Watergate, page 19
Subterfuge sorted, Magruder went to play tennis.
It seems quite likely that Magruder’s account of Mitchell approving the plan—one given in his memoir and under oath to investigators—is wrong. It seems just as likely—perhaps even probable—that Magruder, tired of Liddy pestering him and under pressure from the White House, just gave the go-ahead to the scaled-back plan himself after Mitchell put off the decision again. Mitchell consistently denied ever okaying the GEMSTONE plan, although he did admit in testimony later that he understood the plan proposed illegal activities.
But there’s no doubt that someone okayed the scaled-back GEMSTONE plan after the Florida conversation; the following day, Strachan wrote to Haldeman, “Magruder reports that 1701 now has a sophisticated political intelligence-gathering system with a budget of 300,” seeming to misquote the $250,000 budget actually approved.III
* * *
While Magruder, Mitchell, and LaRue met to plot the campaign’s summer and fall strategy, the finance arm of the reelection effort sprinted to lock in large cash donations ahead of a new political fundraising disclosure law.
Up through the early 1970s, the nation had little history of attempting to limit or demand transparency around political donations and campaign funding—and even less history actually enforcing the few prohibitions that did exist. President Theodore Roosevelt had first pushed for a prohibition on political contributions from corporations as part of his progressive agenda at the start of the century; Congress had later, in the 1940s, added prohibitions on donations from unions. Yet as late as the 1960s, the campaign rules, Lyndon Johnson had said, were still “more loophole than law.”
In early 1972, Congress finally passed the Federal Election Campaign Act, which required regular, quarterly disclosures of donors and expenditures and established the first federal campaign watchdog, a new Office of Federal Election in the Government Accounting Office. Signing the bill that January, Nixon touted its new transparency: “By giving the American people full access to the facts, of political financing, this legislation will guard against campaign abuses and will work to build public confidence in the integrity of the electoral process.”
Behind the scenes, though, during the eleven weeks before the law took effect, his campaign raced to hide as much money as it could. The campaign’s lawyers identified a particularly useful loophole whereby the old disclosure regulations expired on March 10 and the new ones didn’t start until April 7. For just under a month, there were almost no rules at all. It was a period that was perfect for Nixon—as incumbent he was all but assured the nomination—and a disaster for the Democrats, who were still engaged in a multi-way primary with no front-runner to coalesce fundraising around.
By that point, the president’s Newport Beach lawyer, Herbert Kalmbach—who had developed a lucrative business as a prodigious fundraiser and connector between corporate America, wealthy Republicans, and the Nixon world—had focused on maximizing the CREEP war chest for nearly two years and had already delivered in a big way. (By the time all was said and done, Nixon’s ’72 operation would raise some $69 million, more money than had been spent in the ’64 and ’68 presidential campaigns combined.) Long before the election year had rolled around, Kalmbach—later with the help of Stans—leaned hard on deep pockets, crisscrossing the country to meet informally with corporate leaders and influential Republicans.
In every one-on-one meeting, donors knew that Kalmbach sitting across from them represented the manifestation of the president himself. Nixon’s top ten contributors would pledge more than $4 million total; roughly a fifth of Nixon’s haul came from just its top one hundred donors. On November 18, 1970, Nixon sat down to an 8 p.m. dinner at the White House with Kalmbach, Attorney General Mitchell, and five businessmen. The group—which included Pittsburgh banking magnate Richard M. Scaife and an Illinois insurance executive, Clement Stone—enjoyed themselves for more than three hours, never once talking about campaign fundraising, before the president stood up from the table at 11:25. Only after he left did Kalmbach raise the big question: How much would the guests like to contribute to the president’s reelection? Together, they pledged $7.5 million.
During another dinner, in New York in 1971, with George Spater, the CEO of American Airlines, Kalmbach suggested the airline make a $100,000 contribution to the campaign; Spater said he could put together $75,000. He felt he didn’t have much choice—his airline was in the midst of a merger with Western Airlines, and just weeks before their dinner, the Nixon cabinet had split over whether to approve the deal, and Spater knew that Kalmbach, in his legal work, also represented rival United Airlines. The executive moved quickly to deliver the promised donation; American Airlines executives collectively gave the campaign $20,000 personally, and $55,000 from the company laundered through a “special commission” paid to the Swiss bank account of a Lebanese businessman. The businessman, in turn, withdrew the money in cash and returned it to American Airlines executives in New York, where it was placed in an envelope and delivered to Nixon’s team.
