The Origins of Marijuana Prohibition in Australia

In April 1938, the front page of the Australian newspaper, Smith’s Weekly, was dominated by a headline that shrieked ‘New Drug That Maddens Victims’. The article was subtitled ‘WARNING FROM AMERICA’ (which provided a clue to its author) and informed readers that the ‘PLANT GROWS WILD IN QUEENSLAND’. The plant in question was Cannabis Sativa; and this ‘new drug that maddens victims’ was marijuana. This article introduced Australian’s to the word marijuana and the Smith’s Weekly article marked the start of an American-inspired ‘Reefer Madness’ campaign in Australia. The article began:

“A MEXICAN drug that drives men and women to the wildest sexual excesses has made its first appearance in Australia. It distorts moral values and leads to degrading sexual extravagances. It is called marihuana. Marihuana is obtained from a plant (Cannabis Sativa) that has been discovered growing wild in many of the coastal parts of Queensland.”

Although the article was attributed to Smith’s Weekly’s Hawaiian correspondent, some familiar examples from Anslinger’s article ‘Marihuana Assassin of Youth’ published in The American Magazinein July 1937 indicate that the hand behind this was Harry Anslinger and the US Bureau of Narcotics, a fact subsequent stories confirmed. According to the article, ‘Cannabis Sativa was growing wild in Queensland.’ Indeed there were ‘acres of it’.

“There are places on the Queensland coast, some of them within a few miles of Brisbane, where the long-leafed plant, Cannabis Sativa, is to be seen growing freely and in the districts further north it literally flourishes in many places. Not far from Flying Fish Point, six miles from Innisfail, and situated at the mouth of the Johnstone River, is a patch of it which covers five or six acres. Farther along the coast, near Babinda, it is to be seen in plenty – also around Trinity Bay and near Port Douglas.

Much farther south, around Montville, it grows with more or less freedom, its deadly qualities completely unsuspected by those who see it every day and know it by one or the other of the vernacular names it possesses. Its occurrence has been reported from Caloundra, lately become one of Brisbane’s most fashionable holiday resorts, and it grows in profusion in parts of Moreton and Stradbroke Islands.”

This article created a marihuana panic and introduced Australians for the first time to the word ‘marihuana’. According to the article, Cannabis Sativa (marihuana) was a new kind of superweed with the potency attributed to skunk in our era. The article stated:

“Both botanically and chemically Cannabis Sativa is closely allied to Cannabis Indica, from which Indian hemp or hashish, well-known for its violently sex-stimulating effects, is prepared, with the difference that the action of C Sativa is twenty times more potent than is that of C. Indica.

Under the influence of the newer drug, the addict becomes at times almost an uncontrollable sex-maniac, able to obtain satisfaction only from the most appalling of perversions and orgies. Its effect is the same on either sex.”

Of course, this has no basis in botany or medicine. There are several members of the genus cannabis, including two cultivated species: Cannabis Sativa and Cannabis Indica. European hemp or Cannabis Sativa had a long history of use as a seed or fibre crop but it was never used for drug production. Drug cannabis was known in Australia as Indian hemp and was regulated under the Poisons Act asCannabis Indica. Before the introduction of the word ‘marihuana’ in 1938, drug cannabis was widely used in Australia but it was called Cannabis Indica.

So the renaming of drug cannabis as marihuana caused considerable confusion in 1938 and allowed the Bureau of Narcotics to promote ‘marihuana’ as a new drug menace in Australia, even though Australians had a long and untroubled history of cannabis use. As the Director General of Health, Dr JHL Cumpston would shortly inform the Prime Minister’s Department, this ‘new drug that maddens victims’ had been used in Australia for decades.

The furore unleashed by the Smith’s Weekly marihuanaarticle prompted DJ Gilbert of the Prime Minister’s Department to write a memo to the Director General of Health.

“Occasionally the blood curdling noises of Smith’s leads to the spot marked X. If it is true that the plant which is spreading in our midst is as naughty as charged, your department may deem it necessary to become interested.”

