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The CIA in Australia – Part 1

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      Transcript radio documentary, Part 1 of a 6 part series.
                Watching brief, PRNS, October 1986

Welcome to Watching Brief, your national award winning environment
program.  I'm Jane Lanbrook and this week the first of a six part
series on the CIA, the American Central Intelligence Agency, and
its involvement in Australia including the overthrow of the Whitlam
Government.  Only recently, CIA activities have been on the news
again.  The recent attempt on the life of General Pinochet, the
13th anniversary of the CIA-backed coup which overturned the
Allende government in Chile, the continuing war against the Angolan
government and CIA involvement in Australia and New Zealand
politics have made sure that the Agency's role, especially in
Australia, remains the focus of continuing controversy and concern
in the community.  In this special two part series, we look at the
CIA and its covert operations against governments, trade unions,
community organisations and individuals in Australia.  Today, in
part 1, Tony Douglas looks at the CIA's global role and then at its
covert destabilisation operations against the Whitlam government
through the Nugan-Hand bank.

Tony Douglas:  The Central Intelligence Agency or CIA was set up in
1947 when the United States Congress passed the National Security
Act.  Since then the CIA with its large and secret budget has
involved itself in the politics of nearly every country in the
world.  One of its four divisions, innocuously entitled PLANS is
responsible for covert actions.  Covert Action often means the
propping up or overturning of foreign governments.  I asked Ralph
Mcgehee, a former CIA agent, as to how many governments the CIA had

Ralph Mcgehee:  The Agency, of course, overthrew the Mossadegh
government of Iran to establish the Sha; it overthrew the
government of Guatemala in 54, remanents of it are still in control
of that country; it overthrew two Uruguayan governments; the
government of Brazil in 64, Chile 73.  It tried to overthrow the
government of Cuba in 61 with the Bay of Pigs; it conducted
invasions of China; it was running guerrilla warfare operations in
the Soviet Union, Nepal, Albania; it was involving itself in
elections in Italy beginning in 48 up to the 70s, it spent a
hundred million dollars in various Italian elections; it was
involving itself in elections in Germany.  In one country, Syria,
I've counted so far that it has conducted at least seven attempts
to overturn the governments there.  I don't know how many were
successful--I haven't got into that area.  But the Middle East has
been the sort of favourite playground of covert operations.  In
Africa, of course, the same thing.  They are trying right now to
overthrow the government of Angola.  Recently, they tried to
overthrow the government of Ethiopia.  I'd say that I don't think
there is a government in Latin America that has neither been
overthrown or supported by the CIA.  And probably I could say much
the same for governments in the Middle East and, less to do, in

Tony Douglas:  The CIA screens its personnel very carefully to
carry out these tasks.  One such examination was the Externalised
Regulated Adaptive Personality Test.

Ralph Mcgehee:  They were looking for the total personality
picture.  They can pick up one element of your personality or
another or another and come up with the individual's total picture.
And what they are looking for is the E.R.A. type of personality. 
In the E mode they are looking for the extrovert who likes to be
active, who doesn't particularly like to sit and think, who doesn't
like to plan in advance but works by trial and error.  In the R
mode they are looking for the Regulated Individual, or the rigid I
call it, a person who sees the world in black and white
certainties, there are no shades of grey, a person has trouble
feeling sensitivity towards others.  Then in the Social Mode they
are looking for the A or adaptable individual, a person who will
not protest, who adjust his personality to the milieu he finds
himself in at the time. So you get this total E.R.A. type of
personality which they are looking for, and you recruit this man,
knowing this person, knowing his ideological position, always to
the right-wing of course. And then you take this sort of
personality, put him into the system, indoctrinate him in the
tenets that the world is threatened by an international communist
conspiracy and you feed him all the so-called "intelligence" the
agency collects and you have a sort of a dramatically sealed
lifestyle that reality can never penetrate.

Tony Douglas:  It must have been a very painful experience for you
to move from the position of being a "superpatriot"  to working out
that the agency that you had given most of your working life to was
deceiving people and causing mass murder around the world and
subjugating people all over the place.  As a personal experience,
how long did it take you to really come to grips with that and what
sort of levels of pain and suffering did you go through in your
family and people around you?

Ralph Mcgehee:  I well suited the E.R.A. personality type, I guess,
and I tried to hold off reality for several years but I was living
in the valley of the beast and my defences sort of crumbled slowly
and it was a very.., at first you know, "I can't believe this is
true", "I don't want to believe", and ultimately I had no other
recourse but to accept the reality that I was involved in and this
was, as you can imagine, extremely painful. Not only was the agency
that I had so given my life to but my country was deceiving and
killing and all the things that I sort of pondered my personality
and like all in the world shown to be deceit so it was extremely
painful and, of course, one thought of the various solutions to
one's dilemmas such as suicide which I ultimately rejected in the
hope that I could bring my story out.

