Tuesday, December 31, 2019

Part 9: The Crimes of Patriots...The Admiral's Colors...Men of Substance

The Crimes of Patriots
A True Tale of Dope,
Dirty Money & The CIA

By Jonathan Kwitny

The Admiral's Colors 
"A former Admiral commands our Private Bank," blared the headline of a full-page ad in the Far Eastern Economic Review—the most prestigious business publication in the region, which is partly owned by the publishers of the Wall Street Journal. Below the headline was a photograph of Admiral Earl ("Buddy") Yates, occupying most of the top half of the page. 

The text of the ad says: 

When Rear Admiral Yates exchanged the gold stripes of an Admiral for the pin stripes of a banker, he brought added strength to NUGAN HAND INTERNATIONAL-PRIVATE BANKERS. He brought the experience of a man who administered the office that controls a powerful Navy. He brought the executive experience of a man that controlled the careers of tens of thousands of men. The financial expertise of a man who has controlled multi-billion dollar budgets and programs. The business experience of a man who has dealt with the largest engineering and construction firms in the world. All this and, in corporate terms, against the toughest competition in the world. 'Bud' Yates, like all NUGAN HAND executives, gets out and sees his clients on their own ground, face to face. He says, 'That's where you find the clients' problems and that's where you will find the solutions.' 

But because Admiral Yates's activities were more scattershot than Frank Nugan's or Bernie Houghton's, and seem to have involved politically sensitive matters, there is no thorough catalog of them. 

One strange and elusive piece of business he sought for Nugan Hand was to create and run a central banking system for Brunei, a sultanate the size of Delaware, located on the north coast of Borneo. Brunei has been self-governing since 1971, though until 1983 its foreign affairs remained linked to those of its colonizer, Britain. Brunei is a tiny spot, but it was a valuable listening post near the volatile Malaysian-Indonesian border. And life for its 220,000 souls, almost all of them pledged to Allah, had been considerably improved by the discovery of oil. 

Many interests covertly sought the sultan's ear as the rich little nation emerged. One was the United States Government. Just how much intimacy the United States achieved was suggested in December 1986, when it was revealed that the sultan had secretly helped the Reagan administration evade a Congressional ban on aid to the Contra rebels fighting to overthrow the Government of Nicaragua. 

In Congressional investigations of the affair, it was revealed that the sultan had agreed to donate $10 million to the Contras at the State Department's urging. Ironically, it was also revealed that U.S. operatives had lost the whole $10 million while trying to transfer it to the "private" Contra arms network being run by Bernie Houghton's old friend, "retired" air force General Richard Secord. National Security Council staff member Oliver North gave Assistant Secretary of State Elliott Abrams the wrong Swiss bank account number, and the sultan's $ 10 million wound up in the pocket of a Swiss businessman who was no doubt delighted with his windfall. In May 1987, after a five month search, the geniuses who run the U.S. Government finally located the businessman, and went to court to try to get the money back from him. 

Still unresolved was the possibly more important mystery of just what the United States had done to induce the sultan toward such generosity in the first place. Nugan Hand's involvement with the sultan certainly reveals he had long been inclined towards secret business dealings with allegedly private concerns that had links to the U.S. Government and promised under-the-table benefits. What he sought from Nugan Hand was assurance that if he were chucked out of office, either by his subjects or by one of his country's large neighbors, he could take Brunei's public treasury along with him as a retirement benefit. 

In March 1978, Brunei's state finance officer, Pehin John Lee, and an advisor to the sultan, Pehin Dato Isa, agreed to a deal under which Nugan Hand was to "submit . . . an initial draft of an enactment to  be known as 'The Central Bank of Brunei Enactment of 1978,' " and then would become the central bank's management advisor. Nugan Hand also sought the personal accounts of the sultan and other top officials. 

Financial officer Lee was assured in a letter from Nugan Hand representative Graham Steer, who worked directly under Michael Hand in Singapore, that "we are presently advisers to and are acting for a number of Government and semi-Government bodies throughout the world." These weren't specified. 

On May 19, 1978, according to surviving bank records, Admiral Yates was dispatched to Brunei to meet with His Highness the Sultan about the bank and about something referred to as Admiral Yates's "own 'project.' "* This "project" was apparently too sensitive to describe in Admiral Yates's marching orders from Steer, a copy of which was found in Nugan Hand's remaining files even though the orders are headed "CONFIDENTIAL" and "Please Destroy After Perusal." But from the context, the "project" seems to have more to do with intelligence about future political alignments in the region than with banking. 
*On May 17, 1987, a Sunday and the day before the already type-set galleys of this book were to be sent to the printing and binding plant for the last time, Admiral Yates responded to five years of queries, the latest request having been mailed to him in January, 1987, when, he says, he was on a boat trip from which he just returned. Several specific discrepancies are footnoted. 
Admiral Yates says he never went to Brunei. "I remember some discussion of it. I was interested in it. I don't remember the details of it," he says. He says he doesn't remember why he didn't go, or whether someone else from Nugan Hand went in his stead. 
The memo leaves little doubt about Nugan Hand's main selling point, noting, "We would provide his Highness the Sultan a Bank structure and Depository system which he alone can control should any change of Government take place, together with top security for deposits held in Nugan Hand Bank to ensure confidentiality in all matters." 

Regarding financial officer Lee, the instructions to Admiral Yates say, "It would seem that we would have to run one more conversation with him of private personal advantage to him." The memo does not clarify whether this means a bribe. 

"As to your own 'project,' " the memo continues, "you will notice from the recent press release that both Malaysia and Indonesia are taking more than a close look at Brunei, and we were advised that the [result of the] closed session between the prime minister of Malaysia and the president of Indonesia was that Indonesia would not stand in the way of Malaysia should it wish to incorporate this State in their own federation. There is no doubt about it that the oil is the attraction for both Malaysia and Indonesia." 

