David G. Guyatt
The off-ledger trading programs operated by some central and
international banks launder massive amounts of money and provide
vast sums to fund covert ’black budget’ projects
Project Hammer is all about money.
Stupendous great gobs of money.
So much money, in fact, that it will challenge whatever reality you
thought you had about the over-world of banking, finance and
economics. It is also about the nether world of international
banking and finance, a world that is said not to exist in reality.
But exist it does.
More often than not, this never-never-land of international banking
is concealed from public view by the judicious use of two sets of
books. It is also eclipsed from interested investigators by a
never-ending series of real frauds that result in arrest and
imprisonment of numerous scam artists. This creates the clever
illusion that the only thing going on are artful scams designed to
fleece the unwary.
Such swindles fall under the general category of,
Numerous law enforcement cases such as these, when twinned
with dire "beware" warnings published on FBI,
US Treasury and other
websites, easily lead one to conclude that there are no such things
as "real" trading programs. And the powers that be don’t at all
object to this conclusion being reached. It is the old case of
hiding trees in a forest.
A key point to keep to the fore in what follows is that trading
programs operate "off ledger". That is to say, the
banks and central
banks that operate them run two sets of books: one set for public
scrutiny, and another set for private viewing only. Another fact to
bear in mind is that authorized programs generate quite spectacular
profits for very little - in fact, minuscule - risk, and those who are
invited to participate as funders accumulate capital at a shockingly
rapid rate. One reason, perhaps, why the wealthy get altogether
wealthier as the poor sink ever lower into the mire of poverty.
The financial, banking and economic shadow-world in which
Hammer lived, breathed and manufactured money "out of thin air" is
the dirty little secret of the Western economy. It is a form of
money creation that is effectively unchallenged by any form of
oversight or accountability as we understand it. Hammer and numerous
other transactions like it are based on what are known as Collateral
Trading Programs, although many other descriptive names and terms
are also used.
The reason for such programs is to create vast pools of ready money
that are earmarked for use in sanctioned (authorized) operations and
projects. On the plus side, many beneficial projects throughout the
world get funded as a result of program trading. On the negative
side, there are more shadowy projects. Included in the latter
category are certain
The amalgamated pool of funds created and now held in dormant and
orphaned bank accounts runs to trillions of dollars, according to
insiders. At the low end of estimates, there is believed to be
enough to pay off the US national debt plus some change. At the
higher end, estimates range up to hundreds of trillions of dollars.
I have been repeatedly told, almost matter-of-factly, that the
higher estimates are closer to the truth. I simply don’t know how
big the sums amount to, but I can document US$12 trillion. This sum
is revealed in the late Baron Krupp papers that form part of the
exhibits of the companion volume to dossier
Secret Gold Treaty File.
Many different sources say that programs are also used to launder
money by spinning it through a program cycle until it is pristine
clean. Drugs, guns and the usual array of dirty money transactions
are said to feature.
Since US dollars are the cornerstone of all program activity, Uncle
Sam naturally gets a bite of the action. A percentage of the
proceeds is collected via private tax treaties negotiated with
offshore entities. These treaties also help to shield the reality of
these programs from public awareness. There are unsubstantiated
rumors that some of the tax take occasionally gets "diverted" for
altogether private purposes. It is an allegation that is impossible
to stand up, however.
London and Zurich are key centers for program activity, although
transactions are usually booked through offshore entities. London
and Zurich are also gold centers, and more than one credible source
confirms that "black" gold forms an important part of program
trading activity. There are also good reasons to suppose that part
of Uncle Sam’s share of trading profits is credited to the
Exchange Stabilization Fund. Here it is pooled with other funds and used to
shore-up the American economy by - amongst other maneuvers - manipulating
the gold price to keep it below a predetermined price.
