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Medjugorje Chap. 3 – The Ustasha’s fortunate escape

Fr. Krunoslav Draganovic, who had studied at the Papal Oriental Institute in Rome and then worked in the Vatican Archives, returned to Croatia before World War II as secretary to the archbishop of Sarajevo. The priest became an Ustasha officer and participated in the “cleansing” operations against the Serbs in the Kozara region. He was a high official in the Ministry for Internal Colonization responsible for seizing assets of murdered or expelled Serbs, Jews and Roma and reallocating land among Croat and Muslim settlers in Bosnia as well as Slovene settlers purged from the enlarged German Reich. [1]

Draganovic was sent to Rome as representative of the Croatian Red Cross in 1943. He was provided introductions by Archbishop Aloysius Stepinac to senior Vatican contacts, including Pope Pius XII. In 1945 he was secretary of the Croatian Confraternity of San Girolamo (St. Jerome) in Rome and, under protection of the pope, turned San Girolamo into a waystation and hiding place for fugitive Ustasha, including Ante Pavelic and other members of the Ustasha elite. [2] 

Ante Pavelic had first fled to Austria where he was taken prisoner by the American forces near Salzburg. While preparations for his official trial were underway, a “mysterious intervention” stopped the proceedings and Pavelic was released unconditionally it was presumed through the intervention of Pius XII. Pavelic traveled to Italy where Draganovic hid him for two years before arranging his escape, as well as that of other Ustasha, to Argentina. [3] 

After meeting with the Ustasha Chief of Police in September 1945, Stepinac summoned a Bishops’ Conference in Zagreb. In a pastoral letter, the bishops asked the people in so many words to rise and overthrow the post-war Yugoslav government. [4] Instead of disbanding, the Ustasha had become guerrillas. Draganovic funded and organized former Ustasha as “Krizari” (Crusaders), to make terrorist raids. [5] A flag was consecrated to the Ustasha Crusaders’ forces in Stepinac’s chapel. On November 8, 1945, the archbishop received an agent who brought from Austria the “Pledge of Ustasha intellectuals” to fight the Yugoslav Government until the end “for the liberation of the Croatian people.” [6] 

In the summer of 1947, Draganovic was approached by agents of the U.S. Army’s Counter Intelligence Corp’s Austrian branch to help those Nazis whom the Americans wished to protect from prosecution as war criminals to escape Europe such as former Gestapo Chief of Lyon Klaus Barbie who had also fled initially to Argentina. [7]

Amid the news surrounding the extradition of the “Butcher of Lyon” from Bolivia in 1983, millions heard the word “ratline” for the first time in connection with the smuggling of accused Nazi war criminals out of Europe. The U.S. Department of Justice had ordered all departments to search their files from the immediate post-war period and turn over all documents relating to the matter. A heavily censored report dated March 29, 1983, was released in connection with the DOJ’s order. The summary admitted for the first time that the “ratline” existed. Fr. Krunoslav Draganovic is referred to as “one of the prime movers on the CIC/Austria disposal rat-line,” and noted that he worked as an agent for the Department of the Army along with listing his service number. [8]

Documents released as late as January 2011 showed both American and German intelligence knew in 1952 that Adolf Eichmann, responsible for the trains which brought millions of Jews to the concentration camps in Poland, was hiding in Argentina, a decade before the former SS colonel was kidnapped by Mossad agents and put on trial in Israel. It has already been well documented that the German Bishop Alois Hudal operated a ratline in Rome for German war criminals and “there is good reason to believe that Eichmann received help from German, Italian and Vatican officials.” [9] [10]

In early October 1958 (Pius XII died on October 9), the Vatican Secretary of State ordered Draganovic to vacate the College of San Girolamo. [11]


