BLOOD MONEY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00806R000200820006-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: August 3, 2010
• Sequence Number: 6
• Publication Date: April 1, 1984
• Content Type: OPEN SOURCE

,______ Sanitized Copy Approved for Release 2010/08/03 :CIA-RDP
ci`~`t".LE ~I~~EA~ED PENTHQUSE
April 1984
Q~ PA&~
The story of the CIA's
Nugan Hand Bank-an institution committed to
heroin dealing, money laundering,
arms trafficking, and covert dirty tricks.
1
..~.~ arty on a Sunday morning in Jan-
uary t 980, two policemen driving along a lonely stretch of highway near the
Australian city of Sydney came upon aMercedes-Benz sedan with its lights
on. Inside the car slumped across the front seat in a pool of blood was the
body of amiddle-aged man. In the dead man's pockets the police found the
business card of William Colby, a Washington lawyer who three years earli-
er had been director of the Central Intelligence Agency. On the back of the
card was the itinerary of a trip Colby intended to make to Asia.
Next to the body was a new rifle. Alongside it was a Bible with ameat-pie
wrapper as a place mark. On the wrapper were scrawled names-William
Colby's and California Congressman Bob Wilson's. Wilson was then the
ranking Republican member of the House Armed Services Committee.
The dead man turned out to be a Sydney merchant bank~amed Frank
Nugan. He was a co-owner of the Nugan Hand Bank; an Australian bank
with 22 branches worldwide. Investigators at first theorized that Frank Nu-
gan had killed himself because of business troubles. Only later was it
learned that among the people with whom his bank did business were a
number of prominent mobsters. But this would soon seem like a minor de-
tail. For Frank Nugan's apparent suicide triggered an international scandal
that continues to this day, involving heroin dealing, arms trafficking, money
At the time of his death. 37-year-old drank
Nugan was facing cnmrnal charges for de-
tr~udino shareholders in the Nugan-family
food business. Auditors had discovered
big cash payoffs by the company to peo-
ple apparently Inked to drug trafficking.
Three months later, after the Nugan Hand
Bank collapsed, it was learned that Nugan
had illegally diverted 51.6 million of the
bank's money to the family business. The
bank's directors knew of Nugan's legal
trcubles. and one of them frequently aC-
coTpanied horn to the hearings that led to
formal charges. Tris man was General
Edwin F. Black, former commander of
troops in Thai;and during the Vietnam War
and later assistant army ch~e1 of staff in the
Pacific. He was ther, the Nugan Hand
Sank s representative in Hawaii.
=rank Nugan was also in hot water with
the bank's aud,ters. who had refused to
accrove the accounts for the bank's Ba-
hama and CayT,an branches. This meant
that the bank was about to be decertified.
If ~t were decertif~eC. rt would lose its com-
mercialstatus wr,h ether 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
family's lavish waterfront home in Sydney,
complete with sand for an artificial beach.
On the day he died he was completing ne-
gotiations for the purchase of a 52.2-mil-
lion country estate.
Ii such actions reflect suicidal intent,
none of Nugan's associates seemed
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only .n ~so~ated bits and pieces, in part be-
cause of the U.S.-intelligence communi-
ty's reluctance to help or supply informa-
tion to Australian investigators. _
The Australian government's investiga-
tion of the bank's dealings is still under
way, and among the details that have
emerged so tar are the fol~owing:
? The Nugan HanC banking group par-
tic~pated in at.least two U.S.-government-
coven-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 part of a bank protect urged a CIA con-
tract agent to tnreaten 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
tound to have been money laundering
rather than deposit taking.
? The bank was also involved in deal-
ings with international heroin syndicates.
and there is evidence of massive fraud
against UnneC Slates and foreign citizens.
STAT
Sanitized Copy Approved for Release 2010/08/03 :CIA-RDP90-008068000200820006-3