The Crimes of Patriots will reveal how an obscure Australian bank, Nugan Hand Ltd., came to occupy the central position in a vast network of drug transactions, fraud, secret arms deals, and covert intelligence operations. "The Crimes of Patriots is a masterpiece, pulling together previously unavailable documentation in a most creative way and—through Kwitny's original research— addressing the crucial questions to the most mysterious collection of intelligence hands ever caught in a single scandal. The answers Kwitny gathers and the new questions he raises are a roadmap for a major Congressional investigation yet to come." —Scott Armstrong "As this book so clearly demonstrates, Jonathan Kwitny is a peerless investigative reporter." —Peter Maas "There is a secret government in America. It operates with the explicit and implied authority of the highest officials, and in the name of America's interests it has inflicted great damage on the unsuspecting peoples of other countries and on our own fundamental principles... I wish everyone would read The Crimes of Patriots. Perhaps then the current hearings on the Iran-Contra affair—for Ronald Reagan is the latest to wield this secret weapon and to perish by it—will be the last. An informed people might become an outraged people and finally put a stop to our own self-destruction. If so, we will owe much to Jonathan Kwitny's reporting." —Bill Moyers "It is unusual to commend a book of investigative journalism that leaves some questions unanswered, but Jonathan Kwitny's account of the Nugan Hand affair transcends ordinary journalism. The Crimes of Patriots is the story of a reporter at work trying to balance issues of criminality and national security, and Kwitny left me with the sense that no one could have done it better." —Seymour Hersh "This is a superbly researched and exceptionally well-told story." —John Kenneth Galbraith "Jonathan Kwitny is the John Le Carre of nonfiction crime. Sometimes when I was wallowing in The Crimes of Patriots I burst out laughing (perversely) because the kings of this complicated idyl are such shameless rogues. Is there no limit to their white-collar mischief? Kwitny has raised the question again, as only he can." —Robert Sherrill The Crimes of Patriots is the story behind the story revealed in the Iran-contra inves- tigation. It is a chilling glimpse into the workings of the secret government that has operated ruthlessly in this country and around the world for the last forty years, unchecked, answerable only to itself. It is a masterpiece of investigative journalism that reveals the sordid truths shrouded within the "national security interest." A rifle blast blows off the head of an Australian banker in his Mercedes—and a tale of the whole Cold War begins to unravel. The death of Frank Nugan exposes the massive fraud at the heart of his empire, the Nugan Hand Bank; but it also exposes the real power of the bank—a network of U.S. generals, admirals, and CIA men, including a former director of that organization. As the colorful story of the Nugan Hand Bank unfolds, we learn that there have been many similar operations. Patterns and eerie resonances emerge, and the names of those who later masterminded the Iran-contra fiasco lurk in the shadows cast by Nugan Hand: Clines, Shackley, Secord. We are slowly brought to a greater truth. In his last book, Endless Enemies, Jonathan Kwitny showed how our anti-communist based foreign policy undermines American security. Here he exposes at last the crimes committed against American citizens in pursuit of that policy. He shows how some of the biggest names in American defense and intelligence were involved in an operation that promoted the dope trade, tax evasion, and gun running, and swindled American citizens, and citizens of allied countries, out of millions of dollars. Kwitny lays out a mystery filled with questions whose answers—so far—have stayed locked in the U.S. government's vault of secrets. JONATHAN KWITNY, a Wall Street Journal reporter for sixteen years, is one of America's foremost journalists and holds the honor medal for career achievement from the University of Missouri School of Journalism. His reporting exposed former Reagan adviser Richard Allen's conflicts of interest, and forced the resignation of Lynn Helms, Reagan's Federal Aviation administrator. This is Jonathan Kwitny's sixth book. His fifth, Endless Enemies: The Making of an Unfriendly World, was runner- up for the Pulitzer Prize in general nonfiction in 1985. Mr. Kwitny has lived or traveled in more than ninety countries. A native of Indianapolis, he works from the Journal's New York bureau. Author's Note for The Crimes of