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The CIA Addiction to Drugs

Michael Hand Noted Below


Paul Beres

The CIA has often either ignored or become involved in the cultivation and trade of illegal narcotics as a means to achieving its ends. This has caused a dramatic increase in heroin and cocaine production and assisted the forging of highly efficient smuggling networks. Many of the military leaders supported by the CIA have become little more than opium or cocaine warlords with a common interest. Having acquired the necessary connections and skills while on assignment, some of the CIA's ex-operatives have even become drug traffickers in their own right. 

The following is a brief history of the CIA's involvement in the production and trade of illegal narcotics. 

As allied forces stormed the beaches of Sicily in 1943, an American fighter flew over the village of Villalba and dropped a sack addressed to "Zu Calo", Don of the Sicilian Mafia. The sack contained a yellow scarf embossed with the letter L. The "L" stood for "Lucky".

"Lucky" Luciano had emerged as Don of the American Mafia after its leadership and ranks had been purged of the 'old guard' who still held to the tradition of not running narcotics or prostitution rackets. Under his able leadership the end of prohibition simply marked the beginning of the Mafia's diversification into heroin and brothels (complementary interests, since prostitutes could be addicted to heroin). Luciano's luck wavered when he was convicted for 'forced prostitution', but rallied again when the Office of Naval Intelligence (ONI), one of the precursors to the CIA, sought his help in assisting the allied invasion of Italy.

Under Mussolini, the Sicilian Mafia had been mercilessly persecuted to the point where only a few pockets of rural western Sicily remained under its influence. The American Mafia, in addition to the imprisonment of its boss, had also fallen on hard times with the success of an organised crime crackdown. All this changed with the invasion of Sicily and Italy. Sicily's Mafia bosses, in return for local knowledge during the invasion and intimidation of communist and union movements, were installed as the mayors of many of western Sicily's towns. (Zu Calo, known more respectfully as Don Calogero Vizzini, became major of Villalba.) On the Italian mainland a similar, though more subtle, exchange of favours also restored the Mafia to its former glory.

The air drop of Luciano's yellow scarf, a traditional means of identification, was a symbolic gesture of things to come. 

Instead of serving the rest of his 30 year sentence Luciano was deported to Italy in 1946 as a final reward from the ONI for assisting the war effort. In collaboration with Don Calogero and a small army of 100 or so deported American Mafia, Luciano then established the world's most successful narcotics syndicate. Turkish morphine was smuggled through Lebanon to the French Port of Marseilles where it was turned into high grade No. 4 heroin by Corsican laboratories before being exported to Mafia distributors in the United States. 

The laboratories run by the Corsican syndicates in Marseilles, the infamous 'French Connection', had two distinct advantages over the laboratories Luciano had initially set up in western Sicily; superior chemists and political protection. It was also easy for Luciano to do business with the Corsican syndicates, as their codes of conduct, organisation and culture more closely mirrored the Mafia than any other criminal organisation. 

Like their Mafia cousins, the Corsican syndicates key to success was their usefulness, in particular, to the CIA.

The CIA came into existence in September 1947. During that same year, Marseilles' hungry workers, whose wages were now even lower than dtring the height of the great depression, went on strike, bringing France to an economic standstill. The French communist party supported their action and unions throughout France, whose members were experiencing similar hardship, joined in. Interpreting such action as the prelude to a communist coup (despite the advice of analysts that this was not the case) the CIA tried to break the strike by paying socialist union leaders large sums of money to abandon their alliance with the communist-led unions and return to work. The socialists were also encouraged to remove communists from the ranks of the special police unit charged with curbing organised crime and smuggling so that it could be used to intimidate striking workers. 

But this was not yet enough to break the strike in Marseilles, so the CIA's operatives "supplied arms and money to the Corsican gangs for assaults on communist picket lines and harassment of important union officials". By December the strike was over and the Corsican syndicates' arch enemies, the communists, particularly the communist members of the organised crime police unit, no longer posed any threat to their operations. After helping to break up another strike by hungry workers in 1950, the two Corsican syndicate bosses that the CIA had sponsored to do its work, the Genrini brothers, consolidated their influence upon the local politics and docks of Marseilles. In conjunction with Lucky Luciano the Genrini brothers then set about making Marseilles America's heroin laboratory during the heroine epidemic infested 60's, capturing the lion's share of the American heroin market.

