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The Parliament of the Commonwealth of Australia

ROYAL COMMISSION OF INQUIRY INTO THE ACTIVITIES OF THE NUGAN HAND GROUP

Final Report

Volume 1

June 1985

Presented 27 November 1985 Ordered to be printed 28 November 1985

Parliamentary Paper No. 368/1985

mm

The Government of the Commonwealth of Australia and

The Government of the State of New South Wales

ROYAL COMMISSION OF INQUIRY INTO THE ACTIVITIES OF THE NUGAN HAND GROUP

Commissioner: The Hon. Mr Justice D.G. Stewart

FINAL REPORT - VOLUME ONE June 1985

Australian Government Publishing Service Canberra 1985

© Commonwealth of Australia 1985

ISBN 0 644 01334 6 This Volume

ISBN 0 644 01336 2 Set

NOTE

This Report has been edited to remove material which may be prejudicial to prosecutions or fair trial. Blank spaces therefore appear in certain parts of the Report.

Printed by C. J. THOMPSON, Commonwealth Government Printer, Canberra

ROYAL COMMISSION OF INQUIRY INTO THE ACTIVITIES OF THE NUGAN HAND GROUP

Commissioner: T he H on. M r. J ustice D. G. Stewart Secretary: Mr. G. R. L innane

G.P.O. Box 2528 Sydney N.S.W. 2001 Australia

Telephone: (02) 358 2488

28 June 1985

Your Excellency,

Pursuant to Letters Patent issued to me on 28 March 1983 by the Government of the Commonwealth of Australia I now have the honour to present to you the final report of my inquiry into the activities of the Nugan Hand Group.

Yours sincerely,

(D.G. Stewart) Royal Commissioner

His Excellency the Right Honourable Sir Ninian Stephen, A.K., G.C.M.G., G.C.V.O., K.B.E., K.St.J. Governor-General and Commander-in-Chief Government House

CANBERRA A.C.T. 2600

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ROYAL COMMISSION OF INQUIRY INTO THE ACTIVITIES OF THE NUGAN HAND GROUP

Commissioner: T he H on. M r. J ustice D. G. Stewart Secretary: M r. G. R. L innane

G.P.O. Box 2528 Sydney N.S.W. 2001 Australia

Telephone: (02) 358 2488

28 June 1985

Your Excellency,

Pursuant to Letters Patent issued to me on 28 March 1983 by the Government of New South Wales I now have the honour to present to you the final report of my inquiry into the activities of the Nugan Hand Group.

Yours sincerely,

(D.G. Stewart) Royal Commissioner

His Excellency Air Marshal Sir James Rowland, K.B.E., D.F.C., A.F.C., K.St.J. Governor of New South Wales Government House

SYDNEY N.S.W. 2000

.

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TABLE OF CONTENTS

Volume 1 Page H o .

PAPm ONE : INTRODUCTORY MATTERS 1

Section 1 Establishment and Conduct of the Commisson 3

Section 7 Construing the Commission's Terms of Reference 16

Section 3 Other Matters 31

PART TUP : PROFILES 35

Alphabetical Listing of Personal Profiles 37

Explanatory Tables 40

Personal Profiles 42

Aiphabetical Listing of Company Profiles 299

Company Profiles 301

PART THPEF : COMPENDIUM 381

Section 1 Overview 383

Section 2 In the Reainnina - A Dismal Performance (The years 1973 to 1974) 403

Section 3 The Slide Continues - The Timely Emergence of Nugan Hand (Hong Kong) Ltd (The period 1 July 1974 to 31 January 1976) 418

Section 4 The Myth is Established (The years 1^76 to 1977) 444

Section 5 Expansion Continues - But Falters in the Face of Adverse Publicity (The year 1978) 482

Section 6 Problems Multiply - Group Insolvency Accelerates - But Appearances Maintained Until the End 502

(The year 1979)

Section 7 The Death of Mr Nugan 520

Section 8 The Aftermath : 'Bedlam' 529

Section 9 The Concealment and Destruction of Documents 573

Volume 2

PART FOUR : DISCRETE TOPICS 627

Section 1 Nugan Hand (Hong Kong) Ltd 629

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Page H o .

PART FOUR (Cont'd)

Section 2 The Nugan Hand Bank 677

Section 3 The Alleged Involvement of the United States Central Intelligence Agency 739

Section 4 Access to Relevant Records Denied - the Effect of Cayman Islands Law 755

Section 5 The Auditors 763

Section 6 Bankers' Opinions 777

Section 7 An Unusual Relationship 801

PART FIVE : RECONSTRUCTING THE PUBLISHED ACCOUNTS OF NUGAN HAND LTD : 1974-1979 807

PART SIX : ALLEGATIONS OF COMPLICITY IN DRUG DEALINGS 857

PART SEVEN : ALLEGATIONS OF PARTICIPATION IN THE ILLEGAL MOVEMENT OF ARMAMENTS 891

PART EIGHT : ALLEGATIONS OF BREACHES OF EXCHANGE CONTROL LANS 939

PART NINE : ALLEGATIONS OF MONEY LAUNDERING AND TAX EVASION 989

PART TEN : BREACHES OF CRIMINAL LAW IDENTIFIED 999

PART ELEVEN : SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS 1095

APPENDICES 1101

A. (i) Commonwealth Letters Patent, 28 March 1983 1103

(ii) New South Wales Letters Patent, 28 March 1983 1113

B. Nugan Hand Representative Offices 1121

C. Allegations as to the Connection between the

Nugan Hand Group and the United States Central Intelligence Agency (C.I.A.) 1173

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Page N o .

APPENDICES (Cont'd)

D. Examples of Advertisements Used by the Nugan

Hand Group to Recruit Overseas Representatives 1179

E. Examples of Internal Bills of Exchange 1185

F. Exchange of Letters between the Government of

the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America Concernina the Cayman Islands, 26 July 1984 1189

INDEX 1205

Table of Cases Cited 1231

X

EXPLANATORY NOTE

Throughout this report:

A. The expression 'the Nugan Hand Group' is a reference to some or

all of the individuals and companies included within that

expression as defined in the Commission's terms of reference,

[see Appendix A]

R. IJhere not otherwise stipulated the currency referred to is

Australian dollars.

C. The word 'Limited' in company titles is abbreviated to 'Ltd'.

ENDNOTES - EXPLANATORY NOTE

A. Cm ..... , Jones, is a reference to the confidential transcript

of evidence heard by the Commission and the name of the relevant

witness.

T ...... , Jones, is a reference to transcript of a public

hearing of the Commission. The numerals following the

abbreviations indicate the relevant pages of the transcript of

evidence.

R· CD.... is a reference to a Commission document. The numerals

following the abbreviation indicate the relevant number

allocated to the Commission document.

C. A brief description of the Commission document and relevant

folios is niven in most cases. For example: '... Letter

Jones/Brown 15/6/77' indicates that the document relied upon was

a letter dated 15 June 1977 from Nr Jones to Nr Brown.

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For convenience the names of companies have where possible been

abbreviated in the document descriptions mentioned above. For

example 'NHL' is a reference to Nugan Band Ltd

'NHHK' is a reference to Nugan Hand (Hong Kong) Ltd

'NHB' is a reference to the Nugan Hand Bank

'CAC 7th Interim Report1 is a reference to the March 1983

Seventh Interim Report of the Corporate Affairs Commission of

New South Wales special investigation into the affairs of Nugan

Hand Limited and other companies.

'JTF Report' is a reference to the four volume Report of the

Commonwealth-New South Wales Joint Task Force on Drug

Trafficking.

'Interim Report No. 1' is a reference to this Commission's

Interim Report number 1 delivered on 13 October 1983. That

Report dealt with the Commission's inquiry in relation to

paragraphs (e), (f) and (g) of the Commonwealth terms of

reference. [Appendix A(i)]

'Interim Report No. 2' is a reference to the Commission's

Interim Report number 2 delivered on 13 December 1984. That

Report dealt with the Commission's inquiry in relation to terms

(b), (c) and (d) of the respective terms of reference.

[Appendix A]

'JTF ROI Jones' indicates that the document relied upon is the

Joint Task Force record of interview of Hr Jones.

'Jones evidence to CAC' means that the document relied upon is

the transcript of evidence of Mr Jones to the delegates of the

New South Wales Corporate Affairs Commission in the course of

the special investigation by that Commission into the Affairs of

Nugan Hand Limited and other companies.

A reference to the 1 Bangkok conference' is a reference to the

Nuoan fane1 Group International conference held in Pangkok in

January 1978.

A reference to the 'January 1979 conference' is a reference to

the Nugan Hand International Conference held at the Wentworth

Hotel, Sydney in January 1979.

A reference to the 'October 1979' conference is a reference to

the Nugan Hand International conference held at the Gazebo

Hotel, Kings Cross, Sydney in October 1979.

'RCIDT' is an abbreviation for the Royal Commission cf Inquiry

into Drug Trafficking.

A reference to the 'Moloney/Swan committal proceeding' is a

reference to the committal proceedings against Nr M.J. Moloney

and Ns P.M. Swan arising out of the special investigation by the

New South Wales Corporate Affairs Commission referred to above.

A .... is a reference to an administrative file held by the

Commission. The numerals following the abbreviation indicate

the number allocated to the Commission document.

PART ONE

INTRODUCTORY MATTERS

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SECTION 1 : ESTABLISHMENT AND CONDUCT OF THE COMMISSION

A. Constitution of the Commission

Brief general background

1.1.1 The Royal Commission of Inquiry into the Activities of the Nugan

Hand Group was established pursuant to Letters Patent issued by the

Commonwealth and New South Wales Governments on 28 March 1983. The

Letters Patent extended existing Letters Patent issued by those

Governments which related to investigations of certain drug trafficking

and associated matters and upon which the Royal Commission had presented

its principal report on 25 February 1983.

1.1.2 Concern about aspects of the activities of companies within the

Nugan Hand Group and persons associated with the Group commenced in the

late 1970s. Following the death of Mr F.J. Nugan some of the Nugan Hand

group of companies were placed in provisional liquidation and on

18 February 1980 the New South Wales Corporate Affairs Commission was

appointed as Inspector under Part VIA of the Companies Act 1961 (NSW) to

investigate the affairs of Nugan Hand Limited (hereafter referred to in

this report as 'Nugan Hand Ltd') and other companies. From 1 July 1982

the investigation was continued pursuant to Part VII of the Companies

(NSW) Code. After presenting a number of interim reports, the Corporate

Affairs Commission presented the main report on this investigation (its

Seventh Interim Report) in March 1983.

1.1.3 There had, in the meantime, been references in the course of

other official inquiries to the activities of Nugan Hand related

companies and persons associated with them. The Eon. Mr Justice

P.M. Woodward in the further report of the New South Wales Royal

Commission into Drug Trafficking in May 1980 considered allegations of

involvement in drug trafficking and the movement of funds by the Nugan

Hand Group and recommended that the evidence heard by the Royal

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Commission be referred to appropriate law enforcement bodies for further

investigation.

1.1.4 Allegations concerning the activities of Nugan Hand related

companies and persons also came before the Hon. Mr Justice E.S. Williams

in the course of the Australian Royal Commission of Inquiry into Drugs,

which reported in December 1979. That Commission caused certain

inquiries to be carried out under the direction of the then Commonwealth

Police Force including inquiries through official channels directed to

United States law enforcement authorities.

1.1.5 Following upon joint recommendations by Royal Commissioners

Mr Justice Woodward and Mr Justice Williams the Commonwealth and New

South Wales Governments established in 1979 the Commonwealth-New South

Wales Joint Task Force on Drug Trafficking. The Joint Task Force, based

in Sydney, commenced operating in July 1979. The Governments

subsequently agreed to assign to the Joint Task Force responsibility for

the investigation and reporting of the matters touching the Nugan Hand

Group referred to by Mr Justice Woodward. Volume One of the report of

this investigation was presented in January 1982. Volume TWo, dealing

specifically with Nugan Hand aspects, was presented in June 1982. Volume

Three was presented in October 1982 and Volume Four, the final volume

relating to the Joint Task Force investigation was presented to the

Governments in March 1983. Volumes TWo, Three and Four were subsequently

published in an edited form.

1.1.6 The February 1983 report of the Stewart Royal Commission of

Inquiry into Drug Trafficking also referred to evidence it had heard

concerning the involvement of Nugan Hand Group personnel in the movement

of moneys and other matters.

1.1.7 During the whole of this period there were frequent references

in the Australian media of allegations concerning the activities of Nugan

Hand and persons associated with the Group. Articles were also published

in the United States and Asian press speculating about the operations of

the Group and the associations of persons involved with it. On a number

5

of occasions during March 1982, allegations concerning Nugan Hand were

the subject of questions and debate in the Australian House of

Representatives. A number of related documents were tabled by the then

Leader of the Opposition.

1.1.8 In April 1982 the Commonwealth Government released a joint

opinion by the Attorney-General and Solicitor-General which concluded

that a widening of the Royal Commission's terms of reference would be

necessary to enable a corrprehensive investigation into Nugan Hand related

matters to be undertaken. The Commonwealth Government also indicated

that it considered a further inquiry into Nugan Hand would be best

handled by the Royal Commission of Inquiry into Drug Trafficking under

extended terms of reference rather than by a new Royal Commission and

that consultations with the Governments of New South Wales, Victoria and

Queensland, commissioning Governments of that Royal Commission, had been

commenced.

Nugan Hand inquiry

1.1.9 On 29 March 1983 the Governments of the Commonwealth and of New

South Wales announced that Letters Patent had been issued to the Hon.

Mr Justice Stewart extending his terms of reference to include the making

of wide ranging inquiries into the activities of the Nugan Hand Group.

The following statement for the media was released jointly by the Prime

Minister and Premier of New South Wales:

'The Prime Minister, Mr Hawke, and the Premier of New South Wales, Mr Wran, today announced the extension of the terms of reference of the Royal Commission, headed by Mr Justice Stewart, to allow him to inquire into certain activities of the Nugan

Hand Croup.

Under terms of reference issued by both the Commonwealth and the New South Wales Governments, the Royal Commissioner will be able to inquire whether the Nugan Hand Group engaged in activities involving contravention of laws of the Commonwealth or laws of

New South Wales.

In particular, Mr Justice Stewart will be able to inquire whether the Nugan Hand Group contravened laws relating to the importation, exportation or possession of drugs or armaments,

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breached exchange control regulations, or contravened laws relatina to local government authorities.

The Commissioner will also be able to inquire whether the Nugan Hand Croup or any other body interfered with the investigations of any Australian law enforcement body into the activities of the Nugan Hand Group.

Mr Wran and Mr Fawke said the inquiry provided the best

opportunity to examine allegations concerning the activities of the Nuqan Hand Group.

Mr Justice Stewart is to report on his inquiry before

31st December, 1983.'

1.1.10 These Letters Patent, reproduced as Appendix A to this report,

covered a number of apparently disparate matters and the Commission's

first task was to decide an appropriate starting point for its

inquiries. The Commission chose the area covered by the Commonwealth

terms (e), (f) and (g). The Commission's report on these matters

(Interim Report No. 1) was presented on 13 October 1983.

1.1.11 The Commission next concentrated on terms (b), (c) and (d)

contained in both the Commonwealth and New South Wales terms of

reference. The Commission's report on those terms of reference (Interim

Report No. 2) was presented on 13 December 1984.

1.1.12 This final report deals with the remaining matters specified in

the Commonwealth and New South Wales terms of reference. These matters

are explained in Section 2 of this Part.

1.1.13 It was apparent at an early stage in the Commission's

investiqations that because of the breadth, complexity and scope of the

investigations to be undertaken under the terms of reference that the

inquiry could not adequately be undertaken by the proposed original

reporting date. After consideration by the Commonwealth and New South

Wales Governments, a revised reporting date of 30 June 1984 with a review

of progress towards the end of this period was agreed upon.

1.1.14 On 12 June 1984 the Commonwealth Government announced that it

proposed the appointment of the Hon. Mr Justice Stewart as inaugural

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Chairman of the National Crime Authority, the appointment to take effect

from 1 July 1984. The announcement indicated that discussions were to

take place on the most practical way to continue the Royal Commission

investigations remaining to be concluded. The Governments subsequently

extended the reporting date for the Royal Commission to the end of 1984

and finally to 30 June 1985.

B. Cooperation with other investigatory bodies and government

departments

1.1.15 It was evident from the outset of the Commission's

investigations that it would need to work in cooperation with other

Australian law enforcement bodies, government departments and agencies as

well as seeking the assistance of certain overseas governments and

agencies of those governments.

1.1.16 The Commission continued to have available to it from the Royal

Commission of Inquiry into Drug Trafficking a small team of police

investigators drawn from the Australian Federal Police and the police

forces of New South Wales and Queensland which provided the Commission's

necessary police investigatory capacity.

1.1.17 As the documentary material to be examined involved a

considerable amount of financial analysis and investigation, the

secondment of a further two officers from the New South Wales Corporate

Affairs Commission was arranged to supplement the group of three

financial investigators seconded for the purposes of the Commission's

drug trafficking investigations.

1.1.18 Both the police and financial investigators were encouraged to

regard themselves as members of the Royal Commission staff first. They

were of course able to provide the Commission with very good contacts

with their parent organisations and these contacts greatly assisted the

Commission's work.

1.1.19 Over the period of the inquiry formal liaison was established

with the various police forces, the Commonwealth-New South Wales Joint

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Task Force on Drug Trafficking, the Reserve Bank of Australia, the

Australian Taxation Office, the Australian Customs Service, the

Department of Immigration and Ethnic Affairs, the Department of Foreign

Affairs and the Few South Wales Corporate Affairs Commission. The

assistance and cooperation of these agencies in the Commission's work is

acknowledged.

1.1.20 The Commission established liaison with the Hong Kong Registrar

General1s Department. Officers of the Official Receivers Office within

the Department had been appointed liquidators of the Nugan Hand Bank and

Nugan Hand (Hong Kong) Ltd. Following representations by the Royal

Commission, access was provided to certain material held by the

liquidators in Hong Kong.

1.1.21 The Commission examined documentation from a number of agencies

including the Royal Commission on the Activities of the Federated Ship

Painters and Dockers Union, the Commonwealth-New South Wales Joint Task

Force on Drug Trafficking, other Royal Commissions, the reports of the

Corporate Affairs Commission special investigation and the available

reports of the Australian liquidators, Mr J.W. O'Brien and Mr I.D.

Ferrier.

1.1.22 Liaison was established with the United States Federal Bureau of

Investigation through its Australian liaison officer. The Bureau had

conducted a number of inquiries in the United States in relation to Nugan

Hand matters and provided further assistance to the Commission in the

course of its investigation [see 4.3.37].

1.1.23 The Commission acknowledges the essential administrative support

provided by the Commonwealth Department of Local Government and

Administrative Services (formerly the Department of Administrative

Services) and the Department of the Special Minister of State.

1.1.24 The Commission continued to use and develop for its own purposes

certain computer based applications available on the computer system

maintained by the Department of the Special Minister of State.

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1.1.25 The Commission was assisted in its work by the Commonwealth

Reporting Service, which provided court reporting services to the

Commission in Sydney. The Australian Federal Police made staff available

to provide hearing room security services as required. To these

organisations and others who assisted the Commission in its task, the

Commission expresses its gratitude.

C. Overseas visits

1.1.26 The Royal Commissioner accompanied by Senior Counsel and the

Commission Secretary visited Hong Kong in October 1984 and the United

States in January 1985.

Hong Kong

1.1.27 The visit to Hong Kong enabled the Commissioner to take evidence

from persons who had been involved there in substantial and significant

operations of the Nugan Hand Group.

1.1.28 The Commissioner also had discussions with senior officers and

officials of government agencies involved in the liquidation and

investigation of the Nugan Hand group of companies and other related

matters. As a result of these discussions further material was made

available from official sources in Hong Kong.

United States of America

1.1.29 The Commissioner, together with Senior Counsel and the

Commission Secretary visited the United States in January 1985 to take

evidence and hold discussions with relevant government agencies.

1.1.30 A number of important witnesses were heard in Los Angeles and

Washington D.C.

1.1.31 While in Washington D.C. the Commission party met with senior

officials from the Federal Bureau of Investigation, the United States

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Justice Department and the Permanent Sub-COmmittee on Investigations of

the Senate Committee on Governmental Affairs. These discussions were of

great value and are referred to as appropriate elsewhere in the body of

this report.

D. Acknowledgements

1.1.32 The extension of the Commission's terms of reference to

encompass the investigation of matters relating to the Nugan Hand Group

required essentially a continuation of the existing Royal Commission

resources. Accommodation, facilities, equipment and many of the

Commission's personnel were therefore retained for the further inquiry.

1.1.33 However, the Nugan Hand inquiry was a considerably different

type of investigation from that which preceded it. It was necessary for

the Commission to collect and assess a very large volume of documentary

material, much of it requiring financial investigation and analysis.

Consequently the Commission adjusted its staffing resources, made

necessary changes to its organisation and, over the period of its

inquiry, developed certain computer based applications to reconstruct and

analyse the accounts of Nugan Hand and companies associated with it.

1.1.34 The Royal Commission has been exceptionally well served by its

Secretary and by the lawyers, accountants, police, researchers and

clerical staff appointed to assist the Commission. Together, and often

working very long hours, they have carried out the difficult tasks

involved in the gathering and sifting of evidence, including analysing

the large quantity of documentary evidence referred to at paragraph

1.1.39, and the recording of relevant information in the Commission's

computerised systems. Many of these staff have been appointed to

positions with the National Crime Authority.

1.1.35 in particular the Commission wishes to pay tribute to the work

of Mr P.J. Moss Q.C. who has been Senior Counsel Assisting the Commission

from November 1983. His contribution has been in the highest traditions

of the Bar.

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E. Hearings and statistics

1.1.36 The Commission's intention to hold public hearings was notified

in the national press on 9 April 1983. The first hearing under the Nugan

Hand terms of reference was held on 19 April 1983. The evidence upon

which this final report is based was heard in camera. The reason that

this course was adopted is explained, as to a particular part of the

evidence, at 3.9.7-3.9.9. However it became obvious that the whole of

the evidence should be heard in camera due to the publicity which would

otherwise have attended the hearings because of the sensational nature of

some of the allegations made and because of the intense interest

displayed by the media in the alleged activities of the Nugan Hand

Group. Thus, the Commission concluded, albeit reluctantly, that in order

to avoid the likelihood of serious harm being caused to the reputation of

persons as a result of the publication of unsubstantiated allegations,

and the risk that such publication might affect the right of persons to

fair trials in the future, that the whole of the evidence should be heard

in camera.

1.1.37 Public and confidential hearings were all conducted in Sydney,

with the exception of overseas hearings. The Commissioner sat to hear

evidence in Australia for 187 hearing days and heard 267 witnesses.

1.1.38 The Commission took evidence in Hong Kong in 1984, and in the

United States in 1985. Twelve witnesses were heard in Hong Kong. In the

United States one witness gave evidence in Los Angeles and five in

Washington.

1.1.39 The transcript of evidence received in Australia totalled

11 900 pages. Documentary exhibits together with documentary material

not tendered into evidence totalled 11 830 files comprising some 948 200

folios.

F. Research techniques

1.1.40 As mentioned in 1.1.39 the Commission had before it a very large

quantity of documentation relating to its inquiry.

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1.1.41 The task of researching and analysing this material was

considerable. The Commission had available to it computer systems

developed to support the work of the Royal Commission on the Activities

of the Federated Ship Painters and Dockers Union, certain of which were

adapted to suit the Commission's particular purposes, techniques and

methodology.

1.1.42 An economic and relatively stringent approach was developed for

the analysis and assessment of information. Only those matters

considered to be of significance to the Commissions's terms of reference

were entered on the computer system. In order to assess the material a

multi-disciplinary approach was adopted involving lawyers, accountants,

police investigators and research officers together examining records and

analysing material for use in the Commission's investigations.

1.1.43 The Commission's investigating accountants developed a suitable

computer based method of reconstructing company accounts (balance sheets

and profit and loss statements). As the Nugan Hand Ltd journal was not

available for examination, the journal was reconstructed from entries in

the Nugan Hand Ltd general ledger by using an electronic spreadsheet

program. Records were reconstructed for the period 1974 to 1979 and from

these records financial statements drawn and compared with statements

published by Nugan Hand Ltd for the same period.

1.1.44 The Commission also developed a system of keywording the

official transcript of hearings in order to facilitate reference by staff

to the transcript. In addition, much of the transcript from key

witnesses taken over lengthy periods was summarised according to subject

matter, paginated and indexed to assist legal staff and Counsel

(CD10947).

G. Interim reports

1.1.45 The Commission presented two interim reports. The first,

dealing with Commonwealth terms of reference (e), (f) and (g) was

presented to the Commonwealth Government on 13 October 1983 and tabled in

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the Commonwealth Parliament on 6 December 1983. Interim Report No. 2

concerning the Commonwealth and New South Wales terms of reference

(b), (c) and (d) was presented on 13 December 1984 and tabled in the

Commonwealth and New South Wales Parliaments on 20 March 1985.

Interim Report No. 1

1.1.46 The general allegation identified and examined in this report

was that investigations conducted by an Australian law enforcement body,

namely the Federal Narcotics Bureau into the activities of the Nugan Hand

Group had been improperly interfered with or inhibited. The general

allegation was comprised of a number of specific allegations which were

detailed in the report, including allegations concerning politicians and

senior government officials.

1.1.47 The issues raised for investigation were summarised as follows

in the interim report:

1 (i) Is there any evidence that any person, organisation or body

associated with the Nugan Hand Group

(a) directly or indirectly made or offered any payment or inducement

for, or in connection with, or endeavoured by means of a threat

to procure, the disclosure by any Commonwealth officer or any

person who was formerly a Commonwealth officer of information

relating to either or both these investigations?

(b) procured or received, directly or indirectly, from any

Commonwealth officer or any person who was formerly a

Commonwealth officer information relating to either or both of

these investigations?

(ii) Is there any evidence that any person, organisation or body

improperly interfered with, inhibited or endeavoured to

interfere with or inhibit either or both of these

investigations?'

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1.1.48 The Federal Narcotics Bureau had been disbanded in November 1979

following recommendations by Royal Commissioner the Hon. Mr Justice

E.S. Williams. In the main its functions were transferred to the

Australian Federal Police.

1.1.49 The Commission in its investigation of these allegations found

evidence that as a result of major deficiencies within the Narcotics

Bureau, the Bureau investigations were inadequate and ineffective and

that the Bureau failed to evaluate information over a period of time.

The Commission also found that the Bureau's decision, and the events

surrounding it, to cease investigations into the Nugan Hand Group invited

criticism, but that no member of the Bureau had behaved dishonestly or

improperly.

1.1.50 The Commission found no credible evidence to support allegations

concerning named Members of the House of Representatives and concluded

that such allegations were unjustified and false.

Interim Report No. 2

1.1.51 This report concentrated on matters related to the Commonwealth

and New South Wales terms of reference (b), (c) and (d). In essence

these terms concerned whether any activities engaged in, directly or

indirectly, by the Nugan Hand Group with local government authorities in

the State of New South Wales involved contravention of a law of the

Commonwealth or the laws of that State.

1.1.52 The Commission found that Nugan Hand Ltd published to the

Councils accounts that were false for the purpose of inducing the

Councils to invest with the company and that it failed to hold a

requisite dealers licence under the Securities Industry Act 1975 (NSW)

but that apart from these matters there was no evidence that the

activities engaged in by the Nugan Hand Group with local government

authorities involved any contravention by any person, organisation or

body, of a law of the Commonwealth or the laws of the State of New South

Wales.

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1.1.53 The Commission recommended however that serious consideration be

given to the legal position of councils vis a vis the Local Government

Investment Service Pty Ltd when making deposits with that company [see

page 323 of that report].

1.1.54 The Commission also recommended that the New South Wales

Department of Local Government be requested to consider ways in which the

investment of surplus funds by councils might be better monitored.

1.1.55 In relation to the Secret Commissions Prohibition Act 1919 (NSW)

it was recommended that the appropriate authorities consider whether the

Act should be amended to lengthen the period of limitation of time for

the institution of prosecutions (see section 14(3) of that Act), for

provision to be made for heavier penalties and to correct what appear to

be drafting errors in the legislation.

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SECTION 2 : CONSTRUING THE COMMISSION'S TERMS OF REFERENCE

1.2.1 Often the agitation for a Royal Commission is based upon nothing

more than general, allegation and rumour. Accordingly the drafting of the

terms of reference becomes a matter of great importance, the desired

result being to keep the Commission within reasonable bounds yet not to

fetter a proper inquiry. The Salmon Royal Commission expressed this

requirement as follows:

'In view of the inquisitorial nature of the proceedings ... the terms of reference require careful consideration and should be drawn as precisely as possible.Ί

1.2.2 This requirement is particularly important when the matters to

be inquired into by a Royal Commission are allegations of crimes triable

in the ordinary courts. Unless such terms of reference are drawn with

precision defining exactly the allegations to be inquired into and

reported upon, the Commission itself is compelled to interpret or place a

construction upon its own terms of reference and in doing so to take into

account those matters which appear to the Commission necessary and

permissible in respect of such an exercise. Unfortunately, the rule

stated above is all too often overlooked or departed from as is shown by

the reports of a series of Royal Commissions and Boards of Inquiry (the

Victorian eouivalent) which had terms of reference requiring

2

investigation into alleged criminal conduct.

1.2.3 Matters which such a Royal Commission may, and indeed, should

take into account when the need arises to construe its terms of reference

include the very fact that a Royal Commission has been set up to conduct

the inquiry, making it unlikely that the terms should be construed so

that matters of a trivial nature are required to be reported o n , a n d

that an inquiry by a Royal Commission 'is a valuable method of

corrprehensive and authoritative fact finding on which to base

wide-ranging proposals for legislative and administrative reform.'^

- 17 -

1.2.4 In the course of carrying out such an exercise, questions of

relevance often arise for consideration. Here, too, problems of

definition may arise for it has been said that in the case of a Royal

Commission what is relevant may in fact be what the Commission bona fide

believes will assist it in its inquiry.^ Where the Royal Commission,

compelled to construe its own terms, perceives that it is clearly not

possible for it to inquire into every allegation contained within a

literal interpretation of the terms, it must, of necessity, read down the

terms to practical limits*’ or be selective as to which of the total 7

allegations within the terms of reference it will inquire into.

1.2.5 Obviously, it is highly desirable for the terms of reference to

be so expressed that there can be no doubt about the meaning to be given

to them and no doubt about their ambit. If the terms of reference are

not thus drawn so that the Commission itself is compelled to place a

particular interpretation upon some part of them there is a risk that the

Commission's interpretation might be held subsequently to have permitted

inquiries outside the terms of reference on their proper construction.

There is a risk, too, that such an exercise on the part of the Commission

itself might result in an interpretation being placed on the terms which

is contrary to that which the Executive had anticipated would be the

subject of the report.

1.2.6 Notwithstanding these risks, the Commission has concluded that

its terms of reference (so far as relevant to the subject ratter of this

final report) do require the Commission to place a particular

construction upon them having regard to their width and lack of

particularity.

1.2.7 This, the final report of the Commission® is made pursuant to

its terms of reference but excluding term (b) in each of the Letters

Patent and excluding terms (e), (f) and (g) which appear only in the

Commonwealth Letters Patent. The Commission's terms of reference are

reproduced in full in Appendix A(i) and (ii).

1.2.8 As to paragraph (a): the Commission took the view that it

should read the paragraph as requiring its inquiries to be confined to

- i r ­

relevant contraventions of the criminal law of New South Wales and the

Commonwealth. First, it seemed to the Commission highly improbable that

the Commission would be required to inquire into breaches of the civil

law. Second, the Commission took the view that it is not required to

inquire whether there have been relevant breaches of any criminal law no

matter how minor. It seems to the Commission that it should read the

terms as requiring inquiries into relevant contraventions of a kind which

most people would regard as a serious breach of criminal law and which

carry with them a sanction indicating they should be so viewed.

1.2.9 This being the construction the Commission placed upon term (a)

the inquiries called for by that paragraph are seen to be: whether the

Nugan Hand Croup (as defined in the terms of reference) contravened any

criminal law (falling within the category described above) of New South

Wales or the Commonwealth.

1.2.10 When the definition of the Nugan Hand Group is examined

(paragraph (e) of the New South Wales terms of reference), it will be

observed that included in the definition are twenty nine named

corporations (as well as Mr F.J. Nugan, Mr M.J. Hand and any other

corporation which the Commission might identify as falling within

paragraph (e)(iv)).

1.2.11 The inclusion of these twenty nine corporations raises a further

question of interpretation. A corporation can do an act or omit to do an

act but only through the agency of a natural person. A corporation can

be convicted of most crimes, (but not offences which provide imprisonment

as the only penalty) even crimes requiring as an element a guilty mind.

Where a corporation is so convicted the conclusion that the corporation

itself has committed the offence is arrived at by the application of the

doctrine of identification; in other words, those who control or manage

the affairs of the corporation are regarded in a sense as the company

itself. It has been held that the acts of a controller are attributed to

the company even when the controller is acting in fraud of the

9

company." It is necessary to distinguish this result, that is the

identification of natural persons with the company itself, from the many

situations in which the company acts through natural persons who are

viewed merely as the agents of the corporation.

- 19 -

1.2.12 Where a corporation is convicted of an offence the relevant

director or controlling officer will in most cases be a principal or

accessory in respect of the offence. Thus in inquiring whether any of

the twenty nine nominated corporations have contravened a relevant

criminal law the Commission must necessarily inquire into the activities

of those who acted on behalf of those corporations in a relevant way. To

the extent any of the corporations are identified by the Commission as

having contravened a re]evant criminal law the Commission construes term

(a) to mean that it should also include in its report the identity of the

persons whose conduct has led to the conclusion being formed in respect

of the corporation. Indeed, the Commission takes the view that where its

inquiries lead it to conclude that directors or other relevant persons

have themselves contravened a relevant criminal law even though in the

result the corporation itself may not have done, then the contraventions

by those persons should be reported upon provided the contravention has a

sufficient connection with the Rigan Hand Group and the activities of the

Group.

1.2.13 The Commission takes the view that such construction is required

by necessary implication. It cannot be that the Executive's prime

concern is to know whether or not the twenty nine corporations as such

contravened relevant criminal laws. To stop there (or even to conduct a

detailed inquiry) would be to report information of little value. None

of the corporations are now of any importance in that those that were

important in the activities of the Nugan Hand Group have all been wound

up. Further, the various liquidators' reports conclude that they were

hugely insolvent and their creditors remain unpaid to the extent of many

millions of dollars. To the extent that any of the twenty nine

corporations have not been wound up they have ceased trading and their

assets, if any, are minimal.

1.2.14 As to paragraph (c): the requirement to report the nature and

extent of the activities identified pursuant to paragraph (a) supports

the interpretation of paragraph (a) contended in paragraphs 1 .2.8 to

1.2.13. In other words, a detailed picture is required, not merely bare

detail.

- 20 -

1.2.15 As to paragraph (d): the requirement to report whether in the

course of any activity identified pursuant to paragraph (a) the Nugan

Hand Group used, was used by or cooperated with any person etc. casts a

wide net covering principals, agents, co-adventurers, accessories and the

like.

1.2.16 Another factor suggesting a generous, rather than a narrow,

interpretation is called for in relation to the construction of the

Commission's terms of reference, is the direction contained in them that

1 in conducting your inquiry and making your recommendations' the

Commission 'have regard to' certain reports of third parties including

relevant reports of the Corporate Affairs Commission of New South Wales.

These reports themselves were wide-ranging. In order to have proper

regard to them the Commission must regard its own terms as requiring an

interpretation which will permit the direction to be followed adequately.

1.2.17 Quite apart from the necessity of placing its own construction

on the terms of reference, the Commission was also left to determine for

itself two further very important questions, namely, what standard of

proof should be applied before it concluded that a relevant law had been

contravened and what evidence should be relied upon in reaching any such

conclusion. In determining these matters the Commission had regard to

relevant deliberations by several earlier Royal Commissions and Boards of

Inquiry into alleged crimes.

1.2.18 The first of these inquiries to which the Commission had regard

was one conducted in the United Kingdom in 1948 and 1949 into allegations

that Ministers of the Crown and public servants had taken bribes and the

like. The Inquiry was chaired by Mr Justice Lynskey, a Judge of the

Queen's Bench Division, the other members being two Senior Counsel at the

English Bar. The Inquiry was conducted pursuant to the Tribunals of

Inquiry (Evidence) Act 1921.

1.2.19 After adverting to the fundamental distinction [see 1.2.26 -

1.2.27] between such an inquisitorial inquiry and proceedings in a Court

and after observing that in an inquisitorial inquiry all evidence

- 21 -

relating to the making of relevant allegations is relevant, the Report

then dealt with the question of what particular evidence it should rake

findings upon. It arrived at the following conclusion:10

'In coming to a conclusion as to the conduct of any individual witness and in particular whether any allegation made in

reference to him has been justified,, we have had regard only to such evidence as would properly be admitted in a case in which he was a party and his conduct was in question.'

1.2.20 The Jenkinson Board of Inquiry into allegations of criminal

conduct on the part of warders at Pentridge Prison in Victoria

(1973-1974) concluded that in view of the fact that it was required to

report upon whether certain persons appeared to have committed criminal

offences it would refrain from making any such report:

'Unless the Board was satisfied of the commission of the act to the extent which would be required in a civil proceeding of law.'

1.2.21 After observing that the legal rules of evidence had generally,

but not always, been observed in admitting evidence in the course of the

Board's Inquiry the report dealt with the question of what evidence

should be relied upon in respect of a finding of criminal behaviour in

the following terms:11

'The Board has not consciously based any finding of ill

treatment by an identified prison officer on evidentiary material which would not have been admissible against him in a civil legal proceeding to which he was a party and in which the issue was that upon which the finding by the Board has been made, without noting in this report the legally inadmissible

evidence and recording its opinion that the evidence would have been inadmissible in such a legal proceeding.'

1.2.22 In the case of some Royal Commissions and Boards of Inquiry the

terms of reference have included an express direction as to the relevant

standard of proof and the nature of the evidence which ray be relied

upon. The terms of reference of the Kaye Inquiry into allegations of 12 police corruption in Victoria required the Board to:

- 22 -

inquire and report as to whether there is credible evidence raising a strong or probable presumption ...'

that certain police had been guilty of criminal offences. The Board

found it necessary to arrive at its own interpretation of the meaning of

the words quoted above. After considering some relevant case law and

after emphasising the fundamental distinction between its task and that

of a Magistrate giving due consideration whether to commit a defendant to

a criminal trial, it decided that in coming to its conclusions it would

weigh the whole of the evidence adduced before it:"^ a

'... before determining whether it considers that it is probable that any particular police officer has committed a criminal offence.1

1.2.23 The terms of reference of the Beach Inquiry into allegations of

criminal behaviour on the part of certain Victorian p o lice^ contained

a direction in the same wording as that contained in the Kaye Inquiry

quoted above [1.2.22]. The Beach Inquiry came to a conclusion in line

with that of the Kaye Inquiry and reported that it had refrained from

making a finding against a particular police officer unless it had:

1... been satisfied that he has been guilty of the act

complained of to the extent which would be required in the given circumstances in a civil proceeding at law.'

1.2.24 Included in the terms of reference of the Winneke Royal

Commission inquiring into allegations of breaches of Commonwealth and 14

Victorian law by members of a certain Trade Union and of the Costigan

Royal Commission^ was a direction that any finding that a relevant

person had engaged in conduct amounting to a criminal offence:

'... be made only on evidence, admissible in a Court of Law,

sufficient to place [a relevant person] on trial for that offence.1

Commenting on the meaning to be given to these words the Hon. Mr Justice

Mason of the High Court said"*"® that this was not a provision requiring

a finding on evidence amounting to a prima facie case only but was one

which:

23 -

requires the commissioner not to make a finding that an activity is contrary to law in the absence of evidence

admissible in a court of law sufficient to establish a prima facie case ... If the commissioner concludes that there is a

prima facie case against an individual, it is then for the Crown to decide whether it will prosecute in the ordinary courts.1

The Commission observes that such a direction included in the terms of

reference of a Royal Commission acting pursuant to the Commonwealth Royal

Commissions Act may give rise to further difficulties in interpretation

of the terms of reference in that insofar as an adverse finding against a

witness is based in whole or in part on evidence given to the Commission

by that witness such evidence is subject to the provisions of section

6DD. This aspect is dealt with elsewhere in this Section [see 1.2.29­

1.2.31],

1.2.25 Whilst it appears that not every Royal Commission inquiring into

allegations of criminal offences having been committed has discussed in

its report the standard of proof it has adopted and the nature of the

evidence relied upon in coming to conclusions, this Commission takes the

view that such information should be included because it is information

of which the Executive should be aware in assessing the report and the

possible consequences of the Commission's findings.

1.2.26 These observations of the Royal Commissions and Board of Inquiry

cited above (leaving aside the two with expressed and explicit directions

in their terms of reference [see 1.2.24]) arrive at a broadly uniform

conclusion in relation to the appropriate standard of proof to be applied

and the nature of the evidence to be relied upon where an opinion is to

be formed whether or not a relevant person has so conducted himself that

he has contravened a relevant criminal law. The approach adopted is

consistent with and rests upon the fundamental differences between such

inquiries and a Court dealing with a criminal trial. As was said by the

Salmon Royal Commission in 1966:^

'There are important distinctions between inquisitorial procedure and the procedure in an ordinary civil or criminal case ... The Tribunal directs the inquiry and the witnesses are necessarily the Tribunal's witnesses. There is no plaintiff

- 24 -

or defendant, no prosecutor or accused; there are no pleadings defining issues to be tried, no charges, indictments or

depositions. The inquiry may take a fresh turn at any moment. It is therefore difficult for persons involved to know in

advance of the hearing what allegations may be made against them.'

1.2.27 Recent observations by the Chief Justice of the High Court in a

case involving an inquiry by the National Companies and Securities

Commission18 are also apt. In that case the Chief Justice in drawing

the distinction between such an inquiry and a Court of law said that such

an inquiry was not required to proceed as though it were conducting a

trial. He said:

'If the Commission were to accord to all persons whose

reputation might possibly be affected by the hearing a right to cross-examine the witnesses and call evidence as though they were in a court of law, the hearings might become so protracted as to render it practically futile.1

For these reasons, and bearing in mind the obvious desirability of such

opinions of criminal behaviour by various inquiries being based on some

uniform standard, the Commission decided to apply the civil standard of

proof to evidence which the Commission believes would be admissible in a

case in which the relevant person was a party and his conduct was in

question. In view of the omission from the Commission's terms of

reference of any direction in this regard it did not seem that the

Commission was at liberty to insert of its own motion a direction

requiring a finding of a prima facie case [1.2.24], The Commission felt

bound to assume that such omission was not an oversight but rather had

been deliberately omitted from its terms in view of the express insertion

of such a direction into earlier Royal Commissions acting pursuant to the

Commonwealth Royal Commissions Act, one such Commission being conducted

more or less contemporaneously with this Commission.183

1.2.28 However, it is necessary for the sake of clarity to make two

further explanations in regard to this approach. The first is that the

Commission's understanding of the civil standard of persuasion is most

clearly expressed in the following words of Sir Owen Dixon:

- 25 -

'The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can he found. It cannot be found as a

result of a mere mechanical comparison of probabilities

independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define

exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of

persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established

independently of the nature and consequence of the fact or facts to he proved. The seriousness of an allegation made, the

inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable

satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two

dates an admitted occurrence took place, a satisfactory

conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency ... This does not mean that some standard of persuasion is fixed

intermediate between the satisfaction beyond reasonable doubt required upon a criminal inquest and the reasonable satisfaction which in a civil issue may, not must, be based on a

preponderance of probability. It means that the nature of the issue necessarily affects the process by which reasonable satisfaction is attained. When, in a civil proceeding, a question arises whether a crime has been committed, the standard

of persuasion is, according to the better opinion, the same as upon other civil issues ... But, consistently with this opinion, weight is given to the presumption of innocence and exactness of

proof is expected.'

1.2.29 The second explanation is directed to precisely what is meant by

the Commission in the statement above [1.2.27] that it proposes to base

such opinions on evidence which the Commission believes would be

admissible against the relevant person in a court of law. In this

context it is necessary to set out the provisions of section 6DD of the

Commonwealth Royal Commissions Act 1902. That section is as follows:

- 26 -

Ά statement or disclosure made by any witness in the course of giving evidence before a Commission is not (except in

proceedings for an offence against this Act) admissible in evidence against that witness in any civil or criminal

proceedings in any court of the Commonwealth, of a State or of a Territory.'

1.2.30 It seems to the Commission that in deciding whether particular

evidence would be admissible against a relevant person in a court of law

it should apply the rules of evidence that a court would apply in the

absence of such a provision as section 6DD. Otherwise the very strange

result would follow that the witness's own evidence would be excluded

from the Commission’s deliberations on whether he has contravened a

relevant criminal law. In other words, the Commission construes the

expression 'evidence admissible in a court of law' as meaning the

ordinary everyday rules of evidence applied in Courts; a party's own

evidence is clearly admissible in a Court, if relevant, and may implicate

or exculpate him in respect of the conduct alleged against him.

1.2.31 Both Letters Patent issued to the Commission call for:

'a report of the results of your enquiry and your

recoinmendations.'

The Commission does not understand this to refer to recommendations in

respect of the prosecution of any person who has been identified as

having contravened a relevant criminal law and, accordingly, the

Commission has made no such specific recommendation. Having formed such

views of criminal behaviour by applying the civil standard of proof the

Commission considers it would serve no useful purpose to recommend

prosecutions and would be clearly outside its function. As has been

mentioned above the Commission has not attempted to conduct the inquiry

according to all the rules applicable to a criminal trial. As well there

are factors to be taken into account in deciding whether to prosecute a

particular matter which fall outside the Commission's role: the

seriousness of the allegations must be weighed, the passage of time since

the relevant date is obviously a relevant matter and there is also the

effect of the exclusion from any such prosecution of the evidence to

- 27 -

which section 6DD applies. In respect of any of the relevant

corporations there is the further consideration that there m y be no

practical justification for any proceedings against them or any of them,

those companies now either being in liquidation or having ceased to trade

and possessed of assets of little, if any, value. The Commission is

strengthened in this opinion by the fact that of the inquiries reviewed

above which contained in their terms a requirement to make

'recommendations' not one interpreted that to mean recommendations in

respect of prosecutions. Indeed, Mr Justice A.E. Woodward expressly

declined to make such recommendations on grounds similar to those put 20

forward by the Commission in this paragraph. In any event, it would

seem as a matter of principle that it is not for a Royal Commission to

recommend prosecutions, that function being properly one for the Crown

[see 1.2.24].

1.2.32 Finally, the Commission includes here a statement of the

attitude it has adopted in respect of the question of the application to

the Commission's proceedings of the principles known as the rules of

natural justice. Such principles have been explained in an often quoted

passage in the following terms:

'The requirements of natural justice must depend on the

circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with, and so forth.'

This passage was recently referred to with approval by the Chief Justice

of the High Court in the case mentioned above [see 1.2.27] where the

Chief Justice went on to say that:

'the authorities show that natural justice does not require the inflexible application of a fixed body of rules; it requires fairness in all the circumstances ... and may also vary from case to case although each be conducted before one and the same tribunal or person.' [emphasis added]

1.2.33 It does not appear to have been finally settled by the courts

whether or not the rules of natural justice apply to inquisitorial

procedures such as Royal Commissions. The basis for the proposition that

- 28 -

such rules might not be applicable was recently re-stated by a Judge of 21 the Federal Court as follows:

'However, bearing in mind that the function of a Royal

Commissioner is merely to investigate and report and that any recommendation he may make does not affect the rights of any person, it must be a serious question whether the rules of

natural justice apply to proceedings before him.1

1.2.34 However whilst it is true that legal rights are not affected in

a technical sense, it may be that such an approach does not sufficiently

take into account that the proceedings of a Royal Commission and the

publication, if any, of its report may gravely affect the lives and

fortunes of those the subject of adverse comment or finding. Thus, it

has been observed by high authority that to be compelled by a Royal

Commission to answer questions is a serious interference with civil

liberty.22 So, too, it has been acknowledged by the courts that the 23

publication of a Commission's report may:

'... inflict great and perhaps irremediable harm upon those of whom it speaks ill, ...'

In the Commission's view it is at least arguable that having regard to

such possible consequences such inquiries should incorporate the rules of

natural justice into their procedures at least to the extent of ensuring

'fairness in all the circumstances'.

1.2.35 Indeed, it may be that recent cases suggest a change is

approaching or has even arrived and that in future courts will be more

inclined to the view that the rules of natural justice, properly

understood, should apply to inquisitorial inquiries or at least those 24 inquiring into alleged crimes.

1.2.36 Assuming the rules of natural justice to be applicable to Royal

Commissions, in deciding what is fair in all the circumstances regard may

be had to the fact that a trial is not being conducted and that the

inquiry has only a limited time in which to report. It seems to the

Commission that, generally, the rules of natural justice will be

- 29

satisfied in such a context if before concluding and reporting that a

particular person has contravened a relevant criminal law he is made

aware of the risk of such a report being made and is given an opportunity

to be heard. As the Privy Council said in the case cited above^ such

a witness:

'... should not be left in the dark as to the risk of the

finding being made and thus deprived of any opportunity to adduce additional material of probative value which, had it been placed before the decision-maker, might have deterred him from making the finding even though it cannot be predicted that it would inevitably have had that result.1

Within the constraints to which, of necessity, it was subject, the

Commission has attempted to observe this principle in its proceedings.

ENDNOTES : PART 1 - SECTION 2

(See explanatory note at front of report)

1 Royal Commission on Tribunals of Inquiry 1966, Report of the

Commission under the Chairmanship of The Rt Hon. Lord Justice Salmon (Great Britain, 1966, Cmnd 3121), abbr. Salmon Royal Commission, p30 para.77. 2 Report of the Board of Inquiry into allegations of corruption in the Police Force in connection with illegal abortion practices

in the State of Victoria, Mr VJ. Kaye Q.C., (Victoria, 1971), abbr. Kaye Inquiry, Pt.l, Ch.l, p.7 et seq. Board of Inquiry into allegations of brutality at H.M. Prison Pentridge, Mr K.J. Jenkinson Q.C., (Victoria, Pari. Pap.

1973-74, Vol.3 No.40) abbr. Jenkinson Inquiry, Pt.l Ch.l pp.8 et seq.

Report of the Board of Inquiry into allegations against members of the Victoria Police Forced Mr B. Beach Q.C., (Victoria, 1 October 1976, printed 1978 in 3 vol.), abbr. the Beach

Inquiry, ch.3. Report of the Royal Commission into Australian Meat Industry, The Hon. Mr Justice A.E. Woodward, Commissioner, (Commonwealth, September 1982), abbr. Woodward Royal Commission (Commonwealth)

1982, Appendix A(l), pp.286-88. Report of the Honourable Mr Justice Moffitt Royal Commissioner, Allegations of Organised Crime in Clubs, (N.S.W., 1974), Pt.III

at p.ll para.40, Pt.VIII at p.135-36 para.317. L.A. Hallett Royal Commissions and Boards of Inquiry (The Law Book Company Ltd, Sydney, 1982), pp.51 et seq. 3 Jenkinson Inquiry, ibid., p 8

4 State of Victoria v. Australian Building and Construction

Employees' and Builders Labourers' Federation, abbr. Victoria v. BLF, (1982) 41 ALR 71 at p!20, per Mason J. ' "

- 30 -

5 Ross v. Costigan (No.2) (1982) 41 ALR 337 at p351

6 Woodward Royal Commission (Commonwealth, 1982), op. cit., p27 para.2.39.

7 Beach Inquiry, op. cit., ch.4 at pp.21 et seq. 8 Two Interim Reports having previously been delivered. Interim Report Mo.1, which dealt with Commonwealth terms of reference (e), (f) and (g) was delivered on 13 October 1983, and Interim

Report No.2 which dealt with terms of reference (b), (c) and (d) was delivered to both Commissioning Governments on 12 December 1984 9 Moore v. I. Bresler Ltd [1944] 2 All ER 515

10 Tribunal appointed to inquire into allegations reflecting on the official conduct of Ministers of the Crown and other Public Servants'] G.J. Lynskey, Judge of the High Court of Justice (England), Mr G.R. Vick K.C. and Mr G.R. Upjohn K.C., (Great Britain, 1948, Qnd 7616), p3 para.12. .11 Jenkinson Inquiry, op. cit., pi2 12 Kaye Inquiry, op. cit., p7

12a ibid., pi3

13 Beach Inquiry, op. cit., p7

14 Report of Commissioner appointed to inquire into activities of the Australian Building Construction Employees' and Builders Labourers' Federation, Commissioner Mr J.S. Winneke Q.C., (Commonwealth and Victoria, May 1982) 15 Royal Commission on the Activities of the Federated Ship

Painters and Dockers Union Final Report Commissioner Mr F.X. Costigan Q.C. (Commonwealth and Victoria, October 1984), Vol.l p3. 16 Victoria v. BLF, loc. cit., pll6

17 Salmon Royal Commission, op. cit., pll7 para.30 18 National Companies and Securities Commission v. News Corporation Ltd (1982) 52 AIR 417 at p429 18a The question of this Commission's approach to the standard of

proof was touched upon briefly in its Interim Report No.2

(Commonwealth and New South Wales, December 1984), at ppl6 and 17.

19 Briginshaw v. Briginshaw and Anor (1938) 60 CLR 336 at p361-63 20 Woodward Royal Commission (Commonwealth) 1982, op. cit. p47 para.2.117 21 Harper v. Costigan 50 ALR 665 per Morling J. at p.677. In

addition to the authorities there referred to, see Testro Bros. Pty Ltd v. Tait (1963-64) 109 CLR 349 at p366, per Kitto J. 22 The Attorney-General for the Commonwealth of Australia v. The Colonial Sugar Refining Company Ltd (1913-14) 17 CLR 644 at

p651, per viscount Haldane L.C., who gave the judgment of the Judicial Committee of the Privy Council. 23 Victoria v. BLF, .loc. cit., pp97-98 per Stephen J. 24 See Mahon v. Air New Zealand [1984] AC 808, a decision of the

Judicial Committee of the Privy Council. In National Companies and Securities Commission v. News Corporation Ltd, op. cit., pp429-30, Gibbs CJ appeared to treat this decision as applicable to Royal Commissions generally. 25 Mahon v. Air New Zealand, loc. cit., p821 per Lord Diplock, who

gave the judgment of the Judicial Committee of the Privy Council.

- 31

SECTION 3 : OTHER MATTERS

Some Practical Results

1.3.1 The following information has been gathered for several

reasons. First, it provides a catalogue of the Commission's contribution

to law enforcement agencies and prosecutions in criminal trials by the

provision of relevant information (usually in the form of transcripts of

evidence and other documents) at the request of these recipients.

Second, it demonstrates the extent to which the usefulness of a Royal

Commission inquiring into criminal allegations has been enhanced by the

introduction of section 6P into the Commonwealth Royal Commissions Act

1902 giving a Commission the power to provide such information to law

enforcement agencies in a proper case. Prior to the introduction of this

section on 1 February 1983 a Royal Commission's sole function was to

carry out its inquiries and report to government. Clearly, all future

Royal Commissions inquiring into criminal allegations should have this

additional function. The Commission therefore recommends that the New

South Wales Royal Commissions Act 1923 be amended accordingly.

1.3.2 The content of this section also demonstrates the need for some

provision to be made in respect of future Royal Commissions inquiring

into criminal allegations so that such Commissions are not, upon the

presentation of the report, instantly and completely wound up and thus

unable to assist in any way those law enforcement agencies and others who

might be delegated the task of following up particular recommendations

made by the Commission. As this Commission's experience has shown since

the delivery of its principal report on drug trafficking and related

matters of February 1983, in particular, some procedure must be available

to enable the Commission to provide further information and

documentation, as part of the follow up exercise. In fact, this

Commission found it necessary to provide the services of one member of

the Commission's staff on a full time basis to satisfy the inquiries and

- 32 -

requests for information which followed the delivery of the February 1983

report. This staff member was engaged in those duties for a period in

excess of twelve months on a full time basis and from time to time after

that. In addition, the Commission's premises have very often been

visited by law enforcement agencies, not only from Australia but also New

Zealand for the purpose of inspecting Commission documents or seeking

particular information. However, these services were able to be provided

only because the Commission continued in existence due to the extension

of terms of reference which required it to make inquiries into other

matters. But for this fortuitous circumstance, it is probable that the

practical results of the Commission's inquiries in relation to drug

trafficking and related matters would have been considerably less.

Law enforcement agencies to which information has been provided by

the Commission pursuant to section 6P of the Commonwealth Royal

Commissions Act

1.3.3 Name of recipient and number of times information provided to

recipients:

Australia

Australian Federal Police 10

Australian Taxation Office 33

Commonwealth Attorney-General's Department 3

Commonwealth/New South Wales Joint Prosecution Team 54

Commonwealth-New South Wales Joint Task Force on Drug Trafficking 4

Corporate Affairs Commission of Victoria 1

Department of Immigration and Ethnic Affairs 2

Department of Industry and Commerce 4

National Crime Authority 12

New South Wales Corporate Affairs Commission 7

New South Wales Department of the Attorney-General and of Justice 6

New South Wales Police 27

New South wales State Crown Solicitor's Office 4

- 33 -

Reserve Bank of Australia

Royal Commission on the activities of the

1

6

Federated Ship Painters and Dockers Union

Special Prosecutor's Office/DPP, Melbourne

Victoria Police 15

60

[New Zealand

The Commission has, in addition to the above information

provided pursuant to section 6P of the Commonwealth Royal

Commissions Act, provided relevant information to and at the

request of the following authorities in New Zealand:

Auckland District Law Society 6

New Zealand Police Task Force 6

New Zealand Reserve Bank 1]

1.3.4 The Commission had intended, at this part of the report, to set

out examples of results flowing from the provision to law enforcement

agencies of the information referred to above. The intention was, by

appropriate means, to disguise the identity of the persons involved where

to disclose their identity might cause prejudice to pending or current

inquiries or legal proceedings. However, the Commission decided not to

proceed with this course because it appeared that notwithstanding that

the examples did not identify relevant persons, the detail supplied was

such that there was a risk of identification in any event.

PART TWO

PROFILES

%

- 37 -

ALPHABETICAL LISTING OF PERSONAL PROFILES

Page No.

ARESON, William Henry 105

ATTKISSON, Randall L. 107

BACHMANN, Jurgen 109

BATES, Arthur Edward 111

BEAZLEY, Donald Elgin 112

BLACK, General Edwin Fahey 115

BRINCAT, George Frederick 117

BURTON, Noreen Fay 123

CALDER, Brian William 124

CLASEN, Peter Jurgen 125

COCKE, General Erie 128

COLBY, William Egan 130

COLLINGS, Clive Leslie Hillary 132

CONRICK, Edward Thomas 136

COURTNEY-SMITH, George Anthony 138

DUNN, Peter Milton 141

EBERT, Manfred 145

EDELSTEN, Graham Arthur Leighton 146

EVANS, Neil 149

GALICEK, George Vaclav 152

GEHRING, Robert Wallace 155

GEORGE, Quentin Douglas 157

GILDER, Jeremy Mackenzie 159

GREGORY, Wilfred Patrick 167

- 38 -

Page No.

