Why Are There So Many ….Psychopaths in Positions of Power?



 A 2010 study (Corporate Psychopathy – Talking the Walk) that examined a sample of 203 individuals from different companies’ management development programs revealed something interesting. It was found that about 3% of business managers scored in the psychopath range while the incidence of psychopathy in the general population is approximately 1%. So why are there so many psychopaths in senior management positions?  

The study

A more recent study (Psychopathy, Intelligence and Emotional Responding in a Non-Forensic Sample), published in 2014 in the Journal of Forensic Psychiatry and Psychology, shed new light on the behavior of psychopaths, which could explain this phenomenon.  During an experiment, a group of people were given a standard test of psychopathy. At the same time, the participants were shown a series of picture aimed to test their levels of empathy.  For this purpose, the researchers measured their galvanic skin response to examine their emotional reaction to the shown pictures.  

The research showed that psychopaths with average or high levels of intelligence were able to control their galvanic skin response. As a result of this, their responses appeared normal.  At the same time, psychopaths with low IQ exhibited abnormal test results, which are typical for individuals with psychopathic tendencies.  

What the results mean 

Psychopaths are great manipulators, and this research provides new evidence for that. The results of the study suggest that psychopaths with high IQs are able to hide their true identity, faking their emotional responses and probably personality traits as well. As a result, they often show a different picture of themselves and trick others into believing this is their real self.  

Carolyn Bate, the first author of the study, said:

“The ones who are at the top of businesses are often charming and intelligent, but with emotional deficits, as opposed to psychopaths who are quite erratic and tend to commit gruesome crimes and are often caught and imprisoned.”

She also thinks that psychopaths in positions of power could be far more than 3%,

because if people are aware they are psychopathic they can also lie – they are quite manipulative and lack empathy.”

These findings are quite interesting to consider and could apply to other spheres except for the business world.  I’m sure that if psychologists had the opportunity to study those in positions of political power, the figure would go beyond 3%. Being manipulative and able to fake one’s emotions is a quality that certainly helps one become a successful politician. Not even to mention that in order to reach the highest levels of political power, some lack of empathy and conscience is a must

Dr. Paul Babiak writes in his book, Snakes in Suits – When Psychopaths Go to Work:

They are masters of impression management. 

Their insight into the psyche of others combined with a superficial – but convincing – verbal fluency allows them to change their situation skillfully as it suits the situation and their game plan.”

Doesn’t this sound like most of our politicians? 

They are just playing their game, tricking people into believing that their concerns about the world and society are sincere. They pretend to care while in reality, they only want more power and money. And we don’t even need a study to know this for sure.

 by Anna LeMind, August 30, 2016,  from TheMindUnleashed Website

Technocracy…and the RISE of the POLICE STATE!*

 Any police officer who shoots to kill is playing with fire. In that split second of deciding whether to shoot and where to aim, that officer has appointed himself judge, jury and executioner over a fellow citizen. And when an officer fires a killing shot at a fellow citizen not once or twice but three and four and five times, he is no longer a guardian of the people but is acting as a paid assassin. In so doing, he has short-circuited a legal system that was long ago established to protect against such abuses by government agents. We’ve been dancing around the issue of police shootings for too long now, but we’re about to crash headlong into some harsh realities if we don’t do something to ward off disaster. You’d better get ready. 

It’s easy to get outraged when police wrongfully shoot children, old people and unarmed citizens watering their lawns or tending to autistic patientsIt’s harder to rouse the public’s ire when the people getting shot and killed by police are suspected of criminal activities or armed with guns and knives. Yet both scenarios should be equally reprehensible to anyone who values human life, due process and the rule of law. 

For instance, Paul O’Neal was shot in the back and killed by police as he fled after allegedly sideswiping a police car during a chase. The 18-year-old was suspected of stealing a car. 

Korryn Gaines was shot and killed – and her 5-year-old son was shot – by police after Gaines resisted arrest for a traffic warrant and allegedly threatened to shoot police. Police first shot at Gaines and then opened fire when she reportedly shot back at them. 

Loreal Tsingine was shot and killed by a police officer after she approached him holding a small pair of medical scissors. The 27-year-old Native American woman was suspected of shoplifting. 

None of these individuals will ever have the chance to stand trial, be found guilty or serve a sentence for their alleged crimes because a police officer – in a split second – had already tried them, found them guilty and sentenced them to death. 

In every one of these scenarios,

  • police could have resorted to less lethal tactics.   

  • they could have attempted to de-escalate and defuse the situation.   

  • they could have acted with reason and calculation instead of reacting with a killer instinct.

That police instead chose to fatally resolve these encounters by using their guns on fellow citizens speaks volumes about what is wrong with policing in America today, where police officers are being dressed in the trappings of war, drilled in the deadly art of combat, and trained to look upon,

“every individual they interact with as an armed threat and every situation as a deadly force encounter in the making.”

Contrast those three fatal police shootings with a police intervention that took place in my hometown of Charlottesville, Virginia. 

On. Aug. 1, 2016, police responded to a call about a possible abduction of a 17-year-old girl.  When they confronted the 46-year-old “suspect,” he reportedly,

“threw a trash can at them and then charged them with a knife.”

When he shouted at them to “shoot me,” they evaded him.  

When they refused to fire their guns, he stabbed himself in the chest. The officers then tasered the man in order to subdue him.  So what’s the difference between the first three scenarios and the last, apart from the lack of overly aggressive policing or trigger-happy officers? Ultimately, it comes down to training and accountability. 

It’s the difference between police officers who rank their personal safety above everyone else’s and police officers who understand that their jobs are to serve and protect. It’s the difference between police trained to shoot to kill and police trained to resolve situations peacefully.  Most of all, it’s the difference between police who believe the law is on their side and police who know that they will be held to account for their actions under the same law as everyone else. Unfortunately, more and more police are being trained to view themselves as distinct from the citizenry, to view their authority as superior to the citizenry, and to view their lives as more precious than those of their citizen counterparts. Instead of being taught to see themselves as mediators and peacemakers whose lethal weapons are to be used as a last resort, they are being drilled into acting like gunmen with killer instincts who shoot to kill rather than merely incapacitate. 

We’re approaching a breaking point. This policing crisis is far more immediate and concerning than the government’s so-called war on terror or drugs. So why isn’t more being done to address it? As is maked clear in the book Battlefield America – The War on the American People, there’s too much money at stake, for one, and too much power. 

Those responsible for this policing crisis are none other than,

  • the police unions that are helping police officers evade accountability for wrongdoing

  • the police academies that are teaching police officers that their lives are more valuable than the lives of those they serve

  • a corporate military sector that is making a killing by selling military-grade weapons, equipment, technology and tactical training to domestic police agencies

  • a political establishment that is dependent on campaign support and funding from the powerful police unions

  • a police state that is transforming police officers into extensions of the military in order to extend its reach and power

This is no longer a debate over good cops and bad cops. 

It’s a tug-of-war between the constitutional republic America’s founders intended and the police state we are fast becoming. As former Seattle police chief Norm Stamper recognizes, “Policing is broken. Tragically, it has been broken from the very beginning of the institution. It has evolved as a paramilitary, bureaucratic, organizational arrangement that distances police officers from the communities they’ve been sworn to protect and serve. When we have shooting after shooting after shooting that most people would define as at least questionable, it’s time to look, not just at a few bad apples, but the barrel. And I’m convinced that it is the barrel that is rotted. So how do we fix what’s broken, stop the senseless shootings and bring about lasting reform? 

  1. For starters, stop with the scare tactics 

    In much the same way that American citizens are being cocooned in a climate of fear – fear of terrorism, fear of extremism, fear of each other – by a government that knows exactly which buttons to push in order to gain the public’s cooperation and compliance, police officers are also being indoctrinated with the psychology of fear.

“That isn’t the word used in law enforcement circles, of course,” explains law professor Seth Stoughton. 

“Vigilant, attentive, cautious, alert, or observant are the terms that appear most often in police publications. But make no mistake, officers don’t learn to be vigilant, attentive, cautious, alert, and observant just because it’s fun.  They do so because they are afraid. 

Fear is ubiquitous in law enforcement… officers are constantly barraged with the message that that they should be afraid, that their survival depends on it.”

Writing for the Harvard Law Review, Seth Stoughton continues:

From their earliest days in the academy, would-be officers are told that their prime objective, the proverbial “first rule of law enforcement,” is to go home at the end of every shift.  But they are taught that they live in an intensely hostile world. 

A world that is, quite literally, gunning for them. As early as the first day of the police academy, the dangers officers face are depicted in graphic and heart-wrenching recordings that capture a fallen officer’s last moments.  Death, they are told, is constantly a single, small misstep away.

Despite the propaganda being peddled by the government and police unions, police today experience less on-the-job fatalities than they ever have historically. 

  1. Second, level the playing field 

    Police are no more or less special than you or me. Their lives are no more valuable than any other citizen’s.  Whether or not they wield a gun, police officers are public servants like all other government officials, which means that they work for us. They answer to us. We are their employers. 

    While police are entitled to every protection afforded under the law, the same as any other citizen, they should not be afforded any special privileges 

    Most Americans, oblivious about their own rights, aren’t even aware that police officers have their own Law Enforcement Officers’ Bill of Rights, which protects police officers from being subjected to the kinds of debilitating indignities heaped upon the average citizen and grants police officers accused of a crime with special due process rights and privileges not afforded to the average citizen.   

  2. Third, require that police officers be trained in non-lethal tactics 

    According to the New York Times, a survey of 281 police agencies found that the average young officer received 58 hours of firearms training and 49 hours of defensive tactical training, but only eight hours of de-escalation training.  

    In fact,

“The training regimens at nearly all of the nation’s police academies continue to emphasize military-style exercises, including significant hours spent practicing drill, formation and saluting.”

If police officers are taking classes in how to shoot, maim and kill, shouldn’t they also be required to take part in annual seminars teaching de-escalation techniques and educating them about how to respect their fellow citizens’ constitutional rights, especially under the First and Fourth Amendments?   

Congressional legislation has been introduced to require that police officers be trained in non-lethal force, go through crisis intervention training to help them deal with the mentally ill, and use the lowest level of force possible when responding to a threat. 

Unfortunately, the police unions are powerful and the politicians are greedy, and it remains unlikely that any such legislation will be adopted in a major election year. 

  1. Fourth, ditch the quasi-military obsession 

    Police forces were never intended to be standing armies.  Yet with police agencies dressing like the military in camouflage and armor, training with the military, using military weapons, riding around in armored vehicles, recruiting military veterans, and even boasting military titles, one would be hard pressed to distinguish between the two 

    Still, it’s our job to make sure that we can distinguish between the two, and that means keeping the police in their place as civilians – non-military citizens – who are entrusted with protecting our rights. 

  2. Fifth, demilitarize 

    There are many examples of countries where police are not armed and dangerous, and they are no worse off for it.  

    Indeed, their crime rates are low and their police officers are trained to view every citizen as precious. For all of the talk among politicians about gun violence and the need to enact legislation to make it more difficult for Americans to acquire weapons, little is being done to demilitarize and de-weaponize police. 

    Indeed, President Obama is actually reconsidering his limited ban on the flow of military gear to police. The problem is not that police are in any greater danger than before. Rather, by dressing as warriors, they are acting like warriors and increasing the danger inherent in every police encounter. 

  3. Sixth, do away with the police warrior mindset in favor of a guardian approach 

    As Stoughton explains,

“Counterintuitively, the warrior mentality… makes policing less safe for both officers and civilians.”

It also creates avoidable violence by insisting on deference and compliance and,

“increases the risk that other officers face in other encounters.”

The guardian approach, however,

“prioritizes service over crime-fighting… it instructs officers that their interactions with community members must be more than legally justified, they must also be empowering, fair, respectful, and considerate.  

The guardian mindset emphasizes communication over commands, cooperation over compliance, and legitimacy over authority. 

And in the use-of-force context, the Guardian emphasizes patience and restraint over control, stability over action.” 

  1. Seventh, stop making taxpayers pay for police abuses 

    Some communities are trying to require police to carry their own professional liability insurance

    The logic is that if police had to pay out of pocket for their own wrongdoing, they might be more cautious and less inclined to shoot first and ask questions later. 

  2. Eighth, stop relying on technology to fix what’s wrong with the country 

    The body cameras haven’t stopped the police shootings, and they won’t as long the cameras can be turned on and off at will while the footage remains inaccessible to the public. 

    One North Carolina police department is even testing out a pilot machine learning system that “learns to spot risk factors for unprofessional conduct” and then recommend that officer for early intervention. It sounds a lot like a pre-crime program, only aimed at police officers, which sends up its own warning signals. 

  3. Ninth, take a deep breath because change takes time 

    As Stoughton warns,

“Earning public trust will take decades and require rethinking how officers are trained as well as the legal and administrative standards used to review police violence. 

It will require changing the very culture of policing by reaffirming that policing must be done with a community, not to a community.”  

  1. Tenth, stop being busybodies and snitches  

    Overcriminalization has partially fueled the drive to “police” everything from kids walking to the playground alone and backyard chicken coops to front yard vegetable gardens. But let’s start taking some responsibility for our own communities and stop turning every minor incident into a reason to call the police.  

  2. Finally, support due process for everyone, not just the people in your circle  

    Remember that you no longer have to be poor, black or guilty to be treated like a criminal in America. 

    All that is required is that you belong to the suspect class – a.k.a. the citizenry – of the American police state. As a de facto member of this so-called criminal class, every U.S. citizen is now guilty until proven innocent. 

You could be the next person who gets shot by a police officer for moving the wrong way during a traffic stop, running the wrong way in the vicinity of a police officer, or defending yourself against a home invasion when the police show up at the wrong address in the middle of the night. People have been wrongfully shot and killed for these exact reasons.  

So stop judging and start holding your government officials accountable to ensuring that every American is granted due process of law, which means that no one can be deprived of “life, liberty or property” by a government official without certain fair and legal procedures being followed.  

There can be no justice in America when Americans are being killed, detained and robbed at gunpoint by government officials on the mere suspicion of wrongdoing.  Unfortunately, Americans have been so propagandized, politicized and polarized that many feel compelled to choose sides between defending the police at all costs or painting them as dangerously out-of-control. Nothing is ever that black and white, but there are a few things that we can be sure of: America is not a battlefield. 

American citizens are not enemy combatants. And police officers – no matter how courageous – are not soldiers. Therein lies the problem: we’ve allowed the government to create an alternate reality in which freedom is secondary to security, and the rights of the citizenry are less important than the authority of the government. This way lies madness.

The longer we wait to burst the bubble on this false chimera, the harder it will be to return to a time when police were public servants and freedom actually meant something, and the greater the risks to both police officers and the rest of the citizenry. Something must be done and soon.  

The police state,

  • Wants the us vs. them dichotomy

  • It wants us to turn each other in, distrust each other and be at each other’s throats, while it continues amassing power

  • It wants police officers who act like the military, and citizens who cower in fear

  • It wants a suspect society

  • It wants us to play by its rules instead of holding it accountable to the rule of law

The best way to beat the police state:

don’t play by their rules.

Make them play by ours instead…


Detail from ‘Corrupt Legislation’ (1896) by Elihu Vedder, Library of Congress Thomas Jefferson Building, Washington, D.C.

Any society that tolerates this systemic exploitation and corruption as “business as usual” is not just sick – it’s hopeless. 
Everyone who isn’t being paid to deny the obvious in public (while fuming helplessly about the phony cheerleading in private) knows that our society is a layer-cake of pathologies, our economy little more than institutionalized racketeering and our politics a corrupt auction-house of pay-for-play, influence-peddling, money-grubbing and brazen pandering for votes.   

The fantasy promoted by do-gooders and PR hacks alike is that this corrupt system can be reformed with a few minor policy tweaks. If you want a brief but thorough explanation of Why Our Status Quo Failed and is Beyond Reform, take a look at this book.  

If you want an example of how the status quo has failed and is beyond reform, it’s instructive to examine the pharmaceutical industry, which includes biotech corporations, specialty pharmaceutical firms and the global corporate giants known as Big Pharma. 

I hope it won’t come as too great a surprise that the pharmaceutical industry isn’t about cures or helping needy people – it’s about profits. 

As a Big Pharma CEO reported in a brief moment of truthfulness: 

We’re in Business of Shareholder Profit, Not Helping the Sick 

Last month, Martin Shkreli became a household name. 

The CEO of Turing Pharmaceuticals is now infamous for raising the price of a newly-acquired drug to $750 a pill. He also explained in an interview that his company was not alone in acquiring drugs currently on the market to raise their price and, in turn, rapidly drive up their stock price. 

Enter J. Michael Pearson, the current CEO of Valeant Pharmaceuticals who recently said that his company’s responsibility is to its shareholders, while making no mention of his customers who rely on his drugs to live.

“If products are sort of mispriced and there’s an opportunity, we will act appropriately in terms of doing what I assume our shareholders would like us to do.”

Already this year, Valeant has increased the price of 56 of the drugs in its portfolio an average of 66 percent, highlighted by their recent acquisition, Zegerid, which they promptly raised 550 percent. 

Not only does this have the unfortunate side effect of placing the price of life-saving drugs out of reach for even moderately-insured people, but it has now begun to call into question the sustainability of this rapidly-spreading business model. 

In an interview with CNBC, Pearson defended his business practice of acquiring drugs instead of investing in research and development.

“My primary responsibility is to Valeant shareholders. We can do anything we want to do. We will continue to make acquisitions, we will continue to move forward.”

Since being named CEO in 2008, Valeant has acquired more than 100 drugs and seen their stock price rise more than 1,000 percent with Pearson at the helm. 

But it appears that all of the public backlash over price gouging of prescription drugs, which has included both Hillary Clinton and Bernie Sanders taking a stance against the practice as a platform in their respective presidential campaigns, has placed the practice under tremendous scrutiny. 

The House Committee on Oversight and Government Reform is planning to issue a subpoena for information on recent price increases from both Pearson and Shkreli. 

And that pending investigation has sent Valeant’s stock price tumbling more than 27 percent in the last month, which may have shareholders concerned enough to wonder if Pearson pushed too hard for too long.

Longtime correspondent John F., M.D. has been sending me a steady stream of media accounts of pharma companies jacking up prices by 400% and 500%, even though the medications are off-patent and have been around for years or even decades (Mylan’s EpiPen price increases are Valeant-like in size, Shkreli-like in approach). 

John F. explains the context:

“The Epi-Pen (or the generic equivalent) is the only thing that people with severe allergies – including many children – can carry that will save their lives if used at the start of a severe allergic reaction. 

There is no substitute. The maker, Mylan, has increased the price six-fold over the past few years. Epinephrine is a very old generic drug. It is the packaging that makes it patentable.  There is absolutely no reason for the cost to make Epi-Pens to have increased.

People who have had a life-threatening allergic reaction to food or insect stings need these – they are absolutely essential to save their lives. Epinephrine has been generic since I was in medical school in the ’70s, yet the FDA have allowed the manufacturer to increase the price 600% in the last few years. 

There is a generic substitute for the Epi Pen now, but they jacked the price of it up to around $400 (it’s near the end of the article). These kits are cardboard boxes with two plastic syringes with one needle each, with a little medicine in them. 

I can’t imagine they cost more than $10 to make, and they have been around since I was in medical school in the ’70s, so it’s not like they must recoup extensive research costs.”

40+ Drugs to Be Dropped by Insurance – via John F.:

“I wrote to you about the huge increase in price of colchicine, an excellent drug for people with gout, and sometimes the only drug they can use, which is generic, but the FDA allowed a manufacturer to jack the price to the sky in the past 12 months. 

Now, the two major pharmacy benefit companies are dropping it from coverage. It can’t emphasized enough – this is the only drug some patients can take for a disease that sometimes is life-threatening (can cause kidney failure), and by all rights should be ten cents a pill or less.”

Unsurprisingly, pharma sales have been soaring. 

Take cheap generic drugs and jack up the price by 400%, and it’s no surprise that sales have risen from $550 billion annually in 2004 to over $1 trillion in 2014 (Global pharma sales to reach $1.3 trillion by 2018, from $1 trillion in 2014).

 All of the exploitation, deception and corruption has been well documented in dozens of reports and books. 

Here is a small sampling of recent titles on the sickness of our pharmaceutical/”healthcare” systems, the political system that funds and enforces these pathological systems and the tragic consequences of these pathologies.

Here is a sampling of the reviews posted by readers on Amazon re: Overdosed America:

I have been a physician for 10 years. I have seen my profession gradually being taken over by the pharmaceutical industry. I have seen countless patients harmed – alas even killed – by drug reactions and polypharmacy.  

I have sat and listened to countless drug representative presentations that were outright falsehoods and misrepresentations. 

It has been months – maybe even years that I have had available to me a medical education conference that was not somehow tainted by drug company money and therefore propaganda. 

I have repeatedly had patients in my office begging me for medication that they do not need. 

They want it simply because it was on TV News last night – and came with a promise of metaphysical salvation. I spend much time every day dissuading patients from taking medication they simply do not need – indeed may even cause real medical problems.  

The issues that are discussed in this book are very very real – and the scary part is I do not see my fellow physicians doing a single thing to address these huge problems. 

Abramson gives specific examples where published drug studies focus on recipients non-representative of typical (target) users – e.g. younger, and less prone to adverse reactions. 

Sometimes the reported data show (if one has the time to read carefully) that the true targets do WORSE with the medication, and this finding is obscured by positive results with the more numerous (atypical) younger selected test patients. 

Other medical research reporting ploys utilized by drug companies include:

  1. reporting initially positive results, while omitting adverse subsequent outcomes

  2. combining serious (when increased) and minor (when decreased) adverse event numbers to cover up problems

  3. comparing a strong dose of a new medicine with an inappropriate weak dose, comparing a new drug with a placebo, instead of existing efficacious drugs

  4. not reporting negative drug trials

  5. failing to point out that lifestyle changes often provide much better results than drugs

  6. pulling advertising from medical journals running unfavorable articles

As a consumer who believed until recently was an “informed consumer,” I was shocked to discover that the information I was getting on the National Institute for Health’s website “pubmed” was less than definitive when it came to clinical trials. 

With Dr. Abramson’s book, I now understand that those clinical trials, which most doctors depend on in helping them treat their patients are wildly distorted. 

I applaud Dr. Abramson for writing this book. Just as Rachel Carson’s book “Silent Spring” served as a catalyst for supporting changes in how we respect our environment, physicians, consumers and politicians should read this book and take action to protect our nation’s health.  The political corruption that enables and enforces this sick, exploitive system society is equally obvious and well-documented. 

Sir Angus Deaton, recipient of the 2015 Nobel Prize in economics, recently summarized the innate corruption of the American status quo in a Scientific American article (Sept. 2016 issue): How Inequality Threatens Civil Society: A spiral of slow growth and rent-seeking by powerful interests pose a danger to democracy. 

“In the U.S., we spend enormous sums on health care, much of which has little or no effect. This system is fiercely defended by those whose incomes and power come directly or indirectly from the nearly one-fifth of American GDP that health care absorbs.  

The very size of the health care and financial sectors gives them political power that makes them very difficult to control. 

These sectors then become engines of inequality, generating huge rewards for some while slowing growth and undermining innovation.”

Any society that tolerates this systemic exploitation and corruption as “business as usual” is not just sick- it’s hopeless. You can’t fix this layer-cake of pathological deception, exploitation, corruption and racketeering with the usual pathetic “reforms” offered by lobbyist, insiders and think-tank lackeys:

            “the status quo is itself the source of the sickness and the rot.”

by Charles Hugh Smith,  August 21, 2016,  from CharlesHughSmith Website


Afghan National Security Forces patrol an opium field in Bala Baluk, Afghanistan. (Photo: U.S. Navy Petty Officer 1st Class Monica R. Nelson / isafmedia)

Efforts by the United Nations (UN), the US military and the Indian government to curb opium production in Afghanistan since 2007 have been largely ineffective, due in large part to the ties between the drug trade and the Taliban.  Afghanistan is the world’s largest producer of opium, the raw material harvested from poppies to make heroin, as well as alkaloids like codeine and morphine. According to two cables released this month by WikiLeaks, Afghanistan’s supply of opium exceeds the world’s demand for heroin, with its unsold stock currently totaling 12,400 tons. 

Taliban-linked drug cartels emerging along the southern border of the country, where 99 percent of production takes place, influence the majority of poppy cultivation by coercing farmers into growing the crops for a strong and well-supplied insurgency. According to Antonio Maria Costa, former executive director of the UN Office of Drug and Crime (UNODC), the cartels treat the excess stock like a “savings account,” a practice that could pose a serious threat to peace efforts if it is used to fund the Taliban insurgency.

The UN released a report in October stating that Afghanistan’s opium production dropped by nearly half from 2009 levels – however, the decrease was not due to military efforts, but rather the spread of a disease that affected opium fields in Kandahar and Helmand province after crops started to flower.

According to the report, poppy cultivation levels remained the same and were particularly high in the insecure southern and western areas.

“These regions are dominated by insurgency and organized crime networks,” UNODC executive director Yury Fedotov stated in a press release. 

“This underscored the link between poppy cultivation and insecurity in Afghanistan, a trend we have observed since 2007.”

Costa told the North Atlantic Treaty Organization during a September 2009 briefing that,

“High cultivation trends were linked to the insurgency presence, particularly in areas with an absence of Afghan governance structures and security stability.”

The drug trade in the south of the country is compounded by Afghan President Hamid Karzai’s treatment of traffickers, including granting early releases to well-connected suspects. 

Karzai also pardoned five border police officers, who were caught with 124 kilograms of heroin and sentenced to serve 16 to 18 years in prison each,

“on the grounds that they were distantly related to two individuals who had been martyred during the civil war.”

In February 2007, then-President Bush told reporters in a speech that the United States was supporting Karzai in his efforts to end both the cultivation of opium and the corruption that compounds the country’s drug trade.

“[We’re] helping the president in a variety of ways to deal with the problem,” Bush said at the time. 

“One way to deal with the drug problem is for there to be a push back to the drug dealers, and a good way to push back on the drug dealers is to convict them and send them to jail.”

Further complicating the drug trade in Afghanistan are the actions of the country’s neighbors, particularly Pakistan, according to Afghan Minister of Defense Abdul Rahim Wardak

Wardak told Afghanistan Ambassador Karl Eikenberry during a December 2009 briefing that the Pakistani army was helping the Afghan Taliban find sanctuary in areas “deeper into Pakistan.”

National Intelligence Estimates (NIE) reports released earlier in December concluded that the war in Afghanistan cannot be won without Pakistani forces helping to root out Taliban militants on their borders.

Foreign policy expert and Boston University professor Stephen Kinzer agrees that the drug trade in Afghanistan cannot be tackled solely as a US military issue.

“Trying to curb the poppy production could be… a real serious interest of [the US],” Kinzer said. “However, like most of our problems in Afghanistan, this one cannot be solved by us alone. It can only be solved on a regional basis.”

Ending heroin production is,

“a great example of a social and political interest that the US shared with Iran, but we’re telling them if they don’t cooperate on a nuclear issue, there will be no other cooperation. Our policy towards Iran is self-defeating,” Kinzer said. 

“American military action alone, no matter how focused and how intense, is not going to change the situation in a substantial way.”

Rather than fighting the cultivation through military efforts, Kinzer said, the US government should purchase the annual poppy crop from Afghan farmers for an estimated $3-4 billion a yearthe same amount spent on the war in Afghanistan every month.

The AP recently reported that 700 soldiers died in Afghanistan in 2010, making it the deadliest year so far in the nine-year war. Much of the violence is centered in the southern part of the country, where the Afghan army being trained by US forces is often the main target of Taliban attacks.

 by Nadia Prupis,  from TruthOut Website

DOPE: The “Real Syndicate”…It’s All in the Family!


Why, if so much detailed evidence on the world narcotics traffic exists in the public record or in the files of law enforcement agencies, has this picture remained hidden for so long? The answer put forward at the outset was that the “Purloined Letter” principle is in effect: the Hong Shang and other top traffickers who mingle freely in the business world were designed specifically to hide the drug trade behind a facade of legitimate finance. At bottom, that fraud may deceive the general public, but it could not—by itself—hold professional investigators at bay indefinitely. The more important answer lies deeper.

The answer takes the reader behind the corporate board rooms and precious metal exchanges to the inner life of the British elite. What we now present would be easier to explain in the format of fiction than of fact: the entire world drug traffic has been run by a single Family since its inception. That statement applies not merely to growing and distribution, but to political, intelligence, and ideological support as well. We will sketch out the animal in this section and in the accompanying chart.

Popular accounts of the Italian organized crime families, or their counterparts in the Jewish and expatriate Chinese banking groups, give the reader a starting point whence to look at Great Britain’s oligarchy. Britain’s elite, in a superficial sense, runs along lines not much different from the organized crime families. The Keswick family of Jardine Matheson, the Inchcape family of the Peninsular and Orient Steamship Co., the Russells, the Dukes of Sutherland and Elgin, appear and reappear in this account, from the first Opium War to the directors’ lists of the most prominent British banks. 

The same interbreeding dynasty controls every major bank, mining, and transportation company in London, including the HongShang, Jardine Matheson, Barclays Bank, Anglo-American Corporation, N.M. Rothschild, and Lazard Freres. As we will show, their cousins and in-laws also control Britain’s political and intelligence establishments, and have done so throughout the entire time-frame of this report.

After a more careful look, however, the “Mafia” image turns out to be something like a pornographic negative: the Italian, Jewish, Ch’ao Chou Chinese, and other ethnic minorities that figure in aspects of the narcotics traffic are fitting allies of the British oligarchy because their tight-knit family networks parallel it. But the British dynasty is deeper, more sinister than that. The dynasty enjoys such power in Britain that a favored nephew can clear opium shipments through Hong Kong, while an uncle clears payments through a big London bank, a second cousin expedites necessary gold shipments through the Hong Kong market, and an in-law in British intelligence reassures the American drug enforcement authorities.

To call this a “conspiracy” would abuse the meaning of the term. Under examination is a dynasty that has controlled Britain for hundreds of years, enjoys virtually all major positions of corporate and political power, and believes that making events happen from behind the scenes is as natural and ordinary as afternoon tea. When the chairmen of the boards of Britain’s leading banks, trading houses, and mining companies show up at the same weddings and christenings (and bar mitzvahs) as the chiefs of British intelligence and various government ministries, there is no need for the formal trappings of conspiracy.  

Conspiratorial rituals are useful to bind together secret societies composed of otherwise unorganized individuals. But it doesn’t work that way at the top. In a frank discussion, a Lazard Freres partner who is quite active in the Royal Institute of International Affairs exclaimed.

“You seem to think that a group of men meets secretly in a room somewhere to hatch plots about this or that. I can assure you that it doesn’t work that way!”

The British gentleman is entirely within his rights. Like the HongShang Bank itself, the British oligarchy is so much part of the bedrock of events that it does not need to act in conspiratorial fashion: by its own self-description, it merely is, and always has been. Its adherents have indulged in public self-examination only under the protective coloring of fiction, e.g. a famous novel by a member of one of the British secret societies, Bram Stoker’s Dracula. 


The sinister element that sets the British oligarchy apart from the popular image of the Mafia family is its unshakable belief that it alone is fit to rule the world—the view reflected in Cecil Rhodes’s 1877 Testament, cited in Section 7. Their religion is not the Anglican Christianity they publicly profess, but a hodgepodge of paganism, including satanic cults such as Theosophy and Rosicrucianism. The central, syncretic ideology of the oligarchy’s inner cult life is the revived Egyptian drug cult, the myth of Isis and Osiris, the same anti-Christian cult that ran the Roman Empire. And like the ancient Isis-worshipping Egyptian dynasties, the British ruling family networks have maintained power for centuries by keeping the secrets of their intrigues within the family.

The Isis cult also formed the core of Lord Palmerston’s Scottish Rite of Freemasonry. As Prime Minister during both opium Wars, Palmerston employed variants of this ideology to spin a web of connections that stretched from the Order of Zion in Romania to the Ku Klux Klan in the United States. Parts I and III of this report document how Palmerston’s Scottish Rite engendered the subterranean world of drug-related mysticism, and its various secret societies, including what the public now calls “Organized Crime.” (1)

The Cult of Isis, dredged up in modern format, was the official ideology of leading British politicians, financiers, and literary figures during the previous century. Its great public exponent was the colonial secretary during the Second Opium War, Edward Bulwer-Lytton, the author of The Last Days of Pompeii, which first popularized the Isis cult, and the mentor of Cecil Rhodes’s whole generation of British imperialists.

The Royal Institute of International Affairs was the “secret society” called for in Rhodes’s will and is the body that provides the command structure for the drug trade. But the Royal Institute itself was founded by an even more secret group: the “Circle of Initiates . . . devoted to the extension of the British Empire,” in the description of one of its historians. (2) The Circle of Initiates included Lord Milner; Cecil Rhodes, the founder of Britain’s African mining empire; future prime minister Arthur Balfour; Albert Grey; and Lord Rothschild.

All these men celebrated forms of the Isis cult. Their worldview was largely designed by Britain’s leading exponent of the Isis cult, novelist Edward Bulwer-Lytton, and his protégé John Ruskin. Britain’s High Priest of Isis, Bulwer-Lytton, was also the British government’s chief drug-runner.

The words of American Founding Father Tom Paine to characterize British King George III, against whom America fought the Revolutionary War, thus are highly appropriate:

“I rejected the hardened, sullen-tempered Pharaoh of England forever . . . and disdain the wretch.”(3)

The beginning: the Knights of St. John of Jerusalem

The elite of the elite in Britain’s secret dynastic life is Her Majesty’s Most Venerable Order of St. John of Jerusalem — the “Christians who are not really Christians.” (4) We have already highlighted the Knights’ prominence in the centers of the world drug traffic: from the Hong Kong and Shanghai Bank to the Canadian Pacific in Vancouver to Barclays Bank in London. 

Although Queen Victoria reconstituted the Most Venerable Order in the 1880s as the Protestant British branch of the Knights of Malta, our tale properly begins much earlier with the original order of the Knights of St. John, founded in Jerusalem in 1070. The order of St. John inherited what British authors smirkingly call “the wisdom of the East” from the Coptic. Gnostic, and Manichean networks of the Eastern Mediterranean. The Order of St. John thus maintained direct continuity with the ancient Cult of Isis.

However distant from the familiarity of the American reader, the area we have entered must be viewed the way the families themselves see it. The brooding evil of Walter Scott or Robert Louis Stevenson romances, or their cheap Gothic novel imitations, gives the reader a basis for insight into the inner history of the families, and the need to begin with cobwebbed history in order to get to the bottom of Dope, Incorporated.

To begin at the beginning: in the 14th century, the Order of St. John’s emergence in England was part of a project to annihilate its humanist opposition, the Knights Templar. Total warfare had broken out on the continent. The oligarchists in France and Italy, Philip the Fair and Pope Clement V, slaughtered hundreds of Templars, and burned the Templars’ courageous Grand Master, Jacques de Molay, at the stake in 1314.

A renegade group of Templars under the command of an adventurous thug, King Robert Bruce, grabbed Scotland — Europe’s least civilized outpost — as an “offshore” stronghold, as a form of insurance against their uncertain fortunes on the European continent.  

King Robert Bruce is not only the spiritual founder of the Scottish Rite of Freemasonry but the direct ancestor, by unbroken lineage, of all the men of evil in England who figure in this report.

After the death of Jacques du Molay, some Scottish Templars… at the instigation of Robert Bruce ranged themselves under the banners of a New Order (The Royal Order of Scotland) instituted by this prince… It is there that we must seek the origin of the Scottish masonry. (emphasis added) (5)

This statement by a leading historian of the Masonic movement is the standard interpretation of the origin of the Scottish rite. 

 The Family’s Opium Wars

As the accompanying Family Tree (below images) indicates, there is a direct lineage from the King Robert Bruce to the British officials who ran the first opium wars against China. James Bruce, the 8th Earl of Elgin — after supervising the Caribbean slave trade as Jamaican Governor General from 1842-46 — was appointed Ambassador and Minister Plenipotentiary to China from 1857 to 1861 — the period covering the Second Opium War against China. His brother Frederick Bruce had been Colonial Secretary at Hong Kong during the mopping-up operations following the First Opium War and returned to China in 1857 to assist his brother in delivering the British government’s ultimatum to the Chinese emperor. (6)

The British Dictionary of National Biography summarizes the Chinese career of the elder Bruce succinctly:

In 1857 Elgin was sent as envoy to China. On reaching Singapore he was met by letters from Lord Canning informing him of the Indian mutiny, and urging him to send troops to Calcutta and from the force which was to accompany him to China. With this requisition he at once complied, sending in fact the whole of the force, but he proceeded himself to Hong Kong in the expectation that troops would speedily follow…

He repaired to Calcutta… Later in the year he returned to China, fresh troops having been sent out (to replace those which had been directed to India — ed.)… Canton was speedily taken and some months later a treaty was made at Tientsin, providing, among other matters, for the appointment of a British minister, for additional facilities for British trade (i.e., opium — ed.)… and for a war indemnity. (emphasis added)

Elgin returned to England in 1859.