Patriots For five years prior to the publication of this book, the author tried repeatedly and fruitlessly to interview and obtain comment from Richard Secord, Theodore Shackley, and Thomas Clines, former high federal officials connected to Edwin Wilson, the traitor and convicted death merchant. Some of these efforts are described in the book. At the eleventh hour, as books were sitting on the warehouse loading docks waiting to be shipped to bookstores, Clines, Shackley, and Secord's lawyer, Thomas Green, contacted the publisher, stating that they had obtained a proof copy of the book and alleged that there were numerous errors in it. I have reviewed these specifics, along with my own sources, and I find that the men were, on the whole, treated fairly. As usually happens, comment from the subjects being written about did reveal a few erroneous details and conflicting versions of events. — J.K. August 12, 1987 Chapter 20 P. 291, line 25: "reported to" should read "gave reports to." Chapter 22 p. 310, lines 23-24: "Secord...in disaster" should read "Secord was involved in planning the disastrous mission to rescue U. S. hostages in Iran, and was deputy commander of a second rescue plan which was never implemented." P. 311, lines 10-11: "paid...illegal profits" should read "and was identified as part of a criminal scheme. The holding company Clines was associated with paid a $10,000 fine and $100,000 in civil settlements, and the operational company he had formerly been co-owner of repaid $3 million of the illegal profits." P. 312, line 5: change "it" to "the mission." P. 312, line 36: add "Apparently, the deal never produced any sales." P. 379, lines 3-4: "Clines...company," should read "Clines's various companies paid." P. 379, line 21: "didn't come up" should read "was never satisfactorily answered." Contents PROLOGUE 11 CAST OF CHARACTERS 13 1. The End of the Rainbow 19 2. The Cover-Up 34 3. The Golden Triangle 43 4. The Education of a Banker S3 5. Corporate Veils 69 6. Sleight of Hand 81 7. Terrorists and Patriots 95 8. Into Africa 110 9. The Spooking of Australia 126 10. The Un-Bank 143 11. Laughing at the Law 165 12. The Asia Branches 181 13. The U.S. Branches 194 14. Banking in Opiumland 206 15. Officers and Gentlemen 217 16. The Drug Bank 229 17. The "Mr. Asia" Murders 243 18. Bernie of Arabia 257 19. The Admiral's Colors 272 20. Men of Substance 286 21. What the Tape Recorder Heard 296 8 CONTENTS 22. The Wilson Connection 308 23. The Explosion 324 24. Thwarting the Investigators 340 25. "Everybody Left Alive Is Innocent" 355 26. The Agency's Assets 362 APPENDIX: The Questions Whose Answers Are Secret 382 AFTERWORD by Admiral Earl P. Yates, USN (ret.) 391 ACKNOWLEDGMENTS 398 INDEX 401 Photographs appear following page 198 For some time I have been disturbed by the way [the] CIA has been diverted from its original assignment. It has become an operational arm and at times a policy-making arm of the Government. This has led to trouble and may have compounded our difficulties in several explosive areas. I never had any thought when I set up the CIA that it would be injected into peacetime cloak and dagger operations. Some of the complications and embarrassments that I think we have experienced are in part attributable to the fact that this quiet intelligence arm of the President has been so removed from its intended role that it is being interpreted as a symbol of sinister and mysterious foreign intrigue—and a subject for Cold War enemy propaganda. With all the nonsense put out by Communist propaganda about "Yankee imperialism," "exploitive capitalism," "war-mongering," "monopolists" in their name- calling assault on the West, the last thing we needed was for the CIA to be seized upon as something akin to a subverting influence in the affairs of other people. But there are now some searching questions that need to be answered. I, therefore, would like to see the CIA be restored to its original assignment as the intelligence arm of the President, and whatever else it can properly perform in that special field, and that its operational duties be terminated or properly used elsewhere. We have grown up as a nation, respected for our free institutions and for our ability to maintain a free and open society. There is something about the way the CIA has been functioning that is casting a shadow over our historical position, and I feel that we need to correct it. —HARRY S. TRUMAN, December 22, 1963 In a government of laws, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipotent, teacher. For good or ill, it teaches the whole people by its example. If government becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself.