This incredibly complex mission is perhaps best summarized on Wikipedia (which will save you from wondering, like me, whether it was filled with crosses and double crosses and so forth):
Chanel was “a person who knew Churchill sufficiently to undertake political negotiations with him.” For this mission, named “Operation Modellhut,” (“Model Hat”) they recruited Vera Lombardi. Count Joseph von Ledebur-Wicheln, a Nazi agent who defected to the British Secret Service in 1944, recalled a meeting he had with Dincklage in early 1943. Dincklage proposed an inducement that would tantalize Chanel. He informed von Ledebur that Chanel’s participation in the operation would be ensured if Lombardi was included. “The Abwehr had first to bring to France a young Italian woman [Lombardi] Coco Chanel was attached to because of her lesbian vices. . .”Unaware of the machinations of Schellenberg and her old friend Chanel, Lombardi played the part of their unwitting dupe, led to believe that the forthcoming journey to Spain would be a business trip exploring the possibilities of establishing the Chanel couture in Madrid. Lombardi’s role was to act as intermediary, delivering a letter penned by Chanel to Winston Churchill, and forwarded to him via the British embassy in Madrid. Schellenberg’s SS liaison officer, Captain Walter Kutchmann, acted as bagman, “told to deliver a large sum of money to Chanel in Madrid.” Ultimately, the mission proved a failure. British intelligence files reveal that all collapsed, as Lombardi, on arrival, proceeded to denounce Chanel and others as Nazi spies.
So, that threw everything off. However, Chanel wrote a very pitiable letter to Winston Churchill, who managed to get her released. Churchill wasn’t even around when any of this was happening, incidentally. He was in Tunisia with a fever of 102.