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December 12, 2016
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October 2, 2001
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March 27, 1972
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25 pprove or a ease /1 SSSNGTON POST /01 M'A1DP74B00415R000300020010-2 Chile CapAi A 'Good Corporate Citizen' Or Economic Imperialist? By Stanley Karnow Washington Poet Staff Writer The standard leftist stereotype of the multi-national U.S. company engaged in aggressive economic "imperial- ism" abroad has always seemed fanciful or, at best, ana- chronistic. But judging from a collection of secret docu- ments that surfaced last week, the International Telephone, and Telegraph Corp. in fact fits Lhat image as it sought to control events in Chile nearly two years ago. The documents, acquired by columnist Jack Anderson and made available to the press, comprise 26 confidential .ITT memoranda describing the firm's efforts to block the inauguration in late 1970 of Chilean President Salvador Allende Gossens, an avowed Marxist who pledged to na- tionalize U.S. holdings in his country. . Anderson claims that he obtained copies of the docu- ments even though ITT's Washington office destroyed many of its files. ' The memoranda show that ITT operatives in South America as well as corporation executives in Washington and New York considered tactics for promoting and financ- ing a right-wing military coup d'etat aimed at ousting Allende. This plan, the papers reveal, was recommended to a senior ITT representative by a high-ranking member of the U.S. Central Intelligence Agency in charge of clan- destine operations in Latin America. The corporation also tried to enlist the support of top American officials, among them President Nixon's na- tional security adviser, Henry A. Kissinger, Assistant Sec- retary of State for Inter- American Affairs Charles A. Meyer, and Edward M. Korry, then the U.S. " Am- bassador to Chile. Neither Kissinger nor Korry has commented on the affair. In an interview with The Washington Post, Meyer said that he had talked with ITT representa- tives in the past but the company's activities "were .unknown to me." Speaking to a closed ses- sion of the Senate Foreign Relations Committee on Wednesday, Secretary of State William P. Rogers de- nied that ITT maneuvers hid influenced administra- -ti,,, attitudes toward Chile. The administration had not acted in a "wrongful man- ner" in Chile, Rogers said. make clear that the compa- ny's ? attempts to mobilize the administration against Allende were a failure. This failure is reflected in bitterly critical evaluations by ITT executives of Meyer and Korry for their refusal to cooperate with the corpora- tion's efforts to intervene in the Chilean political situa- tion. The Senate Foreign Rela- tions Committee has never- theless decided on a de- tailed investigation into the involvements of American corporations abroad. Ascer- taining the extent to which 1TT's alleged political mach- inations are typical of U.S. corporate practices abroad would be a prime objective of the ivestigation. Better Coordinated In the opinion of Prof. Louis Wells, a Harvard Busi- ness School specialist on in- ternational corporations, ITT is an exceptional, rather than typical, example of the global U.S. conglomerate. - According to Wells, most American firms operating abroad are so diversified geographically that their ac- tivities are not highly organ- ized. They try to sway local U.S. diplomatic officials, C.*ells suggests, but they generally function by "rule of thumb" without central direction. What makes ITT different from most U.S. companies, Wells says, is that it has "long experience and heavy commitment overseas," and is thus "possibly better coor- dinated" to engage in organ- ized political activities abroad. With worldwide assets of $6.6 billion. ITT ranks eighth in Fortune magazine's list of major U.S. industrial giants. Its subsidiaries include such companies as the Sheraton hotel chain and a number of foreign firms. Its holdings in Chile consisted of six af- filiates employing about 8,000 workers. The largest of these, the Chile Telephone Co., began operating in 1930 under a 50-year concession. The Chi- lean government took it over in September 1970 and "ITT has been and con- tinues to be - a good corporate citizen in Chile as well as in all other countries where it has operations." The ITT documents indi- cate, however, that