Stans: He Fixed the Books

September 25, 2007

A look at Maurice Stans is important not because he is a particularly unique individual possessing rare quaalities - there are probably hundreds of men in both the Republic and Democratic parties able and willing to perform the Watergate tasks he carried out. Rather, a study of Stans and the institutions he belongs to will help us understand how the U.S. corporate/political system works. Stans' particular political role over the last years has been raising money for Republican campaigns. As head of the 1972 campaign to Re-Elect the President (CREEP), he was the architect of the most successful ($60 million) and illegal presidential fund raising campaign in U.S. history. A study of Stans must include a look at the institutions he is tied to, for they are the power vehicles through which he works and which provide him access to a wide network of influential and wealthy contacts in the corporate and govern- ment worlds. These institutions - in addition to the Commerce Department, which he headed from 1969 to 1972 - include CREEP and the various corporations and banks to which Stans has been related. As with the other principal figures in the Watergate con- spiracy, Stans was no novice at his job, which involved soliciting and collecting donations, manipulating the books and concealing the identity of the donors. In the 1950s he had won several awards for being the nation's top accountant, based on his performance as Eisenhower's Budget Director (1958-61), and earlier as a senior partner in one of the nation's largest accounting firms - Alexander Grant & Co. of Chicago. Ironically, in 1960 Stans was elected to the American Ac- counting Hall of Fame. Yet today this is tie same Stans who claims to have "lost track" of over $10 million in campaign contributions and who is under indictment for his role in the Vesco affair. Stans' Watergate Role The bill of particulars against Stans which has emerged from the Watergate investigations to date includes the following: 1. Stans was one of the links in the "laundering" of dollars that found its way into the Nixon political war chests. To cite the best documented example: the $89,000 that started in the hands of Midwest soybean king Dwayne Andreas was chan- neled to Gulf Resources & Chemical Chairman Robert Allen in Texas, then to shady lawyer Manuel Ogarrio in Mexico City, to Stans in Washington, and finally to the Miami bank account of former CIA agent Bernard Barker - one of the Republican spies caught breaking into the Watergate Democratic Party office. 2. Stans kept a secret safe in his CREEP office containing $350,000; this money was utilized by Bernard Barker to finance various missions against Nixon opponents. 3. Stans bribed G. Bradford Cook at the time the latter was Chief Counsel to the Securities & Exchange Commission's Investigative Unit. While goose hunting in Texas, Stans told Cook that if Cook would halt an SEC investigation into Robert Vesco's business affairs, Stans would "put in the good word" to Nixon for Cook to receive the position he wanted: the SEC Chairmanship. Nixon eventually named Cook SEC Chairman, but he had to resign in the wake of the Vesco-Stans- Mitchell indictments. Vesco illegally dumped over $200,000 into the Nixon campaign coffers in the hope the investigations into his financial affairs would cease. As a result, two former members of Nixon's "law and order" Cabinet, Stans and Attorney General John Mitchell, were indicted for perjury, conspiracy, and the obstruction of justice. (Their trial starts in January 1974.) 4. Stans ordered CREEP Treasurer Hugh Sloan, and Herbert Kalmbach, head of CREEP-West, to destroy all rec- ords of incoming contributions. This was a blatant attempt to hide the identities of all Nixon donors both before and after the April 7, 1972 deadline requiring disclosure of all donations. 