The Crimes of Patriots
A True Tale of Dope,
Dirty Money & The CIA
By Jonathan Kwitny
CHAPTER THIRTEEN
The US. Branches
General Edwin Black had the most thorough intelligence background of all the
flag officers in Nugan Hand. He was a graduate of West Point and the
National War College. In 1962, he paused to get a master's degree in
international relations from George Washington University.
Black was an OSS veteran. He was Allen Dulles's right-hand man, and Richard
Helms's boss. (Both went on to become CIA directors.) He played tennis and chess with
them.
After the war he got involved in assignments like "military assistant to the deputy
for psychological policy," and the military staff of the National Security Council under
President Eisenhower. He was military advisor on Philippine base negotiations in 1956,
twenty-two years before General Manor conducted his own round.
Going back to the field, Black was active in the U.S. Government's anti-China
undercover operations in Thailand and elsewhere in Southeast Asia. When his friend,
the American "businessman" and eccentric Third World operator Jim Thompson
(widely assumed to be working with the CIA), mysteriously disappeared in Malaya's
jungly Cameron Highlands in 1967, causing an international furor, Black was sent to
lead the search. (He came up empty-handed.)
A specialist in "special forces"-type operations, General Black commanded all
army troops in Vietnam in the early stages of U.S. involvement there. When the war
became big and official, he took command of all U.S. forces in Thailand. Later, he was made an assistant division
commander in Vietnam itself. He was made assistant army chief of staff for the Pacific
Command, then left the army in 1970 (he said because he failed to get his promotion to
major general in the prescribed time).
He ran the conservative and militantly anticommunist Freedoms Foundation for a
while, then took no doubt more lucrative jobs with CIA-military contractors.
Eventually, he settled in Hawaii for semi-retirement under the palms.
One day, he said,* he was approached by two admirals—Buddy Yates and Lloyd
R. ("Joe") Vasey, whom Yates had replaced as chief of planning for the Pacific
Command. Vasey, the son of a naval officer, was an Annapolis graduate and spent most
of his early career in submarine work. But 1965 found him deputy director for operations at the National Military Command Center in Washington, and the next year he
became secretary to the Joint Chiefs of Staff, work for which he was awarded the
Legion of Merit.
*Black died in 1985. He was interviewed by the author in Honolulu in June 1982
Although Vasey officially retired in 1971, he stayed on for an extra year in his
Pacific Command planning job at the navy's request. For that, he was recognized with
another Legion of Merit award that says, in part, "During this turbulent period of
withdrawal from the Republic of Vietnam and major forces adjustments, [Admiral
Vasey] personally developed major plans and policy concepts which, when
implemented, have substantially improved the progress of Vietnamization and the
posture of friendly governments in Southeast Asia, and strengthened the position and
influence of the United States throughout the Pacific, Indian Ocean and Asia areas."
In 1977, when Black says Vasey and Yates approached him, Vasey was running
something called the Pacific Forum. It was a Honolulu-based organization promoting
scholarly and cultural understanding among the Pacific countries by bringing leading
citizens together. There are a lot of such organizations, some of them fronting for the
CIA, probably many more of them not.
We have Vasey's word that he isn't, and never was, involved in the intelligence
business—though it's hard to believe anyone who was secretary to the Joint Chiefs and
head of planning for the Pacific Command was a total stranger to it. Told that the
Australian Labor Party suspected U.S. agencies of having overthrown the Gough Whitlam government, Vasey replied, face totally straight, "Whitlam is a friend of mine,
or he was. I wondered why he hadn't been in touch with me."
Vasey says Yates, his successor on the planning job, had come to him for advice
on who might represent Nugan Hand in Hawaii. Vasey says he naturally thought of
General Black—who had already met Yates while both worked for the Pacific
Command in Honolulu. Vasey says he also gave Yates another name, that of Peter
Wilcox, a British-born U.S. citizen who operates internationally out of Honolulu.
Were Wilcox's credibility more fully supported, he would rate much more space in
these pages, for he later made some bold allegations about Nugan Hand, the CIA, and
drugs. Wilcox, who calls himself an international investor and contractor, claims a
strange and unverifiable past with British intelligence. Admiral Vasey told Admiral
Yates that Wilcox was reputable and capable. General Black and the Australian police
have said they were impressed by him.
On a visit to Australia in November 1977, months after he had been approached by
Admiral Yates, Wilcox called a prominent member of Parliament who had been cited in
newspaper reports as a leading critic of the Nugan fruit company. The story Wilcox told
was so startling that the member of Parliament notified the Australian Narcotics Bureau,
whose agents promptly "debriefed" Wilcox in his Melbourne hotel room.*
*A copy of the "debrief report eventually made the rounds of Australian journalists, was publicized, and has been obtained by the author.
Wilcox told the narcs that he knew Vasey as the former head of a U.S. military
intelligence agency where Bernie Houghton had also worked. He said Houghton was
"still affiliated with the CIA."
After Vasey had told him about the possible job opportunity with Nugan Hand,
Wilcox told the police, he telephoned Yates. Without their even meeting, he said,
Admiral Yates arranged for him to get acquainted with the other Nugan Hand officials
on his next trip to Australia and Southeast Asia.
He described a visit he made to Les Collings in Hong Kong, who he said told him
the business of Nugan Hand involved "shifting bundles of money." He said Collings
told him about the world-famous courier Ron Pulger-Frame, and reported the opening
of a new branch in Chiang Mai, the Thai drug center.
Then, Wilcox said, he stopped in Singapore and visited Mike and Helen Hand in
their "luxury $1 million penthouse, which apparently they leased from an Indonesian
general who had been depositing money with the bank for placement." Hand told him
the bank handled "black money"—then was interrupted by a phone call from Frank
Nugan, Wilcox said, during which they discussed the news that $200,000 had arrived in
a safety deposit box in Sydney.
