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October 11, 1973
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Approved For Release 2001/08/07 CIA-RDP77-00432R0001002500 1-9 CONFIDENTIAL INTERNAL USE ONLY This publication contains clippings from the domestic and foreign press for YOUR BACKGROUND INFORMATION. Further use of selected items would rarely be advisable. WESTERN HEMISPHERE 34 25X1A CONFIDENTIAL Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 R000100250001-9 Texts of Charge Against Vice President an of.Grand Jury Criminal.. Information 71 Special to The New York Times f obtain from those engineering firms cash BALTIMORE, Oct. 10-Following are' payments in consideration therefore. . the texts of United State$ Attorney; "Hammerman, as instructed, discussed ?" eorge Beall's statement of the charge', the matter with Wolff, who was recep iwhich Vice President Agnew pleaded title but who requested that the cash. }Q payments to be elicited from the engi-' no. contest and of a criminal informs-. ?n'ers .be split' In threes equal shares :tfon returned by the Federal grand jury! among Agnew, Hammerman. and Wolff. cgainst Mr.Agnew: . .It 'mmerman informed' Mr. Agnew of Wolff's attitude; Mr, Agnew informed, '?The United States Attorney for. the Hammerman that the split of the cash; District of Maryland charges that: 'foe Mr nltnies would be 50 per. cent b.,'On or about the 23rd day of April,. Agnew; 25 per cent for Hammerman' ,.1968, in the District of Maryland, Spiro ahd 25, per cent for Wolff. Hammer .'ic .Agnew, a ? resident of Annapolis, nian carried that message to Wolff, who,, '.Maryland, who during. the calendar year ..weed to that split. . 3'967 was married, did wilfully and The scheme outlined above was then 'ki owingly attempt to evade and defeat; pit into operation. Over the course of ~a:i large part of the income tax due the approximately .18 months of Mr. arlid owing by him and his wife to the Agnew's remaining tenure as Governor ,United States of America' for the calen-'r ,orMaryland, Hammerman made contact; dac year 1967, by filing and causing wi}h approximately eight engineering to be filed with the. District Director; firms. Informed periodically by Wolff -of' Internal Revenue for the Internal.as. to which engineering firms were. in: iRevenue District of Maryland, at Balti line to receive state contracts,. Hammer- tnore, Maryland, a false and fraudulent' min successfully elicited from seven `joint income tax return . on behalf of ; engineering firms substantial cash -pay- .-himself and his said wife, wherein it' meets pursuant to understandings be-' was stated that their taxable income; t...pen Hammerman and the various en- far said calendar,year was the sum of,. gjpeers to whom he was talking that 426,099 and that the,amount of tax due' the substantial cash payments were'in and owing thereon was., the sum of' return for the state work being awarded. $6;416, whereas, as he then and there. to, those. engineering firms. The monies Well knew; their joint taxable income; 'collected in that manner by Hammer-, .for the ? said calendar year was the sum ? n>,an were split in accordance with the' 'tf:$55,599, upon which said' taxable, in- understanding earlier reached: 50 per, '.come 'there was owing to the United': cent to Mr. Agnew, 25 per cent to' States of America an 'income' tax of Hammerman and 25. per cent to Wolff, $19,967.47. An eighth engineer contacted by Ham- GEORGE BEALL merman' flatly refused to.make pay- United States Attorney ments and, instead, complained-first TAE UNITED STATES ATTOR. to, his attorney and later to Governor I~IEY FOR THE DISTRICT OF Agnew himself - about Hammerman's; solicitation. Wolff, informed of the com=' MARYLAND AS OF OCT. 10, 1973.'. plaint, reduced the share of ? work being t-" Introduction awarded to the complaining engineer The following statement is respectfully b4 ,t decided not to cut that engineering submitted to the court by the Govern-:: .final off completely from state work.for: t at the arraignment of Spiro T. fear of further exacerbating the situa Agnew. It constitutes a detailed recita tion? tion'of the facts and evidence developed; Wolff, as chairman-director of the: 'hy.the investigation to date, which es-, Maryland . State. Roads Commission, ? ? tgblish in part, the source of the unre-j .made initial tentative decisions with re-, , po ted funds which constitute the basis' gard to which engineering firms should p ;;the charge filed today. The presenta- ?be-awarded which state contracts. These. API of this statement in. court 'today tentative decisions.would then be dis }V ,as a material condition, requested by, cussed by Wolff with Governor Agnew.: #lp,Department of Justice, to the. agree-' 'Although Governors Agnew , accorded -tent reached between the Government WOlff's tentative decisions great weight, -ago Mr. Agnew. the Governor always exercised the final' bn" Summary decision-making, authority. Often Wolff 4 .would present the Governor with a'list The relationship of Mr. Agnew, of=' engineering firms competent in H. Hammerman 2d and Jerome' ..Wblff's judgment for a state job, and A; Wolff.. ' . . ' the Governor would make the final' se- uln the spring of 1967, shortly after lection of which particular firm would Mr. Agnew had, taken office as Governor : be awarded that job. of Maryland, he .advised Hammerman; Hammerman also 'successful solic-' .make substantial, cash payments in re- turn. for engineering contracts with the State of Maryland. Mr. Agnew. instructed Hammerman. to contact Wolff, then the' new chairman-director of the Maryland State Roads Commission, to arrange for 'the establishment of an understanding ' 'pursuant to which Wolff would notify Hammerman as to which, engineering, firms were in' line for state contracts that Hammerman:.could ? solicit 'and principal of a large engineering firm ,about the financial bprdens to be im posed upon Mr. Agnew by his ' role as, Governor: Green responded by saying.,' that his' company had benefited from state work and had, been able to gen- .1 orate. some cash funds from which he would be willing to provide Mr. Agnew,' with some financial assistance. Mr:` Agnew indicated that he would be -grate -ful for such assistance. Beginning shortly thereafter,. Greed' delivered to Mr. Agnew six to nine times, a year an envelope containing between: 4$2,000 *and $3,000 in cash. Green's pur-. ,pose was to elicit, from the Agnew' administration as much state work for his engineering firm as possible. That, purpose was clearly understood by Gov ernor Agnew. both because Green oc casionally expressed his appreciation to the Governor for state work, being re ?ceived by his company and because Green frequently asked for and often: ,received from the Governor assurances; that his company would get further state; `.work, including' specific jobs. . 1 Between Mr. Agnew's election and in-i auguration as Vice President, Wolff con.; ,tatted Green, at Mr. Agnew's instruc-' tion, for the purpose of preparing fort .Mr. Agnew it detailed, written computa-': tion of the work and fees which had; .been awarded to Green's company by, Governor Agnew's administration. After assisting:. Wolff in the preparation of f - such a compilation, Green subsequently'i met with Mr. Agnew, who note,' :hat' Green's company had received a lot of; work from Governor Agnew's admin-.' istration and stated that he was- glad t 'that things had worked out that way-.l Mr. Agnew then went on to complain; about the continuing financial burden{ which would be imposed' upon him by his position as Vice -President' and 'to', express the hope that Green would not'; stop his financial assistance to Mr. ,Agnew. To Green's- surprise, Mr. Agnew,,,, went on to state expressly that he hoped to.be able to be helpful to Green with respect to the awarding. of FederalI en- j gineering contracts tq Green's company. As a result of that conversation, Green: ,continued to. make cash payments to Vice President Agnew three or four,i times a ..year up to and including De 'cember, .1972. ' These payments were'. usually about - $2,000 each.' The pay- ments were made both in Mr. Agnew's' Vice Presidential office and at his resi-' :dente in'the Sheraton-Park Hotel, Wash-? ington, D.C. The payments were not dis-.- continued. until after the' initiation of the; Baltimore County investigation by the' United States Attorney for the DDstrictl of Maryland in January 1973. 1 nanci al institution in return for that in- III. The relationship , between. situations being awarded a major role' ' Mr. Agnew and. Lester Matz. . in.' the financing of a large issue' of. - Lester Matz_ a principal in another! The relationship between Mr. corrupt-payments'while Mr. Agnew was :,Agnew and Allen Green. 'County. Executive of Baltimore County . Shortly after Mr.Agnew's election ' in in. the early, nnineteen-sixties.' In those No,i,ember, 1966, as Governor, of Mary- days,. Matz paid 5 per cent of his fees sand : he complained to Allen Green from Baltimore County contracts in cash; , pproved For Release 2D011087Q7 : I A=RQP7 - ?=5 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 to Mr. Agnew through- one of ? Mr.` Agriew's close. associates: After Mr. 'Agnew became Governor ,of- Maryland, Matz decided to make his' payments directly to Governor Agnew.' He made no payments until that summer: 'of 1968 when he 'and his partner calcu ?lated that they owed Mr. Agnew ap-. ,proxiijiately $20,000 in consideration for: the work which their firm had already received from the Governor's admin-' istratio'ni. The $20,000 in cash was gen=' crated in an. illegal- manner and. was given by Matz to Governor Agnew in'? a? manila envelope. in Governor Agnew's' office on or about July 16, 1968. In handing the , envelope to Governor, Agnew, Matz expressed his appreciation; for the substantial amounts of state; :work his company -had been receiving, ,and told the Governor that the'envelope .contained the money that Matz owed.; ,to the Governor in connection with that; work. Matz made no further corrupt pay nients''to Mr. Agnew until shortly after. 'Mr, Agnew became Vice. President; at which time Matz calculated that 'he owed Mr. Agnew -approximately $10,000; more from jobs and fees which the Matz:: firm had received from, Governor-' .'Agnew's administration since July, 1968. After generating $10,000 in cash in an illegal manner, Matz met with Mr. ' Agnew'in the Vice President's office and' gave him approximately $10,000 in cash 'in an envelope. Matz informed the Vice'President at that meeting that the en-' velope contained money still owed to' Mr. Agnew in connection with work' awarded to Matz's firm by Governor, .Agnew's administration and.. that more such monies would be owed and, paid' in, the 'future. Matz did ? make several .subsequent payments to the Vice' Presi `dent; he believes that he paid an ad- ditional $5,000 to Mr. Agnew in cash. In or around April, 1971,' Matz made.' is cash payment?to Vice President Agnew` . 6f'$2 ' 500 in return for. the awarding by the General Services Administration.' -,of: a contract .to a small engineering: ,firm in which Matz had a financial, ownership interest. An intermediary was linstruniental in the arrangement for thatl particular corrupt payment. Full Exposition ' 1. The relationship of Mr..Agnew, I. H. Hammerman 2d and' Jerome.- B. Wolff. I. H. Hammerman 2d is a' highly suc-:., cessful real estate developer and mort=` .gage banker. He has entered into a' formal written agreement with the Gov-` ernmenr,' pursuant to which he ;has. ten 'dered his complete cooperation to the. Government with respect to.the present: investigation. Under the .terms of this, agreement) Hammerman will plead guil-, ,ty to a charge of. violating a felony provision of the Internal Revenue Code.: As a . result of that plea, Mr: Hammer-, man 'will be exposed to a maximum! :sentence of three years in prison. In' return, the Government has agreed. not to. charge Mr. 'Hammerman with ,any' other crime relating to the subject mat-" ter of this' investigation and to bring. his cooperation to the attention of the court at the time of his sentencing. The Government has. not agreed to make ;any specific recommendation with re-; ' spect to the period of incarceration, if 'spy, to which the Government believes: it would be appropriate for Mr. Hammer." man to be septenced. and, in particular,' .the Government has made no represen-:: ;cation to 'Mr. Hammerman that . it will' ;recommend to the court that he bet placed on probation. ' Jerome B. Wolff is an engineer and ;also an attorney. He is the president' ,of Greiner Environmental- Systems, Inc:.' ,Wolff has tendered his complete co=?? 'operation to the Government in the; present investigation. The Government; has not entered into'any agreement with Wolff as to what consideration, if any,' he may expect in return for his coopers; ;tion, other than the assurance that 'his`. own truthful disclosures to the Govern- :ment will not ;be used against him in' ,any criminal prosecution. At the. Gpvernment's' request, both: 4Hammerman and Wolff have executed'' sworn written statements ' that recount", ;their 'relationships with Mr.' Agnew.Y Their testimony, the corroborative testi ,mony of other witnesses, and various; corroborative documents, would prove'. the following: Hammerman has known Spiro' 'I'. `Agnew for many years. When Mr.,? Agnew ran for Baltimore County Ex--, ,ecutive in 1962, however, Hammerman actively supported' his opponent. The: day after the election, Hammerman, {called to congratulate, Mr.. Agnew?'and' asked to ' see him. They met in Ham ,'merman's office and again Hammerman, ,congratulated Mr. Agnew 'on his victory:. Hammerman 'told Mr. Agnew that he; - knew all.campaigns had deficits, and he: ".offered Mr. Agnew a post-election con- tribution of $10,000. Mr. Agnew refused,'. but he told Hammerman that he' would' expect a contribution three times as large when he ran for office again. Between' 1963 and 1966, while Mr; ,Agnew. was the Baltimore County Ex-.. ' ecutive; he and Hammerman developed'': a close, personal friendship. During the .period and continuing up until early:: '1973, they often discussed Mr..Agnew's personal financial situation. Mr. Agnew complained about it, and told Hammer- ; :man that he had not accumulated any? .wealth before he assumed public office, had no inheritance, and as a public of- ' ficial received what he ? considered ' a , small salary. Mr. Agnew believed, more.., over, that, his public, position required t: ,him to adopt a standard of living be-., Mond his means and that his political` ambitions required him to build a fi-, nancially strong political organization. ,During the period when he was County; Executive, Hammerman entertained him introduced him to substantial political", contributors, and gave him. substantial.,' , . gifts. At the outset of the 1966 Maryland. gubernatorial campaign, Hammerman found himself in a difficult situation.; Some of his closest business associates'; were involved in the Democratic candi ,dates' campaign, but Mr. Agnew insist-; ed that Hammerman choose between' 'them and him. Hammerman decided acs: tively to support Mr. Agnew, contrib-: uted $25,000 and raised an even larger'.. .amount in campaign funds for Mr. Ag-: new. Hammerman was one of Mr. Ag-.; new's financial chairmen and devoted' considerable' time, energy and money, to his campaign. After he became Gov ernorand later Vice President, Hammer. man continued toy entertain him, travel ; with him and provide him with other financial 'benefits. These benefits were. not related to ' the, monies discussed halnw In the late nineteen-fifties, while Mr: Agnew was surprised that that en- Wolff.-was Deputy Chief Engineer and" gineer was paying as much' as .10 per- later Assistant Director of Public Works'. ,cent, in view of'the fact that the going ;for. Baltimore .County, Mr. Agnew be- rate was generally 3, per cent. Through came a member of the Baltimore County conversations with still another. 'en-, ;Board of Zoning Appeals; Mr. Agnew: .2 Approved For Release 2001/08/07 : CIA-RDP77-0p432R000100250001-9 .and Wolff became acquainted as a.re-s suit of Wolff's appearances as. a wit-4 ness before the Board. - Wolff left employment with' the Coup-'1 ty approximately. six months after Mr. , Agnew'took office, as County Executive. Mr. Agnew and he became good friends: ,between 1963 and 1967 while Wolff was'r in business as 'a consulting engineer,, and Wolff became an unofficial advis-:; er to him. Mr. ' Agnew arranged for'; :him to receive contracts from the Coun* ty. Wolff greatly admired Mr. Agnew ' and believed that Mr.,?Agnew was sin- cerely attempting, with considerable sue-?; 'cess, to do a good. job as County Ex,",' ecutive. ' ~uestions ,Front' Friends Friends in the consulting business 'asked Wolff,' while Mr. Agnew-was! County Executive, how much Wolff was; paying for the engineering work that i lie was receiving from Baltimore Coun-: .ty. They seemed to assume that he was',' paying, as, it was well known in the' 'business community that engineers gen .erally, and the smaller engineering firms t 4n' particular,. had to pay, in order to obtain contracts from the County in those days. Only a few of the. larger and well established firms were gen- erally considered- to' be immune from this requirement. It is Wolff's belief, basea upon his' experience arid-his understanding of the experience of others, that', engineering' firms generally have to struggle for 10'. "to 15 years in order to become estab-` lished. During this period, and for some, time thereafter, they generally make; payments - sometimes through middle 'men - to public officials at various' levels 'of government throughout Mary-' land in order to receive public 'work;; Sometimes they reach a point where they are' sufficiently established ? as ,qualified engineers. that they do 'not; ;generally have to make' illegal payments ,in order to obtain a fair share of the public work. . . It was Wolff's ?1lelief that a certain" close associate of Mr. Agnew's (referred'e to hereafter as "the close associate" or, ."the middleman") was his principal mid-? dleman in Baltimore County.' The close'; associate courted engineers, developers; ,and others and bragged a great deal about his relationship' with Mr. Agnew.: .Although' Wolff was in a 'favored po-'7 . sition with Mr. Agnew,' on two or more, .occasions while Mr. Agnew .was. County; 'Executive,. the close assocates request-. ed money from. Wolff in return for'{ contracts Wolff wanted or had obtained' from the county. Wolff paid him $1,250 in cash in' April, .1966, and in addi tion made a 'payment to. another asso-: ciate of Mr. Agnew's, ostensibly as le-f, gal fees. Wolff's present recollection is' that.he also made one or two other pay ments to the close associate. ' Another Middleman Seen It was Wolff's' belief that another in-' dividual also acted as a middleman for' Mr. Agnew; Wolff learned from others that 'a 'certain Baltimore engineer was paying for work through that other in- dividual. It is Wolff's recollection that, in his office, Mr. Agnew once remarked to Wolff that the engineer in 'question was paying 10 per cent 'for .the work that he received from the county. Wolff;. Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 i 1' gineer, Wolff. learned that he also was: making payments for county work. During Mr. Agnew's 1966 campaign. for Governor, Wolff: gave him $1,000 in cash as a -campaign contribution.: Wolff also worked in Mr. Agnew's cam p-ign:'Woiff knew that.he had a poten-' i ! personal stake in Mr. Agnew's can-, didacy, as Mr. Agnew had- sometime o.,rlier indicated to him the possibility that he' might appoint Wolff as chair- r,-an-director of the' State Roads Com- mission if Mr. Agnew were elected; wernor. Wolff had first- become 'acquainted" with Hammerman during the period. when Wolff had been an assistant engi nee'- employed by the Baltimore County, .Public Works Department. Hammerman' considered Wolff to be.a brilliant engi- necr, and Wolff had handled in an ? ef- ficient manner various problems that Hammerman had had With ? county; agencies iii- connection with. Hammer- ,man's building ventures. A close per ,sonal friendsip had developed between', 'them. Hammerman had been so im- pressed with Wolff that he had advised j, him that if he ever decided- to leave. county government; Hammerman would retain him as the engineer for his build= ing projects. After Wolff had left county government in 1963 and established his own engineering business, he had done' virtually all of Hammerman's engineer- ing 'work. After his election as Governor, Mr. Agnew told Hammerman that he in- tgnded to appoint Wolff chairman-direc-li for of the Maryland State Roads Com- mission. Hammerman objected stren-' ,uously because he wanted to retain' ' Wolff's engineering services.'Mr. Agnew, responded however, that Hammerman, :should not be too upset about Wolff's appointment because, Mr. Agnew . told -Hammerman, "You' won't load by it. On or about March 1, 1967, 'Wolff took office as Governor Agnew's ap-: pointee as the chairman-director of the state' roads commission. Governor Ag- new had Wolff monitor every consulting .engineering and construction contract; 'that came through the state. It became obvious to Wolff that,, in view of the' provisions of the states road commis-,' sion legislation, he would in effect con-: trol the selection of engineers and archi- tects for contracts to be 'awarded by' the state roads commission, subject only' to the ultimate decision-making author-i ity of Governor Agnew. ? Shortly after- Wolff took office, Gov-, {`error Agnew asked Hammerman to come 'to his office in Annapolis, Md. Af this, meeting, Governor Agnew advised Ham-; merman that there' was. in Maryland a, 'long-standing -"system,", as he called', it, under which engineers made sub-' stantial "cash contributions" in return ! for 'state contracts awarded ' through, the state roads commissions. Governor, -Agnew referred to the substantial politi cal financial 'demands that would 'be' made on both himself and Hammerman, ,and said, in effect, that those who would': .be benefitting (the engineers) should do their -share. Governor Agnew said that' Hammerman could help him by collect-` :ing cash payments from the engineers, ..and told him to meet with Wolff to set things up. ' Hammerman subsequently met with' Wolff, and. told him of the discussion he had had with Governor Agnew. Wolff` readily' agreed to participate and sug- gested'that the payments be equally di- vided among the Governor, Hammerman and Wolff. Hammerman then metagain. ;with the Governor and told him of the.. suggested: division of the payments.' Governor Agnew at first replied 'that. the, did not' see why Wolff should re- ceive any share of the money, but 'he' agreed to the division as long as he. re-' .ceived' 50 per cent of the total' pay-', ment. He told Hammerman. that he didn't. care what Hammerman did with his share. Hammerman went back to Wolff and' told him that Mr. Agnew insisted on 50,: per cent' of the money, and that Ham-`? merman and Wolff should equally divide; the rest between themselves. ? Wolff: agreed. Implementation Described Over-the course of the subsequent, 18 or 20 months that Mr. Agnew served' as Governor of -Maryland, the scheme ,agreed to by Mr. Agnew, Hammerman, and Wolff was fully implemented: Wolff: kept Hammerman informed As to which engineers were to receive state con tracts and Hammerman kept Wolff in- formed as to which engineers were mak ing cash payments. It was soon general ly understood among engineers that Hammerman was the person to see iri: connection with state roads engineering contracts. As a result Hammerman soon found himself meeting with' individual representatives -of certain: engineering' firms. They would inform Hammer-. .man. their interest in obtaining state work, and Hammerman would 'reply he would see- what he could do. In some cases an 'engineer would specify the` particular work in which he was inter- ested; . in most cases,' the engineers, would not specify any particular job. ' There was 'no need for Hammerman to make coarse demands or to issue. threats because the engineers clearly, in,; dicated that they knew what was ex- pected . of them. The discussions were generally about "political contributions," but the conversations, left no doubt that':, .the engineers understood exactly how` the system worked-that is, that cash, payments to the Governor, through Ham =merman were. necessary in' order for; their companies to receive' substantial' ,state contracts. The "contributions" were almost always; in cash, and many' of them were made when there was- no campaign in progress. No Specification On Amount Although -Wolff had told Hammerman that "contributions" should average be tween 3 per cent and ?5 per cent of the contract amount, Hammerman did not specify any exact amount to be paid, and accepted any reasonable sum. Some- ' times the "contribution" was made in one payment, sometimes in several. .When a contract was about to be award- ed to one of the engineers. who was,; .'known to be willing to make payments' Wolff, would advise Hammerman. that .the engineer had been selected for a' certain job. Hammerman would then', ,contact the engineer and congratulate: him.- His congratulations were intended as signals that a cash "contribution" was due, and the engineer would then meet Hammerman and bring him the.' money. ' Pursuant to his understanding with Mr. Agnew and Wolff, Hammerman re- tained 25 per cent of the payment and delivered to Wolff his 25 per cent share.. Hammerman generally held Mr. Agnew'& 50 per cent share in a safe-deposit box until . Mr. Agnew called for it. From time to time Mr. Agnew would call, Ham- merman and' ask how many. "Papers" Hammerman had for him: It was under- , stood between Mr. Agnew and Ham- merman that the term "paper" referred ' 'tell Mr. 'Agnew how many "papers" her had and Mr. Agnew would ask Ham- merman to' bring the "papers" to him. :Hammerman would then collect the cask. from the safe-deposit box, and -person ally deliver it to Mr. Agnew to his 'office in; Annapolis or in Baltimore or wherever; else Mr. Agnew would designate. Cash Was Transferred The cash which Wolff -received from' Hammerman was initially kept in Wolff's home. It was then transferred to two,' and later,' three safe-deposit boxes, two' in Baltimore and one in Washington,. Most of the money was spent on ordi-1 nary personal expenses over a period l of more than four years. A small portion of it was used by-Wolff to make pay- ments to other public officials in order, ,to , obtain work for the two consulting ; firms which he had sold before he had, become chairman of the state roads com-.' mission, but in . which he still had a ; financial interest. Wolff kept detailed"; contemporaneous documents on which,' he recorded the, dates,. amounts, engi,: neering firm, sources. of the monies that' he received from Hammerman as his share of the proceeds of the schemer ! These records are among a large volume 'of of corroborative documents -that Wolff: has turned over to the United States; 'Attorney's office. The selection process fo the state! roads dontracts generally worked in,the, 'following manner: Usually,. based upon' ,previous discussions with Governor Ag.! new, Wolff would make preliminary de- . cisions? with regard to the consulting; engineering and architectural firms to,, :be awarded contracts. He would then ob- "fain the approval of the State Roads. Commission. Governor Agnew' would` `then make the final decision.' During Mr. Agnew's tenure as Gover-: :nor of -Maryland,--Wolff met with him; from time to time to discuss the .status. of various projects and the, decisions., which had to be made.with'respect to'; `engineering, management and sometimes? architectural contracts. Wolff -generall `prepared agendas for these meetings in;: advance: Governor Agnew appeared to? have confidence in Wolff's . technical,' .ability and generally accorded substan-, tial weight to Wolff's preliminary deci sions as to ? which. consulting firms; :should be awarded contracts, generally', concurring with Wolff's selection.. Where'., .'important or unique projects. ere in: ; volvdd, Wolff would present Governot 'Agnew with a list of. several possible ' firms from which Governor AgnevP, would select the firm: to be awarded Governor Agnew always had and from; 'time to time exercised the power to, make all final decisions. Several factors influenced' Woiff iri his own decision-making in the selection, 1 process outlined above: 1. It was the basic premise of Wolff'3? ,selection process, that 'an engineering firm had to be competent to do the: work before it could even be considered' for a contract. Any engineering firm; which, in Wolff's judgment, was com= potent to perform a certain assignment! which might be given consideration. ' 2. Both Governor. Agnew and Ham- merman would from time to time ask' Wolff to give special consideration to a,particular engineering firm, which.' might or not be making cash, payments,' and he would then try to 'do so. He' 'remembers, for example, that the Gov-' ernor on one or more occasions' asked him to give work .to two specific engi= veering firms... Hammerman also recom-x Hammerman would ',3 10.41,000 in cash. ApprovedFor xs~- --RDP77=0043 -9 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 "mended +to Wolff, presumably' because` of -Hammerman's friendship with one or more particular engineers, that work" be given to at least one company, that;: 'according to Wolff's understanding, had;. not made any cash payments. 