Jun 1, 1987

One Man’s Story: The Australian Heroin Connection | By Jerry Meldon | published in Covert Action, Summer 1987

In 1975, Brooklyn-born Edward Hunter decided to relocate his family and his quarter-of-a-million-dollar Asian art collection from Bangkok to Hawaii. The decision to move his business was partially based on encouragement from his neighbor, Coby Black, and her husband, retired Army General Ed Black. Two years later, Gen. Black would also move to Hawaii and become president of a Nugan Hand Bank affiliate there.

Hunter knew nothing then about the Australian-based Nugan Hand Bank. He was unaware that Nugan Hand’s vice-chairman, ex-Green Beret Michael Hand, would in 1975 arrange a 500-pound heroin shipment from Southeast Asia’s Golden Triangle to the U.S. by way of Australia.1 Nor did he know about a November 1977 Australian Narcotics Bureau report that would link Nugan Hand to a drug smuggling network that “exported some $3 billion [Aust.] worth of heroin from Bangkok prior to June 1976.”2

Therefore, Ed Hunter felt only shock and dismay in May 1976, when the last of his goods arrived in Honolulu, via Australia. That January, three large containers had come from Bangkok, but when they were opened, important ceramic pieces were missing, and some were damaged. Then four months later, an unexpected fourth container appeared. When a curious Customs inspector opened it and discovered not only Hunter’s remaining goods—more damaged—but also a large amount of low-grade lumber, taking up space and weight, both were alarmed. It was very likely, Hunter later came to realize, that the weight and space occupied by the lumber had been taken up by heroin on the first leg of the journey, from Thailand to Australia, where the heroin was removed and the lumber added.

His art was temporarily confiscated by U.S. Customs and he returned to Bangkok in search of both an explanation and compensation for the mishandling of his shipment.

The more questions he asked, the more he was treated as a troublemaker. Job opportunities vanished and then threats were voiced. Lawyers deserted him. One lawyer deserted Bangkok altogether.

Eventually Hunter began to wonder whether he had been the casualty of a criminal operation that used his packing crates to transship heroin from Thailand to Australia. Like everyone in Bangkok, he had heard of big drug deals linking the Thai capital with Australia and the U.S. As Hunter looked for answers and tried to patch up his life, he noted scattered news items on the drug-linked Nugan Hand Bank, and learned of its Thai offices in Bangkok and Chiang Mai, in the heart of the opium-producing Golden Triangle.

Untangling the Web

In January 1980, bank chairman Frank Nugan was found shot to death in his Mercedes, 100 miles from Sydney. The ensuing Nugan Hand Bank collapse and subsequent investigations evoked a rash of press reports about drug money laundering, government cover-ups and U.S. military and intelligence connections—Hunter’s old neighbor, Gen. Black, among them.

Later, one particular Nugan Hand client Edwin Wilson, made headlines along with his former CIA superiors turned business partners, Theodore Shackley and Thomas Clines. The three had used the bank to channel funds for covert operations, including the destabilization of the Australian government in 1975.3 Wilson was then caretaker of corporate fronts for Task Force 157 of the U.S. Office of Naval Intelligence.4

Now, because the “Secret Team” led by Shackley, Clines, and Richard Secord has assumed center stage in the Iran/contra affair, allegations have resurfaced about their Nugan Hand connections and drug smuggling.5

Army veteran, former seaman, and a resident of Bangkok for nearly a decade, Ed Hunter had forged a comfortable living as impresario and night club manager. In 1974, the year he married a Thai woman, he temporarily left Bangkok to become worldwide marketing director for a Singapore-based cruise ship. While preparing to leave, he received what would turn out to be a very important phone call.

The caller identified himself as John Ridley, a cultural attaché at Bangkok’s Australian Embassy. Ridley said he was seeking advice on the purchase of Thai ceramics and had heard that Hunter was an expert.

When he showed up at Ridley’s home, the purported foreign service officer said he had also heard that Hunter was looking for a shipping company. Hunter was in need of one to store his goods while in Singapore, but he was startled by Ridley ’s being privy to this, since it had been discussed only once with a friend.

