Nexus - 0304 - New Times Magazine-pages

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Ever since the Nugan Hand Bank af,fair of the I'ate 1970s, bank crashes have fol­ lowed/ a slick and familiar template. Narcotics trafficking, gUll running, CIA covert ops, money laundering and fraud on a massive scale are just some of the ingredients that have sem bank after bank crashing to its knees. Once the smoke clears, bank depositors and shareholders are left picking up the tab. With a spate of billion-dollar financial scandals hitting the headlines, 1995 wasn't such a good year for harassed bank regulators and share.holders. Calls for tougher regulation of the burgeoning financial markets in the wake of the Daiwa, Barings and other debacles are little more than PR palliatives designed to calm the nerves of a cynical public who still form the hard backbone of bank depositors. With thc best wiH in the world, regulators can't keep pace with an evolving and sophisticated mQney machine that daily shuffles upwards of 24 billion E-bucks around the globe in the blink.Qf an eye.' y,et tough regulation, even when emplaced, lis ,easily and regularly evaded. Banking and crime are Cimmerian handmaidens for the simple reason that banks are where the money is. Having access to the money and bcing 'connected' is lihe name of the game Where the stakes ate other people's money. This is the dark side of the financial commu­ nity, a hidden face that Ilargcly goes unreported-until, that is, a major banking scandal hits the front pages. Squirming under the glare of public attention, successive bank dis­ closures have revealed the sinister connections that leading banks have with organised crime and the intelligence community. The money-slmfflers of 'Spooksville' ne.ed 'black fund's' to finance covert operations and appear happy to exchange guns and military hard­ ware for dope that is, in tum, peddled for dollars used to finance other black operations. TilLs happy-go-I\!cky 'Ferris wheel' approach to money-raising on the part of the intelli­ gence community reveals a long history of entanglements with the Mafia. Organised crimc syndicates are now the single largest business sector on the planet and are set to grow. They just love banking. Having accumulated a staggering US$820 bil­ lion from investment interest over the last decade, the Mafia is now estimated to earn US$250 billion a< year from its legitimate investments.1 Dozens of nations who maintain strict bank secrecy laws are, de facto., providing full banking services. to t1hese mandarins of dirty money. A large number of banks are actually owned by Mafia syndicates.1 S.ome of the largest and most respectable appear content to tum a blind eye and earn massive commissions from laundering dirty money" The prudent image of bankers is just that: an image. Banking survives purely on depositor confidence, making it the biggest ongoing "confidence trick"l the world has ever witnessed. That confidence has been dented by one scandall following on the heels of another. THE CIA'S HEROIN CONNECTION One of the earliest scandals was the Nugan Hand Bank affair. Michael Hand, an ex­ CIA operative from tbe Bronx, joined up in 1973 with Frank Nugan, an Australian play­ boy and inheritor of a Mafia fortune, and incorporated the Nugan Hand Bank. 'fhe bank sported an interesting and exclusive board of directors. President of the bank was (Retired) Rear Admiral Earl Yates, former chief of the US Navy's strategic planning. Legal counsel was the CIA's WiLliam Colby, and Walter McDonald, former deputy direc­ tor of the spook agency, was listed as a consultant. An in-house commodity trader on the bank's payroll was also a leading heroin il]lporter, while Richard Secord, later to Ibe impli­ cated in ,the han-Contra affair, was said to have a business connection. Seven years later, the bank coLlapsed following the discovery of Frank Nugan's body slumped in his Mercedes. Clutching a gun in one hand and sporting a hole ,through the JUNE-JULY 1996 NEXUS • 21