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Tag Archives: Richard Nixon

The Anglo-American ambush of the Whitlam Government – 11.11.1975 (Part 3)

Who was really behind the dismissal of the Whitlam Government? As we approach the 40th anniversary of the dismissal, Dr George Venturini* critically examines the giddy rise of Gough Whitlam, his reforms, his cold relationship with the Nixon Administration, the Khemlani loan scandal, the dismissal of the Whitlam Government on 11th November, 1975 and the questions that have lingered since. This is a four part series which will conclude on the anniversary of the dismissal.

Is this an ally?

In November 1972 the American people re-elected Richard Milhous Nixon to the Presidency of the United States. Nixon would have on his side Henry Alfred Kissinger, a proponent of Realpolitik, who played a dominant role in United States foreign policy between 1969 and 1977.

Both turned out to be war criminals. Nixon’s name is indelibly connected with Watergate. There was nothing that Kissinger would/would not do in pursuit of one of his ‘principles’ – a ‘philosophy’ thus formulated: “The illegal we do immediately. The unconstitutional takes a little longer”. He said so in the presence of Melih Esenbel, Turkish Foreign Minister, in Ankara, on 10 March 1975.

In December 1972 the Australian people elected Edward Gough Whitlam’s party to form the government. Left in those hands, the American Administration response to the Whitlam Government could only be sinister.

But there was also from the very beginning a ‘problem of acceptance’ of the new government. In outlining his ‘Program’ Whitlam offered much, perhaps too much: “We have a new chance for our nation. We can recreate this nation. We have a new chance for our region. We can help recreate this region”.

He asked the electors:

“Do you believe that Australia can afford another three years like the last twenty months? Are you prepared to maintain at the head of your affairs a coalition which has lurched into crisis after crisis, embarrassment piled on embarrassment week after week? Will you accept another three years of waiting for next week’s crisis, next week’s blunder? Will you again entrust the nation’s economy to the men who deliberately, but needlessly, created Australia’s worst unemployment for ten years? Or to the same men who have presided over the worst inflation for twenty years? Can you trust the last-minute promises of men who stood against these very same proposals for twenty-three years? Would you trust your international affairs again to the men who gave you Vietnam? Will you trust your defences to the men who haven’t even yet given you the F-111?”

The response from an electorate attuned to periodical ‘plebiscites’, when part of a parliament is ‘chosen’ through an electoral system which defies any decent notion of democracy by compulsory exhaustive distribution of the votes cast in the ‘two-party’ system to which 23 years of torpor had lulled a largely indifferent populace, was rather disappointing. Labor-with-Whitlam obtained a slim but working majority of nine in the House, but did not gain the Senate.

Any explanation would require a lengthy discussion. Perhaps a historical master-servant relationship would go a short way – but precisely: people who share the rhetoric of ‘mateship’ and the illusion of “fair go”, who satisfy themselves with the notion that “she’ll be right” and who trust that the essence of life is “no worries”, easily become accustomed to ‘things as they are’ under the reassuring ‘presence’ of the Hanovers – who would guarantee from abroad what passes as form and propriety, even if in time expressed by a majordomo in top hat and tails; from across the ocean security would come with the ‘protection’ from a Great and Powerful Friend.

Ask any squatter, race fixer, bookie, real estate agent, ‘producer’, obsequious toady, solicitous lobbyist with their ambulance-chasers and classist judges – and all receivers of, dealers in, stolen goods since 1788 – and they would, though misbelievers, confirm that is ‘as designed by Divine Providence’.

And who would want to deliver the government of ‘this great country of ours’ to the tallest poppy ever seen around?

A literalist would be time-wasting in accepting verbatim Donald Horne’s view of his countrymen.

In chapter four of his The lucky country, dealing with it as ‘Between Britain and America’, Horne wrote: “Australians are anonymous, featureless, nothing men. This modest anonymity reveals itself in the argument that Australia does not run to the kind of person we could turn into a president [of a future Australian Republic]. Is Australia alone in the world in being unable to rig up its own head of state? This is backwater colonialism, nervous of its final responsibilities”.

Horne had already asked himself ‘What is an Australian?’ The response was as cruel as before: “The demand for mindlessness can be so pervasive that able men deliberately stumble around with the rest lest they appear too clever, and therefore too ‘impractical’ … Much energy is wasted in pretending to be stupid. To appear ordinary, just like everybody else, is sometimes a necessary condition for success in Australia”. He had already said: “Many of the nation’s affairs are conducted by racketeers of the mediocre who have risen to authority in a non-competitive community where they are protected in their adaptations to other people’s ideas”.

Those harsh words were written in 1964, and the spirit of such people could not possibly have changed in eight years, towards the coming of the Whitlam Government.

There was perhaps more than the search for a witty expression in the words of Senator Reg Withers of Western Australia, who denounced the arrival of the Whitlam Government as an ‘aberration’ for which he would hold responsible some fringe seats around the two main Australian cities. In and out of the Senate Withers was known as ‘the Toe-cutter’. He was a monarchist, ‘non-ideological’, famous for ‘getting the sensible things done’, and regarded as ’the architect of the supply-withholding’ from the Whitlam Government. It became de rigueur to portray the new government as a troupe of amateurs – noisy clowns, rather – led by an ‘idealist’, and who had come to town but would not stay long, anyway.

A crisis arose almost immediately after the formation of the government. In December 1972 Nixon ordered massive bombing of Hanoi – not to coerce Hanoi, perhaps, but to convince the vassals in Saigon. During the ‘Christmas season’ more bombs were dropped on northern Vietnam in three weeks than in the previous three years. Such action could not be condoned by the Whitlam Government.

What, it seems, the governments of the Menzies era did not know, or pretended not to know, is that between 4 October 1965 and 15 August 1973 the United States would drop far more ordnance on Cambodia than was previously believed: 2,756,941 tons in 230,516 sorties on 113,716 sites. The bombing was designed to deny help through that unfortunate country to the North Vietnamese Army and the Viet Cong. The impact of the bombing is now clearer than ever: civilian casualties in Cambodia drove an enraged population into the arms of an insurgency which had enjoyed little support until the bombing began, setting in motion 1) the expansion of the Vietnam war deeper into Cambodia, 2) a coup d’état in 1970, 3) the rapid rise of the Khmer Rouge, and ultimately 4) the Cambodian genocide under Pol Pot. To put 2,756,941 tons into perspective, the Allies dropped just over 2 million tons of bombs during all of the second world war. Cambodia may be the most heavily bombed country in history.

On 20 December 1972 Whitlam sent a personal message to Nixon through the Australian Embassy in Washington expressing concern at the course of events in Vietnam. The matters raised in the message were discussed in Washington with Kissinger, National Security Adviser, and in Canberra with the U.S. Ambassador, Walter Rice.

The letter to Nixon was polite, but firm. “The disappointment caused by the recession of the prospect [of reaching a cease-fire agreement], coupled with anxiety about the resumption of the bombing, is producing a feeling of grave concern in this country … I question most earnestly whether the resumption of bombing will achieve the result that I know you desire, the return of the North Vietnamese to the negotiating table in a more forthcoming frame of mind”.

Whitlam was “well aware of the difficulties and frustrations which Dr. Kissinger and the other American negotiators have experienced in dealing with the North Vietnamese. We admire the patience and resolve that they have shown … It is of particular concern to me that my first personal message to you on a matter of substance since assuming office as Prime Minister of Australia should not be misconstrued. I want to reassure you, therefore, that I look forward to a period of positive cooperation between our two countries on a wide range of matters in the years ahead and that, on this particular question of Vietnam, I am moved as much by a positive and, I hope, helpful desire to put negotiations back on the rails and by feelings of distress at one particular aspect of your Government policy”.

The letter was not published at the time, but Whitlam reserved the right “to make some public reference to [his] having sent [the message to Nixon]”.

If Whitlam’s intention became public, Kissinger intimated to the Australian Embassy No. 2, “it must have great consequences for our relationship”. Kissinger hardly needed to spell it out. He was talking about the future of the U.S.-Australian alliance.

It seems that the American Embassy in Canberra had been instructed ‘to keep its hands off’ as regards the election of December 1972 – at least officially. What Kissinger might have told Task Force 157 will never be known.

However, the official attitude to the Whitlam Government changed quickly after the election when members of the government Jim Cairns, Clyde Cameron and Tom Uren strongly criticised renewed bombing of Hanoi. They accused Nixon and his men of being “maniacs” and “acting with the mentality of thuggery”. Jim Cairns called the bombing “the most brutal, indiscriminate slaughter of women and children in living memory”.

The military offensive had been Nixon’s attempt to break the will of the North Vietnamese at a time when its leaders were deemed unresponsive to renewed American pressure for peace. As Kissinger had remarked to Nixon, 100 B-52s was akin to “a 4000-plane raid in World War II … it’s going to break every window in Hanoi”.

Whitlam had already written to Nixon that in the circumstances the best means open to him was “to approach the heads of government of some of our neighbours in the Asia/Pacific area to join [him] in addressing a public appeal; to both the United States and to North Vietnam to return to serious negotiations”.

Kissinger’s reaction on reading those words hardly disguises the American Administration’s anger. He instructed the U.S. Embassy in Canberra “to convey that we are not particularly amused being put by an ally on the same level as our enemy and to have an appeal equally addressed to us and North Vietnam”. He thought that it was not “the way to start a relationship with us”. He told the Ambassador: “So, I don’t think we are going to reply to this message. I’ve just talked to the President about it”. But, he added, “this is not an official communication … such an act taken publicly” – that is to say, releasing the letter – “would really not have very good consequences …” (Kissinger to Charge d’Affaires, US Embassy, Australia, 3.25pm, 20 December 1972, Box 17, HAK Telcons, Nixon Presidential Archive).

The sudden shift in the tenor of American-Australian relations had ramifications in the world of media which reverberated all the way through to 1975.

Australian ‘men-of-power’ reacted immediately and with the desired servility. On 4 January 1973 Nixon received a memorandum from his Communications Director, Herbert G. Klein to say that Sir Frank Packer, father of Kerry and then managing director and major share-holder of Australian Consolidated Press, had sent his New York representative “to express to [Nixon] his [Packer’s] personal support and that of his magazines and his television network”. Packer’s message was that he understood Nixon’s motivation in bombing Hanoi, that he was “disturbed” by Whitlam’s comments and that the majority of Australian’s did not share Whitlam’s views. At the same time, according to the memorandum, Packer’s representative “…offered [Nixon] any use [he] may like of [Packer’s] magazines and network”. Packer’s voluntary acquiescence to the U.S. shows how the Australian press did not need to be part of a conspiracy to do the bidding of the United States. The Packer empire were willing collaborators before the American Administration even conceived of using them. As Klein said in his memo to Nixon: “I declined [the offers of help] at this time”. In the event, when John Kerr installed Liberal leader Malcolm Fraser as Prime Minister in 1975, one of Fraser’s first calls was to Kerry Packer, who immediately went to Canberra to give the caretaker prime minister “a great deal of moral support” both then and during the rest of the election campaign.