Next stop, Sydney. Wilcox said he was told that Nugan had just left. But he
reported meeting Houghton, whom he said he had met some years earlier while
Houghton was with Vasey's military intelligence unit. Then it was back to Hawaii,
where he finally met Nugan.
Nugan, he says, was drunk, and insulted Wilcox and Wilcox's wife during a long
afternoon in a hotel lobby. He quoted Nugan as saying of Nugan Hand, "We put people
away... We do the bastards over, anybody that gets in our way we can take care of. ... I
want you for deep cover to infiltrate the other side."
Then, Wilcox said, he learned of the drug connections being made in the Australian
press, and he resolved to call the chief parliamentary critic of the Nugan brothers the
next time he was in Australia. This led him to the narcotics bureau. In their report, the
cops wrote that Wilcox appeared "quite reasonable" and "truthful."
Wilcox certainly knew enough about the people he said he'd met to show he had, in
fact, met them. And he made his statements before Colby, McDonald, and the other
well-known CIA types were ever linked to Nugan Hand. When Wilcox met the cops,
the newspapers were still taking pains to point out that Nugan Hand wasn't involved in
the drug and financial controversy over the fruit company. The CIA connection that
later dominated the headlines wasn't even being mentioned. Nor was Nugan's
drunkenness a public legend at the time.
But there has been no corroboration of what Wilcox told the police about his own
and others' intelligence backgrounds. Although he talked with at least one Australian
reporter at first, he has lately ducked interviews. Admiral Vasey has recently
downplayed their relationship, saying he met Wilcox sitting next to him on an airplane,
was impressed by his knowledgeable talk of international finance, and so recommended
him to Yates. Years later, General Black continued to speak highly of Wilcox, calling
him "a super entrepreneur and organizer," but said Wilcox "didn't think they were
giving him enough money" and so refused a job with Nugan Hand.
All this can be taken for what it's worth, which may be nothing.
By the time Wilcox met the police, General Black had long since been given the
Hawaii job. Nugan, Hand, and Houghton all came to Hawaii to welcome him aboard,
and, he said, Vasey and Yates were there to make the introductions. What a collection:
two admirals, a general, an ex-(?)-CIA man, an Australian banker who was imbibing at
least a fifth of Johnnie Walker Black Label every day, and the man who seemed able to
orchestrate all of them—a quiet saloon-keeper with a strange life-long proclivity for
military-intelligence intrigues and a reputation for liking nubile boys.
Black died in 1985. But in June 1982, he recalled the story to a reporter over lunch
at his private club. He said that he had some doubts about taking the job because of the
drug rumors. "I didn't want to have anything to do with any drugs," he said. But he
traveled around with the friend he says he much admired, Dr. Neil Scrimgeour, the
"right-wing" (General Black's term) Western Australian separatist whose "Association
for Freedom" organization was listed as owing money to a Nugan Hand affiliate.
Black and Scrimgeour sat in on preliminary hearings in the criminal case against
the Nugan brothers in the fruit company controversy. Black said he saw the favorable
reference letter that the international vice-president of Fidelity Bank in Philadelphia had
written Nugan about the trouble. And Black proclaimed himself "personally satisfied"
that the drug rumors were false.
As president of Nugan Hand Hawaii, he drew $1,500 a month unaccountable
expenses, wrote checks on the company account for other expenses, and traveled around
a lot, particularly to Thailand. But it's hard to see what, if anything, he did to further
Nugan Hand as a commercial banking establishment.
"Nugan Hand was going to have an office here. Money was left in escrow," Black
explained. But the plan was changed "because Frank figured he couldn't get around U.S.
laws."
Certainly one would have to "get around U.S. laws" to take bank deposits on
American soil without subjecting oneself to regulation by the American banking
system. It would seem to be plain illegal. And Black insisted, "I never took deposits."
But a 1978 letter he wrote Frank Nugan, quoted by the Stewart Royal Commission,
says he was trying to. And in the 1982 interview, he said, "They were hoping I would
get $1 million or $2 million in deposits. I never was able to get a deposit. Most of my
friends were too smart to go putting their money out of the country for higher interest. I
never really tried too hard."
Admiral Vasey, however, said General Black tried hard on him.
He said Yates made the first pitch, and encouraged him to bring in his friends. "But it
was my basic instinct, and my wife's, not to send money out of the country. Black urged
me to see [Douglas] Philpotts [the Hawaiian Trust Company banker] to get the real
facts," Vasey said. But that wasn't good enough to overcome his and his wife's "basic
instinct."*
*When the Wall Street Journal ran a series of three page-one articles about Nugan Hand, including some of the above quotes, Black became furious and fired off a letter saying he had believed his entire conversation with the reporter, the author, was off the record.
I stand by all this material as accurate and the quoted material as verbatim. Black didn't say anything about the conversation's being off the record until midway through the lunch, and I had been taking notes the whole time. While I tried to keep him talking, I replied to his "off-the-record" requests several times by saying that I considered anything he said reportable, and I never told him anything to the contrary.
Black's letter-to-the-editor was followed by another, from Vasey, with a copy to Black, stating in full: "Regarding the [articles], I would like to clarify for the record that Gen. Edwin F. Black USA (ret.) did not try to get me to invest in Nugan Hand, or anything else for that matter." This completely contradicts what Vasey told me to my face, and that is the statement I give credence to. Black never denied he had tried to solicit depositors.
If Black wasn't trying "hard" to take deposits, what did he think he was doing for
the bank? "I was told I would be an ambassador of good will, arrange meetings with
high-level people when called on," he says. "I introduced them to some important
people. I traveled around Asia. None of these things materialized, unfortunately." One
business idea he helped promote, he says, was an electron machine to enhance the
power of seeds. "But the Philippine Government never jumped on it the way I thought
they would and the company folded."
