In Australia / New Zealand, Regime Change

Joint MI5 CIA sting to unseat Gough Whitlam. (Source the sixtheye.org)

By Jeremy Kuzmarov
November 15, 2023 Covert Action Magazine

British Prime Minister Harold Wilson, Queen Elizabeth and U.S. President Gerald Ford Sanctioned an Operation to Bring Left-Leaning Prime Minister Gough Whitlam Down by Having an Arms Company and Bank Run by CIA Assets Trick His Deputy Prime Minister into Accepting an Illegal Loan

Danny Casolaro was a maverick investigative reporter who was on the verge of exposing a corrupt cabal of CIA officers involved in money laundering and drug trafficking before he was murdered in his hotel room in Martinsburg, West Virginia, on August 10, 1991.

Danny Casolaro. (Source theunredacted.com)

Casolaro stated cryptically before his death: “I am meeting with a source and I will bring back the head of the Octopus.”

The first chapter in Casolaro’s book exposing the Octopus intended to spotlight a joint CIA-British MI6 sting operation in 1975 that brought down the democratically elected Australian government led by Gough Whitlam of the Labor Party.

Deputy Prime Minister and Treasurer Jim Cairns was set up and made to look like he had accepted a $4 billion loan from Saudi Arabia in violation of the Australian constitution. He was forced to resign amidst public pressure, with Whitlam being dismissed soon after.

Declassified CIA documents later revealed that evidence in the scandal was fabricated. An Australian intelligence officer reported in a confidential 1976 intelligence bulletin that “some of the documents which helped discredit the Labor government in the last year in office were forgeries planted by the CIA.”

The Octopus. (Source thesixtheye.org)

Rupert Murdoch, future owner of Fox News, publicized the scandal in newspapers that he owned in Australia and even personally wrote articles implicating Cairns that were designed to raise moral outcry about the alleged corruption and misgovernment under Whitlam’s leadership.

Jim Cairns. Courtesy Wikimedia Commons

 

Rupert Murdoch. Courtesy Wikimedia Commons

 

Source: thesixtheye.org

The CIA and MI6 were against Whitlam because his left-leaning government planned to close a U.S. spy facility at Pine Gap near Alice Springs, Australia, that was used to spy on Australian government communications and assisted in drug-trafficking operations from the Golden Triangle.[1]

Pine Gap. Courtesy Wikimedia Commons

Whitlam and the Australian Labor Party had also been against U.S. carpet bombing of Vietnam, pulling out Australian troops from the war, and were threatening to nationalize subsidiaries of U.S. corporations. Additionally, they sought a peaceful settlement to the Indonesian conflict with East Timor following the end of Portuguese colonial rule, while the Ford administration supported Indonesian army aggression and CIA-trained Indonesian death squads.

Gough Whitlam. Courtesy Wikimedia Commons.

The sting operation, known as the Arab loans scandal, was carried out by enticing Cairns into accepting a $4 billion loan at 2.5% interest to finance needed economic development projects. Cairns’ signature was typewritten on key documents allegedly proving his acceptance of the loan, though he never actually gave his signature.

Key documents containing Cairns typewritten name (Source: thesixtheye.org)

 

Cairns states categorically that he did not sign the document mandating the $4 billion Arab loan. Phillip Cairns is Jim’s son. [Source: thesixtheye.org]

Under the Australian constitution, any loan has to be approved through the Australian loan council. After the manufactured scandal broke out, Whitlam was dismissed by Governor-General John Kerr—who received funding from CIA fronts and was referred to by the CIA as “our man Kerr.”

Malcolm Fraser of the Liberal Party, which had received financing from the CIA through the CIA’s Nugan Hand Bank, was appointed as caretaker Prime Minister and won election the next year.[2]

Fraser and his successors maintained the Pine Gap facility and acquiesced to U.S. policy in East Timor while supporting a more conservative economic policy than Whitlam’s government that was more amenable to U.S. corporations.

John Kerr. Courtesy Wikimedia Commons.

 

Gough Whitlam holding his dismissal letter after the Arab loans scandal. According to Christopher Boyce, who worked for the CIA, there was a “lot of celebration at the CIA after Whitlam was dismissed.” [Source: mintpressnews.com]

Malcolm Fraser. Courtesy Wikimedia Commons.

