The OSS in Istanbul
Istanbul, in neutral Turkey, was a web of intrigue throughout the war, with agents from the Germans, English, Russians, Italians, Turkey’s own secret police, Vichy and Free France, and more engaged in a longstanding campaign of spy and counterspy. The OSS joined the web in 1943, hoping to use their operation to subvert those of the Germans and their allies. They also used the Istanbul operations to keep a wary eye on the Russians, concerned about the possibility of Stalin making a separate peace with the Germans. Throughout the war the English and American agencies addressed that possibility with disinformation and spying campaigns.
The information chain which the OSS built in Turkey was called Dogwood, and it was led by Lanning Macfarland, who operated undercover as a banker involved with funding for lend lease. Dogwood was in fact hired by Macfarland and operated as an employee of the Western Electric Company of Istanbul. In reality Dogwood was an engineer from Czechoslovakia named Alfred Schwarz. Schwarz and his assistant, Walter Arndt, contacted groups opposing the Nazis in Austria, Germany, and Hungary. Schwartz used diplomatic couriers from the Balkan countries and Switzerland to transfer intelligence to resistance groups.
The information obtained by Dogwood was shared with the British SOE by the OSS. British and American intelligence officers examined the information separately, and then shared their opinions over the material. In early 1944 the British detected problems with some of the information being provided by Dogwood and questioned the veracity of some of the agents in the chain. British intelligence devised a means by which the chain could be tested to ensure that false information was not being provided to the OSS and British teams. By then the Dogwood chain was the largest information gathering system operated by the OSS.
In early 1944 the Germans discovered several agents involved in the Dogwood chain and under threat of torture and death, turned them to provide information they would be fed by the Germans. This information ensured that the OSS and British intelligence was receiving false reports about German troop movements, plans, industrial resources, and other information. The false information in turn would ensure Allied resources would be misdirected, in particular the bombing raids flown by the RAF and USAAF. It also meant that the Germans could lead the Allies to attack a particular target and be waiting for them.
A joint OSS-SOE mission revealed that the Dogwood chain had been compromised and the Germans had been feeding false information to the OSS via the turned agents. How far up the chain the Germans detected was not revealed but the entire operation was shut down. A method of using the chain to provide false information to the Germans was studied but deemed to be too risky to implement. How much false information the OSS provided to combat commanders remains unknown, as several of the files regarding the Dogwood operation were destroyed after the project was abandoned.