Thursday, January 13, 2022

Iran-Contra Pt1: The Iran Contra Era

      The Iran-Contra Era: Global Counter-Revolution,

      and the Triumph of the National Security State




   My next article will deal in depth with the illegal Contra resupply operation and the Iran arms deal. This article is meant to serve as a brief introduction to the case followed by a much broader analysis of the whole Iran Contra era. I thought it was best to get some tangents out of my system in this extended introduction. In following the threads that make up the tapestry of the Iran-Contra scandal one is quickly covered with a web of connections that cover the world. The globalization of the covert warfare apparatus although it did not begin in this era reached new heights. Faced with the threat of congressional oversight the national security state outsourced covert operations to allied and even enemy countries. It also increasingly privatized covert war turning to networks of ex spies and military men, arms dealers, mercenaries, NGO’s lobbyists, religious groups, and drug cartels.  



   The Iran Contra era stretches from late 1975-1992 covering the final third of the Cold War which begins in the aftermath of the liberation and reunification of Vietnam a humiliating defeat for the American empire. The first postwar chapter of the Cold war had stretched from 1945 (secretly 1943) to 1959 with the Cuban Revolution marking the beginning of the second part of the Cold War. The Cold War had actually begun in 1917 with the Russian revolution and the failed invasion to crush the soviet union, followed by the attempt to isolate the USSR while arming Nazi Germany for an attack on the USSR. World War 2 was only a minor interruption in this cold war. The postwar cold war began in Greece during WW2 as the British attempted to install the Greek fascist collaborators and death squads into power and to destroy the communist Partisans that had already liberated Greece. The OSS and MI6 were already planning to recruit the Nazis and their allies to battle the Soviets. The postwar cold war had seen dissent crushed to make way for an anti-soviet hysteria, the fixing of the Italian elections to prevent a communist victory  the victory of the Chinese Revolution, the Korean war, the CIA creation of South Vietnam, coups in Iran and Guatemala and around the world. The Second third of the Cold War covered the Cuban Revolution, the failed bay of Pigs Invasion, the export of US counter-insurgency advisers around the world to teach torture, and assassination to prevent “another Cuba” and the transformation of the Vietnam war from a covert counter-insurgency campaign to a genocidal military occupation. However the empire managed a major diplomatic success opening relations with the People’s Republic of China. In the Iran-Contra era China would help the US arm and sometimes train counter-revolutionary forces around the world including UNITA in Angola, the Nicaraguan Contras, and the Afghan Mujahideen. It also worked with the US backing the Khemer rouge in Cambodia and waging war on Vietnam.  Domestically during this second phase of the cold war the civil rights movement and the Anti-war movement had briefly awakened some awareness of the ugly realities of the empire. Watergate, the Coup in Chile, exposed an imperial presidency and the CIA’s role in replacing democratic socialism with fascism. The third chapter began with the post-independence war in Angola when Cuba intervened to foil a US backed invasion from Apartheid South Africa. Congress passed the Clark amendment barring further US involvement but the CIA merely turned to it’s allies in the Safari club to continue the war which would last until 1992. The Safari club would also  play a key role in giving birth to Al Qaeda. The CIA was already meddling in Afghanistan by the late 70’s in part through the Shah of Iran. The Cuban victory in Angola  would ultimately lead to the fall of Apartheid South Africa in the early 90’s . However at the same time American soft power (The NED) had infiltrated and destroyed the Soviet Union thanks to the treachery and incompetence of Mikhail Gorbachev. Gorbachev was himself overthrown the Soviet Union  disbanded. The Warsaw pact was absorbed into NATO.  Russia was ruled by a drunken US puppet Boris Yeltsin hundreds of millions were plunged into poverty and chaos as the country was looted.

   

    Between 1975-1992 the US waged covert and overt dirty wars around the globe in Afghanistan, Libya, Angola, Mozambique, Namibia, Uganda, Congo, Chad, Ethiopia, Somalia, Lebanon, Syria, Grenada, Cambodia, East Timor,Guatemala, El Salvador, Argentina, Nicaragua, Panama, Uruguay, Ecuador, Chile and more. The US was supplying both sides in the Iran/Iraq war it was backing Israel’s plans to dominate and balkanize the middle east. It was backing South Africa’s efforts to dominate Southern Africa. These were the true crimes of the Iran/Contra era the crimes of the American empire. It would take a team of historians to catalog all the covert wars of the Iran-Contra era which covered four presidencies Ford, Carter, Reagan, and Bush and to begin to assess the death count. The Clinton years that strange period between the end of the Cold War and the beginning of the War on Terror saw the US create chaos around the globe in order to justify the continued existence of the National Security State the destruction of Yugoslavia, and the wars in Rwanda and the Congo which lead to millions of dead were examples of sophisticated psychological warfare. The US covertly instigated civil wars fueling ethnic and tribal strife while pretending merely to be a concerned bystanders and eventually “saviors” when they overtly intervened. The Clinton years with the destruction of Yugoslavia and it’s massive NATO expansion set the stage for the second cold war.


    The conventional narrative of Iran-Contra Scandal was consciously created to narrow the focus in time and geography so as to expose as little as possible about the American empire. It also narrowed the focus on the domestic implications of the scandal. Congress only investigated activities between 1984-1986 to avoid recognizing that Reagan had basically come to power in a soft coup in 1980. Back in late 1975 CIA director William Colby had been fired and replaced with George H. W. Bush. Bush’s ties to the agency went back to the 1950’s when he was recruited into the CIA a fact he successfully kept secret for decades. While Ambassador to China Bush and the CIA chief of station James Lilley had recruited Deng Xiaoping who would later rule China and rollback socialism.  Bush’s reign as CIA director  in 1976 was brief but memorable. He was in charge when Cuban forces managed to halt the South African advance in Angola. He turned to the Safari Club to help the US wage war in Angola  He was in charge when the Argentine Junta seized power and began their bloody dirty war. Bush was CIA director when the CIA cubans formed CORU and launched an international terrorist campaign which included blowing up a Cuban airliner. The culprit Louis Posada Carrilles would later be mysteriously “escape” (via CIA bribes) a Venezuelan prison and ended up as part of the Contra resupply operation. 1976 was also the Year of the Orlando Letlier bombing when Chile’s former Ambassador was killed in a car bomb set by CIA cubans working for DINA (chilean Intelligence.) Bush had ignored the warnings he received that DINA assassins were trying to obtain fake passports for the assassination and then after it took place he tried to blame left wing exiles for the Letelier assassination to protect fascist Chile.


   When President Carter won the 1976 election promising to reform the National Security State Bush begged him to let him keep his job. Carter refused and Bush vowed revenge. Over 40 ex and current CIA employees made up the CIA agents for Bush contingent during the Republican primary and the 1980 election. Reagan’s campaign manager was an old OSS hand Bill Casey who had also invented the tax shelter. He created his own team of spies that had moles inside the Carter Administration like Donald Gregg at the NSC a Bush loyalist. They set out to destabilize Carter. Their friends in the oil industry launched a full scale economic war on the US to create a phony oil shortage. Carter’s brother was lured into a Libyan arms deal and then exposed. Finally the Reagan campaign resorted to outright treason negotiating a deal with Iran for a huge amount of weapons in exchange for not freeing the hostages until after the election. This part of the scandal is so shocking (to most Americans) that media and academia have largely ignored all the evidence that has emerged over the years in support of it. It is known as the October Surprise. There is another theory called the deep October Surprise in which the US the UK and France and their allies with Savak and the Shah’s government intentionally helped install Khoemeini as preferable to a nationalist or socialist style government in Iran. The October surprise arms deal undermined the secular minded Iranian President Bani Sadr while elevating Khoemeni’s faction. The whole world has been reshaped in Reagan’s image neo-liberalism has triumphed at home and abroad. Reagan can never be allowed to be exposed as a traitor. The fact that it is accepted that his policies lead to mass murder and genocide around the world show the minor importance most westerners place on the lives of billions of third world people. To get excited or angry about such things is bad form.  No US president had ever been prosecuted for war crimes.


   The Iran Contra era can thus be seen from multiple angles. America’s War on the World. The National Security State vs the illusion of democracy.  The triumph of capitalism, the slashing of the social safety net. The taming of the media. The triumphant return to impunity for the CIA. The rise of Bush from CIA director to President. The mobilization of the Christian right and far right voters. The rise of the imperial presidency. The triumph of the executive branch over any form of checks and balances.The birth of the NED. 


