In his otherwise admirable fight against the scourge of drugs, fraud, illegal arms sales, and abuse of government power, Mr. Kwitny has maliciously maligned and assassinated the character of some truly great American heroes and in so doing has besmirched the reputations of the military and intelligence services of this nation. My purpose here is to defend the honor of those men and the services they represent.
The general comments herein concern only those people for whom I had some measure of responsibility for their involvement in Nugan Hand and for whom I can speak with great confidence. Their names are: General Edwin Black, General Erle Cocke, General LeRoy Manor, Mr. Dale Holmgren, Dr. Guy Pauker, Mr. Donald Beazley, Mr. William Colby, Mr. Walter McDonald, Mr. Robert Jantzen, and Mr. George Farris (hereinafter, THE TRUE PATRIOTS).
I specifically exclude all others, not because I consider them guilty or care any less about their fair treatment, but because I do not have the time, space, or knowledge to defend them against the alleged crimes. I use the word "alleged" advisedly, for as of this date, more than seven years after the collapse of Nugan Hand, no crimes have been proven.
Before addressing the general reader, I direct my first comments to the Nugan Hand employees and investors, who were the principal victims of the bank failure. Each of THE TRUE PATRIOTS has expressed to me a most genuine distress for your losses, particularly those of you whom they might have influenced to invest in Nugan Hand. Most of them lost significant sums of their own. For example, I never received any pay due me and personally lost over twenty-five thousand dollars in unreimbursed business expenses. We are, therefore, able to share both your agony and your anger.
Having devoted their lives to the service of their country and having often risked those lives in dangerous missions, THE TRUE PATRIOTS highly treasure the morale and reputation of those who are taking the same risks today in our national defense. They are distressed over any damage done to that morale and reputation by such warped and distorted viewpoints as found in this book.
Each of them deplores the injury done to the relationship between the United States and Australia, a long, strong, and mutually important relationship, which the Soviet Union and its KGB Disinformation Service would dearly love to destroy.
For the above reasons they unanimously regret any distress that their association, however innocent, might have contributed to others. I add to these regrets my own remorse for having induced THE TRUE PATRIOTS to join Nugan Hand. I must take full responsibility for that. They associated with Nugan Hand largely because of their trust in my assurances that I had gone to extraordinary lengths to determine the integrity of that organization and found no evidence whatsoever of a shortfall.
I informed them that my assurances were based on my personal interviews with a wide range of highly respectable, knowledgeable people and agencies, many of whom had a recognized duty to know the bona fides of Nugan Hand. These included: the managing directors of the two largest banks in Australia, which held Nugan Hand accounts; an agent of the Reserve Bank, which has responsibilities similar to our Federal Reserve Bank; the Premier of New South Wales, whose private office was adjacent to the Nugan Hand offices; two prominent Australian lawyers who had worked closely with Mr. Nugan; an agent of the Australian Tax Department, who was familiar with Mr. Nugan's tax work; the managing director of the Sydney subsidiary of Citicorp, who traded securities with Nugan Hand; a partner of the accounting firm that certified Nugan Hand records; vice-presidents of two large international banks that had accounts with Nugan Hand; the U.S. Consul General in Sydney; the desk officer in the Department of Commerce who publishes financial reports on Australian firms; agents of the Treasury Department; agents of the FBI; some highly satisfied clients of Nugan Hand; and several employees. Of all these, none gave any unfavorable information, and most had high praise. General Black and others interviewed similar groups, including prominent newspapers, with comparable results.
In recruiting THE TRUE PATRIOTS, I explained the substance of my lengthy conversations with Mr. Nugan and Mr. Hand about their ultimate objective to build an international "one-stop business shopping-center" organization to make it easier for small businesses to compete in the international marketplace against the multinational cartels. They liked the concept and the opportunity to pursue it. They believed, as I did, that their employment was honorable, that Mr. Nugan and Mr. Hand were honorable, successful, and reliable businessmen, with the highest sense of personal integrity and genuine concern for their clients.
