Tuesday, December 10, 2019

Part 7:The Crimes of Patriots....Officers and Gentlemen....The Drug Bank

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

By Jonathan Kwitny 
15
Officers and Gentlemen 
A month after arriving in Bangkok, on March 30, 1977, John Owen sent Jerry Gilder a list of twenty expatriate executives he said were considering a deposit with Nugan Hand. The list ranged from managing director of a TRW, Inc., subsidiary to the commercial attache of the Israeli Embassy in Bangkok. 

Owen's whole correspondence file—which was somehow rescued by fate from the shredder—makes interesting reading. He was enthusiastic about working with General Black, but alarmed that Black's lack of financial wile might cause trouble. 

"He certainly knows a lot of people who are important in this country, both in political and business circles," Owen said in a letter. But Owen reported that Black had caused general embarrassment— "a horrified silence"—when he talked openly at a dinner in Thailand about Nugan Hand as a deposit-taking institution. Someone had to publicly point out for the record that "he could not take deposits here because it was illegal," Owen reported. Gilder, in reply, passed it off as a joke. 

Despite the illegality, Owen seems to have been consumed with attracting deposits, as he told Gilder about this or that prospect in his letters. "This man rang us and asked specifically about deposits," he enthused, underlining as he went. Other prospects, he said, urged Nugan Hand "to set up a central finance and trade reinvoicing system for the whole of Southeast Asia including Australia and New Zealand." (Reinvoicing, as explained earlier in the case of the Australian pharmacists, is a method of creating phony tax deductions and currency transfers by importing goods through a front company in another country, which jacks up the price before the goods are brought into your own country.) 

"We have a number of small deposits starting to flow in now," Owen wrote on November 4, noting that a depositor code-named "our cerebral friend" had just handed over $12,000. That account was to grow considerably before the "cerebral friend" suffered a financial lobotomy when the bank folded. 

But Owen's first successes at attracting deposits were overshadowed by his unique achievement in October 1977: he produced the one big, proven trade bonanza in Nugan Hand history. Owen brokered the sale of a Thai cement plant by Kaiser Cement & Gypsum Company, Oakland, California, to some local Thai shareholders. Kaiser received $650,000, and paid Nugan Hand a 10 percent commission—$65,000—for, as Owen wrote Gilder, "arranging, cajoling and generally jumping up and down trying to keep the thing more or less on the rails." 

This commission might be expected to please a merchant bank. But Owen reports he was shocked by the exuberant reaction he got from his bosses when he led his biweekly letter home with news of the commission. 

"Absolutely stunned you didn't phone or telex me," Gilder cabled back. Owen says when he appeared for a meeting of staff, he was surprised by everyone's continued admiration over the deal (and a second one he says he completed, but for which there doesn't seem to be any verification). "We all went to Gilder's house," Owen recalls in an interview, "and [the accountant Stephen] Hill said, 'Thank Christ you brought in that money.' I found out I had the only profitable office. I couldn't understand how they could keep opening up new offices and Nugan and Hand kept jetting around the world." 

In January 1978, Nugan Hand held the first gathering of its recently expanded staff. The Dusit Thani Hotel in Bangkok was the chosen venue for the three-day affair. John Owen was trusted to make the arrangements, from the hotel rooms and official photographer to a concluding golf outing at the Rose Garden course outside Bangkok. "We would have to be able to hire clubs at the course, and naturally we will all need the assistance of some pretty girls to help us around it," Gilder wrote, adding the warning, "I couldn't stand it if we ran into problems in any of these major areas." 

Admiral Yates and his wife were on the guest list. So was General Black. So, by several accounts, was John Charody, the business associate of Australian magnate Sir Paul Strasser. Charody was described as a consultant to Nugan Hand, and was assigned code number 519 in the company's list of reference codes for use in telex and other communications. 

Mike Hand impressed the conference by announcing that Sir Robert Askin, the premier (equivalent to governor) of the state of New South Wales, who was due to leave office soon, might be joining Nugan Hand as chairman. Charody reportedly said the same thing. Askin was in a social circle with Charody's friends, but there isn't any other evidence linking him with Nugan Hand. 

Probably the most striking development at the conference, however, was the introduction of another man who was supposed to become a new staffer: Robert ("Red") Jantzen. Officially, Jantzen had been the first secretary of the U.S. Embassy in Bangkok. The Nugan Hand staff was aware, however, of what was supposed to be a secret: Jantzen's real job had nothing to do with being secretary of anything. He had been CIA chief of station for Thailand, the culmination of a long CIA career, though he had recently declared his retirement from government. 

Jantzen is reported living near Orlando now. There is a Robert Jantzen in the Orlando area, but with an unlisted telephone number, and he couldn't be reached. But Collings memories of the Bangkok conference include "a friend of Ed Black, ... a former CIA guy in Thailand," who "was going to help the firm develop contacts."* Owen remembers Jantzen by name, and describes him and Black as "two CIA guys." 
*Collings says he thinks the man was Edwin Wilson, the CIA outlaw who sold arms to Libya and who had frequent associations with Nugan Hand executives. John McArthur also has said Wilson was at the Bangkok conference. Neither mentioned Jantzen. But from the physical and other descriptions given (such as red hair), it seems clear that Jantzen and not Wilson was the person in question. Neil Evans has said he saw Wilson in Thailand in May 1977, on some sort of arms deal, but there has been no corroboration of this. 
Daniel Arnold, a successor CIA station chief in Bangkok, says Jantzen got involved because he had been a friend of Black and Yates. Arnold remembers Jantzen dropping by his place in Bangkok for a visit during the January 1978 meetings to discuss the Nugan Hand job. 

"From what he told me, which was really all I knew, it would involve going to your friends or acquaintances and getting them to invest money, with visions of sugarplums," Arnold says. "He's a very decent man. My advice was not to get involved." (Arnold announced his own retirement from the CIA soon afterward, and went to work as a lobbyist for the Government of Thailand in Washington.) 

Though Arnold didn't mention anything about drugs, Jantzen must have heard troubling reports. Frank Nugan wrote Jantzen a memo trying to explain the drug rumors innocently. Still, Jantzen used CIA contacts to reach out to Harvey Bates, head of the Australian Federal Narcotics Bureau, to ask if Nugan Hand was under a drug investigation. Bates's reply, if any, has never become public. 

But twelve days after Jantzen's indirect query, Frank Nugan visited Bates to protest that narcotics officers were embarrassing his bank. Soon afterwards, Bates's brother and second-in-command at the narcotics bureau, Brian Bates, who also attended the meeting with Nugan, wrote a "SECRET" memo to his commander in charge of the investigation. 