Dr Cumpston replied to the Prime Minister’s Department in May 1938, advising them that the ‘New Drug that maddens victims’ was not new and had been known about for decades:

“With reference to the front page from Smith’s Weekly of the 23 April 1938 containing a “warning from America” concerning a “New Drug that maddens victims” obtainable from Indian Hemp and that the “plant grows wild in Queensland”, I have to advise that the drug has been known for decades and the hemp plant has been under cultivation in Australia for over 50 years. Being a tropical plant – native of India and Western Asia – it has probably grown wild (now acclimatised) more extensively in Queensland than in the more temperate climates of New South Wales and Victoria. When the plant is cultivated for fibre production, it is harvested quite early, before the pistillate flowers are fully developed, consequently little resin would be obtainable from a crop grown only for fibre.”

Dr John Howard Lidgett Cumpston was appointed as Australia’s first Director-General of the Commonwealth Health Department in 1921, serving until his resignation in 1945. In 1925 when the Prime Minister’s Department sought his advice on the proposal by the League of Nations to include cannabis in the convention on habit-forming drugs, Cumpston opposed the move, advising the government the only regulations on habit-forming drugs were concerned with opium and that Cannabis Indica was included in the various lists of poisons under the state Acts, and was sufficiently under control.

As a result of the Smith’s Weekly ‘New Drug That Maddens Victims’ story Dr Cumpston started the Department of Health’s marihuana file, Drugs and Medicines: Marihuana. The earliest items in the marihuana file were: a copy of the Smith’s Weekly April 1938 article ‘New Drug That Maddens Victims’, a similar article from The Sun in Sydney from 26 April 1938 ‘Marihuana Drug Killer Of Souls’, the letter from DJ Gilbert from the Prime Minister’s Department about the ‘New Drug That Maddens Victims’ article in Smith’s Weekly, Cumpston’s reply to Gilbert and two heavily underlined articles that formed the basis of Cumpston’s reply to Gilbert. The first of these was the section ‘Cannabis Indica, B.P. Indian Hemp’ from the British Pharmaceutical Codex 1911 and the other was ‘Illicit Traffic in Cannabis’ from the US Bureau of Narcotics. Two countervailing views of cannabis policy were colliding: Cumpston represented an ‘Australian’ model, which was medically based, and was represented by the article on Cannabis Indica from The British Pharmaceutical Codex 1911; Anslinger’s views and policies were represented in ‘Illicit Traffic in Cannabis’ and were distinguished by their use of the ‘marihuana’ word and their call for national and global laws similar to the Opium convention to regulate the importation of cannabis.

The disease Cumpston was being asked to administer was a moral panic created by sensational stories like ‘New Drug That Maddens Victims’ and ‘Marihuana Drug Killer Of Souls’ which were inspired by the incredible ‘reefer-madness’ views of Anslinger. While the newspapers unleashed an epidemic of fear, Cumpston’s sensible, well-considered advice would not be heeded. Gilbert’s opening sentences about ‘the blood curdling noises of Smith’s’ were apt. Smith’s noises were blood curdling and the yelpings of the rest of the press pack drowned out all reasonable discourse.

The Second Smith’s Weekly Article

Seven weeks after its first ‘reefer madness’ article, on June 11 1938, Smith’s Weekly delivered the second article in its series ‘Drugged Cigarettes: G-Man Warns Australia: FIRST DOPED PACKETS SNEAKED IN’.

“A FEW cigarettes containing marihuana – the drug which causes its victims to behave like raving sex maniacs, and has made pathetic slaves of thousands of young Americans – have been smoked at recent parties in Sydney.”

The G-Man in question was AM Bangs, the head of the Bureau of Narcotics in Hawaii, one of Anslinger’s deputies, whose photo adorned the cover of this issue of Smith’s Weekly. Bangs was quoted as saying that ‘Undoubtedly, if prompt action is not taken, marihuana will flood Australia and New Zealand’.

For Smith’s credulous readers, Bangs described the situation in Hawaii where his ‘special squad of Washington G-Men’ were smashing this ‘vicious racket’.

“Continually, marihuana dens in Honolulu are being cracked open by raiding squads. The drugged victims are like punch-drunk fighters. They cannot be questioned for hours, sometimes days.

