THE BANK, THE CIA, HEROIN AND MURDER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00806R000200820047-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: August 3, 2010
• Sequence Number: 47
• Publication Date: September 2, 1980
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2010/08/03: CIA
ARTICLE APPEARED LONDON TIMES
ON PAGE Z 2 SEP E?4BER 1980
oin and
The bank, the CIA, herdIi?de1
LAST' FRIDAY afternoon the
Melbourne coroner issued a war-
rant for the arrest of Terrence
John Clark on a charge of
murder. Clark, a New Zealander,
is alleged to have hired the killers
of a young married couple named
Wilson. The motive was revenge.
The Wilsons were both shot in the
head, then buried in a shallow
grave near a Victoria surfing
beach, where they lay undis-
covered for almost two months.
Normally. a sordid murder in
Victoria would merit scant atten-
tion beyond Australia. But this
time more than local affairs are
at stake. The coroner's move is
only the latest development in an
extraordinary'afiair that involves
the collapse of an international
merchant bank, drug trafficking,
and the American CIA.
Nor are the Wilsons the only
ones to have died. In the last two
years the?Nugan'Hand affair, as it
is known, has been punctuated by
a series of mysterious disappear-
ances and violent deaths around
the world. One of the dozen or so
victims-a New Zealand heroin
'trafficker named. Christopher
Johnstone-was found in Britain
last October, at the bottom of a
flooded. quarry near Chorley in
Lancashire. His hands had been
cut off.
Police on tour continents are
trying to find the exact link be-
tween these deaths, the CIA and
the collapse of a Sydney-based
bank, Nugen Hand International.
As yet, many of the pieces of
the puzzle, like the records of the
bank, are-missing. But from the
findings that have so far emerged,
and from-our inquiries, it is clear
that the story has a plot worthy
of John le Carre. The initial
conclusions are startling: '
? Nugan Hand, which boasted
offices. or representatives in a
dozen countries and an annual
turnover- of #500 million, was a
banker for the heroin trade.
? And-tbere-is evidence that the
bank was nurtured, and may even
have been set up by the CIA.
-,Nothing encapsulates the biz-
Hand: vanished Paisley: shot dead Nugan: shot dead
acre tale better than the death of The link was Paisley's close
John Arthur P a i s I e y, whose friendship with an " international
bloated body was fished out of economist " named Walt McDon-
Chesapeake Bay, Maryland, in aid. On his own admission, Mc-
September 1978. He had 401h of Donald was a " consultant " to the
diving weights strapped to his CIA for 25 years. He was also a
waist and a bullet hole behind the consultant to the Nugan Hand
left ear. Bank
The Maryland police decided
that Paisley had set out alone in
his- 31ft sailing yacht Brillig and
had committed suicide because of
" personal problems." That ex-
planation might have been ac-
cepted, but for some curious
discrepancies.
The CIA immediately acknow- 1 always huge discrepancies bed
ledged that Paisley had been on tween the bank's aspirations and
its staff, but it lied about his rank the reality.behind u.
and status. The agency portrayed Founde~i in 1976, the u
Hand banks first -branch con-
him as a not-very-important ana- silted of little more than a brass
h
197A in , _An-_ I_-..
t
e
fact, as deputy head of the office
of Strategic Research he was,
perhaps, the CIA's most senior
last voyage Paisley took with him,.
current and highly classified CIA
documents. It has also emerged
that Brillig was equipped with
including a transceiver far beyond
the requirements of the average
These, and other- puzzling as-
into the " troubling questions.'.'
that hang over Paisley's death. So
vestigation, and no explanation of
what Paisley was really up to. But
that links Paisley to the
Last Friday. McDonald-who
lives on Chesapeake Bay-told us
he had been given the task of find-
ing a bank in Florida that Nugan
Hand could buy, in keeping with
its ambitious plans for expansion.
In tact, such, a move would have
were
sources. But - then there were
Cayman Islands. But Irons its
Sydney base it claimed to
specialise in " flexible, secure
market
id mone
d hi
hl
li
y
g
qu
an
y
instruments" and offered "cont-
plete security and confidentiality
. in the best traditions of
Swiss banking."
Its co-founder,' Frank Nugan,
37, son of a Spanish immigrant
to Australia, adopted a matching
lifestyle. According to Walt.
McDonald, Nugan " never took a
taxi when he could hire a limo-
since, never flew tourist when I
he could go first-class, never flew
first-class when he could charter
a plane." But Frank Nugan's
world ended on January 27 this
year, when he was found shot
dead in his Mercedes-Benz
sedan on a lonely road in the
Blue Mountains, 100 miles west
of Sydney.
His death was officially de-
clared a suicide. Sydney police
gathered little forensic evidence
at the scene-like the Maryland
police, they assumed from an
early stage that they need not
look beyond suicide.
STAT
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Nugan's death thrust into the
limelight his 38-year-old Ameri-
can partner Mike Hand, who
was soon telephoning the bank's
business associates with a dire
message: "You're not going to
believe this," he announced,
"but it looks like Frank ripped
off a stack of money."