the con- glomerate's executives were extremely upset by the Al lende election even to the point of planning extraor. dinary measures. voncedes Defeat A well-to-do doctor in his early 60s, Allende pledged during his campaign to suc- ceed President Eduardo Frei that he would nationalize most U.S. companies in Chile. In addition to ITT's holdings, these included American copper interests valued a $300 million, as well as banks and other business. Allende won a plurality In the election held on Sept. 4, 1970. He then faced a run-off in the Chilean Congress against his two main foes, conservative Jorge Alessan- dri and Christian Democrat Radomiro Tomic. Under Chi- lean law, Frei was barred from succeeding himself. As the Anderson docu- mehts illustrate, it was dur- ing the period between the Sept. 5 election and the run-off on Oct. 24 that ITT was most active in its ef- forts to prevent Allende from taking office. By the time of Allende's inaugura- tion on Nov. 4, the corpora- tion had virtually conceded defeat. Chronologically arranged, the available documents present the following pic- ture of ITT's endeavors to bring its weight to bear on the Chilean situation. In a memorandum sent on Sept. 14, 1970, to William R. Merriam, vice-president in charge of ITT's Washington office, a corporation opera- tive by the name of J. D. Neal reported on a conversa- tion he had the previous Friday with Viron Vaky, a Latin American expert on Kirsinger's staff. Vaky now teaches at Georgetown Uni- versity. Neal. said that he told Vaky of the "deep concern" of H a r o l d S. Geneen, president and board chair- man of ITT, with the Chil- ean situation "not only from the standpoint of our heavy investment but also because of the threat to the entire hemisphere." Approvetc~ ,gr1lt I% 0O1k9s'b/Oy "MRAIM000300020010-2 man ' Charles Bray further ITT, which valued the firm underlined Rogers' state- at $153 million, is ncgotiat- ment on Thursday, saying ing for compensation of $108 that, "any ideas of thwarting million, its 70 per cent own- the Chilean constitutional ership share. The corpora- processes following the elec- Lion still runs two Sheraton tion of 1970 were firmly re- hotels and a telecommuni- jected by the administra- cations company in Chile. Financial Aid p Pja loved For P le a 9nnl8-7 / 11/OUi s6JA?EZDR7s4aWAl&RgQQ 0 2 The ITT operative, aEC ans have c~Con~ ga6c~ -Chile the ITT memo as~tQe must. be ing to the memorandum, in screwing-up their own brought to bear on Frei so further told Vaky that he dessert' serted that Allende was that he'll respond. was aware -of..a plan ad- Evidently undaunted by being directed by the Chi- "Matte did not mention vanced by Edward M. Kor- this lack of cooperation, lean Communist Party money or any other needs. ry, the U.S. Ambassador in Neal reported that he went whose "strategy is coordi- At the end, when it was Chile. Under this plan, to a wedding reception at nated" by the Soviet Union. mentioned that we were, as moves would be made to the Korean Embassy that The report also forecast that always, ready to contribute help Alessandri win the evening in hopes of button- "some degree of bloodshed with what was necessary, he run-off in Congress so that holing Secretary of State seem inevitable" ifs the said we would be advised." he would resign in favor of Rogers or Under Secretary "Alessandri Formula" fa- In a final section of the. Frei. Neal also referred U. Alexis Johnson. vored by ITT succeeded. to "rumors of moves by the Neither man was there, In the event of violence, meremorandum, esentatives o the f f e two r e ITT T Chilean military." but Neal ran into then At- the two ITT operatives pr d When Vaky replied that torney General John N. wrote, the Chilean army and some recommendations for the Chilean situation -was a Mitchell and mentioned the national police "have the actions "apart from direct "real tough one" for the Chilean problem to him. capability."' Moreover, they assistance" that could be un- United States, the memoran- Mitchell answered that he added, "we know that the dertaken to fight Allende. dum states, Neal voiced the had recently seen Geneen army has been assured full Among other things, they hope that the White House, and could "understand" his material and financial assist- proposed that ITT and other the State Department and concern over ITT's invest- ance by the U.S. military es- U.S. corporations in Chile other executive branches ments in Chile. According to