Slugging It out over the ITT Affair

THE public record on this episode is blotted with falsehood. The aura of scandal hangs over the whole matter. If Mitchell says under oath what he said in the statement he issued it will be one of the most arrogant displays of perjury this committee has ever heard."

The sedate hearing room of the Senate Judiciary Committee had rarely rung with such harsh language. Columnist Jack Anderson was pressing his charges that the Nixon Administration had settled antitrust suits against the giant ITT Corp. in return for up to $400,000 in backing to bring the Republican National Convention to San Diego (TIME, March 13). As the second week of tense testimony unfolded, Republican officials were still on the defensive. The Administration had requested the hearings, hoping to dispel quickly any whiff of a deal. Thus far it had failed, and gleeful Democrats were only too happy to prolong the agony in an election year.

Conflicting. The political stakes were high. For the Government and a corporation to collude on such a matter would be a crime. President Nixon was described as wanting the Justice Department to make "a reasonable settlement" with ITT. Also at issue were the integrity of the President's closest political and legal adviser, John Mitchell, and the fitness of Mitchell's deputy, Richard Kleindienst, to be confirmed by the Senate to succeed him as Attorney General. Equally assailed was the trustbusting reputation of Richard McLaren, Mitchell's former antitrust chief and now a federal judge. Over it all loomed the blemished image of a hard-drinking, tart-tongued ITT lobbyist, Dita D. Beard, who was ill in a Denver hospital and unable to testify. It was her memo, as reported by Anderson, that described the supposed deal.

As Democrats and Republicans on the committee thrust and parried in the dramatic duel, the testimony turned complex. Only a few basic facts had not yet been disputed. The Government, under the aggressive McLaren, had begun moving against ITT in 1969, trying to prevent the nation's eighth largest industrial corporation from expanding. McLaren, determined to pursue the issues to the Supreme Court, wanted clarification of the Government's powers to limit the growth of conglomerates--a matter on which the court had never ruled. In the early summer of 1971, San Diego had little interest in bidding for the Republican Convention, but Nixon wanted it there. Local financing was one problem. At a private dinner meeting in San Diego on May 12, ITT President Harold S. Geneen told Republican Congressman Bob Wilson of San Diego that ITT would pledge up to $400,000, if needed, to finance the convention. San Diego was selected as the convention site on July 23. On July 31, the Justice Department announced that it was dropping its suits against ITT and had reached a settlement.

The Administration claims these events were coincidental; Anderson sees a cause-and-effect relationship.

Questions. Through the confusing testimony, the Administration was presenting a multiple defense: that there could not have been a deal because the Justice Department, from Mitchell to Kleindienst and McLaren, was unaware of ITT's convention pledge at the time it settled with ITT; that the decision to settle was made entirely by McLaren on sound legal grounds and uninfluenced by politics; that Dita Beard was too emotionally unstable to be credible. The testimony thus raised several basic questions:

When did Justice Department officials learn of the ITT convention pledge?

Mitchell, who was awaiting his turn to testify, claimed that he "was not involved in any way with the Republican National Committee convention negotiations and had no knowledge of anyone from the committee or elsewhere dealing with ITT." Anderson, testifying crisply and obviously enjoying the spotlight, branded this false. He claimed that California Lieutenant Governor Ed Reinecke and an aide, Edgar Gillenwaters, told Mitchell about the ITT pledge, made through its subsidiary Sheraton Corp., in Mitchell's office last May. "Now Reinecke is singing a different tune," Anderson said. "He says they didn't talk with the Attorney General about the convention until September. This makes no sense. The whole gist of Mr. Gillenwaters' account is that there was doubt whether the convention would be held in San Diego. By September, the city had been selected."

Did Nixon or Kleindienst intercede?

Anderson's legman, Brit Hume, 28, told the committee that Mrs. Beard claimed Mitchell had told her that President Nixon wanted Justice to "lay off" ITT. When he pressed her, Hume said, she softened this to say that Mitchell's actual words were that the President urged "a reasonable settlement." Mitchell promptly issued a statement calling this "totally false" and added: "The President has never, repeat never, made any request to me directly or indirectly concerning the settlement of the ITT case, and I took no part in that settlement."

Kleindienst had shaken off his nervousness of the week before and now testified with his usual confidence; nevertheless he still secerned imprecise about his involvement. He had earlier backed off from his claim that he had had nothing to do with negotiations, conceding that he had talked to two ITT officials about the case. Last week he corrected his testimony again to reveal that he and McLaren had asked Solicitor General Erwin N. Griswold to seek a delay in one ITT case pending before the Supreme Court. "I believe that Judge McLaren and I had a rather hazy recollection," Kleindienst explained. He also claimed that he had never read a letter about the cases sent to him in April by Lawrence Walsh, an antitrust chief in the Eisenhower Administration and now an ITT counsel on antitrust matters. As Massachusetts Democrat Edward Kennedy persistently questioned him, Kleindienst snapped: "There wasn't a fix here. There wasn't a payoff. There wasn't any bribe."

Did McLaren alone decide to settle with ITT?

