Nugan Hand Bank
Nugan Hand Bank was an Australian merchant bank that collapsed in 1980 in sensational circumstances amid rumours of involvement by the Central Intelligence Agency and organized crime. The bank was co-founded in 1973 by Australian lawyer Francis John Nugan and US ex-Green Beret Michael Jon Hand, and had connections to a range of US military and intelligence figures, including William Colby, who was CIA director from 1973 to 1976. Nugan's suicide in January 1980 precipitated the collapse of the bank, which regulators later judged never to have been solvent. Hand fled Australia in June 1980, after financial authorities began investigating his role in the failure.
Nugan Hand Ltd. was founded in Sydney in 1973 by Australian lawyer Francis John "Frank" Nugan and former U.S. Green Beret Michael Jon "Mike" Hand. According to writer Alfred W. McCoy, the Bank was formed with a fraudulent claim of $1m in share capital: "With only $80 in the company's bank account and just $5 in paid-up capital, Frank Nugan wrote his own company a personal check for $980,000 to purchase 490,000 shares of its stock. He then covered his massive overdraft by writing himself a company check for the same amount."
The Nugan Hand Bank attracted investors with promises of up to 16% interest rates on their deposits and assurances of anonymity, tax-free accounts, specialist investment assistance, along with more surreptitious services such as money laundering. Nugan Hand rapidly gained business and expanded its offices from a single Sydney office to a global network that included branches (registered in the Cayman Islands) in Chiang Mai, Manila, Hawaii, Cape Town, Hong Kong, Taiwan, Cayman Islands and Washington D.C..
According to a former employee speaking in 1980, the bank paid commission of up to 2.5% on unsecured investments of $1m or more, when the going rate was around 0.25%. Together with related costs, the bank was paying over 12% to access funds. Yet the bank never became involved in traditional merchant banking activities like equity investment or mortgage financing; instead, its principals sought all manner of unconventional investment opportunities, including gun running and attempts to corner various commodities markets, such as Malaysian rubber and Indonesian oil. Via its Cayman Islands subsidiary it also provided tax avoidance and evasion schemes.
The Nugan Hand Bank gained respectability by the recruitment of a number of retired senior U.S. military and intelligence personnel, such as former Rear Admiral Earl Yates as bank president and ex-CIA head William Colby as legal counsel.
Scandal and collapse
Concerns over the bank's questionable accounting processes began to circulate by the late 1970s as investors attending annual general meetings were prevented from asking questions by the bank. These concerns turned into panic for bank investors in the early hours of 27 January 1980 when Nugan (who was facing charges of stock fraud) was found shot dead by a .30-calibre rifle in his Mercedes-Benz outside Lithgow, New South Wales. The following police investigation returned a verdict of suicide. Suspicions of the bank's activities grew in subsequent days as details emerged of the contents of Nugan's car (including the business card of William Colby) and news that Nugan's house and office had been ransacked by Hand and Yates and important company files destroyed or stolen.
The official inquest into Nugan's death in April 1980 made front-page news amid testimony from Hand that Nugan Hand was insolvent, owing at least A$50 million (and as much as hundreds of millions), including $20,000 rent on their Sydney headquarters.
After destroying many of Nugan Hand's records, Hand fled Australia under a false identity in June 1980.
In April 1983 a Perth businessman, Murray Quartermaine, testified to the Stewart Royal Commission on drugs that Hand was living in Pretoria, South Africa under the name of "Hahn". Quartermaine also told The Age that he had evidence that questioned that Nugan's death was a suicide.
In March 1991, the Australian magazine The Eye reported that Michael Hand was living in the United States, giving an address and other details, but according to the Canberra Times, Australian authorities indicated even if Hand were found, further prosecution was unlikely. Criminal charges had been filed in 1981 against Hand and two other bank employees for conspiring to interfere with the investigation into the bank's failure, but were later dropped against the other two, making prosecution of Hand alone unlikely to succeed. Other charges relating to bank regulations were subject to a five year limit to bring proceedings, and no longer available.
An Australian investigation, the 'Joint Task Force on Drug Trafficking', released a report on Nugan Hand in 1983 stating that the bank's Chiang Mai branch participated in the covert sale of an electronic spy ship to Iran and weapons shipments to Angola.
The report also linked former Philippine president Ferdinand Marcos to the bank. Melbourne and Manila businessman Ludwig Petre Rocka had an account at the bank, as did his wife Elizabeth E. Marcos, sister of Ferdinand. Rocka had helped set up the Manila branch of Nugan Hand and had his Manila office (International Development & Planning Corporation) in the same office as the bank. American investigative reporter Jonathan Kwitny claims that the evidence implies that Ferdinand Marcos was removing money from the Philippines, some of which was in gold, through Nugan Hand, and that a portion of this money, a "commission", was then used to fund CIA activity, like that in Laos.
