Dog kidnapper wins fight to keep Goering's goblet

The young British soldier who removed a 12in silver goblet from the ruins of Hermann Goering's mansion in East Prussia at the end of the Second World War probably thought little of it at the time.

Inscribed with Goering's name and the words, "In memory of the great time. 7.3.36", the piece was wrapped in a piece of blue velvet, stowed in a Sunderland loft and stayed there, untouched, for more than 50 years. But the goblet, which seems to commemorate Germany's invasion of the Rhineland in 1936, is now destined for the auction rooms where it may fetch £2m after a struggle for its possession which has seen a dog kidnapped, the German embassy consulted and a man jailed.

The dispute over ownership of the chalice has been settled at a county court in Newcastle upon Tyne, where Derrick Smith, a local businessman, has been told he is permitted sell it. The Nazi relic is unique and possibly worth £1m to £2m, an earlier hearing was told.

Mr Smith, 52, had lost hope of such an outcome in March 2002, when he was sentenced to nine months' imprisonment for blackmail after kidnapping a former friend's boxer dog when she refused to return the chalice, claiming that it had been given to her in payment of a £40,000 debt.

The dog, named Benji, was the subject of "sinister veiled threats" when snatched, Mr Smith's trial was told. Mr Smith was alleged to have said: "I can vouch for your dog today but I may not be able to tomorrow.

After Mr Smith's conviction, Northumbria Police had the chalice insured for £2m and kept it in a vault. But upon Mr Smith's release from prison he vowed to regain possession of the chalice and to fight against any claim made by the blackmail victim.

Crispian Strachan, chief constable of Northumbria, requested judicial assistance to determine ownership. This resulted in a case presided over by Judge Ben Nolan, who said: "If someone had said to me this morning I would be dealing with a case involving Hermann Goering, a Nazi chalice and a dog called Benji I would have regarded it as a joke."

Joseph O'Brien, for Northumbria Police, told the court that the force had contacted the German authorities, who told them the nation did not want to pursue a claim for the chalice. Goering's elderly daughter had not been contacted at her home in South Africa. But the blackmail victim had relinquished her claim on the goblet, so it was handed to Mr Smith.

Outside court, Mr Smith said that a Syrian businessman was interested in the piece, as was an auction house in San Diego, California, which had put a price of over £2m on it. "I have fought this from day one to ensure I have something to leave my daughter in my will," he said.

The cup has been in British hands since Private George Armstrong, one of the first British soldiers into Goering's Karin Hall Lodge home in East Prussia, found it among the former chancellor and Luftwaffe chief's treasures. Many of the artefacts in the hall were wedding gifts bestowed in their thousands on Goering and his wife in 1923.

Pte Armstrong, who served with the Royal Signals, carried the goblet out of the lodge in his army backpack but hid it in his loft because he worried about being taken to task by his superiors and, later, vilified by his neighbours. When he died, it was passed on to Mr Smith, who was a friend of his family.

Despite his sticking power, Mr Smith will not enjoy all the fruits of his labour. He has accrued debts of about £360,000 since a waste-paper business he owned went bust and left him bankrupt in 1982. The largest creditor is the Inland Revenue, and Mr Smith has accepted that the Official Receiver has first claim on the proceeds of any sale. Mr Smith must also deduct £4,166 in court costs from any money that he makes.