AUSTRALIAN MYSTERY - FALL OF A BANKING FIRM SPOTLIGHTS THE ROLES OF HIGH U.S. OFFICIALS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R001102610022-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 20, 2016
• Document Release Date: August 21, 2006
• Sequence Number: 22
• Publication Date: August 24, 1982
• Content Type: MISC

Approved For Release 2006/08/2:
OPERATIONS CENTER/CURRENT SUPPORT GROUP
News Bulletin WALL STREET
Australian Mystery
Fall of a Banking Firm
Spotlights the Roles
Of High U.S. Officials
Frank Nugan's Violent Death
Opens Lid on Odd Traffic
In Dope, Foreign Funds
Politicians Charge Cover-Up
By JONATHAN KwrrNY
S1affReporter oJ Tae WALL STREET JOURNAL
SYDNEY, Australia-At 4 a.m. Sunday,
Jan. 27, 1980, a police sergeant and a consta-
ble, according to their testimony, were pa-
trolling a lonely stretch of highway 90 miles
from We when they spotted the parking
lights of a Mercedes on an old road off in the
woods. Inside the car, slumped across the
front seat in a puddle of blood, was the body
of a 37-year-old man with a new rifle in his
hands.
They searched his pockets and found the
business card of William Colby, the former
This (s the first of a series of
articles.
JOURNAL, 24 August, page 1.
. This has convinced many Australians
that the company was involved in secret
work for the U.S. government. Despite offi-
cial denials from Washington, the issue has
refused.to die and has become one of the
central debating points, in Australian poli-
tics.
The issue of U.S. investment may be
hard to resolve because many of the essen-
tial records were destroyed. Within hours af-
ter the discovery of Frank Nugan's body,
telephones began ringing urgently all over
the world. One was on the desk in Manila of
three-star U.S. Gen. LeRoy J. Manor, the re-
cently retired chief of staff for all U.S.
forces in Asia and the Pacific. After his re-
tirement, Gen. Manor had been on secret
-duty for the Air Force and at the time of
Mr. Nugan's death he was helping run Nu-
gan Hand's Philippine office. -
Ransacking the Files
According to Nugan Hand's public-rela-
tions man, Tony Zorilla, Gen. Manor called
him and told him to stop the wire services
from reporting Mr. Nugan's death. Mr.
Zorilla says he replied that this would be un-
ethical and impossible, and he refused.
(Gen. Manor would describe his activities
with Nugan Hand only in general terms, and
he wouldn't discuss this incident.)
Halfway around the world, Rear Adm.
Earl P. "Buddy" Yates, the recently retired
chief of staff for strategic planning for U.S.
forces in Asia and the Pacific, heard the
news and immediately jetted to Sydney, Nu-
gan Hand's main office. Adm. Yates was the
president of Nugan Hand, though he lived in
Virginia Beach, Va. En route to Sydney, he
met Nugan Hand's vice" chairman, Michael
Hand, a highly decorated Green Beret dur-
ing the Vietnam War and a former U.S. in-
telligence operative, coming from London.
They raced to the Nugan Hand office and
with a few other insiders began ransacking
the files.
According to witnesses, enough records
to fill a small room were fed to a shredder.
Others were packed in cartons, with every-
one helping, and carried at night to the back
room of a butcher shop owned by Robert W.
Gehring, a former Army sergeant in Viet-
nam. Mr. Gehring worked for Maurice Ber-
nard Houghton, a mysterious Texan who has
owned. several bar-restaurants in Sydney
and who had played an active role in Nugan
Hand's affairs since its inception in 1973.
A Lawyer's Advice `
Mr. Houghton not only joined the rape of
the files, but also brought his lawyer, Mi-
chael Moloney, to direct it. According to the
testimony of Stephen K. A. Hill, a Nugan
Hand director who joined the record-rifling
that week, Mr. Moloney urged the group on
by warning, "I am fully aware of what has
been going on. You all face jail terms of up
to 16 years."
