The Great Heroin Coup - Chapter 14

Note: This chapter was previously posted here, and became the motivation for additional background research. After posting the remainder of Henrik Kruger's book, we will pick up where we left off, back with the question, " Who engineered the heroin coup?"

Although Kruger began chapter fourteen of his book by going back in history to China in 1945, the elements involved in the heroin coup begin much earlier than that. Just as the Office of Strategic Services predated the Central Intelligence Agency, the Coordinator of Intelligence was the first method devised by the executive branch to collect intelligence abroad. 

Franklin Delano Roosevelt was elected in 1932, then again in 1934 and 1936. During his first year in office (1933) a real coup against his Presidency was averted when General Smedley Darlington Butler blew the whistle on mysterious American businessmen and bond brokers who had attempted to recruit  him to  serve as “assistant President,” a  so-called military straw man to prevent disgruntled World War I veterans from organizing a revolution against capitalism.

FDR would, therefore, have known by the time he ran in 1940, having completed three terms totaling twelve years in office, that he needed someone he could trust to gather intelligence for him. In July 1941 the President created the position of Coordinator of Information and appointed William J. Donovan to that post,  placing his eldest son James on its staff. 

A year earlier, following the fall of France to the Nazis in May 1940, President Roosevelt had devised a method of subsidizing the Allied forces while technically remaining neutral. The Neutrality Act had forbidden the U.S. to sell armaments on credit or to make loans to nations engaged in war. The Act was modified by a policy called "Cash and Carry," which morphed into Lend-Lease, which allowed the U.S. to "sell, transfer title to, exchange, lease, lend, or otherwise dispose of ... any defense article," if that country's defense was deemed vital to America's defense.

Because it was a method to pay for certain military goods, FDR had to appoint a banker to head the Office of Lend-Lease, and he chose one connected to the J.P. Morgan banking network--Edward Reilly Stettinius, Jr., the man he later chose to succeed Cordell Hull as Secretary of State. After FDR's death, Truman named Stettinius as the first U.S. Permanent Representative to the United Nations.

Proviso: Remember, it's always about the money. Follow it. It was the Morgan banking and corporate network which set up the Federal Reserve under Woodrow Wilson. Before that, Morgan bankers helped to incorporate opium profits of Americans and their Chinese partners into America's physical infrastructure. Opium had been the first commodity that produced huge surplus funds for Americans, the profits realized through sight drafts issued by London banks converting the silver paid by Cantonese traders into bank notes. One of the biggest Anglo-American banking concerns involved in sight drafts was the Brown family.

President Wilson's chief of staff, Colonel House, though a Texan, was very close to T.J. Coolidge, a member of the China-trading Coolidge family. Even though the combination of Stillman and Rockefeller had seemingly overtaken the Morgan investment portfolio with petroleum assets by the mid-1930's what had actually occurred was a merger of two banking empires (Morgan/Carnegie on the left and Stillman/Rockefeller on the right)  into one investment bank--Brown Brothers Harriman. Where the Gold Is has been leading up to this point in America's banking history, while Minor Musings left off exploring the same question some time ago with an article titled "The Power of the Browns." All these attempts at describing this elephant in the room are finally beginning to merge.

Selected Excerpt from

THE GREAT HEROIN COUP - DRUGS, INTELLIGENCE AND INTERNATIONAL FASCISM

By Henrik Kruger; Jerry Meldon, Translator

South End Press©1980: Box 68 Astor Station, Boston, MA 02123

ISBN 0-89608-0319-5

240pps - one edition - out-of-print; Orginally published in Danish

Smukke Serge og Heroien; Bogan 1976

Previous chapters:

Foreword and Chapter 1

Chapters 2-5

Chapters 6-8

Chapters 9-12  

Chapter 13

CHAPTER FOURTEEN

HEROIN IN SOUTHEAST ASIA

Opium and gold as primary exchange media

The place was Kunming in the South China province of Yunnan. The time was the end of World War II. Amid the chaos of war, opium and gold became the primary media of exchange, and cult‑like bonds were forged among a small staff of Americans and high‑ranking Chinese. Yunnan was a center of Chinese opium cultivation and Kunming was the hotbed of military operations, among them Claire Chennault's 14th Air Force and Detachment 202 of the Office of Strategic Services (OSS).

Among Detachment 202's notorious collection of special agents, one in particular—E. Howard Hunt—has needed no introduction since the Watergate break‑in. In Kunming, the spy novelist who later became a comrade of Cuban exiles and China Lobbyists befriended an equally intriguing character, the French Foreign Legionnaire turned OSS agent, Captain Lucien Conein.[1] Although not part of Detachment 202 proper, Conein frequented Kunming while awaiting parachuting over Indochina.[2]

Detachment 202 was not the first of its kind. As we learn from the CIA's own website: "On April 14, 1942, William Donovan, as Coordinator of Information (forerunner of the Office of Strategic Services), activated Detachment 101 [under Carl F. Eifler] for action behind enemy lines in Burma. The first unit of its kind, the Detachment was charged with gathering intelligence, harassing the Japanese through guerrilla actions, identifying targets for the Army Air Force to bomb, and rescuing downed Allied airmen. Because Detachment 101 was never larger than a few hundred Americans, it relied on support from various tribal groups in Burma. In particular, the vigorously anti-Japanese Kachin people were vital to the unit’s success. By the time of its deactivation on July 12, 1945, Detachment 101 had scored impressive results."

Indochina remained Conein's base of operation after World War II, when, like Hunt, he slid over from the OSS to its successor, the CIA. He then operated throughout South and North Vietnam, Cambodia, and Burma, and became the top U.S. expert on the area‑as well as on the opium‑smuggling Corsican Mafia. He was Ambassador Henry Cabot Lodge's middle man in the 1963 plot to overthrow South  Vietnam's President Ngo Dinh Diem (who was assassinated along with his brother Ngo Dinh Nhu, the Corsicans' partner in the drug traffic). A decade later, Conein and Hunt, working for the Nixon White House Plumbers, would attempt to make it appear that the plot had been ordered by JFK. Both Conein and William Colby, mastermind of the CIA's Phoenix assassination program, were recalled to the U.S. at the start of the seventies.

