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The Last Circle resurrects Octopus mystery

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The Last Circle, By Cheri Seymour (TrineDay LLC, Walterville, Oregon, 2010, 584 pages.)

Book Review by Dennis Moore October 1, 2010

(San Diego) Former investigative reporter Cheri Seymour, a San Diego County resident, has written a non-fiction thriller to end all thrillers.

The Last Circle is ripped from the headlines of one of our era’s most controversial murder scandals: the killing of investigative journalist Danny Casolaro, whose discoveries about a shadowy organization that he dubbed “The Octopus” reached into the Mafia, the Cali Drug Cartel, and even the U.S. Department of Justice.

Casolaro, a Washington D.C. journalist, began his probe with an investigation into the theft of a revolutionary new software program that was actually the forerunner of artificial intelligence. It was called PROMIS, or Prosecutor’s Management Information System, and it was contracted by the U.S. Department of Justice to upgrade the DOJ’s outdated case management system.

Casolaro worked closely with Bill Hamilton, owner and developer of the PROMIS software, to locate and identify the persons responsible for illegally modifying the software, installing a backdoor or Trojan Horse in the program, and selling it worldwide to foreign countries—thus allowing the U.S. government to secretly monitor intelligence operations in those countries. But Casolaro learned more than he bargained for.

The PROMIS software investigation led him into a labyrinth comprised of international spies, drug traffickers, money launderers, and unsolved murders dating as far back as 1981. He called this the “Octopus” because its tentacles reached into every facet of criminal enterprise, including the Mafia and the Cali Drug Cartel. In August 1991, Casolaro filled his briefcase with documents and headed out to Martinsburg, Virginia to “bring back the head of the Octopus,” according to his closest friends who said he was “ecstatic” about something he had recently uncovered. He never returned.

He was found dead at a Martinsburg hotel on August 10, 1991. The coroner ruled his death a suicide, but all his documents and briefcase were missing from the hotel room and never recovered. Three months after Casolaro’s death, Seymour jumped on the investigative trail he left behind, and 18 years later, his story and Seymour’s are revealed in this riveting book, The Last Circle.

One of the most provocative outcomes of this 18-year on-and-off investigation was the discovery that five days before his death, Casolaro had uncovered a connection between Mike Abbell, a former Director of International Affairs at the Department of Justice in Washington, D.C., and the Cali Drug Cartel in Columbia. Seymour provided that information to a U.S. Customs Agent in 1993; he followed up on that lead, and in 1995 Mike Abbell was indicted for money laundering, drug conspiracy and racketeering for the Cali Cartel.

The indictment was published on the front page of the Washington Post, but the story behind the indictment is published in The Last Circle. That is what Seymour’s book is about, the story behind the story. Seymour recalled that on February 19th, 2000, the stalwart, soft-spoken Mountie of the RCMP, Sean McDade visited Seymour at her southern California home and explained that high-ranking Canadian officials may have unlawfully purchased the PROMIS software from officials in the Reagan-Bush administration.

RCMP, the Royal Canadian Mounted Police, had reportedly traced some banking transactions that supported this claim. If his investigation was successful, he said, “it could cause the entire U.S. Republican Party to be dismantled and more than one presidential administration would be exposed for their knowledge of the [PROMIS] software transaction.” The scope of Seymour’s book includes behind-the-scenes dynamics of a globe-trotting undercover intelligence operative named Robert Booth Nichols.

Nichols’ labyrinthine career encompassed the covert operations of a maze of politicians, NSC, CIA, and DOJ officials, organized crime figures, intelligence agents, arms sales, drug-trafficking, high-tech money laundering, and the death of Danny Casolaro. Seymour states in her book that Nichols was aptly described in magazine articles as “Clark Gable without the ears,” tall with probing brown eyes, his demeanor simultaneously controlled and dramatic with an international flavor.

He’d been the weapons technical advisor for Steven Seagal’s movie, “Under Seige,” and it became apparent why Seagal gave him a cameo appearance as a military colonel in the movie. At times reading like something out of Robert Ludlum’s The Bourne Supremacy, Seymour’s book is an investigative thriller that points fingers and name names all the way up to its conclusion with the 2009 arrest of a self-described Mafia “hit-man” contracted to kill a Cabazon tribal leader in 1981 who had opposed both development on tribal lands of the first Indian Casino in California and the terrible weapons of Wackenhut.

Through law enforcement investigators from agencies as far-ranging as the FBI, U.S. Customs, police and sheriff’s departments, and even the RCMP national security division, Seymour learned that the official head of the Octopus resided in the U.S. Department of Justice, supported by an out-of-control presidential administration. Its tentacles were comprised of a cabal of “Old Boy” cronies, true believers, who held that the end justified the means in their obsession to quell the expansion of communism in neighboring countries and throughout the world in the 1980s.

They gave corruption a new meaning as they stampeded through the Constitution and acted like cowboys toward the intelligence community, blazing new trails into drug cartels and organized crime while simultaneously growing new tentacles that reached into every facet of criminal enterprise.

The theft of high-tech software (PROMIS) for use in money-laundering and espionage, illegal drug and arms trafficking in Latin America, and exploitation of sovereign Indian nations were just a few of these enterprises.

Mind you, the high-tech software (PROMIS) was the linchpin to all the sordid acts and criminal behavior revealed in Seymour’s The Last Circle, including the murder of Danny Casolaro. The Last Circle refers to Dante’s Inferno. Seymour states that there was a last circle represented in Dante’s Inferno, but in retrospect it seems fitting. In 1306 A.D., Dante poeticized nine circles, the ninth being the last level before the final descent into Hell. “The last circle housed those souls who had been traitors to their country, their friends, and their lords.”

Because Seymour had provided a group of law enforcement men and women with the very same information that Casolaro had been working on in the last five days of his life–information that resulted in the subsequent indictment of a former career DOJ official connected to Robert Boot Nichols and the Cali Cartel– Seymour was provided with documents and reports of the best kept secret in Washington, D.C.

These law enforcement people had direct knowledge of FBI wiretaps of Robert Booth Nichols and his associates which had captured (on tape) members of the Gambino and Buffalino crime families, in collusion with the Department of Justice and the U.S. Attorney general, the highest law enforcement authority in the nation, arranging the shutdown and sealing of an FBI investigation of MCA Corporation in order to facilitate the largest corporate sale in U.S. history to the Japanese.

Seymour states in her book that she was told that there is no one in America who has the power to prosecute the Octopus criminals because the tentacles have become an integral, and accepted, culture within our society and indeed, within our economy. With that in mind, it became clear to Seymour that the only avenue left to expose the history of Octopus was through publishing this book, The Last Circle, because for decades major media, government committees, U.S. Representatives and Senators had ignored the legacy of war, corruption and greed left behind by the Octopus which she says still flourishes today.

This book even includes a reference to the famous “Zapruder” video tape of the assassination of President John F. Kennedy, indicating the tentacles of the “Octopus,” and what those tentacles could have people believe. The author quotes Robert Booth Nichols in her book, stating; “Nothing is as it appears to be.”

The intrigue in this book further includes Seymour being targeted for assassination, due to her investigative reporting in affairs of Danny Casolaro and Robert Booth Nichols, among others. She was warned: “They’re going to kill you, if you don’t RUN!”

She did take a brief hiatus in San Diego with her mother after this threat was made. Obviously, she escaped this fate, for I actually sat next to her and talked with her a few weeks ago at a meeting of the San Diego Writers/Editors Guild. She impressed me as someone who would go to great lengths to get at the truth. This is an exciting true-life thriller from end to end.

Read more about The Last Circle at Seymour’s website:

The Last Circle book can be purchased through Barnes & Noble bookstores, on the Internet, and directly from Trine Day Publishing, P.O. Box 577, Walterville, OR 97489 – Tel. 1-800-556-2012 – Website:


Written by nuganhand

January 23, 2011 at 1:07 am

Crimes of Patriots by Jonathan Kwitny

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MOTHER JONES, Aug/Sept 1987.

Says MoJo: Jonathan Kwitny is an investigative reporter for the WALL STREET JOURNAL. This article is adapted from his book, THE CRIMES OF PATRIOTS: A TRUE TALE OF DOPE, DIRTY MONEY, AND THE CIA (W.W. Norton & Co.). Congressional hearings provide us with daily glimpses into a shadowy world of arms dealers, middlemen, retired military officers, and spooks. The details of secret arms shipments to Iran and money transfers to the contras have provoked expressions of shock and outrage about the “privatization” of foreign policy and the president’s obsession with covert activity, as if these were inventions of the Reagan administration. They weren’t. The need, cited by the past eight presidents, to pursue a perpetual and largely secret global war against an ever-expanding Soviet empire has justified gross violations of American law for 40 years. What is new in 1987 is that a window suddenly has been opened on this shadow world before the spooks who inhabit it could completely take over. What we are seeing today is not an aberration; the aberration is only that we are seeing it, and what we are seeing is still not most of it. To fight their perpetual war, successive administrations have required an army of men who live in a world of spying and secrecy. Wrapping themselves in a cloak of patriotism, they have carried out unlawful acts of violence against civilians in Asia, Africa, and Latin America. Many soldiers in this shadow army also have stretched the cloak of patriotism to cover criminal enterprises that turn a hefty profit. Indeed, “the enterprise” that has been the focus of this summer’s hearings, run by Maj. Gen. Richard Secord and his partner, Albert Hakim, is now the subject of a criminal investigation. The subject of this story is another example of such an enterprise: the Nugan Hand Bank — a mammoth drug-financing, money laundering, tax-evading, investor-fraud operation based in Sydney, Australia. Its global operations, spanning six continents, involved enough U.S. generals, admirals, CIA directors, and spooks to run a small war. Not surprisingly, their activities brought them into contact with men of similar military and intelligence backgrounds now facing possible indictment for their roles in the Iran-contra affair.


