Q Apart from the general price regulations, Witness, there were other regulations. Will you please tell us very briefly what regulations these were and what was their significance for your work as an auditor of the DWB?
A There were a large number of price regulations in Germany, but the most important ones from my point of view as an auditor were those concerning prices when deliveries were made to the public agencies. The whole of the DWB concerned, with a few exceptions, supplied the public agencies, such as the Wehrmacht, which is the reason why I had to pay such attention to these special price regulations concerning deliveries to public agencies.
Q What were the practical results of these regulations from the point of view of auditing the Economic Enterprises?
A I had to convince myself all the prices checked up, were in accordance with legal regulations of what was known as NSOE. The NSOE are the regulations about prices on the basis of self cost for public agencies from 1938. If these prices were not in accordance with the regulations, I, as an auditor had to see to it that an entry was made accordingly on the debit side as a liability to be paid to the price commissioner. Both the Air Ministry and the remainder of the Wehrmacht in order to audit prices of armament orders, had to have a large number of auditors. If I, as an auditor, gave these certificates namely that the balance sheet was correct and listed all liabilities and the auditors suddenly came across an item of debt, then I personally would again be liable as a professional auditor for any auditing action up to 100,000 marks, which was the reason why I paid great attention to these regulations.
Q What was the connection between the application of this regulation?
A In Germany in war time we had completely abnormal conditions where prices were concerned. For instance, a shell could cost 100 marks with one company, but exactly the same shell could cost 200 marks with another company.
The reason was because the basis of it was selfexpense and that was the task of my auditing concern.
Q On the basis of what regulations did you work out wages? What was it you had to pay particular attention to?
A In these regulations, it was laid down very precisely what had to be made part of these prices. It could only be made part of it what could be paid for, that is to say, only wages could be made part of this balance sheet which were actually being paid. Wages of inmates could be made part of it too which were being paid, which is the reason why, as a matter of course, I had to deal with these inmate wages. That was part of my legal obligation as an auditor.
Q On the basis of these facts, could you draw the conclusion that the auditor was responsible for the set-up and management of the enterprises which he audited, or at least had an important influence on it?
A The auditor has no influence on the production and management of an enterprise. His responsibility consisted of the fact that in the case of deficient management, or deficient organization, or deficient bookkeeping, or wrong prices, he had to note that in his certificate, because he would be responsible up to 100,000 marks.
Q If I followed you correctly, Witness, it was your task to acquaint yourself when you audited an enterprise with all costs of production in the enterprise concerned?
A Well, I could not do anything else. I could not help it, because otherwise I would not be in a position to issue my certificate, which is the reason why, in many cases, I had to refuse my certificate.
DR. HEIM: If the Tribunal please, this dull matter is now over and now let us go in medias res.
Q Witness, on 10 May 1940, you and Pohl concluded your contract as an auditor. When did you start in your activity as an auditor in the Economic Enterprises?
A I went back to Koenigsberg after I signed my contract, and I began on 14 May 1940.
Q Where was your office?
A I had two offices in Berlin. One, the general one, was in my apartment, for which I had reserved three rooms and the second one, the DWB, was in Lichterfelde-West in the office of the WVHA. That was also where the DWB was located.
Q In order to do your work as an auditor of the DWB were you given any assistants and colleagues?
A Yes, I had every right to expect this on the basis of my contract. Some of them were civilians, civilian employees, and later on they were people who were assigned to me by the Waffen SS. All of them had been fully trained. I thought the matter over very carefully whether I should employ auditors myself, but I thought the risk was too great, because, after all, we were dealing with the SS, and I didn't know whether perhaps the next day this assignment would be taken away from me again.
Q What did you do when you started your work?
A First of all, I did one auditing piece after the other. I need not give you the names of the enterprises. Then in the case of the Sudetengau I evaluated the enterprises and we adjusted the Czech Crowns to Reichsmarks. I also audited a number of enterprises which were not part of the DWB, such as the ones which I have mentioned before within the scope of the Reich Association, Maria Schul, Benedictine Monasteries, and so forth.