The women sit on their cell cots, their faces and clothes ripped, trying to piece together what they did in their orgy of lust. The men slowly come out of the stupor that gave them frenzied sexual desires and colossal physical strengths.”

This article also ended with direct quotes from Anslinger’s ‘Marihuana – Assassin of Youth’further confirming the Bureau of Narcotics’ connection.

The Smith’s article was lurid, rubbish, but it would have a lasting effect on Australian drug policy.

Shortly after the Marijuana Tax Act became law in the US in 1937, the US Consul in Sydney wrote to the Australian government, informing them about the Act and requesting information about Australian laws on the importation of cannabis, asking that five copies of each state’s cannabis regulations should be forwarded to the Treasury Department in Washington. An information sheet from the Bureau of Narcotics about the perils of marihuana called ‘Illicit Traffic in Cannabis’ (which proposed national and international laws similar to the Opium convention to regulate the importation of cannabis) was included. As a former diplomat, the head of the Bureau of Narcotics, Harry Anslinger, was probably behind this request. Anslinger had previously worked for the Sate Department and knew how to use the consular system to exert pressure on lagging governments. He would have been delighted with the result. The next day; on the 27 October 1937 the Minister for External Affairs, RG Menzies, wrote to the Secretary-General of the League of Nations giving the agreement of the Australian government to the inclusion of Indian hemp extract or tincture within the scope of Article 10 of the International Convention relating to Dangerous Drugs signed at Geneva on 19th February 1925. Once Australia signed the convention, states like South Australia who’s Advisory Committee under the Food and Drugs Act opposed the extension of the provisions of the Dangerous Drug Act to Indian Hemp were forced into compliance on the 20th February 1941.

The Smith’s Weekly’s series of marihuana articles appeared some months later. They were also inspired by Anslinger. The second Smith’s article relied mainly on Anker Bangs, Anslinger’s Hawaiian deputy; and both the Smith’s Weekly articles and other articles from the time of the moral panic like ‘Marihuana Drug Killer Of Souls’, used examples from Anslinger’s ‘Marihuana, Assassin of Youth’ and his so-called ‘Gore Files’ on marihuana. Australia’s drug policy was Americanised, Anslinger-ised, after 1937 through the manipulation of the diplomatic power of the US state and by the inspiration a ‘Marihuana Sex Drug’ moral panic in the Australian press.

 

Sidebar: Indian hemp

While the word ‘marijuana’ was unknown in Australia before 1938, drug cannabis was very well-known. In the pharmacopoeias of the time drug cannabis was listed as Cannabis Indica. The name means Indian hemp, and the drug comes from the leaves and flowers of a plant that had been cultivated in India for millennia and which the Indians called ganja or bang. Originally an Indian plant, its use spread, first around the Indian Ocean, and then, at a later stage, around the Mediterranean, becoming widely known in Europe only in the nineteenth century.

The first major English work on the medical properties of the Indian hemp plant was Dr W. B. O’Shaughnessy’s On The Preparation of Indian Hemp Cannabis Indica in 1839. The Fifth Edition of the United States Dispensatory (1843) summarised Dr. O’Shaughnessy on the effects of cannabis ‘it alleviates pain, exhilarates the spirits, increases the appetite, acts decidedly as an aphrodisiac, produces sleep, and in large doses, occasions intoxication, a peculiar kind of delirium, and catalepsy’ and added ‘Its operation, in the hands of Dr. Pereira, appeared to resemble very much that of opium’ Since opium was the great herb of western medicine, this was high praise.

In 1860 in America the Ohio State Medical society convened a committee to examine the use of Cannabis Indica in medicine and they claimed successful treatment of neuralgic pain, dysmenorrhoea, uterine bleeding, hysteria, delirium tremens, whooping cough, infantile convulsions, asthma, gonorrhoea, chronic bronchitis, muscular spasm, tetanus, epilepsy and lack of appetite. It was considered by several physicians specific in menorrhagia (excessive menstrual flow) and it was widely used to dull the pain of childbirth; it was also used to alleviate migraine, and it was recommended as a remedy for this condition by Sir William Osler. Many of these medical uses for cannabis ‑ its effectiveness as an anti-convulsant and as an anti-spasmodic; its ability to stimulate the appetite; its reputation as an aphrodisiac; its ability to suppress nausea were rediscovered by marijuana users in the 1970s.

