The CIA has often taken the rap, when things go wrong, when in fact it was merely carrying out the instructions of civilian policymakers. For example, the training of Cuban expatriates and Lebanese militiamen in terror bombing, which has brought about the killing and maiming of hundreds of innocent civilian bystanders, was not a renegade act by the CIA but rather the execution of policies set by presidents from Eisenhower to Reagan.

Nor has the CIA been alone in carrying out secret plans that turned out to work against America. Other operatives, attached to the Defense Department, the National Security Agency, and the White House have also participated.

Decisions made at the highest levels of government, by our past eight presidents, have bestowed legitimacy on the stretching of the cloak: men in the government service are expected to-ordered tosecretly violate our laws to further national policy.

Agents operate in secrecy. Under Presidents Eisenhower and Kennedy, there are vivid examples of times the president, like some Mafia boss, was for his own protection intentionally kept in the dark about exactly what his underlings were doing. Former Undersecretary of State C. Douglas Dillon testified before the Senate Assassinations Committee in 1975 regarding the attempted murder of foreign leaders during the Eisenhower administration. He said that CIA chief Allen Dulles "felt very strongly that we should not involve the President directly in things of this nature." Eisenhower, Dillon said, would simply order "whatever is necessary" to be done, and Dulles and his organization would take it from there.

President Kennedy ordered a secret, illegal, and ultimately unwise war against Cuba, involving probably thousands of covert operatives and lasting many years beyond the public disaster at the Bay of Pigs. There's no public record on whether he specifically ordered the murder of Fidel Castro, though the CIA attempted it many times. Kennedy's closest aides in those years have argued persuasively that he wasn't aware that during one period the CIA hired some Mafia bosses to perform the Castro assassination.

What is clear is that the policy, and its necessarily distanced execution, resulted in setbacks both for our friendly relations throughout Latin America and for our security against criminals at home. Many of the ill-supervised operatives we hired were terrorists and criminals, and went on to practice their craft against civilians here and abroad while their "national security" links protected them against law enforcement. One Mafia gangster the CIA hired was actually sharing a bed partner with Kennedy at the time also, apparently without his knowledge.

One may assume that this distancing of presidential command from the invited illegal execution has continued. President Reagan became so obsessed with overthrowing governments in two relatively small and remote countries, Angola and Nicaragua, that secret operations were devised in his name to skirt federal laws that specifically banned such activity. In early 1987, the overthrow attempts appeared to be failing-in main part because of inadequate popular support in Angola and Nicaragua. Thousands of innocent Angolan and Nicaraguan civilians had been killed or wounded.

The secrecy around the attempts inevitably collapsed, greatly embarrassing the United States and perhaps mortally wounding the Reagan administration politically. In the truly important country of South Africa, the ability of future generations of Americans to trade with a black majority government was endangered by the United States's alliance with white minority South Africa over the Angolan issue.

Meanwhile, millions-possibly hundreds of millions-of American taxpayer dollars were missing and unaccounted for. As these words are written, investigations are underway to sort out what appears to be a long chain of criminal acts. Already, three senior government officials, including a general and an admiral, have invoked their Fifth Amendment right not to incriminate themselves rather than explain to the Congress what they've been doing with the money it appropriates.

Rough orders are given by presidents-prevent such-and-such from happening at all costs-and left for interpretation straight down the intelligence community's chain of command.

So when agents steal, when they facilitate drug deals, how far does the patriotic cloak granted by national policy stretch to cover them? Does it cover an agent who lines his pockets in side deals while working in the name of national security?

What are the boundaries of law and morality when it comes to helping foreigners who are regarded as our "friends," and hurting those who are regarded as our "enemies"? What acts lie beyond a presidential directive to do "whatever is necessary"? When has license been granted, and when simply taken?

Should any act, no matter how wrong, be covered up to avoid embarrassing our national security program? Who decides-the very people who run the program? And by what measure? Is the cover-up really to protect our country's security-or just to protect the politicians and bureaucrats who should be held to account?

So the CIA began supplying the KMT through two front companies: Civil Air Transport, headquartered in Taiwan, and Sea Supply Corporation, headquartered in Bangkok. Only a few people with top security clearance knew that both companies were covertly owned by the U.S. Government. They are important, not only for what they did in the 1950s, but also because they were precursors of organizations that touch directly on Nugan Hand in the 1970s.