   Iran Contra is part of an interlocking pattern of scandals, coups, wars and deep events that go back to the early years of the cold war and before. Particularly relevant are the coups in Guatemala and Iran, the Bay of Pigs, The JFK, MLK, and RFK assassinations, Vietnam, the secret war in Laos, Watergate, The Chilean coup of 73, The Letelier bombing,  GLADIO, Nugan Hand, Koreagate, the Ed Wilson affair, the EATSCO scandal, Iraqgate, WACL, BCCI, Inslaw. A rotating cast of characters making multiple appearances. People like E. Howard Hunt, Frank Sturgis, Ted Shackley, Thomas Clines, Richard Secord, and George H.W. Bush. The same names keep popping up. The never ending scandal of the CIA drug connection. The way things “really work” money laundering, fraud, corruption as standard operating procedure in the alliance between politicians, organized crime, intelligence, and big business that form the basis for the study of “Deep Politics”



   As I write it is the 35th anniversary of the unraveling of the Iran-Contra scandal. The Reagan administration was caught waging an illegal war on Nicaragua funded in part with profits from the sale of anti-tank and and anti-air missiles to Iran in exchange for freeing American hostages. Back in 1984 Congress had passed the Second Boland Amendment forbidding any aid or advice to the Contras after the CIA was caught mining Nicarguan Harbors and supplying the Contras with what the press dubbed an “Assassination Manual” a Phoenix program style guide to Psychological warfare. Congress was less offended by the Contras numerous war crimes then being consistently lied to about what the CIA were up to in Nicaragua. Casey had gotten them to agree originally to a 500 man force whose purpose was solely to prevent Nicaragua from arming the Salvadoran Guerrillas attempting to overthrow the mass mudering regime. In a couple years they had grown to 12,000 men. Congress passed the 1st Boland amendment forbidding the Contras from being used to overthrow the Nicaraguan government Reagan and Casey’s actual goal. Now by authorizing the Harbor mining without properly informing them Casey had made congress look like fools. The fact that the Contras operated like a death squad mutilating some village doctor for providing health care or a teacher for providing education were less important to congress.  


    The story of the National Security Council and Oliver North’s  role in waging an illegal war on Nicaragua had begun to leak in the press in 1985 thanks to journalists Robert Parry, Brian Barger and Alfonso Chardy. However when Congress had chosen to accept administration denials Parry’s editors at AP tried to kill the story. It was Lee Hamilton head of the House Intelligence Committee and who later chaired the Iran/Contra hearings who decided to trust North and ignore the investigative journalists. The media was secretly aware that Oliver North was negotiating the hostages release because some of the hostages were journalists but covered it up rather then risking sabotaging the deals. North was in fact in regular contact with Parry’s editors at AP on efforts to release AP journalist Terry Anderson. North was also a favorite source for journalists. North’s role at NSC was basically an open secret. There was also a civil suit filed by the Christic Institute in the wake of the La Penca bombing which hoped to expose a vast criminal conspiracy by ex-CIA and ex-Military who were acting as private contractors in the illegal Contra resupply operation and an even more illegal drug importation operation. On October 5th 1986 a plane carrying arms to the Nicaraguan Contras was shot down by a 14 year old Sandinista with a soviet surface to air missile. The cargo kicker a former Air America (the notorious drug smuggling CIA airline) employee Eugene Hasenfus was wearing a parachute and managed to jump out of the plane and parachute to the ground. He was captured and began to talk saying he was working for the CIA and naming “Max Gomez” and others working on the illegal contra resupply operation. Max Gomez turned out to be the notorious Felix Rodriguez a drug dealing Cuban CIA man who’s history went back to the Bay of Pigs invasion of Cuba and who had helped capture and kill Che Guevara in Bolivia  reportedly keeping Guevara’s severed hands in a jar. He had served in the Phoenix program in Vietnam under Vice President George H.W. Bush’s National Security adviser Donald Gregg. President Ronald Reagan had personally ordered his National Security Adviser Robert McFarlane to find ways to circumvent the Boland Amendment and keep the Contras together “Body and Soul”. McFarlane had put Oliver North in charge of the illegal Contra resupply operation The scandal  went all the way to the top. Likewise by following the threads of the careers of men like Felix Rodriguez it was possible to unravel a great deal of secret history.


   Congress had ironically agreed the summer of 1986 restore 100 million in lethal aid to the Contras and the Reagan Administration was desperate to cover up their blatant violation of the Boland amendment in case congress decided to change it’s mind. There was a 3 month delay before the funds became available so the illegal contra resupply operation had continued. Elliot Abrams who had been supervising the whole illegal contra resupply as the State Department representative on the Restricted Interagency Group along with the NSC’S Oliver North and the CIA’S Alan Fiers. Elliot Abrams was sent out to the press and Congress to deny everything. Abrams was an expert in lies and denial his prior role had been Assistant Secretary of State for Human Rights when he pretended that El Salvador and Guatemala were showing progress on human rights when they were waging a campaign of mass murder and genocide. His lies got honest reporters like Raymond Bonner reassigned for exposing massacres diring the Central American dirty wars. 


  Once again many in the media fell for Elliot Abrams categorical denials of any connection between the Reagan administration and the contra resupply operation that Hasenfus exposed. Generally the US media parrot the line put out by the US state department which is why a supposedly independent press are in practice government propagandists. Journalists may be interested in exposing the truth but their editors or producers prefer a cozy relationship with the national security state. They all go to the same dinners and cocktail parties. Luckily before before contra resupply story story could be killed news of the Iran arms for hostages deals were published in the Lebanese newspaper Al Shiraa and once the western press picked up on it the story exploded. Reagan had publicly called Iran murder incorporated, it’s allies Hezbollah in Lebanon had bombed the US embassy killing a dozen CIA middle east operatives, kidnapped the CIA station chief William Buckley, then bombed the US marine barracks killing 241. Iran had been officially labeled a terror sponsor by the US which was waging an international campaign Operation Staunch to force it’s allies to stop selling arms to Iran. Unlike the illegal war on Nicaragua which was in line with Reagan’s public rhetoric, the Iran arms deals had the potential to alienate Reagan’s right wing base and if the facts had been known and if there had been the political will, President Reagan could have been impeached or even sent to prison for violation of the Arms Export Control Act. At first the Reagan administration tried it’s usual strategy of denial but it soon became clear that scapegoats and limited hangouts would be required. The current Attorney General Ed Meese a key adviser to Reagan for decades took charge of the coverup. He conducted a brief investigation and his aides discovered a memo from Oliver North on plans to divert funds from the Iran Arms Sales to the Contras. Meese checked with North, CIA director Bill Casey, and National Security Adviser Admiral John Poindexter who all agreed that they would shield Reagan by pretending he didn’t know about the diversion. It became known as the “Diversion Memo” and Meese used it as a giant diversion from Reagan’s illegal authorization of Arms sales from Israel to Iran in the fall of 1985. Instead the issue became did the President know about the diversion? “What did he know? and When did he Know it?” was the media refrain echoing Watergate coverage. North was all to happy to play the political fall guy taking full responsibility although when criminal charges loomed he would later reveal that Reagan knew everything he was doing. By then however the press were again told to kill the story by their editors. Robert Parry at Newsweek was told in 1989 the North trial wasn’t newsworthy. George H.W. Bush was now president thanks to the inability of the press, the legislative and Judicial Branches to get to the bottom of the Iran Contra scandal in which Bush was deeply implicated. 


   Returning to late 1986 President Reagan appointed the Tower Commission to confirm Meese’s version of events creating the myth of a rogue National Security Council which Reagan had failed to properly supervise. Then the House and Senate held a circus like joint investigation of the Iran Contra scandal held on nationwide television the democrats aimed to embarrass rather then destroy Reagan but their strategy backfired when the telegenic Oliver North was embraced as a hero. The republicans however decided that the only crime had been congress’s passage of the Boland amendment and their attempt to meddle in the President’s control of foreign policy. That was the view of future Vice President Dick Cheney who was then a House Rep. for Wyoming serving on the Iran Contra committee.  In 2004 at the height of the war on terror he would cite the minority report on the Iran-Contra scandal and it’s argument for absolute executive power as a blueprint for the Bush Administrations policies.  The price of this failed spectacle which catapulted North to stardom was congress grant of limited immunity to North and Poindexter for anything they might say. This would later sabotage the criminal investigation of the Iran Contra scandal. The Christic Institute lawsuit was dismissed and they were forced to pay 1 million dollars in damages. The Kerry Committee investigated the Contra drug connection but the media ignored or mocked him. An Independent Council was appointed in December of 1986 they would conduct a 6 year investigation they would gradually unravel the true story of Iran Contra but they faced non-stop obstruction from the intelligence community,  Department of Justice, and the court of appeals which overturned the convictions of North and Poindexter. Finally President George Bush whose Iran/Contra role was becoming ever more exposed decided to pardon a dozen Iran Contra figures after loosing the 1992 election to Bill Clinton who as Governor of Arkansas was tied to CIA man Barry Seals contra resupply and drug smuggling operations. Needless to say President Clinton did not want anyone digging into Iran Contra either. The story was revived briefly by the heroic journalist Gary Webb his career was destroyed, and he committed suicide. Ironically however thanks to his work the Contra drug connection a part of the scandal many in the media and Congress wanted to suppress is now the most well known aspect of the scandal.