Douglas Philpotts, vice-president and treasurer of Hawaiian Trust Company, is
listed along with Frank Nugan and Michael Hand as constituting the three-man board of
directors of Nugan Hand, Inc. when it was incorporated in Hawaii in 1974. At least
through 1977, Nugan Hand continued to list Hawaiian Trust's address as its own in
filings to state regulators. Philpotts continued to handle Nugan Hand's high-six-figure
account at Hawaiian Trust until Nugan Hand's demise.
General Black: "I was never consulted by Philpotts in any of these transactions,
and there was no reason I ever should have been. He [Philpotts] was a banker taking
orders from a bank."
And that is exactly what Philpotts told to a representative of the Australian
liquidator who went to Hawaii trying to track $700,000 that had been shipped through the Nugan Hand account there. According to the
affidavit of the liquidator's man, Philpotts said he prepared the balance sheet of Nugan
Hand Hawaii as Nugan instructed him, "notwithstanding that certain of the monies
apparently had been paid to other recipients" than shown in the balance sheet. Philpotts
then told the liquidator's man to talk to Black, who was no more helpful.
Philpotts declined to answer questions for a reporter. He says Hawaiian Trust was
merely acting as agent for Nugan Hand. "All our business is confidential," he said. "We
wouldn't be in business if we revealed confidences. I don't see any reason why we
should talk."
On May 14, 1979, Admiral Yates filed a legally required form with the U.S.
secretary of the treasury in Washington ("Attn: Office of International Banking and
Portfolio Investment"), registering Nugan Hand International, Inc., of 1629 K Street,
N.W., Washington, as the American representative office of the Nugan Hand Bank and
several other Nugan Hand affiliates. The office, he submitted, was engaged in "liaison
and international trade related advisory services" and "public relations."
In the space for "name of person or persons in charge of the representative office,"
Yates listed two names: his own, and that of Brigadier General Erle Cocke. Cocke was
a Dawson, Georgia, boy, whose acquaintanceship with residents of the Georgia dominated Jimmy Carter White House was being exploited for all it was worth in those
years. Cocke's consulting business was called Cocke & Phillips International, and it had
the same address as Nugan Hand International. In fact, Nugan Hand's office was in
Cocke's office.
Besides his Georgia connections, Cocke had a name of his own that he could
exploit. His entry in Who's Who in America includes the following passage: "Entered
U.S. Army as It. Inf. [lieutenant, infantry], 1941; wounded 3 times; prisoner of war 3
times (actually 'executed' by German firing squad and delivered the coup de grace but
survived, 1945); disch. as major, Inf., 1946; brig. gen. N.G. [National Guard]." There
follows a list of citations eight tiny-type lines long, from the Silver Star to the Chamber
of Commerce award as outstanding young man of the year, 1949.
Cocke had gone on to hold various posts at the Defense Department, was an
executive at Delta Airlines, and for a while served as national commander of the
American Legion.
General Cocke says he never knew that his good friend Admiral Yates had
registered him with the Treasury Department as the "person in charge" of Nugan Hand's office. He says he thought Nugan Hand was just renting
space from him, though he agrees they shared a phone number, address, and
receptionist.
Yates told the Stewart Royal Commission that Cocke was a consultant to Nugan
Hand, attended an International Monetary Fund meeting as its representative, and let
Bernie Houghton use his office on business related to American clients whose money
was taken in Saudi Arabia.
The commission found a letter Yates wrote to Hand saying that Cocke was to be
paid $2,000 a month, though both Yates and Cocke said payments were never actually
made. The commission reported as a finding of fact that Cocke "agreed to work as a
consultant for Nugan Hand (while retaining his own consultancy practice) and assisted
Admiral Yates in the formation of Nugan Hand (International) Inc."
Cocke acknowledges he visited Nugan Hand's office in Hong Kong, and that he
welcomed Messrs. Nugan, Hand, and Houghton in Washington. He acknowledges he
arranged White House meetings for Admiral Yates and Frank Nugan to advance their
plans to move Indo-Chinese refugees to a Caribbean island, and to salvage U.S. military
equipment. But General Cocke denies that he ever did any work for the Nugan Hand
deposit-taking enterprise.
Enter Moosavi Nejad, 52, an Iranian lawyer, who says otherwise. Nejad, his wife,
and their four young children sought refuge in the United States from Khomeini justice
in 1979. In the Cocke-Nugan Hand suite, he gave $30,000 to Nugan Hand
representative George Farris, a Green Beret veteran whom Hand had befriended in
Asia. According to Farris's army records, he also served as a "Military Intelligence
Coordinator."
Using his best English, Nejad wrote liquidator O'Brien that the $30,000 he gave
operative Farris represented "only a saving made almost within the last 25 years in
order to live." In other words, this was his life savings, carpet-bagged across the sea to
the land of freedom and opportunity in hopes of parlaying it into a productive career.
He had enrolled in Georgetown University for a doctorate in political science,
Khomeini having rendered his law degree useless at home. Unfortunately for Nejad,
George Farris enrolled at Georgetown Law School that same fall of 1979, after he
returned home from Asia.
According to Farris's testimony in a deposition in federal court, Washington, after
Nejad sued him, Farris had been assigned by his friends Hand and Admiral Yates to
hunt up banking clients in Hong When he announced he was returning to the United States for law school, they
suggested he work in the Washington office of Nugan Hand, he testified.
Farris met Nejad at a cocktail party at Georgetown, and mentioned that Nugan
Hand could pay 14 percent interest on his nest egg instead of the 11 percent Nejad was
making at a local bank. Farris testified that the Iranian was afraid of keeping his money
in the U.S. because of the strained relations between the two countries. After
considering the deal for a few weeks, Nejad decided to go ahead. On Farris's
instructions, he turned over a check for $30,000, which Farris forwarded to the Nugan
Hand Bank account at Irving Trust in New York City.