According to Mr. Hill's testimony, the
burly Mr. Hand then broke in to say that if
Mr. Moloney's orders to sanitize the files be-
fore the law arrived weren't followed, "ter-
rible things" would happen-"Your wives
will be cut up and returned to you in bits
and pieces."
- 24 August 1982
Item No. 1
Mr. Moloney in a recent interview said,
"Sure, I advised Hand to take documents
out of the office. I was told there were seri-
ous deficiencies In the accounts. Everything
I did I talked about with Yates first." (Adm.
7l4tes refuses to discuss any part of his ac-
tivities with Nugan Hand.)
A few months later, on April 11, 1980, Nu-
gap Hand went into liquidation. And the se-
crets that were so frantically being de-
stroyed after Frank Nugan's death began to
to reconstructed. Exposed to view, like
m'ggots, were dozens of affiliated corpora-
dons, with little or no real assets, that Nu-
gan Hand had set up to help its clients avoid
taxes and move money overseas secretly
acid often illegally. Mr. Nugan had boasted
that $1 billion a year passed through these
companies.
4Still unanswered is the question of why so
many high-ranking U.S. military and intelli-
gehce officials were working for the com-
pany. The CIA has denied involvement, and
the State Department says that Nugan Hand
wasn't in any way a U.S. government opera-
tion. But liquidators of the company and
various Australian law-enforcement officers
express anger and bewilderment that the
CIA, the FBI and the U.S. Customs Service,
all of which have information on Nugan
Hand, have refused to release it to help in
the current criminal and civil investiga-
tions.
"It has obvious overtones that somebody
is covering something up," says the court-
appointed Australian liquidator, John W.
O'Brien.
From its base in Sydney, Nugan Hand
had opened at least 22 offices around the
world, including four in the U.S. After the
company failed, anguished messages poured
in from individuals who had invested money
at above-market interest rates in securities
sold by Nugan Hand and who now stood to
lose everything. Liquidators say the official
shortfall could reach $50 million. The vic-
tims include many Americans, not only on
the U.S. mainland but also at construction
sites in Saudi Arabia and at military bases
and legations throughout the Far East, Ha-
waii and the Philippines.
Nugan Hand carried out its operations
with intense secrecy. Cables and interoffice
messages were in code and often were
marked "Destroy After Perusal." Company
employees and customers were referred to
by coded serial numbers rather than by
name, and even references to foreign cur-
rencies were disguised: "Oats" stood for
Swiss francs, "grains" for U.S. dollars and
so forth down to "berries" for Portuguese
escuedos.
An -Impossible Job
This, plus the obvious phoniness of many
c~f the transactions carried on between com-
panies within the Nugan Hand galaxy,
crakes the job of settling claims by creditors
almost impossible. "We wouldn't be able to
gay 1%" on outstanding claims, says a liqui-
dator. Many creditors aren't even bothering
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U.S. director of central intelligence. On the
back of the card was the itinerary of a trip
Mr. Colby planned to make to Asia in the
next month. The two policemen also found a
Bible with a meat-pie wrapper interleaved
at page 252; on the wrapper were scribbled
the names of Mr. Colby and U.S. Rep. Bob
Wilson of California, then the ranking Re-
publican on the House Armed Services Com-
mittee.
All this might sound like the beginning of
a. Hollywood spy movie, but the studios
would have to assign their most imaginative
scriptwriters to produce a tale as startling
as the real-life events that have followed
that grisly discovery more than two years
ago. The body was quickly identified as that.
of Frank Nugan, the chairman of a group of
companies affiliated with the private Aus-
tralian banking concern of Nugan Hand Ltd.
Since then, investigations have pieced to-
gether a picti .?e t?-' :r amazing swindle fiat
spanned six continents and bilked investors
out of millions of dollars.