Unlocking the Mystery

Peter Osborne is a teacher and former science adviser to the Australian government who, after 25 years of research, has helped unlock the full story behind the coup.

The matter is personal for Osborne because his encryption business venture, established with the Australian government and United Nations, was destroyed by CIA Operation StillPoint and a bogus prince appearing in Australia announcing a $1.3 billion donation to the venture, because it had an encryption key that the National Security Agency (NSA)—which operated at Pine Gap—could not infiltrate.

Osborne carried out extensive research in primary documents and interviewed some key historical figures, including Michael Riconosciuto, a CIA computer expert with inside knowledge of the Octopus that Casolaro was investigating.

Riconosciuto told him that the joint CIA-MI6 sting operation to bring down Whitlam was coordinated by Sir William Denis Kendall, a one-time member of the British Parliament, with fascist sympathies who owned an arms company, and Frank Carlucci, a CIA Deputy Director involved in the plots against Patrice Lumumba in Congo in the early 1960s and U.S. Defense Secretary in the late 1980s.

Riconosciuto was friendly with Kendall and witnessed him speak on the phone with Harold Wilson and Queen Elizabeth, who gave Kendall permission to carry out the operation designed to destroy the Whitlam government.

MI6 agents Sir Harry Gilham (aka Double Deuce) and Eric Sear Cowls played key roles in the Arab loans scandal along with Mafia-linked CIA agents Robert Booth Nichols and Michael Hand.

A shadowy figure implicated in the Iran-Contra scandal who helped Philippines’ dictator Ferdinand Marcos steal $1 billion in gold, Nichols owned the Baron of Beef steak and guest house in the Dandenong Mountain Range near Victoria in Australia that served as a CIA safe house. Nichols also helped produce Steven Seagal’s 1992 movie Under Siege in which he made a cameo appearance as Colonel Sarnac.[3]

Hand was a Special Forces veteran who set up the Nugan Hand bank in Australia that was used as a money-laundering front for CIA black operations, including the Arab loans scandal that brought down Whitlam.[4]

Nichols helped to court Cairns, whom he knew well because he had taken refuge at his steak and guest house in 1969 after he had been attacked by some CIA-linked union thugs in his home because of his opposition to the Vietnam War.[5]

CIA operative Ted Shackley, CIA Director William Colby and Secretary of State Henry Kissinger helped support and green-light the Arab loans scandal. According to Osborne, Colby, who became legal counsel to Nugan Hand Bank, met directly with Prince Saud bin Fahd Al Saud who set up the loan and reported back to Kissinger.

As part of the operation, Gilham met with Cairns and his son Phillip in Paris, along with Michael Stephens, a British liaison to the U.S. Air Force who worked for Rolls Royce, to cajole Cairns into accepting the loan and provided Cairns with fictitious documents.

Gilham was later struck and killed with an ice pick by Robert Booth Nichols who then took up residence in the apartment on Half Moon Street in the Mayfair section of London where the coup plot was hatched.[6]

FBI investigation records confirm that Robert Booth Nichols had used the same address of 5 Half Moon Street, Mayfair, London, and 8 Sanford Street, St. Lucia, Queensland, Australia, as his registered places of residence on his “Permit Application to Carry a Concealed Weapon.”[7]

Osborne’s research uncovered that the $4 billion loan coming from Saudi Arabia was cleared through Commerce International Corporation of New York, an arms-dealing company controlled by the CIA and Mafia.

The founder and chairman of Commerce International, Sotiris “Sonny” Fassoulis, was an OSS and CIA operative with Mafia links, whose company sold 90 millimeter cannons and armored vehicles to the U.S. Army during the Korean War.

A combat pilot during World War II who served with Claire Chennault’s legendary Flying Tigers and spent two years in prison in the early 1960s for selling counterfeit bonds, Fassoulis helped Chiang Kai-shek to relocate to Formosa (Taiwan) in 1949 after losing China’s civil war and was later appointed to a prestigious Far East Advisory Committee by Presidents Reagan, George H.W. Bush and George W. Bush.

Letters that were fraudulently signed by Cairns in the loans scandal were traced back to a small office in New York’s Chinatown and had the name listed of a “mystery man” associated with the company named Anthony Fensore.

