Reopening ITT

One of the Nixon Administration's earliest scandals is also turning out to be one of its most persistent embarrassments. The affair centers on the charge, flatly disputed by all officials involved, that the Justice Department in 1971 settled an antitrust case against the International Telephone and Telegraph Corp. on relatively favorable terms to the company shortly after ITT had pledged up to $400,000 to support the 1972 Republican National Convention. Last week it was revealed that President Nixon himself had personally and bluntly intervened in the case.

At the time of Nixon's intercession, the Justice Department was determined to carry an appeal to the U.S. Supreme Court in an attempt to establish the principle that business competition can be unlawfully hindered by the growth of conglomerates, which expand by acquiring unrelated businesses, as much as by corporate growth in a single industry. The test suit was being pushed by Richard McLaren, chief of the Justice Department's antitrust division and now a federal judge. It had the support of then Deputy Attorney General Richard Kleindienst and Solicitor General Erwin Griswold. (Attorney General John Mitchell had withdrawn from the case because his New York law firm had handled some ITT matters.) ITT, fearing an adverse Supreme Court ruling and the probable loss of its profitable Hartford Fire Insurance Corp. acquisition, was seeking at least a delay in the suit. The Government was also asking that ITT be forced to divest itself of two lesser firms, Grinnell Corp. and Canteen Corp.

Kleindienst and McLaren met on April 19, 1971, and agreed that there should be no delay; the appeal would be filed that day. Kleindienst so informed New York Lawyer Edward Walsh, who was helping to advise ITT. Within hours Kleindienst received a telephone call from John Ehrlichman, then Nixon's top domestic affairs adviser. Ehrlichman said the President was "directing" Kleindienst not to file any appeal at all. Kleindienst said he could not agree with this. He explained that the decision to appeal had been made by McLaren and Griswold and declared that it would be carried out. Snapped Ehrlichman: "Oh? We'll see about that."

Kleindienst then received a call from Nixon, who said: "You son of a bitch, don't you understand the English language?" Nixon ordered him to drop the appeal.

Seeking time to dissuade the President, Kleindienst talked to McLaren and Griswold and suggested that the appeal be delayed, although he did not tell them of the White House orders. They agreed. Kleindienst then insisted on an immediate meeting with Mitchell. He told Mitchell flatly that he would resign rather than carry out Nixon's command, and that Mitchell should tell Nixon this. McLaren and Griswold also would resign, Kleindienst suspected, rather than drop the suit at Nixon's behest. Within a couple of days Mitchell told Kleindienst: "I've talked to your friend [Nixon]. He says do anything you want on antitrust cases."

Bad Indiscretion. The appeal then was filed as originally planned. Before it was heard by the Supreme Court, however, the Justice Department worked out an out-of-court settlement allowing ITT to retain the Hartford firm--its priority aim--but to divest itself of most of Grinnell Corp. and all of Canteen Corp. Some outside business and legal experts felt that a Supreme Court decision might have been rougher on ITT. But White House and Justice Department officials have called it a good settlement for the Government, a judgment with which fired Special Prosecutor Archibald Cox concurs.

When the story of Nixon's phone call first broke in the New York Times, the newspaper did not reveal its sources. But Cox had been told about the conversations by Kleindienst as his staff probed the whole ITT affair. Cox conceded that he might have been an indirect source of the Times story because he had "carelessly" mentioned the Nixon intervention to two Democratic Senators, Edward Kennedy and Philip Hart, and some of their assistants. He said he felt terrible about this. The White House eagerly pounced on Cox and his staff, calling the action "an inexcusable breach of confidence." Yet TIME has learned that Cox and his staff were not the only source of the story; actually, Justice Department officials--and White House staff members as well--contributed much key information for it.

It was a bad indiscretion. But that did not alter the substance of the story, whose accuracy the White House did not deny. Quite properly, a White House statement said that Nixon had every right to set "antitrust policy." However, the statement asserted that Nixon had only discussed such policy with Kleindienst, rather than ordering any action. It pointed out that the appeal had, in fact, proceeded--but it failed to note that Nixon was threatened with top-level resignations in his Justice Department if he had not changed his mind.

The Senate Judiciary Committee promptly announced that it would reopen hearings on the ITT matter. Most immediately on the spot is Kleindienst, who was asked about White House influence on the ITT decisions when he sought confirmation as Attorney General in March 1972. Said he at that time: "I was not interfered with by anybody at the White House. I was not pressured. I was not directed." But Kleindienst insisted last week that he had not perjured himself, since he thought the committee questions were aimed at the later out-of-court negotiations with ITT rather than the earlier decision on whether to appeal the case.

The special prosecutor's staff presumably will continue to investigate the matter also. Apart from possible perjury charges, the more serious issue remains the question of whether the President intervened on behalf of ITT in return for the ITT political contribution pledge--a possibility the White House heatedly denies.

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