Meanwhile, in 1950 the CIA regrouped what remained of the defeated 'Nationalist Chinese Army' (KMT) along the Burma-Chinese border for an invasion of Southern China, in an effort to draw Chinese troops away from the Korean front. After a few disastrous incursions into Yunnan province, in which a number of CIA advisers were killed, this idea was wisely abandoned but the proxy army was maintained as a buffer between China and Southeast Asia. Only partly funded by the CIA, this "Yunnan Anti-Communist National Salvation Army," soon turned to its traditional means of support, the opium trade and looting. It invaded Burma's opium rich Shan states, and imposed an opium tax on all hill tribe farmers, regardless of whether they grew opium or not. The CIA did more than just allowing this to happen. Burmese military sources even claimed "that much of the KMT opium was flown from MongHast in unmarked C-47s flying to Thailand and Taiwan." These C-47s were part of the private airforce which the CIA used to supply the KMT and other proxy armies with weapons. 

Today the KMT has planes and airstrips of its own, as well as processing plants and concrete bunkers to defend them. China's and Burma's joint military operations to remove them have only been partially successful. But the CIA's involvement in the Golden Triangle goes far beyond reviving the KMT. 

In 1965 history repeated itself. The United States was now fighting the same loosing battle that France had fought in 1955. To support South Vietnam's corrupt Thieu-Ky regime, which relied heavily upon the opium trade as a source of revenue, the CIA's long range C-47s flew opium, morphine and heroin out of Laos, a feat temporarily beyond the capabilities of the South Vietnamese Airforce.

The C-47s cargoes were in turn transferred to planes belonging to the South Vietnamese Airforce and flown directly to Saigon for distribution to opium dens and a growing number of GI addicts. This not only ensured the stability of the Thieu-Ky regime but also enabled the CIA to increase its influence with the hill tribes of Laos. For appearances sake, the CIA's private airforce was formed into a company and temporarily given the name "Civil Air Transport" or CAT for short.

Meanwhile, in the background, despite the demise of French colonialism in South Vietnam, Corsican syndicates continued to ply their trade, supplying heroin to the laboratories of Marseilles in quantities that now exceeded those supplied by the Sicilian Mafia.

The inevitable fall of Saigon brought an end to Vietnam's participation as one of Asia's leading consumers and exporters of heroin, but its main heroin source, Laos, continued to increase its output.

During and after Vietnam, the CIA fought a secret war in Laos, by recruiting Hmong hill tribe guerrillas to fight the Communist Pathet Loa and other factions. One of the CIA's main agents in Laos, Edgar Buell, was given the task of strengthening the Hmong economy. This inevitably involved improving the Hmong's ability to plant and cultivate opium. Buell, with his agricultural knowledge, rose to the occasion, saying "If you're gonna grow it grow it good".

The CIA encouraged the Hmong to grow opium as a cash crop for export instead of rice, and hence effectively made the Hmong dependent upon CIA air drops of food which were not forthcoming if they did not join the fighting. As in Vietnam, these dubious means of achieving an end, failed. The Hmong were no match for AC-47 helicopter gunships with infrared sensors, firing 6,000 rounds per minute at anything warm enough to be living, but they did increase their opium yields. When the CIA pulled out, many Hmong starved. 

In 1973, Kermit "Buddy" King fell from the tenth floor of a Sydney apartment building. His death coincided with allegations made to the Australian Bureau of Narcotics by the lawyer of his disgruntled Thai housekeeper, accusing him of flying heroin to Australia for Michael Hand. "Buddy" had been the CIA's top ace in Laos, where he had flown Michael Hand, then a CIA operative, to remote hill tribe villages to organise and train Hmong Guerrillas. During that same year Michael Hand and Frank Nugan, an alcoholic and pathological lier, formed "Nugan Hand Limited."

By 1976 large amounts of Asian heroin were being imported into Australia by criminal syndicates that used Nugan Hand Limited to get around Australia's tough currency laws. Nugan Hand would launder the syndicate's money so that it could be used to buy heroin in Thailand and other parts of Asia. The bank had "handled 4.3 million in identifiable drug money for twenty-eight known dealers in 1976 and 1950," but this was really only the tip of the iceberg. Michael Hand, together with Maurice Bernard Houghton, a new senior manager well placed in the CIA's old boy network, looked after the bank's interests in international drug financing, arms deals and sensitive covert actions sub-contracted by the CIA. 

Associates and employees of the bank recruited by Hand included retired US Army Generals and CIA directors. The most notable exploit of one of these associates, Edwin Wilson, an ex CIA operative once tipped to take one of the CIA's top jobs, was selling 21 tons of C-4 explosive to Libya's Muamar al-Qaddafi in violation of US and internationally sanctioned arms bans (the C-4 was destined for Qaddafi's European and Middle East terrorist campaigns). 

Claiming humanitarian grounds as his motivation, Hand even attempted to resettle 3000 Hmong on a tiny Caribbean Island whose abundant airstrips happened to be strategically located on the South American / Caribbean drugs route to the US. But before this feat could be accomplished, the Nugan Hand bubble burst. In 1980 , after a warrant had been issued for his arrest by the Australian Corporate Affairs Commission, Frank Nugan committed suicide in his Mercedes. Aware of how important clients might react to these events if loose ends were not tied up quickly, Hand and Wilson returned to Sidney in time to destroy their company's records before vanishing. 