C. V. Starr

After Mao Tse‑tung's rise to power in China, OSS veterans formed a number of firms that would be linked both to the CIA and to its reactionary client regimes in the Far East. With financial assistance from his friends in Asia, OSS China hand C.V. Starr gained control of several U.S. insurance companies. As brought to light during the McClellan hearings, Jimmy Hoffa awarded one of them, U.S. Life, and a smaller company, Union Casualty —whose agents Paul and Allen Dorfman were among Hoffa's links to the underworld[3] —a Teamsters Union contract despite a lower bid from a larger, more reputable insurance firm.[4]

Starr's attorney was the powerful Washington‑based Tommy "The Cork" Corcoran. Corcoran's law partner, William Youngman [married to a descendant of Robert Bennet Forbes], was a director of U.S. Life. Corcoran's other clients included

• the United Fruit Company, 
• Chiang Kai‑shek's influential brother‑in‑law T.V. Soong, and 
• the mysterious airline, Civil Air Transport (CAT), of which 60 percent was owned by the Taiwan regime and 40 percent by the CIA.[5] 

On behalf of United Fruit, Corcoran triggered a CIA plot — in which E. Howard Hunt was the agency's chief political action officer — to overthrow Guatemala's President Jacobo Arbenz in 1954.[6]

OSS China hand Willis Bird settled in Bangkok, Thailand to head an office of Sea Supply, Inc., a CIA proprietary headquartered in Miami, which furnished weapons to opium‑smuggling Nationalist Chinese (KMT) troops in Burma. One William Bird, representing CAT in Bangkok, coordinated CAT airdrops to KMT troops and ran an engineering firm that constructed short airstrips used for the collection of Laotian opium.[7]

Sea Supply also provided arms and aid to Phao Sriyanonda, the head of Thailand's 45,000‑man paramilitary police force and reputedly one of the most corrupt men in the history of that corruption‑ridden nation. For years his troops protected KMT opium smugglers and directed the drug trade from Thailand.[8]

When President John F. Kennedy in 1962 attempted a crackdown on the most hawkish CIA elements in Indochina, he sought the prosecution of Willis Bird, who had been charged with the bribery of an aid official in Vientiane. But Bird never returned to the U.S. to stand trial.

Upon returning to Miami, the OSS Chief of Special Intelligence and head of Detachment 202 in Kunming, Colonel Paul Helliwell, was a busy man. In Miami offices of the American Bankers Insurance Co. [apparently incorporate in Nevada], he functioned simultaneously as the Thai consul, an the counsel for Sea Supply as well as for insurance companies run by his former subordinate C.V. Starr.[9] American Bankers Insurance was itself a most unusual firm; one of its directors, James L. King, was also a director of the Miami National Bank through which the Lansky syndicate reportedly passed millions en route to Geneva's Swiss Exchange and Investment Bank. One of the Swiss bank's directors, Lou Poller, also sat on the board of King's Miami National Bank.[10]

Moreover, in the fifties and sixties, Thai and Nationalist Chinese capital was invested in Florida's explosive development, much of it by way of the General Development Corporation controlled by associates of Meyer Lansky.[11] It's important to note the dubious alliance of Southeast Asian power groups with those concerned with Florida and Cuba. This early mutuality of business interests is the key to all that follows, and Miami is the nerve center to which we will continually return.

The alliance was comprised of the China Lobby, OSS China hands, Cuban exiles, the Lansky syndicate, and CIA hawks pushing for all‑out involvement in Indochina and against Castro's Cuba. It coalesced between 1961 and 1963, and its members had three things in common: a right wing political outlook, an interest in Asian opium, and a thirst for political might. The last factor led to another common denominator in which the alliance invested heavily: Richard M. Nixon.

Some people effectively overlap the entire spectrum of the alliance. Among them are Howard Hunt and Tommy Corcoran, the man behind United Fruit's dirty work. United Fruit was a client of the Miami‑based Double‑Chek Corp., a CIA front that supplied planes for the Bay of Pigs invasion.[12] Corcoran was the Washington escort of General Chennault's widow Anna Chen Chennault, erstwhile head of the China Lobby, the key to Southeast Asian opium.[13]

Another key figure in the China Lobby was weapons dealer/financier William Pawley, the American co-founder of Chennault's Flying Tigers.[14] Pawley's name was the password to intrigue: OSS China, Tommy Corcoran,[15] CIA cover firms,[16] and arms shipments to KMT Chinese on Taiwan in defiance of a State Department refusal of authorization." All were either directly or indirectly connected to Pawley. He also rubbed elbows with the U.S. heroin Mafia when, in 1963, he, Santo Trafficante, Jr. and Cuban exiles took part in one of the countless boat raids on Cuba.[18]

The China Lobby's Southeast Asian connection naturally went via the Taiwan regime, which controlled the opium‑growing Chinese in the Golden Triangle and, with the CIA, owned the opium‑running CAT airlines. As Ross Y. Koen wrote in 1964:

"There is considerable evidence that a number of Nationalist Chinese officials are engaged in the illegal smuggling of narcotics into the United States with the full knowledge and connivance of the Nationalist Chinese government. The evidence indicates that several prominent Americans have participated in and profited from these transactions. It indicates further that the narcotics business has been an important factor in the activities and permutations of the China Lobby." [19]

British writer Frank Robertson went one step further in 1977:

"Taiwan is a major link in the Far East narcotics route, and a heroin producer. Much of the acetic anhydride -‑ the chemical necessary for the transformation of morphine into heroin -‑ smuggled into Hong Kong and Thailand, comes from this island, a dictatorship under the iron rule of the late Chiang Kai‑shek's son, Chiang Chingkuo."[20]

When the Communists routed Chiang Kai‑shek's forces in 1949, some 10,000 KMT troops fled to Southeast Asia and settled in a remote part of Burma. Heavily armed, they soon assumed control of the area and intermarried with the local population. Under General Li Mi they continued to infiltrate China proper, but each time they were repulsed. While awaiting Chiang's signal for a final, two‑front onslaught, Burma's KMT army needed a source of income. Many had grown opium in Yunnan and so the poppies, which flourished on the hillsides, became the force's cash crop.