Trading programs are the preserve of many governments, their
treasury departments and the top international banks which by their
very nature have the necessary mechanisms in place to enable trading
to take place efficiently and secretly. Banks from G7 nations
It follows, therefore, that a number of problems occur as a
consequence of the multijurisdictional nature of supervision; and
although safeguards are in place to ensure that "clean"
money is fed
into the system, this doesn’t always happen. Funds of suspect origin
do enter the system and are made pristine clean by this form of
Large sums of black gold, cash or other forms of convertible assets
are used as "collateral" to initiate trading programs. There are
also certain classes of government-issued treasury notes and bonds
that are privately lodged with major Western banks. These
"treasuries" are never meant to see the light of day, but are in
turn used by major banks to back the issuance of their own bank
debentures "off ledger" in substantially leveraged amounts that can
run into tens of trillions of dollars - or their foreign currency
In turn, this bank "paper" is traded in pre-arranged "buy/sell"
transactions at steep discounts (cents on the dollar) off the face
value of the issued bank debentures. The trading of the paper
between banks - using proxies - is arranged and coordinated so that
the traded obligations effectively "wash out" or are otherwise
cancelled, although other scenarios exist where issued paper is
purchased at a fair market value and held to maturity. In the past,
trading was paper-based, but today everything is electronic
"screen-based" and consequently the credits traded have a life of
The difference between the buy-and-sell price - usually known as the
"spread" (in the case of Hammer, this was said to be many percentage
points) - generates a "fallout", a term that implies profit. In other
transactions, most notably "Jacobe", the spread was represented to
be at least 10% on a planned face value issuance of US$27.5
trillion, according to documents I have seen. This would have
created a fallout of US$2.75 trillion. However, for reasons yet
unknown to this writer, it seems that the Jacobe program, privately
hailed as the largest program "ever put together", was
- for reasons that are still inexplicable - only two-thirds completed.
Less grand, but just as interesting in other respects, was the
fallout from Project Hammer, which is said to have
US$220 billion. In fact, the precise sum is US$223,104,000,008.03. 2
THE NUGAN HAND BANK CONNECTION
One of the central characters associated with
Project Hammer was
Brigadier General Erle Cocke.
Back in 1966, Cocke, along with his
sleeping partner General Eugene Phillips, established the
Washington-based consultancy firm Cocke & Phillips International.
This was at the height of the Vietnam War, and just a few months
after Cold Warrior Paul H. Nitze issued the directive
the establishment of the US Navy’s clandestine intelligence
collection program more commonly known as "Task Force 157".
TF 157 would later feature in the Nugan Hand Bank affair exposed by
Wall Street Journal investigative reporter Jonathan Kwitny in his
The Crimes of Patriots. Task Force 157 came to an end on the
instruction of Admiral Bobby Ray Inman, once he discovered the full
involvement of "rogue" CIA agent
Edwin Wilson in the Task Force.
Wilson was responsible for so much intrigue and illegality that one
could shake a stick at it. He was eventually arrested, tried and
imprisoned - where he remains to this day, fighting for release. Many
now believe that he was working on orders from above but in a
deniable role and was cynically sacrificed to save other more
During his investigation, Jonathan Kwitny learned that General Erle
Cocke ran Nugan Hand Bank’s Washington office. Cocke’s partner General Phillips denied this, saying they had merely rented office
space to Nugan Hand Inc.’s Hawaii President, General Edward Black
former OSS, CIA and senior military officer. This proved to be
untrue, however. Kwitny learned that papers filed with the US
Treasury listed General Cocke as the "person in charge" of
Hand’s Washington office. Cocke claimed that someone else must have
filed these papers without his knowledge or consent.
In April 2000, Cocke gave a deposition running to 67 pages
concerning his knowledge and involvement in Project Hammer. Ten days
later he died from pancreatic cancer. His explosive deposition
reveals him as a very significant and highly connected player in a
world few of us are familiar with.
Cocke fought in three wars: World War II, Korea and Vietnam. During
WWII he was an artillery officer and a division staff officer and
was a POW under the Germans. He worked for General MacArthur during
the Korean War and for General Westmoreland in the Vietnam War.