tablishment," "pump some advertising" would "take a neutral posi- the memo Mitchell said Frei Was Key into a chain of newspapers tion or not discourage" at- nothing more on the sub- opposed to Allende, "help This estimate of the Chi- with getting some propa- tempts to "save the situa- jest. lean army, the memoran- gandists working again on tion." A memorandum on Sept. dum said, conflicted with- radio and television" and Neal then asked Vaky to 17 e Presdeto E. Gerrity Korry's opinion of the coun- "bring what pressure we signed by two J. ITT of senior Gr the try's forces as a "bunch of can" on the U.S. Informa- ident Geneen Kissinger that was sITT willing to was Vice President come soldiers." The ITT docu- tion Service to distribute comome to Washington to dis- corporation's field ld opera- cuss the corporation's inter- tives-Robert Berrellez, a ment nevertheless gave anti-Allende e d i t o r i a 1 s est, adding that are pre- long-time Associated Press Korry litical high conduct, marks for his po- throughout Latin America pared to assist financially in reporter in Latin America and Europe. sums up to seven figures." now based in Buenos Aires On the one hand, it re- On Sept. 21, Washington. It is not clear from the for the company, and Hal ported, Korry was keeping operative Neal sent a brief memorandum whether this Hendrix, a former Scripps- up the pressure on the re- luctant Frei to engage him- memorandum to ITT Vice- offer of million dollar assist- Howard correspondent in self "to the point of telling President Merriam praising once refers to an input into the area who currently oiler- him to 'put his pants on'." the report by Berrellez and the Chilean situation or rep- rtes for ITT out of New Hendrix, and added a few resents a domestic political York and Miami. Calculating that the anti- remarks. Neal reported hav- contribution. `Big Push' Allende effort "more than ing advised John Fisher, Neal went on to advise Stamped "Personal and likely will require some out- then head of a State Depart- Vaky that ITT has long Confidential," the document side financial support," Ber- ment office formerly called "feared the Allende victory" rellez and Hendrix reported, the Bureau of Andean and and had been "trying unsuc- Washington bears a notation by ITT 's ++IVe have pledged our sup- Washington Vice President port if needed." Pacific Affairs, that -'we are cessfully to get other Ameri- Merriam: "This should be ready to see anyone or do can companies aroused over tightly held." The two ITT operatives anything possible." the fate of their invest- The eight-page memoran- also reported in the memo' According to Neal, Fisher ments, and join us in pre- dum reported that Ambassa- on a meeting they had with replied that he "understood election, efforts." dor Korry had on Sept. 15 one Arturo Matte, a figure our concern." According to the docu- "received a message from whose advice they presuma- The nett day, ITT Vice- ment, Vaky promised to State Department giving bly considered important. President Gerrity sent a pass Neal's message along to him the green light to move Matte told them, they said, short cable to o ityneen, the Kissinger and "offered to in the name of President that the Chilean armed company cable president, a who was keep us informed." Nixon." The ITT memoran- forces commander Rene Told Mitchell dum said that the message Schneider was "fully aware" apparently in Europe at the The following day, Neal gave iiorry "maximum au- of the danger from Allende time. The cable suggested reported in the same memo thority to do all possible- but hesitant to act, that the "strategy" recom- he telephoned Assistant Sec- short of a Dominican Repub- But retired general Rob- mended in the memoran- retary of State Charles A. _ lie-type action-to keep Al- erto Viaux, they went on, "is dum by Berrellez and Hen- Meyer, referring to him as lende from taking power." all gung-ho about moving drix "is they best course to "Chuck," a nickname Meyer Precisely what Korry had immediately." Schneider, be followed. detests. Here again, Neal ap- been instructed to do is not however, had threatened. to More mysteriously, the parently got a brush-off. clear from the memo. Its have Viaux shot "if he message said that Merriam As his report to Merriam context suggests, however, moves unilaterally." reviewed the actions being discloses, Meyer - tactfully that a "big push" was under According t^ Berrellez taken that day "with the advised him that the