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

The end of public funding for political conventions means more private money will be needed to host political conventions. That is not a positive development; rather, it is an invitation for mischief.

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.