INVESTORS LOSE A FORTUNE IN FIRM OPERATED BY THE CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00494R001100700035-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: July 5, 2011
• Sequence Number: 35
• Publication Date: March 15, 1984
• Content Type: OPEN SOURCE

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ARTICLE APPEARED
OIL PAGE THE LISTER ( U.K.)
15 March 1984
Gavin Esler_CIA mischief in Hawaii`
Investors lose a
fortUiieinfiim
operated by the CIA
Gavin Esler tells the story of a CIA operation in Hawaii which could
serve as a storyline for an episode in Hawaii Five-O, except that there is
no scope for its square-jawed hero, Police Chief Steve McGarrett, to
make everything all right.
ike any other upmarket financial
consultancy, the Hawaiian firm of Bishop,
Baldwin, Rewald, Dillingham and Wong had
a company photograph taken. In the front
row sit the chairman. Ron Rewald, and the
president Sunny Wong. Mr Bishop, Mr Bald-
win and Mr Dillingham are not in the picture
because they do not exist. These are what
Hawaiians call 'kamaaina' names-old-
established family names in the islands used
as pan of the company name to give it spu-
rious credibility.
Bishop Baldwin, which collapsed into bank-
ruptcy last August, with S22 million of inves-
tors' money allegedly gone missing, could
have been a simple swindle: the chairman,
Rewald, cheating naive investors. Instead, it
was a major CIA intelligence front-wbat
CIA Central Covet Staff at headquarters in
Langley, Virginia, would call a 'proprietary'.
It was a functioning company of some 40 or
50 people engaged in legitimate business acti-
vitics to provide a cover for around ten CIA
agents. How the operation fell apart and
come to be mistaken for a confidence trick is
a talc of lies and deceit which reveals how the
new CIA under its direc-
tor. William Casey,
operates, and how covert
operations are organised
not, as is widely
assumed, mainly through
American embassies, but
through private busi-
nesses.
Newsnight has un-
covered hundreds of
pages of documents and
tape-recordings relating
to Bishop Baldwin which
show how it was used to
spy on the President of
the Philippines. steal
high-technology plans
from Japan and sell arms
clandestinely to Taiwan. The story links
together three CIA station chiefs, an Ameri-
can four- and a three-star general and one of
the ten richest bankers in the world, a Fili-
pino called Enrique Zobel. On the sidelines
are 400 investors who provided the cover for
CIA operations and have now lost their
money.
Ron Rewald came to Hawaii in 1977, from
Milwaukee, Wisconsin, with. a bankruptcy
behind him and a conviction on a minor
charge. He had one qualification: in the 1960s
he had played a minor role in illegal CIA
spying on American students involved in pro-
tests against the Vietnam War. By 1983 he
was being entertained by generals and CIA
station chiefs, running a fleet of limousines
and playing polo with sultans and princes.
The transformation began in 1978. when
Rewald and Wong set up Bishop Baldwin in
luxurious offices in the heart of Honolulu's
business district-Rewald even had an indoor
waterfall behind his desk. In a sworn affidavit
Rewald says that to complete the cover the
CIA wrote a phoney history for the company,
saying that it had operated in Hawaii since
'territory days'-before
Hawaii became the 50th
state in 1959. The' CIA
also printed a false
degree certificate for
Rewald to hang on his
office wall, and ensured
he was listed as an 'old
boy' in university
records. Such was the
CIA fiction, but. inevit-
ably. the truth was even
stranger.
Bishop Baldwin's staff
sound like extras from a
James Bond film. Jack
Kindschi. listed in pro-
motional literature as an
'outstanding consultant'.
Continued
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was better known at CIA headquarters as a
covert operations veteran of Europe and Cen-
tral America and CIA station chief in Hon-
olulu in the early days of Rewald's company,
before 'retiring' to join Bishop Baldwin, Bob
Jinks, a lawyer from Napa, California, was
another 'outstanding consultant'-and, he
admitted to us, a CIA agent involved in asses-
sing the projected economic impact of the
Communist takeover of Hong Kong in 1997.