How Nugan Hand learned the contents of a closed meeting between the Malaysian and Indonesian heads of state is not told. But the memo notes that "under the above political circumstances surrounding Brunei, your own proposed 'project' should be warmly received not only by the British High Commission but also by the Sultan, and in particular his advisor." 

No known files reveal what came out of Yates's trip to Brunei. It may have failed, or it may have succeeded so well that the results were among the records that Admiral Yates and other Nugan Hand managers saw fit to remove from the office in the week after Frank Nugan's death. The Stewart Royal Commission didn't look into it. 

But Yates continued to travel for the cause. John Owen, the Nugan Hand representative in Bangkok, remembers Yates arriving there, pulling a flask of brandy out of his pocket and adding it to his morning coffee.* Others remember Yates talking about a big petroleum reprocessing deal, but nothing like that eventuated. 
*Yates says he never drinks spirits.  
Some correspondence found in Nugan Hand's own files indicates that Yates went to Beirut for the bank in 1979—and was searched by customs on his arrival into Washington. On the continuing flight, he wrote angrily to Mike Hand back in Singapore, "They stopped me, pulled me out of line, searched me from head to toe and questioned me about my banking activity dealing with overseas banks." From the context, Yates had been in Beirut on behalf of a Nugan Hand client in the Far East, but the specifics weren't disclosed. 

The note from Yates was found in the files with a memo attached, carrying Mike Hand's handwritten reaction. "Adverse news preceded Buddy to Washington," it said, noting that the bank's client was very unhappy over losing money on Yates's mission. Yates had paid several thousand dollars on the client's behalf, the memo says, though it doesn't say what for. 

An official of the Hong Kong liquidator's office says that from what he can tell from the surviving records, "Yates was off trying to make deals with big shots that never came off. He stayed away from day-to-day operations. The thing was actually run by Hand and Nugan, and later Hand and Houghton." 

As long as the question of Nugan Hand's relationship to the U.S. Government stays open, however, one has to question whether Yates's seemingly fruitless journeys can all be chalked up to foolishness and incompetence. Brunei, Beirut, and Southeast Asia were all war zones or prospective war zones. What Yates could have been doing is open to the imagination, but if he were running government missions, or government-approved missions, under cover of a private company, he would hardly have been the first person to do so. 

Nugan Hand's valued friends at the ANZ Bank certainly suspected Nugan Hand did CIA business. A memo in ANZ's files says an ANZ officer brought the matter up in conversation with the owner of a large Hong Kong bank, General S. K. Yee, former head of Chiang Kai-shek's Kuomintang army. The memo says that General Yee, who might be expected to know a thing or two about CIA connections, and who had just been talking to Admiral Yates about the possible sale of his bank to Nugan Hand, assured the ANZ officer that the connections were real. 

One project Admiral Yates worked on intensely with Mike Hand throughout 1979 and even into 1980 was, at least ostensibly, the transfer of thousands of Indochinese refugees from Asia to the Caribbean. It was hoped to obtain millions of dollars in grants from the United Nations High Commission on Refugees, and perhaps other quasi government funding, which would flow through Nugan Hand—although everyone who discussed the project insisted that it was motivated by charitable, not profit, impulses. 

But the whole idea seems a bit bizarre, and it was pursued through some curious channels. There have been official and unofficial suggestions that an ulterior motive lay behind the refugee project. Moreover, there are discrepancies in the accounts that have been given of the affair even some involve plans for a coup d'etat in Haiti. 

Discussing it later, Admiral Yates has attributed the project to Mike Hand's longstanding humanitarian concern for the fate of the allies who loyally fought alongside him in Vietnam. That raises the question, however, of why for counsel on the project Yates decided to turn immediately to Mitchell WerBell III, of Powder Springs, Georgia, who is not a man best known for his charitable pursuits. WerBell is, rather, better known as a longtime trainer of terrorists, and inventor and seller of mini-machine guns and other terrorist equipment, on contract to, among others, the CIA. 

Admiral Yates gave this explanation to the Joint Task Force for his choice of consultants: "As I recall, WerBell had extensive experience in Central America, according to the information we had. At the time we were involved in trying to get refugees housed into various western hemisphere countries and we thought that WerBell might be able to help us with some insights into getting them accepted." 

When a task force investigator asked who arranged the WerBell contact, Yates said, "I don't know. It might have been Roy Manor," the Nugan Hand general who was an expert in guerrilla warfare. (Manor, for his part, says he met WerBell through Yates, though he says he's seen WerBell since then.) "I was aware that WerBell was in the soldier-of-fortune business," Yates explained to the task force. 

And, boy, was he—with a lust for fighting communism that was actually nurtured in the Russian Revolution! This is how the task force summed up WerBell's incredible career: 

A U.S. citizen born 8 March 1918, WerBell is the son of a white Russian emigre who served in the U.S. as the Czar's liaison officer. WerBell graduated in 1938 from Fork Union Military Academy in Virginia and served with the Office of Strategic Services (O.S.S.) in China during World War II. 

He retired as a lieutenant colonel and ... commenced his own public relations firm offering 'geopolitical p.r.' to such people as the Dominican Republic's then president Hector Bienvenido Trujillo Molina and Cuba's Fulgencio Batista [two dictators the United States Government supported, with continuing unpleasant repercussions]. Following the rise to power of Fidel Castro, WerBell led anti-Castro missions, his teams comprising for the most part... exiled Cubans and former U.S. military personnel. . . 

During the early 1960s WerBell was active in the Southeast Asian conflict and served as a training advisor to the Special Forces in Vietnam. . . . 

WerBell has been and still is involved in a number of U.S. companies which under the descriptions of 'defence' and 'physical security' offer advice on guerrilla warfare [the task force reported]. He is a former licensed firearms dealer and has been reputedly involved in the sale of arms to anticommunist or anti-left wing forces. . . . 

In December 1974 U.S. authorities seized a large quantity of weapons owned by one of WerBell's companies. Subsequently his son and an associate were indicted on charges of conspiring to sell 2,000 submachine guns and 1,000 silencers. . . . All charges were dismissed. . . . 