Headed "Nugan/Hand," the memo said, "I desire that this Bureau should not for the time being engage in any active external inquiries into this matter. . . . Will you please therefore ensure that, until further notice from me, no active external inquiries are embarked upon in relation to this matter. . . ." 

Several investigators who had been working on numerous leads became extremely upset. After Nugan Hand collapsed and many of its illegal activities were exposed, their inquiries were proven justified. They got hold of Brian Bates's memo, and accused the bureau of corruption—accusations that were repeated in Parliament. 

The Stewart Royal Commission heard testimony from Harvey Bates that the Nugan Hand probe was called off mainly because Bates, in the commission's words, was "not convinced the Bureau had anybody capable of interpreting a merchant banker's books." Though this is hardly something an investigative agency would be proud of, the commission said it didn't find any evidence of corruption. 

For whatever reason, Red Jantzen chose not to stick around Nugan Hand. Some who attended the Bangkok conference believed he had already joined the group, and he certainly seems to have been introduced there as such. But he apparently never transacted business for the operation. 

Owen continued to try new trade deals. He arranged for Nugan Hand to handle payments on the export of fish from Thailand to the United States by an Australian based company. He worked with General Black, who "brought in top people . . . brought American  business people here" to put up an ethanol plant, and to start production of energized seeds. "But the deals never came to anything," Owen complains. 

The home office's enthusiasm for trade commissions faded. A typed note in Owen's correspondence file, probably from Gilder or Mike Hand, shows that the emphasis was on illegal deposit-taking. "John not closing," the note said. "Potential clients escaping. Probably over emphasising trade." When Owen requested a promotion and pay raise, Gilder wrote back that Hand and Collings had rejected the request, until Owen brought in $500,000 in deposits on his own— "not as a result of introductions effected through General Black or Mr. Robert Jansen [sic]." 

"We should be getting substantial deposits very soon," Owen wrote him. Bird dogs were employed to lure expatriate depositors. One was Lloyd Thomas, the owner of the Takara 2 Massage Parlor and Hairdressing Salon in Bangkok—and the man John MacArthur says was trying to buy a load of bayonets through Nugan Hand. 

Interviewed in his well-appointed waiting room among the scantily clad "hairdressers," Thomas boasts of knowing the CIA personnel at the U.S. Embassy, and offers several names to prove his point. (The names couldn't be verified anyway.) Asked if he got commissions for lining up customers for Nugan Hand, he says, "That might be true and it might not be true. I won't say." Internal Nugan Hand correspondence, however, says Thomas "worked" for the bank at least to the fall of 1979. 

By the end of 1978, Owen had received his promotion. A note from Gilder to Hand said Owen "feels confident of producing $1 million for the year and anticipates additional good volume if current border wars persist." 

Border wars made for turmoil, and turmoil made for a better business in sneaky money. Even the trade deals that continued in favor tended to be military-related. In one letter, Owen reported that "a large military sales contract" had been promised in connection with the Kaiser cement deal. An arms deal for 40-mm anti-aircraft guns was talked about for a while, but fell through. 

Months were spent on a contract to establish an aircraft maintenance and repair center in Bangkok, to replace one that had been created and run by now-departed American G.I.s. Nugan Hand was trying to win the contract for UTA Industries, a big French firm represented by a captain in the U.S. Naval Reserve, who Owen described as "a longstanding client" of Collings. The aircraft maintenance deal was lost in infighting among Thai officials, and the navy captain, reached at his home in Connecticut, ducked efforts to question him. 

One prominent figure in that deal, and other Nugan Hand activity, was former Laotian Prince Panya Souvanna Phouma, son of Prince Souvanna Phouma, for whom the United States ran a covert (and later not-so-covert) war in Laos in the very early 1960s. Prince Panya had recently fled the communist conquest of his country, and according to a John Owen letter, he "swam to freedom across the Mekong River in his socks." Prince Panya, Owen wrote, "has the reputation of being a playboy, but would appear to be a strong negotiator. He is fluent in six languages and has strong connections in Thailand." 

Extensive Nugan Hand files indicate that the bank helped establish Panya in a strange little airline called "Sky of Siam," ostensibly used for seeding clouds to promote rainfall (a pet project of the Thai king), as well as hauling passengers and freight. Owen's correspondence says he helped arrange bank financing for Sky of Siam, and got the aircraft for Prince Panya through the U.S. Navy captain he was dealing with. A letter from Owen to Gilder dated June 4, 1979, says the navy captain was billing the U.S. Government for his expenses, leaving the implication he was on government assignment at the time. 

Panya—who probably has been a major target of American affections, financial and otherwise, over the years—was a principal or front in many deals. A memo from Gilder to Owen June 21, 1979, says, "We put a proposal to Prince Panya in Singapore [Michael Hand's post] concerning Indonesia's military requirements, and I think this appealed to him. I have no doubt that he and Joel [Joel Boscher, a business associate of Panya's], between them could produce millions in volume for us." 

The next day, Owen wrote back that Panya also was trying to get a contract to install a new water system for Pattaya City, Thailand, and wanted Nugan Hand to arrange financing. "With fees and Far-gent sous la table perhaps we could get somewhere on this," Owen reported. 

L'argent sous la table—money under the table—bribes—was apparently a specialty of Nugan Hand. 

Surviving files indicate that Nugan Hand became involved in a deal to find safe overseas havens for massive amounts of graft stolen by officials at the highest level of the Thai military government. The files don't reveal how the deal wound up. 

But Owen wrote a letter to Gilder about it July 3, 1979, apologizing for writing on "yellow paper as I cannot keep copies." The deal "may require some of our heavier members to come to Thailand," the letter said. 

Owen talked about an intermediary, whom he referred to as "the lady with the rubber," and "our lady." He explained that the money to be moved was obtained from $400 million in loans to the Thai Government, raised on Japanese financial markets. The interest rate for the Japanese was 8 percent, Owen explained, but an extra 0.75 percent interest was tacked on to the promissory notes the Bank of Thailand issued for the loan. That was the graft—the money the officials would keep for themselves. 

"The Government officials involved have discounted [cashed in] their notes at local banks here and now want their money out," Owen wrote. "Our Lady has come to me to ask that we, NH [Nugan Hand], do this for them. It has to be discreetly done and quite frankly I do not believe that the Chinese dealers, et. al., are quite the people to handle this ... I really believe it should be a Deak's job," Owen said, in reference to Deak & Company, Ron Pulger-Frame's old employer. 