Sue Wilson, the office manager, worked for
nine years at the ultra-secret National Security
Agency in Washington, including a spell as
secretary to the head of the Cryptoanalysis
and Operations division. Finally, there was
Captain Ned Avary, a 'very experienced con-
sultant', whose name frequently appears on
Bishop Baldwin .telexes concerning an arms
deal with Taiwan.
From 1950 onwards the company grew
rapidly. Four-star General Hunter Harris,
formerly, Vice-Commander at Strategic Air
Command in Nebraska. was an investor and
before it collapsed last summer, was going to
join the company. The Commander of the
Pacific Air Force, three-star General Arnie
Brasswell, was also planning to join the com-
pany when he retired from the military in
Hawaii last autumn. Brasswell was often
photographed socialising with Rewald and, in
December 1982. invited him to a dinner in
honour of the Air Force Chief of Staff Gener-
al Charles Gabriel. Every male guest at the
dinner was either a general or admiral, except
the former bankrupt from Milwaukee.
Rcwald's cover as a multinational financial
consultant allowed him to live like a playboy
in a house worth two million dollars on a
private lagoon along the coast from Waikiki
Beach. He owned at least 20 cars, and ran the
Hawaii Polo Club -here Prince Charles play-
ed in 1982, and where television stars, like
Jack Lord, and the Governor of Hawaii
would occasionally drop in. But the polo club
doubled as an ideal CIA operation where
agents, 'outstanding consultants' and military
friends could meet and cultivate potential
sources of intelligence.
Through polo, Rewald assiduously culti?
vaied the Sultan of Brunei, the absolute ruler
of a tiny oil-rich state on the tip of Borneo
granted independence from Britain this year
Brunci is a member of OPEC and Bishop
Baldwin, and the CIA, hoped to obtain in-
formation on the movement of oil-prices and
to encourage the Sultan to invest in the Un-
ited States. Shortly before independence, the
Sultan switched over four billion dollars of his
investment portfolio from the care of Britain's
Crown Agents to the supervision of two
American banks, Morgan Guaranty and Citi-
bank.
Enrique Zobel, the Filipino, reputed to be
one of the ten richest bankers in the world, is
also a keen polo player and frequently seen in
the pleasant surrounding of Hawaii. Zobel is
cntical of President Marcos, but has access to
the highest levels of Filipino society, and
through the banking system would be aware if
Marcos. in anticipation of being deposed,
were to move funds out of Manila. Ever since
the downfall of the Shah of Iran in 1979 and
American intelligence's humiliation in failing
to predict either the rise of the Ayatollah
Khomeini or the seizure of the American
Embassy hostages, the CIA has been rebuilt
and covert operations given a new prominen-
ce. A key role is to ensure that Americans are
never again caught by the surprise of a hostile
regime supplanting an ally. Rewald says
label was 'number three' on the CIA's list of
powerful people to be cultivated. We have
obtained copies of a contract signed by both
Rewald and Zobel. setting up a joint corpora-
tion in Hawaii, an indication of how close the
two men had become.
Rewald was cultivating a number of In-
donesian businessmen, with such apparent
success that he was in line to become Indone-
sia's honorary consul in Hawaii last autumn.
Obviously, a titular appointment, it would
nevertheless have given Rewald an opponun.
ity to socialise with Indonesian politicians and
military leaders.
What the Hawaiian operation shows is that
CIA agents operating in deep cover arc far
more likely to work as 'businessmen' than as
'diplomats'. The reasons for adopting this
form of cover are obvious: the chance to en-
gage in mutually advantageous financial deals:
offering genuine investment sen'ices to for-
eign clients, and socialising with them results
in the perfect entree for intelligence work. As
CIA agent and Bishop Baldwin consultant
Bob Jinks put it to uc: 'We could hardly
knock on doors and say: "I'm from the CIA,
please tell me all you know."
But the operation fell apart. As investment
consultants they required investments, and
this proved the weak spot of an otherwise
thriving CIA-private enterprise operation.
Four hundred or so investors were recruited
on the promise "of exceptionally good-20 to
26 per cent-annual returns. Most were rela-
dons or friends of agents, or military figures:
Generals Brasswell and Harris, Jack Kindschi,
Kindschi's mother, Rewald and his ? family,
Bob links and 14 friends of his from Napa,
Californ ia. Some knew of the CIA connec-
tion, some suspected it, some were completely
in the dark.