Q What were the results if you made a brief and superficial summation? What was the impression you gained from the enterprises concerned?
A The position is described in Document Book II, Exhibit 22, in a report by the Chief of Office III-A. Many of these enterprises were heavily in debt. Many of them had no money. Some of them had not kept their books for months. Many enterprises had never handed over tax declarations. Almost all of them had very little capital. Several of them were heavily in debt, out of all proportion with their capital, and large amounts of foreign capital were endangered therefore. I might mention here that I audited in certain cases and had to interrupt it and discontinue it again because the books simply could not be audited at all. I then put my auditors into these enterprises in order to bring the books up to date. That was what I did in the beginning.
Q What about the management, bookkeeping, and so forth? What were the financial habits of these companies?
A Management and finances at this time were not too good. In certain cases the managers were not sufficiently trained. Bookkeeping, as I said before, was entirely confused and those were the conditions which I found.
Q What about the handling of taxes in these enterprises? What did you find there?
A In several enterprises all taxation matters had been completely neglected. The obvious reason was that both the employees and the directors of these companies had no idea what their obligations as managers were under commercial law, and the thing to do was to bring things into order.
Q Were there any enterprises which had no legal concepts of commercial law, at all?
A Yes, that also existed. For instance the enterprise of the German Equipment Works, which at that time had not been made part of this concern in Dachau and a similar enterprise in Ravensbrueck, there the position was that it seemed the economic enterprises had gone beyond all control.
The management could do as it pleased, as long as the superior department was agreeable. It could take out money or capital from the enterprises, as much as it wanted to. That is the reason why I made these efforts to put these enterprises back on a commercial basis. Unfortunately this was a special part of the matter.
THE PRESIDENT: And we will hear the last of it on Monday morning at 9:30.
THE MARSHAL: The Tribunal will recess until 0930 Monday morning.
(The Tribunal adjourned until 14 July 1947, at 0930 hours.)
Official Transcript of Military Tribunal II, Case 4, in the matter of the United States of America, against Oswald Pohl, et al., defendants, sitting at Nuernberg, Germany, on 14 July 1947, 0930-1630. Justice Toms, presiding.
THE MARSHAL: Persons in the courtroom will please find their seats.
The Honorable, the Judges of Military Tribunal II.
Military Tribunal II is now in session. God save the United States of America, and this Honorable Tribunal.
There will be order in the court.
JUDGE TOMS: Let the record indicate that the defendant Fanslau is absent from this session of the court at the request of his counsel, and by leave of court.
DR. HEIM: I don't know whether this Tribunal has just received the document books for defendant Heim.
JUDGE TOMS: No.
DR. HEIM: I shall now continue with the examination of the defendant Hohberg as witness on his own behalf.
HANS HOHBERG - Resumed.
CROSS EXAMINATION (continued) BY DR. HEIM:
Q. At the conclusion of the Friday session you were testifying as auditor of the economic enterprises of Pohl. When you were the auditor, at the time were there any enterprises which did not have any legal form as prescribed by the commercial law?
A. We had already given to discussion, this question of the true enterprises which should not have a status according to the commercial law. I made a suggestion to Pohl with regard to these two enterprises, that they should be given a status in accordance with the commercial law. The conclusion was very important, because once these enterprises had received a legal status, it was impossible to remove any part of the substance of the capital invested there.
However, before that time that could be done.
Q. What main tasks had to be solved at first as the result of the insight which you gained at that time?
A. My main task now was as it had been based on the carrying out of the official auditing which was then prescribed by the law. Besides that, however, I also had to take care of two main tasks. One task was the centralization of the files and the shares of the company in order to clarify the point as to whom the shares of this stock belonged. The second was the clarification of the financial matters of the companies which had gone into debt.
Q. What collaborators did you use in order to solve these questions, and just how did you divide all the work between your collaborators?