The Whitlam Government’s relationship with the American Administration never really recovered from this poor start and the relationship was further exacerbated by an ‘unusual’ act by Attorney-General, Lionel Keith Murphy, Q.C.’s on 15 March 1973.

The Attorney-General had repeatedly requested from A.S.I.O. satisfactory information concerning ‘intelligence’ on suspected terrorist groups operated by Croatian Australians. Murphy’s concern about the matter was heightened by the impending visit to Australia of the Yugoslav Prime Minister Džemal Bijedić. Out of incompetence, or perhaps of sympathy, A.S.I.O. had been un-cooperative. The agents could not find the necessary files. Attorney-General Murphy held the conventional view that even a security service, like any other arm of executive government must be accountable to the relevant minister, in this case to the Attorney-General. Murphy decided to go and get the information himself. Early in the morning of the designated day he followed the Australia’s Commonwealth Police which had been ordered to enter the headquarters of A.S.I.O. This unannounced as well and un-conventional visit was immediately branded by the bene-society as a ‘raid’. The word has been used ever since to vilify the Attorney-General and his government. It has become part of the Australian s/language, sanctified ‘at the pub’ as in every ‘respectable’ salon.

What is forgotten in the process is the irresponsible behaviour of A.S.I.O. The Attorney-General had sought the files of the six most dangerous or subversive people in Australia who could constitute a threat to peace on the occasion of the Yugoslavian visit. What he had been given, maybe out of imbecility more than hilarity, were files of several Communist Party unionists and people connected with the peace movement.

Needless to say, the American Administration took seriously the ‘raid’; Attorney-General Murphy came to be regarded as a ‘Communist sympathiser’. ‘Washington’ formed the view that that kind of ‘raid’ could endanger secrets shared between A.S.I.O. and the C.I.A.

Early in 1973 Nixon selected Marshall Green as Ambassador to Australia, a post he held until 1975. Green was a protégé and a key aide to new Secretary of State Kissinger. He had accompanied Nixon on his 1972 visit to China.

His qualifications were impeccable: in 1961 he was the senior American diplomat in South Korea during a coup which toppled a democratically elected government. He was named Ambassador to Indonesia in July 1965, only weeks ahead of an anti-Communist coup which would see President Sukarno replaced with President Suharto and would lead to the deaths of an estimated 500,000 Indonesians. In 1969 Nixon nominated Green as Assistant Secretary of State for East Asian and Pacific Affairs, and Green held this office from 5 May 1969 until 10 May 1973.

He arrived in Canberra with the reputation of a ‘coup master’.

Marshall Green’s appointment was a sign of the United States’ uneasiness over the election of the Whitlam 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 – many but not all.

There is ample evidence from many unsuspected sources that both Robert James Lee ‘Bob’ Hawke and Robert John ‘Bob’ Carr, in their respective position – the first of President of the Australian Council of Trade Unions (1969-1979) and future Prime Minister (1983-1991), and the second of education officer for the Labor Council of New South Wales (1972-1978), future Premier of New South Wales (1995-2005) and Foreign Minister from March 2012 to September 2013 – kept close contact with American officers and consuls in Melbourne and Sydney. The central office of the C.I.A. is said to be in Melbourne.

“Recently declassified U.S. State Department cables offer a fresh way to tell the story of Australia … through the loose lips of the main players in the Labor government … The documents are both painful and amusing, for they reveal the petty treachery of Australia’s elite. Bob Hawke briefed against Whitlam” (George Megalogenis, The Australian moment: How we were made for these times (Melbourne 2012).

In fact, according to James Curran, “Hawke had been speaking to the Americans for years beforehand. I mean the Americans knew Hawke very well. He would talk to American diplomats right through the 1970s and give them briefings on Australian politics and there’s no doubt and that the Americans felt very comfortable with Hawke” (A.B.C., Radio National, Rear vision, ‘A true friend? The US/Australia alliance’, Broadcast: Wednesday 16 November 2011 8:30 a.m.).

Hawke was not alone. In fact the number of informers coming from the Labor Party has been large and embarrassing for a long time.

On 9 December 2010 The Sydney Morning Herald revealed that Senator Mark Arbib, a federal minister and Right-wing Labor powerbroker, had been a confidential contact of the United States Embassy in Canberra, providing inside information and commentary on the workings of the Australian Government and the Labor Party.

His candid comments had been incorporated into secret cables and reports to the American Administration with repeated requests that his identity as a ‘protected’ source be guarded.

A former secretary of the New South Wales branch of the Labor Party between 2004 and 2007, a member of the Party National Executive – from 2004, and a member of the National Executive Committee – from 2007, Senator Arbib was a key backroom figure and an expert on coups within the Party. He first appeared as a contributor to U.S. Embassy political reporting while he was Labor State Secretary.

After one more coup, Arbib resigned from the ministry on 2 March, and from the Senate on 5 March 2012. The following day Arbib was replaced as a Senator by former Premier of New South Wales Bob Carr, who on 13 March became the Foreign Minister (Philip Dorling, ‘Arbib revealed as secret US source’, The Sydney Morning Herald, 9 December 2010).

“Senator Carr’s diplomatic involvement goes back to at least August 1974, when the U.S. Embassy in Canberra reported “‘a pervasive sense of gloom and anxiety”’ within the Labor movement as the Whitlam government “’struggle[d] in [a] disorganised fashion to stem growing inflation”.

Together with N.S.W. Labor president John Ducker, he told the U.S. Consul-General in Sydney that] “economic policy has never been Whitlam’s bag” and criticised his “tendency to delegate practically everything” (Philip Dorling, ‘New database shows US informants were inside Whitlam’s ALP’, The Sydney Morning Herald, 9 April 2013).

Officials in the American Administration were worried about the possible closure of the American bases in Australia, and generally about the possibility that Australia would pursue an independent policy particularly with reference to foreign investments. Ambassador Green was the first career diplomat, unlike the sort of person Australia receives, who is ordinarily one rewarded for contributing money to the Republican or Democratic parties campaigns.

Green had been mentioned in the Pentagon papers as being a high-level policy maker for America in Southeast Asia and he had known C.I.A. connections.

Suspicions about Green were shared by Clyde Cameron, Minister for Labour, who had many face to face meetings with the American Ambassador.

This is what Cameron would say: “Marshall Green was for many, many years a top C.I.A. operative who orchestrated the overthrow of the Sukarno government which led to the installation of President Suharto. He was involved in the C.I.A. 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”.

Cameron described Green’s method of operation: “[It] was to make close contact with the military of a particular country, those who own and control the media, and generally [to] infiltrate the sections of governments where policy or decision-making takes place. And if he is unsuccessful in getting 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 phony uprising was organised by the C.I.A. 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 suit the C.I.A. 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” (The C.I.A. in Australia, Transcript of Part 2 of 6, Watching Brief, Public Radio News Services, October-November 1986, Melbourne).

Whitlam’s attitude to politics was exactly opposite to that of Nixon, particularly under the advice of Kissinger and ‘operations’ by the C.I.A.

Whitlam saw international law as an essential component of efforts to avoid conflict, resolve disputes, and restructure international relations (Michael Kirby, ‘Whitlam as internationalist’, The Whitlam Lecture, University of Western Sydney, 25 February 2010).

It was on this basis, in part, that the Whitlam Government embarked on a vigorous process of ratifying international law treaties. Indeed, under that government, over 133
international treaties entered into force for Australia, including 26 Exchange of Notes Agreements, 32 Bilateral Agreements, 16 Multilateral Agreements, 17 Protocols, 8 International Statutes, and 34 Treaties/Conventions.

Commenting on the international engagement of his Government, Whitlam said:
“We have done a great deal more, I believe, than all previous governments. We have communicated to the world our commitment to international law and our eagerness to contribute to co-operative endeavours. We have displayed a breadth of legal skills. And Australia has come to be regarded as an independent voice” (Gough Whitlam, ‘Australia and International Law’, Address by the Prime Minister to the Seminar on Public International Law, 26 July 1975, Canberra).

This is what Ross Terrill, an ex-patriate Australian author, recalls of the American Administration’s reaction to Whitlam protest on the bombing of Hanoi in December 1972:

“On 23 December 1972, waiting in the White House to see Henry Kissinger, I realised he might broach the Whitlam tornado. I occasionally talked with Kissinger (my former teacher at Harvard) on China; only once did we discuss Australia, when he requested to meet Wilfred Burchett. In an ante-room I phoned the Australian embassy and asked the Deputy Chief of Mission – in the absence of Ambassador Jim Plimsoll – if he would read me Whitlam’s 21 December cable to President Nixon protesting the ‘Christmas bombing’ of Hanoi. He declined.

Entering Kissinger’s office, I found him waving the cable. ‘It’s unforgivable for this new Australian government to put Hanoi and Washington on the same footing,’ he said angrily. ‘How can an ally behave like this?’ I told Kissinger that Whitlam considered ANZUS ‘unshakeable’. He riposted, ‘CAN it be unshakeable? You can’t apply ANZUS on some points and not on others’.

Kissinger said the White House wouldn’t answer Whitlam’s cable, and C.L. Sulzberger wrote in the New York Times that the cable was ignored. In fact, an ‘unofficial’ reply was sent to Whitlam. ‘I have never seen such language in a cable from one government to another’” [Sir (John) Keith Waller, the Permanent Secretary of the Department of Foreign Affairs] told the writer.

“All this made 1973 a difficult year for Canberra-Washington relations. It seemed Whitlam had overplayed his hand.

However, Kissinger presciently floated a solution that morning. Calming down about Whitlam’s cable to reminisce on Zhou Enlai, Kissinger said, ‘For American policy [in East Asia] there are two phases. In the first, Thailand has to be linchpin. But that will give way to a second phase, when détente with China will be the best guarantee of security in Asia.’

A week later, at Kirribilli House – the second official seat, and second official residence, of the Prime Minister of Australia, Whitlam told Terrill: “We’re going to pretend Kissinger’s cable never came”. The Prime Minister asked Terrill: “What am I going to say at my press conference about the Hanoi bombing?” I explained Kissinger’s view of ‘two phases’, which pleased him. When phase two came, with China central, it seemed likely Australian-American relations would stabilise. This eventually occurred”.

Two more problems roiled the Washington-Whitlam relationship. One was the strident protests by the Left wing of the Labor Party immediately after 2 December. Jim Cairns, Minister for Overseas Trade launched insults to Nixon. Other ministers, Cameron and Uren, referred to American ‘maniacs’ and ‘mass murderers’.

All this troubled Whitlam almost as much as it did Washington, as his memoir The Whitlam Government, 1972-1975 indicates. He left the U.S. defence facilities in Australia undisturbed, but he did please the Left with complete withdrawal from Vietnam. Like many Left-of-centre leaders, Whitlam’s main concern during the war was looking for the exit door.

A further problem was the Nixon and his advisers’ ignorance about the Labor Party, such as it was after its 23 years out of power. Kissinger at first referred to the Prime Minister as ‘Mr Whitelaw’. Secretary of State William Rogers was unaware that a Labor prime minister did not [then] choose his cabinet members. Walter Rice, the U.S. Ambassador in Canberra, had not told him.

Andrew Peacock, a Liberal politician, deserves credit for trying to persuade Washington ‘in early 1973’ not to snub Whitlam, but still, in late April 1973, the Australian Embassy in Washington had no certain assurance that Nixon would receive Whitlam on a planned July trip.

Whitlam’s top aide Peter Wilenski, concerned that no meeting with Nixon was fixed for Whitlam’s time in Washington, phoned Terrill on 14 April 1973. He said: “The PM agrees with you that the [Washington] embassy’s access to the White House is not very good”. And went on: “He wants you to arrange a meeting for me with Kissinger”. The Prime Minister feared that requests to Nixon through the Embassy, if refused, would reach the press and besmirch the government.

Nevertheless, Kissinger quickly agreed to see Wilenski on 2 May. Kissinger assured Wilenski that Nixon would receive Whitlam.

Wilenski told Ambassador Jim Plimsoll about his talk with Kissinger only an hour beforehand. Plimsoll struck an odd note in saying to Wilenski: “Argue for our common common outlook as Anglo-Saxons”. Wilenski was born in Poland, Kissinger in Germany (Ross Terrill, ‘Whitlam, Nixon and ANZUS’, The Spectator, 12 May 2012).

Whitlam’s foreign policies would develop – and also quite remarkably – against U.S. interests. He would break ranks with previous Australian Prime Ministers by reaching out to other Asian leaders to create trade and diplomatic relationships. He would become one of the first ‘western’ leaders to attempt normal relations with Chinese leaders. He also, in the midst of the war, established a consular relationship with Vietnam by opening an embassy in Hanoi and later allowed the opening of a Cuban consulate in Sydney.

In other words, for all intents and purposes, Australia under Whitlam was not serving at the behest of British or American dictates. It was independently establishing its own relationships. This was not appreciated by the Nixon Administration, least of all Henry Kissinger who disliked the Labor leader immensely.

Prior to Whitlam and since, American governments have considered Australia as a strategic location and partner in their military ventures. The Americans have bases in Australia, not the least of which being the ‘secret’ base known as Pine Gap in the Australian desert. In time, Whitlam would seek to have more specifics on what the Americans were doing there. He discovered that Pine Gap, a satellite surveillance base, was run by the C.I.A. and he made a public announcement about this. Whitlam would also ask the Americans for a listing of all C.I.A. operatives in Australia.

The Americans were supposed to share information with the Australians from their satellite findings but since the Labor Party had won it was thought that much of the information was being denied the government. Whitlam threatened he would not sign an extension of the Pine Gap lease due in December 1975 and this again infuriated the Nixon Administration.

The fact is that the Pine Gap base activities were making Australia vulnerable to attack and this angered Whitlam, as he had no control over the base activities.

There were at least three occasions when the Americans did not share vital information about the bases.

1) The transmitters at the North West Cape were used to assist the U.S. in mining Haiphong harbour in 1972. The Whitlam government was opposed to the mining of Vietnamese harbours, and would not have appreciated U.S. facilities on Australian soil being used to assist such an undertaking.

2) The satellites controlled by Pine Gap and Nurrungar were used to pinpoint targets for bombings in Cambodia. Again, this was an activity to which the Whitlam Government was opposed.

3) Whitlam was furious when he found out after the fact that U.S. bases in Australia were put on a Level 3 alert during the Yom Kippur war – 6 to 25 October 1973. The Australian bases were in danger of attack, yet the Australian Prime Minister was not alerted to this.

There was one other element which would play a role in terms of foreign policy and it has to do with Chile. A little known fact is that the Australian Secret Intelligence Service, A.S.I.S. was involved in the overthrow of President Salvadore Allende in 1973. Clyde Cameron said that the A.S.I.S. operatives were serving at the behest of the C.I.A. to help in the coup against Allende, as the C.I.A. was not able to work effectively in Chile under Allende. “They had to do their dirty work through somebody else”. Cameron noted “and they chose the Australian intelligence organisations”. When Whitlam discovered this he demanded that the A.S.I.S. be withdrawn from Chile yet they paid no attention to his orders. When Whitlam discovered they had not yet left Chile he was furious and, as Cameron said “put the knife through a lot of these people responsible for ignoring his directions”. By that time, however, Allende had been assassinated and Pinochet had taken over (The CIA in Australia, Part 3, Australia Public Radio News Service, Melbourne 1986).

The Labor Government’s changes in both domestic and foreign policy earned Whitlam Henry Kissinger’s epithet of “one more effete social democrat”. Neither Kissinger nor Nixon had any time for Whitlam or Left-wing politicians in general.

Many others in the intelligence community were concerned, including Ted Shackley, head of the East Asia Division of the C.I.A., who was said to be paranoid about Whitlam; and James Jesus Angleton, head of the C.I.A.’s Counter-Intelligence section, who despised the Labor Government.

Nixon, needless to say, was not amused. Some insiders said he was apoplectic with rage and resented the implications that he was immoral and had to be told his duty by an outsider. Kissinger added that Whitlam’s “uninformed comments about our Christmas bombing [of North Vietnam] had made him a particular object of Nixon’s wrath” (Mother Jones, Feb.-Mar. 1984, at 15).

Soon after Whitlam took office, the American Ambassador to Australia, Walter Rice, was sent to meet with Whitlam in order politely to tell him to mind his own business about Vietnam. Whitlam ambushed Rice, dominated the meeting, and spoke for 45 minutes rebuking the U.S. for its conduct of the Vietnam war. Whitlam told Rice that in a press conference the next day, “It would be difficult to avoid words like ‘atrocious’ and ‘barbarous’” when asked about the bombing.

Whitlam also brought up the issue of the American bases in Australia, and warned Rice that although he did not propose to alter the arrangements regarding the U.S. bases, “to be practical and realistic,” Whitlam said, “if there were any attempt, to use familiar jargon, ‘to screw us or bounce us’ inevitably these arrangements would become a matter of contention” (Minutes of the meeting were reproduced in The Eye, July 1987).

Nixon did agree to a meeting with Whitlam, and it took place on 30 July 1973. Kissinger’s brief to Nixon said the primary purpose of the meeting was “to restore the level of confidence between our two governments at the highest level that existed before the Whitlam government took office” (Kissinger, HA, “Meeting with the Australian Prime Minister Gough Whitlam, Memorandum 4172, CO10 Australia, WHC Files, Nixon Presidential Archive).

Whitlam felt that he had earned the meeting because he had muted criticism of Nixon’s Asian policies, praised détente but primarily because “he has defended our defense installations in Australia against attack from his party’s left wing”. Kissinger’s briefing also mentioned Whitlam’s problems with the Senate before finally discussing ‘US Defense Installations in Australia: No Substantial Change in Prospect’ and noting that Whitlam modified his position “after being briefed on the functions of these facilities” and turned debate at the recent party conference away from vital installations and on to the “less important” Omega navigation system. The briefing says that Pine Gap and Nurrungar merely monitor adherence to arms limitations agreements and missile developments in China and Russia. The briefing also holds out promise of “cosmetic changes” to give the impression of Australian control at North West Cape.

In the lead up to Whitlam’s meeting with Nixon, Kissinger met with the recently appointed Ambassador Green. He told Kissinger: “I would define US interests in Australia as: 1) preserving our defense installations; 2) maintaining our investment and trade there…” (HAK Memorandum of Conversation, 28 July 1973, Prime Minister Whitlam’s Coming Visit, Box 1027, NSC Files, Nixon Presidential Archive).

When Kissinger met Whitlam just before their meeting with Nixon, Kissinger summarised the situation: “We do not see recent changes in Australia as a greater assertion of Australian autonomy. Rather we look at it as a change in some of the mechanics in our relations … We can’t deny that we have had some strains recently – but we consider these matters of the past” (HAK Memorandum of Conversation 30 July 1973 10-11am, Box 1027, NSC Files, Nixon Presidential Archive). (Stephen Stockwell, ‘Beyond conspiracy theory: US presidential archives on the American press, national security and the Whitlam government’, Paper presented to the Journalism Education Conference, Griffith University, 29 November-2 December 2005).

Neither the bases nor investment and trade came into discussion. Whitlam expressed an interest in talking with Nixon about French nuclear testing in the Pacific but the most striking thing is his nervousness about meeting Nixon. Because of legal issues emanating from the Watergate break-in, Nixon had stopped taping conversations before he met Whitlam with the result that there is no record of their conversation. Nevertheless, as relations between Australia and the United States appeared to have stabilised following the meeting, certainly at the leadership level, one might assume that Whitlam and Nixon agreed to leave the past behind them.

In May 1974, after the double dissolution and return of the Whitlam Government, Jim Cairns was elected as Whitlam’s deputy. The news displeased the Americans, because Cairns had been one of the most adamant critics of American foreign policy. He was the natural successor to Whitlam as prime minister. The future of the bases was again in question and Nixon and Kissinger took time out from the management of the Watergate debacle and the disengagement from Vietnam to issue National Security Study Memorandum 204 to the Departments of State and Defense and the C.I.A. on 1 July 1974.

That Memorandum noted, from what is publicly available, the “recent changes in the Labor Government” and proposed to examine “the impact of these changes on basic US objectives toward Australia, particularly in the political-security area”. The Memorandum also called for more than theoretical analysis: “It should define and evaluate policy options for giving effect to the resulting objectives”. In particular the Memorandum called for study of issues around “keeping US defense installations in Australia … relocating essential existing US security functions outside Australia … locating additional US functions in Australia and the policy options for trying to do so” (NSSM 204, 1 July 1974, Box 205, NSC Institutional Files, Nixon Presidential Archive). It gave the N.S.C. Interdepartmental Group for East Asia only two weeks to prepare a report. That remains classified. Nixon resigned from office on 8 August 1974, so it is possible that one of his last acts in office was to establish new policy objectives with regard to Australia but there is no evidence in the archive that this was the case.