Ridley enthusiastically recommended a company called Transpo. It was, he assured Hunter, the shipping agency of choice at his embassy. Only later, after hiring Transpo both for storage and his fateful shipment to Hawaii, was Hunter informed by a General Services Administration representative at the U.S. Embassy in Bangkok, that Transpo was a questionable outfit. And only later did Hunter learn that John Ridley was an Australian intelligence officer.

Thus, when he left Singapore in 1975, having decided to take his chances as an art dealer in Honolulu —-largely on the two-year old advice of General Ed Black’s wife—Hunter hired Transpo to ship his containers.

After months of anxious waiting, the surprise appearance of a fourth container and the embarrassing encounter with U.S. Customs, Hunter returned to Bangkok in mid-1976 looking for answers from Transpo. The day he posted a letter to Transpo demanding action, his lawyer, Harvey Levy, vanished from Bangkok. Months later he resurfaced in Hong Kong.

Until his disappearance. Levy had managed the Bangkok office of William Quasha’s law firm, which was in the same building as a branch of the Nugan Hand Bank. The head of the firm, William Quasha, had been the attorney for General Leroy Manor when the former chief of staff of the U.S. Pacific command was employed at the Manila office of the Nugan Hand Bank.6

Following Levy’s flight, Hunter went through a succession of lawyers whose initial interest generally ceased abruptly upon looking into Transpo. An exception was David Lyman. However, Lyman too bowed out after ultimately informing Hunter that he was in fact representing Transpo.

The years 1977-1978 were marked by legal and financial setbacks for Hunter, and he was divorced. He became increasingly consumed by pursuit of a fair shake from Transpo, and the firm’s matching refusal to comply. Frequently he voiced the hypothesis that Transpo was in cahoots with Nugan Hand, Edwin Wilson, or both, but no one seemed to care.

He tried repeatedly to start life anew, in Bangkok and the United States. In Thailand not only were old avenues of employment sealed off, but he found his phone tapped, and he was harassed by Thai security forces. He sought assistance at numerous embassies and with the International Red Cross until finally, in late 1984, the U.S. Embassy in Bangkok flew him to the West Coast as a returning indigent. Having settled upon San Francisco as his destination, he was surprised when the person there to meet him, told him that he was to go on to New York.

After protesting, he was made to suffer the indignity of admission to the psychiatric ward of a hospital near San Francisco airport. Its administrator, Dr. Newman, warned, *‘I know these people. I’ve worked with the CIA. You’re never going to win.” From that point on, Hunter determined to discover what had happened to his antique ceramics, and what role Nugan Hand played in it.

Hand’s History

Michael Hand was a Green Beret who worked for the CIA in Laos in the mid-1960s. He was also one of the founders of the Nugan Hand Bank. After leaving the Green Berets, he traveled to Australia and began selling Australian land to American servicemen. Then in 1970, he and Sydney solicitor Francis Nugan became partners as investment advisers to the same clientele. During this period serious allegations were raised that Hand was trafficking in drugs.7

In 1973, the Nugan Hand Bank was chartered. It offered tax-free deposits, the highest interest rates, and secrecy, and its specialty was money laundering, at 22 cents on the dollar.8 By 1979 it would have twenty-two branches in thirteen nations and $1 billion in annual business.

In 1976, a Nugan Hand branch opened in Chiang Mai, Thailand. Branch manager Neil Evans later revealed, “I was never under any illusion at any time that I was to go over there for any other purpose but to seek drug money.” The office, on the same floor as the U.S. Drug Enforcement Administration , closed in July 1977. In that brief period Evans claimed to have secured S3 million in narcotics money.9

By 1973, the Nixon administration’s opinion of Australia’s Prime Minister E. Gough Whitlam was indistinguishable from its view of Chilean President Salvador Allende. In 1972, Whitlam had formed Australia’s first Labor government in 23 years. Soon thereafter, he pulled the last of his country’s troops out of Southeast Asia, and his deputy called for a boycott of American exports following the Christmas 1972 bombing of Hanoi.10 Worse still, Whitlam questioned the legitimacy of the CIA's spy satellite monitoring station at the remote Pine Gap, near Alice Springs, Northern Territory.