General Cocke flatly denies Nejad's assertions that the general reassured him time
and again about the safety of the deposit, though the general agrees they met in the K
Street office and talked often. Nejad says Cocke told him, "Your money is in good
hands. This bank is all right. Don't worry. I have even deposited there. I have been to
Hong Kong [to see the bank]."
While denying the sales pitch, Cocke does agree that he told Nejad early on that he
had $30,000 of his own money invested in Nugan Hand—more than Nejad. And he
agrees that after the bank's collapse, he gave Nejad the name of a Hong Kong lawyer to
represent him in the bankruptcy, and that the lawyer was Nugan Hand's former in-house
counsel, Elizabeth Thomson (who declines to talk to a reporter).
General Cocke says he lost the money he had invested in Nugan Hand. Nejad says
General Cocke told him the deposit was retrieved after the collapse, and that Nejad
could get his money, too, if he went to Hong Kong and hired Ms. Thomson. "He said,
'If you want to keep your money from going away, hire this lady.' " Nejad hired
American counsel instead.
Farris talked up Nugan Hand to many potential depositors, he testified in the
lawsuit Nejad filed. But he carefully denied pushing the certificates of deposit in the
United States, which probably would have been illegal.
Instead, he explained his job this way: "In that it was the basic goal of the bank to
do business and to make a profit, the task fell upon me to advise people on the proper
way to make a certificate of deposit if they desired to do so." Again, he emphasized, this
was not the same as selling them, though not everyone might find the distinction worth
making. "There were times when advice was given on how a client could go about
getting a certificate of deposit," he testified. "I would suppose that I gave information sixteen to twenty times in that capacity" in the fall of
1979. But he said he couldn't remember how often his advice had resulted in someone's
decision to invest in a CD.
Farris said—and U.S. District Judge Thomas P. Jackson agreed— that he didn't
know a fraud was being perpetrated, and that he wasn't a decision-maker at Nugan
Hand. "My superiors weren't in the habit of consulting or confiding in me as to what
they were doing," he testified. And Farris showed that after he found out Nugan Hand
had failed in April 1980, he voluntarily telephoned Nejad and had the Iranian stop
payment on a $10,000 check Nejad had sent off to increase his investment.
Without evidence that Farris knew about Nugan Hand's insolvent condition when
he took Nejad's deposit, Judge Jackson threw out Nejad's lawsuit. Not only that, he
granted a $3,000 judgment to Farris on a counterclaim that Nejad was slandering him
by telling people he had stolen the money. Nejad was still officially appealing the
matter in 1987, though he was unfindable around Washington.
Several years earlier, he had complained that he couldn't find a steady job.
Sometimes he performed Islamic weddings, but otherwise lived off the $400 a month
his son brought home working as a counterman at Gino's. "I have spent my last
pennies," Nejad said.
General Cocke admits he "made a terrible mistake to have rented them [Nugan
Hand] space." But he says he is still friendly with Farris—and with Admiral Yates, who
he says "was just as much a victim as everybody else."
Farris, reached in 1982, said he had lost money in the collapse along with the many
friends and relatives he had advised to invest in Nugan Hand. He said he wouldn't name
them, or the large companies he said he dealt with on behalf of Nugan Hand, because
he owed them all confidentiality.
"I think a lot of the clients who lost a lot of money aren't going to file," he
declared. "I don't think there's going to be a nickel paid on the dollar." He was probably
right on both counts.
Meanwhile, Farris had parted company with Georgetown Law School for reasons
neither would disclose. But Farris was busy— "doing some consulting," he said. He
wouldn't say on what. But the consultee was at Fort Bragg, North Carolina, the U.S.
Army Special Forces headquarters. Farris was reached through the Fort switchboard.
There is no question that Nugan Hand bilked American citizens living on
American soil.
Ruth Thierbach and Jeanne Dodds of 1912 Filbert Street, San Francisco, deposited
$5,000 in October 1979, simply sending a check on their San Francisco bank account to
Nugan Hand Bank in Singapore. The next month they deposited $5,000 more by
telegraphic transfer to Irving Trust in New York—all according to the claim they filed
with liquidator O'Brien, which, they say, hasn't gotten them a dime back.
According to his claim, Walter G. Wiedmont, 323 North Central Avenue, Ramsey,
New Jersey, deposited $100,000 in the name of himself, and Jodi and Alene Wiedmont,
his daughters. The money was given to Bernie Houghton.
Houghton collected $15,000 from Joe S. Rodgers, in the city of Channelview, in
Houghton's native Texas. Rodgers's claim doesn't say how Houghton got the money
from him. His mother, still in Texas, says Rodgers now works for the U.S. Embassy in
Moscow.
There were many others across America. None of them has been paid.
According to several accounts, Michael Hand was an avid Christian Scientist. He
was also a health fetishist, built like a wrestler, and didn't hide his strength. He worked
out daily in a gym, popped vitamins, and ate health food. People noticed that he made
them walk ahead of him, not behind. He sometimes frisked people before he allowed
them into his office.
George Shaw: "Hand is an extremely cautious guy. The epitome of disguise. Hand
could be involved in anything and nobody would ever know about it. But this is not to
say anything bad about him."
The Hong Kong liquidator says Hand "was secretive to a ridiculous extent." And as
for his knowledge of corporate finance, the liquidator says, "He got that knowledge
somewhere else than was on his resume. There are gaps in Hand's career." The
liquidator says he is persuaded that the CIA connection was more than Hand admitted—
that it went beyond wartime experiences in the hills of Laos.
Wilf Gregory in Manila says he always thought Hand was "quite probably" still
with the CIA—which Gregory says was just fine with him.