HAND, Michael Jon 63

HANS, Wilhelmus 169

HARLAND, Edward Patrick 171

HEALEY, Mark 173

HEUSCHKEL, Carl Louis 175

HEWITT, Anthony Peter 177

HILL, Graeme Hunter 179

HILL, Stephen Kenneth Alexander 182

HOLMGREN, Dale Oscar 187

HOUGHTON, Maurice Bernard 190

KWOK, Dr Albert 194

LEE, Alexander 197

LEE, Yolanda 201

LOOMIS, Patry Gene 201

LOUEY, Edward Craig 203

LOUIS, Raymond Albert Sidney 205

LOUIS, Raymond Sidney Albert (Jnr) 207

LCVATT, Gillian 209

LOWE, Derrick 211

MANOR, General Leroy Joseph 212

McAr t h u r , John 214

MCDONALD, Walter Joseph 216

MOLONEY, Michael John 219

MORISSET, Brian Keith 223

MURPHY, Robert Michael 224

NEEDHAM, John Charles 228

NUGAN, Francis John 42

- 39 -

Page No.

NUGAN, Kenneth Leslie 232

a TEN, John Desmond 234

PAUKER, Dr Guy Jean 237

PAYNE, Michael John 241

PITTARD, Denis John 242

POLLARD, Warwick Michael 244

PRIOR, Anthony James 247

PULGER-FRAME, Ronald Adam 246

RUSH, John Robert 252

RUTTER, Haydn M. 253

SAUNDERS, Robert Muir 255

SCHULLER, Karl Fritz 256

SCOTT-KEMMIS, Leigh 258

SHAW, George Thomas 259

SHESLOW, Richard Myron 264

SPEAKMAN, Neil William 265

STEER, Graham Reginald 266

STILES, Leonard Ross 269

SWAN, Patricia Mary 271

TAN, Choon Seng 274

THOMSON, Elizabeth Louise 277

WARD, Francis Dennis 280

WONG, Andrew Heck-Ling 285

WONG, Ernest 288

YATES, Admiral Earl Preston 291

YEAR, Kee Aik 295

YOUNG, George Richard 296

- 40 -

PERSONAL PROFILES

This section comprises the profiles of the various individuals who played

a part in the operations of the Nugan Hand Group. By way of introduction

to these profiles, the following table places individuals in categories

according to the role they played in the Group's activities, whether as

director, employee, consultant, auditor, lawyer or representative. Some

individuals necessarily appear in several categories. However, others

whose profiles are included in this section do not appear in the table as

they do not fall within any of these categories. The fact of the

inclusion of a person's profile in this section does not necessarily mean

the Commission considers that person to have been involved in any

wrongdoing.

Nugan Hand Ltd Directors Nugan Hand Ltd Employees/

~ ' Consultants

Calder, B.W. 2.11 Burton, N.F. 2.10

Ceilings, C.L. 2.15 Clasen, P.J. 2.12

Dunn, P.M. 2.18 George, Q.D. 2.24

Edelsten, G.A. 2.20 Hans, W. 2.27

Gilder, J.M. 2.25 Harland, E.P. 2.28

Hand, M.J. 2.2 Healey, M. 2.29

Hill, S.K. 2.33 Hewitt, A.P. 2.31

Needham, J.C. 2.51 Louey, E.C. 2.40

Nugan, F.J. 2.1 Louis (Jnr), R.S.A. 2.42

Shaw, G.T. 2.65 Pittard, D.J. 2.56

Ward, F.D. 2.73 Rush, J.R. 2.60

Wong, A . H . 2.74 Swan, P.M. 2.70

Yates, E.P. 2.76

Young, G.R. 2.78

Nugan Hand Bank Directors Nugan Hand Bank Employees/

Consultants

Collings, C.L. 2.15 Attkisson, R.L. 2.4

Dunn, P.M. 2.18 Beazley, D.E. 2.7

Gilder, J.M. 2.25 Black, E.F. 2.8

Hand, M.J. 2.2 Gregory, W.P. 2.26

Hill, S.K. 2.33 Lovatt, G. 2.43

Nugan, F.J. 2.1 Manor, L.J. 2.45

Rutter, H.M. 2.61 Owen, J.D. 2.53

Ward, F.D. 2.73 Steer, G.R. 2.68

Yates, E.P. 2.76 Tan Choon Seng 2.71

- 41 -

Nugan Hand Hong Kong Nugan Hand Hong Kong

Directors Ercployees/Consultants

Collings, C.L. 2.15 Bates, A.E. 2.6

Dunn, P.M. 2.18 McArthur, J. 2.46

Hand, M.J. 2.2 Pulger-Frame, R.A. 2.59

Hill, S.K. 2.33 Thomson, E. 2.72

Nugan, F .J . 2.1 Yates, E.P. 2.76

Ward, F.D. 2.73

Wong, E. 2.75

Overseas Representatives United States Personnel

Courtney-Smith, G.A. 2.17 Attkisson, R.L. 2.4

Evans, N. 2.21 Beazley, D.E. 2.7

Galicek, G.V. 2.22 Black, E.F. 2.8

Gregory, W.P. 2.26 Cocke, E. 2.13

Hewitt, A.P. 2.31 Holmgren, D.O. 2.34

Holmgren, D.O. 2.34 Houghton, M.B. 2.35

Houghton, M.B. 2.35 Manor, L.J. 2.45

Louey, E.C. 2.40 McDonald, W.J. 2.47

Manor, L.J. 2.45 Murphy, R.M. 2.50

McDonald, W.J. 2.47 Yates, E.P. 2.76

Morisset, B.K. 2.49

Murphy, R.M. 2.50

Owen, J.D. 2.53

Payne, M.J. 2.55

Prior, A.J. 2.58 F.J. Nugan Legal Practice

Saunders, R.M. 2.62

Schuller, K.F. 2.63 George, Q.D. 2.24

Steer, G.R. 2.68 Lee, A. 2.37

Stiles, L.R. 2.69 Needham, J.C. 2.51

Yates, E.P. 2.76 Nugan, F.J. 2.1

Yeap Kee Aik 2.77

Hong Kong Auditors Australian Auditors

Areson, W.H. 2.3

Speakran, N.W. 2.67

Brincat, G.F. 2.9

Heuschkel, C.L. 2.30

Pollard, W.M. 2.57

F.A. Neubauer Bank Orange Spot

Bachmann, J. 2.5 Calder, B.W. 2.11

Ebert, M. 2.19 George, Q.D. 2.24

Hewitt, A.P. 2.31 Louis (Snr) R.A.S. 2.41

- 42 -

2.1 NUGAN, Francis John

2.1.1 Francis John Nugan died, having taken his own life near Lithgow,

New South Wales on 27 January 1980. The story of his life from the time

he commenced to practise as a solicitor on his own account in 1970 was

bound up with the history of the Nugan Hand Group of which he was a

founder. That story (and also Mr Hand's) is set out in summary form in

the Compendium in Part 3. Specific aspects of his activities are the

subject of other parts of the report.

2.1.2 This profile attempts to paint a picture of the man himself,

whereas the report generally concentrates more on aspects of his

activities so far as are relevant.

2.1.3 He was born on 30 December 1942 in Griffith, a country town in

the Riverina district of New South Wales. He graduated in Law from the

University of Sydney in 1963 and later obtained a Masters degree in Law

from the University of California at Berkeley. In 1965 he went to Canada

and commenced studies there for a Doctorate in Law but returned to

Australia in 1968 without completing that degree. While in Canada he did

some work for a parliamentary committee in Ontario.1

2.1.4 Mr Nugan was obsessed with achieving success as he saw it. To

him it was essential to be seen to be successful and wealthy. He gave

the appearance of being both. Once he joined forces with Mr Hand he set

them both on a course which was to have widespread repercussions for many

people both here and abroad.

2.1.5 According to Mr Nugan he first met Mr M.J. Hand [2.2] in 19682 3 and they became good friends. Mr J.C. Needham [2.51] and Mr B.W.

Calder [2.11] told the Commission that Mr Hand had said he first met

Mr Nugan when Mr Hand was a security guard working for a company named

Meekatharra Minerals Ltd [2.112], a company in which Mr Nugan had a

considerable interest and which had been formed to mine for metals in

Western Australia. [For further details of the circumstances under which

Mr Nugan and Mr Hand first met see 2.2.11 to 2.2.13 and for details of

their continuing relationship see 2.2.53 to 2.2.65.]

- 43 -

2.1.6 Mr Nugan professed to have made a considerable amount of money

from this company^ and according to The Financial Review of 30 December

1977 Mr Nugan's 'entry into the banking world was via a small fortune

amassed during the mining boom'. It is however open to conjecture 5

whether the accounts of his success in this field are true. [For

further details of Meekatharra Minerals and Mr Nugan's and Mr Hand's

involvement therewith see 2.2.13 and 2.2.112.]

Land Dealings in the Early Days

2.1.7 In March 1970 Mr Nugan formed a company named Yorkville Nominees

Pty Ltd [2.108] and with Mr Hand and others commenced dealing in land

[see 2 . 2 . 1 4 ] One of the stated objects of the company was to 'carry

on business as merchant bankers'.

2.1.8 Both Messrs Nugan and Hand continued dealing in land and in 1973

Mr Nugan formed another company, P.M. Shelley Pty Ltd [2.100], which

bought and sold land at Brunswick Heads, New South Wales.'7 * 9 *

2.1.9 Some of this land was subsequently sold by yet another company

formed by Mr Nugan, Nugan Hand Needham Ltd [2.97], This company was

incorporated on 6 July 1973 and by change of name on 22 August 1974

became Nugan Hand Ltd [2.97]. As Nugan Hand Ltd, it was to become the

parent company of the Nugan Hand Group.

2.1.10 A newspaper report in 1977® reported 'After liquidating his

property portfolio he [Mr Nugan] and his partner Michael Hand had around

$1 million in capital', but, as has been mentioned above these claims are

open to conjecture.

SIRE, PNB and NARM

2.1.11 In April or May 1973 Mr Nugan and Mr Needham were interested in

a Queensland company called Secured Income Real Estate (Australia) Ltd

(SIRE) [2.118] of which Mr Needham and Messrs Hand and Calder [2.11] were 9 directors. In late 1973 this company acquired a company which had

- 44 -

been incorporated by Mr Nugan called PNB Rubber and Plastic Industries

Pty Ltd (PNB) [2.117] which had itself acquired a Brisbane footware

manufacturing company called North Australian Rubber Mills Ltd (NARM)

[2.113] in September 1973.^ Mr Needham told the Commission that

SIRE's acquisition of NARM involved a cash payment to Mr Nugan by

Mr Needham of $182 000.44

Nugan Hand Needham Ltd

2.1.12 Prior to the incorporation of Nugan Hand Needham Ltd Mr Nugan

had discussed with Mr Needham the prospect of establishing a company to

act as a merchant bank in Sydney. He told Mr Needham it was his

intention that the company be formed with a view to advising clients on

corporate matters, arranging finance, giving tax advice, arranging 12

company takeovers and engaging in real estate marketing. It was

because Mr Needham was well known in Sydney business circles that 13

Mr Nugan wanted Mr Needham's name included in the company's title.

2.1.13 In late August 1973 NUgan Hand Needham Ltd established an office

on the 8th floor of 55 Macquarie Street Sydney [2.2.17].* 1 2 1 3 14 1 5 * * * *

Attempts to establish a 'Money Market Division'

2.1.14 At the time Mr Nugan had discussed the proposal to establish a

merchant bank with Mr Needham he also discussed the proposal with

Mr Young [2.78], a money market dealer who had previously worked for the

merchant banks, CitiNational Securities Corporation Ltd (as it then was)

and National Discount Corporation [see Part 4 Section 7]. Mr Young

commenced with Nugan Hand Needham Ltd in August 1973 in the capacity of

general manager of the proposed 'Money Market Division', and commenced

very limited dealings on the money market in securities on behalf of the 15

company in September of that year [3.2.11-3.2.15],

2.1.15 Despite the fact that Mr Nugan had assured Mr Young that he

(Mr Young) would have $1 million to use as capital for money market

dealings the reality was that Mr Young had no capital with which to deal

- 45 -

and, devoid of such, bought and sold securities on credit relying on

nothing more than his reputation."*"6

2.1.16 According to Mr Young Mr Nugan was entirely ignorant of the

workings of the Australian money market. He said the absence of capital

meant that he was trading under more or less inpossible conditions. He

agreed (after examining the cash books of Nugan Hand Needham Ltd) that

the company's turnover on securities trading during the period he was 17 there was $2.4 million. He agreed that while day to day operations

of the securities trading might on some occasions have been profitable

the overall result for the year was a loss to the company of $18 373.

The company sold its portfolio at a loss in order to quit the

market. Thus ended the Nugan Hand Group's first attempt at trading

in securities on the money market.

2.1.17 Consistent with the observations of other employees of the

Group, Mr Young soon discovered that Mr Nugan's drinking habits were such

that he was rarely sober after 11 a.m. and as the day progressed he 19

became slurred in speech and grandiose in ideas.

Trading in Precious Metals

2.1.18 Early in 1974 Mr Nugan turned his interest to the marketing of

silver bullion and gold coins [see profile Solingen Australia Pty Ltd

2.104] and traded in silver bullion under the business name Pacific

Silver Commodities and in gold coins under the name Macquarie Coin

D e a l e r s . T h e evidence is that this venture, too, was unsuccessful.

Mr Needham Resigns * 2 1

2.1.19 At this time Mr Needham who had taken no part in the operations

of Nugan Hand Needham Ltd, became disillusioned (as had Mr Young), and

resigned from the company on 29 June 1974. The company subsequently

changed its name to Nugan Hand Ltd on 22 August 1974 [2.2.17-2.2.18],

Mr Calder, who also had taken no part in the company's activities 21 resigned about the same time.

- 46 -

Mr Nugan's Law Firm

2.1.20 Despite his resignation from Nugan Hand Needham Ltd,

Mr Needham's association with Mr Nugan continued for a number of years.

Between 30 April 1976 and 27 November 1978, Messrs Nugan and Needham were

in partnership as solicitors, the firm being called Nugan Needham, which

Mr Nugan operated from his Nugan Hand Ltd offices in Macquarie Street,

Sydney. Mr Needham saw this as an arrangement which enabled him to

satisfy the conditions for retaining a practising certificate in New

South Wales, since he had by this time moved to Brisbane to work with 22 HARM. He seems to have been under the mistaken belief that the

partnership did not, at any time, have any clients as there were no 23

transactions recorded in the partnership's trust account.

2.1.21 Contrary to Mr Needham's understanding, the firm employed other

solicitors namely Mr Q.D. George [2.24] and Mr J. Hughes and engaged 24

almost wholly in tax planning for clients of the firm. For further

details of tax schemes offered by the firm see Part 9.

2.1.22 In addition to his association with Mr Nugan's law firm

Mr Needham also continued his association with Mr Nugan in respect of the

Nugan Hand Group's operations overseas. By June 1975 an office had been

established in Hong Kong [see Part 4 Section 1] and at Mr Nugan's request

Mr Needham visited Hong Kong in early 1977 to establish appropriate 25

accounting and office procedures on a consultancy basis.

Developments in Hong Kong and the Cayman Islands

2.1.23 In September 1974 Mr Nugan engaged Mr C.L. Collings [2.15].

Mr Collings was employed as an investment representative on a commission

basis selling silver bullion and gold coins on behalf of Pacific Silver

Commodities and Macquarie Coin Dealers. In December 1974 Mr Collings

went to Hong Kong at Mr Nugan's request to collect deposits on behalf of

a mutual fund established by Mr Nugan called 'Ingold Growth' [see

3.3.6-3.3.10, 3.3.12] , ^ Mr Collings told the Commission that after a

few months he received instructions from Mr Nugan to discontinue that

- 47 -

. . 27

activity, Mr Nugan told Mr Ceilings that he had 'a merchant banking

company in Panama called Nugan Band Inc.1 [2.115] and instructed

Mr Collings either to refund money invested in the 'Ingold1 venture or to

transfer the money to Nugan Hand Inc. Panama, according to the investors' • u 28 wishes.

2.1.24 Nugan Hand (Hong Kong) Ltd had been incorporated under another

name in Hong Kong in October 1972. In early 1975 Mr Collings was

instructed by Mr Nugan to put all his efforts into attracting deposits

from Hong Kong residents for placement with Nugan Hand Ltd in

29

Sydney. In the following year, on 21 July 1976, the Nugan Hand Bank

and Trust Company was incorporated in the Cayman Islands and a banking

licence in respect of this company was issued on 25 August 1976. (The

name of the company was later changed to the Nugan Hand Bank.) Messrs

Nugan and Hand then instructed Mr Collings that wherever possible

deposits collected by Nugan Hand (Hong Kong) Ltd were to be collected on

behalf of the Nugan Hand B a n k . [ F o r Mr Hand's involvement with the

Nugan Hand Bank see 2.2.31 to 2.2.34.]

2.1.25 These overseas developments have been examined in detail in

Part 4 Section 1 in respect of Nugan Hand (Hong Kong) Ltd and Part 4

Section 2 in respect of the Nugan Hand Bank.

Mr Nugan's Objectives

2.1.26 The Commission's evidence concerning Mr Nugan's objectives is

largely that of one witness, namely Mr S.K.A. Hill [2.33] who, after

Mr Hand, was most conversant with Mr Nugan's thoughts on the operations

of the Nugan Hand Group. The Commission has however had access to

certain documentary evidence which supports some of Mr' Hill's assertions.

2.1.27 According to Mr Hill Mr Nugan expressed an intention to set up

an operation locally to fund and underwrite a business and ultimately

bring in partners of substance with sufficient money to build the

operation into a merchant bank.

- 48 -

2.1.28 Mr Hill told the Commission that the credit squeeze of 1973/1974

put paid to these plans and that in 1974 and 1975 Mr Nugan confined his

operations to trading in precious metals and coins and in 1976 conceived

the idea of establishing a banking structure as an asset for sale rather

than as a fully operative concern capable of generating a substantial

income.64

2.1.29 This evidence is corroborated to some extent by correspondence 33

in 1978 concerning the acquisition of the F.A. Neubauer Bank [2.109],

2.1.30 In Australia in 1976 Nugan Hand Ltd was seeking deposits from

local councils and corporations [3.4.2-3.4.6 ] and Mr Nugan's personal

efforts were directed to the provision of legal advice concerning

taxation matters in particular.

2.1.31 According to Mr Hill the Wing On Bank and Ayala Finance (Hong

Kong) Ltd were seriously considering the purchase of the Nugan Hand Group

when the New South Wales Corporate Affairs Commission commenced its 34

investigation of the Nugan Fruit Group in late 1977 [see 3.4.95],

However, other evidence throws considerable doubt on this evidence so far 35 as the Wing On Bank is concerned.

2.1.32 Following the Corporate Affairs Commission investigation Messrs

F.J. and K.L. Nugan [2.52] were charged with offences relating to the

conduct of the affairs of the Nugan Fruit Group [2.114] and on 5 November

1979 the presiding magistrate found that both had a case to answer. The

matters were adjourned to 5 May 1980 for hearing of the defence case.36

2.1.33 The effects of this investigation and subsequent committal

proceedings on Mr Nugan personally were described by one witness in terms

of paranoia. He expressed the view that it was a personal attack on

himself by the Attorney-General, and his heavy drinking which had for

some considerable time been a matter of general comment among the staff . 39

at 55 Macquarie Street Sydney had become a matter of serious concern.

- 49 -

The American Connection

2.1.34 A further phase of the Group's development came with the

decision to enlist the services of United States ex military personnel

who had retired after having held high rank and who had seen service in

South East Asia with a view to the Group gaining respectability generally

and benefiting from their knowledge of South East Asia.40 4 1 This was a

joint decision of Messrs Nugan and Hand although it would appear that

Mr Hand was primarily responsible for the decision and its

implementation. [For some details of this matter see 2.2.49 to 2.2.51.]

Mr Nugan's Business Methods

2.1.35 On the question of salaries it is clear that Mr Nugan paid

extravagantly high salaries to persons with no particular expertise. On

occasions in addition to higher salaries large bonuses plus overriding

commissions were paid, sometimes to avoid granting appointees shares in a 41 particular company.

2.1.36 There were a number of staff members who at one stage requested

some degree of control in the business of the Group and in lieu thereof

Mr Nugan appointed them to directorship» which were purely nominal

appointments.42 4 3

2.1.37 Mr Nugan's manipulation of the directors of the various Nugan

Hand Group companies was not restricted to their appointments and

subterfuges as to shareholdings. He also fabricated the minutes of board

meetings with the assistance of others. [See Mr Brincat's profile 2.9

and Mr Hill's profile 2.33. ] Mr Hill told the Commission that he could

not recall attending a meeting at which minutes were taken and further,

that Mr Nugan was in the habit of preparing documentation on other 43 matters as and when it suited him.

2.1.38 The evidence before the Commission supports this statement most

notably in the area of accounting records. Further details concerning

Mr Nugan's role in misrepresenting the accounts are contained in Part 4

- 50 -

Section 2 in respect of the Nugan Hand Bank and in the Compendium and

Part 4 Section 5 in respect of Nugan Hand Ltd.

General Character

2.1.39 Evidence before the Commission concerning Mr Nugan1s character

is remarkably diverse. Mr Hill and Miss P.M. Swan [2.70] both of whom

knew Mr Nugan from early days and whose association with him was

comparatively close stated in evidence that he was difficult to get to

k n o w . Mr P.R. Lincoln-Smith, a Sydney solicitor, who considered

Mr Nugan a very close friend commented that he was the type of man to 45 conceal his emotions. Other witnesses observed him to possess

46

charismatic qualities. Mr Nugan was also described to the Commission 47 as a 'pathological liar'. The evidence unequivocally confirms this

latter assessment to the hilt.

2.1.40 Several witnesses commented on Mr Nugan's verbosity and his

inability to convey his thoughts in writing. Many documents in evidence

written by Mr Nugan demonstrate that his prose was unwieldy and often

ungrammatical.

2.1.41 Other witnesses described Mr Nugan variously as brash, arrogant,

overbearing, excitable as well as persuasive, knowledgeable, capable and 48

dynamic. Some found him to be kind, warm, dignified and honourable.

2.1.42 It was towards the end of 1977 that signs of irrational

behaviour became apparent. For example there was a curious incident

about September 1977 when Mr Nugan learnt that Mr R.A. Pulger-Frame

[2.59] had been searched for drugs at the Hong Kong airport. The two of

them visited Mr M.B. Houghton [2.35] and in a response which seemed to

indicate that he saw Mr Houghton as his salvation in this affair he . 49 literally 'sat at Mr Houghton's feet'.

A Self Portrait

2.1.43 Mr Nugan's own words may perhaps provide a glimpse of his many

sided character and the following are extracts from a record of

- 51 -

Mr Nugan's address to a meeting of the Nugan Hand Group legal division on

3 October 1979.50 During the course of the meeting Mr Nugan explained

to the legal officers what activities the Group had pursued in the past,

and in the course of his explanation, detailed the types of illegal

transactions previously undertaken. He professed to want to change the

image of the Group and to steer the companies away from illegal

transactions in the future.

2.1.44 Besides providing admissions of past breaches of taxation,

foreign exchange and fraud laws, the transcript provides a graphic

picture of the nature and extent to which criminal conduct permeated the

financial services of the Nugan Hand Group, as a matter of company

policy. The following extracts, evidence, in Mr Nugan's words, the 50a

Group's illegal activities in general terms:

'There are legitimate and illegitimate activities in each of these categories.' [Thereafter follows a list of 15 categories of business.]

This will mean that we will have to go through quite a lot of

files and find all the secret bank accounts that are secret for reasons unacceptable to us ... we are even thinking of passing most of the illegitimate clients off to other banks ... I know of many of these that you people don't know of, so there's more

to get rid of than you would think, simply because I have been the main guilty party for some reason in years gone by, but what little you people have assisted me with, we will also cut out so that we don't have any ... look if you are shocked, let me tell

you that I am determined to achieve this at whatever cost. This company costs about $10 million a year to run - Nugan Hand - and it's going to toss off a lot of illegitimate cash flow and

business, and hopefully I can get legitimate work, or smaller

2.1.45 With regard to Mr Nugan's more specific admissions, that is, in

respect of foreign exchange breaches and tax evasion, the reader is

referred to Parts 8 and 9 respectively.

2.1.46 Apart from these admissions of illegality, Mr Nugan touched on

more personal matters:^

'At present there's F.J. Nugan, the general councillor to the entire firm and in charge of amongst other things, absolutely

- 52 -

and autocratically, both the Nugan and company law firm, such as it is and the entire Nugan Hand group of companies and banks world wide, such as they are.

The problems in the firm basically stem from the top, rather than from the bottom. We've got people who at present get away with murder and never give a damn, because at one time or

another you were either inside a bottle of Scotch or in a church or whatever in this period.

We are reborn, those sons of bitches who were passing under our name, prior to today, including me. We are different people.

I am bigger and smarter than Alan Bond.

High quality people like me who got paid $100 000 a day to work something like that out.

Now secondly, because I am a lawyer I've got to not have him as a client in my law firm, right? Because I can't have him as

another client in my law firm, is another reason why my law firm never has any clients. Number two, I can't do anything that would be unprofessional or infamous conduct.

I have a theory that I espouse but it may be inaccurate or it

may be hallucinating but I operate with a fragmentation theory of thinking.

... but I am probably wrong because I have been wrong on so

many things all my life and maybe my theory is just vanity...

I am an architect of fact.'

2.1.47 In contrast to these revealing statements, often of a self

critical nature, Mr Nugan derided others who had at one time or another

expressed similar criticisms. Mr W.J. McDonald [2.47] gave evidence to 52 . .

the Commission concerning a document which Mr Nugan, while in the

United States, had dictated to Mr McDonald's secretary for despatch to

the Bank of New South Wales in Sydney. Mr McDonald said he could only

describe the document as 'an absolute diatribe' and he told his secretary

not to send it.

2.1.48 The document was entitled 'An Insignificant Commercial "Tragedy"

on the Rim of the World'. It comprised a list of grievances against

individuals or groups of individuals including those involved in the

takeover of the Nugan Fruit Group, parliamentarians, senior government

officers, the media generally and certain journalists in particular, and

- 53 -

the Australian banking and merchant banking community in general. His

allegations v/ere of 'disgraceful conduct', 'swearing a false oath',

'illegal provision of secret information', 'breaches of the Companies

Act', 'innuendo', and 'rew heights in "amateurism" and "low standards"' .

He referred in particular to the Bank of America and the Chemical Bank as

believing:

'the media and built on the shaky innuendo and edifice of

superficially sober criticism and support for the gutter press. Australian United Corporation, merchant bankers Bank of New South Wales, National Bank and others in Australia, Bank of America, Chemical Bank etc in the United States etc and others

elsewhere in the world demonstrated clearly their disregard for facts (they print a good story) and probably most importantly that even humans in big banks are sometimes fallible. They should be forgiven their horrifyingly false references and opinions on Nugan Hand because we will have to live with them in the future and they will improve and raise their standards only very slowly.'

With reoard to this letter, Nr McDonald observed that Mr Nugan was

'really unbalanced' at this time.-^

2.1.49 In the latter part of 1979, it came to Mr Nugan's attention,

through negotiations for the purchase of a share in London Capital

Securities Ltd [2.111], that the other parties to the negotiation had

obtained an unfavourable opinion concerning the Nugan Hand Group from

Australia. This opinion is set out in full in Part 4 Section 6 of the

report. Mr Nugan mistakenly attributed this unfavourable opinion to the

Bank of New South Wales and wrote on more than one occasion to the Bank

complaining that the Nugan Hand Group had been treated unfairly. He

subsequently discovered that the true author of the opinion was the

Australian merchant bank, Australia United Corporation (which no doubt

explains its inclusion in the passage quoted in the preceding

paragraph). In his response, on 2 October 1979 Mr Nugan affected an air 54 of one unjustly accused:

Ί would like you to understand that it is very hurtful to

Michael Hand and myself who are the owners of this Group, and extremely hurtful to the 130 or so executives who have worked very hard for the Group over the past ten years in its embryonic

- 54

stages ... It is not a matter which we propose to refer to our

solicitors, since it is against our religious beliefs to

commence actions other than for recovery of debt in the normal course of business.' [emphasis added]

Tax Expertise * 5 5 * * * 5 9

2.1.50 Mr Nugan made many extravagant claims of expertise of one kind

or another which have been shown to be unfounded. His most recurrent

boast was that concerning his tax expertise. He told 'everyone' he was 55 the best tax lawyer in the world. He boasted that he had collected

$1 million in pay for advice on tax avoidance and that by the end of 1979

he was earning $100 000 per month in this respect.^

2.1.51 Furthermore, when he addressed the Group's conference held at

the Wentworth Hotel in January 1979 on the subject of 'Taxation

Services', he attributed the success of the Nugan Hand Group to his

subsidisation of it from the substantial fees purportedly earnt by him in

the provision of tax advice, a claim he was often to repeat on later . 57

occasions. It was clear from evidence to the Commission that this

unsubstantiated claim had been accepted as the truth by representatives

of the Group and other parties.

2.1.52 One person who was impressed by Mr Nugan's ability in this

respect, who observed Mr Nugan in the process of providing tax advice,

was General E. Cocke [2.13]. Based on his observations at the time he 59

concluded that Mr Nugan was a 'first class tax lawyer'.

2.1.53 However, Mr E.P. Bar land [2.28] who informed Mr George that when

he had worked for the Taxation Office, they had regarded Mr Nugan as one

of the best tax lawyers in Sydney (which was why Mr Bar land went to work

for Mr Nugan) later changed his mind and informed Mr George that Mr Nugan

had a 'narrow understanding of the overall operation of the Act', meaning

for instance that he 'probably could not give conventional accounting tax

advice but he was very aggressive and very inventive'.^

2.1.54 It was impossible for the Commission to quantify the fees earnt

by Mr Nugan in the provision of tax advice but it is quite clear from the

- 55 -

evidence that claims as to the extent of the fees earnt and his

subsidisation of the Group were grossly exaggerated. While he ray have

obtained satisfactory results at the height of certain sections of the

public's interest in various tax avoidance arid evasion schemes, there is

certainly no evidence before the Commission that Mr Nugan earnt large

sums.

Mr Nugan's Lifestyle * 6 5

2.1.55 Mr Nugan's lavish tastes and lifestyle were legendary. lie lived

at Coolong Road, Vaucluse in Sydney [see 3.4.38-3.4.42] in a most

prestigious residence overlooking the harbour which he liought anti

decorated at great expense, though the expense was borne by Nugan Hand

Ltd and not himself. ®4 He had his visitors chauffeured around

Sydney*^ in fleets of Mercedes Penz motor vehicles which he had

regularly on standby. He gave executives the use of expensive motor

cars. In the words of one: 'they gave me a car, they gave me a

Mercedes. They gave everybody a Mercedes'.®4

2.1.56 Overseas, notably in The Philippines, his lifestyle was nothing

short of ludicrously ostentatious. One witness observed that they were

greeted at The Philippines airport by the Minister of Commerce, their

arrival was televised and they were chauffeured from the airport without 65 having passed through Customs.

2.1.57 It was at the I CONE conference in Manila in July 1979 however,

that Mr Nugan made his most ostentatious display. He hired a luxurious

penthouse suite at the Philippines Plaza Hotel, at a cost of 'thousands

of dollars a day', he hosted lavish cocktail parties, he hired two

Mercedes vehicles to wait outside the Hotel 24 hours a day, and publicly

announced a donation of some US$12 000 to a Social Welfare Fund.®®

Understandably, his conduct during the course of the conference gave rise

to a great deal of criticism with references to his 'vulgar display of

ostentation', his 'gauche and totally immature' behaviour®/ and his

'incredibly embarrassing splash'.68

- 56 -

2.1.58 Mr Nugan fuelled the image of personal wealth based on his

affluent lifestyle by blatantly false claims that he possessed

considerable capital. Thus at the January 1978 conference he announced

that Mr Hand and he had private funds which became available on

10 October 1977 by which the capital of Nugan Band Ltd was increased from

$1 million to $2.2 million. ^ [For a description of the second capital

injection into Nugan Hand Ltd, see Part 5. ]

Mr Nugan's Drinking Habits

2.1.59 Mr Nugan's excessive drinking from early morning to late

afternoon was common knowledge among the staff employed at the Nugan Hand

Ltd premises in Macquarie Street. That his early morning drinking was

regular was confirmed by Mr G.T. Shaw [2.65], who referred to an ever

present glass of whisky on Mr Nugan's desk, and Mr F.D. Ward [2.73],

who attributed Mr Nugan's ambivalence or morose nature in the afternoon

to his consumption of alcohol. In a minute from Mr Nugan dated

16 February 1976 reference to the closure of the bar at the company's

offices between 9.00 a.m. and 5.00 p.m. was interpreted by Mr Ward as

perhaps being a promise by Mr Nugan to 'go on the straight'.7i Similar

references to Mr Nugan's drinking habits were made by a number of other 72 witnesses.

2.1.60 .Such was the concern of Mr J.M. Gilder [2.25] at the extent of

Mr Nugan's reliance on alcohol that he asked Mr G.A. Courtney-Smith

[2.17], who claimed experience in the treatment of alcoholics, to assess 73

the extent of Mr Nugan's drinking problem. Mr Courtney-Smith

discussed the matter with Mr Nugan and concluded that while Mr Nugan was

not an alcoholic, he was highly dependent on a large intake of

alcohol.7^

2.1.61 It is clear from correspondence that Mr Hand preferred to ignore 75 the problem at this time but he was later to give physical expression

to his disapproval by knocking the ever present whisky glass, a constant

reminder of his partner's alcoholic state, from Mr Nugan's desk

[2.2.64].76

- 57 -

Mr Nugan finds Religion

2.1.62 To the observance of associates Mr Nugan stopped drinking about

April 1979 and embraced religion with a conspicuous intensity. He

attended church each morning, afternoon and lunchtime and although his

general behaviour remained the same, there was a sanctimonious tone in 77 his dealings with the staff. Mr Shaw recalled occasions when

Mr Nugan returned from St. Andrew's Cathedral and stated that he had

prayed for Mr Shaw and his f a m i l y . A n o t h e r witness described how

Mr Nugan arrived at the conference held at the Gazebo Hotel in October 79 1979 in the following terms:

'Nugan arrives at the meeting, may be a little late, shining eyes, saying, "Oh I feel so good, I have just been to church. I took communion. I feel really good".'

2.1.63 Mr Nugan's interest in religion continued until his death. The

full extent of this was intimated at the funeral when the rector

disclosed that he had given Mr Nugan religious instruction on a regular

basis and they had become firm friends.80

Behaviour in 1979

2.1.64 During the last twelve months of his life there were any number

of incidents of extreme, erratic or inappropriate behaviour on the part

of Mr Nugan. His behaviour had its effects upon the staff of the Group

as well as third parties.

2.1.65 One witness told the Commission that during the last 12 months

of his life, Mr Nugan frequently insulted and humiliated the staff ,8· * "

Another spoke of his great concern when contrary to the facts, Mr Nugan

had, without consulting him, included his name in a new brochure as a

person who had recently joined the Group.8^ In May 1979, a Malaysian

government official, distinctly upset by Mr Nugan's brazen and

insensitive approach to business, had cause to complain that the Group

had falsely claimed to be acting for his government in relation to sales

of rubber, that the Group was a potential political liability and that

- 58 -

Messrs Hagan and Hand had subjected the official to heavy sales

pressure.

2.1. 66 Admiral F.P. Yates [2.76] referred to Mr Rigan's erratic

behaviour in reversing two previously agreed staffing decisions.

Mr Rigan had agreed that Admiral Yates would negotiate the conditions of

Mr D.E. Beazley's [2.7] appointment to the Bank and immediately

negotiated the arrangements himself. Mr Nugan had also instructed

Admiral Yates to dismiss General E.F. Black [2.8] and, having done so,

Mr Rigan immediately re-engaged him.®4

2.1.67 Mr Rigan's constant obsession with prestige and appearances and

his vulgar display of money also manifested itself during this time.

Reference has already been made to Mr Rigan's lavish entertaining at the

Manila conference [2.1.57], So too, in the United States, Mr Nugan

attended the Democrat National Committee fund raising dinner at US$1 000

a head in order to meet and shake hands with President Carter. His

subsequent quest for the photographs of this event achieved, in the

opinion of one witness, the level of a fetish.®®

2.1.68 In Asia and elsewhere Mr McDonald, referring to Mr Rigan's

business activities at this time, described how:®®

'Mr Nugan created the impression running all over Asia and everywhere else that he had tons of money and all you have to do is clear your crazy projects with wait McDonald and if he said its OK I'll be there with the money bags.'

2.1.69 A striking illustration of Mr Nugan's disturbed state of mind at

this time was given in evidence by Mr McDonald in the context of

negotiations with The Philippines government for the purchase of the

Santa Innes iron ore mine. He said Mr Nugan became:®

'incredibly disorientated and left ... He'd become incoherent, his speech made no sense. He'd go off on a tangent. He'd go

into ten minutes of self aggrandizing speech, that kind of thing. As a matter of fact he was so bad - he left by the way

and told me to continue on.'

59 -

As has been mentioned at 2.1.47, Hr McDonald, unbeknown to Mr Nugan,

declined to post a letter written by Hr Fugan, on the basis that the

contents were 1 an absolute diatribe'.

2.1.70 Mr G.A. Edelsten [2.20] said he eventually came to the view that ,, „ 88

Mr Nugan was:

'stark raving mad, and he was painting pictures in the sky of things and schemes and obviously they never intended to

eventuate or nay he lie was so paranoid that he thought they would eventuate.1

2.1.71 So too, Dr G.J. Pauker [2.54], summarising his views of Mr Nugan

in the last month of his life, said he was not a man of sober judgment 89

but a man with a very unbalanced mind. ‘ Mr Nugan' s peculiar behaviour

seems not to have escaped Mr Hand's notice either. In fact Mr Hand asked

Mr McDonald to escort Mr Nugan on his various visits to ensure that he

confined himself to matters of a legal nature and left major projects

alone. It would seem that Mr Hand entertained serious doubts about

Mr Nugan's rationality and staff management from as early as December 90 1978 or January 1979 ' and at one stage in 1979 he contemplated closing

the Sydney office thereby effectively curtailing Mr Nugan's activities 91 save in the legal sphere.

Final Days

2.1.72 By Christmas 1979, Mr Nugan was clearly depressed and in

reference to his children, one observer commented 'he would bounce that

little nirl of theirs very wistfully on his knees and talk to the little

boy in a way that suggested, in retrospect, that he was saying goodbye to

then'. In the first week of January, Mr G.F. Princat. [2.9] told

Mr Nugan that unless the internal bills v/ere repaid, he would qualify the . 93

accounts thus exposing the company's state of insolvency. It was at

this tine that Mr Nugan renewed his shooter's licence, purchased a

rifle94 and subsequently left for two weeks in the United States with 95 ’

his wife,'" where he gave her various legal documents including an

insurance policy on his life.

- 60 -

2.1.73 He then visited Germany^ to reassure Mr J. Bachmann [2.5] of

the F.A. Neubauer Bank that money for the Group's acquisition of the Bank

would be forthcoming. Given the desperate circumstances of the Group and

his own personal plight, it is impossible to reconcile the activities of

the man.

2.1.74 Following this untimely visit to Germany, he then returned to 97

Sydney only to hear news of Mr Hill's proposed resignation and the 98

Taxation Commissioner's rejection of certain tax schemes.

2.1.75 It would seem that the 'massive fraud' (as Mr Nugan's actions

over the years were described by the Coroner in his finding at the first

inquest into Mr Nugan's death) perpetrated by Mr Nugan on the Nugan Hand

Group, his wounded pride at the thought of exposure as a financial

failure and his generally unbalanced frame of mind led him to take his

own life.

2.1.76 On the Friday evening before his death he was said by his friend

Mr Lincoln-Smith to be 'laughing drunk'. Notes concerning his wife and

children and phrases such as 'this is my most wonderful day' left in 99

Mr Nugan's bible were reminders of his religious fervour at this time.

2.1.77 As mentioned earlier in this profile his body was found with a

bullet wound to his head at 4.00 a.m. on Sunday, 27 January 1980 in a

Mercedes car parked near Lithgow, New South W a l e s . A verdict of

suicide was reached by one inquest and subsequently confirmed by another

following an exhumation of Mr Nugan's body."*·1 ^

2.1.78 For further details concerning these final days of Mr Nugan's

life the reader is referred to Part 3 Section 7.

VO CO "~Ι ^ CO M

- 61 -

Endnotes

1 JTF Vol. 2 p 288, CD3774 folio 45; CD4127 folio 59; CT23975-6,

K. Nugan CD3719 Hand's speech to Bangkok Conference January 1978 CT22510, Calder CT22408, Needham CD9571 folios 1-2

CT22311a-312, Swan JTF Report Vol. 2 p 293; CD5609 folio 3 The Financial Review, 30 December 1977 CT22407-08, Needham 10 CT22410, Needham

11 CT22411, Needham

12 CD1308 JTF ROI Needham; p294 JTF Report 13 CD1308 JTF ROI, Needham; p294 JTF Report; CT22409, Needham 14 CT24844, Young

15 CT24829, CT24843, Young 16 CT24845-8, Young

17 CT24860, CT24864, CT24880, CT24858, Young 18 CT24870-71, CT24874, Young 19 CT24829-30, CT24873, Young 20 CD6233 folio 48; CD6360 folio 51; CD919 folio 11

21 CT22412, Needham

22 CD6436 folios 80 and 96; CT22412, Needham 23 CT22412-13, Needham 24 CT19462, Smiles; CT15518, CT21485, Hill 25 CT22415, Needham

26 CT22781, Collings; JTF Report Vol 2 p296 27 CT22781, Collings

28 CT22782, Collings

29 CT22800, CT22804, Collings 30 CD4533 folio 47

31 CT21493, Hill

32 CT21494, Hill

33 CD9926 folio 52

34 CT21496, Hill

35 CD11529 folio 83, Letter Kwok/Commission 9/4/85 36 CD2199 Box 1 folio 118

37 CT22346-7, George

38 CT22346-7, George

39 CT24830, Young; CT25024; CT23230, Ward; CT22333, Swan;

CT19945-6, Moloney; CT22214-16, Gilder 40 CT22245, Gilder; CD1311 folio 173, Gilder JTF ROI 41 CT21503, Hill

42 CT21507, Hill

43 CT24322, Hill

44 CT20302, Swan; CT116254-5, Hill 45 CD2803 folio 2

46 CT22609; CT21247, Houghton; CT22373; CT22376, George 47 CT22373; CT22376, George 48 CT18772, CT18868, CT18895, Evans; CT21597-98, CT25198-99, Brincat; CT22428, CT22432, Needham, CT24829, Young; CT25024,

Shaw; CT24036, Dunn

49 50 50a 51 52 53

54 55 56

57 58 59 60

61 62 63 64 65

66 67 68

69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86

87 88 89 90 91 92 93 94 95 96 97 98

99

100 101

- 62 -

CT22707, Pulger-Frame CD10950 CD10950 folios 8,11,14,24,25,102 CD10950 folios 3,6,37,48,49,53 CD11524 CT24684, McDonald CD232 folios 1-2 CD1308, JTK ROI, Moloney and George CD1308, JTF ROI, Moloney and George CD45 folio 14

CT22921, McArthur CT24603, Cocke CT22359-60, George CT24510, Pauker

CT22320-2, Swan CT24510, Pauker CT20469, Edelsten CT24687-88, McDonald

CT24263, CT24291, Yates CT24263, CT24291, Yates CT24679, McDonald CD10252 folio 15

CT25024, Shaw CT23230, Ward CT22333-34, Swan; CT19945-46, Moloney CT22214-16, Gilder

CT22105, Courtney-Smith CD6186 folio 4 CT22214-6, Gilder CT23988, George

CT25024, Shaw CT24511, Pauker CD2803 CT22217, Gilder CT24512, Pauker CD8628 folio 14

CT24261, CT24265, Yates CT24295, Yates CT24710, McDonald

CT24683, McDonald CT18706-7, Edelsten CT24532-33, Pauker CT24262, Yates CT22541, Houghton

CT24522, CT24533, Pauker CT23749, CT23924, Brincat CD1414 folios 362-3 CD1177 CT22128-33, Hewitt CT22211-12, Hill; CD1414 folios 395-96 CT20832, CT22367, George CD2803 CD1609 folio 14 CD1609

- 63 -

2.2 HAND, Michael Jon

Introduction

2.2.1 In 1968 Michael Jon Hand and Francis John Nugan [2.1] met for

the first time in Sydney. It was a meeting that was to have some quite

remarkable consequences, not only in commercial and financial circles

within Australia but in various countries throughout the world. Indeed

some seventeen years later serious and wide ranging allegations of

misconduct concerning the activities of these two men are still being

asserted both in Australia and overseas; the winding up of companies

incorporated by Mr Hand and Mr Nugan continues both in Australia and in

Hong Kong.

2.2.2 Their backgrounds had little in common and, in particular,

neither had by training or experience any qualifications relevant to the

setting up and the operation of a banking organisation, merchant or

otherwise. Nor did either of them have anything like the funds

ordinarily required for such an undertaking. Notwithstanding this,

between them they formed an international group of companies, some based

in Australia, which advertised themselves throughout many countries as

carrying on merchant banking activities and offering financial and

investment advice and other services.

2.2.3 Following the death of Mr Nugan in January 1980, Mr Hand, who

was in London with Admiral E.P. Yates [2.76] at that time returned to

Australia briefly only to flee the country a few months later and

disappear. The circumstances of Mr Hand's disappearance and subsequent

contact with him are described in paragraphs 2.2.92 to 2.2.100.

Personal details and qualifications

2.2.4 Mr Hand was born in New York City in the United States on

8 December 1941. His early schooling was completed in New York and in

1961 he graduated from the University of Syracuse, New York with a degree

in Forestry. He was a full-time resident of the United States from 1941

to 1964.1

- 64

Service in Vietnam

2.2.5 He enlisted in the United States Army ir, 1963 and served until

May 1966. He served in the Special Forces Airborne Division during a

tour of duty in Vietnam and was highly decorated for bravery in respect

of that service. He was awarded the Silver Star, and the award was later

upgraded to that of the Distinguished Service Cross, (the second highest 2

decoration for bravery in combat awarded by the United States Army ) 3

for 'extraordinary heroism' at Dong Xaoi in June 1965. He was also

awarded the Vietnamese Cross of Gallantry.^ While in Vietnam Mr Hand c .

was a member of the Green Beret Unit."' This was described by a witness

before the Commission as a special elite airborne unit, generally

recruited from the Airborne Division, whose mission in Vietnam was to

work with the hi .11 tribes of the central mountains to combat the

infiltration of supplies and personnel from the North.

2.2.6 Mr Hand told Mr W.E. Colby [2.14], the former head of the United

States Central Intelligence Agency ('C.I.A.'), and other witnesses, that

while he was a rentier of the Green Beret Unit, he had some loose

7

connection with the C.I.A. One witness told the Commission that, in

his view, it was possible that the C.I.A. had at that time worked with g

the Green Berets in conjunction with the hill tribes of Vietnam.

Mr Hand also told Mr Colby and another witness that his association with

the C.I.A. continued while working in another job after he left the

United States Army.^ [Allegations concerning Mr Hand's involvement

with the C.I.A. are further referred to at paragraphs 2.2.105-2.2.109 of

this profile, and are dealt with in detail in Part 4 Section 3 of this

report. ]

2.2.7 Claims have been made that after leaving the United States Army,

Mr Hand was employed in the late sixties in Laos and Vietnam, by either

Continental Air Services or Air America. He was said to have flown

unmarked aeroplanes which 'dropped food to the natives' .

2.2.8 While in Vietnam in the late sixties Mr Hand met Mr Paul

Stocker, an American lawyer, who was at that time selling land through

- 65 -

his company, Ocean Shores Pty Ltd, to American servicemen in Laos. This

land was situated on developments known as Ocean Shores anci Cabarita in

the Brunswick Heads area of northern New South Wales.11 Mr Hand was

later employed for several months as a salesman by Mr Stocker, and was

very successful in selling this land to United States servicemen

stationed in Laos and Saigon.

Early Activities in Australia

2.2.9 Hr Hand had cone to Australia in the late sixties on Rest and Recreation leave and met Nr F.B. Houghton [2.35] the proprietor of the 12 Bourbon and Beefsteak bar and restaurant at Kings Cross in Sydney.

In September 1967 Nr Hand migrated to Australia and took up full-time

residence.11 His initial employment included employment for a few

months by Parkes Developments, selling land on the north coast of New

South Wales.14 This job was obtained for him by Mr Houghton.15 From

about 1967 until 1969, Mr Hand was employed as a Sales Manager for

Wendell West Australia Pty Ltd, the company which had bought out

hr Stocker's interest in Ocean Shores. This company continued to be

involved in land development in the Brunswick Heads area.11 Mr Hand

retained his employment when Wendell West sold its interests to Princess

Properties in 1970.11

2.2.10 In December 1968, Mr Hand married an Australian citizen named

Helene Mary Boreland.1^

First contact with Mr Hugan - Early joint ventures - Incorporation of

Yorkville Nominees Pty Ltd * 1 9 2 0 2 1

2.2.11 Mr Hand first met Mr Nuqan in 1968, when he (Hand) was involved 19

in the purchase and sale of real estate in northern New South Wales.

Evidence before the Commission indicates that they soon established a 20 very close relationship. For a time they shared a flat together in 21

the Eastern Suburbs of Sydney.

2.2.12 In August 1969 Mr Hand together with Mr John Foley and Mr Clive

Lucas, formed a company called Australasian and Pacific Holdings Ltd

- 66 -

[2.80], Mr Hand became the company's managing director. The company was

described as an investment company, set. up to develop a beach resort in

Queensland, it did very little in the way of trading other than some

stock market trading handled by Mr Hand.22 Mr Hugan became associated

with the company in early 1970, and subsequently borrowed a laroe amount - . 23 "

of money from it. The company did little business after 1973,

although Mr Hand remained a director until 1977.2^

2.2.13 In January 1970 Mr Nugan together with Mr Donald O'Callaghan

formed a company called Meekatharra Minerals ML [2.112]. The company was 25

formed to mine for nickel, copper and cobalt in West Australia.

Mr Hand worked as a security guard for Meekatharra M i n e r a l s . H e told

one witness before the Commission that he met Mr Nugan while he was 27 engaged in this work. In a letter from Mr O'Callaghan to the Sydney

Stock Exchange dated 17 March 1970 Mr Hand was said to be the holder of

20 000 shares in this c o m p a n y . M r Hand held no office in the

29

company, but Mr Nugan remained a director until 23 July 1973.

2.2.14 In March 1970, Mr Nugan formed a company called Yorkville

Nominees Pty Ltd [2.108], Mr Hand was associated with Mr Nugan in

relation to the activities of this company, which v/as involved in buying

and selling real estate. Mr Hand was a director of Yorkville Nominees

from 17 March 1972 until 21 June 1972.^ His involvement with Mr Nugan

in land dealings continued during the period 1970 to 1973 and

31

beyond. An associate of Messrs Hand and Nugan during their early

joint ventures suggested that they made about half a million dollars from 32 their joint land deals.

2.2.15 In August 1971 Mr Hand became a foundation director and joint

managing director of Secured Income Real Estate (Australia) Ltd ('SIRE')

[2.117], [For further information as to the role of this company see

3.2.9.] This company carried on business as a property developer in 33 Queensland. During Mr Hand's involvement with SIRE he travelled

extensively in New South Wales to purchase real estate. In conjunction

with others he bought a property at Cowra in the name of Langenfelder Pty

Ltd of which he was a director, and of which Mr Nugan later became a

- 67

shareholder. As approval for subdivision of the Cowra land was not

granted, the venture was unsuccessful; those involved received about

$1 DOn each and Langenfelder Pty Ltd subsequently went into liquidation.

Mr Hand ceased to be a director of SIRE in July 1972. Evidence before

the Commission suggests that Mr Hand resigned because he took the view 34

that SIRE was in financial difficulty and might collapse.

2.2.16 Mr Hand and his wife were also directors of Carlyle Investments

Pty Ltd, (later the name was changed to Garcia Pros Hardware Pty Ltd

[2.83]), a company apparently involved in share trading and investments.

According to the evidence before the Commission, by 1973-74, Messrs Hand

and Nugan together appeared to control a group of 'four companies involved

in property development and share investment; their activities included 35

the strata titling and renovation of old flats for resale.

Establishment of Nugan Hand Ltd * 3 7

2.2.17 Nugan Hand Needham Ltd [2.97] was incorporated on 6 July 1973.

It was soon to change its name to Nugan Hand Ltd. Its first directors

were Messrs Nugan and Hand, Mr John Charles Needham [2.51] and Mr Brian

William Calder [2.11]. The name of the company was changed to Nugan Hand

Ltd [2.97] on 22 August 1974, Mr Needham having ceased to be a

shareholder and director.36 In late August 1973, Messrs Hand and Nugan

established an office of the company on the 8th floor at 55 Macquarie 37 Street, Sydney. It appears that Mr Hand's activities during the

early days of the company were confined to the sale of real estate and

silver bullion and that he was at this stage also ' involved in property

up and down the coast'.

2.2.18 Until December 1973 the company was mainly involved in the sale

of land at Brunswick Heads in northern New South Wales. A major

development with which it was concerned was Ocean Shores, which involved

the re-purchase of between seventy and eighty blocks of land from United

States servicemen who had originally bought them and the resale of these

blocks at a profit. There is evidence before the Commission that in the

early days of the company, it was controlled by Mr Nugan and that

- 68 -

Mr Hand's involvement was limited to specific areas in which he was

interested; for example the Ocean Shores development was described as a 39 pet hobby1 of Mr Hand's. There is evidence before the Commission

that Mr Hand was also involved in selling silver bullion on behalf of

Pacific Silver Commodities^ [see 2.104], Mr Hand was not involved in

the limited money market operations of the company carried out by

Mr Young [2.78] in August 1973, except in relation to formalities such as

signing the dealing book. An employee of the company in these early days

described Mr Hand as a 'very cold impersonal employer who wished to

isolate himself from his staff as much as possible', whose dealings with 41

clients were conducted 'very much on a closed door basis'.

2.2.19 In late 1973 Mr Hand was involved with Mr Nugan in the takeover

of North Australian Rubber Mills Ltd ('HARM') [2.113] by PNB Rubber and

Plastic Industries Pty Ltd, [2.116] and with the subsequent 'rescue

operation' conducted in respect of NARM. NARM was a Queensland footware

and manufacturing company. Messrs Hand and Nugan became directors of

this company on 30 October 1973, at the conclusion of the takeover. 42

Shortly afterwards their interest in NARM was purchased by Mr Needham.

Knowledge of first capital injection into Nugan Hand Needham Ltd -

Signature of 1974 Accounts 4 3 * 4 5

2.2.20 Mr Hand and Mr Nugan were each allotted one ordinary $1 share in 43

Nugan Hand Needham Ltd on 9 July 1973. On 18 July 1973 Mr Nugan was

allotted a further 20 000 shares.^ The minutes of a meeting of

directors of Nugan Hand Needham Ltd dated 17 August 1973 record that

Messrs Nugan and Hand submitted applications for 490 000 shares each and

that Mr Nugan submitted his cheque for $980 000 in respect of these 45 applications. It was resolved that Messrs Nugan and Hand each be

issued with 490 000 shares. Attached to the minute are applications for

the shares signed by Messrs Nugan and Hand and dated 17 August 1973. ^

2.2.21 This was a device of Mr Nugan's designed to give the appearance

that Messrs Nugan and Hand had contributed $1 million in capital to the

company. The mechanics are described in Part 5 paragraphs 5.76-5.87 and

- 69 -

are not repeated here. Mr Hand's involvement in this dishonest scheme at

this early stage is significant. As a result of this scheme a claim was

made in the published accounts that paid up capital was $1 000 005.

2.2.22 Mr Hand also signed the Statement by Directors and the Directors

Report attached to the accounts of Nugan Hand Needham Ltd for the period 47

ended 30 June 1974 on 25 October 1974, again demonstrating that he

was quite prepared to publish false statements.

Mr Hand's Absence - December 1974 to March 1976 - Activities in South

Africa

2.2.23 Mr Hand departed Sydney en route to San Francisco on 17 December

1974.^ After visiting Panama, Arizona, London and Spain, Mr Hand 49

travelled to South Africa on 14 March 1975. He was granted permanent 50

resident status on 19 December 1975. Apart from one visit to

Australia between 17 and 31 July 1975 he and his wife apparently remained

in South Africa until 16 March 1976, when they returned to Australia.51

2.2.24 On 7 July 1975 Mr Hand formed a company in South Africa called

Nugan Hand (S.A.) Pty Ltd. Mr Hand was the sole shareholder of this

company and gave his occupation at the time of its formation as 'property

consultant'. The business of the company was said to be that of 'a

management consultant and general investment adviser'. The company had a

paid up capital of one South African rand. The company carried out no

business transactions during the period of its existence. On 13 October

1976 Mr Hand advised his solicitor in South Africa to take action to 52

de-register the South African company.

2.2.25 There has been considerable speculation as to the reasons for

Mr Hand's departure and return and as to his activities while in South

Africa. Mr Hand himself told the delegates of the Corporate Affairs

Commission that he and Mr Nugan 'separated company' for 'about fifteen

months' in January 1975. He said that he and Mr Nugan had settled this

in Hawaii in early January 1975, and that he then resigned from the

boards of all Nugan Hand Group companies with which he had been

- 70 -

associated. He told the delegates that he was paid out by Mr Nugan over

a period of time for the 410 000 shares which he held in Nugan Hand Ltd.

Of his return to the Nugan Hand Group, Mr Hand told the delegates that

when he returned to Australia in March 1976, Mr Nugan said, 'Can you help

me? I am here all by myself and we will put things back on the same

footing', whereupon Mr Hand agreed to re-join the company.^ Contrary

to Mr Hand's account of his absence, the minute book of Nugan Hand Ltd

records Mr Hand as being overseas 'on company business' on 4 June 1975,

25 June 1975, 7 August 1975 and 12 August 1975. However, as much of the

contents of the minutes were sheer fabrications very little reliance can

be placed on such a record. The records lodged by the company with the

Corporate Affairs Commission indicate no change in the directors and

shareholders to support Mr Hand's assertions.

2.2.26 Mr F.D. Ward [2.73] told the Commission that about January 1975

Mr Nugan returned from a trip with Mr Hand to Hawaii, called the staff

together for a meeting and advised them that Mr Hand would not be coming

back because he bad retired. Mr Nugan said that Mr Hand was spending 56

some time with his wife in South Africa. Mr Ward understood that 5 7 57

Mr Hand intended to establish a turkey farm in the United States.

Mr C.L. Col lings [2.15] told the Commission that Mr Nugan told him that

he had bought out Mr Hand for half a million dollars in Hawaii on

16 December 1 9 7 4 . Mr P.M. Dunn [2.18] told the Commission that he

understood from Mr Hand that he left the company because 'he had sort of

burnt himself out in the earlier stages of the business and was very

happy to withdraw and was looking at all kinds of restful occupations.

He had had enough of the fast life and thought about becoming a turkey

farmer in the United States. He travelled a bit and could not find a

base, found himself in South Africa, and then wanted to return to the rat

race'. Mr Hand told another witness who gave evidence to the

Commission that he left Mr Nugan because of Mr Nugan's drinking

p r o b l e m . T h e r e is also evidence before the Commission that Mr Hand

left the company because he was 'sick of the problems associated with the

bank [Nugan Hand Ltd] and wanted some time to himself' and that Mr Nugan

had begged him to return to the company. The real reason for his

departure in December 1974 may simply have been due to the dismal

performance of the Group at this stage [see paragraph 3.3.1].