Since the late 1970s WerBell has owned and operated a private training facility for counter-terrorism and counterinsurgency in Powder Springs, Georgia. . . . Facilities at the center ... include a gun laboratory, two firing ranges, high-speed driver training track and a parade ground. Attendees have included serving U.S. military and enforcement/secret service personnel, private individuals and foreign nationals. . . . 

WerBell is credited with the design of the world's smallest submachine gun, the Ingram and the Ingram silencer. 

Finally, the task force said, "WerBell is widely accepted as having been since the 1950s through the 1970s until possibly the present day, a contract agent for the CIA and many of his actions have been carried out on their behalf, though neither the precise nature of that relationship nor extent of his sanctioned actions is known." 

Asked about this, WerBell says, "Not so! I never worked for 'em. I've worked with the CIA, but I never got paid by 'em." Does that mean he did it for free? No, he says, he got paid. But the money came from "a group of well-minded private citizens" he would prefer not to identify. 

The task force also provided, by way of exhibit, an advertising brochure for his training camp that lists twenty-six major covert actions WerBell has been associated with—including General Manor's raid on the Sontay prison camp in 1970. "I have no idea where the hell that came from," WerBell says; "it certainly didn't come from here." Manor says WerBell "had zero to do with Sontay." 

Why would Admiral Yates, whether or not on General Manor's advice, consult a man like WerBell about a refugee-aid project? Well, the answer may be that the refugee project wasn't the real, or at least the only, reason they were meeting. 

Whereas Yates told the task force that his chat with WerBell was arranged by someone else, possibly Manor, and "was my one and only meeting and discussion with him," according to the task force, WerBell "said that he knew Yates through their connection with the U.S. Armed Services." 

Then WerBell told the task force that he and Yates actually discussed promoting a possible revolution in Haiti. WerBell had some experience with Haitian revolutions. In 1967, WerBell had been indicted by a Miami, Florida, federal grand jury for his involvement in an attempt by Haitians, Cuban exiles, and others to mount an invasion of Haiti from Florida. 

The indictment was dropped, which, WerBell says,* shows that the U.S. Government sanctioned the operation. He says the invasion he organized wasn't intended to really happen, but was a ruse to bluff Haitian dictator Francois ("Papa Doc") Duvalier into a more moderate course, and to test Fidel Castro's responses.
*This is what he told the task force, and repeated in an interview with the author. 

The task force, after interviewing WerBell on June 12, 1982, reported, "Yates indicated that he wished to meet with WerBell as there were some matters affecting Haiti which could be to their mutual benefit. . . . Within a short period of time, WerBell met with Yates, 'some other U.S. military personnel' whom WerBell declined to name, and Clemard Charles,* an exiled Haitian." 
*The task force reported the name as Charles Clement, possibly because that was the way WerBell remembered it. Some research into Haitian politics, and a phone call to a Charles ally in New York, left no doubt in this author's mind as to who was being talked about.
Charles had been a banker and bagman for Haitian dictator Duvalier, until one day the mercurial Duvalier decided Charles had been over rewarding himself, and so seized the bank and jailed Charles. After some years, Charles was released and exiled, but his animosity toward the Haitian leadership continued, even after Duvalier died and his son, Jean-Claude ("Baby Doc") Duvalier, took over. WerBell, on the other hand, in the wake of his bluffed invasion of Haiti, claimed to have maintained such good relations that Baby Doc had hired him to train his private security force. 

Now, in 1979, WerBell answered Yates's call and flew to Washington. Nugan Hand covered his expenses. (The canceled check Yates wrote to WerBell led the task force to discover the incident.) According to the task force, Yates proposed a plan to move Mike Hand's former Vietnamese comrades, now refugees, to an island in the bay of Port-au-Prince, Haiti. There they would be set up in a fishing village. 

"Because of WerBell's knowledge of Haiti and the fact that he knew 'Baby Doc,' " the task force reported, "they Yates, Charles, and the other, unnamed, military men wanted WerBell to go to Haiti with the plan and to add to it the threat that if 'Baby Doc' did not grant them the island camp there would be an attempt made to oust him and to have [Charles] installed as president by 'popular vote.' In return for his efforts, if 'Baby Doc' granted them the island, WerBell was to have been given the contract for providing a security force for the island. If 'Baby Doc' refused, WerBell was to have been responsible for the takeover of Haiti and the subsequent security of the whole of Haiti. 

"WerBell discussed the proposals over the two days he was in Washington," the task force went on, "but said that from the outset (the time of Yates's telephone call) he thought it was an unrealistic proposition, largely because he did not see it as the type of action that would have any support from the U.S. Government. WerBell turned down the offer." 

Yates, needless to say, was sorely distressed to read the task force's findings. He quickly went to WerBell, got a signed statement conforming to yet another version of the events, and presented that account in a letter to the task force. Under this version, Mike Hand had met with Charles and devised a plan whereby Charles would borrow $250,000 from Nugan Hand for the refugee project. Yates called WerBell to Washington to obtain an independent opinion as to Charles's qualifications. 

Then, the new Yates-WerBell story goes, WerBell flew on to New York alone, where Charles—not Yates—proposed the plan about overthrowing the Haitian government. WerBell decided the proposal was impractical, and returned to Washington with this news. Yates took his advice, paid him, and saw no more of WerBell or Charles—if you accept this new version of events. 

But that's still not the end of it. 

About the same time, the fall of 1979, Frank Nugan, Mike Hand, and Admiral Yates were also pursuing what they said was a plan to move the refugees to the Turks and Caicos Islands—thirty dots of British-owned land, six of them inhabited, near the Bahamas. The main exports are salt, crayfish, conch shells, and cocaine. 

Nugan and Hand were in Geneva regularly to try to wheedle money out of the U.N. refugee commission for the move. They also wanted help from Washington. There, they and Yates took advantage of an ally who was already on board, in a sense: General Cocke, the native Georgian, who was not reticent about letting potential public relations clients know who else in town shared his home state: the president and all his cronies. 