Around 1950 the CIA became interested in the KMT troops. With General Douglas MacArthur pushing to arm them for an attack on Red China, the agency secretly flew them weapons in CAT airplanes. But when the KMT instead used the weapons against the Burmese army, Burma protested before the UN, where it was decided that 2000 KMT troops would be flown by CAT to Taiwan by 1954. Those who eventually made the trip, however, were only farmers and mountain people in KMT uniforms, and the weapons they took out were obsolete.[21] Nonetheless, with help from the Red Chinese army, Burma drove most of the KMT forces into Thailand and Laos, though many later returned. The Kuomintang and their kin now number over 50,000. Though only a fraction are soldiers, the KMT still controls hundreds of thousands of Chinese occupying the region, especially in Thailand.

The junction of Burma, Thailand, and Laos, the Golden Triangle, is the site of the bulk of the world's opium production and thereby the source of enormous fortunes for the French and later the Americans. The French held effective control over the Southeast Asian opium traffic until 1965. Between 1946 and 1955 the Mixed Airborne Commando Group (MACG) and the French Air Force managed the shipment of opium from Burma to Laos. A guerilla corps comprised mostly of Laotian Meo tribesmen and led by Colonel Roger Trinquier, MACG remained unusually independent despite its direct connections to the SDECE and Deuxieme (Second) Bureau. To finance their secret Indochina operations, these organizations turned to the smuggling of gold and opium, with MACG in charge of the latter. Large quantities of opium were shipped to French Saigon headquarters and passed on to the Corsican Mafia, who in turn smuggled the drug to Marseille.

When the French withdrew from Indochina in 1955 after their defeat by the Vietminh, and after the CIA pushed aside the SDECE, MACG leaders communicating through CIA agent Lucien Conein offered the Americans their entire guerilla force. Against Conein's advice they refused.[22] History would cast doubt on the wisdom of that decision.

In 1955 CIA agent General Edward Lansdale began a war to liquidate the Corsican supply network. While Lansdale was cracking down on the French infrastructure, his employer the CIA was running proprietaries, like Sea Supply and CAT, that worked hand‑in‑hand with the opium‑smuggling Nationalist Chinese of the Golden Triangle, and with the corrupt Thai border police.[23]

The Lansdale/Corsican vendetta lasted several years, during which many attempts were made on Lansdale's life. Oddly enough, his principal informant on Corsican drug routes and connections was the former French Foreign Legionnaire, Lucien Conein, then of the CIA. Conein knew just about every opium field, smuggler, trail, airstrip, and Corsican in Southeast Asia. He spent his free time with the Corsicans, who considered him one of their own. Apparently they never realized it was he who was turning them in.[24]

When Lansdale returned from Vietnam in the late fifties, the Corsicans recouped some of their losses, chartering aging aircraft to establish Air Opium, which functioned until around 1965. That year, the Corsicans' nemesis Lansdale returned to Vietnam as an advisor to Amabassador[sic] Lodge. There was also an upheaval in the narcotics traffic, and perhaps the two were connected. CIA‑backed South Vietnamese and Laotian generals began taking over the opium traffic — and as they did so, increasing amounts of morphine and low‑quality heroin began showing up on the Saigon market.

The first heroin refineries sprang up in Laos under the control of General Ouane Rattikone. President Ky in Saigon was initially in charge of smuggling from the Laotian refineries to the South Vietnamese; and Lansdale's office, it is to be remembered, was working closely with Ky. Lansdale himself was one of Ky's heartiest supporters, and Conein went along with whatever Lansdale said.[25]

Ouane Rattikone

One result of the smuggling takeover by the generals was the end of the Corsicans' Air Opium. The KMT Chinese and Meo tribesmen who cultivated raw opium either transported it themselves to the refineries or had it flown there by the CIA via CAT and its successor, Air America, another agency proprietary. Though the Corsicans still sent drugs to Marseilles, the price was becoming prohibitive, since they were forced to buy opium and morphine in Saigon and Vientiane rather than pick up the opium for peanuts in the mountains.

In 1967 a three‑sided opium war broke out in Laos between a Burmese Shan State warlord, KMT Chinese and General Rattikone's Laotian army. Rattikone emerged victorious, capturing the opium shipment with the help of U.S.‑supplied aircraft. The KMT, for its part, managed to reassert its dominance over the warlord. The smuggling picture was becoming simplified, with Southeast Asian opium divided among fewer hands, and most of the Corsicans out of the way.

General Lansdale returned to the U.S. in 1967, leaving Conein in Vietnam. The next year Conein greeted a new boss, William Colby. Since 1962 Colby had run the agency's special division for covert operations in Southeast Asia, where his responsibilities included the " secret" CIA war in Laos with its 30,000‑man Meo army. He shared that responsibility with the U.S. ambassador [sic] in Laos, William H. Sullivan, who would later preside over the Tehran embassy during the fall of the Shah.

Many of the agents who ran the CIA's war in Laos had earlier trained Cuban exiles for the Bay of Pigs invasion, and afterward had taken part in the agency's continued secret operations against Cuba.[26] Since exiles were furnished by the Trafficante mob,[27] intelligence agents had intermingled with representatives of America's number one narcotics organization. The same agents would now become involved with the extensive opium smuggling from Meo tribesmen camps to Vientiane.[28]

In 1967 Colby devised a plan of terror for the "pacification" of Vietnam. Operation Phoenix organized the torture and murder of any Vietnamese suspected of the slightest association with Vietcong. Just as Lansdale was travelling home, Colby was sent to South Vietnam to put his brainchild to work. According to Colby's own testimony before a Senate committee, 20,857 Vietcong were murdered in Phoenix's first two years. The figure of the South Vietnamese government for the same period was over 40, 000.[29[

It was during Colby's tour in Vietnam that the heroin turned out by General Ouane Rattikone's labs appeared in quantity, and with unusually high quality. The great heroin wave brought on a GI addiction epidemic in 1970; Congressional reports indicated that some 22 percent of all U.S. soldiers sampled the drugs and 15 percent became hooked.[30]

Former Air Marshal, then Vice President, Nguyen Cao Ky (now alive and well in the United States) and his underlings still controlled most of the traffic. President Nguyen Van Thieu and his faction, comprised mostly of army and navy officers, were also in it up to their necks. According to NBC's Saigon correspondent, Thieu's closest advisor, General Dang Van Quang, was the man most responsible for the monkey on the U.S. Army's back. But the U.S. Saigon embassy, where Colby was second in command, found no substance to the accusations, Ky's record notwithstanding: Ky had been removed from U.S. Operation Haylift, which flew commando units into Laos, for loading his aircraft with opium on the return trips.