Michael Moloney, Hand's and Houghton's lawyer in Sydney, says, "They all the
time were talking about closeness to the governments of Southeast Asia, and knew what
the military were doing. When I went to Hawaii, I was taken out to Pearl Harbor, or
wherever, and was introduced to the admiral in charge of the Pacific Fleet. He was
sitting there with a big map behind him showing where all the nuclear submarines are,* with electric lights flashing. We were taken aboard a
nuclear submarine."
*For the record, this interpretation of the map is of uncertain accuracy, but the description speaks for itself as to the impression that was made on Moloney and a lot of other people.
Les Collings, in Hong Kong: "He [Hand] used to be good at sort of hinting CIA.
'When I was in Laos' [he would say], 'When I was in Cambodia . ..' But he wouldn't
discuss details. I've always had the idea that once in the CIA, always in it. I used to kid
Mike about it, and he used to say, 'Oh, no, no more. That was it.' But it wouldn't have
bothered me. As far as I am concerned, that's not illegality. It's propriety."
CHAPTER FOURTEEN
Banking in Opium Land
When the Commonwealth of Australia/State of New South Wales Joint
Task Force on Drug Trafficking issued its report on Nugan Hand in
March 1983, it deleted certain passages from the version that was made
public. The task force said the passages were deleted because "release of material is
contrary to public interest," either because "of likely interference with ongoing and/or
future official inquiries" or because "disclosure is likely to identify informants or other
confidential sources of information."
A few such deletions—a name, a word, or even a few sentences— are scattered
throughout the report. Then the reader comes to Chapter 34, nine legal-sized pages of
text and a tenth page of footnotes. The entire chapter is marked "(DELETION)." Not
one of what must have been thousands of words of text, not one of what must have been
at least a dozen footnotes, was permitted to appear. Nor has it been released in all the
time since then.
The title of the chapter is, "Nugan Hand in Thailand." The heroin-fueled political
corruption of Thailand long predated the arrival of Nugan Hand, to be sure. United
States military and intelligence agencies were involved in the drug trade, at least
purportedly for political purposes, back in the 1950s and 1960s.
And just as surely, there were reasons unrelated to drugs why Nugan Hand might
have wanted to open a Bangkok branch in February 1977. Bangkok was a burgeoning
commercial center hamstrung by severe currency exchange laws. It was made to order for a money-laundering
tax scam.
But Bangkok was only one of the branches Nugan Hand opened in Thailand that
February. The other was in Chiang Mai. Chiang Mai is the colorful market center for
the hill people of northwest Thailand. Like few other cities on earth, Chiang Mai is
known for one thing. Like Newcastle is known for coal, or Cognac for brandy, Chiang
Mai is known for dope.
It is the last outpost of civilization before one enters the law-unto-itself opium growing world of the Golden Triangle. John MacArthur says he once visited Nugan
Hand's Chiang Mai office and was taken into the countryside to see some tungsten
mines. "As soon as we got out of Chiang Mai they opened up the glove box and took
out the guns," he says.
If it seems strange for a legitimate merchant bank to open an office in Chiang Mai,
consider this: The Nugan Hand office there was lodged on the same floor, in what
appears to be the same office suite, as the United States Drug Enforcement
Administration office in Chiang Mai. The offices share a common entrance, and an
internal connecting door between work areas. The DEA receptionist answered Nugan
Hand's phone and took messages when the bank's representatives were out.
The DEA has provided no explanation for how this came about. Its spokesmen in
Washington have professed ignorance of the situation, and its agents in the field have
been prevented by their superiors from discussing it with reporters.
The DEA has a history of working with the CIA here and abroad; with drug money
corrupting the politics of many countries, the two agencies' affairs are often intertwined.
Was that the case with the Nugan Hand office in Chiang Mai?
It was, according to Neil Evans, a young Australian, whom Nugan Hand hired to
be its chief representative in town. At least one client or targeted client of Nugan Hand
in Chiang Mai reports that a DEA agent visited her, and spoke favorably of Evans.
After work, DEA agents played cards with him.
In recent years, Neil Evans has made daring statements to the Joint Task Force on
Drug Trafficking, to Australian television, to the CBS Evening News in the United
States—and for a while to anyone who would listen. He has said that Nugan Hand was
an intermediary between the CIA and various drug rings. And he has said that Michael
Hand sent him to Chiang Mai for the purpose of moving dope money.
Evans has said he was present when Hand and Ron Pulger-Frame—the former
Deak & Company courier who went to work at Nugan Hand—discussed the shipment
of CIA money to the Middle East, Saudi Arabia, and Panama. Evans has said Nugan
Hand moved $50 to $60 million at a time for the CIA, and also that Nugan Hand was
involved in Third World arms deals.
For his television interviews, Evans has come up with lots of details. He has also
been paid—reportedly $10,000 from the Australia's Channel Nine, which sold its
footage to CBS here.* The payment alone casts some doubt on Evans's veracity.
*Channel Nine says it "will neither confirm nor deny" the report, which came from excellent sources. CBS aired the interview on its prime news show without notice to the viewer that Evans had been paid to give it. But at least CBS pursued the story.
Beyond that, much of what Evans says isn't subject to verification. Much else that
he says concerns transactions in Sydney and elsewhere that involve intelligence, and
even if they occurred, Evans would not likely have been privy to them. Worse still, his
stories have been contradictory. Both the Joint Task Force and Stewart Royal
Commission rejected his testimony for some of these reasons.
In a signed but not sworn statement to the Joint Task Force, Evans said he had met
Frank Nugan and Mike Hand back in 1974 while he was working as a tax consultant.