The section on Cannabis Indica in the British Pharmacopeia Codex 1911 (which Dr Cumpston relied on when drafting his reply to Gilbert) stated that the drug acted chiefly on the central nervous system. ‘It first produces excitement with hallucinations, a feeling of happiness and indifference to surroundings, this stage being followed by deep sleep. The hallucinations include inability to estimate time and space …. It is used as an anodyne sedative or hypnotic, in mania, spasmodic coughs, phthisis, asthma, acute neuralgia, dysmenorrhoea, and tetanus. It does not produce constipation nor loss of appetite.’ This last comment was obviously meant to distinguish it from opium which had many similar uses, but which produced these undesirable side effects.

In 1938 drug policy in Australia was based on the British model and was firmly in the hands of members of the medical profession like Dr Cumpston. A decade before in 1926, the report of the Rolleston Committee had addressed the problems of opiate addiction and drugs policy. Dominated by doctors, it opted for the medical definition of addiction. Addicts were defined, not as the ‘dope fiends’ of the popular press, but as ‘a person who, not requiring the continued use of the drug for relief of the symptoms of organic disease, has acquired, as a result of repeated administration, an overpowering desire for its continuance, and in whom withdrawal of the drug leads to definite symptoms of mental or physical distress or disorder.’ Addiction was seen as a disease, not as a vicious, criminal indulgence and was treated as such.

In 1938 dozens of cannabis-based remedies were readily available, either by prescription or over the counter, in Australia. The most famous of them, Dr J Collis Browns Chlorodyne, proved an immensely popular medicine in Australia over many decades. Its simple, yet effective recipe ; six grams of black Nepalese hash dissolved in chloroform and topped up with morphine made it the country’s favourite panacea, and it was widely imitated by rivals who produced their own proprietry chlorodynes, such as Faulding’s Chlorodyne and Freeman’s Chlorodyne and the strikingly named Dr Poppy’s Wonder Elixir (with cannabis extract). The British Pharmaceutical Codex 1911 noted that ‘Tincture of Indian hemp is a constituent of, and gives the green colour to compound tinctures of chloroform and morphine’.

Attempts were made to prevent over-the-counter sale of Chlorodyne in the Australian state of Victoria in 1904, and were met with outrage. When a member of the Victorian parliament proposed that it should be unlawful to dispense narcotic drugs such as opium, morphine, Chlorodyne or cocaine without a doctor’s prescription, he met immediate opposition from country members who complained about the inclusion of Chlorodyne. ‘Why should a man have to ride thirty miles to a medical man in order that he might get a bottle of Chlorodyne which was a drug very commonly used in the country?’ one demanded. Another asserted that ‘Chlorodyne was a very wholesome medicament. Why should he have to pay a guinea for a prescription before he could get it?’

In a similar vein, the Chairman of the Central Board of Health in 1906 was outraged that South Australia’s anti-opium acts had defined opium so loosely that any medical preparation that contained opium or morphine could be included in the ban: ‘The effect of the amending Act was that no officer at any station could give anyone a dose of Dover’s Powder for a cold from the departmental medical chest nor could anyone give a member of his family a single drop of chlorodyne for diarrhoea or dysentery without transgressing the law.’ As this indicates, Chlorodyne was regarded as being so safe that children of that era were regularly dosed with it. Like heroin, Chlorodyne was investigated by the Rolleston committee with the result that its morphine content (the focus of concern, not its cannabis content) was reduced.

Cannabis cigarettes, known variously as Joy’s Cigarettes or Cannadonna cigarettes, were also widely advertised in colonial Australia as a cure for asthma. They were still available after the Second World War but the rise of cannabis prohibition would curtail their use, even though the Director and General of Health, JHL Cumpston, noted that ‘no instance of addiction to them has been brought to notice’ and ‘that they are used for medicinal purposes’.

While cannabis prohibition was sponsored internationally by the governments of South Africa, the United States and Egypt, there was little enthusiasm for cannabis prohibition in either Britain or Australia. Australian drugs policy was based very much on the British system and it was a medical model not a US-style law-enforcement model. Hemp was still grown in Australia and wild hemp crops flourished with official indifference. Cannabis medicines were still widely available and possession of cannabis was not even a crime.