Highly decorated for his service, he was awarded a Silver Star, a
Bronze Star and cluster, a Purple Heart with three clusters, a Croix
de Guerre plus the Légion d’honneur from France, and a Medal of
Honor from The Philippines. He was the youngest National Commander
of the American Legion and, prior to his death, became the oldest
National Commander. In addition he was distinguished by the Red
Cross with the medal Cruz Roja, and he was made an Honourable
Comrade of the Nationalist Chinese Air Force.
Cocke was a Shriner Mason of many years’ standing (he held a
semi-official voluntary position for that organization) and a Grand
Commander of the
Knights of Malta
- the secretive Vatican order that
boasts numerous members who serve, or are closely affiliated with,
Western intelligence and military services. Intriguingly, he claimed
to have been the first Protestant "in 1200 years to be so
In 1959 and again in 1960 he was a member of the US delegation to
the General Assembly of the United Nations, holding the rank (and
pay grade) of Ambassador. After that, he was the first fulltime US
Alternate Executive Director of the World Bank, a position he held
for four years from 1961-64. Pressed about this in more detail by
his questioner, a Washington attorney, Cocke responded by saying:
"At that time I owned 28 percent of the stock and, of course, I had
all kinds of people in the Treasury tell me what to do. Don’t get me
wrong, I made all the decisions. But I was the executor, I was the
He also confirmed that he had worked for
every US President:
"...from Truman to date. At some stage of the game I worked for all
of them. I have to admit that some of them were very minor chores
and others were important."
In addition to his many abilities and accomplishments listed above,
Erle Cocke was above all other things a banker - a profession that
ran in the family.
His great-grandfather put a bank "together in
1867", which was then the only bank in Georgia. His grandfather
founded a bank in about 1890, and his father was President of Fulton
National Bank (which became Bank of America) and was at one time the
President of the American Bankers Association and Chairman of the
Federal Deposit Insurance Corporation (FDIC).
Asked about his own knowledge of banking, Cocke said he had taken
all the normal banking courses, and added:
"I understand banking. I can teach banking
- you understand what I am
saying - at the college level."
This banking expertise was at the core of his firm,
Cocke & Phillips
International, which began life as a:
"...normal American firm, lobbying firm, here in
Washington, and we
grew into banking particularly. The UN contacts and the
contacts - sometimes they help those people for 10 years."
In a similar vein, he undertook all sorts of "chores" for some of
the government intelligence agencies. He explained this as follows:
"One thing is if they trusted you, they practically came in and
said, ’What do I do?’ I mean, you didn’t argue with them. You sort
of proceeded with the program and gave them a few choices, of
course. But [they] practically always followed what we did. I was
administrator, arbitrator. I was [the] moderator, bringing people
Asked if that experience "would be true in the financial and banking
world in particular", Cocke replied:
"Oh, yes. I have been able to close things that other people can’t
As we shall see, Cocke’s ability to "close" things other people
could not close did not extend to Project Hammer - a financial
operation that, according to Cocke, deeply involved Citibank and its
Chairman, John Reed. Cocke said he could get to see any President
without any trouble, but complained that he could not get to meet John Reed.
Having briefly examined General Cocke’s background, let’s now return
to that stupendous sum of "black" money mentioned earlier.
purposes of clarity, this amount was referenced in Erle Cocke’s
deposition. If, as we have said, this amount was stealthily
"magicked" into being as a result of an exotic form of financial
smoke and mirrors, the question is: where did it go?
According to Cocke, this sum was lodged in "30-some odd accounts
together". Asked where these accounts were located, Cocke responded
by saying, "In almost one solid block at Citibank".
General Cocke’s questioner then asked: "Would they have been in
control of Mr Reed?" - meaning former Citibank CEO and Chairman
Cocke responded as follows, in this exchange with the attorney:
A. Probably not all because there were so many different
participants involved, and in different locations, countries, that I
would say no, he did not have complete control, but everybody
recognized it wouldn’t be settled until it got to him.