In response to queries about how the firm made money, Mr. Nugan gave me an extensive mathematical dissertation, supported by genuine money market documents, on how to "gross-up" the interest yield on money by buying and selling discounted bills of exchange on the lively Sydney market. He later held a conference of other employees to explain this important aspect of Nugan Hand's money market operation. He further informed me and others that his law practice yielded four to twelve million dollars per year (a false claim, nevertheless substantiated by two other lawyers and a CPA) and that the money was always available as a drawdown to protect our client's deposits.
When I first joined Nugan Hand, I undertook an intensive selftaught accounting and business-law course, at the suggestion of Mr. Nugan, as a first step to better equip myself to make business judgments and eventually assume a position of responsibility and authority in Nugan Hand Bank. In a letter dated 24 January 1977 Mr. Nugan wrote as follows:
"Your title (which may be used on your business cards, letter heads, and in all business contexts) is "President, Swiss Pacific Bank and Trust Company." In this regard you shall be a member of the Board of Directors and shall be subject to the Managing Director, (Mr. Hand) and to the Chairman of the Board of Directors (Mr. Nugan) as well as to the Board of Directors meeting as a Board in the normal course. It is contemplated that as of about the time that an interest in the Bank is made available to you, the position of President will be given its full normal powers by the Board to the effect that you shall become the Chief Executive Officer of the Bank at that time."
The title became effective on 6 April 1977 and I resigned officially by letter on 12 October 1979, never having attended a board meeting or been given any executive authority. The cunning delays of Mr. Nugan (which I now believe were contrived to forestall me from gaining the authority and information that should have accompanied my title) prevented me from being able to determine the true financial status of the bank.
For example, in June 1977 Mr. Nugan gave me my first assignment: to call on the presidents of a hundred U.S. banks to tell them about Nugan Hand's guaranteed deposit arrangements. Though it yielded poor results, this four-month project and similar ones, such as the attempted purchases of various banks and the opening of new offices, constituted the major scope of my assigned duties and authorities and served as clever diversions to my efforts toward becoming an executive.
Following my resignation on 12 October 1979, I was placed on a consulting status to Mr. Hand personally, with no Nugan Hand Bank authority whatsoever. I was enrolled in the Harvard University Business School awaiting the scheduled formation of a Nugan Hand international holding company, in which I was promised options on a 20 percent interest and a seat on the board. Nugan Hand collapsed while I was still attending school, and I then learned that several others had been promised options on the same 20 percent.
Throughout my time of observation as president of Nugan Hand Bank, THE TRUE PATRIOTS served honestly and loyally the interests of Nugan Hand and its clients. They had grown up in the military service and spent their lives in the company of gentlemen well known for honesty and honor, where it is commonplace to risk one's life, not just one's money and reputation, based on the word of a colleague. Day-to-day association with that kind of integrity leads military men to trust their fellow man, and it should not be surprising that it led these men to trust me and my judgment. If any fault can be found, it was in this trust of me, for, to my knowledge, not one of them has committed any crime, violated any law, breached any ethical standard, nor performed any act for which they need be ashamed.
Furthermore, notwithstanding Mr. Kwitny's contempt for their findings, the Australian Royal Commission (the highest judicial body established to investigate the Nugan Hand affair) found no credible evidence to charge any of THE TRUE PATRIOTS with wrongdoing. In their investigation, one of the most thorough and widely reported in the history of the country, the commission developed 11,900 pages of testimony from 267 witnesses under oath. They searched the files of the FBI and held conferences with the highest officials in the CIA. They also found no credible evidence of involvement of the CIA. But where findings of the Royal Commission such as this do not fit his fabricated version of events, Mr. Kwitny casts suspicion on the integrity or intelligence of the commission.
It might be easy to say nothing and let the reader believe Mr. Kwitny's suggestion that THE TRUE PATRIOTS were all working for the CIA. To those about whom THE TRUE PATRIOTS care most, working for the CIA is certainly an honorable profession. But hiding behind that shield would be repugnant to each of them and disloyal to the many fine people who are, in fact, working for the CIA.
Mr. Kwitny does not have the benefit of a background in the military or intelligence services, yet he states authoritatively:
"The men this book is mostly concerned with have lived their lives in a world of spying and secrecy.... they have been trained to keep the taxpayers from... finding out what they do. Compunctions about lying have seldom impeded that effort. They entered their secret world under the cloak of patriotism...."
