Nov 20, 1987

First bank and mistrust company: Deposits and withdrawls of the spooks | by Jerry Meldon | Published in The Boston Phoenix on November 20, 1987 [incomplete]

 Shortly before dawn on Sunday, January 27, 1980, two Australian police officers discovered the bloodied body of 37-year-old Frank Nugan, rifle in hand, an apparent suicide victim, in the front seat of his Mercedes sedan. In stumbling upon the body, the country constables unwittingly unlocked a Pandora’s box of bank fraud, laundering of heroin profits, and machinations by elements of the CIA shadow network that would later engineer the Iran-contra debacle.

            Nugan was co-owner of the Sydney-based Nugan Hand Bank, with 22 branches worldwide. When he died, he was carrying the business card of former CIA director William Colby, who performed legal services for the bank. No sooner did word of the corpse in the car reach London than the bank’s other owner, Bronx-born former Green Beret and onetime CIA operative Michael Hand, hopped a plane to Sydney. There he was joined by Admiral Earl “Buddy” Yates (US Navy, retired), former chief of staff for plans and policy of the entire US Pacific Command, then the president of the Nugan Hand bank.

            At bank headquarters, Hand and Yates hosted a shredding party that would have brought tears to the eyes of Lieutenant Colonel Oliver North and his faithful secretary, Fawn Hall. As you read The Crimes of Patriots: A True Tale of Dope, Dirty Money, and the CIA (Norton, 424 pages, $19.95), by Jonathan Kwitny, you can also imagine Kwitny’s pupils moistening – for a different reason – each time he ponders what those documents might have revealed.

            Kwitny, investigator par excellence for the Wall Street Journal and author of earlier studies of Mafia penetration of legitimate businesses and of US foreign policy, has spent the last five years trying to figure out what Admiral Yates and other military and CIA brass were doing on the payroll of a bank that “engaged in heroin financing, tax fraud, investor fraud, and indirectly, by much evidence, contract murder.” He leaves us with a wealth of evidence suggesting that Nugan Hand was indeed part of a US intelligence operation. But Kwitny is a most careful reporter. With no smoking gun, he won’t be the one to say the CIA was behind the bank. And therein lies the frustration of this important and timely book: the resistance to reaching definitive conclusions in the absence of a confession.

            In retrospect, it should have seemed fishy in 1969 when Michael Hand – recipient of the Distinguished Service Cross for “almost single-handedly [holding] off a fourteen-hour Vietcong attack on the Special Forces compound at Dong Xoai” – founded Australian and Pacific Holdings, in Sydney, with the stated goal of developing a resort on the Great Barrier Reef. Australian and Pacific’s stockholders were an odd lot. Of 37 listed, four worked for Air America, one for Continental Air Service, and five for the US Agency for International Development (AID), employers that had been providing cover in Indochina for CIA agents.

            Author Kwitny discovered that in reality, Australian and Pacific had done little other than make Frank Nugan, a Berkeley-trained Australian lawyer, successive loans of $16,000, $3500, and $8500. The total of $28,000, roughly the initial stockholder investment, was apparently never repaid.

            Having discovered the formula for creative and profitable accounting, Hand and Nugan raised the stakes. In June 1973 they incorporated Nugan Hand Needham, in Sydney. According to a brochure, “This company’s purpose is to act as a trusted Investment House to make all of its services and facilities available to all persons and enterprises, large or small.”

            What the brochure really meant was that Nugan Hand – to which the name was later shortened – would just as gladly rip off little guys as big ones. Reports Kwitny, “The money came mostly in two ways: from high fees charged for illegal [or at least very shady] services, and from the fraudulent procurement and subsequent misappropriation of investments from the public.”

            High on the list of shady services were the financing of narcotics deals and laundering of the profits. Nugan Hand’s clients in this area included Australian Olympic medalist in sculling and former police detective Murray Riley. In 1978 police collared Riley and nine accomplices for shipping a ton and a half of Thai “Buddha sticks” – concentrated marijuana – on a boat out of Hong Kong. Enforcement officials also established that Riley had been sending a hundred pounds of heroin annually to the United States via Australia.

            In 1980, having begun a 10-year jail sentence, Riley testified before an Australian commission of inquiry into the Nugan Hand bank, whose demise followed shortly upon that of Nugan. The bank, Riley asserted, had moved his drug money around the Far East.

            Moving drug money did not distinguish Nugan hand from myriad other banks worldwide. However, Nugan Hand went one step beyond most. In 1976 it opened an office in Chiang Mai, Thailand, the gateway to Indochina’s Golden Triangle, the world’s major source of the opium from which heroin is derived.

            The Commonwealth-New South Wales Joint Task Force on Drug Trafficking, in volume two of its report, issued in June 1982 (all 512 pages are devoted to Nugan Hand), revealed that Michael Hand had decided to open shop in Thailand on the advice of his drug-trafficking client Murray Riley. The Chiang Mai office was housed in the same building – on the same floor – as that of the US Drug Enforcement Administration (DEA), a coincidence yet to be explained. Nugan Hand’s Chiang Mai manager, Neil Evans, told the joint task force, “I was never under any illusion … that I was to go over there for any other purpose but to seek out drug money.”

            Evans’s sensational charge is one of many that Kwitny takes with a grain of salt. Kwitny, who went through extensive efforts to locate all the actors in the drama, never found Evans. However, he did get wind of the claim that Evans had received $10,000 from an Australian TV station for an interview. The Australian station later sold the interview to CBS, and on a September 1982 CBS Evening News program with Dan Rather, Evans stated, “We were to become paymasters for the CIA around the world.”

            “The [$10,000] payment alone,” Kwitny writes, “casts some doubt on Evans’s veracity.” [unclear] reasonable assumption. [Section missing.]

[…]parently considered an expert in failed assaults, having planned and commanded the infamous 1970 raid on a North Vietnamese POW camp. Kwitny reminds us, tongue in cheek, of Manor’s later statement to the press that the onslaught was “a complete success with the exception that no prisoners were rescued.” In 1979 General Manor joined Nugan Hand’s Manila office. Like the branch in Chiang Mai, Thailand, this one was under the same roof as the US Drug Enforcement Administration.

            Kwitny offers two explanations for the presence of such heavies, neither very comforting: the men were either fools or accomplices.

            Once inside the bank how dumb would you have to be to stay duped? Could that level of stupidity be ascribed to high officials who only recently were responsible for supervising billions of dollars in U.S. taxpayer funds – hundreds of thousands of troops and whole fleets of aircraft and aircraft carriers, who specialized in, of all things, “intelligence?” … Now suppose, on the other hand, that the brass wasn’t innocent at all … Did this mean that the U.S. Government had promoted to the highest offices, a bunch of thieves? … Or was it more likely that they weren’t, at least most of them, thieves – that there was some political motive behind their work?

            Throughout the book, particularly the chapter “The Wilson Connection,” Kwitny lays out evidence for the latter. The inescapable conclusion: 1) Nugan Hand was, to an as-yet-undetermined extent, an instrument of the “rogue” US intelligence network whose most notorious member, former CIA agent Edwin Wilson, is now serving half a century behind bars for among other things, shipping explosives to Libya’s Colonel Qaddafi; and 2) the network also included Major General Richard Secord (USAF, retired) and former high-ranking CIA officers Theodore Shackley and Thomas Clines – who all became key players on Oliver North’s Iran-contra secret team.

            When Nugan Hand was incorporated, in 1973, Wilson was running dozens of proprietary-business fronts for the top-secret Task Force (TF) 157. TF157, originally set up to monitor Soviet shipping, was officially under the aegis of the Office of Naval Intelligence (ONI). In actuality, it reported, through Wilson, not to the ONI but to CIA Deputy Director Ted Shackley, according to FBI files cited by Joe Trento in the Wilmington, Delaware, News Journal in September 1981. (TF157 was shut down in 1977 when ONI chief Bobby Ray Inman figured out that Wilson was actually in business for himself.)

            What makes this very interesting are the Wilson-Shackley-Clines connections to Nugan Hand in that same era, connections that are discussed at length both by Kwitny and in volume four of the report by the Australian joint task force.

            The full extent of how the Wilson team used Nugan Hand is unlikely to be revealed. The joint task force, however, learned a good deal from a Wilson associate it referred to only as “J” but whom Kwitny identified as Douglas Schlachter, a former employee at World Marine, a TF157 entity set up by Wilson.

