The head of the Office of Strategic Services (OSS), William Donovan, created the X-2 Counter Espionage Branch in 1943 to provide liaison with and assist the British in its exploitation of the Ultra program's intelligence during World War II.
[2] He additionally allowed the X-2 Branch to use field representatives in coordination with the station chief and outlined that the X-2 would maintain separate communication lines, liaisons and records.
[2] X-2 had its main base for European operations in London but maintained liaison in Washington, D.C., with other agencies including the FBI, State Department, G-2 and Office of Naval Intelligence.
[3] They advised military staff on selecting CI targets, distributing counter espionage (CE) information, protecting sources and interrogating captured suspects.
[7] The Art Looting Investigation Unit (ALIU) worked under the direction of the London office and was created in 1944 to monitor funding for German subversive activities in the post-war period.
[7] The unit specifically attempted to collect information on activities and plans of the enemy by looking at individuals that disposed of stolen works of art and other high value items.
[7] The ALIU was created by Donovan at the request of Justice Owen Roberts, chairman of the American Commission for the Protection and Salvage of Artistic and Historic Monuments in War Areas (The Roberts Commission) and had ten members drawn mainly from the art world, including James S. Plaut, Théodore Rousseau, S. Lane Faison, Jr., Charles Sawyer, John Phillips, and Otto Wittman.
[5] X-2 officers' primary mission in Italy was to eliminate foreign services in the area, although they also received training on doubling and controlling agents, which the regular military counterintelligence lacked.
He developed a contact in Italy's Royal Navy, Capitano di Fregata Carlo Resio, codenamed SALTY, in 1944, which yielded important information as the war went on.
X-2 monitored and tracked signals from these radios to their sources and attempted to turn the users into double agents for the Allies, as in the case of Gordon Merrick, a former French Lieutenant spying for the Germans in Perpignan.