Nugan Hand Bank - Merchants of Menace: The True Story of the Nugan Hand Bank Scandal

Peter Butt is an Australian investigative filmmaker. Over the last three decades he has produced and directed major history series and dozens of documentary specials for local and international broadcasters. His multi-award winning docudrama Who Killed Dr Bogle & Mrs Chandler? solved one of Australias most iconic cold cases and remains the highest-rating documentary in ABC TV history. His book on the Bogle Chandler case was shortlisted for the Douglas Stewart Prize for Non Fiction in the 2014 NSW Premiers Literary Awards.

First Published in 2015

Blackwattle Press

Sydney

www.merchantsofmenace.net

Copyright 2015 in text: Peter Butt

Copyright 2015 in photographs: Peter Butt and individual copyright holders

Copyright 2015 Blackwattle Press

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publishers and copyright holders.

A catalogue record of this book is available at the National Library of Australia

ISBN:978-0-9923252-4-4

Publisher: Peter Butt

Associate Publisher: Sarah Staveley

Editor: Scott Forbes

Cover and internal design: Luke Harris, WorkingType

Printer: Griffin Press

This project has been kindly assisted by the City of Sydney History Publication Sponsorship Program

INTRODUCTION

Deep in conversation over dinner, I was barely aware that my host had left the table, until I noticed a metallic glint out of the corner of my right eye and a moment later the barrel of a silver pistol pressed flush against my nose. Another dinner guest chuckled, as the host removed the gun and handed it to me without a word said. It was a disquieting moment reminiscent of a scene from the movie Chinatown, in which a thug played by director Roman Polanski thrusts a flick knife up the nostril of a very nosey private investigator, Jake Gittes, played by Jack Nicholson. As a documentary filmmaker, specialising in controversial Cold War cases, I am also very nosey by nature.

I was in Tulsa, Oklahoma, reinvestigating the notorious Nugan Hand merchant bank, which collapsed in 1980 following the mysterious death of its Australian founder, Frank Nugan. My pistol-thrusting host, Douglas A Sapper III, had served with Nugans partner Michael Hand in Vietnam and later carried out sensitive and occasionally dangerous money-moving operations for the bank throughout Southeast Asia and southern Africa. One of those assignments had gone wrong and landed him in a Kathmandu prison. By the time of his release, Nugan was dead, Hand had disappeared and a dozen Australian and international police and corporate inquiries were probing the bank over sensational allegations involving drug traffickers, gunrunning and the CIA.

The abiding mysteries of Frank Nugans death and Michael Hands escape drew me to this project. Many of the surviving Australian investigators who assisted me believed that Nugans death at the young age of thirty-seven was not a simple suicide. Indeed, evidence found on his body suggested that there had to be more to it. They also believed that the CIA, or a former employee of the spy agency, had facilitated Hands disappearance.

During my three-day stay in Tulsa, I recorded eleven hours of interviews with Doug Sapper. His startling insights into the leading personalities, the banks CIA and drug-trafficking connections and the role of the FBI in the Nugan Hand story allowed my project to break free of its chrysalis and take flight.

As he bid me farewell at Tulsa Airport, Sapper implored me to find his old friend Michael Hand. I never did ask him what he had meant by his menacing pistol episode over dinner. I simply took it as a warning along the lines of, If you are intent on investigating Nugan Hand, then I am the kind of hard-arse you are going to be dealing with.

LIST OF CHARACTERS

Alexander, Brian (1939c. 1981) Law clerk with John Aston & Co, Sydney. Associated with criminals and with police engaged in drug enforcement. Disappeared in 1981, believed dead.

Allen, Gary* Sydney merchant banker.

Aston, John (1944*) Sydney solicitor who represented Frank and Ken Nugan and Murray Riley and had alleged improper connections with the Mr Asia drug syndicate.

Bailey, Phil* Federal Bureau of Narcotics investigator.

Beazley, Donald E (1942) Florida banker who took over presidency of Nugan Hand in 1979.

Black, General Edwin F (191585) Managed Nugan Hands Hawaii office. Later worked with merchant bank Bishop Baldwin Rewald Dillingham and Wong, whose offices were a conduit for various CIA covert operations.

Clines, Thomas (19282013) CIA covert operations officer who turned to gunrunning. Helped Bernie Houghton leave Australia following the collapse of Nugan Hand. Later became a prominent figure in the Iran-Contra Affair.

Cocke Jr, Brigadier General Earle (19212000) Nugan Hands Washington DC representative whose expertise lay in clandestine banking.

Colby, William (192096) Director of the CIA 197276; became a legal advisor to the Nugan Hand bank in 1979.

Collings, Clive (1937*) Director of Nugan Hand in Hong Kong.

Countis, George Duke (1915 -*) Restaurateur turned professional gambler and wheeler-dealer with connections to Australian and US underworld.

Dowd, John* Liberal Party member for Lane Cove in the NSW Legislative Assembly, 197591.

Arina (1925) Bud Kings Thai housekeeper.

Evans, Neil (1937*) Established and managed Nugan Hands Chiang Mai branch.

Fratianno, James The Weasel (191393) US organised crime figure. Associate of Murray Riley and Duke Countis.

Hand, Helene (1936) Michael Hands Sydney-born wife. They married in 1968.

Hand, Michael (1941) New Yorkborn former Green Beret. Served in the Vietnam War and was awarded the second-highest US award for bravery. Went to work for the CIA in Laos under William Colby. Deputy CEO of the Nugan Hand group of companies.

Hill, Stephen* Money manager with the Nugan Hand group.

Holmgren, Dale (1935) Former head of flight services for a CIA airline who ran the Nugan Hand Taiwan office.

Houghton, Bernie (19202000) Son of a Texas oil driller, he served in World War II, arrived in Sydney in 1967 then set up Kings Cross restaurants and nightclubs, including the Bourbon & Beefsteak. In 1978 he became the Middle Eastern representative for Nugan Hand bank. Suspected CIA operative.

Kelly, Keith (19332007) Former NSW detective.

King, Kermit Bud (19361975) Californian-born former CIA pilot who in 1967 following service in Laos during the Vietnam War, turned up in Sydney with Michael Hand to sell real estate for the Ocean Shores development.

Krahe, Fred (191981) Notorious NSW detective who gained a reputation as a gangland enforcer.

Lowe, Andrew (1943*) Convicted heroin trafficker. Introduced traffickers to Nugan Hand.