A. No one was there to audit the DWB, besides Pohl and Loerner who carried out the entire management of the business. However, compared with the previous time nothing had changed in the way in which this business was carried on. As a temporary collaborator in the handling of these two main tasks, which I had just mentioned, I appointed several of my auditors to carry out this work, on a temporary basis, until by order of Pohl they were officially taken over, by the DWB. On the part of official auditing, they carried out part time work in their use at some other auditing in spare time. Otherwise, I am to point out that this field of tasks that was carried out was within the DWB. That is to say, the internal finance office took care of these things. That is, more literally speaking, it was a department which consisted of one man, and then the statistical office which had approximately six or seven men and which was carrying out something additional. Amongst these people were four young girls. If the Prosecution thinks that the concern was to be directed by these few people, it's wrong and impossible from the point of view of personnel.
Q. Witness, what impression did you get, at the time when the DWB had not as yet been established, with regard to the ownership conditions with the companies and the financial investments there?
A. I did not gain any clear impression at all. Every one of the shareholders claimed to be the trustee for someone, and he had borrowed the capital for these companies from some place or other. For example, he took it from a company, let us say that it was the company for the care of German Cultural Monuments or from the "Property Company Economic Assistance" with the Reichsfuehrer-SS, or he would have borrowed the money from some other party.
Q. Did you make any suggestions at the time in order to effect an improvement in these conditions?
A. In order to clarify this matter, I suggested to Pohl that all trustees should be relieved of their shares in the companies and that they should be included in a holding company. Then, at least all the shares would be located in one single hand.
Q. What reasons were decisive at the time for this suggestion - that is to say, to carry out a centralization of the economic enterprises?
A. Well, it was impossible to clarify the picture and the status of the various companies up to now. The business managers could handle their business as they liked to, and now at least they were placed under some sort of control.
Q. Were there any other reasons for you to make this suggestion?
A. Well, I wanted these companies to be centralized. The second reason was that we tried to have the status of all companies clarified as to the so-called conditions for the adjustment of profits and losses which I have already mentioned. These contracts could only be concluded when a superior, a general holding enterprise, existed. According to German tax law such a company is called an "Organtraeger".
Q. At the time, did you already have clarity about the legal character of the real owner of the individual shares of the company, and did you have clarity about the origin of the shares that were contained in the company?
A. I never did gain any clarity about the ownership conditions with regard to the shares of the company. About the question of the ownership conditions, as far as the holding companies were concerned, I assume that later examination will show that a certain development took place in this respect, that is to say, that conditions varied.
Q. What opinion did you gain later on this subject?
A. According to the sources of the funds which were used to pay for the initial capital - after all, we had several increases of capital with the DWB - first of all, here we had the Party, and in the other case, the German Reich would dominate the picture. It was like a horse race in which one horse leads and then the other horse is in the lead. The SS itself never was the owner of the property. Therefore, it was only possible that either the German Reich or the Party was the owner.
Q. Your Honor, I shall refer to this question later on in detail.
Witness, when you planned this centralization, did you meet with any resistance?
A. The centralization of the companies into a holding company, with all its consequences, was not a very agreeable thought to the business managers of the enterprises. Part of them were afraid of the control which was to be carried out, and they preferred to have a lack of clarity regarding their work. Several letters were written by various business managers which opposed my plan of centralization and which were to destroy it.
Q. Can you give us an example of that?
A. Well, here I am thinking of the DEST. The business manager of this enterprise, Dr. Salpeter, was at the same time a partner in this company. That is to say, he was a trustee partner. Pohl had issued regulations and instructions, according to which several matters which were carried out in this business had to have Pohl's approval. However, when Salpeter did not like to do that, Pohl could never exercise any supervision over that.
Since Salpeter was a partner in the company, he could practically dismiss himself as a business manager.
Q. Did you already pursue a certain aim at that time?
A. Aside from the social aim of the concern, which I have already described, I myself pursued the aim of turning the concern into a concern of the Reich.
Q. In this case, did the financial system of the SS have to be reconstructed, or were any other matters involved in this question?
A. The invested personal capital was very little with regard to the capital as a whole which had been invested. For example, the DEST had RM 20,000 of its own capital. The balance of the DEST and its obligations amounted to, altogether, RM 20,000,000, and later on, even considerably more. Therefore, we have a scale here of one to one thousand. If this company had become bankrupt, then this bankruptcy would not have concerned the SS at all, aside from the RM 20,000 which had been lent. However, the German Reich would have suffered the more as a result of this bankruptcy and, of course, the small taxpayer also would have sustained a loss.