With the coming of President Gerald Ford’s administration, no further national security studies or decisions about Australia are available in the archives. Whitlam called for a meeting with Ford and that was held on 5 October 1974. Briefings for that meeting emphasise Whitlam’s acceptance of American bases. Ambassador Green reported “… there would be no move by an Australian government to terminate these facilities as long as Labor was headed by Whitlam …”. There was concern about Jim Cairns: “Once in the top position [Cairns] would probably veer … towards a foreign policy based on neutrality and the removal of American bases from Australian shores” (Green, M, Telexes 21/30 September 1974, Box 2, NSA-Presidential Country Files for East Asia and the Pacific, Ford Presidential Archive). Kissinger’s briefing for Ford pointed out that Whitlam was mellowing with regard to the bases as he understood their significance for arms limitations but in the event the bases did not come up in their conversation which covered everything except the bases (Memcon, President’s Meeting with Australian Prime Minister Whitlam, 5 October 1974, Box 6, NSA Memcons, Ford Presidential Archive). (Stockwell, op. cit.)

Secret cables which had only come available in May 2013 disclosed that Rupert Murdoch had discussed Australian public figures with Ambassador Green in 1974.

It was known that, by mobilising his newspapers to the advantage of the Labor Party, Murdoch thought that he had played “a substantial role” in Labor’s December 1972 victory.

He was “satisfied that he took the correct position at that time, since it was essential to have a change after 23 years [The] Liberal/Country leadership had become increasingly weak intellectually”.

However, by November 1974 Murdoch’s brief enthusiasm for Whitlam had waned.

“He expects to support the opposition in the next election” Green reported to Washington.

Murdoch savaged Labor’s economic management. He wanted policies with “a more selfish domestic focus”. He particularly slated Australia’s first moves towards economic liberalisation, the Labor government’s 25 per cent across-the-board tariff reductions “which appealed to Whitlam’s orderly legal mind and liberal outlook, [but] were a bad mistake and contributed needlessly to unemployment”. Murdoch said that a number of Australian industries needed tariff protection and he thought the problem should have been “studied on a sector by sector basis”.

A ‘change of heart’ would make Murdoch more credible in 1974.

During a “wide-ranging and apparently very candid conversation” over lunch on 15 November 1974, Murdoch – described in a cable released by the U.S. National Archives and published by WikiLeaks as ‘well informed and extremely influential’ – spoke freely on the mis/fortunes of the Whitlam Government which had been re-elected six months earlier. Almost exactly a year to the day of ‘the Ambush’, Murdoch was predicting the fall of Whitlam.

Still, he could not anticipate that Fraser would usurp the prime ministership. His choice was on Hawke, then president of the Australian Council of Trade Unions. “Bob Hawke is fiercely ambitious to become prime minister of Australia and could make it someday”, Murdoch observed. “He is intelligent and essentially moderate”. However Murdoch thought Hawke would not rush to seek election to Parliament because he saw the Whitlam Government “going down to defeat and does not want to board the sinking ship”.

Murdoch was discounting Fraser, whom he regarded as “the most brilliant as well as the most courageous of the Liberals”, but he judged “too inflexible and too arrogant” by his colleagues. Fraser also tended to be “overly absorbed in foreign affairs and defence”.

Still, Murdoch and his newspapers would enthusiastically support Fraser and the Coalition in the 1975 election campaign, so much so that journalists at his newspapers took industrial action in protest. Labor would not return to government for more than seven years when Hawke defeated Fraser at the March 1983 federal election.

Against the backdrop of the Middle East oil crisis of the previous year, Murdoch was gloomy about the global economy in November 1974, but saw the United States as “the only economy of sufficient stature to provide world leadership in these parlous times”.

Although the Liberal-Country Party Opposition did not at that time have the numbers to block the Labor government’s budget in the Senate, Green reported Murdoch’s confident view that Whitlam’s days as prime minister were numbered.

“Australian elections are likely to take place in about one year, sparked by refusal of appropriations in the Senate. All signs point to a Liberal-Country victory, since the economy is in disturbingly bad condition and will probably not improve much of that time” said Murdoch.

It is not explicit in Ambassador Green’s report, but it is possible that Murdoch may have been drawing on the ultimate inside source: it is known that Kerr attended a social function at the Murdoch’s country estate at Cavan near Yass in New South Wales in late 1974. A journalist in attendance later revealed that over drinks Kerr – a closet-alcoholic – indiscreetly gave Murdoch a “very detailed and elaborate outline” of his constitutional options as Governor-General in the event that the Opposition secured the Senate numbers to block the budget. (Philip Dorling, ‘Whitlam radical, Fraser arrogant, Hawke moderate: Secret cables reveal Murdoch insights’, The Age, 20 May 2013).

Twelve days after Murdoch’s talk with Green, Fraser failed in a bid to remove Snedden as Liberal leader. However he went on to defeat Snedden in a second party room ballot four months later.

To be continued. Tomorrow . . . The economy against headwinds, and concluding with A coup conceived in secret and deceit.

* Dr. Venturino Giorgio ‘George’ Venturini devoted some sixty years to study, practice, teach, write and administer law at different places in four continents. In 1975, invited by Attorney-General Lionel Keith Murphy, Q.C., he left a law chair in Chicago to join the Trade Practices Commission in Canberra – to serve the Whitlam Government. In time he witnessed the administration of a law of prohibition as a law of abuse, and documented it in Malpractice, antitrust as an Australian poshlost (Sydney 1980). He may be reached at George.Venturini@bigpond.com.

 

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The Anglo-American ambush of the Whitlam Government – 11.11.1975 (Part 2)

Who was really behind the dismissal of the Whitlam Government? As we approach the 40th anniversary of the dismissal, Dr George Venturini* critically examines the giddy rise of Gough Whitlam, his reforms, his cold relationship with the Nixon Administration, the Khemlani loan scandal, the dismissal of the Whitlam Government on 11th November, 1975 and the questions that have lingered since. This is a four part series which will conclude on the anniversary of the dismissal.

The C.I.A. in Australia

Set up in September 1947 as a civilian foreign intelligence service of the U.S. Government, the Central Intelligence Agency is charged with gathering, processing and analysing national security information from around the world, primarily through the use of human intelligence. As one of the principal members of the U.S. Intelligence Community, the C.I.A. reports to the Director of National Intelligence and is primarily focused on providing intelligence for the President and his Cabinet.

Next to the C.I.A., but totally independent of it was a group of agents, under the personal control of Henry Kissinger, and for the conduct of whatever operations Kissinger thought were desirable, necessary and convenient to exert his activity as counsellor, later Secretary of State and, at the same time, the principal of Kissinger Associates, Inc.

The business was officially established in 1982, as a New York City-based international consulting firm. It was run by Kissinger and Brent Scowcroft. Officially, the firm was designed to assist its clients in identifying strategic partners and investment opportunities, advising clients on government relations throughout the world. Known for its secrecy, its specific activities have remained carefully protected from public knowledge.

Kissinger Associates, Inc. has had strategic alliances with several firms, including: APCO Worldwide, formed 12 October 2004, The Blackstone Group, an investment and advisory firm, and Hakluyt & Company, a strategic intelligence and advisory firm. It has also been connected since 2003 with Covington & Burling, the well-known international law firm.

Some names of prominent staff give a pretty good idea of the power, ramification and connections. Members are, amongst others: L. Paul Bremer, former managing director, former Iraq Director of Reconstruction; Nelson Cunningham, political advisor and managing partner at Kissinger McLarty; Lawrence Eagleburger, former United States Secretary of State; Richard W. Fisher, President, Federal Reserve Bank of Dallas; Timothy F. GeithnerUnited States Secretary of Treasury; Jami Miscik , President and vice chairman, Deputy Director for Intelligence, Central Intelligence Agency; Joshua Cooper Ramo, Managing Director, former senior editor of Time Magazine; Bill Richardson, former senior managing director, former U.S diplomat and immediate past Governor of New Mexico; J. Stapleton Roy, vice-chairman, Senior U.S. diplomat; and Brent Scowcroft, former vice-chairman, former United States National Security Advisor.

Directors of Kissinger Associates, Inc. have included: Lord Carrington, from 1982 Secretary-General of N.A.T.O.; Gary Falle, of Falle Strategies; Étienne Davignon, former European Commissioner; Pehr G. Gyllenhammar, from 1982 Chairman, Volvo; Saburo Okita, former Japanese Foreign Minister; William D. Rogers, from 1982 Undersecretary of State for Economic Affairs under President Gerald R. Ford; Eric Roll, from 1984 Chairman S. G. Warburg & Co.; and William E. Simon, from 1984 Secretary of the Treasury under Presidents Nixon and Ford.

At different times since 1982 Kissinger was director and/or adviser, consigliere to many multinationals and countries. Among them, at least from those known, are American Express, as director (Hungary, Japan); American International Group, as director, International Advisory Committee (Argentina, China, South Korea); Atlantic Richfield; Chase Manhattan Bank (now JPMorgan Chase), as chairman, International Advisory Committee; Coca-Cola (Malaysia); Fiat; Freeport-McMoRan, as director (Burma, Indonesia, Panama); Heinz (Ivory Coast, Turkey, Zimbabwe); Hollinger, Inc., as director; Lehman Brothers, with Kissinger McLarty Assoc. listed as a creditor in the Bankruptcy Filings; Merck; Volvo, and Warburg.

Kissinger’s personal dislike – (hatred, maybe?) – for Whitlam is well documented. Totally separated from and unknown to the C.I.A. was Task Force 157. Kissinger could trust no-one, even the C.I.A. to do what was necessary in certain countries. And that, in time, included Australia. Specifically, Task Force 157 would allow Kissinger to deny any connection between what it was doing and the C.I.A. The personnel of Task Force 157 included one Ted Shackley.

Theodore George ‘Ted’ Shackley, Jr. was an American C.I.A. officer involved in many important and controversial C.I.A. operations during the 1960s and 1970s. He was one of the most decorated C.I.A. officers. Due to his light hair and mysterious ways, Shackley was known to his colleagues as ‘the Blond Ghost’.

He was one of Office of Strategic Services Edward Lansdale’s protégés in the assassination business, who would go on to set up assassination squads. In the early 1960s, Shackley’s work included being station chief in Miami, as one of the head of sabotage operations against Cuba; and during the period of the Cuban Missile Crisis he directed the Cuban Project – also known as ‘Operation Mongoose’. He was also said to become the director of the ‘Phoenix Program’ – a secret assassination and capture campaign aimed at members of the Viet Cong insurgency’s infrastructure – during the Vietnam war, as well as the C.I.A. station chief in Laos between 1966 and 1968, and station chief from 1968 through February 1972 in what was called Saigon. William Colby, former Director of Central Intelligence – D.C.I., testified that the number killed in the ‘Phoenix Program’ was at least 20,000. The ‘Phoenix Program’ was eventually handed over to the U.S. and so-called South Vietnamese armies. Shackley served in Vietnam through February 1972 when he returned to C.I.A. headquarters in Langley, Virginia.