 

Dr John Jiggens.

“The Origins of Marijuana Prohibition in Australia”, StickyPoint Magazine Issue 05 (2008)
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The Mystery of Nugan Hand Bank and the Murder of Donald Mackay

The murder of Donald Mackay and the mystery of the Nugan Hand bank are two of the enduring riddles of Australian history. But were these two mysteries related? While I was researching the history of the Australian drug trade, I discovered the two mysteries were closely intertwined. Although they both have a Griffith connection what linked them was a ‘Sydney Connection’.

The Sydney Connection was a drug smuggling route that connected the US market for heroin and marijuana to Asia via Australia. It was a transshipment route, organized by US special agents, the US mafia, and Sydney criminals, that came into existence during the Vietnam years, routing the US/Asia drug trade through Australia.

The pioneer of the SE Asia/Sydney/US drug route was a tall, handsome NSW Special Branch detective named John Wesley Egan who was twice recommended for bravery awards for his part in rescues at the Gap. His baby face graced the Sydney afternoon papers. They called him a hero.

Egan’s involvement in heroin smuggling began in 1966 after he joined the political police, the Special Branch, and came via a CIA contact who recruited Egan as a drug courier for an Asian drug army, the Hmong army of warlord Vang Pao, who were fighting a secret war in Laos as a proxy for the CIA against the communist Pathet Lao. Egan made the first trans-Pacific heroin run from Southeast Asia to New York via Sydney in 1966, carrying two kilos of heroin hidden in a specially made corset. Over the next months, Egan made regular flights to New York, taking periodic leave from his police job. Within four months he had exhausted all leave, and he resigned from the NSW police force and moved to New York.

From then on Egan hired other couriers to complete the chain — ‘clear skins’ like himself – usually NSW police officers on leave for the seven-day run. Egan used the ‘shotgun technique’, booking three or more couriers on the same flight, with a ‘supervisor’ riding along to make sure no one absconded. He kept 20 couriers in motion between Sydney and New York. Over a six-month period in 1966-1967, Egan and his gang smuggled $22 million worth of heroin into the USA, before a mistake by a courier led to Egan’s arrest.

Egan’s operation was huge, worth hundreds of million of dollars in today’s terms. This remarkable narcotics ring, composed of NSW police officers led by a Special Branch detective, became known as the ‘Corset Gang’. They were the first major group ever arrested in the United States for smuggling Asian heroin into the US, the pioneers of the Southeast Asia/Sydney/US route. Egan’s operation would leave the NSW police well infected with the germs of the Sydney Connection.

In 1975, a U.S. mobster named Danny Stein visited Sydney to organise the importation of drugs for the U.S. market. The idea, recycled from the Corset Gang, was to use Sydney as a transhipment point for drugs between the Golden Triangle and the U.S. west coast. Amongst the organised crime figures Danny Stein visited in Sydney was another ex-NSW detective called Murray Riley.

Murray Stewart Riley was an ex- detective who became one of the major
criminal entrepreneurs of Sydney. Like John Wesley Egan, Riley was another of the brightest stars of the NSW police, a sporting hero who won two gold rowing medals at consecutive Commonwealth Games at Auckland in 1950 and Vancouver in 1954, partnering future NSW Police Commissioner, Merv Wood. The pair won bronze in sculls at the 1956 Melbourne Olympic Games. Incredibly, Murray Riley became the ‘Mr Big’ of the Australian drug trade in 1976 and, in the same year, Merv Wood became NSW Police Commissioner!

In 1975, Murray Riley met Frank Nugan. In the years that followed, Murray Riley emerged as a major trans-Pacific drug smuggler, while Frank Nugan set up the Nugan Hand Bank, which financed Riley’s drug activities via his Nugan Hand account. The financial arm of this second Sydney Connection was the Nugan Hand Bank and the man at its centre was Frank Nugan.

Frank Nugan was born in Griffith and he and his elder brother Ken went to school with Donald Mackay. By 1977, Frank Nugan was the banker for the Australian drug trade. He lived in Vaucluse in a mansion with its own private beach and he was one of the richest men in Sydney.

