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December 22, 2016
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August 3, 2010
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September 2, 1980
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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 Sanitized Copy Approved for Release 2010/08/03: CIA-RDP90-00806R000200820047-8 Sanitized Copy Approved for Release 2010/08/03: CIA-RDP90-00806R000200820047-8 Z 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. Sanitized Copy Approved for Release 2010/08/03: CIA-RDP90-00806R000200820047-8