BLOOD MONEY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00806R000100010033-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: August 24, 2010
• Sequence Number: 33
• Publication Date: April 1, 1984
• Content Type: OPEN SOURCE

-------- Sanitized Copy Approved for Release 2010/08/24: CIA-RDP90-00806R000100010033-3
? RTIC1E APPEARED
DM PARE if
PENTHOUSE
April 1984
The story of the CIA's
Nugan Hand Bank-an institution committed to
heroin dealing, money laundering,
arms trafficking, and covert dirty tricks.
111J0()11) MONEIT
BY PENNY LERNOUX
1980, 4 any on a Sunday morning in Jan..
isry two policemen driving along a lonely stretch of highway near the
wstralian city of Sydney came upon a Mercedes-Benz sedan with Its lights
in. Inside the car slumped across the front seat in a pool of blood was the
Body of a middle-aged man. In the dead man's pockets the police found the
Business card of William Colby, a Washington lawyer who three years earli-
r had been director of the Central Intelligence Agency. On the back of the
and was the itinerary of a trip Colby intended to make to Asia.
Next to the body was a rtew rifle. Alongside it was a Bible with a meat-pie
'rapper as a place mark. On the wrapper were scrawled names-William
olby's and California Congressman Bob Wilson's. Wilson was then the
inking Republican member of the House Armed Services Committee.
The dead man turned out to be a Sydney merchant bank c amed Frank
ugan. He was a co-owner of the Nugan Hand Bank; an Australian bank
ith 22 branches worldwide. Investigators at first theorized that Frank Nu- 1
in had killed himself because of business troubles. Only later was it
amed that among the people with whom his bank did business were a
ember of prominent mobsters. But this would soon seem like a minor do-
it. For Frank Nugan's apparent suicide triggered an international scandal
at continues to this day, involving heroin dealing, arms trafficking, money
undering, the CIA, and enough high-ranking U.S. military officers to
inch a major invasion.
the time of his death. 37-year-old Frank
an was facing criminal charges for de-
wding shareholders in the Nugan-family
)d business. Auditors had discovered
cash payoffs by the company to peo-
apparently linked to drug trafficking.
ree months later, after the Nugan Hand
ink collapsed, it was learned that Nugan
d illegally diverted S1.6 million of the
nk's money to the family business. The
nk's directors knew of Nugan's legal
ubles. and one of them frequently ac-
rnpanied him to the hearings that led to
mal charges. This man was General
win F. Black, former commander of
ops in Thailand during the Vietnam War
d later assistant army chief of staff in the
cific. He was then the Nugan Hand
nk's representative in Hawaii.
=rank Nugan was also in hot water with
bank's auditors. who had refused to
Drove the accounts for the bank's Ba-
na and Cayman branches. This meant
the bank was about to be decertified.
were decertified. it would lose its com-
rcial status with other banks and would
collapse. Stephen K. A. Hill. a Nugan
Hand director who later testified that he re-
wrote the books on Frank Nugan's in-
structions, had had no problem with the
auditors during earlier meetings. On at.
least one occasion he was accompanied
by another high-ranking former U.S-mili-
tary officer, Earl P. ("Buddy") Yates, re-
tired U.S. admiral and former chief of staff
for strategic planning with U.S. forces in
Asia and the Pacific. Yates was the Nugan,
Hand Bank's president.
Nugan, at that time, had taken to going
to church almost daily. He wrote mystical
notes to himself in a Bible, which was al-
ways with him. "Visualize 100.000 cus-
tomers worldwide," said one. "Prayerize.
Actualize." And he spent money as if he
owned the mint-S500,000 to remodel his
1 family's lavish waterfront home in Sydney,
1 complete with sand for an artificial beach.
On the day he died he was completing ne-
gotiations for the purchase of a $2.2-mil-
lion country estate.
If such actions reflect suicidal intent,
none of Nugan's associates seemed
T
I
y
th
c
a
only in Isolated bits and pieces, in part be-
cause of the U.S.-intelligence communi-
ty's reluctance to help or supply informs-
lion to Australian investigators.
The Australian government's investga-
tion of the bank's dealings is still under
way. and among the details that have
emerged so far are the following:
? The Nugan Hand banking group par-
ticipated in at.least two U.S -govemment.
covert-action operations.
? The bank had strong links to the U.S.-
intelligence community, and some of the
banking group's executives were involved
in large weapons shipments to American-
aided forces fighting against Communist .;
guerrillas in Angola.
? According to the report, retired Admi-
ral Yates, while president of Nugan Hand,
as pan of a bank project urged a CIA con.
tract agent to threaten the Haitian govern.
ment with a coup. (Yates told the Wall
Street Journal that the overthrow threat
wasn't proposed by him but by a prospec-
tive bank client. Yates said he quickly re-
jected the idea.)
? Most of the bank's business was
found to have been money laundering
rather than deposit taking.
a The bank was also involved in deal-
ings with international heroin syndicates,
and there is evidence of massive fraud
against United States and foreign citizens.
? coA7VVrnsD
Sanitized Copy Approved for Release 2010/08/24: CIA-RDP90-00806R000100010033-3