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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