The I.T.T. Affair and Why Public Financing Matters for Political Conventions

March 19, 2014
Nixon's I.T.T. scandal

Quietly and with little fanfare, in a rare moment of bipartisanship on Capitol Hill, the Senate Democrats recently joined Republicans in a voice vote gutting a Watergate era reform: public financing for political conventions. Now campaign finance reform advocates are urging President Obama to veto the bill.

So why do political conventions need the public funds in the first place? Is this just good money going after bad? Not necessarily. Public funding is a bulwark against corrupt deals between incumbent administrations and private convention sponsors.

The history of this reform falls firmly at the doorstep of the Nixon White House. We know more about the Nixon campaign’s fundraising (both legal and illegal) than with almost every other president because of the Congressional investigations into Watergate. The Watergate Special Prosecutor and other criminal prosecutions also uncovered various details about the actions of CREEP, the Committee to Reelect the President.

Included in CREEP’s modus operandi was soliciting funds from corporations that had open matters with the federal government. As I detailed previously, the milk producers wanted federal price supports and McDonald’s wanted to raise the price of their quarter pounder with cheese.

Other businesses that needed the federal government’s approval were also easy targets for CREEP’s shake down. In particular, companies whose mergers needed Department of Justice (DOJ) approval were easy marks. Usually these mergers were reviewed by the DOJ to make sure that they did not violate the Sherman and Clayton anti-trust laws.

When corporations (and not just senior managers at corporations) gave money to CREEP, they broke a federal law called the Tillman Act. Even today corporations cannot give directly to federal candidates’ campaign committees. But this mere illegality did not stop the CREEP fundraisers from asking for the money, which led many of them to spend time in the slammer.

One company that had a reason to be responsive to Nixon fundraisers was International Telephone and Telegraph Corporation, a.k.a. I.T.T., because it needed to settle anti-trust suits by the DOJ and it needed DOJ approval of its merger with Hartford Fire Insurance. The settlement of I.T.T.’s legal troubles happened in 1971. At nearly the same time, I.T.T. pledged $400,000 for the 1972 Republican National Convention to be held in San Diego. ($400,000 would be roughly equivalent to $2 million today.)

President Nixon’s White House tapes showed that Nixon personally intervened in the I.T.T. settlement with the DOJ. As reported by Richard Reeves’s 2001 book, “President Nixon: Alone in the White House,” the White House tapes picked up the following:

President Nixon speaking to Deputy Attorney General Richard G. Kleindienst said, “The I.T.T. thing — stay the hell out of it. Is that clear? That’s an order ... I do not want McLaren to run around prosecuting people, raising hell about conglomerates, stirring things up.”

Mr. Kleindienst’s response was “Yeah, I understand that.”

Kleindienst was later tapped to be the Attorney General. In his Senate confirmation hearing he was asked whether the White House had interfered in the I.T.T. matter. He said no. When the truth came out with the Watergate tapes, Kleindienst pleaded guilty on May 16, 1974, to a charge of failing to give accurate testimony at his 1972 confirmation hearings regarding White House influence on the anti-trust suit. 

But, back to that pledge of $400,000 for the RNC’s 1972 convention. On February 29, 1972, syndicated columnist Jack Anderson reported on an inter-office memo from an I.T.T. lobbyist, Dita Beard, which indicated that the $400,000 pledge for the RNC convention was in exchange for the DOJ’s anti-trust settlement. The memo ended “please destroy this, huh?” A young Brit Hume confirmed its authenticity with Beard.

After the memo hit the press, I.T.T. shrunk its pledge from $400,000 to a more modest $25,000 and the RNC decided to move the convention from San Diego to Miami. Nixon tapes later revealed that the president personally asked for the venue change to avoid further scandal over I.T.T.’s original pledge and all of the questions it would raise. I.T.T. was never charged criminally for the pledge, perhaps because they went on a document shredding binge once the Beard memo leaked.

This whole I.T.T. affair raised serious rule of law issues since it involved the President of the United States meddling with an open court case. This sordid episode is why we have the Tunney Act of 1974, which requires anti-trust settlements go before a judge instead of being settled by the DOJ alone. That part of the law is not going anywhere, but the campaign finance protections that were also passed in the wake of Watergate are crumbling like a sand castle, including public funding for conventions.

The end of public funding means that more private money will be needed to host a political convention for the two major political parties. That is not a positive development; rather, it is an invitation for mischief. Maybe this time the impetus won’t be an anti-trust settlement. But there are lots of goodies the federal government can dole out to a generous convention sponsor: off-shore drilling rights for oil companies, broadcasting spectrum for media companies, deferred prosecutions for — well, that’s a one-size-fits-all gift for any company with pending legal issues. 

(Photo: nixonlibrary.gov)

The views expressed are the author's own and not necessarily those of the Brennan Center for Justice.