Tea. one day last June, after
calling in a liquidator, and
blaming his former partner for
everything that had gone wrong
Hand disappeared.
Witt: both senior partners
cne, only chaos remained. The
liquidator called in by Hand
found many of the bank's
records missing, others written
to an opaque private code.
Estimates of the bank's debts
range up to #25 million.
Most puz_ling of all, apart
front two Australian city coun-
cils, and some hapless American
investors in Suudi Arabia, al-
most no creditors have publicly
emerged to stake their:-claim.
Why?
One explanation is that
Nugan Hand's chief client was
the CIA, and that the bank wcs
set up to move covert funds into
South-East Asia.
There is a firm precedent.
Until 1975, th CIA employed
another outfit based in the Cay-
man Islands, the Castle Ban
to finance its activities against
Cuba and Latin America. And
what is notable about Nugan
Hand is the remarkable pro.
portion of its associates who
prove to have US intelligence
backgrounds.
Foremost was Hand himself.
He arrived in Australia in 1967
Colby: denial Moynihan: wanted
after serving with the US Special
Services in Vietnam. (He won
the US Congressional Medal.)
He soon set up a company
named Australasian and Pacific
Holdings most of whose direc-
tors or s tareholders worked for
Air America, the CIA-controlled
airline involved in nefarious
activities in South-East Asia.
When the bank was set up in
1976, with its principal overseas
branch in Hong Kong, Hand soon
enlisted other American officials
as consultants and representa-
tives. They incitided Admiral
Earl Yates, the bank's first presi-
dent, and General Ed Black,
"Hawaii representative " who
had served with the OSS (a fore..
runner of the CIA) and been a
commander in Vietnam.
Nugan Hand's man in Taiwan
was flight services manager for
Civil Air Transport, another CIA-
owned company. And the Manila
"consultant " was General Roy
Manors, a Vietnam veteran, who
is now helping the CIA to ana-
lyse the failed attempt to rescue
the American hostages in Iran.
Another US employee of
Nugan Hand was George Farris,
who served with the US forces
in Vietnam. Then there was the
CIA's "retired " consultant Walt
McDonald-and, possibly hi,
dead friend, the analyst Paisley.
McDonald denied to us any
knowledge of . a connection
between Nugan Hand and the
CIA. He also denied that Paisley
was linked with the bank. But
there is the intriguing coinci-
dence that Paisley's wife, Mary-
ann, also worked for the CIA.
Her job was in the Requirements
.Division-which finances clan-
destine CIA activities overseas.
Last, there is the curious fact
that a visiting card found on
Nugan's body bore the name of
William Colby, director of the
CIA from 1913 to 1975. Colby
says he was simply Nugan's US
legal adviser. "There was no
connection between Mr Nugan
and my intelligence background,"
he said.
Of course, the CIA may not
have been involved at all. One
interpretation of the gathering
of intelligence men on Nugan
Hand's payroll could be that
Hand merely offered retired
former colleagues a valuable
business opportunity. But even
so, their association with Nugan
Hand must now be acutely
embarrassing to them. For,
whatever else it was up to, one
of Nugan Hand's sidelines was
acting as banker to big heroin
traffickers.
Rod Hall, Victoria's assistant
commissioner for crime. say-
he has seized 23 cases of docu-
ments from a Sydney solicitor's
office that prove that Nugan
Hand handled money for su-.?
petted traffickers. An Australian
Royal Commission report pub-
lished two weeks ago says one
of those believed to be involved
is the British peer Lord Moyni-
han, formerly of Stowe College
and the Coldstream Guards, who
is wanted in this country for
fraud. He now lives in Manila.
Others implicated include
Australian politicians. But, un-
doubtedly, the senior and most
sinister trafficker linked to
Nugan Hand was Terrence Clark,
the New Zealander now 'sough- '
in connection with the murdet
of the Wilson couple.
Hall claims that Clark im-
ported 48 kilograms of heroin-
worth #1 million a kilo-into
Australia in just nine months.
Clark himself boasted that ha
had so much money he was un-
able to spend the interest.
There was no firm evidence
against Clark until early 1979,
when the Wilsons, who were
working for him as couriers,
agreed to tell all to the police.
When Clark was first told,
by a solicitor's clerk, that thr
Wilsons had grassed," he re
fused to believe it. But lie soon
received incontrovertible proof.
In his pay were two senior
" narcos," agents of Australia's
Federal Narcotics Bureau. The%
handed him tares of the Wilson.
making their s.,atements.
By then, Clark had left Aus.
tralia. But last Friday, Mel-
bourne's coroner said he was in
no doubt that Clark hired hit.
men to kill the Wily ins.
Events seemed , to reach a
climax when Frank Nugan took
his last car-ride in January and
Alike Hand disappeared in June.
Since then, however, Nugan
Hand's representative in Saudi
Arabia has also vanished.
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