Hey! Randy

Behind the Bank

Posted by heyrandy on January 10, 2009

The Crimes of Patriots A True Tale of Dope, Dirty Money, and the CIA, Jonathan Kwitny, W.W. Norton, 1987. 424 pgs, index.

How do banks begin?  For what purpose do banks exist?  Why use an obscure bank?  These question are seldom asked by most bank customers.  We tend to assume that all banks are much the same.  It is only a matter of convenience as to which bank to use.  There is a  lot more to banking than we know.  There is the operations of banks that we see, but beneath the surface there is in some banks operation that you are not allowed to see.

The Nugun Hand Bank was one such operation.  Founded in Australia by Frank Nugan, an Australian, and Michael Hand, an American, the bank was curious from its inception.  Kwitny, a reporter for the Wall Street Journal, traces, what he can, of the banks origins, operations, demise, and aftermath.

The bank, it seems (no one knows for sure) was designed to enable people to evade taxes, evade currency export restrictions, and to launder money.  Almost all the bank’s operation outside of Australia were illegal.  Record keeping of deposits and loans often consisted only of a slip of paper kept in a file drawer.  The morning after Nugan’s 1980 suicide, the key officers of the bank went through the files and destroyed and carted off large quantities of records.  They didn’t need to hurry:  the police did not bother to show up at the offices until several days later.  This is just the beginning of a series of bungled attempts to investigate the bank.  There would be two more

Kwitny raises many questions regarding the bank:  Why were so many retired high ranking U.S. military officers involved as officers of the bank, yet they all claim no knowledge of the illegalities?  Why was the bank able to operate for so long and in so many countries without government authorities taking notice?  Why did so many depositors fail to file claims to try to recover some of their money?  What was the relationship of the bank with the Australian Intelligence and Security Organization?

These are all intriguing questions, but Kwitny does not answer them, at least not directly.  He hints at money laundering–the bank had a branch in the Golden Triangle are of Thailand–but doesn’t give the proof that shows the bank was actually helping the narcotics trade (although it is difficult to see why this branch existed, illegally under Thai law, if it was not to move around drug money.)  Kwitny also tries to implicate the CIA, saying the bank was a conduit for CIA funds.

The issue of the retired military officers is quite odd.  Were these men that naive?  Didn’t they investigate the bank and its principals before joining?  Why were they so willing to lend their names and prestige to this nascent operation?  Many of these men tried to lie their way out of any responsibility but changed their story when they were confronted with documents and, in one instance, a tape recording of a company meeting.

The bank was a magnet for former (?) intelligence operatives.  One especially colorful character was an expatriate American who operated a sleazy restaurant and bar in Sydney’s red light district.  There is nothing unusual about this until it is pointed out that the place is frequented by most visiting U.S. elected and appointed officials.  As Kwitny notes, no one goes the for the food.

The Nugun Hand Bank is a dead issue.  Nugun is dead–this was reconfirmed by an exhumation!–and Michael Hand has disappeared.  From my one internet search, it seems that Hand is still missing.  This may be the way everyone wants the situation to remain.

The book concludes with an after word by Earl Yates, USN (ret.)  Yates was President of Nugan Hand in the U.S.; the operation was nothing but a mail drop near Washington, DC.

I found the story interesting, but the unanswered questions are a major weakness in the book.  The book’s strength is to alert us to the sub rosa world of international banking.


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