5. Stans utilized numerous ploys in amassing $60 million for the Nixon re-election campaign - the largest amount ever raised for a U'S. political race. His tricks included the estab- lishment of hundreds of "dummy" committees, including such gems as "Active Friends of a Balanced Society" and "The Committee for the Preservation of the American Dream," whereby a donor could circumvent the required gift tax on contributions of $3,000 or more.22 V't be recouped because it didn't go to ething like the Committee to Re-elect President. It went direct." -Employee of Associated Milk Producers, Inc. discussing possibility of retrieving a milk lobby contribution to Nixon campaign. (New York Times, November 11, 1973.) aer CIA Director and now an I.T.T. director), (Kaiser Industries), Stephen Bechtel (Bechtel and George Ducommun (Ducommun Engines). rs of the Firestone family - Leonard, Harvey, ve a total of $211,000 to Nixon's campaign in Levy: His position in one of Wall Street's most sh banking houses - Goldman Sachs - affords ange of corporate and financial contacts. He is a or not only to individuals such as Ambassador berg (who entrusted his millions to Levy when hd him Ambassahdor to Great Rritain' but also to CREEP's Untold Story: The Real Criminals While Liddy, Magruder, Sloan and various other underlings and small-time operatives face jail sentences, the rulers of the Republican Party go free: men like Leonard Firestone, Thomas Pappas, Gustav Levy, Harold Helm, and the other members of CREEP's Finance Committee (see below). For years these men have pumped millions into the GOP's political war chests. The multinational corporations and banks headed by .these men and their associates are among the chief beneficiaries of U.S. government policies: subsidies, quotas, contracts, depletion allowances, loans, at home, and the creation and support of repressive governments abroad to maintain "favorable investment climates." The men listed below, all members of CREEP's Finance Committee under Stans' command, would certainly qualify as the real criminals in Watergate. Thomas A. Pappas: This key supporter of the fascist Greek junta is reportedly worth $200 million and has long been a GOP fundraiser. Pappas was one of Eisenhower's fundraisers in 1956, and nominated fellow Greek-American Spiro Agnew for the vice-presidency in Miami in 1968, and is reported to have made twelve CREEP trips to Greece during the 1972 cam- paign, returning with hundreds of thousands in cash for the Nixon cause.' In addition, he chipped in $71,000 of his own. Pappas is a leading investor in Greece through his large stake in Coca-Cola Bottling of Greece and was instrumental in bringing Standard Oil (N.J.) to Greece in 1962. His other large holding is the giant Hellenic Steel Corp. Pappas has proudly admitted to collaborating with the CIA, and has gladly loaned his three foundations as CIA conduits for secretly funding cultural and educational institutions abroad, particularly in Latin America. 2 Leonard K. Firestone: One of 26 trustees of the Richard M. Nixon Foundation, Firestone runs the giant Firestone Tire & Rubber empire, the 34th largest U.S. industrial company. Firestone has been a director of the Wells Fargo Bank and Western Airlines. To understand his vast contacts among the wealthy and powerful, look at the men with whom he shares a campsite at the exclusive Bohemian Club of California: John governments, including Panama. 3 Goldman Sachs partners often sit on the boards of the corporations they help finance; hence Levy's directorships include Hunt Foods, Braniff Airlines, Ling-Temco-Vought, Keebler, and Deltec Panamerica. Like all wise bankers, Levy has contacts with both the Democratic as well as the Republic party. One of his recently recruited partners is former Secretary of the Treasury under President Johnson - Henry Fowler. Levy gave $70,000 to Nixon's 1972 campaign. Daniel Hofgren: At age 33, he is the second Goldman Sachs partner to turn-up on the CREEP Finance Committee. Hofgren's recent biography helps illustrate how the corporate sector interacts with the government: In 1969, Nixon ap- pointed Hofgren a Special Aide in charge of securities industry matters at the White House. In the spring of 1970, Nixon sent Hofgren to Panama as special U.S. representative for inter- oceanic canal negotiations. While negotiating the U.S. position in Panama, Hofgren was still a White House aide on securities matters and was a member of Charles Colson's three man staff. (See article on Colson in this issue.) In the fall of 1970, Hofgren resigned his White House post and became a vice- president of Goldman Sachs, the financial advisor to the Panamanian government. Hofgren left Goldman Sachs in 1972 to join the CREEP Finance Committee. It was Hofgren who "just happened to run into" a key Vesco aide in Europe while on a plane and solicited the now infamous $200,000 Vesco contribution. 4 Hofgren and Levy were among five Goldman Sachs partners that contributed heavily to Nixon's 1972 campaign. Harold Helm: One of the most important bankers in the nation, Helm is the chairman of the Rockefeller-affiliated Chemical Bank of New York. A heavy contributor to GOP causes, he is a director of several multinational corporations including Bethlehem Steel, Ralston Purina, Commins Engine, Western Electric, Corn Products Company, Uniroyal, F.W. Woolworth, and Colgate Palmolive. * * * * * Many observers of the U.S. political scene have wondered about Nixon's so-called uncanny ability to "bounce back"23 from political crises. The main reason a man like Nixon is able to "bounce back" is that powerful elements of the U.S. ruling class have stuck with him. It is not difficult to see how Nixon has made a "comeback" after defeats in 1960 to Kennedy, and in the 1962 California gubernatorial race, when we see that the resources of men such as these are at his disposal. And Stans' job was to coordinate their efforts in raising the funds for the 1972 presidential extravaganza. Fundraiser and Corporate Man Stans has been the GOP's leading fundraiser since 1962. According to Republican insiders, Maurice Stans was one of four Republicans to establish the Nixon for President Committee in 1967. The other key individuals were: Robert C. Hill, former director of the United Fruit Company, and one of the engineers of the overthrow of the Arbenz government in Guatemala in 1954, as well as Eisenhower's Ambassador to Mexico; John Davis Lodge, Eisenhower's Ambassador to Spain and former Governor of Connecticut; and Fred Seaton, Eisenhower's Secretary of the Interior and GOP Senator from Nebraska.s To be a successful political fundraiser for a major U.S. party, one must have direct ties to the powerful business interests that finance the electoral campaigns. Maurice Stans had those ties. He has been the president of a major western bank (Western Bancorporation), the head of a New York investment banking house (Glore Forgan), a director of six corporations in five different states, and was a senior partner in one of the nation's leading accounting firms in Chicago. These positions, combined with his government service as Eisenhower's Budget Director and Nixon's Commerce Secre- tary, qualified Stans to be the GOP's leading fundraiser. The following is a profile of Stans' corporate past, with summaries of the main institutions with which he has been affiliated. Glore Forgan-Staats: Stans' most important corporate affili- ation was his presidency of this New York-based investment banking house from 1965 until he assumed the Commerce Post under Nixon in 1969. Now part of DuPont Walston, Glore Forgan was formed after a merger in 1965 between the Los Angeles firm of William R. Staats and Glore Forgan in 1965. An investment banking house, like a law firm, is one of the less visible mechanisms in the overall capitalist structure. It is a strategic link between those who need capital (corpo- rations) and those than can provide it (e.g., banks). Investment banks raise money for corporations by underwriting and selling issues of stocks, bonds and other corporate securities. Investment banking houses also act as financial advisors to corporations and coordinate mergers and acquisitions. Stans' CIA Friends at Glore Forgan The Forgan in Glore Forgan's name is James Russell Forgan, one of the original partners. His activities help illus- trate how an investment bank is much more than a mere financing institution and is actually a coordinating center for implementing the political and economic objectives of the bourgeois interest groups. During the latter years of World War II, Forgan was a commander of European operations for the OSS, the predecessor of the CIA. When he stepped down in 1946, he recommended that his close friend, Allen Dulles, take over his post, thus providing Dulles with a key stepping-stone to his eventual Directorship of the CIA (1953-61).' Forgan had close ties to European capital. His board position on a large Italian corporation, "Italian Superpower," for example, was of use when the OSS was attempting to protect the company from Nazi saboteurs retreating from Italy. After the war, he and his firm founded the Eurofund, the first invest- ment fund of its kind, to buy-up holdings in European companies. The directors of the fund were such powerful men as Philip Reed, Chairman of General Electric; Bankers Trust Chairman S. Sloan Colt; mining magnate and apartheid sup- porter Charles Englehard (the original "Goldfinger"); and former Assistant Director of the CIA Kingman Douglas. Another