to ease the heavy repression of the 1950s, both
domestically and globally. The result was an almost spontaneous global
protest leading to one of the most tumultuous decades of the 20th
Century. It was French demands to exchange dollars for gold that led to
Nixon closing the gold window.
The 1948 Italian election is the first known example of the use of the Black Eagle Trust to fix an election. CIA agent Jesus Angleton had recovered Ethiopian treasure, plundered by Mussolini. Angleton did not return the treasure to impoverish Ethiopia; he appropriated it for the CIA. Angleton arranged for the Vatican to provide 100 million liras to back anticommunists candidates in the election. Some of the funds likely came from the Black Eagle Trust considering the Vatican was one of the 42 countries the recovered gold was shipped to in 1946-47. 113
Manipulating elections and other covert operations was the black side of the Truman Doctrine. Following London’s appeal to Washington that it had no money for military aid to Greece and Turkey, Truman appealed to Congress for a $400 million aid package. Secretly, Truman simultaneously authorized the use of funds from the Black Eagle for covert operations to defeat the communist uprising.
Frank Wisner was the man put in charge of the CIA covert operation in Europe following WWII. Wisner was the person to first come up with hiring ex-Nazis to create a fifth column against the Soviet Union. By 1952, he had operations in forty-seven countries and an official budget of $84 million, and a staff of three-thousand. It is unknown how much funding he may have received from the Black Eagle. Wisner was supported by powerful friends: the Dulles brothers, George Keenan, Averell Harriman, Joe and Stewart Alsop.
Likewise, in Japan funds recovered from the Golden Lily were used in the immediate post war period. Three secret funds existed during the military occupation---the M-Fund, the Yotsuya Fund, and the Keenan Fund. MacArthur was instrumental in establishing the M-Fund. Initially, it was believed to have been as large as $2-billion. Money for it came from the sale of confiscated gold, silver, gems, and other strategic materials.
The M-Fund named after General William Fredi Marquat, chief of SCAP’s Economic and Scientific Section. In theory, Marquat headed the U.S. unit that was to punish Japanese corporations that had made obscene profits off the war. In practice, Marquat spent considerable time and effort in concealing the profits for the businesses. Maquat, like Willoughby, was grossly incompetent. However, he was inside MacArthur’s circle, where loyalty counted more than competency.
Marquat did little in the way of shutting down the profit mongers during the war. He was also in charge of bringing the war criminals from Unit 731 to justice. Unit 731 was Japan’s biological and chemical warfare division that used victims to test their warfare agents on. Instead of fulfilling his outlined duties, Marquat presided over the transfer of Unit 731to Fort Dietrich. All information on the unit was withheld from the American and Japanese public, and the War Crimes Tribunal.
The M-Fund was created to buy elections. Its first big application came in the late 1940s when the socialists won the election. The M-Fund immediately began dispensing great sums to discredit the socialist cabinet. Later, the fund was again used to discredit Tokyo's consideration of opening relations with the People’s Republic of China.
The Yoshida Fund was established with an entirely different objective. It was used to finance the Japanese underworld for "wet work"—kidnapping and murder. General Willoughby controlled the Yoshida Fund. Moneys from this fund were used to silence union leaders and organizers. Willoughby also took on the job of falsifying the Japanese military history to conform to the needs of the American Cold Warriors. His work in this effort was published by the U.S. government under the title of The Japanese Monographs and Japanese Studies in World War Two.
< Joseph Keenan, another figure from MacArthur's inner circle, controlled the Keenan Fund. Keenan was the chief prosecutor in the Tokyo war crimes trials. The sole purpose of the Keenan Fund was to bribe witness at the war crimes trials. Unlike the swift trial of Yamashita in the Philippines, the Tokyo trials were dragged out for three years. Witnesses were bribed to prevent any testimony implicating the Emperor. Witnesses that could not be bribed met with violent and sudden deaths. The fund was also used to prevent testimony of Unit 731.114
In 1956, the Eisenhower administration used the M-Fund again to place Kishi as head of the newly merge Liberal-Democratic Party and as Japan’s new Prime Minister. Kishi had been a signer of the Japanese Declaration of War against the United States. He had actively been involved in slave labor and was part of the hard core ruling clique in Manchuria. He was one of the most prominent war criminals arrested in post-war Japan. However, he was freed with bribe money from Kodama.
Harry Kern, Eugene Dooman, Compton Packenham and other members of Averell Harriman’s group had groomed Kishi for ten years. Despite all the grooming by Harriman, Kishi lost in the 1956 to Ishibashi Tanzan. Washington widely regarded Tanzan as the least favorable candidate. Annoyed, Eisenhower personally ordered the CIA to destroy Tanzan. After a year of paying bribes to all the factions within the Liberal-Democrat Party, the Eisenhower administration was successful in placing their man in the prime minister’s chair.
