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 game. One 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 deals. Nugan 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 Hand’s 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 Freedom. His 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 syndicate’s 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 bank’s 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.
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.
60 minutes Australia did an episode on the discovery of Michael Hand
A documentary on Australian organized crime during the Nugan Hand era
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.
My Iran/Contra article on Shackley, Clines, Secord, and Wilson
My Biography of Ted Shackley
The war in Angola Part 1
The War in Angola part 2
Pete Brewton on the CIA linked S & L scandal