Australia: Many Questions, Few Answers

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Nathan also describes a failed Sydney-based bank with alleged links to the CIA and drug traffickers. The Nugan Hand Merchant Bank, founded in 1973 by Australian Frank Nugan and an American, Michael Hand, boosted its assets from $1 million to $1 billion in three years, allegedly by laundering drug money from Southeast Asia. Nugan Hand employed an astonishing number of retired U.S. military and intelligence officers, thereby fueling speculation that the bank was essentially a conduit for CIA money. Several of the bank's employees were former colleagues of Edwin Wilson's, the notorious onetime CIA agent who was convicted on Nov. 17 for illegal arms shipments and still faces additional charges of arms dealing. Nathan intimates that the CIA used Nugan Hand, which folded in 1980 and is now the target of two separate Australian investigations, to stir up domestic troubles for Whitlam.

The case set out by Nathan is long on speculation and short on evidence. The article is weakened by an insufficient understanding of political realities in Australia today. The author contends that whether or not the rumors are true, the Labor Party strongly suspects that the CIA did help dump Whitlam. Nathan predicts that if Fraser, who has been Prime Minister since 1975, continues to falter in the polls (his current standing: 43%), and the Labor Party, now headed by Bill Hayden, 49, returns to power in 1983, "the alliance with America might be called into question." Hayden, according to Nathan, has called for joint control of U.S. bases and is under pressure from his party to reconsider its role in ANZUS, the Australia-New Zealand-U.S. security pact formed in 1951.

Yet Hayden is considerably less radical than Whitlam. Indeed, the entire Australian Labor Party has become more moderate in the past decade. Hayden has asked for shared control of only one of the U.S. bases: the North West Canal station, on the western coast of Australia, which maintains contact with U.S. subs in the Indian and Pacific oceans. The Labor Party has never called on Australia to pull out of ANZUS. Though a Labor government would pursue a more independent foreign policy, Hayden surely would maintain close ties with the U.S. Many Labor Party officials are privately convinced that the CIA was linked to Nugan Hand in clandestine operations, but they do not draw any connection between these activities and the fate of the Whitlam government. Says a prominent Labor official: "Nathan's article looks like the work of a left-wing academic who has been listening to some of our left-wing academics."

Nathan, 40, explains that he wrote the story because he was struck by the number of rumors about CIA involvement he heard while teaching at the University of Adelaide earlier this year. He insists that his story is intended simply to present a summary of the allegations. As he told TIME: "This is meant to read as an agnostic's report on the case the believers are making in Australia." That explanation is a trifle disingenuous. Nathan sounds too many alarms in his story to claim that he is only demonstrating what the bells sound like.

—By James Kelly. Reported by John Dunn/Melbourne and Christopher Redman/Washington