"The people involved here are the government and should this get out, we would have another government," Owen stressed. 

Asking the Sydney office "to fix this for us when I blow the whistle," Owen wrote that "the funds would be put away for at least two years, possibly more, and could be considerably more than the amount indicated. 

"Following successful completion of this transaction we would be asked to act in a fiduciary capacity to raise another $400 million interest rates, etc., to be used in a similar manner. The time over which these funds are to be raised is within a matter of months. It must be done before there is any chance of a change in government." 

Owen cautioned that he couldn't report the progress of the venture by telex " 'cause my telex is not discreet enough. If we are to use the telex then everything should be done in code and a one-time code at that. Use of words like 'latex' or 'transistors', etc. [from Mike Hand's currencies code] have been compromised long ago. Basically, we should alert Deak's or whoever and then give instructions to them verbally here in Thailand." 

Owen went on to describe technical details of the next loan as would be required to allow for the padded interest rate containing the graft money. No written reply could be found among the fragmentary and badly shuffled records that survived the ransacking after Nugan's death. Gilder wouldn't talk to reporters, and the Stewart Royal Commission made no reference to the situation. 

On January 19, 1979, Owen submitted to Gilder a single-spaced, typewritten report of three legal-sized pages. It began, "This is an evaluation of the Vietnamese capture of Cambodia as asked for by Graham Steer in Sydney last week." There is no further explanation for why former career naval officer Owen began writing a series of long, detailed reports that read like CIA or National Security Council briefing papers. 

Steer, the California- and Florida-educated management consultant, had been working out of the Singapore office under Michael Hand. Hand's primary residence was Singapore by then. 

Owen's first report, January 19, contains news that Vietnamese forces in Cambodia "would seem" to "have been operating under instructions from Hanoi not to close within a certain range of the Thai border," so that "people in Thailand do not seem to be particularly worried about any immediate threat." How Owen would learn this sitting in his rented banking office in Bangkok, several hundred miles from the affected areas, isn't mentioned. But in his report, he elaborated on several reasons for the rapid collapse of Cambodian resistance. 

A fair example of the text: "The Vietnamese having broken through the main Cambodian forces on the Vietnamese/Cambodian border then split up into a number of armoured thrusts which used well paved highways to approach their main objectives of the major towns. In using the highways, they by-passed many pockets of resistance leaving those to be mopped up later. It would appear that the towns were taken by determined thrusts into their centers to capture command posts, thus depriving Cambodian forces means of communication." 

Owen said a guerrilla-type campaign planned by Pol Pot opposition forces had been forestalled by the Vietnamese blitzkrieg. He reported that "consensus of opinion [he did not say among whom] is that the Vietnamese army will probably be tied up in putting down sporadic guerrilla actions over the next 18 months to two years." He included detailed forecasts of probable relations between Vietnam and various of its neighbors, and predicted continued military skirmishing that was "unlikely" to "spill over into Thailand." 

He predicted a diplomatic thrust by Vietnam "to improve her image" with noncommunist Southeast Asian countries. He recommended "forming some sort of military alliance" among those countries "whilst at the same time seeking to improve farm incomes and standards of living in those areas directly facing the Communist threat." 

The next month came another missive of almost equal length, again detailing the tactics of both sides in the Cambodian fighting, and cataloging Vietnam's increasing diplomatic problems with other Third World countries as a result of the invasion. There followed other reports of up to four legal-sized pages, in single-spaced typewriting, containing much the kind of thing a military strategist might hope to find out before entering war. They were sent to Gilder, but with directions for passing on to Mike Hand. 

"Vietnam has 19 divisions in Cambodia, just about the whole of its front line army," he wrote. "This army is being supplied by air since it does not have full control of the highways. It is reported to have run short of fuel for its armoured divisions and its mobility is therefore severely curtailed. Vietnam would appear to control fully only the cities, which have no populations, and it is not in a position to bring people back to the cities since it does not have the wherewithal to feed them. In addition, in Kampuchea, there appears to be few indigenous Kampuchean remaining who can administer the country. . . ." 

Possible Soviet and Chinese responses—military, political, and logistical—were assessed. So were the prospects of a Soviet-American confrontation in the region. In all cases, Owen's emphasis was on the fighting capacity available at the scene, and that was described in detail. 

"Vietnam may in the long run have aims on turning Thailand into a communist state but it is [in] no position at this point in time to put this aim into effect by military means," he summed up. He recommended that the Thai government start social programs to cure the economic inequities he said were causing "significant discontent in the countryside." 

About the time Owen was writing all this, it has since been disclosed, the United States was cooperating with China in aiding the Pol Pot resistance in Cambodia. 

What Owen's reports have to do with Nugan Hand's banking or trade interests is hard to fathom. In fact, many of his recommendations, in the sudden public spirit of curtailing violence, operate against the pro-violence undercurrent elsewhere in company literature. Elsewhere, Nugan Hand correspondence suggests that turmoil is good because it fosters the shady transactions that Nugan Hand profited from. 

As with other foreign businesses operating in Thailand, Nugan Hand needed the patronage of a native Thai to hold the title of "chairman." The Thai who worked with Owen in this capacity from the beginning was a shipping and finance magnate named Suvit Djevaikyl, who boasts of many connections with members of the Thai government, including the finance minister. Djevaikyl says a friend in the shipping business had introduced him to Les Collings in Hong Kong, after which Frank Nugan and Michael Hand went to Bangkok to sign him on as part of the business. 

And Djevaikyl brought home some bacon. "My friends had a lot of money that they deposited with them [Nugan Hand] in Hong Kong," he says. "I cannot give you their names because it is illegal to have money outside." He stresses that his friends got the privileged, Wing-On Bank-guaranteed accounts, so didn't lose their money. 

Owen says Djevaikyl was particularly interested in brokering military sales to the Thai government from foreign sources, but that Nugan Hand couldn't match the prices available in Western Europe. In mid-1979, there was a falling out. Djevaikyl threatened to sever his relationship with Nugan Hand and boot Owen out of the country. Hand transferred Owen to Singapore, and replaced him in Bangkok with George Galicek, a defector from Czechoslovakia who had been representing Nugan Hand in Chile. 

Galicek, an economist for the Czech Ministry of Foreign Trade, had defected after being posted to Chile from 1966 to 1970. He had been working on a deal with Owen and Djevaikyl to sell Thai rice to Chile, so the principals all knew each other. 