In other meetings, Kalmbach was even more direct; while U.S. presidents had long offered ambassadorships to major supporters, Nixon’s campaign turbocharged their offers in exchange for contributions. Nixon thought he knew precisely how much a good diplomatic post—and the lifetime privilege of being addressed as “Ambassador”—was worth to the nation’s well-heeled. “Anybody who wants to be an ambassador must at least give $250,000,” he told Haldeman in the White House. “The contributors have got to be, I mean, a big thing, and I’m not gonna do it for political friends and all that crap.” Over the course of his first term, nearly $2 million had flowed in from donors who later received diplomatic posts abroad. At one point, hearing that Cornelius Vanderbilt Whitney was set to be named an ambassador, Nixon marveled, “It was a great sale. He gave a quarter of a million dollars.”IV
Sometimes—illegally—the trade was specific. J. Fife Symington, Jr., unhappy with his first-term post as ambassador to the new country of Trinidad and Tobago, traveled to California to meet with Kalmbach. He asked for a “European post,” and Kalmbach suggested that Symington, whose wife was heir to the Frick steel fortune, might think about a $100,000 donation. Symington replied that he could do it, but would need to be promised a great ambassadorship from Haldeman himself. Kalmbach left their lunch and called staff at the White House, who tracked down Larry Higby, who was in Chicago with Haldeman and the president that day. Higby called back soon after: “Herb, the answer is go.” Kalmbach returned to the lunch table and wrote out an agreement: $100,000 for Spain or Portugal. At another meeting, department store heiress Ruth Farkas was quoted $250,000 for the ambassadorship of Costa Rica; at a sit-down with Kalmbach, she said, “I am interested in Europe, I think, and isn’t $250,000 an awful lot of money for Costa Rica?” In a follow-up conversation, Kalmbach explained that Europe cost $300,000. “Done!” she said. Her nomination as ambassador to Luxembourg was sent to the Senate six days after the final check of her $300,000 donation arrived for the reelection campaign.
Nowhere else fundraising-wise, though, would Kalmbach and the Nixon campaign have more success than with the nation’s dairy and milk producers. Since Nixon had taken office, the dairy industry had been lobbying to increase the price supports paid to farmers; the Associated Milk Producers, Inc., had spent years organizing and consolidating power to become a political force. Kalmbach had told AMPI in 1969 that “contributions would be appreciated,” and in August of that year, an industry lawyer had flown to Dallas, retrieved a briefcase with $100,000 cash in it, and flown to California to deliver it to Kalmbach. The money went into the campaign’s stash in safe-deposit boxes. Over the next two years, extensive conversations about the industry’s key priorities continued with a variety of Nixon aides, but little movement was made. Even a follow-up pledge of another $2 million failed to yield the results farmers wanted. Progress only began when the group retained Nixon’s longtime advisor Murray Chotiner in March 1971, at a then large $60,000 annual fee.V
With Chotiner now in the picture, Nixon brought together the administration’s top agriculture leaders on March 23, when they revisited the price levels set by the Department of Agriculture. That afternoon, Chotiner and Treasury Secretary John Connally suggested the dairy producers do even more for the campaign; the industry rushed to buy tickets for the next night’s Republican “Kick-Off 1972” fundraising dinner at the Washington Hilton. AMPI executives used the organization’s plane to fly to Louisville at 4 a.m. to gather up checks. The next night, after the fundraising dinner—attended by Nixon, Agnew, RNC chair Bob Dole, and the heads of the GOP’s congressional and senate fundraising efforts—a dairy representative and Chotiner met Kalmbach across town at the Madison Hotel and reaffirmed that the industry was going to contribute $2 million to the president’s reelection. The payoff was fast: The next morning, March 25, a press release from Agriculture Secretary Clifford Hardin announced an “upward adjustment” in milk price supports, changing levels that had been set just two weeks earlier.