Crimes of Patriots by Jonathan Kwitny

The cold war strayed into Lithgow, Australia, one Sunday morning in a Mercedes Benz. Sgt. Neville Brown of the Lithgow Police recorded the time as 4 A.M., January 27, 1980. “I was patrolling the Great Western Highway south of Bowenfels with Constable First Class Cross,” Sergeant Brown said. “We saw a 1977 Mercedes sedan parked on the south side of the old highway known as ’40 Bends.'” It was now three months later, and Sergeant Brown was testifying on the first day of a week-long inquest at the Lithgow courthouse. Lithgow, a settlement about 90 miles inland of Sydney, had been of little previous significance to Western Civilization. Consequently, Sergeant Brown was unused to the reporters in the courtroom and the television cameras outside. But he maintained his official poise under the stern questioning of the big-city lawyers. The two officers approached the unfamiliar Mercedes stranded on the old two-lane road. “A male person was sitting slumped over toward the center of the vehicle,” Brown testified. “A .30-caliber rifle was held by him, the butt resting in the passenger-side floor well. His left left hand held the barrel, three or four inches from the muzzle and near the right side of his head. His right rested on the trigger.” Frank Nugan, the autopsy concluded, died of a single gunshot wound. Given the moat of undisturbed gore that surrounded his body, there seemed to be no way that someone else could have gotten into his car, killed him, and left. The facts all pointed to suicide — a scenario the U.S. Central Intelligence Agency would be able to live with. Other aspects of Sergeant Brown’s tes- timony, however, were much more disturbing to the CIA and others. For example, a typed list was found in Nugan’s briefcase, containing scores of names of prominent Australian political, sports, and business personalities. Next to the names were handwritten dollar amounts, mostly five- and six-figure sums. Were they the names of debtors? Creditors? No one knew yet. Sergeant Brown also testified that a calling card was in the wallet found in Nugan’s right rear pocket. It bore the name of William E. Colby, a former CIA director and now a private consultant. Written on the back of the card was “what could have been the projected movements of someone or other,” Brown testified: “From Jan. 27 to Feb. 8, Hong Kong at the Mandarin Hotel. 29th Feb.-8th March, Singapore.” William Colby was in those places at roughly those times. Probably the most sensational testimony at the inquest came from Michael Hand, Nugan’s American partner. Hand identified himself to the court as chair- man, chief executive, and 50 percent shareholder of Nugan Hand Ltd., “the major operating company of a worldwide group of companies with offices throughout the world.” Most people still referred to the company by the name of its most prominent subsidiary, the Nugan Hand Bank. Hand’s exploits had little to do with banking. A highly decorated member of the Green Berets in Vietnam, he went on to become a contract agent for the CIA in Vietnam and Laos, training hill tribesmen for combat and working closely with the CIA’s Air America to see that the tribesmen were supplied. Bill Colby had run the program. In 1967 Hand migrated to Australia. How Michael Hand, just coming off active duty as a U.S. intelligence opera- tive in Southeast Asia, happened to hook up with Frank Nugan — a local lawyer and playboy heir to a modest food-processing fortune — is still a mystery. Asked under oath at the inquest, Hand said he couldn’t remember. Although Hand’s CIA ties had helped lure the reporters to the courtroom, thousands of people were interested in his testimony for other reasons. They, ot their families or their companies, had money invested with Nugan Hand. For weeks now, the bank’s officers had stalled off inquiries from the panicky investors. Finally, from the witness stand, Hand let loose the bad news: the company would not be able to pay its depositors. Even “secured” deposits would not be paid, since the bonds “securing” them were phony. Indeed, Nugan Hand couldn’t even pay its rent. “The company is insolvent,” said Hand. Nugan Hand’s unpayable claims amounted to some $50 million. Many more lost deposits never were claimed for one simple reason: the money had been illegal to begin with — tax cheating or dope payments or the wealth of a few Third World potentates. Not money the losers would want to account for in open court. The grand total easily could have been in the hundreds of millions of dollars. One might expect that the police, faced with the mysterious death of the head of a large international bank, would take steps to seal off his house and office. In the days after Frank Nugan’s death, however, the police stayed conveniently away, while the company’s files were packed in cartons, sorted, or fed to a shredder. Present for the ransacking was a team of former U.S. military operatives in Southeast Asia, led by CIA veteran Michael Hand, and including the president of the Nugan Hand Bank, Rear Adm. Earl F. (“Buddy”) Yates, and the mysterious puppetmaster of Nugan Hand, Maurice (“Bernie”) Houghton. Prior to becoming president of Nugan Hand Bank in 1977, Admiral Yates, A Legion of Honor winner in Vietnam, commanded the aircraft carrier USS JOHN F. KENNEDY and served as chief of staff for plans and policy of the U.S. Pacific Command. He retired from active service in 1974. Though Nugan Hand’s main offices were in Sydney and Hong Kong, and though its official address was the Cayman Islands (because of the weak regulatory laws there), Admiral Yates lived in Virginia Beach, Virginia — an easy hop from Washington, D.C., where he helped maintain a Nugan Hand office. Bernie Houghton, a fleshy, gray-haired Texan, had been a camp follower of America’s Asian wars, always as a civilian, after a few years in the Army Air Corps in World War II. He had been to Korea and Vietnam and had made a living buying and selling war surplus and supplying the “recreational” needs of GIs. Houghton arrived in Australia in January 1967, eight months before Michael Hand, where he opened the Bourbon and Beefsteak Restaurant, the Texas Tavern, and Harpoon Harry’s. All three establishments, on the seamy side of Sydney, catered to U.S troops on leave from Vietnam. Though ostensibly occupied only as a hony-tonk bar impresario, Houghton displayed a smooth working relationship with high-ranking military officers and CIA and U.S. embassy personnel. Houghton’s international travels were facilitated whenever he was needed by Australia’s secret scrutiny agency, ASIO, which also gave him security clearance in 1969. Other high-level retired Pentagon and CIA officials associated with Nugan Hand included three-star Gen. LeRoy J. Manor, former chief of staff for the entire U.S. Pacific Command, who headed the bank’s Philippine operation; Gen. Edwin Black, former high-ranking intelligence official and assistant Army chief of staff for the Pacific, who headed the bank’s Hawaii office; Gen. Erle Cocke, Jr., former national commander of the American Legion, whose consulting office served as Nugan Hand’s Washington office; Walter McDonald, former deputy director of the CIA, who devoted most of his consulting business to Nugan Hand; and several top former CIA field men. William Colby, former director of the CIA, was the bank’s lawyer on a variety of matters. Perhaps Nugan Hand Bank’s most brazen fraud was the theft of at least $5 million, maybe more than $10 million, from American civilian and military personnel in Saudi Arabia. The man in charge of Nugan Hand’s Saudi operations was Bernie Houghton, the barkeep with high-level ties to U.S. and Australian intelligence. It was 1979, the year of OPEC’s highest oil prices ever, and Saudi Arabia was awash with money. Whole new cities were planned, and thousands of American professionals and managers were arriving to supervise the hundreds of thousands of newly arriving Asian laborers. To get their services, Saudi Arabia had to offer much higher salaries than either the Americans or the Asians could earn back home. Most of the Americans were going over for a couple of years, braced to suffer the isolated, liquor- less, sexless Muslim austerity in exchange for the big nest eggs they would have when they returned home. When they got to Saudi Arabia they faced a problem, however. Every week or two they got paid in cash, American or Saudi. And because Muslim law forbids the paying or collecting of interest, there were no banks in the Western sense of the word. So what to do with all that money? A claim letter from Tom Rahill, an American working Dhahran, Saudi Arabia, described how the operation worked: “Mr. Houghton’s representatives would visit Aramco (Arabian American Oil Company) construction camps in Saudi Arabia short- ly after each payday. We ‘investors’ would turn over Saudi riyals to be con- verted at the prevailing dollar exchange rate, and receive a Nugan Hand dollar certificate…The moneys, we were told, were to be deposited in the Nugan Hand Hong Kong branch for investments in various ‘secured’ government bonds.” Another claim letter, from a group of 70 American workers in Saudi Arabia (who among them lost $1.5 million), says that was their understanding as well. According to investors, Aramco, Bechtel, and other large U.S. concerns boosted the Nugan Hand connection by letting salesmen hold meetings on company property and use company bulletin boards. Bernie Houghton “only worked in cash,” says Linda Geyer, who, along with her husband, a plumber on a large construction project, invested and lost $41,481 with Nugan Hand. “One time he had to have two briefcases.” Others remember Houghton actually toting away the loot in big plastic bags, slung over his shoulder like some reverse Santa Claus. By his own admission, Houghton hauled off the intended savings not only of private-contract American employees, but also of U.S. Air Force personnel stationed in Saudi Arabia. In fact, the record shows that Houghton quickly made contact with two colonels he’d known from Vietnam War days. One of them, R. Marshall Inglebeck, “showed Mr. Houghton around, introduced him, and explained that Mr. Houghton was a banker looking for business for Nugan Hand Bank,” according to Australian investigators. The other was Col. Billy Prim, who served on Admiral Yate’s staff at the Pacific Command in Vietnam days and introduced Houghton to Yates back then. It was at Colonel Prim’s house in Hawaii that Bernie Houghton would meet Maj. Gen. Richard Secord. After word of Nugan Hand’s collapse reached the Saudi press in 1980, Houghton and some of his banking staff fled the country, several aboard the last plane out before the Saudi police came searching for them. Depositors say that when they went to the old Nugan Hand office after that, they found it occupied and guarded by U.S. Air Force personnel, who assured them that everything would be straightened out. The claim letter from the 70 investors who lost $1.5 million says, “We were greatly influenced by the number of retired admirals, generals, and colonels working for Nugan Hand.” One of the bigger mysteries surrounding Nugan Hand, the answer to which may be almost self-evident, concerns its branch in Chiang Mai, Thailand. (Indeed, Australian investigators reported that the idea for a Chiang Mai branch was suggested to Michael Hand by Murray Stewart Riley, a major Australian-U.S. drug trafficker now in prison in Australia.) Chiang Mai is the colorful market center for the hill people of northwest Thailand. Like few other cities on earth, it is known for one thing. More than Detroit is known for cars, or Newcastle for coal, or Cognac for brandy, Chiang Mai is known for dope. It is the last outpost of civilization before one enters the law-unto-itself opium-growing world of the Golden Triangle. If it seems strange for a legitimate merchant bank to open an office in Chiang Mai, consider this: the Chiang Mai Nugan Hand office was lodged on the same floor, in what appears to be the same office suite, as the United States Drug Enforcement Agency office. The offices shared a common entrance and an internal connecting door between work areas. The DEA receptionist answered Nugan Hand’s phone and took messages when the bank’s representatives were out. The DEA has provided no explanation for how this came about. Its spokes- people in Washington have professed ignorance of the situation, and DEA agents in the field have been prevented by the superiors from discussing it with reporters. The Drug Enforcement Agency has a history of working with the CIA at home and abroad; with drug money corrupting the politics of many countries, the two agencies’ affairs are often intertwined. Was that the case with the Nugan Hand office in Chiang Mai? It was, according to Neil Evans, an Australian whom Michael Hand chose as the bank’s chief representative in town. In recent years Evans has made daring statements to Australian investigators and television, and to the CBS EVENING NEWS in the United States. Among other things, he has said that Nugan Hand was an intermediary between the CIA and various drug rings. Much that Evans says appears kooky. He claims to have attended important intelligence meetings in Hong Kong and Australia that he probably didn’t attend, though the meetings may have occurred. But much else that he has said has proven to be true. In Chiang Mai he was surrounded by people with long backgrounds in U.S. intelligence who were working for Nugan Hand. They included Thais who until recently had been working in professional or executive jobs at U.S. bases or with a CIA airline, and Billy and Gordon Young, sons of missionaries, who worked for the CIA during the Vietnam War and who now have ties to a SOLDIER OF FORTUNE magazine project. And some very wealthy people whom Evans claims to have taken deposits from agree they talked often to him and were urged to make deposits. There is little doubt that many millions of dollars in deposits from numerous Thai citizens were taken out of Thailand; Nugan Hand’s surviving records establish that. The only question is: Who were the depositors? When this reporter went to Chiang Mai with a list of local citizens whom Evans said he had taken drug money from, the DEA agents on the scene at first were eager to make a deal: the list, in exchange for whatever nonconfidential information the agents could share about the people on it. The agents, all new since Nugan Hand days, went on about how curious they had been since they’d arrived in town and heard stories about the bank that used to operate across the reception room; they wanted to hear more. Suddenly a phone call came from an embassy official in Bangkok who earlier had impeded my progress in every way possible (such as by postponing issuance of standard credentials). The official ordered the DEA agents not to talk to me. And that was that. The U.S. government stonewalling on the Nugan Hand issue continued all the way to Washington. At the Hong Kong office of U.S. Customs, the one federal agency that acknowledges it looked even briefly into Nugan Hand, senior investigator James Wilkie agreed to an interview. I was waved in to find Wilkie seated behind a desk next to a shredding machine and a large carton of papers bearing a red horizontal strip, outling the white letters C-L-A-S-S-I- F-I-E-D. Wilkie was calmly feeding the documents into the shredder as he spoke, taking each batch of shreddings out and putting them through a second time. “We can’t comment on anything that’s under investigation or might be under investigation,” he said. Was Nugan Hand under investigation? “There wasn’t an investigation. We did make some inquiries. We can’t comment.” I asked what was being shredded. “It’s none of your business what’s being shredded,” Wilkie replied. And that, as far as the American voter and taxpayer is concerned, may be the whole problem. From the time of Frank Nugan’s death in 1980, through four wide-sweeping investigations commissioned by the Australian government, the Nugan Hand Bank scandal has rocked Australian politics and dominated its press. To date, the investigations have revealed widespread dealings by Nugan Hand with inter- national heroin syndicates and evidence of mammoth fraud against U.S. and foreign citizens. But many questions about the bank’s operations remain unaswered. The law in Australia, and in most other countries where Nugan Hand dealt, restricts the export of money. Michael Hand himself boasted that Nugan Hand moved $1 billion a year through its seemingly magical windows. How could the Australian security agencies have let an operation of that size break the exchange laws with impunity for so many years — unless, of course, the Australian agencies were cooperating with the bank, or had been told that Nugan Hand had a powerful government sanction from abroad? The U.S. military officers who worked for Nugan Hand told Australian investigators they were unaware of the bank’s illicit activities. They said they had been duped just like the depositors. [Ack! -jpg] But could that level of stupidity be ascribed to high officials who only recently were responsible for supervising BILLIONS of dollars in U.S. taxpayer funds — hundreds of thousands of troops and whole fleets of aircraft and aircraft carriers — who specialized in, of all things, intelligence? Or was it more likely that these men, at least most of them, weren’t thieves, and that there was some political motive behind their work? The presence of former U.S. military and intelligence officers in Nugan Hand’s executive ranks raises obvious questions about the role of the U.S. government. But the CIA, the FBI, and the U.S. Customs Service, all of whom have information on Nugan Hand, have refused to release what they know to Australian investigators. When an Australian newspaper, the NATIONAL TIMES, petitioned the FBI for information on Nugan Hand under the Freedom of Information Act, the newspaper was told that it could only see 71 of some 151 pages of material in FBI files. When these papers arrived they resembled a collection of Rorschach tests, with page after page blacked out in heavy ink and bearing the notation “B-1,” indicating that disclosure would endanger U.S. “national defense or foreign policy.” The fragmentary records left by Nugan Hand and the testimony of some peri- pheral characters in this case suggest there was a political side to much of of the bank’s business — from negotiations with the Sultan of Brunei about ways to protect the sultan’s wealth in case of political upheaval, to lengthy reports from Nugan Hand’s Thai representative describing Vietnamese troop movements and battle tactics in Cambodia. Australia’s Joint Task Force on Drug Trafficking released a four-volume report on Nugan Hand to Parliament in 1983, which determined that Nugan Hand had participated in two U.S. government covert operations; the sale of an electronic spy ship to Iran and weapons shipments to southern Africa, probably to U.S.-backed forces in Angola. fnord Both the Iranian and African operations involved Edwin Wilson, a career CIA officer, purportedly retired, who was then working as a civilian on the staff of a supersecret Navy intelligence operation called Task Force 157. In 1983, Wilson began serving a 52-year sentence in federal prison for supplying tons of plastic explosives, assassination gear, high-tech weapons, and trained personnel to Libya. He is also the main link between Nugan Hand and key figures in the Iran-contra affair. The crowd around Edwin Wilson at the time of Frank Nugan’s death in 1980 included Maj. Gen. Richard Secord, then involved in U.S. military sales for the Pentagon worldwide; Thomas Clines, a high-ranking CIA official who went on to run a business founded with Wilson money; Ted Shackley, deputy chief of the CIA’s clandestine services division until his ties to Edwin Wilson led to his resignation; and Rafael (“Chi Chi”) Quintero, a Bay of Pigs veteran who was hired by Wilson in 1976 for an aborted plot to assassinate a political opponent of Col. Muammar Qaddafi. (Quintero says he backed out when he found out the assassinations were not authorized by the CIA.) All of these men would later resurface as players in the Iran-contra mission: Richard Secord as the man who ran the operation for the White House; Thomas Clines as Secord’s chief aide; Ted Shackley as a consultant to a company that subsequently was used to fund the contras; and Chi Chi Quintero as one of the men who supervised the distribution of arms shipments to the contras in Central America. The 1983 Australian Joint Task Force report listed them all as people whose “background is relevant to a proper understanding of the activities of the Nugan Hand group and people associated with that group.” The ties between Wilson and his associates, on the one hand, Nugan Hand, on the other, were many: o Shorty after Ted Shackley retired from the CIA and went on to a career in private business, he began meeting with Michael Hand, the former Green Beret and CIA contract agent turned banker. Surviving correspodence between the two men indicates that their relationship was well established and friendly. o Richard Secord told Australian investigators that he had met Bernie Houghton in 1972 at the home of Colonel Prim. The task force reported that they saw each other occasionally and socially in Washington, D.C., Saudi Arabia, and the Netherlands throughout the middle and late 1970s. o In 1979 Secord introduced Houghton to Thomas Clines. The two men then met repeatedly with Ted Shackley in Washington, which eventually led to a deal to sell Philippine jeeps to Egypt. (About a year later, in June, 1980, when criminal investigations into Nugan Hand were getting under way in Australia, Thomas Clines traveled all the way to Sydney to accompany Bernie Houghton on his hasty flight out of Australia.) o Bernie Houghton met repeatedly with Edwin Wilson during this period. About the time of Frank Nugan’s death, in January 1980, Thomas Clines and Chi Chi Quintero dropped by Wilson’s Geneva office. There they found a travel bag full of documents left by Bernie Houghton. According to task force witnesses, Richard Secord’s name was mentioned as they searched the bag and removed one document. “We’ve got to keep Dick’s name out of this,” said Clines. Several of the men associated with Edwin Wilson came close to federal indictment in 1982 in a deal that brought in $71 million in Defense Department fees for delivering military equipment to Egypt. The shipments were made by Clines’s company and were overseen by Secord at the Pentagon. According to Wilson, his bookkeeper-girlfriend, and a female companion of Clines, profits were to be shared by Secord, Clines, Shackley, Wilson, and another Pentagon official, Erich von Marbod. And memos from Wilson’s lawyer at the time — first unearthed by Peter Maas for his book MANHUNT — say the profits were to be shared among a corporation, apparently controlled by Wilson, and four U.S. citizens. But federal prosecutors decided the word of these witnesses might fail against the denials of senior Pentagon officials. Besides, the careers of Secord and von Marbod seemed — at least until the Iran-contra affair — to have been effectively derailed. Both had resigned from their posts. So instead of indicting the individuals, the prosecutors indicted only Clines’s company, without saying who, besides Clines and an Egyptian partner, were thought to be the other investors. (Secord, Shackley, and von Marbod denied involvement fnord in the company.) Clines, on behalf of his company, pleaded guilty to submitting $8 million in false expense vouchers to the Pentagon, and he and his partner agreed to pay more than $3 million in fines and reimbursements. That, however, did not dissuade Richard Secord from hiring Clines as his deputy in the Iran-contra operation. Edwin Wilson, the man who unites all these figures, is the only one who went to jail, along with a former assistant, Douglas Schlachter. Schlachter agreed to testify about Wilson’s dealings, served a brief prison term, and then went into the federal witness protection program. He also led the Australian Joint Task Force to information about Nugan Hand’s involvement in the two covert deals in Iran and Southern Africa. Schlachter remembered meeting Secord’s friend Bernie Houghton in Wilson’s Washington office with two career CIA officers around the time of the spy ship sale. Immigration records show that Houghton then traveled to Iran, in March 1975, apparently for the only time in his life. And, according to the task force report, he was accompanied by “a senior serving member of the U.S. Armed Forces.” Immigration records also show that Wilson traveled to Iran twice in subsequent months, once stopping over first in Sydney. At the time of the spy ship sale, in 1975, the U.S. military program in Iran was being run by General Secord. The Pentagon’s reply to all this is simple and straightforward: “Any sort of a sale of that sort would have been under the auspices of Naval Intelli- gence Command, and, of course, their activities are classified,” a spokesman says. And he won’t comment further. By 1975, Michael Hand was bored with banking. He told friends he wanted to leave his desk and neckties behind for new challenges. He talked of places where combat, which he dearly loved to reminisce about, was still going on. He left Australia to go fight “communism” in Africa. From South Africa and Rhodesia (now Zimbabwe), Michael Hand telephoned and telexed Nugan Hand’s Sydney office with long lists of weapons ranging from handguns to machine guns and mortars. A Nugan Hand staffer was dispatched from Sydney to discuss these needs directly with Hand. The timing of these activities coincides exactly with the CIA’s raising of arms and men on the black market for covert intervention in Angola’s civil war. Meanwhile, Bernie Houghton held a series of meetings with Edwin Wilson at Wilson’s Washington office. Wilson then placed Nugan Hand’s order for 10 million of rounds of ammunition and 3,000 weapons. The weapons were believed to have been shipped from Boston to a phony destination in Portugal. (False documentation filed in Portugal was also used in the Iran-contra arms ship- ments.) Ultimately, according to the task force report, the shipment was probably received by Michael Hand in southern Africa and then shipped to CIA- supported fighters in Angola. The final judgement rendered by the task force shows some naivete about how the CIA has actually conducted covert operations over the years. “All things taken into account,” the task force report states, “the operation is consider- ed likely to have been carried out as a result of private entrepreneurial activity as opposed to one officially sanctioned and executed by U.S. intelli- gence authorities.” For those who haven’t paid much attention to CIA style over the years, perhaps the main problem in understanding Nugan Hand has been this seemingly analytical choice between “private entrepreneurial activity” on the one hand and “officially sanctioned” activity on the other. In fact, as the Iran- contra operation clearly shows, the two have never been clearly distinguished. In phrasing the choice, one may inadvertently rule out what is really the most likely explanation. It is possible, in fact customary, for a CIA-related business to be both private and for-profit, and yet also have a close, mutually beneficial relationship with the agency. The men running such a business are employed exactly as if it were a private concern — which it is. But they may have been steered to their jobs by the CIA, and they never forget the need to exchange favors. According to Victor Marchetti, a former CIA officer who coauthored a best- selling book on the agency whose accuracy has never been questioned, Nugan Hand seems to fall in the category of an independent organization, closely allied with the CIA. “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 organization. It seems to be more of an independent organization with former CIA people connected with it, and they’re in business to make money, but because of their close personal relationship with the agency, they will do favors for the agency.” These favors might include laundering money and providing cover for agents, or for any highly secret activity the agency is involved in but doesn’t want to be connected to. The agency, in turn, might use its influence to throw business the company’s way, or to offer the company protection from criminal investigation. CIA men on covert missions do not identify themselves as such. But those exposed to the culture of spying learn how to interpret the word of members of the spying community, whether active or retired. They know, as any Mafia member does, that the business of the organization cannot always be identified by an official seal. But it can be recognized nonetheless. It is in this sense that one must judge what Nugan Hand was, and what moral responsibility the United States government has for what Nugan Hand did. No one has been convicted of a crime for the Nugan Hand Bank’s activities. Frank Nugan died in his Mercedes — although gossipy newspapers, consumed by the scandal, would occasionally report that he’d been spotted in far-flung places. Suspicion grew so wild that in February 1981 Australian officials ordered Nugan’s body exhumed, just to put everyone’s mind at ease. Michael Hand fled Australia in June 1980, with a false passport and a fake beard, accompanied by another former U.S. intelligence operative. His whereabouts are still unknown. Bernie Houghton disappeared at roughly the same time (accompanied by Thomas Clines). But unlike Hand, Houghton had done most of his stealing outside Australia. Once it was clear that the investigations were rather toothless, he returned there in October 1981, again as a barkeep, with a few years of part-time banking in his past. Admiral Yates, General Manor, and the other retired military officers stayed beyond the reach of Australian authorities and have never testified under oath. The legitimate security interests of the United States certainly require a large and efficient intelligence operation. [snort -jpg] But the people and organizations that make up what is called the intelligence community in the U.S. government have gone far beyond the gathering of intelligence. In many cases, the word *intelligence* has been used as a cover for covert and unconstitutional acts of war and civil crime. The public, here and abroad, knows it, and respect for law itself is dissipated. Dope peddlers and weapons smugglers almost universally claim to be working for the CIA, and many can prove they really are. The connections have prevented prosecution even in cases where the crimes themselves were never authorized, and law enforcement is confused and corrupted. When agents of the United States steal, when they get involved in drug deals, how far should the patriotic cloak be granted by national policy stretch to cover them? Does it cover an agent who lines his pockets in side deals while working in the name of national security? What acts lie beyond a presidential directive to do “whatever is necessary”? When has license been granted, and when has it simply been taken? What the Nugan Hand affair should have established, and what the Contra- gate scandal makes even clearer, is that the license to commit crimes in the name of national security has been granted too often and too lightly. Without a recognition of this central fact, scandal will follow scandal. The nation’s moral capital will continue to be squandered. And the country’s real, legi- timate security interests will be seriously and repeatedly damaged by the twisted values of self-appointed “patriots.”