Then, in 1975, Whitlam was scandalized by leaks of what purported to be correspondence between one of his Cabinet members and a mysterious Pakistani merchant recruited to bolster the faltering economy by securing Australia loans in the Arab world. The merchant was connected to Edwin Wilson. According to CIA contract agent Joseph Flynn, he, Flynn, had fabricated some of the leaked cables under Wilson’s approving eye. His paymaster was Michael Hand of the Nugan Hand Bank.11

Edward Hunter. Credit: Bill Schaap.

One year later, Wilson told the then director of the Office of Naval Intelligence. Admiral Bobby Inman (later deputy director of the CIA), he would use his influence to direct Senate funding his way. if Inman were to direct business Wilson’s way. Inman fired Wilson. Theodore Shackley, then CIA deputy director, appealed to Inman on Wilson’s behalf.

Wilson continued to broker arms deals, privately. His partners included Thomas Clines, who, like Shackley, would resign from the CIA in the late 1970s during Agency director Stansfield Turner’s post-Wilson shakeup. Wilson is currently serving 52 years in federal prison for crimes including the sale of weapons to Libya. Michael Hand disappeared shortly after Frank Nugan’s 1980 death.

The Secret Team, Narcotics and the Bank

Allegations raised in a December 1986 affidavit filed in Miami federal court by attorney Daniel Sheehan of the Washington-based Christie Institute,12 suggest that Nugan Hand was not merely paymaster for CIA “black” operations, but that it was the very conduit through which Shackley, Wilson, Clines, Secord, and company funneled the massive fortune generated by General Vang Pao’s heroin pipeline. The money would finance paramilitary operations such as the covert supply of the contras. (See “Running Drugs and Secret Wars,” by David Truong D.H., in this issue.)

According to Sheehan, whose sources include former intelligence and law enforcement officers, a central figure in the handling of Vang Pao’s opium/heroin profits was former naval officer Richard L. Armitage, currently assistant secretary of defense for international security affairs.

From late 1973 (when Nugan Hand was chartered) until the ultimate withdrawal of U.S. forces from Indochina in April 1975, money was allegedly smuggled out of Vietnam “in large suitcases” by Secord and Clines, and deposited in a secret Nugan Hand account in Australia.

Nugan (left) and Hand, whose death and disappearance show the hazards of the laundry profession.

After Vietnam, Armitage went on to Tehran to establish a “secret financial conduit” for covert operations in support of the Shah of Iran. (According to his official Pentagon biography, following the fall of Saigon, Armitage became a Pentagon consultant and served in Tehran on the staff of the U.S. defense representative.13)

According to the affidavit, Armitage was also involved in trying to relocate the CIA’s Laotian Hmong mercenaries. In 1979, Michael Hand reportedly arranged their resettlement on Turks and Caicos Islands. This led a later Australian commission of inquiry into Nugan Hand to comment that the islands were strategically located along a Caribbean narcotics route. The resettlement project collapsed together with the bank in 1980.14

While in Thailand, Armitage’s official duty as special consultant to the Pentagon was to track down military personnel missing in action (MIAs) in Southeast Asia. He was based at the U.S. Embassy in Bangkok. According to Sheehan’s sources, however, Armitage actually functioned as “bursar” to Theodore Shackley’s Secret Team, overseeing the transfer of Vang Pao’s heroin profits to Tehran and Shackley’s Nugan Hand account.

Armitage’s illicit activities were reportedly discovered by an alert embassy officer, who triggered a State Department investigation, the exact outcome of which is unclear. In any event, Armitage resigned in 1977. He then opened a private business, the Far East Trading Co., with offices in Bangkok and Washington, D.C. The company, according to the affidavit, was a front for the Secret Team.