3. Wolff's decision-making (and 'he' re? "calls that this, was a matter that he: discussed with Hammerman in' particu=, 4ar) was-intended to avoid substantial: 'and noticeable deviations from general" fairness -. that is, he tried to avoid a: situation in which any firm reserved more or, less work than' could be justi- fied on' a purely legitimate. basis. Wolff' always viewed the process as one of accomplishing competent' public work, for the' state of Maryland, very ?simila#. to that which would have been accom- .plished if all the 'selections had been, made strictly+ on their merits, while at. the same'time serving the mutual ends of Mr. Agnew, Hammerman, and himself: Appearance of Fairness,. Wolff, believed it was, important note to deviate' too obviously from the ap-, pearance of fairness and even-handed-., ness in the selection of engineers. Fora ,example; he became aware-he believes' Initially as a result of a conversation he' ,had with Governor Agnew -. that Ham-.; merman had apparently ? approached a certain engineer to solicit cash paymentsr ,in connection with potential state work;: .and that the engineer had complained to ,Governor , Agnew that state contracts',. should not be awarded on this basis. The. Governor was very' upset; ' as Wolff understood it, because Hammer-;~ man had apparently been especially.; heavy-handed with the. engineer, and,- apparently because the Governor felt', that the engineer might make his corn=.' ,plaint public.. For these reasons, Wolff, continued thereafter to 'give the engin neer's firm some work. The investigation also established that'.: ,the same -engineer also complained to .his 'attorney, a close personal friend of Mr. Agnew's, about Hammerman's solici- tation. Shortly after the. engineer had complained to' his attorney, and several'; months before the engineer complained- directly to Mr. Agnew, the attorney met with Mr. Agnew and gave him a de 'tailed account of Hamnerman's solici" tation and of his client's outrage.. He warned Mr. Agnew that Hammerman's activities could undermine all the ate torney believe Governor Agnew was at- tempting to accomplish. Although he indicated that he would look. into . the matter, Mr. Agnew never, reported ,back to 'the 'attorney. He did several months later meet personally, ,with the, engineer, at the attorney's in-; sistence, but the investigation has es tablished' Mr. Agnew. did nothing what ever to stop Mr. Hammerman's continu- ing solicitations of cash payments from -engineers in return for, state work and that he (Mr. Agnew) continued for, several years thereafter to accept his 50 ' .per cent share of these cash payments. 4. The.. fact that a certain firm was making cash payments was a definite factor in the firm's favor. It was, there- fore, accorded special consideration in ,the' decision-making process. Holt--be., lieves'that 'a' comparison of the amount of work given to certain firms before, during and after Governor Agnew's ad, ' ministration would confirm this. On the other hand, there' were times :when a firm was selected for a specific job without'regard to whether or not ,the . firm was making cash payments; Some, local Maryland firms had' out, standing expertise in certain fields of `engineering. This made, them 'obvious rchoices for certain, jobs, 'whether or not they' were making cash payments. Even such firms, however, can never be conij pletely sure that such consideration would be decisive in the decision-making, process, so that even some of,those corn: panies were vulnerable to solicitations for cash payments. . .5. Various other factors worked for br against particular firms or 'individuals; In the selection process. For example,'. Wolff definitely favored Lester Matz ,and Allen Green, and their companies, not only because he understood they were making cash payments directly to' .the Governor, but, also because, Wolff' was receiving money from certain illegal dealings that he had with Matz and' Green that did not involve Governor Agnew. Conversely, one engineering firm ,was disfavored by Wolff because in his`' view that firm had taken postions' con- trary to the best interests of the Cord-l' mission. ' The evidence accumulated, to date,.' both testimonial and 'documentary,.. es tablishes that Hammerman obtained, and'; split with Mr. Agnew and Wolff, cash payments from seven different engineer- ing firms in return for State engineering contracts, and from one ,financial. in- stitution in return for a lucrative ar rangement with the State involving the, ,financing of certain'State bonds. Those: ;seven engineering firms and the one fi= nancial institution will not be named,in - ,this statement in order.to avoid.possible' prejudice to several presently ' , an-:, ?ticipated prosecutions:. It is worth; noting, however, that Ham ~rman specifically 'recalls discussing; with Mr. Agnew whether or nor the particular financial institution would be awarded the lucrative State bond busi- ness,. and that during that discussion Mr. Agnew commented that the princi- pals at the particular financial institution' in question were "a cheap bunch" who' "don't give you anymor ey."' Mr. Agnew informed Hammerman that he did not intend to award that Institution the bond business in question unless a substantial,,. "contribution" were made. Hammerman carried that message to the appropriate. person; a substantial cash "contribution was made; the institution got the bond; .business. Green and Matz 'Contributions Hammerman also remembers that,; while Mr. Agnew' was Governor, Ham-; merman observed that Allen Green and' Lester Matz, two engineers whom he had' known for some time, were receiving very substantial amounts of State Bonds' work. Hammerman mentioned that fact' to Wolff and, since he, had. not received any money from Green and Matz, asked. "Wolff if he should approach them. Both: Green. and Matz had indicated to Wolff 'that they were , approach :them. Both' Green and Matz had indicated to Wolff that they were making their payments:; !directly to.the Governor. Wolff there- fore told Hammerman that both Green: and .Matz were making "contributions and that Hammerman should : "stay away." Hammerman-did so. It is Wolff's understanding and be- lief that both Green and Matz continued: to make cash payments directly to Mr; Agnew after he had become Vice Presi- dent. Wolff ; bases this conclusion, ':on' conversations that.he has had'with both' .`Green and Matz since January, 1969, in, which each of. them has indicated. to Wolff that he had made payments di rectly to-the Vice President. At a certain point, which Wolff be-, 'lieves -was after. Mr. Agnew's :election,. as. Vice President in November, 1968,' 'but prior to his inauguration as .Vice. Maryland. -Instead,, the selection of engi-` President. on. January 20, 1969, Mr. Ag-, ; 4 , new asked 'Wolff to determine the de-' tails of payments that had been made by the State Roads Commission under his. administration to the engineering,. company owned and operated by Allen, Green' Wolff then discussed this request, with Green, who subsequently prepared; :a -list, that he submitted, to Wolff. Wolff] then'prepared a final list, a copy or du-' plicate of which he gave to Mr. Agnew:'( When Wolff handed Mr. Agnew the list,; they' did not discuss it to any extent,,, according to; Wolff's present recollec-, tion.'Mr. Agnew just put it away.. Wolff would testify that much of his' understanding .concerning Mr. Agnew's> actions, and reactions to specific situa-, tions. was inferential, since he and Mr:-~ Agnew did not discuss Wolff's relation. ship with Hammerman?.or others or. the, fact 'that he and Mr. Agnew were act-, ing, either jointly or individually, in a: 'corrupt manner. Wolff believes his rela- tionship with Mr. Agnew flourished be- cause of their mutual sensitivity to, their' own positions and. their mutual respect: for one another. He does r"all, ,how-, ever; an occasion on which ,e was in the Governor's office In the State'House, Governor Agnew and he. were standing, in front of the fireplace after a meet-, king, and the Governor said to Wolff ;in II- The relationship 'between Mr. ;;Agnew and Allen Green. 4 Allen Green is the president and one of 'the principal owners of Green Asso- ciates, 'Inc., a Maryland ' engineering company which., has, ' over the, years, performed variot ,ypes of engineering' work. ' Green has signed a formal. written ,a greement with the Government under, which he has agreed to plead guilty" to a criminal felony violation of the internal Revenue Code that will expose. him to a maximum sentence 'of three ,eats in 'prison. He has given the Gov-. ernment his complete cooperation in this investigation. In return, the Govern,: nient has promised him that he will not" be prosecuted' for any offense related .to this investigation other than the one to which he will plead guilty, and that: 'at his sentencing the Government will bring his cooperation to the attention of the Court. The Government has ex pressly refused to promise Green that it will recommend to the Court at. his sentencing that he be placed on pro kation. At the-Government's request, Green` has executed a sworn written state- ment detailing his relationship with Mr.' Agnew. Green's testimony, the corrobo- rative testimony of other witnesses, and' various corroborative documents would prove the following: Green has been an engineer in Mary- land for 21 years. During this period, he has often made cash payments on behalf of his company in return for' various State and. local consulting con-? tracts and in order to remain eligible for further contracts. He used cash for' the simple reason that checks could have been traced and might have led to the discovery of these illegal pay- ments. These payments formed a pat- tern over the years and . reflected his ,1 understanding, based 'upon experience,; of the system in which a firm 'such as his had to 'participate in order- to, in ,sure its survival and growth. in the State of Maryland. This system had.: developed long ago in Maryland and' in other States as well. . Engineering contracts have not been' Approved, For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 Approved For Release 2001/08/07 : CIA-RDP77-00432R000160250061-9 neers for State roads contracts has' rested exclusively in the. discretion of? public officials - in Maryland, the Gov- ernor, and the members, of the State Roads Commission. They have had virtually absolute control. There are many engineering companies which seek contracts, but price competition was not allowed under the ethical standards of this profession until October of 1971. Therefore, engineers are very vulner- able to pressure from public officials for both legal and illegal payments. An engineerI who refuses to pay can be, deprived of substantial public work without effective recourse, and one who, pays can safely expect that he will be; rewarded. A few companies developed in time; a isze, expertize, and stature that insul ated them to.some extent from this sys-' tem. One or two developed an expertise, for example, in large bridge design, that: ,other local companies could not match.? One or'?two grew so large and had> 'been awarded'so many substantial con-; tracts that the State could not do with- out their services, unless out-of-state, consultants were. employed. In these ways, a few compares in effect "grad- uated" in time from the system to a position of lesser vulnerability, and they. could afford to resist and perhaps in some instances, refuse to participate. In fact, Green believed that his ? own Com- pany was in recent years in the process. of moving into this class. . It was seldom necessary, in Green's experience; for there to be any express prior. agreement between an engineer. and a public official in Maryland. Under, this system, ,which each State adminis tration perpetuated, the connection be-; tween payments and contracts rested on-. a largely tacit . understanding under which engineers knew that if they did- not, pay, they would not receive very many contracts and that if they did pay,, they would receive favored treatment., Therefore, when a politician requested: a payment or when an engineer offered, one, it was not necessary for anyone. expressly to refer to the connection be tween payments and contracts because, everyone understood the system, and could 'rely upon it .without ',actually talking about it. -- Green came to know Spiro T, Agnew, in mid-1963, when' Mr. ' Agnew was, the County Executive for Baltimore, County, Maryland. Although his com 'pany received some, engineering, con- tracts from the county, Green does not, recall-making, any cash payments to Mr.. Agnew 'or to. anyone in his administra-, 'tion -during these years. Green culti- vated his relationship with Mr. Agnewi and, occasionally .had lunch with him.. By 1966, they had developed a close relationship. In connection with Mr. Agnew's sue-; 'cessful 1966 campaign for Governor, Green gave him approximately $8,000, to $10,000 in campaign contributions,., He. did so in part because he genuinely., .admired -Mr. Agnew and believed that. he would make an excellent Governor... He .also knew, however, that Mr. Ag- new would be .grateful for his support, and he anticipated ' that Mr. Agnew would express his gratitude by giving' the Green company state work if he. were elected. After the inauguration, Green met with Governor Agnew on several occa- sions in his new offices, usually in Bal-: timore, but sometimes in Annapolis. At one'of these meetings Governor Agnew, expressed his concern about the substan tial financial obligations' and require- ments imposed upon him, by virtue, of his new position. He told Green that, asi .the titular . leader of the ' Republican party in Maryland, he would need sub- stantial funds in order to support his own political organization. In addition, he believed that he would be called 'upon to provide financial assistance to other Republican candidates around the state. Furthermore, he complained that it was extremely difficult for a person In, - his limited financial situation to bear the personal expenses of high public of- fice, in the sense that his new posi-; tion would require him, he believed, to., adopt and maintain' a life style that was beyond his means: He said that he had served as County Executive at substan- tial financial sacrifice because of the. small salary and that, although the' Governor's salary represented -an in- crease in income, it would still be, insuf- . ficient to meet the additional demands: that he believed'his new position would impose upon hiin. . Complaints by Agnew This was neither the first nor the last occasion upon which Mr. Agnew mentioned to Green his. concern about his, personal financial difficulties. He, had voiced -similar complaints while ,.County, Executive, and he continued, from `time to time to mention his per-; sonal financial difficulties thereafter. Green inferred from what Mr. Agnew .said, the manner: in which he said i4. And their. respective positions that he' was being invited in a subtle but clear' way to make, payments. He, therefore,. replied that he recognized Mr. Agnew's financial problems and realized he was not a. wealthy man. Green told him that his company had experienced successful growth and would probably continue' to benefit from public work' under the' Agnew administration. He, therefore, of- fered to make periodic cash payments' to Governor Agnew, who replied that. he- would appreciate such assistance, very much. ' On the basis of Green's 'experience," he had developed a policy that, where, required, he would make payments in; amounts that did not exceed an average of 1 per cent of the fees, that his com-; pany received on public, engineering. contracts. This inforihal calculation in-, eluded legitimate political contributions, as well as cash payments. He knew that, many politicians believed that engineers; were wealthy and often demanded pay merits in much greater amounts, fre- quently 5 per cent and sometimes high-' er. Although he believed that some en- gineers made payments in these amounts ,,he knew that such percentages were unrealistic, given the economics of the engineering. industry. An engineering firm could not, in his judgment, make; a 'profit on public work if payments. in these excessive percentages , were, made.. He 'h'ad come to the conclusion. 'that his company could, not afford to. pay more than 1 per cent and,.in areas, where more was demanded, he, had simply refused--to pay and had. sought work elsewhere. Therefore, Green calculated, largely' In his head, that it would be. appro-, priate for him to make approximately. six payments a year to Mr. Agnew in: amounts of $2,000, $2,500 or $3,000' each. The exact amount to Green for such purposes at the time of the payment. After.the meeting at which this subject'; had first been discussed, Green sched-. uled appointments with Governor Ag-'. new approximately' six times a year. At the first such meeting, he handed an ? envelope,, to' Governor, Agnew that S contained between $2,000 and $3,000 in'' cash. Greets. told the Governor ' that, he was aware of his financial prob. lems and wished to be of assistance to him. Governor Agnew accepted the en-.~ velope, placed . it in either his desk, drawer or his. coat pocket, and ex- pressed his gratitude.. Over the naxtj two years, they gradually said, less and, less' to 'each other'. about each pay-'? ment; Green would merely hand him an' envelope and Governor Agnew would place it in either his desk drawer or' his coat pocket with little or no discus-+ sion about it. -During, these meetings, Green and; Governor Agnew would discuss a num-' ber of matters; but. Green almost al- ways made it a point to discuss state; roads contracts with him. Indeed.Green'si principal purpose in meeting with him, was always to increase the amount of work that his company received from, the state. They would discuss state con-` tracts in general, and frequently, spe-, cific' upcoming road and bridge con-1 tracts in. particular. Green would ex-s press his desire that his company re-1 'ceive consideration for proposed ,work, and would occasionally ask for specific! contracts that he knew were scheduled` to be awarded by the State Roads Com-' mission. Green knew from experience;, ,and. from what he learned from Wolff, that Governor Agnew played a substan tial role in the selection of engineers; ,for, State Roads Commission work. Gov- ernor Agnew would often tell him in' these meetings that his company could] ? expect to receive 'substantial work' gen-1 erally, and on pccasion, he promised:: Green specific' contracts. On, other oc-' casions, however, Governor Agnew.: would tell Green that a contract had al- ready been or was to -be committed to.; another company. Green admits that his principal pur-; pose in making payments to Governor: Agnew was to influence him to select . the Green Company for as many state roads contracts as possible. ' Based- upon" his many years of experience, it was his belief that such' payments. would probably be 'necessary and certainly helpful in obtaining substantial, amounts: of State Roads commission work. With one exception (to be related later in-this statement), Mr. Agnew nev:. er expressly stated to Green that there.' was any connection between the pay- ments and the selection. of the Green company for State contracts. According to Green, the understanding was a tacit one, based upon their respective posi-; tions and their mutual recognition of. the realities ?of the system; their rela tionship was such that it was unnec- essary for them to discuss onenly the` understanding under which i :se pay-:: ments were given 'and received. The, circumstances were that Green gave Governor Agnew cash payments in sub.' -stantial amounts and asked for con- tracts, and from time.to time, Governor, 'Agnew told him that contracts would` be awarded to the Green company. Green paid Governor Agnew Approx., imately $11,000 in each' of the years.: he served as Governor of Marylandt (1967 and 1968). Green generated the, necessary cash to make these payments. through his company by various means' that violated the Internal Revenue Code, and that were designed to obscure the, purpose for which the cash was used., Green also recalls that during the, early part of the Agnew Administra- Lion, - the Governor occasionally asked, him to evaluate the competency of cer-: tain engineering companies which '. he- was considering for State Roads Com mission work.. On at least -one occasion,., Approved or Release - - - Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 the Governor also asked. him' If certain companies, could be counted upon to. provide financial assistance if . State' work were received. Under the Agnew Administration, the` Green company received substantial.: `work from the Maryland State Roads 'Commisysion. It was awarded approxi-, ,mately~; 10 contracts, with, fees approxi mating;$3,000,000'to $4,000,000. On a few occasions during these years ,Green was asked by Jerome B. Wolff ,if he was; taking care of his "obligations" with respect to the substantial State' work that the Green company was re-, ceiving, and Green .replied that he was. Green saw little or nothing of Gover-- 'nor Agnew between his, nomination as. the Republican candidate for Vice Pres 1dent in the summer of 1968 and the, election in November. He made some, campaign contributions by check to the; -Nixon-Agnew ticket4n the 1968 election.. List of Contracts Prepared In November or December, 1968, after Mr. Agnew was elected Vice President ,but before his inauguration, Wolff`came? to Green with a list that he had pre- pared of the contracts that the Green ;company had received from the State Roads Commission under the Agnew: administration. Wolff told Green .that `Governor Agnew had asked him to nre-; pare the list, and Green concluded.that, the list had.been requested and could 'possibly be used' as a means of assess ing what he owed to Governor Agnew; in return for those 'contracts. . Wolff and Green discussed the con tracts and fees and, in effect, bargained, about the matter. Green` argued that ,some 'of the contracts that appeared; on the list had in fact been awarded: to his company under the Tawes ad- ministration and that the Agnew admin-; Istration was simply implementing a , contract for which the, selection ? had. `been"made previously. Wolff, however,.'' reminded him that the Agnew adminis tration could have canceled at least: some of the contracts, or could have.. awarded , portions. of the. contracts to other. firms. Subsequently, Green, pre pared a revised list, of his own and.; submitted it to Wolff. Some time thereafter, but :still before: the 'inauguration, ' Green met with the, Vice President-elect in his Baltimore i Governor's office. He gave Mr. Agnew ,a payment during the meeting. Mr. Ag-? new began. the conversation by making some reference to the list. and ind'i-,' cated that the' Green company had re-; ceived a lot of work from the State' Roads Commission. Mr. Agnew said that: .he was glad that things had worked. out that way. . He then reiterated that' he had been: .unable to improve his financial situa-t tion during his two years as Governor and that, although his salary as Vice President would be higher than his sal-, ary as' Governor, he expected that the social and. other demands of the, office. would. substantially increase his person- al expenses. For these reasons, he said, he hoped that Green would be able to, continue the financial, assistance that. .he had been providing to him over the preceding two years, and, Mr. Agnew' continued, he hoped he could be helpful 'to Green with respect to Federal work.' This was the only occasion upon. which Green can now .recall that Mr.; Agnew made any 'such express state-' anent to him about the connection be- tween payments and favors. Green did' not believe that it was necessary ex- pressly to refer to' specific favors in "turn Y r.. payments. Indeed, through-, out Mr. Agnew's' gubernatorial tenure,' it had never been necessary to state expressly that Green would receive any- thing in return for the payments .that' he had' made, because a tacit under standing on this matter was more'than .sufficient to satisfy Green and to ac .complish.his purposes. 'Green replied by telling Mr. Agnew, that he would be willing to continue to, be of financial assistance, but that he, was not certain that he could continue, ,to make payments in amounts as great' as those' he had made during the previ ous two years. Green knew that. con tracts awarded by the Agnew adminis- tration would generate income to his, 'company over the next ' several years, and that therefore he could continue, to make payments for several years.' Green also hoped that his, company,'s; Federal work might increAe in amount, as a result of Vice President Agnew's. efforts on his behalf. . He did . tell Mr. Agnew of one im-? ,portant concern: that the new adminis- tration in Annapolis might take. credit .for, -and possibly demand payments in, connection with, projects that had ac-` tually been awarded "to the. Green com pany by the Agnew administration. Mr.: Agnew, however, confidently indicated:. that he did not believe that would hap-,; ,pen. Green continued to make' cash pay ments to Mr. Agnew after he became. Vice President. Payments were made three or four. times a year and were. -personally delivered, to Mr. Agnew by, Green either in the Vice ' Presidents of-' fice in the Executive Office Building in. Washington or' at his apartment in the' .Sheraton Park Hotel in Washington.. Green made his last payment during the Christmas season in December of 1972. As Green recalls it, these payments in-',, variably amounted to $2,000 each. As, .before; the money was always in a plain, envelope, and the two men were always., alone when the payment was made. Green particularly recalls ' the first; occasion upon which he paid money to" Mr. Agnew in his offices in the Execu-; tive Office Building. Green was ".quite impressed with Mr. Agnew's office and ? position and felt very uncomfortable about the transaction that was ,about; to occur. In addition, Green had some, concern that the conversation between: him and Vice President Agnew might be overheard or even taped. For all of these reasons, Green did not believe that it was appropriate or wise to con- ', tinue to speak of personal financial as-' sistance. Therefore, . he stated to. the' Vice President that this money was' part,,,,. .of his 'continuing and unfulfilled com- ' mitment to Mr. Agnew with respect to'-, '"political . contributions." Thereafter,, Green usually made a similar statement; when he delivered money to Mr. Agnew" in his Executive Office Building offices. 'Green recalls that on the' first occasion' he made such a statement to Mr:: Agnew: Green -raised. his eyes to Zhe' ceiling 'in order silently to suggest to.: Mr. Agnew the reason for the unusual, and inaccurate statement. In '1969 and '1970, Green paid. Mr.! Agnew $8,000-a year, four payments of $2,000 each In both years. In 1971 and- 1972, he paid Mr. Agnew $6,000 a yea:,: ,three payments of $2,000 each in both; years, In Green's meetings with-. Vice Presi-' dent Agnew, he frequently asked about- Federal ? engineering contracts for his, ,company, and Mr. Agnew generally in` dicated to him that he was attempting to e as helpful as he could. Green soon realized, however., that' the' Vice Presi- 6 dent did , not exercise any substantiar control over' Federal work, and, in fact,", the Green Company received only one': ,Federal job during this period. The payments were discontinued after December 1972, because of 'the'investi-! ~gation conducted by the "United States' `Attorney's - office into corruption in' Baltimore County, Maryland. ' ? Over the six year period between 1966;, and 1972, Green's cash payments.to Mr, Agnew totalled approximately $50,000. III. The relationship between' ;Mr. Agnew and Lester Matz. ' Lester Matz has been an ,engineer In, 'Maryland for approximately 24 years..t -He is the president of Matz, Childs and; 'Associates, Inc., and Matz, Childs and As- sociates of Rockville, Inc., two Mary-,. land engineering companies.. John.-C.- Childs is his principal business associ-' .ate in these two companies. Matz has, tendered his complete cooperation to the, Government in this investigation. The' .Government has not entered into 'any: agreement with him as to what consid eration, if any, he 'may expect in re- turn for his cooperation, other than the< .assurance that his. own truthful disclos-i ures to the Government. will not be: used against him in. any criminal pros ecution. At the Government's request: Matz. has eecuted a sworn written state- ment that recounts his relations hip with; 'Mr. Agnew. His testimony, the corrobor- i .ative testimony of Childs- and other` witnesses, and various ' corroborative.: documents, would prove.the following: j . Between 1956 and 1963, Matz and Childs supplied various engineering serv ices to private developers, principally! in the metropolitan Baltimore area. Al-i ? though they wanted to do as much pub-, licwork as possible for the ' Baltimore-' County Government, they found it ex-' tremely difficult to receive any substan .tial amount of county work. They ob.: served that a relatively small number; of engineering companies received most, of the substantial county engineering, work during these years, and that most,; ,if?, not all, of these . companies were, closely associated with- County "Admin-, istration or public. officials. They simply could not break. into this group, despite' their repeated. efforts to do so. They, therefore, welcomed Mr. Ag-i new's candidacy for Baltimore Countyi Executive in 1962 because they be-; lieved that-his election would present: their company with an opportunity to. be one of the few engineering com- panies that, they believed,' would in evitably form around his administra-; tion and. receive most of the substan tial county 'engineering work.' Matz. had known Mr. Agnew casually for possibly' two.' years, and during the 1 _ ,,2 cam-: paign, he and Childs made a $500.cashi contribution directly to Mr. Agnew. Prior to the 1962 election, Matz had also worked professionally with one of ; Mr. Agnew's close associates. Indeed, by. this time the three of them (Mr. Agnew,, Matz and the close associate) had al-, ready begun to develop what would in the next four years become a close personal friendship. Very shortly after., Mr. Agnew assumed office as County Executive for Baltimore County, Matz was contacted by the close associate. : During this conversation the close~-a8- sociate told Matz that the two of tiuW were going to make a lot of mnety under the Agnew administration.' At- :though he did not elaborate on tliik comment, Matz' inferred from wharch'e said during this conversation that under the Agnew administration, the two of them could ' expect substantial favors Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 .from the Baltimore County governmMf Shortly thereafter, Matz was invited .by the close'associate to meet with;Mr. 'Agnew: At this.meeting there was rt ,specific discussion about payments dot county work, but Mr. Agnew told NT= that he had a lot of "confidence" irr?his 'close associate. Matz inferred from what Mr., Agnexr said during this meeting that he should work through the close associate and make any payments through him. 03 After. Mr. Agnew became County Ex- ecutive, the close associate contactotl Matz and asked him to prepare,a chart ;which would set forth the amountsiof money that could reasonably be ,eXL petted from engineers on the various kinds and sizes of consulting contract? .that the county generally awarded. Me calculated the profits that could gene erally. be anticipated under the vaript>;; types of contracts, 'and he determined that, on the average, 5 per cent of thb fee was not unreasonable, although-,the percentage varied depending on the size and nature of the contract. He gavete copy of the. chart to the close as[si'S' 'ciate, The chart showed the expected profit' they would, therefore, receive them 'ed by that administration. Both met' share of the substantial county engineera~ were. therefore excited about Mr. A ing consulting work. Although the 5 pgr g- cent payments were not insubstantiaj1 new's candidacy because they believed the company could afford to make the)) that -if he were to be elected Gornor, and Matz and Childs both believed that,; their company could . begin to receive' the payments would make a substantigJI substantial amounts of work from the difference in the amount of work t}iA, State Roads Commission by. continuing' their company would receive from t}.a. Jo make payments to Mr. Agnew through' county. . ,~ .his agents. During the balance of Mr.- Agile Several months after the Agnew ad- tenure. as County Executive, Matz an54 ministration took office, the State-Roads Childs would find out what contrae~ss .Commission began to generate new proj- were coming up in the county; - ay#, ,ects and to award new contracts, and ,Matz would then contact the close asry ,Matz's company began to receive sub- sociate to ask him for as many of these ?stantial amounts of State work. On sev contracts as possible. The close associati eral occasions during the spring and always seemed well aware of the woikt summer of 1967, the close associate to be let, and, from time to time, 1i'G called Matz and attempted to perpetuate would advise Matz that his compan 1 the arrangment under which payments. .had been awarded a particular contraeb had been made for contracts in the Matz then knew that, under their ar-' .past. Matz was reluctant, however, to. ,tangement, the necessary payments were: continue this arrangment, for several ;due, and he would therefore deliver tfle' reasons. ;Mr. Agnew in his office and told him that reliability. in making payments. He?.tol. j; he had given a copy to the.close astb-? the close. associate that he was dish ciate. Mr. Agnew looked at the chart )d, satisfied, and the close associate ary, thanked Matz for his effort on the iria`f ranged a meeting with Mr. Agnew; :,)s ter. Matz cannot recall today'-whei&T: The three men met at Mr. Agnew', Mr. Agnew returned the copy to house.At this meeting,Matz complained is ad Not'Political Contributions' \ eno ugh county, w rkhBoth not 4i Mr.rAgne, When Matz gave a copy of this scliddl- and the close associate. promised that .ule to the close associate,. he was told they would help the company to re that he would be expected- to make pa}0 ceive more county work, and in part ments to the close associate for cou'n'ty' 'titular, Mr. Agnew told him that hey contracts. The close associate said tlia'f would speak on Matz's behalf to th' as Matz's company received fees fr6rif appointed county officials who, went the county, payments were to be made nominally responsible for the selectio. to him in the appropriate percentage'sf of engineers, for county consulting coil 5 per cent on engineering contracts and tracts. 2t/2 per cent on sul?veying contracts. Ie In the 1966 gubernatorial cavaigi, led Matz to believe that this moiie 'Matz'and Childs made campaign con-' would ' be given to Mr. Agnew. Thes tributions to Mr. Agnew, in part bed, payments were not described by tlil~ cause they believed that Mr. Agnew" .close associate as "political contriliu-' would make an excellent. Governor. They tions;" they were payments made in rdri also, however, had another substantiate turn for contracts. - 'In reason for supporting-Mr. Agnew. Under., Thereafter, Matz discussed this propli Governor Tawes's administration, them? osition with Childs. They-were not sure company had not received any substaq ' prised that payments would-be necessaryj tial amount of work from the Maryland because it was generally understood that? St^te Ro^ds Commission, They realiizeci; engineers had been malting such payH .that their inability to secure any sdb;, meats for consulting work in a numbezn stantial amount of state work was the' of Maryland jurisdictions. They agreetd result of the fact that they were not that this would be a satisfactory a,41 among the small group of engineering ran er,,ent. In fact, they were delighted that they would be among the small firms that were closely associated with - group of engineers who would be close' the Tawes administration and that had, to the Agnew administration and that, received most of the state work award- required- cash payments personally t3. the close associate in the latter's office On most occasions, Matz placed t1fel ,necessary cash in plain white envelopesn1 .Usually he. paid in installments rath'etn than in one total payrdent in advance'' Matz and Childs believed that even If, they had refused to make these pa!jl ments, their company would have i'C9 .ceived some cu..nty contracts, but tha,P as before, the. company would not haw@' received any substantial amount of wont' amount of work they received. .Tzk nj Methods of Raising Cash S;n At first Matz and Childs personallyii generated the necessary cash- to make these payments. As the size of MV various cashpayments theywere making' increased, however, they found it ned !( essary to employ other methods 'bye. which to generate these cash funds it4f, .their compansy. These methods violat2d'i the internal Revenue Code and were3 During the first year or two of th6.i which the cash was used. Agnew administration in B1t'imorei County,, the company's county work in=; creased. Matz, however, was not satis.2; -fied because he believed that his come pony was entitled to an even large .7 First, he knew that if he paid Gov" ernor Agnew through any middleman, the credit to which he was entitled by' ,virtue' of these payments would be somewhat diluted because ' the middle- man himself would receive a substantial portion of the credit. Second, he sus-; petted that the close associate had,' without Mr`. Agnew's knowledge, re-{ tanned for himself some of the money; that had been paid to him by Matz' between 1963 and 1966. Third, he knew; that Mr. Agnew believed. that the close' associate ~ had given him poor advice' on certain matters that had resulted in' bad publicity and embarrassment to: Mr. Agnew. Sometime early in Governor Agnew's. administration, Matz met with Governor; Agnew alone in his offices. During this: 'conversation Matz'told Mr. Agnew that' he believed, that the close associate, lacked the discretion necessary safely; to represent. Mr. Agnew's interests and that sooner or later. he would lead the two, of them into trouble. Therefore, rather than, continuing. to pay through' 'the close associate, Matz suggested that, his company establish a savings account; into 'which he would deposit the money; that he owed on State contracts. After; - Mr. Agnew left office, Matz could pay., .him the money accumulated in this ac-' ,count, perhaps under the guise'of legal, fees. Governor Agnew liked the idea, and at a later meeting he referred.-to, the idea.again with approval. These factors and, in particular, these, conversations with Mr. Agnew,.led Matz' to conclude that he could dispense with: the close associate and pay Mr. Agnew* '-directly. He therefore told the cose as sociate that he would ' take care of his' 'obligations directly. Subsequently, how= ever, he abandoned the savings account; idea because lie, feared that it would: involve too many records of payments' and thereby lead to the disclosures of: the scheme,' Instead, he decided to. make his cash payments to Mr. 'Agnew; directly. Taking Care of 'Obligations' The amount of work that Matz's corn-; pany received from the State Bonds, Commission continued to increase sub stantially, and, on at least one occasion.: Matz was asked by Wolff, if hi; was, taking care of his "obligations" with're- spect to his contracts. Matz told Wolff; that'he was taking care of his obliga tions "directly." Although Matz's compai,y received 'several substantial State contracts in 1967, he made no payments that year.: On the basis of his experince, he assume' that he would have to pay 5'per cent' of the fees that his company received' from the State on these contracts. The contracts and fees that their company;, was receiving from the State Roads; Commission were much more substantial; than those it had ever received before," and Matz and Childs therefore decided, that they would defer paymnts until after they had received fees from the, State. No payment was made until the sum-' mer of 1968, by which time Matz knew that he was behind in his obligations.,' He was anxious to fulfill them because he wanted to maintain?his reputation me a man, who could be trustd to fulfill his obligations, in order ?to' nsure that: he wuld continue to receive substantial. amounts of, -work from the State Roads Commission. Although his company was, ,in a financial position to make the large payment that was due, he knew that it wild be extremely -difficult to gnerate safely the 'substantial amount of neces= sary cash, partioularly if he continued to. rely exclusively upon his usual.ineth Approved or Release 2001/08/07 : ~1i~-1 DP7T-0b - Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 Mods for generating the money with which' to make cash payments. Outside the Company Sometime in'late June or early July,; 1968.! Matz calculated that he owed. 'Governor Agnew approximately $20,000 on the, basis of _5 per cent of the fees that his company had already received from the state. lie reviewed this calcu elation with Childs, who agreedwithit.` They did' not believe that they could safely generate this amount of cash fro within the company and, therefore, de-: cided to go outside the company. ' Matz approached an old client and friend of his who was in abusiness in` which he customarily dealt in large' sums of cash. Since Matz knew that he: would be receiving substantial fees from the state within the`next several'months,~ on which he would owe Governor Agnew, approximately an additional $10,000; he told his friend that he needed $30,000 -' ,in cash in the very near future. He did: not disclose to his friend why he needed: this money. They , agreed upon ' the 'following', scheme: Matz's company would by cor-w porate check 'lend" his friend $30,000;' his friend would ten generate $30,000' in cash through his own company which be would ,return to Matz. The "loan" + would be repaid to Matz's company by $1,700 quarterly checks for principal. .and Matz would return these "loan'. repayments" to his friend in cash: This .scheme was satisfactory to Matz be-. ,cause his regular 'procedures were ade quate to generate $1,700 in'cash on at quarterly'basis. The friend reluctantly agreed to assist. :Matz in this manner.' He immediately"., generated $20,000.in cash, which he de-l livered to Matz.' Matz , showed this $20,000 in cash to Childs before he de- 'livered it to Governor 'Agnew. The .friend promised that he would supply; Matz with; the additional $10,000 in cash as soon as he could generate it, and he. did so within the following several months. Thereafter, the "loan" repay- Matz then called Governor Agnew's. office and set up an appointment with the Governor. The meeting occurred in mid-July, 1968. Matz met with the Gov- , ernor alone in his office and handed;. him a manila envelope that contained $20,000 in cash. Matz expressed his ap= preciation.for the substantial stare con-, tracts that his - cmpany. . had received .and told the Governor that the envelope' contained the money that his company' "owed" in ebnnectian with these con-. ;tracts. The meeting was a very short 'one and vey little else was said. To the best of Matz's present 'recol-' lection, he made no further payments. ,for state work to Mr. Agnew while he was Governor of Maryland. During th :1968 national campaign, however, Matz' .firm contributed to Mr. Agnew's cam paign; He also acted as a fund raiser; for Mr. Agnew in 1968. Matz also. re ,calls that at some'point in 1967, Govern-' or Agnew,called him and asked him to 'contribute $5,000 to Newlson Rockefell ;er's campaign for the Republican, Presi dential nomination, a campaign, which Mr. Agnew was then publicly supportin' .Matz asked if he 'wanted cash or a. check, and Mr. Agnew asked for a check which Matz subsequently sent to him.. When Rockefeller later withdrew, Mr.. ;Agnew returned themoney to Matz with A letter. . i A couple of months after Mr. Agnew,, had assumed the office of -Vice Presi- dent, Matz decided that it was?time'for ,his company to make another payment' ;,in connection with contracts that had, 'been awarded by the State of Maryland under the Agnw administration. He was willing to make this payment, even' though Mr. Agnew no longer controlled the contracts awarded by the Maryland: ;State Roads Commission, because he wanted to, maintain his reputation as a ,man who would meet his obligations in. order to influence Vice President Agnew to assist him in securing' federal ei} gineering contracts for-his company. Appointment Set Up Matt called'the Vice President's'office in Washington, and set. up an appoint- ment to meet with Mr. Agnew. On a? piece of. yellow legal-size paper,- Matz calculated the sum then owed to Mr. Agnew for work received by Matz's company from the State of Maryland. ,He took,this piece of paper with him, when he went to the Vice President's office. He met with Mr. Agnew, showed `him the ..,calculations, and briefly -re-, them for him. He then handed him 'an envelope, containing approxi .mately $10,000 in cash. Matz told him.` that the envelope conteained the money` .that his company "owed" in connection'. 'with the State Roads Comission con- tracts that. he had been awarded under 'Mr. Agnew's administration in Annapo-i; lis. Mr.~ Agnew placed :this envelope in; his desk drawer. Matz also 'told the 'Vice President that the company might "owe" him; more mgney'in'the future as, these con-., ,tracts continued to generate,' fees, and. :that he would fulfill. these obligations: ; ,They agreed that Matz was to call.Mr: Agnew's secretary when he was ready, to make the next payment and to tell 'her that he had more "Information" for: Mr. Agnew. This was to be A. signal to Mr. Agnew that Matz had more. mon- ey for him. After: this meeting, Matz returned to Baltimore and told Childs of the payment. -He also told Childs that' she was shaken by his own actions be ,cause he' had just made a pay-off to: the Vice President of the United States' Matz also told -Wolff, 'who was then' :working or about to begin working on the Vice President's staff, that-he had' made. a direct payment to the, Vice. President. Although. Matz believes that he made several additional cash payments .total-,, 'ling approximately' $5,000 to the Vice. President, he-never completely' fulfilled his obligations to M. Agnew with re-;, aspect to the State Roads Commission' contracts, in part because Mr. Agnew, had, very. little,-, if any, influence with, .respect toFederal engineeringcontractsl. Smetime in late 1970. or early 1971, Mtz. f received a, telephone., call from, LVEW YORK TIMES 19 October 1973 Soviet ort Agnew Case: Typical of U.S. Politics `' Special to The New Yolk Times MOSCOW, , Oct. 18-The, Soviet press, in its first' ex= tended commentary on the resignation of Vice President Spiro T. Agnew, says that':` the case was "a model illus.: 'tration of the pernicious and ' all-pervading influence of'., money" in American politics. ? The commentary, ' which" .yesterday in the Government newspaper Izvestia, was the close associate who told him that' there' was an, upcomingFederalproject and that some or all of the engineering 'contracts :could be. controlled by the Vice President. ' He told Matz that, as.. ;usual, he 'would be expected to make' a payment in order to receive a con-; tract. At first, Matz resisted on the ground that he was entitled to this job,' without a payment by virtue of his', prior payments, but the close associate insisted, and Matz agreed to a payment of $2,500. Matz asked that the contract,' :be awarded to a certain small company., in which Matz,. Childs and Associates ,had an interest, and that small com, pany was later awarded the contractsi. Thereafter, Matz received another tele-i phone call. from the close associate.(, during which they agreed that the pay, 14, ment would be made in the Vice Presi-+ dent's office. ,Matz -contacted the president of, then small company and 'explained that ;payment was 'necessary in connection; with the contract. The man' at first' balked and refused to make any sucs payment, but he subsequently agreed; to participate., An appointment was then'' made for Matz to meet with Vice Presi i.. dent Agnew in. the latter's?, office 'in Washington. This meeting occurred inc the spring of 1971. The evidence is: .somewhat contradictory as to whether", ,'or. not the close associate was present{ at the meeting.?Matz placed an envelope containing the $2,500 cash on the Vice. President's desk and stated ? that the 'envelope contained -the money re- .quired for the: contract. When be left", the meeting, the envelope had not been", removed from "the desk, but moments', later Matz re-entered the office and, noticed that the envelope was gone.'i Matz receid $1,000 from the presi-t dent of the small company as his con- tribution to this payment.. In the spring of 1972, the close asso- ciate called Matz and asked him' for ;$10,000 for the 1972 Nixon-Agnew cam-.l paign. Matz! declined.' When the close associate continued to pies 'tim, Matz complained about these solicitations to Mr. Agnew, who told Matz to say that -he gave at the office. Respectfully submitted, `SET CSC- - -. United States Attorney George Beall Barnet D.SkO1nik Assistant United States Attorney Russell T. Baker, jr. Assistant United States Attorney Ronald S. Liebman Assistant United States Attorney.: October 10, 1973 striking because the 'Sovieti press, radio and television have totally avoided com- ments on the ' Watergate affair and had not mentioned charges against Mr. Agnew' until he resigned,' Then, very brief, straight-forward news ccounts of his resignation were run. ' ' Izvestia advised the Soviet" public that only high posi-` tion . and the Administra-,. tion's desire to avoil a scandalous trial had saved Mr. Agnew from imprison-, went. . Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 NEW YORK TIMES 11 October 1973 Texts Of Statements- Read in Court by12ichardson9 Agnew and Hoffman BALTIMORE, Oct. 10 - Following: fire the texts of statements read.-in- .United States. District Court here to- day 'by Attorney General Elliot L.?. Richardson, Vice President Agnew and, Federal.. Judge Walter E. Hoffman in connection with the sentencing of Mr. Agnew:. Richardson Statement May it please the court, I am, like 1 very other participant in these pro `ceedings, deeply conscious of the critical: national, interests which surround them.. The agreement between the parties nowry before the court is one which must be'; just and honorable,. and which must be perceived "to be just and honorable, not' 'simply' to the parties but 'above. all ? to ; the American. people. From the outset of the negotiations .which have culminated, in these pro- ceedings, the Department of Justice has' regarded as an integral requirement of cany agreement a full disclosure of, the .surrounding circumstances, for only with knowledge of these circumstances can' the' American people fairly judge the justice of the outcome. One critical cbmponent of these circumstances is, J the Government's evidence. In accord-' ance, therefore, with the agreement of `counsel, I offer for the permanent record: 'of these proceedings. an exposition of -the evidence accumulated by the in-: vestigation against the defendant con- }ducted by the office of the United States, 'A'ttorney for the District of Maryland as' >of O.ct. 10, 1973: Because this exposi zti.'on is complete and detailed, it is suf ficient for present purposes simply to: state that this evidence establishes a pattern of substantial. cash'payments to the defendant during the period when t:he served as Governor of Maryland in return for engineering contracts with "the State of Maryland. Payments by the principal in one large engineering firm began while the defendant was County ,,Executive of Baltimore County in the early nineteen-sixties and continued into 1971. The evidence also discloses pay- .ine'nts by another engineer up to and. ncluding December, 1972. None of the Government'.s major. witnesses has been promised immunity from "prosecution, and. each of the witnesses. who would testify to having made direct payments .4o'the Vice President has signed a sworn statement subject to the penalties of perjury. In. the light of the serious wrongdoing. shown by its evidence, the Government might have insisted, it permitted by the court to do so, on pressing forward' with the return of'' an indictment' charging bribery and extortion. To-have done' this, however, would have' been likely to inflict upon the nation serious; and permanent scars. ' If would have' been the defendant's right to put the', :prosecution to its proof. The Department of Justice had conceded -the 'power of Congress, once an indictment had been: returned, to proceed by impeachment.: The Congress could. well have elected` to exercise' this constitutional power. If' the Congress chose not to act, the de-. .fendant, could, while retaining office, either have insisted upon his right to ,a, trial by jury or have continued to contest the right of the Government to, try an incumbent Vice President. Which- 'ever. of ? these courses were followed would have consumed not simply month, but years-with potentially disastrous' consequences to' vital interests of the' 'United States. Confidence in the'. ade-: quacy of our fundamental institutions would itself have been put to severe" trial. It is unthinkable that this nation .should- have been required to endure' the anguish and uncertainty of a pro- longed period in which the man next in line of succession to 'the Presidency' was fighting the charges brought against him by his own Government. . On the basis of these considerations,' I am saisfied that the public interest. ,is better served .by this Court's accep- tance of the defendant's plea of nolo ,contencjere to a single count informa- tion charging income tax evasion. ' There remains the'. question of the Government's position toward the sen- tence to be imposed. One possible course ,would have been to avoid this difficult and painful issue. by declining to make an affirmative' recommendation. It be- came apparent, however, in the course ,of the negotiations that, without such' a recommendation no agreement could be achieved. No agreement could have been achieved,' moreover, if that recoin- mendation did not include an appeal for leniency. ' I am firmly convinced that In all :the' circumstances leniency is justified. I am keenly aware, first, of the historic magnitude of the, penalties inherent in the Vice President's resignation from his, high office and his acceptance of a judg 'inent of.conviction for a felony. To pro= pose that a man who has suffered these, penalties should, in addition, be . in-, carcerated in a penal institution, how- ever briefly, is more than I, as head of the Government's prosecuting arm, can . recommend or wish. Also deserving of consideration is.the public service rendered by the defend- ant during more than four and one-half years as the nation's second highest .elected official. He has been an effective. spokesman for the executive branch in the councils of state and local govern- ment. He has knowledgeably and articu- lately represented the United States in meetings with the heads of other gov 'ernments. He 'has participated actively and constructively in the deliberations of the Government in a diverse range-of, ,fields. Out of compassion for the man, out .of. respect for the office he has held, .and out of appreciation for the fact that' ,by his resignation he has spared the nation the prolonged agony that would have attended upon his trial, I urge that 'the sentence imposed on the defendant by this court not include confinement. Agnew Statement My decision to resign ' and enter a. plea of nolo tontendere rests on my firm belief that the public interest requires swift disposition of the problems which are facing me. I am advised that a full legal defense of the probable charges against me could consume several years. I. am concerned that intense media in- terest in the case would distract public attention from important national . prob. ' 'lems-to the country's detriment. I -am aware- that witnesses are pre-, ;pared to testify that I and my agents: 'received payments from consulting en- gineers doing business with the. State of Maryland during the period 1 was' Governor. With the exception of the. admission that follows, 1 deny the as- sertions of illegal acts on my part made by the Government witnesses. I admit that I did receive payments during the year 1967 which were not expended for political purposes and that, therefore, these payments were income taxable to me in that year and that I so knew. I further acknowledge "'at con-' tracts were awarded by state agencies .in. 1967 and other years to those' who, made such payments, and that I was aware of such awards. I am aware that. Government witnesses, are prepared, to'. testify that preferential treatment was' :accorded to the paying companies pur-, suant to an understanding with me': when I was the Governor. I stress, how-. ever, that ?no contracts were awarded`. to contractors who were not competent., to perform the ' work and in most in-, stances state contracts were awarded, without any arrangement for the. pay-' ment of money by the contractor.'I deny' that the payments in any way influenced my official actions. I am confident,: moreover, that testimony. presented in.. my behalf. would make . it clear that I' at no time conducted my official duties as . County Executive or Governor of Maryland in a manner harmful to' the: interests of the county or state, or my' duties as 'Vice' President of the United States in a manner harmful to the' nation, and, further assert that my ac= ceptance of contributions was part of a long-established pattern of political; fund-raising in the state. At no time have I enriched myself at the expense. of the public trust. In all the circumstances, I have. con eluded that protracted proceedings be- fore the Grand Jury, the Congress and: the courts, with the speculation and con troversy surrounding them, would serf These, briefly stated, are the reasons`. I am entering a plea of nolo contenders: .to the charge that I did receive. pay-, ments in 1967 which I failed to report; for the purposes of income taxation. Hoffman Statement For the past two days counsel for. 