   Having laid out the basics of the scandal I’ll provide some historical background. Early in the 19th the US had proclaimed the Monroe doctrine which while framed as opposing European imperialism in the Americas was in reality the US laying claim to the entire hemisphere. As it’s power grew it began to enforce these claims with bribery, invasions and coups. In the 19th century Nicaragua was embroiled in a civil war between the liberals and conservatives. William Walker had attempted to conquer northern Mexico but failed. The Nicaraguan Liberal party hired American mercenary William Walker and his “Fillibusters” to intervene but he decided to seize power and institute slavery he ruled Nicaragua for a year as a dictator but was forced out when Nicaragua’s neighbors invaded to expel him. He died when he tried to invade and seize power again. Shortly before World War 1 the US had invaded and occupied Nicaragua for nearly 20 years. Revolutionary General Augusto Sandino would fight a Guerrilla war to attempt to expel them. Nicaragua would become a laboratory for the use of air power in a counter-insurgency campaign. Sandino was able to survive the bombs and the endless manhunt by US marines outsmarting US forces. However once he signed a peace deal he was assassinated. The US had trained the Nicaraguan National Guard to carry out the dirty war against the Nicaraguan people. They appointed their lackey Anastasio Somoza as it’s head and he would soon seize power his family ruling Nicaragua for decades until the 1979 Nicaraguan Revolution. Somoza would be a key backer of the coup to overthrow Jacobo Arbenz in nearby Guatemala in 1954. The coup in Guatemala would form a blueprint for the later failed Bay of Pigs invasion and later the attempt to overthrow the Sandinistas in Nicaragua. 


    However the Dirty war on Nicaragua would be far more brutal and last far longer then the earlier campaigns. After the Cuban Revolution the US had spent  2 decades training Latin American countries to wage dirty wars on their people. In each country Intelligence, agencies, the Military, and the police waged a coordinated campaign of kidnapping torture and assassination. In the Southern cone countries Operation Condor would unite the regimes in one vast dirty war on the continent. This would occur in the wake of the CIA backed Chilean coup of Pinochet against Allende in 1973. The roots went back to the beginnings of the cold war and the chain of fascist coups had started much earlier in Brazil in 1964. Brazil, Chile, Argentina, Ecuador, Uruguay, Bolivia, and  Paraguay were the first 7 members of a network of countries that carried out a coordinated campaign of assassination, torture, and kidnapping. In the 1970’s this was increasingly combined with installing neoliberal shock therapy economic reforms in Chile and Argentina. Tiny Central America was home to even worse horrors as hundreds of thousands were killed in dirty wars in Guatemala, El Salvador and Nicaragua under Somoza. Guatemala’s campaign of terror had begun when a wave of military uprisings swept the country in protest over the training of Cuban exiles for the upcoming bay of pigs invasion in camps in Guatemala. By the late 60’s it had evolved in a revolutionary armed struggle and Guatemala was flooded with CIA and special forced advisers to wage a scorched earth campaign to destroy the Guerrillas. In El Salvador after a huge massacre was conducted by the fascist dictator General Maximiliano Hernandez Martinez of Indians and suspected communists that killed 32,000 the government had faced little opposition. The US still sent in it’s advisers in the 1960’s and by the 1970’s their endless murder of political opponents and labor had forced the opposition to take up arms. In Nicaragua a revolution had begun in the mid 1970’s and Somoza had waged a brutal scorched earth campaign in an attempt to hold onto power. But on July 17, 1979 he was forced to flee the country and for the first time since Cuba in 1959 a revolution had succeeded in overthrowing a brutal US backed dictator. 


   The Carter administration had cut off aid to Somoza because of his outrageous war crimes and refusal to negotiate with the opposition. Somoza turned to Israel for arms. Israel was also playing key roles in the dirty wars in El Salvador and Guatemala providing arms and advisers helping Guatemala carry out genocide against the Maya Indians. 500 of Somoza’s national guard who had carried out numerous war crimes relocated briefly to Guatemala taking shelter with the “Godfather of the Death Squads” Mario Sandoval Alarcon. They were determined to follow the example of the Cuban exiles and wage covert war on revolutionary Nicaragua. Soon they were joined by Argentine advisers fresh from their dirty war and having recently carried out the Bolivian cocaine coup arrived to advise these contras or Counter Revolutionaries. The Carter administration hoped to use aid as leverage to control Nicaragua’s new government. The CIA was doubtless already backing the Contras who named themselves The September 15th Legion and began carrying out kidnappings, terrorism, and drug smuggling. Reagan would be elected in part through illegal campaign donations from Central American oligarchs in Guatemala and El Salvador who had been promised their full support in waging their dirty wars by former DIA dir General Daniel Graham and General John Singlaub a military/CIA man and future World Anti-Communist League head. Reagan would keep his promise vastly escalating the wars in Central America. 300,000 would die in Guatemala and El Salvador in the name of preventing “another Nicaragua.” Torture rape and mass murder were standard operating procedures. Like in Nicaragua the administration would lie to congress to carry out the dirty wars in Guatemala and El Salvador and constantly find ways to circumvent any limits they put on US support. This never became a scandal. In Nicaragua 35,000 would perish in attacks by the contra death squads. Casey put Duane “Dewey” Clarridge in charge of Latin America and he ran the Contras until turning them over to Oliver North in the wake of Boland II. Clarridge was transferred to head the European Division where he would help arm the Contras and facilitate the Iran arms deals.


   To summarize the cold war history of the middle east would be impossible in so short a space and would require months or years of extra research. The US’s backing of Israel alienated the entire region. The US  scheme to create a middle eastern version of NATO and it’s constant coups to install pro-western regimes would backfire. In Iran in 1953 the CIA overthrew Prime minister Mossadegh and installed the shah. He had been branded a communist for nationalizing the British owned Anglo-Iranian oil company. He had expelled all the british spies and diplomats after their failed coup plots and attempt to lay siege to the country to prevent it’s selling oil. The British were forced to turn to the CIA and after the coup they turned over half of Iran’s oil over to US corporations. The CIA and Mossad trained the Shah’s secret police the Savak to torture and murder their opponents.  Iran became a top customer of the American military industrial complex. Richard Secord would serve as an air force adviser in the 1960’s and then after serving in Vietnam and Laos return in the late 1970’s as head of the US military assistance program. He would meet various corrupt Iranian businessmen with intelligence ties that would later appear in the October surprise and Iran Contra scandals. Then he would supervise arms sales at the Pentagon. In Egypt the CIA recruited Nasser’s successor Sadat. He would sabotage the 1973 Arab Israeli war, expel the soviet advisers from Egypt and then President Carter convinced him to completely betray the Arab cause by signing a peace deal with Israel. His reward was a massive increase in weapons sales from the US. Secord at the Pentagon was a silent partner along with Ted Shackley in Ed Wilson and Thomas Clines EATSCO a transport company created to profit off the Egyptian arms sales. However Sadat’s peace deal was an obstacle to plans Israeli plans to invade Lebanon. His security were trained by American advisers connected to EATSCO and the Muslim Brotherhood assassinated him. Mubarak who was also a key figure in the egypyian side of skimming money from the arms sales was installed as Egypt’s new leader. Ed Wilson in the late 1970’s would be part of a scheme to supply huge amounts of C4 explosives and special forces advisers to Libya in order to gain intelligence to the revolutionaries and nationalists that Gaddafi allowed to train there and in the hopes of stealing soviet weapons systems. Wilson was carrying out an off the books operation for the CIA but they denied any connection to him. His business partners Secord, Shackley, and Clines had grown envious of the vast wealth he had amassed running CIA front companies. Once Reagan became president Libya was falsely blamed for a number of terrorist attacks like the Belle disco attack and the Lockerbie bombing. The US would wage a proxy war on Libya via Chad, and shoot down Libyan aircraft and boats attempting to defend their territorial waters during American war games. The campaign would culminate in a bombing raid aiming to assassinate Gaddafi which would wound his wife and 7 children and kill his adopted baby daughter. Dozens of civilians would also be killed. This occurred in 1986 during the height of the Iran Contra scandal and Oliver North who was also the terror Czar was a key planner of the attacks. Gaddafi would survive until the 2011 NATO war when Libya was bombed into submission while Al Qaeda contras seized the country. 


