A BRITISH war hero who fought with Balkan partisans against the Germans stole thousands of pounds in gold and diamonds sent to fund the war effort, newly released files have revealed.

Colonel Duane Hudson, known as Bill, one of the models used by Ian Fleming for James Bond, buried his treasure under peasants’ huts and in forest hideaways. He later tried to smuggle the hoard out of Yugoslavia with the help of an accomplice using the British diplomatic bag.

The files, released at the National Archives in Kew, west London, show how the authorities, anxious to avoid a scandal, covered up what Hudson had done after he had confessed. He left for a new life in South Africa, where he died in 1995.

The dismay of the Foreign Office at Hudson’s behaviour is shown in the files by F A Warner, an official who wrote in 1947 of “the sensational new evidence . . . contained in Colonel Hudson’s statement”, and that it appeared to be “a sufficient case against him to justify its submission to the director of public prosecutions”. He added that the case was being handed over to “Mr Halford’s friends (code for MI6)”.

Hudson, a mining engineer, was a rugby player, swimmer, rider, skier, boxer and wrestler. He spoke six foreign languages and had a reputation as a ladies’ man.

He was recruited by Special Operations Executive (SOE), set up by Winston Churchill to carry out sabotage behind enemy lines. He told SOE that he was most suited to “tightrope-walking in atmosphere of Balkan intrigues”.

Hudson’s first missions in Yugoslavia included sabotaging German ships in Split harbour using limpet mines.

Later he was landed by submarine on the Montenegrin coast to link up with royalist resistance forces known as the Chetniks, who went on to fight a civil war against Tito’s communist partisans. The mission was highly dangerous and Hudson had his horse shot from under him as the Germans burnt local villages. He was captured and escaped twice and lost his radio and almost all his possessions.

One of Hudson’s tasks was to distribute British gold and diamonds parachuted into Yugoslavia to fund the anti-German fighters. More than £80,000 in sovereigns and diamonds, worth more than £1.75m in today’s money, was sent to the country.

The files show that Hudson confessed after the war to having buried part of the treasure with the aim of retrieving it when peace came.

In 1944 Hudson was parachuted into Poland, where he helped the failed Warsaw uprising.

He was awarded a DSO and OBE for his work during the war.

Afterwards, while working for the army in Romania, the files show that Hudson recruited Stephen Zollner, a Hungarian Jew buying timber for the British government around eastern Europe, to retrieve the treasure.

Zollner succeeded in digging up some gold near a peasant house at Cacak, then in Yugoslavia, which had been occupied by Hudson. He apparently tried to recover a second batch from beneath a hut. Zollner used a bag room clerk at the embassy in Budapest to send the first hoard to Hudson by diplomatic bag.

Zollner was later caught by the Yugoslav authorities and confessed.

The files show how British concerns that Hudson’s exposure would embarrass the government led to a cover-up: “If the case went to court it would no doubt come out that Hudson had lied to us.”

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