Cutting the Cake

At a Washington gathering some time ago, President Kennedy asked Democratic National Chairman John M. Bailey what he had been doing lately. "I've been keeping out of trouble," Bailey replied. So he had. Longtime boss of the Democratic Party in his home state of Connecticut. Bailey, 58, is a behind-the-scenes politician who knows that one way to avoid putting his foot into his mouth is to keep it shut. Lately, however. Bailey's name has been prominently mentioned in a state insurance investigation. The Connecticut state government places its fire, casualty and related insurance through a single "agency of record." which thereby collects lush commissions. This agency distributes part of the commission cake to politically deserving "sub-agents," who do little if anything for the money they get. The arrangement was authorized by a state law in 1939, and Republicans, when they held power in Connecticut, also took full political advantage of it. The Coup. Early this year state Republicans got wind of some politically intriguing facts about the agency of record, the John P. Kelly Co. A married daughter and an 18-year-old son of Chairman Bailey's own 50% of the outstanding stock, and Bailey's son-in-law, Conrad J. Kronholm Jr., is a member of the firm. Founded by a longtime political and business partner of Bailey's, the Kelly agency was incorporated in October 1958, only a few weeks before Abraham Ribicoff, a Bailey man, got elected Governor, ending a stretch of Republican rule in Connecticut. Right after taking over, the Ribicoff administration selected the Kelly firm to be the state's agency of record. That was a considerable coup for a small, recently incorporated agency with capital of only $10,000 (of which Bailey put up $5,000). Since then, the firm has received an estimated $600,000 in commissions on state business. Undertaking an investigation, a committee of the Republican-controlled house of representatives asked the Kelly agency for a list of who got what subagent payments. The agency balked, obtained a court injunction barring the committee from subpoenaing records. Then, two weeks ago, the house authorized the chamber as a whole to pursue the investigation. The Cave-In. The Kelly agency caved in, released a list of 326 subagents who got pieces of the commission cake. Total subagent payments over the past four years came to $367,000. John M. Golden, Connecticut's Democratic national committeeman, got $4,000. Robert J. Beckwith, a top aide of Democratic Governor John Dempsey, collected $7,225. Bailey's son-in-law got $7,750. Bailey's son and daughter did pretty well too. When asked how much they had collected in dividends on their Kelly stock. Bailey had refused to give any figures, said the amount was "surprisingly small." Last week, under the prod of publicity, the Kelly agency revealed that over four years the son and daughter between them have received $20.000 in dividends on their father's $5,000 investment.

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