The CIA in Australia
Part 1
Transcript of a 5-part radio documentary,
Watching Brief, Public Radio News Services,
Melbourne, Australia, October-November 1986

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

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

Ralph McGehee: The Agency, of course, overthrew the Mossadegh government of Iran to establish the Shah; it overthrew the government of Guatemala in 54, remnants of it are still in control of that country; it overthrew two Uruguayan governments; the government of Brazil in 64, Chile 73. It tried to overthrow the government of Cuba in 61 with the Bay of Pigs; it conducted invasions of China; it was running guerrilla warfare operations in the Soviet Union, Nepal, Albania; it was involving itself in elections in Italy beginning in 48 up to the 70s, it spent a hundred million dollars in various Italian elections; it was involving itself in elections in Germany. In one country, Syria, I've counted so far that it has conducted at least seven attempts to overturn the governments there. I don't know how many were successful -- I haven't got into that area. But the Middle East has been the sort of favourite playground of covert operations. In Africa, of course, the same thing. They are trying right now to overthrow the government of Angola. Recently, they tried to overthrow the government of Ethiopia. I'd say that I don't think there is a government in Latin America that has neither been overthrown nor supported by the CIA. And probably I could say much the same for governments in the Middle East and, less to do, in Africa.

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

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

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

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

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

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

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

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

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

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

Tony Douglas: What is Task Force 157?

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

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

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

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

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

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

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

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

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

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

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

Andrew Phillips: Hawthorn also allegedly has connections to Admiral Lloyd Basil who has connections again to this Task Force 157.

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

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

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

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

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

Jane Lanbrook: That special report was produced by Tony Douglas with the assistance of Andrew Phillips in New York. You heard former CIA agents Ralph McGehee and Victor Marchetti; journalists Brian Toohey and Jerry Aaron, co-author of the book Rooted in Secrecy. Next week "The Loans Affair" - Sir John Kerr and continuing CIA operations inside the Australian Labour movement.

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

End of Part 1

Part 2 of 5