State way to persuade the Chilean and Hendrix, Matte empha?.man you introduced him Departm was "watching Congress to select Alessan- sized that Frei was the key, some months ago." The man,, the situation as closely as dri, who would then resign but that he would not budge cited only as Merriam's possible" and was awaiting to permit Eduardo Frei to unless he was confronted by "contact," was reported as the outcome of the run-off run in a new election, Or as "a constitutional threat." having suggested that "all in the Chilean Congress. the memorandum put it: Concluding the report on possible pressures be ex- - Neal said er told him "At this stage the key to their talk with Matte, the erted." that the Chileans them- whether we have a solution two ITT operatives wrote: On Sept. 29, Gerrity sent selves "are becoming quite concerned" and that `even or a 'disaster is Frei-and' Bring Pressure a longer telex message to the labor unions see a disad- how much pressure the U.S. ?That threat must be pro- Geneen, who was still in Eu- , ? and the anti-Communists vided one way or another rope. Gerrity reported that vantage in Allende. Accord- movement ing to Neal, Meyer in Chile can he had been visited by the further throu h rovocation. At the vidual the re- said that ""this i~pprvech Repe''1 arAel%i4~~t9tll~tlt~0(011 problem" and that the Chile- Approvecjo6lgrdRd@aMthVklAlwlt'he?Ico13Por7045n g ~ memo @OO UOO2eOf~Sid, that he ferred to in his Sept. 2Z are making progress , cable. The indidivual was Hobbing, a former 'Life `plainly known to Geneen, editor who has worked inter- because Gerrity described mittently for the CIA for him as "the man you met years, transmitted this coun- with Merriam some weeks gel to Jack Guilfoyle, an ITT ago." employee in Washington. This anonymous "repre- "This is in direct contrast to sentative," . as Gerrity what Broe recommended," 9:ermed him, put forth a plan wrote Gerrity. that would cripple the Chi- In Latin America, mean- lean economy, ignite social while, ITT's operatives were unrest and 'hand the army apparently becoming in- Ahe pretext to take over. creasingly worried that Stating that he did "not nec- nothing was being done in essarily agree" with the Chile to stop Allende from project, Gerrity outlined it winning the endorsement of for Geneen. the Chilean Congress on Among other points, the Oct. 24. This is mirrored in a project required that banks report telephoned by Berrel- delay or not renew credits, lez in Buenos Aires to Hen- .that companies "drag their drrix in New York on Sept. Ings and loan companies be among those who want to closed and that corporations block Allende," said Berrel- either shut their doors or lez, "is that swiftly deterio- withdraw their technical em- rating economy . will ployees and refuse future touch off a wave of violence, technical assistance to the resulting in a military country. coup." ` G e r r i t y 's reservations Apparent in the Berrellez about this plan for "induc- report, however, was this Ing economic collapse," as disappointment with the he called it, were based on progress of the scheme to his doubt that other key cor- undermine the economy and porations in Chile would fell- trigger a military coup. low it. He told Geneen that For one thin. lie said, he advised the unnamed Frei was not taking a firm "visitor" that "we would do ble-dealing but "has been dou- everything to help." But, he -dealing to preserve his added, "I pointed out in de- own stature and image as tail the problems we would the champion of Latin American democracy." In have." addition, Berrellez reported, Be Discreet some businessmen who An internal memo from' seemed all gung-ho about Gerrity to other ITT execu- stopping Allende are now tives in Washington the next. talking in terms of trying to day revealed the mysterious make deals with him.', direpresentative" to have Berrellez said that some been William V. Broe, then Chilean businessmen ad- director of the CIA's Latin vised ITT to "deal in some American division of Clan- manner with Allende in an destine Services. effort to resolve at least a The memo, dated Sept. 30, portion of our investment also disclosed that Geneen instead of losing it all." agreed with Gerrity that Evidently as a hedge Broe's suggestions "are not against future possibilites, workable." Geneen futher Berrellez emphasized, recommended, according to Every care should be exer the document, that "we be cised to insure that we are very discreet in handling