Canada bank said to launder Nazi gold for Portugal

MONTREAL — Canadian officials knew of wartime moves by the Bank of Canada that laundered Nazi gold from Portugal's central bank, a preliminary investigation has revealed.

The probe, launched earlier this month by the Bank of Canada, came in response to the release two weeks ago of a wartime U.S. intelligence document indicating that Portugal used the Swiss central bank to exchange 20 tons of Nazi gold for untainted gold held in the Bank of Canada and the Federal Reserve Bank of New York.

Switzerland has denied that it helped launder looted gold for Portugal during World War II.

Officials at the Federal Reserve Bank of New York refused earlier this month to comment on the intelligence document.

The document's release prompted the Canadian Jewish Congress to write a letter to the Bank of Canada demanding an inquiry.

According to the Bank of Canada's investigation, whose results were issued Monday, Canadian government officials were aware that 12 tons of gold held by the Swiss central bank for Portugal — all of which had likely been looted by the Nazis from the banks of European countries they overran — had been transferred to Portugal's account in the Canadian central bank.

The move, accomplished on the account books of the Canadian and Swiss central banks without any physical transfer of gold bullion, had, in effect, laundered the gold, removing any evidence that the gold in Portugal's account had originally been looted by the Nazis.

The Bank of Canada has now requested that a history professor, Duncan McDowall, conduct a more thorough investigation of the wartime bank transfers.

Jewish leaders applauded the Bank of Canada's quick action, but noted that more investigative work remained.

"While the report sheds much-needed light on important matters, it also poses a series of new important questions that must seriously be looked into," CJC president Goldie Hershon said in a letter to Canadian Finance Minister Paul Martin.