Here it is, the Killing Hope chapter that details the secret history behind a remarkable event in Australian history.

When the leader of a Communist country was removed from office by the Politburo,
this was confirmation to the Western mind of the totalitarian, or, at best, the arbitrary,
nature of the Communist system.
What then are we to make of the fact that in 1975 Edward Gough Whidam, the legally
elected prime minister of Australia, was summarily dismissed by a single non-elected individual,
one functioning under the title of "Governor-General"?
Whitlam took office in December 1972 as the head of the first Labor Party government
in Australia in 23 years. In short order he set about proving to the opposition patties the
correctness of their historical prediction that Labor in power would be "irresponsible and
dangerous"1—to whom, of course, had always been the question.
The war in Vietnam was an immediate example. Australian military personnel serving
there under the command of the United States were called home, conscription was halted,
and young men jailed for refusing military service were released.2 Moreover, the Whitlam
government recognized North Vietnam, several of his ministers publicly denounced
American bombing of Hanoi and called for rallies to oppose it, and protesting dock work-
ers felt inspired to impose a temporary boycott on American shipping, although the last was
opposed by Whitlam.3
Condemnation of President Nixon and his administration volunteered by Labor ministers
was most undiplomatic: "corrupt" ... "maniacs" ... "mass murderers" ... were some of
the epithets hurled at Washington. American officials were reported to be "shocked and
angered".4
The overseas side of Australian intelligence (ASIS by acronym), it turned out, was
working with the CIA in Chile against the Allende government. Whitlam ordered an immediate
halt to the operation in early 1973, although at the time of Allende's downfall in
September, ASIS was reportedly still working with the Agency 5
The Labor government showed itself less than committed to the games security people
play at home as well. Whitlam let it be known immediately that he did not wish to have his
staff members undergo the usual security checks because he knew and trusted them. The
Australian Security and Intelligence Organization (ASIO) was taken aback by such unortho¬
doxy and informed its CIA colleagues in Australia; cables went to Washington; before long,
a political officer at the American Embassy was informing Richard Hall, one of Whitlam's
advisers, "Your Prime Minister has just cut off one of his options." Hal! took the remark to
be a threat to cut off intelligence information.6 Whethet bowing to American/ASIO pressure
or not, Whitlam soon afterward agreed to the security checks.
The new administration also put an end to the discrimination against immigrants who
were being denied naturalization for having opposed the military juntas in places like
Greece and Chile.7 Most exceptional and alarming to the security professionals was the
behavior of the Attorney General who showed up unannounced at ASIO headquarters one
day in March 1973 with the police and carted away certain files because he suspected that
the intelligence agency was withholding information from him. In all likelihood, ASIO was
deliberately keeping certain information from its own government, as does every other intelligence
agency in the world. The difference here, once again, was that the Labor government
simply refused to accept such a state of affairs as normal.
A few years later, after Whitlam's ouster, James Angleton, who had been a high CIA
officer in 1973 and directly concerned with intelligence relations with Australia, complained
to an Australian television interviewer about the "Attorney General moving in, barging in,
we were deeply concerned as to the sanctity of this information which could compromise
sources and methods and compromise human life." The CIA, he said, seriously considered
breaking intelligence relations with Austtalia.8
As a consequence of Whitlam's unconventional way of running a government, the CIA
became rather concerned about the security and continued functioning of its many military
and intelligence facilities in Australia. By the Agency's standards, it was a highly important
setup, employing thousands of persons—a vital part of the early warning system; a key
tracking station in the United States' global spy satellite system of extremely sophisticated
photography and monitoring of activities within the Soviet Union; a US naval communications
station which dealt with nuclear submarines; a huge electronics control center set up
by the US National Security Agency (NSA) to intercept messages, of voice, telex, etc., coming
in and out of Australia and its Pacific region—that is, eavesdropping on everybody and
everything.3
Most of this had been built in the latter part of the 1960s and was run in such secrecy
that not even senior members of die Australian Foreign Ministry had been briefed on exactly
what went on in those buildings in Australia's wide open spaces, and the CIA connection
was never officially acknowledged.