Written by nuganhand

September 2, 2008 at 3:04 am

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The CIA in Australia – Part 6

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Part 6 of a 6 part series
Watching Brief, PRNS, November 1986

Ian Wood:  This is side 6 of the special Watching Brief series on
the role of the CIA in Australian and New Zealand politics.  This
side of the cassette is an addendum to the other 5 part of the
series.  It features an excerpt from each of Watching Brief
editions 38 and 39, 1986.  It focuses on Christopher Boyce and
moves by the Christopher Boyce Alliance and some ALP backbenchers
for an inquiry into the role of the CIA in the downfall of the
Whitlam government.

Jane Lanbrook:  This November marks the 11th anniversary of the
dismissal of the Whitlam government in 1975 and circumstantial
evidence gathered since then points to the likely role of American
and Australian intelligence agencies in the undermining of
Whitlam's reformist Labor government.  In fact, moves are now
under-way to press for an inquiry into the role of the American
Central Intelligence Agency in particular.  Ian Wood reports:

Ian Wood:  After blocking supply bills in the Senate in the early
1970s the then Liberal and Country Party Opposition under Malcolm
Fraser pried on every miscalculation or impropriety of the Whitlam
government leading in 1975 to a political crisis over the passing
of the budget.  Although the Senate never voted to actually reject
the Whitlam budget it did defer the money bills three times.

Inside Parliament:  I don't think people realise yet sufficiently
around this country just what a brink of pessimists we're coming to
because of the unprincipled and absolutely unprecedented action of
the spokesman who historically posed as `The spokesman for Law and
Order' and I give notice to you Frasers that if they are going

Ian Wood:  The stalemate lasted some months with several Liberal
Senators becoming increasingly concerned over the constitutional
legality of voting against supply for an elected government.

Inside Parliament:  ...that the Australian Trade Union movement may
very well think about withholding supplies from them....[Shouts...]

Ian Wood:  The Senate never did actually vote on the supply bills. 
Instead, in an unprecedented move the Governor-General of
Australia, Sir John Kerr, sacked the Whitlam government.

Announcer:  [People shouts of "WE WANT GOUGH", " WE WANT GOUGH" in
the background] The Governor-General of Australia who by this my
proclamation dissolves the Senate and the House of Representatives. 
Given under my hands on the great seal of Australia on the 11th of
November 1975 by his excellency's command, Malcolm fraser Prime
Minister, John Arthur Governor-General.  GOD SAVE THE QUEEN.

Ian Wood:  Not only was Whitlam dismissed, but Opposition Leader
Malcolm Fraser was placed in power as a caretaker Prime Minister
until an election to be held less than four weeks later.

Gough Whitlam:  The man the Governor-General appointed as caretaker
Prime Minister didn't have a majority in the House of
Representatives and didn't have a majority in the Senate either...

Ian Wood:  Whitlam's dismissal created the greatest political
furore Australia had ever seen.  In dealing with the Constitutional
Crisis the Governor-General, in the first instance, is supposed to
take advice from his Prime Minister and while many questioned the
future of the Whitlam government in 1975 and believed that an
election was eminent, few expected that the Governor-General may
unilaterally replace the Prime Minister of an elected government
with the leader of the minority Opposition, then Malcolm Fraser.


Ian Wood:  And so, Australia's internal political crisis was
resolved with the Liberals sweeping to power in the December 1975
election.  But was it internal?  Almost two years later on the eve
of the trial in America of former intelligence worker Christopher
Boyce it was revealed that a CIA telex had been sent to ASIO
headquarters in Australia just two days before the dismissal of the
Whitlam government.

Kelly Johnson:  It was sent by Ted Shackley, who was the head of
the East Asia Division of the CIA, to ASIO in the days prior to
November 11th.  It was essentially an order to ASIO to shut Whitlam
up or get rid of him because on the afternoon of November 11 he was
planning to announce in Parliament that Pine Gap was run by the CIA
and the CIA were extremely reluctant to have this information

Ian Wood:  Kelly Johnson of the Christopher Boyce Alliance.  In May
1977 in America former intelligence operative Christopher Boyce was
put on trial accused of spying for the Russians.  He was convicted
and sentenced to the legal maximum of 40 years jail.  Several years
later Boyce escaped and was eventually recaptured after being on
the run for 18 months.  Boyce had been a telex operator in 1975 for
a private security company, TRW, in California which had close
links with the CIA.  His job was to send and receive telexes
between agents in Australia and CIA headquarters in Langley,
Virginia.  Boyce's story incidentally was told in the film THE
FALCON AND THE SNOWMAN.  Well, Channel 9 in Sydney were good enough
to give us permission to re-broadcast key parts of an exclusive
interview with Boyce by Sixty Minutes' Ray Martin in 1982 in which
Boyce explained how the CIA's deception of Australia was the key
reason he began selling information to the Russians.

Christopher Boyce:  I was brought up in a very conservative home,
the right of Kubla Khan.  As I got older, I came to see that most
everything that I believed in was hypocrisy in this country.  My
Government was deceiving an ally, perhaps had been an ally for two
world wars, English speaking parliamentary democracy.  I thought it
was indicative of, to what my country had sunk to.

Ian Wood:  Christopher Boyce was a telex operator for CIA projects
such as the top secret Rylite and Argus spy satellites which
monitor military bases and missile launchers in China and the
Soviet Union.  Pine Gap near Alice Springs was a key link in the
CIA spy satellite network and in the mid 60s an Executive Agreement
was signed between Australia and America which was supposed to
allow Australia to share this top secret information.

Christopher Boyce:  When the Rylite project was first put in place,
the Executive Agreement meant that all information was to be shared
between the American government and the Australian government.  And
along came Mr Whitlam.  When I went to work for the project, the
initial security briefing that I had, I was told that, in fact, we
weren't going to live up to that Agreement, and that we hadn't
been.  And that there was information that was being withheld.  And
also that the Argus project, which was the advanced Rylite project,
was to be hidden from the Australians.

Ian Wood:  Boyce worked in the highest security area at TRW, the
black vault, and he remembers considerably concern amongst CIA and
Security staff at TRW over the actions and policies of the Whitlam
government in 1975.

Christopher Boyce:  There was definitely conversations in the black
vault and in the security area with members of TRW Security about
the problem of Mr Whitlam.  Mr Whitlam was not a popular figure at
all, to say the least.  The fact that inquiries were being made
about the base. Mr Whitlam was, by wanting to know what was going
on there and by publicising it, was compromising the integrity of
the project.  To their view, he was on the wrong ball club.  Mr
Whitlam's government was a threat.

Ian Wood:  And what about the fall of the Australian Labor
government?  Was there any talk of how the government might have
been undermined?

Christopher Boyce:  There were references to your Governor-General
by the Central Intelligence residents there at TRW in the Rylite
project.  They called Mr Kerr `our man Kerr.'  Joe Harrison said
that in the security area, one time I overheard that.

Ian Wood:  Well, once Whitlam had been sacked, was there any change
in the US policy of not abiding by the Executive Agreement between
the two countries or did the same deception continued and for how

Christopher Boyce:  The entire time I worked for the people,
and I imagine it continued right up until the point of my trial,
until the Executive Agreement was renegotiated.  There was a bit of
celebration that Mr Whitlam had been canned.  But my instruction as
to what was to be sent did not change, no.

Ian Wood:  In this interview with Channel 9 Sixty Minutes, Boyce
also repeated allegations he made at his trial about CIA
interference in Australian unions.  In this excerpt, Petal is the
codename for the TRW intelligence link where Boyce used to work,
Pilot refers to CIA headquarters in Virginia, and twix is
intelligence jargon for a telex message.

Christopher Boyce:  We had hardware, software and personnel to ship
out of Alice Springs, and there was worry over strikes at your
airports.  They had to do with pilots and air controllers.  And
there was an area that Petal had a definite need to know because
strikes would wreck our schedule, and so in this one instance, a
twix came from Pilot which said "Pilot will continue to suppress
the strike, continue shipment on schedule".   My conclusion is,
that either Central Intelligence directly or through intermediaries
would had to have infiltrated the hierarchy of your trade unions at
some level.

Ian Wood:  Although CIA covert activity in Australia in 1975 was
the key reason that Boyce decided to act against his own country it
wasn't the only reason.  His employment at TRW coincided with the
discrediting of the Nixon government over the Watergate affair.

Christopher Boyce:  If Mr Nixon's Government hadn't gone in flames,
I don't think that this would have happened. But at the same time,
it goes way beyond Richard Nixon and Watergate. I think that it's
just the whole general drift of where this government is headed. 
I think that this Government is a threat to mankind.  You can't
protect freedom and liberties behind stock piles of chemical and
biological weapons and nuclear weapons.  My Government built atomic
weapons, used them first, stock piled them first, moved our
I.C.B.M.s first, which was a grotesque escalation, and now that the
Russians have played catch-up for 20 years and finally achieved
equality, the only policy to come out of the White House is build
17,000 more of the monsters.  And to me that's madness.  It seems
to me my government had betrayed me long before I ever betrayed

Ian Wood:  So does Boyce see himself as a traitor?

Christopher Boyce:  I have no problems with the label traitor, if
you qualify what it's to, and I think that eventually the United
States Government is going to involve the world in the next world
war.  And being a traitor to that, I have absolutely no problems
with that whatsoever.

Ian Wood:  Christopher Boyce, interviewed by Ray Martin of Sixty
Minutes in 1982 and many thanks to Channel 9 in Sydney for the use
of that material.  And now, back to Kelly Johnson, who formed the
Christopher Boyce Alliance a year ago to question not only the
influence of US intelligence services in Australia but also the
anomalies involved in Boyce's trial.  Why were his lawyers, who had
top security clearance, not allowed to view the evidence against
him during the trial?  Why did the prosecution concentrate on his
leaking to the Russians of the Pyramider file now thought to have
been a worthless red hearing?  And why was he given a 40 year jail
sentence when the average for his type of crime is less than 20
years?  Kelly Johnson explains why she formed the Christopher Boyce
Alliance and details her current campaign for a formal inquiry into
allegations of CIA activity in Australia leading up to the Whitlam

Kelly Johnson:  Well, I was drawn to Boyce's story because of the
Whitlam connection and the more that I looked into Boyce's story
the more it became apparent that Australia's sovereignty and what
I see as the injustice inflicted on Boyce are inextricably linked. 
There have been two documents compiled by an American academic
which show that the conviction was false and that the information
Boyce was convicted on was actually freely available in the public
arena.  When you combine that with the evidence which shows that
the CIA meddled in Australia's domestic affairs is really a story
that can be ignored and shouldn't be ignored.

Ian Wood:  Well, what was the specific information that he was
convicted on?

Kelly Johnson:  It was a project that was called the Pyramider
file.  The Pyramider was a project for a new type of satellite that
allowed direct communication between spies and the CIA headquarters
in Langley, Virginia.

Ian Wood:  Well, since the Christopher Boyce Alliance was founded
in Australia what sort of actions have you taken?

Kelly Johnson:  The Christopher Boyce Alliance has presented
petitions to the Australian Parliament calling for an inquiry into
the allegations of CIA activities in Australia and expressing
concern about Boyce's allegations and about Pine Gap being a CIA-
run project and expressing concern in general about the massive
secrecy surrounding the functions of the bases.  I've also held a
major press conference releasing the documents compiled by the
American academic showing the false conviction.  The most recent
action is a press conference to be held in Canberra on November
11th in which I will be presenting statements signed by ex-Whitlam
Cabinet Ministers calling on the government to investigate all
activities the CIA has been involved in Australia.  And supporting
those statements will be one signed by present Caucus members
expressing their favour at having such an inquiry.

Ian Wood:  What's the juice of the statement that the ex-Whitlam
Cabinet Ministers have signed?

Kelly Johnson:  They are acknowledging their awareness of the
persistent rumours of CIA involvement in the dismissal,
acknowledging their awareness of specific allegations made by
Christopher Boyce during his trial in 1977, acknowledging their
awareness of the Shackley Cable and their awareness of statements
made by top ranking CIA officials which in effect admit CIA
involvement in the Whitlam coup.

Jane Lanbrook:  Ian Wood there reporting on the campaign by
sections of the peace movement for an inquiry into the role of the
American CIA in the downfall of the Whitlam Labor government in
1975.  He was talking to Kelly Johnson of the Christopher Boyce
Alliance and you also heard extracts from an interview with
Christopher Boyce in Sixty Minutes.  Many thanks to Channel 9 for
permission to re-broadcast that material.
  In Canberra on November 11th Kelly Johnson of the Christopher
Boyce Alliance and Labor Parliamentarian Peter Staples held a press
conference to call for an inquiry into allegations and other
evidence of CIA involvement in Australian politics, especially
events leading up to the sacking of the Whitlam government on
November 11, 1975.  Ian Wood reports.

Ian Wood:  The public campaign conducted by the Christopher Boyce
Alliance to open an inquiry into CIA involvement in the downfall of
the Whitlam government gained momentum on remembrance day November
11 this year with half a dozen ALP Caucus members stating their
support for an inquiry.  Kelly Johnson of the Christopher Boyce

Kelly Johnson:  Well, so far we have signed statements from Oli
Sakarov, John Scott, Russ Colman, Bob Brown, Peter Milton, Peter
Staples and Bruce Childs.

Ian Wood:  But most significant were the statements released at the
press conference supporting an investigation and signed by six
former Whitlam Cabinet Ministers.

Kelly Johnson:  The signatures I have at present are from Moss
Cass, Clyde Cameron, Jim Cavenagh, Jim Cairns, Jean McLeland and
Kent Rett.

Ian Wood:  What was the general response of all those former
cabinet ministers that you approached?

Kelly Johnson:  Well, interestingly, when I first approached them
the vast majority were interested and quite happy for me to send on
the information and send on the statement.  However, attitudes
change, people became reluctant, and I have to say I'm questioning
why that occurred.

Ian Wood:  Well, what about Lance Banner, Whitlam's Deputy Prime
Minister and Minister for Defence?

