Document Type: 
Document Number (FOIA) /ESDN (CREST): 
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Document Creation Date: 
December 22, 2016
Document Release Date: 
August 3, 2010
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Case Number: 
Publication Date: 
November 13, 1982
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PDF icon CIA-RDP90-00806R000200820021-6.pdf94.65 KB
Sanitized Copy Approved for Release 2010/08/03: CIA-RDP90-00806R000200820021-6 ARTICLE APP C.1 1::ru COMPANY NEWS Australia Suspects Bank Link To C.I.A. Spada] to Mn 6New York Times SYDNEY, Australia, Nov. 12 - Australian detectives are expected to visit the United States and Southeast Asia in the next few weeks as they at- tempt to determine whether the failed Sydney based Nugan Hand Merchant Bank was involved in trafficking in heroin and covert activities of the United States Central Intelligence Agency. Under particular scrutiny will be the work carried out for Nugan Hand by retired United States Government officials and military officers between 1977 and 1980, when one of the bank's founders, Frank Nugan, was found shot dead and the other, Michael Hand, vanished. The bank collapsed following Mr. Nugan's death. In a report released earlier this week, the Australian Government said it had uncovered evidence of a link between the C.I.A. and Nugan Hand. The report, heavily. censored because the Government thought that publication might inhibit the continu- ing investigations, was made by a po- lice group studying the possible in- volvement of the bank in drug traf- ficking. The report said that Mr. Hand, who was born in New York City, and a Nugan Hand associate Bernard Houghton, a 62-year-old ;Texan who was the bank's representative in Saudi Arabia, had a background in American intelligence before they ar- rived in Sydney in 1967. Mr. Hand, who became an Austral- ian citizen in 1979, is believed to be in the United States, the report said. A'Strong Inference' The police report said of Mr. Hand:. "His business activities in the late 1960's and the early 1970's with mem- bers of the C.I.A.-controlled airline, Air America, and C.I.A.-Connected Continental Air Service and Agency for International Development led to the strong inference that Hand's intel- ligence activity was with the C.I.A. NEW YORK TIMES 13 NOVEMBER 1982 "There is some evidence to suggest that Hand retrained his U.S. intelli- gence ties through the 1970's and prob- ably into the 1980's. Houghton was as- sociated with U.S. intelligence-person. nel in Southeast Asia and Australia, and had some type of association with personnel in the Australian security and intelligence organization." Kevin Newman, Australia's admin- istrative services minister, said in a statement that senior American offi- cials had assured him that the C.I.A. had no involvement in the bank. The report said it was not drawing conclu- sions about C.I.A. involvement with the bank, and its only recommenda- tion was that further investigation was warranted. The censored part of the report is believed to discuss links between Nugan Hand and organized crime, es-' tablishing that the bank was involved in heroin smuggling. Millions of Dollars Transferred Among the deletions in the report were nearly two pages following the heading "The unfinished investiga- tion, United States personnel in- volved." Almost 40 pages of the 240-page re- port were devoted to Mr. Houghton: The report said that when Mr. Hough- ton ran the Saudi Arabian office, the bank transferred millions of dollars out of Saudi Arabia. The money has yet to be traced. Many pages relating to Mr. Hough- ton were deleted. Their headings in- clude "The destruction of Nugan Hand records" ; his meetings in 1979 with a former? C.I.A. operative, Edwin P. Wilson, who was recently arrested in the United States and charged with exporting explosives to Libya to help train terrorists, and a section headed "Houghton and two Australian clients of Nugan Hand -a case of fraud?" The report included a long list of Americans who worked for Nugan Hand. Colby Is Named Among those named were Rear Adm. Earl Yates, United States Navy, retired, the first president of Nugan Hand International; William E. Colby, Director of Central Intelli- gence from 1973 to 1976, who worked as legal adviser to Nugan Hand Inter- national after 1979; Walter McDonald, former economist and oil expert at the C.I.A., who joined Nugan Hand Inter- national in 1979 as a consultant; Brig. Gen. Edwin Black, United States Army, retired, the bank's'representa-. tive is Hawaii; Lieut. Gen. LeRoy Manor, United States Air Force, re- tired, the Nugan Hand representative in Manila; Dr. Guy Pauker, a consult- ant to Nugan Hand International, and Dale Holmgren, the bank's Taiwan represefitative, who was an Army offi- cer in Taiwan. Apart from the police investiga- tions, a Royal Commission on drug trafficking is also looking into activ- ites of the Nugan Hand Bank. A United States Senate select com- mittee on intelligence has also been. investigating whether there was a link between the bank and the central In- telligence Agency. It has yet to pub- lish its report. STAT STAT Sanitized Copy Approved for Release 2010/08/03: CIA-RDP90-00806R000200820021-6