After the Labor Party took power, some of its members voiced strong criticism of the
secret facilities. They increasingly demanded an official explanation for their presence and
at times even voted for their removal. This was not carried out because the leaders of the
Whitlam administration, for all their radical posturing, were not about to leap into political
no-man's-land by cutting off ties to the West. They spoke of neutralism and non-alignment
on occasion, but they were willing to settle for independence; which is all the Papandreous
wanted before they were ousted in Greece, another site of an American electronics statewithin-
a-state in which the host intelligence and defense establishments typically demonstrate
mote loyalty to their American counterparts than to their own "government of the
day".
In 1976, an investigation by the Australian Royal Commission on Intelligence and
Security concluded that for many years members of ASIO had been providing the CIA with
potentially damaging information about prominent Australian politicians and governmental
officials. The information reportedly ranged from accusations of subversive tendencies to
details about personal peccadillos.10
Moreover, it was later learned that in addition to Chile, Australian intelligence had
aided US operations in Vietnam, Cambodia and Indonesia.11
The Whitlam government displayed its independence where it could. In 1973, Whitlam
disclosed the existence of an Australian Defence Signals Directorate unit in Singapore—
another cold-war toy of the CIA and ASIO which monitoted military and civilian radio
traffic in Asia. (The DSD is comparable to the American NSA and the British GCHQ.)
Later, the Australian prime minister closed the unit down, although he re-established part
of it in Australia. His administration also expressed its disapproval of US plans to build up
the Indian Ocean island of Diego Garcia as another military-intelligence-nuclear outpost.12
And in February 1.975, the Labor Party conference voted to allow the Provisional
Revolutionary Government of Vietnam (the Vietcong) to set up an office in Australia. This
was before the fall of Saigon.
"By the end of 1974," writes Joan Coxsedge, a Labor Party member of Parliament in
the state of Victoria,
almost every move by the Whitlam Government or by individual Labor parliamentarians,
whether it was a departmental decision, a staff appointment, an international cable, a telex, a
phone call, or a confidential letter, quickly became the property of the news media. There was an
unparalleled campaign of personal vituperation, hinting at incompetence, dissension, corruption
and private scandal within the ranks of the government.13
Matters reached the spark point in autumn 1975. Whitlam dismissed the heads of both
ASIO and ASIS in separate incidents, the latter because his agency had been secretly assisting
the CIA in covert activities in nearby East Timor.14 Then, at the beginning of
November, it was revealed in the press that a former CIA officer, Richard Lee Stallings, had
been channeling funds to J. Douglas Anthony, leader of the National Country Party, one of
the two main opposition parties. It was reported that Stallings was a close friend and former
tenant of Anthony's, that the secret facilities in the hinterland were indeed CIA creations,
and that Stallings had been the first head of much of the operation.15
A year earlier, an Australian political journalist, Ray Aitchison, had published a book
called Looking at the Liberals (the Liberal Party, the other important opposition party, was
actually rather conservative}, in which he claimed that the CIA had offered the opposition
unlimited funds in their unsuccessful attempt to defeat the Labor Party in the May 1974 parliamentary
elections.16 Subsequently, a Sydney newspaper reported that the Liberals had been on
the receiving end since the late 1960s, and quoted the remarks of former CIA officer Victor
Marchetti, who confirmed that the CIA had funded both of the major opposition parties.17
Whitlam publicly repeated the charges about Stallings and insisted upon an investigation
of the facilities, to identify once and for all their true nature and purpose. {Whether any
of it was part of a weapons system was one question which seriously concerned the administration.)
At the same time he demanded a list of all CIA operatives in Australia.