In the face of skyrocketing GI heroin abuse, the Army Criminal Investigation Division (CID) looked into General Ngo Dzu's complicity in the heroin traffic and filed a lengthy report at the U.S. embassy.[31] The embassy ignored the report and chose not to forward it to Washington.[32] The BNDD also investigated the roots of the heroin epidemic, but was impeded in its work by the CIA and U.S. embassy. In 1971, however, a string of heroin labs were uncovered in Thailand, and a number were closed down.

In 1971, furthermore, Colby and Conein were recalled to the United States. Colby became the Deputy Director of Operations, the man in charge of the CIA's covert operations. More remarkable, though, was Conein's homecoming after twenty‑four years of periodic service to the CIA in Indochina, raising the question of why the U.S.'s foremost expert on Indochina had been brought back to Washington just as the crucial phase of Vietnamization was about to begin.[33] Ironically, Corsican friends still around for Conein's departure presented him with a farewell gold medallion bearing the seal of the Corsican Union.

At the war's cataclysmic end, the CIA admitted that "certain elements in the organization" had been involved in opium smuggling and that the illegal activities of U.S. allies had been overlooked to retain their loyalties. In reality, the agency had been forced to confess because of its inability to refute the tales of returning GIs, among them that of Green Beret Paul Withers, a recipient of nine Purple Hearts, the Distinguished Service Cross and Silver and Bronze Stars:

"After completing basic training at Fort Dix in the fall of 1965 [Withers] was sent to Nha Trang, South Vietnam. Although he was ostensibly stationed there, he was placed on 'loan' to the CIA in January 1966 and sent to Pak Seng, Laos. Before going there he and his companions were stripped of their uniforms and all American credentials. They were issued Czechoslovakian guns and Korean uniforms. Paul even signed blank sheets of paper at the bottom and the CIA later typed out letters and sent them to his parents and wife. All this was done to hide the fact that there were American troops operating in Laos.

"The mission in Laos was to make friends with the Meo people and organize and train them to fight the Pathet Lao. One of the main tasks was to buy up the entire local crop of opium. About twice a week an Air America plane would arrive with supplies and kilo bags of opium which were loaded on the plane. Each bag was marked with the symbol of the tribe."[34]

The CIA, reportedly, did not support any form of smuggling after 1968. Del Rosario, a former CIA operative, had something to say about that:

"In 1971 I was an operations assistant for Continental Air Service, which flew for the CIA in Laos. The company's transport planes shipped large quantities of rice. However, when the freight invoice was marked 'Diverse' I knew it was opium. As a rule an office telephone with a special number would ring and a voice would say 'The customer here'-‑that was the code designation for the CIA agents who had hired us. 'Keep an eye on the planes from Ban Houai Sai. We're sending some goods and someone's going to take care of it. Nobody's allowed to touch anything, and nothing can be unloaded,' was a typical message. These shipments were always top priority. Sometimes the opium was unloaded in Vientiane and stored in Air America depots. At other times it went on to Bangkok or Saigon.[35]

Even while the CIA trafficked in opium, President Nixon ranted on TV against drug abuse and lauded the crackdown against French smuggling networks.

pps. 129-139

Notes

1. E.H. Hunt: Undercover (Berkeley‑Putnam, 1974).

2. Another of Conein's OSS sidekicks, Mitchell WerBell 111, was years later indicted in a major drug conspiracy case (T. Dunkin: "The Great Pot Plot," Soldier of Fortune, Vol. 2, No. 1, 1977), and now runs an antiterrorist training school in Georgia (T. Dunkin: "WerBell's Cobray School," Soldier of Fortune, Vol. 5, No. 1, 1980).

3. D. Moldea: The Hoffa Wars (Charter Books, 1978).

4. U.S. Congress, Senate, Select Committee on Improper Activities in the Labor or Management Field, Hearings, 85th Cong., 2nd Sess. (cited in P.D. Scott: The War Conspiracy, Bobbs‑Merrill, 1972).

5. CAT, which became Air America, was also identical with the "CATCL" that emerged from Claire Chennault's Flying Tigers.

6. D. Wise and T.B. Ross: The Invisible Government (Random House, 1964); Hunt, op. cit.

7. Scott, op. cit.

8. F. Robertson: Triangle of Death (Routledge and Keagen Paul, 1977); A. McCoy: The Politics of Heroin in Southeast Asia (Harper & Row, 1972).

9. Scott, op. cit.

10. New York Times, 1 December 1969; H. Messick: Lansky (Berkeley, 1971). 11. Carl 0. Hoffmann, the former OSS agent and general counsel of the Thai king in New York in 1945‑50, later became the chairman of Lansky associates' First Florida Resource Corp.

12. L. Gonzalez‑Mata: Cygne (Grasset, 1976).

13. R.Y.Koen: The China Lobby in American Politics (Harper& Row, 1974). 14. Pawley, the ultraconservative former Pan Am executive and Assistant Secretary of both State and Defense, set up the Flying Tigers under a secret order of President Franklin D. Roosevelt exempting him from U.S. neutrality provisions; see A. Chan Chennault: Chennault's Flying Tigers (Eriksson, 1963).

15. Corcoran assisted in the establishment of the Flying Tigers and later Civil Air Transport; see Scott, op. cit.

16. Lindsey Hopkins, Jr., whose sizable investments included Miami Beach hotels, was an officer of the CIA proprietary, Zenith Technical Enterprises of Bay of Pigs note. He was also an officer of the Sperry Corp., through whose subsidiary, the Intercontinental Corp., Pawley helped found the Flying Tigers in 1941. Pawley was Intercontinental's president. See Scott, op. cit.

17. U.S. Congress, Senate, Committee on Judiciary, Communist Threat to the United States through the Caribbean, Hearings, 86th Cong., 2nd Sess. (cited in Scott, op. cit.).

18. See chapter fifteen; it has also been revealed that a prominent Chinese

American, Dr. Margaret Chung of San Francisco, who was a major supporter

of the Flying Tigers, trafficked in narcotics together with the Syndicate; see P.D. Scott: "Opium and Empire," Bulletin of Concerned Asian Scholars, September 1973.