Other names associated with Commerce International and the fraudulent $4 billion Arab loan had known links to drug trafficking and money laundering through the Nugan Hand Bank.

Thomas Ho-lung Yu, a Hong Kong arms dealer who had been part of the Flying Tigers with Fassoulis and was assistant comptroller of the CIA-run Civil Air Transport (CAT-AKA Air America/Air Opium), was a key middleman in brokering the loan who worked with Commerce International.

Marion Smoak, a State Department official and Republican Party powerbroker in South Carolina who golfed with President Gerald Ford, was another consultant on the fraudulent deal.[8]

Key Role of Old CIA China Hand and Bay of Pigs Paymaster

The final approval for the loan was authorized by Mercantile Bank and Trust Company Ltd. of the Bahamas, whose legal counsel was Paul Helliwell, an old CIA China hand and the CIA’s liaison with organized crime who had set up offshore banks for the CIA for money-laundering purposes.

After the triumph of the Communist revolution in 1949, Helliwell had helped coordinate arms supplies to Chinese Guomindang generals in Burma and Taiwan who were plotting sabotage operations inside Communist China. (The CAT planes flew back with opium that helped finance the black operation).

Later, Helliwell helped set up the Nugan Hand Bank, along with the American Bankers Insurance Company based in Galveston, Texas, a cover for businessmen who cooperated with the CIA, and created an international holding company in the Cayman Islands that owned the Learjet used by Barry Seal for drug-running activities to the Nicaraguan Contras out of Mena, Arkansas.

That it was Helliwell’s bank putting up the credit for the fraudulent loan is significant in linking the CIA-Mafia complex or Octopus to the plot to bring down the Whitlam government, which succeeded in removing a key thorn in the CIA’s side.

Michael Hand was connected to the loans affair in that he worked for a company, Ocean Shores of Australia, specializing in the sale of land development lots that was represented by Helliwell and Mercantile Bank President Robert E. Cordes who signed the official letter of credit for the fraudulent $4 billion loan to Cairns.[9]

Cordes’s affiliation with Mercantile Bank was only confirmed in April 2023 after a mysterious 50-year delay of the official liquidation report for the bank, whose auditors, Price Waterhouse & Co. (Bahamas and Caymans) were the same auditors of Nugan Hand Bank and the Bank of Credit and Commerce International (BCCI), another of the CIA’s money-laundering banks.

The owner of Mercantile Bank and Trust—which had branches in Nassau and the Cayman Islands—was Major General George Hamden Olmsted, an American military officer and insurance executive who served with the Office of Strategic Services (OSS), U.S. Navy Intelligence, and allied intelligence services during World War II.

According to an audit by Price Waterhouse, Mercantile had transferred about $2 million in assets and liabilities in 1972 to Castle Bank & Trust of Nassau, Bahamas, which Helliwell founded through a Panamanian shell company through his Miami-based law firm in 1962.

Castle Bank was investigated by the IRS under “Operation Tradewinds” and “Project Haven” for its involvement in drug-trafficking and tax evasion schemes. In 1980, Castle Bank was revealed to be a CIA account for the Helliwell law firm. In addition to Helliwell supposedly being one of the paymasters for the Bay of Pigs invasion of Cuba in 1961, Castle had been one of the CIA’s financing channels for operations in Latin America and against Cuba between 1964 and 1975 which included CIA operatives located on Andros Island, Bahamas.

The implication regarding the Arab loans scandal is that it is the same political operatives and financiers behind other deadly clandestine operations in the Cold War who were behind this one.

Following the Money

According to Osborne, Danny Casolaro was intending to travel to Australia before his death, to expose that “the Octopus” was behind the corrupt practices of BCCI and Nugan Hand Bank, along with the plot to bring down the Whitlam Government.

Osborne’s investigation “follows the money” and uncovers the complex web of common CIA banks, attorneys, accountants and interlocking corporate directorships to reveal the same “Octopus” that Casolaro was exposing before his death in Martinsburg on August 10, 1991.

Today, nearly a half century later, the political implications behind the Arab loans scandal and impunity of the perpetrators for their crimes remains profound.

Whitlam’s removal sent a signal to all subsequent Australian leaders that they must toe the U.S. line or else face a similar fate.

Australia consequently has evolved into what journalist John Pilger termed a “vassal state bar none” whose “politics, intelligence agencies, military and much of its media are [almost completely] integrated into Washington’s sphere of dominance and war plans.”

