AUSTRALIA SUSPECTS BANK LINK TO C.I.A.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00806R000200820021-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: August 3, 2010
• Sequence Number: 21
• Publication Date: November 13, 1982
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2010/08/03: CIA-RDP90-00806R000200820021-6
ARTICLE APP
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COMPANY NEWS
Australia
Suspects
Bank Link
To C.I.A.
Spada] to Mn 6New York Times
SYDNEY, Australia, Nov. 12 -
Australian detectives are expected to
visit the United States and Southeast
Asia in the next few weeks as they at-
tempt to determine whether the failed
Sydney based Nugan Hand Merchant
Bank was involved in trafficking in
heroin and covert activities of the
United States Central Intelligence
Agency.
Under particular scrutiny will be
the work carried out for Nugan Hand
by retired United States Government
officials and military officers between
1977 and 1980, when one of the bank's
founders, Frank Nugan, was found
shot dead and the other, Michael
Hand, vanished. The bank collapsed
following Mr. Nugan's death.
In a report released earlier this
week, the Australian Government
said it had uncovered evidence of a
link between the C.I.A. and Nugan
Hand. The report, heavily. censored
because the Government thought that
publication might inhibit the continu-
ing investigations, was made by a po-
lice group studying the possible in-
volvement of the bank in drug traf-
ficking.
The report said that Mr. Hand, who
was born in New York City, and a
Nugan Hand associate Bernard
Houghton, a 62-year-old ;Texan who
was the bank's representative in
Saudi Arabia, had a background in
American intelligence before they ar-
rived in Sydney in 1967.
Mr. Hand, who became an Austral-
ian citizen in 1979, is believed to be in
the United States, the report said.
A'Strong Inference'
The police report said of Mr. Hand:.
"His business activities in the late
1960's and the early 1970's with mem-
bers of the C.I.A.-controlled airline,
Air America, and C.I.A.-Connected
Continental Air Service and Agency
for International Development led to
the strong inference that Hand's intel-
ligence activity was with the C.I.A.
NEW YORK TIMES
13 NOVEMBER 1982
"There is some evidence to suggest
that Hand retrained his U.S. intelli-
gence ties through the 1970's and prob-
ably into the 1980's. Houghton was as-
sociated with U.S. intelligence-person.
nel in Southeast Asia and Australia,
and had some type of association with
personnel in the Australian security
and intelligence organization."
Kevin Newman, Australia's admin-
istrative services minister, said in a
statement that senior American offi-
cials had assured him that the C.I.A.
had no involvement in the bank. The
report said it was not drawing conclu-
sions about C.I.A. involvement with
the bank, and its only recommenda-
tion was that further investigation
was warranted.
The censored part of the report is
believed to discuss links between
Nugan Hand and organized crime, es-'
tablishing that the bank was involved
in heroin smuggling.
Millions of Dollars Transferred
Among the deletions in the report
were nearly two pages following the
heading "The unfinished investiga-
tion, United States personnel in-
volved."
Almost 40 pages of the 240-page re-
port were devoted to Mr. Houghton:
The report said that when Mr. Hough-
ton ran the Saudi Arabian office, the
bank transferred millions of dollars
out of Saudi Arabia. The money has
yet to be traced.
Many pages relating to Mr. Hough-
ton were deleted. Their headings in-
clude "The destruction of Nugan
Hand records" ; his meetings in 1979
with a former? C.I.A. operative, Edwin
P. Wilson, who was recently arrested
in the United States and charged with
exporting explosives to Libya to help
train terrorists, and a section headed
"Houghton and two Australian clients
of Nugan Hand -a case of fraud?"
The report included a long list of
Americans who worked for Nugan
Hand.
Colby Is Named
Among those named were Rear
Adm. Earl Yates, United States Navy,
retired, the first president of Nugan
Hand International; William E.
Colby, Director of Central Intelli-
gence from 1973 to 1976, who worked
as legal adviser to Nugan Hand Inter-
national after 1979; Walter McDonald,
former economist and oil expert at the
C.I.A., who joined Nugan Hand Inter-
national in 1979 as a consultant; Brig.
Gen. Edwin Black, United States
Army, retired, the bank's'representa-.
tive is Hawaii; Lieut. Gen. LeRoy
Manor, United States Air Force, re-
tired, the Nugan Hand representative
in Manila; Dr. Guy Pauker, a consult-
ant to Nugan Hand International, and
Dale Holmgren, the bank's Taiwan
represefitative, who was an Army offi-
cer in Taiwan.
Apart from the police investiga-
tions, a Royal Commission on drug
trafficking is also looking into activ-
ites of the Nugan Hand Bank.
A United States Senate select com-
mittee on intelligence has also been.
investigating whether there was a link
between the bank and the central In-
telligence Agency. It has yet to pub-
lish its report.
STAT
STAT
Sanitized Copy Approved for Release 2010/08/03: CIA-RDP90-00806R000200820021-6