- 71 -

2.2.27 Other evidence before the Commission suggests that during this

period Mr Hand lived for some time in Rhodesia and spent some time

touring South Africa.6^

2.2.28 Mr Hand and Mr t'ugan apparently maintained a good relationship

during Mr Hand's absence, and they were constantly in touch by

telephone.68 While in South Africa, Mr Hand was in communication with

members of the Nugan Hand Group organisation in relation to a variety of

'business and trading opportunities' in South Africa.* * * * * * 64 There is

evidence before the Commission that while in South Africa Mr Hand made

requests for the supply of a number of commodities, including bullets,

carburettors, canned fruit,65 hand-guns and pistols, and that Mr Nugan

instructed Nugan Hand Group staff to make various trade inquiries on

Mr Hand's behalf. Allegations concerning Mr Hand's involvement in the

shipment of arms to South Africa and other transactions relating to

armaments during this period are further referred to at 2.2.102-2.2.104

of this profile and in Part Seven of this report. The Commission is

satisfied that no transactions involving the export of armaments to South

Africa were concluded.

Role after return to Australia

2.2.29 Mr Hand returned to Australia in March 1976 and apparently

resumed his role as equal partner in the affairs of Nugan Hand Ltd. The

company's access to funds had improved dramatically since the

establishment of Nugan Hand (Hong Kong) Ltd [see Part 4 Section 1 ].

Mr Dunn told the Commission that Mr Nugan reacted to Mr Hand's return as

'a pleasant surprise'.66 * Mr Hand soon caused the removal of the then

managing director Mr Dunn from that position.68 Mr Dunn told the

Commission that he resianed as managing director of Nugan Hand Ltd upon

Mr Hand's return, because he perceived that the real power in the

organisation would then lie with Messrs Hand and Nugan.68 Mr Collings

was told after Mr Hand's return that Mr Hand had renegotiated and 'bought

back in'.6<3 It appears that Mr Hand's activities upon his return to

the Nugan Hand Group concerned the collection of deposits on behalf of

Nugan Hand Ltd, and approaches to potential clients. 80 His role at

- 72 -

this time was described by Mr Ward to the Commission as that of 'a

salesman out collecting deposits'.7· 1 ·

Signature of back dated internal bills of exchange

2.2.30 The introduction of the so called internal bills of exchange

into the published accounts of Nugan Hand Ltd is dealt with at paragraphs

3.3.46 to 3.3.48. It was a scheme designed to camouflage the growing

deficiency in the funds of Nugan Hand Ltd. The close nature of Mr Hand's

relationship with Mr Nugan and the fact that he had by this time acquired

knowledge of the level of activity in Nugan Hand Ltd and already shown

himself willing to be a party to false accounts leads the Commission to

conclude that Mr Hand was well aware of the multiple deceptions practised

by Mr Nugan in relation to the production of false published accounts

[see Part 5],

Establishment of Mugan Hand Bank - Mr Hand moves to Hong Kong * * * * 7 2 7 3 7 4 7 5 * 7 7

2.2.31 The Nugan Hand Bank and Trust Company (later the Nugan Hand

Bank) was incorporated in the Cayman Islands on 6 July 1976. [For

further information on the role of this Bank see Part 4 Section 2. ]

Mr Hand became a director and Vice-President of the Bank on 21 July 1976 72

and a shareholder on 9 August 1976. On 25 August 1976 the company

73

was granted a hanking licence. The name of the company was later

74

changed to The Nugan Hand Bank.

2.2.32 From the time of its establishment, the Bank became Mr Hand's

prime concern. A plan for the development of the Bank, said by Mr J.M. 75

Gilder- [2.25] to reflect the ideas of Mr Hand and Mr Nugan, suggests

countries in which representative offices of the Bank should be

established, the type of operation to be conducted by those offices, the

services to be offered by the Bank and the administrative procedures to

be adopted.7® Mr Hand was responsible for the employment of Mr Gilder

because he wanted to 'get somebody who could really drive the bank 77 along'. At Mr Hand's instigation, Mr Gilder engaged a number of

persons to represent the Bank in various parts of world.7® Mr Hand was

- 73 -

the motivating force behind the establishment of representative offices

of the Bank in South Fast Asia, the United States, South America and 79 Europe. In October 1976, Mr Hand announced that he intended to open

offices of the Bank in Bangkok, Chiang Mai and Phuket. It was

subsequently decided that Mr Collings should go to Thailand to open the

Thai offices and that Mr Hand would replace Mr Collings in the Hong Kong

office of the Nugan Hand Group.88

2.2.33 Mr Hand left Sydney and moved to Hong Kong in about October

1976.®·*· From the time of his move to Hong Kong, Mr Hand 'more or less

took responsibility' for the South East Asian operations of the tJugan

Hand Group.82 He remained in Hong Kong until August. 1977 when he moved

to Singapore.88 According to Mr Dunn, Mr Hand was responsible for the

administration of the Hong Kong office and had an intimate knowledge of 84 its activities. From the time that Mr Hand went to Hong Kong he was

1 thereafter only a visitor to Australia'.88

2.2.34 Mr Hand was concerned to ensure that the Bank offered a highly

confidential banking service. To that end, he devised a system whereby

clients were allocated a client number and referred to in hank records by

number only. The identity of many of the Bank's clients was known only

to himself and Mr Collings.8(1 He was also responsible for the

introduction of a system of codes which were used in the transmission of

messages between Nugan Hand offices. The Nugan Hand Manual reflects

Mr Hand's obsession with secrecy, 0 in that it details steps to be

taken to ensure the client's privacy, which include 'maximum security'

applications for sensitive clients, allocation of code words and numbered

accounts, and the forwarding of correspondence in envelopes having no

conpany markings or return address. It was this section of the Manual

which Mr Hand instructed Nugan Hand staff to shred after Mr Nugan's 89 death " [see Part 3 Section 9].

2.2.35 Mr Needham was invited to join the Nugan Hand Bank as a

director, and went to Hong Kong in May 1977 to inform himself as to the

Bank's Hong Kong operation. Mr Needham said that it was apparent to him

from the books of Nugan Hand (Hong Kong) Ltd [see Part 4 Section 1] that

- 74 -

there was a shortfall of some US$3 million in the company. ^

Mr Needham expressed his concern about the shortfall to Mr Hand and

subsequently a meeting with Messrs Hand and Nugan was arranged in

Singapore. Mr Hand did not contribute much to this conversation and it

was Mr Needham's view that Mr Hand did not understand much about the

financial affairs of the Nugan Hand Group,93

Unusual Circumstances in which Mr Hand granted Australian citizenship

2.2.36 Mr Hand applied for Australian citizenship at the Sydney office

of the Department of Immigration on 17 January 1977. He was at that time

married to an Australian citizen. Mr Hand was interviewed by a

departmental officer on the same day that he applied for citizenship.

Police and security checks were requested on 24 January 1977 and

clearances received on 29 January 1977 and 3 February 1977 respectively.

On 8 March 1977 the Migration office in Hong Kong cabled the Sydney

office of the Department of Immigration requesting the citizenship

certificate in respect of Mr Hand, as Mr Hand had approached the Hong

Kong office requesting that he be granted Australian citizenship while

overseas. The Hong Kong cable suggested that the reason for Mr Hand's

request was that he intended to stay in Hong Kong for the next six

months. However, movement records disclose that Mr Hand returned to

Australia on five occasions between March and November 1977, each visit 92 lasting several days. The certificate was sent to Hong Kong and

citizenship was subsequently conferred on Mr Hand in Hong Kong on 17 May

1977.93

2.2.37 Mr Hand was granted Australian citizenship as the spouse of an

Australian citizen pursuant to section 14(8) of the Australian

Citizenship Act 1948. Mr Hand appears to have met all the technical

requirements for the grant of citizenship. However, shortly after the

grant of citizenship it became apparent to the Immigration Department

that Mr Hand had been granted citizenship under irregular circumstances.

Those circumstances were as follows:

. Immigration officers did not collect Mr Hand's United States

passport for return to the United States authorities at the time

75

that Mr Hand was interviewed in relation to his application for

citizenship. No explanation was recorded at the tine as to why

the passport was not collected. A departmental officer later

said that the passport was not collected because the applicant

wished to travel to Hong Kong; and

. the speed with which Mr Hand's application was processed, in

particular, the fact that he was interviewed on the same day

that he made the application and that police and security checks

were obtained very quickly. In addition, a folio had been torn

from the Sydney file of the Immigration Department in respect of

Mr Hand's application for citizenship. The missing folio should

have been placed on the file immediately above the processing

record and may have indicated the reason for the extremely

expeditious processing of the application.

2.2.38 An internal inquiry was conducted into the matter, which

concluded that the circumstances of Mr Hand's obtaining Australian

citizenship were unusual, but recommended that no further inquiry be

undertaken.^

2.2.39 The United States authorities subsequently demanded that Mr Hand

relinquish his United States passport. Mr Hand wished to retain his

United States citizenship and informed the American consul in Australia

in February 1978 that his decision to become an Australian citizen was

made 'strictly on commercial grounds' and that he planned to return

permanently to the United States to continue his business within five to ας seven years. Mr Hand sought legal advice from Mr Colby, a United

States lawyer, and former head of the C.I.A. in relation to the

circumstances in which he could retain his United States

96

citizenship. There is evidence before the Commission that Mr Hand

told one witness that he was forced to take up Australian citizenship in

order to preserve his Australian business interests, during a period of 97 'anti-Americanism' in Australia.

- 76 -

Mr Hand's Knowledge of Second Capital Injection

2.2.40 In August and October 1977 at a time when Mr Hand was in

Australia Messrs Nugan and Hand carried out a further fraudulent scheme

of a complicated nature designed to give the appearance that the paid up

capital of Nugan Hand Ltd had been increased to $2 million. The details

are explained in Part 5.

2.2.41 Mr Hand's close relationship with Mr Nugan, his prior

participation in the purported first 'capital injection' and the nature

of the transactions [see Part 5] establishes clearly Mr Hand's knowledge

of and continuing involvement in Mr Nugan's fraudulent scheme.

Establishment of Singapore office

2.2.42 In August 1977 Mr Hand moved to Singapore and established an

office of Nugan Hand International Holdings Ltd. The Singapore office

became the administrative headquarters of the Nugan Hand Bank and of the

various companies in the Nugan Hand Group incorporated outside

Australia. The original records relating to the Nugan Hand Bank were

held there, as were documents relating to the receipt and repayment of

deposits in Hong Kong, Manila and Thailand, and other countries where

Nugan Hand had established a presence.

2.2.43 Mr Hand indicated in a memorandum to all Nugan Hand executives

and representatives dated 26 August 1977 that he intended to 'take care

of all business and administration' from Singapore. ® In 1978 Mr Hand

combined his Singapore office with that of Mr G.R. Steer [2.68], the

Nugan Hand representative in Singapore, in new premises at ColIyer Quay.

Together they established Nugan Hand Singapore (Pte) Ltd.^ After

several months Mr Hand decided that there was a conflict of space and

responsibilities between himself and Mr Steer, and he moved his office to

the Straits Trading Building. He then established a company called Nugan

Hand (Management) Pty Ltd. The office staff included an accountant named

Mr Tan Choon Seng [2.71]. His office was primarily the head office of

the Nugan Hand Bank; it was also responsible for the funding of the

- 77 -

Singapore enterprise, and the payment of accounts and retainers to

overseas representatives of the Group.

2.2.44 According to Mr Collings, in late 1977 he was instructed by

Mr Hand to remove the names of the beneficial owners from all files in

the Hong Kong office and to treat each file as a number. Mr Collings

carried out this instruction."^ Another witness told the Commission

that after the arrest of Mr Nugan, Mr Collings was instructed by Mr Hand

that the names of all clients were to be removed from the Hong Kong

records. This instruction was carried out by office staff who either cut 102

or whited out the clients' names from the records.

2.2.45 Further evidence of Mr Hand's activities emerges from an address

he gave to a conference of Nugan Hand representatives held in Bangkok

in January 1978. The conference was attended by Messrs Nugan, Collings

and Gilder, and representatives of Nugan Hand stationed in South America, 103 West Germany and South East Asia. The subject matter of Mr Hand's

address indicated that he was familiar with the operation and functions

of the Nugan Hand offices in Hong Kong and Singapore, and had a detailed

knowledge of the staff employed by them and the functions of those staff;

for example Mr Hand outlined in detail the requirements for

representatives transferring money on behalf of clients, and announced

the provision by the Hong Kong office of nominee companies. Mr Hand

indicated that the accounts for the Nugan Hand Bank and other Nugan Hand

regional companies, such as Thailand, Malaysia and Singapore, were being

written up in Singapore. He implied that he was more familiar than

Mr Nugan with what was transpiring in the overseas offices of Nugan

Hand. He referred to Mr Nugan as having a very large workload and it

being impossible for him to know everything that was going on in the

overseas offices. He referred to a past direction that information and

documents involving the overseas operation be sent through Singapore or 104 Hong Kong, and not through Sydney.

Association with Mr Houghton - F.A. Neubauer Bank - Saudi Arabia

2.2.46 Mr Hand met Mr M.B. Houghton [2.35], the proprietor of the

Bourbon and Beefsteak bar and restaurant in Kings Cross, in the late

78

sixties when he (Hand) visited Sydney during a period of leave from his

military service in Vietnam. Mr Houghton obtained employment for Mr Hand

at Parkes Developments when he came to Australia, and Mr Hand later

formed a close association with him. "*"°^ In about September or October

1878 Mr Hand requested Mr Houghton to travel to West Germany and to give

him an assessment of the F.A. Neubauer Bank [2.109] in Hamburg, which had 10G

recently been acquired by t-lugan Hand." . In late 1978 Mr Hand

requested Mr Houghton to travel to Saudi Arabia to determine the

feasibility of conducting banking business on behalf of the Nugan Hand

Bank in Saudi Arabia."*07 Mr Houghton acceded to Mr Hand's request,

discovered that there were very good prospects for deposit taking in

Saudi Arabia and collected some deposits. He sent the deposits collected

to Mr Hand in either Singapore or Hong Kong and reported that the

prospects for deposit taking were good.7 At Mr Hand's request,

Mr Houghton made further trips to Saudi Arabia. In April or May 1979, on

Mr Hand's instructions, a Nugan Hand Bank representative office was

established in Alkohar, and a further office was later opened at Jeddah.

Mr Houghton and other Nugan Hand representatives visited construction 109

sites to collect deposits from expatriate construction workers.

[For further information see Part 4 Section 2. ]

2.2.47 When Mr Houghton requested access to a balance sheet of the

Nugan Hand Bank in connection with his deposit taking in Saudi Arabia,

Mr Hand told him that, as the Nugan Hand Bank was a Cayman Islands

comfviny, it was illegal to issue balance sheets. Mr Hand instructed

Mr Houghton and other representatives in Saudi Arabia that clients

requesting balance sheets were to be told that the issue of balance

sheets for Cayman Islands companies was illegal."*"70

2.2.48 There is evidence before the Commission that Mr Houghton

delivered money collected from depositors in Saudi Arabia to Mr Hand in

Switzerland during the winter of 1979. Mr Houghton told the delegates of

the Corporate Affairs Commission that he 'vaguely recalled' meeting

Mr Hand in Switzerland on another occasion and aiving him money, but was 112

unable to recall the amount or the purpose.

- 79 -

Engagement of former United States military personnel

2.2.49 Mr Hand was primarily responsible for the employment by the

Hugan Hand organisation of a number of high ranking, former members of

the United States military as representatives of the Nugan Hand Bank.

[For further information see Part 4 Sections 2 and 3. ] Mr Hand's reason

for the engagement of such personnel was that they were 'gentlemen of

status', who would greatly assist in building the reputation of the Nugan 113 Hand Group. Mr Hand was confident that, despite their lack of

banking expertise, these men would bring substantial trade and bank

custom to the Group through their connections in South East Asia. 4

2.2.50 Mr Hand was introduced to Admiral E.P. Yates [2.76] by

Mr Houghton in early 1977. Shortly afterwards Admiral Yates accepted a

position as Director and President of the Nugan Hand Bank and

representative of Nugan Hand Ltd, the Bank and Nugan Hand (Hong Kong) Ltd

in the United States. " Admiral Yates said that he was recruited to

the Nugan Hand organisation by Mr H a n d . H e developed a very close

association with Mr Hand, and felt ' very devoted to him' Admiral

Yates told the Commission that he was responsible for the recruitment of

a number of former United States military officers as advisers to the

Nugan Hand B a n k . W i t h the approval and encouragement of Mr Hand,

Admiral Yates engaged General Leroy Manor [2.45] as the Nugan Hand 119

representative in The Philippines. ' Admiral Yates also engaged 1 20 General E.F. Black [2.8], and arranged with General E. Cocke [2.13] ■ 121

that he provide office space for Nugan Hand in Washington D.C. He

introduced Mr Hand to Dr G.J. Pauker [2.54] who in turn introduced 122

Mr W.J. McDonald [2.47] to the Nugan Hand Group. Admiral Yates was

responsible for the introduction of Mr D.E. Beazley [2.7] to Messrs Nugan 123

and Hand. Mr Beazley later accepted a position with the Group.

2.2.51 In his address to the Group's Bangkok conference in January

1978, Mr Hand praised Admiral Yates as a great asset to the company with

an unbelievable capacity for work. He defended his engagement of

military personnel on the basis that they were hard working, disciplined

in their thinking, methodical, had valuable background knowledge of the

- 80

South East Asian area, and assisted the credibility of the Group because

they were well connected and well respected, and provided a means of

introduction to the American expatriate community.^

Refugee Program

2.2.52 In about March 1979 .Mr Hand requested Admiral Yates to work on a

special project for him, which involved the resettlement of Vietnamese

refugees in Centra] and South America. Admiral Yates travelled

extensively to meet heads of government throughout this region to gain 125 support for this project. ~ Mr Band asked Admiral Yates to evaluate a

proposal made to him that the Island of Jacmal was available for refugee

resettlement. Admiral Yates subsequently recommended that this not be

pursued. Mr Band also employed Mr Colby together with a number of

others to advise on the project. Mr Colby attributed Mr Hand's interest Ί 27

in the project to the fact that he had served in Vietnam. He

described Mr Band as 'almost obsessed' with the project. Mr Colby

consulted at length with local experts and representatives of candidate 128 'host' governments. " Mr Co]by and Mr Hand met with officials of the

Turks and Caicos Islands to discuss the resettlement of refugees."^®

In ear]y 1980 Admiral Yates signed a preliminary agreement to resettle

the refugees in the Turks and Caicos Islands in the C a r i b b e a n . A t

the time of Mr Nugan's death Mr Hand was in London with Admiral Yates for

the purpose of meeting British foreign office officials in connection

with the resettlement program.

Relationship between Mr Nugan and Mr Hand - Personality of Hand * 1 3 2

2.2.53 Evidence before the Commission indicates that Mr Hand and

Mr Nugan formed a very close relationship soon after their meeting in

] % 8. According to the evidence of one witness to the Commission, 132

Mr Nugan had no other close associates. The evidence indicates that

until perhaps 1978 or 1979 the two remained extremely close friends and,

subject to the constraints of distance, spent time together socially in

addition to the time spent on their business interests. They remained in

close and regular communication during the period of Mr Hand's absence

- 81 -

ITT

overseas from late 1974 until March 1976, and again after Mr Hand

left Australia in October 1976.134

2.2.54 Their regard for each other appears to have remained

undiminished at least until the Group's Bangkok Conference in January

1978 at which Mr Hand said of Mr Nugan:-1 ·45

' there is nobody I would prefer to remain back to back with and I think Frank has had the same affection for me over the years. I think Frank and I have probably over the years spent more time together than we have spent with our wives. I would like to

thank you for the good and bad years together.'

'Same from me' came from Mr Nugan in response.155 Their relationship

soured during 1979 as a result of Mr Hand's disapproval of certain of

Mr Nugan's activities and the damaging effects of the criminal charges

laid against Mr Nugan in 1978. This is further referred to at paragraphs

2.2.59 to 2.2.65 of this profile.

2.2.55 It appears from evidence before the Commission that the

personalities of the two men were quite different. Mr Hill described

them in evidence as being 'as different as chalk and cheese'. He said

that Mr Hand was ' very much a motivator, a gung-ho pusher of people',

whereas Mr Nugan was very reticent, did not know how to deal with people 137 and was not very much a mixer. General Black described Mr Hand as

having an entirely different type of personality from that of Mr Nugan;

he described Mr Hand as a 'sort of soldier type', whereas Mr Nugan had

experience and expertise in the business world.4 55 He described

Mr Hand as playing 'more of a promotional role in the Nugan Hand

139

Bank'. Mr Colby described Mr Hand as a very energetic, good

140

American fighting man now making a life in business.

2.2.56 Admiral Yates told the Commission that Mr Hand appeared to be a

very religious man, at the stage when he knew him. According to Admiral

Yates, Mr Hand was a practising Christian Scientist. He told the

Commission that whenever he travelled with Mr Hand they would attend a

church service on both Wednesday and Sunday, at which times Mr Hand

- 82 -

sometimes addressed the congregation. Admiral Yates also said of

Mr Hand:141

'In the mornings when we would travel he would ask me to come up to his hotel room ... and have devotional, and he would take a

reading from his religious doctrine and put it on the tape

recorder, and we would listen to the tape and have a moment of silent prayer and then charge off for the day.1

2.2.57 Mr Hand apparently considered Mr Nugan to be intellectually

superior and referred to his own expertise at the time he met Mr Nugan as . 142 ’

having been primarily in selling. In his speech to representatives

at the Nugan Hand Gazebo Conference in October 1979 in Sydney [see

3.6.13] he described himself and Mr Nugan as being people with different

skills who complemented each other. He inferred that in the early days

of their association, Mr Nugan had the technical expertise and he (Hand)

had the ability to deal with people. He contrasted this with the

position as it existed then and stated that their roles had altered to

the extent that he was now 'a first class pencil pusher1 and 1 Frank has 143 turned into a Dale Carnegie’.

2.2.58 Admiral Yates described Mr Hand as having 'delusions of

grandeur' and as becoming involved in 'pie in the sky schemes' and

'chasing rainbows'. Admiral Yates cited billion dollar oil deals, bank 144

loans and weapons sales as examples of such schemes. He was

instructed by Mr Hand to negotiate the purchase of the United Chinese

Bank from General S.K. Yee [see 3.5.40], After lengthy and expensive

negotiations involving Admiral Yates, General Black and other members of

the Nugan Hand staff agreement was reached with General Yee; at this

point Mr Hand indicated that the $30 million needed for the purchase was 145

not available and instructed Admiral Yates to drop the project.

Discontent with the activities of Mr Nugan

2.2.59 During 1978 and 1979 the evidence suggests Mr Hand became

disillusioned with Mr Nugan because of certain activities being pursued

by Mr Nugan.

- 83 -

2.2.60 In late 1978 or early 1979 Mr Hand made disparaging comments

about Mr Nugan and his brother, Mr K.L. Nugan [2.52], as a result of the

bad publicity attracted to the Nugan Hand Group by the committal

proceedings against the Nugans in connection with the Nugan Fruit 146 Group [2.114 - see also Part 3 Section 4], Mr Hand described the

Fruit Group case in a letter to Mr Hill in February 1979 as 'a mess' and

said, 'the whole thing is like cancer' ,"*"1 ^

2.2.61 In December 1978 or January 1979, Mr Hand told Admiral Yates

that he had a plan whereby he was going to ease Mr Nugan out of the Nugan

Hand organisation. He told Admiral Yates that he did not believe that

Mr Nugan was being rational or that he was 'handling his people

■ u m 1 4 8

right'.

2.2.62 Mr Houghton gave evidence to the Commission that during 1979

Mr Hand had told him that he wanted to close the Sydney office because he

was not happv with the way it was being run. Mr Hand expressed the view

that Mr Nugan was not operating the office properly and that he should 149 stick to legal work. '

2.2.63 In the latter half of 1979 Hr Hand expressed concern to

Mr McDonald, an employee of Nugan Hand, in relation to some of the

projects in which Mr Nugan had been engaged, and in particular, the

London Bank [this is a reference to London Capital Securities Ltd - see

profile 2.111], the office that Mr Nugan had apparently tried to set up

in Frankfurt and some mining deals. Mr Hand told him, 'Frank can only

make money doing that legal stuff. That other stuff he should stay away

from'. Mr Hand asked Mr McDonald to accompany Mr Nugan on trips to South

East Asia because he wanted to try and keep Mr Nugan doing legal work and

away from other things that he had been getting involved in. It was

evident to Mr McDonald at that time that Mr Hand was trying to

circumscribe Mr Nugan's activities."*"^*·*

2.2.64 Mr Gilder told the Commission that Mr Hand was strongly opposed

to Mr Nugan's drinking [see Nugan profile 2.1] and he recalled an

occasion in 1979 when Mr Hand knocked whisky glasses off Mr Dugan's

- 84 -

151

desk. In a letter dated 29 October 1977 from Mr Hand to Mr Gilder

1s?

the following appears:

'Jerry, one final point - please do not discuss Frank with

regards to drinking again. We all do things in life which do not make others happy - but that is our own business - Frank is a big boy now and he will do it his way.'

2.2.65 In the latter half of 1979, perhaps as a result of his

disenchantment with Mr Nugan, Mr Hand indicated boredom with the affairs

of the Nugan Hand Bank and raised the possibility of retiring from it.

Mr McDonald told the Commission that Mr Hand said that he wished to get

out of the banking business and discussed with him the option of

organising Nugan Hand into a respectable organisation, turning it into a 153 public company and selling it.

Knowledge of financial irregularity in Nugan Hand Group

2.2.66 Evidence of Mr Hand's knowledge of and participation in

Mr Nugan's many fraudulent schemes has been adverted to in paragraphs

2.2.20 to 2.2.22, 2.2.30, and 2.2.40 to 2.2.41 of this profile. The

following matters further implicate Mr Hand in other fraudulent

practices. In 1977, 1978 and 1979 the records of the Nugan Hand Bank

were rewritten by Mr G.F. Brincat [2.9] in accordance with instructions

received from Mr Nugan. Mr Brincat visited Mr Hand's Singapore office

for several days in each of those years for the purpose of obtaining the

information necessary to bring into existence a new set of records for

the Bank. The new set of records was finalised in Sydney and was the

basis for the formulation of the annual accounts of the Nugan Hand Bank,

which were presented to the auditors in the Cayman Islands. Mr Hill said

in evidence to the Commission that Mr Hand was fully aware of the annual 154

rewriting of the Nugan Hand Bank records between 1977 and 1979, and

that Mr Hand had discussed with Mr Nugan the changes that were to be made

in the accounts of the Nugan Hand Bank. He said that Mr Hand was present

when the records of the Bank were being rewritten in Singapore.^

[For further information on the rewriting of the Nugan Hand Bank records

see Part 4 Section 2 of this report.]

- 85 -

2.2.67 Mr Hill told the Commission that he raised with Mr Hand in

Sinqapore in early 1979 the problems associated with the presence of the

internal bills of exchange in the annual accounts of Nugan Hand Ltd, and

in particular the fact that reference to the internal bills should be

removed and be replaced by appropriate entries in the balance sheet to

explain the true dispersal of funds [see 5.34-5.55], Mr Hand told

Mr Hill in early 1979 that he would ensure that Mr Nugan rectified the 156 balance sheets. Mr Hill also said in evidence that he raised the

matter of the internal bills with Mr Col lings, and that Mr Collings also 1 ''l took the matter up with Mr Hand.

2.2.68 Further irrefutable evidence of Mr Hand's knowledge of the

financial mess the Group was in despite the very different picture

painted, is to be found in Mr Hand's letter of February 1979 to

Mr Hill. In response to an observation of Mr Hill's that the Nugan

Hand company would be wiped out (as a result of the adverse publicity in

relation to the Fruit Group case), Mr Hand wrote in contemptuous vein

'how can you wipe out nuthin'. In his letter Mr Hand noted that Malaysia

and Germany represented 'two real chances to survive', (a reference to

the F.A. Neubauer Bank [2.100] and the representative office in Malaysia)

which suggests that he was aware that there was a real problem in

relation to the ability of the Nugan Hand Group to continue. Mr Hand's

awareness of the dire position of the Group is suggested by the nature of 159

the alternatives he saw as available to him:

i

Ί . Quit go to France have a new face/passport etc. 2. Resign impossible to leave the years of responsibility 3. BARI KARI

4. Be declared legally INSANE 5. Swing harder tomorrow! 6. and keep on.' [Mr Hand's erphasis]

2.2.69 In 1979 he told Mr Houghton that the Sydney office was not

making money and that it was very expensive to have people travelling

between Australia, Hong Kong and Europe, the latter two places being

where the main business activities were taking place. He complained to

Mr Houghton that the Sydney office had asked for funds from South East

Asian operations to prop up the Sydney operations and said that he would

«

- 86 -

not furnish these funds as requested and he was also critical during 1979

of Mr Nugan's spending money on the purchase and furnishing of his house

and the acquisition of the Orange Spot Group, [2.116] which Mr Hand

regarded as an unwise investment."*"® Mr Hand told Mr Houghton in 1979

that Mr Nugan had taken in excess of $1 million to pay the legal costs of

the conspiracy case which had been commenced against him and his brother

in connection with the Nugan Fruit Group [2.114], Mr Hand had also

mentioned during 1979 that Mr Nugan had spent 6500 000 or 6600 000 on the

acquisition of his Vaucluse property and about $300 000 building a beach

and decorating his home. Mr Hand also told him that Mr Nugan had

acquired the Orange Spot group of companies for about $1 million. He

expressed concern about Mr Nuaan's expenditure of these sums of

161

money.

2.2.70 Mr Hill said in evidence that on more than one occasion he spoke

to Mr Hand about depositors' moneys which were outstanding. In these

conversations Mr Hand equivocated, his general attitude being that it was

all under control, and that he and Mr Nugan 'could fix anything up'.

Mr Hill told the Commission that Mr Hand was aware of the fact that

Mr Nugan had used depositors' funds to purchase his home.-*62

Death of Mr Nugan - Mr Hand's response to - Mr Hand's return to Australia

2.2.71 On 27 January ]980 the body of Mr Nugan was located with a gun

shot wound to the head in a motor vehicle near Lithgow, New South Hales.

Mr Hand was then in London with Admiral Yates in connection with his

refugee resettlement program [see 2.2.52]. Mr Hand said in a statement

to the Mew South Wales Corporate Affairs Commission that as a result of a

message from his wife in Singapore he telephoned Mr Hill in Sydney. He

was informed of Mr Nugan's death and asked, allegedly, 'What do we do

now?'. Mr Hill allegedly replied, 'If I were you, I would keep on going

because this thing is going to explode'. Mr Hand said that he replied,

Ί am not running away, I'm coming back to Australia on the first

available plane'."*62

2.2.72 Mr K.L. Nugan said in evidence to the Commission that on the

evening of 27 January 1980 he telephoned Mr Hand in London and advised

#

- 87 -

him of Mr Nugan's death. Mr Hand responded, 'The little fucker, he has

gone and got out of this mess and left me to clean it up' .164

2.2.73 Mr Hand instructed Mr Beazley to go to Hong Kong, and requested

Admiral Yates to accompany him to Sydney. Mr Hand and Admiral Yates left

London on the evening of 27 January 1980. Fn route to Australia, they

stopped in Singapore and were joined by Mrs Hand. Mr Hand said nothing

to Admiral Yates during the flight to Sydney to suggest that there would

be problems in terms of deficiency of funds in either Nugan Hand Ltd or

the Nugan Hand Bank. Mr Hand encouraged Admiral Yates during the flight

to write press releases for distribution in Sydney and to the overseas

offices.165

2.2.74 Mr Hand was met at Sydney airport by a number of members of the

Nugan Hand staff. He appeared to be very distressed.166 He travelled

with Mr Gilder and Mr M.J. Moloney [2.48] from the airport to the Nugan

Hand office at 55 Macquarie Street Sydney. En route, Mr Gilder informed

Mr Hand that Mr Nugan had stolen £3 million from Nugan Hand Ltd. Mr Hand

expressed incredulity at this information. His response was, 'That could

not be right; it is not possible'. When Mr Gilder assured Mr Hand that

this was the case, Mr Hand became quite excited and said, 'How could he

do this to me ... why didn't he tell me ... why didn't I spend more time

in Sydney ... why didn't Hill know ... why didn't Hill tell me'.

According to Mr Gilder, Mr Hand's response basically was, 'Why have I

been kept in the dark?' ,167

2.2.75 Mr Hand described Tuesday, 29 January 1980, at the Nugan Hand

offices as 'a shambles'.168 He remained in a very distressed state and

was particularly upset that he was unable to ascertain the financial

position of the company and that there appeared to be insufficient funds

available to meet withdrawal requests from depositors.16

2.2.76 Mr Hand chaired a number of meetings at the Nugan Hand office,

but appeared to be passive and lacking in direction.170 According to

one account, Mr Hand told one meeting, Ά terrible thing lias happened. I

have found out my partner has taken moneys without my knowledge'.

- 68 -

Mr Hand told the meeting that he had no prior knowledge of what had

1 71

occurred and asked Mr Hill to explain the situation. In fact the

true position was that Mr Hand knew in 1979 of amounts taken by Mr Nugan

and had in 1979 complained to Mr Houghton that he had been asked for

funds from the South East Asian operations to prop up the Sydney

office.172

2.2.77 On 30 January 1980 Mr Brincat, the Nugan Hand Ltd accountant,

reported to Mr Hand that an amount of $1.5 million was owed to unsecured

depositors of Nugan Hand Ltd, and that only $400 000 to $500 000 was

available to depositors. He also reported that there was an overall cash

shortage of approximately $5 million due to internal bills of exchange

drawn on Yorkville Nominees and Nugan Hand International Holdings Pty 173 Ltd. Although Messrs Hill and Brincat raised the prospect of

liquidation of Nugan Hand Ltd during the first week after Mr Nugan's

death, Mr Hand said that there were plenty of funds available

174

overseas. On 30 January 1980 Mr Hand arranged to borrow US$700 000

from the Nugan Hand Bank using the Hong Kong office to provide liquidity

for Nugan Hand Ltd. Arrangements were made to borrow a further

US$500 000 on the following Monday.17-’

2.2.78 According to one account, at a meeting on 30 January 1980,

Mr Hand threatened directors that if they did not 'cooperate1 with him in

the administration of the Nugan Hand Group, dissatisfied clients could

cause them all to 1 finish up [with] lead boots ... concrete shoes' and

that they would be 'liable to find [their] wives being delivered to

[them] in pieces' ,"1 "76 This evidence is not supported by those alleged 177

to have been present on this occasion, although another witness also

alleged that Mr Hand sought to reinforce his fears about threats received

from clients, apparently to ensure that he followed his (Hand's)

instructions.17®

2.2.79 On 31 January 1980 Mr Hand attended a meeting of the directors

of the Nugan Hand Bank. According to the minutes for that meeting, the

directors had received by telex a trial balance for the Nugan Hand Bank

as at 24 January 1980 and expressed concern at the amount of moneys

- 89 -

payable by interrelated companies, as it appeared that these were

substantial. The directors resolved to have up to date audited accounts

prepared in relation to all interrelated companies to ascertain whether 1 79 or not the debts could be paid.

2.2.80 On 1 February 1980 Mr Hand attended a meeting of the directors

of Nugan Hand Ltd. Minutes of this meeting record that the directors

'discussed the results of their investigations into the affairs of the

company and were distressed to find many of the actions in the conduct of

the company's affairs may have been done improperly' but that in all such

matters the directors had followed the advice of Mr Nugan, a qualified

solicitor.*88 The true position was that Mr Hand had been aware since

1973, of irregularities caused by sham injections of capital, the use of

internal bills to conceal inter-company debts, and falsities in the

accounts, and had complained to Mr Houghton in 1979 that the Sydney

office was not being run properly.*8*

2.2.81 Despite his knowledge to the contrary, Mr Hand assured

Mr Houghton that the overseas operations of Nugan Hand were sound. On

the strength of this assurance Mr Houghton advised Nugan Hand

representatives, who had left Saudi Arabia after the death of Mr Nugan, 182

to return to Saudi Arabia and subsequently returned there himself.

According to one account Mr Hand also made reference to a '$15 million

deal' which Mr Houghton was about to complete and which would, Mr Hand

claimed, end any financial problems for the Group.*88

2.2.82 During the following weeks Mr Hand continually assured the

Sydney staff that Nugan Hand Ltd would continue to trade and that

substantial funds were available from the Group's overseas companies

should they be required. Mr Hand gave this false assurance to delegates

of the Mew South V7ales Corporate Affairs Commission when they attended

the Nugan Hand offices on 12 February 1980 and confirmed it when examined

by the delegates on 28 February 1980. He told the delegates on that

occasion that the Nugan Hand Bank and the F.A. Neubauer Bank could easily

introduce $1 million each into the Australian operation pursuant to an

existing standby agreement, although he said that he had spoken to

- 90 -

Mr Vi.M. Pollard [2.57] and believed Nugan Hand Ltd to be 'buoyant1 ,184

About 29 February 1980 Mr Hand formally advised Mr Bill by letter that

draw down facilities of a £2 million each were available from

F.A. Heuhauer Pank, the Nugan Hand Bank and Nugan Hand International

Holdings Ltd on twenty four hours notice of call. Mr Hill subsequently

signed a letter to the Corporate Affairs Commission dated 29 February

1980 to this effect.185

2.2.83 Throughout this period Mr Hand assured Sydney staff and overseas

representatives such as Mr Houghton (Saudi Arabia) and General Manor (The

Philippines) that the Group's overseas operations remained sound.188

However, in late March and early April Mr Hand, on one account, told a

witness that there was a shortfall in liquidity in Nugan Hand Ltd, and

asked the witness whether he could interest anyone in buying shares in tu 187

the company.

2.2.84 Mr Hand went to Hong Kong in late March 1980 and met with Mr N.

Speakman [2.67] and Mr McDonald of Speakman & Company, the Group's Hong

Kong auditors. Mr Hand declared that he was completely satisfied with

the financial position of the Group and gave assurances that negotiable

certificates of deposit held by Nugan Hand Ltd in Australia on behalf of

Nugan Hand (Hong Kong) Ltd were the sole property of the Hong Kong

company and were in no way the subject of any 'double usage'. This

assurance was a blatant untruth.18 [For further details in relation

to this subject matter see 4.1.66 to 4.1.73.] While in Hong Kong Mr Hand

asked Mr John McArthur [2.46] to assume responsibility for the Hong Kong

operations. Mr McArthur agreed to do so after Mr Hand had 'sworn to him

that the company overall was sound although it had a liquidity problem

which could be overcome'. On 4 April 1980 Mr McArthur requested funds

from Mr Hand to meet maturities due on 8 and 9 April 1980, and was

189

informed that these could not be provided.

2.2.85 During this period and until the appointment of a provisional

liquidator of Nugan Hand Ltd, Mr Hand participated in negotiations for

the sale of the Nugan Hand Group. These negotiations involved, inter

alia, a Malaysian consortium headed by Mr Lee Ming Tee. Mr Hand was

- 91 -

apparently very keen about the proposal by Lee Ming Tee. Ultimately none 190

of these negotiations for takeover of the Group proceeded.

2.2.86 Oi 11 April 1980 the Hong Kong High Court appointed the Offical

Receiver as receiver of the Nugan Hand Bank. On the same day Mr Hand, as

Chairman of the Board of the Nugan Hand Bank, announced that as a result

of 'legal and administrative problems' resulting from the death of

Mr Nugan, the Bank would not accept further deposits or effect repayments 191

until audited balance sheets were available.

2.2.87 During the week following the appointment of the Hong Kong

Official Receiver as receiver of the Nugan Hand Bank, Mr Hand attended

for examination by the delegates of the New South Wales Corporate Affairs

Commission. On 17 April 1980 Mr Hand informed the delegates that in his

view Nugan Hand Ltd was not solvent and that a provisional liquidator 192 should be appointed. At a directors' meeting of Nugan Hand Ltd held

later that afternoon, Mr Hand tabled a statement of assets and

liabilities of the company which disclosed a deficiency of

$4.25 million. On the following day, on the application of Nugan

Hand Ltd, the Supreme Court of New South Wales ordered the appointment of

provisional liquidators to that company, Yorkville Nominees Pty Ltd and 194

Nugan Hand International Holdings Pty Ltd.

2.2.88 The Nugan Hand Bank representatives in Saudi Arabia continued to

receive deposits from clients until April 1980 when word of the Bank's

difficulties in Hong Kong reached that country. Mr Hand then advised the 195

representatives to leave Saudi Arabia. The Hong Kong Official

Receiver was appointed liquidator of the Nugan Hand Bank on 13 May 1980,

and the Hong Kong Supreme Court ordered that the company be wound up on 196 17 May 1980. °

Concealment and Destruction of Documents

2.2.89 After Mr Nugan's death, Mr Hand was responsible for the

shredding of documents relating to the Nugan Hand Group, the instruction

of others to shred documents, and the concealment of records relating to

- 92 -

the Group from the delegates of the New South Wales Corporate Affairs

Commission. [This subject matter is dealt with in detail in Section 9 of

the Compendium (Part 3)].

2.2.90 Mr Hand lied to the delegates of the New South Wales Corporate

Affairs Commission, when he said in evidence on 15 April 1980 that he was

unable to produce to them any further documents relating to Nugan Hand 1 97 Ltd. During further evidence to the delegates Mr Hand denied that

he had access to the records relating to companies within the Group

between the date on which they were uplifted from the AMP Centre (late

February early March 1980) and the date on which they were delivered to 198

the office of Mr M.J. Moloney, Solicitor (12 May 1980). Mr Hand

denied that he had caused further records or documentation to be given to

Mr R.W. Gehring [2.23] for storage with records already removed from the

company's premises to the AMP Centre. In fact, within the records

eventually delivered to Mr Moloney's office were records which postdated

the date on which Mr Hand said that he and Mr Gehring moved the records

from the AMP Centre to an address in Pyrmont. Mr Hand offered no

199

explanation for this inconsistency.

2.2.91 Mr Hand gave false evidence to the coronial inquiry into

Mr Nugan's death on 23 April 1980,2*"^ in that he explained his

knowledge of documents missing from the offices of Nugan Hand Ltd on the

basis that he had seen cabinets with labels on them but which had no

papers in them. In fact Mr Hand was aware that papers were missing

because he had assisted in their removal.2 Ο·*·

Hie Disappearance of Mr Hand * 2 0 2

2.2.92 Upon his return to Australia, Mr Hand and his wife resided at

Mr Houghton's Elizabeth Bay unit in Sydney for several weeks, and then 202

moved to an address in Ithaca Road, Elizabeth Bay. About mid May

1980 Mr Hand rented an upstairs flat at 31 Union Street, Pyrmont, Sydney,

from Mr Gehring. According to Mr Gehring, Mr Hand took these premises

because he had received threats to his life and wished to live apart from

his wife so that she would not also be in danger.2^

- 93 -

2.2.93 In late May 1980 Mr Hand told Mr Gehring that he had

unsuccessfully attempted to obtain an Australian passport in another

name. Mr Gehring offered to assist Mr Hand by obtaining a passport for

him in the name of one of his employees. Mr Gehring obtained the birth

certificate of Alan Glen Winter, an employee of his, informing Mr Winter

that the certificate was required for superannuation purposes.

Mr Gehring obtained the necessary application forms and gave these to

Mr Hand. About this time an ex-military associate, who had apparently

served with Mr Hand in Vietnam, came to Australia to assist Mr Hand in

his endeavour to leave the country. Mr Gehring knew this person only as

'Charlie'. 'Charlie' arranged for passport photographs of Mr Hand to be 204

taken depicting him with glasses, a false goatee beard and moustache.

2.2.94 Mr Hand completed a passport application in the name of Alan 205 Glen Winter. Mr Hand gave the application to Mr Gehring, who took

it to a travel agent in Dixon Street, Sydney and requested the agent to

obtain the passport and to book a return ticket from Brisbane to Canada

via Fiji in the name of Mr Winter. Mr Gehring later collected the ticket

and passport and gave these to Mr Hand. Mr Hand travelled to Brisbane by

train and departed Australia on 14 June 1980 from Brisbane. Mr Gehring

believed that Mr Hand was accompanied by 'Charlie'. Mr Hand told

Mr Gehring that he would be able to drive from Canada into the United

States without the need for a visa.

2.2.95 Mr Hand arranged with Mr Gehring to 'buy him enough time to get

into the United States by putting fresh food in the "fridge", wetting his

socks and toothbrush, flushing the toilet and generally making noise, at 207

31 Union Street, Pyrmont, for the benefit of the neighbours'. On

30 June 1980 members of the 'Willesee at 7' television program attended

the premises at Union Street and were admitted by Mr Gehring. On 1 July

1980 members of the Corporate Affairs Commission and the police attended

the premises and a police investigation into Mr Hand's disappearance

commenced.

2.2.96 Subsequent investigations by the Joint Task Force in relation to

the person 'Charlie' revealed that James Oswald Spencer, a United States

- 94 -

citizen arrived in Australia on 14 May 1980. His contact address was

given as a post office box leased in the name of Mr Hand's wife. He

departed Australia on 14 June 1980 on the same flight as Mr Hand. When

interviewed by F.B.I. agents in November 1982, Mr Spencer admitted to

having known Mr Hand at one time but denied having helped him leave

Australia. It seems probable however that Mr Spencer was the person 209 known to Mr Gehring as 'Charlie'.

2.2.97 For some months after Mr Hand's disappearance Mr Gehring

remained in contact with him by leaving messages with Mr Gehring's

parents or brother in Ohio. Mr Gehring told the Joint Task Force that

his last contact with Mr Hand was during a trip to the United States in

February 1981 when Mr Hand telephoned him at San Francisco airport

In evidence to this Commission Mr Gehring confirmed that he had not 211

subsequently had any further contact with Mr Hand.

2.2.98 Mr Houghton also had contact with Mr Hand subsequent to his

disappearance when Mr Hand telephoned him in September/October 1980 while

Mr Houghton was staying in a hotel on the east coast of the United

States. Mr Hand sounded upset and apologised for what he had done to

Mr Houghton and others. He offered to meet Mr Houghton but Mr Houghton

declined and terminated the conversation. Mr Houghton told the

2i 2

Commission that he has had no further contact with Mr Hand.

2.2.99 Following an interview between officers of the Joint Task Force

and Mr Houghton in Acapulco in June 1981, Mr Houghton met them in San

Francisco and was given a letter to deliver to Mr Hand. Mr Houghton

sought to deliver this letter by leaving it with Mr Hand's father,

Mr Oscar Hand, in New York. Mr Houghton did not receive any response 21 3 from Mr Hand regarding the letter.

2.2.100 The Commission sought to make contact, through an intermediary,

with Mr Hand while hearing evidence in the United States in January

1985. After giving evidence to this Commission in December 1984 Admiral

Yates sought to induce Mr Hand to give evidence to the Commission by

recording a cassette tape and sending the tape to Mr Hand's father,

95 -

Mr Oscar Hand, asking him to pass the tape on to Mr Hand. In the tape

Admiral Yates said that he had been given a 'fair shake1 by the

Commission and sought to convince Mr M.J. Hand that it would be in the

best interests of all parties if he cooperated fully. In January 1985

Admiral Yates spoke to Mr Oscar Hand who said, 1 the matter is dead and

buried and I have no intention of digging it up'. He would not disclose

his son's address or telephone number.2·^ Admiral Yates advised the

Commission in May 1985 that he had still received no response to his

tape. He also advised that similar written pleas to Mr Hand had met with 21 c no response.

Allegations of Mr Hand's Involvement with Drugs

2.2.101 Numerous allegations have been made in the media and elsewhere

that Mr Hand was involved in drug trafficking both before and during his

association with the Nugan Hand Group. [For a detailed account of these

allegations involving Mr Hand and the Commission's findings in relation

to them see Part Six of this report. ] The main allegations concerning

Mr Hand are as follows:

a. that he was involved in drug trafficking before his association

with Nugan Hand and continued in this activity during the early 216

1970's with Messrs Stocker and King;

b. that he actively pursued the drug trafficking industry for

business; ^

c. that he met Golden Triangle warlord, Khun Sa, in Sydney and

discussed the importation of five hundred pounds of heroin into 218

the United States via Australia; and

d. that he told Andrew Wellington Lowe and Khun Sa that heroin had

been smuggled into the United States in the bodies of servicemen 71 9 killed in Vietnam.

The Commission found that there was no evidence to support the

allegations (a) and (b) above. The Commission did not accept the

- 96 -

evidence of Mr A.W. Lowe which supported allegations (c) and (d) [6.14 to

6.16]. The Commission reported in its Interim Report No. 1, that it had

serious doubts concerning the credibility of much of Mr Lowe's evidence.

For that reason the Commission considered that the alleged visit to

Sydney of Khun Sa was highly improbable having regard to the information

available concerning this so called warlord.

Allegations of Mr Hand's Involvement in Arms Transactions

2.2.102 Numerous allegations have been made as to Mr Hand's involvement

in transactions relating to armaments during his association with the

Nugan Hand Group. [These allegations and the Commission's findings in

relation to them are referred to in Part Seven of this report. ] The

major allegations concerning Mr Hand are as follows:

a. that while resident in South Africa during 1975/76, Mr Hand 220

attempted to arrange arms shipments;

b. that Mr Hand corresponded with Mr Nugan from South Africa about

arms sales to be paid for with Rhodesian ivory;

c. that Mr Edwin Wilson used the cover of Task Force 157 to obtain

weapons which were subsequently delivered to Mr Hand, who

delivered them to the United States intelligence supported 222 forces in Angola or Rhodesia;

d. that Mr Edwin Wilson went to Bangkok to discuss arms deals with 221 Mr Hand; and

e. that in 1979 Mr Hand attempted to organise a transaction

224

involving shipment of howitzers to Libya.

2.2.103 The Commission is satisfied that Mr Hand continued to have some

form of business relationship with the Nugan Hand Group while he was

absent from Australia during 1975-76. It appears that during this time % 225

he remained on cordial terms with Mr Nugan and that Mr Nugan

- 97 -

instructed his staff to make various trade inquiries on Mr Hand's

behalf.^® Other inquiries by Nugan Hand staff were carried out as a 227

result of direct requests from Mr Hand, The Commission accepts that

during 1975 personnel connected with the Nugan Hand Group arranged for

the export of ten second hand pistols from Sydney for and on behalf of

Mr Hand. The Commission is satisfied that the proposed export did not

take place. Tire Commission is also satisfied that while Mr Hand was

resident in South Africa, representatives of the Nugan Hand Group made

inquiries in relation to the possible export of pistols and other

firearms to South Africa at Mr Hand's request. The Commission also finds

that inquiries were conducted at the request of either Mr Nugan or

Mr Hand or both by various personnel of Nugan Hand regarding the supply

of bullets for export to South Africa. However, the Commission is not

satisfied on the available evidence that this export took place.

2.2.104 The Commission found that there was no substance to the

allegation that Mr Hand corresponded with Mr Nugan from South Africa

about arms sales to be paid for with Rhodesian ivory, and that there was

no evidence to substantiate the remaining allegations made against

Mr Hand.

Allegations concerning Mr Hand's involvement in the C.I.A.

2.2.105 It has been alleged in the Commonwealth Parliament, the media

and elsewhere, that Mr Hand was at one time an agent of the Central

Intelligence Agency ('C.I.A.').228 [For further information in

relation to the C.I.A. see Part 4 Section 3 of this report.]

2.2.106 As previously mentioned [2.2.5] Mr Band served in the Special

Forces Airborne Division of the United States Army between 1963 and May 229

1966 and while in Vietnam was a member of the Green Beret Unit.

Mr Hand told Mr Colby, the former head of the C.I.A. and other witnesses

who gave evidence to the Commission, that while he (Hand) was a member of 230

the Green Beret unit, he had some connection with the C.I.A.

- 98 -

2.2.107 Mr Evans told the Commission that he was told by Mr Hand that

while he (Hand) was in Vietnam he was sent by the C.I.A. to the north

regions of Thailand and to Cambodia for the purpose of investigating the

allegation that drugs were being sent from these regions and smuggled

back into the United States using the corpses of servicemen killed in

action. (As noted elsewhere [6.6.2] the Commission does not accept

the evidence of Mr Evans unless it is supported by independent objective

evidence.) Mr Dunn said that. Mr Hand told him that upon his return to

tiie United States from Vietnam, he became disenchanted with the treatment

accorded returning veterans and went off to a remote place, possibly 232

India or Africa, where he worked with the C.I.A. According to the

evidence of Mr Calder, Mr Hand told him that he worked 'as a special 233

agent of some description' in Vietnam. Mr Hand told Mr Colby that

his association with the C.I.A. continued while working in another job ?34

after he left the United States Army.

2.2.108 Whether Mr Hand's assertions that he was employed by the C.I.A.

are true, the Commission has no way of knowing. General Black told the

Commission that it was possible that the C.I.A. worked during the Vietnam

War with the Green Beret Unit in conjunction with the hill tribes of

Vietnam. 3

2.2.109 Mr Hand told Mr Dunn that it was his ambition that Nugan Hand

become the banker for the C.I.A. However Mr Dunn was not aware of any

steps taken by Mr Hand to get access to C.I.A. business, nor did Mr Hand

say how he intended to achieve this a m b i t i o n . A further witness

confirmed that Mr Hand said that he would have liked the Group to attract

funds from the C.I.A., but saw no evidence that this had occurred. ^

Mr Evans told the Commission that Mr Hand told him in May 1977 that he

had made an arrangement with Congressman Ed Wilson whereby the Nugan Hand

Bank would be responsible for the disbursement of funds on behalf of the

C.I.A. throughout the South East Asian area.^' Other witnesses

alleged to have been present on this occasion have denied that such a 239 conversation occurred.

99 -

Directorships and Shareholdings

2.2.110 Mr Hand was a director of the following companies referred to on

the schedule to the Commission's terras of reference (Appendix A)

Company Appointed Resigned

Distravite Pty Ltd 15. 8.69 23.10.72

Medevac Shipping Pty Ltd 24. 9.76

Newcourt Financial Services Pty Ltd

4. 5.76

Nugan Hand (Hong Kong) Ltd

Nugan Hand, Inc.

26.11.74

Hugan Hand International Holdings Pty Ltd 3. 5.76 8. 1.79

Nugan Hand Trade Services Pty Ltd 20.10.76

The Nugan Hand Bank 21. 7.76

Yorkville Nominees Pty Ltd

17. 3.72 21. 6.72

2.2.111 Mr Hand was a director and shareholder of the following

companies referred to in the

reference:2^"*"

schedule to the Commission's terms of

Company Appointed Resigned

Australasian and Pacific Holdings Ltd 15. 8.69 21.10.77

Garcia Bros Hardware Pty Ltd

28. 1.72

Hidex Pty Ltd 5. 5.76

Leasefast Pty Ltd 23. 9.76

NHN Management Pty Ltd 9. 7.73

Nugan Hand (Dealers) Pty Ltd

9. 7.73

Nugan Hand Ltd 9. 7.73

R. B. Cody Pty Ltd 7. 6.73 24.11.75

Solingen Aust Pty Ltd 11. 6.74 2. 6.75

Profiles for each of these companies are set out in Part 2.

- 100 -

Conclusion

2.2.112 Although the liquidator appointed to the Nugan Hand Bank advised

the Commission in April 1985 that he was unwilling to comment on the

extent of the assets available for distribution to creditors, it is

apparent that these will fall short by millions of dollars (U.S.) of the 242

amount of US$15 million claimed by creditors of the Bank to date.

The ultimate whereabouts of the millions of dollars taken from the Bank

is unknown, except to the extent of approximately A$l.l million owed by

Nugan Hand Ltd to the Bank as at 31 January 1979.242 In the light of

Mr Hand's disappearance and having regard to the major role that he

played in the activities of the Bank, the conclusion is inevitable that

Mr Hand, together with Mr Nugan and other persons unknown, are

responsible for the disappearance of these moneys.

Endnotes

1 CD2308 folio 45, Curriculum vitae, Hand 2 CT24545, Black

3 CD1311 folio 647, Citation for Bravery; CD2308 folio 45,

Curriculum vitae, Hand 4 CT24545, Black; CT24292, Yates; CD2308 folio 45, Curriculum

vitae, Hand

5 CT18841, Evans; CT24292, Yates; CT24545-46, Black; CT24619, Colby 6 CT24546, Black

7 CT18842, Evans; CT22466, Dunn; CT24620, Colby 8 CT24546, Black

9 CT22466, Dunn; CT24620, Colby 10 CD1306 folios 401-02, JTF ROI, Paul Menville Stocker 11 CD1306 folios 401-02, JTF ROI, Stocker 12 CT22528, Houghton

13 CD2308 folio 45, Curriculum Vitae, Hand 14 CT22608-09, Houghton 15 CT22528, Houghton

16 CD1306 folios 401-02, JTF ROI Stocker 17 CT22489, Calder

18 CD1250 folio 336; CD10960 19 CD1311 folio 672 JTF ROI Ceilings; CD10252, Hand's speech to

Bangkok conference January 1978 20 CT22510, Calder

21 CT22313, Swan

22 CD1250 folios 475-76, JTF ROI, O'Callaghan 23 CD1311 folios 556-57, JTF ROI, O'Callaghan 24 CD10690 Schedule of Companies in terms of reference

- 101 -

25 CD1308, JTF ROI, O'Callaghan 26 CT22410, Needham; CT22509, Calder 27 CT22410, Needham

28 CD6175 folio 34

29 CD10095, CAC Company Searches 30 CD10690, Schedule of companies in terms of reference 31 CT22312, Swan; CT24873, Young 32 CD1311 folio 547, JTF Statement Confidential Informant 33 CD2308 folio 45, Curriculum vitae, Hand; CAC diazo document

5530N

34 CT22491, CT22508-09, Calder 35 CT23285, CT23309, Pollard 36 CD10690 Schedule of Companies in terms of reference 37 CT24844, Young

38 CT24841, Young

39 CT22427, Needham

40 CT23365, Shaw

41 CT24828, CT24830, CT24873, Young 42 CT24828-29, Young; CD3088 folio 426 CAC Diazo 43 CD3736 folio 1, Minute book, Nugan Hand Ltd 44 CD3736 folio 4

45 CD3736 folio 8

46 CD3736 folios 9-10

47 CD10015

48 CD1337 folio 240, Hand's Outgoing Passenger Card 49 CD1250 folio 294

50 CD2704

51 CD1250 folio 264; CD1311 folio 337, Notes of travel movements found in Hand's passport; CD1337, Hand's Incoming Passenger Card 52 CD2704

53 CD3037 folio 3, Hand's evidence to CAC 54 CD3736

55 CD10015 CAC diazos

56 CT23165, CT23189, Ward 57 CT23189, Ward

58 CT22805, Ceilings

59 CT24456, Dunn

60 CT23297, Pollard

61 CD1250 folio 4394, JTF Statement - G.P. Farris 63 CT24510, Pauker

64 CT24031, Dunn

65 CT23189, Ward

66 CT24456, Dunn

67 CT22806, Collings 68 CT22456-57, Dunn

69 CT22806, Collings 70 CD4821 folio 126, refers to a meeting between representatives of Ku-ring-gai Council and Mr Hand in relation to money market investments in June 1976 71 CT23179, Ward; CD4821 folios 3-5, memo from Dunn, undated but

written about August 1976, indicates that Mr Hand is aware of the current position in relation to his depositing clients and potential clients, and will follow up a number of the clients referred to.