During Kishi’s term (1957-1960) the Liberal-Democrat Party received $10 million annually from the CIA, chiefly from the M-Fund. While Nixon was negotiating the Mutual Security Treaty, Nixon promised Kishi that not only would he turn over the M-Fund to the Liberal Democrat Party, but he would also return Okinawa to Japan if Kishi would help the Nixon 1960 election campaign with black money. Upon the conclusion of the security treaty Nixon did turn over the control of the M-Fund and in 1973, as President, Nixon returned Okinawa to Japanese rule.
In 1972, Nixon and Kissinger arranged a deal with Premier Chou En-lai to keep China out of the conflict over Taiwan. In return for standing down, Nixon offered China a large quantity of gold provided by Marcos. At the time, China’s economy was in very bad shape and China also lacked foreign currency to purchase any foreign goods, including grain to relieve the widespread famine in China’s rural areas. According to the CIA and Pentagon analysts, China was about to invade Taiwan to gain badly needed assets and foreign currency. At the same time, the United States was bogged down in Vietnam and the public was demanding peace.
Although the details are sketchy and the exact amount is uncertain, Kissinger apparently offered China $68 billion in gold. Supporting evidence for the deal comes from numerous bank accounts, held by members of the Black Eagle Trust, which were being moved to mainland banks inside China. These rabid anti-communists would have had no other reason to move their accounts to China at the height of the Cold War.115
All presidents, from Truman to George W. Bush, have used the Black Eagle Trust to fund covert operations. While these black operations are badly odoriferous and criminal, the real danger comes in keeping the gold out of the hands of private individuals. Yet, from the beginning, the gold was held in private individual accounts. When President Kennedy sacked Lansdale over his operations against Cuba, Lansdale did not give up his covert activities. He merely went private. He still had enough contacts in the military and the CIA to remain a player in covert operations. In practice, this left Lansdale as a private individual with the power to overthrow foreign governments and even the ability to plunge inadvertently or deliberately the country into an unwanted war.
The ability of private individuals or groups to essentially wage war was enhanced by President Reagan. Early in his first term, Reagan signed Executive Order 12333 at the urging of Bill Casey. This authorized the CIA and other government agencies to contract with private military firms. Furthermore, the agency did not have to reveal the contract or arrangement.
Such contracts set a dangerous precedent that allows the president to bypass congress’s ability to declare war, and was immediately used by Reagan to wage war in Nicaragua. The resulting aftermath became known as the Iran/Contra scandal.
By 1980, there were plenty of individuals like Lansdale that had been terminated from government service to staff private military or intelligence firms. Starting in 1972, after John Schlesinger replaced Richard Helms as CIA Director, hundreds of agents that had been engaged in the dirty tricks clique of Helms were forcefully retired. Once it became known the CIA had been involved in Watergate and other domestic break-ins, Schlesinger ordered an investigation. The report termed The Family Jewels led to leaks about assassination programs, death squads like Phoenix, and other embarrassing operations. Over a thousand agents were terminated because of the investigation.
Further investigations in the 1970s led to more dismissals, not only at the CIA but also from the Pentagon. Under President Carter, additional CIA and military personnel were dismissed. Among those dismissed were General John Singlaub, Ray Cline, and General George Keegan. Many of these men regrouped privately in such radical far right-wing organizations as the John Birch Society, the World Anti-Communist League, and the Moonies. Singlaub has became some what of an icon among the far right.
Casey is a good example of these ex-agents. Casey was one of the original OSS crowd. He was Singlaub’s case officer during WWII, while Paul Helliwell was Casey’s immediate superior. In addition, Casey was friends with the Dulles brothers and had worked with Cline. He became involved with Lansdale during the torture of Major Kojima, making Casey one of key players in implementing the Black Eagle Trust.
After the war, Casey founded his own Wall Street law firm. His continued involvement with former intelligence agents allowed him to form Capitol Cities in 1954, just as the CIA was pouring millions of dollars into media companies. Casey benefited from some of that money. It is likely that Casey never left the CIA. In 1973, Nixon appointed Casey as the chief of the Security and Exchange Commission. While SEC chief, Casey worked closely with Stanley Sporkin, who was later appointed by Casey as the CIA’s general counsel in the Schlei case. In 1978, Casey founded the Manhattan Institute a think tank that absorbed several former CIA agents. In 1980, Casey left Capitol Cities to become head of the Reagan campaign. Reagan appointed Casey as CIA Director.