The Australian military-intelligence complex appears Co have been spurred into a flurry
of activity. On 6 November, the head of the Defence Department reportedly met with the
Governor-General, Sir John Kerr, and afterward declared publicly: "This is the greatest risk
to the nation's security there has ever been."18
On the eighth, another senior defence official held a meeting with Kerr in which he
briefed the Governor-General about allegations from the CIA that Whitlam was jeopardizing
the security of the American bases in Australia.19 The same day, the CIA in Washington
informed the ASIO station there that all intelligence links with Australia would be cut off
unless a satisfactory explanation was given of Mt. Whitlam's behavior.20 The Agency had
already expressed reservations about releasing intelligence information to certain government
ministers.21
If this had been a Third World country, the CIA would likely have already sent the
government packing.
On 9 November, Kerr was received at the Defence Signals Directorate for yet another
briefing.22 The following day, the ASIO station in Washington, at the request of the CIA,
sent a telex to its headquarters in Australia in which it stated that "CIA can not see how
this dialogue with continued reference to CIA can do other than blow the lid off these
installations".23 In addition to Stallings, the names of his successors (senior CIA officers)
and the CIA station chief in Canberra had appeared in the press.
Kerr, who was taken with the world of spookery and regularly saw classified material,
in all likelihood was aware of the ASIO telex and the CIA ultimatum.24 On the 1 1th, he
dismissed Whitlam as Prime Minister, dissolved both houses of Parliament, and appointed
Malcolm Fraset, the leader of the Liberal Party, to head an interim government until new
elections could be held on 13 December. In the hours between the appointment of Fraser
and the dissolution of Parliament, the Labor majority in the House of Representatives
pushed through a no-confidence motion against Fraser, an act which obliged the Governor-
General to dismiss the Liberal leader in turn. Kerr chose to ignore this maneuver, which was
a legalistic one, although his dismissal of Whitlam was no Jess a legalistic act.
On 15 October, the opposition-controlled Senate had refused to vote on a new budget
appropriation bill (called "Supply" in Australia) in order to force the government to dissolve
Parliament and hold new elections, hoping thus to regain power. Though the constitution
gave the Senate the technical right to withhold approval of the budget, it was seldom
interpreted literally, as it is in the United States. Precedent was of greater importance, and
the fact was that in Australia's 75-year history as a Federation the Senate had never exercised
this right against the federal government. Only days earlier, eight leading law professors
had publicly declared such action to be constitutionally improper. The opposition tactic
was thus at least debatable.
When Whitlam refused to dissolve Parliament and tried to govern without the budget,
a constitutional and financial crisis steadily built up over the course of several weeks. Then
Kerr invoked a power as archaic and as questionable as that employed by the Senate. It was
the first time a Governor-General had ever dismissed a federal prime minister; it had
occurred but once before on a state level.25
The Melbourne newspaper, The Age {which, said the New York Times, was "generally
held to be one of the nation's most responsible papers"),26 wrote that Kerr's action was "a
triumph of narrow legalism over common sense and popular feeling". It added:
By bringing down the Government because the Senate refused it Supply, Sir John Kerr acted at least
against the spirit of the Australian Constitution. Since 1901, it has been a firmly held convention that
the Senate should not reject budgets ... Sir John has created an awesome president—that a hostile
Senate can bring down a government whenever it denies it Supply. [Kerr] breathed life into a constitutional
relic—the right of kings and queens to unilaterally appoint governments. 27
The office of Governor-General had traditionally been only that of a figurehead representative
of the Queen of England. Kerr's decision, however, appears as a calculated political
act. He gave Whitlam no warning or ultimatum before dismissing him, no opportunity
to request the dissolution of parliament, which would have permitted him to remain in
office. One must read Kerr's own account of his confrontation with Whitlam to appreciate
how he maneuvered the Prime Minister into stalking out of the Governor-General's office
without requesting the dissolution. Kerr claims he refrained from issuing Whitlam an ultimatum
because he feared that the prime minister would leave and then ask the Queen for
his removal as Governor-General. But he fails to explain why he didn't give Whitlam an
ultimatum that had to be responded to on the spot.
Kerr had been appointed, at least in theory, by the Queen. Ironically, she had done so
at Whitlam's recommendation, which he had made against the wishes of his party's leftwing.