It was said about Donald Mackay that he was murdered by the Mr Bigs of the Australian drug trade because he “knew too much” about their activities. Frank Nugan was one of these Mr Bigs.

Did Donald Mackay die because he discovered something that linked Frank Nugan to the drug trade?

What I uncovered was evidence that indicated that this was what happened.

It seems that in these years Australia was growing marijuana for the US market, and acres of cannabis were being farmed in the Riverina region and trucked to Sydney and shipped across the Pacific, entering the US through docks controlled by the San Francisco mafia.

Crime reporter Tony Reeves interviewed a TNT truck driver who told him that in the 1970s he regularly drove shipments down from the Nugan packing shed to the Flemington markets in Sydney. When he turned up at the Nugan packing shed, he would be given money and told to have a meal, and that his truck would be packed for him. He would come back to find the truck packed and the contents locked away behind a new padlock. The same scenario would play itself out at the Sydney markets; he would be given money, told to have a meal, and would come back to find the truck unloaded. Intrigued by this, he checked out the truck and found minute traces of marijuana. The truck driver estimated that his truck fully loaded would hold ten tones of cannabis.

In early 1977, as the newspapers began calling Griffith the ‘pot capital of Australia’, persistent rumours began circulating that the Nugan Group’s packing plant in Griffith was somehow involved. That year, an independent audit turned up secret accounts in the Nugan Group’s books in the names of local pot growers with cheques for hundreds of thousands of dollars made out to members of the Trimboli and Sergi families. Members of these families were heavily involved in Griffith’s marijuana trade, and family members were involved with a one acre plot of pot at Hanwood near Griffith in February 1974, with a thirty-one acre pot plantation at Coleambally in 1975. The secret accounts in their names suggest that some of the pot was being grown for Frank Nugan.

The gangster tactics that Frank Nugan used to hush up the affair provide further corroboration. When the auditors and independent directors of the Nugan Group tried to find out more, Frank Nugan responded by seeking to remove the auditors, and by ‘intimidating’ the opposition directors.

The intimidation was impressive.

The man Frank Nugan hired as his private investigator was Fred Krahe, an ex- NSW detective whose reputation as an underworld enforcer and hit man earned him the nickname of the ‘Killer Cop’. InThe Prince and The Premier, David Hickie called Krahe the “King of crooked police during the Askin era, he organised the abortion rackets, armed hold-ups, the framing of criminals and bribery payments among prostitutes and the police, and he maintained a reputation feared in the Sydney underworld”.

In July 1977, Frank Nugan possessed both the motive for the murder of Donald Mackay and the likely murder weapon, Fred Krahe. Although he was not the grower for Euston or Coleambally, Frank Nugan was the man who paid the growers. The second Sydney Connection, which he fronted, had access to the U.S. market; they were the only network in Australia which could move such a large quantity of pot. Together the two crops, Euston and Coleambally, would have produced about 90 tones of pot according to NSW police estimation, worth approximately $90 million in 1977 dollars or about $1,000,000,000  in 1998 terms.

In July 1977, two weeks before the murder, the crisis over the secret accounts
came to a head when the auditors refused to complete the Nugan Group accounts for the financial year. Donald Mackay became aware of this scandal in the last week of his life. According to Mackay’s solicitor and friend, Ian Salmon, Mackay talked about the affair with him. However, because Ken Nugan, the manager of the Nugan packing shed was an associate and fellow member of the Liberal Party, Mackay was reluctant to become involved.

Griffith locals believed that Donald Mackay was killed because he ‘knew too much’.

The affair of the Nugan Group’s secret accounts suggests that shortly after the secret accounts at the Nugan Group became a public scandal (when the auditors refused to complete the company’s books in the first weeks of July 1977), someone like the truck driver who contacted Tony Reeves, suspected that marijuana growing might be the explanation behind the secret accounts went to Donald Mackay with this information. But Fred Krahe or Frank Nugan learned of this.