not-repeat not-identified Rrna" openly with any anti-Al- ienae move." The Gerrity memo also, While admitting to pessi- t d t th h t inertia. - _- - ..,... " s1ble but was having diffi. On Sept. 30, for example, culty convincing the admin- Neal sent a memorandum to istration to cut "every pos-_ Merriam entitled "Chile-A , sible assistance" to the coun- Questionable U.S. Policy," . try. in which he pointed out that Neal reported that Korry, American aid had been de- seeking to see Geneen, ad- signed to undercut Marxism vised the ITT president to but that the fight was being relay "any ideas about U.S. abandoned "now that the policy toward Allende's gov- battle is in the home stretch ernment" to the White . and the enemy is more House "immediately." clearly identifiable." On Oct. 16,: ITT's Latin A similar tone of disap- American operative Hen- pointment pervades an Oct. drix reported to Gerrity that. 7 memo from Merriam to Gen. Viaux had been primed Gerrity saying that "every- to launch a coup a week ear one foresees an Allende vic- her but received word from tory in Congress unless Washington to "hold back," some last minute miracle As Hendrix put it: takes,place." "It was felt that he was The Merriam memo be- not adequately prepared, his that would later become bit- ter: "Assistant Secretary of State Meyer leaves tomor- row for a week in Haiti and Santo Domingo (while San- tiago burns)!" Two days later on Oct 3 timing was off and lie should `cool' for a later, un- specified date. Emissaries pointed out to him that if he moved prematurely and lost, his defeat would be tanta- mount to a 'Bay of Pigs in Chile.' ? Merriam sent a long memo CIA Swarm to John McCone, former "As part of the persuasion head of the CIA and. now a to delay, Viaux was given member of the ITT board of oral assurances he would re- directors. The memoran. ceive material `assistance dum, essentially a synopsis and support from the U.S. of the Chilean situation, and others for a later maneu- contained no Indications ver." that Merriam was striving Hendrix did not identify to persuade McCone to use the emissaries to Viaux. his influence to obtain CIA lowever, he said that All- help for ITT's cause. ende "obviously must be Merriam disclosed, how- aware of this sort of plot- ever, that lie had lunched at ting,' and quoted the Chi- the CIA headquarters in lean leader as noting that McLean, Va., that day and Chile "was now swarming had learned that unsuccess- with CIA agents." ful "approaches continue to By Oct. 20, as a confiden- be made to select members tial memorandum from of the [Chilean) armed Gerrity to Geneen shows, forces in an attempt to have the ITT hierarchy was look- them lead some sort of up- ing for new alternatives. rising." Gerrity spoke of invoking The ITT vice-president the Hickenlooper Amend. ,also told McCone that "prat- ment, which calls for cut- tically no progress has been ting aid to countries that na- made in trying to get Ameri- tionalize U.S. firms without can business to cooperate in compensation. He also de- some way as to bring on eco- manded that the State Do- nomic chaos" in Chile. partment "be pinned down He revealed that General on the record" to demon- Motors and Ford "say that strate that it "has been abso-. they have too much inven- lutely wrong on the outcome tory on hand in Chile to in Chile, as other govern- take any chances, and that ment agencies have." pom e ou a ot er top mism, Berrellez concluded, they keep hoping that every- The Gerrity memo urged' CIA men were not entirely' by saying that efforts to pro- thing will work out all that ITT executives present enthusiastic about the Broe yoke violence and bring on right." Merriam said that the corporation's case to proposal for an economic military intervention were the Bank of America had President Nixon, Secretary catastrophe. continuing. agreed to close its office Rogers and "our friends in His memo said that Gre. Santiago Burns' "but each day keeps post- Congress." Said Gerrity,. gorio Amunategui, a repre- go Burns poning the inevitable." "Freedom is dying in Chile sentative of Alessandri, had In Washington. mean- On Oct. 15, Neal wrote a and what it means to Latin advised Enno Hobbing of while, signs of ITT's disap- memo on a talk he had that America and to us-to free the CIA that the best policy pointment with the Chilean morning with Korry, who men everywhere-is not at the t M mom n k e as W eep situation were mirrored r as late." Approved For