   Lebanon was another country that was key to understanding the Iran Contra affair. Israel saw it as a key testing ground for it’s Oded Yinon style plans to balkanize the middle east. Lebanon was divided along religious lines and it’s political parties each represented a different faction. The Christians minority held disproportionate power, the Sunnis were divided into pro-western and pro-arab nationalist factions, the Shiite’s were under represented. At one point in the mid 70’s left wing Arab Nationalists were on the verge of seizing power and Kissinger had convince Hafez Assad to prevent their victory in order to prevent an Israeli invasion. Lebanon was home to a huge number of Palestinian exiles who had been forced to flee Jordan after the events of “Black September” when Jordan had launched a brutal crackdown. The Israelis encouraged the Christian Fascists to seize power and failing that break away and form their own country. This lead to the Lebanese civil war. In 1978 Israel invaded southern Lebanon but the Carter administration convinced them to withdraw. In 1982 Israel would invade again this time with the support of the Reagan administration they kidnapped a number of visiting Iranian officials and of course kidnapped imprisoned and tortured huge numbers of Lebanese just as it has arrested  imprisoned and tortured untold numbers of Palestinians over the decades. In 1982 Iran sent the IRGC into Lebanon to help train Hezbollah. Israel captured Beirut and installed the Christian Phalange as president. He was assassinated and in revenge thousands of Palestinians cordoned off by the Israeli army were massacred by the Christian Phalange in Sabra and Shatila. 


   The US pretended neutrality but sided with Israel. The marines were sent in and the US navy began shelling Lebanese villages. In 1983 Hezbollah chased the US out with a series of bombings. In 1984 it began kidnapping Americans to use as leverage to free the 17 Da’awa prisoners in Kuwait who had attacked French and US targets there. They had also kidnapped the CIA station chief William Buckley who was tortured into revealing decades of dirty secrets. The stage was set for the Iran arms for hostages deals. Of course the stage had already been set during the October surprise negotiations that got Reagan elected in the first place. Israel would be the middle man in the October surprise arms deals and the early Iran Contra arms deals. Egypt would be the middle man in the Iraqgate arms deals. The course of the Iran-Iraq war would be prolonged as the US supplied arms to both sides nearly 1 million Iraqis and Iranians would die. The US supplied Iraq Intelligence so it could use it’s chemical weapons to best effect against Iran. Then in 1986 the us began supplying  Iran with intelligence that shifted the balance of the war.  The fallout of the Iran Contra affair would lead to the first Gulf War. President Bush had started authorizing huge loans and weapons shipments to Iraq while encouraging Kuwait to provoke Iraq, Bush had the State department give Iraq the green light to invade Kuwait. followed by sanctions which killed another million, followed by the invasion and occupation of Iraq, and the intentional creation of a sectarian civil war that would claim at least a million more lives.


   The Iran Contra era saw the seeds planted that would more recently bloom into many more recent wars. The invasion of Iraq, the destruction of Libya, the failed attempt to destroy Syria. In the case of Syria the US and Israel had helped launch a muslim brotherhood uprising in 1983 with the aid of Iraq that would eerily mirror the Syrian war of 2011 to today. And then of course their was Afghanistan where the US was again arming drug dealing contras. Socialists Afghanistan was destroyed Afghanistan was taken over by warlords who battled each other eventually the Clinton Administration and Pakistan had the Taliban seize control of the country. The  Iran Contra were a key period in the origins of the war on terror with Benjamin Netanyahu holding the Jerusalem Conference on anti-terrorism in 1979. Casey North and even Secretary of State Schultz all backed plans to form counter-terror squads to carry out “preemptive strikes” on groups labeled “terrorists” (often legitimate resistance groups and left wing guerrillas) Their were plans to declare martial law and round up hundreds of thousands of Central American refugees and tens of thousands of peace activists in the event that the US invaded Nicaragua. Of course the US has been waging war on Central American refugees for decades. However after 9/11 these Iran/Contra era plans were dusted off to form the basis of the patriot act, the rounding up of thousands of innocent muslims and the total surveillance of everyone on the planet. Not only that but many key figures in Iran Contra were put back into power in the George W Bush administrations. Plus of course the creation of a global Phoenix program or Operation Condor a system of kidnap, assassination and torture that is applied worldwide. All in the name of battling an al Qaeda that within ten years it was quite openly supporting. Thanks to the Reagan era victory of “Public Diplomacy” over investigative journalism no one in the media dared point out this little fact. In truth US soft power proved more effective then covert war. It was soft power in the form of the NED interference in the Nicaraguan election of 1990 that brought down the Sandinistas. It was NED soft power not the war in Afghanistan that destroyed the Soviet Union and insured the electoral victory of neoliberalism. The era of the color revolution had begun. The NED had been another of Bill Casey’s projects.


   The victory of Reagan and Bush in the cold war has lead to our current dystopian age. American hyper power is free to rampage around the globe destroying country after country. Always we are reminded that there is no alternative to capitalism. That we should just let the market decide. If a country manages to resist US covert wars and coup plots it will have it’s economy throttled by sanctions like Venezuela and Syria. Today historians have begun to talk of the world having suffered a 50 year counter revolution with seemingly no end in sight. This is the ultimate legacy of the Iran Contra era.


   


 

 

Sources


My next article will include an extensive list of Iran Contra books I used. 


For now I’d like to recommend just two.


Malcolm Byrne’s Iran-Contra: Reagan’s Scandal and the Unchecked Abuse of Presidential Power is the definitive mainstream version of events.


Lost History: Contras, Cocaine, The Press & Project Truth by Robert Parry gives many details left out of mainstream accounts. He has an in depth discussion of the Contra drug connection as well as the role of drugs in Panama and Honduras. He also discusses the Reagan Administration Public Diplomacy campaign that destroyed investigative journalism in the US. 


Malcolm Byrne lecture about his Iran Contra Book


https://youtu.be/xUu8f9rBh_g


A Robert Parry Interview


https://youtu.be/_X3v4Di8YyM



A discussion of the October Surprise


https://youtu.be/2oTY7fQuieY



My earlier series on Iran Contra


Part 1 The Secret Team


http://anti-imperialist-u.blogspot.com/2016/05/irancontra-pt-1-secret-team.html


Part 2 World War 3


http://anti-imperialist-u.blogspot.com/2016/06/irancontra-pt-2-world-war-3.html

Part 3 The World Anti-Communist League Part 1


http://anti-imperialist-u.blogspot.com/2016/07/irancontra-pt-3-wacl.html


Part 4 The World Anti-Communist League Part 2


http://anti-imperialist-u.blogspot.com/2016/08/irancontra-pt-4-wacl-2.html


Ted Shackley a Life in the CIA


http://anti-imperialist-u.blogspot.com/2016/12/ted-shackley-life-in-cia.html


Monday, August 23, 2021

The Nugan Hand Bank: CIA, Drugs, Guns & Fraud

 The Nugan Hand Bank Scandal:

Drugs, Guns, Fraud, Murder, and the CIA

 

 

 

 

   The Nugan Hand scandal is largely unknown today and was largely ignored by the press in the United States at the time. The honorable exception being Jonathan Kwitney who later wrote the definitive book on the bank “The Crimes of Patriots.” In Australia it was headline news, leading to a series of investigations that ended in cover-up.   The story exploded and the bank collapsed when its co-founder Frank Nugan Australian tax attorney turned merchant banker was found dead on an isolated highway, an apparent suicide. He had shot himself with a rifle and on his corpse were found a bible, a list of 21 suspected drug smugglers, former CIA director William Colby’s business card was in his wallet and Colby’s name was also scrawled on a piece of paper along with the head of the House Armed services committee Bob Wilson. Frank Nugan’s partner was Michael Hand a veteran of the US Special Forces in Vietnam and Laos who had been recruited into the CIA. Hand would become one of the world’s most wanted men when he escaped Australia six months later. That didn’t stop the CIA from sending him to Honduras to train the elite 5th Puma Battalion that helped the Contras terrorize Nicaragua. This was not so surprising since many of the key figures in the Iran-Contra scandal had been involved in the Nugan Hand scandal, including Richard Secord, Thomas Clines, and Theodore Shackley along with their former partner Ed Wilson. Wilson would later be framed as a rogue CIA agent so that his partners could gain control of his CIA front companies. A number of “former” CIA officers worked for the bank like William Colby, the bank’s Washington, DC lawyer. The bank also employed enough Admirals and Generals to launch a war including Admiral Earl Yates, General Edwin F. Black, General Leroy Manor, and more key masterminds of the bloodbath carried out by the US in South East Asia. With such well-respected war criminals as executives, Nugan Hand found it easy to swindle American civilians and servicemen worldwide. In 2015 true crime writer Peter Butt managed to track Michael Hand down living under a new CIA supplied identity in Idaho while Butt was working on his book “Merchants of Menace.” It was briefly front-page news but Hand remained untouchable for the authorities.