Tony Douglas:  Over the years there have been many reports linking
CIA activities with the downfall of the Whitlam government. Does
Ralph Mcgehee think they were involved?

Ralph Mcgehee:  Well, my views are as though what's the problem? I
mean, we had a whole series of agency spokesmen said, `oh, yes,
there was an agency role in the overthrow of the Whitlam
government'.  I just don't know why Australians can't accept that. 
I did just a little bit of research before I came out and you had
Ray Cline, a former Deputy Director of the CIA, saying `when
Whitlam came to power there was a period of turbulence and the CIA
will go so far as to pry information to people who will bring it to
the surface in Australia, say a Whitlam error which they were
willing to pump into the system so it may be to his damage and we
may provide a particular piece of information to the Australian
intelligence services so that they make use of it'.   And then the
CIA National Intelligence Daily said, `some of the most
incriminating evidence in that period against the ministers in the
Whitlam government may have been fabricated.'  This is but as
strong as you get to say so.  It is quite obvious that information
was being leaked about ministers Rex O'Connor and Jim Cairns and
some of it was being forged which is a standard CIA process.  Jim
Flynn, who was associated with elements who were involved with the
Nugan-Hand bank, he said that he was involved in manufacturing the
cables and leaking them to the press.  Now he would not be a very
credible source except that he worked for Nugan-Hand.  Admiral
Booby Inman, former Deputy Director of the National Security Agency
and Deputy Director of the CIA, said on two occasions that he
expressed deep concern that investigations of Nugan-Hand would lead
to disclosure of a range of dirty tricks played against the Whitlam
government.  You have the statements by Christopher Boyce who was
in a relay point for information from the CIA and in his trial he
said that `if you think what the agency did in Chile was bad, in
which they did spent 80 million dollars overturning the government
of Chile there, the Allende government, you should see what they
are doing in Australia'.   On the Shackley Cable, which was a
virtual ultimatum to the head of ASIO to do something about the
Whitlam government, it is sort of prima facie evidence of CIA
interference in the Whitlam government.  This was on November 10. 
On November 11, Governor-General John Kerr dismissed the Whitlam
government on a parliamentary technicality.  John Kerr earlier had
been the founder of Law Asia, a CIA-front organisation.

Tony Douglas:  The question in most Australians' minds is why would
the CIA want to bring down the government of a loyal ally, after
all it was the wartime Labor administrations who build up the
special relationship with America.  Jerry Aaron, co-author of
ROOTED IN SECRECY, a book that examines the clandestine element in
Australian politics looks back at the early days of the Whitlam

Jerry Aaron:  There was immediately a reaction about a Labor
government coming to power and the initial acts of Whitlam in the
first few weeks did probably fuel their worst fears that here was
a government dedicated to social reform and, of course, from then
on they would have looked for further evidence of misdemeanour
against the right-wing ethics of the CIA and of the U.S.
administration.  And those were long in force coming because it was
quite clear that certain ministers, and you had to remember that
ministers in the Whitlam government had some stature, contrary to
those of Labor governments, and certain ministers particularly
Connor was obviously out to as he called it, `buy back the farm for
Australia'.   In other words, to get back some of the resources
which were dominated by the overseas companies which had purchased
them earlier.  And no doubt they got even more worried when a
person like as Jim Cairns was made Treasurer--Jim Cairns was a very
well known anti-Vietnam war activist.  So there were probably a
whole heap of things which the CIA could blow up to demonstrate
that this was a raving red alert that had been projected into power
in Australia and had to be get rid of at all costs.

Tony Douglas:  It would seem that a lot of the statements about the
Vietnam war made by Labor ministers, particularly the bombing of
Hanoi by the Nixon administration, and the well-known anti-Vietnam
record of people like Jim Cairns specifically upset Henry

Jerry Aaron:  Yes, well, that's very true. In fact, Kissinger had
a personal hatred for Whitlam.  Certainly, more than a political
fear which sprang from the domino theory and similar nonsense and
one must assume that the fact, for instance, Task Force 157 was set
up separately from the CIA sprang from the fact that they didn't
even trust the CIA to do the right thing by Australia.

Tony Douglas: What is Task Force 157?

Jerry Aaron:   The Task Force 157 was a group set up by Henry
Kissinger and it was set up in a quite strange way.  It was a mini-
CIA which was actually separate from the CIA and probably was set
up by Kissinger so he could deny any connection between what the
Task Force 157 was doing and the CIA.  Nevertheless, the personnel
of Task Force 157 included Ted Shackley, who was one of the head of
sabotage operations against Cuba, he was Station Chief in Saigon
during the Vietnam War, and he was the Chief of the CIA Western
Hemisphere Division, so with an impeccable CIA record like that it
would be very difficult to disassociate him from what the CIA was
doing.  The concept of Task Force 157 seems to have been two-fold:
firstly, to set up operations against the Whitlam government.  And
secondly, to go ahead with using Australia as a base for certain
clandestine U.S. operations such as arms dealing and smuggling of
contraband goods.