Frank Nugan had many reasons to kill to prevent exposure, and in Fred Krahe he had the perfect assassin. Up until this point, Donald Mackay knew only the growers in their grass castles. Now he had a clue that led to the man with the mansion in Vaucluse. As many suspected, Mackay was murdered to protect the financiers and distributors, those higher up the chain of this enormous drug smuggling network. Frank Nugan was that man.

Dr John Jiggens.

“The Mystery of Nugan Hand Bank: The Murder of Don Mackay” (part 3 of 3),
StickyPoint Magazine Issue 04 (2008)
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The Killer Kop

The Killer Kop

An anecdote that shows the close relationship between the Australian media and organized crime: The man who is said to have murdered Donald Mackay, Fred Krahe, was employed at the time of the murder with the Sun newspaper in Sydney. Crime writer Tony Reeves, author of Mr Big and the soon to be released biography of Abe Saffron, Mr Sin, remembers approaching a senior Fairfax police reporter at the Sydney Journos Club and asking whether “Freddie” was now working for them. He was told that Krahe was employed as an editorial consultant on organized crime for Fairfax and that Krahe “knew where all the skeletons were”. Tony Reeves had no doubt that he did. Fred Krahe’s nickname was the “Killer Kop”. He was Australia’s Murder Incorporated, and many of the skeletons were his victims.

Photos of Fred Krahe are never a pretty sight. The Killer Kop had a big, ugly head and he was described by another NSW detective as ‘an evil bloke — a big, brooding bastard with an aura of power and evil about him’. Fred Krahe joined the New South Wales police force in 1940 and rose to the rank of Detective-Sergeant, establishing a reputation as a gangland enforcer feared in the Sydney underworld. David Hickie called Krahe the ‘king of crooked police during the Askin era’. Along with Ray Kelly, Krahe organised the abortion rackets, the armed hold-ups, the framing of criminals and the bribery payments among prostitutes and the police.

But in 1971 Krahe’s brothel madam, Shirley Briffman, blew the whistle on his rackets, subsequently paying with her life. Krahe retired ‘medically unfit’ from the police in 1972 and became a licensed private investigator, working as a security chief for the developers during the Victoria Street redevelopment/Green Ban battle in Kings Cross. In July 1975, Juanita Nielsen, whose local newspaper NOW had led the fight against the multi-million dollar redevelopment, disappeared. Many attribute the murder of Juanita Nielsen to Krahe, a murder with many similarities to the murder of Donald Mackay.

Former National Times editor and leading Australian crime writer, Evan Whitton, assigns four murders to Krahe: Don Fergusson, Shirley Briffman, Juanita Nielsen and Donald Mackay. All were witnesses whose evidence would have disclosed the corrupt practices of a network of criminal police who organized crime in Queensland and New South Wales: Fergusson was a NSW detective who was about to roll over and inform on the Brotherhood; Shirley Brifmann ran the call-girl rackets for Fred Krahe in Sydney and Glen Hallahan in Brisbane; while Juanita Nielsen and Donald Mackay were anti-corruption activists at the two biggest centres of corruption in New South Wales; Donald Mackay in Griffith and Juanita Nielsen in Kings Cross.

Speaking in NSW parliament in August 1977, the leader of the Liberal Party, Eric Willis, commented on the similarities between the murder of Nielsen and Mackay: both discovered a network of corruption that led to the heart of the Australian establishment; both were murdered because they ‘knew too much’ about the central corrupt network; both were extremely professional hits; Juanita Nielsen disappeared without a trace and Mackay’s body was never found; the NSW police were unable to solve either murder. He could have added another: in both cases, Fred Krahe was employed by their opponents.

Krahe visited Griffith in the weeks after the murder and added insult to injury, using his position as consultant on organized crime for the Fairfax papers to muddy the waters and to spread the false rumour that Donald Mackay was having an affair and that he had not been murdered but had run off with another woman. Krahe was also employed in Griffith at this time as a private investigator by the Australian partner of the Nugan Hand Bank, Frank Nugan.