 

Nugan Hand was one of the more notorious examples of a CIA bank and all that entailed. As Nugan Hand was on the rise its infamous predecessor Paul Helliwell’s Castle Bank was finally being shut down after decades of impunity serving the mafia and corrupt politicians like Richard Nixon. It also served the CIA in a money laundering drug network reaching from South East Asia to Latin America as well as playing a major role in covert wars in Vietnam and against Cuba. BCCI the next major CIA banking scandal (except for the S&L debacle in the 1980s, also CIA and drug fueled) was founded the year before Nugan Hand. Eventually BCCI was used to fund the birth of Al Qaeda, launder money for drug syndicates and terrorists worldwide and support what became the Iran/Contra scandal. Of course the more well-known supposedly respectable banks, corporate banks, also do the CIA dirty work while laundering billions in drug money. Nor did the CIA invent the gameOne of the world’s largest banks, Hong Kong and Shanghai Banking Corporation (HSBC), was founded by the British in the 19th century, using the massive profits from the opium trade. Hong Kong, then a British crown colony, remained a major hub in the global heroin traffic. 100 years later and Nugan Hand opened one of itsmore important branches there. In taking control of the South East Asianheroin networks the CIA was merely following in the footsteps of France. 

 

 

Nugan Hand was a typical CIA bank. Money laundering for drug syndicates, bribery of politicians and police, arms dealing, coups, covert warfare, massive embezzlement, fraud, tax evasion, murder, spying, terrorism comprised the range of utility to the CIA. What made it unusual was that it was not really a bank at all and until 1979 none of its executives had any banking experience. It had helped topple Australian Prime Minister Gough Whitlam’s government in a soft coup in 1975. Founded in 1973 in a few short years it expanded worldwide with branches in Australia, the Philippines, the US, Thailand, Burma, Hong Kong, Panama, the Cayman Islands and more. In Thailand its office was in Chiang Mai,then the heroin capital of the world, opened solely to help launder drug money and finance drug dealsNugan Hand shared its Chiang Mai office with the Drug Enforcement Administration (DEA). It supplied weapons for apartheid South Africa and its CIA backed allies in Angola; armed apartheid Rhodesia (now Zimbabwe) and sold arms to Indonesia as it waged a genocidal war in East Timor. It helped Marcos in the Philippines, and the Shah of Iran move their money offshore. At its height it appeared to be moving a billion dollars a year yet after its collapse it seemed to have been bankrupt all along. Honest depositors lost their life savings, while drug syndicates received partial re-payment, and Nugan Hand executives managed to steal a fortune. To this day no one knows where all the money went.

 

Nugan Hand was named after its two founders. Frank Nugan’s parentswere both German Jewish refugees who met in Spain during the civil war after fleeing the Nazis. They married in Palestine and then moved to Australia preferring to tell people they were Spanish and concealing their Jewish origins. They became fruit growers in Griffith Australia. Their sons Frank and Ken Nugan would later run their Nugan Fruit Group, which by the 1960’s was entangled with the Calabrian Mafia who had turned Griffith into a major marijuana growing hotspot. The Nugan Hand bank would owe its downfall to an investigation of the Nugan Fruit Group’s fraud, intimidation, and ties to the murderers of an anti-drug politician who had been targeting local marijuana growers. Frank Nugan was an egomaniac from an early age constantly wanting to be the center of attention, loving to push people over the edge by antagonizing them until they lost control. He lied and manipulated people like a textbook sociopath but suffered severe mood swings. He could be a charmer or an arrogant bully, brilliant or a complete fool. He went to Law school in Australia then studied law getting arcane degrees in the US at UC Berkley and studying in Canada although failing to get his PHD. He returned to Australia and conned people into believing that he had helped rewrite the Canadian corporate tax code. He got a job at a major law firm but soon quit because he saw little chance of advancement since he wasn’t from one of Australia’s more elite families. He set up a mining company that went nowhere which soon was interlocked with Michael Hand’s land speculation scheme that also seemingly went nowhere. The two had met through the actual mastermind of the Nugan Hand scandal Bernie Houghton. At first glance Houghton was merely an American bar owner in the heart of Sydney Australia’s vice district King’s Cross, a mecca for drugs, gambling, and prostitution. Houghton was in reality a CIA officer equally at home and well connected in the underworld, politics, intelligence and the military and seemed to be Michael Hands case officer.

 

Michael Hand was born in the Bronx, New York on 8 December 1941, the day after Pearl Harbor. His mother died mysteriously when he was a child falling out of a 10-story window in an apparent suicide. This left him extremely driven. He studied for a year to be a park ranger, and thenmanaged a sports school before enlisting in the military in 1963. He was quickly selected for the Special Forces and trained at Fort Bragg befriending fellow recruit Douglas Sapper who would later be recruited into Nugan Hand providing muscle for couriers. In February 1965 both were sent to Vietnam. Hand was stationed at Dong Xoia, a Montagnard (Vietnamese hill tribes selected by the CIA as proxies and trained by special forces) camp built along the Ho Chi Minh Trail (the road troops and supplies traveled from North Vietnam into South Vietnam.)  It was typical ruthless cynicism to locate the camp of only 400 Montagnard troops and 19 American Special Forces advisers and Seabees engineers where it was certain to be attacked and overrun. After a couple months the inevitable occurred 1,500 NLF attacked and overran the camp. Michael Hand went into a berserker rage killing until his ammo ran out then gutting a man with his knife and ripping his head off with his bare hands. He also managed to rescue a few injured Americans and became an instant war hero in the press. He won the Distinguished Service Cross. Soon he was recruited into the CIA and sent to Laos to train the Hmong tribesmen who like the Montagnards had been selected by the CIA as proxies and trained by Special Forces operating under USAID cover.  The US had agreed to leave Laos neutral and remove any US military presence. Promises it broke,leading to the CIA’s secret war in Laos. The Hmong had traditionally grown opium and the CIA had installed its man Vang Pao as their leader, helping him build a heroin factory to process the opium and flying the heroin out for him on their Air America flights even giving him his own airline. The Laotian military and Laotian politicians were equally involved in the heroin trade. A series of coups in Laos had just as much to do with transferring control of the drug trade as they did with the CIA goal to push the country into civil war by overthrowing neutralist governments and ultimately provoking the left Pathet Lao forces to fight back.  Michael Hand was soon at home in the world of the deep politics of the global drug trade advising the Hmong and also working closely with the Air America pilots. He met Theodore Shackley and Thomas Clines who both served tours as Chief of Station in Laos. Clines taking over for Shackley when Shackley became Chief of Station in Vietnam. Hand and Houghton would both be spotted with C-47’s full of heroin in various Southeast Asian locales long after they had supposedly retired. It was while in Southeast Asia that Hand was recruited into an Australian real estate scheme eventually known as Ocean Shores, one of whose backers was the singer Pat Boone. For my younger readers in the early days of Rock & Roll white radio stations refused to play black groups so Pat Boone would re-record their songs in his soulless manner epitomizing uncoolness for a generation. Boone was also a frequent guest on Christian television. Thus it is amusing to discover him involved in Michael Hand’s shady land deals that were a cover for heroin smuggling. Michael Hand returned to America then mysteriously decided to move to Australia telling them he planned to become a simple farmer. Most likely it was merely his latest assignment for the CIA and he was being assigned to assist Bernie Houghton.

 

A former military man and tough talking Texan Houghton was a CIA man operating under civilian cover although this has never been officially confirmed. After serving in the military he made his money in Korea and Vietnam selling war surplus and running bars and sex traffic for American troops. He was sent in advance to Australia to set up 3 bars and restaurants in Sydney Australia. He was already in on the secret decision to use Australia as a place to send troops on R&R (Rest & Relaxation.) Upon arriving in Australia he was instantly hired by one of the most wealthy and powerful men in Australia Sir Paul Strasser, a real estate tycoon. Sir Paul Strasser was part of the same social circle as Rupert Murdoch. Another of this same circle Sir Peter Abeles, the wealthy shipping tycoon, would later act as one of Michael Hand’s patrons.

 

Apparently it was a matter of national security that the troops would party with proper supervision that the CIA or military would control the prostitutes because their was no telling what horrific or embarrassing secrets they might reveal whether about the industrial scale mass murder, the massive Phoenix program, the secret wars in Laos, Cambodia and Thailand or the massive drug trade that interconnected it all. Thus before the troops even arrived in Australia Houghton would arrive introduced by the commanding officers and the troops would be told to head for Houghton’s Bourbon and Beefsteak. Once they were at the bar they could obtain anything from illegal drugs to prostitutes or sent to one of Houghton’s friend’s illegal casinos. There was a ping ball sex show upstairs. The food on the other hand was terrible. Houghton was gay and ran a network of young spies former lovers and ex-roommates. He had ties with politicians in Australia, the US and around the world. His bar was also a favorite hang out of Australian gangsters, crooked cops and American mafia-linked figures forced to flee the US. Mob lawyer Harry Wainwright was one of Houghton’s cronies. Wainwright had been granted Australian citizenship despite the fact that the FBI was about to arrest him. His request was approved by the same immigration official who admitted Michael Hand.  Houghton was a middleman, a fixer embodying the interconnections between, business, crime and intelligence. He was the bridge between the worlds of corrupt businessman Frank Nugan and drug world spy Michael Hand. Houghton had also been granted a security clearance by the ASIO, the Australian version of MI5 or the FBI and was allowed to make secret trips without a visa to various Southeast Asianlocales. 