Kerr's action added to Whitlam's reputation as a bad judge of character, a man easily
taken in.
Certainly the warning signs were there, for John Kerr had been intimately involved
with CIA fronts for a number of years. In the 1950s he joined the Australian Association
for Cultural Freedom, an organization spawned by the CIA's Congress for Cultural
Freedom (see Western Europe chapter), Kerr became a member of the organization's executive
board in 1957 and also wrote for its magazine Quadrant. One article, in 1960, was
entitled "The struggle against communism in the trade unions", a program and tactic, as we
have seen, the CIA has consistently accorded a high priority to throughout the world.
In 1966 Kerr helped to found Lawasia (or Law Asia), an organization of lawyers in the
Far East funded by the Asia Foundation. The Foundation was one of the most prominent
CIA fronts for over a decade, with offices and representatives in all the major capitals of
Asia; one of its prime missions, Victor Marchetti has written, was "to disseminate throughout
Asia a negative vision of mainland China, North Vietnam, and North Korea".29 Kenbecame
Lawasia's first president, a position he held until 1970. He describes the organization
as "a non-communist group of Asian lawyers" which the Asia Foundation supported
because "the rule of law is a good thing, a strong legal profession is a good thing, and talk
between lawyers is a good thing. "30
"There was a bit of a celebration" in the CIA when Whitlam was dismissed by Kerr,
reported Christopher Boyce. Boyce is an American who was working at the time for TRW
Systems, Inc., Los Angeles, in a cryptographic communications center which linked CIA
headquarters in Virginia with the Agency's satellite surveillance system in Australia. In his
position, Boyce was privy to telex communications between the two stations. The CIA, he
said, referred to Kerr as "our man".31
Boyce also revealed that the CIA had infiltrated Australian labor unions, had been
"manipulating the leadership", and had "suppressed their strikes", particularly those
involving railroads and airports. The last was reportedly because the strikes were holding
up deliveries of equipment to the Agency's installations. Some unions as well had been in
the forefront of opposition to the installations.32
As matters turned out, Whitlam lost the new election.
One other CIA operation in Australia deserves mention. This is the Nugan Hand
Merchant Bank of Sydney, truly a CIA bank. Founded in 1973 by Frank Nugan, an
Australian, and Michael Hand, an American formerly with the Green Berets in Vietnam and
with the CIA airline Air America, the bank exhibited phenomenal growth over the next few
years. It opened branch offices in Saudi Arabia, Hamburg, Malaysia, Thailand, Hong Kong,
Singapore, the Philippines, Argentina, Chile, Hawaii, Washington and Annapolis,
Maryland, run by men with backgrounds in the CIA, OSS, Green Berets, and similar specialty
areas of banking. Former CIA Director William Colby was one of the bank's attorneys.
The Nugan Hand Bank succeeded in expanding the scope of normal banking services.
Among the activities it was reportedly involved in were: drug trafficking, international arms
dealing, links to organized crime, laundering money for President Suharto of Indonesia,
unspecified services for President and Mrs. Marcos of the Philippines, assisting the Shah of
Iran's family to shift money out of Iran, channeling CIA money into pro-American political
parties and operations in Europe, transferring $2.4 million to the Australian Liberal Party
through one of the bank's many associated companies, attempting to blackmail an
Australian state minister who was investigating organized crime (the CIA opened a Swiss
bank account in his name and threatened to leak the information), and a host of other
socially useful projects.
In addition, several mysterious deaths have been connected to the bank, including that
of a ranking CIA officer in Maryland. And on 27 January 1980, Frank Nugan was himself
found shot dead in his car. In June, Michael Hand disappeared without a trace. The Nugan
Hand Merchant Bank collapsed, $50 million or so in debt.33

NOTES

40. AUSTRALIA 1973 to 1975
1. Henry S. Albinski, Australian External Policy Under Labor (Australia, 1977) p. 126.
2. Joan Coxsedge, Ken Coldicutt, Gerry Haranr, Rooted in Secrecy: The Clandestine Element in Australian Politics
(Australia, 1982) p. 21.