In July 1983, Hawaiian television received a
tip-off from a disgruntled prospective investor
who, because the investment side of the busi-
ness was getting out of hand, had been turned
down. Hawaiian TV journalists investigated
and discovered the name of the company was
phoney, Rewald's degree certificate was false,
and they uncovered other deceptions. It
looked as though they had uncovered a fraud.
Most of the investors remained calm, but a
few panicked and petitioned, for bankruptcy.
Rewald also panicked and, fearing disgrace,
slit his wrists, losing four pints of blood. Continued
z,
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The company photograph
When he had sufficiently recovered, he was
arrested on suspicion of fraud. A bankruptcy
trustee was appointed and state charges of
theft were filed against Rewald. Now it was
the CIA's turn to panic, for they were faced
with imminent disclosure.
If Rewald defended himself against the
fraud charges, he could do so only by un-
covering a priceless network of CIA opera-
tions. Two agents. sent from Washington to
Honolulu, told the judge in the federal court
that to their knowledge there was no connec-
tion between Rewald. Bishop Baldwin and
the CIA. But, they said, six packets of docu-
ments and tapes had been seized during four
CIAJFBI raids on Bishop Baldwin's files, and
these should be sealed by the court because
they contained matter relating to 'national
security'.
Then the bankruptcy trustee's officer.
?Thornu RAY=.,' going through the by now
sanitised retraining filet, noticrd the CIA
were paying S5,000-worth of telephone bilk
for company, operating out of Bishop Bald-
win's Offices. These are, in CIA jargon.
notionals', or paper companies used to move
money to pay agents or provide cover for
other operations. 'Canadian Far East Trade
Corporation'. 'H and H Enterprises' and
'CMI Investments' led the trustee to condudc
that the CIA must have 'egg on its face' for
associating with a swindler. But, of course,
the relationship was far deeper.
Telexes in our possession from the Bishop
Baldwin offices from 'consultant' Ned Avary
talk of arms shipments to Taiwan. Successive
American administrations have attempted to
steer a difficult course between a rapproche-
ment with Communist China and supplying
Taiwan's military needs. Bishop Baldwin was
asked to supply tanks, personnel carriers,
army helmets and even secret laser sighting-
dcsices for rifles. Following the bankruptcy,
Rewald's lawyers have written to CIA direc-
tor William Casey, asking him to forward ten
million dollars'-worth of commission on the
deal to the company.
Rcwald also admitted to his lawyers, in a
tape-recorded interview, to stealing plans for
the Japanese High Speed Surface Transport, a
kind of levitationai train under development
by Japan Airlines in competition with Amer-
ican and European manufacturers. CIA in-
telligence requirements from 1979 show acute
interest in the project. Other intelligence re-
quirements relate to the prospect of Argenti-
na defaulting on American loans, and the
stability of.Thailand.
There are dozens of unanswered questions
about the Rcwald operation, not the least of
which is where did the money go? The trustee
believes, not having seen any of the key CIA
documents, that S13 million was spent in four
years by Rewald the playboy, and most of
Hawaii concurs. Rewald says the money was
funnelled through almost 100 bank accounts.
to Indonesia, Tonga, the Cook Islands, Cay-
man Islands, Fiji. Spain and South America,
and that former 'partners' are not likely to
come forward and admit to an association
with the CIA which might lead to their
deaths.
Whoever is correc , the investors have lost
their money. Ted Frigard lost 5300.000 and
has been evicted twice since the crash.
Through an old family friend, the flamboyant
San Francisco lawyer Melvin Belli. he and the
man who is supposed to have swindled him.
Rcwald, are taking joint legal action against
the CIA. Another lawyer, on behalf of 14
Californian investors. is suing William Cases,
and the CIA for negligence and being party to
the deceptions.
In any event, William Casey and CIA Cen-
tral Cover Staff will find themselves busy over
the next few months, explaining to creditors,
lawyers, and, ultimately, the American people
precisely what they were up to in the middle
of the Pacific. For the moment, the CIA. like
Messrs Bishop, Baldwin and Dillingham, arc
remaining absolutely silent.
Gotin Es/er reported on the CIA scandal in Ho-on
for .Vrsnight (BBC2). The producer .as David
Coxon Torlor.
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