Tony Douglas:  The subsequent inquiries have established the Nugan-
Hand bank was to be the organisation used as cover for the
operations of Task Force 157.  According to Victor Marchetti, a
former CIA officer and author of THE CIA AND THE CULT OF
INTELLIGENCE, the Nugan-Hand bank is typical of the organisations
used by the CIA in their style of operations.

Victor Marchetti:  There are actually three kind of organisations
that the CIA uses and I think we should keep those in mind as we
talk.  One is what is called the proprietary organisation.  This is
an organisation that is owned, operated and controlled by the CIA,
such as Air America was and certain other large airlines.  China
Airlines for example, Civil Air Transport, Southern Air Transport
and the like.  Then there something that is more of a front
organisation.  These are usually a lot smaller and have a much more
specific purpose and are less tightly controlled, maybe a
consulting firm of some sort, that's its cover but it's really used
as a firm like the one here in Washington that came up during the
Watergate affair.  There is a third kind of organisation which is
really an independent organisation but it is closely allied to the
CIA not only in ideology, because many of the people who work for
are ex-CIA people and they have mutual goals in some instances, or
at least their goals run parallel in some instances but in the
other hand they operate independently.  This is like Interarmco
which does a lot of its own work, of course it is an independent
organisation, but it's run by a former CIA man.  He does favours,
or used to do favours for the agency and viceversa.  Nugan-Hand,
from what I know about it, seems to fall into this larger category.
It doesn't seem to be a proprietary in the full sense of the word,
that is owned and controlled by the agency nor does it seem to be
a simple front organisation.  It seems to be more of an independent
organisation with former CIA people connected with it.  They are in
business to make money but because of their close personal
relationship with the agency they would do favours for the agency
and this would include providing cover in some instances for
operators.  It would include laundering of money. It would include
cut outs for any sort of highly clandestine activity the agency is
involved in but does not want to be in any way directly connected

Tony Douglas:  Nugan-Hand bank relationship to the CIA can be
traced through its employees, most of whom have an intelligence
background.  Here top Australian investigative journalist Brian
Toohey tells Andrew Phillips about the background and actions of
senior Nugan-Hand personnel.

Brian Toohey:  It turns out that some of the people directly
involved with the bank, Michael Hand, an ex-American Green Beret,
went on from the Green Berets to work in intelligence work for the
US government.  Bernie Hawthorn  who ended up as number 3 in the
bank and the manager in Saudi Arabia for the bank and before that
had been running restaurants and so forth in Sydney.  He has got an
intelligence background, US intelligence background, and in fact an
ex-member of the British Secret Intelligence Service, Peter
Wilcott, who knows of him said both to me and to Australian
narcotics authorities, in some recorded interview with the
Narcotics Authority, that Hawthorn was working as an undercover
intelligence operative in Australia and he had been in Australia
since the late 60s.  Wilcott says that this was told to him by
people like Admiral Yates, who was a president of the bank in the
United States, and General Black who was the Hawaii representative.

Andrew Phillips:  Admiral Yates?  Where does he fit in all this?

Brian Toohey:  He was the American president of the bank and also
of the Cayman Islands branch which is normally used as a tax
heaven, good secrecy provision prevail there for banking
operations.  The actual bank operated out of its offices here in
Cay Street in Washington, DC, run by a General Cok who is quite
close to the White House.  He claims to have no connection with the
bank at all but it's matter of record that in fact he introduced
Yates for lobbying purposes for a particular scheme they had in
mind, two people in the White House.  Cok himself has got all sort
of intelligence connections.  For instance, he as an Air Force
General provided the B-26 bombers that were used in the Bay of Pigs
episode in which the CIA attempted to use Cuban refugees to in the
early 60s invade Cuba, a total disaster.

Andrew Phillips:  Bernie Hawthorn was another in the scenario. He
apparently was connected in some way to a John D. Walker who was
the CIA Station Chief in Australia during the Labor years.