'the defendant and the 'representatives' of the Department of Justice have en- gaged in what is known as /"plea bar-" gaining," a practice which has received` the judicial approval of the Supreme; `Court of the United States. As the judge of the court, I have refrained from' making any recommendation to the par- ties involved as I was unaware of the' facts ,involving the alleged charges. The', agreement finally reached between the, parties, and 'which has been fully set, forth by Mr. Topkis, one of the attorneys for the defendant, and Mr. Richardson, the distinguished Attorney General of . the United States, was the result of.: some relinquishment of rights on both sides. We are all aware of the fact .that 'some persons will criticize the re-. Approved For Release 2001/08/07 : CIA-RDP77-00432R0001 0025 0001-9 , Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 suit and the sent,,nce' to be Imposed' but, in a case such as this, it would, be impossible to satisfy everyone. Once the' agreement was reached be-' een the parties, it had to be sub- mitted to the judge for his approval or, ,disapproval. It was late yesterday after-' noon when I learned the ' fl al details, of the negotiations. I insisted that all, details would have to be submitted in, open court and in the presence of the, defendant before any formal approval'. or.disapproval could be given. Such has: now- been accomplished and it becomes' my duty to proceed. The judge must accept the final re- sponsibility as to any sentence, but this does not mean that he should disregard the negotiations and advices of the par-' ties who are far more familiar with. he facts, ' the' national interest, and the consequences flowing from, any sen- :tense to be imposed. As.far as the court is involved, 'the defendant is on trial for willful evasion: .of income taxes for the calendar year 1967, which-charge is a felony in the ;eyes of, the law. He has entered a plea ?of'nolo contendere which, so,far as this criminal prosecution is concerned, is the' ,full equivalent of a plea of guilty. Such a plea frequently. is accepted in income, tax evasion cases as there are generally civil'. consequences. flowing therefrom and the' criminal court is not interested: In the precise amount of taxes which; '.maybe due. The, plea of nolo contendere merely permits the parties to further -litigate the amount 'due without regard. ,to the conviction following such a plea. V, A detailed statement has been filed, NEW YORK TIMES 11 October 1973, by the Department of'. Justice and re- futed by the 'defendant, all of which are wholly unreleated to the charge of income ta)f 'evasion, These statements ,are the part of the' understanding be 'tween the parties and are submitted -merely because of. the charges and countercharges which have received so' much advance' publicity. Of course, the., agreement further provides that the Federal Government, will take no further, action, against the defendant as to any. Federal' criminal charge which had its, inception prior to today, reserving the, right, to proceed against him,in any ap- propriate civil ' action for moneys' al legedly due. Furthermore, neither this. Court nor the Department of Justice can limit the right of any, state or organiza tion to take action against the defend -ant. Since the Department of Justice, .pursuant to its agreement,will be barred ,from prosecuting the. defendant as to.; any criminal charge heretofore existing,' .the truth of these charges and.counter- charges can never be established by any ' judicial decision' or action. It would,! , have ' been' my preference-to omit . these statements and end, the verbal warfare I am not inclined to reject the 'agree-' , 'ment for this reason alone. There is a fundamental rule of Taw that every-person accused of a crime js. presumed to be innocent until such time as the guijt is established beyond a .reasonable doubt. It is for this reason that I must disregard, for the purpose, of' imposing sentence, the charges, countercharges and denials which ;; do _ :not pertain; to the single .count. of'in- . IAgnew-Nixon Exchange October 10, 1973 'Dear Mr.. President: As you are aware, the accusations against me can- not be resolved without a long, divisive and debilitating struggle in.the Congress and in the courts. I have con- tcluded that, painful as it is to me and to my family, it, :is in the best interests of the nation that I relinquish thi e Vce Presidency. Accordingly, I have today 'resigned the office of `Vice President of -the United States. A copy of the in- .strument of resignation is "enclosed. . It has been a privilege to serve with you. May I? express to the American people, through you, my deep gratitude for their' confidence in twice electing me to, Sincerely, SPIRO T. AGNEW October .10, 1973. The most difficult decisions are often those that. fare the most personal, .and I knew your decision to re 10 .Sincerely, RICHARD NixoN . Approved For Release 2001/08/07 CIA-RDP77-00432R000100250001-9 come tax evasion. I have so advised counsel for the parties and they are in agreement that this is my duty. We come then to the charge of Income 'tax eva Ion which, as I'stated, is a felony and a most serious charge In Itself, In approving' the plea agreement between ,the parties, I 'have not overlooked my, prior writings and -sentences in other income tax cases. Generally speaking, ,where the defendant is a lawyer, a tax accountant, or a business executive, I resort to the practice of Imposing A, fine 'and a term of Imprisonment, but provide that the actual period of confine.", ment be limited,to a period of from two: 'to five months, with the defendant being placed on 'probation for the balance 6f the term. The reason for taking such, action is that our. method of filing' in- come tax returns is. fundamentally based upon, the honor of the individual report. ing his income, and a sentence. of, actual confinement serves as a deter- rent to others who are` required to, file their returns. But for the strong recommendation of the Attorney General in this case, Ii "would be inclined to follow the same'. ,procedure. 'However, I ' am persuaded. that-the national interests in the present; case are so great and' so compelling-; all -as. described by the chief law enforce- ment officer of the United. States-that; ,the ends of justice would 'be. better: served by making an ` exception ' to ' the general rule. ' 1, thetefore, approve the plea agrev ment between, the parties..' ??z ;sign as Vice President has been as difficult as any facings a man in public life could be. Your departure from the 'Administration leaves me with a great sense of personal loss. You have been a valued associate throughout these' nearly five years that we have served together. How-:! .ever, I .respect your decision, and I also respect the con- cern for the national interest that. led you to conclude ,,that a resolution of the matter in this way, rather than through an extended battle in the courts and the Con- gress, was advisable in order to prevent a protracted, period of national division and uncertainty. As Vice President, you have addressed the great' issues, of our times with courage and candor. Your .strong patriotism, and your profound dedication to the' welfare of the nation, have been an inspiration to all-. who, have served with you as well as to millions of.; 'others throughout the country. I have been deeply saddened by this whole course jof events, and I hope that you and your family will be' isustained in,the days ahead by a well-justified pride 'in all that you have contributed to the nation by your' ,years of. service as Vice President.- ; Approved For Release 2001/08/07 : CIA-RDP77-00432R00010OZ50001-9 NEW YORK TIMES 12 October 1973 9 4 rranscript of the 'Attorne eneral s News, Confeiencen Agnew Resignation Following is a transcript of a news :onfercpce in Washington yesterday by' Attorney General Elliot L. Richardson , aid United - States Attorney George , '-all of Maryland as recorded by The ew York Times. Some questions have. 'cn paraphrased because portions of', ,hem were inaudible. .OPENING STATEMENT Mr. Richardson: Good morning, ]a-.{ lies and gentlemen of the press. I wish ! o make it clear at the outset that it is he purpose of this press conference` ,imply to clarify matters which may lave been left somewhat less than clear vith regard to the proceedings by, vhich we reached this point. ' My office has received numerous in Juiries from you and I have not been-, tr a position until now to make myself.: available to try to answer them. I em- ihatically believe that it would note erve. arty meritorious interest to con inue to debate charges and counter- barges. Our purpose should be to put he matter to rest. 'There are two points that I made in. ,. ourt before Judge Hoffman yesterday. Mich I would like to underscore this. norning. The first relates to my strong. tope that the American people under- ,tand and support what has been done.. said yesterday the agreement between he parties now before the court is one: vhich must be just and honorable and` vhich must be perceived to be just and' tonorable not simply to the parties, but' above all to the American people. From the outset of the negotiations vhich have culminated in these pro- eedings, the Department of Justice has" egarded as an integral requirement irill, ny agreement, a full disclosure of the' urrounding circumstances, for only. tith knowledge of these circumstances an the American people fairly judge he justice of the outcome. i Second, I wish to urge consideration` nd compassion again for the Vice resident, who has rendered a high ervice by resigning and relieving the, ation of a prolonged and potentially: .isasterous, period of anguish and un-' ertainty. I'm firmly convinced that in all the :ircumstances leniency is justified. I'm :een'ly aware first of the 'historic mag- 'dtude of the penalties inherent in the; 'ice President's resignation from his; Iigh office and his acceptance of a udgment of conviction for a felony. ' To propose that a man who has suf ered these penalties should in addition ?e incarcerated in a penal instutition; ?' owever briefly, is more than I, as read of the Government prosecuting .nn, can recommend or wish. Finally, I would like to commend the ' overnment prosecutors United States attorney Beall, and Assistant United states Attorneys Skolnick, Baker and iebman for their tenacious pursuit of ustice and their wise counsel. Although' hey did not always agree with me,. 'particularly ' with regard to the pain- ul issue of sentencing, I know that they vere at 'all times motivated by the ighest regard for the public interest. I would in addition like especially to ommend Assistant Attorney General 'eterson for, his courageous and dis-,; inguished service ? in this case. The :haracteristics of fair and fearless pros- !cution of justice have been. the -hall:; nark of his more than two decades of,, I believe Mr. Stewart of Reuters has. he first question. ? < QUESTIONS ' Q. What purpose was served by your ,preading on the record all of the evi-' lence which you had amassed, had you ,one ahead to try him on extortion and tribery. I think many people see this; is sort of piling on somebody that's ilready down.. A. As I said yesterday in court and* is I have repeated just now, it has been; egarded by the Department of Justice rom the outset as essential to any i tgreement that there be full disclosure if the surrounding circumstances in= auding the evidence assembled by the overnment during the course of its nvestigation. We have had, unfortu=' lately, over recent months a sense that; here has been a cover-up. in some sit- rations of facts which the public was ? ntitled to know. And in- ' order to tehieve and enhance the public. confi- ilence in our institutions and 'justice' and the administration of justice, it, .tad seemed to us in the Department of, Justice essential, as I said, that the American people be in a position them-; elves to judge the basis on which ' this' natter has` been handled. ' This has been the sole reason for the: lisclosures that, we ' have made. and I; vould emphasize the fact not only was., ,:his part 'of the agreement that it was, . inderstood and , accepted by attorneys or the Vice President and by the. Vice )?resident himself; and with the con-' :urrence of the court, the statementI i hat you referred to was entered into, ..he record of the court proceedings, Q. Mr. Attorney General, will you tell us precisely what role President. Vixon may have played in the decisions, in this case, in particular, did the Presi--, sent expressely approve the entering. into plea bargaining? Did he suggest' 'parameters, limits or details of the, ' Justice Department's position in that bargaining? Did he expressly approve in advance the final settlement? . A. The President was kept, of course,.. fully informed at all times. He fully approved each of the major steps that were taken in the course of these nego-, tiations. He did not participate in'the ,negotiations as such. He, had, of course; as President of the United States, 'to be satisfied that the essential elements of what was being done were consonant' with the public interest. Q. The other part of my question- did he suggest any of those elements?-: Either by omission or by setting param- eters or by express suggestion? A. No, he did not. He, was, of course, concerned as all of us ' were, with the ? potential consequences of a prolonged "and agonizing trial of these issues of, fact. And this was a concern, naturally. that he felt, as 'did,. the Vice President, himself and those of us, who have served in the Department of Justice. Q. You've completed the criminal as-- spects of this, I understand, but there are,some tax aspects that are still to , -11, in. September which failed to achieve. Approved For Release - D 77=~ - be followed. Do you still intend.to pur- sue those 'civil tax matters with, all of, the diligence you have been pursunig the .crimina: matters in light of the exposi- tion of facts set out in your 40-pagei document? , A. These, Mr. Mollenhoff, are matters )before the Internal Revenue Service of the Department of the Treasury., As' Judge Hoffman pointed out yesterday,; these are not matters that could be; `concluded in a criminal proceeding and .they remain . to be worked ' out, to ?bei pursued further as between the' Internal: Revenue,,Service and the counsel ,for the, Vice President. . . . Q. It is my understanding *there is no' statute of limitations on the civil as-s pects of this, and that Mr. Agnew could' well be indebted to the Government for: ,penalties of 50 per cent plus several hundred thousand dollars. ' A. I would'nt care to speculate about; tthe.possible amounts or the,question, of whether or not there were. penalties.' These are not matters within the juris- diction of the Department of Justice:,i Q. Under' the conspiracy act of 1970,] Title 9, 'you` have civil authority to act) against any group or organization hav- ing demonstrated 'a pattern . of racke.-, ?teering activities. Do you intend to use~5 'this authority? A. No, this is not a situ ation any aspect of which, in my view,' properly belongs within this scope of.-' that statute. Q. The allegations in your 40-page; document ' yesterday contained a lot. more than one count of income tax' evasion, Why did you ,settle for just' A. Well, of course, the. very essence' of a negotiated plea is that each side, yields something in 'order to achieve; agreement. And while, if satisfying in .terms of weight and substance to a: grand jury, this evidence could have' 'supported ? an . indictment covering;a charges substantially more extensive,, ,than were covered in the single-count information. And in that event these, 'would have been tried. The consequence,: ,of pursuing that course would, as I: pointed out, inevitably have been to i justify 'the Vice President in insisting ,that the Government be put to its': That means, in other words, that we would have had to have very prolonged. court proceedings or potential proceed- ings in the Congress by way of im- peachment. ? Q. Sir, could you tell us whether the, Department initiated the plea bargain-` ing or did Mr. Agnew and his. law yers. A. The Department did not initiate. the plea ' bargaining. We ? were ap-,. proached in the first instance-- not only in the recent negotiations, but in the earlier period of negotiations that. took place in September. " Q. Could you follow up that, to de-- .scribe for us the chronology of plea bargaining, when proposals were made? who made them, and, finally; how did' the arrangement get, made. You indi-: seated that 'some of, your aides did not. agree with the deal on the sentence., Can you tell, us exactly how' this came about and how the deal was made? Approved For Release 2001/08/07 : CIA-RDP77-00432ROO0100250001-9 `agreement. Negotiations' were resumed' first by telephone on Saturday of this. past weekend and then there was a, meeting with counsel for the Vice Presi-; dent .on Monday and with the judge, which was followed by an additional meeting with the judge and with coun izel .on Tuesday afternoon. And it was-' ,at that Tuesday afternoon meeting that. the final provisions of the. agreement; ,,were concluded. Q. Are any individuals still subject.: to prosecution and incarceration.. A. Yes, they 'are.. The 40-page state ment filed with the court yesterday cov- ers the terms of the understanding with the key witnesses on which the state-.j ;ment itself was based. It makes clear that none of these individuals were promised immunity from prosecution.?, :There has been in the case of two un-; i 'derstandings with respect to the plea ,~ ,that they would make, but in no in ,stance, has any individual, been given .any promise as tq disposition of the case.! ?Q. Were any efforts made by the Vhite House, by the Vice President or any other outsiders, to quash the in- vestigation. A. No, there were no such efforts... Q. When you said that the Depart- ment did not initiate plea' bargaining,. in early September-that you were ap- jproached,-who were you approached; "first by-directly'or indirectly-counsel' ;for Mr. Agnew or, counsel for the{ ]'White House? nb A. The f,irsi call I had ' was a call' rom the President's counsel asking if' '3 would be willing to meet with count =set for the Vice President. . Q.. Under Mr. Agnew's unsupervised, sentence, would he be allowed to leave' the country? !'N A. I'm sure that the court would not, "want to impose any narrow restrictions:; J his is, ? of course, a matter for( the court., But since the judge made clear that the probation would be unsuper-! vised that, barring some change of cir cumstance, I suppose that Mr. Agnew, (would be free to " live! wherever he. Gchooses. Q. The President has repeatedly con-' tended that these charges do not re- ;late in any way to the conduct' of the- Vice President's office as Vice Presi-,; `dent and yet, you developed sizeable,, nformation that they do. And that on i at least two instances he was awarded:. -I'm sorry, he received $2,500 for.: `award of a G.S.A. contract and there' ,was another instance in the 40-pages.;; 'Wasn't the. President advised, of this, or didn't he understand the reasoning you. gave him when he said. it. . A. He was aware that the investiga tion touched on this, the $2,50,0 mat-: 'ter. But , it was, of course, at. the ,time when he learned of this at/a very early', stage in. the investigative process and the charge could not, of course, be corp. sidered proven. And,so the President, in effect, was in a position in which it would have been, unfair on his part to imply that he be- lieved that there had been', proof of wrongdoing by the Vice President ' in that capacity. Q: In the final agreement, did you agree on the' same penalties that you, were holding out. for in your original' negotiations with the Vice President? , A. I don't want to go into real detail,'. ` on the negotiations. I think that the, public interest is better served by the., result than it would be a blow by blow" account' of the discussions that went' on among counsel. L So I'll simply say that as of the matter;. Of disposition, that. was.. deferred 'until. 12 'our system works. Indeed, I think this, is the most affirmative aspect of all -.that has taken place over recent months all the disclosures, the . investigations, the indictments. They have exposed the,' shoddy side of the governmental politi- cal process, but they have also dem- gnstrated that the governamental politi- cal process is capable 'of uncovering these things, and uncovering them, tak-; ing proper action. Q. Will the Vice President be called?i 'as a witness in any future criminal', prosecutions? A. I don't know. He is ',certainly not immune from being called. ,As the, judge said, other proceedings'.' may, of course, involve his name or his; role insofar as that is relevant to 'pro-a ceedings. against someone else. Q. Could I address a question to Mr., Beall? A: Yes.. Q. M. Beall, Mr..'Richardson has'al-1 ready said that there were some } agreements between' them and members t r of your staff over the question of sen- tencing: Did you or members of your," staff feel, that the' sentence, was too light, that, Senator Agnew should have been given a prison sentence? i;' MR. BEALL:)The members of my staff t and I had ample opportunity to 'confers t with Attorney General Richardson and' 1 Assistant Attorney General Peterson; and, other persons in the Department; 3' of Justice during the whole, course.. Ofx thhis investigation'. beginning, . I. think,') with our first personal conference. with ,the Attorney General on July 3. The System in Maryland We continually expressed our views as prosecutors, from our vantage point, in Baltimore. We, continually expressed., your concerns. about the case itself, the ; ,.consequences of the case and. so on. And I think I can say in summary, that I could no better -articulate the conclusion that was reached than the' Attorney General already has.. There, ,was honest disagreement among reason-, able men, reasonable attorneys, as to. r what resultw as proper., But .keep in mind that our vantage !.point in Baltimore was entirely differ-; ent than the Attorney . General's van- 'tage point in Washington. There was ar- gument over many different aspects of the' whole negotiating process. And I think it would be inappropriate to sin-[ gle out any one particular item that:: came up during the discussion. Q. In the summary of,evidence, Mr., ,Agnew is quoted, I believe, as saying.. that he was following a system that 'had been. practiced in Maryland, that's he fou^'i in place. which suggests this,; guest'-: Are., ?!cu now nvestigatin~'. .the 'present Maryland Administration; :of Governor Mandel and if you are not investigating, why not? The grand jury investigation which be gan officially in January of this year, continues. There has already been ac-?! 'tion from that grand jury in the form of indictments` of other public officials in Maryland, the specific parameters of the grand jury investigation is some-' ,thing that I, would purposefully and, ,dutifully like to avoid at this time. We have consistently taken the posi- tion notwithstanding your polite objec-; itions that grand jury proceedings are, 'secret, that they should be kept from-, "public view and we expect to main-.; taro that posture but nonetheless to', continue the investigation into, bribery,; 'corruption, kick-backs and political; misconduct in the State of Maryland. Q. You're not 'ruling it out? A. I can't rule anything out at this' time because ' the investigation continues, Approved For Release 2001/08/07 : CIA-RDP77-00432ROO0100250001-9 such time as it became evident that the, recommendation of this department :would be regarded by the judge a's im ;portant in the court to the disposition% of the matter. ' And so that question, therefore, was; not squarely reached until 'after ;the; .meeting with Judge Hoffman on Mon-' ,day and then finally disposed of at the subsequent meeting with him on, Tues-1 ,day. , . . Q. It has been said there was dis agreement about the terms of the agreement. A. No, I don't believe that.' :in the first place they had reached a,. .firm view as to what the alternative- would be. But clearly,, this was a 'natter 'in . which reasonable men; including attorneys; could disagree. And I fully' ,respect their views. Q. When did you first learn.of the!. 'dimensions of the case,, and when did you first discuss it with the President;' .and was it your feeling then. that he, 'had previously been aware of the in-.' vestigation? ' A. I first discussed it with the Presi-: ,dent early in August, and I had made'. members of his staff-first General ;Haig-aware of it' in July. So that he therefore already knew something: about the situation; as the result. of ,, communications to . him by , General; Haig. No Evidence Withheld Q. Had he known before July, do you, 'believe? A. I think he was aware, in' addition, before that that an 'investiga- tion was underway because he had been, ,so informed by the Vice President him- self. Q. Did you withhold some of the evi-' dente against the former Vice Presi-' dent or has all the evidence that's come-1 .to, your . attention been . made public..' A. All of the evidence that'has been' developed on the basis that we be ,;cued would have been sufficient to, ,submit to a -rand ,fury-if a grand , jury 'were going to be asked to act 'on this., matter as of Oct. 10. Q.' If something new comes up next week that you didn't know about,, would you be limited in your prosecu-' tion in that area? A. We would be limited with respect' to anything of 'this kind that !antedated, the court proceedings yesterday. Q. In other words, anything in the,.' corruption. and fraud area while he was executive officer in Baltimore County, Governor of Maryland, and Vice Presi- dent. A. Yes. Q. That would be barred, and any- ""one who comes forward now with new information would be turned aside, or, would be. sent to the Internal Revenue A. The Internal Revenue Service, of. course, would only deal with civil as ;-pects of . the situation.. So far as the Government's investigation is concerned,' the Federal Governme>tit, and the things' that have been touched on ai-e uncov-, ered in the course of that investiga-? tion, the matter is closed. Q. We've been through a period un precedented in American history. What do you believe the nation can learn ,from the Agnew case? ?tion would feel that the process of crim- inal justice is one that it can trust and have confidence in. I would hope that it would. feel that the. interest of the. "nation has been placed first' by -all ,those, concerned, including, the Vice, President himself. . . I would hope that most fundamentally all of us would have confidence that Approved For Release 2001/08/07.: CIA-RDP77-00432R000100250001-9 and, as I say; the parameters are im- possible to precisely define. Q. A follow-up question on that.' There are indications similar symptoms-, are widespread in other states. Do you, ;feel there is a need for similar investi- gations in other states and' will the. .Justice Department: undertake them? Mr', Richardson: The Just Depart-: ment"has-in fact under Assistant At torney General Peterson and United; States Attorneys in other districts in' the country conducted investigations and launched prosecutions arising out.: of political corruption. This has been' true to a very large extent for example in New Jersey, in New York, in Illinois and 'in a number of other states and certainly this is a continuing responsi- bility of the department. Q. There's a persistent reference in,' the 40-page document to a close asso+ ciate of Mr. Agnew, unamed. Are we' 'to infer from that that you are pro ceeding -against him as an object of the; ,investigation? A. I don't think it would' 'be proper for me to suggest any in-: .Terence to be drawn from that. Q. For Mr. Beall. The County Execu-i :five of Baltimore County is already under indictment. You indicated at that 'time your investigation of corruption' in Baltimore Coutny was contnuing. Is this realistic now to expect that addi tional indictments against public of- ficeholders in Baltimore County? Additional Criminal Charges Mr. Beall George, I would rather not. get into the business of predicting ,what indictments may or may not come. 