Glore Forgan partner with extensive CIA ties was William Jackson. Before joining Glore Forgan in 1953, Jackson had served on the commission that drew up the plans for the formation of the CIA in 1947, had been a Deputy Director of the CIA and a member of Eisenhower's committee charting the psychological warfare strategy and covert operations for the Cold War. Also a director of Bankers Trust and the Great Northern Railroad, Jackson was partner in one of Wall Street's most important law firms - Carter, Ledyard & Milburn. Stans' other partners at Glore Forgan included Richard Millar, a director of Northrop Aircraft (a major client of Herbert Kalmbach's west coast law firm), and Charles Hodge, Glore Forgan's key intermediary to the Penn Central Railroad. Besides hauling in a fortune from the business the Penn Central's subsidiaries provided for Glore Forgan (as we shall see in the Penn Central section), Glore Forgan's major clients, in addition to various Penn Central subsidiaries, included: Wynn Oil, Commonwealth Edison, Universal Oil, and the Interstate United Corporation. Fluor Corp. is "one of the two or three leading refinery engineering and construction firms in the country.- Stans was a Fluor director from 1963-69. J. Robert Fluor, president of the company, was the 1964 Los Angeles County Republican Finance Chairman and now heads the powerful Lincoln Club. The Lincoln Club is a right-wing Southern California power base located in Newport Beach, hometown of one of its leading members - Herbert Kalmbach (see Kalmbach article). Fluor has long been a supporter of the GOP's right-wing and gave at least $30,000 illegally to the 1964 Goldwater campaign, a contribution Stans most likely arranged." Another Fluor director, Thomas Pike, a former Assistant Secretary of Defense under Eisenhower, was one of Stans' CREEP-West lieutenants. Fluor directors also sit on the major California firms: Crown Zellerbach, Wells Fargo Bank, Hewlett-Packard, and the United Financial Corp. of California. Ogleboy Norton Corp.: Stans was also a director of this large midwest corporation tied into the strategic iron and steel industries. His fellow board members included such Cleveland powers as George Karch of Cleveland Trust and Firestone Tire & Rubber, and Courtney Burton, former head of the Ohio Republican Finance Committee and who in the 1940s was an Assistant Coordinator for Inter-American affairs under Nelson Rockefeller. Western Bancorporation: After leaving his post as Budget Director under Eisenhower in 1961, Stans became the head of the Los Angeles-based Western Bancorp., a holding company for 24 banks in 11 western states. Among its holdings is the large United California Bank. During Stans' presidency at Western Bancorp (1961-63), the board included John McCone, past CIA Director, I.T.T. board member, and Standard Oil of California director; and Sherman Hazeltine, Nixon's former law partner in the Los Angeles firm of Adams, Duque & Hazeltine. Thus Stans came to CREEP's Finance Committee with close ties to New York, Midwestern, and Southern California interests in particular; and to U.S. big business and financial24 groups in general - contacts that were to prove highly useful in his fundraising efforts. However, his job was not just one of collecting funds from willing donors, but also included squeezing funds from reluctant donors. For example, while Commerce Secretary, Stans would approach potential donors threatening that if they did not contribute the desired sum, he would initiate unfavorable pollution action against their corpo- rations. He would take this action, he said, through the Pollution Council he helped establish at the Commerce Department. The scope of Stans' fundraising operations while he was still Nixon's Secretary of Commerce was revealed recently by two oil company executives. They told the Senate Watergate committee that a contribution of $100,000 each was expected from all large corporations. Though corporate contributions to national political campaigns are illegal, Gulf Oil executive Claude Wild, Jr. told the committee the practice is not unusual. He said that in his post as vice president for governmental affairs he had also given in previous campaigns to Democrats but observed, "the Republicans always cost you twice as much as the Democrats." 