On the strength of a claimed turnover of $1 billion, the Australian Financial Review reported in early February 1978: “At this sort of growth rate Nugan Hand will soon be bigger than BHP.”
But two years later, on January 27, 1980, one of the bank's two founders, Frank Nugan, was found dead near Lithgow in NSW from a gunshot wound to the head. An inquest found it was suicide. Meanwhile, the other founder of the bank, Michael Hand, was busy shredding documents, including “files identifying clients regarded as sensitive”.
By June, the bank was in liquidation with debts of more than $50 million and Hand had fled to the US.
New York-born Hand served in the US Army in Vietnam where he worked for the CIA contract airline, Air America, known locally as Air Opium from its role in transporting opium grown by the Hmong tribe in northern Laos.
The Royal Commission of inquiry set up to investigate the murky affairs of Nugan Hand noted allegations made in the Wall Street Journal and various Australian newspapers, that Hand was involved in drug trafficking.
From 1975, the Nugan Hand Bank was responsible for arranging the financial transactions of at least 26 known drug dealers. These included the former NSW policeman Murray Stewart Riley, who imported heroin from Thailand on six occasions during 1976 and 1977. In 1978, Riley received a 10-year jail sentence for his part in importing 4.5 tonnes of Buddha sticks from Bangkok.
One of Nugan Hand's overseas offices was in the heart of the Golden Triangle heroin production area, Chiang Mai. Its principle purpose, according to the employee who set it up on the instructions of Hand, was to attract deposits from those involved in the drug-trafficking trade. The office was apparently not too inconvenienced by its location next door to the US Drug Enforcement Agency.
Neither Nugan nor Hand were bankers and they employed a number of prominent former-US military and CIA personnel who similarly lacked banking experience.
The bank's president was Admiral Earl Preston Yates, who was deputy chief of staff in the US Pacific Command, during the final US withdrawal from Vietnam. Three other ex-US generals were also employed by the bank. So too, was Walter Joseph McDonald who worked for the CIA from 1952 to 1979, including a period as deputy director.
William Egan Colby, US Ambassador to Vietnam from 1968 to 1971, and then executive director, and later director, of the CIA from 1973 to 1976, was retained by the bank to provide legal advice on taxation matters. His card, on which were written the dates when he would be available to meet Nugan in Hong Kong or Singapore in March 1980 was found in Nugan's possession after his death.
Hand left Australia in June 1980 on a false Australian passport, entering the US from Canada. He had previously been granted Australian citizenship as the spouse of an Australian citizen, despite a number of “irregular circumstances”, including the fact that his US passport was not collected from him and returned to US authorities — a matter on which he sought legal advice from Colby.
It was this irregular — not to say illegal — retention of his US passport that allowed Hand to enter and then go to ground in the US. In December 1980, a warrant was issued for Hand's arrest for trying to pervert the course of justice, but he could not be found.
The reason he could not be found is that no one seemed to be looking very hard. In 1982, ASIO was told he was working as a military advisor — presumably in the pay of the CIA — on the Nicaragua-Honduras border harassing the Sandinista government. But ASIO was unable to track him down and the FBI could not help either.
In 1991, a magazine reported that he was living in Washington state and even published his address, but nothing came of it.
Last week, the TV program 60 Minutes located him in the US state of Idaho. When the Australian Securities and Investment Commission (ASIC) was asked about this, they said they do not comment on operational matters. They also noted that the matter is more than 30 years old and they would have to satisfy themselves that any investigation “benefitted the public interest”.
The Australian Federal Police also declined to say if it would investigate the matter, but did say they would assess the “new information”. This is comforting to know.
The trifling matter of a missing $50 million and a crooked bank that allowed the heroin trade to flourish in Australia should indeed be assessed. But the smart money would be on the CIA having done its own assessing and concluded that Hand is not going to be extradited to Australia.
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