A Political Issue
More perplexing yet, evidence has turned
up that Nugan Hand bank was deeply in-
volved in moving funds about the world for
big international heroin dealers and also
might have been involved in the shady world
of international arms traffic. To cap it off,
the offices of Nugan Hand and its affiliates
were loaded with former high-ranking U.S.
military and intelligence officials
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to file claims, apparently fearful that to do
>~e would expose them to prosecution for iile-
aalndeals carried out with the aid of Nugan
d.
Currently, liquidators in Sydney, Hong
4ong and the Cayman Islands are investi-
ting the company, and often working at
purposes; seeking to recover assets.
Criminal investigations are being conducted
Uy the New South Wales attorney general's
office and by a joint task force of the New
South Wales police and the Commonwealth
police. The Royal Commission on Drugs ran
into Nugan Hand so much that it has recom-
ended a separate Royal Commission be
*)pointed just for Nugan. Hand.
,In June 1980, Mr. Hand, disguised and us-
i>jg a phony passport, flew to the U.S., ap-
p rently y via Fiji and Vancouver. He hasn't
been seen since.
Leaving. Australia about the same time
4?s Mr. Hand was his closest friend and ad-
4iser, Bernie Houghton. Mr. Houghton has a
broad acquaintanceship with many high-
ranking U.S. officials. As a civilian, he dar-
4gly traded goods all over the Southeast
4sian war zone in the 1960s. Though his res-
taurant is in a sleazy district of Sydney that
warms with prostitutes and sex shows, he
has frequently welcomed congressmen, CIA
officials and military brass there. A few
weeks before Mr. Nugan died, Mr. Houghton
played host, at a luncheon and later a din-
ner, to five members of the House Armed
Services Committee who were in Australia
tp inspect defense and intelligence-gathering
facilities. He arranged for Rep. Wilson and
another congressman and their wives to
dine with Mr. Hand. Last year, Mr.
Houghton returned to Australia. Authorities
have questioned him at length, but he avoids
reporters.
Eithttming a Body
':'With the scandal refusing to the down in
Australia, reports began to circulate that
the body in Frank Nugan's grave wasn't his
aVd that he was still alive and hiding out in
the U.S. Once he was reported having been
seen in a bar in Atlanta. Finally, in Febru-
ary 1981, officials ordered the body ex-
biimed. With gruesome diligence, Australian
TV covered the event by interviewing prac-
tically everyone in the area. ("Some are
dr
y, some are wet," one gravedigger told in-
terviewers, complaining that Mr. Nugan
was "wet" and therefore "very messy.") A
dentist definitely identified the remains as
those of Mr. Nugan.
Stymied by the lack of progress in the in-
vestigation of the company's affairs, the Na-
tional Times, an Australian newspaper, peti-
itioned the FBI under the U.S. Freedom of
;Information Act for information it had on
Nugan Hand. The newspaper was told that
Hof some 151 pages of material in FBI files, it
+eould see 71. But when the papers arrived,
they resembled a collection of Rorschach
tests, with page after page blacked out in
heavy ink and bearing the notation "B-1,"
indicating that disclosure would endanger
U.S. "national defense or foreign policy."
What was left was a few pages of more or
less routine information, such as a copy of a
Nugan Hand subsidiary's petition for incor-
poration in Hawaii.
In response to more-official Australian
demands, the State Department sent a two-
man FBI delegation to Sydney in April, 1982.
But the two men stonewalled, telling law-en-
forcement officials that the FBI had already
given its information to an appropriate Aus-
tralian agency; they wouldn't say which
agency or re-release the material. Austra-
lian state and national police investigating
Nugan Hand say that they have never re-
ceived the information. The only other likely
recipient would appear to be the Australian
ai 1
Security Intelligence Organization (ASIO), a
secret counterspy group that long has
worked closely with the CIA.
