The Secret Gold Treaty

The subsequent arrest and fraud charge directed at Johnston is, in my opinion, utterly absurd. I have read and re-read thousands or pages of private correspondence and witness transcripts provided by Johnston about this matter. A child, unencumbered by bias, could readily determine that Johnston and his partners observed strict honesty and professional integrity at all times. They always, without exception, made it totally clear to all potential buyers that the latter must undertake their own due diligence and establish the bona fides of the certificates.

In fact, it is the established market procedure when negotiating the purchase of gold bullion certificates for the buyer to "prove up" the paperwork -- unless specified to the contrary. This is no different from any other business including retail purchasing where the universal watchwords are "let the buyer beware." 

This is especially the case, moreover, when dealing with sensitive Secret or Private Treaty documents. All buyers involved in this and related transactions were aware of the sensitivity involved and openly committed themselves to their own professional obligation to conduct validating enquiries. They all undertook these measures without complaint or disfavour. These "probes" repeatedly showed Johnston's documentation was solid and was of sufficient validity for each to then issue Corporate "Ready Willing and Able" (RWA) to purchase letters, signifying their agreement to move to the next stage of negotiations.

This raises numerous important questions. If the potential buyers (none of them members of the public), after conducting rigorous due diligence investigations, were content to proceed to the next stage in purchasing the certificates, where is the crime?  The charge of fraud implies deception, but in Johnston's case there was no deception. On the contrary, Johnston told all concerned of his arrest, of the UBS allegation and his upcoming trial and also repeatedly stated that the buyer must validate the certificates in line with market procedure. He was also quite open in saying he believed the certificates to be genuine, but could not state categorically that they were. What more could he do?

The events as outlined raise the possibility, at least in my cynical mind, that someone somewhere was watching and listening to Johnston. This is especially so when recalling that Bruce Mead issued his purchase letter to Johnston just two days before the article appeared in the London Times. At stake, when one includes all the certificates under Johnston's control, was a staggering US$300 billion worth of gold. This does not include the large quantity of gemstones, platinum, foreign currency and, in fact, three even larger gold certificates in the possession of the Last Legal Holder.  

A number of subsequent letters and telephone conversations from both Source A and Source B have a considerable bearing on this story: 

Source A phone call 27 June 1995:(3 months after arrest)

"The assets [certificates] are genuine and authentic." 

"In 1972 forty-eight (48) countries signed off a convention as to the assets under the Doctor's [Damanik] control." 

"This is a political red hot potato…" 

The Federal Reserve/IMF have given in principal proof for a Government entity to lease/purchase the assets…" 

Source B letter dated 12 April 1995: (1 month after arrest)

"… any prospective buyer… needs Federal approval. My principals have that approval." 

Source B letter dated 12 July 1995: (3 months after arrest)

"Firstly, the contract format enclosed is the ONLY means of transacting this proposal successfully. It would not be possible to 'buy' this amount without destroying the existing market and with it, the Western economy. I do not overstate the fact. The transaction will be overseen by representatives of several authorities including the Federal Reserve and the IMF…" 

"It is our estimation that total integration of these transactions into the world monetary system will be in excess of forty years…" 

Source B letter dated 21 September 1995: (6 months after arrest)

"… I take this opportunity to re-affirm that the position of my principals remains unchanged. We are ready to transact immediately for any and all of the Metal and paper currently held under signature of Dr. Damanik…" 

The last is interesting in that the principals clearly understood that Dr. Damanik (the Last Legal Holder) was not the owner of the certificates and underlying gold metal, but rather a conduit. This fact is repeated again and again, by both sources. In fact, they appeared to know a great deal more about Damanik's past activities than did Johnston: 

Source A letter dated 7 July 1995: (4 months after arrest)

"The Dr. has issued in the last few years, no less than seven mandates [Johnston being the latest]. Those mandates were withdrawn three weeks ago." 

"No mention of this transaction must be leaked in any way to any one. If it is leaked, the whole matter will become very serious indeed and I have been informed that we could face very serious consequences." 

