The discovery in a nondescript US town of Michael Hand, a onetime Central Intelligence Agency contract operative who disappeared after helping to foment one of Australia’s biggest scandals, is a reminder of just how out of control the US’s intelligence services were in the aftermath of the Vietnam War – and may still be.

The fact that Hand is in an obscure town under a new name in the sparsely populated western state of Idaho, manufacturing weapons for “special operations groups,” raises suspicions that his disappearance from Asia, his new identity and his business were manufactured for him by a US government that would prefer not to have him found, and that 35 years later, he still enjoys the US’s surreptitious support.

Hand and an Australian lawyer, Frank Nugan, founded the Nugan Hand Bank, a merchant bank that prosecutors said became a haven across Asia for drug dealers, money launderers and surreptitious operators of all stripes. It was described as the center a “vast network of drug transactions, fraud, secret arms deals and covert intelligence operations.” Although nothing was proven, the bank was widely assumed to be a creature of the CIA in a period when the US under then-President Richard Nixon was in the thick of attempting to back anti-communist insurgents throughout much of Asia and Africa.

An enterprising Australian author named Peter Butt found Hand, now 73, now living under the name of Michael Jon Fuller in Idaho Falls, Idaho, and apparently still in touch with US military authorities, manufacturing tactical weapons for US special operations groups, the US Special Forces and others. Butt, from Sydney, provided a video clip to the Sydney Morning Herald of the bearded, taciturn Hand getting into his car in Idaho Falls, wearing a neck brace. Butt’s book, Merchant of Menace, details his search for Hand.

Although the partners said the bank was founded on US$1million of share capital, a subsequent investigation found it had only US$80 in its account and U$5 in paid-up capital at the start. It eventually was paying 16 percent annual interest on deposits, providing anonymous tax-free accounts and other services. The once-obscure bank expanded into a network that included branches in Chiang Mai in Thailand, Hawaii, Singapore, Hong Kong, the Cayman Islands and Washington, DC.

The bank failed spectacularly in 1980 when Frank Nugan was found in his Mercedes Benz near Lithgow, two hours from Sydney, with a rifle bullet in his head. A coroner’s inquest determined he had killed himself although many have questioned the verdict. In his pocket was found the business card of William Colby, the onetime director of the CIA from 1973 to 1976. After Nugan died, Hand gave contradictory stories of who really owned the bank. At an investigation called by Australian authorities into the demise of the bank and Nugan’s death, Hand, who at times said he was merely a minority shareholder, said he and Nugan were actually the beneficial owners.

Former Wall Street Journal reporter Jonathan Kwitney, in his book, “The Crimes of Patriots,” wrote of the principal characters of the Nugan Hand saga that they “have lived their lives in a world of spying and secrecy. Though they have been and in some cases still are paid with US tax dollars, they have been trained to keep the taxpayers—among others—from finding out what they do. Compunctions about lying have seldom impeded that effort. They entered their secret world under a cloak of patriotism. They have stretched that cloak in various ways. Claiming a patriotic duty to the United States, they have carried out unlawful and scarcely believable acts of violence against civilians in Asia, Africa, and Latin America.”

Hand was a decorated Green Beret from the Vietnam War who went on to train hill tribesmen in Vietnam and Laos as a contract operative for the CIA. As the war wound down, Hand went to Australia, where he met up with Nugan, a local lawyer, and founded the bank in 1973. But the bank never became involved in traditional merchant banking activities such as equity investment or mortgage financing. Instead, it became famous to suspicious authorities over allegations of gunrunning and attempts to corner commodities markets, providing tax avoidance and evasion schemes in the Cayman Islands.

Although mainly associated with Australia, Nugan Hand had an office in Hong Kong and advertised its banking services to the expatriate community. They were, like the better known Deak & Co, known for facilitating the movement of money across jurisdictions with harsh exchange controls – the norm rather than exception in Asia at the time. The distinction between money laundering and exchange control evasion was a hard case to make.

Its Hong Kong representative was Les Collings, who also represented a company called Pacific Energy Systems, which purportedly would run on anything as fuel. Pacific Energy Systems eventually became known as the Rubber Band Engine Co. because of its dubious science. Collings reportedly disappeared abruptly from Hong Kong at about the time Nugan Hand fell apart.

For US citizens too, Nugan Hand may have been a useful conduit for avoiding taxes, particularly on ill-gotten gains from drugs, arms smuggling and other activities which thrived during and immediately after the Vietnam War. Hong Kong, at that point with its lack of exchange controls and minimal supervision of banking, was the ideal place from which to operate the Asian end of the business. Various local expatriate businessmen who were associated with the company went on to dubious careers of their own.

Nugan and Hand recruited senior military personnel including former US Navy Rear Admiral Earl Yates as bank president and Colby, after his retirement from the CIA, as legal counsel.

The bank’s Saudi Arabian representative was Maurice Bernard Houghton, who worked with Hand to attempt to arrange arms deals with revolutionary groups in Southern Africa. Houghton later worked with Edwin P. Wilson, another onetime CIA operative to supply weapons surreptitiously to the revolutionary Islamic government in Iran. Wilson eventually was arrested and sent to prison.

After Nugan’s death, the bank collapsed with debts in excess of $50 million. A subsequent Australian royal commission found evidence of money-laundering, illegal tax avoidance schemes and widespread violations of banking laws. But beyond two minor figures, nobody was ever charged or convicted.

“Under the cloak of patriotism, and with the help of local bankers like Frank Nugan, hundreds of millions of dollars have been stolen by fraud from innocent investors,” Kwitny wrote. “Billions of dollars have been moved illegally about the globe, facilitating corruption and thwarting tax collectors in the United States and many countries regarded as US allies. The cost of government has often been taken off the shoulders of citizens who are privileged enough to participate in such machinations, and transferred to the shoulders of citizens who aren't.”

As the Sydney Morning Herald reported on Butt’s revelations, “Governments, security and espionage agencies ran dead or appeared to look the other way. Many men associated with the bank's affairs in Australia, the US and Asia have died early or in mysterious circumstances.

Butt told the Morning Herald that he thought Hand had been protected since fleeing Australia.

"It turns out that the FBI could have dealt with Michael Hand long ago. A simple background check reveals Fuller's social security number is identical to the one allocated to Michael Hand in New York in 1960," he said. "The fact that Hand has been allowed to live the free life in the United States suggests that he belongs to a protected species, most likely of the intelligence kind. Indeed, an intelligence document I found places Michael Hand back working for the CIA in Central America 18 months after his disappearance."