Q. You therefore said that in this case it was not necessary to reconstruct the financial structure of the SS but that other interests were involved in this case. To what extent did the latter apply?
A. After all, the SS had not invested any money in these enterprises. The little money which the SS had put into the enterprise had been borrowed. The big loans of the Reich were important here. For example, the loan from the General Construction Inspector or the Gold Discount Bank, or the numerous loans of the German Red Cross. Of course, these loans would have been lost, but not the money of the SS.
Q. Finally, the German Economic Enterprises GMbH, were established. They, in short, were the DWB. When did this happen?
A. This must have been at the end of June 1940, as can be seen from the documents.
Q. I am now coming to the establishment of the DWB. Dr. Hohberg, who were the founders of the DWB?
A: Pohl, with 90,000 marks and Loerner with 10,000 marks. Loerner, however, turned over his 10,000 marks immediately to Pohl. He was only involved in this by name.
Q: What was the construction of the DWB according to commercial law?
A: The DWB had two business managers, Pohl and Loerner. It did not have any board of supervisors. Therefore, we have the following picture: Pohl was the first business manager; secondly, he was the only partner; and thirdly, he carried out the supervision over this enterprise, as chief of the WVHA.
Q: Where were the financial funds obtained from in order to found the DWB?
A: The basic capital of the DWB only consisted of 100,000 marks. Frank furnished that money. I don't know from what source these 100,000 marks were taken. Whether this money came from the Party or the Reich I didn't know at that time at all, nor do I know it today. Frank doesn't know it wither today.
Q: What else can you tell us about your activity when the DWB was established?
A: In the beginning a small number of my auditors carried out the work which accumulated in the DWB. The main tasks were bookkeeping where centralized shares of the companies had to be listed, and then, of course, the activity of the so-called internal finance office. Later on the small legal department was added, and in this form in which this business was carried out nothing changed until the time I left.
Q: Was this activity part of the field of task of an economic consultant and auditor?
A: The execution of the establishment of companies and the carrying out of usions of businesses and increases in capital and decreases in capital, are all typical tasks which are normally handled by an auditor. The auditor then leaves this task again from the very moment when the experts of a newly established company, for example, independently take over this field of task.
Q: The Prosecution in its opening speech has made the following statement, and I quote: "In 1940 Pohl and Georg Loerner established the DWB in the form of a holding company. This enterprise was commonly known as the DWB, and many economic enterprises were subordinated to it. The defendants Hohberg, et al., developed these economic enterprises, and they directed them. Concentration camp inmates were used as workers to a very large extent. Please make a brief statement with regard to these statements by the Prosecution, and please answer in particular the question what you knew at that time about the utilization of concentration camp inmates.
A: I myself did not develop a single economic enterprise. Aside from my collaboration in this holding company where this special taxation task had to be fulfilled, I myself never had the functions of a director. While I was an auditor with the DWB altogether twenty different companies were founded. Of these twenty companies three enterprises employed inmates. These companies which employed inmates were only founded according to commercial law, in that particular form. After all, these plants had already been in existence before, and later, upon my suggestion, they only received the form and the title of a company. I mention these enterprises as the German Lebensmittel GMBH, the Textile and Leather evaluation GMBH, or Deutsche Textile Und Lederverwertung GMBH, and in the last month of my activities it was the Osti.
During my first year in connection with my auditing work I had no contact with plants employing inmates. First of all I examined all the enterprises which had a regular bookkeeping set-up.
Q: In this connection I would like you to look at Document Book II of the Prosecution, Page 2 in the English and the German text. This is Document NO-542, Prosecution's Exhibit 22. This is a report about the tasks organization and financial planning of Office III. Do you know where this report originated?