By 1980, private military and intelligence firms had proliferated to such an extent that they became known during the Iran/Contra scandal as "The Enterprise." Marcos had connections that extended beyond the CIA into this loosely confederated network.
In the mid-1970s, Marcos became pathologically greedy. He was already a billionaire from clandestinely recovering some of the Golden Lily’s treasure. However, the only means he had of selling it was through the CIA or Japan. Both would take the odd sized ingots without the standard paper trail required in the legitimate gold market, but only at a steep discount.
To bypass the CIA and Japan and sell in the open market, Marcos had to have the gold resmelted and the fingerprint from impurities altered so the gold would appear to have a Philippine origin.
By 1975, Marcos had already formed the Leber group (rebel spelled backwards) to uncover the Golden Lily treasure from 34 of the known 172 sites. Due to Marcos’s personal fascination with psychics, the group included Olof Jonsson, a psychic from Chicago. Marcos then contacted Robert Curtis, a mining engineer from Sparks, Nevada.
Curtis had developed a process to extract platinum and reclaim more gold from the mining tailings in the Sierras, which made him a moderately wealthy man. He was also an expert at changing the fingerprint of gold bullion. At first, Curtis turned down Marcos’s offer to resmelt the gold.
However, Curtis was amazed at the amount of gold that was being discussed in the offer. It was ten times the amount of the average gold that the Philippine mines had ever produced. After several offers, Marcos finally revealed to Curtis that the gold came from Japanese looting during WWII. The idea of recovering Japanese gold fascinated Curtis and he accepted the job, arriving in the Philippines at the end of February 1975.
On March 25, 1975, Curtis signed a contract with the Leber group. As part of his participation, Curtis agreed to supply two smelters. Curtis needed a loan to cover the expenses of the smelters and turned to a previous contact inside the John Birch Society. Curtis had been contacted earlier in the 1970s by Jerry Adams, Robert Welch, Jay and Dan Agnew, and Floyd Paxton. Robert Welch founded the John Birch Society. It was a fringe group on the far right of mostly consisting of wealthy businessmen, far right politicians, ex-military, and intelligence officers. Lansdale was a member.
The members of the Birch Society were also goldbugs. After Nixon allowed citizens to own gold, the Birch Society developed a backdoor through Canada to buy overseas gold and smuggled it into the U.S. through Canada. The Birch Society then used the gold to fund their own private vigilante force. The vigilante force was something similar to a private FBI. The John Birch Society has always maintained some type of blacklist, which is typical of all hard right groups. From time to time, news articles have appeared about the Birch blacklist. Generally, these right wing blacklists receive a wink and nod from the FBI as they view such blacklists as helpful.
Curtis was unaware the inner circle of the Birch Society knew about the Black Eagle Trust and previous recoveries of gold. They knew because one of the founding members was Colonel Laurence Bunker, who had succeeded General Bonner Fellers position in MacArthur’s staff in Tokyo.
The Birch Society arranged the financing for Curtis through Washington State Senator, Floyd Paxton and his son, who ran Kwik Lok Corporation. Another participant was Jerry Adams, the head of the Great American Silver Corporation, a company associated with the Hunt brothers. Welch and Congressman Larry McDonald told Curtis that they had cleared the loan personally. MacDonald was the head of the Anti-Communist League before he died in a plane crash. The loan was unsecured except for Curtis’s promise to return a 22 percent of his Leber share.
By the time Curtis had opened the first treasure site, the John Birch Society placed new demands on him for additional security for the loan. Curtis offered them the titles to his heavy equipment in Nevada. He also was obligated to give the Birchers the exclusive right to market up to $20 billion of any gold recovered. The Birchers told Curtis that the gold would be sold through Commonwealth Packaging Ltd, located in the Bahamas and owned by Kwik Lok. The proceeds would be deposited in the Nassau branch of the Royal Bank of Canada and finally transferred to a branch in Kelowna Canada. There the money would be smuggled into the U.S. by a key financial expert of the Birch Society.
The sudden demands of the Birch Society were triggered by July 4 and 5, 1975 columns by Jack Anderson, who reported that Marcos was recovering gold with the help of several Americans. Curtis barely escaped from the Philippines with his life.
Later, Curtis learned that Marcos had recovered 22,000 metric tons of gold bullion. Marcos had the treasure resealed without recovering two gold Buddhas and the barrels of gemstones.
While Curtis was still in the Philippines he learned that the Gold Cartel had offered Marcos a Mafia style deal—either kill Curtis and let the Cartel handle the gold or Marcos would be in trouble. The Cartel refers to the alliance of prime banks, gold companies, and national treasuries (including the Federal Reserve and the Bank of England) that dominate the world gold market. In the end, Curtis was left broke. Johnson Mathey-Chemicals (and a part of the Cartel) now owned his two Philippine smelters.