 

 

Once in Australia, Michael Hand began working on his land scheme selling worthless plots of land to his military buddies, Air America pilots and Australian customs officials. When Nugan Hand was at its height the legend was it was funded from the profits from Hand’s real estate schemes and Frank Nugan’s Mining scheme. Yet Hand’s Ocean Shores was mostly worthless, as the land was never developed. The plots were sold for around ten thousand a piece then later bought back at a fraction of the cost and resold in Panama. Overtly it was small time but at least one of the buyers, Michael Hand’s friend Kermit “Bud” King, built an airstrip that his Thai housekeeper informed police was used to smuggle heroin. Ironically it was King who brought Hand in on the Ocean Shores scheme to begin with. After coming to the attention of the crooked drug cops King quickly wound up dead. By then Nugan Hand had been founded and four days later Michael Hand “resigned” from Nugan Hand claiming he was going to become a turkey farmer. In reality it was a cover for a year long mission to sell arms to South Africa and Rhodesia for the CIA’s covert wars in Angola, Namibia, Mozambique, and its propping up of apartheid in violation of US arms embargoes and later of the Clark amendment. King and Hand had been part of a drug ring and King was probably murdered when word leaked that the FBN was onto him. Hand was out of the country when King died however just as he was when Nugan later died. 

 

It was via Ocean Shores, which repeatedly changed its name like most of the Nugan Hand Shell Companies, that Nugan and Hand became intertwined. Nugan’s secretary was on the board of directors. Soon Ocean shores loaned Frank Nugan money in exchange for shares in his mining company. These are some of the basic ingredients in white-collar crime, the creation of multiple shell companies, the transfer of worthless stock, the issuing of loans that are canceled and never repaid. Worthless assets are traded from shell company to shell company creating the illusion of valuable assets, which are used as collateral for loans that are never repaid. A complex web of transactions boils down to a sort of shell game or three card monty. The whole thing is so complicated and boring that it is nearly impossible for the Press to explain it to the public or for a prosecutor to explain to a jury. So the game goes on. Bank crash follows bank crash, real estate bubble follows real estate bubble and people think it is all as natural as the change in seasons. 

 

Nugan Hand was founded in July 1973. The lawyer and the Green Beret may have been selected in part to form the bank because their names gave the bank an Asian sound. Neither had any banking experience but Frank Nugan was a brilliant financial conman. He claimed that his knowledge of money markets allowed the bank to offer an extra 2% of interest to depositors. Nugan was also able to convince the gullible that his tax evasion schemes were all perfectly legal. In reality the bank operated on two levels and depositors funds were used as a slush fund to enable the bank to carry out its real work of illegally moving money overseas for drug syndicates and tax evaders. Frank Nugan had created a simple strategy he called “The Contra”. A drug dealer would make a deposit in Nugan Hand Sydney and then Nugan would call ahead to one of the Asian branches and tell them to give the client an equal amount of money when he arrived in a couple days, minus the commission of up to 22%. The second transaction was off the record so it would appear no money had been moved. The dealer would use the cash to buy drugs and then smuggle them back to Australia perhaps for shipment on to the US or elsewhere. The same system was later used to fund assassinations or to bribe politicians. There were of course more complex schemes involving fake loans and shell companies. In the 1970s most countries including Australia had strict foreign exchange rules forbidding export of capital overseas. Nugan came up with a number of schemes to both move money overseas and to create tax shelters to cheat on taxes. The CIA was very interested in controlling the flow of this offshore wealth since it would provide them with leverage over Nugan Hand clients which eventually included Thai generals, Laotian princes, dictators like the Shah of Iran and Ferdinand Marcos in the Philippines as well as Saudi Princes.

 

On 11 November 1975, a soft coup toppled Prime Minister Gough Whitlam. For decades the CIA had worked with the ASIO that it had helped set up to manipulate the Australian political scene. They funded the Liberal-Country Coalition. The CIA also manipulated the unions. Whitlam had dared to complain about CIA ties to his political opponents. He had already angered the US by opposing the war in Vietnam and withdrawing Australian troops. In March1973 Whitlam had taken the extraordinary step of having the Attorney General Lionel Murphy lead a raid on ASIO headquarters. The CIA was outraged that its secrets had been exposed in the process. Even more important to the CIA and the US national security state was the huge listening post it had built at Pine Gap. It was used to monitor electronic communications across the entire region, receive spysatellite signals, and relay orders to the US atomic submarine fleet. It had been built under the false cover story that it was part of the space program. Whitlam worried that it could make Australia a target in a atomicwar and was outraged to discover his own intelligence agencies had lied to him and told him its head Michael Stallings was with the Department of Defense and not the CIA. Worse Stallings was renting a house from the right wing head of the Country Party Doug Anthony. Whitlam requested a list of all CIA agents operating in Australia but his own intelligence agencies were more interested in maintaining friendly relations with the CIA than in obeying the head of Government. 

 

Early in 1975 Whitlam further alienated both Australian and US intelligence when he fired to head of Overseas Intelligence for lying about Australia’s role in the genocidal war on East Timor, which would eventually claim hundreds of thousands of lives. In December 1975 the Pine Gap treaty was up for renegotiation. Whitlam had to be removed before he could interfere further in the CIA’s schemes. The exact role of the Nugan Hand bank in the coup is unclear but Houghton was almost certainly involved. The ASIO and the CIA chief of station, John Walker, had granted him a security clearance. In Australia, John Walker, who transferred to Israel shortly before the coup, and the new CIA chief of station, Milton Corley Wonus spent long hours at his bar, the Bourbon and Beefsteak. Houghton also had close ties to people at the Union Bank of Switzerland (UBS) that helped frame members of the Whitlam government. The Whitlam Government was destabilized in a way eerily similar to the recent coup in Brazil. The CIA and ASIO leaked information to the press including a forged telex that implicated the Labour government in the “Loans Scandal” that brought down first the treasury head and then the energy minister. Whitlam began to slide in the opinion polls and the opposition decided to force an early election by refusing to pass the budget. However Whitlam was able to mobilize opinion against this attempt to paralyze the government and it no longer appeared certain he would lose in an early election. Drastic measures were needed. On 8 November 1975, Theodore Shackley, by then CIA assistant deputy director for operations sent an ultimatum to ASIO on Whitlam claiming that he was endangering the CIA by daring to expose their activities in public. In CIA parlance Whitlam was exposing sources and methods and was a dangerous threat to national security and if he weren’t dealt with the CIA would cut ties to Australian intelligence. Shackley was backed in this ultimatum by Henry Kissinger himself. Only three days later on 11 November 1975, John Kerr the Australian Governor General (the representative of the British crown), untilthen a largely ceremonial post, removed Whitlam from office due to an obscure power that had never been used before. Kerr had close ties to the OSS, the predecessor to the CIA, and had spent decades working for various CIA fronts like the Australian Association for Cultural FreedomHis work had also been subsidized by the CIA. Kerr appointed Liberal Party leader Malcolm Fraser as the new temporary Prime minister. Ironically Whitlam had appointed Kerr the year before the soft coup as a concession to his right wing critics. When Nugan Hand collapsed Shackley’s right hand man Thomas Clines would show up to help Bernie Houghton escape to Mexico by way of the Philippines.

 

1975, the year of the soft coup against Whitlam, was the same year Michael Hand had announced his sudden “retirement” from the bank fourdays after the death of his friend, Air America pilot Bud King. He claimed he was going to become a turkey farmer. Instead he was heading to Africa along with hundreds of CIA men and mercenaries hired through CIA contractors. Hand had pretended to resign to distance himself from Nugan Hand’s American branch in Hawaii because he was going into the illegal arms business. Fascist Portugal had desperately hung onto its African colonies of Angola, Guinea Bissau, and Mozambique battling African revolutionaries intent on liberating their countries. However Portugal’s government had recently been overthrown by a left wing coup and the new government decided to end the costly African wars and grant the new countries independence. The American empire and the CIA which had backed NATO member Portugal’s wars to keep African’s subjugated now faced the emergence of left leaning African governments in Angola and Mozambique. The US and the CIA decided to ally with apartheid South Africa and Mobutu in Zaire to try to install its proxies in Angola and Mozambique or at least to wage bloody dirty wars to destabilize the new governments. In Angola Cuba decided to send troops to counter a US backed South African invasion. Eventually not only would Cuba successfully defend Angola’s independence but its victory would lead to the liberation of South Africa and Namibia. Hand spent the year traveling from Angola to apartheid Rhodesia and South Africa setting up arms deals. The exact details are unknown but it is believed that Hand managed to carry out a major arms deal with the notorious Ed Wilson who ran profitable CIA arms dealing and consulting fronts. Wilson had known Bernie Houghton since before he supposedly resigned from the CIA in 1971. Wilson would later hire Houghton and Nugan Hand to help him with his Libyan arms deals and construction schemes and after Nugan Hand’s collapse Houghton would go to work for Wilson’s EATSCO in which his partners were Thomas Clines, Richard Secord, and Theodore Shackley. Houghton’s stolen Nugan Hand files would be stored in Ed Wilson’s Geneva Switzerland office. Even after Hand’s return from Africa to Australia in 1976 Nugan Hand would continue to supply arms illegally to South Africa and many other places including Indonesia, Burma, and Thailand.