Sheehan’s charges are supported by Ed Wilson’s former business partner, ex-CIA operative Frank Terpil, who remains a fugitive from weapons chargers and a 53-year prison sentence. He was interviewed in 1983 by journalist Jim Hougan. Hougan related some of Terpil’s comments, which follow:

The significance of Miami is the drug syndicate. That’s the base...All the people that I hired to terminate other people, from the Agency, are there. They get involved in this biggest drug scandal going, which is whitewashed. Who is the guy behind the scandal? Clines. Who’s the boss of Clines? Shackley. Where do they come from? Laos...Where did the money come from? Nugan Hand. The whole goddamned thing has been moved down there...

Before that, in Asia...the pilot of the plane was Dick Secord, a captain in the Air Force...What was on the plane? Gold! Ten million bucks at a time, in gold. He was going to the Golden Triangle to pay off the warlords, the drug lords... Now what do you do with all the opium?...You reinvest it in your own operations...where?...Thailand... You pay it to Alice Springs. Billions of dollars—not millions—billions of dollars.

The pilot Terpil referred to, lead-off witness Richard Secord, came away from this spring’s Iran (contra hearings with movie offers, cockier than ever. Following his testimony, he told 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. I’ve been involved in some of the biggest black bag operations of all time. If I wanted to steal money, I could have been a real winner in those days.”15

Secord’s cockiness is perhaps explained in part by the scene at Edwin Wilson’s Geneva, Switzerland apartment one day in April 1980, three months after Frank Nugan ’s death. The bank's Saudi Arabian manager, Bernard Houghton, whom Secord had introduced to Shackley and Clines the previous year, had left a travel bag in the apartment. That day in April, Thomas Clines arrived and asked an unidentified witness to see the bag. Clines reportedly removed one document, and said, “We've got to keep Dick’s name out of this.16

Time and the special prosecutor will perhaps reveal whether Secord remains cocky. Hopefully, they will also vindicate one of the losers, Edward Hunter, who for a very long time had smelled rats on the Secret Team.


Jerry Meldon is associate professor of chemical engineering at Tufts University, and a frequent contributor to the Boston Globe.

1.       Commonwealth-New South Wales Joint Task Force on Drug Trafficking Report, Vol 4: Nugan Hand {Fart II), March 1983.

2.       Greg Earl, “Nugan linked to heroin racket,” Sunday Pictorial (Australia), March 26, 1982.

3.       Philip Frazer, “Dirty Tricks Down Under,” Mother Jones, February/ March 1984.

4.       Nancy Feinstein and Christopher Simpson, “The spies who are out in the cold,” Inquiry, November 23, 1981.

5.       Peter Dale Scott, “The secret team behind contragate,” The Nation, January 31, 1987.

6.       Wall Street Journal, August 26, 1982.

7.       7. Report, op. cit., n. I.

8.       Penny Lemoux. “Blood Money.” Penthouse, April 1984.

9.       Report, op. cit. , n . I .

10.    James A. Nathan, “Dateline Australia: America’s foreign Watergate?” Foreign Policy , Winter 1982-83.

11.    Ibid: in an unprecedented move. Whitlam was ordered to resign by Governor General John Kerr, representative of the British Crown and former intelligence officer with abundant links to the CIA. For Flynn’s role in the overthrow of the Whitlam government, see Sunday Times (London), September 7, 1980. p. 1; National Times of Australia, November 9-15, 1980, p . 10; and Nancy Grodin. “The Ousting of the Labor Party: 1975.” CAIB, Number 16 (March 1982), p. 53.

12.    United States District Court, Southern District of Florida , Case No. 86-1146-CIV-KING, Affidavit of Daniel P. Sheehan, December 12 , 1986.

13.    Ben Bradlee, Jr. “H. Ross Perot to have asked for probe of U.S. official,” Boston Globe, January 11, 1987.

14.    Report, op. cit., n. 1. There was also an aborted plan to resettle the Hmong mercenaries in Guyana. See CAIR, Number 9 (June 1980), p. 24

15.    New York Times , May 17. 1987.

16.    Report, op. cit., n. 1.

No comments:

Post a Comment