McLaren blew up at similar questions about whether others had influenced his decision to settle. "I was not pressured or influenced by anyone in any way!" he shouted. "I think it's absolutely outrageous the way these committee proceedings are going. There was no hanky-panky about it." Yet McLaren, too, had refreshed his memory since the week before. Now he conceded that he had talked to the chief White House troubleshooter on relations with corporations, Peter Flanigan (see box, next page). "Mr. Flanigan was simply a conduit," McLaren said. Flanigan obtained a report on the financial impact that ITT would sustain if it was required to divest itself of Hartford Fire Insurance Co., as McLaren had been insisting it must. The analysis helped change McLaren's mind. "I read the report and found it persuasive," McLaren said.

That was a surprising admission.

The report had been prepared by Richard Ramsden, 33, a former White House fellow and now an investment consultant on Wall Street. Ramsden spent just two days analyzing the $7 billion-a-year conglomerate, was paid $242--and delivered his report to Flanigan rather than the Justice Department. California Democrat John Tunney asked whether the fact that Ramsden's firm manages some 200,000 shares of ITT stock would affect Ramsden's objectivity. "No," replied McLaren, "it wouldn't bother me a bit." But could not a negative report by Ramsden have adversely affected the stock's value? "I have no comment," said McLaren. The angry McLaren attributed his reversal to this report, his own antitrust experience and consultation with the Treasury Department. But he conceded under questioning that the Treasury involvement consisted of one brief telephone call.

Is Dita Beard believable?

One of her physicians, Dr. Victor L. Liszka, testified that she tended to drink "excessive" amounts of liquor, often used tranquilizers at the same time, which is a "bad combination," and was suffering from a weak heart that impaired blood circulation to the brain. All that, he said, made her behavior "distorted and irrational." Going far beyond medical matters, he said she was "mad and disturbed" when she wrote her memo, and now had a "mental block" against recalling why she wrote it. He said that when she approached Mitchell at a Kentucky Derby party last May in the mansion of then Kentucky Governor Louie Nunn. Mitchell gave her "a dressing down such as I never heard in my life." He told her to limit any discussion of ITT to "proper channels."

Liszka's testimony became suspect when he admitted talking to Justice Department officials about it both before and after visiting Mrs. Beard in Denver. Moreover it was learned that U.S. Attorneys had recently investigated him on charges of fraud in Medicare billings (he was subsequently cleared), and was still considering similar accusations against his doctor-wife Katherine.

Nunn appeared as a surprise witness to describe Mrs. Beard as "obsessed about losing her job" at the party and as one who "drinks quite heavily." He said that Mrs. Beard repeatedly tried to get Mitchell to talk about ITT, claiming the company was getting "a damn rotten deal." But each time Mitchell brushed her off, Nunn said, and Mitchell told her that "he didn't want to hear any more about it." Then Mrs. Beard became ill, collapsed in her motel room and had to be revived. In her memo, however, Mrs. Beard claimed she learned, partly through Nunn, that "Mitchell is definitely helping us, but cannot let it be known." In testifying, Nunn too could have had a personal motivation. He told the committee that he had spoken to Kleindienst to suggest his suitability for appointment as a federal judge. Curiously, before testifying, Nunn had told reporters for the Associated Press, the Chicago Tribune and the Louisville Times that he could not recall whether Mitchell and Mrs. Beard had discussed ITT at all.

Opposed. At week's end a lawyer for Mrs. Beard called a news conference at her Denver hospital to say that she "categorically denies" that any deal involving convention funds was made between ITT and the Government. She considered the hearing "an absurd circus" and wanted to testify as soon as she was medically able "in order to put at rest false rumors, innuendos and outright lies."

A broader question was whether ITT actually got a special break in the settlement, and whether the public interest was slighted. ITT was required to divest itself of six subsidiaries (Canteen Corp., Avis-Rent-a-Car, ITT Levitt & Sons, Hamilton Life Insurance Co., ITT Life Insurance Co. and one division of Grinnell Corp.), which, taken together, earned less than $40 million last year. It was allowed to keep Hartford Fire Insurance, which not only earned $105 million but also provides the large cash flow vital to an expanding company. The settlement was almost identical to a proposal made by the company in 1970--which McLaren then flatly rejected. Moreover no court has allowed a company's plea of economic hardship to excuse an antitrust violation--which was the basis for Ramsden's recommendation and presumably McLaren's change of view. The antitrust laws are designed to protect competitiveness in business, not to protect shareholders. The out-of-court settlement also cut off Supreme Court clarification of whether new laws are necessary to control conelomerates like ITT.

So far the Anderson charges had not been proved, but the Administration's defense had been bumbling. Officials seemed worried that the Administration's chumminess with corporations might become an embarrassing issue beyond the ITT case itself. Republicans tried to put Democrats into the same bag; National Committee Chairman Robert Dole called for an investigation of why another corporation, A.T. & T., was letting the Democratic Party charge more telephone service when it already owed $1.5 million for past calls. Yet extending credit to a party out of power is hardly comparable to a charge of obtaining favors from Government officials.

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