Kelly Johnson:  Well, to begin with Lance Banner was interested. 
We had several discussions on the issue and then suddenly he said,
`no, I cannot sign it for security reasons.'

Ian Wood:  And what about Whitlam himself?

Kelly Johnson:  Mr Whitlam began by indicating his concern for
Christopher Boyce's situation.  However, he said he felt he was not
in the position to put his signature to the statement because he
felt it vital that he retains complete control over what approach
he takes on this matter.  However, he did say that he was pleased
other members of the cabinet had signed the statement.

Ian Wood:  Kelly Johnson.  Well, at the press conference ALP
backbencher Peter Staples outlined why some Caucus members were
also joining the call for an inquiry into the CIA's activities in
Australia, especially in 1975.  

Peter Staples:  What is of great concern to us is that the Boyce's
allegations, the Shackley Cable, and other numerous allegations and
comments that have been made over the last 11 years have not been
taken seriously in Australia and this general involvement of the
United States' operations in Australia is something that both the
Christopher Boyce Alliance, myself and many other members of
Parliament, both current and past, believe that needs to be
investigated.  We've circulated letters to former ministers in the
Whitlam government, former Members of Parliament as well as to
current Members of Parliament, asking them to support an inquiry,
a full public inquiry into the activities of the CIA in Australia,
particularly at that time.

Ian Wood:  Then Kelly Johnson explained at the Canberra press
conference why she felt an investigation was necessary.

Kelly Johnson:  In 1975 when I was 21 years old I was aware of the
Loans scandal, the Morosi scandal and the blocking of supply but
largely dismissed them as the games that politicians played.  On
November 11th, my cynicism and complacency were rather shattered. 
In the United States, another 21 year old was experiencing extreme
rage and frustration associated with the Whitlam government. 
Christopher Boyce had taken a job as a postal clerk at an
electronics firm in California.  Within 13 weeks he had been given
an exclusive security clearance from the FBI, the CIA, the US
Defence Department, and the National Security Agency and they gave
him access to America's most secret espionage operations.  It was
there that he discovered that the US was inflicting a daily
betrayal, a daily deception, against Australia and that it was
intent on toppling the Whitlam Labor government.  Boyce lashed out
by making contact with the Russians and it was during Boyce's
espionage trial in 1977 that Australia received its first
confirmation of CIA involvement in Australia's domestic affairs. 
Immediately following that, the Shackley Cable surfaced and its
authenticity was confirmed in Parliament by Mr Whitlam.  And to
quote Mr Whitlam, he said, `In plain terms that cable revealed that
the CIA had deceived the Australian government and was still
seeking to continue its deception.'  In the same speech he also
said, `I believe the evidence is so grave in its detail and so
alarming in its implications that it demands a fullest
investigation.'   The statements that have been signed today by ex-
Whitlam Cabinet Ministers and by present Caucus members echoes
those words and we have to address the question:  Will we allow a
boy to spend 68 years in solitary confinement without questioning
whether he was denied a fair trial because of the implications it
would have had on the Australia--US alliance.

Ian Wood:  After the press conference I asked Kelly Johnson for
more details of the connections between Christopher Boyce and the
Whitlam government.

Kelly Johnson:  Well, Christopher Boyce was working in a
communications relay room from which information was coming
directly from Pine Gap to the relay room and it was then passed on
to CIA headquarters in Langley, Virginia.  And it was through this
information coming from Pine Gap that Christopher Boyce had to
prove that the CIA was intent on toppling the Whitlam Labor

Ian Wood:  What sorts of specific information did Boyce come across
that led him to believe that the CIA was involved in Australia and
in trying to topple the Whitlam government?

Kelly Johnson:  It began during Boyce's initial briefing for the
job in the relay room.  He was told that although America and
Australia had signed an Executive Agreement to share all
information that Agreement was not being honoured and that there
was information that was being withheld from the Whitlam

Ian Wood:  What about the issue of CIA interference in Australian

Kelly Johnson:  Well, Boyce raised this specific instance where
there was personnel, hardware and software due to be ship out to
Pine Gap and there were strikes imminent in Australia amongst
pilots and air controllers and these strikes would have caused
unintentional disruptions at Pine Gap.  Boyce then discovered a
telex which came from CIA headquarters in Langley, Virginia,
stating that CIA had suppressed the strikes and the shipments could
continue as normal.  It may be questioned why Pine Gap was so
important and why the strikes were suppressed.  The covert
surveillance facilities in use at Pine Gap were used to spy on the
Whitlam Labor government.  The CIA knew precisely what was
happening on a day by day level in regards to the Loans Affairs and
they knew at which point the CIA-fabricated telexes could be
introduced to the Liberals and to the media to give the most

Ian Wood:  What about the famous Shackley Cable?

Kelly Johnson:  The Shackley Cable arrived in Australia on November
10, 1975, after a briefing the CIA had given to the ASIO liaison
officer in Washington on November 8.  The reason for this was that
Gough Whitlam had stated that Richard Stallings, who was a former
director of Pine Gap and who supposedly was an employee of the US
Defence Department, was actually a CIA employee.  Whitlam had been
challenged to prove this and he intended to give his proof in
parliament on the afternoon of November 11 and this is the first
time that Australia would have had confirmation that Pine Gap was
a spy base and was run by the CIA and was spying on Australia and
on other nations, friendly nations to Australia and the United
States.  The CIA became incensed that Whitlam was going to do this
and there was much pressure put on Whitlam, particularly by Arthur
Tange, to change his Hansard.  Whitlam indicated that he would not
change his Hansard.  And then this cable from Ted Shackley, who was
head of the East Asia Division of the CIA, came through indicating
that the CIA could not allow Whitlam to make this disclosure.  The
Shackley Cable was in fact leaked in 1977, hard on the heels of
Boyce's allegations, and Mr Gough Whitlam has verified the
authenticity of the cable in Parliament.  And if I could just quite
from Mr Whitlam, `In plain terms that cable revealed that the CIA
had deceived the Australian government and was still seeking to
continue its deception.'

Ian Wood:  The Shackley Cable also seems to indicate something that
is perhaps even more ominous and that is the Australian security
organisations were also involved and knew about the pressure from
the CIA?

Kelly Johnson:  Yes and in fact if I can again quote from Mr
Whitlam, from a speech he made in Parliament, he said, `Implicit in
the CIA's approach to ASIO for information on events in Australia
was an understanding that the Australian organisation had
obligations of loyalty to the CIA itself before its obligations to
the Australian government.'

Ian Wood:  Kelly Johnson of the Christopher Boyce Alliance.  Well,
it's that evidence and the growing anti-bases campaign in Australia
that its rekindling public interest in the role of foreign
intelligence agencies in our domestic and political affairs,
especially the American CIA.   Peter Staples sums up at the press
conference on November 11 in Canberra.

Peter Staples:  This is not an anti-United States bash.  The United
States is recognised as a fundamental ally of Australia.  I bring
back to your attention Whitlam's words from Hansard of 1977, while
the first Boyce's trial was in progress, and he said, `It is
precisely because America is our principal ally that Australia must
be satisfied that American agents are not acting in a manner
contrary to our interest as a nation.  Are we to let an ally get
away with something that a rival would not be allowed to get away
with?  Alliances are not strengthened by covert operations or by
condoning and covering up such covert operations.'   Other people
who have made allegations about the CIA's activities at the time of
the dismissal include Ray Cline, former Deputy Director of the CIA;
James Flynn, former CIA employee; James Angleton, of the CIA;
Admiral Bobby Inman, former director of the NSA; and more recently
in Australia, Ralph McGehee, formerly of the CIA himself.  I think
there is enough evidence to warrant a full inquiry at this stage,
it has to be seen not only in terms of what happened in 1975 and
perhaps the period before but certainly is has to be seen in terms
of Australia's sovereignty as a democratic nation.

Jane Lanbrook:  Ian Wood there reporting on the call for a formal
inquiry into CIA involvement in Australian politics, especially the
dismissal of the Whitlam government in 1975.  Kelly Johnson of the
Christopher Boyce Alliance, and Labor MP Peter Staples who were
speaking at a press conference in Canberra on November 11, 1986.

End part 6 of a 6 part series

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The CIA in Australia – Part 5

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                     Part 5 of a 6 part series
               Watching Brief, PRNS, November 1986

Jane Lanbrook:  Hello and welcome to the second part of Watching
Brief for this week.  I'm Jane Lanbrook and today we conclude our
five part series on the CIA's role in Australian and New Zealand
politics.  Last week, in part 4 of the series, we looked at the
CIA's attempt in 1983 to split the New Zealand Federation of Labor
through the activities of the short-lived Labor Committee for
Pacific Affairs.   This move to split the unions was seen as a last
ditch attempt to destroy Labor movement unity at a time when the
Labor Party, with is anti-nuclear policy, was heavily favoured to
win the 1984 elections.  This week we look at attempts being made
to destroy the Lange Government against the background of
heightened American interests in the South Pacific and the CIA's
previous record of interference in New Zealand politics.  Here with
the final instalment is producer Tony Douglas.

Tony Douglas:  Since the Lange Government announced its nuclear
ships ban it has been publicly pressured by the United States and
its allies to reverse the policy.  But are there indications that
the Reagan administration having failed to change the New Zealand
government's policy are planning, through the CIA, to change the
government?  One person who thinks so is former CIA agent Ralph
McGehee who visited New Zealand recently. 

Ralph McGehee:  I've certainly seen indications that it is
involving itself.  I can't state 100 percent but certainly I have
seen indications.  The first thing you do, of course, you create an
enemy and all over the United States and over New Zealand you see
the editorials all saying that `the Russians are coming to the
South Pacific'.  You have to create an enemy so you can discredit
anybody who is opposed to your policy. So with this strong thing
that `the Russians are coming' then anyone who is soft on nuclear
issues, nuclear free issues, and soft on defence can be labelled 
`pro-communist', `pro-Soviet' or `communists' themselves.   Then
you have the attempts to penetrate the media.  USIS, the United
States Information Service, has been sending back a stream of media
types, academicians, politicians and Labor types to the United
States for red carpet treatment and when they come back their
opinions towards American policy has changed for the better, if you
will, and one would suspect the hand of the CIA in some of that. 
You have the attempts to establish Labor unions in New Zealand,
right-wing think tanks, united with the issues that `the Soviets
are coming.'  Now if I were relating the scenario for the elections
next year what I would do is to attempt to split the Labor party by
all various techniques, dirty tricks, forging documents and leaking
documents.  Before I left New Zealand, four documents of the Lange
Government had been leaked to the media.  One of the documents
related to its policy towards unions, a very divisive document. 
Well, you have the same thing in the Whitlam overthrow.  Documents
were being leaked all over the place and it was instrumental in the
removal of two Cabinet ministers.  Well, the same thing seems to be
happening in New Zealand.  But as the elections approaches you can
anticipate forged documents being released, poisoned pen letters to
further divide the Labor Party, to divide the Labor Party and to
divide and conquer if you want.  There have been reports that the
National party, the opposition party, has gone to the CIA for
funding and this is very standard part of a political operation. 
If I was doing it, I would split the Labor party, fund the National
party and maybe just before the elections keep `the Russians are
coming' thesis going to keep the pot boiling.  But just before the
elections, a document would be released that would implicate
prominent members of the Labor party in relations with the Soviet
embassy.  Then, when that's documented with prominent media
coverage, you need media operations... when the elections are held
that document has had an impact on the votes.  Then after the
votes, the election is over, the National party wins, then a
commission is set up to establish the links of the Labor party
members with the Soviet embassy and over a period of two years
nothing develops, it's just a device to deceive public opinion. At
the same time I would try to destroy the peace movement. I would do
that by penetrations of the peace movement who would try to divide
and conquer, who would label effective members of the peace what we call `put on a smith jacket'.  In other words
to say that a person is working for the police or for the
intelligence services, just to discredit him and destroy his
effectiveness.  Or in a case of a parade the peace movement might
call, just at a critical moment, the penetration agent would pull
out the New Zealand flag and burn it to make sure that the media
coverage was all focused on that rather than the real intent of the
peace movement in the parade.  And all the various dirty tricks
would be used to not only destroy the peace movement, to destroy
its credibility, but also to divide the Labor party and to support
the alternative party.

Tony Douglas:  In Mcgehee's scenario the creation of a Russian
threat is the first step in bringing undone the Lange Government
and its nuclear ships ban.  Perhaps this goes a long way to
explaining the story of the mystery nuclear submarine which
appeared inside the territorial waters of the Cook Islands between
the 17th and 21st of February this year (1986) and led to weeks of
speculations, alleged leaks and innuendo in the New Zealand media. 
The Cook Islands, to the northeast of New Zealand, are about four
hours flying time from Auckland.  While the Cook Islands were
granted self-government in 1965 they still rely on New Zealand to
defend them.  The first sighting of the submarine was made by two
Cook Islanders when they were travelling on an inter island flight. 
Three days later there was a second report of sighting by two
Tahitian fishermen.  At this stage, the New Zealand Air Force moved
in and sent two Orion aircraft in search of the submarine.   New
Zealand peace researcher Allan Wilks takes up the story.

Allan Wilks:  It seems that the plane took off at midday that day
and they actually obtained a clearance to fly directly back to New
Zealand.  But then, instead of flying back to New Zealand, they
diverted them through the other side of the island and they started
flying a path back and forth in the area where the submarine had
been seen just that morning and they discovered the submarine
within an hour or two and so they radioed back to New Zealand and
another Orion was sent up and for the next two and a half days they
kept that submarine under continual surveillance and, apparently,
they were dropping sono voi into the sea all the time and the sono
voi picked up the noises of the engines and so on made by the
submarine and from that they were able to recognise it as a nuclear
submarine, because nuclear submarines make different noises than
diesel submarines obviously, and they were also able to identify
the nationality of the submarine.

Tony Douglas:  What kind of technology did they have with this sono
voi, how do they operate and how could they discover it was a
nuclear submarine and identify which nationality it came from?

Allan Wilks:  Well, the sono voi is a cylindrical object which is
dropped from the aircraft and it contains a hydrophone, a
microphone that works in the water, and the hydrophone just picks
up the noises that is made by the engines and the propeller and
then the voi itself has a little radio transmitter and it transmits
those noises back to the aircraft where they listen to them and
tape record them and analyse them on video screens and it's very
obvious that a nuclear submarine is going to sound very different
from a diesel submarine because you sort of get the pounding of the
diesel engines if it is a diesel submarine whereas if you listen to
the noises from pumps and valves and turbines it is a nuclear
submarine.  And then, apparently, different classes of submarines
have quite distinct sound signatures, as they call it, you know,
it's like...if you've got your eyes shut and you listen to cars go
past the chances are that you can tell the difference between the
noise made by a Miner and a Jaguar and the same thing applies to
submarines so it's quite easy to identify a particular noise that
is coming from an American submarine rather than a Russian
submarine and, apparently, that is what happened in this case. 
Initially they were quite positive that they identified the
submarine as an American submarine.  Now, this has never been
admitted publicly but I got it from people in the Cook Islands. 
The Cook Islands government was told three days afterwards by the
New Zealand government that it was an American submarine that had
been detected there.

Tony Douglas:  Soon after a political game of ducks and drags began
in the New Zealand media with much speculation as to the identity
of the submarine.  On March 4, Allan Wilks after putting together
the facts went public claiming that the submarine was probable
American.  This drew a sharp response from the Chief of Defence
Staff, C.U. Jamison, who asked Wilks to produce his evidence.

Allan Wilks:  That was also somewhat unprecedented for the Chief of
Defence Staff to enter into a public debate on his own accord and
he challenged me and demanded that I produced my evidence that it
was an American submarine.  And this was rather interesting because
at that stage I hadn't particularly claimed to have evidence.  I
had simply concluded, from the public information, that it appeared
to be the behaviour one would expect from an American submarine
that was trying to masquerade as a Soviet submarine.  And I heard
afterwards that the reason why the Chief of Defence Staff came out
like that and demanded that I produced my evidence was that he was
trying to track down a suspected leak within the Ministry of
Defence.  He figured that if I was saying that so confidently then
I must have got information from someone within the Ministry of
Defence to the effect that it was an American submarine.

Tony Douglas:  Well, talking of leaks.  All sort of leaks started
to appear in the New Zealand media about it being a Soviet
submarine.  Now, from about what date did these leaks start coming
out that it was a Soviet sub and do we subsequently know where
those leaks came from?