'forth from the grand jury in the for=: 'seeable future. I think that you can. anticipate that if the investigation con-': tinues as I have said it would that' there will be additional criminal! charges lodged against the subject of the investigation. I'm presuming that. 'the information that we presently have, bears up under the microscopic eye of., 'the grand jury proceedings. Q. I would like to ask a question of Mr. Beall.' Do you plan to use the Vice President in pursuing others after giv- ing him immunity? Has there been any': :consideration of this? ' MR. BEALL: I' think the Attorney General answered' that question essen- 'tially earlier. Q. He did not answer the question; as to whether the Vice President would be used in criminal activity. In other-' words, are you giving him blanket im unity. In other-words everybody, who' dealt with the Vice President? A. The answer' to the question is no., ,But as to whether there may be :some' .discussions with ' particular persons in-i volved in the investigation, Q. That sort of information relative to others who. were involved in this mess- of corruption that goes back for' 10 years? A. The investigation is stillq :an open one as far as we are con- cerned and we have not yet firmly de-' .termined what persons may be spoken; '-'with and talked to in connection with: that investigation. Q. Mr. Attorney 'General. You-said; ,that' the first contact you had. on the, ~negotia'tions was with counsel for the - President. Which counsel for the Presi- ident was that and did he indicate that. the was acting at the President's behest? MR. RICHARDSON: This was a calf from Mr. Buzhardt. He did not indicate', that he was acting at the President's: behest. Mr. Buzhardt. has at various stages during the course of ,these negotiations served. in a , capacity of facilitating communications and this was'his initial; role as it was his continuing role from 'time to time. Question on Leaks. Q. Regarding the charges that were. ,made by Mr. Agnew against the Justice; Department and particularly Mr. Peter ,son about stories that were leaked d'ur- ing the investigation of him, do you feel :,that the charges were justified and also'- iwould you tell us what your investiga-.' tions of how this information was leaked turned out? A. I do not feel that the charges were: justified,. certainly not in.the terms set ,, forth in the affidavit front Mr. Agnew's i ,-council filed 'in court, which charges a' 'systematic 'campaign of leaks from the l r department. Our . own investigation failed. to identify any source of leaks in j the department. Now obviously I can-,:, not with- total confidence' assert that-' no one in the department said anything sSo a member of the press which could' be characterized as. a leak. I could only, say first of all that we were unable to find anybody in the department who. was the source of a leak and we are': absolutely confident in 'any event that, we were not responsible for a campaign;; of leaks. We have been able to identify, as Mr. Pommerening's report makes. clear, a, number. of potential sources of infor~j mation that found its way to the press. outside the Department of Justice itself.' Indeed as, my letter to ' the . then Vice: President in August made clear, there J were many people; outside of the depart-:,' ment who had information including: the witnesses themselves, who were, of course, the original source of our own.' information. ' Q. Your name is mentioned as, a pos sibility for the Vice Presidential nomina-?i tion. Would you take that nomination:; if asked by the President? A, No. I would not. I think it would be highly inappropriate for me as , the 1 Government accuser of the : Vice Presi- ',dent and who in his'capacity as Attor-;; ney General has been responsible: for ')ringing a criminal information against;; r ., the .investigations that'" ht about his resignation to me for 'b roug one moment to consider it as a potential successor to him. - Q. I'd like to ask whether you had other evidence not contained here that ',you spelled out to the Vice President's 'attorneys during his more recent round of negotiations? ' ' ' A. No, there were some references covering matters under continuing in- vestigation but the investigation has ;terminated and the disclosures made to the court constitute; as I said earlier, a full summary-,of the Government's i case on that basis. . Q. Is there anything in the agreement + that could be considered , as implicitly. 1 ,.or explicitly preventing the prosecution 'by state authorities against Mr. Agnew, and in the event of a /state prosecution, would you share any of your evidence with the, state prosecutors? A. To answer the first part of the ;question: No, there's nothing in the agreement that would prevent action by state prosecutors. The judge yesterday made this clear in summarizing for the record the substance of the agreement and the effect of the. agreement. If a state prosecutor should initiate action we would then have to consider what' 'steps to take. Of 'course the full. sum- mary filed with the court is already a "matter of record. My own hope would be that it would ,be considered by state prosecutors as it is by Federal prosecution that the public, interest is now best-served by considering this matter to have been' dealt with on a basis of fairness and, justice inthe public interest both state and Federal. Q. Is there any reason at all to be- "?.. lieve that Mr. Nixon knew of Mr.' Ag ;new's misconduct prior to August, 1972?; A. I would be fully confident in as-: , serting that the President had rSo rea- cson. Of course, this is one of those in ? stances where one is in effect asked to'j prove a negative. But the-aside from: 'the Vice President's own mention of 'the, ,fact that ? an investigation was under" .way and, of course,' the information; that came to the President shortly be- fore Aug. 6, from General Haig, the President would not, in my judgment x ? and belief, have had any reason to.; know. Q. Did you use the background in .vestigation by the F.B.I. or' any others that might have reflected serious ques- .tion against the Vice President's ca-: seer,- background material : that might) have been available in 1967 or 1968, to the President? A. No, we. did not. I think it's worth-: while to emphasize as has been stated before, and I think it's apparent on the "face of the Government's disclosure in' ,the case, that the development of this'; .evidence arose out of an investigation,' of the activities of county officials in, Baltimore County. Mr. Beall first in- formed me of the status of the county investigation on June 12.-of this year. At that point there was- only one .slight indication that evidence might; point toward acts of wrongdoing on the:; part of the then' Vice President. It was l not 'until later that month that addition- al evidence was developed and, not un 'til July 3 that the investigation had reached a point where Mr; Beall and j 'his associates felt that it was serious enough in scope so that I. should be! informed of it. They did inform me fully of it on that date. . Q. Mr. Attorney General, you say that,' the .moral of this whole episode is that., ;the public should have, confidence in ,the system of justice. Is the public go-' ing to gather that if a man is' high: ,enough he gets off very lightly? A. I think this is a feeling that some people may have and of course it was, the awareness that this .would be the ' reaction of-or might be the reaction' of-some of my fellow citizens that led me to try to make as. clear' as I could ; in my statement to the court yester- ,day that the interests of justice as well as'the interests of the public were bet- ter served in this instance by a dispo sition that did not involve. confinement of the former vice President in a penal` institution. I can only say that I hope that these considerations prove per. suasive to the majority of my fellow citizens. Q. Do you consider that 'as far as ? the other targets of the grand, jury goes that a precedent has been set in this case? A. This is, of course, a ' matter for the court to consider in dealing with ,any subsequent offenders who,may'be brought before the court. I, do believe that it is desirable that the case of oher defendants related to this' investi- gation as a whole should, if the District ,with the governments closest to the, people? Q. Does this investigation shake the confidence so often expressed in the President's revenue-sharing, ' program with the governments closest to the peo ple? A. No, certainly not. All I need say' on that score is that-mind you, that I came.to, the Federal Government un 13 Kpprovr Release 2001/08/07: CIA-RDP77-00432R000100250001-9 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001. 9 -der this Administration after a tour of 'terday. And I'm wondering if that fact duty as United States Attorney for the had anything to do with the timing District of Massachusetts where my et- of the. forts were largely devoted to uncovers A. Not, certainly, ' as far as the De `ing state-level corruption. apartment of Justice' is concerned. We I w4s Attorney General in Massachu were looking forward to the opportuni setts and in that capacity followed the 'ty to give our.depositions in this matter.- . period of tenure of Attorney' General 'And I might -remind you that all of -Brooke, who was largely involved in :us in the Department of Justice who' ;prosecution of Massachusetts 'corrupt had any knowledge whatsoever of this tion. And I had to?deal with that again., case have already subscribed and sworn 'And I have always felt that the surest way of eroding both the quality and the integrity of state and local govern- 'ments is to deal with them on: a basis' that implies, a lack of trust and that. does' not rest clear-cut accountability; on them. I think the'best way.to improve their', :quality is to make clear where the re sponsibility lies. In matters that are of, direct and immediate concern to people and where it is important that their Government be responsive to them and' ,sensitive to local needs. Q: Will you give as your thoughts on, .this. Compassion for Mr.. Agnew could, have come at the end of the road rath .er than at the beginning of the road,. -and that a public trial could very well have brought reforms and the greatest, deterrent to a repetition of this at any level in the future. ? A. This is certainly a point of view.' ,that had to be weighed and considered.' But, of course, the price of whatever gain might have been achieved in that direction would have been a prolonged anguish and uncertainty associated with, the trial of an incumbent Vice Presi 'dent. Q. Could you tell us when and in what manner the President. approved' ,the agreement that was entered in the' ',courthouse yesterday? A. The President. didn't pass on the agreement as such: J n specific terms and conditions. His, was a role rather, of approving the gen-? ,;eral direction and the fundamental basis; ,.upon which .the matter ; was being handled. . . . r Q. Did you present the outline of the; agreement to him after it was reached' Tuesday afternoon, and did he corn:; ,meet upon it or give it a clearance for you to go to in court? A. It was pre- '"sented to him, I believe, by the Vice President himself on Tuesday evening:. 4 did not make any presentation to him. Q. Persons. convicted of felonies in'. this country are commonly stripped of, ,their civil rights, including the right to vote. Will this, occur in Mr. Agnew's. case? A. He can continue to vote, according to the views of an assistant attbrney, general. There will be no consequence' with -respect to property rights and 'there would be no prohibition against his holding office under the Maryland Constitution. Q. On the tax aspects of this matter.: Is there any evidence you have that, shows that the Vice President paid any tax on the payoff money. In other words, any-reports on the income in: the, earlier years? A. The tax investigation which was going forward concurrently with the--in--` .vestigation of other aspects of this -matter, have not been completed as of yesterday. In the first place, I cannot answer the question. In the second' .'place,, since it is now a civil matter' pending before the Internal Revenue 'Service, it would be inappropriate in ,any event. . ' Q. The Justice Department was under. ?a certain amount of pressure. Apparent- ly senior Justice officials were supposed 'to have given sworn depositions yes- to affidavits subject to the penalties of :perjury. Those affidavits in each in-' !stance deny responsibility for being the, :source of any leaks. Mr. Lydon? Q. In your concern .for the anguish- V a drawn-out proceeding, are you not subject to the charge of permissiveness yourself? And wouldn't he, in another day, have called you permissive, even" a permissive 'judge? And, secondly' .when you boil it all down, doesn't this, 'amounts-have you not rendered a po- 'litical bargain here rather than a crim-' ,final bargain? He's been allowed to get; tuff without penalties except, that he 'give' up the office that apparently the' Whie House always waned him to give up for the last several months anyhow. In the, end, -is it not a political judg- ment rather than a .prosecutorial judg; ?ment?. A. I think each ,individual will have. to make up his or her own mind about the justice of this 'result. I believe, as'I- have said, 'that it is just, fair and honor-. able. I have insisted, and have done my' 'best, with. my colleagues, to assure that all the facts upon "which 'the re, 'suit 'was reached are publicly acces-, sible. As to the charge of permissivenest all. I can say, Chris,, is:that,. so far any. prosecuting role '.I've ever had, this: 'would be the . first, time anybody has suggested that. ' As to the' political' aspects about it,' .'of course in the fundamental sense of, , the word "political," of course it's 'po=. litical. And we are, dealing here with ,issues involving the Government of the United States of America. We are deal-' .ing with a situation involving a man -next in line of succession-who was next in line of sucession to the Presi-. ;dency itself. While the Middle Eastern crisis had no direct bearing on the outcome, It certainly is a situation illustrative of: the kind of problem that has to be facedf in considering whether the national in-, terest would be served if an indictment were returned and if the Vice President. -as was his full right=had insisted upon a trial, either in the Congress, if, the Congress had chosen: to act, or by a jury of his peers. Q. There was some thought before. you mentioned that the first round of,, negotiations failed. The Vice President; did not want to. serve any time in jail....' A. I don't think it would serve any' -.useful purpose to go into this. The process of negotiation, of course, in a; matter of this kind, is one in which there were strong interests represented' 'by each side. And the result is one that I think represents a fair' balance be tween those interests. A Summary Discription Q. Did you inform the President of . the details of the investigation as con tained in your' 40-page statement -early on, in August 'or early September? In- other words, when-he said that noth1 g the Vice Presid'ent.did had,. any relati~n; 14 to his office of Vice President, he was' in fact charged with committing a felo- ny while he was in office. .I'm wondering when the President knew about this and what he, based that statement on. i - A. The President has never had more. than a.vey summary description of the kinds of evidence developed by the- Government Investigation. He felt that it was not appropriate for him to be' Informed of the details of the case. He did have a broad.description, es~. sentially in the same terms that I pre sented an outline of . the case to . the. Vice President himself on the same ;day, later in the afternoon after I had' Fseen the President.' The fact that the investigation has, touched on actions of ' the Vice Presi-. ,dent in his capacity as such, does not; `constitute a charge. There has been nor 'charge against the Vice President ex-t cept the charge embodied in the in-I formation to which, he pleaded nob o ~'yesterday..We have summarized as ac- curately and fairly as we can the sub- ;-stance' of the Government's evidence ',.in order that the American people' would have this before them.', ? But we do not assert that this sum ,mary of .the evidence is an indictment.. It is designed, I've said, for, purposes of disclosure and with the recognition that, ; (were the information not set forth, the' consequence inevitably would have been, that there would have been a persist-` ing effort to dig it out, the process' ,'would have dragged on, and the result, would have been an open ulcer on the, Q. From your experience in the Ag-i new case and knowing that Presiden-? :tial candidates do not know everything about the man that's his running-mate,, do you have any recommendations for any strengthening of the sc'reer3ing pro-! 'cess in 1976 for the choosing of Vice-. Presidential candidates. A. That's, I think, a very important' point, , it's one to which I have given: ,some thought, but not enough to have any clear recommendations beyond 'the' .obvious point that there clearly ought: ,to be some mechanism that enables the ,,.to chosen as. his party's standard' bearer to get a more complete picture,; ,of the private history of a proposed running-mate. Q. I have a question for Mr. Beall.. Mr. Beall, the summary is not precise, on one point-how much money Mr. Agnew supposedly took. What does the Justice Department claim was the total amount of graft Agnew took in this kickback scheme? MR. BEALL: I think the Attorney, 'General has already answered that ques .tion? substantially, when he. ?indicatet that the Internal Revenue Service in-' vestigation in this case was not com-' plete as of yesterday, and that it ' is impossible, for that reason, 'to accurate- ly answer in terms of dollars and cents the amount of monies which may have been involved. Incidentally, I think it's important to, -recognize from our standpoint ' the -tremendously effective work that was done by the. Internal Revenue Service and by, specifically, the Intelligence: Division of the Internal Revenue Serv- ice which was the investigative ann of- ,the United States Attorney's Office and the Department of Justice throughout this entire matter- Thank you very rnucn. Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 NEW YORK TIMES 13 October 1973 Nixon's Address and ears., b., Ford Following is a transcript of the the great challenges of the future. This, spect of both Democrats and Republi..; address by President Nixon last night is a time for a new beginning for Amer- cans. He is a man. also who has been'! ica, a new beginning in which we all unwavering in his support of the poll in Washington nominating Represent- dedicate ourselves to the tasks of meet- Gies that brought peace with honor for dative Gerald R.'Ford of Michigan to be ing the challenges we%% face, seizing the America in Vietnam and _in support of: ,)Vice President and of Mr. Ford's re- opportunities for greatness and meeting . the policies for a strong national de. sponse, as recorded by The New York the dangers wherever they are at home' fense for this country that .is so essen- Times. or abroad. ? . tial if we are to have peace in the. world. President Nixon . Calls for Support. And above all he is a man who'if the! > Members of the Cabinet, members of And I am confident tonight as I stand responsibilities 'of. the great office that1 the Congress, members of the diplo- here before leaders of both parties, I'm .I hold should fall upon him, as has been the corps, all of our distinguished confident we shall meet those dangers - the case with eight Vice Presidents in e matic t guests here in the. East Room, and my and also seize those opportunities, I am ' our history, we could all say the leader-: fellow Americans: confident that we shall doso, but we ship of America is in-good hands. can and will do so only if we have the Our distinguished guests and my fel-- s I have invited you here tonight so support of millions of our fellow Ameri-, low Americans, I proudly present to,' that I could share with all of you, not can all across this land. you the man whose name I will submit only in this room but the millions listen- We can and will do, so' only if we to the Congress of the United States,; mg on television and radio, my an-' have bipartisan support in the Congress for confirmation as the Vice President ynouncement of the man whose name I of the United States in matters in which' 'Of the United States, Congressman'; shall submit to the Congress -tomorrow ' Gerald Ford of Michi an. for confirmation as Vice President of , no partisanship should ever enter. g And we can and will do so only if Ladies . and gentlemen, Congressman,. the United States. we have strong effective leadership in Ford' knows the rules that since he now I shall. ask the Congress tonight, and the executive branch of this Govern- has to be confirmed by both houses his'! also when I submit the name tomorrow, ment. ' remarks will be very brief. ? s .to act as expeditiously as -possibly on. ' These were the considerations that I i this nomination because of the great had in mind as I considered what man Mr. Ford challenges we face at. home and abroad ? or other individuals to select as the ' Mr. President, I'm deeply honoree( today. nominee for Vice President of..the United and I'm extremely grateful and I'm ter,~M1 We live at a time in which we face ' States. ribly humble. great dangers but also a time of very Criteria for Job But I pledge toyouu, Mr. President,' great opportunity. Let me tell you what the criteria and I pledge to my colleagues in the- We can be. thankful tonight that for were that I had in mind: ? ? Congress, and I pledge to the'American the first time in 12 years the United First, and above all, the individual people, that to the best of my ability,, r States is at peace with every nation of who serves as Vice President must be if confirmed by 'my colleagues in the,;; } the world. ? qualified to be President. Congress, that I will, do my utmost to: Second, the individual who serves as the best of my' ability to serve: this` Expansion of Economy Vice President of the United States country well and to perform .those:`, i We can also be thankful that we are must be one who shares the views, of duties that will be my new assignment in the midst of a rising expansion. of the President on the critical issues of .. as effectively and as efficiently and" our economy in which more Americans foreign policy and national defense- . with as much accomplishment as pos- have better -jobs at higher wages than. a which 'is so important if we are to play sible. at any time in the history of our our great role, our destined role, to Mr. President, with pride I have'sup country. keep peace in the world. ? . ported our country's policies, both ata But also on the other side we have to, And third at this particular time, home and abroad, aimed at seeking-; ,recognize the fact that the peace that 'when we have the executive in' the peace worldwide and a better well-be- ing for all of our,citizens throughout we have worked so hard to build not hands, of one party and the Congress' only for ourselves but for, all the world controlled by another party, it is' vital our great land. j is now threatened because of a new that the' Vice President of the, United ' And I will continue to work with you- ,,~ :outbreak of war in the Mideast: States be an individual who can work and With 'the Congress in the further i And also we must recognize the fact with members of both parties in the implementation of those policies iii the;-; that the prosperity that we seek is Congress in getting approval for those months and years ahead. It seems to plagued by an inflation which is a bur- programs of the Administration which' me that we want an America, a united ? den of the family budget of millions of we consider are vital for the national' .Ainerica. I hope I have some assets that Americans. interest. ' ? might be helpful in working with the This is the time therefore that we It was these criteria that I had ' in. Congress in doing what I can through- .need strong and effective leadership . mind when -I pondered this decision out our country to make because the hope of the world of peace last night and early this morning in the. United America. ;, lies with the leadership that we have quiet beauty of Camp David and the .. And I pledge to you my full efforts', here in the United States of America. man I have selected meets those three ' and I pledge the same to my colleagues~- And ability to build a new prosperity criteria. and to the, American, people. in the need for strong leadership In the for 25 years 'in the House of Repre- i d Un te States of America. sentatives with great distinction. ' Mr. Nixon Never in our history has the world ' Ladies and gentlemen, please don't I know that all of you will want to: more needed a strong America, a united tb premature, there's several here who see Congressman Ford and Mrs. Ford.. America with both the power and the have served 25 years in the House of We'll be in the Blue Room if you would ' -will to act in the spirit that made this ` Representatives. like to come, by and say hello, cort ` a great, country, and it has kept it a gratulate them, and also there will be. ifree country. . Respect of.Both Parties ' refreshments, I understand, in the state'. ` And that' is why at this 'part'icular In addition to that service in the dining room in case some of you dida't , time it, is vital that We turn away from House, I should point out that in that have supper. , ' . . ?_ , Approved f Release 2001108107. CIA= 0 - Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 THE VIRGINIA GAZETTE . 5 Oct. 1973 First Of Three Reports By Ed.Offley (a r~oln/ 12 D e [ LL concerned with the gathering of, .intelligence. "If you know what a ,you're talking about," Prouty said, I "You know that 90 percent of the. agency's activity is in clandestine, operations." Power Of Exclusion Prouty defined the "secret team" as personnel who have access to secret intelligence, which is "the really powerful stuff - inside in- formation, advance knowledge, satellite data, agent data. This is what breeds the team." He added that the concept of "need to know", extends a total power of exclusion to, those not on the team. Who is on this team? Prouty explained that it begins with the National Security Council and the top executives of the CIA, and extends to a ring of Executive Branch officials, senior military officers, "think tank" analysts and leaders of the education and business worlds. "Henry Kissinger, by law (in his role as Presidential advisor for foreign affairs -and chairman of the National Security The Central Intelligence Agency has come a long way, although; some think it has taken the wrong direction. Originally enacted by Congress in 1947, the CIA was charged with gathering and coordinating in-, telligence produced by it and other federal intelligence agencies.