In the following year he was again sent to China, the Emperor having failed to ratify the treaty of Tientsin and having committed other unfriendly acts. . . . The military opposition (to Elgin’s mass addiction policy — ed.) was not effective, but the Chinese resorted to treachery. (Chinese forces killed some British troops enforcing opium distribution — ed.). In retribution for this treacherous act, the summer palace, the favorite residence of the Emperor at Peking, was destroyed. A few days later the treaty of Tientsin was formally ratified. (7)

The account concludes that Elgin’s “letters show he was a man of warm affections, eminently domestic, with very decided convictions on religion. . . .”

Who was running England at the time? 

The prime minister was the same Lord Palmerston who turned the Scottish Rite into Britain’s leading cash-producing export product. The foreign secretary was Lord John Russell, son of the 6th Duke of Bedford, and grandfather of Britain’s most dangerous 20th century intelligence operative — Bertrand Russell.

Palmerston and Russell were relatives of the Bruce brothers, the Elgin peerage, by marriage into the direct line of Order of St. John control over England. The branch that encompasses Britain’s two leading cabinet ministers during the Second Opium War is the Villiers line. The line began with George Villiers, who assisted Robert Cecil and Edward Bruce in seizing the English throne for another descendant of Robert Bruce — James I of Scotland — in 1603. (8)

Lord Russell’s daughter, Victoria, married into the Villiers family. Russell’s grandson, Bertrand, among his other covert operations, maintained liaison with Chou En-lai throughout the postwar period on behalf of British intelligence, at the height of the Anglo-Chinese drug traffic. (9)

Even more significant is the third member of the London team during the Opium Wars — Colonial Secretary Edward BulwerLytton, a relation by marriage of the Duke of Wellington. His son married Edith Villiers, of the same branch of the leading Order of St. John dynasty.   

 The imperial cultists and opium

Bulwer-Lytton is best known to Americans through his 1838 novel, The Last Days of Pompeii, but he is also both the spiritual father of the Rhodes-Milner secret societies and of Nazi fascism. A mystic and prenascent fascist, Bulwer-Lytton led the English Rosicrucians, a branch of the Scottish Rite Masons headed by his Prime Minister Palmerston.

Unlike the comparatively closed members of the British elite around him, Bulwer-Lytton was an outspoken exponent of the Isis cult, which formed the subject of his famous novel. His popularized Isis myth was the inspiration for an entire array of warped imitations.

Included among these was Helena Blavatsky‘s book, Isis Unveiled, and her Theosophist cult. Theosophy was the Satanic bible of the mystic secret societies, including Germany’s “Thule” group, which produced most of Hitler’s SS. (10)

Another Bulwer-Lytton protégé was Satanist Aleister Crowley, of the “Thule” group’s equivalent in England, the “Isis-Urania Hermetic Order of the Golden Dawn.” Both of these groups traced their lineage back to Palmerston’s Scottish Rite Masons through Bulwer-Lytton. (11)

Aleister Crowley was the tutor of Aldous Huxley, the prophet of mind control, who later introduced the LSD cult into the United States during the 1950s (see Part IV). (12)

Britain’s imperial link to Nazi fascism is even more direct in the case of Bulwer-Lytton’s other published work. His novel Rienzi, about the Knights of St. John, provided the text of Richard Wagner’s first opera. His 1871 novel, Vril; The Power of the Coming Race, contained virtually everything that Houston Stewart Chamberlain later had to say on racial theory; Prof. Karl Haushofer, who ghost-wrote most of Mein Kampf in Hitler’s prison cell 50 years later, named his first secret organization the Vril Society.” (13)


Bulwer-Lytton’s Nazi German and British secret societies met officially for the last time when Nazi minister Rudolf Hess attempted to make contact in 1941 by flying to Britain. Bulwer-Lytton directly influenced John Ruskin at Oxford University and established the lineage that leads — through such names as Milner and Rhodes — to the present-day Royal Institute of International Affairs. 

Ruskin’s students included Milner, Rhodes, Albert Grey, and the future director of research for the IA, Arnold Toynbee. Ruskin’s inaugural speech at Oxford in 1870, inspired by Bulwer-Lytton, left such an impression on Cecil Rhodes that he carried a handwritten version of it with him until he died. 

The speech — which set the tone for Rhodes’s 1877 will quoted in Section 7 — stated in part:

There is a destiny now possible to us — the highest ever set before a nation, to be accepted or refused. We are still undegenerate in race; a race mingled of the best northern blood… We are rich in an inheritance of honor, which it should be our daily thirst to increase with splendid avarice… (England) must found colonies as fast and as far as she is able… seizing every piece of fruitful ground she can set her foot on, and teaching these her colonists that their… first aim is to advance the power of England by land and sea… (14)

Bulwer-Lytton’s son Edward Lytton was Viceroy and Governor-General in India 1876-80. Two aspects of the younger Lytton’s rule in India are important to this report. First, Lytton supervised the single greatest expansion period in the history of opium production in British India. (15) As noted in Part I, Palmerston had set forth this task as a means of compensating for Britain’s industrial decline relative to the United States. It was fitting that the son of his former cabinet colleague and fellow cultist personally carried out Palmerston’s opium-expansion program.

Secondly, Edward Lytton’s rule in India provided a home for the most important of the crackpot cultists inspired by his father. Lytton himself was the closest friend of Rudyard Kipling’s parents, members of the circle around A. P. Sinnett‘s Allahabad journal The Pioneer. (16) The elder Bulwer-Lytton’s follower Madame Blavatsky, of the Theosophy Cult, appeared in India in 1879, and recruited A. P. Sinnett to her belief-structure. (17) Both Kipling and Blavatsky employed the swastika as their personal mystic symbol. From Kipling, Blavatsky, Haushofer, and others, the swastika found its way into the German cults that formed the core of later Nazism.

Kipling’s last major official post was under press czar Lord Beaverbrook at the wartime Propaganda Ministry; working side-by-side with him was a relative of the Lyttons’ by marriage, Sir Charles Hambro. Hambro went on to run Britain’s dirty operations during World War II as chief of the Special Operations Executive from 1942 onwards. Kipling also served as a trustee of the Rhodes Trust from 1917-25.

Kipling’s cousin, Stanley Baldwin, was prime minister from 1923-29 and 1935-37; during his second tenure, the Baldwin government groomed Hitler as a “marcher lord” against the Soviet Union, setting the stage for Munich 1938. (18)

Another well-known British literary figure, also with a mystical bent, deserves mention in this context: Alfred, Lord Tennyson. Tennyson married the niece of the 8th Lord of Elgin (James Bruce), and remained a close personal friend of the commander-in-chief of the Second Opium War. Tennyson was a founding member of the Metaphysical Society, with Bulwer Lytton’s protégé John Ruskin, Lord John Russell’s uncle Lord Arthur Russell, future prime minister Arthur Balfour, and Thomas Huxley. (19) 

In 1880, the Metaphysical Society was reorganized, and became the Aristotelian Society. Lord John Russell’s grandson Bertrand Russell became the Aristotelian Society’s President 1913-14 and 1935-37; one of his successors was Sir Karl Popper. The Aristotelian Society remains the Apollonian side of British intelligence’s High Priesthood.

Tennyson’s unambiguous endorsement of opium abuse was expressed in his well-known poem,

“The Lotus Eaters”:

Let us swear an oath, and keep it with an equal mind, In the hollow Lotus-land to live and lie reclined, On the hills like Gods together, careless of Mankind. (20)

Today’s opium dynasty

The closing days of the Baldwin government and the opening days of World War II are an appropriate place to pick up the contemporary trail of the leading opium families — the Inchcapes and Keswicks. In 1939 the creation of Britain’s Ministry for Economic Warfare offered a meeting place for the old families: Sir John Henry Keswick, later the architect of the Peking Connection; Sir Mark Turner, the current chairman of the old Matheson-Keswick firm Rio Tinto Zinc; Gerald Hyde Villiers, a leading scion of the evil old family; and John Kidston Swire, of the old Swire dope-trading family.

Starting from the Matheson family’s role in the first Opium War and tracing through to the World War II period and up to the present, the fortunes of the Matheson and Keswick line of the dynasty run the entire gamut of political developments surrounding the drug trade.

The Rio Tinto Zinc Company was founded in 1873 by James Sutherland Matheson’s nephew Hugh Matheson — taking the lineage of that firm all the way back to the days of George III and the American Revolution through then-Prime Minister Spencer Perceval. The younger Matheson founded the firm with his uncle’s opium profits and help from the Schroeder banking family — who in 1931 funded Bulwer-Lytton’s ideological spawn Adolf Hitler. The Lyttons and Mathesons are relatives by marriage, through the Villiers family and the Sutherland family.

Hugh Matheson’s successor at Rio Tinto Zinc in 1898 was J. J. Keswick, a partner in the opium-running Jardine Matheson firm, and a relative of the Mathesons by marriage through the Fraser family.

Apart from their leading role in Jardine Matheson, J. J. Keswick’s family had a leading role in the British governance of the official opium trade. His cousin, William P. Keswick, was British Consul-General in Hong Kong during the same years that Edward Lytton, Governor-General in India, was expanding opium output according to the Palmerston program.

William P. Keswick’s son Henry Keswick, a past chairman of the Hong Kong and Shanghai Bank at the height of its dope-trading glory, had three sons: David, John H., and William J. David Keswick is still among the largest shareholders and a partner of the London merchant bank Samuel Montagu. Sitting with him on the board of directors of Samuel Montagu is Rio Tinto Zinc’s current chairman Sir Mark Turner. Turner, as noted, also worked with brother Sir John Henry Keswick in the Ministry of Economic Warfare. Later, John Henry went on to the British embassy in Chungking, picking up the opium trail where World War II had cut it off (see Section 7).

The third brother, Sir William Johnston Keswick, is the protagonist of Section 8 dealing with Canada; as previously documented, Keswick ruled the Shanghai Municipal Settlements at the height of Shanghai’s heroin traffic, and set up the first big heroin connection, via intermediary Jacob “Yasha” Katzenberg (see Part III Section 1).

The family history of the Keswicks intersects the story of the Russells, Villiers, and Bruces through their most senior political operatives, notably Lord Milner. Milner, Cecil Rhodes’s protege and one of racist John Ruskin’s early trainees, bridged the gap between the establishment of the Rhodes Trust and the creation of the Royal Institute of International Affairs in 1920. Milner became a director of Rio Tinto Zinc in 1921, and served as chairman from 1922 until his death in 1925.

More important, however, is Milner’s joint work with the Keswick family in setting forth the “geopolitical” policy than finds its most succinct expression today in Britain’s proposed alliance with China against the Soviet Union. As documented above, that policy includes a free hand for British drug-running.

This option first saw the light of day through the World War I collaboration of Lord Milner, William Boyce Thompson, and wartime British Commissioner in St. Petersburg, Frederick Lindley. During his wartime mission to Russia, according to the History of the London Times, a documentary source, Lord Milner worked closely with Frederick Lrndley to install and then, unsuccessfully, to maintain in power, Alexander Kerensky. (21) This followed Britain’s post-American-Civil War policy offostering a weak and dependent Russia. Frederick Lindley was the grandfather of Henry NevilleLindley Keswick, who currently occupies the traditional family seats at the head of Jardine Matheson’s directors and on the board of the Hong Kong and Shanghai Bank. 

The third member of the Milner team, William Boyce Thompson, was the head of the Red Cross delegation in Russia; the Red Cross is, officially, the “charitable” side of the Order of St. John of Jerusalem. (22) After the war, Thompson, with funding from the Morgan bank, established the Anglo-American mining firm in South Africa — which now controls 60 percent of world gold output outside the Soviet Union, and, through its controlling interest in De Beers, virtually all the diamond output (see Section 4). That is the origin of London’s top-down control over the precious metals and gems channels for laundering dirty money.

To tie these strands back into the main line of the narcotics traffic: Milner’s hand-picked successor at Rio Tinto Zinc, whose original mines were in Spain, was Sir Auckland Geddes. Geddes, who ruled until 1952, was a sponsor of Francisco Franco’s fascist coup in Spain. (23)  

His nephew, Ford Irvine Geddes, was a director and then chairman from 1971-72 of the Inchcape family’s huge shipping complex, the P&O Steamship Company, which has shipped more opium than any other entity in the world. One of P&O’s officers, deputy chairman Sir Eric Drake, is a close associate of Sir William Johnston Keswick, also of the old Rio Tinto Zinc family (see Section 8). Drake and W. J. Keswick jointly control Canada’s Hudson’s Bay Company, which established the rum-running routes from Canada into the United States during Prohibition, together with the Bronfmans.  

The old Inchcape family, whose current scion, the 3rd Earl of Inchcape, still is chairman of the P&O Lines, is closely related to the Matheson family of Jardine Matheson. The founder of Jardine Matheson, James Sutherland Matheson, was the son of Katherine Mackay and Donald Matheson; Mackay is the family name of the Earls of Inchcape. The 3rd Earl, J. W. Mackay, is the son of the 2nd Earl of Inchcape, who authored the infamous 1923 Inchcape Report, insisting that the opium trade must be maintained to “protect the revenues” of the British Empire — despite the outcry of the League of Nations.

Through the current Lord Inchcape, the old opium dynasty married into the highest level of British banking. The afore-mentioned J. W. Mackay of the P&O Lines married Aline Pease, his brother-in-law, Richard T. Pease, has been the vice-chairman of Barclays Bank since 1970. Barclays Bank, as noted above, is the controlling institution for the entire array of Israeli financial operations, through its control over the current Japhet family bank — Charterhouse Japhet. The current senior Japhet family member, Ernst Israel Japhet, is now. the chairman of Israel’s biggest commercial bank, Bank Leumi. Barclays Bank controls outright Israel’s second-largest commercial bank, the Israel Discount Bank, also known as Barclays discount bank.

Taking together the Inchcapes, Keswicks, Peases and related families, control over London’s banking establishment becomes a swirl of intermarriages, to the point that the top London banks and the scions of the drug trade appear as a single family entity, rather than competing or even parallel institutions. For example, the current deputy chairman of Inchcape and Co. — the family, holding company that owns majority stock in the P&O Lines — is Sir Hugh Mackay-Tallack. Mackay-Tallack is also the deputy chairman of the Standard and Chartered Bank, the second-largest bank in the Far East after the HongShang. The 3rd Lord Inchcape himself, J. W. Mackay, is also a director of Standard and Chartered, along with cousin Sir Hugh.

As the reader can judge from the chart, the Pease branch of the Family is further closely related to:

  • The Schroeder Bank, whose chairman, the 10th Earl of Airlie, is the brother-in-law of A. D. F. Lloyd, of the bank that bears his name.

  • Kuhn Loeb, whose leading partner was Otto Kahn; his granddaughter is the wife of the 10th Earl of Airlie, the chairman of Schroeder Bank

  • The family of Winston Churchill, whose mother-in-law is an Airlie

  • The Lazard group, related to the Churchills by marriage; Lazard controls the London Financial Times, the Economist, Penguin books, as well as one of Britain’s top merchant banks.

It should be remembered that the Lytton family and the Keswick family are related to each other, via marriage through the Fraser family, whose current leading member is deputy chairman of Lazard. The British and American Hofjuden are represented at the borders of this complex. As noted, the 10th Earl of Airlie married the granddaughter of Otto Kahn, Capo of American Hofjuden; his sister, Margaret Ogilvie, married into a branch of the dynasty (see chart) that, in turn, married into the Rothschilds.

The Rothschilds were the first of a number of leading families to come up the ladder through intermarriage with the leading families — an award for special service to the British monarchy. Other prominent examples are the Kennedys and Bronfmans. After a display of Anglophilia during his tenure as America’s Ambassador to the Court of St. James, Joseph Kennedy achieved his ultimate social-climbing ideal: his daughter Kathleen married the son of the 10th Duke of Devonshire. After their elevation to the status of leading Hofjuden during the 1930s, the Bronfmans intermarried with the French de Gunzberg family and the Belgian Lambert family (the Belgian branch of the Rothschilds).  

However, Edgar Bronfman’s attempt to wed Caroline Townshend, the direct descendant of the Lord Townshend who precipitated the American Revolution through a tea tax, came to naught. Shortly after their 1972 marriage, Edgar Bronfman sued for divorce, on the grounds that the English noblewoman had denied him connubial relations. Apparently, there are limits to what the British families will suffer from social-climbing Hofjuden. 

Few even among specialist readers will appreciate how many significant historical and intelligence problems of the last hundred years are clarified, in one degree or another, by this summary description of the Family. Only a small portion of the names listed on the chart, or their historical significance, has been presented in this section. 

Nonetheless, the point is irrevocably established for the general reader that the individuals named throughout this section are part of a single family operation, whose members take critical roles in furthering the opium trade, financing the opium trade, and directing the opium trade — wherever the opium trade is a matter of public record. This includes every crucial juncture of Dope, Incorporated: the period of opium production expandion in India, the Opium Wars against China, the Shanghai Connection of 1928, the Peking Connection of the World War II period and after, and the Opium War against the United States.

The point is also indisputably established that this has been and is the policy of the British government and, through the Most Venerable Order of the Knights of St. John of Jerusalem, the British Monarchy itself.


 by Konstandinos Kalimtgis, David Goldman, Jeffrey Steinberg

DOPE: Canada…North America’s Drug Capital


 How the Royal Institute of International Affairs Runs Drugs and Dirty Money

Now we will take the reader up through the chain of command of the world drug and dirty money business, to the top level of political control: to Chatham House, St. James Square, London, the headquarters of the Royal Institute of International Affairs. We have inspected the books of Drugs, Incorporated, met the operating personnel, visited its subsidiaries in Hong Kong, Bangkok, and Peking, as well as its farms and factories in the Golden Triangle, on the common border of Burma, Laos, Thailand, and the People’s Republic of China. The Far East drug traffic emerges as a single business operation, a British-Chinese joint venture, in which Britain is the senior partner.

It is obvious, by now, that an operation of this scope could not exist without the political approval of the British government, nor without the gigantic supporting facilities of the world’s off-shore credit markets, the world’s gold and diamonds trade, and “hands-on” management of the retail distribution, or organized crime aspects of the operation.

The next step is an introduction to the Board of Directors of Drugs, Incorporated, and an overview of their multifarious ties to the Far East opium growing and wholesaling operation, the offshore dirty money operations, gold and diamonds mining and distribution, the Canadian connection, the Zionist Lobby dirty money installations, and the top levels of British policy-making.

The Hong Kong and Shanghai Bank is not an independent malefactor, but a special operation of the British oligarchy’s top banks, specializing in the Far Eastern drug traffic. The Hong Kong and Shanghai Bank’s governing body, the London Committee, is the British oligarchy’s delegated group assigned to the Far East drug traffic.

More specifically, it is an economic warfare operation. Two of its directors, J.H. Keswick — of the family that founded Jardine Matheson in 1828 to trade opium — and J.K. Swire — of the Swire family of hereditary opium traders — were senior officials in Britain’s Ministry of Economic War during World War II. Another senior official of that Ministry is Sir Mark Turner, the chairman of Rio Tinto Zinc, the HongShang’s partner in numerous fields, including gold operations. Turner is now a key figure in the Royal Institute of International Affairs, founded by Lord Milner, an earlier chairman of Rio Tinto Zinc.

What we will show here is that the Royal Institute of International Affairs (RIIA) and its leading personnel control not only the Far Eastern drug traffic but every important dirty money operation on the surface of the globe.

The next section will further document the British monarchy’s control of the Canadian banks and corporations, the same installations responsible for channeling drugs into and illegal funds out of the United States. It demonstrates that the direct agency of control over Canada’s huge financial warfare apparatus is the Canadian Institute of International Affairs (CIIA), a mock-up of Britain’s RIIA, created by the RIIA in the first place.  

Included in the Canadian operation are the Bank of Nova Scotia’s domination of Canada’s gold market, Canadian banks’ huge role in Caribbean Silver Triangle dirty money operations, and — most important — the direct links between the hard-core Far East drug wholesalers, and the Canadian institutions that have participated in the wholesale drug traffic on the North American continent since the closing days of Prohibition. 

Through the Canadian outpost of the British monarchy, the drug traders close the circle between the Keswick family of Hong Kong, the founders of Jardine Matheson in 1828, and the Bronfman family, the immediate sponsors of the top levels of so-called organized crime in the United States.

From their base in the $200 billion dirty money traffic, the institutions assembled in force on the leading committees of the RIIA dominate:

1) All of Britain’s top commercial banks directly

2) Both big British oil companies, British Petroleum and Royal Dutch Shell directly

3) All the leading British meindirectly

4) The world gold and diamonds trade

5) Every leading old-line opium P&O Steamship Company, Jardine Sons, and Charterhouse Japhet, directly


Now that the command structure of the worldwide operation is evident, we are going to examine the content of the Royal Institute of International Affairs’ subversive activities, following through the careers of some of its leading operatives — including Sir John Henry Keswick, member of the family which controls the Hong Kong and Shanghai Bank, and from the old Jardine Matheson opium trading firm; and the current chairman of the Council of the RIIA, Lord Humphrey Trevelyan, member of the board of directors of HongShang’s gold-smuggling subsidiary, the British Bank of the Middle East. These are the men who created the Peking Connection in its modern form.

According to the Charter of the RIIA published in 1920, the Royal Institute of International Affairs is “an unofficial and non political body,” whose object is “to advance the sciences of international politics, economics, and jurisprudence,” to “provide and maintain means of information upon international questions,” and “to promote the study and investigation of such questions.” Few times in the history of the written word have so many lies appeared in so few lines.

However, a concise summary of the RIIA’s purposes appears in its de facto founding document, Cecil Rhodes’s 1877 bequest. Rhodes, who founded both the gold and diamond mining empire that still dominates world markets under the aegis of Anglo-American and De Beers, and also founded the dope-trading Standard Bank (the African partner of the Asian-based Chartered Bank, since merged), is the starting point for the present form of the disease. Rhodes left his wealth to the Rhodes Trust, administered by Lord Milner. Milner’s collection of Oxford trainees, called the “Milner Kindergarten,” made up most of the 1916 Lloyd George government, and formed the RIIA at a meeting in Versailles on May 30,1919.

Rhodes’s 1877 will was:

To establish a trust, to and for the establishment and promotion and development of a secret society, the true aim and object whereof shall be the extension of British rule throughout the world, the perfecting of a system of emigration from the United Kingdom and the colonization by British subjects of all lands wherein the means of livelihood are attainable by energy, labor, and enterprise, and especially the occupation by British settlers of the entire continent of Africa, the Holy Land, the valley of the Euphrates, the islands of Cyprus and Candia, the whole of South America, the islands of the Pacific not heretofore possessed by Great Britain, the whole of the Malay Archipelago, the seaboard of China and Japan, the ultimate recovery of the United States of America as an integral part of the British Empire, the consolidation of the whole Empire, the inauguration of a system of colonial representation in the Imperial Parliament which may tend to weld together the disjointed members of the Empire, and finally, the foundation of so great a power as to hereafter render wars impossible and promote the best interests of humanity. (1) (emphasis added)

The secret society concept was passed on by Milner, Rhodes’s successor as High Commissioner in South Africa, through Milner’s trainees Lionel Curtis (of the Round Table Group), and Lord Robert Cecil — whose family dates back to the Genoa-Amsterdam coup against Elizabethan humanism in 1601. Curtis and Cecil both participated in the May 1919 meeting at Versailles which founded the RIIA.

The Royal Institute for International Affairs is the secret society.    

1949: The British-Peking deal

Let us backtrack, for a moment, to the point of origin of the Lon don-Peking joint drug-running venture in the Far East, the wartime deal between the RIIA and Chou En-lai. Detailed records of the relevant years have recently been made available. In August 1978, the U.S. State Department released 1,300 pages of documents to the public dealing with American diplomacy in China at the time of the Maoist takeover. (2) From the British side, the RIIA in 1977 released its own records of its wartime and postwar operations group in the region, the Far East Committee — the real British Foreign Office. (3)

Both sets of documents yield the same interpretation: the creation of the People’s Republic of China included an alliance between the British dope-runners and the Chinese dope-runners. This was negotiated from the British side by Sir John Henry Keswick and from the Chinese side by Chou En-lai. The Chinese team also prominently included top figures in the opium trade, such as the Bank of China’s Chi Ch’ao-ting, Shanghai Commercial Bank’s K.P. Chen (who also headed the Chinese wing of the Institute for Pacific Relations), and elements of the so-called Green Gangs. The Green Gangs, which could be called the Chinese mafia, ran the opium trade not only in the Far East but through the far-flung networks of the Chinese expatriate community.

From both the British and the Chinese side, the alliance was explicitly against the United States. The Chinese knew it, and said so, the British knew it, and said so, and American diplomats cabled home that the United States had been shafted. (4)

When the top representatives of Britain’s RIIA began soundings in the Chinese Communist stronghold of Yenan and at Chou En-lai’s Chungking legation during the World War II period, they had reasons dating back a century to expect results. China lost the opium wars because such a large section of officialdom had been corrupted through opium dependency.

But the credit for the re-creation of the alliance between Britain and the modern equivalent of the Triad gangs must go to Sir John Henry Keswick, the RIIA’s man-on-the-spot at the British Embassy in Chungking during the crucial period of World War II. It is known that Keswick was in regular contact with Chou En-lai in his capacity as a prominent businessman and through his attachment to the British embassy in Chungking. Chou was in Chungking from 1937 through the 1940s. (5)

Keswick, of the hereditary drug-trading family that founded and still controls Jardine Matheson, also represented the RIIA and its sub-branch, the Institute for Pacific Relations, to the United States. (6) Sir John Henry is still Britain’s number one man for China policy, Chairman of Britain’s China Association, Vice-President of the Sino-British Trade Council, and a member of the Great Britain-China Committee. (His predecessor at the China Association from 1951-55 was John Kidston Swire, of the old opium-trading Swire family, who still sits on the London Committee of the HongShang.)

Two pieces of eyewitness testimony from Mao Tse-tung’s wartime hideout in China’s northern Yenan province bear comparison. The first is the report by Peter Vladimirov, the Soviet liaison to Mao’s headquarters in Yenan during 1941-45. According to the Soviet-published Vladimirov Diaries, the Chinese Communist Party operating in Yenan grew opium for profit, not only for medicinal uses. Opium had been a major cash crop for Yenan before Mao’s arrival; Vladimirov claimed that Mao continued the practice. The Soviet representative also suspected the CPC’s chairman’s close contact with American visitors connected to the Institute for Pacific Relations. (7)

A second account appeared in the January 1978 issue of International Affairs, the journal Of the RIIA:

Victor Farmer, who was a director of Imperial Chemical Industries (China) and who in 1944 had recently returned from a visit to the Far East (stated): “I have met some (Chinese) Communists and their ideas are very open-minded. If you could get rid of this ultra-nationalist clique in the saddle at present in Chungking, and many Government officials are extremely broad-minded, I think that the way would be open for a compromise with the Communists; and an effective compromise.” (8)

The view Farmer expressed on behalf of the RIIA’s Far Eastern Committee had already surfaced in the United States through the committee’s American branch, the Institute for Pacific Relations (IPR), the institution that produced the pro-Maoist group in the U.S. State Department centered around John Stuart Service and John Carter Vincent. Although the IPR included American citizens and was funded through the Rockefeller and Carnegie Foundations, it functioned exclusively as a branch of the RIIA and British policy-making.  

The IPR’s two most prominent general secretaries, Edward Carter and William Holland, had extensive British pedigrees. Carter, whose reign as IPR chief lasted until 1946, was a leader of the international YMCA, while his successor Holland was a citizen of New Zealand until 1943 and a member of London’s Royal Institute.

The dead giveaway on the IPR’s British character is the organization’s move to Canada subsequent to the 1950 McCarran Committee investigation, which mistook pro-British treason for pro-Communist treason. With hearty British cheers, the disgraced Institute for Pacific Relations moved to Canada.

Britain’s support for the IPR was further expressed by the chairman of the RIIA’s Far Eastern Group, Sir Andrew McFadyean (who in 1947 became the chairman of S.G. Warburg’s, the merchant bank). In a 1952 letter he wrote:

“The fact that I have criticized certain activities and certain officers of the IPR entitles me to say with greater emphasis, firstly that it would have been a useless body if it had not represented a wide variety of political views, and secondly that throughout my acquaintance with the Institute its governing body, while respecting the rights of free expression, has never encouraged or countenanced subversive views.” (9)

Once in Canada, the IPR came under the official sponsorship of the Canadian Institute of International Affairs, the local RIIA subsidiary, and its chairman — now “honorary Chairman for Life” — Walter Lockhart Gordon. During the last 30 years, Gordon has been the most consistent North American apologist for Maoist China. Gordon currently has direct personal ties to Canada’s “old China hands,” including Dr. Paul Lin, Chester Ronning, and James Endicott. All three served as advisors to Chinese Premier Chou En-lai; Paul Lin’s official duties as an aide to Chou terminated only in 1965. Lin, in turn, is a power in the expatriate Chinese community in Vancouver, the most important transshipment point for opium entering the United States.

The ties run back the other way across the Pacific as well. Gordon sponsored the initial founding of the Chinese People’s Institute of Foreign Affairs in China, an official Red Chinese organization that currently maintains links with the Canadian Institute of International Affairs. Chester Ronning has been the Chancellor of the University of York in Canada; Walter Lockhart Gordon arranged funding for the Norman Bethune School at that university under Ronning’s supervision, the most overtly pro-Maoist institution on the North American continent. That is the pedigree of the British-created, British-defended, and still British-run Institute for Pacific Relations. (10)    


According to the RIIA’s official account cited above, the RIIA-IPR’s function at the close of World War II was to propose the John Service-John Keswick policy of fostering Maoism as the “alternative” to Britain’s shrill insistence on her colonial rights in the area. Prime Minister Churchill still balked at the self-determination provisions of the Atlantic Charter, namely that Britain give up its Southeast Asian colonies.  

Anti-British feeling ran so high in the United States, the International Affairs study points out, that Henry Luce’s Life magazine urged the British people,

“to stop fighting for the British Empire and fight for victory … if you cling to the Empire at the expense of a United Nations victory you will lose the war because you will lose us.”

A poll taken in 1942 revealed that 56 percent of Americans questioned agreed that the British could rightly be described as “oppressors . . . because of the unfair advantage . . . they have taken of their colonial possessions.”

The RIIA and the IPR’s “alternative” posture was a retreat under fire from an imperial position in the Far East to an alliance with the Great Han chauvinists of the Communist Party of China. Any suggestion that an actual policy difference intervened between the “hidebound reactionary” Winston Churchill and the openly pro-Maoist Victor Farmer of the RIIA’s Far Eastern Group, is made silly by the role of Jardine Matheson’s John Henry Keswick.

Keswick was a prominent figure in the Shanghai International Settlements, of which his brother, Sir William Johnston Keswick, was chairman throughout the 1930s and until 1949. Britain had owned a chunk of the city of Shanghai by the treaty that ended the Second Opium War. The status of the Shanghai International Settlement was one of the major policy conflicts between Roosevelt and Churchill, since it represented a foreign colonial intrusion in an allied nation. Britain’s concern for Shanghai may also have been motivated by the fact that it was the world’s center for refining opium into heroin. Keswick and the refineries both picked up and moved to Hong Kong in 1949.

In January 1945, pro-Maoist Victor Farmer and John Henry Keswick (with Andrew McFadyean) together led Britain’s delegation to the Institute for Pacific Relations’s most important conference at Hot Springs, W. Va. Ten British officials went along in tow with the RIIA officials. The British delegation presented a softer front to the Americans than the Churchill government was then willing to officially concede. RIIA documents show that the queer combination of Chinese Communist Party apologist Victor Farmer and old-line opium trader John Keswick did the trick of mollifying the Americans.

“The general atmosphere here (at Hot Springs — ed.) is very much better than (at the last Institute for Pacific Relations conference at) Mont Tremblant. . . . There is much less disposition to twist British tails just for the fun of seeing how the animal reacts,” McFadyean wrote back to the RIIA in relief. (11)

American delegates included Treasury official Harry Dexter White, responsible for selling to the United States John Maynard Keynes’s British blueprint for the International Monetary Fund.

Not until Mao’s army marched into Shanghai in 1949 did the Americans realize what they were in for. The new mayor of Shanghai, Chen Yi, summoned John Keswick for secret talks, the State Department documents reveal, virtually as soon as the mayor arrived in the city. After a lengthy round of talks, Keswick departed and called on the American consul-general. The stunned diplomat later telexed back to Washington that Keswick,

“made a statement that he did not expect Americans to fare well under the Communist regime, but did not indicate whether this opinion was formed as a result of the conversation with the mayor.”

Keswick was either threatening the United States or relaying what the Chinese had told him, the consul-general wrote.

“He would hardly have invented this as a bluff to frighten away American competitors,” the American concluded optimistically. (12)

How ingenuous that evaluation was became clear within days.  

Behind the backs of the Americans, the British negotiated a deal to keep Hong Kong under London’s control, and opened up confidential lines of communications between the mainland and Hong Kong. In wires to Washington, American diplomats accused the British of tearing up the standing Anglo-American agreement that all decisions respecting the Communist government would be made in close consultations. “The Communists are obviously trying to play off the British against us and seem to have succeeded somewhat,” one American official wrote. (13)

The British added insult to injury by maintaining an official pro-Maoist propaganda campaign, which began far before the Communists took over. British officials gave awards to leading members of the CCP, even while maintaining “official” diplomatic relations with Chiang Kai-shek, and gave lavish public receptions for dissident elements of the Kuomintang, such as the widow of Sun Yat-sen, the Chinese nationalist leader who died in 1925. (Sun’s wife is currently an official of the PRC government.) Shortly before the Communist takeover, one journalist wrote:

“The British have a reputation for very smart diplomacy in Asia. Part of this comes from their ability to spot key groups and get on the right side of them. It is generally believed by observers that the British now figure the intellectual left wing to be one of the groups that will gain rather than lose strength in the political changes of the next few years, and are preparing for this eventuality.” (14)

American intelligence dispatches from 1947 reprinted in the State Department release wrote:

“It is significant to note that shortly after the Communist takeover of the key city of Shanghai, the Maoists halted all anti-British propaganda.” (15)  

 Creation of the Hong Kong drug nexus

Under the public cover of Anglo-Chinese mutual seduction, and before the horrified eyes of American observers, the British and Maoists created the financial infrastructure of what would later underwrite the Far East narcotics traffic. Keswick’s opening of channels between Peking and Hong Kong permitted a division of the Shanghai banking families between mainland China and Hong Kong; this 1947 division founded the expatriate Chinese connection between Peking and London. (Apparently, other expatriate networks, like the Thai bankers who date back to the 1930s, were consolidated in the same fashion, al-though the same degree of documentation from the period is not yet available.)

The Senate investigation of the Institute for Pacific Relations revealed indirectly the role of the Royal Institute of International Affairs in the creation of the drug-financing networks. The McCarran Committee made public some of the correspondence of IPR General Secretary William Holland. Holland, before his ascendance as IPR chief in 1946, took over the China stations of the American Office of War Information, an organization closely tied to the wartime predecessor of the Central Intelligence Agency, the Office of Strategic Services. Holland was in frequent touch with the head of the RIIA in London, which as noted above, had created Holland’s IPR in the first place.

In one of the letters available from the 1950-51 McCarran proceedings, Holland informed the RIIA that a top Chinese Communist banking official “may turn out to be one of the best friends we have.” (16) The official in question, Chi Ch’ao-ting, was a top officer in the Nationalist Bank of China, until the Maoist victory. At that moment, he shifted allegiance to the PRC Bank of China. Moreover, Chi’s defection was preceded by that of a whole faction within the Nationalist Bank, which chose to “make a deal” with the Communists rather than flee to Taiwan. This faction, according to the 1949 State Department papers, made arrangements to communicate with Chinese IPR leader and Shanghai banker K.P. Chen, who had left Shanghai for Hong Kong, even after-the Communist takeover. (17)

It should be added that, as a matter of public record, most of the Nationalist Bank of China’s cash flow during the period of Chi’s service came from the opium traffic, which the Chiang Kai-shek government continued throughout the war years. Chi’s shift of allegiance was merely the poppy stem’s bending with the wind of change.

Chi’s defection to Mao’s Bank of China began an illustrious career, during which he rose to a high position in the bank and participated in international conferences for the PRC as well. As noted, the Bank of China’s financial connections to the West are through Hong Kong, its reserves were and still are held with the Hong Kong and Shanghai Bank and the Standard and Chartered Bank, its remittances payments conducted through the same banks, and so forth. Chi’s move — under the approving eyes of Holland — only typified what went on in the Shanghai banking community at large. In the same dispatch to the RIIA cited above, Holland reported on his contacts with leading Shanghai bankers, citing the case of Chinese Shanghai Commercial Bank chief K.P. Chen. Chen fled to Hong Kong shortly before the Communists took over, Holland reported, adding, “Impossible as it now seems, I have an idea Chen will later go to Shanghai.” (18)

An entire section of the Shanghai bankers resisted pressure by the departing Nationalist forces to transplant their operations to Taiwan. As in the case cited by Holland, they preferred to hedge their bets between the British and the People’s Republic of China. At the lower levels of the narcotics traffic, the notorious Green Gangs, the foot-soldiers of the traffic, broke en masse with the Kuomintang forces, and moved into the Communist camp. Neatly and speedily, the entire postwar opium apparatus had been redeployed between Shanghai and Hong Kong.

One of Holland’s close associates during the period was the Canadian representative in Chungking, Chester Ronning — still prominent in the Canadian connection to the London-Peking drug apparatus. Utterly enamored of the Maoists, Ronning met almost weekly with Chou En-lai’s chief deputy, Wang Ping-nan, during his 1945-47 tour of duty. (19)

Ronning’s relationship with Wang Ping-nan has a special importance, which we will indicate momentarily. Ronning went on to act as midwife in the Institute for Pacific Relations’s 1950 re-birth in Canada after the scandal.

Both the State Department and the RIIA releases make fools of those Americans who thought that the Institute for Pacific Relations had “betrayed” American ally Chiang Kai-shek to the red menace. The Kuomintang, a gang that couldn’t shoot straight, was merely losing the battle for Far Eastern opium. (There has been substantial documentation, not immediately relevant to the present chain of evidence, that remnants of the Kuomintang army in Burma continued to grow opium for a quarter-century after the Communist victory, and that some of their friends in the China Lobby, e.g. AirAmerica, transported it for them.) In fact, the United States was sold down the Pearl River by our British “allies,” in combination with the snickering Chinese. America’s youth paid the terrible price of this deception.

At the outset of the Korean War, the public amity between Great Britain and China was reduced — for purposes of public consumption. However, the leading individuals who created the Peking Connection continued to hold all the important strings, and maintained the full continuity of the narcotics traffic. Despite the public hostilities, the PRC operated freely on Hong Kong’s illicit gold exchanges, and present-day luminaries like Stanley Ho (see Section 5) made their fortunes smuggling strategic goods into China from Hong Kong.    


In 1951, Lord Humphrey Trevelyan took his post as British Ambassador to China, the same man who today sits on the board of the British Bank of the Middle East. Public contacts between Lord Trevelyan and the Peking regime were necessarily low-key, by the dictates of what even the British and Chinese consider public decency. To cover their tracks the British claim that Trevelyan did not meet Premier Chou En-lai during the first two years of his stay in Peking, although they do admit that Trevelyan’s fellow diplomat John Henry Keswick had had regular access to Chou during the early 1940s in Chungking.

However, Trevelyan’s stay in Peking was not without great importance. Trevelyan set up the beginnings of the so-called American opening to China, laying the basis for the “China Card.” His partner in this maneuver was Chester Ronning’s old Maoist contact, Wang Ping-nan. By this time, Chou En-lai’s old deputy of the Chungking days was the PRC’s Ambassador to Poland. Trevelyan set up the first American diplomatic contacts with the People’s Republic of China — through China’s Embassy in Poland — during the mid-1950s. America’s contact man with the Peking government was Ambassador Wang Ping-nan.

Trevelyan’s further career is remarkable. After a brief stay in West Germany, he went on to become Britain’s Ambassador to Egypt during the Suez Crisis — the British-French-Israeli invasion of Egypt that wrecked President Eisenhower’s world development plan, the Atoms for Peace program. After a tour at the British Foreign Office, he was Britain’s Ambassador to the Soviet Union during 1962-65, during the British-inspired Cuban missile crisis. Currently, he sits on the board of directors of British Petroleum, along with John Keswick’s brother Sir William Johnston Keswick, and various other members of the boards of the HongShang and the RIIA council.

Lord Trevelyan completed the circle by taking the chairmanship of the Council of the RIIA, while keeping an active hand in the opium business, through the British Bank of the Middle East.  Direct experience in the drug trade is apparently a standard qualification for chairmen of the Council of the RIIA.  

When Trevelyan, Keswick, Holland, and Ronning were young men setting up the Peking Connection during World War II, the chairman of the RIIA Council was Waldorf Astor. Astor’s great-grandfather, John Jacob Astor, was a British agent-of-influence in the first years of the American republic; according to his biographer, J. J. Astor was the first American to get in on the drug trade alongside the British East India Company, starting in 1816.

Figure 6

London’s Royal Institute for International Affairs— Drugs and Dirty Money

The RIIA is not composed of the most influential people in Great Britain the inner circle of the British monarchy and the orders of nobility — but rather brings together the chief operating officers of the British monarchy’s policies in various fields.  

Its leading members include the following:

Lord Humphrey Trevelyan

  • Son of the British historian George Trevelyan;

  • Chairman of the Council of the RIIA;

  • Chairman of the Trustees of the British Museum;

  • Chairman of the Committee for the Tutankhamen Exhibit;

  • Economic and Financial Advisor, United Kingdom High Commission for West Germany, 1951-53;

  • Ambassador to Egypt, 1955-56;

  • Undersecretary at the United Nations, 1958;

  • Ambassador to Iraq, 1958-61;

  • Deputy Undersecretary of State of the Foreign Office, 1962;

  • Ambassador to the Soviet Union, 1962-65;

  • High Commissioner in South Arabia, 1967.

  • Director:

    • British Petroleum Co., 1968-75;

    • British Bank of the Middle East (100 percent owned by Hong Kong and Shanghai Bank);

    • General Electric Company Ltd., 1965-75;

    • President, Council of Foreign Bondholders.

Sir (Roland) Mark (Cunliffe) Turner

  • Council RIIA, 1949-50;

  • Chairman Rio Tinto Zinc;

  • Deputy Chairman of the merchant bank Kleinwort Benson Ltd.;

  • Chairman, Bank of America International Ltd. (London), 1971-;

  • Director,

    • National Cash Register; Toronto Dominion Bank;

    • Midland and International Banks Ltd.;

    • formerly with Samuel Montagu and Co.;

    • Ministry of Economic Warfare, 1939-44;

    • Undersecretary,

    • Control Office for Germany and Austria, 1945-57.

    • Sir Frank Roberts:

    • Member of RIIA Council;

    • Advisory Director Unilever;

    • Advisor on International Affairs to Lloyds;

    • British Embassy in Paris, 1932-35;

    • Cairo, 1935-37; Charge d’Affaires to Czech Government, 1943;

    • Deputy High Commissioner to India, 1949-51;

    • Ambassador to Yugoslavia, 1954-57;

    • Representative to North Atlantic Council, 1957-60;

    • Ambassador to the Soviet Union, 1960-62 (preceding RIIA Chairman Lord Humphrey Trevelyan);

    • Ambassador to West Germany, 1963-68;

    • Vice-President, German Chamber of Commerce in the United Kingdom, 1974-.

Sir Richard Powell

  • Member of RIIA Council;

  • Deputy Chairman, Permanent Committee on Invisible Exports, 1968-;

  • Deputy Secretary Ministry of Defense, 1950-56;

  • Permanent Secretary, Board of Trade, 1960-68;

  • President, Institute for Fiscal Studies.

Carmichael C.P. Pocock

  • Member of Council, RIIA;

  • Managing Director, Royal Dutch Shell, 1970-;

  • joined Shell in 1946,

Sir Arthur Knight

  • Member, RIIA Council;

  • Chairman of Courtauld’s since 1975;

  • Director, Rolls Royce, 1971-;

  • Member, Finance Committee of RIIA, 1971-;

  • Court of Governors, London School of Economics, 1971-.

Andrew Knight

  • Member, RIIA Council;

  • Editor of the London Economist, 1974-;

  • J. Henry Schroeder and Wagg Co., 1962-;

  • Investors Chronicle, 1964.

Ronald Grierson

  • Economist staffwriter, 1947-8;

  • S.G. Warburg, 1948-58, executive director 1958-69;

  • Chairman Orion Bank, 1971-75;

  • Director, General Electric Ltd;

  • member Trilateral Commission.

William Malpas Clarke

  • RIIA Council;

  • Director, Committee on Invisible Exports since 1966;

  • Director, Grindlays Bank Ltd.;

  • Euromoney Publications;

  • Brandt’s Ltd.;

  • The London Times, 1962-66.

Baron Shawcross

  • Member, RIIA Council;

  • Director, Shell Transport and Trading Co., 1961-72;

  • Morgan et Cie., International, 1966-;

  • Times Newspapers Ltd., 1967-74;

  • Hawker Siddeley Group Ltd., 1968-;

  • Chairman, International Advisory Council, Morgan Guaranty Trust Co. of New York until 1978.

B.A.C. Sweet Escott

  • Finance Committee, RIIA;

  • Group Finance Coordinator, BP Co. Ltd., 1962-;

  • Economic and Overseas Committees, Confederation of British Industries;

  • Kleinwort Committee on Invisible Exports.

J.R. Robinson

  • Finance Committee, RIIA;

  • director, Eagle Star Insurance;

  • former director, National Westminster;

  • Finance Director, Rio Tinto Zinc.

J.P.G. Wathen

  • Finance Committee, RIIA;

  • General Manager, Barclays Bank Dominion, Colonial and Overseas;

  • former manager, Lloyds Bank Ltd.

Again, Chart 2 shows that the leading members of the London Committee of the Hong Kong and Shanghai Bank have extremely close ties to the core RIIA group. The chart also shows that these links continuously intersect two major groups whose activities are key to drug wholesaling and large-scale laundering of dirty money.

The first is the old-line British opium traders, including the Peninsular and Oriental Steamship Lines, Jardine Matheson, John Swire and Sons, and Charterhouse Japhet. The second is the tightly knit complex of world gold and diamonds production and sales.

  • Lord Catto of Cairncatto is the chairman of the board of the prominent merchant bank Morgan Grenfell & Co., which has close ties of ownership to Morgan et Cie. International, one of Lord Shawcross’s companies. 

  • Philip de Zulueta, the private parliamentary secretary to Harold MacMillan when the latter was Prime Minister, advisor to every Tory Prime Minister since the war, spent most of his career with the leading British merchant bank Hill Samuel, also the largest merchant bank in South Africa; he is thus in close association with Sir Mark Turner, Rio Tinto Zinc’s Chairman, and a director of Midland, and International Banks, Samuel Montagu (owned by the same families as Hill Samuel), and various gold and other mining ventures in which Zulueta has interests. 

  • Henry Neville Lindley Keswick, of the family that controls Jardine Matheson, now occupies the traditional Jardine Matheson seat on the London Committee of the HongShang, a tradition that goes back to 1864. His father, Sir William Johnston Keswick, is also a director of British Petroleum, along with Lord Trevelyan, Chairman of RIIA, and B.A.C. Sweet-Escott of the RIIA Finance Committee.  

  • The elder Keswick is also the representative of drug wholesaling operations in the Far East with respect to drug retailing operations in Canada: he is a director of the Hudson Bay Company (see Section 8).  

  • H.N.L. Keswick’s uncle David Johnston Keswick has been with Samuel Montagu, a core RIIA bank, since 1930, as well as with the family firms. Another uncle, Sir John Henry Keswick, is the top man for British corporate policy towards China. He is Chairman of the China Association, Vice-President of the Sino-British Trade Council, and a member of the Great Britain-China Committee.  

  • John Kidston Swire, the Swire family’s representative on the HongShang board, goes back to World War II with RIIA Council Member Sir Mark Turner and various other leading lights of the RIIA, when they all worked on the Ministry of Economic Warfare. Sir John Henry Keswick is another Ministry of Economics War veteran.   

  • J.A.F. Binny and R.J. Dent are both directors of the National Westminster Bank, one of the core RIIA institutions.  

  • Sir Michael Turner, who retired as Chairman of the Hong Kong and Shanghai Bank in 1952 but remains on the London Committee, is still a director of National Westminster Bank.

Canada: North America’s Hong Kong

Most heroin entering North America comes through Canada. This is the estimate of authoritative law enforcement sources — despite the misleading publicity about Mexican supply routes, which are in any case mostly transshipment channels for Far Eastern dope.

Virtually everything the reader now knows about the British Crown Colony of Hong Kong applies to the British Dominion north of the American border. The idea that Canada is a nation — in the sense that Americans understand the term — is the product of low-grade, if persistent, public relations efforts. Politically and financially, Canada is run straight from the top by the British monarchy, starting with the Governor-General whom the Queen appoints, the Privy Council, and including the core group of Knights of St. John of Jerusalem who control the bulk of Canadian business.

Canada’s role in the drug flow to the U.S. is not much different from its role during Prohibition — as we will document in Part III of this report. Canada transships most of the heroin entering the American market, because it was created and maintained as a British Dominion on the northern flank of the United States to carry out precisely such operations.

Despite the British monarchy’s iron grip over the highest levels of Canadian public life, there are a few individuals well placed in Canada, including in its law enforcement services, who look to America rather than Britain as a model for Canada’s future. At great risk to themselves, they have fought a long rearguard action against criminal activities that enjoy near official sanction. The American public has heard little of their efforts because of Canada’s Official Secrets Act, modeled on Great Britain’s own 1911 Official Secrets Act.  

That legislation prevents any publication or public discussion of what the government — that is, the British-appointed Governor-General — chooses to regard as a state secret. Given Canada’s make-up, most drug-running, dirty money laundering, and organized crime activity, including political terrorism, fall into that category. Anyone who writes about this in Canada will go to jail immediately and could, under the law, be executed.  But without the help of Canadian citizens with access to official sources, willing to take the risk, this report could not have been written. 

 Three crucial cases
  Before examining the structure of Canada’s drug and dirty money operations, a few leading examples will suffice to indicate the nature of the problem. One is the personage of Walter Lockhart Gordon, Honorary Chairman for Life of the Canadian Institute of International Affairs (CIIA), the Canadian offshoot of the British Royal Institute of International Affairs. The. CIIA receives most of its funding directly from the office of the Governor-General. Every Canadian Secretary of State for External Affairs since the CIIA’s founding has been a CIIA member. 

The CIIA is also the official sponsor of the Institute for Pacific Relations, the nexus of Britain’s Peking Connection (Sections 6 and 7), after public scandal forced the Institute for Pacific Relations to leave the United States after 1947.


Walter Lockhart Gordon’s fingerprints show up throughout this section. Apart from his lifetime post at the top of the CIIA, he is a past chairman of the Privy Council, the Governor-General’s select operations group for running Canadian politics (1967-68); he was finance minister from 1963 to 1965; and is a director of some of the dirtiest corporate operations in Canada.

But most important, he founded Clarkson and Gordon, the accountants firm that audits three of the five Canadian chartered banks: Bank of Nova Scotia (of which Gordon is a director), Toronto Dominion Bank, and Canadian Imperial Bank. Gordon’s partner, Stephen Clarkson, is also a leading member of the Canadian Institute of International Affairs, as well as a leading sponsor of the Institute for Pacific Relations. Through a network of accountants dispersed through these banks, Clarkson and Gordon functions as a command center for the most extensive dirty money laundering operation in the world, stretching from the heroin receiving points in the Pacific Northwest, to the branch operations of the Canadian banks in the Caribbean Silver Triangle.

Gordon, as we shall detail below, is also Canada’s chief con tact-man for the Peking Connection (see Section 7).   


A second example is the group of British “spooks” who run the Eagle Star Insurance Company, which heads the accompanying chart of the Canadian drug networks. Eagle Star is one of Britain’s largest financial corporations, and a joint operation between Britain’s top financial firms, including Barclays Bank, Lloyds, Hill Samuel, and N.M. Rothschild & Sons.

Eagle Star, as the chart shows, runs the Bronfman family operation from the top, through its control of English Properties, and English Properties’ control of the “Bronfman” Trizec Corporations.

The Bronfmans are what is known in intelligence jargon as “cutouts,” or controlled front-men. What is significant here is Eagle Star’s special qualifications for controlling the Bronfman family’s corporate group, which, in turn, has been the seat of Canada’s rum-and dope-running, dirty money, and terrorist operations since Prohibition. Eagle Star’s management is British intelligence, by an arrangement that traces back to World War II.

Two Eagle Star directors, Sir Kenneth Strong and Sir Kenneth Keith, were Number One and Number Two men, respectively, in British intelligence immediately after World War II — when the Bronfman family created its “legitimate” front Trizec with Eagle Star funding. (1) Both men have kept up their close ties to Britain’s foreign intelligence service, MI6. Part III of this report tells the story of the Bronfman family’s dope-running, organized crime, and terrorist activities. What is crucial to keep in mind here is that the men who own the Bronfmans sit in the highest councils of British covert operations.

In a pattern that has already become familiar, Sir Kenneth Keith moves between the secret world of British intelligence and the opium politics of the Far East. Keith is also a leading member of the Canadian Institute of International Affairs. Among other leading corporate positions, including a directorship at Canada’s Bank of Nova Scotia, he is the chairman of the Hill Samuel group of companies, one of the leading British merchant banks, and an incarnation of the old Samuel banking family’s interests.

Sitting with Sir Kenneth Keith on the board of directors of Hill Samuel is the Hong Kong and Shanghai Bank’s Sir Philip de Zulueta, member of the HongShang’s controlling “London Committee.” Zulueta was private parliamentary secretary to a string of British Conservative prime ministers while Sir Kenneth Strong was completing his career at British intelligence.

Eagle Star is a sterling example of Canada’s role in drugs because it contains every element of the drug machine: the Bronfman family, which has spokes tying into the Zionist dirty money and terrorist apparat; the top levels of British intelligence; and the core of the opium trade, the HongShang itself.  


The Hudson’s Bay Company is the appropriate starting point for a look inside the operations of Canada’s drug machine. During Prohibition, it was the Bronfman’s Seagram’s partner in the “Pure Drug Company,” the main source of bootleg liquor during Canada’s dry period.

The Hudson’s Bay is also a front for the grand old families of the opium trade, the Inchcape and Keswick families, the proprietors, respectively, of the Peninsular and Orient Steamship Company, the world’s (and the Far East’s) largest shipping fleets, and Jar-dine Matheson, Hong Kong’s dominant trading company. The 2nd Earl of Inchcape, whose son still runs the P&O lines, wrote the notorious 1923 Inchcape report advocating the continuation of opium production in the Far East to maintain British revenues. The number two man today at the P&O, Vice-Chairman of the board Eric Drake, sits on the board of Hudson’s Bay.

Jardine Matheson’s Sir William Johnston Keswick — the chairman of the Shanghai Municipal Settlements during the 1930s peak of Shanghai heroin traffic — only recently retired as a director of the Hudson’s Bay Company.

William Johnston Keswick and Sir Eric Drake also sit together on the board of British Petroleum, next to Lord Humphrey Trevelyan, the chairman of the council of the Royal Institute of Inter national Affairs and Britain’s charge d’affaires in Peking during the critical years 1951-53.

Drake is also a director of the top British merchant bank Kleinwort Benson. As noted in Section 7, Kleinwort Benson’s whollyowned subsidiary Sharps Pixley Ward jointly runs the Hong Kong gold market with the Hong Kong and Shanghai Bank, a crucial support operation for the Far East drug traffic. Drake’s fellow director, the deputy chairman of Kleinwort Benson, is Sir Mark Turner, of Rio Tinto Zinc. Rio Tinto Zinc, in turn, was founded by Matheson family money in the 1840s, and Mathesons ran Rio Tinto Zinc until the turn of the century. To complete the circle, William Johnston Keswick sits on the board of Jardine Matheson, along with several directors of Sir Eric Drake’s P&O Steamship Company.

In other words, the Hudson’s Bay Company, the most “Canadian” of companies, is run from the top by a combination of Far Eastern old-line drug traffickers and their closest London contacts.

The Hong Kong opium connection goes even further. Sir William Keswick’s son, Henry Neville Lindley Keswick, a board member of the Hong Kong and Shanghai Bank, is also a director of MacMillan Bloedel, one of Canada’s biggest pulp and paper operations, closely tied to the Macmillan publishing interests. The Macmillans took off as a Canadian family when Harold Macmillan—later British prime minister at the time of the Kennedy Administration — married the daughter of Canada’s GovernorGeneral, the Queen’s personal representative. 

The Governor-General in question was the 9th Duke of Devonshire, Victor C.W. Cavendish, who held office 1916-20 at the outset of Prohibition; his son-in-law Harold Macmillan became his chief assistant in Canada in 1919, the same year that Arnold Rothstein set up the big liquor delivery contacts in England. The Governor-General’s son William helped Joe Kennedy make-contacts among big English distilleries. The MacMillan interests started with Prohibition. Today, through their association with William Johnston Keswick — who personally ran the Shanghai heroin traffic during the 1930s — they are up to their necks in the drug trade.

Canadian Pacific Ltd., the biggest company in Canada, holds a controlling interest in MacMillan Bloedel.

Dope goes in, dirty money goes out

According to high-level Canadian intelligence sources, most of the heroin that reaches North America is flown in through Canadian Pacific Air. There is no “smoking gun” evidence to substantiate this, but a November 1978 trial in Vancouver reveals evidence that Canadian Pacific was involved in the smuggling of 22 pounds of cocaine from Hong Kong.

Figure 7 neatly traces the flow of heroin and dirty money in Canada: the drugs come in through Canadian Pacific and then are conduited to points south of the border. Heavily interlocked with the Western Canada connection is the Bronfman group, whose corporate center is Seagram, and whose financial center is the Trizec group. Since Prohibition, Seagram has handled the flow of smuggling into the United States (see Part III).

Both Seagram (and its old Prohibition rum-running partner, Hudson’s Bay) are interlocked through a maze of contacts with all five of the big Canadian chartered banks: the Bank of Montreal, the Royal Bank of Canada, the Bank of Nova Scotia, the Toronto Dominion Bank, and the Canada Imperial Bank. Thus the dirty money gleaned from the drug trade is conduited through these banks to points further south: the banks’ offshore centers in the Caribbean and from there the money makes its whirlpool round of worldwide laundering.

Canada’s Big Five dominate all Canadian banking as fiercely as the British Big FourBarclays, National Westminster, Lloyds, and Midlands — do in Britain. Unlike the United States, which has a relatively broadly spread base of regional banking, Canadian and British banking is run from the top by the institutions named. The Canadian institutions are barely distinguishable in their current practice from the British buccaneers who plied the Caribbean during the 17th century. Along with the British banks, which have numerous joint ventures with the Canadians — e.g., the Royal Bank operates in the Bahamas under the “RoyWest” cover in a joint venture with National Westminster — they are the core of the dirty money operations offshore of the United States.

The Royal Bank of Canada has 21 affiliates in offshore banking and subsidiaries — more than any other bank in the world save Barclays Bank. Royal Bank’s “RoyWest” connection to the National Westminster Bank ties it closely to the Hong Kong and Shanghai bank itself; HongShang has two mutual directors with National Westminster, J.A.F. Binny and R.D. Dent. Dent is the descendant of the old-line British opium trading family that founded Lancelot Dent about the same time that Jardine Matheson appeared.  Among other links, the Royal Bank of Canada is tied to the Bronfmans through Neil Phillips — son of Lazarus Phillips, the Bronfman family’s lawyer and most trusted aide from Prohibition until the 1950s.   


Royal Bank has the dirtiest reputation of any bank in the Caribbean. According to authoritative diplomatic sources, the Royal Bank of Canada directly ordered the Guyanese government to plant marijuana in order to raise foreign exchange income. In 1976, when Guyana went flat broke and applied to the International Monetary Fund for emergency assistance, Royal Bank of Canada officials met with senior members of the Guyana government. The Royal Bank insisted that Guyana transform its economy into a “cash crop” producer before it, or any other major bank, would issue loans. The Guyanese were desperate and did what they were told. Northwest Guyana, in consequence, has become a major producer of marijuana for the North American market.

Second in the Caribbean offshore centers to the Royal Bank is the Bank of Nova Scotia — Walter Lockhart Gordon’s bank. A top Bronfman aide and figure in Canadian Zionist organizations,

R.D. Wolfe, sits both on the board of Seagram and the Bank of Nova Scotia. Scotiabank has 13 branches in offshore centers, as well as innumerable joint ventures and similar fronts.

Banking and diplomatic sources agree that the Bank of Nova Scotia is the number one handler of flight capital out of Caribbean countries, especially troubled countries such as Jamaica. Apart from funds fleeing difficult political situations, much, if not most, of all illegal money transfers out of the Caribbean. A large portion of Jamaican illegal funds are conduited through a Jamaican national currently employed in a senior position at the big New York brokerage house Drexel Burnham Lambert. (2)

Scotiabank’s Jamaican trade is a particularly filthy business, since it involves shifting funds earned in Jamaica by local criminals into safe havens. The cash side of the Jamaican operations, according to law enforcement sources, is done more with arms than drugs. Planes fly into Jamaica with loads of small arms, and take loads of marijuana out. The retail side in Jamaica is arms selling. The ultimate cash proceeds of the selling chain are then laundered through Scotiabank.

The Bank of Nova Scotia’s role in Canadian gold markets, through its own trading operations and its interlock with the chairman of the second-largest Canadian gold trader, Noranda Mines, was already noted in Section 4. According to informed New York gold market sources, a substantial proportion of Nova Scotia’s flight capital operations are accomplished through illegal purchases of gold by Jamaican and other nationals. The same sources add that Dr. Henry Jarecki‘s Mocatta Metals in New York (see Section 4 again) has a substantial share of Caribbean dirty money traffic.   

The Canada-Peking connection

The starting point of any examination of Canadian drug traffic is Walter Lockhart Gordon’s close relationship to Canadian Pacific. Gordon is Canada’s grand old man, Honorary Chairman of the Canadian Institute of International Affairs for Life, top leader of the ruling Liberal Party, finance minister after 1963, and chief foreign policy-maker in Canada for the past 30 years.   Gordon sits on the board of directors of Canadian Pacific and the Bank of Nova Scotia; his accounting firm, Clarkson and Gordon, handles the accounts of the Bank of Nova Scotia, Toronto Dominion Bank, and Canadian Imperial Bank.    


Authoritative Canadian intelligence sources further identify Gordon as the controller of Canada’s three leading China specialists, Paul Lin, James Endicott, and Chester Ronning, whom we met earlier in Section 7. The association goes back in the cases of Endicott and Ronning to the end of World War II, when the two returned from close collaboration with Chou En-lai, to become the core of the transplanted Institute for Pacific Relations in Canada.

Based in Montreal, Paul Lin is the go-between for Walter Gordon and the Vancouver, British Columbia drug wholesaling and transshipment operations. Lin’s most important contact is the former president of drug-shipping Canadian Pacific, John D. Gil-mer. Gilmer is a Knight of St. John of Jerusalem, and the patron of People’s Republic of China fronts on Canada’s West Coast. Paul Lin is his personal attorney.

In turn, Gilmer is the attorney for two open representatives of the People’s Republic of China in Vancouver, B.C., the Chinese Commercial Corporation and the Chinese Cultural Center. The Chinese Cultural Center in Vancouver receives funding from an-other Knight of St. John, John Robert Nicholson, a close associate of Gilmer.

Both Gilmer and Nicholson are major funders of the Simon Fraser University in Vancouver, which became the home of the Institute for Pacific Relations after it was driven out of the United States. Paul Lin’s brother, Dr. Tsing Lin, is currently employed at the Institute for Pacific Relations. All these men have been working together since the Institute for Pacific Relations, as detailed in Section 7, served as the Royal Institute of International Affairs bridgehead into the United States, and Chester Ronning was meeting weekly with Wang Ping-nan and occasionally with Chou En-lai in Chungking.

Endicott, now an old man, created the leading North American center of explicit Maoism, the Norman Bethune Institute at York University. Walter Gordon was the university’s chancellor for many years. Gordon personally arranged the funding of the Bethune Institute, named after a Canadian doctor who served in Mao’s armies.

Gordon’s accounting firm Clarkson and Gordon tries to keep its nose clean of overt involvement in the drug trade. But one of its escapades caused a public scandal in Canada five years ago. Clarkson and Gordon put together the funding for Rochdale College in Toronto, an experimental university that quickly became the most drug-ridden college campus in Canada. By the early 1970s Rochdale College had become not only a main center of illegal drugs consumption, but also the retail distribution point for marijuana and hallucinogens throughout most of Eastern Canada. When the story inevitably became headline material in the early 1970s, Canadian police were compelled to shut it down, as a matter of public decency.   Clarkson and Gordon, who had created Rochdale College, sadly took the drug-ridden remnant back, acting as its receiver and liquidator.    

 Who rules Canada

But the company to which Gordon is closest is Canadian Pacific, which controls most of the dominion’s air, sea, and land transportation. It has directors in virtually every industry it does not control.

Figure 7, Drug-Running—The Canadian Connection
*Far East Opium Runners

As the accompanying chart demonstrates, it is interlocked three ways with Seagram Ltd., the core of the Bronfman group. The chart only shows a handful of Canadian Pacific’s links to the five major chartered banks; no fewer than 14 of its directors sit on their boards.

Most important, Canadian Pacific features no fewer than four members of the Most Venerable Order of St. John of Jerusalem on its board. They include the aforementioned J.C. Gilmer of Vancouver, the angel for every Maoist front in the city; W.E. McLaughlin, the chairman of the board of the aforementioned Royal Bank of Canada; and J.P.W. Ostiguy.

Only one other corporation in the world, Barclays Bank, contains more members of the British monarchy’s most elite order among its directors. That fact alone establishes Canadian Pacific’s vassal-hood before the feudal rights of the British monarchy. In terms of Canada’s real chain of command, it is an honor for Charles R. Bronfman to sit on Canadian Pacific’s board.

The concentration of Knights of Malta on the council of the Canadian Pacific Company also clears up — from a professional intelligence standpoint — why that company has special access to the Far Eastern narcotics traffic. The chairman of the board of the Hong Kong and Shanghai Bank from 1962 to 1970 was Sir Michael Turner. When the current chairman, M.G. Sandberg, replaced Turner in 1970, he remained on the “London Committee” of the HongShang (as well as the board of directors of National Westminster Bank, with two of his fellow HongShang directors). 

Sandberg was created Commander of St. John, a high-ranking position in the elite order, in 1960. He is still the chairman of the Council of St. John — the organization of the Knights — in Hong Kong. The company most under the direction of the Knights of Malta in Canada deals directly with the chief of their order in Hong Kong.

At the other end of the Canadian drug cycle, the dirty money banks, each of the five Canadian dirty money banks has at least one Knight of Malta on its board. The Canadian Imperial Bank and the Bank of Nova Scotia are directed by three Knights of Malta each.

In addition, there is no question that the Canadian Institute of International Affairs — which has picked every Canadian foreign minister of this century — is not a Canadian institution, but the local branch of the British monarchy’s most elite chivalric order. Canada’s former Governor-General, Roland Michener, and current chairman of the CIIA is also a Knight of St. John. A board member of the Italian branch of the Order of St. John, the Order of St. Lazarus, is a member of the CIIA’s board, Henry R. Jackman. J.J. Jodrey, another board member, is also a Knight of St. John.

The Order of St. John respects the same chain of command as do Canada’s Governor-General and Privy Council: the Queen of England, who is the titular head of the Order, and the Queen’s cousin, the Duke of Gloucester, who is Grand Prior to the Order. These men control the finances and logistics of Canada’s economy. Through a series of “cutouts,” like the Bronfman family, they also control the drug-running, the organized crime, and the political terrorism directed against the United States.

There has been little effective challenge to their rule of these forces in Canada since 1910, when then-Prime Minister de Laurier attempted to organize a counterweight from within the British dominions, including support from then Prime Minister of South Africa, Botha. Lord Milner, whom we profiled earlier in Section 7, traveled to Canada in 1908 to avert what would have been a catastrophe in the eyes of the British monarchy.

Milner’s visit, which founded the Canadian Round Table Group — the mother organization of Walter Lockhart Gordon’s Canadian Institute of International Affairs — was ultimately successful. Robert Borden, a Milner protégé, replaced de Laurier in 1910, and Canada was secured for the Prohibition offensive against the United States. Robert Borden’s descendant Henry Borden still sits on the Council of the Canadian Institute of International Affairs.

The project is best summarized in a letter that Rudyard Kipling, the swastika-wielding racist who helped found Canada’s Institute of International Affairs, wrote to Lord Milner after the de Laurier initiative failed:

“This busts the de Laurier-Botha liaison,” Kipling wrote, “in what are called our Imperial Councils. Additionally, Australia will be deprived of big sister’s (i.e. Canada’s — ed.) example as an excuse for nibbling after American ‘protection’ on her behalf… and I do believe it smashes French power for good. Seriously, don’t you think it’s the best thing that’s happened to us in ten years? Also, we’ve worked very hard for it.” (3)

by Konstandinos Kalimtgis, David Goldman, Jeffrey Steinberg

DOPE: Hong Kong…The World’s Drug Capital

drugs & dope opium trade caricature ""Opium War"" drawing in ""Le Rire"" Paris 1899 death as missionary boxes China Asia,
drugs & dope opium trade caricature “”Opium War”” drawing in “”Le Rire”” Paris 1899 death as missionary boxes China Asia,

Illegal drugs are the biggest business in the Far East — and by a close margin the biggest business in the world — but in Hong Kong, drugs do not merely dominate the economy: they are the economy. A look at the British colony of Hong Kong gives us a picture in microcosm of the drug-dirty money economy worldwide.

First, start with the fact that Hong Kong is the most drug-ridden place in the world, per capita. Official British police estimates have it that 10 percent of Hong Kong’s population or 500,000 people, are hardcore addicts. Unofficial estimates run this figure up to 50 percent. A safe, conservative estimate is 20 percent or 1 million people — more than New York City’s addicts. Assuming the daily cost of a serious opium or morphine habit in Hong Kong to run to about $10 U.S., the annual cash-flow of retail drug sales at HongShang’s back porch runs to about $3.7 billion.

As the region’s central bank, the Hong Kong and Shanghai bank provides banknotes to its clients, among other services. Any reasonable estimate of Hong Kong’s dirty money operations including the retail drug trade, as well as the notorious bribes to police officers, international drug wholesaling based on the island, illegal gambling, and other forms of illicit transactions, must yield a shockingly large number. With a drugged-up population of that size, the life of Hong Kong’s population must be organized around illegal activity.

Shifting focus to New York City for a moment indicates the magnitude of the world’s drug-centered illegal economy. Most estimates put the city’s addict population at 500,000 (and another 250,000 nationally). Assuming a $50 per day habit is average — which the federal estimates apparently do — this addict population must obtain $9 billion a year out of New York City’s faltering economy to meet its needs.

Where does it get $9 billion? Not substantially through well-paying jobs. With rare exceptions that is physically impossible. Not from muggings; however bad matters seem, neither 500,000 muggings, nor a combination of muggings and burglaries, take place daily in New York City. Even prostitution could contribute only a small portion of the $9 billion annual habit of New York City’s addicts.

Where does the money come from? From organized crime activity: the numbers racket, bookmaking, protection rackets, auto-theft, stolen auto parts distribution, prostitution, pornography, arson-for-hire, and similar occupations. Drug addiction could not possibly exist without organized crime to provide the means of financing addiction.

The National Education Television’s recent series on the narcotics trade demonstrated irremonstrable nerve by repeatedly citing the view of the (well-paid) Royal Police of Hong Kong that the narcotics traffic will always exist as long as there is a market. The market for the worst form of human misery not only is the most centrally organized of any market in the world, but could not possibly exist in any other way. If the demand provokes the supply, one might ask, why do narcotics wholesalers produce roughly ten times what addicts can consume annually?

Hong Kong is the capital of the world’s illegal drug economy. This explains some of its most notable characteristics: the biggest illegal market in dirty money, drugs, and gold; the world’s biggest liquidity ratio; and the world’s biggest bribe rate.

The annual exports of the colony this year will be no more than $8 billion; as we have seen, it will take in more than $10 billion in drug and drug-related financial activity. There is no credence to the myth that Hong Kong’s economy is booming on the basis of cheap electronics and textiles.     

 The illegal market
Apart from retailing and wholesaling of drugs, huge sectors of the island’s economy are indirectly dependent on the drug traffic. Exemplary is the booming gold market, whose turnover doubled from 305 tons in 1976 to 600 tons (worth $43.6 billion) in 1977. Some several hundreds of millions of dollars of gold go directly to the Golden Triangle; hundreds of millions more absorb and hide the profits of drug traffickers across the Far East.

This is the place where the Hong Kong and Shanghai Bank smuggled gold openly for a quarter-century, rigs the stock market in full public view, and promotes Chinese smugglers to the upper reaches of Hong Kong society. Nothing moves in the colony without the knowledge and approval of the Hong Kong and Shanghai Bank and interlocked old-line opium trading companies. They set the island up as an opium center in the 1820s when it was bare rock, and they run it now.

A Soviet commentator, M.A. Andreyev, wrote in 1974:

“In the Far East Hong Kong is the main center of illegal operations in gold and foreign exchange. Large-scale illegal transactions are carried on regularly there in Filipino pesos, Indonesian rupees, Malay and Singapore dollars, Burmese kyats, Thai bahts, South Vietnamese piastres, Cambodian riels, Laotian kips, Chinese yuans, British pounds and U.S. dollars. The foreign exchange transactions in Hong Kong daily involve several billion U.S. dollars (the figure is a gross underestimate, even for 1974 — ed.), with the larger part of these transactions carried on by businessmen from Southeast Asian countries. On a lesser scale such illegal transactions in foreign exchange and gold are conducted in Singapore and Bangkok ….

“The overseas Chinese bourgeoisie actively finances the gold and foreign currency operations in Hong Kong and on the outskirts of Southeast Asia. Ever since the end of the Second World War much of the migrating capital from China has been used in the illegal gold and foreign exchange operations in Hong Kong.

U.S. economists note that in the mid-1950s most of these operations in the Hong Kong black market were handled by Chinese brokers. Chinese businessmen are even more active in the gold and foreign exchange black markets in the Southeast Asian countries. Regarding the part played by Chinese financiers in the gold and foreign exchange market in the Philippines, a Hong Kong publication (Wong Po-Shang, The Influx of Chinese Capital into Hong Kong since 1937— ed.) wrote:

‘Besides remitting through the regular free market, these people have made transfers of their money by trade transactions and devious means as well as by out and out smuggling. This is said to be the case with money from the Philippines where large underground organizations are said to be in operation with the object of helping to smuggle funds, gold bullion and valuables out of the country.’ ” (1)

Andreyev adds:

“Three types of transactions predominate among the innumerable and varied black market gold and foreign exchange operations. These are, first, the acquisition in the local market of gold and foreign exchange (mainly U.S. dollars) smuggled into the country concerned for local currency which devalues quickly. Next, the smuggling of local currency overseas, to countries with a relatively stable currency, for the subsequent exchange of that currency for gold or hard currency. Whereas these types of transactions involve the physical movement of gold and bank-notes from one country to another and are, thereby, closely connected with smuggling (in all Southeast Asian countries there are strict limitations on the inflow and outflow of gold, foreign exchange, and local currency), the third type of black market gold and foreign exchange operation is practically not linked with the movement of bank-notes or gold from country to country . . . (but rather with obtaining) funds in the black market from local businessmen desiring to build up large overseas hard currency or gold accounts.

“The existence of organizational links between numerous Chinese companies in the different Southeast Asian countries makes it possible to export Chinese capital from country to country even without the physical movement of that capital. Take, for instance, a Chinese firm with branches in Hong Kong, Singapore, Djakarta, Kuala Lumpur and Bangkok. It can, if it so desires, pay for its operations conducted in its behalf by its Bangkok branch not through official channels but by transferring the necessary sum of money in foreign exchange to that branch’s overseas bank account. In this case the Bangkok branch pays for these operations from its local currency fund and in exchange gets an addition to its hard currency account abroad.” (2)

Highest liquidity ratio Hong Kong’s drug traffic and the region wide illegal dealings surrounding it undoubtedly account for the colony’s chronic excess of liquidity (see International Currency Review, vol. 10, no. 4, for a descriptive analysis). Year-to-year growth in money supply as of April 1978 was 25 percent; however, some of that is attributable to inflows of foreign currency related to the opening of an offshore Hong Kong bond market. 

Over the past 15 years, the huge volume of external lending tended to suppress the other ise huge money supply needed to finance several billions of illegal activity on an island whose reported money supply is now about $4.5 billion, U.S. Offshore business booked through Hong Kong was formerly so large that the liquidity ratio of the banks (taking into account both cash and rediscounted offshore bills of exchange) stood at an extraordinary 50 percent. Most of the local money supply was in the form of cash. (3)

In effect, the cash-based local drug traffic in Hong Kong created a reserve base for offshore lending to finance the drug traffic in the rest of Asia! Since 1975, however, the development of the offshore bond market and the influx of foreign capital has led to the reduction of the liquidity ratio to a still-extraordinary 43 percent.

Understandably, even public business practice in Hong Kong is politically corrupt. The HongShang’s entirely open role in gold smuggling between Hong Kong and Macao was noted above. The London Financial Times of July 4, 1977 reported a 1977 scandal in which Wheelock Marden, a trading company listed on the Hong Kong Stock Exchange, provoked an investigation by the Securities Commission, after a “modestly optimistic statement” was followed by “revelation of huge profits drop, dividend cut, write-offs and liquidity problems.”

The Financial Times wrote,

“insider trading is rampant . . .. These flurries may be attributable to leaks by clerks, secretaries and translators, rather than to insider trading at the top. But who can blame these lesser lights when Mr John Marden is still chairman of Wheelock Marden, still sits on the board of the Hong Kong and Shanghai Bank, is still a pillar of ‘respectable’ colonial society?” (4)

Biggest bribe rate

Law enforcement sources report that the “lesser lights” are generally taken care of through the world’s most efficient bribery system. At least $1 billion is passed out to Hong Kong’s officialdom.

According to a report in the same London Financial Times article cited above:

“‘Perhaps a billion dollars a year flow into the syndicates,’ admits Mr Jack Cater, Hong Kong’s head of the Independent Commission Against Corruption (ICAC) started in February. The sum gives one clue to the size of the problem the ICAC has to tackle. Another, Mr Cater points out, is the extent of official and in particular police corruption in the Colony. With membership varying from 10 to 300, there are at least 28 identifiable public sector syndicates, and 25 of them are in the Royal Hong Kong Police Force ….

“The ICAC has considered about 9,500 reports on corruption, about 85 percent of them involving Her Majesty’s service. Reports of police crime (4,000) have regularly accounted for more than half the reports of government crime …. Mr Cater has failed to bring back the many wealthy and mostly Chinese non-commissioned police officers who left Hong Kong before the ICAC cast its net.” (5)   

(The largest concentration of the last-mentioned is in Vancouver, British Columbia, where they are still active in the narcotics traffic, according to law enforcement specialists.)

The $1 billion figure cited can be counted as overhead on the narcotics and related drug traffic in the area. Earlier, the local Hong Kong retail drug traffic was estimated at about $4 billion, and the area’s drug wholesaling business at $3 million and more. Assuming that bribes of police and other officials — what most of the $1 billion cited represents — amount to no more than 10-15 percent of the volume of drug traffic, retail and wholesale combined, then the estimates for the size of the drug traffic already made are unquestionably on the low side.  

The $1 billion in Hong Kong corruption annually estimated by the authorities — and it is not likely that this estimate is excessive — indicates drug traffic in and through Hong Kong of close to $10 billion, by ordinary reasoning. That figure, of course, does not include bribes to customs officials at Bangkok, Rangoon, Singapore, and elsewhere, let alone bribes to Thai and Burmese army officials.

To the extent that limited efforts at giving the appearance of honesty have come to pass in Hong Kong, both the police and the Chinese expatriate community have risen in revolt against them. Last year police rioted uncontrollably against so-called anticorruption efforts. The July 4, 1977 Financial Times account notes that the crusade “enraged Chinese business in particular …. In a rare display, the Chinese Manufacturers Association (pro-Peking) and the Kowloon Chamber of Commerce held a mass rally to protest against ‘interference in Chinese ancient customs.’ ” (6)

Such ancient customs indicate the nature of Hong Kong and its bank. According to custom, no bribes are solicited, none offered. Instead, couriers make their rounds through Royal Hong Kong Police and other official buildings early each Monday morning, leaving an envelope containing between one and five hundred-dollar bills in the top drawer of every desk. Any policeman who refuses to take his envelope will probably be dead within 48 hours, according to law enforcement officials.

The Peking Connection

Some of them (U.S. troops in Vietnam) are trying opium. And we are helping them. . . . Do you remember when the West imposed opium on us? They fought us with opium. And we are going to fight them with their own weapons. . . . The effect this demoralization is going to have on the United States will be far greater than anyone realizes.

Chinese Prime Minister Chou En-lai, in conversation with Egyptian President Nasser,  June 1965 (1)

Only since Henry Kissinger‘s 1972 trip to China has the Chinese role in the world opium trade been out of the headlines. The American, European, Japanese, and Soviet authorities had long insisted that Peking was a major primary producer and exporter of opium and its derivatives, and the British, under extreme pressure from abroad, had to assent. The highlights of the public record to this effect follow below in this section. However, even the most compelling documentation of Peking’s role in opium production misses the point.

Red China’s revenues from opium exports, as we will demonstrate, are a mere $800 million annually. Peking makes its real profits in the wholesaling, retailing, and financing of the opium traffic, mainly through Hong Kong, where the big money is made. As noted in Section 4, the People’s Republic of China has taken active part in the gold smuggling side of drug financing in the orient since 1950.

But since approximately the time of the Sino-Soviet split in the late 1950s, Peking has deliberately integrated its external financial affairs with the top British drug-running firms in Hong Kong, and the expatriate Chinese drug wholesaling and dirty money networks throughout the orient. Peking’s financial policy coincides with strategic commitment — stated unambiguously by the late Premier Chou En-lai — to the full-scale use of the opium weapon against the White Devils of the United States.

Peking’s financial dependence on Hong Kong is a matter of public record. On Oct. 2, 1978, Chase Manhattan Bank’s news-letter East-West Markets estimated that the financial flow into mainland China this year (excluding exports) through Hong Kong would total $2.5 billion, up from $1.3 billion in 1977. This $2.5 billion includes income on Peking’s foreign investments in Hong Kong and other Southeast Asian centers, plus remittances back to relatives on the mainland from Chinese expatriates.

Apart from the purely financial off take, most of Red China’s exports pass through Hong Kong. In 1976, Peking earned $2.4 billion in exports through the British colony, or sufficient to cover 40 percent of the PRC’s total import requirements for that year. Peking does all its banking through Hong Kong, largely through the Hong Kong and Shanghai Bank, and secondarily through the Standard and Chartered Bank. Peking conducts all its investments abroad through Hong Kong. That dependency is not merely established, but is increasing markedly.

The astonishing $2.5 billion financial reflow back to the PRC this year represents the fruits of Peking’s 20-year-old program of moving into the higher echelons of the drug traffic, by agreement with the British. Combining American and Soviet sources, we will demonstrate that this estimation of foreign drug revenues through Hong Kong is a good approximation of Peking’s income from drug wholesaling, retailing, and financing, as well as gambling, real estate, and other shady joint ventures with British and expatriate Chinese finance, closely related to the drug trade proper.

Even the $2.5 billion figure does not include the $800 million Peking earns as a primary opium producer. To estimate Peking’s gross revenues from the drug traffic, an additional sum of several hundred millions of dollars must be added: the overhead cost of maintaining one of the largest and best-financed intelligence and sabotage operations in the world, the Chinese Communist Intelligence Service (CCIS).

In summary, we will demonstrate that the People’s Republic of China is a 40 to 60 partner with the British oligarchy in the Far Eastern narcotics trade. 


Peking’s current policy represents a direct line of continuity between the current regime and Britain’s 19th century corrupt collaborators in China. Correspondingly, the fortunes of the Maoist Great Han Chauvinist faction in Peking are linked to the opium trade and the British oligarchy. They have staked China’s economy — its capacity to import urgently needed foreign goods — on the opium trade.

In consequence, the factional importance of the opium issue inside China is enormous. One unmistakable indication that reached Western view is the peculiar case of the Chinese-made film The Opium War, now distributed throughout the West. The Opium War uses the 19th century events as a parable for contemporary China. 

The villains of the film are not so much the British, but the corrupt Chinese who enable the British to win the Opium Wars, by preventing the Emperor and his loyal intelligence chief Lin Tse-hsu from repelling the White Devils. The film was initially banned by Madame Mao and the rest of the “Gang of Four,” allegedly because hero Lin Tse-hsu was an oblique reference observers, related drugs. to to Gang of however, a raging Four opponent have speculated-political battle over Peking Teng that Hsi the ao-p’ing. banning involvement in Some was

What political fireworks ensue every time a Japanese trade delegation, export-financing agreements in hand, shows up in Peking, can only be imagined. Japan’s economic approach to China, embodied in the recent Sino-Japanese treaty, offers the PRC an alternative to dependence on drugs and the British. Correspondingly, the Japanese approach gives the anti-opium group in the PRC powerful factional arguments.

Despite the Japanese initiative, however, Peking’s policy has taken dramatic new steps toward economic integration with British Hong Kong.

Among the first major foreign credit arrangements the Peking government has accepted was a $200 million deposit last summer in the Bank of China by a consortium of banks led by Standard and Chartered. Then, in October 1978, the venerable opium traders Jardine Matheson concluded a $300 million agreement with PRC firms in Hong Kong to develop a real estate complex adjoining a branch station of Hong Kong’s new mass transit system. 

Apparently, the joint investment came as part of a package deal including the largest-ever export package to China, also announced at the beginning of October by Jardine Matheson, which handled the negotiations on behalf of a consortium of British firms. The $300 million real estate development in Hong Kong’s New Territories includes an 80 percent stake on the part of two PRC-owned firms in Hong Kong, the Sun Company and the Kui Kwing Company; a 15 percent stake from the Hong Kong Land Company Ltd., headed by Jardine Matheson’s ex-chairman H. N. L. Keswick; and a 5 percent share from Jardine Matheson itself. (2)

The extraordinary leap in Peking’s investment income in and through Hong Kong, and the haste in opening new operations in common with the British, including Peking’s official entry into the Hong Kong gold market, mean one thing: Peking and London are jointly preparing a massive expansion of the opium and heroin traffic. Apparently, the market research that Dope, Incorporated conducts in the United States shows that the push for decriminalization of drug use could open the U.S. market up like a clam. In this section, we will show:

(1) The content of Peking’s activities in Hong Kong;
(2) The documented record of Peking support for the drug traffic;
(3) The activities of the grossly underestimated Chinese Communist Intelligence Service (CCIS).

Peking intelligence and the expatriate, largely Ch’ao Chou Chinese networks who handle the drug traffic are the same entity. As we demonstrated in Section 3, the expatriate networks operate under financial control from London. In fact, the entire operation of these networks runs through Peking-London joint ventures.  

Then, in the next section, we will report how the Royal Institute of International Affairs — which makes policy for the HongShang and the rest of the British banking establishment — negotiated the continuation of the old Anglo-Chinese drug traffic at the end of World War II.   

 “Communist fat cats”

London’s current view of Hong Kong’s relationship to the mainland is rosy.

“By its acceptance of the status quo, China shows that it is happy to keep the Kong Kong show on the road,” wrote the London Financial Times.  

“The existence of the communist banks (in Hong Kong) is an indication of the continuing commitment, as the establishment of a machinery manufacturing plant on Tsing Yi island, one purpose of which is to modify mainland machinery which fails to meet the requirements of potential buyers in the region.  

“This sort of commitment is understood by even the most nervous businessmen and helps remove the cloud of uncertainty which would otherwise start to gather. … It may be the final irony of the Hong Kong paradox that to ensure Hong Kong’s wellbeing, Peking will have to increase its own investment and participation in the colony.” (3)

The same Financial Times report then specified what it meant by increased Peking participation in the colony, citing the exemplary case of a leading Hong Kong and Macao entrepreneur, Mr. Stanley Ho:

“It is a widely accepted allegation that Mr Ho and his partner, Mr Henry Fok, started their fortunes at the time of the Korean War running strategic materials into China. Certainly, both men became prominent during that era of smuggling. Indeed, Mr Ho seems to have weathered the 1967 riots (following the Cultural Revolution — ed.) without taking sides, and he even managed to bolster his friendship with Peking authorities. The relationship, and Mr Ho’s wealth, can be traced to the award of China’s sand monopoly in Hong Kong to his partnership with Mr Fok. Later, in 1962, Mr Ho was awarded the 25-year gambling franchise in Macao, where he had worked during World War II for a Japanese company. It is fair to say that the gambling franchise was a present from Peking.”

The Financial Times could have cited other cases, like the Shaw Brothers (Anglicized Chinese name), Hong Kong’s premiere producers of Kung Fu films for distribution throughout the world. Apart from their chain of theaters in Chinese communities across the world, the Shaw brothers control most of Hong Kong’s prostitution. (4)

In any corner of the world but Hong Kong, Peking’s relationship to the British elite — Peking-owned businessmen and British bankers rub shoulders in the Hong Kong Jockey Club and other havens of Hong Kong’s elite — would be a source of international outrage.

Peking controls the Chinese General Chamber of Commerce in the colony, the same organization that organized riots in 1977 to protest the Independent Commission Against Corruption’s “interference in the ancient Chinese practice” of bribing police officers. Its chairman, Dr. Wang Kwan-cheng, is a frequent visitor to the mainland, and has been identified in intelligence reports as a PRC political intelligence operative. Wang’s position has been described as “the most prestigious in the colony, along with the British Governor-General.”   

Among other things, Wang is among the wealthiest men in Hong Kong, with interests in the retail trade, restaurants, real estate, and transportation. Accord ing to his entry in Who’s Who in Hong Kong, Wang is “chairman of the Board of Directors of Magna Development Company, Chinese Arts and Crafts (Hong Kong),” and a member of the Hong Kong Jockey Club.

The vice-chairman of the Chinese Chamber of Commerce is C. H. Kao, who, like Macao gambling czar Stanley Ho, amassed great wealth by running strategic materials into China during the Korean War. Other known Peking agents include Ho Yin, chairman of the Macao Chamber of Commerce, and Macao’s representative to the PRC’s People’s Congress, the organization that centralizes the political activities of Chinese expatriates through Peking (see below). Another is K. C. Jay (or Choi), formerly with the Bank of China in Peking, and currently a resident financial intelligence operative and currency specialist for the Bank of China in Hong Kong.

As Richard Deacon, the British author of The Chinese Secret Service, puts it:

“What is abundantly clear is that Peking has a great reservoir of strength and talent among its supporters in Hong Kong. Its Secret Service activities there are low-key, as in many other centers, and have avoided clashes with the authorities. Indeed the only espionage scandals to break in the colony for several years past are attributable to other powers altogether, some of them at least manufactured by the Chinese to embarrass another nation. Perhaps the subtlest of these was when in 1973 a Chinese Intelligence agent tipped off the British about two

K.G.B. agents, who had been taught Chinese at the University of Vladivostok, arriving in Hong Kong. In their possession were found documents containing valuable information about the Soviet espionage network in the Far East.”

And as Deacon remarks,

“There may even be some unofficial contacts on an intelligence level between the British and Chinese secret services. . . .” (5)

Deacon also reports that when China’s narcotics smuggling operations were at their height, they were controlled by the Central External Liaison Department and the Ministry of Investigation. According to Deacon, the major secret agents were employed through the pro-Peking China Sailors’ Union in Hong Kong. The union was responsible for bringing in a large shipment of heroin discovered by the New York police in January 1973. “The International United Front operations, controlled by the CFLD, included drug-pushing with the aim of creating disruption and demoralization in carefully selected target areas indicated by the CFLD.”

Deacon adds:

“From Italian sources, diplomatic and otherwise, comes confirmation that the heroin traffic between Hong Kong and Europe is master-minded by Chinese secret agents. It is even suspected that there may have been undercover deals between the Chinese and the Mafia for distribution of the stuff.”

Deacon identifies Keng Biao as the chief of the cited Central External Liaison Department. Whether Keng, in fact, coordinates Chinese drug-pushing cannot be independently corroborated at this time. Since the 1974 publication of Deacon’s account, however, Keng was elevated to the Politburo, China’s highest political body, in August 1977. In August 1978, he toured some of the prime marijuana-growing regions of the Caribbean, including Jamaica. Keng also stopped in the island of Malta, the old base of the drug-pushing Maltese order, for unexplained reasons, on his return home.

The renowned Mr. Stanley Ho, mentioned above, who as controller of Macao gambling is the proprietor of what law enforcement agencies consider the world’s dirtiest financial operation, is a bona fide member of Hong Kong’s social elite. Macao’s relationship to Peking became a public scandal in 1974, when the revolutionary Portuguese government offered to cede the colony to PRC. The Peking government refused, because Macao is much more useful to Peking as a source of illicit foreign exchange earnings through opium and other forms of smuggling than as a people’s commune. (6)

Only in rare instances have the links between the Hong Kong opium firms, British intelligence, and the Chinese Communist Intelligence Service come to public light. Where they have, the results put the best pulp thrillers to shame. One illustration is the story of the luckless Rennie family, Scots traders who sold their operation to Jardine Matheson in 1975. The Rennies are old Africa and Asia hands both in merchant ventures and the British colonial service, with major operations in South Africa, through Rennies Consolidated Holdings Ltd. (7)  

A relative, Sir John Rennie, resigned as head of Britain’s foreign secret intelligence organization DI6. Normally the identity of the chief of DI6 — “M” in the James Bond movies — is one of Britain’s best-guarded secrets. But Rennie’s identity came to light after his son, Charles Tatham Ogilvy Rennie, was arrested for heroin trafficking in London on January 15,1973. Official British press censorship, the infamous “D-notices” sent to newspaper editors, delayed press coverage of the blue-blooded drug bust until February 7, 1973, when London’s Evening Standard reported that “the previously unnamed son of the head of DI6, who is facing drugs charges in London, is Charles Tatham Ogilvy Rennie.”

Significantly, on the same day West Germany’s Stern magazine blew Sir John Rennie’s cover — in a dispatch from Hong Kong, the base of the Rennie family’s business partners, Jardine Matheson. Stern magazine’s information could have come either from Rennie family channels through Jardine Matheson, or through the Chinese Secret Service, or both.  

According to a Chinese Communist intelligence source cited by a British author,

“In the case of Sir John Rennie I believe the Chinese were so cautious that they refused to accept their own suspicion (that Rennie was head of DI6) for a long time. Confirmation finally came when Sir John’s son was arrested. They did not have far to look as his son’s wife used Gerrard Street — almost a 100 percent Chinese quarter of London — as a rendezvous for obtaining Chinese heroin.”

The British author, Richard Deacon, commented,

“I suspect that some of the leakages to the press of this information came from the Chinese, who have a very high regard for the British Secret Service.”

Of course, nothing is proven; British author Deacon guards his version of this story with an elaborate description of the Chinese Communist Intelligence Service’s purported method of discovering the chiefs of British intelligence branches through a careful reading of Who’s Who. Nonetheless, we have the fact that the head of DI6 was a member of a family with intimate business ties to the core of the Hong Kong drug traffic; that his son dealt in narcotics through Peking intelligence agents in London; and that the ultimate public announcement of his son’s arrest came via Hong Kong sources, either British or Chinese.

More recent events provide a useful epilogue. On September 2, 1978, the London Economist reported, “One after another, top South African businessmen have been falling foul of the country’s strict foreign exchange laws. This week’s man in the spotlight was Mr Charles Fiddian Green, chief executive of the country’s leading transport conglomerate, Rennies … He was convicted of currency offenses on Aug. 29 and fined Rand 10,000.

“Last week Mr Gordon Rennie (Sir John’s relative and Rennie Consolidated chairman) cut his throat and wrists after police came to talk to him. He went to hospital and was charged with currency offenses. Four other Rennies executives have been questioned by police; another has already been charged with currency smuggling; and two, including Mr Laurence Parry, have been sacked after apparently leaving the country.” (8)

Also significant is the implication of Laurence Parry in the recent Rennies scandal; Parry was chief of Rennies Holiday Inn franchise in Swaziland and Lesotho, where rich South Africans, spend weekends gambling and watching fleshy floorshows that are prohibited in puritan South Africa. Rennies, since 1975 a 53 percent owned subsidiary of Jardine Matheson, has an almost classical dirty money profile, apart from its casino-gambling and fleshpot operations.  

Rennie’s subsidiary in the security field, Fidelity Guards, is South Africa’s leader in armored car services and payroll preparations, including its own computer facilities — tailor-made for the currency smuggling operations of which Rennies has just been accused. In addition, Rennies owns its own air and cargo shipping facilities, making it the leading transport group in South Africa. (9)

At the time of Rennies’ merger with Jardine Matheson, South Africa’s magazine Management wrote, “For both, it’s a getting together of like people, like lifestyles, and remarkably similar management philosophies. Good solid Scots tradition abounds in both groups.” Apart from its affinity to the leading Hong Kong dynasty, Rennies is part of the South African mining establishment.  

Two of its board members, the just-arrested Charles Fiddian-Green and Fred G. Wolmarans, were previously senior officials of Consolidated Gold Fields of South Africa. Consol idated Gold, as quoted extensively in Section 4 above, wrote the book on currency smuggling — literally.    


The PRC’s financial intimacy with Hong Kong is a matter of public record. (Less public is the PRC’s relationship to the Bangkok connection noted above, the seven-year residency of drug financier Chin Sophonpanich in Peking.)

The PRC’s roughly $3 billion in foreign exchange reserves are banked through HongShang, Standard and Chartered Bank, and other British banks through Hong Kong. In 1978 Peking began large purchases of gold through the Hong Kong gold market, according to the London Economist’s Financial Report. (10)

The International Currency Review reported in September 1978:

“China’s increasingly open economic policies are likely to have a further impact on other Hong Kong balance-of-payments items . . . the Bank of China’s announcement in early July that the 13 Communist-owned banks in Hong Kong would be able to purchase bullion, deventures and possibly equities, should generate further hard currency revenue for Hong Kong’s financial community — and will also probably encourage a great deal of additional business. . . . The Chinese Government’s initiative in this connection represents one of several financial liberalizing measures recently implemented by Peking. In June, for example, the Bank of China and the Vanying Bank issued guarantees for a real estate project in Tsuen Warn, located in the new territories.” (11)

Peking’s opium weapon

Gold trading, banking, property, gambling — and roughly half of Peking’s foreign trade. That is the bottom line of the Peking investment in Hong Kong. Since the early 1950s, it was the official view of American law enforcement agencies that Hong Kong was the main outlet for heroin grown in Red China. In 1961, just before the Kennedy Administration kicked him out, U.S. Narcotics Bureau Chief Harry Anslinger stated,

“One primary outlet for the Red Chinese traffic has been Hong Kong.” 02

Figure 5, Hong Kong and Peking: Sharing the Drug Take

Roughly $10 billion annually passes into and out of Hong Kong as payments related to the production and wholesaling of illegal opium. Of this, something under half is paid to or at the disposal of the People’s Republic of China. The involvement of the Chinese Communist Intelligence Service in the dope trade may be considered self-financing, at a minimum; the Chinese also receive something on the order of a $.5 billion directly for opium growing. By far the largest part of Peking’s drug-take assumes the form of remittances to the mainland by overseas expatriate Chinese, the bulk of this $2.5 billion accounted for by those Ch’ao Chou drug-financiers and others in the Southeast Asian orbit of Britain’s Hong Kong and Shanghai Bank.

The police blotter’s record of Red Chinese opium traffic through Hong Kong is comprehensive. Even the British and Hong Kong police have been forced, on occasion, to admit this is the case. Scotland Yard attributed a large quantity of heroin seized in a 1969 bust in London’s West End to PRC shipments through Hong Kong. On Oct. 15,1970, the chief of Hong Kong’s notoriously corrupt narcotics bureau, Shih Tieh-pi, told a press conference that his force had confiscated 10,500 pounds of raw opium, 320 pounds of heroin, and 250 pounds of morphine, all of Red Chinese origin, during 1969. The quantities just cited compare dramatically with the largest-ever U.S. bust of heroin — the so-called French Connection bust involved a mere 100 kilograms. (13)

Without knowing the quality of the heroin seized, or the veracity of Mr. Shih Tieh-pi, comparisons are difficult. But if the 320 pounds of heroin seized so close to the original source were fairly pure, which is likely, and the rule of thumb applies that roughly one-tenth of illegal narcotics shipped are seized by police — then 3,200 pounds of heroin passed through Hong Kong in 1969. That is roughly what American narcotics addicts consumed in 1969.

The PRC’s Hong Kong connection is not a matter of convenience, but the expression of a quarter-century-long policy agreement between the Peking government and the highest levels of the British oligarchy. The best-known source for the unexpurgated views of China’s elite is Al Ahram editor Mohammed Heikal. Heikal reported the following 1965 conversation between Nasser and visiting PRC Prime Minister Chou En-lai:

“One of the most remarkable statements Chou En-lai made on that evening (June 23, 1965 — ed.) during our discussion of the demoralization of American soldiers was that: ‘Some of them are trying opium and we are helping them. We are planting the best kinds of poppies especially for the American soldiers in Vietnam.’ Nasser appeared to be somewhat disturbed, but Chou continued: ‘We want them to maintain a large army in Vietnam that will serve us as a hostage, and we wish to demoralize the troops. The effect of this demoralization on the United States will be much greater than anyone can imagine.’ Nasser thought that Chou might be exaggerating somewhat, but Chou’s concept was clear. He left no doubt that this was his course of action.” (14)

The Soviet government newspaper Isvestia of Feb. 17, 1978 cited a Chou En-lai speech in Wuhan in 1952 elaborating the same policy. According to Isvestia, the Chinese Prime Minister said:

“We are trying in every way to support the creation of opium poppy plants. From the standpoint of the revolution, opium is one of the means of helping the revolutionary cause and must be used actively. If the question is approached from a class standpoint, opium is one of the most powerful sorts of weapons of the proletarian revolution. … It is extremely important for us to export morphine and heroin in big quantities, use them to weaken the combat strength of the enemy and destroy the enemy without entering into war with him.”

Whether or not the Soviet citation is accurate, the views expressed coincide with those reported by observers such as Heikal, who is far from pro-Soviet or anti-PRC, and conform to the practice of the PRC and its secret service, the CCIS.

Ironically, the British were quick to point an accusing finger at the PRC when it benefited their policy, during the Korean War. In 1950, the British Mission to the United Nations made public a PRC offer to sell 500 tons of opium grown in Jehol (North China) and in storage in Canton, to a firm in Hong Kong. The British Mission said that the offer had been refused.


Until the “China Card” strategic policy found favor in Washington under Kissinger, the official American view, among others, was that the PRC grew and exported large quantities of opium. Harry Anslinger, the first chief of the U.S. Federal Bureau of Narcotics, said in 1961:

“Heroin made in Chinese factories out of poppies grown in China is smuggled into Hong Kong and onto freighters and planes to Malaysia, Macao, the Philippines, the Hawaiian Islands, the United States, or, going the other direction, India, Egypt, Africa, and Europe. A prime ‘target area’ in the United States was California. The Los Angeles area alone probably received 40 percent of the smuggled contraband from China’s heroin and morphine plants. The syndicate crowd does not object to dealing with the Reds as long as the profits are big in terms of dollars.” (15)

U.S. investigators have only succeeded in putting heat on the Hong Kong authorities, provoking token busts of local drug operations. The last major scandal raked up by American authorities — immediately before the “opening to Peking” slammed the lid down on further action — came in 1973, when U.S. Congressman Lester Wolff visited Hong Kong on behalf of the House Select Committee on Drug Abuse 

Citing the Nixon Administration’s effective crackdown on Turkish heroin entering the U.S. East Coast through the so-called French Connection in Marseilles, Wolff charged,

“All the narcotics entering the United States must be coming from somewhere else, the center of which is Hong Kong.” (16)

The Japanese authorities held the same view. Susai Sugahara, head of the Japanese Narcotics Bureau, maintained that China was the largest opium producer in the world. Taking the export figure Sugahara cited, the Soviet commentator V. Ovchinnikov estimated in 1964 that one-third of PRC opium production went to Japan. According to the Japanese Narcotics Bureau, the PRC was the source of the major influx of opium into Japan that began in the early 1950s, producing an estimated 40,000 addicts as of 1953. (17)

In 1969, the Soviet monthly Liternatura Gazyeta estimated Chinese opium export earnings at $500 to $800 million per annum. (18) There is no way to confirm this report, and Soviet estimates (as well as Taiwanese) of the size of the PRC’s opium crop unquestionably exaggerate in many instances. However, there is a strong element of credibility in the 1969 Soviet report: the $500 to $800 million is within the range of the $1 billion estimate developed independently (see Section 2) for the primary wholesaling revenue of the Far Eastern opium traffic. The Soviet estimate corresponds closely to what may be readily deduced from hard law enforcement agency data.

Why has no action been taken against Hong Kong, when the evidence is so well known? There are two reasons. First, no American law enforcement or intelligence agency has ever had operational access to Hong Kong. Hong Kong, as British territory, was strictly off limits to American investigators. To our direct knowledge, American intelligence never tries to circumvent this feature of the “special relationship” between Britain and the United States. Secondly, the courageous work of Harry Anslinger and other American narcotics officials did succeed in putting some heat on the rotten little island. The British seizures of narcotics cited earlier are an indirect result of the pressure applied, in the context of Nixon’s war against drugs.

The more important reason is that, to a great extent, the actual refining of heroin — which moved lock, stock, and barrel to Hong Kong from Shanghai after the Communist takeover in 1949 — is no longer done in Hong Kong. Rather, Hong Kong’s importance is overwhelmingly in the sphere of dirty money operations, and secondarily in transshipment of heroin. The great shift of the production-refining cycle from the Shanghai to Hong Kong route to the Golden Triangle (including substantial portions of China’s Yunnan province) occurred in the context of the Vietnam War.  

Vietnam, which Britain successfully advised the United States to enter, provided a gigantic captive market with easy access from the Burmese-Thai-Laotian growing areas, some of which had already grown substantial quantities of opium during the British colonial period.

For whatever reason, American intelligence ignored field reports throughout the 1960s that indicated a gigantic step-up of Peking’s narcotics trafficking. One of the most extraordinary of the stories that got lost in the intelligence bureaucracy involved an airfield in northern Laos, 75 miles south of the PRC border, built by PRC troops during the summer of 1964.

According to American intelligence sources, the airfield appeared in Phong Sally province, between Luang Prabang, Thailand’s religious capital, and the border of Red China’s Yunnan province. Meo guerrillas operating in the area under American direction discovered the Chinese building the airstrip far into Laotian territory, and reported back in June 1964.

However, the intelligence chain-of-command showed little interest in those reports. An enterprising mercenary pilot flying a T-28 aircraft obtained clear-as-daylight reconnaissance photo graphs of the airfield, including shots of Chinese soldiers pushing wheelbarrows. The photographs were duly sent through channels, where they disappeared. American officers, however, believed that the airstrip was intended to link up with an asphalt highway the Chinese had been building from Yunnan province into northern Laos for some time. Initially, thinking among American intelligence officers centered on the possibility that the airstrip had been intended as a forward fighter base for PRC involvement in the Indochinese conflict. Only later, when no Chinese fighters appeared, did the truth emerge: the Chinese road and connected airstrip were built to ship opium out of Yunnan province.

American investigators, who have always viewed the drug traffic from the bottom levels upward, never “cracked” the controlling financial relationship that Hong Kong exercises over the traffic.    

 The Ch’ao Chou connection
The key to the Far Eastern drug traffic — the link that ties the entire operational picture together — is the Chinese expatriate connection. As noted in Section 3, law enforcement investigators have known for years what the Ch’ao Chou Chinese networks were up to. But the law enforcement agencies never followed through the maze of financial connections: to do so would have violated standing American intelligence agreements with British intelligence.

Crucial clues to the inner operation of drug traffic — the joint operations of the Chinese Communist Intelligence Service (CCIS), British intelligence, and Chinese and British finance — have been gathering dust in police files for years. One such clue is the 1972 arrest of a Chinese Communist Party official in Djakarta, the Indonesian capital, in 1972.  

