Comment

Intelligence agency friends hide corruption

Paul Malone

Most of us who recall the extraordinary story of the Nugan Hand Bank never expected to live to hear an explanation for some of its notorious activities, never mind see anyone prosecuted for their conduct.

But now, thanks to Sydney investigative journalist Peter Butt, one of the bank's co-founders, Michael Hand, has been found and we might at last get some answers.

A spokesman for Minister for Justice Michael Keenan, pictured with Minister for Small Business and Assistant Treasurer ...
A spokesman for Minister for Justice Michael Keenan, pictured with Minister for Small Business and Assistant Treasurer Kelly O’Dwyer, said the government did not disclose whether it has made or intends to make an extradition request to a foreign country. Photo: Alex Ellinghausen

Hand slipped out of Australia in June 1980 following the apparent suicide of his partner, Frank Nugan.

Butt, researching his book, Merchants of Menace, discovered him living under the name Michael Jon Fuller in the small US town of Idaho Falls where Channel Nine's Sixty Minutes confronted him

After the body of Nugan was found in his Mercedes-Benz on a deserted road outside Lithgow on January 27, 1980, the bank collapsed, costing Australian investors millions of dollars.

But there was more to this story than financial mismanagement and a suicide. The bank was widely believed to have been involved in drug trafficking, gun running, money laundering and nefarious CIA activities.

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For sceptics who think it must be some wild flight of fantasy to suggest that a small merchant bank set up in Sydney in 1973  could have significant links with the CIA and gun running, let me name a few of the bank's personnel and associates as documented in official sources.

Passing over the bank's founders, let's look at other players as identified by the Commonwealth-NSW Joint Task Force on Drug Trafficking published in June 1982.

  • The first president of Nugan Hand International was US Rear-Admiral Earl P. Yates (retired), formerly head of planning for US Pacific Command who joined the bank in 1977;
  • US Brigadier General Edwin F. Black was introduced to Nugan Hand by Yates and became the bank's representative in Hawaii;
  • Dale O. Holgrem was an officer in the US Army stationed in Taiwan, who worked as flight services manager for the CIA airline, Civil Air Transport (later Air America). He joined Nugan Hand in 1978 and became its Taiwan representative;
  • US Lieutenant-General Leroy J. Manor accepted an offer to become the bank's representative in Manila in February 1979;
  • Dr Guy Pauker, who has been described as a CIA operative, was a consultant to the bank in 1979-80;
  • US Admiral Lloyd Vasey appears to have had an "unofficial" role with the bank while US General Earl Cocke was believed to have had  an executive position in the bank and provided office space for the group in Washington;
  • Walter McDonald was employed as an economist for the CIA for 25 years and joined Nugan Hand as a consultant in 1979;
  • and, to top it all, William Colby, the head of the CIA from 1973 to 1976,  was introduced to Nugan and Hand by a "mutual friend" and worked as legal adviser to Nugan Hand International in Washington.  A card bearing Colby's name was found on Frank Nugan's body.

The coroner found that Nugan had shot himself with a rifle he had bought two weeks earlier.

In the month following his death many of the Sydney records of the group were destroyed.

The Joint Task Force discovered Hand's means of escape. A former US Special Forces CIA associate of Hand, James Oswald Spencer, arrived in Australia on May 14, 1980, giving a contact as H. Boreland of Sydney. Helen Boreland was Hand's wife. 

Spencer left Brisbane aboard an Air Pacific flight for Fiji, accompanied by Hand travelling under the name Alan Glen Winter.

Former CIA Indo-China station chief Theodore (Ted) Shackley told investigative journalist Brian Toohey that Hand had worked for him in clandestine CIA activities in the 1960s. Other sources told Toohey that while in Laos, Hand worked with US-backed mercenary armies drawn from the Meo hill tribes. 

The Joint Task Force also uncovered a note Nugan wrote exploring business prospects in south-east Asia in which he said "Mike good Vietnam specialist (CIA) tough physically".

Another key player in the bank was Maurice Bernard Houghton, an American citizen and one time Saudi Arabian manager of the bank. The Joint Task Force concluded that Houghton was probably associated with US intelligence personnel in south-east Asia and Australia.

Returning to Sydney in February 1972 without a valid visa, Houghton was stopped by immigration officials but found two friends he could call for assistance. The immigration officer scribbled on his file "Vouched for by Mr Charody of Parkes Development and Mr Leo Carter, ASIO."   At the time Carter was NSW head of ASIO.

Houghton's passport was endorsed "A" allowing him to stay as long as he wanted.

In addition to running Kings Cross bars, such as the Texas Tavern and the Bourbon and Beefsteak for US servicemen on rest and recreation leave, Houghton found time to travel back and forth to the US, sometimes flying out of Richmond Air base on US military transports.

Nugan and Hand also travelled frequently to the US and, according to Toohey and Marian Wilkinson, in their Book of Leaks, Hand was involved in arms dealing.  A file with notes in Nugan's handwriting read: "Military weapons. Rhodesia, pay in gold, recoilles (sic) rifles, mortars 60/80m, M79 grenade launcher, quad 50 calibre machine guns "

Following the Sixty Minutes broadcast last Sunday (November 8) the Australian Federal Police said they were aware of the report regarding the apparent location of a US citizen allegedly involved with the collapse of an investment bank in 1980.  While neither confirming nor denying any action, the AFP said they would assess any information and liaise where appropriate with Australian and international law enforcement partners.

Hand has some story to tell, if we ever get to hear it.

In addition to explaining where $50 million of investors' funds has gone he could cast light on the bank's Chiang Mai operations where its office was on the same floor as the US Drug Enforcement Agency and where one witness testified $3 million in drug money came in from six clients. The Joint Task Force report says there is little doubt the bank's Thai offices were established largely for the purposes of securing drug money.

But if there's one lesson to be learnt from the Nugan Hand affair it is the danger arising from the secrecy surrounding intelligence agencies and the protection they enjoy.

Without this aura Nugan Hand could never have financed or benefited from drug and arms deals, money laundering and tax evasion and Michael Hand could not have escaped prosecution in Australia.