- 102 -

72 CD4467 folio 132

73 CD10805 folio 598

74 CD6942 folio 3

75 CD7358

76 CT22213, Gilder

77 CT22810, Collings

78 CT22214, Gilder

79 CD1311 folio 167, Gilder JTF ROI

80 CT22809, Collings

81 CD1250 folio 294, Hand's travel movements 82 CD1311 folio 672, Collings JTF ROI 83 CD6522 folio 40, Hand memo 26/8/77 84 CT22460, Dunn; CD1308, Dunn JTF ROI 85 CT24375, Hill

86 CD10252 Hand to Bangkok conference January 1978 87 CD10978 folio 4, Lovatt's statement to Commission investigators 88 CD7832 folios 113-30

89 CT20434, Gilder

90 CT22420, Needham 91 CT22423, Needham 92 CD1250 folio 264; CD1311 folio 337, Notes of travel movements found in Hand's passport 93 CD1311 folios 804-05, Hand's passport application. Mr Hand

applied for an Australian passport on the same day that

Australian citizenship was conferred on him. 94 CD1311 folios 754-55, Internal minute to Director of the

Department of Immigration and Ethnic Affairs 7/10/80. 95 CD1311 folios 455-57, Hand letter to American Consul 7/2/78. 96 CT24618-19, Colby 97 CT24707-08, McDonald 98 CT20063, Steer; CD6522 folio 40 99 CT20063, Steer

100 CT22064-65, Steer 101 CD4445, Collings JTF ROI 102 CD10978 folio 3, Lovatt Commission ROI 103 CD10252

104 CD10252

105 CT22237-38, CT22608, Houghton 106 CT22523-24, Houghton 107 CT22527, Houghton 108 CT21239, Houghton 109 CT22534, Houghton 110 CT22538, Houghton 112 CD10624 folio 59, Houghton, CAC evidence 113 CT22245, Gilder

114 CD1311 folio 173, Gilder JTF ROI 115 CT24240, Yates; CD11322 folio 27 116 CD11345 folio 25

117 CT24266, Yates

118 CD11345 folio 27

119 CT24256-57, Yates; CT24664, Manor 120 CT24542, Black

121 CT24258, Yates

122 CT24258, Yates

123 CT24263-64, Yates; CD11345 folio 25 124 CD10252

- 103 -

125 CT24270-71, Yates 126 CD10542 folios 188-89, Letter Yates/JTF 127 CT24619, CT24628, Colby 128 CD1311 folio 658, Colby JTF ROI

129 CT24628, Colby

130 CT24301, Yates

131 CD11345 folios 28,31, Yates 132 CT22510, Calder

133 CT23189, Ward; CT24031, Dunn; CT25038, Shaw 134 CT24378, Hill

135 CD10252 folio 44

136 CD10252 folio 44

137 CT16254-55, Hill

138 CT24545, Black

139 CT24552, Black

140 CT24632, Colby

141 CT24266-67, Yates 142 CD10252, Hand speech to NHG Bangkok Conference 143 CD1429

144 CD11345 folio 27

145 CT24253, Yates

146 CT24378, Hill

147 CD1297 folio 24

148 CT24262, Yates

149 CT22541, Houghton 150 CT24684-85, CT24688, McDonald 151 CT22216, Gilder

152 CD6186

153 CT24692-93, McDonald 154 CT21903, Hill

155 CT24376, Hill

156 CT21870-71, Hill; CT25362, Brincat 157 CT21867, CT21870, Hill 158 CD1297 folio 24-28

159 CD1297 folio 28

160 CT22541, Houghton 161 CT22542, Houghton 162 CT24376, Hill

163 CD1311 folios 374-78, Hand Statement to CAC 21/5/80 164 CT20926-27, K. Nugan

165 CT24274, CT24284, Yates 166 CT19950, Moloney; CT22539, Houghton 167 CT19952, Moloney; CT22211, Gilder 168 CD3037 folios 41-45, Hand evidence to CAC 23/5/80 169 CT22539, CT22541, Houghton 170 CT22211, Gilder; CT25128, Shaw 171 CT19954, Moloney

172 CT22541-42, Houghton 173 CD1614

evidence folios 2246-55, MHS Committal Proceedings, Br incat's 174 CD1614 folios 2246-55, MHS Committal Proceedings, Brincat's evidence; CD3008 folios 86-88, CAC 23/10/80 175 CT19955, Moloney; CT25130-31, Shaw 176 CT21007-09, Hill

177 CT20003, Moloney; CT20732, Shaw

- 104 -

178 CT20731, Shaw

179 CD4968 folios 13-14

180 CT20016, Moloney; CT25131, Shaw; CD4968 181 CT22541, Houghton 182 CT22542, Houghton 183 CT25131, Shaw

184 CT19760-61, Purdon; CD3037 CAC folio 19, Hand to CAC 185 CT19760-61, Purdon; CT21835-38, Hill 186 CT22542, CT22550, Houghton; CT24659, Manor 187 CT20569, Wong

188 CT22994, Speakman 189 CD4460 folio 3

190 CT21496, Hill; CT25134, Shaw 191 CD1373 folio 198 The Age 18/4/80; CD8384 folio 4 192 CD3499 folio 61, Hand evidence to CAC 193 CD5044

194 CD4354 folios 51-53

195 CT21244, CT22550-51, Houghton 196 CD11034

197 CD3037 folios 60-61, Hand evidence to CAC 198 CT20741, Shaw; CD1308, Gehring JTF ROI Answer 39; CD3037; CD3049 199 CD3037 folio 52, Hand evidence to CAC 200 CD3509, Hand evidence to Nugan coronial inquiry 23/4/80 pl27 201 CT20006, Moloney; CD3037 folios 61-62 202 CT22529, Houghton 203 CD1308 folio 59, JTF interview Gehring 3/6/81 204 CD1250; CD1308 folio 59, JTF interviews Gehring 3/6/81 and

17/2/82

205 CD1250, Statement of Sergeant Wardrobe 5/5/82 206 CD1308 folio 59, JTF interview Gehring 3/6/81 207 CD1308 folio 59, JTF interview Gehring 3/6/81 208 JTF Report p 468

209 CD1308 folios 31,148; JTF Report pp 778-79 210 CD1308 folio 59, JTF interview Gehring 3/8/81 211 CT20203-04, Gehring 212 CT22562, Houghton 213 CT22561, Houghton 214 CD11370

215 CD2077

216 The Wall Street Journal folios 1, 26-27, 24/8/82 217 CT18843-44, Evans ~

218 The Australian 26/5/83, RCIDT Vol. 3, folio 360; The Age

26/5/83, RCIDT Vol. 3 folio 362; The Sydney Morning Herald, 26/5/83, RCIDT Vol. 3, folio 365; Interim Report No. 1 paras 4.25-4.32 and 5.33-5.36 219 The Australian, 26/5/83 RCIDT Vol. 3, folio 360; The Age,

26/5/83 RCIDT Vol. 3, folio 362 220 CD11011 folios 650, 656; Sun Herald, 3/4/83 221 The Asian Wall Street Journal, 17/8/83 222 CD1526 folios 698, 812; The Asiyi Wall Street Journal, 17/8/83 223 The Wall Street Journal, 24/8/82 224 The National Times, 21/2/82 225 CT23I8y, Ward; C'i'24031, Dunn 226 CT23190-91, Ward; CT25121, Shaw; CD3082 folio 14 227 CD3025 folios 14-17, Hans to CAC; CD3082 folio 14, Ward

- 105 -

223 Hayden, Hansard page 926, 11/3/82; Newman, Hansard page 1567, 20/4/82; Hayden, Hansard page 1571, 20/4/82; The Aqe 10/11/82 RCIDT Vol. 2 page ΈΗ9 ------~

229 CT18841, Evans; CT24292, Yates; CT24545-46, Black; CT24619, Colby 230 CT18842, Evans; CT22466, Dunn; CT24620, Colby 231 CT18842, Evans

232 CT22466, Dunn

233 CT22489-90, Calder ·

234 CT24620, Colby

235 CT24546, Black

236 CT22466-68, Dunn

237 CT22428, Needham

238 CT18839, Evans

239 CT22467-68, Dunn; CD1308 JTF ROI Pulger-Frarae 10/9/81 folio 7 240 CD10690

241 CD10690

242 A173 Letter Liquidator of NHB/Commission 2/4/85

2.3 ARESON, William Henry

2.3.1 Mr William Henry Areson was born on 10 October 1941. At the

time he gave evidence on 23 August 1984 he held a United States (New York

State) Accounting Certificate and conducted an accounting practice in

Hong Kong. Although Mr Areson was a qualified accountant his certificate

was not recognised by the Hong Kong authorities for the purpose of

certifying audits of companies in the colony. " * ■

2.3.2 In evidence Mr Areson stated he was introduced to Mr C.L.

Ceilings [2.15] by Mr J.A. Marks, who later worked in the Hong Kong O office of Nugan Hand. In approximately June 1975, Mr Col lings asked

Mr Areson if he would do the accounting work for the Nugan Hand companies

based in Hong Kong. Mr Areson agreed and completed the accounting work

for Nugan Hand (Hong Kong) Ltd [2.94] and some of the associated

companies. Documents in the possession of the Commission, however, would

seem to indicate that Mr Areson's association with the Nugan Hand group

of companies commenced earlier than stated. On 11 December 1974

Mr Areson wrote to Mr M.J. Hand [2.2] and accepted appointment as the

accountant for Nugan Hand (Hong Kong) Ltc, Ingold Growth Ltd and Ingold

Management Ltd.^

2.3.3 Mr Areson's accounting duties included the incorporation of

companies. Mr Collings in his evidence said Mr Areson handled all the

106 -

bookkeeping records except those of the Nugan Hand Bank [2.106],4

Mr Areson said he drew up accounting records for Nugan Hand (Kong Kong)

Ltd to reflect incoming and outgoing funds. He had difficulty eliciting

sufficient information from Mr Collings to enable him to complete these

records as he only had bank statements and deposit slips to rely upon for

details. Mien the accounting records prepared by Mr Areson were

completed they were forwarded to Sydney for approval. The records which

were subsequently returned to Hong Kong had been rewritten and recorded

information not previously known to Mr Areson.®

2.3.4 Mr Areson said Mr pollings had suggested that he refer clients

to the Nugan Hand group of companies as the deposits would receive

favourable interest rates and he would receive a commission. However,

when Mr Areson questioned Mr Collings about the interest rates he was

informed that instructions had to come from Sydney in relation to these 7 matters. Mr Areson did not refer any of his clients to the Nugan Hand

Group although one of his clients, Lighthouse International Ltd did

invest with Swiss Pacific Bank & Trust Company (later known as the Nugan

Hand Bank).®

2.3.5 In July 1976 Messrs J.C. Needham [2.51] and Hand suggested to

Mr Areson that he correspond with the auditors of Nugan Hand Ltd [2.97]

with a view to establishing a working relationship. On 28 July 1976

Mr Areson wrote to the firm of Heuschkel & Pollard [see 2.30 and 2.57],

Mr Areson stated he could not recall receiving a reply to his letter and 9 no relationship was established.

2.3.6 In 1977 Mr Needham travelled to Hong Kong and requested

Mr Areson's assistance in ascertaining the financial position of the

Group. Mr Areson told the Commission Mr Needham did not tell him of any

alleged US$3 million shortfall within the Group [2.51.11]. Mr Areson

said he was unaware of that claim and would not have had sufficient

information to comment on such an allegation.4®

2.3.7 As Mr Areson was not qualified to certify audits in Kong Kong

his services were terminated and on 15 November 1977 he received a

107 -

letter from Mr Ceilings advising him that Speakman & Co. (a Hong Kong

firn of accountants [see 2.67]) v/ould be completing future audits of the

Nugan Hand companies.'*""*'

Endnotes

1 CD7082 folios 62-65, Letter Areson/Heuschkel and Pollard

28/7/76; CD10979 folios 1-2, Areson, statement 15/8/84 to Commission 2 CT22952, Areson

3 CD7082 folios 62-65

4 CT22859, Collings

5 CT22954-55, Areson

6 CI22960-61, Areson

7 CT22965-66, Areson

8 CD10979 folio 2

9 CD7082 folios 62-65; CD10979 folio 2 10 CT22420, Needham

11 CD10979 folio 2

2.4 ATTKISSON, Randall L.

2.4.1 Mr Attkisson did not give evidence before the Commission. The

information herein relies upon documents produced to the Commission in

the course of its inquiries including material supplied by other

investigatory bodies.

2.4.2 Mr Randall L. Attkisson is a United States citizen residing in

Kentucky, U.S.A. In late 1979 Mr Attkisson was approached by a friend,

Mr n.E. Beazley [2.7], concerning possible employment with the Mugan Hand

Bank [2.106]. Mr Beazley was assessing the Bank's viability and had said

if it could be made a going concern he would assume management of the

Nugan Hand Group. Mr Attkisson had heard rumours that the Croup was

involved in illegal activities and mentioned these to Mr Beazley who

assured him the allegations could not be substantiated. Based on this,

Mr Attkisson agreed to assist Mr Beazley in assessing the viability of

the organisation.

- 108 -

2.4.3 On 26 November 1979 Mr Beazley held a management conference in

Singapore. He invited Mr Attkisson to attend, saying that it would

enable the latter to meet Nugan Hand personnel and gather information on

the solvency of the Nugan Hand Group. Mr Attkisson subsequently returned

to Miami, Florida and was later introduced to Mr F.J. Nugan [2.1] at Palm 2 Beach, Florida.

2.4.4 In a letter to Tan Choon Seng [2.71], Mr Beazley stated

Mr Attkisson had been appointed Regional Director for Asia and from

1 January 1980 was to have his salary of US$55,000 per annum paid by the

Hong Kong office. Before this, Mr Attkisson had received payment from

the Miami office of Nugan Hand International.^

2.4.5 On 23 January 1980, Mr Attkisson arrived in Hong Kong to

continue the assessment of the Nugan Hand Group operation as well as

attempt to improve its performance by implementing better management 4 methods. While in Hong Kong he decided the organisation was not

viable and was doomed to failure. He determined the Group's initial

prosperity was from its currency trading but when the market altered it

lost large amounts of funds through mismanagement.^ [For information

regarding the early years of operation of the Nugan Hand Group see Part 3

Section 2 and in particular 3.2.11 to 3.2.17.]

2.4.6 In early 1980 Mr Attkisson visited the Singapore office and told

Mr G.R. Steer [2.68] that he intended to alter the entire structure of

the Nugan Hand Group operation in the Asian region.^ However,

Mr Attkisson heard of Mr Nugan1 s death and also heard that a company in

Australia had commenced litigation against Nugan Hand. Mr Attkisson

contacted Mr Beazley who advised him to claim funds due to him and return

to the United States, which he did.^

Endnotes

1 2 3

CD10859 folio 2 CD9934 folio 4, Telex Reazley/H.K. staff 25/1/80; CD10859 folio 3 CD7940 folio 25, Letter Beazley/Tan Choon Seng

- 109 -

4 CD10326 folio 9, Memo Thomson/NHI staff 18/1/80; CD10859 folio 3 5 CD10859 folio 3

6 CD3076 folios 1,10-12, Steer evidence to CAC 17/6/80 7 GDI0859 folios 3-4

2.5 BACHMANN, Jurgen

2.5.1 Mr Jurgen Bachmann did not give evidence before the Commission.

The information herein relies upon other witnesses' evidence and

documents produced to the Commission in the course of its inquiry.

2.5.2 Mr Bachmann was born in Germany on 16 February 1937. In 1965 he

went to work for his father and Dr Neubauer in the F.A. Neubauer Bank

[2.109], He was also active in real estate transactions."^

2.5.3 In December 1977 negotiations were underway for the purchase of

F.A. Neubauer Bank by Nugan Hand International Holdings Ltd

[Appendix P ]. Mr Bachmann was, at that time, the general partner of

F.A. Neubauer Bank and owned the bank's licence to conduct general

business.^

2.5.4 An agreement was entered into between Mr Bachmann, Mrs E.

Toepfer (nee Bachmann) and Nugan Hand International Holdings Ltd, Hong

Kong, in December 1977. In accordance with this agreement Mr Bachmann

'sold' and transferred to Nugan Hand International Holdings Ltd for

DM900 000 a partial share of his holdings in F.A. Neubauer Bank,

remaining general partner, holder of the banking licence and Chief-

Executive. The DM19 000 share retained by Mr Bachman earned him interest

of eight per cent per annum and he received DM4 000 per month in

consideration for his services to F.A. Neubauer Bank. Mrs Toepfer sold

her total share of DM820 000 to Nugan Hand International Holdings Ltd .

Mr Bachmann and Mrs Toepfer were to receive DM250 000 each over and above 3 the worth of their shares. Documentary evidence suggests that

DM500 000 was paid into a Trust Account and finally released to

Mr Bachmann and Mrs Toepfer in January 1979. However the balance of

purchase money which was secured by a pledge of the shares was never

paid.'*

- 110 -

2.5.5 Mr Bachmann as chief executive of F.A. Neubauer Bank was

responsible among other things for all administrative aspects of the day

to day running of the office, the supervision of staff and overseeing the

preparation and maintenance of bank records and documentation.

Mr Bachmann was to work with Mr A.P. Hewitt [2.31], a representative of

Nugan Hand Ltd [2.97] and consult him on a regular basis on all aspects 5

of the bank's activities and development. In October/November 1978

Mr Bachmann accompanied Miss E.L. Thomson [2.72] on a visit to the Nugan

Hand Group offices in Sydney, Singapore and Bangkok.®

2.5.6 Correspondence from Mr J.M. Gilder [2.25] to Mr Bachmann in

November 1978 mentions Mr Bachmann's wish to remain involved with

F.A. Neubauer Bank after disposal of his major shareholding and his 7

willingness to act as second manager for the Bank. In January 1979 an

agreement was made between Mr Bachmann and Nugan Hand International

Holdings Ltd in which Mr Bachmann agreed to continue acting as general

partner of F.A. Neubauer Bank and as licence holder in accordance with

German banking laws. The appointment was for two years from January 1979

and Mr Bachmann was to receive an annual salary of DM120 000. ®

2.5.7 Mr Hewitt gave evidence that the shares acquired by Nugan Hand

International Holdings Ltd from Mr Bachmann and Mrs Toepfer were pledged

back to them as security for a loan of the purchase price. According to

Mr Hewitt, Mr Bachmann was nervous as the pledge had not been finalised

and Mr F.J. Nugan [2.1] visited Germany several times to placate him.

Mr Hewitt said that Mr Nugan visited on either 22 or 23 January 1980 as

Mr Bachmann had become 'rather insecure' about the failure to finalise

the pledge. Mr Hewitt said Mr Nugan was able to satisfy Mr Bachmann

about the loan repayment but ultimately the Nugan Hand group of companies

collapsed and the loans were never repaid. He said after his departure

F.A. Neubauer Bank carried on as before and at the time of giving

evidence to the Commission, he believed it was still operating with a 9 Swiss bonking partner.

- Ill -

Endnotes

1 CD4428 folio 12, Bachmann resume 2 CT22126, Hewitt

3 CD6469 folios 11-13, FAN establishment - NHL and NHIH a/cs 4 CT22129, Hewitt; CT24602, Cocke; CD6469 folios 11-13; CD6156 folio 14, Telex Voss 27/1/78; CD6469 folios 3-4, Minute Thomson 9/2/79

5 CD6476 folios 69-75, Bachmann/FAN responsibilities 6 CD1109 folios 21, Telex Thomson/Gilder 24/10/78, folios 30-31, memo Gilder/Sydney staff 20/10/78 7 CD1109 folios 7-9, Letter Gilder/Bachmann 15/11/78

8 CD6469 folios 11-13, Agreement Bachmann/NHIH Ltd 9 CT22128-33, Hewitt

2.6 BATES, Arthur Edward

2.6.1 Mr Bates did not give evidence before the Commission. The

information herein relies solely upon material contained in documents

produced to the Commission in the course of its inquiry.

2.6.2 Mr Arthur Edward Bates was born in Britain on 14 January 1940.

Before commencing his employment with the Nugan Hand Group, Mr Bates had

been employed by Sun Life Assurance Company of Canada, in Britain. In

this position he was involved in recruiting, training and motivating his

own team of insurance sales persons.

2.6.3 On 1 November 1978 Mr Bates commenced employment as an account

executive with Nugan Hand (Hong Kong) Ltd [2.94], His charter was to

solicit depositors for the company and he was to receive HK$6 000 per

month salary. In August 1979 his terms of employment were reviewed

and his salary increased to HK$10 000 per month. In addition he received

HK$5 000 housing allowance, entertainment expenses and a performance

bonus. This bonus was based on the performance of the division to which

he was attached, deposits made by clients secured as a result of his

introductions and deposits arising from trade activities of other

divisions.^

2.6.4 In December 1978 Mr Bates applied to the Hong Kong Securities

Commission for an investment representative's licence. This application

- 112 -

was endorsed by Mr C.L. Collings [2.15] for Nugan Hand (Hong Kong)

Ltd. During this same month Mr Bates wrote a memo to Mr Collings

suggesting the establishment of Nugan Hand Life and Pensions Services Ltd

which would provide life assurance and pension services to clients. 5

There is no evidence of anything concrete arising from his suggestion.

2.6.5 In September 1979 Mr Bates returned to Britain due to the death

of his father. While he was there he arranged meetings with prospective

clients and former colleagues who may have been in a position to refer

clients to the Nugan Hand Group.® Notes of these contacts were sent by

Mr Rates to Mr J.M. Gilder [2.25] in Australia. Mr Bates later returned

to Hong Kong and continued working for Nugan Hand (Hong Kong) Ltd until

at least February 1980.^

Endnotes

1 CD10524 folio 236, A.E. Bates' Curriculum Vitae 2 CD10524 folio 229, Letter Collings/Bates 25/10/78 3 CD10524 folios 224-25, Letter Collings/Bates 17/8/79

4 CD11038 folios 138-47, Bates1 application for registration as representative 22/12/78 5 CD6476 folios 182-87, Memos Bates/Collings 4/12/78 and 18/12/78 6 CD6157 folios 12-25, Memo/reports re U.K. trip 10/9/79 7 CD754 folio 5, Memo Bates/Gilder 10/9/79; CD10449 folios 14-15,

Memo Attkisson/Personnel File 21/2/80

2.7 BEAZLEY, Donald Elgin

2.7.1 Mr Beazley did not give evidence before the Commission. The

information herein relies upon the evidence of other witnesses and upon

documents produced to the Commission including material supplied by other

investigative bodies.

2.7.2 Mr Donald Elgin Beazley is a United States citizen born in

Edinburgh, Virginia on 4 October 1942. In 1965 he graduated from

Virginia Polytechnic Institute with a Bachelor of Science degree in

Economics. From 1965 to 1970 he was employed as a Bank Examiner with the

- 113 -

Federal Reserve Bank, Richmond, Virginia. Within this period he also

served in the U.S. Army in Germany as an officer in the Infantry Branch,

obtaining his commission through the Reserve Officers Training Corps, and

was honourably discharged. Between 1970 and 1973 he was employed as

Assistant Vice President of the First National Bank of Atlanta, Georgia.

From 1973 to 1977 Mr Beazley was the Vice President of Flagship Banks

Incorporated and from 1977 to 1979 he was the President and Chief

Executive Officer of American Bancshares Incorporated. In 1979 he worked

in his own banking consultant group in Miami, Florida."1 "

2.7.3 Mr Beazley told the Commonwealth-New South Wales Joint Task

Force on Drug Trafficking (Joint Task Force) that he first met Admiral

E.P. Yates [2.76] and Mr F.J. Nugan [2.1] in late 1976. Both were in

Miami, Florida, representing the Nugan Hand Bank [2.106] and discussed

with Mr Beazley the possible purchase of a South Florida bank. After

this initial contact, Admiral Yates periodically called Mr Beazley

concerning the potential acquisition of a bank. Mr Beazley later met

Mr M.J. Hand [2.2] in connection with the potential purchase of a bank in

Hong Kong. In August 1979, Admiral Yates offered Mr Beazley a position

with the Nugan Hand Group and a few weeks later Mr Nugan contacted Mr

Beazley and repeated the offer. Mr Beazley finally agreed to the

appointment but placed a number of conditions on his acceptance including 2

the verification of the financial status of the Nugan Hand Group.

Admiral Yates told the Commission that he approached Mr Beazley by 3

telephone in 1977 and later introduced Mr Beazley to Mr Nugan.

Mr Beazley became President and Chief Executive of the Nugan Hand Group

and was introduced as such in October 1979 at a conference of company

executives in Sydney.^

2.7.4 He was assigned responsibility for analyzing the existing

organisation and providing recommendations for personnel changes and

restructuring. He enlisted the help of Mr R.L. Attkisson [2.4] to assist

in the evaluation task. During the course of his employment Mr Beazley

conducted acquisition analyses of three financial institutions in the

United States for the Nugan Hand Group. Mr Beazley said that during his

negotiations, it was necessary to have the ability to offer a 'good faith

- 1.14 -

deposit'. To this end he requested and received US$200 000 fron

Mr Hand. In a letter to the Joint Task Force Mr Beazley claimed the

negotiations were unsuccessful and accordingly he returned the 'good

faith money', after deducting his expenses, to Mr Nugan during January

1980.5

2.7.5 Mr Beazley travelled extensively throughout Europe and Asia in

an attempt to evaluate the Nugan Hand Group companies' balance sheets but

had trouble reconciling them. He scheduled a meeting for February 1980

at which all Nugan Hand Group accountants were to be present in an

attempt to resolve the balance sheet reconciliation problems he was

experiencing. This meeting never eventuated due to Mr Nugan's death in

January 1980. Mr Beazley stated Mr Nugan's death complicated the

reconciliation process and as 'some things didn't add up' he

resigned.®

2.7.6 Towards the end of his association with the Nugan Hand Group,

Mr Beazley took over negotiations for the purchase of a share in the

English merchant bank, London Capital Securities Ltd [2.111], on behalf

of the Nugan Hand Group,. After Mr Nugan's death, Mr Beazley was

contacted by Mr M.B. Houghton [2.35] and was asked if he was interested

in continuing negotiations for the purchase of the bank. Mr Beazley

claimed Mr Houghton said he was making this request on behalf of a

7

Mexican, Mr Ricardo Chavez, who wished to purchase the bank. Mr

Houghton told the Commission that Mr Chavez was a depositor with the

Nugan Hand Group in Saudi Arabia with whom he had discussed the possible

purchase of London Capital Securities Ltd. He told Mr Chavez that 'Nugan

Hand would direct the Saudi deposits to this new bank'. According to Mr

Houghton, Mr Chavez instructed him to withdraw funds from his account for

the purchase of equity in London Capital Securities Ltd. This

Mr Houghton did and in the company of Mr Beazley delivered the funds to

Mr D. Mosselson of London Capital Securities Ltd. A share certificate in

favour of Mr Beazley was then endorsed by Mr Beazley in favour of

Mr Chavez. This endorsement, according to Mr Houghton, was not recorded

by London Capital Securities Ltd and resulted in Mr Chavez not being

listed as a shareholder. The share certificate was later delivered by

- 115 -

Mr Houghton to Mr Chavez in Switzerland. Mr Beazley subsequently became

a director of London Capital Securities Ltd. In October 1980 he resigned

this position and had no further contact with the bank.®

2.7.7 Despite repeated requests to Mr Beazley and his attorneys in the

United States, Mr Beazley declined to make a statement or give evidence

to this Commission.

Endnotes 1 2 3 4 5 6 7 8

1 CB1176 folio 273; CD6930 folio 3, Letter Beazley re educational qualifications 2 CD1176 folios 274-76; 0)1290 folios 6-14 3 CT24263-65, Yates

4 CT22553, Houghton; CD1429 folio 26, Sydney Conference 1979 5 CD1176 folio 285, Letter Beazley/JTF 26/1/82; CD10859 folio 2 6 CD1176 folio 275

7 CD1176 folios 278-79

8 CT22552-56, Houghton; CD10525 folio W

2.8 BLACK, General Edwin Fahey

2.8.1 General Edwin Fahey Black was born in the United States on

17 August 1915. He attended the United States Military Academy, West

Point and gained a Bachelor of Science degree in Civil Engineering.

After graduating in 1940 he served in various command and staff positions

during World war II, and the Korean and Vietnam Wars. Staff assignments

included duty with the United States National Security Council and the

Office of the Secretary of Defense. Command assignments included working

for the Office of Strategic Services (O.S.S.), Commander of the United

States troops in Thailand during the Vietnam war and later Assistant Army

Chief of Staff for the Pacific. General Black obtained a Master of

Science degree in International Relations from George Washington

University, Washington, D.C. in 1962. He retired from the United

States Army in 1970 and subsequently held directorships in various 2 3

companies. He is currently engaged as a consultant.

- 116 -

2.8.2 In October 1977 General Black, despite the fact he had no

banking experience, was asked by Admiral E.P. Yates [2.76] if he would

join the Nugan Hand Group. He subsequently met Messrs F.J. Nugan [2.1]

and M.J. Hand [2.2] who said they wanted hin to be their representative

in Hawaii and help them meet influential people in South East Asia.

General Black wrote to Mr Hand on 31 October 1977 stating he was joining

forces with the 1 bank1 on 1 November 1977 and that he had tried to get

instructions from Admiral Yates but was unable to contact him.'* In

March 1978 he again wrote to Mr Hand and said at that time he and Admiral

Yates had not reached a satisfactory agreement as to the running of the

Honolulu office or as to his work contract.6

2.8.3 At the time he joined the Nugan Hand Group, efforts were being

made to purchase the United Chinese Bank in Hong Kong. General Black

joined the team that was finalising the negotiations for the purchase of

the Bank and visited Hong Kong with Admiral Yates. The proposed purchase

never eventuated due to lack of funds on the part of the Nugan Hand

Group.6

2.8.4 General Black suggested to Mr Nugan that his best contribution

to the Nugan Hand Bank would be to handle special projects. He believed

large joint ventures with capital raised by the Nugan Hand Group, if

successful, would ultimately generate large amounts of cash which would

benefit the Bank. General Black worked on a number of projects but

nothing materialised as the Nugan Hand Group was unable to arrange the

necessary finance.^

2.8.5 The New South Vales Corporate Affairs Commission in its Seventh

Interim Report referred to General Black's possible involvement in

negotiations over helicopters, fragmentation bombs and ammunition and the

sale of shelters for combat aircraft to Thailand and South Korea. It

also referred to knowledge of these matters on the part of Messrs Hand,

Nugan and Admiral Yates.® General Black's evidence to this Commission

in relation to these matters is discussed in Part 7.

2.8.6 In January 1979 Admiral Yaces, acting on the instructions of 9

Mr Nugan dismissed General Black from the Nugan Hand Bank. He was at

- 117 -

that stage employed on a salary of US$25 000 per year plus expenses.1 2 3 4 5 6 7 8 9 10 1 1

General Black subsequently contacted Mr Nugan who reinstated him and in

February 1979 wrote to him regarding his new arrangement with the Group.

He was to represent Nugan Hand International [Appendix B] for all

commercial and trade services in Hawaii and was to be paid US$1 500 on a

month to month basis in accordance with the directions of Mr Nugan. He

was to bear all expenses unless otherwise authorised. General Black

considered himself to be, until the collapse of the organisation, the

Nugan Hand Group representative in Hawaii.12

Endnotes

1 CT24542, Black

2 CD1144 folio 1, Black's background, folio 10, AFP/Black's

particulars; CD1955 folio 44, E.F. Black's background 3 CT24538, Black

4 CD1955 folio 163

5 CD1955 folio 81, Letter Black/Hand 16/3/78

6 CT24551-52, Black; CD1250 folios 2577-79, JTF ROI Black 11/12/82 7 CT24551, CT24553, Black; CD1250 folios 2577-79 8 CAC 7th Interim Report pp660-62 9 CT24261, Yates

10 CD1250 folios 2577-79

11 CT24550, Black; CD6212 folios 13-14, Letter Nugan/Black 13/2/79 12 CD1250 folios 2577-79

2.9 BRINCAT, George Frederick

2.9.1 Mr George Frederick Brincat was born on 30 October 1950 in

Sydney. In 1968, he commenced work with Charles J. Berg & Partners, a

firm of public accountants, in George Street, Sydney. He worked for this

firm for a period of five years and during this time he studied Commerce

part time at the NSW Institute of Technology. He completed that course

in November or December 1973 and received a Diploma in Commerce early in

1974.1 Following the award of his Diploma he gained full admission as 2

an Associate of the Australian Society of Accountants.

2.9.2 While studying, he worked as an accounts clerk and then, in

1973, in a position he described as a 'Senior Level "B"'3 carrying out

I

accounting, taxation, secretarial and audit work under supervision.^

He worked on the audit of two public companies5 providing assistance in

vouching and verifying assets and liabilities. He was not required to

finalise these audits nor was he qualified to sign the respective audit

certificates.® Mr Brincat described his audit experience prior to 1974

as limited, particularly in relation to newly incorporated companies.^

2.9.3 In May 1974 at the age of 23, Mr Brincat joined the firm of

Heuschkel and Pollard.® Messrs C.L. Heuschkel [2.30] and W. Pollard

[2.57] had also worked for Charles J. Berg & Partners and had met

9

Mr Brincat there during their mutual period of employment. A month or

so after his appointment, Mr Brincat was instructed by Mr Pollard to

provide accounting services for Nugan Hand Needham Ltd [2.97] (as it then

was) and its associated companies. More specifically, he was instructed

to finalise the books of account, so that financial statements and

taxation returns could be prepared, and to verify assets and

liabilities."*"*^ At this time he had not previously had responsibility

for the audit of a public company. " * " " * "

2.9.4 When Mr Brincat first attended the offices of Nugan Hand Needham

Ltd it was towards the end of its first year of business. No financial

statements had yet been published and some accounting records had yet to

be established. He introduced the appropriate records and carried

out bookkeeping services which were later provided by Miss P.M. Swan

[2.70] and thereafter by Miss N.F. Burton [2.10]."*"5 He carried out

some verification work in respect of the 30 June 1974 accounts for Nugan

Hand Needham Ltd in about July or August of that year but as Mr Brincat

was not then a partner of the firm Mr Pollard signed the relevant audit

certificates"*"^ [see Part 4 Section 5J. Mr Brincat became a registered

auditor during 1974 and was subsequently admitted as a partner in the

firm on 1 July 1975."*"^

2.9.5 From and including the financial year ending 30 June 1975,

Mr Brincat prepared the accounts, conducted the audit and, moreover,

signed the audit certificate, in respect of Nugan Hand Ltd [2.97]. That

is to say, Mr Brincat occupied the position of both accountant and

- 118 -

- 119 -

auditor in respect of each of the five annual accounting periods of Dugan

Hand Ltd, and as such, was in a crucial position to determine the final

form of the company's accounts. In certifying those accounts each year

he says he simply accepted Mr F.J. Dugan's [2.1] version of various

transactions. He also prepared the accounts and carried out an audit in

respect of a number of associated companies. Details of companies, the

accounts of which he prepared and audited, are set out at the conclusion

of this profile.

2.9.6 In addition, Mr Brincat was a director of Distravite Pty Ltd

(from 25 November 1976 to 1 February 1978) and Illarangi Investments Pty

Ltd (appointed 15 November 1977) at a time when the companies were not

trading. He was also a secretary of Leasefast Pty Ltd (appointed

2 December 1977) and S.L. Notwist Pty Ltd (appointed 30 September

1976).17

2.9.7 During his time with the firm of Heuschkel & Pollard, Dugan Hand

Ltd was the only public company for which Mr Br incat performed the

services of auditor. Aside from this and accounting work for Nugan Hand

Ltd and associated companies, he provided accounting, taxation and

secretarial services for a number of family companies. Based on

estimates by various parties of Mr Brincat's times of attendance at the

offices of Nugan Hand Ltd at Macquarie Street, Sydney, he clearly spent a

considerable proportion of his time on Nugan Hand Group business."*"®

His own estimates included one that he attended every day for a period of

one or two hours and at times remained for more than five hours each 19 day and another, that he attended 50 to 60 per cent of his time

20

overall, with attendances on two or three days a week or more.

Mr Brincat estimated the income from the Nugan Hand group of companies to

be 30 per cent of total income of the firm.2"* The Nugan Hand group of 22

companies was the firm's largest client.

2.9.8 Mr Brincat's audit working papers in relation to the Nugan Hand

Ltd accounts for each financial year were central to the Commission's

examination of the company's financial circumstances. One significant

feature of the company's accounts was the use of internal bills of

exchange to represent inter-company debts [see 3.3.46-3.3.47, 5.34-

- 120 -

5.55], At the time the internal bills were introduced into the accounts,

neither Mr Brincat nor his partners had experience in their use. As a

result, Messrs Pollard and Heuschkel sought legal advice from an

independent firm of solicitors. Mr Nugan intervened at this point and

persuaded the partners including Mr Brincat to accept the view of his own

solicitor, Mr J.L. Aston, that the use of internal bills was not

inappropriate although it should be the subject of a suitable note to the 21 accounts.

2.9.9 The use of the internal bills continued to be the subject of

frequent discussions between Mr F.J. Nugan [2.1] and Mr Brincat until, at

a meeting three weeks before Mr Nugan's death, Mr Brincat said he would

qualify the audit report for the year ending 31 January 1980 to the

extent of writing off between $4-5 million against the internal bills, 24

thus exposing Nugan Hand Ltd as hopelessly insolvent.

2.9.10 In addition to the accounts of the Nugan Hand group of companies

in Australia, Mr Brincat also played a major role in the production of a

set of records for the Nugan Hand Bank which were submitted to the Bank's

auditors in the Cayman Islands in 1977, 1978 and 1979. In the process,

the original records maintained in the Group's Singapore office were

rewritten, principally by Mr Brincat, on instruction by Mr Nugan. These

accounts were passed by the auditors in the years 1977 and 1978 but in

1979 the auditors queried the accounts and subsequently advised the

Banking Commissioner that the accounts could not be presented to the

Commissioner in accordance with the requirements of Cayman Islands 25 law. [Further details of the accounts and audit of Nugan Hand Bank

are provided at paragraphs 4.2.117 to 4.2.177.]

2.9.11 Mr Brincat described Mr Nugan as a strong willed and overbearing

person who exerted considerable influence over Mr Brincat. ® By all

accounts, Mr Brincat was particularly shocked by the news of Mr Nugan's 27 death. On Tuesday, 27 January 1980, he attended a meeting at the

Nugan Hand Ltd offices in Macquarie Street where he and Mr S.K. Hill

[2.33] were the only two with any knowledge of the Group's financial

situation. Later in the evening he visited Mr Hill's home together

- 121

with Mr Pollard and Admiral E.P. Yates [2.76] where he discussed with

Mr Pollard the question of approachinq a solicitor for legal

29 "

advice.

2.9.12 A week later, on Tuesday 5 February 1980, Mr Brincat informed

Mr Pollard of irregularities in the Nugan Hand Group accounts including

the fact that negotiable certificates of deposit belonging to Nugan Hand

(Hong Kong) Ltd [2.94] had been used to secure deposits in Nugan Hand

Ltd. After discussions with his solicitor on the following day,

Mr Pollard took over control of the January 1980 audit to the exclusion

of Mr B r i n c a t . F u r t h e r details concerning the accounts of Nugan Hand

Ltd are contained in Parts 3 and 5 and, on the subject of audit

procedures, the reader is referred to Part 4 Section 5 of the report.

2.9.13 In addition to Nugan Hand Ltd, Brincat also prepared the

accounts and was the auditor of the following associated companies:

Australasian and Pacific Holdings Ltd [2.80] - accounts and audit from June 1977 to June 1979. Distravite Australia Wide Servicing Company Pty Ltd [2.81] - accounts and audit from date of incorporation. Distravite Pty Ltd [2.82]

- accounts and audit from date of incorporation. Garcia Bros Hardware Pty Ltd [2.83] - accounts and audit from 1974 to 1975. Hidex Pty Ltd [2.84]

- accounts and audit from date of incorporation. Illarangi Investments Pty Ltd [2.85] - accounts and audit for June 1978. Leasefast Pty Ltd [2.87]

- accounts and audit from date of incorporation.

Medevac Shipping Pty Ltd [2.89] - accounts and audit from date of incorporation. Naretha Pty Ltd [2.90] - accounts and audit from date of incorporation. Newcourt Financial Services Pty Ltd [2.91]

- accounts and audit from date of incorporation. Nugan Hand (Dealers) Pty Ltd [2.93] - accounts and audit from date of incorporation. Nugan Hand International Holdings Pty Ltd [2.96]

- accounts and audit from date of incorporation to June 1978. Nugan Hand Ltd [2.97] - accounts and audit from June 1975 to January 1979.

NHN Management Pty Ltd [2.92] - accounts and audit from date of incorporation.

^ l o kd co σ\

- 122 -

Nugan Hand Trade Services Pty Ltd [2.98] - accounts and audit from 1974 or 1975. Pacific Continental Ltd [2.99] - accounts and audit from 1974 or 1975. P.M. Shelley Pty Ltd [2.100] - accounts and audit from 1974 or 1975. R. B. Cody Pty Ltd [2.101] - accounts and audit from 1974 or 1975. Skah Pty Ltd [2.102] - accounts and audit from date of incorporation. S. L. Notwist Pty Ltd [2.103] - accounts and audit from date of incorporation. Solingen Aust Pty Ltd [2.104] - accounts and audit from date of incorporation. Swiss Pacific Pty Ltd [2.105] - accounts and audit from date of incorporation. W.V. Tennyson Pty Ltd [2.107]

- accounts and audit from 1974 or 1975. Yorkville Nominees Pty Ltd [2.108] - accounts and audit from 1974 or 1975.16

Endnotes

1 CT23763-64, Brincat; CD3008 Part 1 folios 94-95 2 CD3008 Part 1 folio 94

3 CD3008 Part 1 folio 95

CT23763-64, Brincat CD3008 folio 97 CT23764, Brincat CD9009 folio 14 CD9009 folio 1 CT23763-4, Brincat; CT23286, CT23310, Pollard 10 CT23765, Brincat

11 CT23770, Brincat

12 CT23766

13 CT23766, Brincat

14 CT23764, CT23769, Brincat, CD9009 folio 1 15 CT23308, Pollard; CD3008 Part 1 folio 95 16 CT25527, Brincat; CD3008 Part 1 folio 108-110 17 CT25319; CT25320, Brincat 18 CT23919, Gaudry; CT22316-8, Swan; CT23354-6, Pollard 19 CT23767-68

20 CT23769, Brincat

21 CT23767-68, Brincat 22 CT23769, Brincat

23 CT23867-84, Brincat; CT23878-84, Aston 24 CT23749, CT23924, Brincat 25 CT21903-04, Hill

26 CT25198-99, CT25576-67, Brincat 27 CT23919, Gaudry; CT20879, Moloney 28 CT20997, CT21001, Hill 29 CT23291, Pollard

30 CT23294, Pollard; CT20313, Brincat

- 123 -

2.10 BURTON, Moreen Fay

2.10.1 In mid June 1976, Miss Noreen Fay Burton commenced work with

Nugan Hand Ltd [2.97] as a bookkeeper following an interview with Mr W.

Pollard [2.57] of Heuschkel & Pollard, accountants. Mr G.F. Brincat

[2.9] instructed her on the duties of the position.* These duties

included responsibility for writing up the cash books of Nugan Hand Ltd

and some of its associated companies and keeping those cash books up to 2 date at all times. She was also required to record all deposits and

withdrawal details (including interest paid to clients) in the cashbooks

and clients' ledger cards as well as arrange the banking and drawing of 3 cheques. Miss Burton also prepared daily cash reports. She contacted

the banks where various companies within the Nugan Hand Group kept

accounts and checked the daily balances of all such accounts. She

maintained a sheet showing all deposits and repayments and the balance 4 during the course of the day. At the end of each day she gave a

1 summary of transactions' sheet to Mr S.K. Hill [2.33]. Miss Burton

also maintained the records relating to Mr F.J. Nugan's [2.1] personal

bank account at the ANZ Bank, Pitt and Hunter Streets branch including

records relating to payments from Yorkville Nominees Pty Ltd [2.108] to

his personal account.®

2.10.2 In mid 1977 Miss Burton was required to assist in the recording

of matters pertaining to bills of exchange [see Part 3 Section 3]. The

securities registers, in which all external and internal bill details 7

were recorded, were maintained by Mr Hill, Mr Brincat or herself. She

also kept a summary of outstanding bills and noted the dates of

maturity. She would inform Messrs Hill or Brincat when the bills were

due for repayment or rollover and organised the purchase of duty stamps

from the post office as required.®

2.10.3 During 1978 Miss Burton became an authorised signatory for the 9 . .

cheque accounts of Nugan Hand Ltd. She was also authorised to sign

and endorse bills of exchange on behalf of Nugan Hand Ltd."*·®

2.10.4 Miss Burton was employed by Nugan Hand Ltd until April 1980,

when the company was placed in provisional liquidation.'*''*' After this

- 124 -

she assisted the provisional liquidator until early July 1980.

Miss Burton was at the time she gave evidence to the Commission employed 13

as a bookkeeper by a firm of Sydney solicitors. * 1 2

Endnotes

1 CT20136, CT23513, Burton 2 CT20137-41, CT23517, Burton 3 CT23516, Burton

4 CT23520, Burton

5 CT23537, Burton

6 CT23519, Burton

7 CT23522, CT23536, Burton 8 CT23513-15, Burton

9 CT23519, Burton

10 CD3010 folio 19, Burton evidence to CAC 11 CT20136, Burton

12 CT20137, Burton; CD3727 folio 1, Burton Statement to CAC 28/4/82 13 CT20136, CT23511, Burton

2.11 CALDER, Brian William

2.11.1 Mr Brian William Calder was born in Australia on 22 December

1930 and was educated in Brisbane. He qualified as an accountant in

Queensland and was employed by the ES&A Bank (as it then was) for

12 years in the Overseas Bills Department. His position, when he

resigned in 1958, was Assistant Manager in the Bills Department of the

Brisbane office. Mr Calder subsequently joined Corrie & Co, Stockbrokers

of Brisbane. In 1960 he was appointed Branch Manager and held this

position until 1970 when he took up a position with Sydney stockbrokers

Lance Jones & Co.

2.11.2 Mr Calder first met Mr M.J. Hand [2.2] about 1970 shortly after

commencing employment with Lance Jones & Co as Mr Hand was a client of

that firm.^ Mr Hand introduced him to Mr F.J. Nugan [2.1] in 1971.^

Between September 1972 and February 1977, Mr Calder was a director and

secretary of Langenfelder Pty Ltd, a land acquistion and disposal

company. Mr Hand was also a shareholder and director of the company 4 during that period.

- 125 -

2.11.3 Mr Calder was one of the original subscribers of Secured Income

Real Estate (Australia) Ltd ('SIRE') [2.117], a real estate development 5

and investment company of which Mr Hand was a founding director.

Mr Calder was appointed inaugural secretary in August 1971 and became a

director in May 1972.® In 1972 Mr Calder left his position with Lance

Jones & Co. as that firm was closing its Sydney office and he wished to 7

remain in Sydney to continue his involvement with SIRE.

2.11.4 Between July 1973 and November 1974 at the request of Messrs

Hand and Nugan, Mr Calder held the positions of secretary and director in

tiie following companies: Nugan Hand Needham Ltd (later Nugan Hand Ltd

[2.97]), NHN Nominees Pty Ltd (later Nugan Hand (Dealers) Pty Ltd

[2.93]), NHN Management Pty Ltd [2.92] and NHN Funding Pty Ltd.8

2.11.5 In late 1973, SIRE gained a controlling interest in North

Australian Rubber Mills Ltd ('HARM') [2.113]. Mr Calder was appointed a

director of HARM in December 1973 and held this position until February

1978. He became secretary of HARM in June 1974 and resigned in June Q 1975. Mr Calder was fully engaged in the business of SIRE and HARM

for some years in both Brisbane and Sydney, and moved to Brisbane in

1976.10

2.11.6 In December 1977 Mr Calder terminated his employment with SIRE

and NARM and returned to Sydney. However, the company records of SIRE

indicate that his resignation as director was not formalised until June

1979. Mr Calder approached Mr Nugan for a job, and commenced work with

Nugan Hand Ltd in January/February 1978.11 According to Mr Calder,

Mr Nugan asked him to form a couple of companies for 'the express purpose

of going into vitamins and orange juice distribution business'.

Mr Calder arranged for Apollo Land and Developments Pty Ltd to change its

name to Distravite Pty Ltd [2.82] and incorporated Distravite Australia

Wide Servicing Company Pty Ltd [2.81]. Mr Calder had one share in each

company which he held in trust for Mr Hand. In fact the primary purpose

of these companies was that they be used in the implementation of a

taxation scheme which Mr Nugan was making available to clients [see

Part 9], Mr Calder's role was to locate outlets for the distribution of

- 126 -

packaged vitamins and fruit juice. He was made secretary and director of

Distravite Pty Ltd and Distravite Australia Wide Servicing Company Pty 12 Ltd in February 1978. From August 1978, he held directorships in the

Orange Spot group of companies [2.115] which were also involved in

taxation schemes devised by Mr Nugan. Mr Calder did not perform any

duties in relation to this group of companies.1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 13

2.11.7 Between October 1978 and October 1979 Mr Calder was also

secretary and director of Solingen Aust Pty Ltd [2.104], In October 1978

he assisted Mr Q.D. George [2.24] and Mr O.T. Shaw [2.65]; the latter was

at this time establishing Mars Road Investments Pty Ltd [2.88], a company

in which Mr Calder subsequently held the positions of company secretary, 14

director, public officer and principal accounting officer. However,

Mr Calder told the Commission that he took no part in the operations of

Mars Road Investments Pty Ltd, although as a director he did sign a

number of blank cheques which he gave to Mr Shaw.13

2.11.8 Mr Calder resigned from Distravite Pty Ltd, Distravite Australia

Wide Servicing Company Pty Ltd and from the Orange Spot group of

companies in June 1979 and purchased a small business.16 He is

π

currently employed as an accountant by a large Australian company.

Endnotes

1 CD3944 folio 292, Calder's application for a seat on the Sydney Stock Exchange; CD6112 folios 9-10, Calder's Curriculum Vitae 2 CT22489, Calder

3 CD3011 folio 3, Calder evidence to CAC transcript 4 CT22508, Calder; CD10719 folio 136 5 CT22407, Needham; CT22490-91, Calder 6 CD10719 folio 77

7 CT22493, Calder

8 CT22492-93, Calder; CD10719 folios 128, 151, 156-58 9 CD10932 folios 1-2, North Australian Rubber Mills Ltd CAC

microfiche

10 CT22493, Calder

11 CT22494, Calder

12 CT22495-96a, Calder 13 CT22501-03, Calder

- 127 -

14 CT22495, Calder; CD5468 folio 1, Minutes Mars Road Investments Pty Ltd 11/10/78 15 CT22505-07, Calder 16 CD3011 folio 32

17 CT22488, Calder

2.12 CLASEN, Peter Jurgen

2.12.1 Mr Peter Jurgen Clasen first met Messrs F.J. Nugan [2.1] and

M.J. Hand [2.2] in 1974 or 1975."*" He was later offered employment by

Mr Nugan and commenced working for Nugan Hand Ltd [2.97] in Sydney in

February 1975. Although, according to his own evidence, Mr Clasen had

very few qualifications for the task, Mr Clasen was employed to collect

funds from depositors for investment in Nugan Hand Ltd. Mr Clasen said

his attempts to collect deposits were unsuccessful.3

2.12.2 Mr Clasen said he was later asked by Mr Nugan to sell some real

estate owned by him. The real estate was called Golden Beach and was

part of the Ocean Shores Development located on the border of New South

Wales and Queensland. Mr Clasen negotiated for the sale of only one

block of land in the development but ultimately this did not proceed and 4 the purchaser's money was refunded.

2.12.3 In February 1976, Mr Clasen held discussions with executives of

the Asien-Pazifik-Bank, in Hamburg, West Germany. They discussed whether

the Asien-Pazifik-Bank would be prepared to guarantee deposits collected

in West Germany on behalf of Nugan Hand Ltd and the feasibility of that

bank and Nugan Hand Ltd representing each other in their respective

countries. Mr Clasen also approached a German chemical company, with a

view to having it appoint Nugan Hand Trade Finance Ltd as its

representative in trade negotiations with China. Neither of these 5 proposals came to fruition.

2.12.4 While in West Germany, Mr Clasen spoke by telephone to Mr Hand

who was in South Africa and was interested in obtaining a supply of

several million bullets suitable for use in a .303 rifle [see Part 7].

Mr Clasen then made some telephone inquiries in relation to the bullets.

The following day Mr Clasen was advised by Mr Hand not to pursue the

- 128 -

matter further. Mr Clasen told the Commission that as far as he knew

nothing resulted from his inquiries in West Germany.6

2.12.5 From Germany Mr Clasen returned to Nugan Hand Ltd in Sydney and

left the employ of that company in early 1976.^

Endnotes

1 CT21151-52, Clasen

2 CT21160-61, Clasen; CD6112 folio 33, Clasen expenses

Feb.1975-Feb.1976 3 CT21151-53, Clasen

4 CT21153, CT21161, Clasen 5 CT21154-56, Clasen; CD6112 folios 35-37, Report Clasen/Nugan and Ward 6 CT21156-58, Clasen 7 CT21160-61, Clasen 8 CD6112 folio 26 Note to Hand; folio 27, Real Estate proposal by

Clasen 12/4/76; folio 33

2.13 COCKE, General Erie

2.13.1 General Erie Cocke Junior volunteered to give evidence to the

Commission. He was interviewed by the Commission in the course of its

inquiries in the United States in January 1985.

2.13.2 General Cocke was born in Dawson, Georgia, U.S.A. on 10 May

1921. He is a graduate of the University of Georgia and the Harvard

University Graduate School of Business Administration. He holds a Master

of Science degree from George Washington University and honorary

doctorates from Mercer University (Laws), Missouri Valley College

(Letters) and Presbyterian College (Business Administration). He is a

highly decorated United States serviceman and achieved the rank of major

by the end of World War II. He retired from military service as a

Brigadier General of the Georgia National Guard.*'" General Cocke

enjoyed an extensive business career both in the public and private

sectors. He was appointed by President Kennedy as U.S. Alternate

Executive Director of the World Bank. He served as consultant to two

defence secretaries and was involved in presidential appointments to

- 129 -

international committees. He served as a United States delegate to the

United Nations with the rank of ambassador. Since 1966 he has conducted

a management consultancy service in Washington and is a well known

lobbyist. He is a past Vice-President of Peruvian Airways and has served

in executive positions and on boards of directors of several

2

organisations.

2.13.3 In mid 1977 General Cocke was approached by Admiral E.P. Yates

[2.76], whom he had known for some years, who suggested that he act as an

occasional consultant for the Nugan Hand Group.^ Admiral Yates told

the Commission that General Cocke worked as a consultant for the Nugan

Hand Group, while maintaining his private consultancy. General Cocke

told the Commission that he advised the Nugan Hand Group not to buy an

American bank or try to start one as they would encounter regulatory A problems. Admiral Yates said General Cocke was well placed in

Washington to arrange contacts and introduce prospective investors to the

Group. Admiral Yates said he used General Cocke's name to register the

office of Nugan Hand International [Appendix B], with the United States

Treasury Department. He also said while he was in Asia representing the

Nugan Hand Group, General Cocke's Washington office was his official 5

headquarters as the Group rented part of that office. General Cocke

said his office was also used by Mr M.B. Houghton [2.35] on several

occasions.® Mr Houghton told the Commission he used the office as a

place to repay the deposits of American clients returning from Saudi

Arabia. He also said General Cocke attended an International Monetary

Fund meeting in Yugoslavia on behalf of the Nugan Hand Group.^

2.13.4 General Cocke made one trip in April 1978 to Taiwan and Hong

Kong to meet members of the Nugan Hand Group including Messrs F.J. Nugan

[2.1] and M.J. Hand [2.2], neither of whom appeared. Again in mid 1979

he visited Hong Kong to meet Messrs Nugan and Hand but they failed to

attend this meeting also. General Cocke then told them that they would

have to travel to Washington to meet him. He said that the expenses for

the two trips to Asia were not met by the Nugan Hand Group.®

General Cocke ultimately met Mr Hand in Washington and Mr Nugan some time

later. He told the Commission that he thought Mr Hand was a good

- 130 -

international banker and Mr Nugan was 'a very fine, qualified lawyer,

particularly a very fine tax lawyer1 1 1 . The latter was based' on his

observations of Mr Nugan1s handling of a legal problem concerning the

Ringling Brothers and Barnum & Bailey Circus.®

2.13.5 In a letter dated 19 April 1979 to Mr Hand Admiral Yates stated

that General Cocke would receive US$2 000 per month plus commission on

any business he brought to the Group. In evidence however Admiral Yates

said General Cocke was not paid for his consultancy by the Nugan Hand

Group but gave such assistance as a favour to him (that is Admiral

Yates) Mr Houghton said General Cocke had mentioned to him that the

Nugan Hand Group owed him US$60 000 for telex and other expenses relating

to the running of the Washington office.^ General Cocke told the

Commission about his financial arrangements with the Group. He said the

payments for office space were accumulated in Hong Kong and General Cocke

was issued with certificates of deposit issued by the Nugan Hand Bank in

the Cayman Islands which were now worthless. General Cocke claimed he 12

never received any other payment from the Nugan Hand Group.

Endnotes

1 CT24597, Cocke; CD4426 folios 3-4, Cocke biographical information ■ 2 CT24597-98, Cocke; CD4426 folios 3-7 3 CD1120 folio 1, JTP ROI Cocke 20/11/82 4 CT24595, Cocke

5 CT24258, Yates

6 CT24596, Cocke

7 CT22577, Houghton

8 CT24594-96, Cocke; CD1120 folio 1 9 CT24603-04, Cocke

10 CD2026 folios 82-83, Letter Yates/ Hand re Cocke 19/4/79 11 CT22578, Houghton 12 CT24594, Cocke; CD1120 folio 2

2.14 COLBY, William Egan

2.14.1 Mr William Egan Colby volunteered to give evidence to the

Commission. He was interviewed by the Commission in the course of its

inquiries in the United States in January 1985.

- 131 -

2.14.2 Mr Colby is a former Director of the United States Central

Intelligence Agency ('C.I.A.'). He worked for the Office of Strategic

Services (the predecessor in some ways of the C.I.A.) during World War II

and joined the C.I.A. in 1950. In 1962 he became Chief of the Far East

Division of the C.I.A. In 1968 he went to Vietnam for the State

Department with the rank of Ambassador. He returned to the United States

in 1971 and became Executive Director of the C.I.A. In September 1973 he

was sworn in as the Director of the C.I.A., and remained in that position

until January 1976.1

2.14.3 After leaving the C.I.A. Mr Colby joined the legal firm of Reid &

Priest. Mr Colby said that it was through the legal firm that he came

into contact with the Nugan Hand Group. He said that approximately six

months before Mr F.J. NUgan's [2.1] death Mr W.J. McDonald [2.47]

contacted him and said the Nugan Hand group of companies needed some

advice about United States law. Mr McDonald then arranged for Mr Nugan to 2 meet Mr Colby. Mr Colby also met Mr M.J. Hand [2.2] who had been

referred to him by Mr McDonald to discuss the legal problems associated

with Mr Hand's wish to retain his United States passport although he was

an Australian citizen.3

2.14.4 Mr Colby in his interview with the Joint Task Force said that

Mr Nugan had requested him to research the 1 taxation consequences' for

Americans who invested in overseas ventures and the 'taxation

consequences' of both Messrs Nugan and Hand becoming resident aliens in

the United States. He was also asked to advise on the establishment of a

Refugee Resettlement Fund. Mr Colby believed the idea and finances

supplied for the Refugee Resettlement Program in the Turks and Cacios 4 Islands were attributable to Mr Hand.