Allan Wilks:  The leaks started coming very soon after we broke the
story.  Maybe I should say a little bit more about the leak.  The
first thing we got here about was that New Zealand aircraft were
searching for a submarine.  And then the story went completely dead
and no journalist offered to pick up one or anything like that and
several days afterwards I decided it was time to start inquiring
about it and that was when we found out that a submarine had indeed
been detected and the government was refusing to say whose it was.
But it was very soon after that one or two journalists started to
be fed what was supposed to be leaks and none of the journalists
have admitted who they were getting the leaks from at all.  They
said that they were getting leaks from `trustworthy sources'. One
journalist said that he got his leak from a `Western embassy' which
was not the United States embassy.  You still haven't thought that
one out.  But the leaks, the alleged leaks got more complicated as
the public story got more complicated too and the final leak was to
the effect that it very definitely was a Russian submarine but the
Chief of Defence Staff did not want journalists to report this
because he didn't want to be seen as pressuring the government on
this issue.

Tony Douglas:  But the New Zealand government was pressured on the
issue.  In fact, Mr Lange changed his position on the submarine
three times in the space of a month.  On March 10, he declared he
knew the identity of the submarine, was prepared to reveal whose
side it was and would deliver a protest to its owner if the Cook
Islands wished to.  Four days later Lange did an about face saying
he wouldn't reveal its identity.  And on April 7, just over three
weeks later, said that he didn't know its identity but intended to
find out.  Why the change of story?  Allan Wilks again.

Allan Wilks:  The Prime Minister's office, I'm pretty sure, was
initially told that it was an American submarine.  The military
were very worried about this, that they were upsetting and
embarrassing an ally by having discovered the submarine and so they
were searching for ways of getting out of this admission. 
Subsequently, and I think the United States government obliged by
coming up with a denial that they had a submarine anywhere near
that place at that particular time, and of course the United States
was doing something quite unusual there because it's like nuclear
weapons the United States doesn't normally admit to where their
submarines are at sea at anytime.  It's the old `neither confirm or
deny' policy so that allowed them to introduce the confusion. 
Whether some particular pressure was put on the Prime Minister to
change his story there or not, but it's certainly quite remarkable
the change that took place.  At one stage, he was sort of joking
about the whole business and saying that he was considering going
against his own defence people and revealing the nationality of the
submarine and then suddenly he made that change and said he
wouldn't say anything and then the other change was when, and this
was a more gradual change, when the government started to say, you
know, `maybe there wasn't any submarine there at all.  Maybe we
just detected a fail or something or other like that.'  And that
case, that change came about because of a report from the
Australian Joint Intelligence Organisation (JIO).  Now, JIO as a
matter of cause, apparently, is to see all our tape recordings and
so on of submarines that are picked by Orions and on this occasion
they analysed this reporting and they concluded, so it seems
according to the leaks that have come out, they concluded that it
was certainly not an American submarine and probably not a
submarine at all.  I would say that they have had the pressure put
on them by the United States to diffuse the story.

Tony Douglas:  I'm just having a look at the assessment of the
Joint Intelligence office in Australia that they probably sighted
a whale.  Does that hold a lot of credibility? I mean, is there a
possibility that there wasn't in fact a submarine there at all?

Allan Wilks:  Apparently it does happen that if you are using what
they call an active sonar in which you create an underwater noise
and then you listen for the echoes of that noise coming of objects
that are in the ocean, that the echo of a whale can sound quite
similar to the echo of a submarine.  But in this case, it was not
active sonar that they were using.  The fact that they identified
the engine noise and all that sort of thing indicates that they
were using passive sonar, the kind of sonar in which you're simply
listening and there is no way you can mistake the song of a love
sick whale for the sound of a diesel engine or a nuclear power

Tony Douglas:  Of course there were other elements to this story. 
The Prime Minister of the Cook Islands, Sir Tom Davis, a former
employee of the United States Army and strong supporter of the
Americans blacked out news coverage of the submarine in the Cook
Islands from February 25 for 51 days and refused to comment even
though the Cook Islands territorial waters had been violated.  The
leader of the opposition National party in New Zealand, Jim Bolger,
refused even to be briefed on the issue.  And the National party
disarmament spokesperson, Dough Graham, checked with Cook Islands
MP Vincent Ingraman about the identity of the submarine and when
told it was American made no further comment.  While the submarine
episode appears to be an obvious set up what about the rest of
McGehee's scenario?  Do members of the New Zealand government see
it coming through as well?  Here is government member and party wit
Fran Wall.

Fran Wall:  Oh, yes, I think there is a lot of truth in what he
sees.  The American diplomatic presence in New Zealand has been
considerably strengthened in terms of quality if you want.  Since
this has happened they now have a professional ambassador there
whereas prior to that it was a political appointment and the man
they have there is a very good propagandist and in fact has a
background which indicates that they are taking it seriously. 
There is a stream of American visitors through New Zealand,
academics and politicians, who work both publicly and privately to
try to change what we are doing.  There is also a stream of New
Zealanders invited over to the United States at the U.S. government
expense who are briefed and given the American point of view on
what we are doing.

Tony Douglas:  Much of the concern centres on the appointment of
career diplomat Paul Cleveland as United States ambassador to New
Zealand in January 1986.  We tried to interview the ambassador for
this program but were told he was unavailable to talk to the
Australian media.  Perhaps that's not surprising seen he was a
protege of Marshall Green who was American ambassador to Australia
during the Whitlam years and whose role in Australia in 1975,
Greece in 1967, Indonesia in 1965 and South Vietnam in 1963 have
been commented on in an earlier part of these series.  Cleveland
himself worked under Green in Indonesia in 1965 just before the CIA
inspired coup by the military.  According to Cleveland, Green was,
and I quote, `one of America's greatest professional diplomats and
I learnt an infinite amount from him', unquote.  Cleveland was also
Green's Special Assistant at the East Asian Desk in Washington from
1970 to 1973.  Since then, Cleveland has held several senior
postings in South Korea so he has much experience in representing
United States interests in politically sensitive areas.  But how do
government members feel about his appointment.  Fran Wall again.

Fran Wall:  New Zealand is aware of that connection and perhaps is
slightly different here in that you don't need a coup to overthrow
a government, you need an election loss, after all the Americans
did say they would change our nuclear policy, our anti-nuclear
policy, and having failed to change that I suppose it's logical to
think that they would have an interest in a change of government
here indeed.  Firstly, Mr Cleveland is a very active propagandist
and seems to be very caught up in his craft so I would imagine that
the decision to send him here was a deliberate one.

Tony Douglas:  Is that propaganda aimed at the New Zealand public
in general or is it aimed at certain powerful groupings inside the
bureaucracy or the New Zealand military or the New Zealand
conservative opposition?

Fran Wall:  It is aimed at both actually and the public is...there
has been a very high rate of influx of American visitors who have
come around the country and done lecture tours and talked to
various groups and given media interviews.  These have included
politicians and academics.  They are obviously aimed at changing
public opinion on softening our nuclear issues and, in fact, I
recall and I can't remember whether it was the ambassador or
another embassy official, somebody actually did state at one stage
that that was their intention, that they wanted to inform or
educate the New Zealand public on our policy.  However, they also
have been aiming at specific opinion leaders picking memo through
a very active program of exchange in the opposite direction and
they take journalists over to the United States, they take
politicians over, trade union leaders and run them through a
briefing process over there.

Tony Douglas:  Which organisations in New Zealand have rather been
hosting these visits or have been producing this kind of pro-
American propaganda?

Fran Wall:  Well, the visits are arranged through the embassy.  I
mean, they have a politician over, he is here as an American
visitor with that sort of status.  There have been others though,
for example, there is a newly apparent rise in the fundamentalist
right in New Zealand and they have very actively hooked them to the
American Law majority type of movement and they have brought
visitors over to New Zealand and their criticisms of the government
have not simply been on the so-called moral issues or lifestyle
issues but also, of course, on our foreign policy as well.

Tony Douglas:  Nobody should be surprised that the New Zealand
Labor party is aware of these machinations.  After all, the United
States involved itself in the last New Zealand elections. 
Australian journalist Denis Freney looks at the record.

Denis Freney:  Yes, well, I mean there was open intervention there
by the Americans.  I mean, the ambassador, they had a whole range
of official visitors, people like Vernon Walters who is now
Reagan's ambassador to the United Nations.  But he was a former
Deputy Director of the CIA and in fact was Acting CIA Director when
the coup took place in Chile.  And he came out and they had
admirals coming out and so on.  All making statements trying to
sort of say, you know, `this is the end of our relationship.  You
can't vote for Labor.'  In the lead-up during the election campaign
there was open political pressure, there were leaked stories in the
media, there was enormous amount of pressure to at least come in
politically behind the National regime.  On the other hand, there
is also suggestions, and they have not actually been proven but
suggestions, that the National party has been funded by the CIA or
if not by the CIA then by U.S. government institutions.

Tony Douglas:  The accusations of CIA funding for the National
party go back a long way.  Fran Wall looks back to the watershed
year of 1975.

Fran Wall:  There was a very intense but effective television
advertising campaign run in 1975 at the time of the defeat of the
New Zealand Labor government which was purported to have been
funded by an American-based agency with connections to the
intelligence world.  And, of course, the time the New Zealand
government was thrown out was also the same time the Australian
Labor government was overturned and I know that there has been a
lot of unrest in Australia about the reasons for that.

Tony Douglas:  But back to the present day, how do you deal with
the destabilisation campaign that is happening now?

Fran Wall:  I think you deal with it by having a public that is
aware of what's going on and it seems to me that there is quite a
high level of public consciousness of the desire of other states to
change our policy.  Perhaps the mistakes the Americans are making
is in assuming that our policy is in fact something that has been
sort of rushed through and placed on the New Zealand public by the
Labor government.  That in fact is not the case, it's totally the
opposite.  It is a very widely supported policy and has been for a
long time and I believe it is one of the reasons why the government
changed in the last elections and why Labor was voted in.

Jane Lanbrook:  That was the fifth of our series on the CIA and its
role in Australia and New Zealand politics.  Appearing on the
program was former CIA agent Ralph McGehee, New Zealand government
member Fran Wall, New Zealand peace movement researcher Allan Wilks
and Australian journalist Denis Freney.  These programs were
produced by Tony Douglas.  Well, that's all on Watching Brief this
week.  if you'd like more information or cassette copies of the
program or if you've got information that may be of interest
contacts us on Public Radio News Services, P.O.Box 103, Fitzroy,
Victoria 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 tune in again next week for Watching Brief, Public Radio's
National Environment Program.

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The CIA in Australia – Part 4

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                     THE CIA IN AUSTRALIA

                  Part 4 of a 6 part series
              Watching Brief, PRNS, October 1986

Clyde Cameron:  Lionel Murphy was attending a meeting of world
leaders in the fields of finance and commercial interests in which
a top American businessman, who has a very close connection with
the CIA, made the statement that `we' [`we' meaning the corporate
world] have no trouble with governments, we can manage them, we can
handle governments, but the difficulty always is handling the Trade
Union movement'.

Jane Lanbrook:  Welcome to the second half of Watching Brief this
week.  I'm Jane Lanbrook and today part 4 of our series examining
the CIA's role in Australian politics.  Producer Tony Douglas looks
at the agency's continuing attempts to subvert Australian and New
Zealand Trade Unions.  The CIA with vast sums of money at its
disposal has resorted to bribery, contributed to campaign funds,
established front organisations and most importantly has fully
financed trips to the United States for local trade union
officials.  Once there the officials undertake training programs
organised by the agency.  Former Whitlam Minister Clyde Cameron
looks at the first of this, the so-called `Leadership Grants.'

Clyde Cameron:  Leadership Grants have been grants to trade union
leaders in which they are invited to go to America for up to six
weeks at a time, funded and given the first class hotel
accommodation with first class return fares in order to brainwash
them into inculcating in their thinking process, at the least, that
private enterprise is the only way to go.  And we can look at the
list of the trade union leaders who have been invited to go to the
U.S. and we can see a general pattern of right-wing people, people
that we perhaps say on the centre-left who might be swung over to
the right, being invited to go to America.  I'm not suggesting for
a moment that all of them have been brainwashed and that all of
them have had their views subverted but the Americans must believe
that they are getting good results because they continue to do it.

Tony Douglas:  The Leadership Grant Scheme really took off when the
national secretary of the Australian Workers Union, Tom Doherty,
was invited to the United States.  At the time the AWU, covering
most rural workers, had a huge membership and virtual control of
the Queensland Labor Party.  During the 1950s and the 1960s the
union was still all powerful and didn't even bother affiliating
with the ACTU until 1967.

Clyde Cameron:  Tom Doherty, I remember, when he was General
Secretary of the AWU went on an extended tour in America as a guest
of the CIA and while he was there they made a point of having him
introduced to J. Lansdowne who had been a former communist but who
had turned coats, so to speak, and had gone over to the
administration and J. Lansdowne asked Doherty to give him the names
of the union leaders in Australia who ought to be invited to
America under these so-called Leadership Grants.  And Doherty
supplied him with the names of a lot of people and whilst he was
talking to Lansdowne, Lansdowne explained to him that no American
Labor attache can ever be appointed unless he has been verified by
me and you can bet your buttons of it that ninety percent of Labor
attaches are working either as direct agents of the CIA or in
conjunction with them.

Tony Douglas:  Do they get involved in actual union elections
through the Labor attaches?

Clyde Cameron:  Yes, of course, they do.  They pay for costs of how
to vote material, they pay for the cost of posting, how to vote
material to union members when elections are held and in the 1964
elections for the South Australian branch of the AWU.  I can speak
for South Australia and I presume that it happened elsewhere in all
the other branches as well.  But in South Australia every AWU
member on the roll had posted to him from Melbourne how to vote
material telling him to vote against the Mick Young-Don Cameron-
Clyde Cameron ticket.  And the proof of that did come from the
Labor attaches' offices in Melbourne and it was given subsequently
by one of the people who had been working with the council.

Tony Douglas:  The use of American Labor attaches in Australia by
the CIA has largely ceased.  The United States Embassy in Canberra
has one Labor attache compared to the six or seven they used to
have working out of consulates in all Australian capital cities. 
Jerry Aaron, co-author of ROOTED IN SECRECY, looks at the critical
role played by successive Labor attaches in Melbourne, home of the
ACTU, the Arbitration Commission and the Labor Left.

Jerry Aaron:  Some of them were quite clearly connected with the
CIA.  One of the more interesting ones is a chap by the name of
Edward McCale and he, before that, was Assistant Director of the
CIA Radio Free Europe and he was a representative of the USIA, US
Information Agency, in London and he was a Labor attache in
Johanesburg.  And then the operation there, or the cooperation of
McCale with the trade union leaders was very close indeed.  And
after McCale returned to the US, he came back again in 1979, and he
had been full of discussions which you may or may not regard as
genuine where he spoke with Australian trade union leaders and
discussed the state of the trade union movement in the United
States with them, ostensible.  Another one was a chap by the name
of Bob Bockenshaw [?] and both McCale and Bockenshaw were very
closely connected to Bob Hawke.  Bockenshaw was serving in
Melbourne as a Labor attache in 1962-64, he met Bob Hawke, and
Hawke later on became a house guest, six years later, when he went
to Washington on a visit.  Bockenshaw officially retired from the
CIA in 1976.  There are quite a few others.  A chap I know, Arthur
Purcell, who also served in Victoria as a Labor attache has an
interesting history: he was a marine in Turkey, Holland, Tanzania
and Monrovia.  He completed a labor course in 1964, he served in
Bolivia as a Peace Corps Director and in the Philippines and Peru
as a labor political officer.  Evidently in those countries they
can make it much more plain that they are there to do a political
job rather than anything else.