After China was given up on, the focus of U.S. efforts in East Asia shifted to Indochina. Civil Air Transport was then transformed into (among several successor entities) Air America. That was the airline Michael Hand worked closely with as a CIA contract agent. Many of the CIA associates whose money first helped Hand get started in business in Australia were Air America employes.

Sea Supply Corporation, for its part, was founded and run by a lawyer and CIA operative named Paul Helliwell. During World War II, Helliwell had been chief of special intelligence in China for the OSS. Colleagues from those days told the Wall Street Journal's Jim Drinkhall that Helliwell, then a colonel, regularly used to buy information with five-pound shipments of opium ("three sticky brown bars," one man said). Drinkhall also reported being told that Helliwell ran an operation code-named "Deer Mission," in which OSS personnel secretly parachuted into Indochina to treat Ho Chi Minh for malaria.

After the heyday of Sea Supply in the 1950s, Helliwell moved to Miami and became an important figure in the Bay of Pigs invasion and the CIA's other battles against Castro. His Castle Bank both funneled money for the CIA and, privately, operated as a profitable tax-cheat business. Its unexpected demise in the mid-1970s directly coincided with the growth of Nugan Hand. Considering the gaggle of brass from the U.S. intelligence community who helped push Nugan Hand into orbit in the late 1970s, there has been understandable speculation that Nugan Hand was Castle Bank's successor.

Michael Hand was born in the Bronx, December 8, 1941. His father, a New York civil servant, still lives in a condominium in Queens, but absolutely will not discuss his son, or anything else, with reporters. Visitors are barred from the building by locked doors and security guards. A sister, reportedly severely handicapped, is also said to live in the New York area. Hand is said to have sent home money for her care regularly over the years.

The old Bronx neighborhood is now a slum, but when Hand was young it was upper middle class, and his high school, De Witt Clinton, was considered one of the city's best. He graduated 248th in a class of 695, won a scholastic achievement award, was appointed student prefect, and was starting receiver and defensive back on the football team. He passed every class he took, and was noted for exceptional character, courtesy, cooperation, and appearance. His IQ registered an also exceptional 131.

Graduating in 1959, he stated that his ambition was to become a forest ranger. Shortly afterward, his mother died in a fall from a third-floor window; the question of accident or suicide was never resolved.

Mike Hand turned into a bearish man, with thick layers of muscle that melted largely to flab in later years. On the one hand, he developed an aggressive, macho, locker-room image that put more sensitive men off; on the other, he was known as a devout Christian Scientist and regular churchgoer, who rarely drank.

When Hand became a prominent banker in Australia, he told the world he was a graduate of Syracuse University, and mentioned to some that he had taught school in California before joining the army. The record shows instead that in 1961 he completed a one-year course at the New York State (forest) Ranger School. The school was attached to Syracuse University but hardly the equivalent of its B.A. program.

Hand's teacher, David Anderson, says Hand finished thirtyeighth in a class of forty-nine, though Anderson has a lasting impression of Hand as extremely personable. He must have been that, just to be remembered after all these years. Anderson says that Hand wrote from California in 1962 that he was managing a swim and sports school in the swank Los Angeles suburb of Palos Verdes Estates. The next year, Hand wrote back that he was taking Green Beret training at Fort Bragg, North Carolina. The record shows he enlisted in the army in May 1963.

In Vietnam, Hand won a Silver Star, a Purple Heart, and the Distinguished Service Cross, second only to the Congressional Medal of Honor as the nation's highest military award. On June 9, 1965according to the Distinguished Service Cross citation-he almost single-handedly held off a fourteen-hour Vietcong attack on the Special Forces compound at Dong Xaoi.

Alexander Butterfield, a former Asian-intelligence officer, had some helpful advice for a reporter asking questions about Bernie Houghton. In 1973, Butterfield had attained instant celebrity by revealing to Congress and the world that Richard Nixon's Watergate conversations were secretly taped in the Oval Office. (Little if anything was made of the curious circumstance that a career intelligence operative had played such a pivotal role in the downfall of a president.)