2.14.5 Mr Colby said his firm received a US$10 000 retainer for the work

they were to undertake for the Nugan Hand Group. The retainer fee was

paid by a cheque drawn on 'a German bank' which was subsequently lost.

Despite repeated requests Reid & Priest did not receive a replacement

cheque. As a result an account has been submitted to the Official

Receiver in Hong Kong.5

- 132 -

2.14.6 Mr Colby told the Commission that he last saw Mr Nugan in January

1980 and told him that he would be travelling to South East Asia in March

1980 and suggested 'V7hy don't we get together if you happen to be in

Singapore or Hong Kong?1 2 3 4 5 . Mr Colby said he wrote the dates that he would

be overseas on his card and gave it to Mr Nugan. It was this card that

Mr Colby believes was found on the body of Mr Nugan at Lithgow on

27 January 1980.6

Endnotes

1 CT24613-14, Colby

2 CT24615-16, Colby

3 CT24299-300, Yates; CT24707-08, McDonald; CT24619, Colby 4 CT24618-19, Colby; CD1250 folios 4376-80 5 CT24631, Colby

6 CT24626-27, Colby

2.15 COLUNGS, Clive Leslie Hillary

2.15.1 Mr Clive Leslie Hillary Ceilings was born on 10 January 1937 in

London, England. He was educated at Hardy's Grammar School, Dorchester

between 1948 and 1954, then at the King Edward VII Nautical College until

1955 when he was employed as a deck officer. In 1957 he joined the Royal

Air Force and was discharged in 1959. He then worked in a family

business for twelve months and emigrated to Australia in 1960. He

entered the real estate business and in 1961 completed the course in Real

Estate Valuation and Practice at the University of Sydney. In 1962

Mr Ceilings commenced his own real estate company in Sydney and for the

next ten years worked in all facets of property development and

management. During this period he became director of a number of

companies and was made a Fellow of the Society of Real Estate Agents and

Valuers.

2.15.2 Mr Collings and Mr S.K. Hill [2.33] became associated in either

1970 or 1971 in a company called Freight Distribution Industries Ltd of

which Mr Collings was a shareholder and Mr Hill the accountant. On 2

Mr Hill's advice the company was eventually put into liquidation.

- 133 -

2.15.3 As a result of a real estate transaction Mr Collings came into

contact with the Australian Investment Management Corporation which he

said was the offshore company controlling the Fund of Australia [2.110].

In 1972 Mr Collings was recruited to the Fund of Australia Group by

Mr J.M. Gilder [2.25] and commenced employment as a representative

selling units in the property trust. Also working for the company were

Messrs P.M. Dunn [2.18], G.A. Edelsten [2.20], W. Hans [2.27], F.D. Ward

[2.73] and J.A. Marks (who later worked with Mr Collings in the Hong Kong

office of companies within the Nugan Hand Group). In September 1972

Mr Collings was sent to The Philippines by Fund of Australia and remained

there until 1974. It appears that Fund of Australia was illegally

carrying on business in The Philippines and Mr Collings commenced

proceedings to have the company legally registered. This occurred in May

1974. In July 1974 however, 'they [the company] stopped redemptions' and

Mr Collings' commission ceased so he had 'absolutely no money'.^

2.15.4 Following his experience with Fund of Australia Mr Collings

learned from Mr Ward that Mr Hans was working for the Nugan Hand Group.

Mr Hans introduced Mr Collings to Mr G.T. Shaw [2.65], In a statement to

the Joint Task Force on 10 December 1981, Mr Collings said he was

employed in September 1974 by Messrs F.J. Nugan [2.1] and M.J. Hand [2.2]

as 'an investment representative on a commission basis selling silver

bullion and gold coins on behalf of Pacific Silver Commodities [2.104]

and Macquarie Coin Dealers [2.104] ... In November the same year Hand

and Nugan told me of a proposed mutual fund called ' In gold Growth' which

they had formed ...'.^ Subsequently, Mr Collings induced Mr Ward to

join the Nugan Hand Group specifically because Messrs Nugan and Hand were

intending to set up the 'mutual fund called Ingold Growth'. According to

Mr Collings, Mr Ward was a 'real expert in handling representatives

working o v e r s e a s ' M r Collings told the Commission that he encouraged

people such as Messrs Ward, Dunn and Edelsten to join the Nugan Hand

Group because they 'were some of the greatest salesmen in the world'.®

2.15.5 On 31 December 1974 Mr Collings arrived in Hong Kong, initially

to sell units on behalf of the 'Ingold Growth' fund. One depositor with

'Ingold Growth' was the Wing On Group which invested US$10,000. ^ Its

- 134 -

Chief Manager, Dr A. Kwok [2.36], met Mr Ceilings and according to

Mr Dunn, Mr Collings developed a very close relationship with

Dr Kwok.® In 1975 Mr Collings was instructed by Mr Nugan to cease

selling on behalf of the fund (due to the instability in the price of

gold) and to begin collecting deposits on behalf of Nugan Hand Inc.

Panama [2.95]. Mr Collings did so and issued certificates of deposit on g behalf of that company.

2.15.6 About this time, Mr Collings also began collecting deposits on

behalf of Nugan Hand Ltd [2.97]. In April 1975, Mr Collings approached

Dr Kwok 'with a view to discussing possible ways in which the Wing On

Bank could assist Nugan Hand Ltd by acting as its agent for the

transmission of funds from Hong Kong depositors to Nugan Hand Ltd in

Australia, and by giving (at its sole discretion) security to depositors,

who requested security'^® [3.3.40]. During these discussions (which

took several months), Mr Collings received advice about the matter from

Messrs terd and Hill in Sydney. Mr Collings claimed that the guarantee

arrangement with the Wing On Bank 'was probably the whole reason for

Nugan Hand who were developing internationally' Dr Kwok informed

the Commission that the agreement was finalised during July 1975 and that

he 'permitted Wing On to enter into the arrangements with NHL [Nugan Hand

Ltd] in return for commitment fees and commissions payable by NHL [Nugan

Hand Ltd ], and also for the purpose of generating foreign exchange 12 business for Wing On' . In a memo to Mr Ward, dated 11 September

1975, Mr Collings stated he had collected US$1 million in deposits in

four weeks and said 'As long as Albert [Kwok] keeps on taking our paper, 13 you will all smile anyway' [see also 4.1.27-4.1.55].

2.15.7 Mr Collings said that the deposits were collected by Nugan Hand

(Hong Kong) Ltd as a representative office on behalf of both Nugan Hand

Ltd and the Nugan Hand Bank [2.106], and therefore Nugan Hand (Hong Kong)

Ltd was not required to be licensed by the Hong Kong banking

14

regulations. In July 1976 Nugan Hand (Hong Kong) Ltd obtained a

deposit taking licence from the Hong Kong banking authorities. However,

according to Mr Collings, that company did not commence collecting

deposits until late in 1977 and in fact, only collected approximately

- 135 -

twenty deposits on its own behalf.^ This was due to the restrictions

imposed by the Hong Kong banking regulations (including a 15 per cent

withholding tax applied to interest earned on deposits).·1 ·6

2.15.8 In July 1976 the Nugan Hand Bank [2.106] was incorporated in the

Cayman Islands."1^ Mr Col lings' efforts were then mainly directed to

collecting deposits for the Nugan Hand Bank because of the restrictions

on the Hong Kong company and also because the Wing On Bank guarantee

arrangement did not apply to deposits collected on behalf of the Nugan

Hand Bank. This meant lower overheads in that the commission charged by

the Wing On Bank was not applicable.· * · 6

2.15.9 Mr Ceilings said that during a visit to Sydney in 1976, Messrs

Nugan and Hand had told him they wanted to get somebody who could really

'drive the bank along' and he had suggested Mr J.M. Gilder [2.25],

Messrs Nugan and Hand subsequently employed Mr Gilder to help promote the IS bank and 'find the right people' . Mr Col lings said that in 1976 both

he and Mr Hill were told by Messrs Nugan and Hand ' the two of you are

20

going to be equal with us on everything outside Australia'.

2.15.10 In February 1977 Mr Collings went to Thailand and managed the

office there for nine months before being summoned to Hong Kong by

Mr Hand to manage that office as Mr Hand was dissatisfied with the

21

current manager, Mr Dunn.

2.15.11 In August 1979 Mr Collings was offered a position as managing

director and deputy chairman of a company engaged in developing new 2? engine technology. He subsequently resigned from the Nugan Hand 23 Group on 12 October 1979. When he gave evidence to the Commission he

was working in Hong Kong as a director of an information company.

2.15.12 During his employment with the Croup, Mr Collings was a director

of Nugan Hand Ltd, Nugan Hand (Hong Kong) Ltd, Nugan Hand International 74

Holdings Pty Ltd [2.96] and the Nugan Hand Bank.

- 136 -

Endnotes

1 CD7153 folio 45, Collings resume 2 CT22777-78, Collings 3 CT22768-69, CT22774-75, Collings 4 CD4445 folio 62, Statement Collings/JTF 10/12/81 5 CT22779-80, Collings 6 CT22768-69, Collings 7 CT22781, CT22783, CT22791, Collings; CD6491 folio 19 8 CT22460, Dunn

9 CT22781-82, Collings 10 CD11529 Letter Kwok/Commission 16/4/85 11 CT22789, Collings

12 CD11529 folio 86

13 CD6509 folio 464, Memo Collings/Ward 11/9/75 14 CT22784, Collings

15 CT22805, Collings

16 CT22822, Collings

17 CT22805, Collings

18 CT22819, CT22822, CT22825-26, Collings 19 CT22810-12, Collings 20 CT22809, Collings

21 CT22860, Collings

22 CD10835

23 CD3736

24 CT22809, Collings

2.16 CONRICK, Edward Thomas

2.16.1 Mr Edward Thomas Conrick is a chartered accountant, holding a degree in Commerce. From 1 July 1979 until 25 November 1983 Mr Conrick

was employed by B.W. Atkinson & Associates, Chartered Accountants.

2.16.2 On 16 February 1980, Mr Q.D. George [2.24] and Mr M.J. Moloney

[2.48] engaged the services of B.W. Atkinson & Associates to write up a

set of accounting records for Mars Road Investments Pty Ltd [2.88] from

its date of incorporation, 11 October 1978, up to the latest possible 2 date. Mr Conrick said he received instruction from Mr Atkinson

concerning the work to be done for the new client. Mr Conrick was

'pretty certain' Mr Atkinson said: 'Quentin George is a young solicitor,

he has been employed by the Nugan Hand group'. Mr Conrick commented that

Mr George 'was apparently just a puppet director of one of those

companies, and he was very concerned that he would be seen as being

- 137 -

negligent in complying with the requirements of the Companies Act as a

director of Mars Road1.

2.16.3 Mr Conrick worked from records provided to him by Mr George

including cheque butts, cheque requisitions, deposit books, bank

statements, presented cheques and a file 'in the nature of office

expenses ...'. He also sought and received explanations from Mr George

where insufficient supporting data was available.'* Mr George said in

evidence that he did not give Mr Conrick the blue and red cash books kept

or held by Mr G.T. Shaw [2.65], because he was of the opinion that they 5

were already missing from the Nugan Hand Group records. Ultimately,

Mr Conrick produced a cash summary highlighting payments and receipts of

Mars Road Investments. He also produced the beginnings of a journal, a

trial balance and a pro forma ledger. ® Mr George said that the set of

accounts Mr Conrick drew up for Mars Road Investments was incomplete

because of the lack of documentation.^

2.16.4 In a letter dated 6 May 1980, Mr Conrick reported his findings

to the directors of Mars Road Investments. These findings included: "The

company did not follow proper procedures for receipting monies deposited

with it nor has sufficient documentary evidence been produced to us to

explain the nature of receipts banked to the company's account.

Substantial cash sums were both deposited and withdrawn from the

company's bank account which have been posted to a Cash Suspense Account

in the Ledger pending further clarification ... There is virtually no

information available supporting these cash transactions except in a few

instances the names of individuals to whom cash cheques were apparently

issued have been noted on cheque butts.'®

2.16.5 All accounting records used by Mr Conrick were returned to the

directors at that time and his association with the Nugan Hand Group 9

ceased on the presentation of his report.

- 138 -

Endnotes

1 CT19503, Conrick

2 CDS477 folio 1, Letter B.W. Atkinson and Associates/Mars Road Investments Pty Ltd 6/5/80 3 CT19508, Conrick

4 CT19508-10, Conrick 5 CT20839, George

6 CT19516-18, Conrick 7 CT20823, George

8 CD5477 folio 1

9 CT19517-18, Conrick

2.17 COURTNEY-SMITH, George Anthony

2.17.1 Mr George Anthony Courtney-Smith was born on 3 November 1923 and

now resides in Sydney. When he gave evidence to the Commission he said

that he was a professional punter.1

2.17.2 In 1942 Mr Courtney-Smith went to New Guinea as a member of the

Australian Army. He remained in New Guinea after the war and managed a 2

rubber and coconut plantation, returning to Australia in 1959.

Mr Courtney-Smith was employed by Legal and General Insurance from 1959

to 1966 as an insurance representative. He met Mr J.M. Gilder [2.25] who

was also employed at Legal and General during this period.1 In 1965

Mr Courtney-Smith was involved in land developments in New South Wales

and South Australia.

2.17.3 Mr Courtney-Smith first met Mr F.J. Nugan [2.1] early in 1977.

He was requested by Mr Gilder to assess whether Mr Nugan was an

alcoholic. The reason put forward for this request was that

Mr Courtney-Smith had an ongoing interest in the treatment of alcoholism

and a long association with the Langton Clinic in Sydney which was

concerned with such matters. Mr Courtney-Smith's opinion was that

Mr Nugan was not an alcoholic, but that he was a person highly dependant 4 on a large intake of alcohol.

2.17.4 Subsequent to the meeting with Mr Nugan, Mr Courtney-Smith was

invited by Mr Gilder to become a representative of the Nugan Hand Bank

- 139 -

(Swiss Pacific Bank and Trust Company as it was then known) [2.106] and

he commenced a contract of employment with that company in April

1977.^ Before commencing work as a representative, Mr Courtney-Smith

received instructions as to policy and office procedures. He was also

provided with Nugan Hand literature, including a manual of operations.

He then travelled to the Cayman Islands and spoke with Mr H.M. Rutter

[2.61], an attorney whose services were retained by the Nugan Hand Bank

in the Cayman Islands. Mr Rutter told him that the Bank was registered

and was functioning according to law.6

2.17.5 Mr Courtney-Smith commenced work as a Nugan Hand Group sales

representative in Argentina in June 1977. He remained in Argentina until

August 1978, except for his return to Australia during the period from

December 1977 to February 1978. His aim in Argentina was to generate

trading transactions between South America and other countries, with a

view to eventually attracting cash deposits from his trade clients to the

Nugan Hand Bank. He said that he was totally unsuccessful in achieving

these aims as he did not attract any trade clients to the Nugan Hand Bank

and collected only two deposits of minimal amounts. He attributed his

lack of success to the inability of Nugan Hand to assist clients in the

financing of trade deals and to compete with the services and facilities 7

offered by the larger established banks in Argentina.

2.17.6 Mr Courtney-Smith said that during 1977 and 1978 he did not

receive a monthly salary from the Nugan Hand Bank. His contract of

employment stated that he would receive a percentage of brokerage in

respect of deposits, or a percentage in respect of trade deals.

Mr Courtney-Smith leased an office in the offices of Tedin and Co,

Attorneys in Buenos Aires for which he was reimbursed by the Nugan Hand

Bank.® The Nugan Hand Group paid for Mr Courtney-Smith's return air

fare between South America and Australia, and most, but not all of his

expenses; he told the Commission that he was ultimately 'out of

9

pocket'.

2.17.7 Upon his return to Sydney in August 1978, Mr Courtney-Smith

worked for the Nugan Hand Group on a very casual basis.'1 '0 In April

- 140 -

1979 he commenced work for the Group in Hong Kong as a sales

representative. His job was to collect deposits from Hong Kong residents

and companies, and if possible to generate trading transactions."*'"*' He

said he had probably thirty or forty clients in Hong Kong and estimated

he collected a total of thirty deposits on behalf of the Nugan Hand Bank

and Nugan Hand (Hong Kong) Ltd [2.94], the local deposit taking company.

He also serviced existing clients. Clients came into the Hong Kong

office to make deposits after seeing advertisements placed by the Group

in the local pre.ss. Mr Courtney-Smith showed potential depositors the

monthly reports issued by the ANZ Banking Group in respect of the Nugan 12 Hand group of companies.

2.17.8 After the resignation of Mr C.L. Collings [2.15] in September

1979, Mr Courtney-Smith became jointly responsible, with Mr J. McArthur

[2.46], for the Group's operations in Hong Kong."*^ In late 1979 or

early 1980, Mr D.E. Beazley [2.7], vAo had recently been appointed Chief

Executive of the Nugan Hand Bank, visited Hong Kong and asked

Mr Courtney-Smith whether he would return to Australia to promote the

relationship between the Bank and Australian trading banks.

Mr Courtney-Smith requested some conditions be met before departure and 14

received no answer from Mr Beazley. Later, Mr Courtney-Smith was

advised by Mr Beazley that his services were no longer required. He

ceased to be employed by the Nugan Hand Group in early February 1980.

2.17.9 Mr Courtney-Smith1s contract of employment in Hong Kong was with

Nugan Hand Management Services Ltd [Appendix B]. Pursuant to this

contract, he received a salary and an accommodation allowance, but no 15 commission. He later made a claim on the Group for holiday and

severance pay and other expenses which he had incurred but no payment was

forthcoming."*"6

2.17.10 In April 1980 Mr Courtney-Smith was contacted by Mr McArthur who

stated that there were difficulties concerning the repayment of

depositors' funds and asked him if he would assist in answering

depositors' inquiries on an honorary basis. Mr Courtney-Smith agreed and

spent three or four weeks answering clients' queries. During this time

- 141 -

he was interviewed in the Kong Kong office on several occasions by

Mr Robertson of the Hong Kong Registrar-General1s Department.

Mr Courtney-Smith returned to Australia in May 1980.

2.17.11 In April 1979 Mr Courtney-Smith invested A$35 000 with Illarangi

Investments Pty Ltd [2.P5], This money was the proceeds of the sale of

his home. He said he made this investment because he was told by Mr S.K.

Hill [2.33] he would receive twenty percent interest on the

investment."*"® When he gave evidence to the Commission he had received

no return on his investment and had lodged a claim with the liquidator of 19 Illarangi Investments Pty Ltd.

Endnotes

1 CT22085, Courtney-Smith 2 CT22089, CT22101, Courtney-Smith 3 CT22101, Courtney-Smith 4 CT22102-05, Courtney-Smith 5 CT22105-06, Courtney-Smith; CD6123 folios 5-9, Courtney-Smith

employment contract 14/4/77 6 CT22090-91, Courtney-Smith 7 CT22091, Courtney-Smith 8 CT22107-08, Courtney-Smith 9 CT22108-10, Courtney-Smith 10 CT22092, Courtney-Smith 11 CT22092-93, Courtney-Smith 12 CT22109-13, Courtney-Smith 13 CT22094, Courtney-Smith 14 CT22094, Courtney-Smith 15 CT22109, Courtney-Smith 16 CT22095, Courtney-Smith 17 CT22095, Courtney-Smith

18 CT22119, Courtney-Smith; CD10635, documents produced by

Courtney-Smith

19 CT22097, Courtney-Smith

2.18 DUNN, Peter Milton

2.18.1 Mr Peter Milton Dunn was born on 12 September 1933 in

Gillingham, Kent, England. Between 1960 and 1965 he was employed with a

United Kingdom management consulting firm and its Australian subsidiary.

In 1966 he established his own management consulting company, Peter Dunn

- 142 -

& Co, in Australia and was self employed until 1971. During 1971 to 1975

Mr Dunn worked as a commission agent for the Fund of Australia [2.110],

in Europe, North and South America and Australia."*·

2.18.2 In 1975 Mr Dunn was introduced to Mr F.J. Nugan [2.1] by Mr F.D.

Ward [2.73], and was offered employment with the Nugan Hand group of

companies. He initially declined this offer because he considered that

the structure of the organisation was too loose, and that many of its

employees were not professional people. He eventually joined Nugan Hand

Ltd [2.97] in September 1975. He was subsequently employed as a sales

representative and held an investment representative's licence on behalf 3 of Nugan Hand Ltd. His main function was to attract corporate

investors to Nugan Hand Ltd. In this regard he said he enjoyed some

early success; he estimated in evidence before the Commission that he was

responsible for attracting deposits in Australia worth between $4 million

and £6 million in a three month period.'* Mr Dunn also sought deposits,

on Mr Nugan1s instructions, from Sydney councils. [See also Interim

Report Ho. 2 paragraphs 4.30 and 6.20-6.23.]

2.18.3 Perhaps as a result of his apparently spectacular early efforts,

in February 1976 he was appointed Managing Director of Nugan Hand Ltd in

Sydney. However, shortly afterwards he relinquished this position, the

new Mercedes car and 'all the perks with it', when Mr M.J. Band [2.2]

returned from South Africa to resume his involvement with Nugan Hand

Ltd.6 Mr Dunn continued to collect deposits on behalf of Nugan Hand

Ltd after Mr Hand's return, but operated from his home rather than the

Nugan Hand Ltd offices. The reason advanced by Mr Dunn for his decision

to work from his home was that he perceived the real power in Nugan Hand

Ltd was retained by Messrs Nugan and Hand. He felt it was inappropriate

to be styled Managing Director when he was 'nothing more than a glorified 7 office boy at that time'.

2.18.4 Mr Dunn was appointed a director of the Nugan Hand Bank [2.106]

on 21 July 1976, and a director of Nugan Hand (Hong Kong) Ltd [2.94] on

9 August 1976.® In approximately August 1976, at the request of

Messrs Nugan and Hand, Mr Dunn went to South East Asia for the purpose of

- 143 -

seeking deposits on behalf of the Sydney and Hong Kong offices of Nugan 9 Hand. He was based in Hong Kong but travelled throughout South East

Asia. He told the Commission that he was not successful. About February

1977, Mr C.L. Collings [2.15] moved to Thailand and Mr Dunn temporarily

replaced him as Manager of the Hong Kong office. His main job in Hong

Kong was to attract deposits to the Nugan Hand Bank and Nugan Hand (Hong

Kong) Ltd from local financial institutions, deposit-taking companies and

banks. He also attempted, without success, to negotiate trading

transactions on behalf of Nugan Hand.·*"*"1 On 8 March 1977 Mr Dunn was

appointed a director of Swiss Pacific Trade Ltd. (This company

changed its name to Dartman Ltd on 19 August 1977.)

2.18.5 Mr Dunn submitted his resignation to Mr Hand in September 1977.

He told the Commission that he resigned because he felt he should have

been a partner, and that his negotiations with Messrs Nugan and Hand to

that end 'kept falling down'. He said that both Messrs Nugan and Hand 12

encouraged him on different occasions to become a partner. Documents

in the possession of the Commission indicate that Mr Dunn resigned his

directorships of Nugan Hand Ltd, the Nugan Hand Bank and Nugan Hand (Hong

Kong) Ltd on 6 September 1977, and his directorship of Dartman Ltd on

6 October 1977.^

2.18.6 Mr Dunn told the Commission that during the period of his

directorships of the above companies he had little or no understanding of

his responsibilities and statutory duties as a member of the board of

directors. He said that he took no steps to satisfy himself as to the

correctness of the annual accounts published by Nugan Hand Ltd for the

period ending 31 January 1977. Mr Dunn said that during the period when

he was Managing Director he had no access to Mr Nugan's records as

Mr Nugan said he believed he retained some protection under the law as

long as he denied others access to the files. Mr Dunn also said that he

took no steps in his capacity as director of Nugan Hand (Hong Kong) Ltd

to assure himself that the books of that company were properly kept or

that its accounts were accurate. In relation to his role as a director

of the Nugan Hand Bank, he told the Commission he believed that he was

asked to lend his name as a director because he was a relatively

- 144 -

presentable person who 'presented something of a clean cut image for the

Bank', and that he had no other function as a director.14

2.18.7 The commission and salary arrangements applicable to Mr Dunn

during his employment with Nugan Hand Ltd were extremely generous. He

earnt approximate]y $50 000 during the period September 1975 to July

1976, and approximately $60 000 during the period August 1976 to February

1977. In addition he incurred 'expenses' of approximately $40 000 in the

latter period. The arrangement with Mr Nugan was 'a very loose

arrangement'.1" During his term as manager of the Hong Kong office,

Mr Dunn received monthly remuneration of US$2 000, his own commission and

an over-riding commission in respect of the deposits collected by

representatives under his direction. The commission rate applicable to

him was as follows:

10% on 7 year deposit

9% on 5 year deposit

8% on 4 year deposit

7% on 3 year deposit

5% on 2 year deposit

3% on 1 year deposit

2% on 6 months deposit

1% on 3 months deposit1®

Mr Dunn received US$77 164 in commission during the period March -

September 1977.17

2.18.8 Mr Dunn subsequently joined Ward Pierce International in March

1978 and on 6 July 1978 became a director of Ward Knight & Dunn Ltd. He

resigned from this position on 24 September 1979 and was a self-employed

sales consultant when he gave evidence to the Commission.1®

- 145 -

Endnotes

1 CT22444, CT24025-26, Dunn; CD10321 folios 20-21, Dunn's

2 3 4 5 6 7

8

Curriculum Vitae written by Nugan to the Governor of Grand Cayman; CD10969, Letter Fund of Australia Ltd/Commission 24/9/84 CT22444-45, Dunn CD2303 folio 14, Dunn/CAC application for licence CT22455, Dunn CT22447-52, Dunn CT22455, Dunn CT22455, CT22458, CT24457, Dunn

CD8857 folio 70, 'Alphabetical list of events re NH Inquiry' stating Dunn's appointments as Director 9 CD4821 folio 114, Memo Nugan and Hand/All staff re Dunn's

appointment 30/7/76 10 11 12

13

CT22458-64, Dunn CD10007 folio 3, Dartman Ltd company information CT22462, Dunn; CD6380 folio 1

CD6112 folio 3, Letter Dunn/Hand re Dunn's resignation from NHHK directorship 6/9/77; CD7009 folio 3, Letter Dunn/Hand re Dunn's resignation of directorship from NHG 6/9/77 ; CD10007 folio 3 14 15

16

CT24026-29, CT24034-35, Dunn CD3015 folio 18-19, Dunn evidence to CAC 12/3/82 CD6523 folios 4-8, Handwritten memo from Dunn re his overseas appointment 14/2/77; folio 13, Summary of points agreed between Hand and Dunn circa 21/2/77 17 18

CD6112 folio 8 CT24025, Dunn

2.19 EBERT, Manfred

2.19.1 Mr Manfred Ebert neither gave evidence before the Commission nor

was he the subject of other witnesses' evidence. Thus, the information

herein relies solely upon documents produced to the Commission in the

course of its inquiry.

2.19.2 Mr Ebert was born on 27 May 1929 in Hainichen, Saxony, West

Germany. He was employed by the DGL-Bank, West Germany in 1956 and was

Head of the General Administration and Finance Department between 1966

and 1978. He was a member of the board of directors between 1963 and

1967.1

2.19.3 Mr Ebert joined F.A. Neubauer Bank, Hamburg [2.109] on 1 June

1978 as Head of the Finance and Bookkeeping Department.2 His salary

- 146 -

was DM5905 per month, which included health, unemployment and pension

insurance.^

2.19.4 A Manual of Reporting, Operations and Procedures for

F.A. Neubauer Bank, prepared by Miss E.L. Thomson [2.72] on 31 October

1978, includes an organisation chart showing Mr Ebert as Director of

Accounting and Office Manager, responsible to Miss Thomson in Hong Kong 4

and Mr A.P. Hewitt [2.31], (NHI Group Representative) in Hamburg. The

manual also detailed Mr Ebert's essential daily routines and described

his position as being in charge of financial and statistical matters and

reporting in respect of those matters. In addition, he was in charge of 5

the F.A. Neubauer office in the absence of Mr Hewitt. A memo from

Mr Hewitt to Mr J.M. Gilder [2.25] indicates that Mr Ebert was a

signatory to the Nugan Hand International Holdings Ltd [2.96] account

with the Deutsche Bank, Hamburg.®

Endnotes 1 2 3 4 5 6

1 CD10241 folio 12, Ebert's curriculum vitae 2 CD10241 folio 12

3 CD1587 folio 67, Schedule of FAN employees and their salaries 4 CD5852 folio 4, NHIH procedures manual for F.A. Neubauer Bank, communication and reports chart 5 CD5852 folios 6-7, Description of Ebert's position 6 CD8475 folio 48, Memo Hewitt/Gilder re NHIH signatures 26/10/78

2.20 EDELSTEN, Graham Arthur Leighton

2.20.1 Mr Graham Arthur Leighton Edelsten was born in Canada on 22 June

1943. He studied Arts and three years of Law at Sydney University. He

deferred his final law year to work in the kangaroo fur manufacturing

business he had built up. Between 1969 and 1979 Mr Edelsten lived

overseas, first in Nigeria and from 1976 in London. He initially went to

West Africa as a salesman for Fund of Australia [2.110] where his job was

to sell shares in 'Australian property unit trust' to expatriates. In

1973 he formed a number of companies in various parts of the world

including Africa, United Kingdom, Italy and Switzerland. Those companies

- 147 -

were involved in the transportation and distribution of consumer goods.

Mr Edelsten formed property development companies in Noosa, Queensland

during the 1970's and while he was overseas these were conducted by a

partner."*

2.20.2 While living in London Mr Edelsten spoke with Mr J.M. Gilder

[2.25] regarding the possibility of working for the Nugan Hand Group.

Both men had previously worked together in the Fund of Australia group of

companies. Mr Edelsten commenced work with the Nugan Hand Group in June

1979 operating primarily in the United Kingdom and Europe. While in

England he was involved in the negotiations for the acquisition of London

Capital Securities Ltd [2.111] by the Nugan Hand Group.**

2.20.3 On Mr Edelsten's return to Australia, Mr Gilder arranged a

meeting between Mr Edelsten and Mr F.J. Nugan [2.1] at which Mr Edelsten

was offered the job of General Manager of Nugan Hand Ltd [2.97]. After

reading the balance sheet and obtaining a report on Nugan Hand Ltd from

Dun & Bradstreet, Mr Fdelsten accepted the position, commenced work in

September 1979^ and remained there until January 1980.4 Mr Edelsten

did not believe his position as General Manager was ever formalised as he

never received any signatory powers nor did he have access to bank 5 records. He informed the Commission he did not have a great deal to

do and was 1 really General Manager of nothing'.

2.20.4 While working for Nugan Hand Ltd, Mr Edelsten said part of his

work was to develop the money market business; this he did by obtaining

deposits from some large corporations.7 He enrolled at the Security

Institute to learn the money market business. Mr S.K. Hill [2.33] was to

assist him but was seldom available.® It appears from available

documentation that while Mr Edelsten was General Manager of Nugan Hand

Ltd he introduced the Nugan Hand Commodity Trading Syndicate, a

professionally managed commodity syndicate, and attempted to introduce

the Nugan Hand Real Estate Syndicate or Real Estate Portfolio Management

section both designed to manage portfolio investments in Australian real g estate. Another of Mr Edelsten's duties was the supervision of

certain executives, including Mr M. Healey [2.29], Mr R.M. Sheslow [2.66]

- 148 -

and Mr J.R. Rush [2.60] as well as the secretarial pool on the 4th floor

at 55 Macquarie Street, Sydney.10

2.20.5 After the death of Mr Nugan, Mr Edelsten attended a number of

meetings at the Nugan Hand Group offices and was appointed Managing

Director on 4 February 1980 following the resignation of Mr Gilder.11

[For a description of the weeks following Mr Nugan's death and

allegations concerning the removal and destruction of the Nugan Hand

Group records refer to Part 3 Sections 8 and 9.]

2.20.6 Mr Edelsten received a salary of approximately 62 000 per month

while he was General Manager of Nugan Hand Ltd. This was paid through

Nugan Hand (Dealers) Pty Ltd [2.93]. He also received two commission

payments for money market business he generated. This was an amount

between 63 000 and 65 000 and was paid into his account with

F.A. Neubauer Bank [2.109],12

2.20.7 Mr Edelsten wrote to the Board of Directors of Nugan Hand Ltd

(by then renamed Nuhan Ltd) in mid April 1980 and advised them he would

only remain as Managing Director of the company until he had located some

documents for the Corporate Affairs Commission and would then formally

tender his resignation.11 Mr Edelsten's taxation group certificate

shows he was employed until 23 April 1980.14 He currently lives and 15 works in Queensland.

Endnotes 1

1 CT18709-11, Edelsten? CD6400 folios 12-15, Edelsten's curriculum vitae 2 CD968 folio 223, Memo Gilder/all Staff introducing Edelsten 21/6/79; CD10262 folio 230, Telex Edelsten/Gilder re London

Capital Securities 3/7/79; CD11441 folio 3, Interview of Edelsten by Commission investigators 3 CT18704, CT18711-13, Edelsten 4 CT20464, Edelsten 5 CT20479, Edelsten

6 CT18704, CT20465, Edelsten 7 CT18708, Edelsten

8 CT18705, CT20465, Edelsten

- 149 -

9 CD167 folios 14-20, Memo Edelsten/Hand re ancillary Products of NHL 30/11/79 10 CT18704-06, CT20466, Edelsten 11 CT19974, CT20023, Moloney; CT20111-12, Pearce; CT21929, Hill 12 CT18706-08, CT18713, CT20469, Edelsten 13 CD1250 folio 2180, Letter Edelsten/Nuhan 17/4/80 14 CD10083, Edelsten, Taxation Returns 15 CT18703, Edelsten

2.21 EVANS, Neil

2.21.1 Mr Neil Evans was born on 1 November 1937 in Brisbane. He told

the Commission that his present occupation is that of a professional

punter. Mr Evans has no formal qualifications. He has held the position

of State Manager for an Australian publishing firm in Brisbane. In the

early 1970's, he commenced his own business as a broker for tax

schemes.

2.21.2 Mr Evans first met Mr F.J. Nugan [2.1] in 1973 and over the next

four years dealt with him on a number of occasions in relation to the tax 2

problems of various clients of Mr Evans. Mr Nugan introduced Mr Evans

to Mr M.J. Hand [2.2] in mid 1974. Mr Hand subsequently informed

Mr Evans that he and Mr Nugan intended to establish a bank called the

Swiss Pacific Bank and Trust Co. (which later changed its name to the

Nugan Hand Bank [2.106]) and recommended that he apply for a position in

an overseas office of the Bank. Mr Evans later submitted an application

for a position advertised in "The Australian' newspaper and was

interviewed by Mr J.M. Gilder [2.25] at the Sydney office of Nugan

Hand.6

2.21.3 In February 1977 Mr Evans was employed as a Nugan Hand sales

representative^ and travelled to Thailand to establish a Nugan Hand

office in Chiang Mai. Mr Evans initially conducted business from his

Chiang Mai apartment. He later acquired an office adjacent to that of

the United States Drug Enforcement Agency in Chiang Mai6 . He told the

Commission it was put to him by Mr Hand that he should seek out deposits

for the Nugan Hand Bank from people who were involved primarily in the

drug trafficking trade.^ Mr Evans said he was responsible to Mr Hand

and was instructed to liaise only with him.6

- 150 -

2.21.4 Mr Evans said that, at the suggestion of Mr Hand, he made his

initial approaches to several American tobacco companies in the

Chiang Mai area, with a view to arranging re-invoicing transactions

through Hong Kong on their behalf, and obtaining deposits for the 9 Bank. Mr Evans told the Commission he was successful in obtaining

deposits from about seven clients in Bangkok and three in Chiang Mai but

was unable to estimate the total amount of deposits collected by him10

[see paragraphs 6.62 to 6.75]. Mr Evans said he periodically received

telexes from Hong Kong informing him of the prevailing rates of interest

offered by the Bank. "*"* He told the Commission it was his practice to

advise Mr Hand and Mr R.A. Pulger-Frame [2.59] in Hong Kong each time a

deposit was about to be made. "*"^ He said Mr Pulger-Frame arranged the

physical transfer of the deposit from Bangkok to Hong Kong. In his

evidence to the Commission Mr Pulger-Frame has repudiated this

assertion."*"^

2.21.5 Mr Evans told the Commission he went to Singapore at Mr Hand's

request to meet representatives of the Moscow Narodny Bank, and discuss

with them an arrangement whereby the Bank would guarantee deposits

collected on behalf of Nugan Hand in Singapore. Nothing came of these

discussions. "*""

2.21.6 In July 1977, Mr Evans decided to leave Thailand and the employ

of Nugan Hand."*"® He told the Commission the reasons for this decision

were that he did not have a good relationship with Mr Collings [2.15], he

wished to be re-united with his family, and he felt he was in danger in 17 Thailand. Mr Evans obtained a doctor's certificate which falsely

stated he had hepatitis. He returned to Australia, advised Mr Gilder he

was ill, and telephoned Mr Hand to inform him he wished to quit the

Nugan Hand organisation. Mr Evans said he had no further contact with

the organisation."*"®

2.21.7 Mr Evans said in evidence to the Commission he obtained a work

visa for Thailand shortly before he departed Thailand in July 1977. For

the majority of the time that he was in Thailand, Mr Evans was working

illegally."*"9

- 151 -

2.21.8 Mr Evans' arrangement with Nugan Hand was that he was to receive

commission in respect of deposits collected and an amount to cover 20 expenses, but no salary. He told the Commission he received a total

of $60 000 in commission, the bulk of which was paid in cash to his

21

father in Australia. The balance of his commission was directed to 22

his bank accounts in Bangkok and Chiang Mai. He also received a

small amount from Mr Hand to cover expenses and this was banked to an 23 account with the Thai Military Bank.

2.21.9 Upon his return from Thailand, Mr Evans resumed his previous. 24

occupation as a broker for tax schemes. In early 1981 he appeared in

a televised program concerning Nugan Hand which was the subject of 25 defamation litigation.

Endnotes

1 CT18761-62, Evans

2 CT18761, Evans

3 CT18772-74, Evans

4 CT18778-79, Evans; CD1308 folio 3 JTF ROI Evans 6/1/81 5 Although Mr Evans told the Commission that he commenced

employment with Nugan Hand in February 1976, (CT18778) it appears from other evidence to the Commission, that the correct date is February 1977. Mr Evans told the JTF that his

commencement date was February 1977. (CD1308 folio 3) 6 CT18793, CT18819, Evans

7 CT18853, Evans

8 CT18786, Evans

9 CT18853, CT18861, Evans

10 CT18791-92, CT18883, Evans 11 CT18794, Evans

12 CT18824, Evans

13 CT18795-9, Evans

14 CT22695, Pulger-Frame 15 CT19063, Evans

16 CD1308 folio 25; Although Mr Evans told the Commission that he decided to leave Nugan Hand's employment in July 1976, (CT18832) it appears from other evidence to the Commission that the correct date is July 1977. Mr Evans told the JTF that his

employment terminated in July 1977. 17 CT18832, Evans

18 CT18833, CT18837, Evans 19 CT18909, Evans

20 CT18778-79, Evans

- 152 -

21 CT18888, Evans

22 CI18800-01, CT18814, CT18885, Evans 23 CT19062, Evans

24 CT18873-74, Evans

25 CT22401, CT22404, Evans

2.22 GALICEK, George Vaclav

2.22.1 Hr George Vaclav Galicek was born in Czechoslovakia on 19 May

1933. He is an accountant and economist. Before coming to Australia he

was employed in the International Trading Section of the Czechoslovakian

Ministry of Foreign Trade. He was in charge of overseas subsidiaries for

International Trade in Argentina from 1962 to 1965 and in Chile from 1966

to 1970. Mr Galicek arrived in Australia in 1972 and gained employment

with a meat exporting company. In 1975 he joined the Sydney office of a

South American company and later became a partner in that company.^

2.22.2 In December 1976, Mr Galicek answered an advertisement in a

Sydney newspaper. The advertisement was headed '$60,000 a year man' and

invited applications for positions as representatives for a 'small though

rapidly expanding Banking Group'. Mr Galicek replied to the Hong Kong 2

address listed and was contacted by Mr J.M. Gilder [2.25] in Sydney.

After being interviewed by Mr Gilder on two or three occasions, he

received a letter in March 1977 inviting him to join the Swiss Pacific

Bank and Trust Company (later known as the Nugan Hand Bank [2.106])

Shortly afterwards, Mr Galicek commenced that employment and for

approximately two months he attended seminars conducted by Mr Gilder on

the subject of banking. Mr Galicek was subject to Mr Gilder's

supervision throughout most of the period of his employment with the

Bank.^

2.22.3 Due to his previous experience in South America, Mr Galicek was

asked to visit Brazil, Argentina and Chile to determine whether the

opening of a Nugan Hand Group office in that region was a viable

proposition. Mr Galicek understood his initial role in South America was

to act as a broker in respect of trading transactions; he was to try to

locate companies and persons who had goods to sell and match them up with

- 153 -

buyers, and vice versa. He thereby aimed to earn commission for the Bank

and himself. He was instructed to send his trade enquiries to the Nugan

Hand Group offices in Sydney and Hong Kong. Mr Galicek also understood

he was to advise the persons that he contacted in the course of his trade 5

negotiations of the banking services offered by the Nugan Hand Bank.

2.22.4 Mr Galicek left Australia in September 1977 and travelled to

Brazil. After several weeks he decided that Brazil was not a suitable

place for the establishment of an office and travelled to Buenos Aires.

There he met Mr G.A. Courtney-Smith [2.17] who was also employed by the

Nugan Hand Group. Mr Galicek' s main activity in Argentina was to send

trade inquiries to the offices in Hong Kong and Sydney. He also

introduced Mr Courtney-Smith to many of his business contacts. ® At the

end of October 1977 Mr Galicek travelled to Chile where he contacted all

the people he knew and outlined the banking services of the Nugan Hand

organisation to them. He said he flooded the Sydney and Hong Kong

offices of the Group with trade inquiries and offers of exports, but no

trading transactions came to fruition by the end of 1977, nor had

Mr Galicek collected any deposits on behalf of the Nugan Hand Bank during

his first four months in South America.^

2.22.5 At the end of 1977 Mr Galicek returned to Australia to discuss

the South American situation with Messrs Nugan [2.1], Hand [2.2] and

Gilder.^ They were disappointed that no trading transactions had been

organised and were undecided whether to open an office in either

Argentina or Chile. Mr Gilder told Mr Galicek that if Mr Galicek could

come up with two small trade transactions, it would assist Messrs Nugan g

and Hand in deciding to open a South American office.

2.22.6 In February 1978 Mr Galicek returned to South America. He spent

most of 1978 in Chile. Again Mr Galicek forwarded many inquiries and

offers of exports to Mr J. McArthur [2.46] in Hong Kong and Mr Gilder in

Sydney*"® but was not successful in concluding any trade

transactions."*""*· Nor did he collect any deposits in South America

during 1978, although one Chilean sent a deposit direct to the Nugan Hand 12 Bank. Cn 24 October 1978 he registered the company name, Nugan Hand

- 154 -

13

(Chile) Inc. [Appendix B] but an office was never opened in Chile.

At the end of 1978 Mr Galicek returned to Australia.lz*

2.22.7 While employed in .South America, Mr Galicek received a monthly

retainer of US$1 500 from the Bank which also paid his air fares to and

from South America.15 By January 1979, Mr Galicek was overdrawn in

advances from the Bank to the extent of US$22 2 9 6 . 6 8 . This debt was 17

subsequently written off by Mr Nugan.

2.22.8 In 1979 Mr Galicek did not return to South America. He was

instructed to continue his South American trade negotiations from Sydney

by the use of telexes. He successfully organised some small trade

transactions and also collected deposits from some Australian residents.

Mr Galicek understood that these deposits were collected on behalf of the

Nugan Hand Bank.1 2 ^

2.22.9 In August/September 1979, Mr Galicek was sent to the Thailand

office to complete a transaction involving the export of rice from

Thailand to Chile.1® The transaction was completed in December 1979

and yielded a commission for the Group of US$39 000. Mr Galicek also 20

received commission in respect of the transaction. He returned to

Sydney in mid December 1979 but, at the request of Mr Hand, went back to

Thailand in January 1980, pending the arrival of a new Nugan Hand

representative.

2.22.10 Towards the end of torch or early April 1980, Mr Hand asked

Mr Galicek to return to Australia. He was informed that the company had

passed into provisional liquidation and that he should seek other 21 employment. Shortly afterwards he gained employment as an accountant 22 with a company in Sydney.

Endnotes

1 CT22004, Galicek; CD9846, Galicek statement to Commission 2 CT22016, Galicek; CD7142 folio 21, Galicek's reply to

advertisement

- 155 -

3 CD7142 folio 17, Offer of employment to Galicek 4 CT22005, CT22012, CT22016-17, Galicek 5 CT22027-29, Galicek 6 CT22006, Galicek; CD9846, Galicek statement to Commission

7 CD9846 folio 3

8 CT22006, Galicek; CD10554 folio B 9 CD9846, folio 3

10 CT22022, Galicek; CT22916, McArthur 11 CT22005-07, Galicek; CT22025, McArthur 12 CT22006, CT22022, Galicek; CD1934 folios 19-21, NHB list of

Australian clients 13 CD9846 folios 3-5; CD7664 folio 4, Corporate information for NH Chile 14 CT22006-07, Galicek 15 CT22023, Galicek; CD10544 16 CDS651 folio 6, NH Reps brokerage, expenses, statement of

balance owed to NHB 17 CT22031-32, Galicek 18 CT22007, CT22021, CT22033-35, Galicek; CD600 folio 82A, Minute Galicek/Gilder; CD1934 folios 3-5,

19 CT22007, CT220036, Galicek; CD8647 folio 52, Minute Galicek/Tan re outstanding expenses 20 CD8647

21 CT22008, Galicek

22 CT22003, Galicek

2.23 GEHRING, Robert Wallace

2.23.1 Mr Robert Wallace Gehring was born in Dayton, Ohio, United

States on 18 September 1946.^ He served in the United States Marines

from September 1964 to August 1968, spending the last three years in

Vietnam.2 Mr Gehring arrived in Australia in November 1968 on a

temporary entry permit and was not granted permanent resident status

until July 1975.^ Mr Gehring first met Mr M.B. Houghton [2.35] at the 4

Bourbon and Beefsteak bar and restaurant in 1968. He was later

employed by one of Mr Houghton's companies, Argus Investments Pty Ltd.

In November 1968 Mr Gehring commenced employment with the Bourbon and

Beefsteak bar and restaurant, initially as a trainee and later as a

manager.'’ Later, Mr Gehring became a wholesale butcher and the

proprietor of Gehring's Providers Pty Ltd, Pyrmont, Sydney.

2.23.2 Mr Gehring is a shareholder and director of numerous companies

controlled by Mr Houghton by way of a discretionary trust.7 While in

- 156 -

the employ of Mr Houghton, Mr Gehring met Mr M.J. Hand [2.1] and Mr M.J.

Moloney [2.48].®

2.23.3 In late 1979 Mr Gehring accompanied Mr Houghton on a trip from

London to the United States via Canada. Mr Gehring told the Corporate

Affairs Commission delegates that the purpose of his accompanying

Mr Houghton was to carry a suitcase containing a large amount of

9

money.· That allegation was put to Mr Houghton by this Commission.

Mr Houghton said he did take a large sum of cash and travellers cheques

between Singapore and London for the purchase of London Capital

Securities Ltd [2.111], These funds remained in London and were not

conveyed to the United States. Mr Houghton suggested that Mr Gehring

would not have been aware of this fact and probably presumed that the

suitcase still contained the funds.

2.23.4 In early March 1980, Mr Gehring with the assistance of his

employees, moved Nugan Hand Group documents from the AMP Centre to his

premises in Pyrmont where they were stored [see Part 3 Section 9].

Before his departure overseas Mr Hand stayed at

Mr Gehring's Pyrmont address.

Endnotes 1 2 3 4 5 6 7 8 9 1 0 1 1

1 CD1274 folio 121, JTF Dossier on Gehring 2 CD1559 folio 42, JTF Report on Gehring's immigration status 3 CD1559 folio 46

4 CD3608 folio 4, Gehring evidence to CAC 3/6/80 5 CT22599, Houghton; CD1559 folio 75 6 CT20197-98, Gehring 7 CT22521, CT22571, Houghton 6 CT20203, Gehring; CD3608 folio 11, Gehring evidence to CAC 3/6/80 7 CAC 7th Interim Report pp 554-56

8 CT22557-58, Houghton 9 CAC 7th Interim Report pp 554-56; CD5764 Gehring unsworn

interview with CAC 13/5/82 10 CT22557-58, Houghton 11 CD1274 folio 32, JTF ROI Gehring 3/6/81

- 157 -

2.24 GEORGE, Quentin Douglas

2.24.1 Mr Quentin Douglas George was born on 2 October 1953. He is a

solicitor now in private practice in Brisbane."*· Mr George first met

Mr F.J. Mugan [2.1] through a mutual friend and client in September

1976. From November 1976 to January 1977 and for the two subsequent

university Christmas vacations he was employed by Nugan Needham as a law

clerk. After completing his law degree in Perth, Mr George commenced 2

full time as a law clerk for Nugan Needham in January 1978. From June

to December 1978 he was absent from the practice without pay while

attending the College of Law in Sydney. Mr George was admitted as a

solicitor of the Supreme Court of New South Wales, with a restricted

practising certificate, on 21 December 1978. In February 1979 Mr George

was employed by the firm of solicitors, Nugan & Company as a

solicitor.® In November 1978 the legal practice known as Nugan Needham

had been dissolved and the firm had changed its name to Nugan &

4

Company. Mr George continued to be employed as a solicitor for this

firm until the death of Mr Nugan.5 In March/April 1980 Mr George

commenced employment with M.J. Moloney & Associates, solicitors, and

remained with that firm until 20 October 1980.6

2.24.2 While working for Mr Nugan's law firm, Mr George was concerned

with taxation planning for clients of Mr Nugan.® It was Mr George's

role to draft documents and research legal problems or

technicalities.® He incorporated a number of shelf companies for the

firm and became a director of a number of companies associated with

Nugan Hand Ltd including Distravite Pty Ltd [2.82], Distravite Australia

Wide Servicing Company Pty Ltd [2.81] and Mars Road Investments Pty Ltd

[2.88].® From time to time Mr George also undertook legal work for the

Nugan Hand group of companies. This consisted mainly of commercial

drafting, especially trust partnerships and joint venture arrangements

which were then submitted to senior counsel for approval before

. 10

implementation.

2.24.3 During the time he was employed by Mr Nugan's law firm,

Mr George received a salary of $2 500 a month. To gain a tax advantage,

- 158 -

he opened an account in Singapore in August 1979 and arranged for A$1 000

a month to be paid into that account from his salary. This situation

existed until February 1980 but Mr George claimed the account was never

used due to the collapse of the Nugan Hand o r g a n i s a t i o n . M r George

also received various payments from Nugan Hand Ltd [2.97] and on one 12

occasion from Nugan Hand International Holdings Pty Ltd [2.96].

2.24.4 Mr George told the Commission he believed that he was the last 13

of the Nugan Hand employees to see Mr Nugan alive. On Saturday

26 January 1980 Mr George attended a meeting at the offices in

55 Macquarie Street to discuss taxation matters. After the meeting

Mr George remained and 'spoke to Frank Nugan about borrowing his Mercedes

motor vehicle for a wedding that I was attending that evening. The

previous afternoon he agreed, however on Saturday he told me that he

needed the vehicle for the weekend. I then left the office which was the

last time I saw him'

2.24.5 Mr George was a director of Mars Road Investments Pty Ltd from

its incorporation in 1978. He agreed that following the death of

Mr Nugan, he attempted to get the books of Mars Road Investments Pty Ltd

into order as he had not previously taken any steps to see that proper

books were kept in relation to the affairs of that company.16 During

January and February 1980 Mr George, Mr M.J. Moloney [2.48] and an

accountant, Mr J. Smiles, attempted to sort out the accounting records of

Mars Road Investments Pty Ltd.16 Acting on the advice of a barrister,

Mr George engaged the accounting firm of B.W. Atkinson and Associates, to

attempt to write up a set of books. When it was established that

satisfactory records of account could not be prepared, Mr George caused

the company to be placed into liquidation on 6 May 1980.^

Endnotes

1 CT23986, George

2 CT18661, George

3 CT18661, CT20820, George; CD5498 folio 17, JTF running sheets

and interviews extracts (copies)

- 159 -

4 CD6436 folio 105, Letter Nugan/Law Society of NSW 1/12/78;

folio 110, Minutes meeting 25/11/78 5 CT20820, George; CD3627 folio 58, George evidence to CAC March 1980 to September 1981 6 CT20820, George; CD3627 folio 32 7 CF18662, George

8 CT18666-68, George

9 CT18661-62, CD5498 folio 18 10 CD5498 folio 18

11 CT20831, George; CD4556 folio 2, Listing of deposit and interest from 15/8/79 to 15/2/80 for George 12 CD10766 folio R, Observations that George received moneys from NHL and NHIH, folio S, List of money paid to George from NHL and

NHIH

13 CT22371, George

14 CT20821, George

15 CT20836, George

16 CD20823, George

17 CD3627 folio 65

2.25 GILDER, Jeremy Mackenzie

2.25.1 Mr Jeremy Mackenzie Gilder was born in Mudgee, New South Wales

on 2 June 1936.·*· When he gave evidence to the Commission he was a

2

grazier residing at Dalgety, New South Wales. There can be no doubt

Mr Gilder played a leading role in the expansion of the tiugan Hand Group,

particularly in South East Asia. He was a highly paid senior executive

who, in matters relating to personnel management and marketing ranked in

importance next after Messrs Nugan and Hand. The evidence suggests he

was not involved in either the formulation of policy, financial

, 3

management or the overall administration of the Group.

2.25.2 During the years 1958 to 1967 Mr Gilder was employed by Legal

and General Assurance Society Ltd as a supervisor/representative selling

life assurance policies.^ In 1968 or 1969 he founded and became a

director of Fund of Australia Services Ltd which managed the Fund of

Australia Unit Trust [see 2.110]. About 1971 Mr Gilder was appointed to

the board of Property Bonds Australia Ltd. That company's object was to

raise money from the Australian public for investment in property

developments. Mr Gilder's role with the Fund of Australia Group was

similar to his later role with the Nugan Hand Group in that his primary

functions related to marketing and personnel, including the recruitment

of sales staff whose function it was to induce the public to deposit

- 160 -

moneys as an investment. When he began with the Nugan Hand Group he put

in train much the same operation as that at the Fund of Australia Group.

With the Nugan Hand Group, as with the Fund of Australia Group Mr Gilder

was paid a salary in addition to an 'over-riding commission', that is to

say a commission calculated as a percentage of the commission earned by

the salesmen under his control."’

2.25.3 Mr Gilder told the Commission that in about 1974 Property Bonds

of Australia Ltd suspended redemptions due to the failure of the

Australian property market and the company finally collapsed in 1978 or

1979. About 1976 Mr Gilder resigned as a director of Fund of Australia

Services Ltd and other companies in the group, primarily because he

disagreed with the policy then being pursued by management.® Also

employed by the Fund of Australia Group were Mr P.M. Dunn [2.18], Mr F.D.

Ward [2.73], Mr C.L. Collings [2.15], Mr G.A. Edelsten [2.20] and Mr Neil

Harris. With the exception of Mr Edelsten each left the Fund of

Australia Group to join the Nugan Hand Group prior to Mr Gilder.

Mr Edelsten joined after Mr Gilder.^

2.25.4 Mr Gilder was first attracted to the Nugan Hand Group when he

received an invitation from Mr Collings to meet Messrs F.J. Nugan [2.1]

and M.J. Hand [2.2]. There followed a series of meetings culminating in

J.M.S. White Pty Ltd, a company of which Mr Gilder was a director,

entering into an employment contract with Nugan Hand Ltd [2.97].® The

agreement, dated 19 November 1976, provided for payment of 62 500 per g month to J.M.S. White Pty Ltd. This amount was paid into the

company's account at the Pitt and Hunter Streets branch of the ANZ Bank,

Sydney. ^ About the same time Mr Gilder entered into a contract of

employment on his own behalf with the Nugan Hand Bank and Trust Company

[2.106], under which he was to receive [JS62 466 per month in addition to

25 per cent of all commissions paid to representatives recruited by him

and working overseas.^ Such moneys were paid into Mr Gilder's account 12

at the Singapore branch of the Banque Nationale de Paris. From a

document in the possession of the Commission Mr Gilder identified as

correct the sum of US647 239 as the amount of consultancy fees paid to 13

his Singapore account between June 1978 and December 1979. He also

- 161 -

identified as 'generally accurate1 the sum of US$94 173 as the amount

paid to him by way of commissions during the same period. In addition an

over-riding commission of US$15 625 was paid to Mr Gilder in respect of a

trade transaction conducted by Mr J.D. O e n [2.53] in October 1978.14

About January 1980 Mr Gilder sought, through the facilities of the Nugan

Hand Group, to repatriate the funds held in the Singapore account to

Australia.

2.25.5 Documents in the possession of the Commission refer to Mr Gilder

as a director of Nugan Hand Ltd, Nugan Hand International Holdings Ltd (a

Hong Kong company), and the Nugan Hand Bank and Trust Company.45

Indeed Mr Gilder informed the Commission he wanted the 'prestige, status

and kudos' of a directorship in relation to his activities including

those abroad.4® Although appointed as a director of Nugan Hand Ltd in

September 1977, Mr Gilder could not recall signing any statutory

documents in respect of this appointment but did recall that the

appointment was conditional upon him signing an undated form of

resignation as director of Nugan Hand Ltd.42 He resigned as a director

of Nugan Hand Ltd on 4 February 1980. Mr Gilder informed the delegates

of the Corporate Affairs Commission that he was a director of the Nugan

Hand Bank from July 1979 to 4 February 1980 and Nugan Hand International

Holdings Ltd from 1978 to 4 February 1980. On 4 February 1980 Mr Gilder

also resigned from 'all offices and positions' in Nugan Hand Singapore

(Pte) Ltd [Appendix B] and Nugan Hand (Malaysia) Sdn. Bhd.