3. Albinski, p. 125,
4. Ibid.
5. Coxsedge, et al., p. 24; Seymour Hersh, The Price of Power: Kissinger in the Nixon While House (Summit
Books/Simon &. Schuster, New York, 1983) p. 295.
(,. Richard Hall, The Secret State (Australia, 1978), p. 2,
7. Coxsedge, etal,, p, 25-6.
8. Denis Freney, The CIA's Australian Connection (Sydney, 1977) pp. 75-80, for the text of the interview. This
book deals with many of the events discussed in this chapter.
9. Desmond Ball, A Suitable Piece of Real Estate: American Installations in Australia (Sydney, 1980) passim.
10. The National Times (Sydney weekly newspaper), 6-12 May 1983, p. 3.
11. Jim jose, "The Whitlam Years: illusion and Reality" in Pat Flanagan, ed., Big Brother or Democracy' (Great
Britain, 1981) p. 50; Albinski, p. 11; Ball, passim.
12. Albinski, pp. 9, 241, 254-6.
13. Coxsedge, et al., p. 26.
14. Jose, p. 50.
15. The Australian Financial Review (Sydney daily newspaper), 4 November 1975, p. 1; 5 November, p. 4. In his
book on the National Security Agency, The Puzzle Palace (New York, 1982), p. 205, James Bamford identifies
Stalling as an official of the NSA, not the CIA,
16. New York Times, 24 September 1974, p. 2.
17. Ibid., 5 May 1977, citing the Sydney Sun, 4 May 1977.
18. Coxsedge, et at., p. 35.
19. The Australian Financial Review, 28 April 1977, p. 1; Jose, p. SI, adds that the official, Dr. Farrands, denied the
allegation but did admit to visiting Kerr in October, although he refused to discuss the nature of the meeting.
20. The Australian Financial Review, 28 April 1977, p. 1,
2). Albinski, p. 169,
22. Coxsedge, etal., p. 96.
23. Freney, pp. 30-31, for the full text of the telex.
24. Coxsedge, et a l , p. 35; Freney, p 33;The Village Voice (New York), 1-7 July 1981,
25. Discussion of the political and legal issues surrounding the budget crisis and Kerr's dismissal of Whitlam:
a) Coxsedge, op. cit., Freney, op. cit, Flanagan, op. cit.
b) Sir John Kerr, Matters for judgment: An Autobiography (New York, 1979) chapters 20-22.
ctRussel Ward, The History of Australia: The Twentieth Century, I90M975 [London, 1978) pp. 398-419.
d) New York Times, 12, 14 November 1975.
26. New York Times, 14 November 1975, p. 7.
27. Tfce Age, 12 November 1975, pp. 9 and 3.
28. Kerr, chapters 20-22.
29. Victor Marcheiii and John Marks, The CIA and the Cult oflntelligence (New York, 1975) p. 178; see pp. 178-9
for a description of the Asia Foundation.
30. Kerr in the Association for Cultural Freedom and Lawasia: Kerr, pp. 172-86, and most of the Australian books
mentioned above; the Quadrant article was in the Spring, 1960 issue, pp. 27-38.
3 1. San Francisco Chronicle, 24 May 1982. Boyce is the subject of the book and film "The Falcon and the Snowman"
by Robert Lindsey.
32. New York Times, 28 April 1977, p. 18; The Guardian (London), 29 April 1977, p. 7.
33. Nugan Hand Bank:
a) Sunday Times (London), 31 August 1980, p. 2;
b) New York Times, 13 November 1982, p. 3 1;
c) The Village Voice, 1-7 July 1981;
d) CounterSpy magazine (Washington, D.C.), November 1980-January 1981, pp. 30-3.3;
e) Jonathan Kwitny, The Crimes of Patriots: A True Tale of Dope, Dirty Money and the CIA (New York, 1987), passim.

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