1 0 Watergate and the Wreck of the Penn Central We have seen that Stans' CREEP Finance Committee played a key role in one of the nation's most notorious political events: the Watergate conspiracy. What is less well known is how his investment bank, Glore Forgan, played a major role in one of the nation's most significant economic events: the June 1970 collapse of the Penn Central Railroad - the 6th largest U.S. corporation. The wreck of the giant firm was the largest bankruptcy in U.S. history. Since various financial institutions played major roles in the event, the House Banking & Currency Committee initiated hearings to investigate the causes. 1 1 By 1962, the railroad industry was weakening as a result of the nation's increasing dependency on trucking and air freight. 1 2 At that time, in an effort to achieve greater financial stability, the Penn Central decided to diversify its holdings by investing in non-rail corporations. Subsequently, the Penn Central bought into or acquired the following firms: Great Southwest Corp,'" Tropical Gas Corp.,' 4 Arvida Corp, and the Kaneb Pipeline Company. Glore Forgan played a key role in this drama as the Penn Central's chief investment advisor - the result of a close friendship between Glore Forgan partner Charles Hodge and Penn Central Chief David Bevan. Hodge and Bevan initiated part of the diversification pro- gram in 1962 by establishing an investment firm called Penphil. Penphil, according to the House Banking Committee, was one of the primary culprits in the wreck of the rail firm. An example of how the Penn Central was "looted" is provided by Penphil's investment in Executive Jet Aviation. Hodge and Bevan dumped $21 million of the railroad's money into the firm - money that was supposed to be utilized by the railroad for its own growth, not for jet planes. Even though the investment proved a severe loss for the Penn Central, Stans' Glore Forgan made a fortune off of the Executive Jet Aviation transactions. The Senate Commerce Committee, which also conducted investigations into the bankruptcy, charged that Penn Central's investment bankers (Glore Forgan), in collusion with top directors and officers, must also share in the responsibility's Glore Forgan and Hodge had several different links to the Penn Central: (1) Principal investment advisor to Penn Central; (2) investment advisor to and broker for the Penn Central o,25 Supplemental Pension Fund and the Contingent Compen- sation Fund; (3) investment banker for three Penn Central subsidiaries: Tropical Gas, Great Southwest, and Kaneb Pipeline; (4) director of Great Southwest, Arvida, and Tropical Gas; (5) holder of investments in the above corporations. As House Banking Committee Chairman Wright Patman pointed out, How could Charles Hodge give sound, objective investment advice to Glore Forgan clients con- cerning their investments while being so personally involved in the management and control of these significant corporations? Similar questions can be raised for other people involved with the Penphil- Penn Central-Glore Forgan complex. 1 6 Stans also profited nicely from Glore Forgan's relationship with the Penn Central. As a finders' fee for helping the Penn Central buy into Great Southwest, Stans and several other Glore Forgan partners each received 38,000 shares of Great Southwest (a real estate firm) stock. Before taking office as Secretary of Commerce, Stans' shares in the Great Southwest were worth more than $500,000. However, like all Cabinet officers, Stans pledged to place the holdings in a "blind trust" while he served as Commerce Secretary. When the Penn Central went bankrupt, the Nixon admini- stration's highest aides, including Stans, began discussing whether to bail out the firm with government loans. It was disclosed during this time that Stans had failed to report his Great Southwest holdings at the time of his confirmation as Commerce Secretary. In short, Stans was involved in dis- cussions about how to save the parent company of a corpora- tion in which he held a large interest. In an obvious admission as to how "blind" his trust was, Stans disqualified himself from later meetings, saying his presence raised too many questions about possible conflicts of interest! Workers Hit Hard By Boss' Greed Who suffered from the wreck of the Penn Central? Not Glore Forgan. Rather it was the workers, on the other hand, who suffered the most as a result of these men's greed and mismanagement. Thousands of Penn Central workers were laid off, and 7,000 workers who were investing their savings in the company's stock took heavy losses. Ironically, it was the workers who had unknowingly pro- vided Hodge and Bevan with part of the capital they used to loot the Penn Central - and the workers' pockets. Stu Bishop Footnotes 1. Pan Hellenic Liberation Newsletter, June 1973. 