There is no doubt that CIA tolerance and complicity in the drug trade in and around the Southeast Asia golden triangle contributed greatly to an increase in the availability of heroin worldwide during the 60's and 70's. But much worse was to come. 

In 1979 the CIA teamed up with Pakistan's "Inter Service Intelligence" (ISI) to organise Mujaheddin resistance in Soviet occupied Afghanistan. The recipient of more than half the 'aid' given to Mujaheddin rebels by this CIA-ISI alliance was Gulbuddin Hekmatyar. The results were immediate: Gulbuddin's private Mujahaddin army, Hezbi Islami, invaded some of Afghansistan's prime agricultural areas and persuaded its peasants to grow poppies. The opium was then brought across the Pakistan border to refineries under the protection of Parkistan's General Fazle Hug, where it was turned into No. 4 heroin for export to Europe and America. 

Today, this second golden triangle now rivals the production of the first, and has been estimated to have captured 50 percent of the world's heroin market. 

Meanwhile, in Latin America, the CIA's proxy Contra army of "freedom fighters" was also supplementing its income. Smugglers working for the Colombian Medellin cartel would land on Contra air-strips for refuelling and either fly on to North America themselves or offload their cargoes to other smugglers on the North American run. In return for this service the Contras were able to fund their campaign to liberate Nicaragua from the Sandanisters.

The CIA often used the same cocaine smugglers to, in turn, fly military supplies back to the Contras from North America. The cost of these supplies and their transportation was partly paid for by the CIA and partly paid for by the Contra's services to the Medellin cartel. In some instances no exchange of money was necessary; weapons and cocaine were the only means of exchange. Like the commanders of the KMT, many of the Contras leaders became drug traffickers in their own right.

When the US Congress cut all aid to the Contras in 1984, the CIA began to operate landingstrips of its own through John Hull who turned his Costa Rica ranch into a miniature airport. Support from other agencies was also forthcoming. Under National Security Councillor Colonel Oliver North, two ex CIA operatives who served together in Laos, retired General Richard Secord and Thomas Clines, raised the necessary funds to buy more aeroplanes by illegally selling arms to Iran. 

The CIA was now actively involved in smuggling cocaine. Before a Capital Hill hearing, Gary Bretzner, a former pilot working for the Colombian drug smuggler George Morales, gave testimony of John Hull's complicity. 

"In July 1984 Betzner flew into Hull's ranch in a Cessna 402-B loaded with a cargo of weapons for the Contra
southern front. Betzner was met at the airstrip by Hull and they watched the cargo of weapons being unloaded, and cocaine, packed in 17 duffel bags, and five or six two-foot square boxes being loaded into the now empty Cessna. With his cargo of cocaine, Betzner flew the Cessna north and landed at a field in Lakeland, Florida, without any search.". 

The contribution which these efforts made in increasing the supply of Colombian cocaine to the US deserves special mention. In 1980 the amount of cocaine reaching the US doubled and by 1985 regular cocaine users already outnumbered heroin addicts by more than ten to one. 

By 1986 cheap crack, cocaine converted from a powder to a granular base for smoking, had found its way into US schools, costing as little as $10 a tab. Not surprisingly cocaine use and profits now dwarf those of heroin.

Although North America and Europe are the premium export markets for cocaine and heroin, new markets have been cultivated closer to home in the developing world. Pakistan, for instance, had a virtually non-existent heroin addiction problem before the Afghanistan conflict, but now has one of the largest and fastest growing population of addicts in the world, while in Thailand heroin addition is more widely spread throughout society than ever before. 

This brief history is by no means the full story, or even the end of the story. Despite this, the recurring trend of the drug trade becoming an 'end in itself' rather than a 'means to an end,' is clearly evident. This is more than just a recurring trend, however; it is a spiral with devastating consequences. 

Successive US Presidents have declared war on drugs, but have failed to acknowledge the CIA's part in batting for the opposition. On the contrary, they have increased the CIA's powers; the very same powers that have enabled CIA operatives to become so deeply immersed in the politics of drugs.


Cocaine Politics: Drugs, Armies, and the CIA in Central America by Peter Dale Scottand and Jonathan Marshall, University of California Press 1991.

The Politics of Heroin: CIA Complicity in the Global Drug Trade by Alfred W McCoy, Lawrence Hill Books 1991. 

Reagan Versus the Sandinistas: The Undeclared War in Nicaragua, edited by Thomas W. Walker, Westview Press, Boulder and London 1987.

Turning The Tide: US Intervention in Central America and the struggle for Peace by Noam Chomsky, published by Pluto Press 1985.

Copyright 1991 The Akha Heritage Foundation