Nugan Hand collapsed shortly after Galicek got to Bangkok. But from what Djevaikyl says,* he had determined to break his connection anyway. He says that during 1979, Hand proposed that Djevaikyl and his family buy a bank in Florida. (At this time, Nugan Hand was looking to take over a Florida bank, but in someone else's name.) 
*Interview with the author.
Apparently as a result of his efforts to check out the bank offer, Djevaikyl says, "Some of my police friends told me he [Hand] was from the CIA." Djevaikyl says he also learned from his "police friends" that "these people Ed Black [and] Red Jantzen were with the CIA. A friend of the American ambassador also told me, but that was after Frank Nugan died. 

"If I know all these people were CIA, I would never let them put my name on their company," Djevaikyl asserts indignantly. "Suppose you're a businessman and somebody come to see you and you find out they are CIA, you would not like that. People might get the wrong idea and think I am CIA. And there are many killings. Some of these people die." 

The CIA rumors weren't the only ones surrounding the bank. By much evidence, the Nugan Hand staff was very conscious of the narrow line the company was walking with its drug connections. A letter from Gilder to Owen November 14, 1977, expresses concern about the Chiang Mai situation, and about Otto Suripol, the former U.S. air base interpreter from Vietnam War days. Since Neil Evans had taken his hepatitis wracked body back to Australia, Suripol had been left alone representing Nugan Hand in Chiang Mai. 

Gilder thought Suripol was "not up to Group Representative standard." In the November 14 letter, Gilder asked Owen to supervise Suripol carefully, because "with the maliciousness and scurrilous remarks that have been made against the Nugan Fruit Group in Australia, Chiang Mai is a situation I am sure you will appreciate which we must be right on top of all the way [sic]." Gilder was obviously talking about illegal drug trafficking. 

In a February 21, 1978, letter, Owen wrote Gilder about "one disturbing thing to me which I think you should know about." The disturbing thing was that Otto Suripol in Chiang Mai had told people that he was under instructions from Gilder "to go to the people he thought had 'hot' money from the 'trade' to see if we could look after it for them." 

A year later, Owen wrote again, expressing his concern, and that of a depositor, about the presence on the Nugan Hand staff of one Ernest Wong. Wong was from a Chiang Kai-shek-associated family that had settled on Taiwan. 

"Ernest has been recruited by Les and Mike to work on deals out of China," Owen wrote. Then he added, "Wong has a long and close relationship with Kuomintang Army remnants in the North of Thailand and is or was President of a Shan [States of Burma] Association in Bangkok. Their involvement with the drug trade [as already discussed earlier in this book] is a known fact as it was this way that they were able to raise money to buy arms. I am not suggesting that Wong was involved in any way, but you have to be very careful in this part of the world not to be implicated by association in any way." 

But having said all that, Owen immediately cautioned Gilder not "to do anything about it nor repeat it to Les [Collings] or Mike [Hand]. I don't believe that anything I or you may say could make any difference." The clear implication of this remark is that Hand wouldn't have cared—or might even have intended the drug connection. 

Soon, one of Ernest Wong's northern Burmese neighbors—a man born Chiang Chi-Fu, but known in his trade as "Khun Sa"—was being exposed in the newspapers, and on television, and in the U.S. Congress, as the biggest heroin dealer in the world. Khun Sa's men had fought against the Chinese Kuomintang, and won control of most of the Golden Triangle's crop. 

The ensuing truce between the two sides was still fraught with skirmishes. Like the Kuomintang (KMT), which continued to insist that it would one day re-take China, Khun Sa also claimed to be dope-peddling for a noble cause—in his case, the independence of his people in the Shan States of Burma from the Burmese majority.* 
*Andrew Lowe, the Australian dopelord who was on Nugan Hand's staff in Sydney until he was sent to jail for heroin violations, put Khun Sa in Australian headlines by alleging that among his chores for Nugan Hand was arranging a meeting between Khun Sa and Michael Hand in Sydney to discuss a heroin deal. The police were unable to find any corroboration for Lowe's story and discounted it. 
Nugan Hand's Ernest Wong seemed able to straddle the Shan-KMT wars, ingratiating himself with both sides. He was also reputed to have worked for British and German banks, and to have government connections in China. "Wong said he was tied to the KMT, and he was promoting for the Shan States," Owen told a reporter in 1982, shaking his head in amazement. "That's Khun Sa's army!" 


16
The Drug Bank 
Nugan Hand liked to brag about its banking relationships with the rich and famous in order to attract new depositors. But there was at least one prominent Australian figure—a former Olympic hero and police official— whose banking relationship was something the firm didn't much talk about with outsiders. 

He was Murray Stewart Riley, and his status as a customer made big headlines when it was discovered after Frank Nugan's death. Riley, a rower on Australia's 1952 and 1956 Olympic teams (he won a bronze medal in 1956), and then a detective, had seen his fame turn to disgrace in a police corruption scandal in the 1960s. It was discovered that he had been protecting the business interests of Abe Saffron, the Sydney vicelord. He lost his job. 

Riley was tied to half a dozen illegal gambling casinos and was eventually convicted of bribing a policeman. He was jailed for nine months, then went back to the vice industry, specializing in the narcotics trade. He was arrested in 1978 in a luridly publicized case when he greedily overloaded a boat, the Anoa, which he used to bring "Buddha sticks"—a concentrated form of marijuana—in from Hong Kong. Unable to reach its intended port, the multimillion-dollar cargo sailed into the hands of police. Riley was jailed for ten years, and nine others were jailed with him. The ensuing investigation established that Riley was also importing about a hundred pounds of heroin a year, some for use in Australia, the bulk for transhipment to the United States. 

"He bought it for several thousand dollars a pound in Thailand,and sold it for several thousand dollars an ounce in Australia, after being cut [diluted with sugar or another harmless powder] three times," says a police investigator on the case. According to police investigators and the staff of two royal commissions, the heroin Riley brought in was shipped to the United States on freighters that were serviced by stevedoring firms infiltrated by Riley's associates. 

In 1980, in the heat of the Nugan Hand collapse, Riley sought to reduce his sentence by confessing some selected sins under oath before a royal commission on drug trafficking. He testified that Nugan Hand had moved his drug money from Australia to Hong Kong. He said it financed his purchase of at least one boat (not the Anoa) used in trafficking, and that he had sought out Nugan Hand because it could "transfer funds from Hong Kong to the United States." 

With Riley's at times detailed testimony to go on, investigators from the Commonwealth/New South Wales Joint Task Force on Drug Trafficking and the Corporate Affairs Commission were able to find Nugan Hand records documenting some transactions by Riley and his friends. They showed a total of $211,000 in deposits, mostly in Sydney, and $174,000 in withdrawals, mostly in Hong Kong, all between November 1975 and December 1976. 