A: I have seen this report here for the first time among the documents. I can assume quite certainly that this report originated with Dr. Salpeter. At that time he was the so-called chief of Office III-A, and at that time he would mainly advise Pohl on economic matters. The report is very interesting for the reason that it states the status of the companies as it actually was, that is, it was completely desperate. He described how many millions had been invested in these various enterprises, and how at that time it could be seen that the majority of the enterprises would suffer severe losses. At the time when I recognized the somewhat weak business abilities of Dr. Salpeter, I suggested to Pohl that Salpeter be replaced by somebody else. When discussing this however, the question of inmate labor was never mentioned. Here we only dealt with making the loans of the Reich and other loans, which in part had already been lost, more secure.
Q: As you have just said, this report originated with Dr. Salpeter. Just what gives you that idea?
A: At the time Dr. Salpeter was the expert in these questions.
Nobody else could have written that report.
Q: And therefore you have only seen this document for the first time here in Nurnberg. In spite of this did you know anything about the aim of the SS with regard to economic enterprises? Was anything known to you about that, as is contained in this report?
A: Well... When I concluded my contract Pohl had informed me about the aims which he pursued with regard to the economic enterprises and the SS. He told me something quite different at the time. Pohl told me that we were only pursuing social aims in order to raise the standard of living of the simple people. Therefore, these were only purely social points of view. In the report by Dr. Salpeter, it looks as if the only main task of the economic enterprises had been the utilization of inmate labor. That may have been the case as far as Dr. Salpeter was concerned. However, this was not the main principal policy according to what Pohl told me at the time.
Did you as an auditor have any influence on the economic management and guidance of the economic enterprises? Did you develop them and did you direct these enterprises as alleged by the Prosecution?
A: No, I did not have any supervisory authority at all. I was not in charge of these enterprises.
JUDGE MUSMANNO: Counsel you asked a number of questions. You began by saying, did he have any influence, then you ask, did he direct. Well, there is a vast distinction which can be drawn between those two. He might not direct, but yet he might have had some influence. I would be happy if you would separate those two questions.
Q: By Dr. Heim: I, therefore, shall put this question to you in another form. Did you as an auditor have any influence on the economic direction and the purposes of the economic enterprises?
A: Actually I did not have any influence aside from my personal influence on Pohl. Indirectly I did have some influence because I tried to influence Pohl as far as the social tasks were concerned. Later on it will be shown that Pohl went along with my plans enthusiastically.
Q: Did you develop these economic enterprises?
A: I did not develop these economic enterprises, however, I was assisting in the tax centralization of the DWB as an adviser on tax matters.
Q: Were these economic enterprises under your direction as alleged by the Prosecution?
A: No, no enterprises were under my direction.
Q: What fields of task and what purposes did the DWB Concern have?
A: There is a basic difference between the tasks of the DWB and the task of the DWB Concern. It was the task of the DWB, which was carried out by a very few people, and they were the bookkeepers, Dr. Volk and Dr. Wenner, to carry out the reconstruction of those enterprises. The companies which belonged to the DWB Concern, on the other hand, within the various branches, carried out and fulfilled various tasks, and they were generally social tasks.
Q. What was the circle of the enterprises concerned with regard to these social aims?
A. Those who had any advantages as a result of the social aims, of course, were members of the SS, according to the desire of Pohl. After I became a friend of Dr. May we thought of enriching the DWB; that is, we wanted to have the DWB incorporated into the Reich so that not only the SS members and their families would benefit, but also the public in general.
Q. I am now coming to your activity after the DWB had been founded. What was your activity after the establishment of the DWB?
A. Out side of my activity as a tax adviser in the DWB nothing changed as far as my activity was concerned. My auditors continued their work. Several of the auditors were completely transferred, and they became employees of the DWB. They were replaced by other auditors.
The extent of the business managing activities of Pohl remained exactly the same as it had been before; as far as his authority was concerned with regard to the SS enterprises, Pohl now and before had exactly the same authority. Now we only had a difference that now he was also authorized to give instructions on the basis of commercial law because now he was the official business manager-which he had not been before.
Q. Therefore, did you have any auditors, in order to execute your auditing work?
A. Yes.
Q. Did you employ these auditors, or were they employed as auditors by some other agency?
A The first auditors were civilians, and I myself recruited them, and I suggested them to Pohl for employment. They then were subordinated to me professionally; that is, they were furnished to me in order to carry out the auditing work.