About the same time, things turned bad for Marcos. Marcos was trying to blackmail the Japanese over the Showa Trust at the Sanwa Bank. The Trust had come from treasures recovered from the Golden Lily. At the time, the Showa Trust was so large that it was generating a billion dollars a year in interest. Exposure of the trust would be embarrassing for both Washington and Tokyo. Apparently, Marcos was successful in his blackmail, as several accounts with his name appeared in the Hong Kong branch of the Sanwa Bank shortly after his negotiating team had visited Tokyo.
In his first year in office, Reagan declared that he would restore the gold standard. Reagan had long standing ties to the Birch Society, dating back to the 1950s. The Reagans were also long time friends with Marcos. To make his plan for a new gold standard work, Reagan needed a large stock of gold. He asked Marcos privately to lend part of his hoard of black gold for his plan. Marcos however, demanded a higher commission than what Reagan was willing to pay.
In combination with Marcos blackmailing the Japanese and his demand for a high commission to Reagan, Marcos had sealed his fate and was shortly removed from office. Once under siege in Manila, Senator Paul Laxalt offered Marcos an ultimatum forfeit his gold in return for being rescued by the U.S. That evening, after accepting the ultimatum, barges were towed alongside the presidential palace and loaded with gold from the palace. The barges were then towed to Subic. Then Marcos were rescued and taken to Hawaii where authorities seized billions of dollars worth of gold certificates.
Marcos’s high flying days playing wild and loose with black gold ended in Hawaii. However, the Reagan administration’s interest in the Golden Lily treasure buried in the Philippines continued. In January 1987, Curtis was contacted by Alan Foringer to talk about Philippine treasure.
After meeting Curtis, Foringer and his aid John Voss informed Curtis they were with the Nippon Star. The Nippon Star had been formed by General John Singlaub to search for treasure in the Philippines. Curtis wanted no part of dealing with the CIA or any CIA connected fronts. However, Curtis was then informed by a phone call from General Schweitzer that President Reagan had personally endorsed the Nippon Star and the Phoenix Exploration groups. Reagan couldn’t publicly endorse the explorations but had fully briefed the U.S. Embassy in Manila, and the commanders at Subic Bay Naval Base, and the Clark Air Force Base. Others involved in the exploration included Colonel Dick Childress, General Daniel Graham, General Jack Vessy, and Ray Cline.
Curtis reluctantly agreed to meet them in Hong Kong. However, this time he demanded to tape-record the meeting to protect himself. Once again, the John Birch Society was financing the operation. Curtis also discovered that Singlaub had been duped and was using false maps. Curtis had retained the maps for all the sites from his earlier trip to the Philippines. Desperate to dig himself out of a financial hole, Curtis suggested to first try a site on Corregidor. After digging had proceeded for five days, Philippine Army helicopters swooped down and demanded the treasure hunters leave at gunpoint. Curtis then returned home.
Curtis returned the third time to the Philippines as a partner with Charles McDougal, a former Green Beret. Once again, as he was about to strike gold, Curtis was forced to leave the Philippines. Later, his former partners recovered roughly $4.5 billion in gold that Curtis had located.
Further evidence of the Reagan’s administration's involvement with recovering Golden Lily treasure comes from a suit filed by Mel Beli over gold deposits held by Citibank. Beli had concluded that Citibank’s John Reed had joined with President Reagan, James Baker, Bill Caset, and Prime Minister Margaret Thacher to use Golden Lily treasure to finance covert operations by the U.S. and Britain. Beli referred to the plan as "The Purple Ink Document." Unfortunately, Beli died before the case could proceed. However, the case is still pending.
The danger now is that the Black Eagle Trust is no longer fully in the hands of the government. Instead, several far-right groups have access to it and can use it to further their radical agenda. Furthermore, they know more treasure is to be found in the Philippines. Undoubtedly, some of the political shift to the right in the United States since, the 1980s has been funded with parts of the Black Eagle Trust.
In 2001, George W. Bush sent a Navy Seal team to the Philippines to retrieve a portion of the loot. The younger Bush has been a player in the black market for gold for sometime. His representative to purchase the gold was William S. Parish, his nominee as ambassador to Great Britain, and the manager of his blind trust. James Foley was appointed as ambassador to Haiti by George W. prior to the Bush inspired revolt in 2004. Foley was another player in the Black Eagle Trust. Which leads to the question, did money from the Black Eagle Trust finance the arming of the Haitian rebels?