Shackley had taken with him another assassin, Felix Rodriguez, from the Cuban Project to Laos for the secret war in support of Vietnam. Felix Rodriguez was a close confidante of former C.I.A. Director George H. W. Bush, and maintained direct phone contact with Bush when Bush became Vice President under Ronald Reagan. In Vietnam, Shackley and Rodriguez would expand their circle of operatives to include Oliver North, Richard Secord and Richard Armitage. North, Secord and Armitage had proven themselves as men who could ‘get results’ against the Communists by operating outside of the rules.

From 1972 Shackley ran the C.I.A.’s Western Hemisphere Division. When Shackley took over the division, one mission for him was ‘regime change’ in Chile – the so-called ‘Project Fubelt’. This was the code name for the secret C.I.A. operations which were to prevent Salvador Allende rise to power before his confirmation, and promote a military coup in Chile.

Even after his ‘repatriation’ Shackley retained an interest in the Whitlam Government, about which he had seemingly developed a ‘paranoia’, as will be seen further. He considered both Prime Minister and government as ‘security risks’.

In May 1976 Shackley was made Deputy Director of Covert Operations, serving under C.I.A. Director George H.W. Bush, before ‘officially’ retiring from the organisation in 1979.

Despite his ‘retirement’ in 1979, controversy continued to surround Shackley over alleged involvement in the ‘October Surprise’ of 1980, and later the ‘Iran-Contra affair’ of the mid-1980s. He had hoped to return officially to the Agency, and during the 1980 presidential campaign, Shackley met Bush almost every week; his wife, Hazel, also campaigned for Bush.

With such an impeccable C.I.A. record it would be very difficult to disassociate him from what the C.I.A. was doing – anywhere. In December 1986 Shackley was named in a lawsuit by attorney Daniel Sheehan and the Christic Institute for his orchestration of the ‘Iran-Contra scandal’. Sheehan also claimed that Shackley and an associate were running a private assassination program which had evolved from projects they ran while working for the C.I.A. Shackley is perhaps best known for his involvement in C.I.A. ‘black ops’.

As far as Australia was concerned the activity 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 and drugs dealing and smuggling of contraband goods.

The Nugan Hand Bank was to become the organisation used as cover for the operations of Task Force 157. The bank was typical of the organisations used by the C.I.A. in their style of operations.

There were actually three kind of organisations employed by the C.I.A. One is what is called the proprietary organisation, an organisation owned, operated and controlled by the C.I.A., such as Air America, which was landing freely at many legal and improvised airports – up to fifteen, it seems – in Australia. Then there is something which 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 is its cover but it is really used as a firm: a restaurant, for instance. There is a third kind of organisation which is really an apparently independent organisation but it is closely allied to the C.I.A. not only in ‘ideology’, because many of the people who work for it are ex-C.I.A. 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 – founded in 1953 and which came to dominate the ‘free world’ market in private arms sales – which is independent but ordinarily run by a former C.I.A. ‘asset’.

Nugan Hand Bank fell into this latter category. It was neither proprietary in the full sense of the word nor a simple front organisation. It appeared as an independent organisation with former C.I.A. people connected with it. They were in business to make money but, because of their close personal relationship with the Agency, Nugan, Hand and their many associates 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 with which it does not want to be in any way directly connected – Kissinger style.

The Nugan Hand Bank relationship to the C.I.A. can be traced through its employees, most of whom had an ‘intelligence’ background.

Francis John Nugan was born in Sydney in 1943. In 1963 he obtained a law degree from Sydney University. He then moved to the United States where he studied for his masters at the University of California. By 1965 he was studying at York University in Canada. Nugan returned to Australia in 1967.

Michael Jon Hand was an ex-American Green Beret, who had gone from the Green Berets to work in intelligence work for the U.S. government as a C.I.A. contract operative. He had been operating in Northern Laos as part of the ‘Phoenix Project’.

In 1973 Nugan and Hand established the Nugan Hand Bank. It began operations with 30 per cent of the stock held by Australasian and Pacific Holdings – 100 per cent controlled by Chase Manhattan Bank, 25 per cent by C.I.A.’s Air America, 25 per cent by South Pacific Properties and 20 per cent held by one Bob Seldon – a C.I.A. operative, Nugan and Hand.

The Irving Trust Bank’s New York Branch established U.S. links between the C.I.A. and Nugan Hand, with a worldwide network of 22 banks set up to:

  1. ‘launder’ money from heroin operations in the Golden Triangle and Iran;
  2. be a C.I.A. funnel to pro-U.S. political parties in Europe, Latin America and Australia;
  3. be a spying conduit for information from Cambodia, Laos, Vietnam and Thailand;
  4. finance arms smuggled to Libya, Indonesia, South America, the Middle East and Rhodesia using one Edward P. Wilson, a C.I.A. and S. Naval Intelligence officer.

Frank Nugan’s family ran the primary supply shipping operation between the U.S. Navy base in the Philippines and Australia. It is through Frank Nugan and his business partner Sir Peter Abeles that insight is provided to the flow of some of Ferdinand Marcos treasure. Sir Peter Abeles was reputed to be a member of what was known in Australia as the ‘Hungarian Mafia’ and a partner with Henry Keswick. Sir Henry Keswick was the son of S.O.E. officer John Keswick. The Keswick family had controlling interest in Jardine Matheson, which owned and operated Ferdinand Marcos’ gold smelting operation, which was opened in the mid 1970s. The Keswick family also had controlling interest in the Hong Kong and Shanghai Banking Corporation.

It was Sir Peter Abeles and Sir Henry Keswick who brought Canadian businessman Peter Munk back to business prominence from a scandalous insider-trading lawsuit in Canada in 1967. Munk would partner with Adnan Kashoggi – the well known merchant from Saudi Arabia; Sheik Kamal – the son of Sheikh Mujibur Rahman, former President of Bangladesh; and Edgar Bronfmann – a Canadian-American businessman and philanthropist, who worked for his family drinks firm, Seagrams, eventually becoming president, treasurer and chief executive, in a series of operations which ultimately would evolve into Barrick Gold. Barrick Gold would become an investment for nearly every gold bullion bank associated with the Marcos gold recovery. The records of many of those transactions disappeared when Enron collapsed and the trading operation and all its records were taken over by U.B.S., another major recipient of Marcos gold. The F.B.I. was reportedly conducting an investigation into those transactions, and the investigation files were kept on the 23rd floor of the North Tower of the World Trade Center. A review of the personal accounts of ‘September 11’ now suggests that office was deliberately targeted with explosives prior to the collapse of the W.T.C.

The Nugan Hand Bank would be one of the many banks used for transferring the Ferdinand Marcos gold from the Philippines into covert operations. Brigadier General Earle Cocke was the President in charge of the Nugan Hand Washington Office, and would be the key manager of ‘Project Hammer’ and the ‘Black Eagle Trust’. Other Nugan Hand Bank employees from U.S. Intelligence operations included:

  • Richard L. Armitage, who was the special consultant to the Pentagon in Thailand who oversaw the transfer of heroin profits from Indonesia to Shackley’s account in Tehran;
  • General Edwin F. Black, president of Hawaii branch, former commander of U.S. forces in Thailand;
  • William Colby, former director of the C.I.A. as legal counsel;
  • Dale Holmgreen, former chairman of C.I.A.’s Civil Air Transport, manager of the Taiwan branch;
  • General Leroy J. Manor, manager of the Manila branch, former chief of staff of the U.S. Pacific Command and deputy director for counter-insurgency and special activities; he shared his office with Marcos‘s brother -in-law;
  • Walter McDonald, retired C.I.A. deputy director, headed Annapolis branch;
  • Dr. Guy Parker, an expert from the RAND Corporation who came on as a bank consultant, and senior Republican foreign policy adviser;
  • Richard Secord, all around operative with responsibilities in Iran-Contra, Vietnam assassinations, organising Mujahadeen armies in Afghanistan, and central Asia;
  • Rear Admiral Earl P. Yates, the former Chief of Staff for Policy and Plans of the U.S. Pacific Command and a counter-insurgency specialist, became president of the company.

Another key figure in this venture in Australia was one Maurice Bernard ‘Bernie’ Houghton, who had a U.S. ‘intelligence’ background, and had been working as an undercover intelligence operative in Australia, where he had resided since the late 1960s. He was closely connected to C.I.A. officials, Ted Shackley and Thomas G. Clines.

‘Bernie’ Houghton was connected in some way to a John D. Walker who was the C.I.A. Station Chief in Australia during the Whitlam Government years. He also had a connection with Edwin P. Wilson, who was a very senior member of Task Force 157. In the C.I.A. Wilson had run some proprietary companies. One such company was Australasian and Pacific Holdings, the company started by Mike Hand in Australia in the late 1960s. A number of the shareholders in that were members of Air America.

Nugan ran operations in Sydney whereas Hand was in charge of a branch in Hong Kong. This enabled Australian depositors to access a money-laundering facility for illegal transfers of Australian money to Hong Kong.

There were other branches throughout South East Asia, and one very active in Singapore.

Overseas there were more important persons connected with the Bank: U.S. Admiral Yates was a president of the Bank in the United States and also of the Cayman Islands branch which is normally used as a tax haven, for good secrecy provisions prevail there for banking operations, and U.S. General Edwin F. Black was the Hawaii representative of the Bank.

The actual Bank operated out of its offices in ‘K’ Street in Washington, D.C., run by Brigadier General Earle Cocke who was quite close to the White House. He claimed to have no connection with the Bank at all but it is 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. Cocke himself had all sorts of intelligence connections.

There was an informal partnership between the Bank and Houghton – who, with the financial involvement of powerful building and transport tycoons, was operating a series of bars around King’s Cross, in Sydney. Houghton, who was known mainly as proprietor/manager of the Bourbon and Beefsteak Bar and Restaurant in Sydney, a centre for Americans on Rest & Recuperation from Vietnam, led the Bank’s international division into new fields: drug finance, arms trading, and support work for C.I.A. covert activities. Hand openly told friends that it was his ambition that Nugan Hand became banker for the C.I.A.