Since the quantities of drugs Riley was handling were worth much more than that, and since Riley continued trafficking until his 1978 disaster and continued to use Nugan Hand, it is assumed there was much more money involved, and that other records were either destroyed or never kept. (When dealing with the surviving records of Nugan Hand, one must constantly be aware that they are fragmentary, selective, and often coded or understated.) 

Investigators also found records of transactions for quite a few other dope traders. Prominent among them, of course, was Andrew Lowe, whose standing as one of Australia's leading heroin importers while on the Nugan Hand staff as a "commodities" dealer has already been described. 

Other dope dealers named in these records were friends or relatives of George Shaw. As Australian lawmen began interviewing Shaw about this, one acknowledged associate of his was charged with supply and possession of 1,760 pounds of heroin. Shaw's family is said by police to have a record of drug trafficking, though it's hard to trace because of names. Shaw acknowledges that his name is a derivative of an originally Lebanese name; he insists,* however, that he doesn't remember what his original name was, or what his father's name was or is. 
*Interview with the author. 

As laid out in the Corporate Affairs Commission and Joint Task Force reports, Nugan Hand's records showed: 

DONALD WILLIAM MCKENZIE (OR MACKENZIE), who had eleven criminal convictions relating to drug offenses alone, and an additional history of other crimes, ran at least $36,180 through Nugan Hand in 1975 and 1976. One $20,000 deposit, identified by the task force as the proceeds of drug sales, came a few days after McKenzie was arrested for possession of marijuana. McKenzie dealt mostly with George Shaw. 

Shaw, in his initial testimony, tried to minimize his knowledge of McKenzie and assert that he thought McKenzie was interested in the leather business. But Rona Sanchez, Shaw's secretary at Nugan Hand, testified that she thought all along McKenzie was a dope dealer. 

"I could tell by the style of Don's living," she said. "He never had a job and yet he drove a new red Mercedes-Benz. He was always smartly dressed and he told me that he had sent his girlfriend on two or three cruises." Besides overhearing conversations about money "obviously . . . from the sale of drugs," she reported that "Don was quite often stoned when he came in to see George." 

According to testimony before the Corporate Affairs Commission from narcotics agent Denis Kelly, McKenzie was employed for a while by Jack Rooklyn, an expatriate American who came to Australia to supply slot machines to Saffron's gambling dens on behalf of Bally Corporation. Bally is a major American gambling concern that started under secret Mafia ownership, and was later financed by the Teamsters' Union's corrupt Central States Pension Fund. McKenzie, the dope dealer, was brought onto the staff of Bally's man Rooklyn in the perhaps surprising capacity of tutor for his children. 

Like other dollar amounts listed here, McKenzie's deposit total of $36,000 is probably much less than what actually flowed through Nugan Hand on his account. To take his case as an example, George Shaw eventually testified that his own records showed McKenzie actually withdrew $100,000 on a day when Nugan Hand's records show him withdrawing only $1,000. 

Commented the Corporate Affairs Commission about this hundredfold discrepancy, "This withdrawal of $100,000, if accurate, indicates both the size of the off-ledger cash kitty facility offered by Nugan Hand Limited through Mr. Shaw, and the likely origin of some of the funds deposited but not recorded in the official books..." 

In fact, the incident could indicate that the figures for Riley and the other Nugan Hand drug clients were also grossly understated. In his own testimony, Riley was conveniently forgetful of details like dollar amounts that might have caused him a tax liability. The enormous amounts of drugs that Riley and other Nugan Hand customers were dealing in likely would have produced and required sums in the millions of dollars. 

Other persons whose names were found in Nugan Hand records and listed in the Corporate Affairs Commission and Joint Task Force reports as among the bank's drug clients: 

JAMES LEWIS WILLIAMS 
(ALIAS JAMES ARTHUR WATSON), who was arrested in 1981 on what the Corporate Affairs Commission called "drug cultivation related charges" (he was convicted in 1982), deposited $23,000 in Nugan Hand and withdrew $27,000 from July 1976 to June 1978, the available records showed. 

GEORGE CHAKIRO, who has no criminal record but whom the Corporate Affairs Commission identified, based on police and underworld sources, as "deeply involved in hashish importation and distribution," deposited $13,000 and withdrew $15,000 between June 1976 and June 1979, the commission and task force said. Hawaiian records not cited by the official bodies show that a George Chakiro was a big borrower from Nugan Hand's Hawaiian Trust Company bank account as far back as 1974. 

MALCOLM CRAIG LADD, who (in the commission's words) "was involved in the distribution of drugs since 1972," deposited more than $ 145,000, according to a reconstruction of records by the commission and task force. According to the task force, Ladd had convictions for possession and use of heroin and marijuana, and admitted selling them, and hashish, on a large scale. 

CHARLES ROBERTSON BEVERIDGE, "a partner of Mr. Ladd in drug trafficking," the commission said, deposited $60,000 and withdrew a like amount between May 1976 and February 1979. The task force said Beveridge also admitted his work as a distributor, and, like Ladd, said that George Chakiro was at times his supplier. Both Beveridge and Ladd admitted to the task force that at least most of their deposits were the proceeds of drug deals, and couldn't cite any other jobs or sources of income. —

BARRY GRAEME CHITTEM AND 
MURRAY DON NEWMAN from February 1978 to May 1979 ran at least $30,000 through Nugan Hand that they conceded was money made from, and reinvested in, marijuana and hashish, the commission said. Newman had been convicted for a marijuana offense. The task force said Chittem and Newman argued in testimony that only part of the money they put in Nugan Hand was from drug sales. But the task force said no other source of income could be found, and that the drug activities were on a scale to produce much more money than the amount Chittem and Newman admitted to. 

Furthermore, the task force said, Chittem and Newman admitted withdrawing cash from the Sydney and Singapore offices of Nugan Hand, packing it in their luggage, and smuggling it on to Bangkok and Chiang Mai. Added the task force, "Chittem claimed that he was unaware that Chiang Mai was closely associated with drug production and distribution, which seems somewhat absurd in all the circumstances." 

—"W," a man the task force would identify only by this pseudonym, deposited at least $23,000 in Nugan Hand between July 1976 and September 1977. In February 1978, the task force said "W," who already had seven "minor criminal convictions," was sought on a warrant for growing marijuana, and escaped arrest by holding a gun on an undercover policeman. He was later captured and when the task force issued its report he was awaiting trial, apparently inspiring the pseudonymous reference. 