Asked about Houghton, Butterfield quickly said to call Allan Parks, a retired air force colonel who now runs the flying service at Auburn University in Alabama. Sure enough, Parks remembered Houghton well, mostly, he said, from his days as intelligence officer at the U.S. Embassy in Bangkok during the war. Parks recalls constantly stumbling over Houghton's name in cable traffic.

Military secrecy still prevents Parks from telling all he knows, he says, but he remembers meeting Houghton-and he places Houghton in Asia well after Houghton allegedly retired to Australia to become a barkeep.

"He ferried C-47s, cargo airplanes, from Thailand," Parks says. "The man, he was running everything. Between Australia and Thailand. I met him in Bangkok in a bar. I was involved in Laos in some things I can't discuss in '70 and '71. There was traffic I read relating to that. But I can't go into it because it's all secret." It was something to do, Parks says, with "Project 404," which is still "classified." (Asked about Michael Hand, Parks has the same response: "I can't tell you. It's classified. No comment.")

But the mention of Houghton elicits reminiscences from Parks: "There's no doubt about it, he'd fly anything. The Golden Triangle, that's where he got his opium from. There was one flight, he flew in slot machines. He did some deals over in India."

Asked the name of Houghton's airline, Parks just laughs, and says, "He didn't call his planes anything. Nobody could track his airplanes. He didn't have an airline, like. The embassy was always trying to run him down. It was funny." Asked for other sources, Parks says, "Anybody who would know would give you the same answer I would."

Then he refers a reporter to General Aderholt, who he says also observed Houghton from the U.S. Embassy in Bangkok. Aderholt went on to become commanding general of the U.S. Military Assistance Command in Thailand, and, with General John K. Singlaub, ran covert air operations throughout the Vietnam-Laos-Thailand war zone. Retiring from active duty after the war, generals Aderholt and Singlaub took command of various right-wing paramilitary groups in the United States.

During the mid-1980s, when the Reagan administration was barred by Congress from supplying and directing Contra rebels trying to overthrow the Government of Nicaragua, but was determined to do so anyway, Generals Singlaub and Aderholt played important roles in keeping the Contra rebellion alive. Though they were supposedly working through private channels, their efforts were coordinated by the White House through Lieutenant Colonel Oliver North, and the source of their funds was open to question during the Contra scandal investigations of 1987.

Aderholt seems to have been in good position to know what was going on in Southeast Asia during Bernie Houghton's days there. Aderholt had combined his air force career with work on the side for little airlines and medical relief agencies overseas, creating the aura of someone involved all along in private "front" operations for the CIA or some related U.S. intelligence agency. But Aderholt's recollections of Houghton contradict with the accepted chronology of Houghton's life.

Frank Nugan got a law degree from Sydney University in 1963, then set out for North America, where he pursued two highly unusual postgraduate degrees in law. His only real achievement during his American stay, though, was constructing, with some artifice, the resume that was to lure many clients when he returned down under.

Nugan later claimed he achieved a reputation as an international tax expert-the result, he said, of his studies at the University of California, Berkeley, for a master of laws degree. Master of laws is a degree most lawyers don't think worth the trouble of obtaining, but which Nugan won in 1965. A veteran professor at the Berkeley law school, Richard Jennings, recalls Nugan as "a kind of wild fellow" who "dropped into Berkeley with an XKE, kind of a playboy type." He remembers Nugan spending time with glider airplanes, and laughs at the idea that Nugan was a tax expert. "He never even studied taxes when he was here," Jennings says.

Next, Nugan went to Toronto, where he studied for the even more arcane degree of doctor of laws (he never got it). To help pay the Jaguar's gas bills and other expenses, he worked for a corporations task force performing an overhaul of Canadian corporate law. Nugan later claimed-and it was widely believed in Australia-that he had a big hand in rewriting the Canadian legal code. In fact, the task force's report names three authors and twenty-four valuable assistants, none of whom was Frank Nugan.

Philip Anisman, a professor of law at Osgood Hall Law School of York University in Toronto, remembers that in 1967 Nugan got a clerical and research job with the task force. But Anisman says Nugan never had a hand in the task force's recommendations. Anisman says Nugan was "kind of wild, loquacious, fun." But on the main expertise Nugan claimed to bring back from North America, Anisman says, "I never heard anything about any work he did on tax."