[Appendix B].4® Mr Gilder expressed some doubts to the Commission as

to whether or not he held these directorships and contended he was a

director in name only. However, he agreed that he had no such doubts in

respect of Nugan Hand Ltd, the Nugan Hand Bank and Nugan Hand

International Holdings Ltd up to and including his resignation on

4 February 1980.4^ To his knowledge he was described as such in

literature as early as 1977. Mr Gilder told the Conmission that from

time to time he handed out business cards which identified him as a

director of 'Nugan Hand International' and in so doing was intending to

represent that he was a director of either Nugan Hand International or

Nugan Hand Ltd.214 He also signed numerous pieces of correspondence

between 1977 and 1979 as a director.21 In support of his contention

- 162 -

that he was a director in name only, Mr Gilder pointed to the fact that

he did not act as a director in the sense of being a member of the

board. He claimed he was a 'director' in the loose commercial sense of

being the coordinator of marketing and personnel.22

2.25.6 Before Mr Gilder joined Nugan Hand Ltd he was informed by Messrs

Nugan and Hand that the company was a merchant bank receiving deposits

from the Australian public, offering attractive returns in respect of

those deposits and, in the case of institutional deposits, providing

security.23 At the time the Group's only overseas office was in Kong

Kong and Mr Gilder understood his principal role to be the recruitment of

representatives with a view to the international expansion of

24

operations. He described his role as a 'personnel function' and said

he thought such matters took up about 80 per cent of his time.23

Representatives were often recruited from press advertisements on the

basis of their potential to solicit deposits, this being the criterion

considered most important by Messrs Nugan and Hand.26 In this capacity

Mr Gilder recruited Mr A.P. Hewitt [2.31] who subsequently worked in West

Germany, Mr G.V. Galicek [2.22] (Chile), Mr G.A. Courtney-Smith [2.17]

(Argentina), Mr G.R. Steer [2.68] (Singapore), Mr E.C. Louey [2.40]

(Malaysia), Mr J.D. Owen [2.53] (Thailand), Mr B.K. Morisset [2.49]

(Singapore), Mr Warren Tapp (Singapore), Mr N. Evans [2.21] (Chiang Mai)

and Mr L.R. Stiles [2.69] (Korea). He also recruited Mr R.M. Sheslow

[2.66] who managed the Trade Services division of the Sydney office,

Mr Don Paegle the representative in Hamburg and Mr James Auyeung, the 27 representative in Kuala Lumpur. Mr Gilder claimed he played no part

in the appointment of 'senior American Service personnel'. When he asked

Messrs Nugan or Hand the reason for their engagement he was told that

they were '... gentlemen of status who would greatly assist in the group,

improving its reputation, building its reputation'. Mr Gilder stated the

foregoing comment was more attributable to Mr Hand than Mr Nugan.2®

2.25.7 In an effort to provide a broader support base for his overseas

representatives Mr Gilder was involved in the production of a newsletter

on economic matters (with the assistance of Mr M. Healey [2.29]) and

re-established Nugan Hand Trade Services Pty Ltd [2.98], a previously

- 163 -

existing company, by the appointment of Mr Sheslow. One of that

company's functions was to assist the overseas representatives with their

inquiries about trade matters. Mr Gilder also assisted Mr Nugan with the

drafting of the Nugan Hand International Group Manual.30 He also

organised and coordinated overseas conferences for the benefit of

overseas representatives [3.5.43-3.5.46, 3.6.12-3.6.15].33 Indeed at a

conference held in Bangkok in January 1978 Mr Gilder delivered an address

titled 'The Year Behind The Year Ahead'. In that address he spoke of the 32

growth of the Nugan Hand Group in the following terms:

29

'First there was the creation of the concept in 1976 by

Frank Nugan and Mike __

Then there was action. First the action of applying for a

Banking licence in Cayman. Then the action of putting up a

sizeable chunk of money to support the Licence application. Then the action of allocating a further substantial sum for the development of the Bank internationally ...

Then a series of highlights. Development of a marketing

strategy for the Bank. Our first booklet, our first brochures, our first manual, our first advertisement - "Are you a 60 000 a year man?" Our first appointment, Karl. Four hundred

applicants and one hundred and twenty five interviews, then our first Seminar. The moving departure of a number of you men from Australia. Our first deposit (Graham). Approval for our first Representative Office in Germany. Approval for our office in

Thailand. Placement of our first funds, our first big trade fee, our first consultancy fee. The emergence of a spirit

between us all and now our first full Conference together.'

33

Mr Gilder concluded:

'It is quite remarkable that in our first year we have achieved what we have. To enter the Banking world on an international scale equipped as we were with little more than a silver booklet and a wheelbarrow full of determination, yet to have captured a

number of clients in different countries and to achieve

substantial deposits, healthy trade profits and consulting fees, is impressive ... '

2.25.8 Mr Gilder was involved in the marketing of the Nugan Hand Group

and its services. He played an important part in the layout and design

of many of the advertising brochures. He corrected the drafts v/ritten by

Mr Nugan which Mr Gilder said were usually verbose and contained

- 164 -

grammatical errors. Upon Mr Nugan's final approval Mr Gilder ensured the

printing was of a satisfactory standard and that the brochures were . . 34

distributed overseas. Mr Gilder said although he was not the author

of the brochures some of his ideas may have been included but only with

the approval of Messrs Nugan or Hand.35 He had no input into any of

the brochures produced overseas.35

2.25.9 On 20 October 1976 Mr Gilder wrote a letter to Mr Dunn in which

he described himself as having been engaged in coordinating and

37

establishing the early operations of the Cayman Islands bank. To his

knowledge he was advertised as the ran who put the Nugan Hand Bank 'on

the rap'.38 Mr S.K. Hill [2.33], in evidence, described Mr Gilder as 39

the main person involved in the Nugan Hand Bank and this evidence was

corroborated by that of Mr Ceilings who said:^8

'... the first brochure was a beautiful silver-looking brochure - a very impressive thing which Gilder arranged. Bank

application cards, application forms. Gilder was churning out all this printed material for promoting the bank ...'

and later

'... so the bank started to promote itself with Jerry Gilder being the rain person. Gilder was the rain person to promote the Bank - that's absolutely the way it was.'

2.25.10 This allegation was denied by Mr Gilder who said his main 42

concern was the appointment of people to represent the Bank. He did

however, assist Messrs Nugan and Hand and had discussed with them how the 43 44

Bank might operate. Of the Cayman Islands bank Mr Gilder said:

'... the project was languishing when I joined the company. I think Hand had applied for a licence and the pair of them had a brochure half-written and a few thoughts as to places to operate and the like prepared, but there were follow through things to do - in particular, to make sure that there was some brochure to hand out to prospective depositors ...'

2.25.11 Mr Gilder said the early deposit taking efforts of a number of

the overseas representatives he recruited certainly helped to put the

- 165

Nugan Hand Bank 'on the map'. He said this result was the inevitable

consequence of his successful carrying out of his specific duties.45

2.25.12 In 1977, on behalf of the Nugan Hand Group, Mr Gilder travelled

to London where he established a representative office involving the

incorporation of a company called Nugan Hand (u.K.) Ltd [Appendix B].

From the United Kingdom he went to West Germany and assisted in

negotiations for the purchase of F.A. Neubauer Bank [2.109],45

2.25.13 As part of Mr Gilder's marketing and personnel functions he was

assigned the task by Messrs Nugan and Hand of organising and coordinating

overseas conferences for the benefit of overseas representatives. In a

'Nugan Hand Newsletter' there appears a photograph of Mr Gilder and

others taken at the January 1978 conference in Bangkok.4^ The caption

describes them as 'Chief Executives of Nugan Hand International'. The

same newsletter subsequently describes Mr Gilder as the 'Banking and

financial administrator, systems and controls expert'. Mr Gilder said

this newsletter was probably produced by Burson-Marsteller (an

advertising agency in Hong Kong) thereby implying he had no knowledge of

the content of the document at the time of publication and did not

48

approve its content.

2.25.14 [For a description of Mr Gilder's involvement in the aftermath

of Mr Nugan's death and his role in the destruction and removal of

documents from 55 Macquarie Street, Sydney, refer to Part 3 Sections 8

and 9].

Endnotes

1 CD1178 folio 100, Gilder's application for an Australian

passport 25/1/77 2 CT18656, Gilder

3 CD11378, Gilder submissions to Commission; CD8620 folio 29, Telex Nugan and Hand/Gilder, Copy of letter King of Tonga re a meeting in Sydney 4 CT23045, Gilder

5 CT20410-14, Gilder

6 CT20383-85, CT23047, CT23077-78, Gilder; CD11378; CD7153 folios 25-26, Gilder's resume

- 166 -

7 CT23048, Gilder

8 CT18699, Gilder

9 CT18699, CT20443, Gilder; CD9851 folio 723, Letter J.M.S. White Pty Ltd/Nugan 16/11/76 10 CT20414, Gilder

11 CD9851 folio 726, Letter Gilder/Nugan and Hand 19/11/76 12 CT20414-15, CT23063-64, Gilder 13 CT20415, Gilder; CD5303 folio 13, Memo Tan Choon Seng/Hand re Gilder 11/2/80

14 CT23054, Gilder; CAC 7th Interim Report p 395 15 CT20402, Gilder; CD4803, Letter of resignation Gilder/Hand 4/2/80; CD8460 folios 7, 9, Nugan Hand International Group Manual; CD9851 folios 713, Letter Department of Finance and

Development Grand Cayman/Bruce Campbell and Co. 9/7/79, folio 714, Minute of NHIH 29/6/78 16 CT23088, Gilder

17 CT20402, Gilder

18 CD4803

19 CT20399, CT23048, Gilder; CD11378 20 CT20410, Gilder

21 CT20400, Gilder; CD3320 folios 2-8, Letter Gilder/several London businesses 22 CD11378

23 CT23079-80, Gilder 24 CT23080, Gilder

25 CT20386a, CT20443, Gilder 26 CT20447, Gilder

27 CT20389, Gilder; CD3022 folio 75, Gilder evidence to CAC; CAC 7th Interim Report pp 387-88 28 CT22244-45, Gilder 29 CT20388, CT23088-89, Gilder 30 CT20431, Gilder; CD8460, Nugan Hand International Group Manual 31 CD11378

32 CD3719, Proceedings of Bangkok conference 1978 33 CD3719

34 CT20388, CT23089, Gilder 35 CT23090, Gilder; CD11378 36 CT23049, Gilder

37 CD65 folios 7-8, Letter Gilder/Dunn 20/10/76 38 CD917 folio 34, NHI printed newsletter, Vol. 1 No. 3 39 CT21822, Hill

40 CT22812, Collings 41 CT22818, Collings 42 CT22212a, Gilder

43 CT22213, Gilder; CD7358, NHB Cayman blueprint by J. Gilder 44 CT23093, Gilder

45 CD11378

46 CT20387, Gilder

47 CD3713 folio 4, NHI newsletter 48 CT23052, Gilder

- 167 -

2.26 GREGORY, Wilfred Patrick

2.26.1 Mr Wilfred Patrick Gregory did not give evidence before the

Commission. The information herein relies upon the evidence of other

witnesses and upon documents produced to the Commission in the course of

its inquiry.

2.26.2 Mr Gregory was born in England on 25 February 1924 and gained

his formal education at Francis Xavier College of Technology, Manchester,

England. Upon leaving college, he served a mechanical and electrical

apprenticeship followed by design work to engineer status with

Metropolitan Vickers and A.V. Roe. Mr Gregory also undertook advanced

management studies at project engineer level and was the personal

assistant to the Managing Director (Production) for Hawker Siddeley

aircraft between 1962 and 1966. He migrated to Australia in 1966 and

settled in Perth where he became involved in estate planning, business

management consultancy and investment counselling. Mr Gregory is an

Associate member of the Institute of Mechanical Engineers and an

Associate Fellow of the Australian Institute of Management.

2.26.3 In late 1977 while Mr Gregory was in Malaysia and still employed

by Karl F. Schuller and Associates Sdn. Bhd., Mr M.J. Band [2.2]

approached Mr Gregory and discussed the possibility of his joining the

Nugan Hand Group. ^ However, in a telex to Mr Hand on 6 December 1977,

Mr J.M. Gilder [2.25] stated 'my recommendation is that Wilf. not be paid

salary by Group or formally appointed as he has activities other than

Group's and granting him appointment status denigrates our image'.

Mr Gregory commenced employment with the Mugan Hand Bank on approximately

15 January 1978 and was to receive a salary of US$1 500 plus US$500 in . 4

expenses per month as well as commissions.

2.26.4 Mr Gregory initially worked from the Hong Kong office but

later moved to The Philippines. Admiral E.P. Yates [2.76] assisted

Mr Gregory in organising the opening of the office and in an interview

reported upon in the Manila Times on 10 May 1978, stated 'the proposed

head of the Manila office, Wilfred Gregory, has been in Manila for some

weeks surveying the situation'. ®

- 168 -

2.26.5 In August 1978, Mr Gregory obtained an option on office premises

in the Ramon Magsaysay Centre, Manila and the regional headquarters of 7

Nugan Hand International [Appendix B] was established at that location.

2.26.6 In January 1979, Mr Gregory attended the Nugan Hand

International conference in Sydney [3.5.45]. He presented a paper on The

Philippines and discussed the Nugan Hand Group's activities in that

country. Mr Gregory said that the Philippines office had cultivated

centres of influence including private business, banking and diplomatic

circles.® Mr Hand was not satisfied with Mr Gregory heading the

Philippines office. In his evidence to the Commission, Admiral Yates

said Mr Hand wanted him to head the Manila office but he declined and

suggested General L.J. Manor [2.45] as a possible alternative. General

Manor subsequently joined the Nugan Hand Group and worked in the

. . 9

Philippines office. Mr Gregory also attended the Nugan Hand

International conference held in Sydney in October 1979."*"®

2.26.7 While he was employed by the Nugan Hand Bank, Mr Gregory

researched and presented a paper called 'Tax Haven Facilities'. This

paper discussed the criteria for deciding on tax havens as well as

outlining those countries that offered low taxation, tax exemptions and

special incentive privileges."*""*"

2.26.8 The Nugan Hand Group operation in The Philippines ceased in mid

1980 following the collapse of Nugan Hand Ltd [2.97] and Nugan Hand (Hong

Kong) Ltd [2.94].

Endnotes

1 CD6933 folio 242, Biographical data - qualifications and

experience of Gregory 2 CD6933 folios 246-47, Memo Hand/Nugan 22/12/77, folio 250,

Letter Gregory/Hand 3/11/77 3 CD649 folio 175, Telex Gilder/Hand 6/12/77 4 CD1561 folios 59-60, Memo Tan Choon Seng/Hand and Steer 4/4/79; CD4432 folio 12, Questionnaire - includes details of Gregory's

salary etc.; CD6933 folios 243-44, Memo from Hand re Gregory's commission & bank and Memo Hand/Nugan 22/12/77; folios 246-47

/

- 169 -

5 CD7305, NHB - Gregory, W.

6 CT24253-54, Yates; CD6933 folios 226-27, Excerpt from Manila Times 10/5/78 ------

7 CD1561 folio 78, Telex Steer/Dugan, Hand, Gilder, Hill, Shaw & Collings 27/2/79; CD6933 folio 59, Note made by Gregory 8 CD8449 folio 26, Transcript of Tape - Sydney Conference 3/1/79 9 CT24256, Yates

10 CD1429 folio 364, Transcript of Tape - Sydney conference 13/10/79 11 CD1561 folios 55-57, Paper by Gregory entitled 'Tax Haven

Facilities'

2.27 HANS, Wilhelmus

2.27.1 Mr IJilhelmus Hans was born in Holland on 20 December 1927 and

presently resides in Queensland. He holds a ground and flight engineer's

licence as well as a pilot's licence endorsed for agricultural

flying. Before joining the Nugan Hand Group Mr Hans was employed by 2

Fund of Australia [2.110] and operated out of Indonesia.

2.27.2 Mr Hans in his interview with the Joint Task Force said he

answered an advertisement placed by Pacific Silver Pty Ltd (probably

Pacific Silver Commodities [2.104]) and that this company's objective was

to launch a silver bullion company called Ingold Growth Ltd (later Nugan

Hand International Holdings Ltd [Appendix B ]). He said that 'Ingold' was

Mr M.J. Hand's [2.2] idea and that Mr F.J. Nugan [2.1] assisted with the

legal and financial aspects. Due to the falling price of gold, the

company did not succeed. Mr Hans then began work attracting depositors

to Nugan Hand Ltd [2.97].^ Mr S.K. Hill [2.33] in evidence before the

Commission stated that Messrs F.D. Ward [2.73] and Hans were involved in

soliciting deposits from councils, clubs and semi-governmental type 4 institutions.

2.27.3 In his evidence to the Corporate Affairs Commission Mr Hans said 5

he was employed by the Group from August 1974 until December 1975 , yet

documentation indicates that Mr Hans was employed on 21 August 1976®

and that he received regular payments from Nugan Hand Ltd until at least

February 1976.7

- 170 -

2 . 2 1 Λ Documents obtained by the Commission suggest that while he was a

representative of Nugan Hand Ltd, Mr Hans received a commission of two

per cent on unsecured deposits and one half per cent on secured deposits

that he attracted. In addition, he was paid director's fees of $1 000

for a six month period as well as consultation fees.

2.27.5 Mr Hans was also associated with two other companies within the

Nugan Hand Group. Corporate Affairs Commission records show that Mr Hans

and his wife were directors of NHN Funding Pty Ltd from 25 June 1975

until 17 November 1976 and of F.N. Spenser Pty Ltd from 22 June 1975

until 25 November 1976.^

2.27.6 Mr Hans told the Joint Task Force, that at Mr Nugan's request,

he travelled to Rhodesia in 1975 to set up a conduit to transfer funds

out of that country. He said he also travelled to Angola, Mozambique and

South Africa and spent a total of approximately six weeks in Africa.

Mr Hans said no funds were removed from Rhodesia even though a company

was set up for that purpose. While in Africa, Mr Hans said he discussed

the current market in helicopters and guns with Mr Hand.10 Mr Ward in

evidence before the Commission, said that while Mr Hand was in South

Africa, Mr Hans was involved in gathering information from around the

world on munitions and weapons at Mr Hand's request.11 Mr K.J. Loy, of

the loy Arms Corporation Pty Ltd in Sydney, told the Joint Task Force in

an interview in July 1982, that initial inquiries from the Group

12

regarding the purchase of pistols came from Mr Hans. [The

Commission's examination of the Nugan Hand Group's alleged involvement in

arms dealing and associated matters may be found in Part 7 of this

report.]

Endnotes

1 CD768 folio 20, Hans resume; CD2242 folio 2, statement to

Commission 17/8/83 2 CD3025 folio 4, Hans evidence to CAC 3 CD1308 Part 72 folios 1-2, JTF ROI Hans 20/7/82 4 CT21459, Hill

5 CD3025 folio 38

- 171 -

6 CD6112 folio 53, Personnel file: commission details for W. Hans 21/8/76 7 CD3802 folio 44, NHL No. 1 Account - Cash Receipts/Payments

27/7/73-30/6/76 8 CD6112 folios 52-53

9 CD8730 folios 33, 37, NHN Funding Pty Ltd - Minutes; CD8707

folios 31, 45, F.N. Spenser Pty Ltd - Minutes 10 CD1308 Part 72 folio 8, JTF ROI Hans

11 CT23151, Ward

12 CD1308 Part 72 folio 7

2.28 HARLAND, Edward Patrick

2.28.1 Mr Edward Patrick Harland gave evidence to the Corporate Affairs

Commission on 17 June 1980. That is the only evidence of Mr Harland's

available to this Commission as he died on 8 August 1980. The

information contained herein has been compiled from the transcript of

that evidence and from other evidence and documents before the Commission.

2.28.2 Mr Harland, an accountant, was employed by Mr F.J. Nugan [2.1]

for specialist taxation advice. He had been employed by the Australian

Taxation Office for approximately twenty years and had worked in the

assessing, investigating and legal branches of that Office. In February

1973 he left the Australian Taxation Office and in early 1974 he met

Mr Nugan.^

2.28.3 According to Mr Q.D. George [2.24], Mr Harland had said that

while he was with the Australian Taxation Office Mr Nugan had been

regarded as one of the best tax lawyers in Sydney and that is why he went 2 and worked for him. However, Mr Harland told the Corporate Affairs

Commission that he did not think Mr Nugan was a brilliant corporate and

tax lawyer even though he advertised himself as such. He said Mr Nugan

did not keep up to date with developments in the income tax law and for

this reason Mr Harland believed he was retained by Mr Nugan as a

consultant.^

2.28.4 Mr Harland said that from January 1976 he worked as a taxation

consultant for Nugan Hand Ltd [2.97]. In July 1979 this arrangement

ceased and he became consultant to Nugan & Company, Solicitors. After

- 172 -

Mr Nugan's death Mr Harland was asked by the directors of Nugan Hand Ltd

to remain and advise the company and its directors on 'any matters that

might arise with specific relation to interpretation of income tax

laws'. He remained as a consultant until March 1980. while he was a

consultant to Nugan Hand Ltd Mr Harland received a retainer of $15 000

per annum and as a consultant to Nugan & Company he received $10 000 per 4 annum.

2.28.5 Mr Harland told the Corporate Affairs Commission that his duties

were 'to advise on interpretation of the Income Tax Act in relation to

the affairs of Nugan Hand Ltd and its clients, specific clients who may 5 have specific tax problems'. He said he had advised St George Leagues

Club and had also acted as a tax agent for the directors of that

Club. Mr Harland said he also had discussions with Mr G.R. Steer

[2.68] about advisory facilities which could be offered to clients of the 7 Nugan Hand Group in Singapore.

2.28.6 As a specialist consultant, Mr Harland gave a lecture at the

Nugan Hand International conference in Sydney in January 1979 [3.5.45].

He discussed tax evasion and tax minimisation, advocated taxation

planning and outlined tax avoidance schemes used by international

corporations.®

2.28.7 Evidence has been received by the Commission of various taxation

schemes offered by Nugan Hand Ltd [Part 9]. Mr A. Lee [2.37] said

Mr Harland handled most of the tax schemes and Mr S.K. Hill [2.33]

said Mr Harland dealt in tax advice matters. 0 Mr George gave evidence

to the Commission about a meeting which was attended by Messrs Harland,

Nugan, A. Lee, G.A. Edelsten [2.20], Miss E.L Thomson [2.72] and himself

on 26 January 1980 to discuss tax matters. Mr George said the tax

schemes concerning Distravite Pty Ltd [2.82] and the Orange Spot Group

[2.115] had been disallowed by the Commissioner of Taxation. He believed

that Mr Harland was going to draft objections but he did not know what

ultimately happened."*''*'

2.28.8 Mr Harland told the Corporate Affairs Commission that to his

knowledge Nugan Hand Ltd 'was never involved in tax minimisation plans or

- 173 -

schemes of any type and consequently I was never asked to advise on tax 12

minimisation plans or schemes of that nature1.

Endnotes

1 CD45, Harland's speech at Nugan

January 1979

Hand International conference

2 CT22359-60, George

3 CD3029 folio 22, Harland evidence to CAC 17/6/1980 4 CD3029 folios 8-11

5 CD3029 folio 9

6 CD3029 folio 13

7 CD3029 folio 20

8 CD45

9 CT18616, A. Lee

10 CT15518, Hill

11 CT22367, George

12 CD3029 folio 9

2.29 HEALEY, Mark

2.29.1 Mr Mark Healey was born in Sydney on 19 October 1950. He is

currently employed as a personnel manager with an Australian company.

Mr Healey completed a Bachelor of Economics degree at Sydney University

in 1973 and was employed between 1973 and 1975 at the Ford Motor Car

Company under the Ford Graduate Training Program. Between 1975 and 1978

he was an Industrial Officer with a large Australian company.3

2.29.2 Mr Healey was visiting a friend Mr J.R. Rush [2.60], at the

Sydney office of Nugan Hand Ltd [2.97] when he met Mr F.J. Nugan [2.1].

Mr Healey mentioned he held an honours degree in economics and had been

employed by major companies in the personnel field. Mr Nugan suggested 2

Mr Healey become a personnel consultant with Nugan Hand Ltd.

Mr Healey accepted Mr Nugan’s offer and commenced employment with Nugan

Hand Ltd on 24 April 1978. He remained with that company until

5 February 1980 when his employment was terminated by Mr G.A. Edelsten

[ 2. 2 0 ] . 3

- 174 -

2.29.3 Hr Nugan informed Mr Healey his salary would be $17 000 per

annum. After one year this was increased to $24 000 following an

4

approach by Mr Healey to Mr Nugan. Mr Healey said he was later

offered the position of joint general manager of Nugan Hand Ltd by

Mr Nugan. Although Mr Healey rejected the offer, Mr Nugan increased his

salary to $36 000 per annum.

2.29.4 Mr Healey's work with Nugan Hand Ltd involved 'personnel

service', which he understood to mean provision of personnel

administration and advice on industrial matters for clients he

secured.® However, shortly after Mr Healey commenced with Nugan Hand

Ltd, a warrant was issued for the arrest of Mr Nugan. This caused

Mr Healey to believe he had made a mistake in joining Nugan Hand Ltd and

as a consequence he did not seek out clients for a few months. Responses

that Mr Healey subsequently did receive from prospective clients were

negative.^

2.29.5 Mr Edelsten gave evidence that Mr Healey was 'purportedly

working with Mr Nugan on the free trade zone which was to be set up in

The Philippines'. He identified Mr Healey as one of the executives on g

the 4th floor who in his view did not know what they were doing.

Mr Healey was questioned on whether the activities on the 4th floor were

legitimate to which he replied, '... it was not very successful, and

people wondered at times how we could stay employed ...'

2.29.6 According to Mr J.M. Gilder [2.25], Mr Healey 'gleaned

interesting economic material' for the production of a newsletter on

economic matters. " * " " * ■ Mr Healey assisted Mr Gilder in assembling the

Nugan Hand International Manual for use by representatives as well as

coordinating Nugan Hand Ltd's participation in the International Congress 12

on New Enterprise ('ICONE') in The Philippines [3.6.14]. This

conference considered possible joint ventures which Mr Healey tried to

organise in The Philippines such as a sewerage treatment plant. These

projects, however, did not come to fruition.^

- 175 -

Endnotes

1 CD6087 folio 2, Healey resume; CD9821 Healey statement and

taxation group certificates 1977 to 1980 2 CT19119, Healey

3 CT19111, CT20355, Healey 4 CT19120, CT19127, Healey 5 CT19127-28, Healey

6 CT19119-19a, Healey 7 CT19120-21, Healey

8 CT18705, Edelsten

9 CT20465, Edelsten

10 CT20373, Healey

11 CT20388, Gilder

12 CT19119-22, Healey; CD9821 13 CT19122, CT20355, Healey

2.30 HEUSCHKEL, Carl Louis

2.30.1 Mr Carl Louis Heuschkel is a qualified and registered accountant

and auditor. From 1964 to 1971 he was employed as a junior accountant

and then senior accountant by Charles J. Berg & Partners an accounting

firm in Sydney. It was while working for Charles J. Berg & Partners that

Mr Heuschkel met Mr W. Pollard [2.57] and Mr G.F. Brincat [2.9]. All

three did their professional training at Charles J. Berg & Partners.1

From 1971 to 1973 Mr Heuschkel was employed by Boyded Pty Ltd as

assistant company secretary, company secretary and then group

accountant.^

2.30.2 In May 1973 Mr Heuschkel and Mr Pollard commenced their own

accounting practice, Heuschkel & Pollard, and subsequently Mr Brincat

commenced work for the firm as an employee. Mr Br incat later became an

equal partner of the firm with Messrs Pollard and Heuschkel.3

2.30.3 In early 1974 Mr Heuschkel first met Mr F.J. Nugan [2.1]. This

came about because Mr Pollard was doing accountancy work for Mr M.J.

Hand's [2.2] companies. Mr Heuschkel was introduced first to Mr Hand and 4 later to Mr Nugan. Subsequently, Heuschkel & Pollard commenced

accounting work for the Nugan Han.d group of companies. Mr Heuschkel said

- 176 -

he would have been involved in the decision that Mr Brincat should

undertake the audit for Nugan Hand Ltd [2.97] for 30 June 1974. He said

the practice was expanding and Mr Brincat was brought into the firm to

help with the work load and this was just one of the areas that was

handed over to him. Initially the small companies of Mr Nugan were 5

handed over and later the public company (Nugan Hand Ltd) as well.

2.30.4 Mr Heuschkel stated he did not assist in the preparation of the

1974 audit and did not work with Mr Brincat in connection with the audit

of 'any of the Nugan Hand Group of companies'. He said he was not

involved in actual audit checks, the preparation of the audit program or

submission of the audit results. He said he may have signed the annual

accounts for Mr Nugan' s personal companies but did not sign the annual

accounts for any of the companies associated with the Nugan Hand

Group.6

2.30.5 Mr Heuschkel said he first became aware of the internal bills of

exchange problem [3.3.46] in approximately August/September 1977. He

said Mr Brincat told him there were bills drawn between Nugan Hand Ltd

and Yorkville Nominees Pty Ltd [2.108], (which Mr Heuschkel understood

from Mr Brincat was a company owned by Mr Nugan) and that from Yorkville

Nominees Pty Ltd there was a loan to Mr Nugan. As this was a director's

loan the accounts would have to be qualified in relation to it, or the

loan had to be secured or repaid. Mr Heuschkel stated that Mr Brincat

indicated that the problem had recently arisen following the last

balancing date, 31 January 1977.^

2.30.6 A meeting was held between Messrs Pollard, Brincat and Heuschkel

to discuss the internal bill problem. Following this meeting Messrs

Heuschkel and Pollard discussed the problem between themselves to the

exclusion of Mr Brincat and decided to seek legal advice without telling

Mr Brincat. Mr Heuschkel had at that time professional contact with an

accountant, Mr Phillip Finn who suggested Mr J.L. Aston as an appropriate

lawyer to use for advice on corporate matters.6 Cm 16 September 1977

Messrs Heuschkel and Pollard had a meeting with Mr Aston who told them he

acted for Mr Nugan. Mr Aston said, according to Mr Heuschkel, that since

- 177 -

there was a conflict of interest he would not advise them and recommended

they seek advice from Mr Michael Rosser's firm of solicitors, and

specifically from Miss Dianne Truss, to give them independent legal 9 advice. On 19 September 1977 Messrs Heuschkel and Pollard met

Miss Truss and discussed what they perceived to be their problems

regarding the inter-company loans and internal bills. A meeting was

later held between Messrs Nugan, Pollard, Heuschkel and Miss Truss.

After this meeting Mr Heuschkel stated he played no further role in the

audits of the Nugan Hand accounts. A second meeting was ultimately

held with Mr Aston attended by Messrs Nugan, Pollard and Brincat where it

was agreed that the advice of Mr Aston was to be followed. He advised

that a note should be included in the accounts referring to the use of

internal bills. Miss Truss was not consulted again.^

2.30.7 In May 1978 Mr Heuschkel resigned from the partnership, due, he

said, to family commitments. At the time he gave evidence he was

12

conducting his own accountancy practice.

Endnotes 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2

1 CT23555, Heuschkel

2 CT23550, Heuschkel

3 CT23550, Heuschkel

4 CT23556, Heuschkel

5 CT23557-58, Heuschkel 6 CT23550-51, Heuschkel 7 CT23560-62, Heuschkel 8 CT23551, CT23563-64, Heuschkel 9 CT23566, Heuschkel 10 CT23553, CT23573, Heuschkel 11 CT23286-88, Pollard; CT23493, Truss; CT23567-68, Heuschkel;

CT23868, CT23872, Brincat 12 CT23554, CT23576, CT23581, Heuschkel

2.31 HEWITT, Anthony Peter

2.31.1 Mr Anthony Peter Hewitt was born in Sydney on 8 October 1939.

From 1961 until 1967 and from 1972 until 1976, he was employed as a sales

representative and sales manager by several Sydney insurance companies,

- 178 -

and also established his own insurance brokerage firm. In 1976 he became

a marketing and sales consultant.1

2.31.2 Mr Hewitt joined Nugan Hand Ltd [2.97] in May 1978 after being

approached by Mr J.M. Gilder [2.25] with whom he had worked in the

insurance industry. He had no prior experience in merchant banking.

Mr Hewitt spent the first few months of his employment in Sydney trying,

unsuccessfully, to interest his contacts in the insurance business in 2 investment with Nugan Hand Ltd. After several months Mr Hewitt was

sent to West Germany to conduct a three month survey of the F.A. Neubauer

Bank [2.109] in Hamburg, which the Nugan Hand Group was at that time 3 negotiating to purchase. His task was to look at the Bank's

respectability, and its domestic and international potential, and to

report whether it was worthwhile to proceed with the purchase. On his

return to Australia Mr Hewitt reported it would be difficult to make the

F.A. Neubauer Bank a successful project as it required a substantial

injection of capital and results would only be achievable in the long . 4

term.

2.31.3 In October 1978 Mr Hewitt returned to West Germany to act as the

representative of the Nugan Hand Group in that country and to act as a

representative of the F.A. Neubauer Bank. His job was to enlist deposits

for Nugan Hand International Holdings Ltd, Hong Kong, from some of the

German banks and the non-German people in the area, particularly British 5 and Australians. He successfully attracted a number of depositors and

also attempted to attract prominent Germans to an advisory board for

F.A. Neubauer Bank.® Mr Hewitt told the Commission his role was

largely to establish a good relationship with Mr J. Bachmann [2.5], a 7

partner in F.A. Neubauer and owner of the banking licence.

2.31.4 For Mr Hewitt's services to the Nugan Hand Group, his consulting

company in Sydney, A.P. Hewitt Investment Services Pty Ltd, received

initially A$1 000 per month and later A$1 500 a month.8 Mr Hewitt

received the balance of his remuneration 'off-shore'; part was paid into

his account with the United Overseas Bank in Singapore and part was paid

into a West German Bank account. Mr Hewitt severed his connection with

\

- 179 -

F.A. Neubauer Bank and returned to Sydney, shortly after the death of

Mr F.J. Nugan [2.1].^ At the time he gave evidence to the Commission

he was employed in marketing by a large company"^ and had lodged a

proof of debt with the liquidator of Nugan Hand Ltd in respect of salary

owed to him.

Endnotes

1 CD10279 folios 18-20, Hewitt Resume; CD4428 folio 14 2 CT22122-25, Hewitt

3 CT22124-25, Hewitt

4 CT22128-29, Hewitt

5 CT20391, Gilder; CD8622 folio 27,

20/3/80

Memo HewittAan Choon Seng

6 CT22130-32, Hewitt

7 CT22129, Hewitt

8 CD76 folio 168, Letter Hewitt/Gilder 21/11/78 9 CT22132, CT22134, Hewitt 10 CT22121, Hewitt

11 CT22134-35, Hewitt

2.32 HILL, Graeme Hunter

2.32.1 Mr Graeme Hunter Hill is a chartered accountant and at the time

he gave evidence to the Commission was a partner in the accounting

practice of Hill Rogers & Associates, chartered accountants, Sydney.^

2.32.2 According to Mr Hill 'Nugan Hand' was first mentioned to Hill

Rogers & Associates by one of their clients who had deposited money with

Nugan Hand Ltd and was impressed by the high interest rates being paid by

the company. Subsequently Mr Hill's firm was approached by Mr E.P.

Harland [2.28] to do some accounting work for him. When Mr Harland

learnt that the firm was interested in investing with Nugan Hand Ltd he

undertook to keep them informed of the company's stability and credit

worthiness. Mr Harland later introduced Messrs G.T. Shaw [2.65] and

F.J. Nugan [2.1] to the partners of Hill Rogers & Associates.2

2.32.3 Mr Hill said Hill Rogers & Associates:

'made the usual enquiries from other banks etc. and received the company's audited balance sheet to satisfy ourselves that the

- 180 -

company was what it purported to be. These checks continued throughout our dealings with the company and at no time before Frank Nugan's death were we not satisfied by the information sought and given.'3

2.32.4 Certain of Mr Hill's clients deposited funds with the Nugan Hand

Group. According to Mr Fill, if a client asked him where he was

investing his own money, he would tell them the alternatives, 'including

Nugan Hand who circularised a monthly letter ... that set out their

rates'. Mr Shaw handled these investments. Mr Hill said:

'those clients received a better rate of interest on their money, personal service from George Shaw who would, on a phone call, deliver or collect withdrawals or deposits personally.'

Mr Hill said Mr Shaw offered an introductory commission of one half to

one per cent. On a few subsequent occasions Mr Shaw did tender seme

money, based on this arrangement, but according to Mr Hill, it was

considerably less than the costs incurred. Mr Hill said the commissions

were declared as taxable income by Hill Rogers & Associates. Mr Hill

also liaised with employees of the Nugan Hand Group on the basis of 4

mutually referring clients and cooperating in taxation matters.

2.32.5 Mr Hill deposited both his own funds and those of his family

company, Hunthill (Holdings) Pty Ltd, with Nugan Hand Ltd.^ Records

show Mr Hill deposited $4 500 with Nugan Hand Ltd in November 1977 which

was repaid soon after.® Hunthill (Holdings) Pty Ltd made a deposit of

$30 000 in August/September 1979 which earned interest of approximately

$1 100; a repayment of $25 000 was made on 22 January 1980.^

2.32.6 Records show that an International Certificate of Deposit for

HK$20 000 was issued to Mr Hill on 10 November 1978. HK$8 000 was

withdrawn in July 1979 and in October 1979 a request was made for the

balance to be repaid. A cheque to cash for HK$13 717.95 was issued on

14 November 1979.® Mr Hill told the Commission that he presumed that

this money belonged to one of his clients who for convenience had

deposited in Mr Hill's name. (An International Certificate of Deposit

was a piece of paper issued by the Nugan Hand Bank to a client as a

I

- 181 -

receipt for a deposit and an acknowledgement of the debt of the Nugan

Hand Bank to that client for the amount of the deposit plus interest. It

normally showed the amount of the deposit, the term and interest rate

applicable, the place the deposit was received and the name or number of

the client.)

2.32.7 Mr Hill told the Corporate Affairs Commission he had no problems

with investments lodged with the Nugan Hand Group until shortly after

Mr Nugan's death when cheques began to be dishonoured.111 In evidence

before the Corporate Affairs Commission Mr Hill said he personally lost

about $13 000 and his family company $5 000 on the collapse of Nugan Hand

Ltd.11

2.32.8 In September 1977 Mr Hill travelled to South East Asia,

apparently with 'financial support' from Nugan Hand Ltd. While there he

visited Jakarta, Singapore, Kuala Lumpur, Hong Kong and Manila. He

renewed friendships with business associates and was able to make both

direct and indirect introductions to the Nugan Hand "Group. Mr Hill told

the Commission that Mr Shaw paid his fares and accomodation for a number

of trips to Manila where Mr Hill introduced Mr Shaw to a number of

12

depositors who were personal friends.

2.32.9 Hill Rogers & Associates were also 'offered the opportunity to

consult with either Mr Frank Nugan or Ted Harland [2.28], a former

taxation officer, on any matters of a taxation nature'. Mr Hill said

'Mr Harland's knowledge was well known and Mr Nugan was introduced to us

by Ted Harland as a most innovative and imaginative tax planner'. In

October 1979 Mr Hill went to see Mr Nugan to discuss a taxation

minimisation scheme for one of Hill Rogers & Associates' clients. When

he arrived he found that Mr Nugan was conducting a seminar for the Nugan

Hand Group's solicitors. Mr Hill said he 'learned nothing' which could

not have been learned from the local newspapers and taxation

14

publications.

2.32.10 Mr Hill said in evidence before the Corporate Affairs Commission

that he was only involved in one tax scheme arranged by Mr Nugan. This

- 182 -

involved the deposit of an amount less than $30 000 with Mars Road

Investments Pty J j i 6 [2.88].*"^

Endnotes

1 CD3032 folio 2; G.H. Hill evidence to CAC; CD11385 folio 5, G.H. Hill statement to Commission 13/3/85 2 CD9580 folio 1, Interview of Hill by Commission investigators; CD11385 folio 5 3 CD11385 folio 5

4 CD11385 folios 6, 9; CD3032 folios 11-13; CD3654 folio 126, Shaw evidence to CAC 5 CD3032 folios 3-4

6 CD497, Hill - NH Aust. client deposit documents 1977 7 CD3234, Hunthill (Holdings) - deposit NHL 8 CD4564 folios 8, 12, 19, 28, NHB client file re Hill 9 CD11385 folio 7

10 CD9580 folio 1

11 CD3032 folio 5

12 CD6296 folios 39-42, Letter Hill/Nugan Hand Ltd 6/10/77; CD11385 folios 4,9 13 CD11385 folio 6

14 CD10950, Transcript of a meeting of Legal Division chaired by Mr Nugan; CD11385 folios 8-9 15 CD3032 folios 6-7, 16; CD5474, Mars Road Investments Pty Ltd - cheque butts

2.33 HILL, Stephen Kenneth Alexander

2.33.1 Mr Stephen Kenneth Alexander Hill was born in Ireland on

6 January 1946. He left Ireland in 1964 or 1965 for New Zealand where he

studied accountancy part time at Auckland University. Mr Hill worked for

several employers during this time. In 1970 he migrated to Australia."*·

2.33.2 O n e of the positions Mr Hill held after arriving in Australia

was that of accountant to a freight forwarding company formed by Mr C.L.

Collings [2.15] and associates, called Freight Distribution Industries,

although he held that position for only three months.

2.33.3 In 1972 Mr Hill was working as Operations Manager for

CitiNational Securities Corporation Ltd (as it then was) and its

- 183 -

associated company National Discount Corporation Ltd. It was in the

course of this employment that he met Mr Leigh Scott-Kemmis [2.64] and

subsequently developed a relationship with him that had important

consequences for the Nugan Hand Group [Part 4 Section 7], In this

position Mr Hill organised settlements and maintained account records.

Mr G.P. Young [2.78], the senior trader of CitiNational Securities

Corporation Ltd left that company in 1973 and subsequently gained

employment with Nugan Hand Needham Ltd [2.97] commencing in August 2 1973. He invited Mr Hill to assist him in an attempt to set up the

company's money market division.® According to Mr Young, he did the

trading on the money market, while Mr Hill did the 'leg and book work'

with particular responsibility for the day to day settlement of

transactions.^

2.33.4 After several weeks the money market operation which was always

very small, was scaled down and Mr Hill became involved in Mr F.J.

Nugan's [2.1] takeover of North Australian Rubber Mills Ltd ('NARM')

[2.113]. At the conclusion of this takeover, Mr Hill took a position

with NARM in Brisbane.6 The money market operations of Nugan Hand Ltd,

conducted by Mr Young ceased and Mr Young became General Manager of

NARM. Subsequently Mr Hill returned to Sydney where for a brief period

he performed liaison duties between NARM in Brisbane and its new parent

company Security Income Real Estate (Australia) Ltd. He then worked for

several months as an accounts clerk for a Sydney motor dealer.6

2.33.5 In April ]975, in response to an approach by Mr Nugan, Mr Hill

returned to Nugan Hand as Money Market Manager. He was to stay with

Nugan Hand Ltd until its liquidation in April 1980 and, in the process,

became the third most important executive of the company and, with

Mr Hand's [2.2] departure overseas in 1976, he became, in effect, second

in charge of the Group's operations in Sydney. He was in fact the

longest serving director of Nugan Hand Ltd after Messrs Nugan and Hand,

and subscribed his name to the directors' reports on behalf of the board,

in the years 1976 to 1979 inclusive.®

2.33.6 Mr Hill brought to the Nugan Hand Group, qualifications in

accountancy which enabled him, more so than any other person apart from

- 184 -

Mr G.F. Brincat [2.9], to understand the accounts and accounting

procedures used. He was, in addition, the only one in Nugan Hand Ltd,

after the departure of Mr Young, who had any expertise in trading in

securities on the money market. Mr Young departed at the end of 1973 and

it was not until Mr Hill's return in April 1975 that the arrangements

were entered into between Mr Hill and Mr Scott-Kemmis which are the

subject of comment in Part 4, Section 7.

2.33.7 The money market trading which Mr Hill recommenced on his

return, was of a very limited nature as is explained at 3.3.36. Mr Hill

was permitted to buy and sell securities solely for the purpose of

securing deposits. In order to attract prestigious depositors, such as

local government councils, Mr Nugan authorised him to offer one per cent

above the going rate notwithstanding that this resulted in a loss.

2.33.8

2.33.9

2.33.10 Mr Hill was also a director of Nugan Hand (Hong Kong) Ltd [2.94]

and the Nugan Hand Bank [2.106], Mr Collings, who considered Nugan Hand

(Hong Kong) Ltd to be 'his very special company' consulted Mr Hill during

the course of his negotiations with the Wing On Bank, which negotiations

resulted in that bank guaranteeing Hong Kong depositors in respect of

- 185 -14

their deposits with Nugan Hand Ltd. In November 1977, Mr Hill,

together with Mr Brincat, visited the Hong Kong office to establish an

internal accounting system for Nugan Hand (Hong Kong) Ltd.'*·'’ Further,

Mr Hill advised Nugan Hand (Hong Kong) Ltd and the auditors of that

company, that negotiable certificates of deposit were held by Nugan Hand

Ltd on behalf of Nugan Hand (Hong Kong) Ltd which he knew to have been 15

pledged by Nugan Hand Ltd to its own depositors. When the company

auditors visited Sydney to examine the negotiable certificates of deposit

Mr Hill arranged for the certificates to be temporarily uplifted from the

ANZ Bank, where they were held for Nugan Hand Ltd's own depositors, for

the purposes of the inspection. [Further details of these events are

provided in Part 4 Section 1.]

2.33.11 As far as the Nugan Hand Bank was concerned, Mr Hill was closely

involved with the production of a set of records and financial statements

for submission to the Bank's auditors in the Cayman Islands. In the

process, the accounts prepared by the Bank's accounting office in

Singapore were rewritten, principally by Mr Brincat in accordance with

instructions from Mr Nugan. In each of the years 1977, 1978 and 1979,

Mr Hill travelled to Singapore with Mr Brincat to check the accounting

records and to make arrangements for the records to be made available in

Sydney. After the records were rewritten, and a set of financial

statements prepared based upon the rewritten records. Mr Hill took them

to the Bank's auditors in the Cayman Islands."*"® In 1977 and 1978 the

accounts were passed by the auditors. In 1979, however, the auditors,

alerted by adverse publicity, sought an undertaking from Mr Hill that the

accounts reflected the true position of the Bank's finances. Mr Hill

declined to give the undertaking and consequently the auditors advised

the Banking Commissioner that the accounts could not be presented to the

Commissioner in accordance with the requirements of Cayman Islands law.

[This matter is considered in detail at paragraphs 4.2.117 to 4.2.177.]

2.33.12 According to Mr Hill, he proffered his resignation in 1978 in

order to further his legal studies and, though his resignation did not

take effect, he claimed to be less involved in the Group's 'day to day 19 activities' during 1979. It was Mr Brincat who, on learning of

- 186 -

Mr Hill's proposed resignation in early 1979, sought Mr Hill's assistance

in persuading Mr Nugan to cease using the device of the internal

. 20

bills. Discussions concerning this matter continued and culminated

in a conversation between Mr Hill and Mr Nugan on the Friday before his

death. During this conversation, which is reported in full at paragraphs

3.7.6 to 3.7.9, Mr Hill spoke of resignation and Mr Nugan spoke of

committing suicide as Mr Nugan's only way out of his problems.

2.33.13 Mr Hill's activities following Mr Nugan's death and his role in

the concealment and destruction of records are reported in detail in

Part 3 Sections 8 and 9.

2.33.14 He finally tendered his resignation as a director of Nugan Hand

Ltd on 5 April 1980.21

2.33.15 Finally, it should be noted that apart from his position as a

director of Nugan Hand Ltd, Nugan Hand (Hong Kong) Ltd and the Nugan Hand

Bank, Mr Hill held a number of positions with the following companies:

Australasian and Pacific Holdings Ltd [2.80] - director from 21 October 1977 Hidex Pty Ltd [2.84] - director from 5 May 1978 Newcourt Financial Services Pty Ltd [2.91]

- director from 16 October 1978 S.L. Notwist Pty Ltd [2.103] - director from 30 September 1976 Illarangi Investments Pty Ltd [2.85]

- director and secretary from 17 November 1977 Leasefast Pty Ltd [2.87] - secretary from 23 September 1976 to 2 December 1977 NHN Management Pty Ltd [2.92]

- director and secretary from 1 August 1977 Nugan Hand (Dealers) Pty Ltd [2.93] - director and secretary from 1 August 1977 Nugan Hand International Holdings Pty Ltd [2.96]

- director from 2 February 1976 to 1 August 1979 and secretary from 28 October 1975 to 1 August 1979 Nugan Hand Trade Services Pty Ltd [2.98] - director and secretary from 20 October 1976.22

- 187 -

Endnotes

1 CT15490, CT15511-12, Hill

2 CT24847, Young

3 CT15490, Hill

4 CT24847, CT24850, CT24852-53, Young 5 CT1490a, CT21721, Young; CT21721, Hill; CD11339 6 CT16256, Hill

7 CT20140-41, Burton; CT23958, K. Nugan 8 CT25765, Hill

9 CT16223-29, Hill; CT21507, Hill; CD3667 folio 148 10 11 12

13 14 CT22816, Collings 15 CD11153, folio 80

16 CT22849, CT24808, Hill; CD10083 folio 30 17 CT24082-84, Hill

18 CT21630, CT21814-15, Hill 19 CT15490a, Hill

20 CT15719, Hill

21 CT21856, Hill

22 CD10690

2.34 HOLMGREN, Dale Oscar

2.34.1 Mr Holmgren did not give evidence before the Commission. The

information herein relies solely upon material contained in documents

produced to the Commission in the course of its inquiry, including

documents produced by other investigative bodies.

2.34.2 Mr Dale Oscar Holmgren was born 16 April 1935 and is a United

States citizen. He graduated from Kansas State University in 1958 with a

Bachelor of Science degree and later attended Quartermaster's School

Fort Lee, Virginia, where he completed six months basic training. As

part of his military training program Mr Holmgren was assigned to the

Military Assistance Advisory Group in Taiwan where he conducted the

Officers Mess. On completing his tour of duty in Taiwan, Mr Holmgren

returned to the United States, where he was discharged. He then returned

to Taiwan and managed all in flight services for a group named Civil Air

- 188 -

Transport. Mr Holmgren held this position from 1960 until 1965. After

leaving Civil Air Transport Mr Holmgren commenced a company called

Oceanic Engineering which was involved in the repair and maintenance of

ships. He later became president of Oakwood International Corporation,

Taiwan which undertook diecasting and the manufacture and export of

mopeds.1

2.34.3 In an interview with the Joint Task Force on 15 December 1982,

Mr Holmgren said he met Mr M.J. Hand [2.2] at a cocktail party in m y

1978. After discussions with Admiral E.P. Yates [2.76] in Taiwan,

Mr C.L. Collings [2.15] in ftong Kong and Mr Hand in Singapore,

Mr Holmgren agreed to 'assist' the Nugan Hand Group in November 1978.

Mr Holmgren said that at a meeting with Mr Hand, the possibility of an

office being opened in Taiwan had been discussed. At a subsequent

meeting Mr Hand had raised the possibility of Mr Holmgren acting as the

Taiwan representative for the Group. Mr Holmgren told the Joint Task

Force that when he decided to assist the Nugan Hand Group, the agreement

was that he was not to be paid, as he had other business commitments and

did not want to create a position of employment with the

organisation.2

2.34.4 Documents before the Commission, however, indicate that this was

not the case. A memo from Mr Collings to Mr Hand dated 15 June 1978,

gives details of the Taiwan office and lists an address in Taipei and

private information relating to Mr Holmgren.3 Also, two letters from

Mr Collings to Mr Holmgren (both dated 19 June 1978) indicate that

Mr Holmgren was employed by the Nugan Hand Bank before November 1978.

The first letter confirms Mr Holmgren's employment as 'a representative

of the Nugan Hand Bank and Manager of the Taiwan office', details the

terms of his employment, including the payment of US$1,000 per month in

salary, and gives his commencement date as 1 June 1978.4 The second

letter authorises Mr Holmgren to 'fulfill the function of

"representative" in furthering the business activity of all parts of

Nugan Hand International'.3

2.34.5 In his interview with the Joint Task Force, Mr Holmgren said he

was neither responsible for the recruitment of depositors to the Group

- 189 -

nor the payout of any money. He claimed he was not aware of any deposits

being taken in or paid out in Taiwan. 0 However, in a memo from

Mr Collings to Mr Hand dated 19 July 1978, it is stated that Mr Holmgren 7

had * 1 cracked the ice already' with a deposit for US$1 850. In a

letter to Mr Hand on 9 September 1978, Mr Holmgren said he was confident

that deposits would be coming in to the Taiwan office in the near

future.0 Also a memo from Mr Tan Choon Seng [2.71 ] to Mr Holmgren on

29 October 1979 details the brokerage due to him for deposits he had

solicited and advises that the funds would be credited to his

account.®

2.34.6 Mr Holmgren attended the Sydney conference of Nugan Hand

International representatives in January 1979 [3.5.45] where he gave a

report on Taiwan.10 In October 1979, he attended the Sydney conference

held at the Gazebo Hotel [3.6.13] where he met Messrs D.E. Beazley [2.7]

and M.B. Houghton [2.35].11 Mr Holmgren subsequently spoke with

Mr Beazley in Hong Kong and expressed uneasiness about the Nugan Hand

Group. Shortly after this, Mr Hand informed Mr Holmgren of Mr Nugan1s

death.^

2.34.7 Mr Holmgren then asked Mr Hand for the US$35 000 in expenses

which was owed to him. Mr Holmgren told the Joint Task Force that he

only received US$24 000 of this amount before the Nugan Hand Group's

collapse.11

Endnotes

1 CD4431 folio 3, Promotional literature for Oakwood; CD1162 folio 1, JTF ROI Holmgren 15/12/82 2 CD1162 folios 2-3

3 CD1563 folio 24, Memo Collings/Hand 15/6/78 4 CD1819 folio 3, Letter Collings/Holmgren 19/6/78 5 CD4431 folio 7, Letter Collings/Holmgren 19/6/78 6 CD1162 folios 3-4

7 CD1819 folio 34, Memo Collings/Hand 19/7/78 8 CD4431 folios 24-25

9 CD8655 folios 3-10, Holmgren brokerage documents 10 CD11135

11 CD1429 'Last Supper' tapes and transcript 12 CD1162 folio 4

13 CD1162 folios 3-4

- 190 -

2.35 HOUGHTON, Maurice Bernard

2.35.1 Mr Maurice Bernard Houghton was born in Texas, the United States

on 25 July 1920. He was studying business management at University when

the United States went to war. He enlisted in the Air Force Cadet

Training Program and was discharged in 1946. Mr Houghton told the Joint

Task Force that following his military discharge he 'went into business,

restaurants, clubs, surplus war material and miscellaneous' occupations

until 1964 when he then travelled to South East Asia. For the next

three years Mr Houghton was employed by a Mr William Green whose business

involved port, airport and military base construction. He travelled to

places such as Saigon and Bangkok 'contacting construction purchasing 2

departments [for the] procurement of construction materials'. In this

role he made contact with many United States military personnel involved

in the Vietnam War.

2.35.2 He came to Australia on 1 January 1967 and commenced work as a

real estate salesman with Parkes Development Pty Ltd. In November 1967

he opened the Bourbon and Beefsteak bar and restaurant in Kings Cross,

Sydney. The premises were partly owned by Comserv (No.86) Pty Ltd, a

company controlled by Mr Houghton. In February 1968, Mr Houghton

purchased shares in Argus Investments Pty Ltd which owned a private hotel

at Potts Point, Sydney. That hotel subsequently became the Texas 3 Tavern. It was at the Bourbon and Beefsteak and the Texas Tavern that

many of the people who later became associated with the Nugan Hand Group

first met.^

2.35.3 Due to his experience in the liquor industry, Mr Houghton

assisted at David Lynn Pty Ltd, a liquor store at Waterloo which

according to Mr Houghton was experiencing financial difficulty in the

early 1970's, and later, in partnership with Mr John Charody, Sir Paul

Strasser and Mr Robert Whyte opened 'Harpoon Harry's', a restaurant in

Sydney. He left this partnership in January 1974. He told the

Commission that in partnership with Mr Lesley Senes and Mr Charody he

purchased the premises of the Aquatic Club in Potts Point which were then

leased back to the Aquatic Club. Mr Houghton subsequently withdrew from 5 this partnership.

- 191 -

2.35.4 Mr Houghton first met Mr tend in the late 1960's when the latter

came to Australia. During Mr Hand's visits to the Bourbon and Beefsteak,

he became friendly with Mr Houghton. Subsequently Mr Houghton borrowed

money from Mr Hand on several occasions; interest free and without

security. These loans by Mr tend were made by cheques drawn on various

Nugan Hand companies. The first was in approximately October 1977 when a

cheque for $35 000 was drawn on Yorkville Nominees Pty Ltd [2.108] in

favour of Poziers Pty Ltd, another of Mr Houghton's companies.®

2.35.5 In evidence to the Commission, Mr R.A. Pulger-Frame [2.59]

referred to a meeting that he had with Mr Nugan in late 1977. En route

to Sydney from Hong Kong Mr Pulger-Frame had been stopped in Hong Kong

and searched for drugs and Mr Nugan was visibly upset when he heard this

on Mr Pulger-Frame's arrival in Australia. After this arrival

Mr Pulger-Frame went to Mr Houghton's apartment in Elizabeth Bay, Sydney

where, according to Mr Pulger-Frame, Mr Nugan 'literally sat at his

[Mr Houghton's] feet' and requested Mr Houghton's assistance. According

to Mr Pulger-Frame Mr Houghton said he, with his connections in the

United States, would get to the bottom of the matter and there was 7 nothing to be concerned about.

2.35.6 In October 1978 Mr Hand offered Mr Houghton an all expenses paid

trip to Europe in return for an opinion on the viability of the

F.A. Neubauer Bank [2.109] in Hamburg which was being purchased by the

Nugan Hand Group. En route to Germany Mr Houghton visited Hong Kong

where he was joined by Miss E.L. Thomson [2.72]. They visited the

Frankfurt office of the NUgan tend Group which was managed by Mr K.F.

Schuller [2.63]. Mr Houghton later advised Mr Hand to close this

office. In respect of F.A. Neubauer Bank and its Hamburg office,

Mr Houghton reported to Mr Hand that there appeared to be no activity in

the office which would generate business, no money changing hands, few

telephone calls and no customers entering the office. He recommended

that the personnel have their employment terminated.

2.35.7 Mr Houghton returned to Australia via the United States where he

visited Admiral E.P Yates [2.76] who encouraged him to join the Nugan

- 192 -

Hand Group. While in the United States Mr Houghton met with Mr James

Wheeler, an employee of Beck Arabia who informed Mr Houghton of banking

opportunities in Saudi Arabia. Oi learning this Mr Hand asked

Mr Houghton to travel to Saudi Arabia and assess the feasibility of

conducting business there. Mr Houghton agreed and on his first visit to

Saudi Arabia was successful in obtaining deposits for the Nugan Hand

Bank. He made several further trips and eventually established an office

there in April or May 1979 which he operated until April 1980.9

Mr Houghton also attracted some deposits in Australia."^

2.35.8 In return for establishing the Saudi office, Mr Houghton was to

be paid his expenses plus one and a half per cent commission on deposits

taken on a yearly basis. He told the Commission that he realised this

would not fully compensate him for the disadvantages of living in Saudi

Arabia but he had an arrangement with Messrs Nugan and Hand whereby a

loan of $35 000 made to Mr Houghton by Mr tend would be discharged once

he had provided services to that value. According to Mr Houghton this

debt was secured by a mortgage over his home unit at Elizabeth Bay.