Millions of men and women who have served in the military and intelligence services will easily recognize this as a gross distortion of the truth. They know from first-hand experience that military men and most intelligence officers live remarkably open lives, abhor lying, invite and welcome fair-minded outside attention, and often disguise the depth of patriotism that guides them. This obvious example of distortion is part of a consistent thread of deceit in Mr. Kwitny's descriptions of all the events about which I have first-hand knowledge and leads me to suspect comparable distortions about unfamiliar events throughout his text.
For example, his story that I "raced" to Sydney, Australia, to destroy records is almost totally false. Records of customs, passports, and airlines and other documents readily show this. He even admits to possible error therein, but he nevertheless uses the story to advance the false accusation that I participated in the destruction of vital records. He also fails to note that the records of Nugan Hand Bank (the only Nugan Hand subsidiary in which I might reasonably be expected to have had some personal interest in the records) were located in Singapore, not Sydney.
Furthermore, he recounts minor and irrelevant differences in the accounts of witnesses, apparently to discredit the word of THE TRUE PATRIOTS, yet he fails to note the consistency of the testimonies of those PATRIOTS taken under oath, as was found by the Royal Commission.
He preposterously describes Nugan Hand's relatively small operation as "mammoth." If Nugan Hand was "mammoth," then what word is left to accurately describe Citicorp, a New York banking firm ten thousand (10,000) times the size of Nugan Hand? This sort of distortion pervades his work and makes one wonder about his motives and his efforts to achieve accuracy.
The book also describes an "elaborate code" system used to shield illegal activity. Yet, by any standard, it was the very simplest of codes, far less complicated than pig-latin, used principally to shorten cable messages. It was prominently posted by office telex machines, was widely distributed to employees, and was available to just about anyone who wanted to use it. Only the most unsophisticated and poorly informed would truly believe that this code could have been seriously used to conceal information. To stress on staff personnel a respect for clients' rights to privacy? Perhaps. But to hide from authorities?? One would have to assume that the authorities are stupid, blind, and illiterate, or that Mr. Kwitny merely wished to give a sinister cast to the story.
The book rails against THE TRUE PATRIOTS for failure, as insiders, to uncover and expose the alleged crimes of Nugan Hand, but Mr. Kwitny fails to note that three of the ten PATRIOTS never visited the Australian headquarters, where the alleged crimes were masterminded, directed, and executed; four of them made only one brief trip; and three made only two or three trips. I personally made only four short trips there, none longer than about ten days and two less than four days. None of THE TRUE PATRIOTS were employed by Nugan Hand Ltd. or any other Australian organization. None even knew about the various companies privately owned or controlled by Mr. Nugan and Mr. Hand, through which the alleged crimes were executed, and most certainly were never allowed to examine their records. The book does not reveal that only after three months of intensive analysis by an experienced former U.S. Federal Reserve Board bank examiner, and a suicide, did the examiner find reason to suspect the true status of Nugan Hand. Even after seven years of study, the liquidating authority, with full access to the records, has been unable to unravel completely the complex accounting and record system which Mr. Nugan had established. To what extent is a prudent man expected to go to establish the integrity of his employer? Should it not suffice to check the certified assurances of reputable accountants, supervising government authorities, clients, business associates, other employees, and the record of past performance?
Through artfully fallacious reasoning, Mr. Kwitny has created criminals out of some noble and unfortunate victims. By reprinting the lies, innuendos, half-truths, loose associations, and distortions of cheap scandal sheets, left-wing newspapers, and communist-fed, antiAmerican sources, he has, wittingly or unwittingly, served the interests of the Soviet Union and the KGB Disinformation Service.
Finally, even excluding its gross inaccuracies and distortions, this book fails to make a valid case that any of THE TRUE PATRIOTS committed any crime. None were shown to have been involved in or even to have had knowledge of any drug traffic, illegal arms sales, or laundering of money. None of the deposits of their clients violated any currency or banking laws. None of THE TRUE PATRIOTS benefited materially from their association with Nugan Hand, and the only imprudence for which they might be accused is that they trusted a fellow officer.