Recollections of when Nugan returned to Australia vary-from late 1967, about when Hand arrived, to early 1969. And just how did Nugan-the playboy heir to a modest food-processing fortune with strange beginnings, even stranger criminal associations, and built in part on U.S. military contracts-happen to meet Hand, just coming off active duty as a U.S. intelligence operative in Southeast Asia? Nobody seems to remember that, either. Asked under oath at the inquest, Hand declared that he didn't remember how he met Nugan-highly unlikely, considering that for better or worse they became the most important person in each other's lives.

In his otherwise admirable fight against the scourge of drugs, fraud, illegal arms sales, and abuse of government power, Mr. Kwitny has maliciously maligned and assassinated the character of some truly great American heroes and in so doing has besmirched the reputations of the military and intelligence services of this nation. My purpose here is to defend the honor of those men and the services they represent.

The general comments herein concern only those people for whom I had some measure of responsibility for their involvement in Nugan Hand and for whom I can speak with great confidence. Their names are: General Edwin Black, General Erle Cocke, General LeRoy Manor, Mr. Dale Holmgren, Dr. Guy Pauker, Mr. Donald Beazley, Mr. William Colby, Mr. Walter McDonald, Mr. Robert Jantzen, and Mr. George Farris (hereinafter, THE TRUE PATRIOTS).

I specifically exclude all others, not because I consider them guilty or care any less about their fair treatment, but because I do not have the time, space, or knowledge to defend them against the alleged crimes. I use the word "alleged" advisedly, for as of this date, more than seven years after the collapse of Nugan Hand, no crimes have been proven.

Before addressing the general reader, I direct my first comments to the Nugan Hand employees and investors, who were the principal victims of the bank failure. Each of THE TRUE PATRIOTS has expressed to me a most genuine distress for your losses, particularly those of you whom they might have influenced to invest in Nugan Hand. Most of them lost significant sums of their own. For example, I never received any pay due me and personally lost over twenty-five thousand dollars in unreimbursed business expenses. We are, therefore, able to share both your agony and your anger.

Having devoted their lives to the service of their country and having often risked those lives in dangerous missions, THE TRUE PATRIOTS highly treasure the morale and reputation of those who are taking the same risks today in our national defense. They are distressed over any damage done to that morale and reputation by such warped and distorted viewpoints as found in this book.

Each of them deplores the injury done to the relationship between the United States and Australia, a long, strong, and mutually important relationship, which the Soviet Union and its KGB Disinformation Service would dearly love to destroy.

For the above reasons they unanimously regret any distress that their association, however innocent, might have contributed to others. I add to these regrets my own remorse for having induced THE TRUE PATRIOTS to join Nugan Hand. I must take full responsibility for that. They associated with Nugan Hand largely because of their trust in my assurances that I had gone to extraordinary lengths to determine the integrity of that organization and found no evidence whatsoever of a shortfall.

I informed them that my assurances were based on my personal interviews with a wide range of highly respectable, knowledgeable people and agencies, many of whom had a recognized duty to know the bona fides of Nugan Hand. These included: the managing directors of the two largest banks in Australia, which held Nugan Hand accounts; an agent of the Reserve Bank, which has responsibilities similar to our Federal Reserve Bank; the Premier of New South Wales, whose private office was adjacent to the Nugan Hand offices; two prominent Australian lawyers who had worked closely with Mr. Nugan; an agent of the Australian Tax Department, who was familiar with Mr. Nugan's tax work; the managing director of the Sydney subsidiary of Citicorp, who traded securities with Nugan Hand; a partner of the accounting firm that certified Nugan Hand records; vice-presidents of two large international banks that had accounts with Nugan Hand; the U.S. Consul General in Sydney; the desk officer in the Department of Commerce who publishes financial reports on Australian firms; agents of the Treasury Department; agents of the FBI; some highly satisfied clients of Nugan Hand; and several employees. Of all these, none gave any unfavorable information, and most had high praise. General Black and others interviewed similar groups, including prominent newspapers, with comparable results.

In recruiting THE TRUE PATRIOTS, I explained the substance of my lengthy conversations with Mr. Nugan and Mr. Hand about their ultimate objective to build an international "one-stop business shopping-center" organization to make it easier for small businesses to compete in the international marketplace against the multinational cartels. They liked the concept and the opportunity to pursue it. They believed, as I did, that their employment was honorable, that Mr. Nugan and Mr. Hand were honorable, successful, and reliable businessmen, with the highest sense of personal integrity and genuine concern for their clients.