Release 2001/11~/Ori X~~1'-'' uerrrty also sent a ff '~"rrVrowMa to McCone on Oct. 2 sEor R$JM1?0Q j 1/01: CIA-RDP74B00415R000300020010-2 gesting, that Gen. Viaux hopeful Gerrity sent the might still stage a , coup ; Kissinger note to Geneen against the lame-duck Presi- with the comment: "Believe dent Frei before Allende's this. is more than perfunc- inauguration on Nov. 4, The tory.p ITT executive informed 'Male Martha Mitchell' McCone of rifts between Nearly a week after the Korry and the State Depart- Chilean Congress voted Al- ment. lende into office, ITT's ap- Approach Mansfield parent quest for scapegoats Contending that the am- focused first on Meyer. In a bassador "deals now di- memo to Gerrity on Oct. 30, reetly" with the White Hendrix wrote that Meyer House, Gerrity said that. "ranks very high as the "the word among Korry's weakest Assistant Secretary colleagues is that Charles in recent times-at least Meyer and his deputy, John during my 22 year's of asso- Crimmons, are determined ciation with the area." to get Korry out of Chile- Accusing Meyer of show- and out of the Department lug "an enormous lack of if possible." imagination," Hendrix said On Oct. 22, the Chilean that he and his deputy, John commander-in-chief Gen. Crimmons. "jointly led the Rene Schneider was assassi- effort to make certain that nated, presumably for resist- the U.S. this time did noth- ing pressure to oppose Al- ing with respect to the Chi- lende. Viaux was implicated lean election." in the plot and arrested. The Hendrix and Berrellez fol- same day, Merriam advised lowed this appraisal of Gerrity that the time had Meyer with written assaults come for congressional ac- against Korry. Berrellez tion in Washington. called Korry "a sort of male Merriam reported that a Martha Mitchell" who "blew $2.9 billion Inter-American his composure with the U.S. Bank appropriation billwas news media. He also awaiting Senate approval, charged Korry with having and he said that he and col- become "blindly enamored" leagues planned to approach of Frei, and thus "his politi- Senate Majority Leader cal evaluation suffered ac- Mike Mansfield of Montana cordingly." and Republican leader Hugh Hendrix added that he Scott of Pennsylvania "to felt "fairly certain" from see if they will just (forget) Korry's comments that "he to take up the bill." is trolling for a position The head of ITT's Wash- with ITT when he gets ingt:on office also said he bounced by State." Korry, a was contemplating "what former Look magazine cor- other pressures we can respondent, is now with the drum up to make the State Overseas Private Invest- Departnrent sullen its atti- ment Corp., the U.S. govern- tude," Ile suggested that ment's private development ITT President Geneen tele- loan guarantee organization phone directly to Assistant which now has millions of Secretary Me~'er. dollars in claims against it In an attached "Pcap- praisal of Our Latin Ameri- can Policy," Merriam said that he did "not visualize re- taligt.ion or vengence as part of "Our policy." lie urged, however, that "every possi- ble pressure which might keep Dr. alleude within for the U S. copper interests expropriated by Allende. In Chile, meanwhile, the .documents linking ITT and the CIA are now proving to be a noon to the Allende government. Among other things, government media are associating ITT and the bounds" be applied, includ- CIA with the Schneider as- ing "a stoppage of all loans sasination. Gen Viaux and by international banks and 24 others arrested and con- U.S. private batiks" if confis- victed in the assassination cated American holdings in plot are still awaiting sen- Chile were not compen- tencing. sated. Merriam sent a copy of this program to Kissinger on Oct. 23 and asked for the presidential adviser's com- ments. It took Kissinger more than two weeks to reply with a brief brush-off forts to gain compensations' for its Chilean holdings. Discussing the possible re- percussions the corpora- tion's political activities might nave, ITT Vice Presi- dent Merriam expressed an awareness of the risks but tended to discount them. In, a memo on Oct 22, 1970, he wrote: I. oersonally, feel that we don't have m':ch to lose one way or the other, unless, of course, our so-called 'pres- sures' come back to haunt us in other Latin American countries. This I also doubt." saying that he had reroved For Release 2001/11/01 : CIA-RDP74B00415R000300020010-2 "carefully" and passed it on to his Latin American spe-