2. Andreas Papandreau, "Greece: Neocolonialism and Revolution," Monthly Review, Dec. 1972. See also "Agnew's Junta Ties Disturb NATO," The Washington Merry-Go-Round, Washington Post, Nov. 1, 1968; and "A Bostonian Pappas Means ESSO in Greece," New York Times, May 4, 1969. 3. "The Honorable Mr.- Annenberg," Parade Magazine, Washington Post, August 16, 1970. Annenberg's late father, Moe, was a famous bootlegger of the Prohibition Era. Walter heads Triangle Publications, publisher of Seventeen and TV Guide. Annenberg held 180,000 shares of Penn Central stock that he unloaded when he saw the firm was in trouble. See New York Times, October 11, 1970 for an advertisement about Goldman Sachs being financial advisor to Panama. 4. New York Times, March 2, 1973. 5. Stephen Hess and David Broder, The Republican Estab- lishment, (New York, Harper & Row, 1967), pp. 185-86. 6. See R. Harris Smith, OSS: The Secret History of America's First Intelligence Agency, U. of California Press, 1972, p. 116. According to Smith, Forgan was the son of the director of "Italian Superpower." Smith is mistaken. It was not Forgan's father but Forgan himself who was the director. 7. See "Fluor Flourisheth," Forbes November 1, 1973. The article details how Fluor will make a mint off of the energy crisis because "The U.S. may not know where its next barrel of oil is coming from, but one thing is certain: without refineries, the oil won't be of much use." 8. Morton Mintz and Jerry Cohen, America Inc. (N.Y., Dell, 1971), pp. 211-212. 9. Jerry Vorhees, The Strange Case of Richard Milhous Nixon, Paul S. Erikson, N.Y., 1972, pp. 112ff. 10. The New York Times, November 15, 1973. 11. The Penn Central Failure and the Role of Financial Institutions, Staff Report of the House Banking & Currency Committee, U.S. Government Printing Office, Washington, D.C., February, 1971. 12. See, for example, the New York Times, February 11, 1973. 13. Great Southwest Corp. has long been identified as a key firm in the financial nexus surrounding the persons thought to have really assassinated John Kennedy. See Peter Dale Scott, "From Dallas to Watergate: The Longest Cover-Up," Ramparts, November 1973. 14. Tropical Gas Corp. was originally formed in 1954 to acquire the liquid propane gas business of ESSO-Standard Oil in Cuba, and today operates in Central America, the Caribbean, and Venezuela. The firm had three Glore Forgan partners on the board at the time of the wreck of the Penn Central, including Alfonso Manero of Mexico. 15. Mary Oppenheimer and Robert Fitch, "Who Rules the Corporations?," Part 2, Socialist Revolution, September- October 1970, p. 111. 16. Staff Report of House Banking & Currency Committee, op. cit., Part 3, "Penphil: The Misuse of Corporate Power" (Note 10). STANS FOUNDATION IN THAILAND The Stans Foundation, incorporated in Illinois in 1945, is a tax haven for Maurice Stans' accumulated wealth and also serves as an investment vehicle. One of the more interesting Stans Foundation investments was in Thai In- dustrial Estates, a partnership formed in 1968 to develop real estate in Thailand. In addition to the Foundation, the partners were Glore Forgan Staats, the New York invest- ment bank headed by Stans at the time, and Stans' close friend Henry Kearns. Kearns has had a long association with the GOP's right wing and accompanied Nixon on business trips to the Far East in the mid-1960s. A former member of the Hoover Commission's Task Force on Intelligence Activities, Kearns is a director of Firestone Tire & Rubber of Thailand and was Ass't. Secretary of Commerce for International Affairs under Eisenhower. Nixon subsequently appointed Kearns to head the Export- Import Bank. Eventually the partnership was dissolved and the Stans Foundation was paid off in shares of Siam Kraft Paper Company, a firm Kearns had set up in Thailand with the help of a $14 million loan from the Export-Import Bank. For Stans the disclosures of this investment were particularly embarrassing since he was Secretary of Commerce at the time and the transactions involved an agency of the U.S. government - the Export-Import Bank. (Source: New York Times, December 13, 1971)

Tags: Maurice Stans, Richard Nixon, Watergate, accounting, corporatism

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