In June 1941, Pavelic issued decree No. 11689 which set up an “Office on Religious Affairs.” This office was in charge of “all matters pertaining to questions connected with the conversion of the members of the Eastern Orthodox Church.” Pavelic appointed Franciscan Fr. Dionizije Juricev as Chief of the Religous Office. Juricev was one of the oldest sworn members of the Ustasha. He had shared exile with Pavelic prior to the war. The transfer of confiscated property of the Eastern Orthodox Church to the Roman Catholics was made in a “legal” manner thorugh the Office of Religious Affairs. Rich monastaries, valuable real estate, many Orthodox churches and a great volume of religious art and treasure thus passed to the Catholic Church. The greatest share went to the Orders of Friars Minor [the Franciscans]. Pavelic gave to the Franciscan Province of St. Cyril and Methocius in Zageb the great estate of the Serbian Orthodox Church in Pakrac. The Franciscans moved into the building of the Pakrac Serbian Bishop and from there managed the estate. Pavelic gave the property of the Serbian church in Gospic to the Franciscans of Zagreb.

According to a letter from the Ordinariat of the Bishopric of Djakovo No. 2733/942 of June 8, 1942, twenty-eight Serbian churches had been changed into Catholic churches by that time in the territory of that Bishopric alone….

Archbishop Stepinac himself petitioned Pavelic to permit the Trappist monks to take over the Serbian Orthodox Monastery in Orahovica, which was confiscated by the Ustasha authorities.

Much of the loot stolen from the Orthodox, including art objects, church articles, gold and precious stones was never recovered. After the liberation of Zagreb, Yugoslav authorities found in the crypt of the Franciscan monastery on the Kaptol in Zagreb 36 boxes of gold which had been stolen from victims of the Ustasha. Among the articles were watches, bracelets, earrings, gold teeth, pendants, etc. These boxes were concealed under the bones of long-dead Franciscans. It was later established that the gold was hidden by the Fr. Radoslav Glavas acting in agreement with the head of the Franciscans, Fr. Modest Martincic, and the head of the monastery, Fr. Klemen and with the knowledge of Archbishop Stepinac. [12]

In their book, Unholy Trinity: How the Vatican’s Nazi Networks Betrayed Western Intelligence to the Soviets (New York: St. Martin’s Press revised, 1993 ed), Mark Aarons and John Loftus wrote that the genocide of World War II directed at Jews, Serbs, Roma, Soviets, and others by the Nazis and their allies generated vast amounts of loot and plunder including gold coins, wedding rings, and dental gold from concentration camps. These genocide-tainted treasures were re-smelted at the Reichsbank and other central collection points and laundered through the Swiss banks, Bank for International Settlements and the Vatican Bank during and after World War II. According to Aarons/Loftus, much of the postwar Ustasha and Vatican activity was cloaked in the guise of anti-communist activities and was encouraged or actively sponsored initially by British Intelligence and later the CIA. [13]

At the request of U.S. President Bill Clinton in 1995, Stuart Eizenstat directed a massive investigation that culminated in his 1998 report detailing how Nazi Germany looted gold from the central banks of the countries it overran and from the gold stolen from living and dead concentration camp victims, re-smelted and hid it, thereby confirming what was exposed in Unholy Trinity. Eizenstat’s efforts on behalf of Holocaust victims began when he was U.S. ambassador to the European Union and continued while he was Under Secretary of Commerce for International Trade.

The Eizenstat report stated that U.S. State and Treasury Department officials estimated that up to $579 million of monetary gold ($5.6 billion in 1997 value) had been looted in Europe by the Nazis and that Germany shipped around $400 million in gold to Switzerland during the war. The State Department estimate, contained in the Fletcher Report, was that of this amount, $276 million in gold was sold by Germany to the Swiss National Bank and an additional $138 million was “washed” through the Swiss National Bank and eventually re-exported to the Catholic fascist countries of Portugal and Spain. Of the $276 million in gold that the State Department estimated that Switzerland had purchased from Germany, it concluded that “the larger part was looted gold.” The State Department also concluded that part of the gold that Switzerland sold during the war to Portugal and Spain could also have been looted gold. Using different calculations, Treasury officials estimated that Switzerland likely received $289 million in looted gold. [14]

In 1998, the government of Switzerland and the Swiss National Bank agreed to reimburse victims, their heirs, the Swiss Federation of Jewish communities and the Swiss Central Agency for Refugee Assistance. [15] The Vatican, however, refused to disclose how much Nazi/Ustasha loot they had received and what had become of it.