A subsequent royal commission inquiring into the activities of the Nugan Hand Group revealed money-laundering, arms shipments, drug dealing, theft (including US$5 million from US military personnel in Saudi Arabia) and large-scale tax avoidance by Nugan Hand throughout its brief but eventful existence. One witness, a former Nugan Hand director, stated that Hand threatened bank executives: "If we didn't do what we were told, and things weren't handled properly, our wives would be cut into pieces and put in boxes and sent back to us".
Authors Alfred W. McCoy and Sterling and Peggy Seagrave claim that Nugan Hand was totally CIA controlled (via Paul Helliwell), seeing it as part of a series of CIA-controlled banks, preceded by Castle Bank & Trust and succeeded by the Bank of Credit and Commerce International (BCCI). They further assert that the bank was just small stepping stone for the CIA in laundering capital that started during World War II and continues on.
No one connected with Nugan Hand has ever been convicted of a crime. Admiral Yates and his fellow senior officers[who?] who were involved with Nugan Hand have not responded to Australian requests to testify about the bank.
- McCoy, Alfred W. (1991). The politics of heroin: CIA complicity in the global drug trade. Lawrence Hill Books. pp. 462–478. ISBN 1556521251.
- Sydney Morning Herald, 26 September 1980, Ambitious schemes never eventuated: Chase after an elusive 'big deal'
- Tony Reeves, Mr Sin: The Abe Saffron Dossier, Allen and Unwin, Sydney, 2007, p 84.
- Sydney Morning Herald, 25 September 1980, The last 20 frantic day's of Frank Nugan's life: Desperate bid to save bank empire
- Sheehan, Paul; Tom Ballantyne; and Greg Wilesmith (21 August 1981), "How Michael Hand Left Australia", Sydney Morning Herald
- Wilson, Marshall; and Stephen Foley (8 April 1983), "Drugs probe to hear Perth man's evidence", The Age
- Campbell, Rod (1991-03-27). "Notorious banker found, but who cares?". Canberra Times. p. 1. Retrieved 2015-05-03.
- Campbell, Rod (1991-04-08). "No extradition for Hand". Canberra Times. p. 7. Retrieved 2015-05-06.
- Kwitny, Jonathan (Aug–Sep 1987), "Crimes of Patriots", Mother Jones Magazine 12 (6): 10
- Foley, Stephen (8 April 1983), "NSW report shows link with Marcos relatives", The Age
- Kwitny, Jonathan (1988), The Crimes of Patriots: A True Tale of Dope, Dirty Money, and the CIA, Touchstone Books (Simon & Schuster), p. 37,186
- Morton, James; and Susanna Lobez (2010), Dangerous to Know: An Australasian Crime Compendium, Melbourne University Publishing, p. unknown, ISBN 978-0-522-85681-1 Morton and Lobez cite John Owen's 1983 book Sleight of Hand: The $25 Million Nugan Hand Bank Scandal for the claim.
- McCoy, Alfred W. (1991), The Politics of Heroin: CIA Complicity in the Global Drug Trade, Lawrence Hill Books, pp. 461–469, ISBN 978-1-55652-126-3
- Seagrave, Sterling; and Peggy Seagrave (2003), Gold Warriors: America's Secret Recovery of Yamashita's Gold, Verso, pp. 98, 148, ISBN 978-1-85984-542-4
- e.g., Blum, William, 'Australia 1973-1975: Another free election bites the dust' in Killing Hope: US military and CIA interventions since World War II. Common Courage Press, Maine 1995, p. 249. Inter alia, it is alleged that the bank transferred $2.4 million to the Liberal Party of Australia which contested two forced elections in 1974 and 1975 to oust Whitlam's Labor government.
- Cockington, J. (2001) History Happened Here, ABC Books, Sydney.
- Kwitney, J. The Crimes of Patriots, a True Tale of Dope, Dirty Money, and the CIA; New York: W.W. Norton, 1987, ISBN 0-393-02387-7.
- McCoy, A. The Politics of Heroin: CIA Complicity in the Global Drug Trade; New York: Harpers and Row, Publishers Inc., 1991 ISBN 1-55652-125-1
- Owen, J. Sleight of Hand : The $25 million Nugan Hand Bank Scandal; Balmain, Sydney, Australia: Colporteur Press, 1983. ISBN 0-86399-023-1
- Jiggens, John Lawrence (2008). "Marijuana Australiana: Cannabis use, popular culture and the Americanisation of drugs policy in Australia, 1938-1988" (pdf). Queensland University of Technology. Retrieved 2009-03-12.