The ITT Affair

It could not have come at a more inopportune time, what with the election drawing closer and the President trying to cash in on the political benefits of his China trip. Last week, though, the Nixon Administration found itself laboring under the shadow of what could be a major image-damaging scandal. The charge was that for a price--a $400,000 gift to help defray this year's G.O.P. convention costs --the Justice Department had dropped antitrust suits against the International Telephone and Telegraph Corp. The President was only indirectly involved, but the accusations--so far unproved --were aimed at his closest adviser, former Attorney General John Mitchell, and Mitchell's successor-designate, Richard Kleindienst.

The source of the charges was that well-known dealer in secret memos, Washington Columnist Jack Anderson. Last week Anderson published a summary of a personal memo, purportedly written by ITT Lobbyist Dita Beard, that linked the favorable antitrust settlement with ITT's pledge to underwrite some of the convention costs. Addressed to William R. Merriam, head of ITT's Washington office, the memo refers to Mrs. Beard's accosting Attorney General Mitchell at a party thrown by former Kentucky Governor Louie Nunn in Louisville after the 1971 Kentucky Derby.

Talking Freely. Mitchell had indicated to her, the memo said, that the settlement would turn out favorably for ITT. "Certainly the President has told Mitchell to see that things are worked out fairly," Mrs. Beard wrote. But, she warned Merriam, ITT officials were talking too freely about the $400,000 commitment, and if there was any more publicity, Mitchell might back away. So why didn't ITT put up the money and get its executives to shut up? The memo ends with the suggestion that Merriam destroy it.

The following day Anderson took out after Kleindienst in his column. The Attorney General-designate, he charged, had lied outright last year when he denied--in reply to a letter from Democratic National Committee Chairman Lawrence O'Brien--any connection between the convention cash and the antitrust settlement and insisted that neither he nor Mitchell had played any role in the department's negotiations with ITT. On the contrary, Anderson wrote, Kleindienst had in fact held several meetings on the case with ITT Director Felix Rohatyn before the settlement was reached.

Anderson's charges and the memo set Washington buzzing with rumor and speculation. It was no secret in the capital that ITT had given $100,000 --through its subsidiary the Sheraton Corp.--to the G.O.P. and was considering giving more. It was also known that the money for the convention had been pledged only eight days before the Justice Department's favorable ruling. At the time, the department's Antitrust Division was under Richard McLaren, an exceptionally tough prosecutor who is now a federal judge in Chicago. The division had been furiously attacking ITT's earlier acquisition of several major companies, including the Hartford Fire Insurance Co. Several stories about the "coincidence" of the division's subsequent favorable ruling had run in the Washington press. But it took Mrs. Beard's memo and Anderson's columns to show a direct link between the settlement and the ITT gift.

The G.O.P. responded to the Anderson columns with slightly red-faced outrage. Mitchell flatly denied any prior knowledge of ITT underwriting for the convention. Kleindienst, who had been expecting routine confirmation by the Senate next week, quickly requested that the Senate Judiciary Committee, which had earlier given him a 13-0 vote of approval, reopen public hearings on his qualifications so that he might refute the charges.

Crucial Concession. Kleindienst showed up before the committee accompanied by McLaren and Rohatyn. All three denied any wrongdoing. Kleindienst insisted that he knew nothing about the ITT convention contribution until it became public knowledge "on or about Dec. 3" of last year. He also said that he had had nothing to do with the negotiation of the settlement agreed to by McLaren's Antitrust Division. He did, though, admit to several meetings with Rohatyn to discuss "some of the economic consequences" of the suit--meaning the impact on the stock market if the ITT-Hartford merger fell through.

The testimony by Kleindienst, Rohatyn and McLaren was not too well synchronized. In his statement, Kleindienst conceded that, besides Rohatyn, he knew one other ITT employee, a neighbor named John Ryan, who was deputy director of the corporation's Washington office, and whom he had met a few times at parties. But, he said, they had never discussed ITT's troubles with the Antitrust Division. Later, while McLaren was answering questions, Rohatyn and Kleindienst held a whispered consultation, after which Kleindienst cut off the questioning to announce: "My memory has been refreshed." Yes, he said, he had talked to Ryan about ITT's troubles after all; in fact, it was Ryan who had asked him to meet with an ITT executive, who turned out to be Rohatyn. Many in the audience felt that it was a crucial admission.

At the next day's hearing, Committee Member Ted Kennedy produced a letter written to Kleindienst by Reuben Robertson, an associate of Consumer Crusader Ralph Nader, questioning whether there was any connection between the ITT settlement and the company's gift to the G.O.P. Kennedy also produced the reply, dated Sept. 22, 1971, and written by McLaren, insisting that there was no such connection. Kennedy then pointed out that in earlier testimony both men had said that the first they had known of ITT's convention contribution was when it became public, "on or about Dec. 3." Yet here was a letter, dated two months earlier, discussing the gift. Both men denied any recollection of McLaren's or Robertson's letters, but Kennedy's probe had again cast doubt on their testimony.

Meanwhile questions mounted concerning Mrs. Beard, who had dropped out of sight two days after Anderson published her memo. She had told a California Congressman that "where I'm going they won't be able to find me, and I won't be able to talk to them." Late last week, however, she was reported to be in the cardiac unit of the Rocky Mountain Osteopathic Center in Denver. Clearly Mrs. Beard, a divorcee of 53 with five children, and one of Washington's more colorful lobbyists, holds the key to many of the uncertainties surrounding the ITT affair.

There seems little doubt that she actually wrote the memo, but there are conflicting theories about why. According to one, she wrote it for the exact reason it states--to squelch loose talk about the $400,000 gift by company officials. Others suggest that she was about to be fired because of her abrasive personality and that she fabricated the memo to get even with ITT. The corporation has officially denied that the contribution to the G.O.P. was in any sense a political payoff, and insisted that there was no deal of any kind to settle the antitrust case.

So far, the hearings have established only that the Justice Department figures involved have both frail memories and a rather chummy relationship with certain ITT executives. Kleindienst may well survive further testimony with his reputation unsullied. Now, though, the chances of his confirmation being defeated were put at 25%--up from zero the week before.

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