In response to queries about how the firm made money, Mr. Nugan gave me an extensive mathematical dissertation, supported by genuine money market documents, on how to "gross-up" the interest yield on money by buying and selling discounted bills of exchange on the lively Sydney market. He later held a conference of other employees to explain this important aspect of Nugan Hand's money market operation. He further informed me and others that his law practice yielded four to twelve million dollars per year (a false claim, nevertheless substantiated by two other lawyers and a CPA) and that the money was always available as a drawdown to protect our client's deposits.

When I first joined Nugan Hand, I undertook an intensive selftaught accounting and business-law course, at the suggestion of Mr. Nugan, as a first step to better equip myself to make business judgments and eventually assume a position of responsibility and authority in Nugan Hand Bank. In a letter dated 24 January 1977 Mr. Nugan wrote as follows:

"Your title (which may be used on your business cards, letter heads, and in all business contexts) is "President, Swiss Pacific Bank and Trust Company." In this regard you shall be a member of the Board of Directors and shall be subject to the Managing Director, (Mr. Hand) and to the Chairman of the Board of Directors (Mr. Nugan) as well as to the Board of Directors meeting as a Board in the normal course. It is contemplated that as of about the time that an interest in the Bank is made available to you, the position of President will be given its full normal powers by the Board to the effect that you shall become the Chief Executive Officer of the Bank at that time."

The title became effective on 6 April 1977 and I resigned officially by letter on 12 October 1979, never having attended a board meeting or been given any executive authority. The cunning delays of Mr. Nugan (which I now believe were contrived to forestall me from gaining the authority and information that should have accompanied my title) prevented me from being able to determine the true financial status of the bank.

For example, in June 1977 Mr. Nugan gave me my first assignment: to call on the presidents of a hundred U.S. banks to tell them about Nugan Hand's guaranteed deposit arrangements. Though it yielded poor results, this four-month project and similar ones, such as the attempted purchases of various banks and the opening of new offices, constituted the major scope of my assigned duties and authorities and served as clever diversions to my efforts toward becoming an executive.

Following my resignation on 12 October 1979, I was placed on a consulting status to Mr. Hand personally, with no Nugan Hand Bank authority whatsoever. I was enrolled in the Harvard University Business School awaiting the scheduled formation of a Nugan Hand international holding company, in which I was promised options on a 20 percent interest and a seat on the board. Nugan Hand collapsed while I was still attending school, and I then learned that several others had been promised options on the same 20 percent.

Throughout my time of observation as president of Nugan Hand Bank, THE TRUE PATRIOTS served honestly and loyally the interests of Nugan Hand and its clients. They had grown up in the military service and spent their lives in the company of gentlemen well known for honesty and honor, where it is commonplace to risk one's life, not just one's money and reputation, based on the word of a colleague. Day-to-day association with that kind of integrity leads military men to trust their fellow man, and it should not be surprising that it led these men to trust me and my judgment. If any fault can be found, it was in this trust of me, for, to my knowledge, not one of them has committed any crime, violated any law, breached any ethical standard, nor performed any act for which they need be ashamed.

Furthermore, notwithstanding Mr. Kwitny's contempt for their findings, the Australian Royal Commission (the highest judicial body established to investigate the Nugan Hand affair) found no credible evidence to charge any of THE TRUE PATRIOTS with wrongdoing. In their investigation, one of the most thorough and widely reported in the history of the country, the commission developed 11,900 pages of testimony from 267 witnesses under oath. They searched the files of the FBI and held conferences with the highest officials in the CIA. They also found no credible evidence of involvement of the CIA. But where findings of the Royal Commission such as this do not fit his fabricated version of events, Mr. Kwitny casts suspicion on the integrity or intelligence of the commission.

It might be easy to say nothing and let the reader believe Mr. Kwitny's suggestion that THE TRUE PATRIOTS were all working for the CIA. To those about whom THE TRUE PATRIOTS care most, working for the CIA is certainly an honorable profession. But hiding behind that shield would be repugnant to each of them and disloyal to the many fine people who are, in fact, working for the CIA.