19. Koen, op. cit. 20. Robertson, op. cit.. After a one‑year suspension, the U.S. State Department recently approved the sale of $280 million in military weaponry to the repressive Taiwan regime (New York Times, 20 January 1980), the same regime whose disdain for human rights was most recently expressed by the preparation of cases of sedition against sixty‑five opposition demonstrators (New York Times, 24 January 1980). The CIA's Taiwan station chief in the late fifties and early sixties, when the unholy alliances were forged, was Ray S. Cline. Closely associated with the China Lobby, Cline became famous for his drunken binges with Chiang Ching‑kuo, currently the president of Taiwan (see V. Marchetti and J.D. Marks: CIA and Cult of Intelligence, Jonathan Cape, 1974). A CIA hawk, Cline also helped a gigantic Bay of Pigs‑style invasion of the Chinese mainland which was rejected by President Kennedy. Cline is currently the "director of world power studies" at Georgetown's Center for Strategic and International Studies (CSIS), which, according to writer Fred Landis ("Georgetown's Ivory Tower for Spooks," Inquiry, 30 September 1979), "is rapidly becoming the New Right's most sophisticated propaganda mill." In testimony before the House Select Committee on Intelligence, Cline defended CIA manipulation of the press, saying "You know that first amendment is only an amendment."

21. McCoy, op. cit.

22. D. Warner: The Last Confucian (Angus & Robertson, 1964). 23. McCoy, op. cit.

24. Conein told writer McCoy: "The Corsicans are smarter, tougher and better organized than the Sicilians. They are absolutely ruthless and are the equal of anything we know about the Sicilians, but they hide their internal fighting better." (McCoy, op. cit.).

25. McCoy, op. cit.

26. T. Branch and G. Crile III: "The Kennedy Vendetta," Harper's, August 1975.

27. U.S. Congress, Senate, Select Committee to Study Governmental Operations with respect to Intelligence Activities, Alleged Assassination Plots Involving Foreign Leaders, Interim Report, 94th Cong., 1st Sess. Senate Report No. 94‑463, 1975.

28. C. Lamour and M.R. Lamberti: Les Grandes Maneuvres de l'0pium (Editions du Seuil, 1972); McCoy, op. cit.; Committee of Concerned Asian Scholars: The Opium Rail (New England Free Press, 1971).

29. Marchetti and Marks, op. cit.

30. Congressman M.F. Murphy and R.H. Steele: The World Heroin Problem (U.S. Govt. Printing Office, 1971).

31. Like Nguyen Cao Ky, Ngo Dzu came to the U.S. as a refugee after the final debacle in South Vietnam. Though accused by Rep. Steele of responsibility for the addiction of thousands of GIs to heroin, Dzu went about as a free man until his 13 February 1977 death in Sacramento of apparent heart failure.

32. McCoy, op. cit.

33. Conein's summons home coincided with Howard Hunt's recruitment by the White House and the creation of the special narcotics and Plumbers groups. 34. Committee of Concerned Asian Scholars, op. cit. 35. Lamour and Lamberti, op. cit. (quote retranslated from the French).

Continued here.

A plan to opiate the boomer generation

The Third Rail – Part Three

By Kris Millegan

In the statist world in which we live, there is a very real tendency to accept as fact all that the official organs of propaganda emit.                       — Alan Milchman

My father, Lloyd S. Millegan, was associated with American intelligence gathering operations from 1936 until he left the CIA in 1959. On his 18th birthday, in August of 1936 he boarded a ship from Portland, Oregon to spend his sophomore year of college at the University of Shanghai. In August of 1937, he left Shanghai traveling to Vladiviostok to board the Tran-Siberian Railway [important historically because of the money that built it just prior to the Bolshevik takeover in Russia, loan funds negotiated for Morgan Bank by Willard Straight, Whitney son-in-law] and journey across the USSR, and Europe, eventually attending the 1937 Oxford Life and Work Conference, along with John Foster Dulles, before going back to Oregon to finish school.

After college, my father was scheduled for graduate studies in 1939 in Switzerland, but finances and the kindling of WWII, sent him instead to Washington, DC. He was soon working in the basement of the Library of Congress under Archibald MacLeish, first as a research analyst for the Library of Congress, then with the Office of the Coordinator of Information, and finally moving on to the Office of Strategic Services (OSS) in mid 1942.

Then in August of 1943, my father became involved in what Professor Peter Dale Scott calls “deep politics.” Dad was inducted into the military, given the shortest training available, as a medic, but placed into G-2, and then joined General MacArthur's staff as the personal secretary to Dr. Joseph Hayden, who was MacArthur's Civil Advisor on Philippine Affairs. Part of my father's work was to report back to OSS in Washington about MacArthur and his aide Colonel Willoughby.

Among my father's other duties was working with the Philippine guerrillas. After Dr. Hayden died, my father worked even closer with guerillas. He went into Manila ahead of the American troops to “sequester” the Japanese-puppet governments papers. For that act he was sued by the Japanese government and given the Legion of Merit by the US Army. He had became very friendly with the guerrillas and helped them set up a temporary government.

When MacArthur returned, he found that many of the native Filipino oligarchs (who were his friends) had collaborated with the Japanese and been jailed by the guerrillas, who had actually fought the Japanese. MacArthur proceeded to let his friends out of jail, and soon someone came to replace my father, a Lieutenant Ed Lansdale. My father moved on to do research and analysis for the invasion of Japan, and then his final job in the military was to gather information and write a report on the Japanese use of opium and narcotics before and during WWII. This was a months-long project that including traveling and interviewing many political figures as well as the major opium players in East Asia.

My father then came back to Washington, DC, first to work in the State Department and then the Central Intelligence Agency, where he worked overtly until April of 1951, his last position, serving as Branch Chief, Head of East Asia Analysis Office. He then went into “private business,” setting up Pacific Books, Inc., and taking our whole family with him to Indonesia. After about a year we were back in Fairfax, Virginia, outside DC, where my father “worked” in public relations and advertising sales.

Then in 1956, my father and mother took a 4-month long trip to East Asia. Us kids were told it was to gather information for a book. He never wrote the book. Late in 1957, he was asked to serve as the vice-president of Scarritt College in Nashville, Tennessee. Then, all of a sudden, in 1959, the president of the school quit, my father was asked to serve as president, he said no, and moved the whole family out to Oregon. He went back to college, and soon was teaching junior high school to earn income. I was ten years old, a kid just following his folks around.

Then in the late 1960's my father asked me what I thought of the Vietnam War, and I gave him a flip teen-age answer, “You have some rice paddies, and a sack of hand grenades. You throw the grenades and win the war for the guys in the white hats.” My father said we had to have a talk. Sometime later, in September of 1969, he said it was time to have that talk. By then I was married, had a young daughter, was a partner in a growing record store, and sponsoring rock and roll dances. On Sept, 21, 1969, the day before my 20th birthday, we had that talk.

It was amazing, even though, I had no idea what was being said. My father seemingly had waited until a friend of his, Dr. D.F. Flemming (who was out promoting his new book, The Cold War and its Origins) was in town to participate. My father straight off told me, “The VietNam war is about drugs,” and that there were secret societies involved.

I didn't understand, and since it was the late 1960s, and I had long hair, etc. I deduced my father was having a “drug talk” with me. It all seemed so serious, what with some professor and all. So, I proceeded to sit up straight, and got ready to say, “yes, sir," waiting for my dad to tell me not to smoke dope, etc. But that is not what happened.

My father continued talking about his intelligence career. He explained, how he had first worked with the State Department, when he was an exchange student, then his service in the OSS, being “sheep-dipped” into G2, and being put on MacArthur's staff. They also talked a bunch about the Viet Nam war. They both felt that “they” (the powers that be) were playing out a “lose scenario,” because of the U.S. actions taken so far. They talked about psychological warfare, about how the news wasn't the real news. That the stuff in the news was “sway pieces,” and that when I had been told he was an advertising/PR salesman, my dad was actually helping to put together a daily high-level briefing. That he had left the CIA in 1959, and was talking to me now because of some paper he had signed, that didn't allow he to reveal anything for ten years.

It soon became apparent that I had no frame of reference, and wasn't truly able to comprehend what they were saying. The meeting was over, and I went on with my life.

I had some other conversations, and arguments with my Dad where I learned some other things, but one of the most amazing came after he was gone. Even though I hadn't understood the talks, had inspired me to investigate “CIA-Drugs.” Going through my father's papers after his death in 1990, I found an itinerary for the 1956 trip and noticed that he had traveled to Chiang Mai, Thailand. At that time I was very interested in the history of Chiang Mai, because of the role the city has played in the opium/heroin trade. I had been told that the city had grown to over a million people from a very small town in the 1950s, and was looking for information. Now, I could simply ask my mother.

So the next time I visited my Mother, I asked her about Chiang Mai. She said that, “Yes, it was a small village. The biggest thing in town was the church.” She said she had some pictures in a book up on her bookshelf. I reached up to get the photograph album, and mom made a little aside, “That's when I stopped believing everything I read in the newspaper.”

That pricked up my ears, because I had asked my mother questions before, and she always just brushed them aside, saying she didn't know anything. So, I asked my mom, what did she mean?

She said that in 1956 they had been in Vietnam before going to Thailand, and while in Thailand the newspaper reported on a battle in Viet Nam, right where they had been. She said, “There was no battle, we were having a picnic.”

I turned back the pages of her photo book from Chiang Mai, and there were pictures of my parents, Ed Lansdale and a bunch of soldiers. They were obviously having a picnic.

I borrowed the photo book and photocopied the page. One was a picture of my mother where she was so radiant and vivacious that it was later used during her memorial. Also in that picture you can see Ed Lansdale and others sitting around having a good time – a picnic. The interesting item, is what my mother had written in the margin next to the picture:

“Eudora (my mother's name) out from Saigon with Col. Lansdale and North Vietnamese Military leaders.” North Vietnamese Military leaders? Having a picnic?

Lansdale is the guy sitting with the flattop. And it is in the historical record that he fought fake battles in the Philippines. Could it be that he did something similar in Vietnam? (Fletcher Prouty's JFK: The CIA, Vietnam, and the Plot to Assassinate John F. Kennedy has some amazing revelations about Lansdale's mock and fake battles) What else was going on in Viet Nam at that time?

From Gerald Posner's in Warlords of Crime:

French intelligence and the CIA became involved in clandestine activities that would seem far-fetched in a spy novel but that played a major role in making the Triads and the Golden Triangle the greatest factors in the narcotics business. French intelligence dealt in narcotics to bankroll their costly war against Ho Chi Minh. The CIA, obsessed with the perceived cold war threat of monolithic communism, assisted criminal empires on the assumption that they would provide a buffer to postwar Communist expansion. The policies of these intelligence agencies transformed the region into the leading heroin-producing and -smuggling center. The French led the way.

When the French government finally banned opium in Indochina, French intelligence (SDECE) took the trade underground. The French military had decided the best way to fight the North Vietnamese Was to employ tens of thousands of mercenaries in counterinsurgency warfare. But the problem was a lack of funds. The Indochinese war was tremendously unpopular in France and the government provided little money. Senior French intelligence operatives decided expediency outweighed legality and "Operation X" was born.

From 1951 to 1954 the French developed a sophisticated opium distribution network, a feat which won the loyalty of the hill tribes, the population from which the French hoped to recruit their counterinsurgency army. Each spring SDECE operatives bought opium at competitive prices from the hill tribes. Mountain guerrillas then avoided customs and police controls by flying the illegal drugs to a French military school. From there they were taken by truck to Saigon, where they were turned over to a syndicate of river pirates who worked for the SDECE. The river pirates transformed the raw opium into a smokable version in two large Saigon refineries. Then they distributed some to the city's underground dens and sold the substantial excess to Chinese merchants with Triad connections. The river pirates split the enormous profits with French intelligence.

Operation X initially boosted the military efforts with large infusions of money. And the hill tribes rallied to the French cause as long as they received high prices for their opium. But when the SDECE utilized non-highland minorities as middlemen, the hill tribes complained they were being cheated. The French ignored the complaints. As the money to the hill tribes dwindled, so did their support for the French. The intelligence service's opium policy unwittingly helped to end France's role in Indochina. The Meo hill tribes, the backbone of the mercenary army, were so dissatisfied with their opium prices, they allowed the North Vietnamese to infiltrate the surrounding jungles and surprise the French garrison at Dien Bien Phu. Without Meo reinforcements, the French surrendered on May 8, 1954, and signed an armistice two months later.

The entire SDECE opium experience was not lost on the CIA, which monitored the French operation and realized that opium was the key to hill tribe loyalty. In half a dozen years, when the CIA sent agents into the Laotian and Vietnamese hills to organize counterinsurgency armies, they offered the French colonel who created Operation X a senior position. Convinced the CIA would never give him real power, he refused. The SDECE, in financing its Indochina war, made the Southeast Asian narcotics trade international in scope. While some opium was smuggled out of the Golden Triangle before 1950, the sheer bulk restricted the amount exported. But when French intelligence used the air force to move unlimited quantities, they established the foundations for large-scale postwar trafficking. By selling to Chinese merchants with Triad connections, they accelerated a narcotics network that expanded and paralleled the booming Hong Kong Triads.

Although the French signed a 1954 armistice, they merely agreed to withdraw from the northern half of the country and held a nationwide referendum in 1956. The SDECE maintained its partnership with the Saigon river pirates, ensuring immense profits from the opium dens, gambling casinos, and prostitution houses, including the Hall of Mirrors, the largest whorehouse on the globe. The CIA wanted to cancel the referendum since the Communists were likely to win a popular election. The CIA asked French intelligence to abandon its underworld ventures and turn them over to the Americans. The SDECE refused.

By early 1955 the French mobilized the river pirates and some Corsican mercenaries into a wartime battalion. In April the CIA, together with the South Vietnamese Army, fought a pitched battle with the SDECE forces. It was the first and last time that two Western intelligence agencies entered open combat. [emphasis added] Colonel Lansdale, the CIA chief, directed operations from the presidential palace, while Captain Antoine Savani, the SDECE chief, moved into the river pirates' headquarters. For six days a savage house-to-house battle raged for Saigon.

The river pirates offered a reward to anyone who brought Colonel Lansdale to their headquarters, where they promised to cut open his stomach and stuff him with dirt. There were no takers. The river pirates had grown soft through a decade of vice and corruption, and the CIA forces pushed them back into the Run Sat swamp. The outnumbered Corsicans withdrew. At the battle's end more than 500 were dead, 2,000 wounded, and 20,000 homeless. Ngo Dinh Diem, the Americans' handpicked choice, was in firm control of Saigon's political machinery and its extensive underworld.

During the next fifteen years the United States allowed the South Vietnamese to become deeply involved in the narcotics trade. The chief of the air force, later Premier and Vice President, Nguyen Cao Ky, became a principal smuggler, disguising his trafficking as intelligence and surveillance forays. His brother-in- law ran the Saigon port and oversaw a massive import and export of drugs. South Vietnamese officials worked closely with a Triad based in Saigon's Chinese suburb, Cholon. The Vietnamese used government planes and trucks to transport opium from the Golden Triangle into Saigon. The Cholon Triad negotiated the price with the Chinese growers in the Triangle, refined the narcotic in jungle labs and then distributed it to Vietnam's addicts and sold the excess to large Hong Kong syndicates. During this time Bangkok became a key transshipment point, a role it retains to this day.

U.S. military files are replete with the names of South Vietnamese government leaders who spent more time dealing in narcotics than in fighting Communists. Money poured into a system held together by corruption. But the United States not only overlooked its allies' illegal activities, it also assisted them. The CIA followed the path of French intelligence. When operatives went into the Laotian hills to organize counterinsurgency units, CIA agents assisted the Meos in planning maximum harvests.

Posner does leave some of the story out. He lays the blame for the opium smuggling on our “allies,” and the Triads, and leaves out a major player, Corsican Lucien Conein (who we will see plays a role in later events), but the basic history lesson is correct: The US took over the Golden Triangle opium trade from the French in 1955.

The words my father used were,

“The Viet Nam War is about drugs. There are these secret societies behind it. Communism is all a sham, these same secret societies are behind it. It's all a big game.”

And that “they” were playing out a “lose scenario.”

Later in a discussion/argument he told me that there was a plan to opiate the boomer generation. I didn't understand what he was saying, but I can now comprehend, somewhat, of how he came to those opinions.

So, why would someone have a “picnic” and tell the world they were having a battle?

It is a psychological operation – psy-ops. The action forces people to choose sides, and that's one of the first steps to being manipulated. "They" want you to choose a side, any side, they don't care. Sides can then hardened, and soon there is a “conflict.” Then, American boys and girls are sent to “Hell,” for one year. If they survive that year they get to go home. And a significant number of those boys and girls became addicted, and took their addiction home, where many became dealers to sustain the habit … and an “infection” began.

This was part of the warm-up for Watergate.

But you see this wasn't the only “protected” drug flow. There were several, creating problems for the players.

There was a flow through Texas, that Jack Ruby was involved with. There was one working through Albania, remnants of a “Nazi” network. There was an old one run by the mercantilists, with cover from the State and Justice Department. There were the operations run by Angleton. There was the one run through the old “China hands.” There were Mafia flows: All of these separate operations were causing problems, they were creating separate power centers.

Drug trafficking, gathers intelligence and money, which are always a nice commodity to have in one's corner. And with all these separate operations, hidden from each other by need-to-know and other spook and smuggler tricks, they kept on stepping on each others toes. Plus you had new people trying to get into the game.

Where did Nixon get his slush funds? What was all that about Mexican money laundering? From “Watergate to Whitewater Thrillride” by Daniel Hopsicker:

When the hush money finally gets paid to the arrested Cubans, it comes in the form of Mexican checks, turned over first to Maurice Stans of the CREEP, who transferred them in turn to Watergate burglar Gordon Liddy. Liddy then passed them on to Bernard Barker, one of the Miami station Cubans arrested on the night of the final Watergate break- in. Barker was actually carrying some of this "Mexican" cash left over from these checks when he was apprehended.

The money for the Plumbers had come from one of George Bush's intimates, and at the request of Bush, a member of the Nixon Cabinet from February, 1971 on. Just two days before a new law was scheduled to begin making anonymous donations illegal, $700,000 in cash, checks, and securities had been loaded into a briefcase at Pennzoil headquarters [a building formerly known as the Zapata Building] and picked up by a company vice president, who boarded a Washington- bound Pennzoil jet and delivered the funds to the Committee to Re-Elect the President at ten o'clock that night.