The Indonesian authorities arrested a Ch’ao Chou Chinese, complete with Chinese Communist Party card and other documentary evidence, in possession of 30 kilograms of heroin — worth between $60 and $150 million in terms of American street value, depending on the quality. The investigation, employing the combined efforts of Indonesian and American drug enforcement officials, showed that the purpose of the heroin imports was the financing of the Indonesian Communist Party (PKI) through the creation of a drug ring in Djakarta. (19)

An interview by a U.S. Labor Party investigator with a Malaysian intelligence source made in November 1978 is worth printing in full here for the insight it gives into this particular type of operation:

Source: It is definitely a fact that China distributes narcotics to its fraternal Communist parties in Southeast Asia as a means or raising funds for their activities. The most recent case is that of North Korea. Their diplomats have been kicked out of several European countries for smuggling and distributing heroin. Opium is not grown in North Korea. It is obviously given to them by the Chinese. In Singapore Communist agents were reported selling narcotics to American students at the American school for lunch money.  

Imagine, they were giving fixes out for 20 or 30 cents — just to get the kids hooked for their return to the U.S. Question: Can you substantiate that? Source: It’s on the Singapore official record. There is more information at the local Kiwanis Club. They keep a file on narcotics. Also there was a DFA report written on how the PRC distributes narcotics through local party functionaries in the region. The report was never released but photostats exist.

Question: There is a lot of accumulated evidence that the Hong Kong and Shanghai Bank is at the center of the entire Far Eastern narcotics trade.

Source: HongShang is the largest bank in the region and particularly in Singapore. China’s biggest agent is Pang Hock-lim. He is instrumental in trafficking Chinese opium into India, Thailand, Singapore, and Malaysia.

Question: Has he been arrested?

Source: Sure. He’s been arrested plenty of times but every time a fix is made and he is released.

Question: Who makes the fix?

Source: He’s directly linked with the Hong Kong and Shanghai Bank. That’s a fact.

A handful of similar incidents are on record. At the same time, American policy busted a Filipino diplomat carrying seven pounds of pure Number Four white heroin in his country’s diplomatic pouch. He had been followed from the Philippines to a New York City hotel room. His contact man, arrested with him, was a Ch’ao Chou Chinese.

One of the very few things that American intelligence knows about the CCIS is that the majority of its operatives are ethnic Ch’ao Chou. The Ch’ao Chou — as in the case of leading Bangkok banker Chen Sophonpanich — are also the leading element in the expatriate Chinese community involved in the drug traffic. (20)

Published Soviet material documents the spider’s web of links between the Peking government and expatriate Chinese; the cited M. A. Andreyev’s recent book, Overseas Chinese Bourgeoisie — A Peking Tool in Southeast Asia, is the most comprehensive Soviet source available. What the Soviets either do not know, or have not chosen to publish, is that joint Chinese expatriate-British financial operations in the world narcotics traffic hold the entire structure of Chinese foreign intelligence together.

The Chinese expatriate population’s close ties to the Peking regime are well documented. According to a British author writing in 1965, two-thirds of the Chinese expatriates in Southeast Asia supported the Peking regime, and only one-third Taiwan. (21) American authors like A. Doak Barnett have drawn the same conclusion. (22) These impressive figures are the result of assiduous cultivation of such ties on the part of the Peking government.

Peking’s insistence on the continuity of ties between the 12 million Chinese residing abroad and the Great Han motherland is a matter of public record, and achieved notoriety through such incidents as the recent border disputes with Vietnam.

Andreyev complains,

“Under the 1954 Constitution the overseas Chinese have 30 representatives in the National People’s Congress, the highest legislative organ in China. … In 1953, representatives of overseas Chinese supporting the people’s democratic system and actively opposing the Chiang Kai-shek regime met in Peking, where they had a preliminary discussion on the procedure for nominating deputies to the National People’s Congress from the Overseas Chinese. . . An enlarged sitting of the Overseas Chinese Affairs Committee, held in Peking in July 1954, was attended by 195 representatives of Chinese living in different countries. This meeting delegated 30 representatives of the overseas Chinese to the National People’s Congress.” (23)

At that time, the Chairman of the Overseas Chinese Affairs Committee declared that “no one can rupture the bonds linking overseas Chinese with their homeland. China is the motherland of all overseas Chinese.” Peking policy, as stated publicly, has not changed through to the present.

Andreyev documents a complex, tightly knit web of Peking connections to the expatriate Chinese, including foreign investment, trade, and, perhaps most important, expatriate remittances to relatives in the PRC.  

Andreyev writes,

“By agreement with the Bank of China, two British banks — the Hong Kong and Shanghai Banking Corporation and the Chartered Bank — with their large network of branches in Southeast Asia — handle the remittances of overseas Chinese to China.” (24)

The system of remittances from Chinese residents abroad to families on the mainland, and the more recent system of joint investments between the Peking regime and Chinese expatriates, are not only a major source of foreign exchange for China; they are the financial infrastructure of Chinese secret intelligence. The network of financial ties between Peking and the expatriates overlaps the networks that control the wholesale drug trade in the Golden Triangle.

Several examples make this conclusion inevitable. One is the cited fact that the biggest dope financier in the region, Bangkok Bank chief Chin Sophonpanich, fled a fraud charge in Thailand and spent the next seven years in Peking; since his return, Sophonpanich has kept up close contact with Peking. But the most compelling evidence is the structure of the remittances transfers which — as noted — channel through the Hong Kong and Shanghai Bank.

The cited Soviet commentator argues that the standard estimates of the flow of remittances back to China, which run to a few tens of millions of dollars a year, are grossly inadequate.

“Most of these evaluations,” Andreyev wrote, “are based on at least three assumptions. The first is that all the foreign exchange and commodities are sent via Hong Kong. Actually, this is not true. In particular, this assumption ignores Macao, through which pass considerable quantities of overseas Chinese capital. Moreover, in Southeast Asia and Hong Kong there are a number of official PRC agencies that have the possibility of secretly sending large sums of money directly to Peking. Considerable possibilities are opened for this by China’s commercial dealings with Southeast Asian countries, and Peking, evidently, uses these possibilities.” (25)

Andreyev continued,

“Lastly, along the poorly controlled Sino Burmese border there, probably, are loopholes through which considerable material values can drain to the PRC, at least from the countries in the Indochinese Peninsula. This is borne out by the flow of gold to China across that border.” (26)

That report — matching the earlier-cited Isvestia estimate that the PRC’s opium earnings were $500 to $800 million — is entirely credible, when matched to related evidence. This is in the general range of what the PRC’s “take” should be if our earlier chain of evidence holds up. The Burmese border area is the ultimate destination of much of the gold that passes through the HongShang’s gold market in Hong Kong, through the myriad of small Chinese banks. (With the 13 PRC-owned banks in Hong Kong now operating in the gold market, the PRC will be able to take an additional cut, in the form of trading commissions on gold that it will ultimately receive as payment for opium.)

Red China not only receives gold across the Yunnan province border in the Golden Triangle in return for opium going out, but indirectly intervenes among the competing opium warlord factions in Burma itself. During the early 1970s, the PRC armed the so-called White Flag Communist Party under the command of Ping Chia-hsiang, supporting Ping’s move to take over prime opium-growing areas in the neighborhood of the Suloween River. (27)

China is one primary factor in the opium growing regions; Britain is the other. Most of the Burmese opium-growing regions are subject to genial competition between the Maoist-controlled White Flag Communist Party and other armed gangs, and Self Defense Forces under the control of British-trained and still British-influenced Burmese security forces. Anglo-Chinese cooperation on the Burmese border is one of the biggest scandals in the area.    

 Forging the Hong Kong-Peking link

Until the Sino-Soviet split period, the ties that bound the expatriate Chinese to the mainland were the strongest of all: family. This link was expressed in the large-scale transmission of remittances back to families on the mainland. According to the limited available data, the largest volume of such remittances, for which special remittance transfer agencies had been created, was to the small city of Swatow on the northern Chinese coast; Swatow is the home city of the Ch’ao Chou Chinese. 

The Ch’ao Chou, seafaring and commercial people with a special dialect, evidently maintained the closest family links with the mainland. That is the background to the wholesale recruitment of expatriate Ch’ao Chou Chinese into Chinese secret intelligence during the postwar period. (28)

In the late 1950s, the volume of reported remittances dropped off sharply. Instead of paying remittances directly to relatives, expatriate Chinese invested heavily in both mainland China and in foreign joint ventures with the Peking government. The flow of remittances was capitalized in joint ventures with Peking, and relatives back home received dividends from these investments.

The volume of remittances is given in the following table:

The point of decline of remittances (that is, legal remittances, as reported above) coincides with Peking’s orientation to joint investments with expatriate Chinese. That policy goes back to 1951, when the South China Enterprise Company, the forerunner of the present Overseas Chinese Investment Corporation, sold 100,000 shares to Chinese businessmen in Hong Kong and Macao. However, until 1957, the attractions for such investors were limited; overseas Chinese investment could only find opportunities in agriculture, the least profitable sector of the economy.

But in 1957 new regulations came into effect that not only guar anteed a 12 percent dividend investment, against a normal 8 percent dividend in ordinary mixed companies. The Peking government also made provision for repatriation of part of the profits to the overseas Chinese investor.

By the mid-1950s, this capital was concentrated in the Overseas Chinese Industrial Construction Company and related companies, which merged into the Overseas Chinese Investment Corporation (OCIC) in 1955, with initial capitalization of $50 million. The board of directors of the OCIC included leading Chinese businessmen resident in Southeast Asia. By 1966, there were 140 businesses under the OCIC aegis operating in China. (29)

By the mid-1960s, however, the policy of using the hard currency of expatriate Chinese to invest in China gave way to a much more efficient form of raising vitally needed foreign exchange. Peking took a stake in the expatriate Chinese community’s expanding operations in drug-pushing and dirty money operations, centering on the boomtown in Hong Kong. The result is the flagrant cohabitation between London and Peking noted in Section 4. (30)

  Despite the overwhelming weight of evidence showing Peking’s integration into the Southeast Asian drug trade, there is no way to “prove” that the $1.3 billion financial reflow into the PRC during 1977 estimated by Chase Manhattan and the projected $2.5 billion flow during 1978 represent the revenues of the traffic. However, it can be demonstrated to the satisfaction of the reader that this estimate is entirely consistent with all the previous data.

By two independent types of estimate, our earlier data (Sec-tion 3) showed that the cash flow of the Far East drug trade broke down as follows:

Assuming that the PRC’s primary wholesaling profits are $500 million, or half of the total — the lower range of apparently accurate Soviet estimates — then the PRC’s secondary whole-saling profits would be in the ratio of 5 to 1 with respect to the first figure, or $2.5 billion. That is the Chase Manhattan figure reported above. Since the PRC is undertaking major official investments in Hong Kong this year, it is fair to assume that it would repatriate illegal profits to be re-invested in legal enterprises to a greater extent than during 1977, when the reflow back to Peking was only $1.3 billion.

Of course, the above calculations are hypothetical, but they do indicate that the $2.5 billion net revenue suggested by the Chase Manhattan figure is well within the range of accuracy.

The same type of range can be obtained through an entirely different chain of reasoning. The Soviet economist Andreyev, using published sources of area governments, calculated that total expatriate Chinese capital flow into China amounted to $1.66 billion in the years 1950-64 inclusive. Up through this period, the primary financial relationship between the PRC and expatriate Chinese was in the form of foreign investment inside China, through such vehicles as the Overseas Chinese Investment Corporation, as noted above. It is documented that after 1964, PRC policy shifted into a high-gear “Opium War in Reverse” posture, to use the phrase of British author Richard Deacon. At this time, Chou En-lai made his infamous confession to Nasser.

As noted, the financial relationship shifted into joint ventures in Southeast Asia between PRC-owned institutions and expatriate Chinese, with a heavy concentration in narcotics traffic and related activities.

Assume that the identical rate of expatriate Chinese financial support continued during the years 1965-78 in this form of investment, augmented only by a 10 percent inflation factor, highly conservative for the area. The aggregate investment during 196578 would amount to $6.3 billion, in joint operations with the PRC. Assume a 40 percent annual profit margin on this investment, much lower than profits on the drug trade, but in the middle of the range of the 30-50 percent figure given above for smugglers’ profits in the area. The annual income from this investment would be precisely $2.5 billion.

The big move into Hong Kong transformed Red China from a mere producer of opium, into Britain’s international partner in the distribution, and later the financing, of the opium trade in the Far East — if not elsewhere. (The Ch’ao Chou Chinese arrested in a New York hotel room with a Philippine diplomat and seven pounds of heroin carried the business card of the local New York Ch’ao Chou fraternal association.)

America’s disastrous involvement in Vietnam gave the Mao regime the opportunity to make it big in the world of narcotics, and Peking jumped in — and into Hong Kong — with both feet. America paid the price of a skyrocketing rate of narcotics addiction. Nonetheless, the late 1960s were only a period of transition, the fulfillment of a strategic design sketched out between Mao Tse-tung and the British old-line opium families in the early 1940s.  

by Konstandinos Kalimtgis, David Goldman, Jeffrey Steinberg

DOPE: Banking and the Worlds Biggest Business



Assembled as one picture, the hard evidence available from the Drug Enforcement Administration and other law enforcement bodies leaves only one possible conclusion: The drug “industry” is run as a single integrated world operation, from the opium poppy to the nickel bag of heroin sold on an inner-city street corner. Not only is illegal drug traffic under the control of a single world network, but opiates traffic in particular is without doubt the best-controlled production and distribution system of any commodity in international trade, illegal or legal. De Beers’ Central Selling Organization’s 85 percent control of world diamond wholesaling — an example not irrelevant to the drug trade — pales by comparison to the orderly marketing arrangements for heroin demonstrated by the hardest figures available.

Investigators are daunted by the fact that the solution to the problem is so obvious. Imagine Edgar Allan Poe’s fictional purloined letter, photographically enlarged to 8 by 20 feet, and used as wallpaper; then, imagine the French police attempting to find it with magnifying glasses.

When we speak of the drug-related illegal economy — for drugs are the pivot on which most other illegal activity turns — we are talking of a $200 billion per year business, the biggest business in the world. That is net, not gross, annual sales of drugs, plus related illicit payments.

How can such activity avoid sticking out wildly, especially in areas of concentration such as the Far East? Because the British monarchy organized most of the Far East to conform to the drug traffic! How can $200 billion in illegal payments get through the international banking system past the eyes of law enforcement authorities? The answer is: the Anglo-Dutch “offshore” banking system. This and related precious metals and gems trade were designed around illegal money in the first place!

Mere consideration of the obvious — or what will quickly become obvious when the evidence of the public record is assembled below — gives the financial specialist the equivalent of an inner-ear disorder. The financial world, remember, is one in which the stock market will do flips over a measly few hundred million dollars’ difference in the weekly reported figures for the American money supply. Although most of the necessary evidence has long been available, both investigators and the public prefer to see world drug traffic and related illegal activity as a montage of movie villains: Far Eastern warlords, free-lance smugglers, jowly gangsters, and corrupt politicians. Such individuals figure into the world drug traffic, but as the arms and legs of a top-down operation, under the immediate control of the British and allied monarchies.

The most striking single fact for this conclusion is that the price series for heroin at retail level in major American cities show virtually total uniformity. Law enforcement records show that, within the acceptable range of 3 to 6 percent purity at the street level, the price of heroin has been constant between widely disparate distribution points during the past ten years.

Arrests of local distribution chains, internecine warfare among drug-traffickers, interdiction of smuggling routes, the virtual elimination of the Turkish opium supply after 1972, the scouring of Asian and European transit points, and local changes in political and growing conditions in the Golden Triangle growing area, all have failed to have any effect on the single world heroin price! The few exceptions prove the rule, and consist mainly of sharp temporary drops in some local retail prices, attributed to occasional free-lance supply through returning Vietnam War veterans and the like. (1)

 Where does it go?
 Closely related to the striking uniformity of inner-city heroin prices at retail level in the United States is the gigantic discrepancy between known levels of opium production for illegal purposes and consumption by the world’s addict population. Fairly reliable statistical data are available for both. Within great margins of fluctuation depending on weather, enforcement, and other conditions, available supply exceeds demand by roughly a factor often.

Approximately 700 tons annually are produced and transported out of the world’s largest opium-growing area, the Golden Triangle. (2) Seven hundred tons of raw opium, in the form of balls of opium gum, are the equivalent of about 70 tons of refined heroin. In practice less than half this amount is refined into heroin; the remainder is sold in the form of either opium or morphine base, largely for smoking purposes, and largely to an addict population in the orient itself. However, by all estimates of the American addict population, approximately three tons per year of refined heroin are more than sufficient to meet annual consumption “requirements.” About that much again is required to maintain all other heroin addicts in the noncommunist advanced sector.

DEA and other official sources affirm the cited production figures through direct monitoring of opium shipments and other sophisticated intelligence methods. Consumption and sales are obviously limited by the possible size and financial resources of the addict population in the advanced sector. To use a rough example: If the full 30,000 kilograms of annual Golden Triangle heroin production obtained the full street price for heroin, the total retail value would be about $150 billion. But most estimates of annual illegal purchases of retail heroin are under $15 billion.

In short, most of it is never sold, because production capacity is enormous relative to the market’s absorption capacity. What happens to the rest of the heroin? Only a small portion of the total comes into the hands of law enforcement agencies, whose capture of a few pounds of heroin is a matter for celebration. We still must account for tens of tons. The law enforcement records indicate that the drug is warehoused in huge stockpiles against contingencies and to prevent oversupply on the market.

For example, during the height of the crackdown on Southeast Asia heroin traffic in 1972 (immediately after U.S. troops withdrew), a single refinery captured by Thai police had on hand a stockpile of 3,000 kilograms, roughly one-tenth of Southeast Asian production. At the time, 21 refineries were known to be operational in the area. (3).

The law enforcement record shows that Dope, Incorporated does its best to avoid mishaps through careful research — on the streets of American cities — which is transmitted back to the poppy fields. Meo tribesmen in the Burmese or Yunnan Province mountains foothills do not plant what they feel like, but what they are told to plant. This facet of the production cycle is well known to law enforcement investigators. If for some reason the market research is off, chaos will ensue, as it did in 1972, when the Golden Triangle yielded a bumper harvest, after wholesalers told poppy-growing peasants to increase their acreage by 50 to 100 percent.

The wholesalers counted on the continuing exponential expansion of heroin consumption among American soldiers in Vietnam. Nixon pulled the rug out from under them by pulling the troops out, leaving the world heroin market in an unprecedented state of oversupply.

Reckless price-cutting and competition for sales outlets in this case might have provoked serious consequences for Dope, Incorporated were it not for “government regulatory intervention.” The Thai government stepped in and sold 22 tons of opium to the United States. The opium was burned in a public ceremony attended by giggling Thai officials, thus restoring “equilibrium” to the market. (In any case, the Thais were only repeating the action of the Imperial Chinese in 1839, who purchased and burned more than 3,000 tons of opium to the great relief of oversupplied British traders, who sent special fleets to India to bring additional opium back to get the Imperial Government’s attractive price.)

Once world illegal opiates traffic comes under scrutiny as an integrated, centralized “monopoly,” the discrepancy between the huge oversupply and relatively restricted demand presents no further difficulties. We are looking at an “industry” based on the same principles as the world diamond cartel controlled by De Beers, or the so-called “club” among leading pharmaceuticals manufacturers.

Diamond production capacity is so large relative to the absorption capacity of the world market that De Beers’ Central Selling Organization, running 85 percent of world diamond wholesale trade, limits availability in order to obtain essentially the price it wants. Pharmaceuticals are, ironically, an even better example. Since the knowledge to manufacture most of the commonly used prescription drugs is widespread among the pharmaceuticals companies, and since the costs of production are insignificant compared to the retail prices of most drugs, elaborate legal arrangements are necessary to prevent a price collapse.  Notoriously, the profits of the pharmaceuticals industry owe not to chemists but to patent lawyers.  

 How big an industry?   
Heroin trade is the ideal commodity cartel; its price is more reliably controlled than that of crude oil, and its world volume of sales, at roughly $25 billion for heroin alone and considerably more for smoking-opium and other derivatives, is substantially higher than that of most of the commodities UNCTAD is presently considering for cartelization. A couple of comparisons are in order. At the recent world gold price of $225 per troy ounce, annual world gold mining production (outside the Soviet Union) yields less than $7 billion. During 1977, after an unprecedented price run-up, world diamond output was under $5 billion.

Allowing for the relative ease with which a large dollar value of heroin may be transported — the drug is worth at street level 366 times its weight in gold (4) — the worth of the drug trade is still boggling. It is even more boggling when the retail value in the United States and other OECD countries of non-opiate illegal drugs comes into the picture. For example, the Colombia marijuana crop officially estimated for this year alone carries a retail value of $40 billion. (5) Since marijuana smoking is so widespread in the OECD countries, there probably exists a much larger market in dollar terms than the relatively restricted market among heroin addicts.

Beyond such examples, no accurate data exist. The best that can be stated is that the total world cash flow of illegal drug traffic certainly exceeds $100 billion, and almost certainly does not exceed $200 billion.

The $100 to $200 billion figure includes heroin, opium, morphine, marijuana, cocaine, so-called hallucinogens, and abuse of otherwise-legal prescription drugs. It does not include the proceeds of other drug-related illegal activities, including gambling, theft, prostitution, smuggling, arms traffic, and so forth. It is almost meaningless to assign a total figure to the size of the world’s illegal economy. It can only be stated confidently that the illegal economy, whose cornerstone is illegal drug traffic, exceeds the gross national product of most of the OECD countries! That is an extremely conservative projection of the hard data available.

To put the matter another way: all international traffic in controlled substances, including drugs, and also including means of barter for drugs — gold, diamonds, armaments, and so forth — the $200 billion international narcotics trade is bigger than the world oil trade. “DOPEC” is bigger than OPEC. World trade volume is a mere trillion dollars.

 Where does the money go?
The question that emerges now is,

“How is it possible that $200 billion and up in dirty money, crisscrossing international borders, can remain outside the control of the law?”

Again, only one possible answer can be admitted: a huge chunk of international banking and related financial operations have been created solely to manage dirty money. More than that, this chunk of international banking enjoys the sovereign protection of more than a few governments.

These conclusions are obvious. If the entire resources of the largest private bank in the world, roughly $70 billion, had no other use but the financing of illegal world drug traffic and related illegal activity, those resources would be insufficient. If the members of the New York Clearinghouse, the richest group of commercial banks in the world, applied their entire $150 billion lending volume to the illegal economy, the volume might just be sufficient.

In the following sections of this report, the Anglo-Dutch banking operations that control illegal drug and related trade are documented in detail. Below, we will demonstrate through several chains of evidence that this is the only possible banking network that could handle the requisite volume of illegal traffic.

The Anglo-Dutch oligarchy’s banking operations have the following qualifications :

  1. They have run the drug trade for a century and a half.

  2. They dominate those banking centers closed off to law enforcement agencies.

  3. Almost all such “offshore,” unregulated banking centers are under the direct political control of the British and Dutch monarchies and their allies.

  4. They dominate all banking at the heart of the narcotics traffic; the Hong Kong and Shanghai Bank, created in 1864 to finance the drug trade, is exemplary.

  5. They control world trade in gold and diamonds, a necessary aspect of “hard commodity” exchange for drugs.

  6. They subsume — as documented below — the full array of connections to organized crime, the prodrug legislative lobby in the USA, and all other required elements of distribution, protection, and legal support.

Financial specialists, who have lived too long with the smell of the West Indies backwaters to mind it any longer, will choke on the above assertion. The general reader, by contrast, only needs to know a few facts in order to realize that something is wrong. All the offshore international banking operations — including the clean side — are such a speculative whirlpool that virtually the entire deposit base changes hands every week. Hundreds of billions of dollars, including at least a hundred billion in the offshore centers and further hundreds of billions elsewhere, circle the world through teletyped bank transfers.

No banking reserves are kept on any of this, as insurance against sudden withdrawals; in the United States, by contrast, commercial banks must hold 15 percent of their checking account balances and 4 percent of their savings balances on reserve. The “offshore” banks just assume that if they are short of cash, they can borrow what they need on the enormous “interbank” market. This mind-boggling financial procedure involves banks lending funds to each other in order to obtain fractional advantages in interest rates. Perhaps 40 percent of the total market is interbank money. Deposit maturities are so short, and money transfers are so rapid, that $50 billion changes hands every business day through the New York banks’ Clearinghouse system alone.

The “offshore” banking markets are precisely what the name implies: either Britain’s old island colonies refurbished for international banking, or inland feudal relics like Andorra and Liechtenstein. Federal bank regulators will only stare at their shoes when asked what goes on in these places.

In the Cayman Islands, one of the largest offshore centers, the only government is the official “Tax Haven Commission.” Law enforcement officers have absolutely no way of getting hold of bank records in such places. Repeatedly, they have identified the offshore centers as the place to look for dirty money. They have not been able to, because virtually all the centers are under British political protection (see below).

American banks do a land-office business in the offshore centers, precisely because no reserves are needed, and every dollar of deposits can be lent out for interest. Currently American banks have over $35 billion in loans booked through Caribbean offshore islands, more than through their offices in London.

Even clean banking operations have moved offshore because present federal banking regulations virtually force them to. The big movement offshore began under the Kennedy Administration, when Anglophile Treasury officials C. Douglas Dillon and Robert V. Roosa railroaded legislation through Congress that taxed loans made to foreigners by American banks. The tax did not apply to loans made offshore, so that is where the bankers went. By the time the Dillon-Roosa legislation was lifted in 1974, the banks were “hooked” through the difference in reserve requirements. In a recent interview in Euromoney magazine, Citibank’s chairman Walter Wriston denounced the Dillon-Roosa taxes as a “pure gift to London.” (6)

According to the estimates of the Bank of International Settlements, the total assets of so-called Group of Ten offshore banking centers, the unregulated islands and enclaves where “bank inspector” is a dirty word, amount to $94.349 billion, or close to $100 billion, as of February 1977.

The figures break down as follows:

The above figures do not show the actual size of the offshore banking centers, because they include only the assets of branches domiciled in the largest ten industrial countries. They do not include such entities as the three large banks in Thailand’s capital, Bangkok, which figure prominently in financing Golden Triangle opium production. Nor do they include thousands of smaller, “offshore” finance companies based only in the offshore centers themselves.

Expatriate Chinese banks in the Far East, which have long been known to be a key point of contact with illegal drugs and other contraband traffic in the Far East, also do not show up on these tables; there is no available data on these institutions at all. Furthermore, the above table does include a great deal of legitimate banking business which American and other industrial-country banks bring to the “offshore” market for tax and other reasons. However, the round figure of $100 billion is a useful starting point.

Another set of figures is provided in the Bank of England’s quarterly report, although it contains the same unwanted additions and deletions, and is thus relevant; it shows the large volume of interchange between London, which in major respects functions as the world’s biggest “offshore” center, with the previously mentioned outposts for illegal money.

Unfortunately the available figures mix in both British banks’ dealings and those of American and other banks which have offices in London.


More important than these numbers — which give a meager understanding of the volume of business in the offshore centers and mix in the legitimate business of American and other institutions — is the political control of the unregulated banking centers, With very few exceptions, offshore banking as a whole is under the thumb of the Anglo-Dutch oligarchy.

The British pre-eminence makes the world picture of offshore banking and dirty money more comprehensible. If the world offshore banking sector appears to run as a single operation under British monarchy control, that is because the same group of people who run it also run the opium traffic whose proceeds this banking sector was created to handle.

One index of British muscle is the following breakdown of the offshore banking centers, comparing the number of banks in each center directly attached to the Royal Institute of International Affairs governing bodies with the number of other banks in each center:

London and Switzerland are not normally considered offshore banking centers, although in practice both centers function that way. Although Switzerland has signed a treaty with the United States permitting law enforcement officers to investigate and seize funds relating to illegal narcotics traffic (resulting in one recent $250 million seizure), Swiss banks are still notorious depots for dirty money.

However, the Swiss side of the operation, typified by Lombard Odier and Edmond de Rothschild’s Banque Privee in Geneva, and the Zionist-controlled Baseler Handelsbank is more specialized. Their most important activity is conduiting funds for international terrorism. Most recently, European authorities traced the funding of the 1978 Aldo Moro assassination through Swiss channels back to Israel.

London is the largest center for Eurodollar banking under the encouragement of the Bank of England, which permits the foreign branches of U.S. and other banks to hold external accounts in London without reserve requirements, and with minimal inspection. At last count, international banks had $90 billion in assets in London. The Bank of England can do as much or as little as it wants in the way of regulation, under British law.

For self-evident reasons, even the best-protected institutions of the British oligarchy prefer to launder their dirty money through Caribbean, Hong Kong, and similar branch operations, rather than in London itself.

Because the British suppliers of narcotics have ironclad control over offshore bank operations, American organized crime marketers of those narcotics have had a field day in the Cayman Islands and the Bahamas. American drug enforcement authorities know that most of the dirty money arising from the U.S. drug trade and related illegal activities ends up in the Bahamas. There has been, unfortunately, little public heat against the British officials who control the operations.

This level of control reaches the flagrant. For example, the chief of all banking regulation and licensing in the Cayman Islands, a close third behind Hong Kong and Macao in the big league of dirty money, is one Mr. Benbow. Mr. Benbow is a retired official of Britain’s National Westminster Bank, which shares two directors, J.A.F. Binny and R.J. Dent, with the Hong Kong and Shanghai Bank.

Benbow got his present job at the recommendation of the British-influenced International Monetary Fund, according to a source at the IMF’s Exchange and Stabilization division. Direct British “hands-on” management of the Caribbean offshore operation dates back to the 1940s, when E.D. Sassoon, Ltd. of Hong Kong — which had made its fortune from the opium trade over the preceding century — picked up, moved, and became E.D. Sassoon, Ltd. of the Bahamas.

Virtually the only one of the offshore centers not under official British control is Panama; not coincidentally, Panama is the only offshore center where American banks strongly outnumber British banks. That is not to say that Panama is clean; on the contrary, most of the funds derived from the Colombian trade in marijuana and cocaine are laundered through Panama, through the three large Colombian banks resident there. However, American banks have a measure of maneuvering room that they do not have in the Cayman Islands or the Bahamas, under the snooping eyes of the British authorities.

West German banking sources believe that the British banks behind Drugs, Incorporated want to move in on Panama and close the gap. The West German sources identify a special feature of the drug-ridden Hong Kong and Shanghai Bank’s proposed takeover of a controlling share in New York’s $20 billion Marine Midland Bank: Marine Midland is the transactions agent for the central bank of Panama. All of the national accounts clear through Marine Midland. Should the Hong Kong and Shanghai succeed in acquiring the American bank, it would exercise a decisive margin of control over the Panama offshore market, and bring British control over the offshore centers full circle.

Longstanding ties between Marine Midland and Panama were reflected in the fact that a former board member of Marine Midland Bank, Coudert Brothers lawyer Sol Linowitz, negotiated the Carter Administration’s recent treaty concerning the Panama Canal.


The next sections will concentrate on the Far East offshore banking connection to the drug traffic as a model for the world operation, and follow the trail back to the controlling centers in London. British control over the world dirty money operation is no secret, and the British-Canadian-Caribbean connection to organized crime in the United States is so thoroughly documented that no doubt need remain.

However, it is the Far East that acts as a chokepoint for dirty money, in such volume that it dwarfs legitimate economic activity in the region, and in the British Crown Colony of Hong Kong in particular.

London has seduced and jostled American banking operations into the Caribbean to such an extent that there is a vast amount of legitimate money mixed in with the proceeds of the drug traffic. However, Hong Kong was set up by the British, literally from bare rock, as a center for the drug trade, and remains to this day purely British, and purely a center for the drug trade. In the Far Eastern example we can “prove” that Britain (and its Peking allies) run every phase of international drug traffic.

 The laundering cycle

The Drug Enforcement Administration and other law enforcement organizations know how the cycle of dirty money in the United States works. The $50 billion retail proceeds of the total drug traffic in the United States are partly recycled into the drug operation in the United States itself, with large “off-take” by each level of the crime machine. The net profits, in cash, are laundered through hotels, restaurants, gambling casinos, and sports events — the “corporate profile” of the Max Jacobs family and other foot-soldiers of the British drug machine.

After the cash is laundered through these nominally legitimate channels, it is transferred to offshore banking operations or their equivalent. Then, according to Drug Enforcement Administration officials, the funds take several trips around the world over the telex machines of offshore banks, passing through at least a half
dozen, and usually more, different bank accounts and corporate fronts, from the Caymans to Liechtenstein, from Liechtenstein to the Bahamas, from the Bahamas to a “nonresident corporation” in Canada, from Canada to Panama, and so forth.

At various points in the process, the funds will purchase diamonds, gold, paintings, or similar portable valuables. At a further point, the valuables will be translated back into cash, eliminating even the trace of a bank transfer. For this reason, the use of undercover agents, in place even at fairly high levels in known branches of narcotics trafficking, has a poor record of detecting either the source or ultimate destination of narcotics-related funds.

Once laundered, the proceeds of the drug traffic and related illegal activities divide into three channels.

  • First, between 10 and 20 percent of the total is recycled back to the opium wholesalers in the Far East and the marijuana wholesalers in the Caribbean and Latin America, constituting the net profits of the wholesale drug trade.

  • A second part is invested in expansion of offshore operations, particularly gambling casinos, resorts, and other profitable operations that are also useful for further laundering of dirty money.

  • The remainder is reinvested in the United States in “legitimate” racing, gambling, hotels, restaurants, and other business appropriate for cash-laundering and further expansion of the domestic drug traffic.

As noted, Hong Kong and related Far East operations are the chokepoint in the entire traffic, where dirty money is a way of life. We will focus on the Far East, the point of origin of world heroin traffic, and work backwards through the maze of Dope, Incorporated fronts and subsidiaries, to arrive at the British-controlled syndicates in the United States.

From Opium to Dirty Money

The starting point for the drug cash flow is the cash size of the opium and heroin traffic in the Far East itself, before the drugs obtain the stupendous price markups available in Western markets.

The price pyramid is known to be the following:

  1. Raw opium, the gum of syrup extracted from opium poppies, is produced in the Golden Triangle, the conjunction of the southern border of the People’s Republic of China (Yunnan province), and the northern borders of Thailand, Burma, and Laos. The mountainous terrain, largely above 4,000 feet in elevation, provides ideal growing conditions. Mountain peoples, rather than ethnic Chinese (including those in Yunnan province), grow the opium and collect the gum. The merchant purchasing the gum pays roughly $100 a pound, (1) at collection points such as Lashio or Misai in Burma. 

  2. By the time the merchant, typically a Yunnanese, has brought the gum by mule train to the triborder area, e.g. Tachilek or Chiengrai in Thailand, the price has doubled, to $200 a pound. (2) At this point the opium is either refined into heroin at refineries located in the triborder area itself, or earmarked for the large Far Eastern market for smoking opium and related derivatives.

    Existing data permit the estimate that a division of an average 700-ton crop into 300 tons for heroin refining and 400 tons for opium shipment for Far Eastern smoking purposes is usual. (3)

    The $200 pound price at the triborder area is the price paid to the local agent by a wholesaler based either in Bangkok, Rangoon, or Hong Kong. Any distinction among these cities is meaningless. The business structure of the area is under the control of two principal groups that straddle the Far East. The first is the old British banks and trading companies, including the HongShang, Jardine Matheson, Charterhouse Japhet, Swire’s, and the Peninsular & Orient Lines. The second, their satellites, is the overseas Chinese networks, under the joint control of London and Peking.

    The wholesale value of the 700 tons of annual opium product in the Golden Triangle, prepaid in the triborder area, is roughly $280 million. The $280 million figure, compared with the Gross National Product of Thailand, is considerable; it is like $35 billion in terms of the American GNP.

  3. But this wholesale figure is only a small portion of the cash flow of the Far East drug traffic. The next wholesaler, the Bangkok merchant who buys from the first wholesaler, pays about $1 billion for the equivalent of 700 tons of opium in the form of either raw opium or refined heroin. This is roughly four times what the opium was worth at the first wholesale round. The majority of production is retailed locally at large markups (although the markups are much smaller than in the case of heroin retailed in Western countries).

    While no hard estimates are possible, the cash flow in the Far East related to this first phase of opium production alone could not be less than $1 billion. That by itself is 15 percent of the estimated assets of foreign banks in Hong Kong, or 10 percent of estimated bank assets of foreign banks in Singapore, or precisely Thailand’s 1977 balance of trade deficit!

    Measured against the size of economic activity in the regions, there is no possible way to chalk these numbers up in the “Errors and Omissions” column. The cash must go through nominally legitimate channels, in such volume that the nominally legitimate channels — like the HongShang — cannot possibly be unwitting as to the origin.

