HOLLYWOOD, Feb 24, 2008 (AFP) - An Austrian film about a money counterfeiting operation hidden in a World War II concentration camp struck Oscars gold here Sunday.

Stefan Ruzowitzky's "Die Faelscher" ("The Counterfeiters"), which won best foreign film, tells the true story of a group of Jewish prisoners recruited by the Nazis to mount one of the largest counterfeiting operations in history.

The 139 printers and forgers would succeed in replicating the pound and the dollar before the end of the war, and would produce 131 million pounds in false notes as part of a scheme by the bankrupt German state to flood the British economy with counterfeited cash.

Based on a survivor's account by Adolf Burger, who spent two years in the Sachsenhausen concentration camp north of Berlin, the film poses questions of morality and survival as the counterfeiters, housed in separate barracks, enjoy small luxuries amid the death and squalor of the camp.

In one powerful scene, the men interrupt a game of table-tennis when they hear an inmate being shot on the other side of the dividing wall.

Meanwhile, the main protagonist Salomon Sorowitsch, played by a suitably taciturn Karl Markovics, becomes obsessed with producing perfect copies of the pound and dollar without considering the consequences of his actions.

Burger meanwhile, who acts as the men's moral conscience, sabotages their work, thereby endangering his colleagues' lives as he refuses to support the German war machine.

The line between good and evil, victim and torturer, is blurred even further as the SS commandant appeals for the counterfeiters to deliver the dollar quickly so that he may maintain his comfortable position and ensure their further protection.

Ruzowitzky recounted in an interview how Burger and another survivor who were consultants on the set, continued to argue "whether the SS commandant of the counterfeiting workshop was a murderer or a life saviour. I thought then: this is exactly what this film is about.

"It tackles very current, universal questions: are you allowed to play table-tennis in a concentration camp while right next to you people are being tortured to death?... can one take an all-inclusive holiday when nearby, people are starving?"

Ruzowitzky thanked the Academy for the award Sunday. "There have been some great Austrian filmmakers working here, thinking of Billy Wilder," he said.

But he added "most of them had to leave my country because of the Nazis, so it sort of makes sense that the first movie to win an Oscar is about the Nazis' crimes."

"The Counterfeiters," which also stars up-and-coming German actor August Diehl as Burger and Devid Striesow as SS Commandant Friedrich Herzog, is only the second Austrian production to be nominated for best foreign language film after Wolfgang Glueck's "'38" in 1986.

The other nominees in this category this year included Israel's "Beaufort," "Mongol" from Kazakhstan, "Katyn" from Poland and "12" from Russia.