BRUCE ALAN SMITHERS, another drug trafficker, deposited $43,000 in late 1977—while he was on bail on charges of cocaine and hashish trafficking. He was convicted, and deported to New Zealand in July 1979. 

—JAMES SWEETMAN, who in the words of the Joint Task Force was "a major drug trafficker in the 1960s and 70s," was apparently a client. Although direct evidence of deposits or withdrawals wasn't found, his name appeared on the client list Frank Nugan carried with him at his death. Sweetman associated with Riley and members of Riley's group. He disappeared after two drug-related arrests in Britain in 1977. 

—GEORGE SHAMOUN, a Lebanese, was arrested March 19, 1980, on a charge of trying to import into Australia twenty-two pounds of hashish oil, which police said was worth about $176,000. When he was arrested, Shamoun was carrying a receipt from Yorkville, a Nugan Hand affiliate, for $80,000. It was signed by George Shaw. Some sixteen other Nugan Hand documents were found indicating international transfers by Shamoun of about $200,000, mostly to Singapore. 

Shamoun was acquitted at trial on the hashish charge. He explained his Nugan Hand deposits to the task force with "vague details of a gift from his family in Lebanon and of business dealings he claimed to have had in Singapore, Lebanon and Saudi Arabia." Shaw supported this story. Both men said the $80,000 had been a typographical error, and that the actual deposit was $8,000. 

But after its investigation, the task force determined "beyond doubt" that Shamoun and Shaw were lying in "an attempt to hide their participation in drug related activity." They eventually admitted as much, after Karen Jones, a Nugan Hand secretary, testified that the Yorkville deposit was $80,000, and that "Shamoun regularly visited Shaw and . . . made other substantial deposits with Shaw."* 
*Shamoun came clean about the $80,000 figure before the task force, and Shaw testified to it before the Stewart Royal Commission
During this time, Shamoun was unemployed and on welfare. 

—JAMES BLACKER, COLIN COURTNEY, STEPHEN DEMOS, JOHN BROOKING, AND JOHN CERUTO all were dope dealers brought to Nugan Hand by Andrew Lowe, the task force said. For most of their transactions no records were kept, the task force said, but it found "reliable information" that Courtney alone deposited about $400,000 cash. 

From all this, the Corporate Affairs Commission drew its typically reticent conclusions: "The delegates [commission members] do not assert that Nugan Hand actively pursued the drug trafficking industry for business, although in the case of Mr. Hand this is a possibility. However it seems unlikely that the executives were completely unaware of the activities of certain clients associated with drug trafficking. As with other areas, Nugan Hand was not in the business of refusing funds associated with illicit or questionable activities. . . . Whilst it cannot be stated with confidence that Mr. Shaw was aware of the activities of these drug traffickers, or of the source of their funds, however [sic] it is reasonable to infer that he was aware the funds were not the result of normal commercial enterprise and fell within the general description of 'black money.' " 

The Joint Task Force was a little more blunt, stating in its conclusions that Shaw's " 'drug' clients . . . were in their early to mid 20s at the time of their dealings with Shaw. In every case," the task force said, "deposits they made were by way of cash, often in quite substantial sums, and frequently no 'official' receipt was issued. . . . With perhaps one or two exceptions, it can be fairly said that in neither their physical appearance nor their mannerisms did they have the appearance of legitimate successful business people. Indeed, one depositor was described by an employee as frequently having the appearance of being affected by drugs on his visits to Nugan Hand offices. Shaw's clients were quite open in their comings and goings. ... In short, apart from any legal responsibilities Hand and Nugan had towards Shaw as their employee ... there can be little or no doubt that they were aware of Shaw's procurement of 'drug' money ... and that their failure to stop it was, if nothing more, an implied acceptance of that practice." 

As for war hero and CIA man Mike Hand himself, the task force concluded, "throughout 1976, Hand was knowingly involved in drug activity with the 'Riley' group in that he permitted and even encouraged the use of Nugan Hand facilities for the movement of 'drug' money... By 1977, Nugan Hand was well established in drug activity." 

How much did the other executives know? Les Collings, Nugan Hand's Hong Kong representative, offers a perfectly innocent explanation of how he happened to dole out funds to dope dealer Murray Riley. "He was like any other Nugan Hand customer," Collings says. "He was a businessman and he wanted cash put out of Australia. I was told [by the Sydney office] to pay him some money. I was told to wine him and dine him. I didn't know who he was from Adam. Riley could have been anybody. Here was a nice guy coming up and giving Nugan some money." 

A fine story—until you analyze it. For one thing, Riley was a wildly notorious character, especially in 1974 when Collings was still living in Sydney. Riley was all over the newspapers that year as a result of hearings by the Moffitt Royal Commission on organized crime activities. 

For another thing, the Joint Task Force reported testimony from Collings that in September 1976 he got "urgent instructions" from Mike Hand to have $100,000 in U.S. cash available for Riley, who then dropped by to pick it up, or most of it. The orders were so urgent that Nugan Hand didn't have time to supply the documentation required by Hong Kong banking authorities for large bank withdrawals. 

So, Collings told the task force, he had set up an account in his own name to pay Riley—clear evidence that Riley was not just "like any other customer." When Mike Hand heard about Collings's special arrangement, he was so alarmed that he shot a memo to Collings saying, "Please hold fire on using this account for pay offs. Some method totally disassociated with you and the company should be employed for payout." 

The task force noted that "both Nugan and Hand frequently handled 'black' money, which caused them no particular concern, but these transactions were of particular concern to Hand." In other words, Hand knew that his customers were engaged in dope smuggling, not just routine tax cheating. Strong suspicions, at the least, might likewise be attributed to any Nugan Hand executives who got instructions like the ones Hand gave Collings. 

From what it could find of records, the task force also raised the "question" of whether Nugan Hand, rather than just moving money, was lending Riley and his friends their capital, and thus financing the dope trade. Justice Philip Woodward, in his Royal Commission report in 1980, had indulged in the same speculation. 

One ground for thinking that Nugan Hand was bankrolling heroin, the task force said, was that much of the money the Hong Kong office shelled out to Riley and his friends "appears never to have been reimbursed"—either through deposits or through money transferred up from Sydney. The task force also noted that Mike Hand had personally ordered the destruction of the Riley records in Hong Kong, and "regarded his relationship with Riley as being so significant that he was prepared to perjure himself in respect of it." 