He said he had heard of their ability to reduce taxes and get money out of Australia
through legal loopholes. They kept in touch, he said, and Hand approached him in 1976
about going to Chiang Mai to "seek out deposit moneys from people that were involved
primarily in the drug trafficking trade." Hand knew about these people, Evans said,
"through his associations during the Vietnamese War . . . through his association with
the CIA." Hand "felt he could use his influence and his connections with the CIA to
attract the business," Evans said.
He said Mike Hand told him that their conversation about this was to be private
from other officials of Nugan Hand, and that Evans should just apply to Jerry Gilder for
a sales job—which he did. Evans didn't mention these secret instructions from Hand
when he was interviewed by Australian journalists; he told them that he wrote to Gilder
after seeing an ad for salesmen in a newspaper in December 1976.**
**By the time the author got to Australia, Evans had delisted his phone number and was lying low. I never found him.
But much that Evans has said is provably true, and at least one colleague, John
Owen, confirms that Mike Hand, not Jerry Gilder, hand-picked Evans for the Chiang Mai job. The people Evans has described dealing
with in Chiang Mai, in all his interviews, exist. They agree they dealt with him. Of
course, they deny that they are dope kingpins as he alleges, but it is not likely they
would admit to that if it was true.
Most significant, Nugan Hand certainly employed Evans, and it assigned him to be
the lone representative in a post everyone knew was extremely sensitive. It trusted him
there. In fact, Nugan Hand was very high on Evans.
On February 10, 1977, Jerry Gilder sent a memo to Mike Hand announcing that the
two new Thai representatives were on their way. "Both guys expect to meet you in
Hong Kong for a brief orientation period, take a look at the office and receive from you
specific instructions that are required relating to conduct of business in the appropriate
manner," Gilder wrote.
The memo described Neil Evans as if Hand didn't know him. It said Evans was "a
gunslinger, he is 39 and married with one boy aged 2 1/2 years. Sales have always been
his life and he has sold a wide range of products including encyclopedias, accounting
systems and real estate. He appears to always have been a good earner, fluctuating
between the $20,000 and $40,000 region. He could be described positively as . . .
friendly, likeable, gregarious"—and, Gilder added, for what it was worth, "honest." As
Gilder saw it, "Neil is willing to go anywhere he can make lots of money and will
proceed on the basis of leaving his family somewhere safe and coming back to see them
from time to time."
The other new man was John Owen. He had been a career officer in the British
Navy, then went to work in the defense industry for a radar manufacturer. Eventually,
he landed in Australia, where he took other jobs with cement and real estate companies.
There can be no assurance about secret arrangements made in advance—such as
Neil Evans described to the police—or what phony documents might have been created
for deception. But an application letter in Owen's handwriting was found in Nugan
Hand's files, and it supports Owen's own story that he replied to one of the bank's
newspaper advertisements for salesmen.
Owen laughs about it now in a Bangkok bar. "There were big ads in the paper," he
says, asking, " 'Are you a $60,000-a-year man?' And I said, of course I was. I came up
[to Bangkok] with $5,000 and a 'See how you do.' "
Owen admits he occasionally tried to lure deposits, but he denies he ever successfully reeled one in. Deposit-taking, after all, could get Owen hauled off
his barstool and taken to the hoosegow. As his former Nugan Hand colleague John
McArthur has remarked, "It was very risky. In Thailand they put you in jail for twenty
years and then have a trial."
Owen says the deposits were sucked up by Les Collings, who, he says, "used to
come in from Hong Kong. Collings got quite a few depositors. I saw Collings literally
browbeat this fellow, a Thai, into giving him $300,000. He talked to him for about four
hours until the guy was literally a nervous wreck."
The really big clients, Owen says, were in the $500,000 to $750,-000 range—
businessmen involved in "trading, banking, hotels." He speaks of one such man who
withdrew his Thai deposit in Hong Kong, but then, "against my better advice he put
some money in in Sydney, and he lost it."
Like Wilf Gregory and others, Owen says his main work was fostering trade deals.
He denies that he knew about any kind of drug connection or that he was involved in
any intelligence work.
Now for the evidence. Owen's correspondence file at Nugan Hand,* much of it in
his own distinctive handwriting, shows that he did take deposits. It shows that he was
very worried about dope-connected people being associated with the bank—but felt
unable to do anything to stop it because Mike Hand wanted the connection.
*The file was somehow not destroyed in the ransacking of the files. But I obtained it after my interview with Owen in Bangkok, and so couldn't confront him with it.
The correspondence file also shows that periodically, former naval officer Owen
sent back long reports, almost tiresome in their detail, about troop movements and other
military and political activities, mostly in Cambodia (which he referred to as
Kampuchea), but also in Laos, Vietnam, and Thailand. The reports appear totally
unconnected to any banking or business activity, and bear notations they were to be
shown to Michael Hand.
John Owen remembers visiting Neil Evans in Chiang Mai, and "sitting in his funny
little apartment at the Rincome Hotel," a main hangout for foreigners. And he
remembers Evans running around "saying he had great overseas loans."
According to what Owen and many small businessmen in Chiang Mai say, Evans
was operating the equivalent of an advance-fee loan scheme, long popular among
American confidence men. The scheme involves telling businessmen that you have a source of loan money for them, showing
them all kinds of phony documentation, and saying that you can arrange the loans if the
businessmen pay brokerage fees in advance. The fees are collected, and the loans never
materialize.
"I don't blame him, really," Owen says. "It was the only way he could get along."
The people at Nugan Hand, however, aimed to do more than just get along, and
that's all Evans was able to do with his advance fees. From interviews with the swindled
businessmen, it appears that the fees Evans obtained from them averaged only $1,000 to
$5,000. Apparently the total never approached even $100,000. Evans was clearly into
something bigger—at least if you consider the amazing array of U.S. intelligence
veterans he hooked up with almost overnight.