In 1974 the Bank got involved in helping the C.I.A. to take part in covert arms deals with contacts within Angola. It was at this time that Edwin Wilson became involved with the Bank. Two C.I.A. agents based in Indonesia, James Hawes and Robert Moore, called on Wilson at his World Marine offices to discuss “an African arms deal”. Later, Bernie Houghton arrived from Sydney to place an order for 10 million rounds of ammunition and 3,000 weapons including machine guns. The following year Houghton asked Wilson to arrange for World Marine to purchase a high-technology spy ship. This ship was then sold to Iran.

The investigative journalist Jonathan Kwitny became convinced that the Nugan Hand Bank had replaced the Castle Bank and Trust Company in Nassau, as the C.I.A.’s covert banker. That bank had been forced to close after the Internal Revenue Service discovered that it was laundering C.I.A. funds and drug profits (Jonathan Kwitny, The Crimes of Patriots: A True Tale of Dope, Dirty Money, and the CIA (1987) chapter seven).

In the winter of 1979 Edwin Wilson had a meeting with Bernie Houghton and Thomas G. Clines in Switzerland in an attempt to help him out of his difficulties. This included a non-delivery of 5,000 M16 automatic rifles. The three men discussed ways of using the Nugan Hand Bank to float a $22 million loan to finance the delivery. Hand was obviously concerned that if Wilson was arrested he might begin talking about his dealings with Nugan Hand.

On 7 January 1980 Robert Wilson – of the U.S. House of Representatives Armed Services Committee and Richard Ichord – chairman of the Research and Development Subcommittee of the Armed Services Committee had dinner with Bernie Houghton at the Bourbon and Beefsteak Bar and Restaurant.

Nugan flew to the United States on 9 January to visit William Colby before moving on to Florida where he entered negotiations to buy a condominium. He also spent time in the Cayman Islands and Switzerland before arriving back in Australia. On 25 January he had a meeting with Bernie Houghton. The following day Nugan agreed to spend $ 2.2 million on a 828 acre country estate. Nugan told the seller that he was to close the deal the next day.

On 27 January 1980 Frank Nugan was found shot dead in his Mercedes Benz – ‘suicided’ probably. Near to his body was a Bible which included a piece of paper. On it were written the names ‘Bob Wilson’ and ‘Bill Colby’.

Bernie Houghton was in Switzerland at the time and he immediately rang his branch office in Saudi Arabia and ordered the staff to leave the country. Houghton also visited Edwin Wilson’s office in Geneva and left a briefcase with bank documents for safekeeping. Soon afterwards, a witness saw Thomas G. Clines going through the briefcase at Wilson’s office and remove papers which referred to him and General Richard Secord.

Two days after Nugan’s death Michael Hand held a meeting of Nugan Hand Bank directors. He warned them that unless they did as they were told they could “finish up with concrete shoes” and would be “liable to find their wives being delivered to them in pieces”.

Michael Hand, Patricia Swan, Bernie Houghton and his lawyer, Mike Moloney, spent the next few days removing files from Nugan’s office. They also began paying back selected clients. One estimate is that over $1.3 million was paid out in this way.

Frank Nugan’s inquest took place in April 1980. Testimony from Michael Hand revealed that Nugan Hand was insolvent, owing at least $50 million. Hand then promptly fled Australia under a false identity on a flight to Fiji in June 1980. Bernie Houghton also disappeared at this time and it is believed both men eventually reached the United States.

According to one witness, Thomas G. Clines helped Bernie Houghton escape. Michael Hand also left the country accompanied by James Oswald Spencer, a man who served with Ted Shackley in Laos. The two men travelled to America via Fiji and Vancouver. One report published in November 1980 suggested that Michael Hand was living in South America. It claimed that he had managed to escape with the help of “former C.I.A. employees”.

An investigation by the Australia/New South Wales Joint Task Force on Drug Trafficking discovered that the clients of the Nugan Hand Bank included several people who had criminal convictions relating to drug offences including Charles Robertson Beveridge, James Blacker, John Brooking, John Ceruto, Barry Graeme Chittem, Colin Courtney, Stephen Demos, Malcolm Craig Lord, Donald William McKenzie, Murray Don Newman, Murray Stewart Riley, Bruce Alan Smithers, James Sweetman, and James Lewis Williams. According to the records the Bank was receiving $100,000 a year from tax advice. In reality, it was receiving it for money laundering.

The Australian government appointed D. G. Stewart as Royal Commissioner to investigate the Bank scandal. The Stewart Royal Commission findings were published in June 1985. They confirmed that the “Nugan Hand Ltd. was at all times insolvent … and flouted the provisions of the legislation as it then stood in that large volumes of currency were moved in and out of Australia”.

Stewart went on to blame the dead Frank Nugan and the missing Michael Hand for the illegal activities of the Bank. William Colby, General Edwin F. Black, Dale C. Holmgren, Bernie Houghton, General Leroy J. Manor, Walter J. McDonald, Guy J. Pauker and U. S. Rear-Admiral Earl P. Yates were considered blameless. Despite the evidence, Hand and Patricia Swan, Nugan’s secretary, were accused of being the only ones “responsible for the shredding of documents”.

Task Force 157, which was also used for operations involving smuggling, drug trafficking and arms dealing in conjunction with the Nugan Hand Bank, included a yacht equipped with a special nuclear intelligence sensor that operated in the Bosphurus and shadowed Soviet ships.

There is plenty of evidence that in October 1974 Dr. Ray Cline, Deputy Director of Intelligence began to implement William Colby’s – Director of Central Intelligence, D.C.I. from September 1973 to January 1976 – plan to oust Prime Minister Whitlam. Colby was losing sleep over the near apocalyptic circumstance of Willy Brandt being the 4th Chancellor – and the first Social Democrat Chancellor since 1930 – of (then) West Germany (1969-1974), James Harold Wilson – a modest reformist – the Prime Minister of the United Kingdom (1974-1976) and Edward Gough Whitlam – also a modest reformist – the Prime Minister of Australia. Nugan Hand Bank would provide payment – up to $ 24 million – to the Australian Liberal Party, the Country Party and other pro-U.S. politicians. A joint bugging operation commenced between C.I.A. and A.S.I.O. Rupert Murdoch, playing his part, began to use his newspapers and television network to spread what many would argue to be lies and misinformation. Whitlam, as well as refusing to waive restrictions on overseas borrowing to finance the aluminium cartel, had plans to ensure that all corporations were at least 50 per cent Australian-owned. This interfered with the Seven Sisters’ plans to build three oil refineries at Cape Northumberland in South Australia to exploit the Great South Basin discovery. In December 1974 Sir John Kerr, five months after being appointed Australian Governor-General, would join Ray Cline’s payroll and receive his first pay-off of US $200,000 credited to his account number 767748 at the Singapore branch of the Nugan Hand Bank.

In 1991, a month after Kerr’s death, the late Margaret Whitlam – a person of independent and considered judgment, asked by a reporter whether she thought the Central Intelligence Agency was involved, said: “I do. He [her husband] doesn’t. As an old thriller reader I’m prepared to believe it”. On whether [she and her husband] had broken out the champagne when Kerr died, Mrs. Whitlam said: “No. I didn’t bother. I regretted his descent into his miserable life …” (The Sun Herald, 28 April 1991).

At 8 a.m. on Wednesday 27 July 1977, arranged by the American Ambassador Philip Aston, a close friend of President Jimmy Carter, a 30-minute breakfast meeting took place in the Qantas VIP lounge at Sydney airport.

Present at the meeting were Whitlam, then Leader of the Opposition; the Ambassador; Warren Christopher, the President’s Assistant Secretary of State for Asia and the South Pacific; and Richard Butler, a ten-year service diplomat who had become Whitlam’s Principal Private Secretary in 1975.

On his way to the A.N.Z.U.S. Council meeting which was to begin in New Zealand on the following Monday, Christopher advised Whitlam that he was there at the direct request of President Carter, having made a special detour in his itinerary for the sole purpose of speaking to Whitlam.

“The President had asked him to say:

  1. That he understood the Democrats and the ALP were fraternal parties;
  2. That he respected deeply the democratic rights of the allies of the US;
  3. That the US Administration would never again interfere in the domestic political processes of Australia; [Emphasis added] and
  4. That he would work with whatever government the people of Australia elected.” (Whitlam, The Whitlam Government 1972-1975, at 52-53).

Alston died in 1988, Christopher died in 2011 but had confirmed the meeting and Whitlam’s account, and so did Butler. (Max Suich, ‘Whitlam death revives doubts of US role in his sacking’, The Australian Financial Review, 30 October 2014).

‘Buying back the farm’

The industrial oligarchy, backed largely by British investment, is godfather to our provincialism. So that second-rate Englishmen, if they work for ICI or Unilever, are often looked upon as first-rate Australians (Ashbolt, 34).

Beginning shortly after the end of the second world war, American investment capital started to arrive in Australia. At 1947 values, $2 billion had already accumulated.

“And the short-term return for Americans on this investment, the outflow of profits, had reached by 1969 around $ 320 million a year, according to The New York Times. The volume of inflow had started to swell when American exporters found, in the late 1940s, that because of the dollar shortage in Australia they could sell to Australians in any meaningful quantity unless they set up business locally. Then the import quotas which were introduced to solve the balance of payment crisis in the early 1950s gave further impetus to the American companies. The real incentives, though, came by way of tax concessions and other financial guarantees from the Commonwealth Government, not to mention the various kindly offers made by state governments when Sir Charles Court, Sir Thomas Playford, Sir Henry Bolte and other splendiferously-accoutred mendicants visited the United States around 1958-60” (Ashbolt, 75).

At that time American know-how was thought of almost sacramentally, as the one thing that could send Australia soaring into the technological age. What seemed to be forgotten is that American know-how was built on cheap raw materials and large mass markets; and further, that the trick was not so much in the technique of production as in the plentifulness of low-cost resources and high-price buyers.

“Of course U.S. capital inflow, particularly in the form of direct private investment as distinct from portfolio investment or loans, is not always easily picked as coming from the USA. Sometimes it comes via Canada (which is already economically captive to the USA), sometimes in conjunction with British or Japanese capital, and sometimes it wears a gay, multi-coloured, multi-national plumage. But collectively, overseas investment, with its deep-dyed American strain, seems to have exacerbated long-standing weaknesses in the Australian economy. Firstly, it has helped to concentrate the ownership of industry in fewer hands, by the simple device of the merger – not a healthy trend in a country prone to over-concentration of ownership. Secondly, far too much capital proportionately is going into what is virtually primary industry, particularly the extraction of mineral, without promoting ancillary secondary industries. In mining, for example the latest Bureau of Statistics report shows that, even as far back as 1966, nearly one-half of the value of production – 49.8 per cent, to be precise – was under overseas control” (Ashbolt, 75-76).