Source A letter dated 28 June 1995: (3 months after arrest)

"We trust you fully understand and appreciate our verbal explanation of why the assets under the signatory control of Dr. Damanik, have not been given approval by the U.S. Federal Reserve and the I.M.F., since 1972, inclusive of our proposed transactions and same for any transaction that would generate profits by hypothecating the assets value into a Trading Programme." 

"Simply, or politically, the West, Fed's and the I.M.F. will not and can not allow the magnitude of the profits, the power and the worlds financial foundation to be put at risk by the unknown and uncontrolled utilisation of the proposed profits." 

Source A letter dated 19 June 1995 (3 months after arrest)

"We have been warned and instructed that nothing of this transaction should become common knowledge and any leakage would result in the closing down of this project." 

"We are given information only on a face to face basis by a representative of GOVERNMENT. This Government has given explicit instructions that nothing at all should be stated on open telephone or fax, only by face to face contact. Our faxes and phones are being constantly monitored as are yours, even if you do not know it." 

Australians do not enjoy being ordered around, especially by Poms. The content of some of these statements was sufficient to light a blue touch paper and matters soon became acrimonious. In Source A's letter dated 7 July 1995, wrangling and intransigence had appeared to cause, according to the writer, a response from the US Feds:

‘The Feds 'have now instructed that all papers appertaining to this transaction in the hands of the syndicating banks to be shredded immediately." The writer added: 'The transaction has to be cleaned and started again from scratch.'" 

When I telephoned and spoke to Source A, on 28 November 1996, the individual was audibly shaken and clearly scared. After some minutes and my dropped comment that I had copies of all his correspondence, he agreed to speak, providing I withheld his name. He had been advised not to speak of this subject by "unofficial channels," he said. He confided these channels were "US Intelligence." In a still later conversation, he identified this as the FBI. Meanwhile, he related he had been "instructed" to shred all documents related to the gold certificates. Finally, he said that publication of the story could wreck the western economy. So far, I have been unable to speak directly with Source B.

Both Bruce Mead and Source A, at one time or another, stated that the stories of Nazi and Japanese gold were true. Oddly, I had not posed this question or even hinted at it, but it was to prove a vitally important avenue of investigation. However, during my late 1998 telephone call with Source A, I specifically asked the origin of Dr. Damanik's gold. "Marcos," was the one word reply. 

 THE MYSTERIOUS DR. DAMANIK

 So who is this mysterious Dr. Edison Damanik who has access to so much gold?  Born 30 November 1930, in Pematang, Slantr City, Northern Sumatra, he later lived in the USA where he studied for his Doctoral degree. He later travelled widely in Europe and Asia before returning to live in Indonesia. He was a former Indonesian policeman holding the rank of Inspector.

Johnston understood he was an "adviser" to President Suharto and a "consultant" to the Suharto Government. This has been confirmed by his son, Petrus, who said his father had a "connection" with President Suharto as well as the Central Bank of Indonesia. Moreover, during a trip to Switzerland in 1995, Johnston had a brief, chance meeting with the daughter of former President Sukarno, who was accompanied by French-Canadian attorney, Guy Lassard. During this meeting, Sukarno's daughter expressed her knowledge of the certificates and proclaimed they were genuine. 

Damanik, meanwhile, was the Chairman of a financial entity titled P.T. Galaxy Trust with a registered address in Tomang, Jakarta. Johnston told the Police what he knew of the background and history of this trust during his interrogation. Originally, a trust had been founded in the late 18^th century, called the Molexi Trust and was registered in Hong Kong. This was one of seven trusts in operation, each with its own trustee/director, but Dr. Damanik was the last surviving trustee for all of these. Johnston and Bristow, in piecing this information together, concluded that the seven trusts had been connected to the seven wills of Cecil Rhodes. In any event, Molexi Trust appears to have been absorbed by a new entity, P.T. Galaxy Trust, in the late 1920's or early 1930's. All the gold certificates and other financial papers (platinum, gemstones, cash deposits etc) were now nominally owned by P.T. Galaxy Trust. 