In 1999, a class action law suit was filed in Federal court in San Francisco against the Vatican Bank (IOR or Institute for Religious Works) and against the Franciscan order, the Croatian Liberation Movement (the Ustasha), the National Bank of Switzerland and others to recover $100 million in damages for the Vatican’s participation in and money laundering of the proceeds from their victims. The suit was filed by Jewish, Ukrainian, Serb and Roma survivors, as well as relatives of victims and various organizations that together represent 300,000 World War II victims. The lawsuit sought an accounting from the Vatican of assets the plaintiffs allege were stored and laundered by the Church for the Ustasha government. It also asked for restitution and damages. The U.S.-based lawsuit was filed after the Swiss agreed to pay $1.25 billion in restitution to people who said the banks stole, concealed or sent to the Nazis hundreds of millions of dollars worth of property owned by Jews. [16]

The lawsuit, however, is about more than gold and jewels. First and foremost the plaintiffs want to know who is responsible for hiding and laundering these assets and where it went. Therein lies the problem since, besides having to pay $100 million, the Church would find the truth embarrassing to the historic legacies of all the popes from Pius XII to the present.

According to the revised suit, Alperin v. Vatican Bank Case 3:99-cv-04941-MMC Document 413 Filed 04/14/2009:

The “Ustasha Treasury” refers to a horde of “looted assets” originally plundered from Serbs, Jews, and Gypsies in Croatia, Bosnia-Herzegovina, Dalmatia, portions of Slovenia and Serbia, and from citizens of the former Soviet Union by agents of the Ustasha Regime and revealed as having been concealed since May 1945 by the Eizenstat Report on the Ustasha Treasury released in June 1998 by the U.S. State Department. In the closing months of the Second World War, this plunder was collected from various repositories and banks in Zagreb by the Ustasha Regime dictator Pavelic, who personally supervised its partial evacuation in several tranches from Zagreb to Switzerland. In late 1944 or early 1945, [Franciscan Fr.] Draganovic transported an unknown quantity of the Ustasha Treasury to Rome and the Vatican at the behest of Pavelic. 

Another substantial portion of the Ustasha Treasury accompanied Pavelic into exile in Austria in May 1945 where it was hidden. In late 1945 two boxes containing 45 kilograms of the Austrian gold horde were entrusted to Draganovic who personally delivered it to [Franciscan Fr.] Mandic and the Croatian Confraternity of San Girolamo in Rome to set up operations there…. 

When it became apparent the Axis powers would fall, [Ustasha Lt. Colonel Ivan] Babic and Draganovic were tasked with conceiving plans whereby the Ustasha Treasury could be saved from the advance of the Red Army. Draganovic and Babic devised a plan in which Ustasha assets would ostensibly become assets of the Roman Catholic Church with the active cooperation of OFM [Order of Friar Minors i.e. the Franciscans]. The Ustasha Treasury therefore would not only be saved from the Communists but from seizure by the Allies as Axis loot. 

In 1946, Babic carried out the final leg of the plan when he and Ustasha members dressed in British uniforms, accompanied by a few men clad as priests escorted the remainder of the Ustasha Treasury in a 10 truck British flagged convoy through Northern Italy to the San Girolamo Pontifical College in Rome where it was received by Mandic, Draganovic and the Confraternity of San Girolamo on behalf of the OFM and certified as property of a Roman Catholic Church entity and thus eligible for deposit at the Vatican where it would be safe from the Allies. At some point during the convoy’s journey it was joined by Ante Pavelic personally who was present for the convoy’s arrival in Rome. 