Amidst intellectual and political indolence, Australians could have looked forward to a future when rivers and harbours would become more polluted, air more contaminated, soil more depleted, forests more denuded, beaches more eroded, ecology more unbalanced. And there would be overcrowded cities, chaotic transport, crime, poverty, disease and nervous tension to mar most megalopolitan complexes in the world. And that would happen because Australians would be satisfied with a life of wakeful anaesthesia and backwater colonialism.

Australia was facing the prospect of becoming a vast disused quarry, of moving in a century from the condition of a Hanoverian colony and later a British sheepwalk to that of an American protectorate and multinational empty quarry. By the mid-1960s slightly more than one-third of the total value of Australian mineral and fossil-fuel production was controlled by non-Australian ventures. By 1967 the figure had risen to nearly 53 per cent, and on the past rate of progression would [in 1974] be around 70 per cent. Certainly over 70 per cent of the mineral sector, considered separately, is in foreign hands” (Ashbolt, 347).

What Whitlam was offering while delivering his ‘Program’ on 13 November 1972 was a policy of “buying back the farm”. And he was not alone; most notably with him were Dr. James Ford ‘Jim’ Cairns, Minister for Overseas Trade and Minister for Secondary Industry who eventually became Treasurer and Deputy Prime Minister, and Reginald Francis Xavier – better known as ‘Rex’ – Connor, Minister for Minerals and Energy.

This explains how important in the ‘Program’ was the matter of Foreign Investment. Opening the campaign Whitlam said:

“FOREIGN INVESTMENT

Rural industries no longer hold the dominating position in Australia’s export trade that they once did. But they have been traditionally and overwhelmingly the industries which Australians have controlled, industries from which Australians – all Australians – have derived the benefit and profit, and industries for which Australians – all Australians – have shared the burden in times of hardship and difficulty.

Now, the most profitable and significant of Australia’s industries and resources are under foreign control. Sir John McEwen described this process as selling a bit of the farm year by year to pay our way. Mr. McMahon, more than any other Liberal, prevented any effort to limit foreign investment in those years. More than any other Australian, Mr. McMahon bears the responsibility for Australia “selling the farm”. But in truth, it has not been the “farm” which has been sold – not the industries like wheat or wool or fruit or dairying or gold, the industries which have faced the crisis and hardships of recent years. It is the strongest and richest of our own industries and services which have been bought up from overseas. It’s time to stop the great takeover of Australia. But more important, it’s time to start buying Australia back [emphasis added]. A Labor Government will enable Australia and ordinary Australians to take part in the ownership, development and use of Australian industries and resources”.

The 1973 oil crisis pushed the costs of energy to an all-time high, and caused disarray to economies all over the world. Australia suffered with the rest of them, with rising inflation and unemployment.

One of the Whitlam Government’s policies was to reclaim Australian ownership of Australia’s vast natural resources, such as oil and minerals, and its manufacturing industries. By the late 1960s, foreign control of the mining industry, for example, stood at 60 per cent, while 97 per cent of the automobile industry was foreign-owned. Both Whitlam and Connor, Minister for Minerals and Energy had grand ideas for developing the necessary infrastructure, and the means to help Australian companies to “buy back the farm”. Connor’s schemes included a petroleum pipeline across Australia, uranium enrichment plants, updated port facilities, and solar energy development, as well as the establishment of government bodies with the authority to oversee development and investment in key areas, such as oil refineries and mining. Connor estimated that Australia’s mineral and energy reserves were worth $5.7 trillion dollars – at 1972 values.

However, buying back the farm would not be cheap for a nation in the grip of inflation and economic stagnation. It was determined that the government would need about $4 billion. While Australia had an excellent credit rating with its usual lending banks in ‘the City’ – the term often used as a metonym for the United Kingdom’s trading and financial services industries – and ‘at Wall Street’, no established bank would extend Australia an amount even close to a quarter of what it wanted.

The other side to the oil crisis of 1973 was that the members of the Organisation of the Petroleum Exporting Countries in the Middle East were rolling in petrodollars. To Whitlam, Rex Connor and also Jim Cairns the Middle East seemed an appealing source of funds, as it would also be yet another step towards gaining independence from Australia’s traditional economic partners.

In 1974 Whitlam instructed Connor and Cairns to find a Middle Eastern source for a $4 billion loan.

Thus began the so-called ‘loans affair’.

As soon as it became known that the Australian Government wanted to obtain such a large loan, both Connor and Cairns were inundated with offers to broker the loan. Most offers were not worthy of consideration.

There were two offers, however, which brought about the downfall of both the Ministers involved, and eventually the downfall of the Labor Government.

In March 1975 Jim Cairns, now Deputy Prime Minister and Treasurer, met one George Henry Harris, a Melbourne businessman best known in his role as President of the Carlton Football Club. Harris was on very friendly terms with many leading members of the Melbourne ‘Establishment’. He was also a friend of Phillip Lynch, Liberal Party Deputy Leader and Shadow Treasurer of the federal Opposition. Harris had first approached Cairns in a 16 November 1974 letter, by which letter he sought approval for himself and one Nagy to negotiate overseas loans for state authorities. On 7 March 1975 Harris produced a telex from Sunlight, a New York company, which was prepared to offer $4 billion at 7.2 per cent interest “with a once-only brokerage fee of 2.5 per cent”. To confirm that the offer was genuine, Harris showed Cairns a letter from the New York office of Commerce International. According to an intermediary present at the meeting, Cairns rejected the offer, as the terms of the loan were “unbelievable” and a “fairy tale”; Cairns also flatly refused to sign any letters making a commitment to the brokerage fee. He did, however, write for Harris two letters saying that the Australian Government was interested in raising a loan.

Now the facts become fairly foggy. It seems that Harris was going in and out of Cairns office to dictate a draft letter to one of Cairns’ secretaries, one of whom Harris apparently knew very well. So she came out of Cairns’ office and handed an additional letter to Harris.

The two previously mentioned letters said nothing compromising, but the third letter which also carried Cairns’ signature was, fatally, an agreement to a 2.5 per cent commission.

Two months later, Cairns was asked in Parliament whether he had signed a letter committing the government to a 2.5 per cent brokerage fee. Cairns denied he had signed any such agreement. However, several days later, a letter with Cairns signature was reproduced in major newspapers around Australia. Cairns did not remember signing the letter, and said so. It was easy for Cairns to claim that he might have signed the letter in question unknowingly while signing a batch of fifty or so letters and that it was not uncommon practice for politicians to sign letters that they had little or no memory of signing. Many blamed the disorganised state of Cairns’ office for what ultimately turned out to be a misleading statement to Parliament in June that he had not authorised any such commission. Easy, but not successful.

The fact remained that that letter carried Cairns’ signature, and on 2 July 1975 he was forced to resign his position for misleading Parliament.

The evidence that Cairns was set up is compelling. The motives may have been not only to discredit and damage the Whitlam Government, but also to have Cairns removed from office. Cairns was already one of the most popular Labor ministers for his leadership of the anti-Vietnam war movement. His popularity rose over Christmas 1974, when as Acting Prime Minister he flew to Darwin to view the destruction caused by Hurricane Tracy. As Deputy Prime Minister he would be the next in line to take on the leadership of the Labor Party. But as he was quite to the Left of the Prime Minister and much more vociferous than Whitlam in criticising the American Administration, the prospect of Cairns being the next Prime Minister frightened the C.I.A. Even early on attempts were made to discredit Cairns. In June 1974 A.S.I.O. had leaked their dossier on him to The Bulletin. It indicated that A.S.I.O.’s main concern about Cairns was the ‘terrorist’ potential of his part in the anti-Vietnam war protests.

Far more startling are the facts concerning George Harris and the loans affair. The letter Harris showed Cairns was from Commerce International, an arms dealing company based in Belgium, and with well-known links with the C.I.A. Commerce International remains a highly classified topic at the C.I.A.

It does not seem completely clear how the Opposition obtained knowledge of the letter with Cairns signature on it. However, Harris was seen with Phillip Lynch, Deputy Leader of the Liberal Party, a few days before Cairns was asked in Parliament about the letter.

Further evidence of a set-up was provided by one Leslie Nagy, an intermediary at the initial meeting between Cairns and Harris. A Sydney businessman, Nagy was the senior partner of Alco International in which he held a sixty per cent interest while Harris, who had joined on 1 March 1974, held a forty per cent interest. According to Nagy, Cairns had left the meeting, refusing to sign his name to a letter making a commitment to a brokerage fee. Yet minutes later, to Nagy’s surprise, Harris produced a letter with Cairns’ signature agreeing to the 2.5 per cent commission fee. While Harris denies that he set Cairns up, Cairns always denied having signed the incriminating letter.

Finally, the C.I.A. itself provided an interesting hint that there was some sleight-of-hand in the loans affair. The National Intelligence Daily, the C.I.A.’s intelligence gathering arm’s top secret briefing document for the President, reported on 3 July 1975 that Dr. Cairns had been dismissed, “even though some of the evidence had been fabricated”. An A.S.I.O. officer writing for The Bulletin in June 1976 concurred. He said that in his opinion, “some of the documents which helped discredit the Labor Government in the last year in office were forgeries planted by the C.I.A”.

Just like Cairns, Rex Connor, Minister for Minerals and Energy, was commissioned by Whitlam to find a Middle Eastern source for the $4 billion loan. The loan was to be used to fund a number of natural resources and energy projects, including the construction of a natural gas pipeline, the electrification of interstate railways and a uranium enrichment plant.

The loan was sought not from the traditional American and European sources, but from the Middle East, which was awash with petrodollars, following the quadrupling of oil prices in 1973 and 1974.

The search began by accident in October 1974 when one Gerry Karidis, a South Australian migrant from Greece, met up with a friend of his, Clyde Robert Cameron, then Minister for Labour, at a party in Cameron’s electorate. Karidis told Cameron that he knew of some sources for loans if the Australian Government was interested. Cameron passed the information on to Cairns and Connor, who then met with Karidis. Karidis was not certain of the sources of the funds, but a friend of his had assured him that the money could certainly be raised. Karidis was adamant that $4 billion petrodollars were available, and more.

There would be an intermediary, one Tirath Khemlani, a Pakistani businessman. Khemlani volunteered to broker the loan at very reasonable rates, despite the fact that he had no experience in brokering loans, let alone such a large one. From the beginning, there was something unsettling about Khemlani’s behaviour, and why Connor would trust him remains a mystery.

From the very start, the connection between Karidis and Khemlani was not clear. The line of finance seemed to pass through an Adelaide jeweller and opal dealer, one Tibor Shelley. Khemlani, who was manager of Dalamal and Sons, a London-based commodities firm, had learnt of the Australian interest through a friend, Theo Crannendonk, a Dutch arms and commodities trader who in turn knew a Hong Kong connection of Tibor Shelley’s. It was Thomas Yu, another Hong Kong arms dealer. Yu’s firm had a very close association with Commerce International, which is a very powerful Brussels-based armaments outfit with well-known links with the C.I.A.