There is no question that this trust exists and that Johnston was legally empowered to negotiate various gold and platinum certificates (and other valuables) on its behalf. I have in my files hundreds of pages of documents, letters of authority and other papers attesting to this fact. Nor do I doubt that these certificates were of substance. Dozens of different companies and banks around the world had issued corporate offers to buy them. This included, as we have seen, a state-owned bank in France, Credit Lyonnais, as well as a shadowy and hitherto unidentified "syndicate." Others have included, Phillip Morris, the massive American tobacco company and, in fact, the Government of France, in the form of the Interior Ministry's own company SOFREMI (Societe Francaise D'Exportation de Materials, Systems et Services du Ministere de L'Interieur). Their letter dated 25 May 1996 was addressed to: "last legal holder of International Guarantee Certificate - Dr. Damanik," and bore the reference "96/21-BP/MV/2945. It was headed "LETTER OF INTENT." 

The text of the letter is straightforward and to the point: "We are willing and able to work with certain international gold guarantee certificates. We would like to present to your attention Mr. Nicholas Marorslavac, Administrative and Financial Director of SOFREMI." It was signed Bernard Poussier, Executive Vice President. 

I felt this was of some significance and, therefore, asked a high level financier I was acquainted with to verify the letter. He confirmed that Mr. Poussier was the EVP of SOFREMI, and that the signature purporting to be his was a good likeness. [ii]

Damanik told Johnston and Bristow some, but not all, of the background to the origin of the certificates. He said they resulted from a "Private Secret Treaty" that arose in 1954. He also said this had to do with the Bandung meeting that was held in Bandung, Indonesia, in 1955. This was the first ever meeting of the Non Aligned Nations. Attending the meeting were numerous heads of state and other senior government representatives.  Included, was China's Chou En Lai, who the CIA planned to assassinate during the meeting. Not least, Damanik said the certificates were to do with "Rhodes scholars, who are the keepers of the currency."

Other certificates Johnston was authorised to negotiate included, as named holders: Mao Tze Tung, Mr. Todor Zhivkon, Augusto Pinochet, Mr. Kim Il Sung, Mr. Ferdinand Marcos, Mr. King of Bhumibol (King of Thailand), Adnan Kasogi, Hosni Muburak and Chaim Herzog. Almost without exception, these names have been misspelled, incorrectly titled or possess other grammatical flaws, such as that for "Mrs. Queen Elizabeth 11," - also rendered on other documents as "Mrs. Elizabeth Queen 11." 

Not only do the foregoing, in most cases, form an international rogues gallery of some of the most gruesome and bloody dictators in recent history, but most are known to have been eminently corruptible. [iii]  Meanwhile, if forgeries they are -- something that I sincerely doubt -- then the master forger should be hung for these slipshod errors.

This is not, however, reflected elsewhere on the certificates, which are otherwise of an immaculate standard. Whoever it was that prepared these documents, clearly was expert and went to a great deal of time and effort. For example, the quality of the paper, the ink, the various designs, artwork and presentation are first class.

In my earlier career in the City I have handled almost every form of "bank paper" ever issued (from bearer bonds to stock certificates and certificates of deposit and bills of exchange through to promissory notes -- and many others besides) and I have rarely seen such quality as these. [iv]  Therefore, it strikes me as very odd indeed, that a person (or persons) capable of producing such high standards and intricacy of detail would fall foul of such elementary mistakes as spelling errors and the misrepresentation of correct titles. For this to occur once or twice is, in my view, extremely unlikely but just about feasible. But, for it to happen in every case defies belief.

Moreover, it is worth repeating that each certificate was in reality a set of documents. For the 740 MT, this consisted of 17 certificates and 20 Heritage documents. Printed front and back in fine detail, the entire "set," totalled 74 different pieces of artwork. This alone demonstrates that these documents represented a considerable investment in time and effort.