The only question remaining was how to funnel such a huge amount of money to the campaign without raising eyebrows. As Kalmbach later testified in a twist of Orwellian doublespeak, “We were trying to develop a procedure… where they could meet their independent reporting requirements and still not result in disclosure.” Their creative solution was to channel the money in very small donations, under $3,000, through a network of hundreds of new campaign committees created in D.C. by John Dean and Robert Bennett—the head of the PR firm that employed Howard Hunt—all with instantly forgettable names like the Committee for Political Integrity, Americans Dedicated to Stable Growth, Organization of Sensible Citizens, Americans United for Safer Streets, Volunteers for Good Government, the Committee for a Better Nation, and the Committee for Adequate Political Information. Nearly a quarter million dollars flowed from the milk producers through to the Nixon organization.
Despite the best efforts of the campaign and the White House to disguise the contributions, reporters noticed the wave of questionable new political groups; upon examination, the accompanying paperwork proved sloppy and suspicious.VI Suspicions would dog the campaign for months.
Millions of dollars flooded through the Nixon campaign in the first days of April, as the campaign rushed to both collect and distribute donor money ahead of the deadline on the 7th. The campaign employed a half-dozen couriers to collect cash, racing around the country in a frenzy so great that in one city Sloan later recalled, “We couldn’t even pick up a $50,000 contribution.” All told, they collected more than $11 million in untraceable money—some $5 million of which came in a final, frenzied sprint in the forty-eight hours before the law kicked in.
Although Hugh Sloan held the money as treasurer, he had little control over it, handing it out at the orders of Kalmbach, Mitchell, Stans, and others. The first disbursement went out in April to a Republican congressional candidate in Maryland named William Mills—other monies went to Kalmbach’s own cash fund and to start funding Liddy’s activities—but not all of the incoming donations were even converted to cash before heading out; some incoming checks went directly to Liddy, donations that would, with time, help bring down the Nixon presidency. (The money to Mills, meanwhile, would later come with an even higher price.)
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On Monday, April 10—the first business day after the new campaign finance laws kicked in—Laurence Richardson, the president of a conglomerate known as the International Controls Corporation, appeared in Maurice Stans’s office carrying a briefcase with $200,000 in cash. The money, intended to be anonymous, was the culmination of a yearlong lobbying campaign by ICC, whose founder Robert Vesco had run into trouble with the Securities and Exchange Commission in the U.S., as well as other authorities overseas. Vesco—a young, fabulously successful New Jersey businessman who considered himself tightly tied to Sears and GOP power brokers—had been increasingly desperate to use his connections with the Nixon administration to shut down the probes and increasingly frustrated when his scheming didn’t seem to deliver.
In March, Vesco and Richardson had met with Stans at his 1701 Pennsylvania Avenue NW offices. Vesco was convinced that if he could just get an audience with the head of the SEC, they’d be able to talk out the problem mano a mano—surely that was the type of thing Nixon’s team could arrange. Stans politely redirected, saying that maybe John Mitchell could help, then returned to the matter of a donation to the reelection campaign. “I want to be in the front row,” Vesco told him, proposing a $500,000 donation. Stans had outlined the new law and suggested that the first $250,000 be paid by April 6 to avoid disclosure. There was no doubt in Vesco’s mind what his money was buying. “Tell Stans to get that fucking SEC off my back,” Vesco had told Richardson as Richardson prepared to deliver the cash. The money helped Vesco get a hearing with John Mitchell himself, who placed a call to the SEC to set up a meeting with Vesco’s representative.
Even though the Vesco money hadn’t met the deadline, Stans processed the donation anonymously at CREEP anyway, handing it off to Sloan. As Sloan would later recall, Stans instructed him to list the donation under John Mitchell’s initials; it went into the ledger as “JM.”VII
In his role as the campaign finance committee’s counsel, Liddy found himself totally consumed by the early-April rush for money. In just days, he helped set up new committees to spread around untraceable donations, collected checks in the offices of the Robert Mullen Company—Hunt’s employer—raced to New York to bag another $50,000 donation, and traveled onward to Detroit, Buffalo, St. Louis, and Chicago to affect the final collections.