By law, ASIO can give information only
to Prime Minister Malcolm Fraser or his at-
torney general. Mr. Fraser says the U.S. has
assured him that it had no connections with
Nugan Hand, and he has rejected opposition-
party demands for a top-level probe. But the
continuing parliamentary debate could re-
kindle the once-hot political controversy
over vital CIA bases here. These bases mon-
itor U.S. satellites watching the U.S.S.R.
and China and direct the U.S.'s nuclear sub-
marines.
The opposition Labor Party-which now
leads Mr. Eraser's liberal Party in some
polls-has openly questioned whether the
CIA, through ASIO, helped topple Aus-
tralia's last Labor government, led by
Prime Minister Gough Whitlam. The CIA
has denied this. Now suspicions have been
raised that Nugan Hand, which handled en-
ormous amounts of money, may have been
used to channel funds to favored Australian
political candidates.
When Vice President George Bush visited
Australia this April, Labor Party leader Bill
Hayden-a strong possibility to become
prime minister-used his 30-minute meeting
with Mr. Bush mostly to press for the re-
lease of details on the Nugan Hand and
Whitlam affairs. Mr. Bush only gave his as-
surances that the CIA wasn't involved in ei-
{ ther matter. Mr. Bush was the CIA director
i in 1976, succeeding Mr. Colby, who later was
to become a lawyer for Nugan Hand.
A Secret Wiretap
Suspicions of a government cover-up
could be heightened by a disclosure by Aus-
tralian liquidator O'Brien. He says that he
has learned from the government-run tele-
phone company that Frank Nugan's phone
conversations were secretly recorded the
last two years of his life on a device in-
stalled at the phone company, apparently by
a government agency. Mr. O'Brien says
phone-company officials have told him that
the tapes-which might solve the mystery of
who was behind Nugan Hand-aren't at the
company anymore.
Wiretap authority is tightly restricted in
Australia, being allowed only in cases in-
volving national security or narcotics inves-
tigations, according to the Commonwealth
attorney general's office. State and national
police have reported that they don't know
anything about a wiretap on Mr. Nugan.
Again, this points the finger at ASIO.
Australian immigration records show
that a senior ASIO official, Leo Carter,
vouched for Nugan Hand's ubiquitous Mr.
Houghton when he entered Australia in Feb-
ruary 1972 with an expired visa. On ASIO's
word, Mr. Houghton received a visa allow-
ing him to come and go from Australia at
will. Mr. Carter has died, and ASIO won't
comment on this.
Presumably the most sensitive of Nugan
Hand's records were shredded right after
Mr. Nugan died. But the remaining records
hold many suggestions that the company
may have been much more than a banking
venture.
Notes on Troop Movements
The records contain long, periodically
filed reports about military and political ac-
tivities, mostly in Kampuchea (Cambodia),
but also in Laos, Vietnam and Thailand.
There is no concrete evidence that Nugan
Hand was an active participant in U.S. co-
vert operations. However, these detailed re-
ports of troop movements appear unconnec-
ted to any banking or business activity.
They were prepared by Nugan Hand's Bang-
kok representative, John Owen, a former ca-
reer British navy officer, and bear notations
that they were to be shown to Mr. Hand.
The flies also show that Nugan Hand
worked on big international arms deals,
though it isn't clear what, If anything, was
shipped.
For example, there were proposed trans-
actions in 1979 for a partnership with Prince
Panya Souvanna Phouma, the son of the for-
mer Laotian leader Souvanna Phouma. In
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A U T'V L / 4-k) AfYS i ~k y
Admirals, Generals, Ex-CIA Men Took
Prominent Roles in'N an Hand Bank
SYDNEY, Australia-Enough top-rank-
ing U.S. military and intelligence officers
worked for Nugan Hand to run a small-
sized war. The list includes:
ADM. EARL "BUDDY" YATES, a 1943
graduate of the U.S. Naval Academy, Le-
gion of Honor winner in Vietnam, and com-
mander of the aircraft carrier USS John F.