He certainly did perjure himself. Appearing before Woodward's Royal Commission inquiring into drug trafficking, Hand was asked, "Do you know Murray Stewart Riley?" He replied, "I do not recall meeting a person by that name." Hand then flatly denied he knew of any discussion by anyone in the Nugan Hand organization in which Riley's name even came up. He even denied that Nugan Hand ever transferred funds except "through a regular bank." 

"It seems highly probable," the task force concluded, "that Hand knew Riley and [his friend Harry] Wainwright were involved in drug trafficking and that their requests for use of the Nugan Hand facilities for the movement of money were in furtherance of that activity. And knowing this, Hand assisted them not only by freely offering them the use of those facilities, but indeed encouraging that use." 

One more aspect of the Murray Riley case deserves to be explored before moving on to Nugan Hand's other connections with dope, and murder-for-hire. It involves both the American Mafia and Sir Peter Abeles, that knighted bastion of proper wealth, whose circle of friends kept popping up as benefactors to Bernie Houghton and Michael Hand. 

Riley had a pack of expatriate American friends in Australia, with pretty unsavory pasts of their own. There was Harry Wainwright, a New Orleans native who practiced criminal defense law in San Francisco until his disbarment, and began going to Australia in 1968. Wainwright became a naturalized Australian citizen in 1973, thus escaping extradition; he was indicted that year on federal tax charges in San Francisco. 

According to Justice Woodward, writing in his Royal Commission's 1980 report on drug trafficking, "Information received from the United States authorities alleges that he [Wainwright] was, while practicing as a lawyer . . . , an associate of known 'Mafia' leaders. Despite his denials, I am satisfied by the evidence . . . that there is substance in this allegation." Justice Woodward also reported that he had received "some evidence" that Wainwright got his Australian citizenship in ways that were "highly suspicious and obviously call for further investigation by the appropriate authorities." 

In Australia, Wainwright, like Riley, became a client of Nugan Hand. Les Collings remembers wining and dining and paying Wainwright money several times in Hong Kong—but, of course, noticed nothing suspicious about him. Justice Woodward wrote that "Wainwright came to the attention of the Commission principally because he travelled through Wings Travel Pty. Ltd.," whose services were relied on by the dope syndicate Riley was part of. Wings was owned by William Sinclair, a Labor Party politician working for a city council that deposited its money with Nugan Hand, and who was jailed in Bangkok for heroin possession. According to the Joint Task Force, Wings was "a significant vehicle for the secretion of travel movements by those involved in all levels of the drug trafficking trade." 

Another Wings traveler was Kenneth Derley, a henchman of Riley's. Derley appears in Justice Woodward's catalogue of characters "who have strong links with drug trafficking." He also appears, through an alias, on the list of Nugan Hand clients found on Frank Nugan's body at his death.* 
*The name on the list was Ken Dooley, and the amount by his name was "$19,267." It is widely assumed—the Joint Task Force flat-out states—that "Ken Dooley" is Ken Derley. The change may have been a crude code, or may just have resulted from Frank Nugan's slapdash accounting system. Either way, it was typical of Nugan.
Tracking a courier who was "bringing back white powder from Manila," Justice Woodward wrote, led the commission to another friend of Riley's, Danny Stein, or Steinberg, an illegal gambling figure who was visiting from Las Vegas. 

"New South Wales police received information which they regarded as reliable that the purpose of Stein's visit to Australia at that time [1975] was to organize importation of drugs from the 'Golden Triangle' for transshipment to the United States," Justice Woodward went on. (Woodward's commission on organized crime should not be confused with the more criticized Stewart Royal Commission on Nugan Hand.) 

Other Riley friends included George ("Duke") Countis, who from the late 1940s or early 1950s had been an illegal bookmaker and otherwise business agent in the operations of Mafia leader Aladena ("Jimmy the Weasel") Fratianno.** Fratianno, a racketeer and hit man with at least two dozen murders to his credit, traveled in the glitzy Las Vegas show business world. His most famous photograph published in Life magazine, shows him bringing together Frank Sinatra and the late Boss of Bosses, Carlo Gambino. Finally, in the 1970s, boxed in by the FBI, he became a highly effective government witness. 
**The Joint Task Force Report, volume two, at page 317, calls Countis "one of Fratianno illegal bookmaking agents." There are other police documents to support the association, as does Fratianno memoir, The Last Mafioso, written with Ovid Demaris. 

Countis's love of casinos led him to the Abe Saffron quadrant of Sydney. There, inevitably, he got to know Murray Riley. According to the Joint Task Force,*** it was Countis who first introduced Riley and Harry Wainwright to Frank Nugan and Mike Hand. That was in 1975 or early 1976. 
***Citing testimony from Stephen Hill, among other things. 
Justice Woodward reported that Wainwright not only "dealt with Frank Nugan" but "became a friend of his. They played chess together. Nugan handled the transfers of money to Hong Kong" for Wainwright and Riley, Woodward said, and did so without the knowledge or consent of the Australian Reserve Bank—in other words, illegally. 

The Woodward Commission's report went on to speculate about the source of this money: "I think," Justice Woodward wrote, "that the costs involved in importing . . . would have been beyond the unaided financial resources of Riley and his group. I am convinced that there was a financier or financiers behind the importation ... and that his or their identity is known to . . . Riley" and his associates. "They have kept their secret, motivated, no doubt, by fear of the consequences of disclosure. . . . Some information came into my possession implicating the Americans Wainwright and Stein in financing the Anoa venture, using the facilities of Nugan Hand. It has not been possible to verify this information. The records of Nugan Hand are in complete disarray and many of them are missing." 

The Joint Task Force reported that in June 1976, at the very time Wainwright and Riley were importing a big load of heroin from Asia, "Wainwright held a lavish function at his Darling Point [an exclusive waterfront section of Sydney] penthouse. It was attended by Nugan, Hand, Hill and other Sydney-based employes of Nugan Hand, Clive [Les] Collings the then manager of the Hong Kong office, and a number of other people not identified. The attendance of these Nugan Hand people at this party certainly demonstrates a considerable degree of familiarity with Wainwright, greater than one would reasonably expect if the client was not a major one." 

Riley, the task force reported, became a social friend of Mike Hand's. In fact, it said, "Hand's decision to establish offices in Thailand was substantially influenced by discussions he had with Riley, and perhaps Wainwright, during the latter half of 1976." 

Riley and Fratianno's man "Duke" Countis even approached Mike Hand about financing a $23 million Las Vegas casino project. Hand was interested, but the deal died. In his memoir, The Last Mafioso, written with Ovid Demaris, Fratianno described his attempt in December 1976 to launder Mafia funds through "foreign banks ... any tax haven bank" to build the casino, but said it never came off. 