            Schlachter described several meetings during the late ‘70s in World Marine’s Washington office between Wilson and Nugan Hand’s number-three man, American Bernard Houghton, whose current whereabouts, like Michael Hand’s, are unknown. Following the Houghton-Wilson meetings at World Marine, Wilson, under cover of TF157, “placed an order” – with a private arms manufacturer, the financing for which was done by Nugan Hand – “for something like 10 million rounds of ammunition [and] 3,000 weapons … The shipment is believed to have left the U.S. from Boston.” Schlachter told the joint task force he believed the weapons were “delivered to U.S. intelligence supported forces in Angola.” (This would have occurred just as the Senate was about the pass the Clark Amendment, banning US involvement in Angola. A direct analogy can be drawn to the later circumvention of the 1984 Boland Amendment, banning support of the contras, by the same Wilson gang, though Wilson himself was by then behind bars.)

            The Australian joint task force concluded that “the [Angola] operation is considered likely to have been carried out as a result of private entrepreneurial activity as opposed to one officially sanctioned and executed by U.S. intelligence authorities, specifically Task Force 157.”

            The Australians, without realizing it, had gotten wind of the “off the shelf” intelligence operation that Reagan CIA director William Casey would turn to for the Iran-contra operations. As Kwitny writes, “The [Australians’] final judgement … shows some naivete for how the CIA has actually conducted covert operations.”

            Besides examining the covert shipment of weapons to Angola, Kwitny reviews evidence linking the Wilson-Shackley gang – through Nugan Hand – to the 1975 undermining of the left-of-center Australian Labor government, an abortive 1979 plan to take over a Miami bank in partnership with deposed Nicaraguan dictator Anastasio Somoza, and the successful takeover of a London bank in 1980. Regarding that London bank, the Australian inquiries determined that the man pulling the strings in the takeover was Wilson’s business partner, Thomas Clines (by then no longer with the CIA – both Clines and his boss, Shackley, left the agency following the indictment of Wilson).

Shackley would later be the first semi-official US contact of the Iranian businessman Manucher Ghorbanifar, and thereby lead the way to the Iran-contra affair. Clines would arrange arms shipments to both Iran and Central America through his contacts in Europe. Secord, who had introduced Clines to Bernard Houghton of Nugan Hand while still on active duty with the Air Force, would manage the whole show for Oliver North – together with his partner, the Iranian-born Albert Hakim, on whose payroll, at one time, were Wilson and Shackley...


Oct 22, 1987

Uncovering details of the Iran-contra covert operations lobby | by Jerry Meldon | The Christian Science Monitor, October 22, 1987


The Iran-Contra Connection – Secret Teams and Covert Operations in the Reagan Era, by Jonathan Marshall, Peter Dale Scott, and Jane Hunter. Boston: South End Press. 233 pp. and footnotes. $11 paperback.


            Flush with the aura of stardom that enveloped him as he entered the Iran-contra hearing room, Maj. Gen. Richard Secord (USAF, ret.) last May told a reporter from the New York Times: “This is pipsqueak stuff. When I was in Southeast Asia, we used to pay out people in cash and gold bullion … If I wanted to steal money, I could have been a real winner in those days.”

            The cocky, stocky former deputy secretary of defense was referring to the fate of multimillion-dollar profits from the covert supply of arms to Iran and the Nicaraguan contras.

            The general and his partner, the Iranian-American arms dealer Albert Hakim, were Lt. Col. Oliver North’s right-hand men. They controlled the Swiss bank accounts to which many of the funds have been traced.

            Whether Secord pocketed a bundle is not, according to Jonathan Marshall, Peter Dale Scott, and Jane Hunter, an incidental matter. It lies at the heart of the fundamental issue they raise in “The Iran-Contra Connection – Secret Teams and Covert Operations in the Reagan Era”: Are covert operations:

            1. Inherently inimical to the public interest?

            2. Likely [sic] to transgress statutory authority?

            3. Hostile to public accountability? Their answer is yes across the board.

            In light of this summer’s daytime TV fare there can be no arguing items 2 and 3. The key, of course, is No. 1. Marshall, Scott, and Hunter conclude from the recent historical record – backed by voluminous reference to mainstream and alternative news media accounts and occasional interviews with intelligence sources – that covert operations have done the average American little good.

            The problem, they argue compellingly, is the combination of a durable “covert operations lobby” whose family tree can be traced to the anti-Castro and Indochina operations of the 1960s, with the predilection of presidents for calling upon it, as they have in the Bay of Pigs, Watergate, Iran-contra, and assorted other misadventures.

