A Branch Bank in Heroin Country : THE CRIMES OF PATRIOTS: A True Tale of Dope, Dirty Money, and the CIA<i> by Jonathan Kwitny (W.W. Norton & Co.: $19.95; 394 pp.) </i>

Lt. Col. Ollie North shredded documents every day of his White House assignment and was proud of it. The principals in this story, maybe not so proud, did the same thing and with the same result. “The Crimes of Patriots” is Jonathan Kwitny’s reconstruction of the deeds and fate of the men who formed Nugan Hand, the Australian “investment bank” that collapsed in a spectacular fashion in 1980. Nugan Hand was more nearly an international confidence scheme, earning commissions by moving large sums of cash across national borders, evading currency controls, and fleecing small investors in several countries. The end began in January, 1980, with the violent suicide of Australian lawyer Frank Nugan, and proceeded swiftly thereafter. Nugan Hand associates immediately began systematic efforts to dispose of the firm’s records, but claims by depositors and creditors soon established that much more than the usual chicanery was afoot. By 1987, Kwitny notes, the astonishing thing was that still no one had been sent to jail for any aspect of the Nugan Hand affair.

The other half of this enterprise was Michael Hand, an American Vietnam veteran who had also worked for the Central Intelligence Agency in Laos. Hand began a business relationship with Nugan in 1970, and in June, 1973, they incorporated in Sydney as a “trusted Investment House.” Nugan Hand eventually had offices or even banks in Singapore, the Philippines, Hong Kong, Hawaii, Panama, the Cayman Islands, and Saudi Arabia. Along the way, the enterprise enlisted an impressive array of former intelligence or military, especially special operations, officers as representatives of its branches or boosters. The list included two generals, an admiral, a senior CIA economic analyst, and as corporate counsel in the United States, former CIA director Bill Colby. Nugan Hand also opened a very curious branch in the upland heart of Southeast Asia’s “Golden Triangle” heroin country, Chiang Mai, Thailand.

All this is dramatic stuff. A rifle suicide, large sums of cash, drugs, other mysterious deaths, jilted depositors, official investigations, seemingly the stuff of a classic whodunit. The author is well equipped to tell the tale; as a reporter for the Wall Street Journal, Kwitny followed the Nugan Hand affair from the beginning, sometimes reaching major participants or witnesses even before official investigators. He kept up with subsequent revelations in the Australian press, monitored the three successive official Australian inquiries and followed many of his leads to great lengths. The Nugan Hand case offers Kwitny the opportunity to explore microscopically the theme he sketched broadly in his last book, “Endless Enemies”; namely, that ham-fisted U.S. foreign policy methods needlessly create enmities where none need exist.

With great potential, the best resources, and good intentions, Kwitny nevertheless stumbles in good part because of the miscellaneous disposal of documents, in essence, shredding. A healthy dose of conflicting testimony from Nugan Hand principals further impedes the investigation. Kwitny opens his account with the inquest into the Nugan suicide, which left many questions unanswered. Soon afterwards, he warns, “this is not a book for people who must have their mysteries solved.” In fact, “Crimes of Patriots” ends with an appendix listing 57 more questions that Kwitny supplied to the House Select Committee on Intelligence in 1982. In between, plenty of additional questions appear in the narrative.

Except for conspiracy stories, nonfiction is not usually this laden with mysteries. Moreover, in an effort to follow the money, Kwitny laces the story with a generous dollop of anecdotes of wronged investors and big fish who got their money away. Then there are the protestations of innocence of the American brass and other Nugan Hand folk. Ultimately the shredder is silent. Except circumstantially, Kwitny cannot quite carry off the conspiracy he initially promises, among the dope dealers, Nugan Hand and the CIA. There is good circumstantial evidence for the dealer link to Nugan Hand; Kwitny comes closest to a CIA-Nugan Hand link in tying Michael Hand to efforts to ship arms to the CIA-backed side in Angola in the mid-1970s; nevertheless, the triangle remains incomplete. Kwitny’s evidence is insufficient to demonstrate a CIA link to the Chiang Mai drug peddlers, and his discussion of the Laotian war is really too brief to set the proper context.

The conclusion puts Nugan Hand and Contragate in the perspective of previous U.S. covert operations. Nugan Hand’s involvement, at least, ultimately remains fuzzy and imprecise. There are nuggets of great value in “The Crimes of Patriots” for conspiracy fans, intelligence buffs and contra-gate devotees. Nuggets include more on the 1975 “constitutional cop” in Australia, on notorious CIA renegade Edwin Wilson and Nugan Hand, and on such contra-gate figures as Richard V. Secord and Thomas Clines. There are even cameo appearances by the Marcos family and Pat Boone. The nuggets are good, but the money trail and the shredder have kept this book from realizing its full potential.