"Admiral Yates wanted to meet somebody in the White House because he wanted to talk about a refugee program," General Cocke recalls.* So Cocke introduced Yates to John G. Golden, the former college roommate and, in the words of the Washington Post, "favorite partying companion" of Hamilton Jordan, who, in turn, was the closest advisor of the President of the United States. Through Golden, then a "consultant," Yates and Nugan each bought $1,000 tickets to a Democratic fund-raising dinner. Golden seated them at his table and, Maxine Cheshire reported in the Post, was so eager to satisfy Nugan's wish to meet Jimmy Carter that he spilled a bottle of wine on the table while introducing them. 
*A desire for White House influence doesn't comment one way or the other on what possible continuing links Nugan Hand may have had to U.S. intelligence. Plenty of people in government seek such influence to promote their special projects. A real mover like Edwin Wilson constantly plied prominent senators and White House staffers to help strengthen his hand while he was a career officer both at the Central Intelligence Agency and in the Office of Naval Intelligence. 

Another evening, Yates, Nugan, Cocke, and Golden dined at the Four Seasons Hotel in Washington with some other men; Yates told Cheshire he "doesn't remember" their names, and "doesn't recall" what was discussed. But Cheshire found "another source who was present" who recalled that Nugan wanted Golden to help Nugan Hand in Panama, where Hamilton Jordan had been conducting negotiations over the Panama Canal and other matters with dictator General Omar Torrijos. 

According to this source, "He [Golden] bragged about Hamilton's connections with Torrijos. He said General Torrijos would do anything for Hamilton—they're very, very good friends." 

Asked about this, Cocke says, "I might have been there. I'd hardly say it was a major dinner. It was one of those things where people went in and out all evening." He does remember, however, that Nugan Hand "wanted to salvage military equipment on the islands." 

Yates told the task force that the U.S. Navy was closing its base on Grand Turk Island on March 31, 1980, and that Nugan Hand wanted to use the base for its refugee settlement. Others recall that Nugan Hand wanted the navy to leave behind as much equipment as possible, for use or salvage. Wilf Gregory, George Shaw, and General Black all remembered Yates pursuing the deal energetically, but said they didn't understand how it would make money. 

Nugan Hand signed a preliminary agreement with the Turks and Caicos Government in early 1980. In exchange for rights to the soon-to-be-abandoned navy base, the bank pledged to provide at least $ 1 million capital for maintaining the base's airport and port facilities, improving the deep-water harbor, building roads, and so forth. The bank collapse made the agreement null almost before the ink was dry. 

All this prompted considerable speculation from the task force, which said Nugan Hand probably couldn't have raised the necessary capital for the port improvements and that the islands lacked enough food and water even for their present populations.  

"The above considerations pose the question of the existence of hidden motives for the project," the task force declared. 

One possibility is that Hand/Nugan Hand envisaged the future use of the Turks and Caicos Islands as a tax haven. . . . Another possibility is that they expected [an] influx of government . . . United Nations and private funds following the commencement of the program and from which funds they would be able to benefit either by way of commissions or manipulation. A third option is that it was simply a wild scheme with little real possibility of ever eventuating. 

"There is, however, a fourth and far more sinister option," the task force wrote. 

The proximity of the Caribbean and Central America to a number of South American drug source countries makes them a natural transit point for illicit drug shipments destined to the North American market. The Turks and Caicos Islands are a significant transshipment point along the line of route. Drugs are usually transported in small, private aircrafts or seagoing vessels, which put into the islands in order to refuel or to change the drugs over to another courier method. Lack of habitation on some islands enables aircraft to land and ships to unload or load in secret. Traffic is organized primarily by Colombians and North Americans, though a number of local individuals are also involved. 

In 1985, several senior officials of the Turks and Caicos Government were convicted in U.S. federal courts of taking bribes from major cocaine syndicates to allow refueling and storage rights. 

No final conclusion is available to the task force it said. But one option the task force feels it can reject is that put forward by the friends of Hand, that it was a project based on Hand's humanitarian concern for the refugees of Southeast Asia. Certainly there is no evidence in the past activities of Hand or in the WerBell/Haitian episode ... that reflects] for Hand a humanitarian image. The deception of employes by Nugan and Hand has been previously referred to and it should be stressed here that the task force makes no assertion whatsoever against Yates in relation to drugs or proposed drug-related activity. 

Another possibility is that the United States Government, having dragooned the Montagnards into a hopeless twenty-year fight, having left many of them dead and more of them abandoned, genuinely felt an obligation to do something to help the rest—and at the same time saw the possibility of using them further. An analogy might be the Cuban Bay of Pigs veterans who were later hired on in great numbers by Uncle Sam to work on all sorts of secret and not-so-secret projects here and abroad. 

A nearby colony of a similar Third World group who were orphaned of their own country by their dedication to fighting communism might have appealed to certain minds at the CIA and Pentagon, or even at the White House. That idea might have met the desire of a private bank with strong government connections to make some money and put itself on the map. The men in government and their career colleagues at the bank might have made a secret deal to cooperate, each being mindful of the goals of the other. 

The private company helps the government pursue policy goals, and the government helps the private company make money. Such deals are routine procedure—note the case of Paul Helliwell's companies, already described in these pages, or the constant cooperation between the CIA and international banks, airlines, and big and little military equipment manufacturers. Note also many arrangements revealed in the Iran-Contra arms scandal of 1986-87. 

If such secret cooperation occurred in the Nugan Hand refugee affair, it certainly would not constitute an oddity. But without a public investigation, we'll never know. The Stewart Royal Commission, which took its testimony in secret, didn't report on it. 

The same possibility of secret cooperation could have applied to many Nugan Hand ventures. For example, the company maintained an interest in the international arms business through its last year, though solid evidence of completed sales hasn't turned up. Correspondence was found in surviving files showing that Mike Hand was working with Prince Panya Souvanna Phouma, America's longstanding hope to take over the Laotian throne once occupied by his father. 