 

The Banker

Frank Nugan was born in Griffith in 1942, the son of a Spanish migrant who started a fruit packing business there. The playboy heir to a modest food processing fortune, Nugan got a law degree in 1963 from Sydney University and a Master of Law from Berkeley University in 1965. After working in Canada, he returned to Australia in 1968 and met Bernie Houghton and Michael Hand with whom he established a number of companies, including the Nugan Hand Bank. By the late 1970s, Frank Nugan was calling himself ‘one of the wealthiest men in Sydney’. He drove a gold Mercedes and lived in a million dollar mansion in Vaucluse with a harbour view and its own beach. Half owner of the Nugan Hand Bank, at its prestigious 55 Macquarie Street address, he shared offices overlooking Circular Quay with Sir Robert Askin, recently-retired Premier of New South Wales.

Askin and his powerful circle were Frank Nugan’s sponsors. Admiral Yates, the President of Nugan Hand Bank, said he accepted the position as Nugan Hand president on the advice of Sir Robert Askin. Admiral Yates said he trusted Askin’s opinion about the bank principals, Frank Nugan and Michael Hand, because Askin knew them well and shared an office with them. Yates said: ‘I inquired of Sir Robert Askin, who had a private office at 55 Macquarie Street with them, and he gave them very strong credentials’. Yates said Askin had told him Nugan and Hand were ‘good solid business people — a little flamboyant, but that was because they were so successful’.

Nugan touted his skills as a tax consultant and a financial adviser, but his genius lay in deception. Secret accounts were his trademark, and he was gifted at losing money in elaborate deceipts, scattering cheques to create bewildering paper trails. Stewart, in his report into the Nugan Hand Bank, had a diagram of one $30,000 diversion of funds from the Nugan Hand Bank to the Nugan Group in Griffith which Frank Nugan sent through eleven transactions between the source (the Nugan Hand Bank) and its destination in the Nugan Group.

The Nugan Group, Frank Nugan’s family company, began in 1941 in a primitive shed in Banna Avenue in Griffith, packing fresh fruit and vegetables. By 1977 the Nugan Group was valued at $11 million; it operated a major 5 acre factory complex in Griffith and ran factories in Casino, Lismore and Brisbane. It was one of Australia’s major fruit juice producers, and the largest proprietary fresh fruit and vegetable packers and distributors in the country.

In early 1977, as the newspapers began calling Griffith the ‘pot capital of Australia’, persistent rumours began circulating that the Nugan Group’s packing plant in Griffith was somehow involved. That year, an independent audit turned up secret accounts in the Nugan Group’s books in the names of local pot growers with cheques for thousands of dollars made out to members of the Trimboli and Sergi families.

The accounts ran from May 1973 until their discovery in 1977, and they co-incided with Griffith’s marijuana growing years when members of the Trimboli and Sergi families were heavily involved in Griffith’s marijuana trade; members of these families were involved with a thirty-one acre pot plantation at Coleambally in 1975, and with a five acre plot at Euston in March 1977. The secret accounts in their names raised the possibility that some of the pot was being grown for Frank Nugan. Although the Nugans argued that the secret accounts were a way of paying cash to growers of legal crops, such secret accounts would obviously be useful to pay growers for illegal crops.

The gangster tactics that Frank Nugan used to hush up the affair provide further corroboration. When the auditors and independent directors of the Nugan Group tried to find out more, Frank Nugan responded by seeking to remove the auditors, and by intimidating the opposition directors.

The intimidation was impressive.

The man Frank Nugan hired as his private investigator to look into these matters was Fred Krahe. Four days after the Mackay murder, on the following Tuesday, 19 July 1977, four Nugan Group directors resigned.

According to his close friend Ian Salmon, Donald Mackay had heard the Nugan Group were running bodgie accounts and some of the names, but he had no proper details of the transactions. He did nothing about it overtly because he was constrained by inadequate information – it was at best rumour – and he did not want to breach a longstanding friendship with the main proprietor, Ken Nugan, Frank Nugan’s elder brother. The two men were of the same age and were members of the same clubs; their families were friendly and lived close by; they were both members of the Liberal Party and were pillars of Griffith’s business community.

As Donald Mackay vacillated, Fred Krahe investigated.

For Donald Mackay, an assassin was waiting.

 

Dr John Jiggens.

“The Banker & The Killer Kop: The Murder of Don Mackay” (part 2 of 3),
StickyPoint Magazine Issue 03 (2007)
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