  

On his way back to Australia in 1976 Michael Hand opened a Nugan hand branch in Panama, another money laundering and drug smuggling hub. Then he arrived in Australia and was immediately reinstated at Nugan Hand. In 1977 Hand would travel to Hong Kong to open a Nugan Hand office and would send Neil Evans to open the Chiang Mai branch in Thailand to help drug dealing Thai Generals and warlords move their money overseas. Within two years Nugan Hand would have more than a dozen branches around the world, Chile, Argentina, the Philippines, Singapore, West Germany, London, and the Cayman Islands. 

   

It was during this global expansion that Nugan Hand recruited a half dozen American generals and admirals through Bernie Houghton. Hand was now bragging privately about the banks CIA backing. Admiral Earl “Buddy” Yates (Ret.) was recruited as the bank’s president. Admiral Yates was the former Commander of the USS John F. Kennedy aircraft carrier and chief of staff for plans and policy for Pacific Command. Pacific Command had responsibility for all of Asia, including of course the wars in Vietnam, Laos, and Cambodia. 

 

General Edwin Black had been in the OSS serving under Allen Dulles and above Richard Helms, both of whom went on to become infamous CIA directors. After serving Eisenhower’s Psychological Strategy Board as military assistant to the deputy he served on the military staff of the National Security Council. He was in charge of US Forces in Vietnam when it was still a covert war. He then headed US Forces in Thailand before becoming an assistant division commander in Vietnam and Assistant Army Chief of Staff for Pacific Command. He also headed the Freedom Foundation.  

 

General Leroy Manor was a fighter pilot in World War 2, Korea, and Vietnam. He commanded air bases at Clark Field and Subic Bay in the Philippines. He had been Chief of Staff for Pacific Command and had negotiated a USD 500 million military aid package for the Philippines and spent seven months with President Marcos renegotiating the leases for US bases in the Philippines. He was an expert on counter-Insurgency. He was recruited to run the Nugan Hand branch in the Philippines, sharing his office with the Marcos’ brother in law Ludwig Rocka. 

 

General Earle Cocke was a specialist in moving “black money” for various government agencies. He was very close to President Carter. During World War Two he had survived an execution by a German firing squad. He went on to work at various shadowy jobs at the Department of Defense, was a former executive at Delta Airlines and former National Commander of the American Legion. Nugan Hand’s Washington DC branch was run by Cocke out of the offices of his Cocke and Philips International Consulting Firm.

 

Nugan Hand also recruited a number of CIA men. Former CIA director William Colby and his law firm Reid & Priest were hired as lawyers representing Nugan. Colby had helped set up Gladio in Scandinavian countries, serving as CIA chief of station in Vietnam during the formation of the Phoenix assassination program. Walter McDonald had headed the CIA’s economic division for 25 years and was no mere analyst. When Admiral Yates introduced him he noted that while many were unaware of the role of the CIA’s economic division it was “acknowledged in this world of grass politics, drug events and battles and it starts generally in the area Walt is heading.” McDonald was given the unenviable task of babysitting the drunk and out of control Frank Nugan. There was also Guy Pauker a CIA man under Rand cover he had arrived in Indonesia in 1958 during the CIA’s failed plot to overthrow Sukarno using a military uprising. He joked that by 1965 the friends he had made back in 1958 were now running the country. The CIA had successfully overthrown Sukarno and was helping Pauker’s “Friends” carry out one of the bloodiest massacres of the cold war with one million suspected communists and ethnic Chinese slaughtered by death squads. Pauker was still a fierce defender of the Indonesian junta, which had unleashed another blood bath after invading East Timor in 1975. Pauker was an adviser to both Henry Kissinger and Zbigniew Brzezinski. Nugan Hand Taiwan was run by former Civil Air Transport executive CIA Dale Holmgren. Air America, the CIA’s drug smuggling airline, had grown out of the CIA/Taiwan airline CAT Civil Air Transport that had been smuggling heroin since the early days of the cold war. Michael Hand and Admiral Yates recruited another infamous CIA figure Mitch Werbell III the expert on silencers and the inventor of the Mac-10 machine gun. WerBell ran a mercenary training camp in Georgia and was recruited by Hand as a consultant on his project to resettle the Hmong and Montagnards in the Caribbean where they could be used as a proxy army to menace Cuba. The scheme fell through but they were eventually used as proxies in Reagan’s Central American wars. 

 

 

  This array of admirals, generals, and CIA officers were executives at a bank that was deeply involved with the Mr Asia syndicate and its series of murders. Four Mr Asia couriers were arrested in separate incidents and they all talked to police. Three of the four ended up dead and the fourth was beaten unconscious with baseball bats. They had talked and the cops were on Mr Asia’s payroll via Nugan Hand’s Australian law firm run by John Aston and Brian Alexander. The firm represented a number of drug dealers including the Mr Asia syndicate. Alexander ran a network of corrupt cops that extended through every level of Australian drug law enforcement. They immediately informed Alexander any time someone ratted out the Mr Asia syndicate. Their bribes were paid in some cases through opening accounts for them in Nugan Hand. When Nugan Hand first came under suspicion for its role in the drug trade the FBN (Federal Bureau of Narcotics) investigators discovered that Frank Nugan knew every detail about their investigation within hours of it occurring thanks to Alexander. In fact Frank Nugan boldly arrived at FBN headquarters on 14 February 1978 protesting his complete innocence and boasting of his political connections. Within weeks higher ups in the FBN had killed the investigation into Nugan Hand.  Aston’s law firm was used as a drop point by Nugan Hand clients Frank Nugan had helped launder $300,000 from a bank robbery for Mr Asia to finance these murders and Hand had personally managed the Asian end of the operation. Finally the number 2 man in Mr Asia, Terry Clark, planned the murder of Mr Asia syndicates head Christopher Martin Johnson who was getting too much press attention. His dismembered corpse was buried in four separate countries. Again the money trail led through Nugan Hand. A year and a half after Nugan Hand’s collapse lawyer Brian Alexander “disappeared ” after having his feet tied to an antique stove before being tossed overboard from a police boat.

 

Another murderous disappearance would cause trouble for the Nugan Fruit Group. Donald Mackay was the Griffith Branch president of the Liberal Party who had launched an anti-drug crusade against the Calabrian marijuana growers. On 15 July 1977, he disappeared. Police found bloodstains in his van and shell casings at the scene so he was presumed murdered. Records showed that the Nugan Fruit Group had paid the gangster’s who were the main suspects in the killing Antonio Sergi and Robert Trimbole. Trimbole was also part of the Mr Asia syndicate. After Mackay’s death a Royal Commission was appointed to investigate his murder and the Griffith drug scene. Back in 1973 Ken Nugan had sold a 40% share in the Nugan Fruit Group to an insurance company and they were demanding an audit to discover why payment had been sent to gangsters and because they realized Ken Nugan was embezzling money. Ken called in his brother Frank for help and in the fall of 1977 they carried out a sort of “corporate coup.” First they hired corrupt cops infamous as strong-arm men and hired killers to terrorize the auditors. When that didn’t work the cops hired a bunch of thugs and unemployed drunks to become Nugan Fruit Group stockholders and at a stockholder’s meeting managed via threats to force the Insurance company off the board and fire the auditors. This led to a corporate affairs commission investigation of the Nugan Brothers. Frank Nugan stole one million from Nugan Hand to pay the mounting legal costs. The scandal eventually began to damage Nugan Hand’s credibility although Admiral Yates and General Black both continued to publicly defend Frank Nugan in the press. In addition to intelligence backers Nugan Hand had been vouched for by top banks in Australia, Hong Kong and the US. In the Cayman Islands Nugan Hand’s books had been vouched for by Price Waterhouse & Company. By 1979 they were no longer willing to continue endorsing the company as it became increasingly clear that the Nugan brothers would be convicted of fraud. The whole house of cards was on the verge of collapse.