Prince Panya kept himself busy running an arms company that sought Hand's help in finding customers. Among products Prince Panya listed in his correspondence with Hand are Hughes helicopters, various Italian-made handguns and machine guns, French combat aircraft, British armored vehicles, Chrysler tanks, and "missiles of various types." 

A Washington man named Joseph Judge has asserted to several newspaper reporters that Nugan Hand financed numerous arms sales Judge helped arrange while working with the Central Intelligence Agency. Unable or unwilling to supply documentation to support this, Judge might be passed off as a totally unreliable source—except for two things. First, he clearly was working for a U.S. Government sponsored front company set up by Edwin Wilson during Wilson's CIA/Naval Intelligence days. And second, he knows too much about Mike Hand and Bernie Houghton to have invented his acquaintanceship with them.* 
*Admiral Yates says he met Judge through a friend and that Judge was with the CIA, but only before Nugan Hand existed. So, he says, Judge couldn't have been told to use Nugan Hand on CIA deals. 
"We were told to use Nugan Hand as international bankers for various deals," Judge asserts, but then says he can't reveal the details because "it would be against the law. I was with the agency then." He remains one more unfittable piece in the Nugan Hand puzzle.** 
**For what it's worth, Judge fits a profile also fit by several other people in this book—Peter Wilcox, and Neil Evans, for example. They are men who have had an intelligence connection, whether or not by chance, and who arrive at the scene of scandals involving the CIA, poisoning press accounts with exaggerated and undocumentable claims. Doing this, they invariably make a legitimate story appear "kookie." That such characters may be evidence of conscious efforts by the CIA to defuse problems in this manner is purely speculation on the part of the author. There are other entirely plausible explanations for their remarks, and the truth about Judge or any of them is something I can't provide.
Judge has also contended that Nugan Hand, working with Wilson and with the blessing of the CIA, helped move some of the Shah of Iran's money to safe havens in the late 1970s. He describes deals in which road-building materials were sold to the Iranian Government at grossly inflated prices, so that hundreds of millions of Iranian Government dollars could be diverted to Swiss accounts. But, again, Judge is unable or unwilling to supply documentation. 

Again, however, there is just enough independent evidence to keep the curiosity afloat. In its investigation, the Corporate Affairs Commission came across correspondence and even eyewitness accounts verifying that Nugan Hand—Iranian discussions were held throughout the second half of 1978 and into early 1979, the year the Shah was chased from power. 

These discussions were carried out at first with a Swiss financial broker, Peter Busse, who claimed access to the Shah's funds. Also participating was a purported Iranian princess named Madame Nam-bah. Later, telexes refer to a mysterious "Mr. X" whose identity and bona fides as an Iranian contact seemed to be known to and accepted by Michael Hand. The negotiations were carried out by Karl Schuller, an Australian who had earlier been a partner in a financial planning business with Wilf Gregory, Nugan Hand's Manila representative. Schuller himself had worked briefly for Nugan Hand. 

The deal involved a series of loans that would launder funds in the hundreds of millions, in some cases even billions, of dollars—sums so large that the negotiations might seem ludicrous if they hadn't involved so much of Mike Hand's attention. 

The financial world is always awash with brokers claiming access to the most famous fortunes of the day, and many of these brokers turn out to be schemers or dreamers who fail to produce any money when called on. Nugan Hand's Iranian negotiations may have been just such a bubble. 

On the other hand, the Corporate Affairs Commission found telexes into 1980 indicating that Mike Hand was making serious efforts to unload large amounts of Iranian currency. There was also a telex dated June 22, 1979, from General Black with copies to Frank Nugan, Mike Hand, and Admiral Yates, stating that Black's wife was "arranging special dinner our house" the next day for Charles El Chidiac, a Middle Eastern financier, "and Gen. Moinzadeh, senior member Shah's staff."* 
*The telex was disclosed in the Corporate Affairs Commission report of 1983, after the author's interview with Black and shortly before his death. To the best of my knowledge, he was never asked about it.

Concluded the commission, "Whether these telexes relate to the above Iranian fund venture remains an open question." 

Men of Substance 
During the summer of 1979, as Bernie Houghton hauled away bags of cash from U.S. civilians and servicemen in Saudi Arabia, and police around the world struggled to solve the "Mr. Asia" dope murders, four extremely heavy hitters from the United States intelligence community got involved with Nugan Hand. 

They began coming on board about the time of an international conference in Manila June 24-29. Called the International Congress on New Enterprise, or ICONE, the conference was supposedly privately organized. But it bore the clear fingerprints of the U.S. Government, and it allowed Nugan Hand extraordinary prominence and promotional leverage. 

The organizer, William McCrea, was identified as an American businessman. But before he began the business of organizing ICONE, he had been working under contract to the State Department arranging trade with developing countries. Before that, he had worked for the National Aeronautics and Space Administration, and before that for the engineering department of Pratt & Whitney, a major defense contractor. In other words, his career was entirely consistent with that of a well-regarded CIA officer, though, of course, he may not have been one.* 
*Attempts to locate him failed.
For ICONE, McCrea obtained financial sponsorship from the World Bank and a few affiliated regional banks dominated by the  United States Government. Original co-sponsors included several U.S. Government agencies, the Philippine Government, two otherwise unidentified private sources, and Control Data Corporation— the company Admiral Bobby Ray Inman later left the number two job at the CIA to go to work for. 

At the conference, to this rather exclusive group of co-sponsors was added the name Nugan Hand. And the five hundred businessmen who shelled out $995 each to attend couldn't have overlooked the company's presence. Frank Nugan and other executives from the group were featured on panels. Nugan Hand hired Mercedes cars to ferry dignitaries around, rented a lavish penthouse suite, and held cocktail receptions graced by Marcos family members—in fact, Imelda Marcos is said by some to have attended, although that is denied by others. 