After he had spent some time in Saudi Arabia establishing the office,

Mr Houghton raised once more with Mr Hand the matter of his remuneration

as he had not received any of the commission he had been promised. It

was agreed that from 1 January 1980 he would be paid $100 000 per annum

plus expenses and the $35 000 debt would be d i s c h a r g e d . T h e

discharge of mortgage was in fact signed by Mr Nugan and handed to

Mr Houghton. However, no payments other than expenses were received by

Mr Houghton."*"^

2.35.9 During 1979, meetings were held in Geneva, Switzerland between

Mr Houghton on behalf of the Nugan tend Group and Mr Edwin P. Wilson now

serving a prison sentence in the United States of America for illegal

arms dealing, among other offences. Mr Houghton said Mr Wilson was

looking for letters of credit worth US$22 million to enable him to supply . . 12

Korean made uniforms to Libya. Mr Houghton approached Messrs Nugan

and Hand concerning this request but Mr Wilson subsequently obtained the

letters of credit elsewhere. Mr Houghton saw Mr Wilson on several other

occasions and offered him the services of the Nugan Hand Group in the

- 193 -

banking field but to Mr Houghton's knowledge nothing eventuated.

[The matter of alleged arms dealing is dealt with in Part 7 of this

report.]

2.35.10 Between December 1979 and January 1980 the Group began

negotiations for purchase of a London bank known as London Capital

Securities Ltd [2.111]. Following the death of Mr Nugan, Mr Hand told

Mr Houghton that he could not afford to continue with the purchase.

Mr Houghton suggested that Mr Ricardo Chavez, a person who had deposited

large sums of money with the Nugan Hand Bank in Saudi Arabia, might be

interested in acquiring London Capital Securities Ltd. According to

Mr Houghton, in February 1980 he withdrew funds from the account of

Mr Chavez with the Bank and took them to London. The funds were handed

over to the vendors of London Capital Securities Ltd and a share

certificate was issued in the name of Nugan Hand Group president Mr D.E.

Beazley [2.7]. The certificate was endorsed by Mr Beazley in favour of

Mr Chavez and Mr Houghton delivered the certificate to Mr Chavez in 14 Switzerland some days later.

2.35.11 Mr Houghton was present at the Sydney office on the days

immediately following the death of Mr Nugan. He retained a solicitor,

Mr M.J. Moloney [2.48], for the purposes of dealing with press inquiries

arising out of the death of Mr Nugan. Mr Hand later sought Mr Moloney's

assistance on a range of matters. During the week following

Mr Nugan's death, depositors were asking for repayment and Mr Houghton

lent Mr Hand $20-25 000 for this purpose on a daily floating basis. The

debt was repaid within a couple of weeks."*"® [For Mr Houghton's role in

the events following the death of Mr Nugan see Part 3 section 8 ]

2.35.12 In February 1980 Mr Houghton returned to Saudi Arabia where he

passed on to his staff assurances he had received from Mr Hand that the

overseas operations were sound. He then returned to Australia via the

United States where he was contacted by Mr R.M. Murphy [2.50] who was

then a Saudi employee, and who was concerned about current newspaper

reports alleging the collapse of the Nugan Hand Group in Hong Kong. He

advised Mr Murphy to leave Saudi Arabia and go to London where they met

before returning to Australia together."*"^

- 194 -

2.35.13 Hr Houghton was summonsed to appear before the Royal Commission

on his return to Australia in April 1984 and he gave evidence on 16 April

1984 and 15 August 1984.

2.35.14 At the time of giving evidence Mr Houghton said he was currently

manager/consultant to the Bourbon and Beefsteak bar and restaurant. * 1 1 1

Endnotes

1 CD5491 folio 3, JTF interview Houghton 22/6/81 2 CD5492 folio 3, JTF interview Houghton 23/11/81 3 CD1308 part 93 folio 2, JTF ROI Houghton 9/6/81; CD1308 part 93

folio 33, JTF ROI Houghton 30/1/81, 4 CT19906 Moloney; CT22528-29, CT22599 Houghton; CD3608 folio 10, Gehring evidence to CAC 3/6/80; CD10859 folio 11 5 CT22521-23, Houghton 6 CT22528-29, Houghton 7 CT22707-08, Pulger-Frame; CD4625 folios 111-12, Official

Receiver Hong Kong interview of Pulger-Frame 8 CT22523-26, Houghton 9 CT22526-28, CT22530 Houghton; CD1308 part 92 folio 3 10 CT22584-88, Houghton 10a The evidence suggests that both Mr Houghton's salary and

the $35 000 loan were in Australian dollars. 11 CT22529-30, Houghton 12 CD10624 folio 82, Houghton statement to Commission 14/8/84 13 CD1308 Part 93 folios 39-40, JTF ROI Houghton 10/2/82;

CD10624 folio 83; JTF Report p 491 14 CT22554-56, Houghton 15 CT22540, Houghton

16 CT22545, Houghton

17 CT22550-51, Houghton 18 CT22521 Houghton

2.36 KWOK, Dr Albert

2.36.1 Dr Albert Kwok has been a Director of Wing On Bank in Hong Kong

since 1971, and Chief Manager since 1 May 1977.·*" In 1975, Dr Kwok met

Mr C.L. Collings [2.15], after the Wing On Group invested US$10 000 with

the 'Ingold Growth' fund, which Mr Callings was promoting in Hong Kong at 2 the time. According to Mr P.M. Dunn [2.18], Mr Collings developed a

very close relationship with Dr Kwok.^

- 195 -

2.36.2 In his evidence to the Supreme Court of New South Wales in

Wing On Bank Ltd v Secured Income Real Estate (Australia) Ltd and Ors1 ^

Dr Kwok said he met Mr Col lings in 1975; he agreed that they had

negotiated an arrangement between the Wing On Bank and Nugan Hand Ltd

[2.97].^ Mr Collings said in evidence before the Commission that after

discussions with Mr S.K. Hill [2.33] and Mr F.D. Ward [2.73], he put the

proposal to Dr Kwok concerning the Wing On Bank. As a result of

discussions between Mr Collings and Dr Kwok over a period of time, an

arrangement was ultimately agreed upon whereby the Wing On Bank

guaranteed to Hong Kong depositors, who placed funds with Nugan Hand Ltd,

repayment of those deposits.6

2.36.3 In late 1975, Dr Kwok was involved as a party in legal

proceedings concerning conspiracy to defraud. Mr Collings said Mr F.J.

Nugan [2.1] travelled to Hong Kong with legal precedents3 and,

according to Mr S.K. Hill, Mr Nugan assisted Dr Kwok in the

proceedings. ® Correspondence from Mr Nugan to Dr Kwok supports both of 9 these statements. Messrs Collings and Hill said in evidence that as a

result of the litigation a close relationship developed between Mr Nugan

and Dr Kwok. " * " 61 Mr Hill proffered the opinion that this led to the Wing

On Bank granting more and more facilities to the Nugan Hand Group.33

However, a telex from Mr Collings to Messrs Nugan and Hill, dated

25 January 1978, indicated that Dr Kwok would 'not go much higher' until

he had independently ascertained the convertibility of Nugan Hand paper

in Sydney, and pointed out that Dr Kwok would need to justify this with

the auditors anyway.·*·2 However, Dr Kwok in his letter addressed to the

Commission dated 9 April 1985 stated he could not 'recall any details of

changes in the arrangements made between July 1975 and January 1978'

regarding the safe custody account [see 3.3.39-3.3.41]. He also stated

he 'relied completely on references obtained from the BNSV (now Westpac)

and The ANZ Banking Group Ltd ('ANZ') in deciding to agree to the

arrangements with NHL'."*'3

2.36.4 Mr Ward said in evidence he understood that the securities being

held in Sydney on behalf of Wing On Bank would be a 'mix', but eventually

Wing Oi Bank would accept Nugan Hand Group paper. Mr Ward said it was a

- 196 -

matter for Mr Nugan and Mr Fill to determine the 'mix of

securities' nr Kwok stated:"*"^

'Winq On at ail times emphasized to NHL [Nugan Hand Ltd] and NHHK [Nugan Hand (Fong Kong) Ltd] that the amount of Nugan Hand paper which was to be accepted in the safe custody account was to he strictly limited. BNSW and ANZ did not monitor the

quality of the documents lodged in their respective safe custody accounts but Wing On kept a close watch on all switch

transactions whereby one type of security was replaced by another and I endeavoured to ensure that Nugan Hand paper was kept to a minimum as far as was possible...It was intended that additional Nugan Hand paper could only be placed in the safe custody account as part of the "within the day" arrangement.'

See 4.1.27 to 4.1.55 for details of these guarantee arrangements.]

2.36.5 Mr Hill gave evidence to the Commission that Mr Nugan's main

objective was to set up the Nugan Hand organisation and then sell it as

the nucleus of a large corporation.16 Mr Hill alleged discussions in 17

this vein had taken place between Mr Nugan and Dr Kwok. Mr Nugan's

proposal was that Wing On Bank purchase 49 per cent of the Nugan Hand

organization. Mr Hill further alleged that after Mr Nugan's death,

Dr Kwok was still considering buying the Nugan Hand Group 'to save ...

his investment [of] ... $3 million.'"1 '8 Dr Kwok stated in his letter to

the Commission, that he did not recall Mr Nugan ever having approached

him with a proposal that Wing On Bank purchase Nugan Hand Ltd or the

Nugan Hand Group. He also said he would definitely not have been

19

interested had he received such an approach.

2.36.6 The Wing On Bank had issued guarantees totalling $3 052 963 as

at 8 April 1980. At the time Nugan tend Ltd went into liquidation the

Wing Oi Bank safe custody account contained securities with a face value

of A$2.5 million. These securities comprised A$ 1 .8 million in worthless

Nugan Hand internal commercial bills, A$600 000 in Secured Income Real

Estate (Australia) Ltd ('SIRE') [2.118] commercial bills and A$100 000 in . 20

ANZ bank bills. The Wing On Bank honoured the guarantees given to 2 1 21

depositors in respect of which Nugan tend Ltd defaulted.

- 197 -

2.36.7 As noted earlier the Wing On Bank took legal action against

SIRE, to recover the $600 000 represented by the SIRE bills. The Supreme

Court of New South Wales gave judgment in favour of Wing On Bank,

however, an appeal has been lodged by SI R E . ^ This appeal had not been

heard at the time of writing this report.

Endnotes

1 CD10940 folios 40-41, Kwok evidence to Supreme Court of N.S.W. Feb 1982 2 CT22781, CT22783, CT22791, Collings; CD6491 folio 19 3 CT22460, Dunn

4 CD10940 Wing On Bank v. SIRE - Appeal Book CA152 of 1982,

CL11095 of 1981 5 CD10940 folio 41

6 CT22789-91, CT22796, Collings 7 CT22813-14, Collings 8 CT21839, Hill

9 CD6572 folios 13-15, Letters Nugan/Kwok 9/4/76, folios 25-26, Letter Nugan/Kwok 29/3/76 10 CT22813-14, Collings; CT21839, Hill 11 CT21839-42, Hill

12 CD11097 folio 65, Telex Collings/Nugan and Hill, 25/1/78 13 CD11529 folio 86, Letter Kwok/RCINH 9/4/85 14 CT23198, Ward

15 CD11529 folios 83-84

16 CT21927, Hill

17 CT21839, Hill

18 CT21496, Hill

19 CD11529 folio 83

20 CD5116 folio 8, Nuhan Ltd List of Bills

21 CD10940 folios 310-12, Affidavit of Kwok sworn 16/4/82 22 CD10940 folio 329, Judgement Wing On v SIRE 14/5/82, folios

331-36 Amended notice of appeal - SIRE (Australia) Appellant and Wing On, Calder, Swan Respondents 2/6/82

2.37 LEE, Alexander

2.37.1 Mr Alexander Lee was born in the United Kingdom and came to

Australia in 1955. In the United Kingdom he obtained a diploma in

management from the London School of Economics. In Australia he obtained

a diploma in accountancy from the Department of Technical Education and

has been registered in New South Wales as a public accountant since about

- 198 -

1962."*· Οι 1 July 1969 he and his wife, Mrs Yolanda Lee [2.38], who is

also an accountant, commenced an accountancy partnership under the

business name Alex Lee & Company. From May 1972 until April 1980 that

firm carried on business at 45 Macquarie Street, Sydney. On 1 July 1979

Mr Steven Heller, accountant, became a registered proprietor of the 3 business. Mr and Mrs Lee and Mr Heller are also shown on Corporate

Affairs Commission records as being registered proprietors (from 10 March

1980) of lee Heller & Company, an accountancy practice with the same 2

business address as Alex Lee & Company.

2.37.2 While practising as an accountant Mr Lee completed a part time

law degree at the University of New South Wales. In July 1979 he was

admitted as a solicitor with a restricted practising certificate and 4

commenced employment with Nugan & Company, solicitors. When

Mr F.J. Nugan [2.1] died in January 1980 Mr Lee commenced employment with

Mr J.L. Aston, solicitor, and remained with Mr Aston's firm until he 5

obtained his full practising certificate in July 1980. Mr Lee then

commenced practice as a solicitor under his own name and later advised

the Corporate Affairs Commission he had ceased to carry on business under

the business names of both Alex Lee & Company and Lee Heller & Company.

In January 1983 Mr J. Rigg, solicitor, became a partner with Mr Lee in

the legal firm which then changed its name to Lee Rigg & Company.®

2.37.3 Mr Lee met Mr Nugan in the early part of 1974, when they were 7

introduced by one of Mr Lee's clients. At their first meeting,

Mr Nugan offered assistance in relation to taxation matters, and for some

time thereafter Mr Lee met Mr Nugan about every month for the purpose of

obtaining advice about the taxation affairs of his (Mr Lee's)

clients.® Shortly after Mr Lee's introduction to Mr Nugan, Mr Lee

began to make deposits, on behalf of clients of his accountancy practice, 9 to Nugan Hand Ltd [2.97], Clients of Mr Lee sought taxation advice

from Mr Nugan and made deposits to the Nugan Hand Group until its

collapse in April 1980.

2.37.4 Mr Lee told the Commission that he, on behalf of his clients,

availed himself of two of the taxation schemes offered by Mr Nugan. He

- 199 -

said that about ten of his clients participated in the Yorkville Nominees

Pty Ltd [2.108] management scheme [see Part 9], and that about 6300 000

was invested by his clients in this way."*"^1 Further clients

participated in a scheme which involved the purchase of a franchise from

Distravite Pty Ltd [2.82]. " * " In addition, Mr Lee advised his clients

of the competitive interest rates offered by Nugan Hand Ltd and inquired,

on their behalf, about the interest rates available for particular 12 deposits. In return for his introduction of clients to the Group,

Mr Lee received at different times from Mr Nugan, cash payments which he

estimated variously at a total of one, two, three, four and five thousand 13 dollars. The first payment could have been made in 1976 and the

14

payments continued until the time of Mr Nugan's death. [See also the

Commission's Interim Report No. 2 at 5.90 to 5.149.]

2.37.5 In November 1978, Mr Lee attended a luncheon at Mr Nugan's home

at Vaucluse, a suburb of Sydney, at which the possibility of Mr Lee and

Mr Q.D. George [2.24] commencing employment with Nugan & Company (and

eventually becoming partners in the practice) was discussed."*"5 Mr Lee

commenced employment with Nugan & Company, as a solicitor, in July 1979,

although he had done legal work in connection with clients of that firm

from about 1 9 7 7 . Mr Lee said he considered his starting salary,

which he said was $12 000, to be too high but Mr Nugan insisted on paying

this amount and stated that it diminished his own status if his employees 17 were not well paid. From August 1979, Mr Lee, according to him at

Mr Nugan's suggestion, arranged for part of his salary to be paid

offshore; A$1 000 per month was thereafter paid into an account with the

Nugan Hand Bank in Singapore.

2.37.6 In October 1979, Mr Lee visited the Hong Kong offices of the

Nugan Hand Group at the request of Mr Nugan. He was asked to ensure that

the records of nominee companies incorporated in Hong Kong were being

correctly maintained, and that the statutory requirements had been 19

complied with. His expenses were met by Nugan Hand. After

Mr Nugan's death, Mr Lee's accountancy firm prepared rough balance sheets

and accounts, to trial balance stage, for three or four of the companies

within the Nugan Hand Group. Mr Lee was responsible for liaison between

- 200 -

20

his firm and Nugan Hand for this purpose. Mr Lee remained with Nugan

& Company for several weeks after Mr Nugan's death in order to complete 21 outstanding matters. χ

2.37.7 Mr Lee became a director of the Nugan Group Ltd, Griffith

[2.114] in 1978 and held the position of managing director during 1983.

His accountancy firm did taxation work for the Nugan Group Ltd and Mr

K.L. Nugan [2.52].22

2.37.8 Mr Lee arranged, through Nugan Hand, for transfer of funds to

London on four occasions for the purchase of coins on behalf of himself

and his clients. These funds were transferred using the Yorkville contra 23 system [see Part 8 ],

Endnotes

1 CT18478-81, A.Lee

2 CD9021, CAC information 3 CT18482, CT18593, A.Lee 4 CT18485, A.Lee; CD9037 folio 5, Law Society of New South Wales

records

5 CT18490, A.Lee

6 CT18490-91, A.Lee; CD9021, CAC information 7 CT18626, CT18639, A.Lee 8 CT18491-92, A.Lee

9 CT18494, CT18552, A.Lee 10 CT18612, A.Lee

11 CT18619, A.Lee; CD11219 Vol.3, Lee ROI questions 59-64, 129-30 12 CT18494, A.Lee

13 CT18552, CT18554-55, A.Lee; CT21207-08, CT21209, Y.Lee; CT24459, A.Lee CT24451, 14 CT18557, A.Lee

15 CT18486-89, A.Lee

16 CT24445, A.Lee; CD2687 folios 12,13,14, Information Society of New South Wales from Law 17 CT18486-88, CTl8516, A.Lee 18 CTl8536, CT18545, A.Lee; CD4559 folio 2, Letter 15/2/80 Lee/Tan

Choon Seng re Lee's accounts; folio 5, Memo Tan Choon

Seng/Karuna 6/2/80 confirming receipt of money to Lee 6/2/80; folio 14, Memo Hill/Hand and Tan Choon Seng re Lee's new account 15/8/79; CDS885 19 CT18507, CT18510-11, A.Lee

20 CT19154, CT19157, Heller 21 CT18489-90, A.Lee

22 CT18574, A.Lee; CT19160-61, Heller 23 CT18567, CT18585, CT18587-89, CT18592-92, A.Lee; CD10976; CD8885 folios 2, 3, 5, 7, 101, 141, 183, 229, 313, 414-16

- 201 -

2.38 LEE, Yolanda

2.38.1 Mrs Yolanda Lee is the wife of Mr A. Lee [2.37]. Mrs Lee was an

alderman of Ku-ring-gai Municipal Council from 1975 to 1980. She was a

member of the Finance and General Purposes Committee from 1974 to 1977

and Deputy Mayor of that Council from 1977 to 1980. " * " Mrs Lee's

evidence to the Commission and other matters regarding the Ku-ring-gai

Municipal Council's investments with Nugan Hand Ltd [2.97] has been

reported upon in the Commission's Interim Report No. 2.

2.38.2 In 1962 Mrs Lee obtained a Diploma in Accountancy from the New

South Wales Department of Technical Education and immediately commenced 2 her own accountancy practice. On 1 July 1969 Mr and Mrs Lee formed an

accountancy partnership called Alex Lee & Company."* In December 1977

Mr Steven Heller commenced work as an employed accountant for this

partnership. On 1 July 1979 Mr Heller became a partner in the firm and

remained as such until June 1983. The latter partnership was initially

called Lee Heller & Company. Mr Lee resigned on 1 July 1981 and the 4

partnership comprised Mrs Lee and Mr Heller. That partnership was

dissolved when Mr Heller left and commenced business on his own account

in June 1983.**

Endnotes

1 CT18911 Y. Lee; CD2366C

2 CT18480, CT18482, A.Lee 3 CT18482, A.Lee

4 CD9021 folio 3, CAC Information 5 CT19147-48, Heller

2.39 LOOMIS, Patry Gene

2.39.1 Mr Patry Gene Loomis was born in Wisconsin, the United States,

on 5 July 1945."*" He graduated in 1969 with a Bachelor of Science

degree, from the University of Wisconsin.^

- 202 -

2.39.2 Mr Loomis told the Commission that he was recruited as an

operations officer for the United States Central Intelligence Agency

('C.I.A.') in 1969. He served in Vietnam between 1970 and 1972 as a

paramilitary adviser, following which he had a commercial cover

assignment in South East Asia. In 1976 he returned to the United States

and worked on assignment at C.I.A. Headquarters until he resigned in

1977.3

2.39.3 Between 1977 and 1978 Mr Loomis was associated with Mr Edwin

Wilson's company, Consultants International, as an independent sales

representative. This involved sourcing supplies for overseas contracts,

which included everything from uniforms to agricultural products, for

export primarily to the Middle East. Mr Loomis moved to Ireland

following termination of this employment. He was, as at 25 October 1984

the Managing Director of a company named Lowe Alpine Systems, Tullamore, 4

Ireland which manufactures mountaineering and bush walking equipment.

2.39.4 Mr Loomis appeared before the Commission and said he was not

aware of any association between the Nugan Hand Group and the C.I.A.

Further, he stated that at the time of his association with Mr Wilson

[see Part 7] he had no knowledge of Mr Wilson's contact with either the

Nugan Hand Group or any other contacts in banking or business in

5

Australia. Mr Loomis was asked, whether at the time of his employment

at C.I.A. headquarters, he would have been likely due to his position to

know of any significant contact between the Group and the C.I.A.

Mr Loomis replied that the C.I.A. was compartmentalised even within the

operations branch and his position had nothing to do with South East Asia

or Australia. Mr Loomis did not have any knowledge of the Agency's

financing, or specifics about banks and individuals.6 In evidence

before the Commission Mr Loomis said that he had heard of the allegations

concerning the Nugan Hand Group and the C.I.A. through the media. He

agreed, however, that he had probably read these after the death of

Mr F.J. Nugan [2.1] in January 1980 [see also 4.3.35].3

- 203 -

Endnotes

1 CD11015 folio 1, Loomis statement to the Commission 25/10/84 2 CD2076 folio 25, Loomis resume, undated 3 CD11015 folio 1

4 CD11015 folio 1

5 CD11015 folio 2

6 CT23441, Loomis

7 CT23440, Loomis

2.40 LOOEY, Edward Craig

2.40.1 Mr Edward Craig Louey was born in Melbourne in 1940 of Chinese

parents. In 1963 he graduated from the University of Melbourne with an

honours degree in Commerce. He was employed as a market research

executive and a financial analyst and in 1966 assisted his family in

setting up a motel in Melbourne. In 1969 he worked as a marketing

manager promoting Australian exports and in 1971 commenced his own export

consultancy business, Export Administration A s s o c i a t e s . W h e n he gave

evidence to the Commission he said he was currently operating a business 2

which provided radio telephone equipment.

2.40.2 In January 1977 the Nugan Hand Group sought to recruit overseas

representatives by advertising in Time magazine in Australia offering

applicants the prospect of remuneration of $60 000 per annum

[Appendix D]. Mr Louey replied to this advertisement and was

subsequently employed as an overseas representative by Mr J.M. Gilder

[2.25]. Mr Louey saw this as a progression for himself and an

opportunity to work overseas for a time. He was told that he could

undertake trade work as well as his representative duties. Although

Mr Louey had no experience in the field of merchant banking he was one of

the few overseas representatives who had commerce based qualifications.^

2.40.3 After 'a few sessions' in which he was briefed on the overseas

market operations of the company and the duties of a representative

Mr Louey was posted to Singapore in August 1977. He worked there in

conjunction with Mr G.R. Steer [2.68] for about a month and started to

pursue trade opportunities. While there Mr Louey was appointed a

- 204 -

director of Nugan Hand Singapore (Pte) Ltd [Appendix B] but did not

actively serve as such.^ He was subsequently sent to Malaysia by

Mr Gilder because there was found to be no need for two representatives ■ . 5

in Singapore. While in Malaysia Mr Louey was asked to set up a

company as a business advisory service. This company was initially

called Nugan Hand Trade Malaysia Sdn. Bhd. (later Nugan Hand (Malaysia)

Sdn. Bhd. [Appendix B]) and Mr Louey became a director of this company.6

2.40.4 In a letter dated 15 September 1977 to Mr Gilder, Mr Louey

suggested that a payment of M$5 000 should be made to certain Bank Negara

(Malaysian Reserve Bank) officials in order to expedite the registration

of a Nugan Hand company in Malaysia. On the letter Mr Gilder had written

the words 'easier to pay $2000 cash1. In his evidence before the

Commission, Mr Gilder said he did not think this was an extraordinary

situation as 'Malaysia is a j p l a c e where everybody seems to pay everybody

else to get things done.' However, in evidence to the Commission

Mr Louey said the proposal to pay the officials was not put into

effect.®

2.40.5 Mr Louey's main activities in Malaysia were to attract people

who wished to invest in any of the Nugan Hand Group companies overseas.

Deposits were sent by new clients directly to Sydney, Hong Kong or

Singapore for crediting with the Nugan Hand Group.® Mr Louey enjoyed

considerable success in attracting these deposits. During 1978 he took

in excess of US$700 000 in deposits and, during the first six months of

1979, he took further deposits which probably exceeded US$1 million.

Mr Louey was paid commission on the deposits he brought in and he

estimated that in 1979 this amounted to about US$70 000 which he placed

in bank accounts in Kuala Lumpur and Singapore."*"®

2.40.6 Mr Louey was also involved in arranging back to tack loans for

clients [see Part 9]. He claimed he would not have accepted his

appointment with the Group had he known that this would be typical of the

work he would be doing. Nevertheless, he continued with his employment

at Nugan Hand because he and his family were ' under tremendous

hardship'

- 205 -

2.40.7 Mr Louey returned to Sydney towards the end of 1979 and

recommenced work with the Nugan Hand Group in mid to late January 1980.

His office was on the 4th floor at 55 Macquarie Street and his duties

were to concentrate mainly on the short term money market business by

soliciting short term funds from large companies such as the major

advertising agencies. Mr Nugan died on 27 January 1980 and Mr Louey told

the Commission that the situation in the Sydney office following

Mr F.J. Nugan1s [2.1] death was 'absolutely chaotic' [Part 3 Section 8 ].

He 'could not get any sense out of anyone' and, though he tried, he was

not able to see people like Messrs Gilder and M.J. Hand [2.2].^

Endnotes 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2

1 CT22139-40, Louey; CD649, folio 250, letter Louey re

advertisement in 'Time' 2 CT22139, Louey

3 CT22139-40, Louey 4 CT22140-42, Louey 5 CT22142-43, Louey 6 CT22144-45, Louey

7 CT22227-29, Gilder 8 CT22145-47, CT22180-82, Louey 9 CT22157-59, Louey 10 CT22160-63, Louey 11 CT22167-69, louey 12 CT22194-95, Louey

2.41 LOUIS, Raymond Albert Sidney (air)

2.41.1 Mr Raymond Albert Sidney Louis was born on 13 October 1910.1

He is the father of Mr R.S.A. Louis [2.42].

2.41.2 In August 1976, Mr Louis senior became general manager of the

Orange Spot group of companies [2.116] and his company, L.A.D.

2

Investments Pty Ltd, was appointed financial consultant to the Group

at a retainer of $1500 per month.^ Mr Louis was offered the position

of manager by his son, Mr R.S.A. Louis, who was associated with Nugan

Hand Ltd [2.97].^ On 13 December 1976, Mr Louis became a director of

Orange Spot Pty Ltd, and its eight subsidiary companies (the Orange Spot

- 206 -

5

Group). From 28 June 1979, Mr I,ouis also held one share in Orange

Spot Holdings Pty Ltd in trust for Mr F.J. Nugan [2.1].6

2.41.3 When he commenced his employment with the Orange Spot Group,

Mr Louis understood that Mr Nugan had purchased the Group, and that he

was to work for him.^ Shortly after taking up his employment, Mr Louis

sought advice from Mr Nugan regarding the business and was informed by

him that he (Mr Nugan) had nothing to do with it. This remained the

position until approximately August 1978, when litigation concerning the

Orange Spot Group was settled and Mr Nugan acknowledged that the Group

belonged to him.®

2.41.4 The business of the Orange Spot Group was the manufacture, sale

and distribution of orange juice to outlets in Sydney. The Group leased

land at Redfern on which a substantial factory existed and the Group's

assets included various items of plant. Mr Louis was unable to assess

the value of the Orange Spot Group at the time he commenced to manage it,

but informed Mr Nugan that it was not worth the $1 million that he was 9 reputed to have paid for it. The Group was in a very poor financial

state when Mr Louis commenced its management and he made drastic cuts in

staff. He believed that the Group made a very small profit about the

second or third year of his management."*"® Mr Louis remained full time

manager of the Group until Mr Nugan's death, and was then requested by

Messrs M.J. Hand [2.2] and M.J. Moloney [2.48] to continue in that

position."*""*" Ihe Orange Spot Group was subsequently sold to 'Mr Juicy',

a juice manufacturing and distributing company, for $500 000. Mr Louis

obtained $200 000 from the proceeds of the sale, in return for his

12

agreement to retire from the orange juice business.

2.41.5 Mr Louis also held the position of director of Distravite Pty

Ltd [2.82] and Distravite Australia Wide Servicing Company Pty Ltd [2.81]

from 13 December 1978. He was requested to take over the management of

these companies by Mr Nugan after the resignation of Mr B.W.Calder

[2.11].13

- 207 -

Endnotes

1 CD1217 folio 4, JTF ROI Louis, Snr 26/5/81 2 CT23252-53, Louis, Snr

3 CD9768 folio 13, Marbella Pty Ltd (previously The Orange Spot

Pty Ltd) taxation returns 4 CD10966 folio A

5 CT23257, Louis, Snr

6 CT23272, louis, Snr; CD10128 folio 17, Minutes - Orange Spot

Directors Meeting 28/6/79; CD10690, Data from CAC microfiche 7 CT23254, Louis, Snr

8 CT23255-57, Louis, Shr 9 CT23259, Louis, Snr; CD1058 folios 77-95, lease and

cor r espondence

10 CT23255, Louis, Snr

11 CT23269, Louis, Snr

12 CT23272, CT23276, Louis, Snr 13 CT23258, CT23268, Louis, Snr

2.42 LOUIS, Raymond Sidney Albert (Jnr)

2.42.1 Mr Raymond Sidney Albert Louis is the son of Mr R.A.S. Louis

(2.41]. He was first introduced to Mr F.J. Nugan [2.1] in the early

1970's by Mr J.C. Needham [2.51] for the purpose of investing funds. At

that time Mr Louis was conducting an insurance brokerage business.

Through Mr F.J. Nugan, Mr Louis met Mr K.L. Nugan [2.52] and subsequently

acted as broker for the Nugan Group Ltd and associated companies

operating in Griffith.1

2.42.2 In the course of his dealings with the Nugan Hand Group Mr Louis

invested $100 000 on behalf of Hornsby Rugby Union Club of which he was a

committee member. He later placed funds with Nugan Hand Ltd [2.97] on

behalf of several others and invested about $20 000 to $30 000 of his own

funds. Mr Louis agreed that he 'would have been promised commissions'

for investments with the Group but informed the Commission that, to the 2

best of his knowledge, he never received any such commissions.

2.42.3 In 1975 after the sale of Mr Louis' brokerage business, Mr F.J.

Nugan provided him with an office at 55 Macquarie Street, Sydney, free of

charge. Mr Louis made use of this office for about 12 months while

operating as a financial consultant and conducting a business installing

- 208 -

spa baths. During this period Mr Louis acted as a consultant for

Mr Nugan on various projects. At Mr Nugan's request he travelled to

New Guinea to investigate the market for gold coins and attended the

Nugan Hand Group office in Hong Kong to review operations there.

Mr Louis also undertook an inspection of the Orange Spot Group operations

[2.116] and reported to Mr Nugan that the purchase of the Orange Spot

business would be a 1 stupid investment1. While Mr Louis possessed no

accountancy or other specialist qualifications relevant to the areas in

which he undertook to consult, he classed himself as a 'businessman' and 4

examined the projects from that point of view.

2.42.4 Mr Louis net Mr L.P. Carter, the Town Clerk of the Council of

the City of Sydney, at the Nugan Hand office at 55 Macquarie Street,

Sydney and was aware that Mr Nugan had purchased land from Mr Carter for

subdivision and sale [see Interim Report No. 2]. Mr Louis occasionally

took telephone calls from Mr Carter regarding mortgage payments due to 5 Mr Carter from Mr Nugan. (While Mr Louis claims that this is the

extent of his knowledge of the Naretha Pty Ltd transaction, Mr M.J.

Moloney [2.48] gave evidence to the Commission that he received advice

from Mr S.K. Hill [2.33] that Mr Louis knew 'all about' this

transaction. Mr Moloney said that he subsequently contacted Mr Louis who

gave him the background information and indicated that the transaction

involved a private arrangement between Messrs Carter and Nugan.®)

2.42.5 Mr Nugan made lavish promises of remuneration for Mr Louis'

consultancy work including shares in the Nugan Hand Group and substantial

amounts of money, but ultimately Mr Louis received nothing. He was also

promised the use of a vehicle but again this never eventuated and

Mr Louis used his own car.^

2.42.6 Mr Louis believed that some of the early deposits he made on his

own behalf were invested with Yorkville Nominees Pty Ltd [2.108]. He

also borrowed $50 000 from this company secured by a mortgage over a

property that he owned on the Central Coast of New South Wales. This

mortgage was subsequently discharged, and the loan repaid, on the sale of

the property.

- 209 -

2.42,7 Mr Louis terminated his association with the Nugan Hand Group 9

before Mr Nugan's death because he was not earning sufficient income.

At the time of giving evidence he was the publican of a hotel in the

10

Hunter Valley.

Endnotes 1 2 3 4 5 6 7 8 9 1 0

1 CD10097 folios 3-4, Louis, Jnr, Interview with Commission 19/4/84 2 CD10097 folios 4-5; CD499, Hornsby Rugby Union Club - Deposit Doc's - NHL 3 CT22483-88, .Louis, Jnr; CD10097 folio 5 4 CT22484-86, Louis, Jnr 5 CT22478-79, Louis, Jnr

6 CT22289-90, Moloney 7 CD10097 folio 6

8 CD10097 folios 6-7

9 CT22486, Louis, Jnr

10 CT22477, Louis, Jnr

2.43 LOVATT, Gillian

2.43.1 Mrs Gillian Lovatt was born in Essex, England on 19 October 1931

and has resided in Hong Kong since October 1948."*" She commenced

employment with Deak & Co. (Far East) Ltd. in Hong Kong in December 1964

and remained with that company until October 1976. Her employment with

the Nugan Hand Group was initiated by Mr R.A. Pulger-Frame [2.59] who she

knew when both were employed by Deak & Co. (Far East) Ltd.

Mr Pulger-Frame introduced Mrs Lovatt to Mr M.J. Hand [2.2] and in

December 1976 she commenced employment with the Swiss Pacific Bank and

Trust Company (later known as the Nugan Hand Bank [2.106 ]).^

2.43.2 Mrs Lovatt maintained the 'certificate of deposits maturity

book' which consisted of loose sheets on which were recorded the clients'

number, amount invested, interest rate, maturity value and disbursement

instructions. She was also responsible for the client record files

(which contained correspondence, a copy of the certificate of deposit and

maturity sheet) for sending deposit acceptances to clients and for

carrying out clients' disbursement instructions upon maturity of the

deposit.^

- 210 -

2.43.3 Mrs Lovatt agreed with Mr J.C. Needham's [2.51] observations

that when he arrived in Hong Kong in 1977 the records were inadequate and

almost non existent.^ Mrs Lovatt said when she commenced work in the

office there was no bank cashbook and she began to record credit and , 5

debit transactions. She later took over the issuing of client numbers

from Mr Hand and instituted a card system to record client details. If a

client was 1 2 3 4 5 6 7 8 sensitive1, however, only the representative who introduced

the client would know the client's identity.®

2.43.4 Mrs Lovatt was a co-signatory of several of the Nugan Hand

Bank's accounts with the Wing On Bank and in Mr C.L. Collings' [2.15]

absence placed funds on the Asian Currency Unit market. Initially, Mrs

Lovatt was responsible for sending a weekly summary of operations in Hong

Kong to Sydney but this function was later taken over by the Accounts

Department.

2.43.5 In May or June 1977, Mrs Lovatt flew to Brisbane with a number

of documents which she delivered to Mr Needham. She was told by Mr Hand

they were books of account requiring audit. After handing over the

records she returned to Hong Kong.^ These records were ultimately

handed to this Commission by Mr Needham.

2.43.6 On 24 April 1980 Mrs Lovatt's employment with the Nugan Hand

Bank was terminated. She remained and on a voluntary basis assisted the

Official Receiver's Office with its inquiries. She informed the

Commission in August 1984 that she was currently employed as a treasurer

of a Hong Kong company.®

Endnotes

1 CD4458 folio 14

2 CD10978 folio 2, Lovatt, Statement to Commission 14/8/84 3 CD10978 folios 3-4

4 CT23026, Lovatt

5 CT23027, Lovatt

6 CD10978, folio 2

7 CT23029-30, Lovatt; CD10978 folio 3 8 CD10978 folio 6

- 211 -

2.44 LOVffi, Derrick

2.44.1 Mr Derrick Lowe is a Fellow of the Institute of Chartered

Accountants of England and Wales. He worked for the accounting firm of

Coopers and Lybrand in London from 1974 to 1978 and in August 1978

transferred to their Sydney office where he subsequently became audit

supervisor. Mr Lowe is not registered as a public accountant in

Australia but is eligible for registration as a consequence of his

British q u a l i f i c a t i o n s . M r Lowe was involved in several bank audits

in London. In Australia, he was involved as audit supervisor in the

audit of Barclay's Bank Australia Limited and from that audit he said 2

that he gained some knowledge of bills of exchange.

2.44.2 Following the death of Mr F.J. Nugan [2.1], Mr W. Pollard [2.57]

of the accountancy firm of Pollard & Brincat (Mr Heuschkel having left 3 the partnership in May 1978) , decided to complete the audit for Nugan

Hand Ltd [2.97] as at 31 January 1980 and contacted Coopers and Lybrand

for assistance. Mr Lowe who had been working for Coopers and Lybrand as

an audit supervisor was asked by Mr R. Lynn, a partner in that firm, to

assist in a consulting role to Mr Pollard, with specific reference to the

accounts and audit for the year ending 31 January 1980. However as

Mr Lowe had already resigned from Coopers and Lybrand it was then 4

suggested that he assist Mr Pollard on a sub-contracting basis.

According to Mr Lowe, Mr Lynn told him that Coopers and Lybrand were to

assist in the 1980 audit because Mr Pollard did not have sufficient

personal experience. Also, Mr Pollard had discovered that a number of

commercial bills were missing and when he [Mr Pollard] asked for the

originals of the internal bills for the 1980 annual accounts, the

directors had failed to produce them and Mr Pollard suspected that they

had never been drawn up. Mr Pollard had told Mr Lynn that it was his

opinion that the bills did not in fact exist. At this time, Mr Lowe said

he did not realise that the so called 'commercial bills' were in fact

internal bills of exchange.^ [See 3.3.46-3.3.48 and 5.34-5.55 for

further information about internal bills.]

2.44.3 Mr I/jwe told the Commission that he was mainly responsible for

drafting a letter dated 23 June 1980 from Pollard & Brincat to the

- 212 -

Companies Auditors Board. This letter sought consent for Pollard &

Brincat to resign as auditors of Nuhan Ltd (formerly Nugan Hand Ltd) for

which provisional liquidators had been appointed. It stated that the

firm's 'preliminary audit work has indicated that numerous significant

transactions were not properly recorded in the company's books of

account'. The letter also stated that it was 'apparent that certain

information received in the past from the company was either inaccurate

or misleading'. In addition it was said that the 'draft accounts

prepared by the company's accountant on which we have based our

preliminary audit work are deficient in many areas and the audit report

thereon would contain numerous significant qualifications.'1 2 3 4 5 6

Endnotes

1 CT23599, CT23619, Lowe

2 CT23620, Lowe

3 CT23550, CT23576, Heuschkel 4 CT23599, Lowe

5 CT23599-60, Lowe

6 CT23600, Lowe; CD4837 folios 35-36, letter Pollard & Brincat

companies' auditor board 23/6/80

2.45 MANOR, General Leroy Joseph

2.45.1 General Leroy Joseph Manor volunteered to give evidence to the

Commission. He was interviewed by the Commission in the course of its

inquiries in the United States in January 1985.

2.45.2 General Manor was born on 21 February 1921. In 1942 he

commenced his military service as an aviation cadet. He had a highly

distinguished military career and served in the Second World War, the

Korean War and the Vietnam War. He retired as a Lieutenant-General on

1 July 1978 holding the post of Chief of Staff of the Pacific Command.

He then worked for the American government as its representative in the

negotiation of military leasing arrangements with The Philippines.^ At

the time he gave evidence to the Commission, he was Vice President of the 2

Retired Officers Association, Alexandria, Virginia, U.S.A.

- 213 -

2.45.3 Fhile General to nor was working in Hawaii, Admiral E.P. Yates

[2.76] contacted him and told him he was employed by the Nugan Hand Bank

[2.106]. He suggested that a person with managerial skills such as those

of General Manor could be utilised by the Nugan Hand Group.® In early

1979, while General Manor was living in The Philippines, Admiral Yates

again contacted him and told him that Messrs F.J. Nugan [2.1] and

M.J. Hand [2.2] were travelling to The Philippines for the International

Congress on New Enterprise (1ICONE1) on 24-29 June 1979 [3.6.14] and that

he should meet them. General Manor travelled to Manila and had an 4

informal meeting with Messrs Nugan, Hand and Admiral Yates.

2.45.4 After attending the ICONE conference, Admiral Yates contacted

General Manor who was then living in Florida, and offered him a position

with the Nugan Hand Bank in The Philippines. Admiral Yates told General

Manor his expenses would be paid if he travelled to the Nugan Hand

International Conference to be held in Sydney in October 1979 [3.6.13].

Admiral Yates also told General Manor that in Sydney he would meet

Mr D.E. Beazley [2.7] a well respected banker who was to be one of the

main executives in the organisation. General Manor attended the

conference, which he found to be well conducted, and was asked by

Mr Nugan to give an address. General Manor's address criticised the lack

of organisational structure in the Nugan Hand Group and suggested that a

decision be made to attempt to clarify it. After the conference Mr Nugan

offered General Manor a position with the Nugan Hand Bank for two years

based in The Philippines. General Manor agreed to work for one year and

at its end reconsider his position. ® He was to receive US$3 600 per

month in salary plus US$1 000 per month in discretionary expenses.^

2.45.5 In The Philippines, General Manor, together with Mr W.P. Gregory

[2.26], tried on behalf of the Nugan Hand Group to develop joint business

ventures between companies there and in other parts of the world. In

evidence to the Commission, General Manor stated he never successfully

completed a trade transaction while employed by the Nugan Hand Bank.®

2.45.6 General Manor was told of Mr Nugan's death by Mr G.T. Shaw

[2.65] who was in Manila at the time.^ Being concerned about the

- 214 -

financial status of the organisation he attempted to contact both Messrs

Beazley and Hand."*"** Mr Hand travelled to The Philippines and reassured

General Manor that the finances of the company were sound."*""*" Later,

Mr Δ.Η. Wong [2.74] visited Manila and expressed his concern about the

ability of the Nugan Hand Bank to repay its depositors. As a result of

this General Manor successfully requested the repayment of a deposit to 12 '

one of his clients. He then tried unsuccessfully to contact

Mr Beazley who was in London negotiating the purchase of London Capital

Securities Ltd [2.111], By the beginning of April 1980, General Manor

had decided to resign and return to the United States. However, he

thought at that time that he would return to The Philippines and work for

the Nugan Hand Bank if the problems were solved."*·"*

Endnotes 1 1 1

1 CT24641-42, Manor; CD1526 folios 673-74, JTF final report 2 CT24638, Manor; CD1135 folio 1, JTF ROI Manor 24/11/82 3 CT24642-44, Manor; CD1135 folios 1-2 4 CT24644-45, Manor; CD1135 folio 1 5 CT24645-46, Manor

6 CT24648-49, Manor; CD1135 folio 2 7 CD6862 folios 15-16, Manor letter of appointment 18/10/79 8 CT24651-52, Manor

9 CT24656-57, Manor

10 CT240657-58, Manor 11 CT24659, Manor

12 CT24659-61, Manor

13 CT24658, CT24661, Manor

2.46 McARTHUR, John

2.46.1 Mr John McArthur was born in England on 20 December 1923 and

currently resides in Hong Kong where he is employed as managing director

of a Hong Kong based printing company. Before joining the Nugan Hand

Group he was managing director of a large construction company. His only

employment in connection with merchant banking was as a junior management

trainee in 1941."*"

2.46.2 Mr McArthur was employed by Mr M.J. Hand [2.2] on 7 February

1977 after being introduced to him by Mr Douglas Sapper, an army

- 215 -

2

associate of Mr Hand. Mr McArthur commenced working for Nugan Hand

(Hong Kong) Ltd [2.94] as an account executive seeking deposits for Nugan

Hand Ltd [2.97], the Nugan Hand Bank [2.106] and Nugan Hand (Hong Kong)

Ltd."^ He also became involved, through Mr C.L Collings [2.15], in 4

establishing back to back letters of credit for trading operations.

2.46.3 As a result of Mr Michael Laloe leaving the employ of Nugan Hand

(Hong Kong) Ltd, Mr McArthur took over the task of trade services in Hong

Kong. He, in fact, became Managing Director of Nugan Hand Trade Asia Ltd

[Appendix B] which, after the Bangkok conference of January 1978 [see

3.5.43], became responsible for the coordination of all trade

5

inquiries. Mr McArthur also dealt with Alnav Trade Asia (a nominee

company of Nugan Hand Nominees Ltd)® and Far West Aircraft Spares.

Both these companies were responsible for buying and selling aircraft and

spare parts for distribution around the world.^

2.46.4 Mr McArthur was signatory of a number of bank accounts and in

the absence of Mr Collings, would participate in management decisions.

In January 1979 he became interested in trade with China and made several

trips there in an endeavour to establish a trade relationship. Between

the time Mr Collings left Nugan Hand (Hong Kong) Ltd in late 1979 and the

time Mr Hand took over, Mr McArthur and Mr G.A. Courtney-Smith [2.17]

acted as caretaker managers but had no authority to do more than 'mind

the shop1

2.46.5 A meeting of the Nugan Hand Bank directors on 31 January 1980

resolved that Mr McArthur be instructed that all deposits to the Bank be

placed on the Asian Qirrency Unit market and securities given to the Q

client or held by Mr McArthur on the client's behalf.

2.46.6 In March 1980 Mr McArthur was approached by Mr Hand and asked to

take over the complete running of the Hagan Hand Group in Hong Kong. He

did so on the assurance that the company was solvent. Mr Courtney-

Smith said that in April 1980 he was contacted by Mr McArthur who

informed him of difficulties concerning the repayment of depositors'

funds and the inability to get satisfactory answers to inquiries directed

- 216 -

to the Nugan Hand Group executives in Australia. Mr Courtney-Smith

advised Mr McArthur to go to the Hong Kong authorities and explain the

situation."*·"*" In early May 1980 Mr McArthur spoke to Mr Hand telling

him he proposed to resign from all the positions he held within the Nugan

Hand Group. Or 23 May 1980 Mr McArthur dismissed all staff and

subsequently offered his services on a voluntary basis to the Hong Kong

authorities to assist them with their inquiries concerning the Nugan Hand 12 group of companies.

Endnotes 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2

1 CT22910, McArthur

2 CD7153 folio 42, McArthur resume

3 CT22912-3 McArthur; CD10823 Commission ROI McArthur 14/8/84 4 CD10823

5 CD10823

6 CD6562 folio 3, List of Nugan Hand Nominees Ltd nominee

companies

7 CD6491 folio 112, Record of conversation CAC/McArthur

30/8/80

8 CT22094, Courtney-Smith

9 CD4968 folio 13, NHL minutes 1980

10 CD6491 folio 114

11 CT22095, Courtney-Smith

12 CD6491 folio 123

2.47 MCDONALD, Walter Joseph

2.47.1 Mr Walter Joseph McDonald volunteered to give evidence to the

Commission. He was interviewed by the Commission in the course of its

inquiries in the United States in January 1985.

2.47.2 Mr McDonald is a United States citizen born on 20 September

1925. During World War II he served with the United States Marines in

the Pacific and was decorated. He is a professional economist and from

1952 until he retired in 1979 was employed by the United States Central

Intelligence Agency. Between 1972 and 1977 he was Head Officer for

Economic Research and was involved in the establishment of the United

States Economic Energy Department. In that department he held the

- 217 -

position of Principal Assistant Secretary for Internal Affairs as well as

serving on the National Foreign Intelligence Board.^ After resigning

he formed his own consulting group called McDonald & Associates T 2

Inc.

2.47.3 While attending a conference in Bali in July 1979, Mr McDonald

was introduced to Mr F.J. Nugan [2.1] by Dr G.J. Pauker [2.54]. At

Mr Nugan's invitation he travelled to Australia to view the Nugan Hand

Group operation. After discussing the operation and the Nugan Fruit

Group, Mr Nugan offered Mr McDonald a position as an economic

consultant. In an interview with the Joint Task Force, Mr McDonald said

that Dr Pauker 1vouched for the credibility of the Nugan Hand operation,

as did the Bank of New South Wales ... As a result [he] signed a

contract1 of employment. One of the documents supplied by Mr McDonald

to the Commission was a letter dated 24 July 1979 from Mr Nugan to

Mr McDonald outlining his terms of employment. Those terms included a

salary of US$120 000 per annum, use of company credit cards and payment

of office expenses which were not to exceed US$40 000 per annum.

Mr McDonald was to be a 'special adviser1 available exclusively to

Messrs M.J. Hand [2.2] and Nugan, or, at their request, adviser to other

executives in the Group. In addition Nugan Hand recognised that

Mr McDonald would from time to time, 'wish to exercise the right of

"private practice" in respect of an assignment or fee from a client, 4

independent of anything you do on behalf of our Group1.

2.47.4 Mr McDonald said that 1 following his return to the US [he] 5

opened a Nugan Hand office in Annapolis', Maryland. Later he

travelled to Canada to investigate the feasibility of an oil drilling

scheme. He also accompanied Mr Nugan to The Philippines to carry out a

management study of a proposed investment in the Santa Innes iron mine.

Mr McDonald decided that the transaction would be feasible if it were

government backed. Mr McDonald believed the Nugan Hand Group invested

only about $150 000 in the mine with the financial aspects being handled

by Mr G.T. Shaw [2.65].6

2.47.5 In October 1979, Mr McDonald attended the Sydney conference held

by Nugan Hand International [see 3.6.13]. At this conference both he and

- 218 -

Mr D.E. Peazley [2.7] were introduced to the other executives within the

Nugan Hand Group. Py late 1979 both Messrs McDonald and Beazley had

commenced a systematic review of the Group. According to Mr McDonald it

was obvious to both of them 'that in many instances the wrong type of

personnel had been employed as few had very little if any banking

experience, and that many aspects of the Group's operations should be

reviewed'.^

2.47.6 It has been alleged in the press that Mr McDonald was involved

in the Nugan Hand refugee resettlement program. In an interview with the

Joint Task Force in 1982 Mr McDonald denied any involvement other than

when in Thailand he once dined with Messrs Hand, Beazley, R.L. Attkisson

[2.4] and a person involved in refugee resettlement programs in the

United States.®

2.47.7 In his evidence to the Commission Mr McDonald said Mr Hand had

told him he had become an Australian citizen but wished to retain his

United States passport and was concerned about the legal problems

involved. Mr McDonald referred him to a friend, Mr W.E. Colby [2.14],

Mr Nugan later employed Mr Colby's legal firm, Reid & Priest to research g

some international taxation inquiries.

2.47.8 In late 1979 to early 1980 the Nugan Hand Group was negotiating

the purchase of London Capital Securities Ltd [2.111], Mr McDonald told

the Commission that he accompanied Mr Nugan to England for negotiations

and was present when discussions were held with Lloyds."1 "0 Following

the death of Mr Nugan, Mr Beazley contacted Mr McDonald about the

proposed purchase of London Capital Securities Ltd. He advised

Mr Beazley of the possible financial problems in the Nugan Hand Group and

said there would probably not be enough available funds for the purchase

to continue."1 " ' 1 '

2.47.9 By January 1980, Mr McDonald was working on a full time basis

assessing the feasibility of a number of different projects for the

Group. He was given assurances by Mr Hand of the continuing viability of

the Nugan Hand Group but Mr McDonald felt that this was not the case. As

- 219 -

a result, he ceased working for the Group and claims to be still owed for 12 services and expenses.

Endnotes 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2

1 CT24671, McDonald; JTF report p 673 2 CT24672, McDonald

3 CT24674-75, McDonald; CD1118 folio 6 , JTF ROI McDonald 19/11/82 4 CD11524 folio 2

5 CT24676, McDonald; CD1118 folio 7 6 CT24681-83, McDonald; CD1118 folio 7; CD1250 folio 4368 7 CT24688-90, McDonald; CD1118 folio 8-9 8 CD1118 folio 10

9 CT24299-300 Yates; CT24707-08, McDonald 10 CT24687-88, CT24690, McDonald (Mr McDonald did not specify to which entity he was referring when he named 'Lloyds'.); CD1118 folio 8 11 CD1118 folio 10

12 CT24709 McDonald; CD1118 folios 10-11

Profile 2.48 has been deleted.

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- ■ r ■ .·:,ί

* I ; .·â– ·â– .'. ■ ’ ·,■■■■ . ■ .

: . ■ 1'

.

·â–  ■ : ' -,

. : : τ ■; . r

3 c

.

- 223 -

2.49 MORISSET, Brian Keith

2.49.1 Mr Brian Keith Morisset did not give evidence before the

Commission. The information herein relies solely upon documents produced

to the Commission, including material provided by other investigative

bodies.

2.49.2 Mr Morisset was born on 12 December 1948 in Adelaide, South

Australia. He studied land brokerage at university standard, passing

examinations in 1972 and continued with courses relating to finance and

life insurance. Mr Morisset spent six years as a bank officer (resigning

in 1972) and four years as a licenced broker and real estate agent.

Between 1975 and 1979 he conducted his own company, B.K. Morisset

Nominees Pty Ltd which sold life insurance."*"

2.49.3 Mr Morisset replied to a Nugan Hand Group advertisement placed

in The Bulletin on 6 February 1979 [Appendix D], In March 1979 Mr J.M.

Gilder [2.25] offered him a position in the Nugan Hand Singapore (Pte) 2

Ltd [Appendix B] office and he accepted. He arrived in Singapore on

20 April 1979 and was thereafter paid a retainer of A$2 000 per month

plus commission. Mr Morisset was informed by Mr G.R. Steer [2.68], his

supervisor, that his duty was to get in touch with the Australian

business community in Singapore and advise them of the manner in which

the Nugan Hand Group could assist internationally in the areas of trade,

law, tax, offshore banking and general business advice.3

2.49.4 In September 1979, Mr Morisset was issued with an employment

pass by the Immigration Department of Singapore. Oie pass stated he was

the general manager of F.A. Neubauer Management (Pte) Ltd [Appendix B].

He subsequently learned that this company had a management agreement with

- 224 -

4

Nugan Hand Singapore (Pte) Ltd. Mr Morisset selected the oil support

industries as an area in which to actively seek deposits. He claimed in

an interview with the Singapore Police Force to have about 50 clients who

had deposited approximately US$500 000 with the Nugan Hand Bank, Cayman

Islands, between April 1979 and April 1980.5

2.49.5 Mr Morisset's employment with the Nugan Hand Group ceased with

the placement of the companies into liquidation. His present occupation

is unknown. * 1 2 3 4 5

Endnotes

1 CD10524 folios 12-14, B.K. Morisset job application; CD4536

folio 49, Singapore Police ROI Morisset 2 CD4536 folio 49

3 CT20394-96, Gilder; CD4536 folio 50 4 CD4536 folio 50

5 CD4536 folio 52

2.50 MURPHY, Robert Michael

2.50.1 Mr Robert Michael Murphy did not give evidence before the

Commission. The information herein relies upon the evidence of other

witnesses, and upon documents produced to the Commission in the course of

its inquiry including material supplied by other investigative bodies.

2.50.2 Mr Murphy was born in Jesup, Georgia, United States on 6 January

1949. He is a Bachelor of Business Administration (Management) from the

University of Georgia and was a licensed real estate agent in Georgia,

United States.·*·

2.50.3 Mr Murphy arrived in Australia in December 1971. While in

Australia he worked -at Harpoon Harry's restaurant and Die Texas Tavern

restaurant in various positions, commencing as a barman and cook and

rising to assistant manager. During this period, he was an employee of

Mr M.B. Houghton [2.35]. He returned to the United States in December

- 225 -

1973 and had a variety of financial interests in tars and restaurants.

After leaving Australia, Mr Murphy maintained his friendship with

Mr Houghton who visted him when in Georgia. Mr Murphy said Mr Houghton

paid for his honeymoon (being a trip to Sydney, in January 1978) as a 2 wedding present.

2.50.4 In June 1979, Mr Murphy was contacted by Mr Houghton who offered

him a position with the Nugan Hand Group in Saudi Arabia. Mr Murphy

accompanied Mr Houghton to Saudi Arabia to 'look at the situation

there1. They then travelled to New York where Mr Murphy met Mr M.J. Hand

[2.2] who also offered him a position with the Group. Soon after this,

the Saudi Arabian office of the Nugan Hand Bank (Cayman Islands) was 3 opened. Documents obtained by the Commission show that Mr Murphy was

employed from 26 August 1979 at a gross salary of US$25 000 per annum.

This was paid into his cheque account at the F.A. Neubauer Bank [2.109]

in Hamburg, Germany until April 1980. He also received US$500 per month

living expenses.^

2.50.5, Mr Houghton said in evidence that he, and later Mr Murphy,

leased and lived in a house at Alkobar which was also used as an

office."’ Mr Houghton said Mr Murphy managed the day to day activities

of the Alkobar office, although he (Mr Houghton) would have been regarded

as the senior staff member.®

2.50.6 Mr Murphy's duty was to attract deposits. He collected deposits

in local or United States currencies, took these to the local bank or to

a money changer, and converted them into United States dollar travellers

cheques or bank cheques. These cheques were then sent by courier to

Nugan Hand Management Services (Pte) Limited [Appendix B] in Singapore

marked for the attention of Mr Hand who would telex to acknowledge

receipt. The depositor would then be issued with a certificate of

deposit.^ Mr Houghton said Mr Murphy would also have sold nominee

companies (most of which were registered in the Cayman Islands) for tax

minimisation purposes, while working for Nugan Hand in Saudi Arabia.®

2.50.7 Mr Murphy told the Joint Task Force that between September 1979

and April 1980 he sent US$2.5 million to Mr Hand in Singapore and that

- 226 -

there were about 200 clients in Saudi Arabia, most of whom were

construction workers. Mr Murphy said Mr S.K. Hill [2.33] told him the

money went from Singapore to Hong Kong where it was used to buy

9

securities on the international money market. Mr Murphy told the

Corporate Affairs Commission that the Nugan Hand Saudi operation offered

interest rates on deposits of between ten and 16 per cent with the bulk

being at around 12 to 13 per cent. Until February 1980 the office

accepted about $30 000 per week and from February 1980 to April 1980 the

office accepted $100 000 per week in deposits.^ Mr Murphy told the

Joint Task Force that he received one half per cent commission on all

deposits while he worked in Saudi Arabia.