    Even these numbers do not sufficiently reflect the scale of the cash flow derived from crude opium sales alone. It must be added that most of this cash flow is seasonal; virtually all wholesaling must be completed during the two months following the March poppy harvest. Correspondingly, the visible flow of drug-related funds is several times as large during those two months.

  4. Finally, the wholesale and local retail cash figures presented above exclude what is possibly the largest component of Far Eastern narcotics money: the reflow of funds back to the Far East from sales made in the West. The narcotics wholesaler in Bangkok or Rangoon or Hong Kong with direct contacts with the growers and control of refineries has paid about $2,000 a pound for the refined heroin. Between him and the street corner, the same pound of heroin will undergo three markups of 1,000 percent. Its ultimate retail value (for pure heroin) will be close to $5,000,000 per kilogram, according to official DEA figures, or $2.27 million a pound, with a total of $25 billion for Western sales.

    What portion of this markup, and, in what quantity, accrues to the Far East wholesaler?

    There is no possible way to estimate this. According to the record of arrests of heroin smuggling, a substantial portion of such smuggling is conducted directly through expatriate Chinese channels, like the Hong Kong-to-Vancouver route, (4) and the notorious activities of the China Sailors’ Union of Hong Kong.

    However, it is this markup that pays the wholesaler’s out-of-pocket costs, including the original purchase from the highlands merchant, the refining, the huge quantity (perhaps 300 tons annually) of acetic anhydride used in heroin refining, security, bribes, transportation, warehousing, and so forth.


    Figure 1

    If the annual profit of the Golden Triangle operators is in the range of $5 billion — or a mere one fifth of the annual retail sales of heroin in the West — then the total cash flow in the Far East related to drugs is not $1 billion, as above, but $6 billion. The actual reflow is probably several times that sum. Some of the $5 billion may be banked elsewhere than in the Far East.

    The comparisons to the size of the region’s economic activity become all the more grotesque: Thailand’s 1976 total exports were only $2 billion. Even the $6 billion figure does not include the huge Far Eastern market for opium and heroin consumption. Added in, the retail volume brings the total close to $10 billion — twice Hong Kong’s money supply.

    There is another way to arrive at the same $10 billion figure: the official estimate for bribes paid annually to Hong Kong police is an astonishing $1 billion, more than the annual police budget. From a hard business standpoint, that $1 billion in payoffs is a major part of the overhead cost of both wholesale and retail drug operations in Hong Kong, the area’s drug capital. Since the known profit margin in the drug trade is 500 to 1,000 percent, it is fair to state that the $1 billion bribe figure is no more than 10 percent of local drug revenues. If $1 billion is 10 percent of the total, the total is $10 billion.

 How the Drug Trade is Financed

The chain of financial control of world opium traffic begins in Hong Kong, with billions of dollars in Hong Kong dollar loans to expatriate Chinese operators in the drug-growing regions. These

expatriates include two of Bangkok’s best-known bankers, according to American law enforcement files. Hong Kong also provides essential logistical support, including:

1) Smuggler-sized gold bars, obtainable through Hong Kong and Shanghai Bank subsidiaries
2) Diamonds, available through Hong Kong’s Anglo-Israeli controlled diamond monopoly
3) Warehousing facilities, dominated by a subsidiary of the Hong Kong and Shanghai Bank

The Hong Shang

Hong Kong and Shanghai Bank is the semi-official central bank for the Crown Colony, regulating general market conditions, holding excess deposits of the myriad smaller banks, providing rediscount facilities, and so forth. Clearly, the Hong Kong and Shanghai Bank is also the financial hydra unifying the production, transportation, and distribution of Asia’s opium.

Not only does it dominate financial activity in Hong Kong, with 50 percent of total banking business on the island, but “bank and government often work closely together,” (1) the London Financial Times comments. The Colonial government in Hong Kong makes virtually no statistics on banking activity available.

Commenting on the $8.3 billion figure for Group of Ten bank operations in Hong Kong, the Financial Times notes that,

“The official figures are also just the tip of an almost certainly greater volume of business, which is conducted by international banks with finance company subsidiaries in Hong Kong, or organized from Hong Kong but routed through entirely offshore accounts in such places as Vila (New Hebrides).” (2)

To be precise, there are 213 deposit-taking finance companies in the Colony, as well as 34 local banks and 104 bank representative offices. Over these squats the Hong Shang.  

The Chinese middleman

The essence of the bank’s drug control is its intimate relationship to scores of expatriate Chinese banking families scattered throughout the Far East. The British and Dutch connection to these families dates back to the first East India Company penetration of the region. The central banking role of the HongShang expresses an agreement that grew out of a century of official opium trade and continues through the present.

First, consider the financial and logistical requirements of the trade. Planning for the March opium harvest begins in September. The Bangkok or Hong Kong drug wholesaler must estimate the size of his market during the next summer, and, after market research is completed, inform his agents in the triborder area. (That market research must come from the United States and other retailers.)

They, in turn, will communicate to the Yunnanese and other merchants who operate in the poppy-growing high-lands to the north what the market will bear for the next harvest. The merchants then inform the Meo peasants what acreage they may plant.

At this point, the wholesaler must consider the following. First, the physical means of payment must be obtained, including American or Soviet armaments, gold in appropriate small-bar or jewelry form, or whatever, and this to the tune of $140 million worth. Golden Triangle peasants can’t use American dollars. Thousands of mules and muleteers must be made ready for the treks into the highlands. Bribes must be paid, routes monitored, border conditions observed, smuggling routes secured, contacts opened in the West, and other loose ends secured. The required seed money is in the range of the wholesaler’s $2,000 a pound price for refined heroin. (3)

What portion of the investment is made through “internal resources” of the drug wholesalers, and what portion borrowed, is a matter of guesswork. It is known that a very large amount is borrowed seasonally to finance drug wholesaling, largely from expatriate Ch’ao Chou Chinese banking networks. Since the Ch’ao Chou category includes Thailand’s most prestigious bankers, who are known to engage in financing drug traffic, very considerable financial resources are at the traffic’s disposal. It is a matter of a 200 percent annual rate of interest — agreed and no questions asked.

Known “angels” of the narcotics trade include Chen Pi Chen, a.k.a. Chin Sophonpanich, Chairman of the Board of the Bangkok Bank, with $5 billion in assets; and Udane Tejapaibul, former Chairman of the Board of the Bangkok Metropolitan Bank, with $2.4 billion in assets. Significantly, Sophonpanich, whose name is a Thai pseudonym, is a Ch’ao Chou Chinese expatriate. (4)

Such scandalous relationships are not much of a surprise in the region. At the time of the 1973 Thai coup, the premier’s son and chief of the narcotics bureau, Narong Kittikachorn, was found to be a prominent investor in drug wholesaling.

The annual credit line that must be extended to drug wholesalers, assuming they finance half their operations through credit, probably comes to about $150 million. Through pure chance, that is the average annual growth of the Bangkok Bank’s “Loans and Advances” during each of the last ten years. Of course, Chin Sophonpanich competes with many of his Ch’ao Chou colleagues for this lucrative business.


Wherever the Ch’ao Chou expatriate banking community has surfaced in leading positions of influence, Peking, British, and opium trade connections are evident. In 1958, the Thai authorities issued a fraud warrant against Bangkok Bank’s Sophonpanich. He fled to Peking and remained there until 1965, after which he returned, a deal with the Thai military in hand. According to area sources, Sophonpanich still maintains close contact with the Peking regime.

As one among several Bangkok financiers who finance the drug wholesalers in the volume of $100-200 million per year, Sophonpanich’s contacts include several names that have frequently appeared on the “Opium Watch List” of American law enforcement agencies: Ying Tsu-li, General Lo, and the brothers Hutien-Hsiang and Hutien-Fa, leading refiners of heroin in the triborder area.

In addition, area sources report that Sophonpanich has direct links to the so-called Triads, the expatriate Chinese secret societies that do most of the legwork in the opium traffic (see Part I). Yet, Sophonpanich is actually nothing more than a subcontractor of the Hong Kong and Shanghai Bank, as we now demonstrate.

  The HongShang-Chinese deal

Bangkok Bank illustrates the way the chain of financing leads back to the HongShang. Its current asset volume is $5 billion, much larger than the savings capacity of the area could justify. Banking sources report that most of its credit-generating capacity comes from rediscounting of the trade paper of the Singapore and Hong Kong financial markets, and mostly with the HongShang itself. Since the HongShang controls 50 percent of Hong Kong deposits and acts as the ultimate rediscount agency for the entire colony and much of the rest of Southeast Asia, the dependency of the Bangkok Bank and other Thai banks on the HongShang is virtually total. Most of the Bangkok Bank’s lending volume is subcontracted business, controlled by the HongShang.

The British-Chinese expatriate link goes back as long as the British have been in the Far East. The British organized the systematic colonization of tens of thousands of Chinese expatriates throughout the area, and started them out in the lower levels of the business otherwise conducted by the East India companies and their successors. (5)

Even where Britain displaced early overseas Chinese financial interests from positions they had enjoyed in the precolonial period, they left them in local control or in a junior status in such ureas as opium trading, and often virtually restricted them to those areas. As W.J. Cator notes in his book The Economic Position of the Chinese in the Netherlands Indies (6) and Purcell notes in The Chinese in Malaya, (7) Chinese monopolies of opium and alcohol local distribution continued in many Southeast Asian colonies, under the aegis of the colonial authorities, into the first decades of the 20th century.

Colonial powers divested Chinese merchants of control of many trading monopolies granted by the precolonial local authorities, hut left them in control of gambling and local drug and alcohol distribution because Chinese secret societies were uniquely equipped to handle them. The secret societies, representing branches of societies operating in southern China, theoretically pursued the aim of their founding — the overthrow of the Manchu Ch’ing Dynasty in Peking.

But as time wore on and the regime remained in power, the societies abroad became less interested in the politics of their homeland and more the instruments of overseas economic interests. As anthropologist William Skinner notes in his book Chinese Society in Thailand, An Analytical History, (8) the immigrant societies were usually headed by influential monopoly owners — opium traders, keepers of gambling and prostitution houses — who generally used the societies to further the interests of their monopolies.

In other economic sectors besides opium, it is common knowledge that overseas Chinese business interests were often employed as compradors, middlemen in the service of colonial banking and trading operations, indispensable due to their knowledge of the local market and their language abilities. The close economic relationships that certain segments of the Chinese business community enjoy with particular British banking interests date from that experience. At every point in the postwar political history of the region, the Chinese expatriate financiers have acted as consistent allies of the British and Dutch.

According to standard estimates, Chinese expatriate financiers currently control 60 to 80 percent of the economies of Indonesia, Thailand, and Malaysia.


What the size of expatriate dependency on the Hong Kong market is can only be guessed. However, the existing financial data show that the Hong Kong financial market is enormously oriented to foreign lending, in roughly the same proportion as the American banking system. One-third of all Hong Kong-dollar denominated loans — excluding the so-called Asia-dollar market — are to foreign borrowers. Foreign lending stood at HK $18.47 billion in March 1978, against $39 billion in local loans. (There are about 4.6 Hong Kong dollars to one U.S. dollar.) (9)

Since the borrowers’ market for Hong Kong, rather than American, dollars is limited to the areas of the Far East still under British financial sway, the HK $18.47 billion figure of overseas loans reflects the immense financial dependency of Burma, Thailand, and Malaysia on Hong Kong. The business is largely conducted through Chinese expatriate family ties. Most of Hong Kong’s 250 locally registered finance companies, in fact, are owned by Chinese expatriates.

The scale of expatriate Chinese operations, centered in Hong Kong and dependent on the Hong Kong and Shanghai Bank, is gigantic; the overseas Chinese community controls 42 percent of the foreign trade of the Southeast Asian countries, compared to 32 percent of Western business, 18 percent of non-Chinese local firms, and only 8 percent of state-controlled trading companies. (10)

As of the most recent figures available, Chinese expatriate investments in the area totaled only slightly less than combined American, Western European, and Japanese investments (although recent Japanese expansion in the area may have shifted the proportion somewhat).

The Hong Kong and Shanghai Bank, self-described as “a monument to British finance in Asia,” is in full control of the Hong Kong money market (1), on which such Chinese expatriate institutions (2) as the Bank of Bangkok absolutely depend for rediscounting loans, etc. Opium smugglers and wholesalers (3) in turn depend on the expatriate banks to finance their barter-purchase, refining and transport of opium and heroin from the “Golden Triangle” peasants of Southeast Asia and China’s Yunnan Province (4).

From seed-money to dirty-money, the proceeds of the drug trade start and finish with the HongShang (a.k.a. Hong Kong & Shangai Bank).

The above figures only give a partial picture of overseas Chinese financier dominance of Southeast Asian economies, because the expatriate Chinese bourgeoisie is overwhelmingly in such strategic sectors as banking, insurance, shipping, warehousing, and other intermediary activities, rather than manufacturing or agriculture.

According to one of Stanford University’s classic China studies, Thompson and Adloff’s Minority Problems in Southeast Asia, “Foreign-exchange and other controls (imposed by national governments in the area — ed.) have transformed many of the Chinese into smugglers and black marketeers, and such operations have increased both their wealth and their unpopularity.

Attempts to control the Chinese have almost everywhere run into the bewildering maze of overlapping Chinese organizations which exists in every country of the area, and they have been frustrated by Chinese evasion, ability, and indispensability.” (11)

The activities of the corrupted section of the expatriate Chinese community in Southeast Asia have provoked a long series of clashes with national authorities — who have not generally been successful in limiting illegal traffic. The one exception is the British possession of Hong Kong, the center of illegal operations in the area, where the smugglers are members of Hong Kong’s high society, e.g., Macao gambling overlord Stanley Ho, who made his career smuggling strategic materials from Hong Kong to China via Macao during the Korean War.

Britain’s Gold and Dirty Diamond Operations

One feature of the financing chain of the Far Eastern drug traffic—the Asian gold market—is a tipoff of the British (and especially Hong Kong and Shanghai Bank) control over the entire process. It might seem strange to the general reader, but the gold connection was one of a handful of critical clues that led investigators up the whole chain of evidence that will eventually put the management of the HongShang and a few other long-established institutions behind bars.

Vast quantities of gold are absorbed into the Asian drug trade—an inestimable percentage of the 400 to 600 tons of the metal that pass through the orient in a year, mainly through Hong Kong, and mainly through subsidiaries of the HongShang. The trade could not run without it and other precious, portable, untraceable substances—like diamonds.

First of all, peasants of the Golden Triangle poppy fields do not appreciate secret accounts in the Bahamas. Furthermore, since the end of the Vietnam War, and the end of the widespread traffic in contraband and American arms and American dollars, the U.S. dollar in the form of currency is no longer an acceptable medium of exchange. They must be paid in food—which they do not produce themselves—goods, and gold or the equivalent.

Secondly, the People’s Republic of China’s share of Golden Triangle production is paid almost entirely in gold, shipped in bulk across the Burmese border. (1) PRC gold income on opium production probably absorbs around one-seventh of all gold traded in the orient (judging from data analyzed more closely in Section 6, The Peking Connection). There could be some double counting here, since Peking also sells gold on the Hong Kong market.

Third, and possibly most important, gold cannot be traced, although any bank transfer ultimately can. One bar of gold looks like any other; changing a bank balance into gold or diamonds, and then changing it back into a bank balance, is like crossing a river to avoid bloodhounds.

Gold is so important to the entire business that the metal’s price is pegged to the price of raw opium in the Golden Triangle highlands. The dollar’s fall in terms of the gold price from $35 an ounce before 1971 to about $225 recently has also dramatically escalated opium wholesale prices. The escalation of the gold price over the past year has been so steady that all the numbers regarding the size of the opium trade may already be gross underestimates.

One indication of the closeness of the gold-opium relationship is the well-known story that the CIA fieldmen in northern Laos carried both gold and opium, to use as means of payment to the local Me’o population in case of need.

  How illegal gold travels

The American public will be shocked at how openly the Hong Kong and Shanghai Bank uses its monopoly in the Far Eastern gold trade to feed smuggling operations. Prior to the official opening of the Hong Kong gold market in 1974, HongShang openly financed the gold markets of Macao, the flagrantly crime-ridden island that plays “offshore” to Hong Kong’s own “offshore” operations. Today the Hong Kong market is run topdown by Sharps Pixley Wardley, a 51-percent owned subsidiary of the HongShang. The Hong Kong market’s current daily trading volume is in the hundreds of millions of dollars, on a par with London and Zurich.

Apart from Hong Kong, the other route for smuggled gold to the Far East is through the Persian Gulf sheikdom of Dubai. The dominant commercial and gold market force in Dubai is the British Bank of the Middle East, a 100 percent subsidiary of the Hong Kong and Shanghai Bank. A 1972 description from one of Britain’s best-known experts, Timothy Green of Consolidated Gold Fields, Ltd., (2) is instructive on how the illegal flow of gold travels:

“It may indeed sound romantic, but it is a fact that both in 1970 and 1971 at least 500 tons of gold—that is to say half of all South Africa’s production, or 40 percent of total gold production in the non-communist world—passed through unofficial channels on the way to its ultimate destination.”

“Unofficial” channels, as the author proceeds to make clear, means illegal channels. Most of the world’s existing gold is held by central banks; prior to 1971, gold was the basis of central bank reserves. With the advent of the new European Monetary System, gold is again becoming an official monetary reserve. Gold dealings among banks, industrial users such as jewelers, and so forth, are also counted as “official” channels.

Apart from the drug traffic and related money-laundering uses, gold smuggling has played a major role in aggravating the payments deficits of Third World countries such as India, where large numbers of private citizens hold gold. However, the Indian government in 1977 opened up direct sales to the Indian population. This largely eliminated India as a haven for gold smuggling by making gold available through official channels. Despite this, judging from the activity of the Hong Kong market, the proportion of gold running into illegal channels has, if anything, increased, and the drug-related proportion of the illegal gold increased as well.


“… these unofficial channels usually start in gold markets such as Beirut (since defunct — ed.), Dubai, Vientiane, Hong Kong and Singapore which I am discussing today. Their chief role — their raison d’etre — is as distribution centers for the smuggling; they are entrepots convenient to nations, which for a variety of reasons, forbid the official import of gold for commercial or hoarding uses ….

“Dubai has become the largest gold market in the world, except for London and Zurich — no mean achievement for a shiekhdom with a population of around 60,000. Both in 1970 and 1971 Dubai had well over 200 tons of gold — indeed in 1970 the equivalent of a quarter of all South African production found its way along this golden pipeline to India and Pakistan (and further East. Since the beginning of official gold sales by the Indian government, and the reopening of the Hong Kong gold market, Dubai’s importance has attenuated somewhat — ed.) . . .

“By contrast to Dubai, a gold market that developed very quickly to meet a special short term need was Vientiane in Laos. The market there really grew with the escalation of the war in South Vietnam. And it grew because it was the nearest and cheapest source of gold. . . . This gold which was bought as a hedge against the constant devaluations of the Vietnamese currency and to hide the vast black market profits made from pilfered American arms and equipment, was paid for almost entirely in cash. (Throughout the 1960s and 1970s, pilfered American arms and equipment formed a major part of the barter goods exchanged for opium in the Golden Triangle highlands — ed.).

“Vientiane’s short success made some impact on the oldest gold market in the Far East — Hong Kong, or more correctly Hong Kong-Macao, for the two are held together as it were by a golden chain. Hong Kong, as a British Crown Colony, forbids the private holding of gold bullion; only commercial gold of less than 945 purity may be traded. To get around this regulation, gold bullion has for more than twenty-five years made a curious sideways shuffle from Hong Kong to Macao and back again. The gold bullion — in 995 good delivery bars — that comes into Hong Kong by air from Europe and Australia … is transferred in Macao, where it is melted down into Chinese 1.5 and 10 tael bars. It then returns, stealthily, to Hong Kong. This traffic has been presided over for may years by the Wong Hong Hon Company which negotiated a series of two-year contracts with the Portuguese authorities in Macao for exclusive rights for the gold traffic. The traffic was financed by the Hong Kong and Shanghai Bank,” (emphasis added)

That is, in the testimony of Britain’s leading gold expert, the HongShang financed illegal gold trade in Hong Kong itself, prior to the reopening of the Hong Kong gold market, after which the HongShang subsidiary Sharps Pixley Wardley took over the legal trade.


Digging into the back archives, it is clear that Consolidated Gold Fields’ 40 percent figure for smuggled gold in 1972 represents, if anything, a moderation of past trends. Earlier figures are much higher. For example, British author Paul Ferris in The City (3) claimed that in 1951 only 17 percent of all world gold production went through official channels; Ferris’s report was based on interviews with the London gold pool. “What happens to the gold when it disappears into the economic undergrowth of the East is of no concern to the London bullion dealers,” Ferris claimed, but as we will demonstrate, the London bullion dealers know precisely what happens to the gold in the Far East. The London bullion market is merely a subsidiary of Dope, Incorporated.

In the July 22, 1952 issue of The Reporter, an article under the byline of H.R. Reinhart, the then Far East correspondent of the Neue Zuercher Zeitung, estimated Asian gold smuggling at $150 million in that year. At today’s gold prices, the figure would be $1 billion for the same quantity of gold. The account bears impressive credentials, since 1) the Reporter editor at the time was Harlan Cleveland, now a senior official of the Aspen Institute, and part of the present drug machine in the U.S.; and 2) the Neue Zuercher Zeitung, Switzerland’s top daily paper, is linked through European aristocratic ties directly to the British monarchy. (4)

Reinhart identified a “Golden Loop, the circuitous path that leads from North Africa to the coast of Red China and back again as far west as India.” The center of gold smuggling was the Portuguese-controlled island of Macao, where gold smuggling is legal, and “anyone who dares call a smuggler a smuggler can be sued for libel.” Then the gold is smuggled into Hong Kong, and thence to the rest of Asia.

A mere 3 percent of the smuggled gold is seized by Hong Kong authorities, Reinhart noted, even though customs officials receive a 20 percent commission on all seizures; presumably, bribes to customs officials are more substantial.

Standard Western and Soviet sources estimate the smugglers’ commission at 30-50 percent in such transactions. Soviet economist M.A. Andreyev reports:

“According to a Chinese businessman in Singapore, smuggling yields a profit of up to 100 percent on invested capital, which is several times higher than the profit received in the basic branches of the island’s economy. In Hong Kong the commission paid to smugglers amounts to from 30 to 50 percent of the cost of the smuggled commodities.” (5)

However, if the bribes paid to Hong Kong customs officials are substantial enough to overshadow the 20 percent kickback on seized contraband gold, the bribes must also be in the order of 30 to 50 percent. The point is that the gold trade itself would not be profitable, unless it were only a bridge transaction in a much more profitable operation — e.g., narcotics traffic! That is the case.

But as Reinhart reported,

“British justice, as dispensed by the magistrates’ court in Hong Kong, extends even the benefit of the doubt to a suspected smuggler caught with the goods.”

That should not be a surprise at this point; as noted before, it was a matter of public record for a quarter century that Britain’s Hong Kong and Shanghai Bank itself financed the gold smuggling!


One further crucial point — whose full importance will only emerge in the following sections — is that the People’s Republic of China has been in on the illegal gold market since the 1949 Maoist takeover.

Gold flown into Macao, as noted above, was (before Hong Kong opened up its gold markets in 1949) resmelted into bars of less than 95 percent purity, whose trading the Hong Kong authorities hypocritically endorsed. The resmelting, Reinhart reported, was the business of the Kan Kuam Tsing Company in Macao. “On the Hong Kong exchange,” the Swiss journalist added, “the buyer is not unlikely from the People’s Republic of China.” Since the PRC buyer wants metal of monetary-reserve purity, above 95 percent, he takes the gold back to the Kan Kuam Tsing Company, and reconverts the gold back to a higher purity level. Reinhart identified the firm Pao San and Co. as a regular vehicle for Peking gold purchases during the early 1950s. (6)

According to Reinhart, the PRC entered the Hong Kong gold market in 1950. Last July’s announcement that 13 Communist-owned banks in Hong Kong would be permitted to trade directly in the Hong Kong gold market thus only extends an agreement that has been in force since the founding of the PRC.

  One big gold pool

Apart from a relatively insignificant flow of gold into Hong Kong from mines in Australia and the Philippines — insignificant compared to the 300 tons of gold traded in Hong Kong during 1977 and the 600 tons traded during 1978 (projected) — Hong Kong depends entirely on the London gold pool for its supplies.

Figure 3

Above map is based on one appearing in the 1977 annual report of Consolidated Gold Fields, Ltd.

The world total of gold in metric tons was only approximately 1,500.

Of this, 390 metric tons was distributed from Europe through Dubai and 287mt through China, primarily by British-controlled agencies, most of it ending up in Hong Kong.

Another 18mt is directly exported to Hong Kong, for a total of 695mt.

The vast proportion of this flow is “unofficial,” and is put to use in drug-related dirty-money laundering. (Cf. Figure 5.)

Why do London’s gold pool operators tolerate this situation? Because the London gold pool is the same operation as the Hong Kong and Shanghai Bank, controlled by the same London families whose drug-running activities go back 150 years.

There are two major South African gold producers, Anglo-American and Consolidated Gold Fields (whose gold specialist was quoted above); there is one major South African diamond producer, De Beers, largely owned by Anglo-American; and five major London gold pool firms, who meet every day in the trading room of N.M. Rothschilds at New Court, St. Swithin Street, London, to set the world gold “fixing.” Examining these firms individually, we discover such a manifold of connections that it is meaningless to speak of the London and Hong Kong gold markets as anything but branch offices of the same operation.

Hong Kong and Shanghai’s own gold-trading outlet is Sharps Pixley Wardley, of which they own 51 percent. One of the five London gold pool firms, Sharps Pixley, owns the remaining 49 percent. But Sharps Pixley itself is a fully owned subsidiary of the London merchant bank Kleinwort Benson whose deputy chairman is Sir Mark Turner, the chairman of Rio Tinto Zinc.

Rio Tinto Zinc itself was founded a century ago with the opium-trading profits of Jardine Matheson, by a member of the Matheson family; the Mathesons are still large shareholders in the HongShang. The Matheson family’s heirs, the Keswick family, still have their traditional seat on the HongShang board. Sir Mark Turner spent World War II at Britain’s Ministry of Economic Warfare, which also employed Sir John Henry Keswick, and another HongShang board member, John Kidston Swire.

Hong Kong’s second largest bank, the Standard and Chartered Bank, owns a majority share of another member of the London gold pool, Mocatta Metals. Standard and Chartered’s predecessor, the Standard Bank, was founded a century ago by Cecil Rhodes, of whom we will have much to say later in Section 7.

Standard and Chartered is not only a close collaborator of the HongShang in such matters as the transfer of Red Chinese opium money (see Section 6 below) — but is heavily interlocked since the days of the official British opium trade.

Figure 4.   British Gold and Diamond Syndicate

One of Standard and Chartered’s directors is the current Lord Inchcape, of Inchcape and Co. and the Peninsular and Orient Steam Navigation, the latter dominating ocean freight in the Far East. Both companies are heavily represented on the HongShang board of directors. Inchcape’s father wrote the notorious 1923 Inchcape Report recommending continued British sponsorship of the opium traffic — despite the outrage of the rest of the League of Nations — in order to “protect the revenues” of then-British colonies in the Far East.

This example also indicates why the London gold pool’s dirty money operations are a worldwide, not merely a Far Eastern, problem. Mocatta Metals, a subsidiary of Standard and Chartered’s Mocatta and Goldsmid, operates one of New York’s biggest dirty money laundering operations.

Mocatta Metal’s current chairman, Dr. Henry Jarecki, has been under investigation for years for illegal activities, although no indictment has yet been handed down. According to European intelligence sources, Jarecki’s dirty money operation helps fund the activities of the Mossad, Israel’s foreign secret intelligence service, in New York City, including assassination teams.

Jarecki is no small fry: he is a frequent gold columnist for British financial publications such as Euromoney, and rated a lengthy profile in the September 1978 issue of Fortune magazine. Nonetheless, he is eminently suited for the role of bag-man for Israeli intelligence hit squads. Jarecki began running drugs as a small-time pusher on the University of Michigan campus in 1950-51. In 1952, he spent six months in jail for suspected espionage in East Berlin. According to published sources, approximately half of Jarecki’s present staff of 28 gold traders started out in the same Harvard Psychology Department that featured LSD-pushers Dr. Timothy Leary and “Baba Ram Dass” in the early 1960s. (7)

Midland Bank stands behind both Standard and Chartered and Mocatta and Goldsmid, with a 20 percent ownership of Standard and Chartered; it also wholly owns another London gold pool bank, Samuel Montagu. Sir Mark Turner is a director of both Midland Bank and Samuel Montagu. The Montagu family, heavily intermarried with the Rothschilds, Montefiores, and Samuels, is the cream of Britain’s Court Jews. One of their protégés is HongShang board member Philip de Zulueta.

N.M. Rothschild and Sons, which opened up operations in Hong Kong in 1975 to take advantage of the newly liberalized gold trading laws, and Johnson Matthey, the remaining members of the London gold pool, are also interlocked several times over with both the HongShang and the major South African gold producers, Consolidated Gold Fields and Anglo-American who control between them 90 percent of South Africa’s gold output. (For further details see Section 7 and 8.)

  The diamond black market

Second in importance in the money-laundering process is the world diamonds market, worth $5 billion annually at wholesale value, whose single presiding manager is Sir Harry Oppenheimer of De Beers Corporation. Oppenheimer is also the chairman of the larger South African gold producers, Anglo-American. The Anglo-American and De Beers complex runs the Hong Kong side of the money-laundering diamonds operation on two levels — wholesale and retail. De Beers runs 85 percent of the wholesale diamonds market; through his intimate Israeli connections, Oppenheimer also runs the Hong Kong diamond market.


There are two points of special relevance for diamonds to the international heroin traffic. The first is that, in value relative to size and weight, diamonds are the closest approximation to heroin as a store of value for furtive use. Secondly, the De Beers-controlled international diamond cartel operates according to a pyramidal structure identical to that of the world heroin trade.

The use of expatriate ethnic networks for the dirtier side of the operations is also homologous, except that in the case of diamonds, Jews take the place of Ch’ao Chou Chinese. Not coincidentally, there is almost as little publicly available information on international diamonds trade as on the heroin traffic.

South Africa’s largest producer, De Beers, was the 1888 creation of Rothschild legman Cecil Rhodes; in 1929, the company underwent reorganization by Sir Ernest Oppenheimer, of the Anglo-American family. De Beers controls the Central Selling Organization (CSO), which handles 85 percent of international diamond trade.

At ten “sights” each year, 300 clients purchase stones from the CSO. The list of these select clients is secret. Following their purchase by the secret list of clients, the diamonds are sent to cutting centers for further preparation. The two dominant cutting centers are Antwerp and Ashqelon, in Israel. Antwerp’s diamond cutting and related trade is financed by the Banque Bruxelles-Lambert, controlled by the Lambert family, the Belgian cousins of the Rothschilds. Israel’s (and also New York’s) diamond business is financed by Bank Leumi. (8)

Within the individual centers, dealers trade among themselves on such exchanges as the New York Diamond Dealers Club, the Ramat Gan in Tel Aviv, and the Antwerp Diamond Bourse. No written records are kept of any transactions on these exchanges; the agreements are sealed with a handshake. No aspects of this trade are available for scrutiny by law enforcement agencies, even under American law, before the diamonds reach the jewelry store level.

Hong Kong’s own substantial wholesale diamond market is the virtual monopoly of the Union Bank of Israel; this bank is wholly owned by Israel’s largest finance house, Bank Leumi. Bank Leumi, in turn, is under the control of Barclays Bank, on whose board sits Harry Oppenheimer and the Oppenheimer family itself. Bank Leumi’s own chairman is Ernst Israel Japhet, of the Charterhouse Japhet family whose fortune derived from the official British opium trade during the nineteenth century!

Ten times a year, representatives from the Ramat Gan, Tel Aviv’s diamond exchange, go with Union Bank financing to the De Beers Central Selling Organization “sights” in London, and purchase one-third of the world diamond output.

Like the Peking-British-controlled Ch’ao Chou Chinese networks in the Far East, Britain’s Zionist financiers are a cult unto themselves, with their own family networks, cults, and language. New York’s diamond market consists, at the lower levels, mainly of members of the extremist Hasidic sects resident in the area. This exotic feature of the diamond traffic achieved public notoriety after several unexplained thefts and murders occurred in the diamond trade during 1977.

Although there is an apparent division of labor between the Hofjuden precious metals and precious stones channels of the world dirty money operation, the various firms involved are so closely intermarried, interlocked, and interowned with the major dirty money banks, that the working of the dirty money apparatus is totally integrated.

A case in point is Canada, the dumping ground for all aspects of Dope, Incorporated that feed into the United States. The Bank of Nova Scotia, for example, is both the major gold dealer (and banker for the second largest gold dealer, Noranda Mines), and the major dirty money operator in the Caribbean.

The Nova Scotia is notorious for bribing its way into new branch offices in the Caribbean, violating local currency laws, running flight capital against currency restrictions, “investing” in local businesses known to be intelligence fronts, and so forth. Nova Scotia’s branch network in the Caribbean is the largest of any bank in the world, save Barclays which has a similar pedigree. Gold is a specially useful medium for the special case of the Caribbean, where official restrictions make some bank transfers difficult. Conveniently, Nova Scotia leads the Toronto gold market.

The other leading gold market operator in Toronto is Noranda Mines: its chairman Powis is a member of the board of directors of the Bank of Nova Scotia. Powis is also a member of the board of Sun Life Assurance, the Rothschilds’ insurance company.

by Konstandinos Kalimtgis, David Goldman, Jeffrey Steinberg



We now live in a culture that prefers the authentic, the organic, the homemade and homegrown, the approachable, the touchable, the human and the natural. These things seem to offer us the ethos of goodness minus the boundaries and parameters of the biblical definitions of sin. In order to speak to this post-Christian generation and cause them to consider a life committed to Christ,  we need men and women who are committed to five ministerial characteristics  in I Thes. 2:2-10.

Paul in I Thes. 2:2-10 laid down five character traits of “effective ministers of the Gospel”, which are listed below.

  1. Courage. Every minister of the Gospel must be courageous in their delivery of the Gospel message. He “must not” preach to please the audience, he must preach to “please God.” He” must not” use flattery in order to receive a “big honorarium.”  He must not be “greedy for money.” He must not seek “the praise of men.”
  2. Gentle. He must be as “gentle towards the audience” as a mother who carries her children.
  3. Love. The motive of sharing the Gospel and the motive of interacting with the people must be “that of love” , the love that Christ showed the entire world.
  4. Hard Work. In ministry there are a number of temptations, but the greatest of these are “sexual, financial, and laziness.” It’s imperative that the minister not fall prey to temptations, but especially these temptations as they have brought down many wonderful ministers and well as their ministries.
  5. Holiness. Every minister must “strive to be holy, righteous and blameless” in both their private and public life.

As a minister of the Gospel, one must never forget, WHO called them, why HE called them and the account that they will most certainly given to the One who called them.





This is the setting for what follows below: narcotics are pouring in from abroad through a well-organized, efficient group of smugglers. One-fifth of the population abuses drugs, an epidemic surpassing any known since the Great Plagues. Not only the poor, but the wealthy and the children of the wealthy have succumbed. Within the nation, organized crime displays its drug profits without shame, ruling local governments, and threatening the integrity even of national government. None of their opponents is safe from assassins, not even the chief of state. Law enforcement is in shambles. The moral fiber of the nation has deteriorated past the danger point.

And one of the leading dope-traffickers writes to his superiors abroad, “As long as this country maintains its drug traffic, there is not the slightest possibility that it will ever become a military threat, since the habit saps the vitality of the nation.” (1)

The description is familiar, but we are not writing of America in 1978, but China in 1838, on the eve of the first Opium War, when Great Britain landed troops to compel China to ingest the poison distributed by British merchants.

An American President lies dead of an assassin’s bullet.

Corrupt members of the Cabinet cover the tracks leading to a conspiracy, including the leading narcotics mobs, ethnic-based secret societies, and a foreign government. The public does not believe that the assassin acted alone, but the weight of the cover-up, the silence of the leading press, and the deaths of witnesses blur the trail from the public’s view.  

Was that the death of John F. Kennedy? It was  the death of Abraham Lincoln. 

 During the last century, British finance protected by British guns controlled the world narcotics traffic. The names of the families and institutions are known to the history student: Matheson, Keswick, Swire, Dent, Baring, and Rothschild; Jardine Matheson, the Hong Kong and Shanghai Bank, the Chartered Bank, the Peninsular and Orient Steam Navigation Company. Britain’s array of intelligence fronts ran a worldwide assassination bureau, operating through occult secret societies: the Order of Zion, Mazzini’s Mafia, the “Triads” or Societies of Heaven in China. 