However, I did not have any disciplinary authority over them, and I was unable to dismiss them. May I point out at this time that in January, 1943, all auditors were taken away from me on the same day. I just happened to be absent on that particular day and nobody asked me about that before.
Q. Were any special reasons decisive for the selection of your collaborators?
A. Well, of course I tried first of all to get those auditors I liked personally--and none of then was a member of the SS.
Q. Can you give us a few names, and characterize this group of persons?
A. If I were to characterize all these people it would take too long. However, I shall give you a few names. We had an auditor Schmiehl; before he had belonged to the Communist Party. Then we had Petruska who before that was a member of the Socialist Party. Then we had Dr. Wenner who came from a strictly protestant family; the auditor Rapp who had special difficulties afterwards because his brothers had refused to serve in the German army. They came from Alsace. However, I would go too far if I were to mention all the names here.
Q. Were these auditors subordinated to you?
A. They had been furnished to me in order to carry out this auditing work, and they were professionally subordinated to me. However, I did not have any disciplinary authority over them.
Q. When did your authority end with respect to the auditors who became collaborators of the DWB?
A. My authority to issue instructions to these auditors who had been furnished to the DWB ended from the moment on when they officially were taken over by the DWB.
Fundamentally, that was the case from the very moment on when Dr. Weimer and Dr. Volk had been appointed managers with power of attorney (Prokurist). You must imagine this in a way that fundamentally no practical work had to be carried out in this holding company aside from the central handling of taxation matters.
Of course, that work was considerable.
Q. What tasks did you deal with at first, after the DWB had been founded?
A. I only advised Dr. Wenner as a sideline on taxation matters. However, I had to use the necessary intensity because I myself was personally liable with my property. That was by virtue of a Reich law. I myself carried out auditing work with my auditors. Above all, I converted everything to gold mard balances or Reichmark balances of the enterprises which previously had carried out their balance in some sort of other currency. For example, the Mattoni A.G. Another example is the Bohemia A. G.; and another is Kunod, at Prague. And, aside from that, I carried out the organization of the bookkeeping matters in a very large number of all the enterprises.
Q. What tasks were solved within the scope of the DWB which had been newly established?
A. The first task of the centralization of the company shares and the stock was solved immediately, and it only took a few weeks to solve them. The big task which was then carried out under the direction of Dr. Wenner was the elimination of the heavy losses with the assistance of the big profits of the other companies. This was carried out as a result of the so-called "holding contracts", or the contracts for the adjustment of profits and losses.
Q. What special training did you benefit from in this case?
A. I knew something about corporation charters because before I had worked with the Senior Finance President at Berlin as a so-called "concern auditor in charge."
Q. Did you have any influence on who was used as a collaborator in the DWB?
A. Yes, I did have some influence on that. At the beginning I would recommend potential collaborators to Pohl. Then they were employed by the business manager. Here we mainly dealt with people who had to know their business in special fields with which the DWB dealt. For example, the field of taxation law, and so on.
Q. When the accounting of adjustment of profits and losses was done could all the various enterprises be dealt with at the same time?
A. I have already described on Friday that a separate balancing was necessary with the various companies as far as the adjustment of profits and losses was concerned. Beyond that, however, these things had to be dealt with separately with regard to all the enterprises which were located in a field which had its own tax right. For example, Poland and Czechoslovakia. These enterprises therefore could not be used in order to balance the profits and losses.
Q. In February, 1942, the WVHA was established. Up to this time what was the organizational construction of the Main Office for Administration and Economy, and Budget and Construction?
A. You are asking me too much in this case because I have heard of these things mostly from the documents now or I heard about them at Minden when I worked on the report there, which Mummenthey, Dr. Volk and I compiled there, at Minden. I only know that with the Main Office for administration and Economy the enterprises were also listed as so called offices on the organizational chart. However, that is known here instead of W-1 to W-8; at the time we had 3-A to 3-F.
Q. What position did you occupy within this organization, or what position did your collaborators occupy?