"A Suggestion From America’s Last Honest Man"

The U.S. House of Representatives Banking and Currency Committee, chaired by Texas Democrat Wright Patman, soon began a vigorous investigation of the money financing the break-in, large amounts of which were found as cash in the pockets of the burglars. The largest amount had gone into the Miami bank account of Watergate burglar Bernard Barker, a CIA operative since the Bay of Pigs invasion, $100,000 that had been sent in by Texas CREEP chairman William Liedtke, longtime business partner of George Bush.

On the day Nixon resigned the Presidency, Patman wrote to Peter Rodino, chairman of the House Judiciary Committee, asking him not to stop investigating Watergate. Though Patman died in 1976, his advice still holds good…but we won't hold our breath.

 

How much did George Bush himself know about the activities of the Plumbers, and when did he know it? George Bush? In 1972? Egad! But, apparently, Bush was knee-deep in things, as illustrated by the notorious White House meeting of June 23, 1972, whose exchange between Nixon and Haldeman--even without taking into consideration the unexplained 18-and-a-half minute gap in the same conversation-- provided the coup de grace to the agony of the Nixon regime. 

 

Haldeman says (on the tapes): "Now, on the investigation, you know the Democratic break-in thing, we're back in the problem area because the FBI is not under control, because [FBI chief] Gray doesn't exactly know how to control it and they have --their investigation is leading into some productive areas because they've been able to trace the money--not through the money itself--but through the bank sources--the banker. And, and it goes in some directions we don't want it to go."

 

To which Nixon's famous answer is, "When you get in-- when you get in (unintelligible) people, say, "Look, the problem is that this tracks back to the Bay of Pigs, the whole problem is that this will open the whole, the whole Bay of Pigs thing and the President just feels that ah, without going into the details--don't, don't lie to them to the extent to say there is no involvement, but just say this is a comedy of errors, without getting into it, the President believes that it is going to open the whole Bay of Pigs thing up again and, ah…they should call the FBI in and (unintelligible) don't go any further into this case period!

 

Based on Haldeman's later testimony, that Nixon's references to Howard Hunt and the Bay of Pigs are an oblique allusion to the Kennedy assassination, it seems that perhaps Mr. Nixon may have known more about the killing of Jack Kennedy than he was ever held accountable for--doubtlessly placing him in company with scores of others.

There then comes the one historical moment which, more than any other, delineates the character of George Bush. The scene was the Nixon White House during the final days of the Watergate debacle. White House officials, including George Bush, had spent the morning of that Monday, August 5, 1974, absorbing the impact of Nixon's notorious ``smoking gun'' tape, the recorded conversation between Nixon and his chief of staff, H.R. Haldeman, shortly after the original Watergate break-in, which could now no longer be withheld from the public. In that exchange of June 23, 1972, Nixon ordered that the CIA stop the FBI from further investigating how various sums of money found their way from Texas and Minnesota via Mexico City to the coffers of the Committee to Re-Elect the President (CREEP) and thence into the pockets of the “Plumbers” arrested in the Democratic Party headquarters in the Watergate building.

These revelations were widely interpreted as establishing a prima facie case of obstruction of justice against Nixon. That was fine with George, who sincerely wanted his patron and benefactor Nixon to resign. George's great concern was that the smoking gun tape called attention to a money-laundering mechanism which he, together with Bill Liedtke of Pennzoil, and Robert Mosbacher, had helped to set up.

When Nixon, in the “smoking gun” tape, talked about “the Texans” and “some Texas people,” Bush, Liedtke, and Mosbacher were to whom he was referring... The threat to George's political ambitions was great. The White House that morning was gripped by panic. Nixon would be gone before the end of the week. In the midst of the furor, White House Congressional liaison William Timmons wanted to know if everyone who needed to be informed had been briefed about the smoking gun transcript.

In a roomful of officials, some of whom were already sipping Scotch to steady their nerves, Timmons asked Dean Burch, ``Dean, does Bush know about the transcript yet?”

“Yes,” responded Burch. “Well, what did he do?” inquired Timmons. “He broke out into assholes and shit himself to death,” replied Burch.Why would Bush do that? Break out into assholes and shit himself to death? Could Barry Seal's arrest on explosives charges on July 2, 1972, have had something to do with the operations of Bush's Republican Texas money-raising squad of Hugh Liedtke, Pennzoil, and Robert Mosbacher?

Richard Nixon: Drug Kingpin?

Why not? Is anyone still so naive as to believe that the notorious practice of covert operatives "looking the other way" when drug trafficking is afoot began during the Contra Cocaine 80’s? Later in our story, we will even hear some persuasive evidence that Nixon’s buddy Bebe Rebozo had been the "money man" behind top Medellin cartel drug kingpin (and Barry Seal associate) Carlos Lehder.

According to "The Great Heroin Coup," Nixon's antidrug campaign was in reality a bid to establish his own intelligence network. Egil Krogh wanted the White House, instead of the CIA, handling the drug intelligence work, allowing Nixon's staff to decide which drug traffickers to pursue. So they reorganized.

When Howard Hunt told Krogh he could enlist for the office experienced CIA figures, starting with CIA veteran Lucien Conein at its head, it was a ballsy move, since the CIA had just been acutely embarrassed by the discovery that a huge proportion of the smugglers arrested in the big Justice Department Operation Eagle drug bust in 1970 were Cubans, and Bay of Pigs veterans to boot.

When Nixon chose William Sullivan instead, who had once been second to J. Edgar Hoover in the FBI, "the boys down at the Masonic Lodge," as we’ve heard them referred to, could not have been overjoyed. Clearly, the White House was out to gain control of narcotics intelligence at home and abroad. But even that wasn't enough. Nixon's staff also sought to control enforcement itself, and that required effective strike forces.

So in January of 1972 the White House set up the Office For Drug Abuse Law Enforcement (ODALE), according to a plan conceived by Gordon Liddy. Nixon named the soon-to-resign-in-disgrace Myles Ambrose to head of the newly created Drug Enforcement Office, which later became the Drug Enforcement Administration.

There is much more in the article, such as one particular Mexican drug run/cash flow that was rudely interrupted until Nixon was out of office. The full article can found online. The story and more are also in Hopsicker's book, Barry and "the Boys," The CIA, the Mob and America's Secret History.

And what was Nixon really doing in 1964 out in a Vietnam jungle with a box of gold that was so heavy it took three people to carry?

Watergate is much more than a “third-rate burglary”:  at its core, it's all about endgame.