Also among the participants in the conference was Guy Pauker, one of the most important foreign policy advisors the U.S. Government has had over the past thirty years. Pauker says he came to the conference at the suggestion of his old friend Admiral Yates, whom he used to advise while Yates was on active duty in charge of planning for the U.S. Pacific Command. 

Pauker told the Stewart commission that Yates had introduced him to Bernie Houghton in the early 1970s, and that Houghton had "displayed kindness in inviting him to use the facilities of his penthouse and dine at the Bourbon and Beefsteak." In Hawaii in 1977, Yates introduced Pauker to Frank Nugan and Mike Hand. Two years later, on the eve of ICONE, Pauker says Yates again wanted him to meet the two owners of Yates's bank. Indeed, the bank was a heavy presence in the official program. 

The list of participants in the ICONE conference session of June 25 begins with the names Earl Yates, Guy Pauker, and Donald Beazley—a Florida banker who was also destined soon to join Nugan Hand. Interviewed in 1982,* Pauker at first denied he had ever worked as a consultant for Nugan Hand. When some of his own tape-recorded statements from 1979 were read back to him, however, he agreed that his words would justify the assertion that he was a Nugan Hand consultant. "I didn't know they had recorded this," he explained. 
 *By the author.
Pauker has also denied over and over that he works for the CIA. To pursue the question, as some journalists have, is to be a little naive about how intelligence relationships work. Pauker doesn't deny getting paid for dealing in secret information with people in the military and foreign policy apparatus. His career has been that of a professor at the University of California and a staff member at Rand Corporation, a think tank heavily relied on by the government (and vice versa). Whether or not Rand is a CIA cover for Pauker is significant only for Rand's bookkeeping purposes. 

Pauker, friends say, had frequent personal access to White House National Security Advisors Henry Kissinger and Zbigniew Brzezinski. He is one of the government's leading experts on many matters, particularly Southeast Asia. Before the fall of Saigon in 1975, Pauker has acknowledged spending a lot of time in Vietnam, Laos, and Cambodia. 

His best known expertise, however, is with Indonesia—going back to the 1950s, when the United States organized covert military operations to overthrow the socialist government of President Sukarno there. Although an amphibious Bay of Pigs-style invasion we organized in 1958 failed, in 1965 we succeeded in having installed in Indonesia a military regime under President Suharto that, with U.S. counsel, massacred hundreds of thousands of Indonesian citizens. 

Admiral Yates told the Stewart commission, it said, "that Dr. Pauker . . . had been involved in Indonesia when President Suharto succeeded President Sukarno." For his part, Pauker has openly boasted that the head of the CIA's Asia section "became a very dear friend of mine," who later thanked Pauker for saving him "many millions of dollars" in some unexplained way. 

Fletcher Prouty, a longtime military intelligence official who served as the Pentagon's liaison to the CIA during some of the Indonesian operations, and has since quit in disgust, says he remembers Pauker serving as a diplomatic missionary to cover for the military operations. "I worked with Pauker a lot in my job as CIA liaison officer," Prouty told the Australian Financial Review, adding, "There is no question in my mind that he worked for the agency with Rand as a cover." 

Whatever the case, one can certainly say that Pauker has—to use Mitchell WerBell's distinction—worked with the CIA if not for it. 

Pauker himself says he got to know Yates years ago "in connection with my normal duty, consulting the Pacific Command. Buddy Yates and I are friends. We've stayed in each other's houses." Yates, he says, is the one who invited him to speak at ICONE— further indication of the close connection Nugan Hand had with the planning of the conference. 

There in Manila, Yates re-introduced Pauker to Frank Nugan, and they evidently made quite an impression on each other. Yates (or maybe it was General Manor, Pauker says) told Pauker that Frank Nugan "was the most brilliant young tax lawyer in Australia." Nugan was impressed that Pauker knew "everybody in Southeast Asia." One of the people Pauker knew was Australian Prime Minister Malcolm Fraser, who later acknowledged in Parliament that he had met Pauker on several occasions going back many years. 

After the ICONE conference was over in Manila, Nugan tagged along with Pauker to an energy conference in Bali, Indonesia, where Pauker had also been invited to speak. Soon Pauker was assigned his own secret code number on the Nugan Hand staff. (After the debacle, he maintained that he never authorized that.) 

At the conference in Bali, Pauker introduced Nugan to another man he calls his "good friend," Walter McDonald, a career CIA officer since 1952. By his own account, McDonald has served the agency in some forty countries. He rose to head the economic research branch, occupying one of the deputy director jobs that are the second-highest in the CIA, reporting straight to the director, then James R. Schlesinger. 

When Schlesinger left government in 1979 to pursue big bucks at Lehman Brothers, a Wall Street investment firm, McDonald decided it was time for him, too, to branch out on his own. He declared himself "Consultant and Lecturer on International, Economic and Energy Affairs." Nugan Hand became his first and biggest client. By his own account, he spent most of his time with Nugan Hand. He traveled the United States and Europe with Frank Nugan and talked to him daily, if not in person then by telephone. It was McDonald, along with Yates, who arranged for a former CIA director, William Colby, to become legal counsel to Nugan Hand. 

Pauker remembers going home and getting a "very excited" call from McDonald, saying the former CIA economic division chief had stopped off in Sydney on the way back at Nugan's invitation, and decided to accept a job representing the bank in Washington. 

"They had a big office, three stories in a high-rise next to the Sydney Opera House," McDonald says. "It looked like any brokerage house that you go into, very up and up, lots of busy-looking people doing lots of things." McDonald says he went from office to office of the bank to see how it was run. "It really looked like a real viable bank. I was surprised as anyone to see it go down the tubes." 

In an interview with the Wall Street Journal March 15, 1982,  McDonald said he hadn't heard rumors about Nugan Hand's being involved with drugs until after Frank Nugan died. He also said he was unaware of Hand's CIA connections. "He certainly wasn't the type," McDonald said of Hand. "Where he made a lot of money, he and Frank invested in real estate." 