2.50.8 Mr Houghton said Mr Murphy had a $25 000 share in a joint

venture to produce and franchise ice cream in Saudi Arabia. The other

partners were a Jordanian living in Saudi Arabia and 1 Douglas Scott1, a

pseudonym used by Mr Hand. Mr Houghton said he owned a portion of

Mr Murphy's share in the joint venture and that he, Mr Murphy or Mr Hand

signed the name Douglas Scott to the agreement. The venture failed due

to the collapse of Nugan Hand and Mr Murphy lost his money when he fled 12 from Saudi Arabia.

2.50.9 In late 1979/early 1980, Mr Joseph N. Williams, a student at the

University of Georgia with Mr Murphy, Mr Robert Hatchell who was a former

work colleague of Mr Murphy's and Mr Rex Shannon, a friend of a Nugan

Hand client in Saudi Arabia were hired to work in Saudi Arabia for Nugan

Hand. In 1980, Messrs Hatchell and Williams opened the Jeddah office of

Nugan Hand and Mr Shannon worked in Alkobar.·*·^

2.50.10 Following Mr F.J. Nugan's death [2.1], Mr Murphy as well as most

other Nugan Hand overseas representatives including Messrs Hatchell and

Williams were summoned to a meeting in Singapore convened by Mr G.R.

Steer [2.68]. Mr Murphy told the Corporate Affairs Commission that at

that meeting, Messrs Tan Choon Seng [2.71], steer and Houghton all

assured him that Price Waterhouse & Co had audited the books of the

overseas offices and found them to be sound. While at this meeting,

Mr Murphy received a phone call from Mr Hand who told him to return to

- 227 -

Saudi Arabia and resume deposit taking and to destroy the client and

office records kept in Alkobar. Mr Murphy then returned to Alkobar and 14 did as he was told by Mr Hand.

2.50.11 Mr Houghton said when he telephoned Mr Murphy from Washington

D.C. in March 1980, he was told of an article in an English language

newspaper in Saudi Arabia which described the collapse of Nugan Hand

(Hong Kong) Ltd [2.94] and its inability to pay out depositors.

Mr Houghton said Mr Murphy told him that their Saudi Arabian depositors

were already agitating for repayments.15 Mr Houghton suggested that

Mr Murphy leave Saudi Arabia immediately due to the severity of that

country's criminal laws. Mr Murphy was also advised by Mr R.W. Gehring

[2.23] by telephone, to depart Saudi Arabia.* 1 2 3 4 5 6 7 8 9 ® It appears Mr Murphy

paid off what depositors he could with the money on hand in the office,

used US$5 000 to purchase air tickets for Messsrs Williams, Shannon,

Hatchell and himself and left Saudi Arabia with the Saudi Arabian police 17 already in pursuit of them.

2.50.12 Mr Murphy arrived in London where he met Mr Houghton. He and

Mr Houghton proceeded from London to Sydney. It is thought that

Mr Murphy may have gone via Hamburg to redeem the contents of his

F.A. Neubauer Bank cheque account. After arriving in Australia,

Mr Murphy stayed in Mr Houghton's apartment. (Mr Hand was also residing

there at the time.) He worked at the Bourbon and Beefsteak bar and

restaurant from about August 1980 until early 1981 when he returned to

the United States.1®

Endnotes

1 CD3038 folios 23-28, Houghton evidence to CAC 2 CD10859 folios 11-13

3 CD10859 folio 13

4 CD7093 folio 54, Murphy-NHB client file; CDS615 folio 55, 5 CT22530, Houghton

6 CT22531, Houghton

7 CD1250 folios 746-49

8 CT22576

9 CD1250 folios 746-49

- 228 -

10 CD3053 folios 9-18; The currency was not specified but, as mentioned at 2.50.6 deposits were collected in either local or United States currencies.

11 CD1250 folios 763-64

12 CT22578, Houghton

13 CD10859 folio 14

14 CD1165 folios 61-3

15 CT22570, Houghton

16 CD1165 folio 55

17 CT21244; CD1165 folio 57

18 CD10859 folio 17

2.51 NEEDHAM, John Charles

2.15.1 Mr John Charles Needham was a practising solicitor of the

Supreme Court of New South Wales until 31 July 1979. (He notified the

New South Wales Law Society that he would no longer be practising after

that date.) He later lived for some time in Queensland and at the time he

gave evidence was a grazier in New South Wales."1 " He was introduced to

Mr M.J. Hand [2.2] by Mr B.W. Calder [2.11] in April/May 1973 and he met

Mr F.J. Nugan [2.1] several weeks later. Both Messrs Hand and Calder

were directors of Secured Income Real Estate (Australia) Ltd ('SIRE')

[2.118], Mr Needham was asked to join its board. He subsequently

obtained a controlling shareholding in SIRE in September/October 1973 and 2

became its Chairman and Managing Director.

2.51.2 In late 1973 Mr Needham, together with Messrs Hand and Nugan,

became a director of North Australian Rubber Mills Ltd ('NARM') [2.113].

About the same time SIRE took over PNB Rubber and Plastic Industries Pty

Ltd ('PNB') [2.117] which gave it a controlling interest in NARM.

According to Mr Needham SIRE's acquisition of NARM involved a cash

payment to Mr Nugan by Mr Needham of $182 000.4 Mr Needham later moved

to Brisbane to become further involved with NARM but sold his interest in 5

that company in February 1978 and his interest in SIRE in 1979.

2.51.3 Mr Needham stated in evidence before the Commission that from

1976 'normal commercial transactions' occurred between SIRE, NARM and

Yorkville Nominees Pty Ltd [2.108], SIRE and NARM deposited funds with

Yorkville Nominees Pty Ltd and Rigan Hand Ltd [2.97]; the largest amount

- 229 -

of funds on deposit at any one time was $250 000. SIRE and NARM did not

receive security for these deposits.®

2.51.4 SIRE and NARM also borrowed funds from Yorkville Nominees Pty

Ltd. These funds were secured by way of commercial bills of exchange

[3.2.9 ]. When Nugan Hand Ltd went into provisional liquidation the

current bills of exchange securing the indebtedness of SIRE and NARM were

held in a safe custody account conducted at the ANZ Bank, Pitt & Hunter

Streets, Sydney on behalf of the Wing On Bank. The bills of exchange

were presented by the Wing On Bank on maturity but were subsequently

dishonoured. The Wing On Bank commenced leoal proceedings against SIRE

in respect of the dishonoured bills of exchange and obtained judgment in

the Supreme Court of New South Wales. At the time of writing this report

SIRE had lodged an appeal against the Court's decision, but the appeal η had not been heard [see also 4.1.53-4.1.54].

2.51.5 In January 1978 Mr Needham wrote to Mr E.C.Louey [2.40]

appointing Nugan Hand (Malaysia) Sdn. Bhd. [Appendix B] as buying agents

for NARM.® Mr Louey however was unable to recall any significant 9

business being done as a result of that appointment.

2.51.6 In July 1973 the company Nugan Hand Needham Ltd (later Nugan

Hand Ltd [2.97]) was established. Messrs Needham, NUgan, Hand and

Calder, became inaugural directors of that company on 9 July 1973."*·®

Although no particular role was initially proposed for Mr Needham in the

company, he understood there would be one in due course. Mr Needham was

of the opinion that Mr Nugan wished to use his (Mr Needham's) name. He

remained a director of the company until 28 June 1974. He said that his

only positive act, while a director of Nugan Hand Needham Ltd, was to

obtain a licence as an investment representative under the Securities

Industry Act 1970 (N.S.W.J.11

2.51.7 Mr Needham was also a director of NHN Nominees Pty Ltd (later

Nugan Hand (Dealers) Pty Ltd [2.93]) and NHN Management Pty Ltd [2.92]

between July 1973 and June 1974. In both of those companies Mr Needham 12 played only a nominal role.

- 230 -

2.51.8 Hr Needham went into partnership with Mr Nugan in the law firm,

Nugan Needham, between April 1976 and November 1978. The partnership was

formed so that Mr Needham could satisfy the conditions for continuation

of his solicitor's practising certificate in New South Wales, as he was,

during that period, a resident of Brisbane. Mr Needham told the

1 -3

Commission he believed that the firm did not have any clients [see

3.4.44-3.4.47],

2.51.9 In 1977, Mr Needham was invited by Mr Nugan to become a director

of the Nugan Hand Bank [2.106], Mr Nugan suggested to Mr Needham that he

act as a consultant in the Hong Kong office of the Nugan Hand Group, in

order to examine the Bank's operations and determine whether or not to

accept the offer of employment. Mr Nugan asked Mr Needham to establish

proper books of account and statutory records for the Group's Hong Kong

companies, to liaise with its solicitors and accountants there, and to

improve the administrative procedures of the Hong Kong office. Mr

Needham commenced work in Hong Kong in March 1977 and remained there

until mid May 1977.^

2.51.10 Mr Needham's role in Hong Kong was in relation to the

administrative, legal and accounting side of the Group's operations. He

did not collect deposits, but was involved in the above activities in

relation to the deposit taking company, Nugan Hand (Hong Kong) Ltd

[2.94]."^ He gave directions to Mr W.H. Areson [2.3] and others to

write up the books of account and prepare proper statutory records for

all the Hong Kong companies.^ He also caused to be prepared a

brochure which was 'an introduction to the Swiss Pacific Group'.

2.51.11 Mr Needham was initially impressed with the office in Hong Kong

and the quality of the staff, particularly Admiral E.P Yates [2.76], and

anticipated taking up Mr Nugan's offer of employment. However, Mr

Needham told the Commission, the records of Nugan Hand (Hong Kong) Ltd,

when written up by Mr Areson, appeared to indicate a shortfall of

approximately US$3 million [2.3.6], Mr Needham brought this shortfall to

the attention of Mr Nugan, who contended that it was largely due to . 19

intercompany indebtedness. Mr Needham consequently decided against

- 231 -

joining the Nugan Hand Bank and returned to Australia. He was, however,

prepared to assist Messrs Nugan and Hand in a personal capacity from time

to time as requested.20

2.51.12 In May or June 1977 Mrs G. Lovatt [2.43] flew to Brisbane with a

number of documents which she delivered to Mr Needham. She was told by 21 Mr Hand they were books of account requiring audit. Mr Needham said that he expected these records to be collected by a Nugan Hand

representative. However, the records remained with Mr Needham until

13 August 1984 and were produced to the Commission on that date. The

records contain correspondence and statutory information on the overseas 22 companies.

2.51.13 In June 1977, at the request of Mr Nugan, Mr Needham went to

Singapore to assist Mr Hand who was experiencing administrative problems

in the newly established Nugan Hand Group office. He made further visits

to the offices in Hong Kong in July 1977 and Hong Kong and Singapore in

September 1977. The Group paid for Mr Needham's expenses in Hong Kong

and some of his travelling expenses and he charged them for services 23

rendered by him in Hong Kong and Singapore.

2.51.14 In July 1977, at Mr Nugan* 1 2 3 4 5 6 7 8 9 s request, Mr Needham became a

director of the Nugan Group Ltd, Griffith [2.114] in ret tra for which he

received director's fees. He chaired several public meetings for that 24

group of companies, and resigned shortly after August 1977.

Endnotes

1 CT22404, Needham; CD5715 folio 72, Needham evidence to NSW

Supreme Court re Wing On Bank v SIRE 2 CT22407-08, Needham 3 CT22410, Needham

4 CT22411, Needham

5 CT22412, CT22415, Needham 6 CT22413, Needham

7 CT21841, Hill; CT22413, Needham; CT25004, O'Brien 8 CD6374 folios 25-26, Letter Needham/Louey 24/1/78 9 CT22163-64, Louey

- 232 -

10 CD10243 folio 7, CAC information 11 CT22408, CT22412, Needham 12 CT22411-12, Needham 13 CT22412-13, Needham 14 CT22415, Needham

15 CT22424-25, Needham 16 CT22420, Needham

17 CT22430, Needham; CD3205 18 CT22426, Needham

19 CT22420, CT22423, Needham 20 CT22425-26, Needham 21 CT23029-30, Lovatt 22 CT22416-18, Needham; 0310805, Documents relating to NHHK

produced by Needham 23 CT22425-26, CT22432, Needham 24 CT22433, Needham; CD2203 folio 12, JTF ROI Needham 20/2/81

2.52 NUGAN, Kenneth Leslie

2.52.1 Mr Kenneth Leslie Nugan was born on 4 August 1940 and is the

brother of Mr F.J. Nugan [2.1]. He resides in Griffith and at the time

of giving evidence was employed as a consultant to the Nugan Group Ltd

[2.114] ,1

2.52.2 On 29 May 1978 a criminal prosecution was commenced by the

Corporate Affairs Commission of New South Wales against Messrs F.J.

Nugan, K.L. Nugan, and others. They were charged with 'conspiracy' in

relation to the affairs of the Griffith based Nugan Group Ltd. On

5 November 1979 a prima facie case was found against both Messrs F.J. and

K.L. Nugan.2

2.52.3 The publicity surrounding the charging of the Nugan brothers was

extensive and resulted in bad publicity not only for the Nugan Group Ltd

in Griffith but also for the Nugan Hand Group. A strategy paper for

Nugan Hand International [Appendix B] was prepared on 5 June 1978 in

which a public relations program was discussed, and the suggestion made

that the Nugan Group Ltd change its name to Nugan Fruit Group Ltd to

avoid confusion with Nugan Hand Ltd [2.97].^

2.52.4 Mr K.L. Nugan subsequently pleaded guilty to three charges of

fraudulent appropriation of property by a director, under Section 173 of

- 233 -

the Crimes Act 1900 (N.S.W.), and was convicted by the Hon. Mr Justice

Roden of the New South Wales Supreme Court on 4 August 1982. He was

sentenced to six months imprisonment on each count to be served

4

concurrently. Mr K.L. Nugan told the Commission that he did not

borrow any money from Mr F.J. Nugan to pay for his defence because at the

beginning of the proceedings Mr F.J. Nugan said: Ί want to control this

defence, it is the only way a group defence can be run and I will pay

everybody's costs provided that the defence goes the way I want it to

go' In evidence to the Commission, Mr S.K. Hill [2.33] said that

over a period of three years from 1977 approximately $760 000 was

transferred from Nugan Hand Ltd to the Nugan Group Ltd using companies

under the control of Mr F.J. Nugan. Mr K.L. Nugan told the Commission

that there were two different flows of money from Mr F.J. Nugan; one to

meet the costs of the defence and one by way of unsecured short term

financing to the Nugan Group Ltd. At the date of Mr Nugan's death,

1 $400 000 odd* 1 2 3 4 had been expended on the defence and $230 000 on short

term loans to the Nugan Group Ltd. In relation to these funds legal

proceedings were commenced by the liquidator of Illarangi Investments Pty

Ltd [2.85] and subsequently settled after the payment into court of

$231 000 by Nugan (Griffith) Pty Ltd.7

2.52.5 On 27 January 1980, Mr K.L. Nugan identified his brother's body

after it had been found in his car near Lithgow, New South Wales.

Mr K.L. Nugan subsequently proceeded to Mr F.J. Nugan's house at

Vaucluse, according to him, to search for a suicide note.® On the

following day he attended the offices of Nugan Hand Ltd, ostensibly to

look for a suicide note and to remove his 'personal and court case

defence d o c u m e n t s ' [ T h e events that occurred in the weeks following

the death of Mr F.J. Nugan are described in Part 3 Sections 8 and 9.]

Endnotes

1 CT18715, K.L. Nugan

2 CD2199 folios 48, 118-27, 136 District Court file re K.L. Nugan 3 CD8463 folios 15, 21

4 CT18626 Lee; CD2611, K.L. Nugan Sentence

- 234 -

5 6

7

CT20940, CT23963, K.L. Nugan CT15721-22, Hill

CT23959, K.L. Nugan; CD5674 folios 23-25 Short Minutes of Order Nugan (Griffith) Pty Ltd vs Illarangi Investments Pty Ltd; folio 56, Affidavit CT20923-24, CT20930, K.L. Nugan

CT20920, K.L. Nugan 8 9

2.53 OWEN, John Desmond

2.53.1 Mr John Desmond Owen was born in England on 17 January 1937. He

served for 13 years with the Royal Navy leaving in 1968 to become Systems

Manager attached to the Decca Navigation Company. In 1970 he emigrated

to Australia and joined Pioneer Concrete Ltd starting as yard labourer

and becoming manager of the main city plant. In 1971 Mr Owen formed a

development company responsible for the acquisition of land and

negotiations for development approvals. The company was liquidated in

1975 -and he joined L.J. Hooker Pty Ltd in their Sydney commercial

division.·'"

2.53.2 Mr Owen was recruited to the Nugan Hand Group by Mr J.M. Gilder

[2.25] as the result of a newspaper advertisement. He was appointed

trade representative for the Nugan Hand Bank [2.106] (then known as Swiss

Pacific Bank and Trust Company) in Thailand for a period of three years 2 from 24 February 1977. His duties were to advise and liaise with

clients and potential clients of the Bank regarding the services offered

in the areas of international banking, trust and trade services. He was

also expected to solicit deposits for the Bank.^ Mr Owen was appointed

Managing Director of Nugan Hand (Thailand) Ltd [Appendix B] in August

1978.4

2.53.3 Mr Owen initially received, as remuneration, US$2 000 on

28 February 1977 from Nugan Hand Ltd and further payments of US$2 000 on

2 April 1977 and US$1 000 on 2 May 1 9 7 7 . In March 1978 Mr Owen's base

salary was raised from US$1 500 to US$2 000 per month and in October 1978

the minutes of a purported meeting of the board of directors resolved

that Nugan Hand (Thailand) Ltd would pay him an additional US$1 000 per

month for accommodation costs and expenses.®

- 235 -

2.53.4 Mr Owen was involved in a number of transactions for the Nugan

Hand Group. Hie first of these occurred in May 1977 when a client wished

to raise a loan of US$500 000 to complete the construction of a hotel.

This transaction was subsequently completed by Mr C.L. Collings [2.15].

The second, which took place in September/October 1977, was the sale of

114 000 shares in the Jalaprathan Cement Company on behalf of Kaiser

Cement & Gypsum Corporation. This generated for Nugan Hand (Thailand)

Ltd about US$70 000 commission. The third transaction, which occurred in

1978, involved the sale of all of Kaiser Cement & Gypsum Corporation's

shares in Jalaprathan Cement Company for just over US$8 million. This

generated a commission of approximately US$400 000 for the Nugan Hand

Group. Mr Owen received about US$75 000 in commission for these

, 7

transactions of which US$60 000 was paid outside Australia.

2.53.5 In April 1979 Mr Tan Choon Seng [2.71] visited the Nugan Hand

(Thailand) Ltd office. In a memo to Messrs F.J. Nugan [2.1] and Gilder

he said that Mr Owen lacked the discipline to perform the duties

generally expected of a manager, and that Mr Owen's main line of business

did not appear to be deposit taking.® Mr CWen was the subject of

another memo written by Mr Gilder in May 1979 stating that he (Mr Owen)

had been responsible for bringing in fees of US$60 000 and US$300 000.

Mr Gilder also said in the memo that Mr Owen was an extremely critical

person and voiced his criticisms without restraint for which he had been

reprimanded. Mr Gilder added that Mr Owen had steadfastly refused to

make any efforts in the deposit gathering area. He concluded Mr Owen had

no future with the Nugan Hand Group unless he attempted to correct his

attitude.®

2.53.6 In his book 'Sleight of Hand', published during 1983, Mr Owen

stated that he met Mr Nugan in Sydney in late May 1979 and was informed

that he had three months in which to bring in some deposits or he would

be dismissed. Mr Owen returned to Bangkok and was informed in mid July

1979 that from the end of that month the Singapore office would no longer

provide operating costs for Nugan Hand (Thailand) Ltd.

2.53.7 Mr Owen said Mr Gilder rang him on 20 August 1979, informed him

that Mr Nugan wanted him to leave Bangkok and offered him a job in

- 236 -

Singapore.^ On 23 August 1979 the offer to Mr Owen of a salary of

US$3 000 per month, four weeks annual leave and full facilities and

privileges attaching to a senior executive position was confirmed. On or

about 22 August 1979 a telex to Mr Nugan stated that Mr Owen acknowledged

he had to leave Nugan Hand (Thailand) Ltd and would do so before

31 August 1979. A telex on 23 August 1979 to Mr Gilder from Mr G.R.

Steer [2.68] stated that Mr Owen would be able to take his holidays from

25 August 1979.12

2.53.8 In a letter dated 10 September 1979 to Mr Nugan, Mr Owen

requested US$100 000 as compensation for wrongful dismissal from the

Thailand office. Mr Gilder responded on behalf of Mr Nugan and said that

following the meeting in Sydney in May 1979 [2.53.6], Mr Owen had not

secured any bank clients in the specified time nor had he ceased making

derogatory comments about the organisation. It had been resolved to

request his departure from the Bangkok office and offer him a transfer to . 13

Singapore. An arrangement was finally reached between Mr Owen and

the Nugan Hand Group and an agreement was signed on 27 September 1979

pursuant to which Mr Owen received a car and US$12 000 and was to receive

commission on any transaction initiated by him and completed before

31 December 1979. It was also agreed that Nugan Hand (Thailand) Ltd pay

for airfares and transportation of household effects to Sydney provided

this occurred before 31 December 1979. Mr Owen agreed to transfer his

shareholdings from Nugan Hand (Thailand) Ltd and F.A. Neubauer Management

Ltd [Appendix B] and resign his directorships in both those

. 14

companies.

2.53.9 In November 1979 Mr Owen was visited at his new place of work by

Mr Gilder who indicated to Mr Owen that he had breached his part of the

agreement as he was still openly criticising the Nugan Hand Group and

therefore the Group was not going to pay the balance of commission due to

him. Mr Owen then arranged for a notice of debt to be served on Nugan

Hand Ltd for the amount of $10 598 on 24 December 1979. In January 1980

Nugan Hand Ltd was prepared to settle the claim in exchange for a total

and unconditional release from the agreement with Mr Owen on or before 15 25 January 1980. In the book 'Sleight of Hand' Mr Owen says

- 237 -

Mr Gilder offered him $10 000 for this release which he turned down.16

Correspondence of 29 January 1980 from Mr M.J. Moloney [2.48], solicitor

for Nugan Hand Ltd, to Mr Oven's solicitors states that Nugan Hand Ltd

disputed there were any funds outstanding to Mr Oven.11

Endnotes

1 CD7153 folios 16-17,27,38, Oven resume 2 CD10179 folio 32, Letter Ward certifying Owen is trade

representative 7/2/77 3 CD1308 folio 130-31, JTF ROI Owen 4 CD9984 folio 63, Letter Gilder/Oven 11/8/78 5 CD1893 folio 14, Account at Chartered Bank, Bangkok 24/2/77

folio 52, Memo Hand/Gilder re payments for Owen 2/3/77 folio 56, Declaration that Owen received $2000 cash from NHL 28/2/77 folio 57, Memo Gilder/Hand re payments to Owen 24/2/77 6 CDS8 folder 1, folio 61, Telex Glider/Cwen re CWen's expenses

11/10/78; CD1893 folio 29, Letter Gilder/Owen re salary 15/2/78 7 CD1308 folios 4, 6, 130

8 CD9984 folios 16-17

9 CD6242 folios 8-10, Memo Gilder/Nugan and Hand re Owen's

attitude to NH Group 24/5/79 10 CDS 8 folder 2 folio 130, Memo Owen/Hough ton re Ibraham Khoja

28/5/79; CD9634 folios 171-72, 175 11 CD9634 folios 175-78 12 CDS8 folder 2 folio 39, Telex Gilder/Owen re transfer to

Singapore 23/8/79, folio 41, Telex Steer/Gilder re Oven's holiday 23/8/79, folio 44, Telex/cable Gilder/Nugan re Oven's Singapore terms 13 CDS8 folder 2 folios 16-18, Telexes re Oven being removed from

Thailand 17/9/79, folios 25-26, Letter Owen/Nugan re Oven's 'Compensation for Wrongful Dismissal' 10/9/79 14 CD9984 folios 4-5

15 CD6243 folios 11, Letter Gilder/Hand re Owen's claims for moneys 10/1/80, folio 12, s.222 Companies Act demand 24/12/79 16 CD9634 folio 180

17 CD6158 folio 10, Letter Moloney/NHL re Oven v NHL 29/1/80

2.54 PAUKER, Dr Guy Jean

2.54.1 Dr Guy Jean Pauker volunteered to give evidence to the

Commission. He was interviewed by the Commission in the course of its

inquiries in the United States in January 1975.

- 238 -

2.54.2 Dr Pauker was born on 15 September 1916 in Bucharest,

Romania.·*· He moved to the United States in 1948 and later gained a 2

doctor of philosophy degree from Harvard University. He is a United

States citizen and now resides in California, the United States. ^

Dr Pauker has been associated with the Rand Corporation (a United States

government controlled company) since 1956, first as a consultant when he

was teaching at Harvard University, then after 1960 as a senior staff

member. In 1983 at his request, he became the senior resident

consultant.^

2.54.3 Admiral E.P. Yates [2.76] told the Commission that Dr Pauker was

a recognised authority in the field of United States strategic and

objective plans in the Pacific, and had been involved in Indonesia when

President Suharto succeeded President Sukarno. Admiral Yates said

Dr Pauker was a teacher at the University of California and was 'quite

knowledgeable of the people ... events and ... structure of every major 5 nation in the Pacific'. Dr Pauker told the Commission he first met

Admiral Yates when he travelled to Hawaii to brief Admiral Gayler on a

forthcoming trip to Indonesia. A friendship then developed and in 1977

Admiral Yates told Dr Pauker that he was working for the Nugan Hand Bank

and asked him if he wanted to make a deposit. Dr Pauker declined this

invitation to invest.®

2.54.4 Dr Pauker, in an interview with members of the Joint Task Force

in December 1982, said he met Mr M.B. Houghton [2.35] in the early 1970s,

having been introduced by Admiral Yates. Mr Houghton then introduced him

to Sir Paul Strasser and Mr John Charody. Dr Pauker said that

Mr Houghton displayed kindness in inviting him to use the facilities of

his penthouse and to dine at the Bourbon and Beefsteak bar and

restaurant.^

2.54.5 In 1979 Admiral Yates asked Dr Pauker if he would attend the

International Congress on New Enterprise ('ICONE') [3.6.14], which was to

be held in June 1979 in Manila, and talk about government in South East

Asia promoting joint ventures. By coincidence, Dr Pauker was to attend

an energy conference in Bali, Indonesia in July 1979 and agreed to attend

- 239 -

the ICONE conference.® Admiral Yates said that at the conference

Mr F.J. Nugan [2.1] asked Dr Pauker if he would assist him in becoming

involved in the oil industry in Indonesia. This request was made because

Dr Pauker was a good friend of General Alimurtopo, assistant to President 9 Suharto. Dr Pauker told the Commission that as an employee of the

Rand Corporation and as a matter of principle he regarded it as improper

to use his friendship and influence with government officials in such a

way. The Commission accepts Dr Pauker's evidence in this regard.

While in Manila, Dr Pauker was invited by Admiral Yates to attend a

cocktail party held by Mr Nugan. Present at this party was General

L.J. Manor [2.45]. Dr Pauker told the Commission he was impressed by the

presence of General Manor and Admiral Yates at the party."*"®

2.54.6 Following the ICONE conference, Mr Nugan attended the Bali

conference where he met Mr W.J. McDonald [2.47] and other important

businessmen and academics. It has been alleged in the media, notably The

Sydney Morning Herald of 26 September 1980, that Dr Pauker was a Central

Intelligence Agency ('C.I.A.') linked Rand Corporation employee who

arranged introductions for Mr Nugan to Indonesian government

officials.11 Dr Pauker denied arranging these alleged introductions

and told the Commission that the Rand Corporation is not linked to the 12 C.I.A. There is no evidence before the Commission which contradicts

Dr Pauker*s evidence concerning these allegations and, the Commission

accepts Dr Pauker's evidence.

2.54.7 After the Bali conference, Dr'Pauker flew to Sydney and visited

the Nugan Hand offices at Mr Nugan's request.11 In mid 1979

Mr McDonald, who was by then employed by the Group, contacted Dr Pauker

and asked if he would speak about business opportunities in South East

Asia, at a conference of the Nugan Hand representatives in October

[3.6.13]. Mr McDonald told Dr Pauker that apart from himself, Mr D.E.

Beazley [2.7], Admiral Yates and General Manor would be attending the 14 conference. Dr Pauker said that at this conference he was asked, for

a second time, to join the Nugan Hand Group and become the international

relations adviser. Mr Nugan said:

- 240 -

'You are an authority on South East Asia, you could be our

international relations adviser and you could introduce us ... you knot; everybody.1

hr Pauker refused to rake such introductions to the Croup and did not

accept the offer of employment. He said no serious negotiations were

entered into, no remuneration was discussed and no contract was signed at

the time of the conference. To his great annoyance, however, he was

already described in a brochure as the Nugan hand Group consultant on IS international affairs. "

2. 5 4 . 8 in late 1975 when Pr Pauker and his wife entertained fir Nugan

in Washington, P.C. Nr Nugan invited Dr Pauker and his family to visit

Australia over Christmas 1979. Pr Pauker arrived in Australia with his

wife and son and stayed near t ' r Nugan's father's home in Queensland where

Nr Nucan chartered an aeroplane and a helicopter for Dr Pauker and his

son to go scuba diving. He said the stay in Australia was most

unenjoyable, due mainly to Mr Nugan's behaviour^’ [see also 3.7.1],

2.54.9 Dr Pauker said that he sought advice concerning the Nugan Band

Group from a Nr D. Leinhach. Dr Pauker described Mr Leinbach as a Wall

Street banker of the best kind. He had been a partner in the very

distinguished Lehman Brothers firm and had, in that capacity, been

appointed financial adviser to the Indonesian oil company Pertamina.

Mr Leinbach had, on the basis of reports from his Australian contacts,

advised Dr Pauker to be very cautious. He said he did not understand how

the Group made its money and he said what he did not understand he did

not trust. Nore significantly, Nr leinbach said that he had the

impression that the Croup was engaged in a pyramid game. He said it was

not a pyramid of money hut a well known 'con' game of pyramiding people

which he found intriguing. According to this process, once people with

impressive credentials were appointed, others were likely to accept. He

considered that to be what the Australians were doing to Dr Pauker and

other appointees. He further said that Nr Beazley had an absolutely

first class reputation on Wall Street, and was considered one of the best

young bankers in the business.^

- 241 -

Endnotes

1 CT24522, Pauker

2 CT24522, CT24533, Pauker 3 CD9047 folio 2, Pauker's address 4 CT24480-81, Pauker

5 CT24258, Yates

6 CT24484-85, Pauker; CD1250 folio 4362, JTF CD1250 folios 4364-66 ROI Pauker 7/12/82 7 8 CT24486-87, Pauker

9 CT24259, Yates

9a CT24528, Pauker 10 CT24490, Pauker

11 0)8882 folio 56

1.2 CT24527, Pauker 13 CT24495-97, Pauker 14 CT24502-04, Pauker 15 CT24512, CT24529, Pauker; CPA]51, U.S.

liaison; CD1250 folio 4365

government agencies -

IP. CT24521-24, Pauker 17 CT24516-18, Pauker

2.5=; PAYNE, Michael John

2.55.1 Mr Payne did not give evidence before the Commission, nor was he

the subject of other witnesses' evidence. Thus, the information herein

relies solely upon documents obtained by the Commission.

2.55.2 Mr Michael John Payne was born in New Zealand on 28 November

1937. He js a registered accountant and a qualified member of the

Institute of Cost and Management Accountants and the Chartered Institute

of Secretaries and Administrators. He held a variety of jobs

specialising in the area of takeovers, mergers, reconstructions and

financing.^

2.55.3 Mr Payne answered an advertisement placed in The Financial

Review on 31 January 1979 and subsequently attended an interview on

20 March 1979.2 On 5 July 1979 Mr J.M. Oilder [2.25] invited him to

join the Nugan Hand International group of companies and represent them

in The Philippines. His primary role was to attract clients who would

benefit from the professional international banking and trade service

- 242 -

facilities offered by the Nugan Hand Group. He was paid a salary of

A$2 000 per month and commenced employment in August 1979.^

2.55.4 Mr Payne was with the Nugan Hand Group until its collapse, a

period of approximately seven months. A file note indicates he

introduced two clients in that time and had difficulty in adapting to his 4

position and relating to his colleagues. * 2 * 4

Endnotes

1 CD585 folios 64-66, Letter and resume from Payne answering

advertisement 2/2/79 2 CD585 folios 64-66

3 CD585 folios 69-70, letter Gilder/Payne re Payne's application 5/7/79 4 CD585 folio 8, Note listing Payne's achievements in three months and a list of frustrations

2.56 PITTARD, Denis John

2.56.1 Mr Denis John Pittard was born on 8 December 1945.^ In 1974

he was introduced to Messrs F.J. Nugan [2.1] and M.J. Hand [2.2] in the

context of some land dealings at Brunswick Heads and Byron Bay. The

introduction was made by Mr Robert Honan, who was at that time, in 2

partnership with Mr Pittard in the 'insurance business'. Sometime

later Mr Nuaan asked Mr Pittard if he would act as an agent for Nugan

Hand Ltd [2.97] and solicit deposits.^

2.56.2 From 1974 until 1980 Mr Pittard introduced clients to Nugan Hand

Ltd and received a commission for so doing. It was initially agreed that

he would be paid at the rate of one per cent for secured deposits and two

per cent for unsecured deposits, though this was later varied to half a

per cent for secured deposits and one per cent for unsecured

4

deposits. In 1978 to 1979 Mr Pittard was employed on a full time

basis for approximately six months and paid a retainer of about $150 or

$200 per week, which was to have been in addition to his commissions.

However he was not paid commissions during this period and accordingly

- 243 -

resigned on 28 June 1975.J In late 1979 Mr S.K. Hill [2.33] asked

Mr Pittard to resume his role as an agent soliciting deposits for Nugan

Hand Ltd. Mr Pittard agreed, on the basis that he would again be paid

commissions on deposits. He continued in this capacity until shortly

after the death of Mr Nugan in January 1980.

2.56.3 According to Mr Pittard, an amount of about $31 000 shown in the

records of Yorkville Nominees Pty Ltd [2.108] as a loan to him, in fact

represents the commissions earned by him during the period 1974 to 1980.

Mr Pittard said these commissions were paid to him in cash or by cheques

drawn on Yorkville Nominees Pty Ltd, Leasefast Pty Ltd [2.87] or

Illarangi Investments Pty Ltd [2.85].^

2.5(i.d In the course of Ids employment with the Nugan Hand Group,

Messrs Nugan and Hill asked Mr Pittard to approach some of the 'Labor

Party councils' to solicit deposits, because they knew of his association

with the Australian Labor Party. Three councils approached by Mr Pittard

did decide to invest with Nugan Hand Ltd. These were Leichhardt

Municipal Council, Marrickville Municipal Council and South Sydney

Municipal Council. [A detailed account of these transactions is given

in the Commission's Interim Report No.2.] Other depositors introduced to

Nugan Hand Ltd by Mr Pittard included South Sydney Junior Rugby League

Club Ltd, Randwick labor Club Ltd, the Jewel group of companies and

Marrickville RSL Club Ltd.®

2.56.5 On 8 June 1978 Mr Pittard was appointed a director of Illarangi

Investments Pty Ltd. He told the Commission he became a 'nominal

director' at Mr G.F. Princat's [2.9] request after the resignation of

Mr Peter Lavcock. Mr Pittard did not attend any meetings of directors of

Illarangi Investments Pty Ltd or carry out any duties of a director other

than to sign the 1979 annual company return. He said he had no other

knowledge of this company.^® This company was placed into liquidation

on 4 June 1980.

2.56.6 On 27 January 1980, following the news of Mr Nugan's death,

Mr Pittard accompanied Mr Hill to Mr K.L. Nugan's [2.52] unit and later

- 244 -

wont to a meeting with Mr Gillett of the Jewel group of companies

[3.8.6-3.8.10], On the following day Mr Pittard accompanied Mr Hill to

the Nugan Hand Ltd offices. [The events of that day have relevance to

the concealment and destruction of records described in Part 3 Section 9.] * 1

Fndnotes

1 CT1601P, Pittard

2 CT15977, Pittard; ΓΤ15513, CT21508, Hill; CD3653 folio 1,

Pittard evidence to CSC; CD3058 folio 3, Pittard evidence to CAC 1.4/12/81 3 CT15997, CT16D18, CT20659, Pittard 4 CT16018, CT20659, Pittard 5 CT16P16-16a, CT20659, CT20665-69, Pittard; CP4987 folio 14,

Pittard's wage record 13/7/78-28/12/78 6 CT20659, Pittard

7 CT2P660, CT20670-73a, Pittard; CD47S7 folio 3,

Yorkville-Provisional Liquidators papers - loan balances 29/4/RD; CD.5519 folio 37, Yorkville ledger - D.Pittard loan 8 CT16018, Pittard

9 CD3058 folio 26

ID CT20664, Pittard; CD3058 folio 4

2.57 POLLARD, Warwick Michael

2.57.1 Mr Warwick Michael Pollard is a public accountant and at the

time he gave evidence was practising under the name Warwick Pollard &

Company. Mr Pollard completed his accountancy examinations at the

Technical College of New South Wales in 1969 and became registered as a

public accountant, company auditor and company liquidator in 1971. After

completing the course at Technical College, Mr Pollard worked as an

accountant for a number of Sydney firms including Charles J. Berg (<

Partners where he met Messrs C.L. Heuschkel [2.30] and G.F. Brincat

[2.°].^ He worked there for 18 months doing mostly accounting and tax

work for private companies. In 1972 Mr Pollard commenced his own

practice.^

2.57.2 In 1974, Mr Pollard purchased a small practice in Narwee, a

Sydney suburb, in partnership with Mr Heuschkel. Later, Mr Brincat

- 245 -

commenced with Heuschkel & Pollard as an employee and was subsequently

made a partner. In 197Γ- the partnership opened an office in Sydney and

the practice in Narwee was sold. The city practice continued as a

partnership between Messrs Pollard, Heuschkel and Brincat until 3 Mr Heuschkel left in May 1978. It then continued with Messrs Pollard

and Brincat as sole partners. The Narwee practice had several

companies on the books when the partnership took it over in 1974. These

companies included Carlyle Investments Ptv Ltd, whose director/manager

was Mr M.J. Hand [2.2]. It was through Mr Pollard carrying out

accountancy work for Carlyle Investments Pty Ltd, that he met Mr Hand who

in turn introduced Mr Pollard to Mr F.J. Nugan [2.1]. Subsequently

Mr fiuqan asked Mr Pollard to perform general accountancy work in relation

to companies of which he and Mr Hand were directors and eventually

Mr Nugan asked Mr Pollard to audit the accounts of Nugan Hand Ltd

[2.97].5

2.57.3 Mr Pollard said when Nugan Hand Ltd was first incorporated

another firm of auditors were appointed but had later resigned. He

understood that Nugan Hand Ltd had been set up for approximately three

months and that no audits had been conducted during that time. For this

reason he did not consider it necessary to contact the firm that had

previously been nominated to act as the auditors. Mr Pollard said that

as his firm had begun to do most of the general accountancy work for

Mr F.J. Nugan's companies it seemed appropriate that they should also do

the audit work.®

2.57.4 Mr Pollard stated that his 'audit experience since practising in

partnership was not particularly great. My own practice predominantly

consisted of small private family companies involving only a small amount

of balance sheet verification work1.^ Mr Pollard commenced audit work

at the ace of 17 but always under supervision and he did not sign the

auditor's certificate. Mr Pollard said he had never signed an audit

certificate in respect of a public company before commencing the audit

work for Nugan Hand Ltd.®

2.57.5 Mr Pollard said Mr Brincat completed the audit work for the

accounts of Nugan Hand Ltd. Mr Pollard signed the annual accounts audit

- 246 -

certificate because Mr Brincat was not yet a partner and therefore not

entitled to sian. However, Mr Pollard admitted he had not looked at

Mr Brincat's working papers and so was in no position to hold the opinion

expressed above his signature (which was that the Nugan Hand Ltd accounts

for 1974 gave a true and fair view of the state of the Group's affairs)

because he himself had not done the necessary work. Mr Pollard said that

when he sinned the accounts he did not know whether they were true or

not. He said the documents were probably just put in front of him and he 9

signed them as he relied completely on Mr Brincat.

2.57.6 In 1977, Mr Brincat raised a query about the nature and extent

of the hills of exchange being used internally by the Nugan Hand Group

[3.5.6], Mr Brincat mentioned it to Messrs Heuschkel and Pollard who

decided to seek legal advice without telling Mr Brincat. A professional

acquaintance of Mr Feuschkel's, Mr Phillip Finn, suggested Mr J.L. Aston

as an appropriate lawyer for the purpose of giving advice relating to

corporate matters."*^ On 16 September 1977 Messrs Heuschkel and Pollard

spoke to Mr Aston, who said that he may have a conflict of interest

because Mr Nugan was his client. He referred then to the firm of

Mr Michael Fosser, solicitor, and specifically to Miss Dianne Truss of

Mr Posser's firm, to obtain independent legal advice."^ Messrs

Heuschkel and Pollard subsequently visited Miss Truss who said that she 12

would consult the authorities in order to provide a formal opinion.

Following the conference with Miss Truss, Mr Nugan contacted Messrs

Pollard and Heuschkel and told them that he objected to them seeking

legal advice. A second meeting with Mr Aston was ultimately held and was

attended by Messrs Pollard, Brincat and Nugan. They subsequently agreed

to be nuided by Mr Aston who advised that a note should be included in

the accounts referring to the use of internal bills. Neither Miss Truss

nor anv other independent solicitor was ever seen again by either 13

Mr Pollard, Mr Heuschkel or Mr Brincat concerning this matter.

2.57.7 After Mr Nugan's death, Mr Pollard decided to complete the audit

for Nugan Hand Ltd as at 31 January 1980 and sought the assistance of the

accountancy firm, Coopers and Lybrand. By arrangement with that firm,

Mr D. Lowe [2.44] assisted on a subcontracting basis, in consultation

- 247 -

with Mr Robert Lynn, a partner of the firm. The 1980 audit took almost 14 two months to complete.

2.57.8 Mr Pollard said that by a letter dated 18 February 1980, his

firm made a formal written report to the Corporate Affairs Commission of

suspected breaches by Nugan Hand Ltd of Section 167 of the Companies 15 Act. A Corporate Affairs Commission Special Investigator, Mr Purdon,

gave evidence before the Commission that the report by Mr Pollard was the

catalyst for the Corporate Affairs Commission's investigation of the

Nugan Hand group of companies.16

Endnotes

1 CT23310, Pollard; CT23555, Heuschkel 2 CT23283, Pollard

3 CT23554, Heuschkel

4 CT23284, RxLlard

5 CT23285, CT23309, Pollard 6 CT23285, Pollard

7 CT23284, Pollard

8 CT23309, Pollard

9 CT23316-21, Pollard; CD10015 folio 102, CAC information 10 CT23551, CT23563-64, Heuschkel 11 CT23566, Heuschkel 12 CT23493, Truss

13 CT23286-88, Pollard; CT23493, Truss; CT23567-68, CT23868, Heuschkel; CT23872, Brincat 14 CT23299, Pollard; CT23600, Lowe 15 CT23295-96, Pollard 16 CT19700, CT19702-05, Purdon

2.58 PRIOR, Anthony James

2.58.1 Mr Prior neither gave evidence before the Commission nor was he

the subject of other evidence. The information herein relies solely upon

material produced to the Commission in the course of its inquiry.

2.58.2 Mr Anthony James Prior was born in Ehgland on 10 January

1934.* 1 11 In 1978 he was Managing Director of Modular Investments Ltd, an

investment company incorporated in Hong Kong and Chairman of Modular 2

Developments Sdn. Bhd. situated in Kuala Lumpur.

- 248 -

2.58.3 In August 1978 Mr Prior corresponded with Mr G.R. Steer [2.68]

indicating he and Mr G.H. Hill [2.32] of Hill Rogers & Associates were to

be considered partners in all financial matters introduced to Nugan Hand 3

Ltd [2.97] from the South East Asian area by either of them.

2.58.4 In September 1978 Nugan Hand International * 1 formed an

association' with Mr Prior and agreed to assist his company, Modular

Developments Sdn. Bhd. in obtaining finance for its property

developments. Nugan Hand International was to receive 50 per cent of any 4 net profit earned.

Endnotes

1 CD2015 folio 3, Personal Data Sheet - Prior 2 CD2015 folio 20, Letter Gilder/Prior re association with NHI

8/9/78, folio 30, Letter Prior/Steer re agreement with G.H. Hill 1/8/78 3 CD2015 folio 30

4 CD2015 folios 20-21

2.59 PULGER-FRAME, Ronald Adam

2.59.1 Mr Ronald Adam Pulger-Frame was born in Scotland on 6 February

1928. According to the biographical data he supplied to the Nugan Hand

Group, Mr Pulger-Frame served with the Royal Navy and later with the

Royal Air Force towards the end of World War II. In 1947 he worked for

the Glasgow firm of Montgomarie Stobo & Co Ltd and was involved in sales

of oil and industrial parts. After three years he went abroad in the

employ of Duncan Brothers & Co Ltd, a tea estate management company in

North East India where he was responsible for the superintendence of a

group of tea estates. In 1967 Mr Pulger-Frame moved to Hong Kong where

he joined Kasho (H.K.) Ltd as administration manager. He remained in

this position until he joined Deak & Co. (Far East) Ltd ('Deak & CO.') in

1970. He was appointed assistant manager, specializing in foreign

exchange, money market operations and investment advice.1

2.59.2 In an interview with the Hong Kong Official Receiver on 4 June

1981, Mr Pulger-Frame stated: 'Deaks had a system which was devised by me

249

to circumvent Australian Exchange Regulations'. When this statement

was put to him by the Commission, Mr Pulger-Frame said the system was

devised by the then Managing Director of Deak & Co in Hong Kong and that

he (Mr Pulger-Frame) had implemented the system. In the first instance

with the approval of the Reserve Bank of Australia, Deak & Co. opened an

external Australian dollar bank account in Sydney. The account was for

the stated purpose of repatriating Australian currency from Hong Kong and

selling such currency, the proceeds of which were remitted in United

States dollars from Australia to bank accounts held by Deak & Co. in the

United States.^ Ostensibly for this purpose, Mr Pulger-Frame would

regularly enter Australia during the period of his employment with Deak &

Co., carrying suitcases full of Australian currency collected from Hong

Kong. The ANZ Bank was notified in advance that a courier was on the way

with Australian currency— from Hong Kong. The purpose stated by

Mr Pulger-Frame however, was t.o disguise the fact that frequently he or

some other representative of Deak & Co., once in Australia, would collect

other Australian currency from an agent and add this to the funds carried

into Australia. The total amount of currency would then be sold to the

ANZ Rank and the proceeds remitted to Deak 1 Co. U. i'ed "r.Ues accounts,

thereby exporting Australian currency without the knowledge of the

Reserve Bank of Australia.^ It would anpear that at all times the ANZ

Bank was under the impression that all the currency had been brought into

Australia and not added to here.

2.5°.3 Mr Pulger-Frame in an interview with the Official Receiver Hong

Kong, said he met Mr C.I.. Collings [2.15] before the Nugan Hand Group's

involvement in Pong Kong. Mr Pulger-Frame said he was working for Deak &

Co. when Mr rollings approached that company regarding a transaction

involving Vietnamese piastres. Although this transaction did not

eventuate, it left Mr Ceilings with some idea of Mr Pulger-Frame's

capabilities. Following the establishment of the Hong Kong office,

Mr Ceilings suggested to Mr Pulger-Frame that he leave Deak & Co. and

work for the Nuoan Hand Group. In Hong Kong Mr Pulger-Frame had

previously met Mr F.J. Nugan [2.1] who had also suggested that he join

the 'new, young, more aqoressive Group'. About a year later, in June

1976, Mr Pulger-Frame resigned his position at Deak & Co. On 19 July

2

- 250 -

1976 Mr Pulger-Frame commenced employment as Manager, Nugan Hand (Hong

Kong) Ltd [2.94].^

2.59.4 Although Mr Pulger-Frame was given the title of Manager, he was

employed to attract deposits from the public on behalf of either Nugan

Hand (Hong Kong) Ltd or the Nugan Hand Bank [2.106]. He estimated*>that

80 per cent of the deposits he collected went to the Nugan Hand Bank

because deposits collected on behalf of Nugan Hand (Hong Kong) Ltd

attracted a withholding tax on the interest earned. The same did not

apply to deposits with the Bank.®

2.59.5 Mr Pulger-Frame had several Australian clients and also used a

former agent of Deak & Co. residing in Australia to consolidate clients' 7

funds which Mr Pulger-Frame then deposited with Nugan Hand Ltd.

2.59.6 Mr Pulger-Frame said he became disenchanted with the Nugan Hand

Group in 1977 having concluded that funds were being taken from all

aspects of the operation without due regard to the distinctions between

companies. He also became aware that a large number of deposits were

placed on the Asian Currency Unit market at lower interest rates than the

Group was paying the clients. In addition there was commission payable

to himself as well as the payment of overriding commissions. He agreed

that it appeared the Nugan Hand Group 'were going out backwards'.®

2.59.7 In late 1977 or early 1978 Mr Pulger-Frame was searched at Hong

Kong Airport for drugs. He later recounted this event to Mr Nugan in

Sydney. He said that Mr Nugan went 'white, absolutely white, all the

blood drained away from him'. Mr Nugan first took Mr Pulger-Frame to see

Mr J.L. Aston who was then a solicitor practising in Sydney and then to

see Mr M.B. Houghton [2.35]. Mr Pulger-Frame said that Mr Nugan

literally 'sat at Mr Houghton's feet' and requested his assistance.

Mr Pulger-Frame interpreted this as indicating the great respect that 9

Mr Nugan had for Mr Houghton's abilities.

2.59.8 During his employment with the Nugan Hand Group, Mr Pulger-Frame

and his wife were directors of Baia Do Oriente Limitada, a company

- 251 -

incorporated in Macau which Mr Pulger-Frame believes was a vehicle used

by Messrs Nugan and M.J. Hand [2.2] to avoid taxation."*"®

2.59.9 In a memo of 21 July 1976, Mr Collings stated that

Mr Pulger-Frame was employed on a salary plus commission.11 Ihe Wing

Oi Bank was instructed to transfer HK$5 000 to Mr Pulger-Frame’s account 12 at the Chartered Bank each month. In October 1978, Mr Pulger-Frame

was in dispute with Mr Collings over the brokerage schedules and expenses

owed to him. A compromise was reached and in a memo to Mr Hand, on

17 October 1978, Mr Collings stated that for the 'special services that

Ron has performed1 he would receive a total of US$23 320."*"^ Six weeks

later Mr Pulger-Frame resigned from the Nugan Hand Group and his

resignation was accepted by Mr Collings to take effect as from 1 December 14 1978.

Endnotes 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4

1 CD7153 folio 41, Pulger-Frame's resume 2 CD4625 folio 40, Official Receiver Hong Kong ROI Pulger-Frame 4/6/81 3 CT22683, Pulger-Frame 4 CT22689, Pulger-Frame 5 CD4625 folios 3-4

6 CT22693, Pulger-Frame 7 CT22696, Pulger-Frame 8 CT22701, Pulger-Frame 9 CT22707-08, Pulger-Frame 10 CT22713, Pulger-Frame

11 CD4645 folio 6, Memo Collings/Nugan, Hand and Hill re

Pulger-Frame's appointment 21/7/76 12 CD1984 folios 144, 172, Letter Collings/WOB re Pulger-Frame Account 22/8/78 13 CD4645 folios 2-3, Memo Collings/Hand re clarification of

certain items with Pulger-Frame 17/10/78 14 CD6959 folio 88, Memo Collings/all staff re Pulger-Frame's resignation 1/12/78

- 252 -

2.60 RUSH, John Robert

2.60.1 Mr John Robert Rush was born on 31 May 1950 in Sydney. He holds

a first class honours degree in Economics from the University of Sydney.

From 1973 to 1977 he worked as a Research Graduate for the Research

Department of the Reserve Bank of Australia."1

2.60.2 Mr Rush commenced employment with Nugan Hand Ltd [2.97] on

15 August 1977 and worked full time until April 1978, receiving a salary 2

of approximately $15 500 per annum. Mr Rush was responsible for the

writing of regular weekly and monthly economic newsletters such as the

Nugan Hand International Australia Report and the Nugan Hand

International Review. These newsletters were forwarded to Hong Kong to 3

be distributed to clients of the Nugan Hand Group. Mr Rush also gave

general economic advice and performed ad hoc tasks at Mr F.J. Nugan's

[2.1 ] request such as the preparation of statistical reports on general

economic conditions and the preparation of demographic data in connection 4

with the formation of companies by Mr Nugan. Cti 9 September 1977 the

Corporate Affairs Commission granted Mr Rush a licence to act on behalf

of Nugan Hand Ltd as an investment representative. This licence was

revoked in 1979.8

2.60.3 In April 1978, Mr Rush's company, Rush Economic Research Pty Ltd

entered into a consultancy agreement with Nugan Hand Ltd pursuant to

which the company received an annual retainer of approximately

$18 000.® As a consultant, Mr Rush's employment was initially for only

one or two days per week but by the latter half of 1979 he was attending

the Nugan Hand Ltd office on a full time basis.^

2.60.4 Mr Rush was working for Nugan Hand Ltd at the time of Mr Nugan's

death. Οι 1 February 1980 Mr Rush told Messrs S.K. Hill [2.33] and

G.A. Edelsten [2.20] that he would prefer not to have any further

connection with Nugan Hand Ltd. The consultancy agreement between Rush

Economic Research Pty Ltd and Nugan Hand Ltd was then terminated by

mutual agreement.8 At present Mr Rush is employed as a senior manager 9 of a merchant tank.

- 253 -

Endnotes

1 CD7153 folio 20, Rush resume

2 CT21127, CT21130, Rush; CD4987 folio 25, NHL salary for Rush 3 CT21132-33, CT21148, Rush; CD470, 'Nugan Hand International Review1 4 CT21133, Rush

5 CD2313, CAC application for licence - J. Rush 6 CT21128, CT21136-37, Rush; CD332 folio 1, Rush - personnel

information

7 CT21132, Rush

8 CT21136-37, Rush

9 CT21130, Rush

2.61 RUTTER, Haydn M.

2.61.1 Mr Haydn M. Rutter did not give evidence before the Commission.

The information herein relies upon the evidence of other witnesses and

upon documents produced to the Commission in the course of its inquiry.

2.61.2 In 1979 Mr Rutter and Mr Peter Kandiah were partners in the

Georgetown, Cayman Islands legal practice of Bruce Campbell & Co.

Mr Bruce D. Campbell was a consultant to the practice and Mr Ian

N. Falconer was an associate.1 Mr S.K. Hill [2.33] stated in evidence

before the Commission that the registered office of the Nugan Hand Bank

[2.106] in the Cayman Islands was in the same building as the office of 2 Mr Rutter's legal firm.

2.61.3 Mr Rutter was instrumental in drawing up the Nugan Hand Bank's

memorandum and articles of association. He also arranged incorporation

of Riverstone Investments Ltd, a nominee company requested by Miss E.L.

Thomson [2.72] for transfer to Mr M.B. Houghton [2.35]. Mr G.A.

Courtney-Smith [2.17] told the Commission that before deciding to join

the Nugan Hand Group, he travelled to the Cayman Islands and spoke with

Mr Rutter, who Mr Courtney-Smith described as an attorney briefed and

retained by the Group. He said Mr Rutter assured him that the Nugan Hand

Bank was registered and functioning according to law. He said Mr Rutter

told him of the benefits of the Cayman Islands registered Bank, about the

Bank's confidentiality being protected by law and that the Cayman Islands

- 254 -

4

was a British colony and a tax haven. Admiral E.P. Yates [2.76]

stated in evidence to the Commission that in mid 1977 he and Mr F.J.

Nugan [2.1] travelled to the Cayman Islands to meet Mr Rutter and the

accountants employed by the international accounting firm Price 5

Waterhouse & Co. who were then the accountants for the Nugan Hand Bank.

2.61.4 On 1 July 1976 Mr Rutter was registered as one of the three

shareholders in the Nugan Hand Bank and Trust Company in the Cayman

Islands.6 The other shareholders shown were Mr Kandiah and

7

Mr Campbell. Mr Campbell was also a director of the Nugan Hand Bank

but on 30 January 1978 notified Mr M.J. Hand [2.2] that he was resigning

from his legal firm and as a director of the Bank. In his letter he

recommended that Mr Rutter replace him. This was effected in March 1978

and Mr Rutter remained as a director of the Nugan Hand Bank until the

appointment of a liquidator on 29 April 1980.8

2.61.5 Messrs Campbell, Kandiah and Rutter were all listed as

shareholders of Swiss Pacific Holdings Ltd [Appendix B] on 10 November

1976, and Messrs Kandiah, Falconer and Rutter were listed as the 9 directors of that company. Messrs Campbell, Kandiah and Rutter were

also listed as the three shareholders and directors of Nugan Hand

International Holdings Ltd [Appendix B] on 18 January 1978.10 At a

directors' meeting of Nugan Hand International Holdings Ltd held in

Georgetown, Grand Cayman on 24 January 1978, Mr Rutter was appointed

secretary of that company."*""'" Within the documents in the possession of

the Commission an undated letter of resignation of directorship from

Nugan Hand International Holdings Ltd, signed by Mr Rutter, was

located.^

Endnotes 1 2 3 4 5

1 CD7285 folio 3, Letter Bruce Campbell & Co/Nugan Hand Singapore Ltd 26/7/79 2 CT21640, Hill

3 CD7285 folio 21, Letter Bruce Campbell & Co/Thomson 6/6/79 4 CT22090-91, Courtney-Smith 5 CT24272, Yates

- 255 -

6 CD7675 folio 13, List of subscribers of Nugan Hand Bank & Trust

Company 6/7/76 7 CD7285 folio 3

8 CD7164 folio 5, Letter Peat Marwick Mitchell/G.P. Haddon-Cave 29/4/80; CD7006 folio 9, Letter Bruce Campbell & Co./Hand 12/4/78; CD7006 folio 12, Letter Bruce Campbell & Co./Hand 6/3/78

9 CD11221 folio 4, List of Directors - Swiss Pacific Holdings Ltd; folio 67, Signatures of Campbell, Rutter and Kandiah 10/11/76 10 CD11319 folio 64, List of subscribers of NH International

Holdings Ltd 19/1/78; folio 78, Minutes of meeting of

subscribers of NH International Holdings Ltd 24/1/78 11am 11 CD11319 folio 65, Minutes of meeting of subscribers of NH

International Holdings Ltd 24/1/78 11.30am 12 CD11319 folio 70, Letter Rutter/Directors of NH International Holdings Ltd.

2.62 SAUNDERS, Robert Muir

2.62.1 Mr Saunders did not give evidence before the Commission and was

not the subject of other witnesses' evidence. The information herein

relies upon documents produced to the Commission in the course of its

inquiry including material supplied by other investigative bodies.

2.62.2 Mr Robert Muir Saunders was born on 19 August 1936 in

Australia. He is married and has two daughters."*·

2.62.3 Mr Saunders was employed as Manager, Trade Services of Nugan

Hand Trade Asia Ltd [Appendix B] from 1 April 1979 until 10 January

1980. He received a salary of HK$10 000 per month plus a bonus payable

at the directors' discretion. These were paid into his account with the 2

Hong Kong and Shanghai Banking Corporation.

2.62.4 Documents in the possession of the Commission show that

Mr Saunders obtained from the Nugan Hand Group a personal loan of

HK$35 000 repayable at HK$2 000 per month and that at 15 January 1980, he