There was a far stranger deal that did come off, however, between Fratianno and his Australian connections. Riley and Wainwright, according to various accounts, were working with Jimmy the Weasel (Fratianno) on a plan to farm a purportedly new strain of marijuana, and were looking for a plot in Australia to do it. They had become friends of a man named Bela Cseidi, who, although the protege of a wealthy Sydney industrialist, had himself become something of a playboy, involved in quick stock promotions, horse racing, and other gambling. 

Cseidi says Riley and Wainwright approached him to use some of his land for the marijuana farm, and made the approach through their banker—Michael Hand. On a flight back to Sydney from Hong Kong, where Wainwright and Riley had introduced him to Hand, Cseidi says Hand "proposed a serious criminal venture. Wainwright had told him I was the only one who could solve their problem." 

Cseidi says he agreed to sell some land to Wainwright, but never participated in the marijuana farm—which is why he is so upset that he had to serve three years in prison for it, especially since Wainwright went free. (The courts decided it was still Cseidi's land.)* 
*The Joint Task Force, following up on the openly declared suspicions of the Woodward Royal Commission, found in its published report that Wainwright was "involved in the financing of the" marijuana venture. The published report doesn't mention Fratianno by name in connection with this particular venture, though it cites him on the casino deal. The task force's detailed account of the Cseidi marijuana venture is contained in a volume of its report that has never been made public. It is said to cite Fratianno. 
The Woodward commission, in 1980, came upon the Wainwright involvement too late to cause Wainwright criminal problems in the five-year-old case; several others had been convicted in 1977. But the Joint Task Force flatly declared that Wainwright was prominent in a ring of "known or reputed drug traffickers" who dealt with Nugan Hand, and both the Corporate Affairs Commission and the Stewart Royal Commission accepted this judgment. 
But the interesting part of the story is the effect all this had on Cseidi's mentor, the wealthy industrialist who had taken him under his wing almost as a son when Cseidi was a boy, It was Sir Peter Abeles. 

As a familiar credit-card commercial might put it: "Do you know me? I am one of Australia's wealthiest tycoons, the boss of a worldwide shipping empire that rakes in $1.5 billion a year and has at least eighteen subsidiaries in the United States alone." 

Sir Peter Abeles is chairman of Thomas Nationwide Transport— TNT, as it's commonly called in Australia. Queen Elizabeth knows him—she knighted him in 1972. Rupert Murdoch, owner of Fox Television in the United States and publisher of the New York Post and other publications, knows him; the two men are good friends and business partners in several Australian ventures. 

Sir Paul Strasser knows Sir Peter. Sir Paul, who picked up a purportedly penniless, just-arrived Bernie Houghton and got him going in Australia, is a card-playing bestbuddy of Sir Peter's. 

Fred Millar also knows Sir Peter. Millar, manager of the real estate business that picked up a just-arrived discharged G.I., Michael Hand, and got him going in Australia, is general counsel for TNT. He is Sir Peter's right-hand man. 

It so happened that while Cseidi was getting to know Wainwright and Riley, Sir Peter was trying to expand his shipping and trucking empire to the United States, and was encountering problems with the Teamsters Union. Among these problems, according to a memo from the executive who was sent over to run the American operations, were "wildcat strikes, bombings, burnings, shootings and pickets at all terminals."* 
*The memo was uncovered and published by Marian Wilkinson in Australia's National Times. 
At Wainwright's house one day in 1974, Sir Peter's friend Cseidi met Wainwright's friend from the San Francisco crime scene, Rudy Tham, head of the West Coast Teamsters. Tham—who in 1979 was sent to jail for embezzling union funds—was a friend of Jimmy the Weasel; they even owned a clothing boutique together. On that same trip to Australia, Tham also visited Sir Peter and saw the TNT transport facility. 

Tham won't discuss what happened. Cseidi won't divulge all the details, either. But in 1975, he says, Sir Peter asked him to intercede in TNT's business problems. "Ever since I was a young boy I've been a close friend of Sir Peter Abeles, and he said there was this thing he couldn't quite handle, and would I go and handle it. He didn't quite know what he was getting into," Cseidi says. 

Sir Peter and Cseidi (together or separately) went to California and New York in early 1975, and met Fratianno (the Weasel) and Tham. Tham and possibly Fratianno suggested that some friends of theirs could probably solve Sir Peter's Teamster problems. The friends turned out to be associates of Frank ("Funzi") Tieri, head of the former Vito Genovese crime family and at the time probably the most powerful Mafia leader in the United States. Among the new advisors Sir Peter was thus introduced to were another professional hit man called "Little Ralph," a character known as "Benny Eggs," and a dock boss who was a cousin of Frank Sinatra. 

Sir Peter says that "by this time we knew Tham fairly well," and so he agreed to welcome a couple of the proposed advisors up to his hotel room. "They said, 'We are looking for profitable opportunities,' " Sir Peter recalls. Next thing he knew, Sir Peter, Jimmy the Weasel, Benny Eggs, and some others were trooping up to the Westchester Premier Theater in Westchester County, New York, a mob-connected theater that later collapsed in a bankruptcy scandal that resulted in several federal convictions. Sinatra sang there in an apparent effort to help out the mob owners. 

Sir Peter says he politely turned down the men's suggestions that he buy the theater. But he ultimately agreed to another deal designed to bring labor peace. He paid $700,000 for a little trucking business his new advisors owned, and gave them a 20 percent stake in his U.S. operations. He hired Benny Eggs and Sinatra's cousin as consultants at $50,000 a year, with the money to be paid into a series of small Cayman Island and U.S. corporations his consultants designated. So important was this arrangement that each year, Sir Peter, head of a vast international air, land, and sea transportation enterprise, took time out from his other duties to personally write out the payment vouchers and currency exchange forms for the consultants' fees. 

Eventually the Justice Department charged the consultants with hiding their income from the Internal Revenue Service. But when Sir Peter refused to come to the United States to testify at the trial, the judge threw out the charges for lack of evidence that the money from the foreign corporations he paid had gone to the consultants. 

Sir Peter says he was treated fairly by Tham and the others, and that all his dealings were legitimate. Cseidi says his dealings, too, were legitimate, though he's not so happy about his treatment. "I had nothing to do with drugs," he insists over an expense account-breaking lunch topped off with Cordon Bleu cognac at his private club before heading to the track. But he had tried the same line on an Australian jury, and it had chosen instead to send him to prison for three years.

NEXT
The "Mr. Asia" Murders 


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