But eighteen months earlier, in a September 30, 1980, interview with Inquiry magazine, McDonald said he had been aware of both the drug and CIA matters.* He said Frank Nugan had showed him legal files on the drug allegations, and offered to open the bank up to him and show him any other records "to disprove this sort of thing. He was very forthcoming," McDonald said. Moreover, McDonald said he had checked with two banks, both of which told him Nugan Hand was "sound and responsible." 
*The Inquiry editor who interviewed McDonald, and later wrote the first solid account of the Nugan Hand mess to appear in the United States, was Jonathan Marshall. I have known and admired Marshall as a reporter, writer, and editor since 1982. He is meticulous about detail, and I trust his work. He has shared with me his original interview notes. Obviously, I did the McDonald interview for the Wall Street Journal.

As for the CIA connection, McDonald revealed to Inquiry that he was well aware Hand and Nugan had handled money for Air America pilots during the Vietnam War. And he told the Stewart commission that Pauker had "vouched for the credibility of the Nugan Hand operation." 

McDonald signed an employment contract giving him $120,000 a year, use of company credit cards, and office expenses of up to $40,000 a year. Pauker told the Stewart commission that shortly afterwards, McDonald called him and reported taking his old boss, Bill Colby, out sailing on his boat with Frank Nugan, during which time it was decided Colby would represent Nugan Hand. 
(Colby remembers talking at about the same time to Admiral Yates, who also knew him from Vietnam War days. But he thinks McDonald approached him first. For that matter, General Black also knew Colby from the Vietnam campaign.) 

Colby's bills show that he, McDonald, Hand, Nugan, and Bud Yates spent a lot of time meeting on the Caribbean refugee resettlement project, on negotiations to purchase a bank in Homestead, Florida, and on the tax consequences Nugan would face if he resettled in the United States. The bills also refer to unspecified work Colby's firm, Reid & Priest, did for Nugan Hand in Panama. 

Like McDonald, Colby says all his work for the bank was straightforward and businesslike. He acknowledges he had heard stories about the bank's involvement in the drug traffic, but says he checked one or two references who thought the bank was reliable, and discounted the stories. 

The fourth major U.S. intelligence figure Nugan Hand linked up with in 1979 was Theodore G. Shackley, who may have had as much to do with U.S. covert operations in the Cold War as any man alive. Before he announced his retirement from the CIA after thirty years' service in September 1979, Shackley had led the secret war against Cuba and the secret war in Laos. Later, as station chief in Saigon at the height of the Vietnam War, he commanded CIA activities throughout the region. Finally, he became number two man running the clandestine services division worldwide, at CIA headquarters in Langley, Virginia. 

Looking at the list of disasters Shackley has presided over during his career, one might even conclude that on the day the CIA hired Shackley it might have done better hiring a KGB agent; a Soviet mole probably could not have done as much damage to the national security of the United States with all his wile as Shackley did with the most patriotic of intentions. 

Between Shackley's Cuban and Indochinese campaigns, more dope dealers were probably put onto the payroll of the United States Government, and protected and encouraged in their activities, than if the government had simply gone out and hired the Mafia—which, in the case of the Cuban campaign, it did. 

Shackley was the CIA officer Edwin Wilson reported to during his service with Naval Task Force 157, and afterwards, when he was supplying arms and terrorist equipment to Muammar Qaddafi. It was Shackley who almost torpedoed Kevin Mulcahy's attempt to blow the whistle on Wilson. And Shackley was also the CIA officer who on November 8, 1975, notified the Australian Security Intelligence Organization that the CIA was gravely concerned about the actions of Australian Prime Minister Gough Whitlam; three days later, Whitlam was removed from office. 

Despite the announcement of Shackley's retirement in September 1979, he stayed active enough to play a critical role in the Iran-Contra affair. In November 1984, he met in West Germany with two Iranians who had been important officials in SAVAK, the Shah's secret police, and yet who were influential with the Ayatollah Ruhollah Khomeini's government as well. 

They were General Manouchehr Hashemi and Manouchehr Ghorbanifar, and they used Shackley to relay to the White House the cockamamie notion that President Reagan could prevent Iran from falling into the Soviet camp by delivering sophisticated U.S. missiles to "moderates" in Iran—people like Hashemi and Ghorbanifar, for example. They even suggested that they had contacts through which the U.S. could ransom for cash and weapons the American hostages, including CIA station chief William Buckley, who had been seized by Palestinian groups in Lebanon. 

Shackley first took this news to the State Department and got no positive response. He tried General Vernon Walters, the Top-secret U.S. national security emissary and later United Nations ambassador; there still was no positive response. He continued to meet with the Iranians. Finally, in May and June 1985, Shackley got their message through to consultant Michael Ledeen and Lieutenant Colonel Oliver North in the White House. 

The rest is history. Shackley also worked as consultant to a company that General Richard Secord used to fund the Contras with White House help in defiance of an act of Congress. 

Against this background, we return to the fall of 1979, immediately after Shackley's resignation from the CIA, to find him hobnobbing with Michael Hand— apparently an old friend, or at least acquaintance. 

"Dear Ted," Hand wrote to Shackley on November 27, 1979, "I finally returned home on Saturday the 24th, in the morning and after greeting my wife who thought I was a stranger, settled down to try and catch up on my sleep and at long last feel alive and well again. The opportunity of meeting you again on different terms was very enjoyable and I sincerely trust that something worthwhile business-wise may surface and be profitable for both of us." 

Meeting you again on different terms? 

"I just checked with Dale Holmgren," Hand went on, throwing out a name Shackley probably had known in CIA days, "with regard to the equipment query which you gave me, and am on-forwarding by telex. He advised me that some of the items could be supplied from Taiwan and he has already forwarded a catalogue to you. 

"If there is anything else which we may be able to exchange ideas on, or any avenues in S.E. Asia which we may be of assistance to you on, please feel free to call or write. I would be very happy to get something worthwhile going. Maybe next time I am in Washington, we may be able to have the opportunity to sit down and have a bit of lunch together with Bernie Houghton." 

