The Nugan Hand merchant bank operated from 1973 to 1980 and has been selected as a rare example of systematic money laundering about which there is public knowledge. The bank was definitely involved in laundering (for a 22 per cent fee), tax fraud, and stealing from investors, and has been accused of a vast array of other crimes. It has been frequently alleged it was a front for the Central Intelligence Organisation, but a police inquiry found no evidence of that. However, it undoubtably had extensive personal connections with American military and intelligence officers and ex-officers, and it acted on behalf of American interests at this level internationally.
Frank Nugan was brought up in Griffith and with his brother Ken took over their father’s fruit packing company, which was turned into one of the nation’s largest fruit and vegetable distributors. Frank became a lawyer and settled in Sydney, where in 1973 he started Nugan Hand with American former Green Beret Michael Hand, who had fought in Vietnam and worked closely with the CIA in Laos. The bank offered interest several points above the going rates and before long had offices around the world.
Nugan Hand employed former American soldiers and intelligence officers (its president was ex-Admiral Earl P Yates; ex-CIA boss William Colby was its legal representative in America) and was particularly successful in attracting funds from American service personnel, most of whom never saw their savings again. The amount of investors’ money that disappeared when the bank collapsed in 1980 was somewhere between $50 million and several hundred million dollars.
The bank performed more efficiently for some of its Australian clients. The 1970s were a time when there were considerable restrictions on the movement of money in and out of Australia, but few means of catching anyone who flouted them. (Today the situation is somewhat the opposite.) Nugan Hand transported suitcases of cash around the globe, particularly from Australia and Hong Kong to foreign tax havens. This service had particular appeal to a certain type of customer, and the banks’ clients included criminals met before in this series, such as Abe Saffron and Murray Riley.
An important figure involved with Nugan Hand was Texan Bernie Houghton, who had close connections with the American and Australian intelligence communities. He arrived in Sydney in 1967 and opened some of the main venues, such as the Bourbon & Beefsteak, patronised by the thousands of US troops who promptly started to pour into the city from Vietnam on R&R leave. Houghton was a director of Nugan Hand and some considered him the bank’s Number Three – it was he who introduced Abe Saffron to the bank. (Naturally a man in Houghton’s line of business in Kings Cross would have had to have been on good terms with Saffron.) In 1975 or 1976, Houghton and other representatives of the bank were involved with an American intelligence officer in the purchase of weapons for non-government forces in what was then Rhodesia. Michael Hand was probably responsible for the African end of that operation.
Between 1975 and 1979 the bank took deposits from drug dealers of which $4.4 million is known, although the total was probably higher. In 1977 and 1978, it ran an office in the small town of Chiang Mai in Thailand, at the heart of the heroin Golden Triangle. The branch accepted $3 million in funds from six Thai-based drug traffickers. Another bank drug client – to the tune of $260,000 – was the Mr Asia syndicate.
Despite the bank’s extensive criminal endeavours, and the faked records and incompetent management provided by Frank Nugan, many of those associated with it were honest people who had no idea of its dark side. For seven years it operated apparently as an Australian international success story, although there were suspicions in some – but by no means all – parts of the banking industry that its success was too good to be true.
In 1978 Frank and his brother Ken were charged with conspiracy to defraud the family business, which by then had gone public. Frank stole almost a million dollars from Nugan Hand to fund his defence, but things looked bad. (Ken was later convicted and gaoled; another person charged but not convicted was the deeply corrupt ex-policeman Fred Krahe, also met before in this series.) At Nugan Hand, an audit of the books was due within a week.
In January 1980 Frank shot himself. His house and the bank’s offices were ransacked by Michael Hand and others, who removed large quantities of documents, which were later destroyed. (This damage control was conducted far more efficiently than the bank’s affairs had been.) Hand disappeared in June and is believed to have retired in America under a new identity. No one connected with Nugan Hand has ever been convicted of criminal activity involving the bank.
Official and journalistic attempts to learn more about the bank have been frustrated by the refusal of those who know, including senior US ex-military and intelligence personnel, to talk. In 1987 Jonathan Kwitny, a respected Wall Street Journal reporter, published a book about Nugan Hand called The Crimes of Patriots. He argued that the bank was even more sinister than described above, but acknowledged that much of the truth would never be known because of the nature of the people involved. His comment is worth quoting. “The men this book is mostly concerned with have lived their lives in a world of spying and secrecy. Though they have been and in some cases still are paid with US tax dollars, they have been trained to keep the taxpayers – among others – from finding out what they do. Compunctions about lying have seldom impeded their effort.”
Michael Hand has not been heard of since he disappeared in 1980. Bernie Houghton, who was of little help to various government inquiries, died a wealthy man in Sydney in 2000. A bust of him was erected in Fitzroy Gardens, just up the road from the Bourbon & Beefsteak.
MAIN SOURCES: Report volumes two and four of the Commonwealth-New South Wales Joint Task Force on Drug Trafficking; Connections by Bob Bottom; The Crimes of Patriots by Jonathan Kwitny.