Paging back over the records of the narcotics traffic and its wake of corruption and murder, the most uncanny feature of the opium-based Pax Britannica is how shamelessly, how publicly the dope-runners operated. 

Opium trading, for the British, was not a sordid backstreet business, but an honored instrument of state policy, the mainstay of the Exchequer, the subject of encomia from Britain’s leading apostles of “Free Trade” – Adam Smith, David Ricardo, Thomas Malthus, James Mill, and John Stuart Mill. The poisoning of China, and later the post-Civil War United States, did not lead to prison but to peerages.  

Great sectors of the Far East became devoted to the growing of the opium poppy, to the exclusion of food crops, to the extent that scores of millions of people depended utterly on the growing, distribution and consumption of drugs. 
The Keswicks, Dents, Swires and Barings still control the world flow of opiates from their stronghold in the British Crown Colony of Hong Kong. Jardine Matheson, the Hong Kong and Shanghai Banking Corporation, and the Peninsular and Orient Steam Navigation Company still control the channels of production and distribution of the drugs from the Far East, through the British dominion of Canada, into the United States. 

By an uninterrupted chain of succession, the descendants of the Triads, the Mafia, and the Order of Zion still promote drug traffic, dirty money transfers, political corruption, and an Assassination Bureau even more awesome than the conspiracy that claimed Abraham Lincoln’s life. Of course, the drug revenues of this machine are no longer tallied in the published accounts of the British Exchequer. 

But the leading installations of the drug traffic are no more hidden than they were a hundred years ago. From the Crown Colony of Hong Kong, the “HongShangBank (a.k.a. Hong Kong & Shangai Bank) does what the Keswicks set it up to do: provide centralized rediscounting facilities for the financing of the drug trade. Even the surnames of senior management are the same.

Even today, the grand old names of Prohibition liquor and dope-running rouse the deep awareness of Americans: Bronfman, Kennedy, Lansky. Are the denizens of the India opium trade, of the Prohibition mob, imprisoned in the history books and behind the movie screen? Not infrequently, the observer feels a momentary lapse in time, and sees not a history book, but the morning newspaper, not the late-night movie, but the evening television newscast.  The story we have to tell happened twice. It first happened to China, and now it is happening to the United States.  Emphasizing that neither the names nor the hangouts of the criminals have changed, we begin by telling how it happened the first time.

 1 – Britain’s First Opium Wars

From 1715, when the British East India Company opened up its first Far East office in the Chinese port city of Canton, it has been official British Crown policy to foster mass-scale drug addiction against targeted foreign populations in order to impose a state of enforced backwardness and degradation, thereby maintaining British political control and looting rights. 
While the methods through which the British have conducted this Opium War policy have shifted over the intervening 250 years, the commitment to the proliferation of mind-destroying drugs has been unswerving.

It was the British Crown’s categorical opposition to and hatred for scientific and technological progress that led it to adopt an Opium War policy during the last decade of the 18th century. Having stifled the development of domestic manufacturing during the previous century, the British Crown found its treasury rapidly being drained of silver reserves – the only payment the Chinese Emperor would accept in exchange for silk, tea, and other commodities Britain imported. 

To reverse the silver exodus, which threatened to collapse the financial underpinnings of the British Empire, King George III mandated the East India Company to begin shipping large quantities of opium from Bengal in the British Crown Colony of India into China. The dual objective was to favorably alter the balance-of-payments deficit and to foster drug addiction among China’s mandarin class. 

By the time of the American Revolution, East India Company opium trafficking into China was officially reported to be at a scale 20 times the absolute limit of opium required for medical and related use.

In a very direct sense, the Founding Fathers of the United States fought the American Revolution against the British Crown’s opium policy.

  • East India Company intelligence operative Adam Smith’s Wealth of Nations spelled out the colonial looting policy against which the Founding Fathers rebelled. In that same document – as part of the same scheme to defend the Empire – Smith advocated a massive increase of East India Company opium exporting into China. (2)   

  • The dirty money culled from that opium trade made up a sizable portion of the war chest that financed Britain’s deployment of Hessian mercenaries into North America to attempt to crush the rebellion.   

  • The “Secret Committee” of the East India Company – under the direction of Lord Shelburne and company chairman George Baring – coordinated British secret intelligence’s campaign of subversion and economic warfare against the newly constituted American republic even before the ink had dried on the Treaty of Paris (1783). (3)

After the American Revolution, Smith’s call for a dramatic increase in opium exporting into China was enacted with a vengeance. 

From 1801 to 1820, official British figures placed the opium trade at approximately 5,000 chests per year. By the late 1820s, a network of trading companies operating under overall East India Company “market control” was founded to facilitate the trade. Some of these British opium houses, including the biggest, Jardine Matheson & Co. Ltd., maintain an active hand in Far East heroin trafficking to this day.

The establishment of these trading companies – the core of Britain’s Opium War infrastructure – fostered an epidemic- scale increase in opium trafficking into China. By 1830-31, the number of chests of opium brought into China increased fourfold to 18,956 chests. In 1836, the figure exceeded 30,000 chests. In financial terms, trade figures made available by both the British and Chinese governments showed that between 1829-1840, a total of 7 million silver dollars entered China, while 56 million silver dollars were sucked out by the soaring opium trade. (4)   When the Chinese Emperor, confronted by a galloping drug addiction crisis, tried to crack down on the British trading companies and their dope smugglers, the British Crown went to war.

In 1839, the Chinese Emperor appointed Lin Tse-hsu Commissioner of Canton to lead a campaign against opium. Lin launched a serious crackdown against the Triad gangs sponsored by the British trading companies to smuggle the drugs out of the “Factory” area into the pores of the communities. The Triad Society, also known as the “Society of Heaven and Earth,” was a century-old feudalist religious cult that had been suppressed by the Manchu Dynasty for its often violent opposition to the government’s reform programs. The Triad group in Canton was profiled and cultivated by Jesuit and Church of England missionaries and recruited into the East India Company’s opium trade by the early 19th century. (5)

When Lin moved to arrest one of the British nationals employed through the opium merchant houses, Crown Commissioner Capt. Charles Elliot intervened to protect the drug smuggler with Her Majesty’s fleet. And when Lin responded by laying siege to the factory warehouses holding the tea shipments about to sail for Britain until the merchants turned over their opium stockpiles, Elliot assured the British drug pushers that the Crown would take full responsibility for covering their losses.  The British Crown had its “casus belli.”   

Matheson of the opium house Jardine Matheson joyously wrote his partner Jardine – then in London, conferring with Prime Minister Palmerston on how to pursue the pending war with China:

. . . the Chinese have fallen into the snare of rendering themselves directly liable to the Crown. To a close observer, it would seem as if the whole of Elliot’s career was expressly designed to lead on the Chinese to commit themselves, and produce a collision. Matheson concluded the correspondence: “I suppose war with China will be the next step.” (6)

Indeed, on October 13, 1839, Palmerston sent a secret dispatch to Elliot in Canton informing him that an expeditionary force proceeding from India could be expected to reach Canton by March, 1840. In a follow-up secret dispatch dated November 23, Palmerston provided detailed instructions on how Elliot was to proceed with negotiations with the Chinese – once they had been defeated by the British fleet.

Palmerston’s second dispatch was, in fact, modeled on a memorandum authored by Jardine dated October 26, 1839, in which the opium pusher demanded: 1) full legalization of opium trade into China; 2) compensation for the opium stockpiles confiscated by Lin to the tune of £2 million; and 3) territorial sovereignty for the British Crown over several designated off-shore islands. In a simultaneous memorandum to the Prime Minister, Jardine placed J&M’s entire opium fleet at the disposal of the Crown to pursue war against China. (7)

The Chinese forces, decimated by ten years of rampant opium addiction within the Imperial Army, proved no match for the British.  The British fleet arrived in force and laid siege in June of 1840. While it encountered difficulties in Canton, its threat to the northern cities, particularly Nanking, forced the Emperor to terms. Painfully aware that any prolonged conflict would merely strengthen Britain’s bargaining position, he petitioned for a treaty ending the war.

When Elliot forwarded to Palmerston a draft Treaty of Chuenpi in 1841, the Prime Minister rejected it out of hand, replying, “After all, our naval power is so strong that we can tell the Emperor what we mean to hold, rather than what he should say he would cede.” Palmerston ordered Elliot to demand “admission of opium into China as an article of lawful commerce,” increased indemnity payment, and British access to several additional Chinese ports. (8)   The Treaty of Nanking, signed in 1842, brought the British Crown an incredible sum of $21 million in silver – as well as extraterritorial control over the “free port” of Hong Kong – which to this day is the capital of Britain’s global drug-running.

The First Opium War defined the proliferation of and profiteering from mind-destroying drugs as a cornerstone of British Imperial policy. Anyone who doubts this fact need only consider this policy statement issued by Lord Palmerston in a January 1841 communiqué to Lord Auckland, then Governor General of India:

The rivalship of European manufactures is fast excluding our productions from the markets of Europe, and we must unremittingly endeavor to find in other parts of the world new vents for our industry (i.e., opium – ed.). . . If we succeed in our China expedition, Abyssina, Arabia, the countries of the Indus and the new markets of China will at no distant period give us a most important extension to the range of our foreign commerce. . . . (9)

It is appropriate to conclude this summary profile of Britain’s first Opium War by quoting from the 15th edition of the Encyclopedia Britannica, published in 1977.  

What the brief biographical sketch of Lin Tse-hsu – the leader of the Chinese Emperor’s fight to defeat British drugging of the Chinese population – makes clear to the intelligent reader is that British policy to this day has not changed one degree:

… he (Lin—ed.) did not comprehend the significance of the British demands for free trade and international equality, which were based on their concept of a commercial empire. This concept was a radical challenge to the Chinese world order, which knew only an empire and subject peoples. 

… In a famous letter to Queen Victoria, written when he arrived in Canton, Lin asked if she would allow the importation of such a poisonous substance into her own country, and requested her to forbid her subjects to bring it into his. Lin relied on aggressive moral tone; meanwhile proceeding relentlessly against British merchants, in a manner that could only insult their government.

Britain’s opium diplomacy

Not a dozen years would pass from the signing of the Treaty of Nanking before the British Crown would precipitate its second Opium War offensive against China, with similar disastrous consequences for the Chinese and with similar monumental profits for London’s drug-pushers. 

Out of the second Opium War (1858-1860), the British merchant banks and trading companies established the Hong Kong & Shanghai Corporation, which to this day serves as the central clearinghouse for all Far Eastern financial transactions relating to the black market in opium and its heroin derivative.

Furthermore, with the joint British-French siege of Peking during October 1860, the British completed the process of opening up all of China. Lord Palmerston, the High Priest of the Scottish Rites, had returned to the Prime Ministership in June 1859 to launch the second war and thereby fulfill the “open China” policy he had outlined 20 years earlier.

Like the 1840 invasion of Canton, the second Opium War was an act of British imperial aggression – launched on the basis of the first flimsy pretext that occurred. Just prior to his ordering of a northern campaign against Peking (which permitted the British to maintain uninterrupted opium trafficking even while a state of war was underway), Lord Palmerston wrote to his close collaborator Foreign Secretary Lord John Russell (grandfather and guardian of the evil Lord Bertrand Russell). 

“We must in some way or other make the Chinese repent of the outrage,” wrote Palmerston, referring to the defeat suffered by a joint British-French expeditionary force at Taku Forts in June 1859. The expeditionary fleet, acting on orders to seize the forts, had run aground in the mud-bogged harbor and several hundred sailors attempting to wade to shore through the mud were either killed or captured. “We might send a military-naval force to attack and occupy Peking,” Palmerston continued. (10)  

Following Palmerston’s lead, The Times of London let loose a bloodcurdling propaganda campaign:

England, with France, or England without France if necessary. . . shall teach such a lesson to these perfidious hordes that the name of Europe will hereafter be a pass- port of fear, if it cannot be of love throughout their land. (11)

In October 1860 the joint British-French expeditionary force laid siege to Peking. The city fell within a day with almost no resistance. Despite French protests, British commander Lord Elgin ordered the temples and other sacred shrines in the city sacked and burned to the ground – as a show of Britain’s absolute contempt for the Chinese.

Within four years of the signing of the Treaty of Tientsin (October 25, 1860), Britain was in control of seven eighths of the vastly expanded trade into China. This trade amounted to over £20 million in 1864 alone. Over the next 20 years, the total opium export from India – the overwhelming majority of which was still funneled into China – skyrocketed from 58,681 chests in 1860 to 105,508 chests in 1880. (12)

Furthermore, the opening of China prompted the British opium traders to diversify into “legitimate business.” The opium firms opened cotton traffic into China – to the point that cotton cloth shipments into China (like the opium shipments) quadrupled from 1856-1880 from 115 million yards of cloth to 448 million yards.

The London opium traffickers’ diversification into the cotton trade at the close of the second Opium War intersected with the same London oligarchy’s shifting of its principal strategic policy focus to the destruction of the United States – beginning with the efforts to wreck the republic via the British-sponsored Civil War.

The massive expansion of cotton exporting was undertaken with full knowledge that U.S. cotton production – centered in the Deep South slavocracy – would be severely disrupted with the pending “civil war” destabilization in North America. (13)

The slave and cotton trade in the South was run to a significant degree by the same Scottish-based families that also ran the opium traffic in the orient. The Sutherland family, which was one of the largest slave and cotton traders in the South, were first cousins of the Matheson family of Jardine Matheson. The Barings, who founded the Peninsular & Orient Steamship Line heavily involved in the opium trade, had been the largest investors in U.S. clipper shipping from the time of the American Revolution. The Rothschild family as well as their later “Our Crowd” New York Jewish banking cousins, the Lehmans of Lehman Bros., all made their initial entry into the United States through the pre-Civil War cotton and slave trade.

In the case of the U.S. Civil War, the British opium traffickers bet on the loser. By the mid-1860s, cotton goods from the southern United States were back on the international markets, triggering waves of bankruptcies among London speculators who bet on dramatic inflation in the prices of Indian and Egyptian cotton. As in the period immediately following Britain’s loss of its American colonies during 1776-87, the oligarchy turned to an expanded opium traffic to paste over the losses.

To facilitate the planned expansion of the opium trade, the British banking and merchant circle founded the Hong Kong & Shanghai Corporation in 1864. Almost simultaneously, the Matheson family founded Rio Tinto (now Rio Tinto Zinc), a tin mining venture in Spain which soon began shipping these ores as a method of payment for the opium.

Who founded the Hong Kong and Shanghai Corporation? The same circle of merchant banking, trading, and shipping families – centered around the British monarchy – who opened the East India Company’s opium trade as an instrument of British state policy during the previous century.

The following points summarize British Opium War policy against China through the 19th century:

  • Open sponsorship of mass-scale opium addiction of targeted colonial and neocolonial populations by the British Crown

  • Willingness of Her Majesty’s government to deploy military force up to and including full-scale conventional warfare in support of the opium trade

  • Build-up of an allied terrorist and organized criminal infra- structure employing revenues gained from opium trade and related black market activities

Protecting the opium market

 Even through the early decades of the present century, Britain retained an open diplomatic posture on behalf of unrestricted drug profiteering.  In 1911, an international conference on the narcotics problem was held at The Hague. The conference participants agreed to regulate the narcotics trade, with the goal in mind of eventual total suppression. The success of the Hague Convention, as it was called, depended on strict enforcement of the earlier Anglo- Chinese agreement of 1905. Under that agreement, the Chinese were to reduce domestic opium production, while the British were to reduce their exports to China from British India correspondingly.

The Chinese, who had subscribed enthusiastically to both the 1905 and 1911 protocols, soon discovered that the British were completely evading both by sending their opium to their extra- territorial bases, Hong Kong and Shanghai. Opium dens in the Shanghai International Settlement jumped from 87 licensed dens in 1911 at the time of the Hague Convention to 663 dens in 1914! (14) In addition to the trafficking internal to Shanghai, the Triads and related British sponsored organized crime networks within China redoubled smuggling operations – conveniently based out of the warehouses of Shanghai.

If anything, British profiteering from the opium trade jumped as the result of the reversion to a totally black-market production-distribution cycle. Ironically, the legalization of the opium trade into China forced upon the Emperor through the Opium Wars had cut into British profits on the drug. Legalization had brought with it the requirement that the British opium merchants pay import duties, an overhead they did not have to absorb when the drug trade was illegal.  In yet another act of contempt for the Hague Convention, Britain issued a major new loan to Persia in 1911. The collateral on that loan was Persia’s opium revenues. (15)

Even with the post-Versailles creation of the League of Nations, Britain flaunted its drug trafficking before the world community. During this period, Her Majesty’s opium trafficking was so widely known that even the Anglophile U.S. newsweekly The Nation ran a series of documentary reports highly critical of the British role. (16)

At the Fifth Session of the League of Nations Opium Committee, one delegate demanded that the British government account for the fact that there were vast discrepancies between the official figures on opium shipments into Japan released by the Japanese and British governments. The British claimed only negligible shipments, all earmarked for medical use, during the 1916-1920 period; while the Japanese figures showed a thriving British traffic. When confronted with this discrepancy as prima facie evidence of large-scale British black market smuggling of opium into Japan, the British delegate argued that such black marketeering merely proved the case for creating a government owned opium monopoly.

As late as 1927, official British statistics showed that government opium revenues – excluding the far more expansive black market figures – accounted for significant percentages of total revenue in all of the major Far East Crown colonies. (17)

British North Borneo            23 percent
Federated Malay States      14 percent
Sarawak                            18 percent
Straits Settlements             37 percent
Confederated Malay            28 percent

In India as well, official Crown policy centered on protection for the opium market. According to one recently published account, when Gandhi began agitating against opium in 1921

. . . his followers were arrested on charges of “undermining the revenue.” So little concerned were the British about the views of the League of Nations that after a commission under Lord Inchcape had investigated India’s finances in 1923, its report, while recognizing that it might be necessary to reduce opium production again if prices fell, went on to warn against diminishing the cultivated area, because of the need to safeguard “this most important source of revenue.”

. . . while the British Government was professing to be taking measures to reduce consumption of opium and hemp drugs, its agents in India were in fact busy pushing sales in order to increase the colony’s revenues. (18)

Lord Inchcape – who chaired the India Commission which endorsed continued opium production in British India – was a direct descendant of the Lord Inchcape who during the previous century founded the Peninsular & Orient Steamship Line and subsequently helped found HongShang as the clearinghouse bank for opium trade. Through to the present, a Lord Inchcape sits on the boards of P & 0 and the HongShang.

In 1923, the British-run opium black market represented such a seriously perceived international problem that Representative Stephen Porter, Chairman of the U.S. House of Representatives Foreign Affairs Committee, introduced and passed a bill through Congress calling for country-by-country production and import quotas to be set on opium that would reduce consumption to approximately 10 percent of then-current levels. The 10 percent figure represented generally accepted levels of necessary medical consumption.

Porter’s proposal was brought before the League of Nations Opium Committee – where it was publicly fought by the British representative. The British delegate drafted an amendment to Porter’s plan which called for increased quotas to account for “legitimate opium consumption” beyond the medical usage. This referred to the massive addict population in British colonies and spheres of influence (predominantly in Asia) where no regulations restricted opium use. 

The enraged U.S. and Chinese delegations led a walkout of the plenipotentiary session; the British rubberstamped the creation of a Central Narcotics Board designated with authority to gather information and nothing more; and the journalists stationed in Geneva henceforth referred to what remained of the Committee as the “Smugglers Reunion.” (19)

A chest of opium in 1820 sold for $2,075 on arrival at the port of Canton. While this figure tended to drop marginally as the volume of traffic increased after 1830, any calculation of cash valuation of the opium trade into China establishes a figure that very nearly parallels “the present $100-200 billion (when appropriate calculations are made to account for differences in purchasing power of the dollar in ratio to total volume of world production) in annual “black” revenues.   

The assassination bureau 

Narcotics traffic was the business of organized crime during the 19th century no less than in the 20th, and Britain’s Opium War cabinet spun out a web of criminal connections that crisscrossed the globe. 

Prime Minister Palmerston conducted, the opium business behind a screen of respectability, in full public view.
What remained hidden – until the report of the Military Commission that heard evidence on the Lincoln Assassination – was the importance of Palmerston’s secret life, as Patriarch of the Scottish Rite of Freemasonry.

It does not surprise the modern student that the perpetrators of the narcotics traffic show up in every element of the dirty side of 19th century politics, including presidential assassinations. But the extent of the web of criminal networks put in place by Palmerston could have come out of a Gothic horror story, American counterintelligence specialists of the time, such as Edgar Allan Poe and Samuel Morse (1), knew the problem well.

Palmerston’s irregulars, employed in illegal dope trafficking, assassinations, and “Fifth Column” subversions against the United States in the period before and during the Civil War, are the linear ancestors of what is now called organized crime.

  • the Chinese “Triads,” or Societies of Heaven;

  • the Order of Zion and its American spinoff, the B’nai B’rith;

  • “Young Italy,” whose Sicilian law enforcement arm became known as the Mafia;

  • the Jesuit Order based in decaying Hapsburg Austria;

  • Mikhail Bakunin’s bomb-throwing anarchist gangs;

  • nearly every other inhabitant of Britain’s political netherworld…

…followed a chain of command that led through the Scottish Rite of Freemasonry directly to Lord Palmerston and his successors.

The model for the Scottish Rite operation is the ethnic secret society – Jewish, Italian, or Chinese. Closest to hand among Palmerston’s agencies was the Order of Zion, a highly specialized dirty tricks operation founded by London-based Hofjuden (“Court Jew”) families, whose close ties to the British oligarchy traced back to the founding of the Bank of England, and before that to an alliance with the piratical financiers of post-Renaissance Genoa. 

The names of these families will appear and re-appear throughout this report, including the Mocattas and Goldsmids, gold dealers in London before even the Bank of England was there, now the operators of one of the world’s most sophisticated money-laundering devices; the Montefiores, now central figures in the modern Most Venerable Order of St. John of Jerusalem; and the de Hirsch family, whose tightly controlled colonization program for Jews in Canada brought the present leaders of organized crime to the New World.

Control over the Order of Zion rested in the British Board of Deputies, founded in 1763 and still in action. One of the board’s earliest presidents was Sir Moses Montefiore, described in contemporary accounts as “Queen Victoria’s favorite Jew.” (2)

When Montefiore took command of the board in 1835, its dirty tricks division, the Order of Zion, was on the verge of launching the covert campaign that would lead to both the Lincoln assassination, and the founding of organized crime, so-called, in the United States. Through the efforts of Montefiore, later Prime Minister Benjamin Disraeli (the Earl of Beaconsfield), and the then nouveau riche Rothschilds, the Order of Zion nursed into being the leadership of the Confederacy.

Their starting point was the 1843 founding of the B’nai B’rith, also called the Constitutional Grand Lodge of the Order of the Sons of the Covenant, as a recognized branch of the Scottish Rite for American Jews. B’nai B’rith’s first headquarters were at 450 Grand Street in Manhattan, at the house of Joseph Seligman, the wealthy “dry goods” merchant. (3) Seligman, whose name survives on Wall Street along with such of his contemporaries as August Belmont, Loeb, Schiff, and Lazard, was allied to the cotton-trading British oligarchy.

B’nai B’rith was a straightforward covert intelligence front for the Montefiores and Rothschilds. Its American house organ, the Menorah, could not disguise its relationship to the Rothschilds. 

It chose to flaunt it:

“The name Rothschild, in all countries is a synonym for honor and generosity, and no name in Europe has a popularity so great and so well merited. The Rothschilds in France occupy a social position even higher than that of the English branch of the family.” (4)

The Menorah was also frank on the subject of the B’nai B’rith’s relationship to the Scottish Rite Freemasons:

“Their reunions were frequent and several of them being members of then existing secret benevolent societies and especially of the Order of the Free Masons, and Odd Fellows, they finally concluded that a somewhat similar organization, but based upon the Jewish idea, would best obtain their object.” (5)

Once in operation, the B’nai B’rith effectively merged its operations with another branch of the Scottish Rite, based in the Midwest and South – the Knights of the Golden Circle, the fore-runner of the Ku Klux Klan, the training ground for the entire Confederate military and political leadership. (6) Its most important American operative was Judah P. Benjamin, a British subject and leader of the B’nai B’rith, whose amazing career included a brief term as Confederate Secretary of War and then Secretary of State, during the closing phases of the Civil War. (7)  

Another British subversive agent later worked together with Benjamin to found the Ku Klux Klan. He was Dr. Kuttner Baruch, B’nai B’rith leader and grandfather of Bernard Baruch, a leading Wall Street Anglophile. (8) Their colleagues in that venture included Confederate General Albert Pike, a Grand Commander of the Scottish Rite, and a Jesuit priest. (9) The same group carried out the Lincoln assassination – which raises questions concerning the Defense Department’s refusal to release secret files concerning that assassination. Are they afraid to embarrass the now politically powerful B’nai B’rith?

The B’nai B’rith and its Confederate opposite numbers, the Knights of the Golden Circle and the Ku Klux Klan, were only three of the many parallel operations that Palmerston brought to life during the 1860s. In Britain, future Prime Minister Disraeli, the man who evaded debtors’ prison through the help of the House of Rothschild, launched the “Young Englanders.” (10) 

In Italy, the local leader of the Scottish Rite, Mazzini, organized and commanded “Young Italy.” (11) Scottish Rite member and Rothschild agent Alexander Herzen initiated a similar group covertly, avoiding the watchful eyes of the Czarist secret police; his best-known protégé took the name Bakunin. (12) In China, as of the second Opium War, the long-established “Triad” secret societies had already taken the retail distribution franchise for the distribution of British opium imported from India, and had become an uncontrollable, paramilitary arm of British “free trade.”

What Palmerston and his colleagues had at their disposal was an International Assassination Bureau, capable of eliminating any chief of state who resisted British policy objectives. Not much different from the Red Brigades of Italy or the Baader-Meinhof terrorists of Germany today, the Scottish Rite’s rainbow gathering of secret societies took money from the narcotics traffic and orders from Lord Palmerston.   What must be judged, in the long run, as the most deadly of these organizations was organized on an international footing at the same time that B’nai B’rith appeared in the United States.

Disraeli, Moses Montefiore, and other leading British Hofjuden founded a new masonic-style order called, in the original French, the “Alliance Universelle Israelite.” It became known – and feared – under the name of its elite secret arm, the Order of Zion. (13) Most of the Order of Zion’s funding was provided through the London and Paris banking houses of Rothschild, Montefiore, and de Hirsch. In crucial respects, the Order of Zion and Palmerston’s Scottish Rite of Freemasonry were indistinguishable. In France, for example, the head of both organizations was the same individual, Adolphe Isaac Cremieux. (14)

Order of Zion leader Judah P. Benjamin was the individual who gave the order for Lincoln’s assassination, according to the one authoritative historical document in the public domain, the report of the Judge Advocate assigned to investigate the assassination and report to the Military Commission responsible. (15) The report cites the orders of Confederate President Jefferson Davis and Judah Benjamin. According to this document, Confederate secret intelligence had raised a dirty tricks slush fund of $649,000 through the sale of Confederate bonds in Liverpool.  

At the time, the headquarters of this outfit, called the Secret Cabinet, were housed in St. Lawrence Hall in Montreal – in the same building occupied by the Commander in Chief of British forces in Canada, General Sir Fenwick Williams. (16) The report names George N. Sandis as the group’s money mover; Sandis was an American citizen, formerly an advisor to Democratic presidential candidate Stephen Douglas, and Consul of the United States in Liverpool under the Pierce Administration.

Eight days before Lincoln’s death, the chief of the Secret Cabinet – former Interior Secretary in the Buchanan Administration, Jacob Thompson – withdrew $180,000 from the group’s account at the Bank of Montreal in Montreal, to set the murder plot in motion. (17) His courier was one John Harrison Suratt, a British agent trained at Jesuit Georgetown College. Neither Thompson nor Benjamin was ever apprehended; both fled to England and remained there under the Crown’s protection. (18) This evidence, heard on June 25 and June 26, 1865, ran up against a cover-up effort under the direction of Secretary of War Edward Stanton that compares in audacity with the work of the 1963 Warren Commission. 

The relevant raw documentary is not available to researchers. The documents relating to the Lincoln assassination are still locked up in the archives of the Defense Department. Jefferson Davis, who lived comfortably in Montreal after the collapse of the Confederacy, kept his papers in the Bank of Montreal, the same bank that conduited the funds for the assassination itself. If they are still in the vaults of the Bank of Montreal, the bank has not acknowledged this. (19)

These facts concerning the death of President Lincoln are more than a useful case history, illustrating the power of the dope trade’s criminal networks. If the leads developed in New Orleans District Attorney Garrison’s investigation of the Kennedy assassination were accurate, the two murders were the work of the same operation. All that is necessary is to cross out the names “Secret Cabinet” and “Judah Benjamin,” and write in: Permindex and Major Louis Bloomfield (see Part III, Section 3).  

From what remains of the official record, there is no question that the death of Abraham Lincoln was traced to British-controlled and British-funded networks by American military intelligence. It must be underscored that much more than the central figure of Lord Palmerston brought these networks into the mainline of the narcotics traffic. 

Southern cotton, for which the British verged on invading the United States during the Civil War (20), was not merely a facet of the same trading operation that produced the dope trade; for all purposes, it was the dope trade. Opium was the final stage in the demand cycle for British-financed and slave-produced cotton. British firms brought cotton to Liverpool.  

From there, it was spun and worked up into cloth in mills in the north of England, employing unskilled child and female labor at extremely low wages. The finished cotton goods were then exported to India, in a process that destroyed the existing cloth industry, causing widespread privation. India paid for its imported cloth (and railway cars to carry the cloth, and other British goods) with the proceeds of Bengali opium exports to China. Without the “final demand” of Chinese opium sales, the entire world structure of British trade would have collapsed.  Palmerston’s above-cited remark concerning the future of British trade in opium-consuming China and other parts of the East was, in fact, a matter of hard contingency.

Britain’s new instrument of subversion in the United States was controlled elements of Italian and Chinese immigration, combined with the Order of Zion entity that had been in place since 1843. By the turn of the century, the different ethnic networks became so intertwined that, for generic purposes, the name “organized crime” applies to all of them.

The implantation of the ethnic secret societies into the United States is a complex story, but may be centered accurately in a few case histories. One is the way that the family of Sam Bronfman – the man who shipped enough liquor to the United States to double the size of Lake Erie, in the testimony of Lucky Luciano – got to North America. Bronfman’s story begins, in fact, in Romania, where the Order of Zion secret organization achieved its first major victory, a coup d’etat that brought King Charles of Romania to the throne in 1887. 

In the years following the Civil War, the Order of Zion merged with the much older Cult of Mizraem, a centuries-old covert organization that dated back to the days of Genoese and Hapsburg intrigue and assassination. (21) From the British side, Sir Moses Montefiore, and on the Romanian front itself, American Consul Benjamin Peixotto, aided the local secret society in installing a new monarch. (22)  Peixotto held a leadership position in the American B’nai B’rith and was a member of the Order of Zion.   

The Elders of Zion 
Romania became, in consequence, a nesting place for the most lurid form of Central European covert operations until the Second World War. 
The character of the political machine the Order of Zion installed in that country is perhaps best illustrated by the strong support Order of Zion elements gave to the Romanian Green Shirt Nazis, who seized power in Hitler’s wake during the 1930s. (23)  Romanian Jews show up prominently in American organized crime, as well as in the terrorist activities of the Israeli secret service, the Mossad.

The Order of Zion was simply the Jewish division of the Most Venerable Order of St. John of Jerusalem, the London-centered chivalric order and secret society, whose members swear – and act on – a blood oath. A secret meeting in Paris in 1884 yielded the famous minutes of the Order, published under the title, Protocols of the Elders of Zion. The minutes were intercepted and published by the Russian counterintelligence service, the Okhrana. (24)  

Probably, the decision to publish the captured minutes involved retaliation against the Order of Zion’s role in fomenting a sweeping destabilization against the government of Russian Prime Minister Count Witte, whose government fell during the so-called 1905 Revolution. Witte had sought an alliance with Germany and France against Britain on a program that included the industrial development of Russia.  The question of the authenticity of the Protocols has been a matter of fierce, even hysterical dispute. 

The question may be settled with dispatch by a textual comparison between the oaths of the Order of Zion printed in the Protocols, and the blood-curdling oaths sworn by initiates into the fourth Grade of the Knights of Columbus of Mexico, which maintains close ties to the Jesuits and to the Order of St. John of Jerusalem, which reads in part as follows: (25)

I, ________ , in the presence of all-powerful God, the blessed Virgin Mary, the blessed St. John the Baptist . . . by the belly of the Virgin Mary, the womb of God and staff of Jesus Christ, I declare and swear that his holiness the Pope is vice regent of Christ and sole and true head of the universal Catholic Church on earth, and in virtue of the keys to do and undo given to your holiness by my savior Jesus Christ, (you) have the power to depose kings and heretics, princes, states, communities and governments and dismiss them from office without risk. . . . 

I promise and declare that I will, when the opportunity presents itself to me, wage war without quarter, secretly or openly, against all the heretics, Protestant and Mason, such as I may be ordered to do, in order to extirpate them from the face of earth, and I will not take into account either age, sex or station, and I will hang, burn, strangle and bury alive those infamous heretics: I will cut open the stomachs and wombs of their women and smash the heads of the babies against the rocks and walls, in order to annihilate the execrable race; that when this cannot be done openly, I will secretly employ the poison cut, strangulation, the sword, dagger or bullet, without consideration for the honor, rank, dignity or authority of the persons, whatever their status in public or private life may be, such as I may be ordered at any time. . . . 
If I manifest falsity or weakness in my determination, I consent that my brothers and comrade soldiers in the army of the Pope may cut off my hands, my feet and slit my throat from ear to ear. . . . 
I promise to execute and fulfill this oath, in testimony whereof, I take this sacred sacrament of the Eucharist and affirm it even with my name written with the point of this dagger, drenched in my own blood and sealed in the presence of this holy sacrament. Amen. (26)

Romania’s Order of Zion stronghold produced, among other criminal elements, one Yechiel Bronfman, who emigrated to Canada in 1889. The circumstances of Bronfman’s emigration are noteworthy. His passage was paid by the de Hirsch family fund for settlements in Canada – which conferred benefits with strings attached. De Hirsch political screening of new immigrants was so precise that a significant number of new arrivals were sent back without funds, for unreliability. (27).

The important features of the arrival of the Italian “Mafia” in the United States are inseparable from the story of the Order of Zion. Mazzini, the sponsor of the Mafia in Italy, reported directly to the most prominent of Britain’s Hofjuden, Prime Minister Benjamin Disraeli, and received funding from the leading British Hofjuden bankers, Rothschild and Montefiore. (28) 

Correspondingly, when Mazzini sent his lieutenants into the United States, the veterans of the “Young Italy” movement moved into channels already carved out by the likes of ex-General Pike and B’nai B’rith.  The combination of Hofjuden-controlled crime networks and the Mafia provided the framework for organized crime on a big-business scale.    

Mazzini’s mafia 
The first arrivals of the Italian-speaking mob followed the tracks of the original “dry goods” merchants who figured so prominently in the B’nai B’rith, the grandfathers and fathers of the Our Crowd banking group in New York City. 

New Orleans, the first base of the Lehmans and Lazards in the United States, also became the receiving station for the Mazzini networks. Most important, the first recorded evidence of organized Mafioso activity in the United States identifies the Mazzini networks with General Pike’s guerrilla war against the “Reconstruction” South.

Nothing depicts this arrangement better than the stories of the first New Orleans godfathers, Joseph Macheca and Charles Matrenga. Protégés of Mazzini, they took over the New Orleans franchise on behalf of the Palermo mob, which reported to Mazzini and thence to Disraeli. The chain of command was so well known that the joke made the rounds that the word “mafia” was really an acronym for “Mazzini autorizza furti, incendi, e attentati” – “Mazzini authorizes theft, arson, and kidnapping.” (29)   

The first of the Mazzini networks drifted in before and during the Civil War.

“The Mafias in New Orleans, New York, and Palermo were separate societies,” wrote one leading historian of the period, “but they cooperated closely. A member who was properly sponsored could be transferred from one city to another, from one family to another.” (30)

By the close of the Civil War, Disraeli’s Mafia was in the hands of one Joseph Macheca. By contemporary accounts, the activities of the Macheca gang were indistinguishable from those of the Klan. In 1868, Macheca organized the New Orleans side of Democratic candidate Seymour’s campaign against Ulysses S. Grant. Seymour’s funding and political direction came from August Belmont, the Rothschilds’ official business agent in the United States. 