Khemlani, a novice in high finance, wanted to broker the loan and in November 1974 flew to Australia. He arrived in Sydney on 11 November, in the company of Theo Crannendonk. Karidis was among those who met Khemlani at Sydney airport and took him to meet Rex Connor. Khemlani would say that he first heard that the Australian Government was interested in raising a loan while he was visiting his friend Crannendonk. Khemlani was in Crannendonk’s office when a telex about the loan came through from Thomas Yu.

Connor told Khemlani about the government’s interest in a $4 billion loan, and gave him a letter of introduction to that effect. On 13 December the Australian Executive Council – which on that day consisted of Whitlam, Cairns, Connor and Attorney-General Lionel Murphy – authorised Connor to raise the $4 billion 20-year loan, albeit “for temporary purposes”. There was a fault there: the Executive Council has the power to approve loan-raising activities without consulting the Parliament, but only if the loans are “for temporary purposes”. And, though there was a pressing reason in that the loan was to serve “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”, it remains difficult to reconcile the borrowing of such large sum, not only for twenty years but also “for temporary purposes”. It must be assumed that secrecy was the motive for such extra-ordinary process. Had the Executive Council members consulted with their colleagues and/or brought the matter to Parliament, they would not have caused so much damage to the Government; they would not have entered into a temporary loan the terms of which meant that the Australian Government would have had to pay $20 billion in November 1995.

It seems that Khemlani made various attempts to raise the money. But each time he claimed to have secured the sum, the deals would fall through. By late December 1974 the top echelon of the Australian Treasury and other officials became increasingly suspicious that Khemlani was leading the Government on. Sir Frederick Wheeler, the permanent head of the Treasury Department convinced Cairns, then Treasurer, that Khemlani was lying to the Australian Government about his ability to raise the loan.

On 21 December 1974 Connor telexed Khemlani and terminated their relationship. On 7 January 1975 the Executive Council revoked Connor’s authority to search for loan sources.

Nevertheless, Khemlani continued to work on the loan-raising, and on 28 January Connor’s loan authority was re-instated, on Khemlani’s promise that he was confident that a loan would soon be provided, even up to $8 billion. Connor’s authority, however, was reduced to securing a loan for only $2 billion.

But Khemlani failed again. Nevertheless, in the following months Khemlani promised Connor that he could raise the money. Regardless of the many disappointments Connor still believed that Khemlani would have delivered. Clearly Connor had become obsessed with Khemlani’s purported ability even though the had been let down every time.

On 20 May 1975 Connor’s authority was revoked once and for all. But three days later, Khemlani contacted Connor and told him that a loan was within short reach. Connor replied positively, and continued to deal with Khemlani, without authority and unbeknownst to any person in the Government. On 10 June Whitlam told a press conference that none of his Ministers any longer had the authority to raise a loan, and no loan was being raised. On 9 July Connor was asked to table in Parliament all documents relating to his loan-raising activities. He neglected to tell Parliament that he was still dealing with Khemlani.

Leaks of the loan deals appeared in various newspapers around the country. Then in October 1975, after nearly a year of promises to drum up a loan, Khemlani turned up in Australia with two suitcases full of the telexes Connor had sent him, including those sent after Connor was ordered not to contact Khemlani again. Khemlani handed the telexes over to the Opposition – which had provided Khemlani with bodyguards on his arrival to Australia – and the incriminating telexes appeared in newspapers around the country.

It is not known why Khemlani would turn on the Government as he did, but it is presumed that he was handsomely rewarded for it. The Liberal-Country Party Coalition denied they had paid Khemlani, but there is evidence that the media did buy the telexes off him.

There must have been something in the mind of Sir Frederick Wheeler beyond the ‘established tradition’ of borrowing from ‘reputable sources’ in London and Washington. During lengthy discussions the frequent question had been: why had Khemlani volunteered to broker a loan of $4 billion? And another question might have been: how could Khemlani devote so much time and spend so much money about the project? Further: why would the intended lender – and not the Australian Government – have paid for his services?

Some new elements emerged in time. For instance, both Thomas Yu, from whom Khemlani was said to have heard about the Australian Government’s search for the loan, and Theo Crannendonk were together in a joint venture with another character connected with Commerce International. It was one Gerhard Whiffen, who represented Commerce International in Singapore. And the purpose of the venture was a shipment of arms to Angolan rebels supported by the C.I.A.

In addition, the joint venture included one Chris Brading, about whom little is known except for the fact that he was a pilot for C.I.A.’s Air America, and one Don Booth who had a reputation as a former C.I.A. operative. Naturally, the C.I.A. has denied having a file on Khemlani, but of course such denial would be by definition unreliable. The same organisation, however, directed any question to the National Security Agency, which is another notorious U.S. intelligence organisation of the United States government, responsible for global monitoring, collection, and processing of information and data for foreign intelligence and counter-intelligence purposes. Such information is then passed on to other ‘intelligence’ agencies.

It does not come as a surprise that the N.S.A. would have information about Khemlani who was telexing right and left in the Middle East with a view to obtain the loan.

Khemlani was certainly a curious character. Whether by accident or design, in 1980 he left at the home of a ‘business consort’ several suitcases full of documents detailing many of his activities over previous years, including his connection with the Nugan Hand Bank.

Some of the documents show that in 1978, if not before, Khemlani had extensive business with the Nugan Hand Bank’s Cayman Island’s branch. One can smell the whiff of Shackley.

Whether Khemlani had a connection with Nugan Hand Bank before 1978 is not known, but again several of the documents show that in September of that year he had contacted the Bank to act as a trustee for several of Khemlani’s projects.

The papers also indicated that, after his loan-raising efforts on behalf of the Australian Government, Khemlani had been involved in seedy business in several countries, including Ghana, Haiti and Sierra Leone.

In 1979 Khemlani was arrested by the U.S. Federal Bureau of Investigation for defrauding the Citizens National Bank in Chicago of $1 million worth of bonds. He was tried and convicted but given a suspended three-year sentence in exchange for turning state’s evidence and pointing at a criminal syndicate with which he had been working.

Surprisingly, the U.S. authorities found it necessary to inform A.S.I.O. of Khemlani’s arrest.

There is at least one reliable source of corroboration that Khemlani had possible connections with the C.I.A. The source explains how Khemlani was responsible for providing documents, falsified by the C.I.A., which were used to embarrass the Whitlam Government and led to the downfall of Connor and Cairns when they were tabled in Parliament (Ralph McGehee, Deadly Deceits: My 25 Years in the CIA. Melbourne 1999).

On 11 November 1975 Prime Minister Whitlam received a plain envelope. It contained the draft of a telex, which had been found in a hotel room in Hawaii, and shows the C.I.A. involvement with Khemlani.

The draft reads:

“1. Do not transmit via phone or letter. Encipher before transmitting by telex contact ‘LM’ at 536 6009 for assistance.

Reference your correspondence on 11 Oct. 1975.

On 16 Oct., Mr. T. Khemlani will be departing for Singapore to arrange matters in case government capitulation seems near. If not Mr. Khemlani will return to Australia on or about 26 Oct. 75 to create further chaos.

Newspapers’ editorials must continue to put pressure on the Labor Government if capitulation is to succeed. If capitulation does not succeed by 14 November 75, support from overseas will cease until mid 76”.

The draft telex appeared in May 1977 in The Sun of Sydney, an afternoon tabloid newspaper owned by Fairfax Holdings as the afternoon companion to The Sydney Morning Herald.

The C.I.A., contacted at the telephonic number provided in the draft, denied that anyone with the initials ‘LM’ was working at its headquarters in Hawaii. Understandable, one would say.

Yet, “In 1981, a CIA contract employee, Joseph Flynn, claimed that he had been paid to forge some documents relating to the loan affair, and also to bug Whitlam’s hotel room. The person who paid him was Michael Hand, co-founder of the Nugan Hand Bank (The National Times, Jan. 4-10, 1981)” (Heather Gray, US Meddling in Australian Politics, Counterpunch, 5 December 2007).

On 26 May and 2 June 2013 the Australian Broadcasting Corporation went on air with Whitlam: the power and the passion. The documentary revealed many details of persons deeply connected with the Liberal/Country Party Coalition. Amongst other matters the documentary showed how Khemlani had been provided with a bodyguard on his arrival to Australia.

Unfortunately, the A.B.C. repeated most of the allegations thrown at the Whitlam Government by Rupert Murdoch’s newspapers with no evidence whatsoever to support them. It simply repeated ugly and untrue stories that The Australian had run for weeks; stories which have since been shown to be contrived, exaggerated and plainly false.

The documentary did not mention that Phillip Reginald Lynch – later Sir, who was Deputy Leader of the Liberal Party, had ‘facilitated’ Khemlani’s travel arrangements. He and the future Prime Minister John Winston Howard were among the busy bee Liberals who secretly brought Khemlani to Australia and took him to a Canberra hotel with his two suitcases of records of supposed dealings with the Whitlam Government. Yet, after long days and nights sifting through the papers, Howard and his colleagues found nothing – absolutely nothing – which could be held detrimental to Whitlam and/or his government. But Opposition’s propaganda did its best job for the occasion. And Lynch and Howard always had that quality that the Germans call Sitzfleisch – a reference to a person’s buttocks with the necessary air of authority and staying power.

The charge of having had contact, particularly secret contact, with Khemlani, outside the ‘appropriate lines of credit: the City and/or Wall Street’, and with a Pakistani to boot, developed with rapid, negative reflex in Australia.

On 14 October 1975 Whitlam, always concerned with respecting parliamentary rules, forced Connor’s resignation for having misled Parliament, just like Jim Cairns five months before him. Whitlam, who relied on the word of his colleagues, had told the Australian people that no more attempts were being made to raise such a large loan. He was also accused of misleading the public. The scandal provided for the Opposition with the “reprehensible circumstances” that the Leader of the Opposition needed to block the passage of the Budget though the Senate and force an election.

To be continued. Tomorrow . . . Is this an ally?

* Dr. Venturino Giorgio ‘George’ Venturini devoted some sixty years to study, practice, teach, write and administer law at different places in four continents. In 1975, invited by Attorney-General Lionel Keith Murphy, Q.C., he left a law chair in Chicago to join the Trade Practices Commission in Canberra – to serve the Whitlam Government. In time he witnessed the administration of a law of prohibition as a law of abuse, and documented it in Malpractice, antitrust as an Australian poshlost (Sydney 1980). He may be reached at George.Venturini@bigpond.com.

 

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