- Today, the CIA is much, much more than that: It has evolved into the core of a shadow government, whose edifice is unrecognizable and whose power is unstoppable. That's the opinion of one government official whose job enabled him to learn more about the CIA than most of its own employees ever could. L. Fletcher Prouty served as the Pentagon's chief support officer for the CIA for nine years from 1955 to 1963. As a full colonel in the Air Force, he was not constrained by the CIA's oath of secrecy. In late August, 1955, Prouty was ordered to establish a CIA support office in the office of the Secretary of the Air Force. In 1960, he tran- sferred the office to the office of the Secretary of Defense, and later expanded the support facility under the Joint Chiefs of Staff at the Pentagon. Prouty retired from the Air Force Dec. 31, 1963. Documented History Prouty has written a documented- history of the CIA, which traces its birth under the National Security Act of 1947, through the "activist", directorship of Allen W. Dulles, who brought the agency into clandestine, operations, and through the CIA's deceptive role in getting the United States into the Vietnam War. "The Secret -Team" (1973, Prentice-Hall), presents an in- dictment against the CIA, saying. that it.has subverted the language and intent of its own statute, and in doing so has become a threat to American democracy at home and international stability abroad. In an interview in Williamsburg last Thursday with The Virginia Gazette, Prouty said that most accounts of the CIA are misleading, because few people know that only 10 percent of the agency's activity is Council), leads the team," Prouty said. The National Security Act of 1947, as amended, states: "Powers and duties of the CIA-403.(d)(5) to. perform such other functions and duties related to intelligence af- fecting the national security as the National Security Council may from time to time direct." Loophole Used The above quoted section - of! federal law was the primary means by which the CIA went beyond in-, telligence gathering and into clandestine operations during the early 1950s, Prouty said in his book. The chief- architect of clandestine operations was Allen Dulles, director of the CIA during 1950-1961. In "The Secret.Team," Prouty wrote that Dulles' appointment as head of the agency "foretold the existence of a vast, secret in- telligence organization, a top echelon clandestine operations !facility at White House level, a hidden infrastructure throughout other departments and agencies of the government, and the greatest clandestine operational capability the world had ever known....'. The Intelligence side of the CIA is now little more than a "cover" for the CIA's ultra-top secret operations, Prouty told the Gazette. Pouring It Out "They (intelligence branch) have a job to do -- to provide the President with intelligence. So they pour out their stuff day after day, like a newspaper or magazine," Prouty said. "But their big gripe is that people don't read it, and even if they read it, they don't heed it." Prouty explained that the main function of the CIA's intelligence branch has been the preparation of the "national intelligence estimate," an intelligence situation report prepared for the President and other top government officials with the freshest information gleaned from the CIA's worldwide network. "Those reports are very matter- of-fact," Prouty said. "They'll say, for instance, 'We're sure there's going to be a coup in Chile.' And the next day they'll say, 'Every ap- pearance is that the coup d'etat will take place within the next 30 days.' They keep pouring this stuff out. "We Told You" "Well, sure enough, sooner or later there's a coup d'etat, and they (intelligence branch officials) say, 'See? We told you."' *Prouty explained that the national intelligence estimate system has often been n' isused by "any Director of Central In- telligence who intends to use the .. gathering of intelligence as a cover for secret operations." As an example, Prouty cited a national intelligence estim^te for Aug. 3, 1954,' which said t.uat In- dochina was "hopeless." He added that "on the very same day, "CIA director Allen pulles met with the National Security Council to seek an increase in the size and scope of the "Saigon Military Mission," a clandestine CIS, paramilitary unit headed by the}-golonel Edward G. Lansdale of the Air Force and CIA. Prouty wrote in his book, "There is only one copolusion that can be drawn, and it is flerived from one of two alternatives: Either the author (of the national intelligence estimate) did pot know about the existence of apd the mission of the Dulles-directed Lansdale team; or if he did, he was attempting to cover up the CIA role in such activity, -16 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 which had more to do with the course of events in Indochina since that time than anything else...." The Saigon Military Mission had a name that was used to mislead people into thinking it was a military operation, Prouty said. He added, "It was a cover name - that was an agency operation, 100 percent CIA - the Central In- telligence Agency was often hidden in code words." Crunched In 1961 Prouty stated, both in his book and in last week's interview, that the hardest attempt to control the CIA's clandestine operations was made by President Kennedy after the agency's Bay of Pigs disaster in, 1961. The vehicles used were two National Security Action memoranda, Nos. 55 and 57, which assigned responsibility for "peacetime operations - that is, clandestine, covert, operations," to the chairman of the Joint Chiefs of Staff, Prouty said. "After the Bay of Pigs, it was pretty hard (for the CIA) to sell Kennedy anything," Prbuty ex- plained. He added that after Kennedy's assassination, "Those restraints weren't there anymore, and it was easy for various forces to burst their bounds." On Oct. 2, 1963, just six weeks before Kennedy's assassination, Defense Secretary Robert S. Mc- Namara and General Maxwell Taylor, chairman of the Joint Chiefs, returned from a 10-day fact- finding mission to South Vietnam. The Pentagon Papers revealed that although dissatisfied'with the Diem regime's crackdown on political opponents earlier that summer, the McNamara-.Taylor mission reported "present favorable military trends" and recommended a withdrawal of the "bulk of U.S. personnel" by 1965. "Disturbing Situation" Eighty days later, with. Kennedy and Diem both dead, a second fact- finding report was delivered by McNamara to President Johnson. Describing the situation in South Vietnam as "very disturbing," McNamara told the President, "We should watch the - situation very carefully, running scared, hoping for the best, but preparing for, more forceful moves if the situation does not show early signs of . im- provement, the Pentagon Papers said. The Dec. 21 report, Prouty-.said last'week, told "a totally different story - escalate, send more people, big trouble over there." Prouty understands the significance of reports such as the Oct. 2 and Dec. 21 memoranda for the President. He and his colleagues in the Pentagon support office for the CIA - by then called the "special assistant for coun- terinsurgency and special ac- tivities" - wrote both reports. Already Written They wrote them before the fact- .finding trips were ever made, using the CIA's ultra-secure com- munications network to forge "authentic" Saigon date-time headings on messages .'addressed from Saigon to Washington, -but in reality, written in Washington and sent to Saigon, for inclusion in the report, Prouty said. "I worked on the Oct. 2 report," Prouty said last week. "I worked 36 straight hours with General (Victor) Krulak (head of SACSA) on that one we wrote it right on our desks in the Pentagon." The reason for CIA ghostwriting, Prouty explained, is "that the Secretary couldn't render such a report anyway, and that we really know more about it than he (Mc- Namara) is ever going to know. about it. Dummy Messages Prouty said the dummy messages sent from the Pentagon by the CIA were often "submerged." This means that the CIA would draft a dummy message, wire it to agency officials in Saigon, who in turn would re-transmit it back to Washington as a State Department message through military chan- nels. "The people writing the report, like Gen. Krulak and myself, would be in constant touch with the White House," Prouty said. "We would know what the President would accept." Prouty said that in understanding the actual procedure by which the U.S. government's policy-making decisions were manipulated by the CIA, "the (Dec. 21, 1963) report itself more or less signified that all of these groups realized im- mediately that they would no longer be restrained." He added, "They were taking advantage of this threshold period before Johnson had gotten things under control - it was a runaway." Control Lost In addition, Prouty said, the CIA "started a backfire" on 'the limits Kennedy had set on agency-run clandestine operations. "With the death of Kennedy, there was no one who seemed to have that controlling interest any longer," Prouty said. The argument raised by the. CIA concerned the concept of "small" clandestine operations, which were permitted under NSAM 57, Prouty said. He explained that the CIA "began to cut out for themselves an area of operation on the basis of the interpretation of 'what is small."' "With the proliferation of clan- destine. activities in North Vietnam and Laos, the agency was operating 17 hundreds of people every day, before the Gulf of Tonkin incident," Prouty: said. He noted that. ultimately, the CIA was authorized over $li billion for the pacification program in South Vietnam in 1971. Order Buried "NSAM 57 had gone by the boards," Prouty said. "NSAM 55 has just disappeared. I doubt that it has been.repealed, but it's just been forgotten, buried." At midnight on July 30, 1964, amphibious raids were staged by commandos. on the North Viet- namese islands of Hon 'Ie and Hon Nieu in the Gulf of Tonkin. Most accounts of the incident have described the attacking force as South Vietnamese commandos operating under General William Westmoreland, U.S. military commander, Vietnam. That same night, the U.S. destroyer Maddox entered the Gulf of Tonkin on an intelligence gathering mission. Three days later, the Maddox, the North Vietnamese and the com- mando raids came together to form the Gulf of Tonkin incident, the Pentagon Papers reported. The commando raids, according to 'Prouty were called Oplan 34A, and was, in his words, "a CIA clan- destine operation." Commando Theory Subsequent press accounts of the incident, later amplified by the Pentagon Papers, raised con- siderable speculation that the North Vietnam q,, thought the Seventh Fleet destroyers and the onshore commando raids were part of the same military operation. Prouty's explanation of the Oplan 34A operation does not dispel that theory. He said, "The CIA does not normally give their clandestine operations serial numbers like that (34A), CIA calls them things like PARKLAWN." "This 'Oplan 34A' was selected just like the Saigon Military Mission to make the casual reader, in- cluding McNamara, think that this was a Navy mission." He added that the deception "went right through, because even Navy people wouldn't know about the operation. The CIA would never tell the Navy that they (CIA) had a 34A mission." The Pentagon Papers revealed that the destroyers Maddox and Turner Joy resumed patrolling the Gulf of Tonkin on Aug. 3, 1964, and that two more Oplan 34A com- mando raids were conducted than same night. The North Vietnamese retaliated the next day, Aug. 4, attacking both destroyers. Eleven hours later, President Johnson began the bombing of North Vietnam and the Vietnam War was on. (continued) AppFuved Fur /(?8/O7 CIA-RDP77 - Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 NEW YORK TIMES back home and in a position to choose how to spend his life he has turned to law. For a man who has the moral strength and the mental resources to stand the ordeal, a prison term may strengthen a man. Certainly John Downey will bring to his legal studies and his career an under- standing of penal problems learned at first hand. -Few persons have the initiative or the stamina to start a new ca? reer at age 43 after having under- gone the duress of John Downey. But this young Connecticut man - young in heart and in determina- tion, if no longer so young in years - has the will to start anew. And in so doing he sits an example of hope, courage, and industry which the rest of us may heed with profit.. 1s 12' October 1973 ,!mire Says C.I.A. ALL? Uses the Seas' To" ? ?ad caste ig By DONALD JANSON Special co The New York . mee CAMDEN, Oct. 11--The Rev. Dr. Carl D. McIntire said today that if the. Federal District Court here did not lift- its tem. porary injunction against his pirate-ship broadcasts he would subpoena top Government of- 'ficials to prove that the Cen- tral Intelligence Agency also used the high seas for un-, licensed broadcasts. Ty Federal Communications .Commission obtained the re- ;'straining order Sept. 21, con. !tending tgthe Fundamentalist minister from Collingswood,. N. J., had interfered with shore. 'based stations by illegally breadcasting without an F.C.C. license, from several miles off Cape May in a converted mine- sweeper. The.67-year-old minister con- cedes that he did so in retalia- tion for the agency's denial of a lie ' ense'renewal last ser for his station, WXUR, in Media, Pa. But he contends that the F.C.C: has no power to license broadcasting stations in international waters beyond; the three-mile territorial limit., He Is-Scheduled As followers marched outside the courthouse withsigns de-? manding restoration of his WXUR license and his "free. dom of speech," the contro- versial preacher said in an interview that his lawyers would take depositions from C.I.A. officials unless the court lifted its temporary injunction. The depositions would be used at a hearing scheduled for Nov. I before Federal Judge Mitchell H. Cohen , here on al Government motion to make the! injunction permanent. ' Today Judge Cphen'heard an interim appeal by Dr. McIntire to lift the temporary injunction. The judge said he would rule on the matter by Oct. 23. Former, , Mayor Alfred R. Pierce of Camden, one of four lawyers appearing with Dr. Mc- Intire, told the court ; that the 1934 Communications Act, re- quiring F.C.C. licensing for broadcasting 'from' . United States vessels; had been super- seeded in regard to broadcasts from international. waters by a 1959 Geneva treaty. { That convention prohibits, broadcasting stations aboard ships outside national territo- ries. Approved For Release 2001/08/07: CIA-RDP77-00432R000100250001-9 A CIA Glossary CIA: Originated in the Office of Strategic Services during World War II; formally enacted by the National Security Act of 1947 and the Central Intelligence Agency Act of 1949; annual budget and number of personnel unknown; headed by the director of central in- telligence. DDI: Deputy director of in- telligence, whose depart- ment is responsible for the collection, coordination and analysis of intelligence data. DDO: Deputy director of operations (also known as DDP, or Plans), responsible for clandestine operations. DDS: Deputy director. of support, whose department handles logistic support for the agency's other bran- ches. .NIE: National intelligence estimate. A regularly produced situation report compiled by inputs from the CIA and other U.S. in- telligence agencies, usually dealing with a specific country in which the American intelligence community is involved. NSAM: National security action memorandum. Policy directives issued by the President from time to time which deal with national security matters. Usually signed by a senior member of the White House staff, the NSAM's were addressed to the Department of Defense for implementation. SACSA: Special assistant for counterinsurgency and special activities; chief military support office for the CIA in the Pentagon, organized by Air Force Colonel L. Fletcher Prouty in 1961, but with similar operations dating back to 1955. Secret intelligence: Analyzed data obtained by deep penetration of an enemy country by agents or technological devices, such as spy satellites. Secret team: Persons in or out of the U.S. government who have access to secret in- telligence. RECORD, Meriden, Conn, 23 September 1973 er in the making John Downey, law, y After spending 20 years in a Chi- n e s e communist prison, John Downey, now 43 years old, has en- tered Harvard Law School to start a new career. Downey, born in Wallingford, was graduated from Yale in 1951. Upon graduation he joined the Cen- tral Intelligence Agency. His ca- reer came to an end when he was captured over China and held prisoner as a secret C.I,A.. agent. His imprisonment lasted 20 years until he was finally freed in the de- #ente which followed President Nixon's visit to Peking. During his long years in the Chi- nese prison Downey read volumi. nously. His tastes were catholic, and his reading reflected his far- ranging interests. Now that he is Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 MASHII.CTOUI STAR 9 O CT 1973 etc By.Oscar M. Villarejo Stti~it4 to the Star-News Lyman B. Kirkpatrick's lntewbook on contempo- :-Ary political problems as- rcciatcd with the U.S. intel- t. ained, objective study on the operations of the whole American intelligence appa- ratus, both foreign and domestic. It is only a coinci- dence that he has produced at this time a comprehen- sive work treating of topics very much in the news fol- lowing Ervin investigating committee. The author, an officer of the CIA from 1947 to 1965 while serving in such capac- ities as its inspector general and executive director- comptroller, is now profes- sor of political science at. Drown University. lie re- tains, as the book's preface suggests, many unbroken fi iendships with officials of the government and of the military establishment in Washington, dating back to the years when he served with distinction as an intel- ligence officer with the U.S. Army during World War II. THE MAIN THESIS of Kilpatrick's book is that the extensive interlocking agen- cies of the U.S. intelligence community - the Central Intelligence Board, the Na- tional Security Agency, the CIA, the FBI, and the rest - came into being in re- sponse to inexorable forces operating on a world-wide scale; that each of the agen- cies so created, with their well-defined functions and responsibilities material- ized on the American scene as the result of normal leg- COMMUNITY: Foreign Policy and Domestic Ac- tivities. By Lyman B. Kirkpatrick Jr. Hill & islation within Congress; and that as long as current threats to the national inter- ests of the U.S. continue, there is little or no likeli- hood that such agencies are going to be dismantled soon, if at all. In establishing all. this for his readers, Kirkpatrick points out the abrupt changes that have occurred in the general political cli- mate of the western world since that bygone.era - for example, when, at the be- ginning of WWI, only two officers and two clerks in the War Department were assigned to the gathering of intelligence. Even so, it was not until August, 1918 - in the midst of a declared war on the part of the U.S. against Germany - that the number of individuals allot- ted to intelligence activities within the same department rose to 282 officers, 29 en- listed personnel, and 949 computer data in Washing- ton on the war-making po- tential of practically every nation on earth; and what appears to be a considera- ble amount of electronic eavesdropping and wire tapping of private homes, ambassadorial residences, and government offices in at least a dozen different foreign countries overseas. Kirkpatrick states, of course, that the Soviet Un- ion and other nations within its orbit of influence are engaged in exactly the same kind of espionage ac- tivities. PROBABLY the most important part of Kirkpat- rick's book concerns itself with covert operations of the American intelligence community abroad; as in the case of the embarrass- ing U-2 incident of the Ei- senhower years or the Bay of Pigs affair in Cuba in the time of President Kennedy. Kirkpatrick describes accurately the involvement of the CIA in both of these undercover operations that went disastrously wrong, adding another for good measure - the notorious civilians. . _"Phoenix" project of the Today, at the conclusion of the war in Vietnam and- in an era when the tensions of the Cold War between the Soviet Union and the U.S. seem to be lessening, Amer-, ica finds itself with an intel- ligence community of un-' precedented complexity and size, the members of which are routinely engaged in such operations as the pho- tographic surveillance of land masses of the world by satellite; the acquisition of CIA in South Asia between 1967-69 which, according to Kirkpatrick, "acquired an unsavory reputation as an assassination program" to destroy the Viet Cong in- frastructure in South Viet- nam. In all three of these in- stances, Kirkpatrick re-, minds us, the programs were approved in advance at the highest levels of the government, including the White House. Although he does not say so outright; he indicates here and there in his text that covert opera- tions of the CIA all too fre- quently got out of hand. The revelations of Watergate,- coming hard on the heels of the completion of Kirkpat- . rick's book, seem to sub-' this subject. An index and an intelli gently selected list of books' for further reading empha- size the scholarly nature of Kirkpatrick's book. . Oscar BM. Villarejo, a pro- fessor of English at George. Washington University,. served as a U.S. diplomatic. courier during World War.. IL 12 Oct. 1973 'Kelley Opens F. B. 1. t From now on, said Clarence M. Kelley, director of . the Federal Bureau of Investiga- ~.tion, there will be an "open stance" policy by which the F.B.I. will deal with the press. Mr. Kelley told a meeting of the National Newspaper Association yesterday that the new policy will be one of 'complete candidness and willingness to answer press inquiries, ' recognizing the .right of the press in our democratic society Co obtain .information for the enlighten. merit of the public." The recently confirmed director. of the F.B.I. made his remarks in Hot Springs, -Ark. His office in Washington 'described his speech as "a major policy statement." the Press The policy he outlined con trasts sharply with the one imposed by Mr. Kelley's predecessor, the late J. Edgar Hoover, whose distrust of the press resulted in a re quirement that F.B.I. field agents funnel requests for in- formation through his head- quarters. There was no press office, and inquiries were handled by an assistant director in charge of the crime-records division. Mr. Kelley has set up a three-member press section to answer press questions, and field agents have been given authority to answer many in- quiries without checking with Washington. 19 A l f or R-f e l s e 2001108W: C - - 010025000t-9-- 02500x1 9 Wang. 212 pages. $7.95. Wang. Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 NEW YORK REVIEW OF BOOKS 18 October 1973 M'~ .:hw'r.t :y, WL 4d M~ rMw.ft~sL _Y! r+1,'ho Maims tiers: The ('r+ wait Versus Congress by Jacob IC. Javits with, Don Kelicrtnann. Morrow, 300 pp., $8.95 The Lavin; Preef;:eney: The resources a:td Dilemmas XXV-white only one , ' nd:nent (XVII) has modified the tc ,illative' branch and one (XI, now universally forgotten) the judicial. B of they At:aer:can I'ri idcntial Office by Emmet John Hughes. Coward, McCann & Gcohegan, 377 pp., S10.50 FIanry Stale Comniaoer. The Presidency has always given us trouble. It was, from the beginning, the "dark continent" of American constitutionalism -the phrase is Charles A. Beard's. There were ample prccc- dents for the new legislative and judicial departments which the framers established, but none-except in a limited way in the states-for an elected executive who would serve at the pleasure of the people and on terms laid down by them. History, that great arsenal of morality, taught that all men in power were ambitious, vainglorious, and corrupt, and prone to aggrandize power to themselves: you could read it in Thucydides or Plutarch or Montesquieu or Gibbop. Contemporary experience reinforced the teachings of history, and the framers were determined that the United States should never have a Louis XIV to ruin his nation by his i extravagance, a Frederick the Great to plunge his people into ceaseless wars, a George III to corrupt elections. As James Wilson, himself a strong- executive man, observed early in the Convention, he "did not consider the Prerogatives of the British Monarch as a proper guide in defining the Execu- tive powers." All true enough. Yet after the near-breakdown of (lie Con- fed eraiiun, the nation needed a strong executive.. And there was a further consideration-almost an embarrass- ment. Throughout the Convention, there sat George "Washington presiding with awful dignity over the delibera- tions, the great man who would in- evitably' be the first President, whose rectitude was unassailable, and whose image would inevitzbly be reflected in the provisions for the presidential of- fice. As it turned out lack of precedents and experience , produced grave. diffi-; culties. Article 11 was the most debated and the least satisfactory part of the !new Constitution. It emerged from the debates a kind of masterpiece of ambiguity and evasion whose meaning , we have beenlii N . exporng ever snce.ot surprisingly, it has been modified by .no fewer than four covsti utionel amendments-XII, XX; XXII, ar,d 20 ecause the powers of the President were not adequately defined, their character depended, from the begin- ning, on the Preskientc who exercised have "soaked up jurisdiction like a sponge." Are we witnessing now a shift from a,gg rnadizement to usurpation? The dist.incticn, not always clear, is that the former, functions within the hcapitable and arcommndatinj franme- work of the Constitution, acrd (lie. latter does not. Washington, Lincoln;' and Franklin Cocscvclt v,,cre in- dubitably "stronger" Presidents than Mr. Nixon, but Ni::on is the first who dictators, we conjure up Cromwell, Napoleon, Stalin, or Hitler, and ,?ssurc ourselves that it is improbable that one of theme could ever emerze out of American poi-tics. The trzriticnal r?eazr -:g of the tcro , ho-J'evcr-fix t S'ii?tell traces =sack to anc:cnt iii.tcry-cs "one who is con- stitutionally or legally vetted with supreme authority during a crisis." That is precisely vtltat Mr. Nixon is aiming at in some areas of gneernntent, certainly in the conduct of foreign affairs, of war, and of whatever he chooses to believe involves national security-a supreme authority which is' above the law. It is this principle that, enables him to countenance, and his sycophantic subordinates to - brush aside, Watergate and the iillsberg break- in, to authorize the use of cgents provocateurs, flout congressional will in appropriations; wage secret war on a neutral country and then lie about it, conceal vital information from the people and from the Congress, and claim privileges and irnrrat:pities hereto- fore unknown to the'Constitution. The Supreme Court (::::posed of these claims to be above the law first in the Milligan case of 1356 and then, some ninety years later, in the Youngs- town steel case-a case which has ,interesting an :logics to the invocation of inbep cnctent. war powers and na- tional security argi'ments by Mr. Nixon today. The Constitution of the United States Isaid Justice Davis) is a law for 'rulers and for people, equally in war and in peace, and covers with the shield of its protection all classes of men, at all times, and under all circumstances. No doc- trine involving more pernicious consequences was ever inverted by the wit of man than that any of its provisions can be suspended during any of the great exi_-eau.ies of government. Such a doctrine leads directly to anarchy or des- potis4n, but the theory of neces. sity on which it is based is false; for he government, within tiro' Constitution, has all ? the powers granted to it which, arc necesspry to preserve its existence. And in Youngstown v. Sawvyer, which rejected President Trumnn's seizure of the steel mills on the ground of military necussity, Justice Black re- turned to the principle of Milligan: The' contention is that presidential power-should be implied from the aggrc3ate of his powers under the Constitution. Particular reliance is placed upon Article 11 which says that the Executive Power shall be vested in a President," that he "shall take care that the laws be 4' fnilhflrlly executed" and that he jJ' "shall be Coinmander-in-Chief of the Army and Navy of the United States." This order (Mr. Truman's take: over] cannot properly be sus- tained because of the several con- stitutional provisions that grant executive power to the President. In the framework of our Constitu- tion, the President's power to see that the .laws are faithfully exe- cuted refutes the idea that he is to be a lawmaker, The Constitution limits his functions in the law- making process to the reconimend- ang of laws he thinks wise, and the vetoing of laws he thinks bad. And the Constitution is neither silent nor equivocal about who shall make laws which the President is to execute. Now once again the great question of the scope, and the limit, of these powers is before the courts. Over the . years courts have been courageous and bold in the exercise of judicial review, as they were in the Milligan and. the Youngstown Steel cases, but is it a courage we can count on or a boldness we should ask them to display? Judges are understandably reluctant to injervene in the conduct of a war: as Justice Hughes once said,. "The war power is the power to wage war successfully," The interventions usually, though not always, come well aft,.r the fact-as (lid that of the Al:aigan case. Traditionally judges have a? oided "questions of a political nature"--an avoidance less sweeping in t':(: past two or three decades than in it,,! more remote past. They are often t, .ubled by the question of jurisdic- tinn -as they are, even now, over the qua.