Sorting out the how and the who of all the campaign’s money proved challenging. Throughout the campaign finance committee’s office, cash piled up in office safes. At the White House on April 6, Haldeman’s liaison to CREEP Gordon Strachan asked Alexander Butterfield to recommend someone to hold some of the questionable cash. Butterfield tapped a friend, Virginia management consultant Leonard Lilly, and handed off $350,000 in cash, packed inside a briefcase, in the lobby of the Key Bridge Marriott in Arlington, Virginia. The money represented a sizable chunk of the leftover 1968 funds overseen in the slush fund by Herbert Kalmbach. Lilly placed them in an Arlington safe-deposit bank for quick use if and when needed.VIII
Sloan also asked Liddy if he could convert to cash a series of signed traveler’s checks that had been donated to the campaign; Liddy flew to Florida and met with Barker, who arranged for a Cuban banker to get the cash. Soon, Sloan returned again—first with a $25,000 check from a Minnesota businessman named Kenneth Dahlberg, dated after the deadline, and then with a pile of four checks drawn on a Mexican bank. Each time, Liddy helped turn the checks into cash. Much of it came back from Barker’s contact in crisp, brand-new, sequentially numbered $100 bills.
* * *
Once the frenzied finance deadline passed, Liddy was able to launch the plans he’d spent all winter concocting. He asked Sloan for the first down payment on GEMSTONE’s funds, requesting $83,000 out of the $250,000 he’d been authorized. Sloan handed the money over in hundred-dollar bills, stuffed in a manila envelope, coincidentally some of the same sequentially numbered $100 bills Barker had laundered through his Miami bank contacts.
GEMSTONE’s first move, Liddy decided, would be to leverage RUBY II. A few months earlier, in March, Hunt had recruited a new campaign spy, a young Utah college student named Thomas Gregory, to begin working in Muskie’s campaign headquarters in D.C., on the foreign affairs policy team. Dubbed “RUBY II,” Gregory was charged with typing up regular reports about information he’d gleaned while working for Muskie and delivering them during weekly rendezvous with Hunt in a downtown D.C. drugstore. As the Democratic campaign evolved and Muskie faded, though, Strachan told Liddy that Haldeman wanted Liddy’s “capability” to shift its focus to McGovern. (“George McGovern was the perfect political opponent, Nixon felt, far to the left of center. If we did our job, McGovern would leave Nixon most of the moderates and independents,” Ehrlichman wrote later.) Hunt asked Gregory to move over to the McGovern campaign, which he promptly did, and Roger Stone urged McMinoway—aka SEDAN CHAIR II—to move over to McGovern’s campaign. McMinoway relocated to California and continued to report each day to Stone by phone.
According to Liddy’s scaled-back GEMSTONE budget, the operation had funding for four surreptitious break-ins—operations Liddy code-named OPAL—and he began planning to target both McGovern’s headquarters and the Democratic convention in Miami. The break-ins were manpower-intensive, and expensive. When Liddy added up the costs of a break-in—including a bonus of a month’s salary for Hunt and McCord, payments and round-trip first-class airfare from Miami for the Cuban burglary team, as well as hotels, car rentals, and more—each OPAL operation came in around $10,000.
As Liddy’s various operations were getting underway, Magruder finally passed along the detail—supposedly decided in Key Biscayne—that Liddy was to burgle and bug the Watergate offices of Democratic Party chair Lawrence O’Brien. “Get in there as soon as you can, Gordon—it’s important,” Magruder said. Liddy was not pleased; the Watergate hadn’t been on his original list, and adding it would use up the last of his contingency funds, almost even before he’d started work.
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While he was attorney general, John Mitchell had had five FBI agents watch over him and his family, and now that he was out of the cabinet, he continued to worry about the safety of his family—especially given Martha’s public profile on the campaign. The idea of Jack Caulfield or Fred LaRue sitting around the pool in Key Biscayne with a gun didn’t seem sustainable, and he insisted that James McCord find a long-term solution. Until McCord could hire a permanent bodyguard, he began escorting the Mitchells’ daughter, Marty, to and from school himself.