Houghton is not otherwise identified to Shackley; apparently, he didn't need to be.

Did Hand somehow hear that Shackley was loose from the agency and on the trail to make some money, then get in touch with him? Did the veiled reference to a change in relationship mean something else? There is no further evidence of how they got together. 

Could Shackley have been dealing with Michael Hand for years the same way he dealt with Ed Wilson, after Wilson went off into private business? If so, was his relationship ordered by, approved by, or even known by anyone else in the CIA? Did it even need to be? Despite much bandying about in the courts and the press, we still don't know the answer to those questions in regard to Shackley's relationship with Wilson. In regard to his relationship with Hand, apparently no one in position to ask Shackley under oath about it has thought to do so. 

On December 10, Shackley wrote back to Hand in a way that provides no real clues. "Dear Mike," he began, "I enjoyed our Washington discussion and look forward to seeing you again, either here or out in your part of the world." Shackley wrote that he had already exchanged telexes with Dale Holmgren, and referred to a "Mexican oil deal" he had obviously discussed with Hand, which he did not otherwise explain. 

Shackley declines to talk about this episode in his life. He wasn't accused of any illegal activity by Australian investigators, though the Joint Task Force listed him as one of the leading characters whose "background is relevant to a proper understanding of the activities of the Nugan Hand group and people associated with that group." Much of his connection to Nugan Hand involves Europe, and a discussion of that requires the introduction of yet another character, the last major new figure in the Nugan Hand saga. 

Donald E. Beazley was born in 1942, and, according to his biography as generally given*, went through military school and Virginia Polytechnic Institute. After, the army, he began a banking career in a not extraordinary way, as an examiner for the U.S. Federal Reserve Bank in Virginia. 
*Though Beazley agreed to telephone interviews with the Wall Street Journal in 1982, he hung up when approached with questions for this book.
He became a junior officer at the First National Bank of Atlanta in the early 1970s, then vice-president with Flagship Banks, a Florida chain. His big break came in 1977. 

Beazley somehow caught the eye of Marvin Warner, a big, fast rising bank wheeler-dealer who liked to hobnob with the politically powerful and was able to contribute enough money to the Democratic Party to do so. President Carter, the object of much of Warner's political munificence, appointed him ambassador to Switzerland. And while Warner was away, he needed someone to watch his bank chain, then known as American Bancshares, now as Great American Banks. 

So Beazley became president of Great American, a big Florida-based company whose shares were traded on the New York Stock Exchange. "When I left, he assumed the position," Warner says. "I don't recall the transitions or what he was offered, but we considered him to be a good banker, a very responsible, able fellow. I have a lot of respect for Don." 

But, of course, not so much respect that when Warner returned from Switzerland he didn't want his old job back. So in 1979, Beazley needed another chair. And maybe just as well; barely a year after he left, Great American Banks was caught up in a drug money-laundering scandal involving a big Colombian cocaine cartel that brought in bags of cash and came away with cashier's checks in the U.S. or overseas, much as the Mr. Asia syndicate did at Nugan Hand. The bank chain and some officers (not Beazley or Warner) were indicted for conspiring to defraud the government by not filing, or falsely filing, required reports of currency transactions totaling some $97 million.The bank paid a fine of $500,000. 

In 1987, Warner himself was convicted in state court, Cincinnati, of banking and securities violations in connection with the 1985 collapse of his Home State Savings Bank; that collapse had caused a run on savings and loan institutions throughout Ohio. 

As for Beazley, after leaving Warner's Great American Banks he tried consulting, then joined Nugan Hand. Admiral Yates once said that his daughter had worked for Beazley awhile. Beazley says Admiral Yates, acting on behalf of Nugan Hand, had approached him back in 1977 to buy a Great American subsidiary, the Second National Bank of Homestead, Florida, location of a major U.S. Air Force base. Negotiations are said to have dragged on stubbornly and unsuccessfully for two years. 

Though it's difficult to confirm after many ownership changes, the Second National Bank of Homestead is said by some to have been an interest, years ago, of none other than Paul Helliwell, the career CIA man whose supposedly private business, Sea Supply Corporation, ran guns and dope for the CIA in Thailand, and whose other supposedly private business, Castle Bank, was involved in fraud and political money movement in the Bahamas. Helliwell had also been paymaster for the Bay of Pigs operation. 

Beazley says he's never knowingly worked for U.S. intelligence, or for anyone he knew was involved with U.S. intelligence. 

In early 1977, shortly after Yates approached Beazley about buying the Homestead bank, he took Beazley to Sydney to meet Frank Nugan and Mike Hand. Then the admiral escorted Beazley on a tour of other Nugan Hand offices—quite a treatment for a stranger from Florida who already had a good job. Beazley says he was pursued off and on for two years by Yates and Frank Nugan to sell the Homestead bank and come to work for Nugan Hand. He assures everyone he avoided any association. 

But among the undestroyed records of Nugan Hand, authorities found a June 1978 list of commissions paid to representatives who solicited deposits. Most of the names on the list are those of full-time staffers, like Jerry Gilder, Graham Steer, John MacArthur, and John Owen. But one name stands out: "Mr. Donald Beazley . . . $5,000." 

"The payment," commented the Corporate Affairs Commission in its report, "indicates a much earlier association in which he [Beazley] obviously introduced depositors to Nugan Hand Bank and received a commission." 

And sometime by October 1979, Beazley had agreed to become president and chief executive of Nugan Hand—the first real banker the organization had ever had. It was widely agreed that one was needed. 

It may have been put best by Jill Lovatt, the office manager in Hong Kong who now describes herself as "only a secretary," although Nugan Hand literature described her as a "Monetary Specialist.. . with a strong background gained from working with a Hong Kong finance house. . . ." As to why Nugan Hand needed Beazley, she says, "They felt they should have someone in with qualifications, instead of having it run by people like me with no qualifications." 

What the Tape Recorder Heard


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