Q. And these were, you say, accounts for various people around the
Q. Produced as a result of what?
A. Well, most of them figured that greed in particular was mighty
high. And, if they put up this amount of money, then I am going to
get this kind of money coming back. That’s the way practically all
of it was. I hate to use the word "sole", but "present" might be a
Q. Were these accounts for the benefit of people who had engaged in
some kind of trading program?
A. They were all to get in the
trading program. I haven’t found
anybody that didn’t go in wanting to increase their income and their
greed in the highest bracket if they could possibly put up money.
Q. What I am understanding from you is that whatever these
individuals, corporate entities, or even government... they believed,
apparently by putting these funds with Citibank as part of this
effort, they would then receive later down the road a pay-off?
A. That is correct.
Q. As a result of Citibank’s management of these funds, is that fair
A. Yes, basically the whole trading bloc in a nutshell.
During the course of his deposition, General Cocke
was asked if he knew who "created" Hammer "to begin with".
He admitted that he didn’t know and was
even reluctant to make a guess, but added that whoever set it in
motion "had to have been somebody at a pretty high level". He then
made the interesting observation that whoever it was who had
authorized it, "the original structure" had "obviously got way out
of proportion as time went by". The implication was that some of the
money - the fallout - got diverted from its original
More than a few of those involved in Project Hammer at various
levels have told me that they believe some of the pool of money
created by the Hammer project was "diverted" and
used to rescue many
of the world’s major banks, which by the very end of the 1980s faced
insolvency following reckless lending policies throughout the late
1970s and early/middle 1980s. It is certainly true that at that time
many major banks like Citibank, HSBC,
Chase, BoNY and others stood
teetering on the very brink of disaster.
Another view is one that has been expressed by Daniel Hughes, of
Hughes Oil Company, a Florida-based corporation. Hughes had been
heavily involved in finding collateral to place in a number of
trading programs over several years. This cost him tens of thousands
of dollars, since most of these were illegitimate rather than
It is a fate that waits for untold thousands of
unsuspecting investors who step into this shadowy realm unprepared.
Even so, it seems that Hughes did play a part in attempting to place
collateral in Project Hammer. He believes that the funds diverted
from Project Hammer ended up in a CIA-controlled Swiss bank account
in the name of the late Howard Hughes. On the basis of years of
investigation, Daniel Hughes believes that Project Hammer involved
the trading of US$13.6 trillion in debentures, resulting in a
"fallout" of about US$1.1 trillion which was stashed in the
Hughes account in Credit Suisse.
Whilst there is no hard
corroboration in support of this claim, it remains an intriguing
possibility. More so, for in his deposition General Cocke indicated
that black money generated by trading programs might be hidden in
dormant accounts, and a Howard Hughes account set up 30 years ago
would clearly fall into that category.
According to Erle Cocke plus others I have spoken with,
Hammer began life as an authorized but secretive
aimed at repatriating dollar assets that dated back several decades.
Cocke confirms this when he was asked what the overall objectives of
Project Hammer were:
"Well, it was mainly to bring monies back to the United States from
all types of activities, both legitimately and illegitimately. Not
that they were in the smuggling business per se, but they were
in the arms business; they were all retracing dollars of one
description or another that had accumulated all through the ’40s and
’50s really. And that probably is as broad a definition as I can
give you. And all kinds of nationalities were involved, all kinds of
people were involved"
Cocke was then asked who would have been behind the
Would it, the questioner asked, have involved "various agencies of
the US Government"?
"Yes. Obviously the CIA, the
FBI, the national security agencies of
all types, Pentagon in the broadest sense of it and as such, and the
Treasury, Federal Reserve. Nobody got out of the act,
wanted to get in the act."
But there were numerous other entities involved in Project Hammer.