-tion of a subpoena of the execu- tive tapes. And time and again they find themselves in the position of putting the stamp of constitutionality. upon legislation or conduct which they disapprove on grounds of policy or of morals-as they did, for example, in Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 the fugitive stave cases and in the Japanese relocation cases. Doubtless the deeply engrained American instinct for putting contro- versial political and legal conduct to the constitutional test-which means the judicial test-is admirable, certainly it is instructive; it is also dangerous. It is admirable because It bespeaks a respect for the law and a conviction that the Constitution and the law are supreme and that no one, no matter how exalted, is above the law. It is in.~tructive because it provides for the whole American people a continuous learned commentary on constitution and law, and on a great many other things as well: in the clarification of the never-ending problem of the rela- tions of men to government, the? United States Supreme Court is the greatest educational institution in his- tory. It is dangerous because, over the years, it has substituted the criteria of legality for those of policy or wisdom; correctly so, for the function of the Court is legal, not moral. ' As we tend to assume that an Act or an action which is unconstitutional is bad, and should therefore he rejected, so we conclude that one which sonic- flow satisfies the criteria of constitu- tionality is good, and should be ac- cet'pted. This is the position an which Mr. Nixon now takes his stand. lie is not prepared to defend in piin'iplc such things as taping the conversations of his guests and associates, bringing.. ;Cambodia and then lying about it, or. ' 'using provocative agents to instigate crime; instead he makes a great show of legal rectitude by shifting the whole question to that of his executive immunity to questions or to challenge. In this sleight-of-hand he has been, so far, successful. He has the whole country talking about his constitu- tional right to protect the confidential- ity of his tapes rather than asking why he made them in the first place; he has the country gravely considering whether his solemn obligation to, protect the "national security" permits hint to ignore ordinary constitutional limitations rather than asking what a civil war in Cambodia has to do with our national security or, for that matter, what the records of Mr. Ells- berg's psychiatrist have to do with national security. If the historic con- troversy over Mr. Nixon's abuse of executive authority in the foreign or the domestic arena bogs dowl- in a debate over constitutionality it will achieve little except universal exacerba- tion. ? Ultimately there is no warranty for the principle of the supremacy of the law, the integrity of the constitutional fabric, and the successful functioning of the democratic process except the virtue and intelligence of. the American people and of those they choose for high office. If these fail us, nothing will succeed. The question which confronts us now-it is the theme or the major premise of both Senator Javits's and Eininet Hughes's books-is whether the constitutional crisis which Presidents Johnson and Nixon have precipitated is a product of irresistible currents of history which cannot be deflected or reversed, or of the fortuitous conjunc- tion. of the cold war and the ten-year war in Indochina and of two Presidents given to paranoia and egomania. On the answer to this question will depend in large measure our answer to the fateful query whether we can return to our long tradition of constitutionalism or whether we must resiL n ourselves to revolutionary changes in our political system. amilton, who wrote the Federalist Papers on Article 11 of the Con- stitution, insisted that the most im- portant quality in' a President was energy, and lie defined energy as the constitutional provision for unity; du- ration, adequate provisions for support, :1n0 competent powers. In this definition, Hamilton's customary habit of looking at all sides of a question failed him. The definition was circular, and the principle misleading. Energy for what, and to what ends? After all, there was no lack of energy in Freder- ick the Great or Napoleon; in our own time there has been no lack of energy in llitler or Stalin. It is because Presidents Johnson and Nixon have indulged their energies irresponsibly and presumptuously that the Presi-' dency is in graver trouble today than ever before in our history, and that. the American constitutionality is in trouble too. . The central principle of that con- stitutional system, as both Madison and James Wilson saw, is not energy but authority moderated by prudence, restrained by law, illuminated by reason, and animated by respect for freedom: in short, the reconciliation of. freedom and order. It was to achieve this reconciliation' that the Founding Fathers framed a constitution (the first of its kind in history) designed not only to form a /more perfect union, lint to establish justice, promote the general welfare, and secure the bless- ings of liberty. That was Lite end to which individual principles and mecli- anisms were made to contii nite: sep- aration of powers, checks and balances, distribution of governments among na- liun 'and states, bills of rights, judicial review. Thanks in large port to Presi- dents who used energy to ensure a more perfect union and to enlarge the area of freedom, this system of author- ity controlled by law survived the Civil War acid the Great Depression and the Seconds World War without sacrificing the general welfare or betraying 41io liberties it was designed to safeguard. Can it survive the present Crisis? ` As soon as we ask this question wve' are conscious that it is rooted iq' disingenuousness and dudilcity. For` in fact the crises of the cold war and f the wars in Vietnam, Laos, and Cam- bodia are not remotely like those of slavery anil secession, of bl' the threat from the totalitarian. world in 1940. By comparison with these, they 'are artificial and almost willful. We can see now-what sensible people saw twenty years ago-that China posed no thr':at to America or to legitimate Anieri. an interests; certainly we can see now' what the other signatories of SI:A'I'O saw from the beginning (all were equally bound by that treaty),, that Vietnam and Laos posed no threat to the United States or to world peace. So with most of the crises that have' disfigured the history of the Nixon' Administration. The crisis of "national. -security" posed by the publication of the Pentagon Papers was imaginary-no'' faintest hint of that threat to national security so hysterically invoked has yet emerged. The crisis 'of student protest' and violence which Mr. Nixon recently' invoked to justify such things as the Ellsberg break-in and' which Mr. Mitch- ell, assumed extenuated the Kent State killings was so artificial that, when it died away of inanition the government had 'to reanimate it by the' use of provocative agents. The fiscal crisis which led to the impounding of money voted by the Congress was phony; Mr. Nixon was prepared to spend twice as much new money on military weaponry and gadgetry as he- proposed to save on medicine, welfare, and education. ito' crisiJ dran)atircd by Witter gato that of ppssible defeat at the 'polls - i was one neither ip principle nor in fact but utterly coplfived.It is absurd to say that the security of the nation was al stake in a Republican victory at the !polls. and after all, Nixon had tlie election in the bag. There was there- fore no excuse even-we-might say-on the criminal level for the'extortion Of millions of dollars in illegal or'surrepti- tious campaign contributions, or for the,. whol4, bag of "dirty tricks" in- dulged in by Mr. Nixon's friends and associates.'And the current crisis of tile tapes, too, is something concocted out of fatuousness and guilt; it could have been avoided by refraining from mak.' ing these indecent recordings in tire` first place 1 Yet to meet these non-crises of his own making, Mr. Nixon created a ,genuine crisis-one that goes far be- yond the fate of his own Presidency and to the vry nature of the institu- 2b Approved or Release 20'01708/DT: - - - Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 tion itself. For to defend policici lie never should have adopted, to justify misconduct he should have avoided, to claim powers he did ? not need and which he had no right to dxercise, he conttunaciouslyN challenged principles of the suprem`l~cy, of the law, the separation of powers. the probity of our system of justicei, and the integrity ,of the,,dcmocratic process. This crisis is 'indeed '.ontinbus. Does it ealI'for drastic remedies? What remedies prese,lt. themselv.ps? We can persuade ourselves that the breakdown in the Presidency is a product of Mr. Nixon's, malfeasance and try, tp impeach him and remove him from office. We can conclude that' 1hc .presidential system, adequate for simpler days, is no longer competent to. the problems that confront us, and turn to that 41;parliatttcnfary sykteni which has proved ?uccesstul and which the majority of the civilized nations of 'the globe now embrace, We can argue that the' failure' oflil'hd Congress to -assert itself ? is not' pathological but fortuitous; and that the mere reasser- tion of its power' over, tthe purse.-where all ? that is needed is backbone-will restore that balance of power which was the original, des of the framers. Or we can sick t6 write into the law or the Constitution additional safe,- guards against usurptitioit of power by Presidents. It. is improbable that- impeachment would succeed, and ccrtajn that whether' it did or not it would further exaderbate rather/ than heal the deep rifts in our political and social fabric. It is wildly improbable that Americans i would trade in, a system which has served them well for over a century and a half in exchange for one with which they have no experience, which is ill-adapted to the needs of federal-' ism, and which has worked just as badly for many countries as its, worst critics think the presidential system works in America. A vigorous reassertion of the power of the . purse would indeed' bo far to restore congressional au tliority and curb executive pretensions, but ex- perience since Tonkin Bay (or perhaps sin.ce ' McKinley's Boxer expedition of 1900!) demonstrates that in times of foreign or military crisis the Congress As not disposed to call the President to account-or even to inquire too closely into the 'legitimacy of the crisis Per- haps% the fourth remedy, holds out some promise of placing curbs on the executive which, by . taking on the sober garb of tile' familiar and the routine instead of the lurid robes of emergency, might survive executive im- petuousness, duplicity, and corruption. Catharsis and reform rather than con- vulsion and revolution seem indicated. 22 Senator Javits's contribution to this ongoing debate, Who Makes War, is a swift, vigorous, and lucid survey, of the choreography between President and !Congress in the making of war (and of foreign policy) from the: beginning of our history to the present. It makes clear that the early Presidents-those who had been schooled in the great revolutionary debates, and who had sonic experience in state 'and nationa! I politics, scrupulously observed. con- stitutional limitations on presidential war-making. The next generation was not so fastidious, and the aggrandize- ment of war-malting powers, citn he dated, from President Polk's exploita- tion . of the' border dispute petween Texas and Mexico, to foi3t a war on both countries-coriiiuct which' 'ated Jilin'. the cognomen "Polk the hle la- CIO leis mendacities seem mild enough now. Senator Javits's discus,,,ion of Lincoln as war President overlooks sonic important considerations of that unique chapter in presidential history- the distinction, for example, between makinI g or .waging;-.a foreign war and putting' down a domestic insurrection, or that between, responding to an attack on United States soil and carry- ing wi r to the territory of other Fguntries. 't'ile modern history of executive uhurpation begins with the otherwise mild and innocuous McKinley, who fought one, unauthot zed war an the i'itilippines and, .without even consult- ing the Congress, committed 5,00C troops to the rescue of foreign lega- tions in Peking at the time', of l 4w. Boxer uprising. Wilson's record ''as surprisingly irregular for so logical a man: he was high-handed in Mexico and (lie Caribbean but legally scrupu- lous in his conduct toward the Euro- pean belligerents in the great war. Like most of .us, Senator Javits is ambiv- ali at about Fran D. Roosevelt;?his latitudinarian use of the war powers was, the senator concedes; necessary if the nation was to survive, but we have paid a high price for it, nevertheless. Mr. Davits is careful! to point out that with Roosevelt, as with Lincoln, the crisis which he faced was a real one, that he did not make his more extreme actions the basis for extreme claims of power, and that he always sought, and received, congressional approval ' for what he slid. The senator's discussion of recent usurpations of executive power in the cold war, the Korean War, and the wars in Southeast Asia are, in a sense, ,a prelude for his argument for the Javits-Stennis War Powers Act. That bill, which has already, passed the Senate, is now under attack from both the right and the left-if pros:. terms arc not misleading. Arthur, Schlesinger, one of the most acrimonious and relentless critics of the' Johnson-Nixon misuse ,of t!te war powers? argues suasively that .the bill would langt:r- ously Iindicap the President in ti't?y t:cnuule' emergency but he off ls:lliu, value' in staying Ilie hand of a 1'r4 dent who wished to contrive an emc'r- 1 nc'y to justify his own ambition or folly. "Had (his act been on the statute books, surely it would have prevented Roosevelt from responding to !tiller in file North Atlantic," lie has said, "and would surely not have prevented Johnson from escalating the war in Vietnam." Th,s is a criticism whose justice Senator Javits himself acknowledges, without conceding that it is fatal.. At the other extreme is Tom Wicker, who regards the war powers bill as simply another invitation to presidential war- making, for what Congress, he asks, would stop a war after just one month of fighting? After all, it took Congress eight years to get around to stopping our part in the least justifiable and most disgraceful war in our history-if indeed we have permanently 'stopped it. Do legislation can cover all contin- gencies, just as no statesman can anticipate the future. As Hamilton wrote (in Number 23 of the Federalist Papers), "It is impossible to foresee or define the extent or variety of national exigencies." This observation holds good, to be sure, of almost all legisla- tion, and if we tool; its implications literally might paralyze all legislation that looked to the future. Tha chief value of the war powers bill--if and when - passed-is in all likelihood symbolic: it puts the Congress on record against the Johnson-Nixon brand of imperial wars. Mr. Emmet Hughes, a lorg?timc aficionado of the Presidency, has given us not so much history as a political and moral tract which draws on his- tory, politics, law, and personal expc- rience. It is not a systematic inquiry into the question of presidential pow- ers--trc kind of inquiry That Raoul Derger has conducted in so magisterial a manner-but rather, as the subtitle indicates, "a con::ider::tion of the re- sources and dilemmas of the presi- dential office." It is informed, intelli- gent, and acute, sharply critical of recent developments in the Presidency but not unsympathetic to the problems and complexities of that office. At times, indeed, Mr. llu;thes is so overwhelmed by the spectacle of mountains of uncontrollable problems, domestic and foreign, that lie is almost ready to admit that the United States is ungovernable and the presidential office impossible; he never goes to quite that extreme. After all, Franklin Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 . Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 Roosevelt managed the Presidency dur- ing the worst of our economic crises and the greatest and most. terrible of our wars, and did this without impair- ing the constitutional fabric of the nation--or its moral fabric, either. The oncltlsion must surely be not that the oblems are so much more formidable c',day but that the Presidents are so +viuclt less. For three quarters of a century, now, t;tcre has been a steady, though Iluctu- Iing, growth of presidential power. ;tis process may continue, and while the Old World finds itself with mon- archs who have neither the power not the trappings of power, we may find ourselves with Presidents who have both beyond other heads of state in the Western world. Or are we perhaps on the verge of a shift in the nature and exercise of presidential power? If that power depends so largely on war, will the end of our ten-year war in Asia and of the prospect of war among the great powers diminish the opportunity of exercising it? if much of the strength of Kennedy, Johnson, and Nixon came, over the years, from their special tole as cold warriors at a time when the country always seemed to be on the verge of nuclear war, will the thawing of the cold war and the growing improbability of nuclear war diminish the ' presidential role as champion of the "free" world? If* domestic issues such as the control of environment, pollution, public health, zero population growth, poverty, urban' renewal, and race problems, which demand professional expertise and bureaucratic efficiency, usurp the place. of war and foreign affairs in the-public mind, will not the center of political gravity shift from Presidents who be- stride a world stage, no matter how awkwardly, to efficient managers wild can solve unglamorous domestic prob- lems? If the impact-slower in coming than most of us thought-of Baker v. Carr, and the twenty-sixth amendment,` the emergerce of blacks as a genuine. political force, the disillusionment of organized labor over the mismanage- ment of the economy, all g,o to revive ,an opposition party and bring more independent politicians into the Con- gress; may we not_ see that branch reassert its legislative prerogatives, and thus weaken or diminish the role? that the President may be expected to play? And finally, may not Watergate, with its sordid revelations of chicanery and blundering, spread such a sense of disillusionment through the body poli-: tic that voters will turn wearily from executive to legislative lcadership- always assuming, to be sure, that the Congress can provide it? If so, we may he on the verge of a .wing away from the fell tide of executive power to ebb tide. If this is possible, it is too soon to write obituaries on the presidential system of government. P-X . ut to speculate on the future is' hazardous: countervailing forces may' prevail, and may serve to enhance rather than to contract executive power. There is, after all, no assurance that the detente between the United States and the Soviet Union will be permanent, nor is it clear that the United States has acknowledged the folly of her Asian policies over the past quarter century and permanently abandoned the dream-or nightmare- of becoming an Asian power. Far more threatening in the long run is the upsurge of defiance' and resolution among the impoverished nations of.the globe-an upsurge whose strength and character was dramatically revealed in the recent meeting of seventy-six na- tions at the Algiers conference, whose theme was an end to the "pillage" of the globe by the great powers- particularly the United States. The United States might be strong enough, independently, to resist, both materially and morally, pressure from fifty or sixty of the smaller unaligned nations, but can it resist pressure from the Arab nations which control most of the world's oil; can it resist India whose friendship it has all but for- feited by its demented policy of "tilting" toward Pakistan; can it resist China if that behemoth throws its support to the underdeveloped nations and peoples of the world? If the quarter century of cold war between the United States and the 'communist nations is to be succeeded by a new cold war between the West and the rest of t e world, all the .23 considerations that produced the obses- sion with: armaments and secrecy andr, the coney ntration of power in the: executive will inevitably continue. Nor is the threat wholly military.; What if we continue to lay waste our, natural resources of soil, water, timber,., coal, and oil, and come more and ntore".4 to depend on outside contributions? ., What if our economy, staggering under the insensate demands of the military, the demands of the exploration of outer spa cc, the insatiable demands for an ever-h.igher standard of living and; of growing inefficiency and wasteful- ness, cannot successfully compete with nations like Japan and Germany, hap- pily emancipated from the demands of the military, or with the European Compton Market? Would not an eco- nomic crisis of this distension enhance the executive power much as the crisis .of the Great Depression made pos- sible-evcn inevitable-the enhancement of presidential power under Franklin Roosevelt? Just as the best and perhaps the only way to curb presidential misuse of the war o.oweis is to end the cold war and avoid violent war, so in the long run the only way to limit the abuse of presidential authority in domestic affairs may be to recognize the great revolution of three-fourths of the human race seeking, in one genera-' tion, to pull abreast of the rich and pow- erful nations of the West, and to join with them, and with the United States, to achieve a more just distribution of wealth .and welfare and an end to every kind of colonialism-even the colonialism implicit in our 1,200 mili- tary bases and our CIA operating stealthily in sixty-one countries. It does not require much imagina- tion to see the problems and perils that confront us, or much statesman- ship to acknowledge the necessity of a multinational attack oil those prob- lems. Alas, this Administration seems more prone to create and welcome crises that appear to require the en- largement of presidential powers than to work out solutions to those crises that might weaken the rationale for the exercise of those powers. 0. Approved r-Release 2001/08/07-: - - Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250:001-9 nothing about it. From that position, it was difficult, to imagine that negotiations would ; .bring an improvement, Every one of the plans put) lonward by responsible Israeli.and other leaders hinged on Ise rael giving up something. The only dif-. ference between them was how much. Moreover, almost any conceivable' peace in which Israel gains territory,, as all Israelis, hawks and doves alike, demand, would presumably bring more Arab citizens. This Is a fundamental di-. lemma. The Zionists never foresaw nor, are most Israelis today In favor of a. binational state. The early Zionists .saw Israel as an exclusively Jewish. state; most today are prepared to toler= ate, even to enjoy, an Arab minority. but the state is clearly not of them, by, them or for them. Given the concep- tion of the state, it would be far more difficult to integrate Arabs than it has been to integrate blacks or Indians in,, America. The reaction of Mrs. Meir's govern- ment was to set the price of peace very high. This included lour elements: "reconciliation" by the Arabs to an in- dependent Israel; face-to-face negotia-' lions; open boundaries (which apparent-, ly means free economic competition) and the continuation of Israeli military' superiority. Israeli leaders openly con- ceded that the Arabs could not accept these terms. H V THE SPRING of 1973, the Egyp-' Mans were faced with three pain- ful possible courses of action. First, mairitenance df the status quo. Egypt was becoming increasingly shabby as its 800,000-man army consumed about $0 cents of every dollar the country., earned. The population, now more than- 34 'million, Is increasing at 2% per cent yearly. Although not admit- ted, the Aswan high dam has ' been a7 disastrous mistake. The Suez Canal has' remained closed and Egypt has been, forced to rely heavily on the good will Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 7-7 By William R. Polk Israel's Status Quo gp]:IE STRATEGIC and diplomatic, A issues ihave been clarified in the. last six months. On their side, the Isra- elis found' the cease-fire relatively:. comfortable and very profitable. Guer rilla warfare and terrorism had been' eliminated in the occupied territories; 'Arabs from Gaza and the West Bank' poured into Israel daily to perform thei chores, like the Turks in.Germany pnd, the Pakistanis in England, that Israelis preferred ' not' to do; tourism was: increasing; oil from the occupied Sinal,l peninsula was being 'profitably produced;: massive American private and govern-: .mental support was forthcoming; the economy was not only booming, with ` growth rate comparable to Japan, :,but' Israel was rapidly becoming self-suffi- signs that' the Soviet Union:. was 'inter-: ested in at least discussing beL.a'r rela- . tions and although the United Nations, constantly passed resolutions demand-' Ing that Israel give up the territories ,that it conquered in 1967, the U.N. did, Polk is. president of the:Adl'aa Stevenson Institute of InternationialAffairs, :and professor of Middle Eastern History.. at the University of .Chicago. From, '1961 to 1965, he was' a' member of the State Department's Policy "Planning' 'Council. He is the author of "The United States and the Arab World" and other books. AS THE TRAGIC and bitter events of the Middle East unfold, two ques- tions demand careful analysis: Why did the war break out? And is It possible that the fighting may bring a real peace settlement closer?. , The first question is simple but the answer, to be true, must be complex. It must be answered on three levels: first, the 'psychological; second, the diplomatic. and strategic, and third, by defining the immediate- cause or the . "trigger" which caused the outbreak of fighting at this time. Both the Arabs and the Israelis are, haunted by ghosts of the past. Fof each, these ghosts are real and, their presence is ever felt. One cannot hope' to understand the contemporary Mid- dle East without being sensitive to `both of them. r In the back of the mind of every Is- . raeli today is the spectre of the holo-, caust. The destruction of the European Jewish community is regarded not only as an act of savage genocide by the Nazis but of weak acquiescence by, many European Jews. Israelis today are determined not only never again, to, :expose themselves to persecution by others but to be strong, self-reliant and assertive. Israel is the national myth of" Masada writ large. It is the last re- doubt from which there can be no re- treat. Consequently, Israelis recoil in an- ger from suggestions for a settlement which' they believe would weaken them, put them in an inferior bargain- Ing position or os~a'acize them. This is, the underlying political reality with' which any Israeli, Arab or neutral gov- ernment must reckon. Tho Arabs are haunted by their ghost too. It does not have the drama of the holocaust but it is a ghost' shared by the poor, underdeveloped .two-thirds of the world's population. It Is the ghost of humiliation and weak- ness. Heirs to a proud civilization, con-, temporary Arabs are the sons and grandsons of those who lived under' imperialism and colonialism. The last; British troops evacuated. Egypt, after, 66 years, in 1956 - just a few months' before they, the French and the Isra- elis Invaded Egypt in the Suez crisis. During the long British occupation, Egypt, already poor and backward, fell- relatively further behind the rich na tions. Its population grew rapidly and its resources remained almost static. Little was done with education and when Nasser made his coup d'etat In '1952, the legacy of poverty, ignorance and disease was awesome. This sense of backwardness, humiliso tion and memory of distant grandeur. Is a poisonous political brew. We have, watched its 'consequences in Africa;; Asia, Latin America and here at home.. Few Arab governments aI'e free of its effects. One effect is extreme sensitivity to questions of honor and dignity. This is 'not an "Oriental" attribute -- it has been a central issue of French politics since Vichy. Defeat is always a bitter' draught but when combined with the legacy of weakness and,humiliation, it becomes too much to accept. Refusal to accept the reality of de, feat is the central thread of Arab poli- tics since 1949. Among other people- the British In 1040, the Russians =in 1942, the Free French-we regard re- fusal to admit defeat as heroic; but in the Middle East most Americans have seen it as unrealistic, dangerous and;: frequently, ludicrous. It remains a; fact, however, that no Arab govern-: ment has been strong enough to admit 'defeat and thase Arab leaders who would like to end the war risk being called Quislings. -24 Approved For Release 2001/08/07 : CIA-RDP77-00432ROO0100250001-9 of Lthya, Kuwait and Saudi Arabia. Moreover, President Sadat had in-. 