Mr. Kwitny does not have the benefit of a background in the military or intelligence services, yet he states authoritatively:

"The men this book is mostly concerned with have lived their lives in a world of spying and secrecy.... they have been trained to keep the taxpayers from... finding out what they do. Compunctions about lying have seldom impeded that effort. They entered their secret world under the cloak of patriotism...."

Millions of men and women who have served in the military and intelligence services will easily recognize this as a gross distortion of the truth. They know from first-hand experience that military men and most intelligence officers live remarkably open lives, abhor lying, invite and welcome fair-minded outside attention, and often disguise the depth of patriotism that guides them. This obvious example of distortion is part of a consistent thread of deceit in Mr. Kwitny's descriptions of all the events about which I have first-hand knowledge and leads me to suspect comparable distortions about unfamiliar events throughout his text.

For example, his story that I "raced" to Sydney, Australia, to destroy records is almost totally false. Records of customs, passports, and airlines and other documents readily show this. He even admits to possible error therein, but he nevertheless uses the story to advance the false accusation that I participated in the destruction of vital records. He also fails to note that the records of Nugan Hand Bank (the only Nugan Hand subsidiary in which I might reasonably be expected to have had some personal interest in the records) were located in Singapore, not Sydney.

Furthermore, he recounts minor and irrelevant differences in the accounts of witnesses, apparently to discredit the word of THE TRUE PATRIOTS, yet he fails to note the consistency of the testimonies of those PATRIOTS taken under oath, as was found by the Royal Commission.

He preposterously describes Nugan Hand's relatively small operation as "mammoth." If Nugan Hand was "mammoth," then what word is left to accurately describe Citicorp, a New York banking firm ten thousand (10,000) times the size of Nugan Hand? This sort of distortion pervades his work and makes one wonder about his motives and his efforts to achieve accuracy.

The book also describes an "elaborate code" system used to shield illegal activity. Yet, by any standard, it was the very simplest of codes, far less complicated than pig-latin, used principally to shorten cable messages. It was prominently posted by office telex machines, was widely distributed to employees, and was available to just about anyone who wanted to use it. Only the most unsophisticated and poorly informed would truly believe that this code could have been seriously used to conceal information. To stress on staff personnel a respect for clients' rights to privacy? Perhaps. But to hide from authorities?? One would have to assume that the authorities are stupid, blind, and illiterate, or that Mr. Kwitny merely wished to give a sinister cast to the story.

The book rails against THE TRUE PATRIOTS for failure, as insiders, to uncover and expose the alleged crimes of Nugan Hand, but Mr. Kwitny fails to note that three of the ten PATRIOTS never visited the Australian headquarters, where the alleged crimes were masterminded, directed, and executed; four of them made only one brief trip; and three made only two or three trips. I personally made only four short trips there, none longer than about ten days and two less than four days. None of THE TRUE PATRIOTS were employed by Nugan Hand Ltd. or any other Australian organization. None even knew about the various companies privately owned or controlled by Mr. Nugan and Mr. Hand, through which the alleged crimes were executed, and most certainly were never allowed to examine their records. The book does not reveal that only after three months of intensive analysis by an experienced former U.S. Federal Reserve Board bank examiner, and a suicide, did the examiner find reason to suspect the true status of Nugan Hand. Even after seven years of study, the liquidating authority, with full access to the records, has been unable to unravel completely the complex accounting and record system which Mr. Nugan had established. To what extent is a prudent man expected to go to establish the integrity of his employer? Should it not suffice to check the certified assurances of reputable accountants, supervising government authorities, clients, business associates, other employees, and the record of past performance?

Through artfully fallacious reasoning, Mr. Kwitny has created criminals out of some noble and unfortunate victims. By reprinting the lies, innuendos, half-truths, loose associations, and distortions of cheap scandal sheets, left-wing newspapers, and communist-fed, antiAmerican sources, he has, wittingly or unwittingly, served the interests of the Soviet Union and the KGB Disinformation Service.

Finally, even excluding its gross inaccuracies and distortions, this book fails to make a valid case that any of THE TRUE PATRIOTS committed any crime. None were shown to have been involved in or even to have had knowledge of any drug traffic, illegal arms sales, or laundering of money. None of the deposits of their clients violated any currency or banking laws. None of THE TRUE PATRIOTS benefited materially from their association with Nugan Hand, and the only imprudence for which they might be accused is that they trusted a fellow officer.