None more so than the world’s big bank, as is made clear by the
Q. What other banks and financial institutions were involved in it?
A. Well, if they were, they were still as a correspondent to Citibank
"Correspondent", in the sense
General Cocke’s uses this term, means one bank’s account maintained at another bank. This is used to
handle money transfers between both banks, and it very often denotes
a "special relationship" between the the banks concerned. The
questioner then asked:
Q. Do you know which of those would be involved? Was
A. I am sure that every big bank in every major country at some
stage of the game had some of this pass by them. They had a chance
to refuse, or they had a chance to take it up.
CITIBANK, "THE CHEESE"
Cocke was then asked who the "dominant participant" was in "terms of
running this project, this vast project".
The General is in no doubt
about his reply when he says that, based on his own investigation,
it was "Citibank of New York, in both their Athens, Greece, office
and in their New York City office". He also acknowledged that Hammer
was part of "an ongoing long-term kind of project".
Cocke went on to reveal that Citibank were "going to be the
trustees. They were going to be running the program. They were going
to be the disbursing agency. They were the cheese."
Asked to identify which principal officer in Citibank handled
Project Hammer, Cocke responded that "from all records,
communications and contacts, John Reed was Vice President, but he
was the lone coordinator, for a better word".
Reed, who was Citibank’s President and Chairman during this period,
has formally denied his involvement in Project Hammer.
deposition sworn in December 2000, Reed stated that he had "no
recognition or knowledge of anything purportedly known as Project
Hammer". Nor did he have "any recognition or knowledge" of any
person named Erle Cocke. His deposition goes on to list a number of
other items, people and allegations that he also had "no recognition
or knowledge" about.
For their part, Citibank, in a letter dated December 12, 2000, state
"never issued commercial instruments on the basis of its
possession of quantities of gold made available to it by agencies of
the US Government and the Federal Reserve in order to ensure the
solvency of Citibank in the ’80s and other bullion banks".
This denial, although emphatic, is interesting.
Research shows that
gold recovered by the forerunner to the CIA - the Office of Strategic
Services (OSS) - was deposited in Citibank (and many other banks,
too), not in the name of the OSS or CIA but in the name of one of
their operatives, Severino Garcia Santa Romana.
On his death in 1974, some - but not all - of Romana’s "assets" appear
to have been illegally acquired by former Philippines President
Ferdinand Marcos, who was at one time Santa Romana’s attorney.
According to Santa Romana’s widow, her husband gave Marcos a
Power of Attorney for use solely in the Philippines, since he travelled abroad regularly. It seems that Marcos somehow made use of
this to gain control over Santa Romana’s gold and other assets.
It also appears likely, based on documents in this writer’s
possession, that considerable quantities of gold once held by
Santa Romana were later placed under the control of former CIA covert
operator Major-General Edward Lansdale. However, these assets were
lodged with the Union Bank of Switzerland. Again, it is worthy of
note that they were placed in Ed Lansdale’s name, not in the name of
a US Government agency. These assets are very clearly off the books.
Large quantities of gold held by Citibank remained in the account
names of Severino Garcia Sta. Romana and José Antonio Diaz de la Paz
(the latter being a well-known alias for Santa Romana) under
reference codes "Fanerst King Fisher" and "Burgst Harbor King"
3 These have been the subject of a legal wrangle
between Santa Romana’s heirs and Citibank’s John Reed.
The fact that the gold held by Citibank and others may not have been
in the name of the Central Intelligence Agency or the
Reserve - but, rather, was in Santa Romana’s name - may have been all Citibank needed to wriggle out of a poorly crafted question.
1. Other terms that have been used are:
Credit Enhancement Business;
and Capital Accumulation & Structured Debt Programs.
2. Others involved believe this sum represents a part of the
from the Jacobe transaction, and not Hammer.
3. This information is drawn from a letter dated December 20, 1995,
from C. E. (Jim) Brown (the second husband of Santa Romana’s widow,
Luz), addressed to the US Justice Department. Sta. Romana also used J. Antonio Diaz as another alias. In fact, he used many different
names and entities to conduct his business.
Go to Part 2