Kennedy. Then he was the chief of staff for
plans and policy of the U.S. Pacific Com-
mand, in charge of all strategic planning
from California to the Persian Gulf, until
his retirement in July 1974. He became the
president of Nugan Hand bank early in
1977, recruited by Maurice Bernard
Houghton, who apparently is an old
friend.
GEN. LEROY J. MANOR, the chief of
staff for the entire Pacific Command until
he retired in July 1978 to undertake new
duties that the Air Force says are so secret
that it can't talk about them. These duties
are generally known to have included ne-
gotiating the 1979 agreement with the Phil-
ippine government for continuance of the
U.S. military bases there (which Gen.
Manor used to command) and investigat-
ing the failed hostage rescue raid in Iran
in 1980 (an assignment that apparently
stemmed from his having designed and
commanded the 1970 raid on a North Viet-
namese prison camp that failed to find any
U.S. prisoners). A much-decorated Air
Force three-star general, he also had been
the special assistant to the Joint Chiefs of
Staff at the Pentagon for "counterinsur-
gency and special activities." He joined
Nugan Hand's Manila office, allegedly to
run It (which he denies), in 1979.
GEN. EDWIN F. BLACK a 1940 gradu-
ate of West Point. He entered the Office of
Strategic Services (OSS), which later be-
came the CIA, and was the OSS com-
mander in Berlin. He was the chief admin-
istrative aide to and frequent chess oppo-
nent of Allen Dulles, who became the head
of the CIA. He was the wartime boss and
then tennis partner of Richard Helms, who
also became the head of the CIA. He was
on the National Security Council staff un-
der President Eisenhower and later the
commander of all U.S. troops in Thailand
during the Vietnam war, before becoming
assistant Army chief of staff for the Pa-
cific. He retired in 1970 to become execu-
tive vice president of the Freedoms Foun-
dation in Valley Forge, Pa., a group pro-
moting conservative politics. He also
worked for LTV Corp., an important CIA
contractor. In 1977, he became the presi-
dent of Nugan Hand Inc., Hawaii, and spe-
cial representative of the overall organiza-
tion, making frequent trips to Asia. He
says he was recruited by Adm. Yates and
another admiral.
GEN. ERLE COCKE JR., whose entry
in Who's Who in America says that during
World War II he was "prisoner of war
three times, actually 'executed' by a Ger-
man firing squad and delivered the coup
de grace but survived 1945." He held vari-
ous posts with the Defense Department
and as an executive with Delta'and then
Peruvian airlines. He is a former national
commander of the American Legion, hon-
orary commander of the Nationalist Chi-
nese Air Force and holder of the French
Legion of Honor and top medals from
Spain, the Philippines and Italy. Now listed
as a retired Penes] with the U.S. National
Guard and a consultant. His consulting of-
fice served as Nugan Hand's Washington
office.
WILLIAM COLBY, the U.S. director of
central intelligence, 1973-76. He ran intelli-
gence programs in Vietnam during the
war. In 1979 and 1980, as a lawyer with the
Wall Street firm of Reid & Priest, he
worked for Nugan Hand on a variety of
matters-tax problems; the Foreign Cor-
rupt Practices Act; an abortive project to
relocate Indochinese refugees on an island
in either the Caribbean or the Pacific; an
attempt to take over a Florida bank; the
operations of Nugan Hand's mysterious
Panama branch, and the problems sur-
rounding Mr. Nugan's death. Mr. Colby
submitted $46,000 in bills, which weren't
paid. A $10,000 check for his retainer was
issued but never cashed.
WALTER McDONALD, a career CIA
officer since 1975 and deputy director in
charge of economic research from 1972 to
77. Then, while still in 'the CIA, he helped
his former boss, onetime CIA Director
James Schlesinger, set up and run the U.S.
Energy Department. He served on the
National Foreign Intelligence Board, the
senior advisory group in the intelligence
community. He announced his retirement
in 1979, went into consulting and almost
immediately by his own account began
spending most of his time with Nugan
Hand, traveling In the U.S. and Europe
with Mr. Nugan and talking with him
daily.