The campaign, such as it was, was described as follows in the New Orleans Picayune:

This popular and pleasant-mannered gentleman (Macheca) organized and commanded a company of Sicilians, 150 strong, known as the Innocents. Their uniform was a white cape bearing a Maltese Cross (the insignia of the British Royal Family’s Order of St. John of Jerusalem – ed.) on the left shoulder. They wore sidearms and when they marched the streets they shot at every Negro that came in sight. They left a trail of a dozen dead Negroes behind them. General James E. Steadman, managing the (Seymour) campaign, forbade them from making further parades and they were disbanded. (31)

One historian of the Mafia notes,

“This matter-of-fact account is the first report of a formal Sicilian organization in New Orleans, and it is likely that from the ranks of these armed Innocents came the nucleus of Macheca’s Mafia.” (32)

Belmont’s presidential candidate ran on a program drafted at the Seligman and associated Our Crowd banking houses in New York: the repeal of Lincoln’s Emancipation Proclamation. 

The same cousins of the British Hofjuden controlled General Pike and his hooded goons, the Ku Klux Klan, whom Macheca’s gangsters took such great pains to imitate – along with the conceit of the Maltese Cross. Pike, Macheca, and their paramilitary irregulars unleashed a wave of violence across the South that buried Lincoln’s Reconstruction policy not many years after the President himself.

The historical record shows that Macheca’s group in New Orleans, which started out by shooting blacks for the copperhead Our Crowd banks in New York, had proved its mettle by the early 1870s. It became the jumping-off point for the organization of the mob throughout the United States. Macheca provided a base for Mazzini’s syndicate organizer of the first years of the Mafia, Giuseppe Esposito. A close Mazzini associate, Esposito fled Sicily in the early 1870s, arriving in New Orleans to make contact with Macheca. 

Esposito traveled through the United States, pulling together Italian-speaking secret societies and establishing inter-city communications where none had existed before. From Esposito’s tour onwards, the Sicilian-speaking secret societies became crime syndicates. Mazzini’s representative on the scene had absolute authority over the local godfathers, even over the leader of the New Orleans base organization. Macheca’s “Mafia leadership was eclipsed briefly,” according to one historian, “from 1879 to 1881, when he temporarily deferred to Giuseppi Esposito.” (33)

Macheca died at the hands of a New Orleans mob, which dragged him from a prison cell and lynched him, after he had been arrested for the murder of a policeman. (34) His old lieutenant Matrenga took over the reins. Macheca’s death left a deep impression on the syndicates; possibly this is the point where the mob decided to “go legit,” its strategy ever since. In order to do so, the Matrenga gang turned back to the Hofjuden.

The vehicle for the New Orleans mob’s conversion to “legitimate business” in 1900 was another Romanian Jew, an immigrant from the Romanian province of Bessarabia, whence Yechiel Bronfman had migrated to Canada some ten years earlier. The new immigrant, one Samuel Zemurray, obtained financing from a group of Boston and New York Our Crowd banks, and bought out a portion of the Macheca gang’s shipping interests.  

A historian comments, “Joe Macheca’s shipping line merged with four others to form the great United Fruit Company, which remains one of the largest of all U.S. firms.” (35) United Fruit – re-chartered recently as United Brands Company – traditionally brought in Our Crowd bankers for its top management. Nonetheless, the Sicilian mob was remembered with nostalgia. When Charles Matrenga died in 1943, the entire board of United Fruit turned out for the funeral. (36)

From these most prominent among the Jewish and Italian ethnic crime stories of the formative years of the American syndicates, the roots of the narcotics traffic and associated evils are already evident. The Bronfmans, we will document later, founded and bankrolled the modern-day Murder Incorporated, Permindex, the firm that police agencies in the United States and Europe have suspected of organizing the murders of John F. Kennedy, Italian oil magnate Enrico Mattei, and former Italian premier Aldo Moro, as well as the many attempts on the life of Charles de Gaulle. It was in New Orleans that District Attorney Garrison linked the remnants of the old Macheca mob to the events in Dallas in November 1963.

As old Charles Matrenga withdrew into a “legitimate” back-ground, the day-to-day operations of the New Orleans mob fell into the hands of Sylvestro Carolla, who, in turn, passed the godfather’s mantel onto Carlos Marcello in the early 1950s. 

What had begun as a small secret cult, receiving direction from the London center of the Scottish Rite of Freemasonry and Prime Minister Disraeli’s Order of Zion, had spread across the American South, the Caribbean, and Central America. It maintained close ties with Meyer Lansky and the British installations in the West Indies.  And, according to sources in the Drug Enforcement Administration, 20 percent of cocaine smuggled into the United States arrives on the ships of United Brands.  

The Chinese entry  
Opium and morphine, in the early days of the mob, were not illegal drugs; heroin only came into circulation at the turn of the century and was not made illegal as a prescription drug until 1924. But the British dope-runners had a direct hand in the infiltration of narcotics into the United States, through the third wave of crime-tainted immigration, from China.

Not coincidentally, the first large-scale importing of opium into the United States commenced with the “coolie trade,” referred to by its British Hong Kong and Shanghai sponsors as the “pig trade.” Even before the Civil War, the same British trading companies behind the slave trade into the South were running a fantastic market in Chinese indentured servants into the West Coast. In 1846 alone, 117,000 coolies were brought into the country, feeding an opium trade estimated at nearly 230,000 pounds of gum opium and over 53,000 pounds of prepared (smoking) opium. (37) 

Although Lincoln outlawed the coolie trade in 1862, the black marketeering in Chinese (the term “Shanghaied” referred to the merchant company kidnapping – through the Triad Society – of impoverished and often opium-addicted Chinese) continued at an escalating rate through to the end of the century. Often these Chinese “indentureds” would put their entire earnings toward bringing their families over to the U.S. This traffic in Chinese immigrants represented one of the earliest channels of opium into the country, and laid the foundations for the later mass-scale drug trade out of the Chinatowns developed in San Francisco, Vancouver, and other West Coast cities during this period.

The amount of opium coming into the United States during the last quarter of the 19th century is measured by the fact that in 1875, official government statistics estimated that 120,000 Americans – over and above the Chinese immigrant population – were addicted to opium! (38)  Adding to the opium addiction was the fact that British pharmaceutical houses had begun commercial production of morphine in the years leading up to the Civil War and made large quantities available to both armies. The British firms misrepresented the morphine as a “non-addictive” pain killer and even had the audacity to push it as a cure for opium addiction.  

The British Brahmins in the U.S. 
The nature of the London-centered cycle of international trade from cotton to opium further cultivated a group of British financial allies in the United States. Some of these allies are comprador trading families whose activities span the entire period from the inception of the opium traffic through to the Second World War.  Most important among these groups is the Astor family dynasty, whose founder, John Jacob Astor (1763-1848) made his fortune in Chinese opium sales.  

One of his biographers reports,

“We see that quicksilver and lead from Gibraltar and opium from Smyrna, as well as some iron and steel from the North of Europe, began in 1816 to take a conspicuous place in the list of Astor’s imports into China… Since according to Dr. Kenneth Scott Latourette, quicksilver and opium did not become regular articles of import into China by Americans till about 1816, Astor must have been one of the pioneers of their introduction.” (39)

Leveraged into investments in Manhattan real estate, John Jacob Astor’s opium earnings formed the basis of one of America’s largest family fortunes. Participation in the China opium trade, a de facto monopoly of the East India Company at the time Astor took part in the traffic, was a privilege extended only to Americans the East India Company thought deserving. Other American firms active in the Canton trade did not touch opium. (40)  Possibly, Astor’s trading privileges were a British pecuniary reward for services as a British intelligence operative in the United States. Astor provided funds for the escape of his attorney Aaron Burr after Burr murdered Alexander Hamilton; at the time, Burr was a British intelligence agent. Burr’s control, and the man to whom he fled after the murder of Hamilton, was East India Company employee Jeremy Bentham. (41)

Apart from the Astor group in New York City, the East India Company developed similar networks in Philadelphia and Boston, among other American cities. The leading British merchant bank Baring Brothers, which remodeled the old East India Company as an instrument for the opium traffic after William Pitt’s installation as British Prime Minister in 1783, acquired a group of business partners (and brothers-in-law) in Quaker Philadelphia.  

The family the Barings married into was William Bingham’s, reportedly the richest in the United States at the turn of the nineteenth century. Barings were prominent throughout the first years of the China traffic, founded the Hong Kong and Shanghai Bank in 1864, and retained their family seat on its directing “London Committee” as of the HongShang’s 1977 annual report.

One historian describes how closely the Bingham group aped the British oligarchy:

Bingham was a most enthusiastic admirer of the British financial system which he desired to see copied in America. . . . Immense wealth enabled the Binghams to import fashions, and copy the Duke of Manchester’s residence in Philadelphia. . . they gave the first masquerade ball in the city, encouraging what soon became a mania among the American rich – a passion for dressing up as aristocrats.

The Binghams finally achieved their ambitions by uniting two daughters to foreign aristocrats: one to Count de Tilly, and the other to a member of the London banking house of the Barings, who later became Lord Ashburton. (42)

Another Philadelphia family that united itself with Baring Brothers was that of millionaire Stephen Girard, (43) whose interests survived under the family name, in Philadelphia’s multibillion dollar Girard Bank and Trust.

Several of the old “Boston Brahmin” families, however, made it into the mainstream of the 19th century opium traffic, alongside the well-remembered British names of Jardine, Matheson, Sassoon, Japhet, and Dent. The Perkins and Forbes families achieved notoriety in the traffic after the East India Company’s monopoly expired in 1832, and after the Astors had ceased to be an important factor. William Hathaway Forbes became so prominent an associate of the British trading companies that he joined the board of directors of the Hong Kong and Shanghai Bank in 1866, two years after its founding.   Hathaways, Perkins, and Forbes operated through a joint outlet, Russell and Company, formed around the Perkins family shipping empire, a “business reaching from Rio to Canton.” (44)  

The fortunes of these families, as with the Philadelphia group, began with the slave trade – handed to them when the British dropped the slave trade as unprofitable in 1833. The China clippers of Russell and Company made not only Perkins’s fortune, but most of the city of Boston’s. 

A biographer reports,

“By merging and creating. Russell and Company, he was responsible to a large degree in the establishing of all of Boston’s merchant families – Cabots, Lodges, Forbes, Cunninghams, Appletons, Bacons, Russells, Coolidges, Parkmans, Shaws, Codmans, Boystons and Runnewells.” (45)

Baring Brothers, the premier merchant bank of the opium traffic from 1783 to the present day, also maintained close contact with the Boston families. John Murray Forbes (1813-98) was U.S. agent for Barings, a post occupied earlier by Philadelphia’s Stephen Girard; he was the father of the first American on the HongShang board.

The group’s leading banker became, at the close of the nineteenth century, the House of Morgan – which also took its cut in the Eastern opium traffic. Thomas Nelson Perkins, a descendant of the opium-and-slaves shipping magnate who founded Russell and Company, became the Morgan Bank’s chief Boston agent, through Perkins’s First National Bank of Boston. Morgan and Perkins, among other things, provided the major endowments for Harvard University. (46) Morgan’s Far Eastern operations were the officially conducted British opium traffic.  

Exemplary is the case of Morgan partner Willard Straight, who spent the years 1901-12 in China as assistant to the notorious Sir Robert Hart, chief of the Imperial Chinese Customs Service, and hence the leading British official in charge of conducting opium traffic. Afterwards he became head of Morgan bank’s Far Eastern operations. (47)

The above facts are necessary to round out the historical back- ground to the opium traffic today. What makes them especially interesting is the intricate trail that leads investigators of present-day drug financing back to the same American families and American banks. In Part III, we will blow the cover of Philadelphia’s old “Main Line” Quaker families, whose present generation controls not only the leading supply of illicit amphetamines in the United States, but funds a whole array of street-level drug- trafficking operations as well.

Morgan’s case deserves special scrutiny from American police and regulatory agencies, for the intimate associations of Morgan Guaranty Trust with the identified leadership of the British dope banks (see Part II, Section 7). Jardine Matheson’s current chairman David Newbigging, the most powerful man today in Hong Kong, is a member of Morgan’s international advisory board. 

The chairman of Morgan et Cie., the bank’s international division, sits on the Council of the Royal Institute of International Affairs. The chairman of Morgan Grenfell, in which Morgan Guaranty Trust has a 40 percent stake,- Lord Catto of Cairncatto, sits on the “London Committee” of the Hong Kong and Shanghai Bank.

But perhaps the most devastating example of continuity among the corrupted American families involves the descendants of old John Jacob Astor. American citizen Waldorf Astor, his direct descendant, was chairman of the Council of the Royal Institute of International Affairs during the Second World War, while Harvard-trained American citizens of the Institute for Pacific Relations smoothed the transition to People’s Republic of China opium production (see Part II, Section 7).

The old Boston families who made their fortunes on the narcotics traffic were the ones whom old Joseph Kennedy strove to imitate when he obtained his British liquor delivery contacts during Prohibition, and the same ones who staffed his son’s Administration. 

Britain’s “Noble Experiment”
 In the years 1919 and 1920, two events of critical strategic importance for Britain’s opium war against the United States occurred. First, the Royal Institute of International Affairs was founded.

The purpose of this institution had been set forth over 40 years before in the last will and testament of empire-builder Cecil Rhodes. Rhodes had called for the formation of a “secret society” that would oversee the reestablishment of a British empire that would incorporate most of the developing world and recapture the United States (see Part II, Section 7).  

Toward this objective, Rhodes’s circle, including Rudyard Kipling, Lord Milner, and a group of Oxford College graduates known as “Milner’s Kindergarten,” constituted the Round Table at the turn of the 20th century. In 1919, the same grouping founded the Royal Institute of International Affairs as the central planning and recruitment agency for Britain’s “one world empire.”

On January 6 of the next year, Britain declared its opium war against the United States. Americans knew it as Prohibition. Prohibition brought the narcotics traffic, the narcotics traffickers, and large-scale organized crime into the United States. Illegal alcohol and illegal narcotics made up two different product lines of the same multinational firm. The British, through their distilleries in Scotland and Canada, and the British, from their opium refineries in Shanghai and Hong Kong, were the suppliers.   

The British, through their banks in Canada and the Caribbean, were the financiers. Through their political conduits in the United States, the British created the set of political conditions under which the United States might be won back by means other than the failed Balkanization plan of the Civil War period.

Two tracks led to the drug epidemic in the United States, one in the Far East, and the other in the United States and Canada. Against the outcry of the League of Nations and virtually all the civilized world, the British stubbornly fought to maintain opium production in the Far East, expanding the illegal supply of heroin, just as the drug went out of legal circulation in America in 1924. In North America, Canada – which had had its own period of Prohibition – went “wet” one month before the United States went dry.

In interviews with the authors, Drug Enforcement Administration officials have emphasized the similarity of the alcohol and narcotics modus operandi. When the agents of Arnold Rothstein and Meyer Lansky made their first trips to the Far East in the 1920s, they purchased heroin from the British with full legality. What the American gangsters did with the drug was their own business; the British opium merchants were merely engaging in “free enterprise.”   

When Britain’s leading distilling companies sold bulk quantities of liquor to Arnold Rothstein and Joseph Kennedy – for delivery either to the Bahamas or to the three-mile territorial limit of the United States coastal waters – they had no responsibility for what happened to the liquor once it reached American shores. (The identical explanation was offered by an official of the British Bank of the Middle East, which now services the Far East drug traffic through a smugglers’ market in gold bullion in Dubai, on the Persian Gulf. “We only sell the gold, old boy,” the banker said. “What those fellows do with it once they get it is up to them.”)

Which of the American syndicates obtained this month’s franchise for drug or liquor distribution was immaterial to the British traffickers. The greater the extent of intergang blood-shed, the less obvious their role would be. In fact, the British distillers could provoke such events at will by withholding needed inventory of bootleg alcohol.

The “Noble Experiment” was aimed at degrading the American people through popular “violation of the law” and association with the crime syndicate controlled by the Our Crowd banks of Wall Street – the Zionist Lobby of its day (see Part III). New York’s Our Crowd is an extension of the London Rothschild banking network and British Secret Intelligence into the United States. 

For example, Sir William Wiseman was the official head of British Secret Intelligence in the United States throughout the World War I period. He became a senior partner in the investment house of Kuhn Loeb immediately on demobilization. Wiseman was a personal protégé of Canadian Round Table founder Lord Beaverbrook and one of the most prominent public figures in the Zionist movement. (1)

With this lower Manhattan-Canada-centered grouping acting as the political control, the Prohibition project was launched during the early 1910s under the shadow of the United States’ entry into World War I. It should shock no one that the creation and rapid growth of an organized crime syndicate in the United States was the filthy business of the Our Crowd banks – employing the cults of Lord Palmerston and Disraeli that conducted the unsuccessful assault against the American republic during the Civil War.

It is a fraud of the highest order that Prohibition represented a mass social protest against the “evils” of alcohol. Like the environmentalist movement and other present day anti-progress cults, the Women’s Christian Temperance Union (WCTU) and its Anti-Saloon League offshoots were a small, well-financed and highly organized circle that enjoyed the financial backing of the Astors, the Vanderbilts, the Warburgs, and the Rockefellers. (2)

Then as now, the funding conduits were principally the tax-exempt foundations – specifically the Russell Sage Foundation and the Rockefeller Foundation. John D. Rockefeller I was hood- winked by Lord Beaverbrook colleague and former Canadian Prime Minister MacKenzie King into not only bankrolling the WCTU, but providing it with the services of the foundation’s entire staff of private investigators. (3)

Who made up the Temperance Movement? It was run by Jane Addams, who studied the Fabian Society’s London settlement house Toynbee Hall experiment and came to the United States to launch a parallel project which later produced the University of Chicago. (4) 

The “cadre” were drawn almost exclusively from three pools:

1) the settlement house and suffragette networks run by Addams and the Russell Sage Foundation

2) the pro-terrorist synthetic religious cults operated out of Oberlin College in Ohio

3) the Ku Klux Klan in the South

Oberlin College was founded by British “Christian missionaries” in the decades leading up to the Civil War. Like the ancient anti-Christian Manichean cult, Oberlin was organized around the principle that the material world was wholly evil; all students (i.e. initiates) were required to become vegetarians. From Oberlin’s student body some of the most violent radical abolitionist terrorists were recruited, trained and deployed and safe housed during the Civil War. (5)

Like its predecessor radical abolitionist movement, the Temperance Movement was founded at Oberlin in the post-Civil War period as a violent cult (known at the time as “Organized Motherlove”). At the height of the Prohibition drive during the 1910s, bands of ax-wielding lesbians – the Susan Saxes and Bernadine Dohrns of their day – received banner headlines for their assaults against saloons throughout the Ohio Valley. Many of these women were drawn from the Manichean cult at Oberlin.

Once launched as a nationwide movement, WCTU founded a national headquarters in Evanston, 111. Nearby Wilmette, 111. (along with London and Tel Aviv) subsequently became the North American headquarters of the British Intelligence- organized Ba’hai terrorist cult. (6)

In the South, parallel “fundamentalist Christian” cultists had been drawn together from the turn of the century under the direction of the Ku Klux Klan.

These three British cults agitated nationally for Prohibition. While the WCTU and Anti-Saloon League staged well-publicized and frequently violent raids against saloons, the more sophisticated Fabian Settlement House social workers of Jane Addams used the unique conjuncture of the recently passed Seventeenth Amendment certifying women’s voting rights in national elections and the concentration of much of the adult male population on the war effort to vote up the Eighteenth Amendment making Prohibition the law of the land. 

The Amendment was fully ratified by 1917; however, the Volstead Act that defined the federal enforcement procedures was not scheduled for implementation until January 6,1920.  The three-year lead time was critical for the establishment of a tightly organized crime syndicate, which was being organized out of Canada and Our Crowd banking circles in New York:

  • In Canada, a brief Prohibition period (1915-1919) was principally enacted by order of Her Majesty’s Privy Council to create the financial reserves and bootlegging circuit for the U.S. Prohibition. In this period Canada’s Hofjuden Bronfman family established the local mob contacts in the U.S. and consolidated contractual agreements with the Royal Liquor Commission in London.  

  • Primarily out of Brooklyn, New York, teams of field agents of the Russell Sage Foundation conducted a reorganization and recruitment drive among local hoodlum networks – already loosely organized through Tammany Hall’s New York City Democratic Party machine. “Legitimate” business fronts were established, replacing neighborhood nickel-and-dime loan sharking operations, and specially selected individuals – largely drawn from the Mazzini “Mafia” transplanted to the U.S. during the late 1800s Italian migrations – were sent out of Brooklyn into such major Midwest cities as Chicago, Detroit, and St. Louis in the 12 months leading up to the Volstead enforcement. One such Brooklyn recruit was Al Capone.

The British oligarchy did much more than supply the gutter elements of the crime syndicates with their stock in trade. To a surprising extent, the Anglophile portion of America’s upper crust joined the fun. The case of Joseph Kennedy, who owed his British contracts for liquor wholesaling to the Duke of Devonshire, and later married his daughter into the family, is notorious (see Part III).   

In some respects more revealing is the strange case of Robert Maynard Hutchins, the President of the University of Chicago from 1929 to 1950. Hutchins had American citizen- ship, but was so close to the British aristocracy that he became a Knight Commander of Her Majesty’s Venerable Order of St. John of Jerusalem, swearing an oath of chivalric fealty to the head of the order, the British monarch.

Under the guise of “social studies research,” several well-known University of Chicago postgraduate students received their apprenticeships in the service of the Capone gang:

  • In 1930, University of Chicago graduate student Saul Alinsky, the godfather of the “New Left,” entered the Capone Mob in Chicago. Alinsky for several years was the accountant for the gang – at the height of the Prohibition profiteering. (7) Alinsky went on to be one of the most important British Fabian-modeled social engineers in the United States for the next 30 years, specializing in the creation of synthetic dionysian cults among the nation’s youth and ghetto victims.

    Alinsky, in fact, used the organizational model of the Capone Mob to build up a criminal youth gang infrastructure in Chicago during the early 1960s that assumed street-level control over drug trafficking and related criminal operations run 30 years earlier through the Capone gang. When the Our Crowd sponsors of Capone’s initial deployment to Chicago determined at the close of Prohibition that a more “civilized” cutout was desired, Alinsky was the channel for bringing Frank Nitti into the Mob.  

  • In the late 1940s, University of Chicago professor Milton Friedman was installed as President of the Gold Seal Liquor Company – the original Capone enterprise. Friedman soon also assumed the presidency of the Illinois Wholesale Liquor Dealers Association – a position from which he no doubt carried out his first experiments in “free market economics.” (8)   

  • As late as the 1960s, retired University of Chicago President Hutchins himself was under investigation for his involvement with drug trafficking and other black market enterprises. Through the late 1960s his Center for the Study of Democratic Institutions was financed principally through Bernie Cornfeld’s Investments Overseas Service (IOS) – an international pyramid swindle and drug money laundering enterprise (see Part III, Section 3). Furthermore, Hutchins was simultaneously the president of a little-known Nevada foundation called the Albert Parvin Foundation which several congressional committees investigating organized crime cited as a front for Las Vegas gambling receipts. (9)

  Mounting the drug invasion  
The United States’ fourteen-year experiment in Prohibition accomplished precisely what its British framers had intended. 

Ralph Salerno, an internationally recognized authority and historian on organized crime, a law enforcement consultant and former member of the New York City Police Department’s intelligence division, succinctly summarized the effect of Britain’s Prohibition gameplan in his book, The Crime Confederation:

The most crucial event in the history of the confederation (organized crime – ed.) was a legal assist called Prohibition. . . . Prohibition helped foster organized crime in several ways. It was the first source of real big money. Until that time, prostitution, gambling, extortion and other activities had not generated much capital even on their largest scale. But illegal liquor was a multibillion dollar industry. It furnished the money that the organization later used to expand into other illegal activities and to penetrate legitimate business.  

Prohibition also opened the way to corruption of politicians and policemen on a large scale. It began the syndicate connection with politics and it demoralized some law enforcement groups to the point where they have never really recovered. . . . The manufacture and distribution of illegal liquor here and the importation of foreign-made liquor gave the men who were organizing crime experience in the administration and control of multibillion dollar world businesses with thousands of employees and long payrolls.  

Men who had never before managed anything bigger than a family farm or a local gang got on-the-job training that turned them into leaders developing executive qualities. . . . Mass evasion of the Volstead Act also put the average citizen in touch with criminals, resulting in tolerance and eventually admiration and even romantic approval of them. It permanently undermined respect for the law and for the people enforcing it. Ever since Prohibition the man in the street has accepted the idea that cops can be bought. (10)

The combined revenues of the illicit whiskey and drug trade during Prohibition had constituted a multibillion dollar black market booty.  

While families like the Kennedys and Bronfmans “made out like bandits” in the early 1930s transition to “legitimate” liquor trade, the overall financial structure for maintaining an organized crime infrastructure demanded diversification into other areas of black market activity only marginally developed previously. The market for illicit drugs in the United States – though significantly expanded as the result of the Prohibition experience – was not to become the foundation of a multibillion dollar traffic for several decades.

In the interim, the Our Crowd-British crime syndicate turned to casino gambling and associated enterprises as the immediate area for expansion. The Lansky syndicate took the opportunity of Nevada’s 1933 passage of specific regulations legalizing casino operations to turn that no-man’s-land into a desert resort to house all the West Coast criminal operations that had previously been run on pleasure boats 12 miles off the coast of Hollywood. Lansky also moved into the Caribbean, preparing the way for the British offshore complex of unregulated banking.

Through the investment of the phenomenal profits derived from the Prohibition into gambling casinos, professional sports stadiums and racetracks, organized crime established the foundations during the 1930s and 1940s for the drug trafficking that would begin in the mid-1950s – once a cultural climate had been created that was conducive to fostering drug addiction. 

Nixon’s war on drugs

 It is not widely known that President Nixon was a casualty in the war against Britain’s drug invasion of the United States.  

Had Nixon not taken up the most basic interests of the nation in launching a wholesale effort to shut down the drug trafficking – from the top down – it is likely that he would not have been unceremoniously forced out of office by Henry Kissinger, Ted Kennedy, and their British masters.

By 1970 Nixon became profoundly aware that the proliferation of drug abuse among the nation’s youth had become a problem of such monumental significance that all his efforts to institute a long-range program of peace-through-development would be meaningless unless combined with a ruthless crackdown on the poison that threatened to wreck the nation’s future leadership and its productive sector.  

Documents are available in the public domain from the Drug Enforcement Administration and other executive agencies showing that Nixon’s “War on Drugs” was directed at the top – at the banking institutions, the transportation grids, and only then at the distribution channels delivering the volumes of drugs onto the streets of the country.

At the same time that Nixon generically understood the top-down nature of the problem, he and his assistants scarcely understood that by going after the drug infrastructure they were taking on the entire British oligarchy and the entire underpinnings of the Eurodollar market and the People’s Republic of China. Had Nixon understood the drug problem as a London-Peking problem, he would have perhaps been better prepared to deal with the “inside-outside” attack against his Presidency. 

We will reveal the inner workings of the London-Peking Drug Empire the Nixon Administration ran up against when it declared its War on Drugs.  



1. As quoted in Jack Beeching, The Chinese Opium Wars (New York: Harvest Books, 1975), p. 258.
2. Adam Smith, Wealth of Nations, Representative Selections (New York: Bobbs-Merrill, 1961).
3. Richard Morris, The Peacemakers: The Great Powers and American Independence (New York: Harper & Row).
4. Beeching, Chinese Opium Wars, p. 43.
5. In addition to the Chinese Hong merchants who collaborated with the British opium houses and the run-of-the-mill pirates and river rats that the British recruited into their service as the “eyes and ears” in Canton and the interior, the Hakkas, a people living in the southern province of Kwangsi who were under the strong influence of the Heaven and Earth Society (Triads) were particularly important to the British operations. The Triads, devoted to the days of the Ming Dynasty – and who were very similar to the Freemason organizations in Europe and North America – wanted to overthrow the Manchu Dynasty. The Hakkas were used by both the British and their Triad allies as a grassroots bludgeon against the Emperor. The key figure in the joint Anglo-Triad venture was a religious fanatic named Hung Hsui-Ch’uan.

Hung, having suffered public “loss of face” on four occasions – he failed the examinations that would allow him to join the mandarin class and become a government official – suffered a nervous collapse. He was in a trance for 40 days in which he was supposedly born again and then, using a translation of the King James Bible, he created a new religion based on the notion of “The Chosen People.” The Hakkas were to be the Chosen People, and the Triad identification of the Manchus as the enemy was fully incorporated into Hung’s quasi-Protestant religion.

Hung served as the “prophet,” and a Hakkas Triad member, Yang Hsin-Ch’ing, served as the recruiter and military commander of the movement. Yang was in the employ of the British as an opium runner on the Pearl River.

In 1851, Hung and Yang launched a full-scale assault against the Manchu Dynasty – called the Taiping Revolt, or “The Triad War” – which drained China’s treasury, shook the government, and demoralized China’s pathetic army. The Taiping-Triad forces also played a significant role in the 1911 overthrow of the Manchu Dynasty that led to the republic of China under its president Dr. Sun Yat-sen (also a member of the “Hung Society”), although the organization was outlawed as treasonous and terrorist in 1890.

For further reading on the Hung-Triad Societies see: Lady Queensborough, Occult Theocrasy, Volumes I and II (France: The International League for Historical Research, 1931), pp. 441-42; Beeching, Chinese Opium Wars, pp. 180-205.

6. Beeching, Chinese Opium Wars, p. 80.
7. Ibid., p. 98.
8. Ibid., p. 127.
9. Ibid., p. 95.
10. Ibid., p. 272.
11. Ibid., p. 272.
12. Ibid., p. 264.
13. Karl Marx and Frederick Engels, Civil War in the United States (New York: International Publishing Co.).
14. Brian Ingles, The Forbidden Game: A Social History of Drugs (New York: Charles Scribner’s, 1975), chapter 11.
15. Ibid.
16. Ibid.
17. Ibid.
18. Ibid.
19. Ibid.


  1. Samuel Morse, “The Present Attempt to Dissolve the American Union: A British Aristocratic Plot” (New York: John F. Trow, 1862); Samuel Morse, “A Foreign Conspiracy against the Liberties of the United States” (New York: originally published by the New York Observer, 1835); see also the soon-to-be-published book, The First American Intelligence Service (New York: Campaigner Publications). Morse signed all his published articles under the name “Brutus.”

  2. C. Bernant, The Cousinhood (New York: Macmillan Company, 1972).

  3. Benjamin Peixotto, ed., The Menorah, official organ of the B’nai B’rith, New York, 1 (Sept. 1886).

  4. Ibid.

  5. Ibid.

  6. Official document recorded by Benn Pittman, The Indianapolis Treason Trial, 1865; Official Report – A Western Conspiracy in the Aid of the Southern Rebellion (Indianapolis: 1865); see also An Authentic Exposition of the Knights of the Golden Circle or a History of Secession (pamphlet), author unknown, believed to be Union counterespionage agent named Jim Pumfrey (Indianapolis: 1861); Mayo Fesler, “Secret Political Societies in the North during the Civil War,” Indiana Historical Magazine 3 (Sept. 1918).

  7. Burton Hendrick, Statesman of the Lost Cause, Jefferson Davis and His Cabinet (New York: Literary Guild of America, 1939), pp. 153-181; Max Kohler, Judah Benjamin: Statesman and Jurist (Baltimore, 1905).

  8. Israel Joseph Benjamin, “Three Years in America, 1859-62” (New York: 1863), Vol. I; contains a profile of B’nai B’rith and 44 Jewish organizations.

  9. Albert Pike, Lectures of Arya and Indo-Aryan Deities and Worship, published by the Ancient and Accepted Scottish Rite of Freemasonry of the Southern Jurisdiction of the U.S.A. on orders of the Grand Command of the Supreme Council 33°; see also Queensborough, Theocrasy.

  10. Queensborough, Theocrasy.

  11. Ibid.

  12. Ibid.; see also Merle Curti, “Young America,” American Historical Review, 1929.

  13. Menorah, Sept. 1886; see also Queensborough, Theocrasy.

  14. Queensborough, Theocrasy.

  15. John A. Bingham, Special Judge Advocate, “Trial of the Conspiratorsfor the Assassination of President Lincoln Delivered June 2-28, 1865, before the Military Commission of the Court Martial of the Lincoln Con- spirators,” War Department Records, Section Monograph 2257, Official Transcript.

  16. Clayton Gray, Conspiracy in Canada (L’Atelier Press, 1957); David Balsiger and Charles Sellin, The Lincoln Conspiracy (Albuquerque: Sun Publishing Co., 1977).

  17. Gray, Conspiracy in Canada.

  18. Ibid.; see also Susan Davis, Authentic History of the Ku Klux Klan, 1865-1877,1924.

  19. Gray, Conspiracy in Canada.

  20. A. R. Turner-Tyrnauer, Lincoln and the Emperors (New York: Harcourt, Brace and World, Inc., 1962).

  21. Queensborough, Theocrasy.

  22. Menorah, Sept., 1886.

  23. The Green Shirts emerged from the networks that the Order of Zion had put in place in Romania and consolidated with the coup to install KingCharles in 1887; see also Paul Goldstein, “The Rothschild Roots of the KKK,” Executive Intelligence Review 39: 50.

  24. The political error the Okhrana made in its use of the Protocols was to generalize the notion of a Zionist conspiracy to include all of Jewry. The Protocols were then used by British intelligence operatives within the Okhrana to unleash pogroms against Russian Jews in conjunction with and following the “1905 Revolution” destabilization of the Witte government.

  25. The Protocols have been published most recently in Herman Bernstein, The Truth About the Protocols of Zion (New York: Ktav Publishers, 1971).

  26. Sources in Mexico made this oath available to the authors and have confirmed that it is authentic. It should be noted, however, that the Knights of Columbus in the United States is a very different organization from this Mexican branch, and the two should not be confused.

  27. Canadian Jewish Congress report, 1967-68 (see Part III, Section 1).

  28. Edyth Hinkley, Mazzini: The Story of a Great Italian (Port Washing-ton, N.Y.: Kennikat Press, 1924).

  29. Charles William Heckethorn, The Secret Societies of All Ages and Countries, Vol. I and II, 1875 (New York: University Books, Inc., 1965); see also David Leon Chandler, Brothers in Blood (New York: E.P. Dutton Co., Inc., 1975), p. 31.

  30. Chandler, Brothers in Blood, p. 103.

  31. Ibid., p. 75.

  32. Ibid.

  33. Ibid., p. 79.

  34. Ibid., pp. 95, 97.

  35. Ibid., p. 97.

  36. Ibid., p. 98.

  37. Beeching, Chinese Opium Wars, p. 178.

  38. Ibid.

  39. Kenneth Wiggins Porter, John Jacob Astor, Business Man (New York: Russell and Russell, 1966).

  40. Beeching, Chinese Opium Wars.

  41. Porter, John Jacob Astor, p. 604.

  42. Miriam Beard, History of Business, Vol. II (Ann Arbor: University of Michigan Press, 1963), p. 162ff.; see also Joseph Wechsberg, The Merchant Bankers (Boston: Little, Brown, and Company, 1966), 104 ff.

  43. Wechsberg, Merchant Bankers, p. 123.

  44. Beeching, Chinese Opium Wars.

  45. Brett Howard, Boston: A Social History (New York: Hawthorn Books, Inc., 1976).

  46. Ibid.

  47. Ingles, The Forbidden Game.


  1. Who’s Who in America and Who’s Who in World Jewry.

  2. John Kobler, Ardent Spirits (New York: G. P. Putnam’s Sons, 1973).

  3. Ibid.

  4. Jeffrey Steinberg, “Robert M. Hutchins: Shaper of an American oligarchy,” The Campaigner, Vol. II, 3-4:73-77.

  5. Queensborough, Occult Theocrasy.

  6. Bruce Wood, “Cult and Terrorist Activities in the Detroit, MichiganArea Since the 1960s,” an unpublished manuscript, September, 1976.

  7. Saul Alinsky, Reveille for Radicals (New York: Random House. 1969).

  8. John Kobler, Capone: The Legacy (New York: G. P. Putnam’s Sons, 1972).

  9. Hank Messick, Lansky (New York: Berkley Medallion Books, 1971), p. 152.

  10. Ralph Salerno and John S. Tompkins, The Crime Confederation (New York: Doubleday and Company, Inc., 1969). pp. 275,278-79.

    by Konstandinos Kalimtgis, David Goldman, Jeffrey Steinberg