Brian Toohey:  Bernie Hawthorn. Yes, he is an American who went out
to Australia and set up restaurants in Sydney to take advantage of
the RNR situation during the Vietnam war.  And I'm told here by
other people as well as by Peter Wilcott that he has got an
intelligence background.  John D. Walker was the Station Chief of
the CIA in Australia whilst the Labor government was in power.  I
asked him the other day about his connections to Hawthorn and he
said they were purely social.  Someone else told me that he saw
them together a lot and Walker says `no, it's a purely social
thing'.  As far as he knows, Hawthorn was not involved in
intelligence.  In fact, he implied that he wasn't a suitable sort
person for it and says he doesn't know of any activities he was
involved at all in Australia.  The other connection that Hawthorn
has got is with a man called Wilson, Edwin P. Wilson, who was a
very senior member of a thing called Task Force 157 which was a
very secret group within the US Naval Intelligence Office.  It's
job was kind of on the ground human intelligence activities and
Wilson run was it's known as the proprietary companies and those
were companies which were set up as ordinary businesses but were in
fact used to channel money and so forth and give cut outs to
personnel in the whole operation.  And I'm told that one of the
companies associated with this is Australasian and Pacific
Holdings, which is a company started by Mike Hand in Australia in
the late 1960s and a number of the shareholders in that were
members of Air America, a CIA proprietary airline.  

Andrew Phillips:  And Bernie Hawthorn?  According to Peter Wilcott,
of whom we have talked about already, claims that Hawthorn was a
CIA undercover agent working in Sydney as well as a restaurateur.

Brian Toohey:  That's what he says he has been told.  Don't forget
that Wilcott himself is a former senior member of the British
Secret Intelligence Service and knows quite a bit about this.

Andrew Phillips:  Hawthorn also allegedly has connections to
Admiral Lloyd Basil who has connections again to this Task Force

Brian Toohey:  Well, Wilcott says that he recalls that Hawthorn
used to work for Basil in an intelligence role.  I've since
contacted Basil who just doesn't want to talk about any of this but
denies that particular thing.  He won't deny that he was the one
who introduced Wilcott to Admiral Yates in an attempt to set up
Wilcott getting a job with the bank.  Wilcott, when he got a bit of
a smell of what was going in the bank, turned down the job prospect
and in fact went to Australian and U.S. authorities to suggest that
not all was well with this bank.  

Andrew Phillips:  Another name that crops up is Guy Parker.

Brian Toohey:  Yes, McDonald told me that his introduction to the
bank came from Guy Parker.  Parker has been a long time employee of
the Rand Corporation, a U.S. government sponsored think tank out in
the West Coast here and his speciality is in Asian Affairs,
particularly Indonesia.  Now he denies outright of ever having
received a cent or ever working for the CIA which is flatly
contradicted by a number of people here who have worked for the CIA
and admit to working with him.  And I was given another example of
how Parker was involved in an original CIA attempt to sponsor
rebellion in 1958 against the Sukarno government in Indonesia. 
Parker is extremely hot under the colour of any suggestion that he
is involved in any way in intelligence activities and much more is
really upset in the connection that he has with this bank.  He
keeps stressing to you that he is an absolute honoured academic
around the world, that he is a true scholar, that prime ministers
and presidents receive him at will and that he doesn't want to be
mixed up with this.  Well, the truth of the matter is that he is
mixed up with it.  He went down to Sydney to give a lecture to the
bank, he went to a conference they held in Manila, he made
introductions for Nugan-Hand around Indonesia with senior levels of
the oil industry.  He introduced G. McDonald to the bank and so on.

Andrew Phillips:  So with all of this certainly circumstantial
evidence how do you see in a kind of general summation this
activity fitting in the activities of the Special Task Force 157 in

Brian Toohey:  I know it's a hard fact and I'm not really in a
position to detail it all at the moment, but Task Force 157 was
involved in covert activities against the Labor government
attempting to destabilise the Labor government.  That much I have
as a hard fact from an impeccable source here.  I think over time
more details will come out and certainly the intelligence community
here fears that more details will come out and knows that more
details can come out on how exactly it happened.

Jane Lanbrook:  That special report was produced by Tony Douglas
with the assistance of Andrew Phillips in New York.  You heard
former CIA agents Ralph McGehee and Victor Marchetti; journalists
Brian Toohey and Jerry Aaron, co-author of the book ROOTED IN
SECRECY.  Next week THE LOANS AFFAIR, Sir John Kerr and continuing
CIA operations inside the Australian Labor movement.  

That's all on Watching Brief this week.  If you'd like more
information or cassette copies of the program or if you have
information that may be of interest contact us at Public Radio News
Services.  Post Office Box 103, Fitzroy, Vic 3065.  Or call us on
Melbourne 417 7304.  Watching Brief is produced by Ian Wood and
Tony Douglas for the Public Broadcasting Network of Australia.  I'm
Jane Lanbrook and I hope you'll tune in again next week at the same
time for Watching Brief, Public Radio's National Environment

End Part 1 of a 6 part series.

Written by nuganhand

September 1, 2008 at 2:48 pm

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