GUY PAUKER, a Rand Corp. staff
member who has advised the CIA and
other government agencies since the 1950s,
although he denies reports that he is a ca-
reer employee of the CIA. Mr. McDonald,
whom he calls his "good friend," once said
that Mr. Pauker has long had frequent per-
sonal access to White House national secu-
rity advisers, including Henry Kissinger
and Zbigniew Brzezinski. Mr. Pauker went
to work as a consultant to Nugan Hand af-
ter Adm. Yates introduced him to Messrs.
Nugan and Hand. He;, in.'turn, introduced
them to Mr. McDonald. ? Mr. Pauker says
be wasn't involved in any-completed deals
,for the bank.
DALE HOLMGREN, a former U.S.
Army officer in Taiwan who became man-
ager of flight services for Civil Air Trans-
port, a CIA-run airline in the Far East. He
then went into business in Taiwan. He
opened the Nugan Hand branch in Taipei
in 1978 as a one-man representative. Adm.
Yates once said that Mr. Holmgren had
long worked with the U.S. military in Tai-
wan to develop "within the social structure
of the Chinese in Taipei a close relation-
ship with the U.S. military forces and the
business and government community."
Adm. Yates also said that Mr. Holmgren
had worked for Nugan Hand without pay at
least for a while because he had an inde-
pendent income.
ROBERT "RED" JANSEN, a former
CIA station chief in Bangkok who advised
Thai governments through almost daily
meetings with the prime minister in the
early 1970s, according to persons close to
them. He worked for Nugan Hand there in
1978, although he apparently severed his
relationship that year (according to a col-
league, because he was warned by the U.S.
embassy that his presence at the bank had
aroused suspicion). Mr. Jansen apparently
has an unlisted number and couldn't be
reached for comment.
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rR LIAA) / `Y5ro1Y
one letter, Prince Panya took three pages to
list available weapons, including missiles,
light and heavy armor, tanks, combat heli-
copters and F-104 fighter planes and naval
patrol planes. Nugan Hand memos indicate
that the weapons were intended for delivery
to Indonesia and Thailand. They also discuss
creation of a private, freight-oriented airline
in Southeast Asia (to be called "Sky of
Siam") and other deals with Prince
Panya.
Memos show that in 1975 Mr. Hand was
arranging the sale to Rhodesia of recoilless
rifles, mortars, grenade launchers and ma-
chine gems, and was negotiating for ship-
ments of Rhodesian ivory.
Mr. Houghton has acknowleged in testi-
mony that in 1979 he met in Switzerland with
Edwin Wilson, the former CIA officer who is
now in U.S. custody, who is charged with
selling explosives in Libya and who is al-
leged to have supplied trained men, arms
and technology to Libya and other military
buyers. A former Nugan Hand representa-
tive in Thailand, Neil Evans, has testified
that Mr. Wilson went to Bangkok to discuss
arms deals with Mr. Hand. Other Nugan
Hand officials, however, deny Mr. Evans's
story.
There seems no denying, however, that
Nugan Hand was heavily involved with drug
dealers. Murray Stewart Riley, a former
Sydney policeman now serving time in Aus-
tralia for attempting to import a boatload of
marijuana from Thailand, was a regular
customer of the firm. So were Riley's asso-
ciates, who deposited drug money in Sydney
and withdrew it in Asia.
Riley's business was brought to the bank,
according to extensive testimony, by Harry
Wainwright, a former San Francisco crimi-
nal lawyer who fled to Australia in 1973 after
being indicted in the U.S. for income-tax
evasion.
Testifying from prison two years ago for
an Australian Royal Commission looking
into drug trafficking, Riley said his heroin
and marijuana imports were intended for
the U.S. market. In the words of the com-
mission, he said "that he had been informed
that Nugan Hand offered a facility to trans-
fer funds from Hong Kong to the United
States."