For his chief aides-de-camp, in and out of the office, there suddenly appeared two
Thais: Otto Suripol, who during the Vietnam War had been an interpreter for the U.S.
Government at Nam Pong Air Base, and Suthin Sansiribhan, who had worked for Air
America, the CIA airline. In the known interviews he gave, Evans wasn't ever asked
how he found these two.
Suripol couldn't be located. Sansiribhan, living in a nice new house about an hour's
drive from Chiang Mai, says he was brought in by Suripol. He proudly displays letters
of high praise from Air America officials—in other words CIA men—for his work as
load-master on planes shuttling between Udorn Air Force Base, Thailand, and
Vientiane, Laos. Sansiribhan's ultimate boss back then, and Suri-pol's, was the
commanding general of the U.S. bases in Thailand, Edwin Black.
Suripol and Sansiribhan weren't the only ones to find their way back to familiar
company via Nugan Hand. Into the perceived Nugan Hand coterie, formally or
informally, Evans quickly brought William and O. Gordon Young. The Youngs are
sons of American missionaries in Thailand, and have served off and on as paid CIA
officers in various capacities since the 1950s.
Billy Young says he "left my father's farm north of Chiang Mai" on the occasion of a
coup in Laos in 1960, and went to work with the U.S. AID mission in Laos. His
assigned job, he says, was helping refugees and people about to be refugees. But, in
fact, I wound up as a paramilitary officer working with the tribal people, rebels. Arming and training hill people to defend themselves," he says. "I left the service [the CIA]
in 1966. I joined them again briefly in 1967. I've been here"—in Chiang Mai—
"privately since then."
But for all his "privateness," Billy Young is no simple farmer. "I provide help to
the MIA-POW [missing-in-action, prisoners-of-war] program, the group calling
themselves Project Freedom," he says. Project Freedom operates in the belief that U.S.
servicemen are still being held prisoner in the jungles of Indochina, and that paramilitary operations are necessary to get them out.
Project Freedom gets a lot of support and direction from Soldier of Fortune
magazine, which has half a dozen or more hairy-chested six-footers occupying a
penthouse suite in Bangkok at any given time, running daring missions to do
reconnaissance along the Laotian border, and at times surreptitiously crossing the
border illegally.
Could Soldier of Fortune have a CIA connection, asks a reporter who has often
wondered about that. "I've often wondered about that myself," says Young. "It's a
perfectly obvious place."
The reporter brings up the tendency of Soldier of Fortune people to get involved
with automatic rifles on U.S. soil, where it is illegal for civilians to have them. "I love
weapons," Young says. "I would have twenty to thirty guns around the house. During
the 73 riots [sometimes violent student-led demonstrations in Thailand] I was
determined that if they came in after me I would take a lot of them along with me."
In 1977, Young occupied an apartment next door to Evans's at the Rincome Hotel.
"He seemed like the ordinary nice guy," Young says of his neighbor. Young says he
really never understood much about Kugan Hand's business, though he does nothing to
dispel all the talk of drug deals. "They were setting up some kind of agricultural
extension program," Young says of Nugan Hand. "They would lay out money in return
for indigenous produce. I don't know what kind of produce." (No one so familiar with
Chiang Mai could be ignorant about the paramount local produce.)
Young says he got involved with Nugan Hand "because somebody recommended
to my brother [O. Gordon Young] that he get in touch with them. He was looking for
work at that point." Billy Young says his brother Gordon was first in the family to join
the CIA, back in 1954, and worked with the U.S. operations mission in Bangkok during
the 1960s.
Gordon Young, though, asserts he left the CIA in 1960. He says the Nugan Hand
involvement developed this way: Back in 1977, "somebody told me I should make
every effort to go over there and meet Michael Hand, meet them [the bank executives].
There was one or two letters exchanged." Who was the "somebody" who told him to do
this? "Some friend of mine from somewhere—could have been somebody back here [in the United States]," Gordon Young says. No names come to
mind, he asserts.
So he talked to Mike Hand. And next thing, Gordon Young says, he was "sitting
around the Rincome Hotel" with Neil Evans, talking about "selling certificates."
Ultimately, he says, "no suitable post was found," and he returned to the United States.
In 1982, Gordon Young was a security official at a nuclear power plant operated by
Pacific Gas & Electric Company in California. The security office wouldn't precisely
define his role, but the plant had been under attack by antinuclear demonstrators. It says
he still works there.
A former CIA official familiar with the Bangkok station confirms that the Youngs
spent a lot of time in CIA work. He says he twice fired them, only to go to another post
in the Southeast Asia region and find them still on the payroll.
There is general agreement that the Chiang Mai office of Nugan Hand was going to
have something to do with agriculture. Les Collings insists it was just going to try to
finance local tobacco growing, for export to the United States. Evans, too, says there
was a deal to raise and export a crop that was going to be called tobacco. But he says it
was really going to be marijuana.
Evans says that in his seven months in Chiang Mai he corralled $2.6 million in
deposits, from six big drug dealers. Owen and Collings both scoff at that.
There is also disagreement over why Evans left that fall. He says it was because a
Thai general, a client, warned him that the government was going to have to crack down
on the illegal money-moving. Collings, on the other hand, says he fired Evans because
he wasn't bringing in deposits. Owen—who spent the most time with him— says Evans
left because he contracted a severe case of hepatitis. (And Billy Young also says Evans
suffered some bad health problems just before he left, although, as with most things
about Nugan Hand, Young says he doesn't remember the details.)
If the Nugan Hand bosses weren't pleased with Evans's work, it certainly didn't
show in the performance report Jerry Gilder wrote May 17, 1977, after visiting him
three months into his tour. "Neil is doing a fine job," Gilder said. "He is one of about a
dozen European [white] businessmen in the area and it is a remarkable effort that he has
been accepted in the way that he has by the locals."