This has been seen most recently with the new trilateral security pact (AUKUS) with the U.S. and UK that is part of a strategy of threatened aggression against China, which could lead to the outbreak of World War III.

The cancer of corruption that surrounded “the Octopus” in Whitlam and Casolaro’s time has all the while spread even more malignantly in the U.S. with an aging Joe Biden now in the White House.

Biden played a key role in the 1980s in blocking investigation into “the Octopuses” operations as a member of the Senate Select Committee on Intelligence, and has used his playboy son Hunter to procure corrupt business deals in support of U.S. imperial ventures.

The only silver lining is that the public is increasingly attuned to the corruption prevalent in Washington and criminal machinations of the “deep state.”

This brings hope that, while Casolaro’s book was never written, his goal of exposing and jailing corrupt government officials associated with the Octopus and its successors may yet be fulfilled.

 
Notes:

[1] Prior to his removal from office, Whitlam was in the process of exposing a CIA operative using the facility to spy on Australian government officials and had demanded that the U.S. embassy turn over a list of CIA operatives in Australia. William Blum, Killing Hope: U.S. Military and C.I.A. Interventions Since World War II (Monroe, ME: Common Courage Press, 2004), 247. Consortium News reported very recently on how the National Security Agency’s Pine Gap facility in Australia is monitoring the Gaza Strip and surrounding areas with all its resources, and gathering intelligence assessed to be useful to Israel and providing that intelligence to the IDF.↑

[2] Kerr received funding from the Asia Foundation, a CIA front. William Blum details the CIA’s financing of the Australian Liberal Party, which he says was rather conservative, in Killing Hope, 246, 247. ↑

[3] Described as a “Clark Gable look-alike,” Nichols was allegedly recruited into the CIA while living in Hawaii in the late 1960s and, according to one source, was “involved in virtually every nefarious covert plot carried out by the U.S. government in the 1970s, 1980s and 1990s”: Iran-Contra, the October “surprise,” and MK-ULTRA, among others. Son of a prominent L.A. surgeon, he had been in close contact with Casolaro before his death. FBI investigations linked him to a $500 million stock fraud, drug trafficking, money laundering activities and the Gambino crime family and Japanese Yakuza. His name surfaced in a House Judiciary Committee report on possible malfeasance in the Justice Department during the Reagan era. In the early 2000s, Nichols went to Australia to threaten Peter Osborne, saying that his investigations were upsetting powerful people. He was subsequently involved in a $250 billion money-laundering scheme with Chiang’s daughter and reportedly faked his death in Geneva in 2009 though may still be living somewhere in South America. Information on Nichols can be found in Cheri Seymour, The Last Circle: Danny Casolaro’s Investigation into the Octopus and the PROMIS Software Scandal (Walterville, OR: Trine Day, 2010). ↑

[4] After becoming a fugitive from justice following the collapse of the Nugan Hand Bank, Hand was found in 2015 living in Idaho where he was running a company that supplied tactical weapons to U.S. Special Forces. ↑

[5] The steakhouse was a hangout for members of the Hawthorne Football Club. ↑

[6] Nichols then stole Gilham’s apartment on Half Moon Street in Mayfair in London and lived there. ↑

[7] Nichols owned Meridian Arms Corporation, which developed high-tech submachine guns and explosive devices. He is credited with inventing a submachine pistol superior to the MAC-10. Seymour, The Last Circle, 130. ↑

[8] A graduate of the University of South Carolina Law School who served as a staff judge advocate for the 82nd Airborne Division in Berlin during World War II and was part of Ronald Reagan’s presidential transition team, Smoak wrote the postscript to a propaganda tract called Red Locusts: Soviet Support for Terrorism in Southern Africa. ↑

[9] Hand was introduced to Ocean Shores through a friend, Kermit L. (Bud”) King, a former CIA pilot in Southeast Asia. Ocean Shores Australia was founded by the Christian revivalist singer Pat Boone and Daniel K. Ludwig, a billionaire shipping magnate. Ludwig’s operations in Australia were represented by an attorney named Fred Millar working for Sir Peter Abeles—Rupert Murdoch’s long-time business partner, and employed Bernie Houghton to work with Michael Hand to sell property. ↑

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