The convoy however was not unloaded at San Girolamo but was parked in a safe area off the nearby Via Tomacelli where Pavelic and the British-uniformed Ustasha disembarked. Then with care, the convoy’s British indicia were removed and Vatican license plates provided. The convoy was then driven into St. Peter’s Square and into the Vatican where it was received by representatives of the Vatican Bank in their official capacity as depository for Church contributions from around the world. This single transfer contained the greater remaining part of the Ustasha Treasury. It was estimated in 1946 to be worth an estimated 200 million Swiss Francs by U.S. Treasury Agent Emerson Bigelow who contemporaneously reported the incident to the U.S. government. These funds were placed under the control of Mandic who as OFM Treasurer had the knowledge, access, and ability to utilize the Vatican financial system, Vatican extraterritorial rights in Rome, the OFM’s internal resources and various external OFM and Diocesan accounts to convert the treasure into a useful form that could be dispersed worldwide to banks in Spain, Latin America, the United States and elsewhere in evasion of post war Allied currency and monetary controls in place in Italy and to promote the Ustasha agenda. 

The events described in the preceding two paragraphs were documented by former U.S. Army Counter Intelligence Corps (CIC) Special Agent William Gowen in 1947. Gowen investigated the Ustasha on behalf of the CIC in Rome which was interested in interdicting the ratline and other human smuggling rings. As part of his official duties Gowen interviewed Draganovic and Babic who admitted their roles in the delivery of the Ustasha Treasury to San Girolamo and the Vatican. Three additional named informants of Gowen also verified the events related to Gowen by Babic and Draganovic. These were Ferenc Vajta, the former Hungarian Consul in Vienna 1944-1945 and who served as an informant for French Intelligence in Innsbruck, Austria in 1946 and was involved in smuggling Hungarian assets to Rome and Austria; Dr.Miha Krek, former Deputy Premier of the wartime Royal Yugoslav government in exile who in 1946 was an officer of the British sponsored Central European Federal Club “Intermarium” in Rome and was sentenced in absentia to 15 years in prison by the post war Communist government of Yugoslavia, and Monsignor Augustin Juretic who in 1941-1942 had served as a consultant to the Croatian Catholic Episcopal [i.e. Bishops’] Congress with Draganovic and left Croatia in 1942 for exile in Switzerland and Italy due to political differences with the Ustasha regime and became an Allied informant. [17] 

On December 29, 2009, the 9th U.S. Circuit Court of Appeals upheld a federal District Court ruling that said that as an agency of a sovereign state, the Vatican bank is immune from such lawsuits since the 1976 Foreign Sovereign Immunities Act protects other countries from being sued in U.S. courts. [18]  

The Alperin v. Vatican Bank suit also produced documentation that the Vatican deposited 637 “United States Assay Office Gold Bars…which it does not wish to sell” in a U.S. Federal Reserve Bank in 1940 and kept gold on deposit with the Federal Reserve until at least 1975. [19] Interestingly, the current U.S. State Department website for the Vatican City State [Holy See] lists its principle pursuits as “Industries: Worldwide banking and financial activities; printing; production of coins, medals…”  

During the same post-war era when the Vatican and the U.S. government become partners in fighting world communism, in addition to the hagiographic revision of Archbishop Stepinac’s career, William Gowen’s career as a Special Agent was ended for his efforts and he was transferred from Rome and investigated by the infamous Congressional Un-American Activities Committee. [20]

In response to money-laundering allegations which led Italian financial authorities to seize $30 million in Vatican assets from two Italian banks in September 2010, Pope Benedict XVI created a new Vatican Authority for Financial Information to oversee the IOR effective January 2011 on orders of the European Union Commission. The Ustasha victims and their heirs are “pursuing the claims against the Vatican Bank” with the new Vatican Authority. [21]

In a separate suit filed against the Franciscans in the U.S. as recipients of part of the proceeds of the Ustasha Treasury, an appeal was argued in the Ninth Circuit on February 18, 2011. According to this suit:

The second phase of OFM involvement began in 1951 with the splitting of the Ustasha Treasury related activities between Rome, where Draganovic continued at the Croatian Confraternity, and Chicago where Mandic established a pro Ustasha cultural and publishing enterprise with money from the Ustasha Treasury at the OFM controlled Croatian Custody of the Holy Family of Chicago henceforth Croatian Custody. The Croatian Custody or Commissariat as it was then known was an administrative dependency of the OFM Minister General in Rome and Mandic’s relocation there was explicitly approved by the OFM Minister General. The publishing entity was used to print propaganda favorable to the Ustasha program and Croatian independence.