Over $1 Million of Drugs
Investigators say that they have traced
about $250,000 that Riley moved to Asia via
Nugan Hand and that they believe the final
figure will exceed $1 million. They say they
believe that much of the heroin was trans-
shipped to the U.S. in containers that were
repaired by a dockside welding firm in Aus-
tralia that was closely tied to the dope deal-
ers. They believe that another heroin ring
tied to Nugan Hand used a similar sys-
tem.
Apart from their connection with the
bank, Michael Hand and Frank Nugan had
been viewed suspiciously by narcotics
agents for some time. As early as 1973, the
Australian Narcotics Bureau began a file on
Mr. Hand based on reports that he and K.L.
"Bud" King, a former pilot for Air America
airline had been flying dope in from Asia to
an Australian airstrip. Air America was a
Vietnam war-era airline, with close connec-
tions with the CIA. U.S. drug-enforcement
officials now acknowledge that the airline
also occasionally ran heroin out of Southeast
Asia's famed "Golden Triangle" poppy-
growing area.
The landing strip involved in the 1973
Australian Narcotics Bureau report was on
a real-estate development promoted by
American singer Pat Boone and financed by
millionaire shipping magnate D.K. Ludwig.
Mr. Hand had worked as a salesman for the
project for several years after he came to
Australia In 1967 and later asserted that he
had made a fortune from his land sales.
The report of the illegal drug flights
came from a lawyer representing Mr.
King's housekeeper. Mr. King, who also
worked for the Boone-Ludwig project, has
since died in a fall. The report was released
recently among many files turned over to
the Australian parliament by three former
narcotics officers who contend that the nar-
cotics bureau covered up information on Nu-
gan Hand drug dealings.
Meeting an Opium Overlord
Other released files include information
on alleged Nugan Hand drug deals supplied
by Andrew Lowe, formerly Sydney's biggest
heroin dealer (by his own assessment), who
recently completed a prison sentence for his
dope deals. Mr. Lowe has testified that he
arranged a meeting between Mr. Hand and
Khun Sa, the Golden Triangle's biggest
opium overlord, though there is no way to
verify that.
Through meticulous police work, how-
ever, Australian officials have documented
in a still unreleased report a series of trans-
actions tying Nugan Hand not only to drug
dealing but also possibly to a series of con-
tract murders in which the so-called Mr.
Asia heroin syndicate eliminated at least
three persons who were informing Austra-
lian police about drug activities. Authorities
say the "Mr. Asia" group's heroin circu-
lated in the U.S. and elsewhere and brought
at least $100 million cash to the syndicate's
operators.
According to testimony from dope ring
and bank insiders, corroborated by tele-
phone logs and other evidence, the syndicate
was linked to the bank through a two-man
Sydney law firm that represented both Mr.
Nugan and various members of the heroin
syndicate. The firm's senior partner, John
Aston, used Nugan Hand for personal finan-
cial dealings and helped bring in other cli-
ents. And the law office was used as a drop-
, off point for bank clients who wished to re-
main secret; they left parcels of cash or
other Items at the law office for pick-up by
bank representatives.
One parcel that bank director George
Shaw, a major operational figure at Nugan
Hand, says he picked up at the law office
March 26, 1979, contained $285,000 in small
bills. This money has been traced through a
laundering process involving a soft-drink
firm that Nugan Hand had acquired (appar-
ently because it dealt in big quantities of
cash) and through accounts at different
banks in Hong Kong, New York, Boston and
Singapore.
Eventually the $285,000 was paid out in
checks from Nugan Hand's Singapore office
to a man identified by British police as the
Singapore leader of the heroin syndicate.
The payout was personally arranged by Mr.
Hand in Singapore as instructed in a coded
telex from Mr. Nugan in Sydney. This com-
plicated money movement was a standard
procedure Nugan Hand used for clients
wishing to evade Australia's strict currency
control laws, designed to keep capital at
home.
j7
Approved For Release 2006/08/21 : CIA-RDP84B00049RO01102610022-2