            According to Marshall et al., Secord is a key member of that lobby. In Southeast Asia he made the acquaintance of CIA station chief Theodore Shackley and his deputy, Thomas Clines.

            Other than Indochina and the current drama, what these three veteran covert operatives have in common is the stigma of a close relationship with former CIA agent Edwin Wilson.

            Wilson is currently in a maximum-security federal prison serving a 52-year sentence for, among other things, arming Libya.

            The extraordinarily successful government careers of Shackley, Secord, and Clines – the first had a chance to become CIA director, the second to be secretary of defense – were each terminated abruptly by the Wilson revelations of the late ‘70s and early ‘80s.

            But the profiteering and scheming of former operatives are only some of the disquieting elements of the story told by Marshall, an editor at the Oakland Tribune, and his coauthors, a Berkeley professor and the writer of a monthly newsletter on Israeli foreign affairs.

            Equally troubling is the allegation of illegal foreign contributions to Ronald Reagan’s 1980 presidential campaign from right-wingers with a vested interest in his policies, all represented by the public relations firm of top Reagan aide Michael Deaver.

            Two chapters focus on the key roles of Israeli officials and arms dealers. The first is written with counterproductive stridence.

            Despite this drawback, the authors leave little doubt that the Israelis manipulated the all-too-willing Washington to serve their own geopolitical and financial agendas, in both the Middle East and Central America.

            This is a troubling book.




Oct 18, 1987

A neofascist legend at the end of the trail: But ailing Licio Gelli may still have the last laugh | by Jerry Meldon | The Boston Sunday Globe, October 18, 1987


On Sept. 21, four years after his escape from a Geneva prison, Italy’s most wanted – and arguably most powerful – man, Licio Gelli, turned himself in to the Swiss police. Sixty-eight years old and bearing doctor’s orders for coronary bypass surgery, the silver-haired former mattress manufacturer was an unlikely candidate for outstanding charges that include blackmail, extortion, drug and arms smuggling, conspiracy, illegal possession of state secrets and complicity in bombings, including the 1980 demolition of Bologna’s railway station that claimed 85 lives.

As the charges suggest, Gelli pulled the strings in many of the scandals that punctuate postwar Italian history. Books have been written about him. He plays leading roles in English-language accounts of the sensational careers and untimely deaths of two advisers to the Vatican bank, Michele Sindona and Roberto Calvi.

Gelli, more than anyone, personifies the shadowy flipside of Italian terrorism – the neofascist right. In many ways, it has been a much more dangerous movement than the kidnappers and murders of the extreme left. Far more deaths can be attributed to right-wing terrorists’ acts. More significantly, the neofascists have enjoyed the protection and support of Italian intelligence agencies and, according to a 1976 congressional report, the CIA.

With such official support, the fascists have pursued a “strategy of tension” through their own terrorists acts and those of leftist groups they penetrated. They have cultivated a climate of fear to undermine support for the West’s most popular communist party and justify an authoritarian takeover of the Italian government.

But Gelli went beyond the strategy of tension. Through his own spurious Masonic lodge, he took effective control of a broad segment of the Italian government.

Since World War II, in which he was a Nazi collaborator, Gelli has divided his time between Europe and South America. In January 1981, he was an invited guest at the inauguration of President Ronald Reagan. In Argentina, to which Gelli fled in the late ‘40s from charges that he tortured members of the Italian resistance, he became the confidant of President Juan Domingo Peron. Later, he supported the military junta that, from 1976 to 1983, waged the “dirty war” on subversion during which at least 9,000 Argentines “disappeared.” Peron made Gelli honorary consul in Rome.


Masonic Lodge scandal


It was to South America that Gelli is believed to have fled in March 1981 when the Italian authorities, searching his villa in the Tuscan city of Arezzo, made the discovery that brought down Italy’s then-ruling Christian Democratic regime.

The police seized a list of some 953 members of the secret Masonic lodge “Propaganda Due” – or P-2 – that Gelli had organized in 1971. On the list were the names of 43 Italian generals, eight admirals, the heads of the three principal intelligence agencies, the police chiefs of Italy’s four largest cities, the editor of Italy’s most influential newspaper and 36 members of the Italian Parliament. Gelli has created, in the words of a later parliamentary report, a “state within a state.”

Press exposure of the P-2 membership roll triggered Italy’s greatest postwar political scandal. The government of Prime Minister Arnaldo Forlani resigned. The commanders of the three intelligence services were forced to resign.