Tony Douglas:  The use of Labor attaches and `Leadership Grants'
aren't the only avenues the United States has used to build a
strong pro-American block inside the Australian Labor movement. For
instance, the NSW right-wing has been very supportive of the
Australian trade union program conducted by the Harvard Foundation.
This program is supported by multinational business interests with
its chairman being Brookes Wilson of Coppers International.  Its
list of trustees include a who is who of Australian business with
some prominent politicians on both sides of the fence also
involved.  As well as that, there are some leading members of the
trade union right-wing represented.  For instance, there are four
knights of industry among its trustees: Sir Peter Ables, Sir
Garrick Agnew, Sir Tristan Antico and Sir Warwick Fairfax.  Also
amongst the trustees are avowed opponents of the union movement
like Hugh Morgan of Western Mining.  There is also Bill Dicks and
Chap  Chapman, managing directors of Ford and GMX in Australia, as
well as Bob White of Westpac.  Two prominent Liberal frontbenchers,
Andrew Peacock and Ian McPhee are also there. And so is Bob Hawke,
Neville Wran, Ralph Willis and Barry Unsworth.  Labor MP and co-
author of ROOTED IN SECRECY Joan Coxsedge visited the United States
in 1983 and went to Harvard University to find the Harvard

Joan Coxsedge:  What I found out was very interesting.  I made the
quite startling discovery that there are in fact two Harvard
Foundations.  One Harvard Foundation is genuine and is situated
right in the middle of the university and it is involved with
university affairs.  But I spoke with the people there and they
were quite bewildered by my conversation because I found that they
didn't know what I was talking about when I asked about a
mysterious body paying for our trade unionists.  So what I then did
was to hunt around until I found the other Harvard Foundation that
is funding the Harvard university trade union program and they had
a very small office, I think it was on about the third floor of non
discreet building.  The person who runs the Harvard Foundation and
Harvard trade union program is a man called Joe O'Donell, the
Executive Director, and to show the links with other right-wing
organisations back in 1977 he was actually brought to this country
by Enterprise Australia to come out here and put us on the right
line as far as trade unionism was concerned.  But it's a costly
cause and when Australians take part in it, as they do with other
trade unionists from around the world, the tuition alone is 2,500
dollars and this has probably gone up since then.  The cost of
their room is 1250 dollars, their books are 200 dollars, the meals
vary.  And so you would say each participant would have to pay
around about 5,000 dollars and that's very substantial. And, you
know, you could argue that the people who are taking part in
this...some very powerful people that are taking part since it
started in 1964 and some are witting and some are perhaps unwitting
and it's interesting just to go back and have a look at the
graduates of the Harvard trade union training program: back in 1964
we had Ralph Willis, 66 Barry Unsworth, 68 Joe Thompson, 69 Iron
Workers Secretary Ronald Davidson, 71 John Radcliffe, then we had
John Blakehurst Society of Engineers in 72, John Bannon Transport
Workers in 73, and then in 75 John Mcbeen, we had a John Morris
from the Liquors Industries Workers Union in 78 who is now a
senator, we had Gary Weaven [?] in 78 who is now working for the
ACTU but at that stage was working for the Australian Municipal
Officers Association.  Gordon Baze [?] from the Queensland Vehicle
Building in 79, Michael Alfield from Sydney in 1979, John Bedden in
79 [must have been a good year], Kenneth Oath [?] from the NSW
State Secretary and Federal Secretary of the Tramways Union, Errol
Hother who is a very well know trade unionist from Queensland in
Spring 80, Donald McDonald from the Professional Divers of
Australasia in 1980, we had Raymond Evans in 1980, Tony Bella in
1980 from the Victorian Trade Hall Council, we had Robert Briskie
in 81 and a G. Peter Mitchell from the Vehicle Builders Federation
in 81, and then later in 1981 we had Ian Duffy from the NSW Iron
Workers Union and Michael Eason.

Tony Douglas:  The Harvard Trade Union Program for 1987 is now
asking for applicants.  In a letter from NSW Labor Council
Secretary and 1975 graduate Jack McBeen, dated the 8 September
1986, unions are asked to consider nominating suitable applicants. 
Included in the letter are some details about the training program
itself and a list of previous graduates. McBeen says the course is
worth over 6,000 dollars.  Also attached is a letter from the
secretary of the program in Australia to Michael Eason, himself a
graduate of the course and now Assistant Secretary of the NSW Labor
Council.  In part it says, and I quote: `Having experienced the
many benefits that the program has to offer would you please
consider fellow trade unionists who may wish to benefit in a
similar manner to yourself', unquote.  Well, one of the benefits
Eason may have enjoyed was becoming Australian Secretary of the
short-lived Labor Committee for Pacific Affairs.  The Committee was
short-lived because its activities and links with the CIA were
exposed in newspaper articles in 1973, both here in Australia and
in New Zealand.  One of the journalists involved was Denis Freney
of The Tribune.  I asked Freney who set up the Labor Committee for
Pacific Affairs?

Denis Freney:  It was set up by the US Information Agency which put
up 300,000 dollars and by an organisation called the U.S. Youth
Council which then worked with the AFL-CIO which is sort of the US
equivalent of the ACTU and it went on from there.  Essentially,
however, despite the sort of rather strange way it was funded it
was run by the AFL-CIO with a fellow called Larry Speck who was on
the US Youth Council.  I'm not sure what the US Youth Council is,
except that is a government-funded body. So who he was and what all
added up to I really don't know, except that, as we'll see, it had
CIA connections.

Tony Douglas:  When was it set up and for what specific reasons was
it established?

Denis Freney:  Well, it was set up in 1983.  The basics, I know,
was to get selected right-wing trade union officials from around
the Pacific but particularly from the US, Australia, New Zealand,
Fiji, PNG and the other island nations of the South Pacific
together to discuss...supposedly to discuss common interests and
also to organise tours of trade union officials over there.

Tony Douglas:  Who were the founder members of the Labor Committee
on Pacific Affairs?

Denis Freney:  Well, there were a whole range of people who had all
sort of CIA connections.  The program, the actual education side of
the program, was handed over to the Georgetown International Labor
Program which is turn part of the Georgetown University and its
Centre of Strategic and International Studies.  Now The Centre of
Strategic and International Studies (CSIS) has as one of its
directors a Ray Cline, who is a former Deputy Director of the CIA. 
The other person, though, was Roy Gudson, a person who has CIA
connections and links with the very far right in the US.  For
instance, he wrote a book which was co-authored with a fellow
called Ernest Lefevre, THE CIA AND THE AMERICAN ETHIC which tried
to praise the CIA as the embodiment of the American way of life and
so on and so forth.  Gudson was also the son of a Labor attache in
Britain who was very strongly suspected of being CIA officer and he
set up a similar organisation between British and other European
trade unions and the American trade unions.  So there is a whole
range of people who have been directly involved in them including
a former [US] ambassador to New Zealand who was quite honest about
what the whole operation was about.

Tony Douglas:  Yes, well he was asked in fact if the claims of Jim
Knotts as head of the Federation of Labor in New Zealand whether
the Labor Committee for Pacific Affairs was an attempt to split the
Federation of Labor in New Zealand, what was Henning's reply to

Denis Freney:  Oh, Henning sort of admitted that in fact they had
worked behind the scenes, of course, he didn't try to deny it.  But
I think that the evidence is such that there is no doubt that one
of the primary aims of LCPA [The Labor Committee for Pacific
Affairs] was to form first of all... the first object was to get
together a solid right-wing inside the FLNZ [The Federation of
Labor in New Zealand] which currently hasn't got an organised
right-wing like we have in the ACTU.  For instance, in the ACTU
you've got the NSW right.

Tony Douglas:  What was the chain of events in New Zealand?  Who
did they try to recruit into the NZ Committee and why did it fall

Denis Freney:  The Secretary of the New Zealand Labor Committee for
Pacific Affairs was a fellow called Gart Fraser who was a Secretary
of the Food Workers Union.  And they had other people like Henry
Boul [?] who was a former secretary in the Engineers union and
later became appointed to the Arbitration Court, and Bob T. [?]
from one of the white collar unions.  The main person was Fraser. 
However, now he wasn't a very sensible choice perhaps because
Fraser has not got a very good reputation perhaps as one of the
brightest people around the trade union movement in New Zealand.

Tony Douglas:  There is a lot of talk that this committee was set
up because it looked very likely that a Labor government was to be
elected in New Zealand and, as you said, it was backed by a union
movement that didn't have any organised right-wing and a nuclear
ship ban was very much on the cards.

Denis Freney:  Yes, I think that was a primary thing.  I think that
it was also to tackle the raising anti-nuclear feeling of the whole
of the South Pacific, you know, but specifically in New Zealand
yes, that's precisely the set up just as it became more apparent
that it was probable that Langley was going to win the elections
and so they needed to intervene and they have continued to
intervene at all sort of levels but maybe in a less obvious way.

Tony Douglas:  Let's look at some of the personnel on the
Australian committee of this Labor Committee for Pacific Affairs. 
For a start, Michael Eason?

Denis Freney:  Michael Eason is a young guy who is university
trained.  Originally, he sort of flirted with the left but has
become one of the main people in the NSW right-wing machine.  Eason
was the Australian secretary of the committee, a branch of the
Labor Committee on Pacific Affairs, and spent quite a bit of time
going around with some of the Americans involved, going around the
South Pacific trying to get or select trade union leaders from the
South Pacific involved in this operation.  He played a very
important role in fact in it.  Now he would have been well aware of
the sort of people who were involved on the American end, although
he tried to defend himself...and John McBeen tried to defend
themselves at some stage by saying `oh, well, all the union people
over in America are just sort of really Liberal Democrats, you
know, Kennedy democrats.'   And the reality is, of course, that the
tours they organised were tours were they were given the Reaganite

Tony Douglas:  What's McBeen's role in this Labor Committee for
Pacific Affairs?

Denis Freney:  McBeen was involved, how deeply involved we don't
know, but subsequently Mcbeen withdrew from it and I think it was
one of the reasons why the whole thing collapsed.  I think some
elements in the NSW right realised that this was just not on to be
so publicly associated with a group that had so many links with the

Tony Douglas:  Let's look at Gerard O'Keefe.  What was his role and
what is his background?

Denis Freney:  Yes, well, O'Keefe is officially organiser of one of
the International Labor Workers Union in the States.  He's an old
time CIA agent.  He was named as such by Philip Agee back in the
fifties and sixties, always working through the trade union
movement.  He was in Latin America for a while, he was even in
Chile when they were destabilising the Allende government, and his
role there was to develop whatever contacts he could inside the
trade union movement to turn against the Allende government and
destabilise it, of course.  There were a whole number of miner's
strikes which were very much influenced and supported by the CIA.
And he was filmed by British Granada TV operating in Chile in this
period and he was exposed, you know.  Now, there are many many
stories about O'Keefe.  He has been around this part of the world
quite a bit, he's been in contact with the Clerks' Union and with
other far-right union organisations.  And at one stage he tried to
get into New Zealand back in the 70s and because of the reports, he
was so notorious, the NZ Federation of Labor said `yes we were
happy to welcome him if he categorically denies that he is working
for the CIA', and O'Keefe never would deny that.  Now his
connection is that he in fact was up to his neck in this whole
Labor Committee for Pacific Affairs and in fact lectured chosen
right-wing unions from here and New Zealand, Fiji, etc, who went
over there, gave them lectures about how to run a good trade union.

Tony Douglas:  Can you tell us something about these tours that
people were taken on. For instance, lecturing in one of the tours
in October 1983 was a person called Erwin Brown.

Denis Freney:  Yes, they are lectured by people whose associations
with the CIA go back a long while.  Gerard O'Keefe was one, we
already mentioned him.  Erwin Brown is even more notorious, I mean,
Erwin Brown goes back to the forties when the CIA decided that they
were going to try to destroy the control of the Communist Party of
France and Italy in particular over a lot of trade union movements
and one of the most notorious things that Erwin Brown was involved
in was the operation in Marseille where they used mafia elements
linked up with the Union Cause, which is the French mafia, to try
to drive the Communist Party out of control of the docks and they
funded the Corcigan mafia to take over the docklands and, of
course, Marseille became the centre of the heroin trade and that's
the whole story of the French connection.  Basically they got
control of the whole base of the unions in the docklands of
Marseille because of the help of the CIA and the man in charge of
the operation was Erwin Brown.  And that's been documented by
people like Tom Braydon who was one of his workers or outsiders and
he proudly said, you know, because he was still pro-CIA, that Erwin
Brown did a great job in driving the communists out of Marseille
harbour.  So Erwin Brown goes back that far and he is probably the
most notorious of the lot of the trade union officials and he's
been in Africa, he's been in South Africa, he's been in Latin
America and he pops up again here because he's an old man now
lecturing these Australian trade unionists.  But they also got
lectured by people from the Reagan's National Security Council. 
Now the National Security Council is in fact the body that gives
the CIA orders.  You know, it says `get rid of that government or
we'll invade that country.  We'll support that government' in the
case of countries like Chile under Pinochet and so on.  So, yes, I
mean, they were lectured by the National Security Council, they
were lectured by the Arms Control bodies of the Reagan
administration.  The other important thing about the ICLPA was that
it frankly said that these union officials got together because of
common trade union and political interests.  It was openly a
political body and that's another reason why it fell, you know,
because they were too sweet in putting `political' in it, they
should just have pretended that they were trade union people
getting together for a nice chat and how to win more for the

Jane Lanbrook:  That was part 4 of our series looking at the CIA's
role in Australian politics.  Appearing on the program were Whitlam
Cabinet Minister Clyde Cameron; Victorian Labor MP and author of
the book ROOTED IN SECRECY Joan Coxsedge, co-author Jerry Aaron;
former CIA agent Ralph McGehee and journalist with The Tribune
newspaper Denis Freney.  The program was produced by Tony Douglas. 
Next week the CIA focuses on the Langley Government and its nuclear
ship ban.   Well, that's all on Watching Brief this week.  If you'd
like more information or cassette copies of the program or if
you've got information that may be of interest contact us at Public
Radio News Services, P.O.Box 103, Fitzroy, Vic 3065 or calls 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 tune in again next week at the same
time for Watching Brief, Public Radio's National Environment

End part 4 of a 6 part series

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The CIA in Australia – Part 3

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                  Part 3 of a 6 part series
               Watching Brief, PRNS, October 1986

ANNOUNCER:  [People's shouts of `WE WANT GOUGH, WE WANT GOUGH, in
the background]  The Governor-General of Australia who by this
proclamation dissolves the Senate and the House of Representatives.
Given under my hands on the great seal of Australia on the 11th of
November 1975, by his excellency's command, Malcolm Fraser Prime
Minister, John Arthur Governor-General. GOD SAVE THE QUEEN.

Jane Lanbrook:  Welcome to the second part of Watching Brief this
week.  I'm Jane Lanbrook and now in the third part of our series
examining the activities of the CIA in Australia we look at the
role of the Pine Gap military communications base in connection
with the fall of the Whitlam government.

GOUGH WHITLAM:  The proclamation which you have just heard read by
the Governor-General's official secretary was countersigned Malcolm
Fraser...[people's shouts of BOO BOO BOO]...who will undoubtedly go
down in Australian history from remembrance day 1975 as Kerr's cur.

Tony Douglas: So the first Labor government for a generation was
gone.  It had been in office for three years but hadn't really been
given the opportunity to govern.  Twice in that time the
conservative parties blocked supply and countless other pieces of
legislation were also defeated in the Senate.  As his government
came under daily assault through the building up of the Loans
Affairs, the Marosi Affair and other diversions, Whitlam struck
back at his enemies blowing away some of the secrecy surrounding
Pine Gap.  Former Whitlam Cabinet Minister Clyde Cameron recalls.

Clyde Cameron: We were never told that Pine Gap was a CIA
installation and it wasn't until Gough Whitlam publicly declared
that Richard Stallings was a CIA operative and that he had been in
charge of the Pine Gap installation that we knew that Pine Gap was
a CIA installation and I believe that at the very beginning Gough
Withlam and the Minister for Defence were led to believe that it
was a pretty harmless sort of operation.  But you've got to
remember that just about the time the dismissal took place, the
Australian government had to make a decision as to whether it would
renew the leases of these American installations on Australian soil
and there is every reason to believe that the Americans were
fearful that the leases wouldn't be renewed.  That would be a good
enough reason, in their view, for moving in to destabilise the
government and to bring about its overthrow to say nothing of any
threat that our policies may have for their Australian investments
in the multinational area.

Tony Douglas:  Whitlam's exposure of Stallings also revealed
another interesting fact and that was that Stallings was staying at
National Party Leader Dough Anthony's flat in Canberra.  From
November 2 to November 6, 1975, Whitlam repeated these charges and
demanded a list of all CIA agents in Australia.  The CIA in turn
demanded that ASIO reported to them on what Whitlam was up to.  A
cable from a senior CIA official and Task Force 157 member, Ted
Shackley, on November 10 accused Whitlam of being a security risk
and asked ASIO to do something about it.  The Head of the Defence
Department, Arthur Thang, described as, quote: `The greatest risk
to our nation's security that there has ever been', unquote,
meanwhile Whitlam said he would detail the operations of Pine Gap
in Parliament on the afternoon of November 11.  It wasn't until
years later that details about the Pine Gap base and American fears
that its top secret role would be disclosed were linked to the
downfall of the Whitlam government.  That link came to life when
Chris Boyce, a cypher clerk at TRW--a Californian based aerospace
corporation, was charged with espionage in 1977.  Boyce was working
in the black vault where information from Australia was directed to
CIA headquarters in Langley, Virginia.   Kelly Johnson of the
Christopher Boyce Alliance takes up the story.