Promotion of a Croatian nationalistic agenda at the Croatian Custody of the Holy Family of Chicago continued after Mandic’s death in 1979 with access to residual funds from the Ustasha Treasury through the establishment of Croatia as an independent state in 1991. The Croatian Custody continued to support the Croatian nationalist cause through the conflict in former Yugoslavia by materially supported the controversial unapproved nationalist shrine of Medjugorje, located in the Croatian sector of Bosnia, Herceg-Bosna, and provided support to the shrine’s main promoters – OFM priests like Jozo Zovko, Tomislav Vlasic, Slavko Barbaric and Svetozar Kraljevic. Between 1987-2000 the Croatian Custody maintained an active position at Medjugorje through its own friar, Fr. Philip Pavic, who served at Medjugorje as confessor and pilgrim assistant. [22]


  1. Jasenovac – Donja Gradina: Industry of Death 1941-1945 http://www.jerusalim.org/cd/biblioteka/pavelicpapers/draganovic/index.html 
  2. Ibid 
  3. Avro Manhattan “The Vatican Holocaust” http://www.reformation.org/holoc10.html 
  4. Ibid 
  5. Jasenovac – Donja Gradina  
  6. Manhattan  
  7. Jasenovac – Donja Gradina  
  8. Cali Ruchala “The Return of the Golden Priest: Verona Reports and the Second Recruitment of Krunoslav Draganovic, 1959” http://www.pavelicpapers.com/features/essays/verona.html 
  9. Allan Hall “US ‘knew where Eichmann was hiding for years’” 09 January 2011 http://news.scotsman.com/news/US-39knew-where-Eichmann-was.6684318.jp
  10. The Nazis and Ustasha who fled to Argentina supported the takeover by a military junta in that country from 1976 to 1983. The junta had the support and actual blessings of Catholic prelates and priests over the “disappearance,” torture and murder of 30,000 Argentines. Betty Clermont The Neo-Catholics: Implementing Christian Nationalism in America (Atlanta: Clarity Press Inc., 2009) pp 70-73
  11. Ruchala
  12. “The Case of Archbishop Stepinac” Published by the Embassy of the Federal Peoples Republic of Yugoslavia Washington, 1947 http://www.hartford-hwp.com/archives/62/123.html
  13. Jonathan Levy, “Vatican Sued for Looting Nazi Gold Under CIA, MI Permission: The Lawsuit Against the Vatican and the CIA” News Insider 17 January 2001 http://www.newsinsider.org/editorials/Vatican_CIA.html
  14. “U.S. and Allied Efforts To Recover and Restore Gold and Other Assets Stolen or Hidden by Germany During World War II – Report Summary” http://www.ess.uwe.ac.uk/documents/report.htm 
  15. Julia Collins “Stuart Eizenstat: Taking on the Unfinished Business of the Twentieth Century” http://www.law.harvard.edu/news/bulletin/backissues/summer99/article4.html
  16. Patricia Zapor “Nazi-loot suit against Vatican dismissed” Catholic News Service December 31, 2009 http://ncronline.org/news/vatican/nazi-loot-suit-against-vatican-dismissed
  17. http://www.vaticanbankclaims.com/six.pdf 
  18. Zapor  
  19. http://www.vaticanbankclaims.com/vatican%20gold.pdf
  20. Dr. Jonathan Levy, Esq. “Real Life Angels and Demons” May 3, 2009   http://www.vaticanbankclaims.com/real.htm 
  21. See comment by Dr. Jonathan Levy, PhD, following “The Vatican and the Gold Standard” Open Tabernacle https://opentabernacle.wordpress.com/2010/12/12/the-vatican-and-the-gold-standard/ 
  22. http://www.freerepublic.com/focus/news/2231152/posts 

2 Responses

  1. Fr. Draganović wasn’t a Franciscan. Where do you get your information from?

    • Thanks for noticing that error. I’ll correct it.

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