THE CRIMES OF PATRIOTS A True Tale of Dope, Dirty Money, and the CIA By Jonathan Kwitny Norton. 424 pp. $19.95

IN A damp Australian graveyard, a muddy, aging coffin is slowly hauled to the surface. "Some are dry, some are wet," the weary gravedigger comments, referring to the condition of the body inside. This one, to his displeasure, turns out to be "wet" and a dentist has to be called in to make a positive identification. His report, that the grisly remains with the bullet-hole through the skull are in fact those of Frank Nugan, a wealthy and mysterious Australian banker, is one of the few examples of certainty in the long and complex Nugan Hand Bank scandal which has rocked Australia for much of this decade.

From its earliest moments, the scandal seemed straight out of Robert Ludlum or John Le Carre': The chairman of a shadowy bank is found in a sea of blood and brain matter in the front seat of his Mercedes -- his left hand holding the barrel of a .30 caliber rifle a few inches from the muzzle and his right hand resting near the trigger. Left in his briefcase is a list, later labeled "the body list," containing the typed names of scores of prominent Australians in the political, sports, business and entertainment worlds. Next to their names, scrawled in longhand, are dollar amounts in the five- and six-figure range. Finally, scribbled on the remnants of a meat pie bag, are the names of U.S. Congressman Bob Wilson, the ranking Republican on the House Armed Services Committee, and William Colby, former director of the Central Intelligence Agency. And tucked in the dead man's wallet in his right rear pocket is the former CIA chief's business card containing cryptic reference to Hong Kong and Singapore.

Add to this scandal the involvement of a dozen former U.S. generals and spooks and an admiral, possible ties to the international drug and weapons networks, and cameo appearance by Oliver North's A-Team and you have Jonathan Kwitny's new book The Crimes of Patriots: A True Tale of Dope, Dirty Money, and the CIA.

Essentially, the scandal centers on Francis John "Frank" Nugan, an Australian attorney, and Michael John Hand, a Bronx-born graduate of forest ranger school who spent three years in the Army as a Green Beret in the mid-1960s, became a war hero in Vietnam, and possibly spent an additional year in Vietnam with the CIA before migrating to Australia. There he met Frank Nugan and the two set up an elaborate money laundering/tax cheating and theft enterprise they called the Nugan Hand Bank. To front for and help run the operation they turned to a number of former flag-grade officers and people who once had connections to U.S. intelligence agencies. Former CIA director Colby, then working for a large Washington D.C. law firm, was hired as counsel.

Thus, by itself, the Nugan Hand scandal is both a fascinating and important tale of greed and influence. But, unfortunately, this is not the principal story the author wishes to tell. Instead, Kwitny, who covered the story for The Wall Street Journal, views the scandal as a metaphor for the Cold War, and spends much of his book attempting, with futility, to prove that the whole thing was an elaborate CIA plot. At times his efforts border on the irresponsible.

Determined to show a heavy CIA involvement in an international conference in Manila, Kwitny points out that the conference organizer, William McCrea, an American businessman, had previously worked "under contract to the State Department arranging trade with developing countries. Before that, he had worked for the National Aeronautics and Space Administration, and before that for the engineering department of Pratt & Whitney, a major defense contractor. In other words," Kwitny notes, "his career was entirely consistent with that of a well-regarded CIA officer, though, of course, he may not have been one." Using Kwitny's loose criteria, almost any background could indicate a hidden CIA career pattern.

But he does not stop there. Kwitny also notes that among the original co-sponsors of the conference was Control Data Corporation, the large computer manufacturer. Apparently intent on showing some sinister connection between Control Data and the intelligence community, Kwitny throws out the fact that this was the same company that "Admiral Bobby Ray Inman later left the number two job at the CIA to go to work for." Not only is that wrong (he actually went to work for MCC, a research consortium sponsored by a number of computer companies, including Control Data) but it proves nothing anyway.

Another problem faced by Kwitny in showing the CIA connection is the fact that three exhaustive investigations into Nugan Hand by the Australian government, including the Stewart Royal Commission, which spent two years on the case and produced 11,900 pages of testimony from 267 witnesses under oath, all concluded there was no involvement. In addition, Kwitny seems to have had little luck in finding key sources who would agree to be interviewed by him. Thus, instead of hard facts and details, Kwitny loads an already overly long book with speculation on top of speculation.

Although on the surface the involvement of the former senior U.S. officials as officers of Nugan Hand seems to imply some direct or indirect official Washington involvement, in actuality that seems improbable. More likely, it was simply a case of Nugan and Hand seeking to provide a respectable front for their crooked organization in order to attract large investors, and of a group of greedy, easily conned generals and former spooks anxious to sell their dusty stars, former titles and contacts to the highest bidder with few questions asked. Colby, on the other hand, seems quite blameless. Although he agreed to act as counsel to the company, he actually had few meetings with the two co-owners and he could not be expected to investigate deeply every overseas company his law firm does some work for.

THE PERSON who attracted many of the senior officers to Nugan Hand was a two-star admiral, Earl P. Yates, who agreed to become "president" of Nugan Hand despite the fact that prior to his joining the company his greatest banking experience was likely cashing his retirement checks. In a seven-page afterword included in Kwitny's book, Yates, who had refused to be interviewed, was allowed to contribute his comments. His statement is both bizarre and pathetic. He continually refers to his fellow former generals and CIA officials who helped run the bank as "The True Patriots," as if everyone should stand and salute them for their collective stupidity. He ends by saying that Kwitny's book contains information from "communist-fed, anti-American sources," and that the author has "wittingly or unwittingly, served the interests of the Soviet Union and the KGB Disinformation Service."

Although Kwitny's book has certainly added nothing to the KGB, it has also added little as a contribution to future research on Nugan Hand. Surprisingly, for a book which asks to be taken seriously, there was little attention paid to documentation. Rather than footnotes or backnotes, Kwitny simply throws in an occasional asterisk with a note at the bottom of the page like "Assertions made in this section are all documented at length in Endless Enemies" (Kwitny's previous book). Or "In a letter published in the National Times," without reference to even a date. And never once does Kwitny indicate a book or page number when quoting from one of the official Australian investigations.

Unfortunately, as a result of its many flaws, the only thing certain by the time one finishes The Crimes of Patriots is that the person buried in Frank Nugan's grave is Frank Nugan.

James Bamford, the author of "The Puzzle Palace," a study of the National Security Agency, writes frequently on intelligence issues.