'herited the oversized shoes of the na- tionalist hero, President Nasser. He has proven skillful in thwarting moves' against him but he has found it diffi-. cult 'to explain why, despite a huge army eauipDed with more tanks than ?ermany had when it invaded Russia in 1941,, Egypt had to tolerate Israeli occupation of 23,622 square miles of Egyptian territory,, much of which is less than 100 miles from Cairo. While we have no evidence, it seems reasons-, ble to assume that the officer corps found this yet another cause of humili- ation. The second option was to admit the defeat, to surrender and make peace on Israeli ' terms. It is not widely' known but it is a fact that Nasser tried to find a formula to negotiate after the war in 1967. Until this outbreak of fighting, Sadat was probably not, strong enough to entertain this possi- bility. The third painful option was a, "forward policy." This has two possible, forms, diplomacy and war. The Egyptians mounted a diplomatic offensive at the United Nations and, through emissaries to. a number of countries last spring and summer., They argued that since the United Na tions had demanded an Israeli with- drawal and Israel had refused to com=. .ply, the issue was no longer solely Arab-Israeli but' now concerned the.: whole membership, indeed the contin- ued existence of the United Nations.; They attempted to draw a parallel be- tween Italy's invasion of Ethiopia, a mortal blow to the League of Nations, and the current Middle Eastern-United Nations impasse. ' The diplomatic offensive was a worse failure because of its very sue- cess. Egypt gathered the overwhelming; support of the poor members of the, United Nations,. lukewarm sympathy from Europe, talk' but no action from, the Soviet Union,' and an American veto. Israel was unmoved. FROM OUR LEVANT CORRESPONDENT Amman Jordanians -see the present fighting as merely the fourth campaign in a single drawn-out battle. Whatever the out- come, this fourth campaign has,three .objectives which are, in order of impor- tance: psychological, where the Arabs have already made their point; military, where the point is being made;. and political, where it has still to be made. The psychological point is that Arabs can and will force war on Israel. In postmortems after the 1967 war, Israeli generals asked themselves this question:, why was Nasser not held back by the brake of fear, that cardinal deterrent in Israeli military doctrine? Now the brake has not worked with President Sadat. either. The very fact that he was not Jteld . back has fissured the theory of A Desperate Move ,HAT LEFT. the option of fighting. We are not, of course, privy to Egyptian thinking on these issues but based on years of study, and conversa- tions in Cairo this summer, it seems likely to me that while the decision; may not have been made in precisely' ,these terms, the Egyptian strategists, may have thought along the following lines: Israel has twice proven that preemp-, tive military action is effective; per-, haps it would be effective for the; Egyptians. If the fighting could be pro-, longed, other Arab states, regardless, of' their rational analysis of the. chances or their doctrinal antipathy to Egypt, would be forced to come to the aid of their Arab brothers. Even, those that did not participate militarily ,would be constrained to, use their dip- lomatic and economic pressures on Egypt's behalf. If Egypt could seize' and maintain control of the east bank of the Suez Canal, at minimum the ca- nal might subsequently be reopened' ,and so increase Egyptian revenues by $250 million or so yearly. If the army performed creditably, whether or not. ,,it won, it might be . possible to enter, into negotiations on terms which were: at least not humiliating. Finally, Sadat,' having lashed out militarily in the Arab national cause, could begin to fill the rather large shoes he had inherited and would 'cease to be threatened by -the charge of cowardice or treason. These considerations, it seems to me,; :form an essential background to an un-, '?derstanding of the fighting in the Mid- dle East. ?The third question, - "Why' now?", can probably be answered :quickly. The Egyptian diplomatic offensive. had failed; Russia had withdrawn, In- creasingly, from Its heavy intervention- 1n Middle Eastern affairs and Russian military equipment, particularly in the more sophisticated and delicate items, was rapidly deteriorating. Israel was increasing in power, and prestige vas-a-? Israeli invincibility and means that even if the Arabs are defeated there could be a fifth round. For a people long humilia- ted this is a cause for psychological relief and pride. From bitter experience the Jordanians are not appreciative of Egypt's or Syria's military abilities. But this time they do appreciate the fact that the two countries have succeeded in doing what they failed to do in the three earlier cam- paigns: they have brought the elusive Israeli army-to battle in an old-fashioned frontal face-to-face setpiece fight. The Israelis won the previous campaigns by pre-emptive strikes or by a series of skirmishes, so that the Arab armies felt not so much defeated as cheated. Now Israel has to make head-on attacks against the Egyptian bridgeheads and the stubborn Egyptian peasant is known . as a good defensive fighter. . As the Jordanians see it; the Arabs vis the Arabs. Finally, the persistent' rumors and intelligence and diplo-' matic reports of Israeli-Soviet contacts became precise and detailed about' three weeks ago. Diplomatic rumors-' wl?ether t`rue or not is of little concern: -- indicated that Israel and the So-'! .viet Union were moving close to an ex-? change of ambassadors. My hunch is that this may have been the final; straw for the Egyptians. It may have convinced them that soon they would'. be frozen out of the councils of the, great powers, increasingly weak, in creasingly poor, Increasingly numerousi and that the public mood, in these cir-s cumstances, would turn increasingly bitter against an apparently inept,' cowardly or traitorous government. Ifi this is' true, it suggests that, the wart was a desperate move, almost a throw' 'of the dice, when all else had failed' 'and little could be hoped. d Seize the Moment WHAT-IS to be done? Must we look, = V"a forward to another non-peace, an-i .other enormous waste of human re- sources or armaments, another period. of increased, population, uncured dis- ease, unremedied backwardness? And then, perhaps, an even more bitter and' costly war? The answer is probably yes unless 1 .we can ?eize upon the fluidity of the' crisisranaiyze its elements and assist' the most responsible and constructive among the belligerents and their ,friends to build something better. Ironically, I suggest, the fighting, if .it can be stopped before the damage is too great or before, once again, the Ar-; ,abs are humiliated, may have removed tone of the obstacles to the successful, negotiation of peace. It would be far., easier for Sadat today to negotiate; 'than it would have been a month ago, or a year ago. A week from now the opportunity may have,slipped away. It ' would be tragic if the Egyptians, the Israelis and the world community did not seize it. would achieve their political objective if they hold even a few square miles of their occupied territory when the cease- fire comes. This would enable them to negotiate from a somewhat stronger posi- tion-and if the Israelis ...ere interested in a settlement they would , oason that the Arabs must have a bargaining counter to bring them to the table. The emotional gap between the west and the Arabs has again been shown by their opposing reactions to the fact that the Arabs attacked on the Jewish Day of Atonement. Jordanians dismiss western concern about this as hypocrisy; one American-educated Jordanian pointed out that George Washington, deliberately attacked across the Poto- mac on a Christmas Eve in order to catch the British soldiers at their Christmas dinner. All these untrust- worthy ex-colonials are the same.' 25 Approved Fur Release 2001/08/07 --CI-A=R - - - _~ _ - Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 NEW YORK TIMES 11+ October 1973 By Edward W. Said I can recall that as a, child.' before 1948 in Palestine and Egypt. the., for- eigners :with. whom I was, surrounded articulate Arab in the United States "The Englishman or, the. Frenclirnan or )would frequently be asked to partici- the Greek had recognizable', patterns .' pate in public discussions on the Mid- of 'speech and, even dress,* gestures tldle East question. On one occasion I unique to each,.. and so: on, Yet _ the , was preceded to the lectern by an, Jew, whether he 'was Egyptian,. Pales- Israeli speaker who, I thought then, ti.nian, Italian. or British'.. seemed to,! had the lack of irony to say that it seep through.".those' harder- identities r was the` Arabs that had always seen and' be' mixed `up. with mine.:; Usually themselves as the chosen people. of course,` nothing was. said, but there is Obviously ,this heedless remark was.' was a felt correspondence between us a later embarrassment to him as a.', nevertheless. Maybe : this..experience Jew, and it was easy to mock him was not. common to.. niany.;Arabs: I his own observation . This inci- don't 'really know. Now,,. however, with dent isn't perhaps of tremendous value now, except that it does come back, ..".particularly during these anxious and confusing days of this fourth Arab- Israeli war. You begin to realize that what, as an intellectual.. cf secular .; persuasion you have .always believed,, a divinely, chosen race, has a'disquiet- conflict and a , gradually diinipished ple, but Arabs and Jews together have Every Arab has his own national -.chosen each other for a struggle whose identity to protect his spirit -from the roots seem to go deeper with each' fraying ordeals of Arabism-Israelism,,- year, and whose future seems. less thinkable and resolvable each year.' Neither people can develop without the other there, harassing; taunting, that has endured for eighty centuries; :fighting; no Arab today has an identity r I that can be unconscious of the Jew, .that can rule out the Jew as F. psychic factor in the Arab identity; conversely, I think, no Jew can ignore the Arab in general, nor'can he immerse himself in his ancient tradition and so lose the Palestinian Arab in particular and what' Zionism has done to him. The more intense these modern struggles for identity become; the more attention is paid by;the Arab or the Jew to his chosen opponent,. or partner.. Each is the other. insults, wars,, humiliations and fear, all! the adventurer-pioneer, and the Arab, those seeming inevitabilities; but, there ; his creeping, myctericusly fearsome' are only the rarest occasions for judg- shadow: Thus isolated from I his past' ing how in, victimizing each other- tlie`.Arab''has seemed condemned to tension. For the Egyptian there is an ., unbroken national Egyptian history;; this is a sovereign. life whose richness astounded even ;Herodctus. For ,the;, Palestinian perforce his national iden-'; tity is an, embattled resistance, to dispossession and extinction; yet' for,-, most of the world he has seemed like:.. cigarette ash, moved from corner to corner,, threatened. always with- it reversible.: dispersion How many par tisans of Jewish immigration to Israel recognize that every penny spent"fori, that purpose also buys a Palestinian more time as an exile from his cqun-i try? ' ~1 WASHINGTON POST 9 October 1973 rahs--As-k_UQ'$. 01"I FiTm.5. inance Ant" s NEW YORK, Oct.. 8 (AP)- I action from the oil companies. The Action Committge on l The telegrams urged the" asked major oil companies to- day to spend $10 million to counter what it called Zionist propaganda in the-. United States. , ' Representatives of sonic of these companies are negotia- tion new oils prices in Vienna with six oil-producing coun- tries of the Persian Gulf in- cluding Iraq, which Sunday nationalized the 23.75? per cent interest held in the Basra) Pe- .ti;olcum Co. by Exxon and Mo- Exxon and Mobil are two of .the companies that were asked Jq;r money. The others are Texaco, Shell, Standard Oil of California and Standard Oil of Min. There was no immediate re- companies to spend the $10 million in the United States to "openly; publicly declare their opposition to Zionism." . Dr. M.T. Mehdi, 'secretary general of the committee, which coordinates the activi- ties of Aran groups in the Ui ited States, said in an inter- view that it was' the compa- nies' "moral responsibility" to take this action in order to "help discharge their debt" to' the Arabian oil producing companies. The committee also sent tel- egrams to Sen. Henry M. Jack-, son, (D-Wash.) and Sen.'Jacob K Javits (R-N.Y.) urging them to support a program of ad- mitting one million Soviet Jews to the United States. 26 However, all Arabs -have suffered` both in the ;Middle East, and in the; West.,The Arab is seen as the disruptor't of lsrael's existence, . or, in a" larger view, as a surmountable'obstacle to Israel's 'c'reation in '1948.. This' _has4 been part of the Zionist attitude, to- ward the Arabi especially in the years. before I98,. when. Israel was being promulgated . ideologically. Palestine wa's imagined as an empty desert wait- ing to burst into bloom, its inhabitants minimized as inconsequential nomads possessing no stable claim to the land, and therefore no cultural,. permanence;' At worst, the Arab today.-is conceived. of as a bloody-minded shadow that dogs the ;Jew. The, Jew of, pre-Nazir Europe has split in tyro:, a. Jewish, hero, ' at the hands. of Israeli soldiers anti, tourists, keptin?his'place by American Pharitomi? jets and U;J.A: money. Such human and' political; failure has,, for 'its' answering ' consequence' Arab military and oil thi eats and, soon enough, grab resurgence.'Here'too?-it; is.the syr.metry that is 'disturbing,' the; excluded ? absence -in if, of ..some, ir- regularity in the .pattern. Yet when. the, ,P..alestinians' raised tr_e alternative, of, a"secular democratic state fr`- Arabst and-- Jews, for Jews f'it's Araus,' the., idea was spurner:. as ?to~?'utbpiatT, as-; too. far outside the ..:monotonously balanced sequence of events to'be'ac-' cepted. But--is this war 7-._ e t y n an I'S Irae1 Said to be rani. iini US, ~.lots Washington (KNI) -Israeli who . have been. ' contacted say ' Americans flying for Israel agents have been recruiting there is no. question that theI run a slight risk of losing their American civilian pilots to f lv , recruiters are working on be-.citizenship, State Department, Israeli Embassy, but pilotsIA-4 in combat recently. the A-4 Skyhawk light bomber against the Arabs, the New .York Daily News reported yes- terday. Under the Israeli recruit- ment plan, the Americans, .former military pilots who have flown the United States- built A-4, 'say that- they are being offered $5,000 a month. Some of the pilots are skepti- cal of the offer, saying that the war may be over before they receive their first month's pay- check. They are being told that suitable contract arrangements can be worked out. The top secret program; started in the last few days, is not being conducted out.of the officials ' said. However,' if the pilots fly under contract,, rather than taking an oath. of allegiance and joining the -Is= raeli Air. Force, officials said, "They will not necessarily lose their citizenship. The situation is murky." 27 Approveit rRetease 2001/081,07 : Ct =RDP77=0 =9 Lord Chalfont half of the Israeli government. An Israeli Embassy spokes- man said reports of the re- cruiting were "nonsense." He said the Israelis "have enough pilots. It's planes we don't have. enough of." Israeli offi- cials pointed out ? that their pilots speak Hebrew and the language barrier, would pre- vent Americans' from receiving orders. But some of the American pilots have served in Israel in the past to train Israeli pilots. At least one 'American pilot has been asked to help recruit his friends. Returning Vietnam `veterans form a large pool of ments; Arab oil has become a potent factor in . American economic calculations; and both super-powers have too much at stake elsewhere in the world to allow their plans to be disrupted by Middle Eastern miscalcula- .tions. It is probably inevitable that some supplies of arms will continue, at any rate as long .as the immediate military situation remains unresolved. There is, however, little doubt that it is now in the common interest of the super-powers to bring the. fighting to an end as soon as possible, and to bring about a permanent settlement in the area. . They will have to agree on secure and guaranteed frontiers ; on an armaments policy that will put an end to the cynical arms ,race which has made nonsense 'of any attempt at a settlement up to now ; and not least on their attitudes towards development programmes in the area. The Middle East is likely to be the crucial ' test of whether the United States and the Soviet Union are really moving from confrontation through competi- tion to cooperation ; and whether their common interests are powerful enough to overcome traditional' ideological' reflexes and the conventional reactions of real politik. There remains the question of whether western Europe can play any significant part in these developments. The need for the evolution of common foreign policies in Europe is -not confined to the present crisis, but it presents a decisive challenge to the new relationship between the United States and Europe. Q Times Newspapers Ltd, 1973. Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 NEW YORK TIMES 18 October 1973 Detente and Mideast High U.S.,Aides Still Hopeful, but Critics. Of', .Stronger Soviet Ties ,Are Bolstered By BERNARD GWERTZMAN Special to The New York Times WASHINGTON, Oct. 17- `~'The Middle East war has pro-: induced a'highly emotional crisis; ,in Soviet-American relations, the outcome. of which will probably decide for some time the fate. of the effort by So- 'Viet and American leaders to work out a less contentious, more constructive relationship. This "detente News policy," as it is generally known, Analysis had its severe crit- ics even before the fighting erupt-, ed . between Israel and the F Arabs on Oct. 6. The war, with (.Soviet help flowing to the Egyptians and Syrians, has in- tensified the criticism and has led to a 'widespread view in, Washington that detente is dead. But Secretary of State. Kis- singer, supported by most specialists on Soviet affairs here and by the hopes of the Soviet Embassy, has been urging ev- eryone to show patience, say- ing ineffect that reports of 'detente's death have beenl :greatly exaggerated. II Mr. Kissinger, who has been' .handling the discussions with,, 'the Soviet Ambassador, Anatoly F. Dobrynin, has left his State ,Department aides with the im- pression that a big-power deal. may soon be reached on a formula for ending the wa-.' Despite all the talk 'about rein- forcements,' the mood at they White House and the State Deg partment has been more hope- .(ul than gloomy. Welcome Even If Belated The view here is that Mos- cow, after encouraging Egypt and Syria to fight it out with Israel, may now be ready to join with Washington in a call for an immediate ceasefire, to be followed by negotiations on a' more permanent settlement. The. question then is whether the package can be sold to the Egyptians and the Israelis. Any Soviet cooperation, how- ever belated, would be wel- comed by the Nixon Adminis- tration, not only for its effect on the Middle East war but also for its impact on the de- bate here over the value of detente. (Detente, a French word, is. defined by the Random House Dictionary as "a relaxing, espe- cially of international ten- sion.") Until the Middle East explod- ed, the debate, which has been going on for months, had gen- erally been. confined to the' question whether the United States could really improve re- lations with a country that treats its people in a way dis- tasteful to most Americans. 1. Specifically, the lines had been drawn over the Adminis- tration's efforts to secure from Congress nondiscriminatory tar- iff ?status for the Russians- so-called most-favored-nation treatment. Critics have demand= ed that tariff reductions be linked to unrestricted emigra- tion from the Soviet Union for Jews and others. In addition, when the Ad- ministration's trade bill reaches the floor of the House of Rep- resentatives at the end of the month, the critics will seek to bar Government-backed Export- Import Bank credits for the Russians until their emigration policy changes. The withholding of credits would have more immediate impact on the Soviet economy .than the failure to receive bet- ter tariff treatment because credits are being used to. finance the import of American techllGlogy. Tariff changes would have significance only when and if Soviet manufac- ,volume on the American mar- In the debate over the link between emigration and trade, many who doubted the value .of detente nevertheless sup- ported Mr. . Kissinger's view that, the United States should not tell other countries how to conduct their affairs.. While there can be differ- ences over the relevance of Soviet emigration policy to Soviet-American , relations, if seems evident that if those' relations are to have real mean ing, they should serve to re- duce tensions and limit .local conflicts. , Critics of the Soviet Union's policy-=and there are many in, Washington-have concluded, -on the basis of its role in back- ing Egypt and Syria with arias before and during the current conflict.and of its exhortations to other Arabs to join the fight, that the effort to improve rela- tions has failed and that the' United States was duped into undertaking it. The critics would' like the United States tc adopt a tougher attitude and stop mak-I ing excuses for Soviet behavior, This view is held by a rather mixed coalition-liberal intel- lectuals, right-wing anti-Com- munists, Jewish organizations, .labor leaders and even Melvin 'R. Laird, President Nixon's do- Imestic adviser and former Sec- tretary of Defense. For the moment Mr. Nixon seems willing to go along with Mr. Kissinger's belief that the Russians . have not acted as badly as may seem. The State Department view is that the so- called massive Soviet airlift was somewhat larger than Washington woould have liked but not so great as to shake the foundations of detente. i "We will. match if not ex- Approved For Release 2001/08/07 NEW YORK TIMES 17 October 1973 Israel's rbs'on Press'hn pair . Her Cr(dibglity in Gene,, .Way By TERRENCE SMITH Stectal to The New York Times BEERSHEBA, Israel, Oct. 16 --Israeli military authorities to- day barred newsmen from the Sinai Peninsula, where a major `battle of the war remains to be fought. The action was one illustra- tion of why certain aspects of the Israeli-Arab war are report- ed in detail, and others not at all. ? A. group of journalists- includ-ing this reporter was turned back early this morning when it reached this Negev town, which serves as the headquar- ters for the, southern com- mand. The 'newsmen had de- parted for the canal front from Tel Aviv two hours earlier with an escort officer and full auth- orization to visit the Israeli lines in Sinai. An Israeli source said later that the newsmen had been barred because of intensified shelling and fighting in the central sector of the front, where an Israeli task force had reportedly crossed the Suez Canal. Problem for Newsmen The curb was an example of the problems the still-growing army of foreign journalists is encountering in attempt to re-_ port Israel's fourth war -with he Arabs. The international press corps that gathered in Israel this 'week is one of the largest ever assembled anywhere. More than 600 newspaper and maga- zine reporters, photographers and television .personnel from more than 30 countries have .been accredited since the war began.11 days ago. The basic Israeli policy is not to permit newsmen to ac- company forces at the front. The police seems to stem not so much from a desire for se- crecy as .a a concern over con- gestion at the front and the safety of the newsmen. As a' result, . no newsmer- were permitted to visit either front until last Wednesday, the fifth day of the war. By then, the Israeli's had broken the back of the Syrian offensive in the Golan heights and had retaken all but small pockets of the area west of the former cease-fire line. Since then, reporters have had considerable freedom, of movement on the Golan heights. Because of the area's rolling, almost' treeless terrain and be- cause the forces there are rela- tively concentrated, it is possi- ble to se the fighting on the Syrian front and to follow its course in at least a limited area. In Sinai, however, it has-been another story. The area is vast, the front is three times as long, as that on the Golan heights and the Israeli forces have been mostly on the defensive. Until the area was closed to- day, newsmen were able to drive to bases 15 to 20 miles back from the canal. But they saw little real action. In the absence of personal observation, newsmen have only the official military com- muniques issued several times a day and a nightly briefing provided in Te: Aviv by a re- serve colonel from the filmy spokesman's office. Data Oft-r, Conflict Frequently the information and battle-damage figures con- flict with the descriptions ema, nating? from the Ara? countries, leaving the newsmen little al- ternative 'sut to take account of both. The credibility of Israeli in- formation in the past was gen eeally regarded as high by most of the' newsmen here. ,gut: in this war, the feeling is that it has 'diminished, "The Israeli sin is omission, not commission," a long-time foreign correspondent observed the other day. "They mislead by leavin~ things out, not by, lying." A significant credibility gaps develcped on the third night of' the war when Lieut. Gen. Da- vid Elazar, the Israeli chief of staff,. spoke at a huge news conference in Tel Aviv and.pic- tured the enemy as being on the run on both fronts. Iceed the Soviet airliff," an a diplomatic solution, to main- American official said. Itain the movement toward im- What is crucial in comingiproved relations. days, according to thetop of-I If they can find a formula IN ? l icia s at work on the Middle I leading to a Middle East solu- East crisi s 1 I , s low well the Soviet Union and the United States can juggle sometimes conflicting desires-to supply their friends with arms, to find have been made for the value of detente. If they cannot and tensions increase, the critics will have their day. 28 Approved For Release 2001/08/07 : CIA-RDP77-00432R000100250001-9 WASHINGTON POST 12 October 1973 kenr'/Ome R I By Jonathan C. Randal