Kelly Johnson:  The information was mostly coming from Pine Gap,
Nurrungar and Canberra, from the CIA stations there. It's difficult
to know actually what the content was, it's obviously very secret
what the content was, but it came into the communications relay
room where Boyce worked.  He then sent the information on to CIA
headquarters in Langley and sent certain information back to

Tony Douglas:  Now Australia and the United States had signed an
Executive Agreement to share intelligence from Pine Gap.  Did Boyce
find that his practical experience was all that intelligence
information shared?

Kelly Johnson:  No, in fact he was told in the very beginning,
during the briefing for the job, that although that Executive
Agreement had been signed America was not honouring it and it was
emphasised to Boyce that he must be very particular in what he sent
back to Australia.

Tony Douglas:  What was the result of him becoming incensed by what
he saw his country's duplicity with regard to one of his allies,
what did he do as a result of that?

Kelly Johnson:  It took several months for Boyce to actually do
anything.  From the first day Boyce was working in the vault an
employee who was working with him used to tell Boyce stories about
how easy it would be to pass certain information on to the Russians
and how much money they would get for it.  And this co-worker
actually worked out the best and safest method for taking this
information to the Russians.  At first Boyce used to ignore this
and then one day he discovered a telex message outlining the way
the CIA had infiltrated the leadership of the Australia's unions
and were manipulating them to their own aims.  And following that
he then discovered information relating the way the CIA was
planning to destabilise the Whitlam government and it was then that
the scenario that this co-worker had planned in advance for this
contact with the Russians that Boyce carried it out.

Tony Douglas:  What allegations did Boyce make about CIA
involvement in Australian politics and under what conditions has he
made these statements?

Kelly Johnson:  Well, he tried to make specific allegations under
oath during his trial but he was blocked except on two occasions
when he talked of the CIA infiltrating the leadership of the
Australia's unions and he also talked about the daily deception
that America practices against Australia at Pine Gap.  Since his
conviction he's been interviewed on two separate occasions.  On the
first occasion by Australia's 60 minutes and then by an Australian
journalist named William Pimwill in which he made rather more
specific allegations.  But it has been very difficult to get hold
of a transcript of the 60 minutes interview in order to be more
specific on what he said.

Tony Douglas:  Now Boyce was charged with espionage along with his
partner Dalton Lee.  It was basically around then passing on
information in the so-called Pyramide file.  Now what was the
Project Pyramide?

Kelly Johnson:  Pyramide was a project involving a satellite that
was used solely for espionage.  It was a system of push-button
communications whereby human spy agents on the ground could
communicate with the satellite in space which would relay the
message directly to CIA headquarters in Langley.

Tony Douglas:  When was this research project into Pyramide or this
file compiled?

Kelly Johnson:  It was first proposed in the late 1960s to TRW,
which was the company that Boyce was working for, and it was in
1973 that TRW actually put their plans forward to the CIA with an
estimate that it would cost between 300 -400 million dollars.

Tony Douglas:  And then what subsequently happened to the plans for

Kelly Johnson:  Well, they were temporarily shelved because the CIA
were unable to get funding in that particular fiscal year and it's
then believed that another satellite with similar capabilities but
with a few changes to it was actually launched and Pyramide was
just kept as a plan, it was never implemented.

Tony Douglas:  So what classification did that file have?

Kelly Johnson:  Well, at that time it had an extremely secret
classification.  Mostly because it went against the tacit agreement
that the USSR and America had drawn up together and it was subject
to quite a extreme classification.

Tony Douglas: What's this tacit agreement that the Americans and
the Russians had about this kind of spy satellites?

Kelly Johnson:  Apparently when the Salt Treaty was drawn up in
1972 satellites had no yet been officially announced as being in
existence and in fact they were only referred to in the Salt Treaty
as national means of verification.  Because neither the American or
Russian governments wanted the public to be aware of the existence
of satellites they had agreed among themselves that satellites
would only be used for verification purposes and, of course, the
Pyramide went against that.

Tony Douglas:  Well, how did Chris Boyce come into contact with
this Pyramide file?  Did it come over the telex machine as well?

Kelly Johnson:  No, not at all.  The Pyramide file had actually
been kept in a safe in the vault, which is the department where
Boyce worked, and after Boyce had tended his notice of resignation
from the black vault this Pyramide file mysteriously appeared on
top of an unlocked filing cabinet where Boyce worked.  Boyce asked
about it, what it was doing there, what it was about, and he was
told that it was a dead project and was of no value.  So, in
keeping with his policy of only sending in sensitive material he
copied it and sent it to the Russians.  And in fact this supposedly
top secret file sat on top of that filing cabinet for 36 days.

Tony Douglas:  Why was Boyce only passing on non-sensitive material
to the Russians at this stage?

Kelly Johnson:  That was his method of negating the mistake he made
of contacting the Russians in the first place.  The original
contact with the Russians was made in a sense of outrage and also
the immaturity that goes with of being 21 and in that position. 
Once he had actually made that contact he realised that it was the
wrong thing to do and to negate the mistake he began sending the
Russians what the Russians eventually turned as garbage that he
knew that they would get exasperated with, and frustrated with, and
that's exactly what happened.  It was the Russians who called a
halt to the situation.

Tony Douglas:  So he was tried simply on the Pyramide file and
passing that on to the Russians, none of the other things that he
did ever came to court.

Kelly Johnson:  No, they didn't and yet there were many many
inferences throughout the court hearing about the thousands of
sensitive documents that he passed on to the Russians.

Tony Douglas:  And why was it necessary to use the Pyramide file in
particular to sort of seek his conviction?

Kelly Johnson:  Well, it would seem that there were two reasons for
this.  Nobody was ever allowed to see any of the other documents
and even Boyce's defence lawyers were not allowed to even though
they had appropriate security clearances.

Tony Douglas:  Why do you think Boyce was given such a long
sentence originally forty years for this?

Kelly Johnson:  Well, Boyce was obviously keen to talk about what
he'd seen in the vault and the CIA was keen to shut him up.

Tony Douglas:  Has access to Boyce been easy enough to talk to him
and find out what information he has got especially on America's
involvement in Australian domestic politics?

Kelly Johnson:  Absolutely not.  Boyce is under...he is in solitary
confinement.  He's been there for the last three years and will
remain there for the duration of his term.  He's also not permitted
to have any contact with anybody who he didn't know prior to his
original conviction.  He has been permitted to do three interviews:
one with Australia's 60 Minutes, one with America's 60 Minutes, and
one with an Australian journalist.  And it was following the
interview with Australia's 60 Minutes that he was put into a locked
room with half a dozen members of the Aryan Brotherhood who were a
neo-nazi group within the prison and they established beatings and
have actually got a contract on his life. 

Tony Douglas:  And he is therefore likely to remain in solitary

Kelly Johnson:  Absolutely.  Boyce is allowed out of his tiny cell
one hour a day to exercise alone in a wall courtyard and when he
does go out he's tied to his wrist and ankles.  So the conditions
he's being kept under are really to intense amounts of torture.

Tony Douglas:  Over the last couple of weeks we've surveyed the
evidence of CIA involvement in overturning the Whitlam government. 
We've looked at the work of Task Force 157 through the cover of the
Nugan-Hand merchant bank and the crucial role played by US
ambassador Marshall Green.  We've seen the mighty __ in action
pumping up the Loans Affairs while CIA operatives such as T.
Khemlani are shuffled on and off the national political stage.  We
also delved into the past associations of Sir John Kerr from his
wartime intelligence work through his inaugural presidency of the
CIA-front organisation Law Asia to his phone calls to the American
embassy in the days before the dismissal. And we've seen how badly
the Australian and American defence and intelligence community took
the disclosures about Pine Gap and the first CIA Station Chief
there Richard Stallings.  But the question remains how did the CIA
get away with deceiving and destabilising the Whitlam government? 
Former CIA officer Victor Marchetti looks at it in this way:

Victor Marchetti:  I would say that this would be done, to my
experience, particularly in friendly host countries is always done
with the knowledge of the host country.  I mean, the CIA did not
take these actions upon itself.  It's done in cooperation with the
local intelligence services and they of course provided assistance
and protection.  The CIA has worked with other intelligence
organisations in other friendly countries in England, Norway,
Canada, Germany, in a whole variety of countries in a large range
of joint projects.  The only reason the CIA would get involved in
supporting certain political parties or undercutting other parties
would be because we had the money and the expertise and so forth to
be able to do it and this would be viewed as a cooperative venture
because the host country welcomes the US.  What you in Australia
must understand is that you are more to blame than the CIA is
because you want this to happen, you want a certain administration
in control and you don't want another administration in control.
The first question I tell all foreign journalists when they bring
out this point is...I ask them, `look, you find out where the
loyalties of your intelligence services lies.  Do they lie with
your country as a whole, for better or worse, or to the
establishment in your country?' and in most instances the answer
you find is `to the establishment.'  So in essence is like in the
old days in Europe where the nobility of various countries had more
in common with each other than they did with their own people. 
This is true of intelligence services.  They tend to have more in
common with each other and their establishments which they
represent than they do with their own people.

Tony Douglas:  Well, what are the connections between American and
Australian security and intelligence organisations?  Jerry Aaron,
co-author of ROOTED IN SECRECY looks at the history of secret
agreements that link Western intelligence together, especially the
UKUSA Treaty which was signed in 1947 and not known about even by
Australian Prime Ministers until 1973.

Jerry Aaron:  The quadripartite agreement which operated before the
UKUSA was actually a means initially of keeping the equipment of
the armies of the participating countries standardised and then was
extended to the Navy and the Air Force.  In other words, they
simply lock each other into a particular scenario which is always
the scenario of fighting common wars rather than self-defence.  The
quadripartite pact in 1947 involved the US, Britain, Canada and
Australia and it was so secret that nobody ever knew anything about
it.  In has in fact had a D-notice on it, that's how secret it was,
and as you know there are only very few D-notices in Australia
which prevent the publication of material on particularly secret
matters.  The UKUSA Treaty was also signed in 1947 and when I say
`sign' it's so secret that nobody knows who signed it and in fact
it's claimed that there is absolutely no written record.  UKUSA, as
the name implies, is the UK, USA and Australia but in fact other
countries participate and all the NATO countries are allied to it. 
UKUSA is about what in the jargon of the trade is called sigint
which is signals intelligence which is all the lovely stuff we get
from all the aerials and all the satellites in the sky spying on
their enemies and on each other and it's main components are the
British outfit which is called the GCHQ which is Communication
Headquarters and in Australia the agency concerned is DSD.

Tony Douglas:  What is the DSD?

Jerry Aaron:  Defence Signals Directorate.  I think it's now called
Defence Signals Division, I can't remember which came first, but's
the same outfit anyway.  Nor does it really matter because the
whole thing is coordinated by the head office in the States which
is the National Security Agency which supplies most of the
equipment and for whose benefit the whole thing is organised. This
is really the means by which Australia is locked into the US war
fighting capacity.

Tony Douglas:  And we have been since at least 1947?

Jerry Aaron:  Yes and it was so secret that in fact even successive
the Prime Ministers of Australia didn't know about it and the whole
thing blew up when the existence of the secret DSD activity in
Malaysia became publicised and it was then when they tried to hush
it up but, of course, now is generally understood and known and I
don't think in nowadays people make such secrets about secret
treaties anymore because everybody knows that most of what goes on
in the foreign policy area of most of the countries concerned is in
fact totally secret.

Tony Douglas:  So when Ted Shackley sends a cable to ASIO asking
them to do something about Whitlam can that be seen in terms of an
order from the senior agency?

Jerry Aaron:  Oh, most certainly.  I think we should actually...I
think of what happened when Harold Salisbury who was Police
Commissioner in the Dunstan government in South Australia.  They
had an inquiry into the Special Branch there after Salisbury was
sacked for misleading the government and what he actually said when
he was asked why he hadn't told the government the full truth he
said, `I would have merely justified a very severe criticism from
responsible and official quarters and from security organisations
beyond Australia' and he made it quite clear that his
responsibilities were not to the government of the day but to other
people and when he was pressed on the point as to who the other
people were he said very weakly `The Crown', but obviously the
crown that he paids allegiance to sits in the U.S.

Tony Douglas:  Jerry Aaron's interpretation of the Shackley Cable
is shared by former CIA agent Ralph McGehee.  Was Shackley in a
position to be ordering ASIO about, I mean, you worked under
Shackley in Vietnam.  Is he a senior CIA officer?

Ralph McGehee:  Oh, yes, he was a top CIA officer.  He was also one
of Ed Wilson's closest friends.  Ed Wilson, of course, was head of
Task Force 157.  Prior to that, Wilson had been in the CIA.  And
there are all sorts of evidence that Task Force 157 was also
orchestrating the efforts to overthrow the Whitlam government.

Clyde Cameron:  Well, ASIO has always been a compliant service for
the American CIA.  They have always done that.  They have been
quite sympathetic towards the CIA and let's not forget that the
Australian intelligence organisations were the ones who were
responsible for acting as a conduit for the CIA and Pinochet in
1973 when the CIA-backed Pinochet Junta moved in and overthrew the
elected government of Chile.  I know that members of the Australian
Secret Intelligence Service (ASIS) were active in Santiago at that
time and were acting in cooperation with the CIA because the CIA
weren't able to function in Chile under President Allende.  They
had to do their dirty work through somebody else and they chose the
Australian intelligence organisations.  When I became Minister for
Immigration I was appalled to discover that we had an immigration
officer in Santiago who was in fact an ASIO spy.  He wasn't a
genuine immigration officer at all but was an ASIO spy who had been
put on by my immigration establishment as a bona fide immigration
officer and I sought to have him removed but the Prime Minister
intervened and prevented the removal from taking place.  I remember
that when the Prime Minister discovered that ASIS had been active
in Santiago he ordered that the ASIS operative in that area be
withdrawn that they just ignored it, refused to do anything about
it, and it wasn't until Whitlam took firm action and threatened to
put the knife through a lot of these people who were responsible
for ignoring his direction that they were withdrawn.  But by that
time, of course, the coup had occurred, Allende had been
assassinated and Pinochet had been installed.

Ian Wood:  That was former Whitlam Cabinet Minister Clyde Cameron. 
Before that you also heard former CIA agents Victor Marchetti and
Ralph McGehee; Jerry Aaron, the co-author of ROOTED IN SECRECY and
Kelly Johnson of the Christopher Boyce Alliance.  Next week,
Watching Brief looks at the CIA interference in Australian and New
Zealand trade unions.

Jane Lanbrook:  Well, that's all on Watching Brief this week.  If
you'd like more information or cassette copies of the program, or
if you have got information that may be of interest, contact us at
Public Radio News Services, Post Office Box 103, Fitzroy, Victoria,
3065.  Or call us on Melbourne 417 7304.  That's Public Radio News
Services.  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 tune in again next week at the same time
for Watching Brief, Public Radio's National Environment Program.

End Part 3 of a 6 part series.

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The CIA in Australia – Part 2

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                   Part 2 of a 6 part series
                Watching Brief, PRNS, October 1986

Ralph McGehee:  The Shackley Cable, which was a virtual ultimatum
to the head of ASIO to do something about the Whitlam government,
is a 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.

Brian Toohey:  I know as a hard fact that Task Force 157 was
involved in covert activities against the Labor government.  That
much I have as a hard fact from an impeccable source here.

Jane Lanbrook:  That was former CIA agent Ralph McGehee and
journalist Brian Toohey talking on this program last week about CIA
actions against the Whitlam government.  The destabilisation
campaign was run by the top secret Task Force 157 under the cover
of the Nugan-Hand bank.  Welcome to the second part of Watching
Brief for this week.  I'm Jane Lanbrook and now in the second part
of our series, The CIA in Australia, Tony Douglas looks at the
effects of that destabilisation campaign, the so-called LOANS
AFFAIRS, the dismissal of the Whitlam government and the role of
former US ambassador Marshall Green.

Tony Douglas:  In early 1973 the United States appointed Marshall
Green as ambassador to Australia.  His appointment was a sign of US
uneasiness over the election of the Labor government.  By the time
of Green's departure, in September 1975, many in the Labor party
felt similarly unease over the role played by the master diplomat
in destabilising the Whitlam government.  One who saw the early
signs was Joan Coxsedge, now a Victorian Labor MP, who in 1973
formed the Committee for the Abolition of Political Police.

Joan Coxsedge:  Well, I think it's important for people to
understand that Green wasn't just any old ambassador.  First of
all, he was the first career diplomat that we had in this country
unlike the sort of calibre person we normally get who are rewarded
for kicking in money to the Republican or Democratic parties.  He
was a very very senior man indeed.  In fact, he was mentioned in
the Pentagon papers as being a high-level policy maker for America
in Southeast Asia and he had known CIA connections. So, quite
obviously, the alarm bells rang back in Washington with the
election of a Labor government.  They were worried about policies
that we had to close down the bases to exert more independence
generally on our economy and they wanted somebody to not only
monitor, I suggest, to lead a destabilisation of the elected
government.  God knows he had plenty of experience, he had been
involved in quite a few coups in Southeast Asia including the very
bloody one in Indonesia.