Earlier, I discussed the witness statement of German banker Wolfgang Jentsch, in which he outlined a series of steps that required being followed to validate secret Government documents of this type. Johnston, in fact, received very detailed instructions from Dr. Damanik in this respect. These were as follows: 

"Irrespective of the fact that the papers may bear the name of a well known Prime bank, these papers are Government papers issued under Private or Secret Treaty between the Government Ministry of Finance and the Holder using the named Prime Bank [s] as a vehicle only, and at a level of strictly limited access; i.e., at a minimum level of Corporate/Government banking. These types of transaction exist due to the fact that the value of the transactions were/are beyond the capacity and/or resources that many Prime Banks can commercially handle with full and diligent risk management; therefore the Government would guarantee the transaction's security and/or yield with the sanction of the IMF." [v]

These instructions consist of three A4 sized, single spaced paragraphs of text that I do not intend to repeat verbatim here. However, suffice it to say that this stipulated that validation could only take place on a Government to Government basis through "the United States Federal Reserve Bank." [vi]  Damanik was even more specific when he mentioned the name of Alan Greenspan, Chairman of the Fed. He also added that the certificates were "… extremely politically sensitive and are issued by various Governments using the notated Prime Banks as a vehicle only." [vii]  The clarity of this last statement speaks for itself. 

Each potential buyer was issued with these instructions and provided with a diagram that showed the route they had to take. In a simplified form this was: buyer contacts their domestic Government MoF/Central Bank who contacts the US Federal Reserve. The Fed then contact the issuing Government MoF/Central Bank who contacts the issuing "vehicle" bank. Any response must move back along this chain to the buyer. If the response is satisfactory, the buyer can then proceed to purchase the certificate and underlying gold bullion. In the event that the buyer chose to contact the IMF, a different procedure was to be employed. [viii]

In the Spring of 1998, following Damanik's death, his wife Mrs. Etty Purnama-Damanik, "in her personal and corporate capacity for and on behalf of the legal beneficiary/owner," instructed Johnston and Bristow to forward all original documents to Kontas Investments Limited, a corporate entity with a registered address in Basel, Switzerland. [ix]  This was to facilitate a "reorganisation" of Dr. Damanik's assets. 

This brought to the end four years hard and gruelling work for Johnston and Bristow. The cost of their efforts had been horrendous. Both had lost their houses, their entire savings and in Johnston's case, his liberty for twelve months, plus tarnishing his reputation. Neither of them had earned a penny in the process and, in fact, calculate that the venture cost them a total of A$1 million.  [x]

Footnotes

[i] This, as you will see, did not even remotely inhibit their enthusiasm to purchase a number of bullion certificates Johnston was offering. In fact, none of those lining up to purchase gold from Johnston took the slightest heed of his arrest (other than offering commiserations for his bad luck). Without an exception, all were convinced there was substance to the gold certificates and regarded the intervention of the authorities as bothersome and politically motivated.

[ii] .For personal reasons, however, he felt it unwise for him to make direct contact with SOFREMI to verify further.

[iii] One notable name is obvious by its absence, in my view: Suharto.
 
 

[iv] The closest match in quality in my experience are bearer bonds. 
 
 

[v] Drawn from notes provided to me by Johnston and Bristow. Interestingly, each certificate had IMF codes printed on it.
 
 

[vi] These pages were prepared by Johnston and Bristow under the specific direction of Dr. Damanik.
 
 

[vii] Another individual who was negotiating some of these certificates was an authorised intermediary for an Eastern European Government. This individual, operating through the Central Bank contacted Alan Greenspan at the US Federal Reserve. I have a copy of the preliminary faxed reply.
 
 

[viii] Using the "vehicle" banks as a guide the following Governments appear to be those party to the Secret Treaty: Korea, Switzerland, Hong Kong (i.e., United Kingdom), United States, Sweden, Canada, Australia and France.  All told there are 19 sets of documents representing gold bullion (AU), Platinum (PT) and substantial (tens of billions US dollar equivalent) cash deposits in Canadian Dollars, US Dollars and Swiss Francs. Other documents concerned large carat diamonds.
   

[ix] Mrs. Puranama-Damanik's letter dated 28 April 1998.

[x] Meanwhile, the Eastern European Government intermediary referenced above has been in contact with Kontas Investments. During a meeting in London in summer 1998, he told me he felt that the certificates had become too well known and that restricting access via Kontas was a wise decision.

Back Back To Contents Page 

Next Page