 

  As the pressure mounted on Frank Nugan he began to drink heavily with an open bottle of whisky on his desk every morning. He also stole millions to buy expensive mansions and cars for himself. The more he stole to finance his expensive lifestyle the more respectable and trustworthy he appeared to the potential clients. He went around bragging that he was the richest man in Sydney. He tried to frame his political opponents for corruption and even put a bounty on their heads. Doug Sapper (Hand’s old special forces buddy) was set up in Nepal for smuggling watches after he’d turned down Houghton’s attempt to recruit him to assassinate Nugan’s enemies. Michael Hand increasingly began to cut Nugan out of the loop. Six months before his death Frank Nugan quit drinking and found religion apparently in the hopes that his business would be miraculously saved. His wife left him and headed back to America. He was also demanding that Nugan Hand stop laundering money for drug dealers and get out of the arms trade. Hand and the generals merely ignored him and tried to isolate him. By fall of 1979 Hand and Houghton were already planning their escapes. At the same time they held a seemingly triumphant conference in October 1979 that all the admirals, generals, and CIA men flew in to attend to welcome Miami banker Donald Beazley as the banks new president. The banks Beazley worked for would be implicated in drug money laundering scandals after he had left them. While the bank was unraveling in 1979, Houghton was sent to the KSA where he managed to collect USD 5-10 million dollars in deposits from American oil workers and military men while also engaging in all sorts of mysterious meetings with Arab princes. Given the timing Houghton may have been involved in efforts to escalate the covert war in Afghanistan. This is also when Houghton began doing business with Richard Secord, Thomas Clines, and Ed Wilson.

 

Frank Nugan’s death remains a mystery although apparently he actually did kill himself. Michael Hand claimed it was murder but he had taken out million dollar insurance police for Nugan and himself that wouldn’t pay. In any case the day after Bernie Houghton had visited Frank Nugan at the office Nugan had decided to kill himself. Nugan had underlined words in his bible that hinted that his family had been threatened with death if he didn’t kill himself. Frank Nugan’s body was found on January 27th at 4:20 AM with a rifle, a bible, and a list of drug smugglers for whom he had laundered money. Perhaps he wanted to take Nugan Hand down with his death. The police notified his brother Ken Nugan and gave him the keys to the office. It was later discovered that Brian Alexander had already been purging evidence at Frank Nugan’s home. Ken Nugan arrived at the office to start shredding documents. Hand was in London when he learned of Nugan’s death. He complained that Nugan had left him to clean up the mess. He then flew back to Australia by way of the US. He arrived with Admiral Yates on 29 January 1980 to take charge of the file shredding. Soon Houghton and his lawyer Michael Maloney were put in charge of the cover up. Nugan Hand employees were warned to keep quiet on what they knew or their wives would be chopped into little pieces and mailed to them in parcels. Doubtless because of Nugan Hand’s political connections and intelligence ties the authorities were extremely slow to take action. When Hand testified at the coroner’s inquest the authorities were completely in the dark about his intelligence ties and trusted his lying explanations of his role in the bank. While the bank was collapsing financial advisers were still telling their clients to deposit their money in Nugan Hand. The ordinary depositors would lose everything. Meanwhile Nugan Hand was trying to pay off its more dangerous clients. By the time the CAC finally arrived at Nugan Hand’s Sydney office all the records had either been shredded or moved to a butcher shop owned by Bob Gehring,an ex-marine and possible CIA agent.  Gehring would later help Hand and Houghton escape the country. Amazingly Australian authorities allowed Gehring to physically push them around and bully them in order to block access to the files. No one at Nugan Hand was arrested. Early in June 1980 ex-CIA man Thomas Clines arrived to help Houghton escape to the Philippines from which he headed to a luxurious exile in Acapulco, Mexico. Ex-CIA man James Oswald Spencer, who was a TV actor appearing on Star Trek and Gilligan’s Isle arrived to provide Hand with a ludicrous disguise. Hand escaped two weeks later probably with the help of Australian intelligence. Hand had been staying with Gehring who provided Hand with one of his employee’s passports. Hand left behind $70 dollars and his lawyer managed to convince the press briefly that Hand may have been murdered and disappeared. The bank collapsed taking at least $50 million dollars of depositors’ money with it. The real figure was probably much higher since many Nugan Hand clients didn’t want to reveal their losses in laundered drug money or tax evasion schemes. Houghton had a courier bring Michael Hand 1 million dollars in his American exile. As the bank was collapsing Nugan Hand executives gave themselves huge bonuses.

 

  In 1982 ASIO learned from the CIA or another American Intelligence agency that Michael Hand was stationed in Honduras training the elite 5th Puma Battalion along side American Special Forces. The ASIO refused to try and bring him to justice. It also emerged that the ASIO had been recording all Frank Nugan’s telephone calls in the two years prior to his death while telling Australian law enforcement it knew nothing about the bank or its clients. In 1991 an Australian journalist tracked down Hand’s Australian wife Helene in France and discovered Michael Hand’s address in the US but a rival paper exposed the story and Hand disappeared again.  In the late 1990s Hand had changed his name to Michael Jon Fuller and was running a paramilitary training camp with four other ex-military officers. It trained Special Forces, SWAT teams, and police from around the world. The strange paradox of one of the most wanted men in the world training police from around the world is only conceivable only with CIA protection. Next Hand started a prosperous knife making business TOPS knives. It sold knives to militaries around the globe. The elderly Hand was still running the company when journalist Peter Butt managed to track him down by scouring corporate records of people named Michael Jon. He spotted a familiar signature, found a photo of Michael Jon Fuller, and hired a private detective to track him down, then giving the story to 60 minutes Australia. When confronted Hand refused to say a word to the Press, resigning and disappearing yet again. Australian authorities refused to pursue his extradition not wishing to anger the US government or the CIA or to revive the scandal and the story of the soft coup against Whitlam. On 8 November 2020 Michael Hand died a free man. After his escape, Bernie Houghton only had to wait a year for the heat to cool off. He returned to Sydney seemingly completely untouchable and remained a legendary figure in King’s Cross until his death in the year 2000. Two years later King’s Cross built a statue in his memory. Ken Nugan served a short prison sentence but the Nugan Fruit Group survives to this day. General Edwin Black went to work for another CIA bank Bishop, Baldwin, Rewald, Dillingham, and Wong that collapsed in 1983 when it’s founder Richard Rewald attempted suicide. By 1980 when Nugan Hand collapsed the global heroin routes were shifting from Southeast Asian Golden Triangle to the new Golden Crescent in Afghanistan and Pakistan. The CIA would use the Saudi/Pakistani bank BCCI to move this massive flow of cash around, giving birth to al Qaeda and laundering money for Colombian cocaine cartels. When the big US banks collapsed in 2008 it was discovered that drug money was the only thing keeping the whole financial system afloat. Nugan Hand was merely another chapter in the long interconnected history of corporations, intelligence and organized crime.

 

Sources

 

Jonathan Kwitny’s The Crimes of Patriot’s: A True tale of Dope, Dirty Money, and the CIA Is still the definitive book on the Nugan Hand scandal going into the bank’s history in minute detail. Kwitny was equally skilled in investigating the world’s of financial crime and intelligence.

 

Peter Butt’s Merchants of Menace: The True Story of the Nugan Hand Scandal is also great containing details on Hand’s life in exile and being a lighter more entertaining read. 

 

Peter Butt also released a 4 part podcast called “Merchants of Menace” you can subscribe through a podcast player or download the episodes here. It contains a very entertaining version of events from Michael Hand’s old special forces buddy Douglas Sapper.

 

https://www.merchantsofmenace.net/podcast

 

60 minutes Australia did an episode on the discovery of Michael Hand

 

https://youtu.be/yDhsDU_Z2m8

 

A documentary on Australian organized crime during the Nugan Hand era

 

https://youtu.be/8j-tTpd-Nqk

 

 

Dave Emory and Nip Tuck discussed Nugan Hand as part of their classic series on the CIA the military and drugs, which covers everything from the politics of heroin in Southeast Asia to the CIA role in promoting LSD.

https://spitfirelist.com/anti-fascist-archives/rfa-24-28-the-cia-the-military-drugs/

 

 

My Iran/Contra article on Shackley, Clines, Secord, and Wilson

 

http://anti-imperialist-u.blogspot.com/2016/05/irancontra-pt-1-secret-team.html

 

My Biography of Ted Shackley

 

http://anti-imperialist-u.blogspot.com/2016/12/ted-shackley-life-in-cia.html

 

The war in Angola Part 1

 

http://anti-imperialist-u.blogspot.com/2014/09/castro-vs-kissinger-in-angola.html

 

 

The War in Angola part 2

 

http://anti-imperialist-u.blogspot.com/2015/02/cuba-fought-to-free-south-africa.html

 

 

Pete Brewton on the CIA linked S & L scandal

 

https://youtu.be/vnBXawqUF3o