But what was the true purpose of Gelli’s lodge? The Report of the Parliamentary Commission of Inquiry on the Masonic Lodge, issued in July 1984, found that the lodge had penetrated the highest ranks of the Italian treasury, and the ministries of foreign affairs and foreign trade.

Gelli, according to the report, “played a direct role in promotions in the military service … The penetration of P-2 into circles at the top of the military hierarchy ended in creating a sort of obligatory passage … to higher levels of responsibility.”

The intelligence agencies – the report continues – were “involved with subversive groups and organizations, inciting and aiding them in their criminal projects.” Intelligence agents have since been indicted, along with Gelli and neo-fascist terrorist kingpin Stefano Delle Chiaie, for planning the gruesome August 1980 Bologna train station bombing. Delle Chiaie, who was finally captured last spring in Caracas, also awaits trial for the July 1976 murder of Vittorio Occorsio, an Italian judge who had been investigating the link between the terrorists and P-2.

The full extent of Gelli’s diabolical designs may never be known. What is clear is that they extended beyond the immediate political sphere into the world of high finance, particularly the empires of Michele Sindona and Roberto Calvi, the Milan-based bankers who, in the 1970s, were successive chief advisers to the Vatican Bank.

When Italian police officers conducted their 1981 search of Gelli’s villa, they were looking for a list of 500 wealthy Italians believed to have used Sindona’s banks to smuggle money to tax havens abroad. Sindona was already serving a 25-year sentence in New York – the stiffest for white-collar crime in American history. He had been convicted in 1980 for misappropriating $45 million and thereby triggering the bankruptcy of Long Island’s Franklin National Bank, which he controlled. Italian authorities eventually persuaded Washington to extradite Sindona to face the charge that, in 1974, he also ruined Milan’s Banca Privata Italiana by misappropriating $225 million of its holdings. The Vatican Bank, which Sindona had advised since 1971, lost $30 million when Banca Privata collapsed.

Sindona was extradited to Italy in 1984. He got 12 years for the Milan bank case. Shortly thereafter, he was sentenced to life in prison for ordering the 1979 murder of Giorgio Ambrosoli, the state-appointed liquidator of his Italian financial empire. In March 1986, while confined to a closely-guarded isolation cell, he was fatally poisoned by cyanide that laced his morning coffee. Officially, it was a suicide.

When Sindona’s troubles surfaced in 1974 he was succeeded as adviser to the Vatican Bank by another right-wing financier with a penchant for misplacing millions, Roberto Calvi, president of Milan’s Banco Ambrosiano.

In 1981, Calvi was sentenced to four years in prison for illegal currency dealings. His appeals were still pending, and he was desperately seeking $1.4 billion to balance Banco Ambrosiano’s books, when, on June 17, 1982, Calvi was found hanging from a bridge in London, another official suicide. Banco Ambrosiano, whose assets had once totaled $19 billion, collapsed, taking with it $250 million from the Vatican.

Archbishop Paul Marcinkus of Cicero, Ill., the director of the Vatican Bank, had signed an official endorsement of Calvi after Calvi’s 1981 conviction. Marcinkus was indicted earlier this year for complicity in the Ambrosiano failure. An Italian court later overruled the indictment, citing the absence of jurisdiction over the Vatican City.


‘I’ve got it all figured out’


Three months after Calvi’s 1982 hanging, Gelli attempted to withdraw $55 million from a numbered Geneva bank account that Calvi had previously controlled. He was arrested on the spot. On Aug. 10 1983, nine days before his scheduled extradition to Italy, Gelli reportedly paid off a single guard in Geneva’s maximum-security Champ-Dollon prison. He escaped once again to South America, where he is believed to have remained until his sudden reappearance two weeks ago.

However, it is Gelli who may have the last laugh. According to the Swiss-Italian extradition pact, he may only be tried for crimes recognized by the Swiss, and the Swiss do not recognize the “political” charges – bombings, espionage, conspiracy to overthrow the government. Moreover, an Italian statute minimizes sentences for the elderly, so Gelli may suffer no greater indignity than house arrest.

It remains to be seen whether Gelli will even stand trial. As he once told his French instructor in the Swiss prison: “These Italian politicians don’t know how much I have on them. As soon as I get out of here, I’ll take care of them. I’ve got it all figured out.”