Tony Douglas:  Joan Coxsedge's suspicions about Green were shared
by Whitlam's Cabinet Minister Clyde Cameron who had many face to
face meetings with the American ambassador.

Clyde Cameron:  Marshall Green was for many many years a top CIA
operative who orchestrated the overthrow of the Sukarno government
which led to the installation of President Suharto.  He was
involved in the CIA intrigue in Vietnam and in the overthrow of the
government of Greece.  He's a very very skilled operative in the
art of destabilisation of governments that the United States
doesn't approve of.

Tony Douglas:  What was his method of operation?

Clyde Cameron:  Well, his method of operation was to make close
contact with the military of a particular country, those who own
and control the media, and to generally infiltrate the sections of
governments where policy or decision-making takes place.  And if he
is unsuccessful in giving the right decisions there, well, the next
step would always be to get the army to organise a coup.  That's
what happened in Indonesia, a phoney uprising was organised by the
CIA in order to give justification for the military coup that
followed.  And the same happened with the assassination of Deben in
South Korea. Where a ruler is unable to bring about the kind of
decisions that suits the CIA or where a ruler doesn't even try to
do so, then, the next step is to organise some pretence for
military action.  The same sort of thing happened in Chile in 1973.
And one of the first people he called on after visiting the Prime
Minister and having already put in his credentials to the Governor-
General was me.  And as he was walking through the door of my
office I saluted him in the normal way, `please to meet you your
excellency, take a seat,' and before he could take a seat I said
`what would you do if our government decided to nationalise the
Australian subsidiaries of the various American multinational
corporations?' and he'd been caught by surprise, he wasn't
accustomed to a minister asking that sort of question whilst he was
in the process of taking his seat, and he blurted out: `oh, we'll
move in'.  I said, `oh, move in? like bringing the marines in?.  He
said, `oh...' he looked a bit uncomfortable by now, although he's
a senior man he didn't expect being caught off guard, he was very
uncomfortable and he said, `oh, no, the days of sending the marines
has passed but there are plenty of other things we could do'.  I
said, `for example?'.  He said, `well, trade'. And I said, `do you
realise that if you stop trading with Australia you would be the
loser to the extent of 600 million dollars a year', that was the
balance of trade figures at that time. He said, `oh, well, there
are other things'.  And he didn't elaborate but, of course, there
are other things.

Tony Douglas:  In 1974 the conservative coalition blocked supply to
force an early election.  The move backfired and Whitlam was
comfortably re-elected.  The prospect was now a Whitlam government
until 1977 with prominent left-winger Jim Cairns elevated to the
positions of Treasurer and Deputy Prime Minister.  In that time the
lease of Pine Gap would come up for renewal and Minerals and Energy
Minister Rex Connor would have time to gain control over
Australia's vast and mostly foreign owned basic commodities.  It
was at this stage that two big players wandered on to the national
political stage, offering cheap loans to finance the plans for
buying back the farm.  It led to the media circus known as `The
Loans Affairs'.

Joan Coxsedge:  Well, this was the so-called `scandal' if you like
of 1975 and the scandal of the Loans Affairs filled countless pages
of newspapers day in, day out, week in, week out, the whole year,
and I think the Loans Affairs showed what a tremendous performance
the CIA could actually turn on when they really put their minds up
to it and it started off in February 1975 when copies of telexes
and other documents, some were genuine but some undoubtedly forged,
came flooding in from all over the world, you know, like on queue,
very highly orchestrated.  And Australians were asked to believe
that we were the victims of a monstrous conspiracy in that members
of our Parliament were about to sell off our country to the Arabs.
And, if you actually have a look at the facts, I think they are
worth going back to, and that is that the ruling circles in OPEC
countries had accumulated huge amounts of money following the great
leapt in oil prices in 1973 and they certainly invested thousands
of millions of dollars privately in the United States and elsewhere
and had made loans to British, French, Danish, Italian and Japanese
governments without raising a commotion at all.  An Executive
Council meeting of the Australian government met on the 13 of
December of 1974 and they authorised Rex Connor, who at that stage
(he's dead now) was the Minister for Minerals and Energy, to seek
loans of up to 4,000 million dollars to deal with, this is a direct
quote, `with exigencies arising out of the current situation and
international energy crisis and to strengthen Australia's external
financial position to provide immediate protection for Australia in
regard to supply of minerals and energy'.  This was a very
important concept for Australians to have.  But the authority
wasn't given to Treasury because they were known to be treacherous
and they were known to be very hostile to departmental heads of the
government and, although this decision was supposed to be secret,
it wasn't very long before offers to assist in that search came
from some very strange quarters: from a very odd gentleman called
T. Khemlani and he was supposed to be a financier from Pakistan.
He approached Rex Connor and eventually, and I think that Connor
was caught as fool, but he authorised Khemlani to run around all
the OPEC countries to seek out funds for the government.  Now as it
turned out, Khemlani was sent by a Hong Kong arms firm which had
very close associations with a crowd called Commerce International
and Commerce International is a very powerful Brussels-based
armaments outfits with documented links to the CIA.  And a short
time after that, we had a Melbourne businessman by the name of
George Harris.  He contacted our Federal Treasurer, Dr Jim Cairns,
with an offer of overseas loan money.  Now Harris' overseas
principles were none other than the New York office of Commerce
International and they were the same firm that were in Khemlani's
background.  So there is a whole lot of controversy surrounding the
negotiations between Cairns and Harris and you get different
accounts but I think the most worthwhile account is the one that
was taken from the statutory declaration made a lot later by a
Sydney businessman by the name of Leslie Nagi and that was tabled
by Jim Cairns in the Federal Parliament and Nagi was the senior
partner of Alco International in which he held a sixty percent
interest with George Harris, who joined on the 1st of March 1974
and he held a forty percent interest.  Now, according to Hansard,
Nagi received a call from an acquaintance insisting that Harris
should be present at the meeting with another intermediary in Dr
Cairns' office.  And at that time Harris was very prominent and
influential as a member of the Carlton football club and he was on
very friendly terms with many leading members of the establishment
such as Sir Robert Menzies, Sir John Banting who had been the
Australian High Commissioner in London in 1975 and who was a former
head of the Prime Minister's department and consultant to the
Office of National Assessments [ONA].  And we had Philip Lynch
coming in.  Philip Lynch, who died a number of years go, was a
Deputy Leader and Shadow Treasurer of the Federal anti-Labor
opposition.  But, as well as that, Harris also had a close
association with a number of very important people in the Victorian
Liberal government. And so, Harris first approached Cairns in a
letter dated 16th November 1974 and he sought approval for himself
and Nagi to negotiate overseas loans for state government
authorities.  Now Cairns was told by Treasury, `No', so Harris got
the funds down but at a later meeting in Cairns' office, and that
was on the 7th of March 1975, Harris produced a telex from a New
York company called Sunlight.  But Sunlight was offering 4,000
million dollars at a 7.2 percent interest with an outrageous 2.5
percent brokerage.  Now people today may think that's not very
high, but back in 1975, you know, 2.5 percentage brokerage for a
4,000 million dollars loan was considered utterly outrageous.  But
he also produced a letter showing that the money would be supplied
by Commerce International.  We keep coming back to Commerce
International.  Now Cairns flatly refused to agree to these terms.
And so Harris was left in and out of office to dictate a draft
letter to one of Dr Cairns' secretaries and, apparently, Harris
knew her very well.  So she came out of Dr Cairns office and handed
the signed letter to Harris who, according to Nagi, lost no time in
heading for the door.  Now the finished letter of authorisation was
addressed to Alco International and endorsed a 2.5 percent
commission, two conditions that Cairns had-- according to Nagi--
flatly rejected only a few minutes before.  So subsequently Cairns
gave Harris, whom he trusted implicitly, further letters of
authorisation and Harris and Nagi went overseas to raise the money
promised by Commerce International and, of course, you can imagine
that during these trips Harris made full use of his friendship with
Sir John Banting to show that these letters of authority were
absolutely genuine but, not surprisingly, the search for the loans
proved highly elusive.  One or two tentative offers were made but
they turned out to be totally false but one in particular appeared
to almost be complete and ironically the intermediary was none
other than the Narodni Bank of Moscow.  But after Rex Connor's
first authority to Khemlani expired in January 1975 with no
results, Connor was given a new authority on the 28th January 1975
to raise 2,000 million dollars.  Once again, nothing was
forthcoming from Khemlani so the second authority was rebuked on
the 20th May 1975.  Now, according to Nagi in his statement, he
formed the opinion that no low interest money had ever been
available.  That's a view that's shared by many other people.

Tony Douglas:  If the money for these loans was never there in the
first place who was T. Khemlani, the mysterious Pakistani
financier.  Co-author of ROOTED IN SECRECY Jerry Aaron looks at his
subsequent career.

Jerry Aaron:  We do know that in 1981 he was actually employed as
the Italian companies manager in Haiti which is run by the
government and in 1981 he was found guilty of trying to move timber
in stolen US dollars out of the US on behalf of the mafia and he
was given a life sentence for turning state evidence.  So, perhaps
he is available for further work now.  One of the interesting
features of this Khemlani affair is that just before Whitlam was
dismissed from office he got a letter from Hawaii which contained
a copy of the message which was allegedly sent to Fraser giving
details of the role Khemlani was playing there and which was being
paid for in order to destroy the Labor government.  And the message
contained instructions which should be decoded before transmission
by calling a certain number, which turned out to be the Hawaiian
headquarters of the CIA. 

Tony Douglas:  If the CIA set up the Whitlam government it got
great assistance from two quarters.  Firstly, the Labor ministers
themselves who used go-betweens like Harris and Khemlani neither of
whom had the necessary bona fides to conduct such negotiations and
both of whom were depending on the arms company Commerce
International to supply the money, a company with documented CIA
links.  However, they also received crucial assistance from the
Australian media who blew up the story.  Was this done, as Clyde
Cameron suggested, by Marshall Green cultivating three or four
media owners in Australia or has the CIA penetrated the media
itself?  That's the question I put to former CIA agent Ralph

Ralph McGehee:  Well, the first thing that the agency tries to
build or create is penetrations into the media of the world. They
had a worldwide organisation. And this was penetration of media
assets around the world and they called it "the world" because that
brings a name of an organ and here is an organ which you can play
any propaganda you want anywhere in the world. So, the fact that
the media took it up [in Australia] one can suspect heavy CIA

Tony Douglas:  When Green left Australia in September 1975 all the
pieces were in place.  The Loans Affairs had discredited the
government and given the Opposition leader Malcolm Fraser the
reprehensible circumstances he needed to block supply.  In
addition, the complexion of the Senate had been altered by dubious
constitutional devices to give the coalition parties the numbers to
force the government to the polls.  But what if the government
refused to go.  That pushed the Governor-General Sir John Kerr
right to the centre of the political stage.  Kerr had been
appointed Governor-General in 1974 by Whitlam himself.  The
appointment was strongly opposed by many in the Labor party
including the present Prime Minister Bob Hawke.

Jerry Aaron:  Well, John Kerr came from a working class background
and then he made his way through Law School.  At the end of World
War II we find him working in the Directorate of Research and Civil
Affairs and by this time he was a Lieutenant Colonel and he made
contact in this capacity with the intelligence agencies overseas on
behalf of Australia.  Then, when the war came to an end, Kerr
joined the ALP and represented the ALP legally but the sort of
flirting with the ALP didn't last very long.  He became
increasingly conservative and ultimately became a darling of the
establishment.  He was a very...I'm not allowed to say people are
right-wing judges because they are supposed to give impartial
judgement, but he was certainly the person responsible for jailing
Claire O'Shade and I suppose the sentence in this case was up to
him and this created the greatest post-war industrial upheaval in
Australia leading virtually to a general strike.

Joan Coxsedge:  Well, of course, he had connections with two well-
known CIA sponsor outfits.  One was the Australian Association for
Cultural Freedom.  Kerr was very disappointed actually because
although he had been a long-time member of the Australian
Association for Cultural Freedom he failed to make the presidency
of that organisation, but he did serve as the first president for
two terms of Law Asia from 1966 and that's another well-known CIA

Tony Douglas:  So how did Kerr behave from the days leading up to
the dismissal.  One man near the centre of the action was Whitlam
Cabinet Minister Clyde Cameron.

Clyde Cameron:  What I do know is that as Commander-in-Chief of the
Armed Forces Kerr had been in communication with chiefs of the
Armed Forces.  I know the Governor-General's office had been in
touch with the American embassy.  They contemplated the possibility
of a general strike in which there would be a revolt of the trade
union movement resulting in a complete shutdown of all power or gas
supplies or transport, all activity, even the waterworks, the
sewage, everything would have been cut off.  The country couldn't
have lasted any more than 24 hours. So, if was decided that the
army would be put on red alert so in the eventuality of that sort
of thing happening they would be able to move in.  And in the event
of the army finding that the whole matter had gone beyond their
control... because what could the army do? They couldn't man the
power stations and the water-works and the sewage plants and all
the transport facilities with the kind of army we've got.  And it
was then decided that they would call on the Americans to send in
the Pacific Fleet and would stand ready to take and bombard Sydney.

Tony Douglas:  For most Australians the dismissal is an
uncomfortable reminder of a turbulent period of Australian
politics.  If they reflect on the events of 1975 at all, the
scenario of an Australian Governor-General using the authority of
the English Crown to trigger a series of events that would lead to
the American Fleet bombing an Australian city to bring about the
downfall of a duly elected government is beyond belief.  Surely
these things only occur in banana republics.  Whether or not that
is the scenario of 1975 it's evident that the CIA was deeply
implicated and that leading conservative politicians knew in
advance of Kerr's actions.

Joan Coxsedge:  There is a very fascinating document that we
reproduced, because we thought that was so very interesting.  It
involves Andrew Peacock, now at that stage of course he was widely
tipped to succeed Malcolm Fraser as leader of the conservative
Liberal Party, which he did and subsequently lost.  In 1975 it
showed that during a parliamentary debate that was written up in
Hansard it was revealed that towards the end of September 1975,
almost two months before the coup toppled the Whitlam government,
during a visit to Bali Andrew Peacock disclosed amazing detailed
knowledge of the scenario that was to take place on the 11th of
November 1975.  One of the crucial things, as far as Peacock is
concerned, is that the conversation took place with Bahkin which is
the notorious Indonesian Secret Police.  Bahkin's report of the
meeting, the part that is most interesting to us is the bits on
Australian domestic policies and, according to Mr Peacock, he said
at that time the opposition parties were leading 20 percent in the
opinion polls over the Labor party and in order to win a general
election it was sufficient to have only 3 percent and the
opposition wanted to force an early general election and he
mentioned November 1975.  And he said that he also really wanted to
see this three-year terms fulfilled of the Labor government, he
didn't really want to force a general election by rejecting the
supply bill in the senate but he felt his party would be forced to
agree to bring on a general election because pressure was already
strong enough, because he said that 9 out of 11 members of the
Shadow Cabinet agreed with the bringing on of an election.  He
said, `there might be a bit of a problem with two Liberal senators
who would not follow the command of the party', which also proved
to be true, but he said if the supply bill can really be rejected
by the senate the following scenario would develop:  Prime Minister
Whitlam is not prepared to dissolve the Parliament and the senate,
which would be a double dissolution, and he would therefore
continue to govern without a budget and, as a result, he would not
be able to pay the wages, you know, public servants, and the
situation will become chaotic.  Another option was that Whitlam may
appeal against the senate to the High Court and that would mean a
constitutional battle would result.  And the third suggestion he
made was that Whitlam would not agree to a double dissolution or to
hold a general election and this, he said, the Governor-General Sir
John Kerr would be forced to ask Malcolm Fraser to form a Cabinet
but this Cabinet would not be able to get a mandate to govern
because Parliament is controlled by the Labor party and what can
happen is that Malcolm Fraser is appointed Prime Minister and a
minute later he asks the Governor-General to dissolve Parliament
and the senate following which a general election is to be held.
Now, as we know this was released by Bakhin in September 1975 and
the scenario proved to be remarkable accurate.

ANNOUNCER:  [People's shouts of `WE WANT GOUGH, WE WANT GOUGH, in
the background]  The Governor-General of Australia who by this
proclamation dissolves the Senate and the House of Representatives.
Given under my hands on the great seal of Australia on the 11th of
November 1975, by his excellency's command, Malcolm Fraser as Prime

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