Gilder fairly gushed about his subject. "Neil has made a point of socialising
practically every night," he wrote, "and has accepted every invitation to dinner at the
homes of local people. He is not pushing for business in the normal sense but is quietly baiting the traps, demonstrating
knowledge and patience and forever looking for opportunities to be of service in any
way. . . . Neil's area is poised for a boom and prospects for significant business appear
encouraging."
There are no written records to support Evans's claim of big depositors—any more
than there are clear records of any other Nugan Hand accounts, except as supplied by
depositors filing claims. The purported depositors Evans named are all in business in
Chiang Mai. They are all in a position to have the kind of money Evans describes. They
all say they knew him and talked business with him. And they all deny they deposited
money with him—which is understandable, since any Thai who admitted depositing
money with him would be applying for long-term prison housing.
The people in question include some pretty impressive figures. One is General
Sanga Kittikachorn, whose warning, Evans said, made him get out. General
Kittikachorn is one of the most powerful figures in the Thai military, which has ruled
the country since a coup in 1976. He is a former member of the Thai National
Assembly. And he is also the brother of former civilian Prime Minister Thanom
Kittikachorn, whose Vietnam War-era government worked closely with the U.S.
military under General Black. In fact, a Thai colonel who was on Black's staff back then
had been a leader in the 1976 military coup.
Both Kittikachorn brothers, Thomas and Sanga, met daily with CIA leaders at
times. General Kittikachorn says the CIA and Thai General Staff "work very closely
with each other. I think you know about the function of the CIA. We were very close to
the American Government."
The general—who owns the Chiang Mai Hills Hotel, and whose family owns many
businesses there and in Bangkok—says he met Evans "many times." Evans, he says,
"came to the hotel and said he wanted to know me. He introduced himself as dealing
with the money business."
Owen remembers a meeting with Evans, Collings, and General Kittikachorn at the
Thai Military Bank branch in Chiang Mai. He says the general was being advanced
some money for the hotel.
The manager of the Thai Military Bank in Chiang Mai, Khun Sunet Kamnuan,
concedes he referred Evans to people he thought were likely prospects for Evans's
business. And he concedes that several of the prospects he recommended did pay fees to
Evans, without ever getting the promised loans. The manager of another bank in town tells
pretty much the same story.
General Kittikachorn agrees that somehow Evans "got in with" the Thai Military
Bank. He says he introduced Evans to his own friends and "other people here" because
Evans was trying to lend money. He won't say who these friends and other people were.
Faced with Evans's testimony that Kittikachorn deposited $500,000 with Nugan Hand to
get it overseas, Kittikachorn says, "That is a very funny story. I'm not so crazy to
believe people like them."
He acknowledges that the Nugan Hand team tried to sell him and others on high interest deposits and offshore money transfers. He acknowledges that he went to the
bank's office in Bangkok, as Evans said, and even that he brought "a friend" there. But
he denies making deposits or knowing anyone who did.
"Most people want to borrow money, not put money into the bank," General
Kittikachorn says. Why three Nugan Hand staffers would have been present at the Thai
Military Bank when Kittikachorn was receiving money—unless he was withdrawing
the money from a Nugan Hand account or somehow using Nugan Hand facilities—is
unexplained. Moreover, several people—including Owen, who later had breakfast with
him—say General Kittikachorn seemed particularly distressed when Evans left town.
"Sanga was upset Evans left," Owen says.
Another Chiang Mai resident Evans identified as a Nugan Hand depositor is the
woman who owns the building where Nugan Hand and the DEA had offices. (The DEA
is still there.) The landlady and her husband also own mines around Chiang Mai, and,
moreover, have a franchise to sell dynamite—reputedly an exclusive franchise for
Thailand and certain other places in Southeast Asia. Evans has said she gave him
$750,000 in Chiang Mai, and that her husband deposited even larger amounts, but dealt
exclusively with Mike Hand in Bangkok.
She flatly denies this, and says she rented Evans space because "he dressed very
well and showed off that he had a lot of money. Even the American DEA came in and
talked to me about Evans." But she says that all along "I suspected that they were
crooks. They said they had a lot of money, but instead they borrowed money."
Khun Lertsak Vatchapa Preecha, a big dealer in farm equipment and other
merchandise in Chiang Mai, denies Evans's story that he made a $600,000 deposit. But
Lertsak, as he is called, says he did get to know Evans on the advice of the Thai
Military Bank. He says they became friends. He says he fended off Evans's sales
attempts.
"High interest, I think he did discuss this," Lertsak says. "But I wasn't interested. If
I want to move money around I don't need any help. I have a lot of friends in Hong
Kong."
Asked about Evans's testimony that he made an appointment for Lertsak to meet
the Nugan Hand executives in Bangkok, Lertsak says he just doesn't remember whether
the meeting took place or not.
The DEA declined to disclose the whereabouts of its agents in Chiang Mai at the
time. But Evans correctly supplied their names.
The Stewart Royal Commission report says, "The commission finds there is no
evidence to support the allegation that the office in Chiang Mai was established to
attract deposits from drug producers of the so-called 'Golden Triangle.' " But, typically,
the report presents no independent evidence. It just juxtaposes the lone assertion of the
unreliable Evans against self-serving anti-drug statements from Collings, Gilder, and
another Nugan Hand officer, Peter Dunn.
Though the commission quotes Owen in contradicting what Evans said about big
deposits, it doesn't quote Owen on the purpose of Evans's mission to Chiang Mai. In an
interview, Owen is very frank on the point. "There was nothing there but drug money,"
he says. "I'm quite sure that's what he was there for. Mike Hand sent him."
What begs proof is not the proposition that Nugan Hand went to Chiang Mai
because of the drug business. What begs proof is the proposition that it might have gone
there for any other reason, and the proof is lacking.
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