The Stanses paid $130,000 for a Watergate East apartment on the twelfth floor, only belatedly realizing Watergate South would eventually block their prime view of the Potomac. Kathy Stans, a tall, glamorous brunette, was delighted that nearly all the furniture from their New York apartment fit into their new home, which had three bedrooms, a library and a working fireplace in the massive living room. She installed yellow-and-white wallpaper in the foyer and hung her husband’s collection of African ceremonial knives in the master bedroom—on his side of the bed, next to his exercise bike—and had curtains made from the same fabric used for the dresses of African tribeswomen. In the library, with its grass-cloth wall coverings, seven-foot-tall elephant tusks joined a coffee table with an elephant-leg base and a rug made from the skin of a Bengal tiger shot by Maurice on one of his many international hunting expeditions. They called it their “Africana room.” A combination den/TV room/guest room was turned into a “patriotic suite,” with blue carpeting, three white walls and one wall covered in red felt. “Isn’t it mad?” Kathy giggled.
Martin Anderson, an MIT-trained economist and author of The Federal Bulldozer, in which he recommended the repeal of the federal urban renewal program, was named a special assistant to Nixon. Annelise Anderson was finishing her Ph.D. at Columbia University and followed her husband, Martin, to Washington. She went to the Watergate office to inquire about renting an apartment. “They were rather snobbish,” she recalled, “until I told them my husband would be working at the White House.” Martin and Annelise rented a two-bedroom, two-bath apartment on the second floor of Watergate West, facing Virginia Avenue and the Howard Johnson Motor Lodge. “Everything was well-equipped,” she said, “and seemed to be very secure.” Martin worked long hours at the White House for Arthur Burns, another Watergate resident, until Burns left the White House staff to become chairman of the Federal Reserve Board. Annelise worked at the justice department and finished her dissertation on organized crime in America. Their apartment was a seventeen-minute walk to the White House, although Martin purchased a used car to make the trip home safely at night.
Transportation Secretary John Volpe and his wife, Jennie, bought a three-bedroom penthouse in Watergate East for $130,000. Their apartment had two working fireplaces, one of which Nicolas Salgo found in a demolished mansion in Europe. Mrs. Volpe removed the bright lemon-yellow-and-white wallpaper in the foyer and painted the living room blue, to show off her collection of French provincial furniture upholstered in blues and golds. “I like my old things,” she told a reporter.
Martha Mitchell was slow to acclimate to her duplex, which spanned the seventh and eighth floors of Watergate East and came with four parking spaces. She missed her massive house on a golf course in Rye, New York. “Twenty rooms that I had worked so hard on,” she lamented. “It took three years to decorate. I had no idea of ever leaving. I’m going to have to do so much consolidating. I guess I’ll have to store a lot of things.”
Martha said their new apartment lacked “the woman’s touch” and immediately began personalizing it. “I hate to walk into a decorator-decorated place,” she said. “It looks like a hotel room.” She replaced the parquet floor in the foyer with marble, painted most of the walls her favorite “Wedgwood blue” and brought in a “more traditional” stairway to replace the “contemporary one” that came with the apartment. Surrounded by sawdust, she complained to a reporter about the shortage of local suppliers. “I have to go to New York and get wallpaper, that’s how desperate I am,” she fretted. If the perfect wallpaper could not be found right away, “I’ll just have to paint.” She bought a new wardrobe as well—“with special attention paid to clothes suitable for a Cabinet wife to wear during the Inaugural festivities,” according to her biographer Winzola McLendon—and proudly showed off her bulging closets to an old friend who had come to visit.
In March, Sidney James, a lobbyist for Time Inc., hosted the first stop of a black-tie “progressive party” in his Watergate East apartment for some of his new neighbors, including the Mitchells, the Volpes and the Stanses. After cocktails at the James apartment, the group moved to the apartment of Laurence Wood, Washington vice president of General Electric Co., for dinner. From there, they went to the apartment of Joseph Farland, former ambassador to Panama and now a Washington lawyer, for coffee. The hosts told the Wall Street Journal their goal wasn’t to build relations with the Nixon crowd, but to allow their wives to “exchange decorating ideas.”
Other Nixon appointees who moved into the Watergate included Postmaster General Winton M. Blount; the incoming U.S. chief of protocol Bus Mosbacher; Frank Shakespeare, chief of the U.S. Information Agency; H. Dale Grubb, a Nixon liaison to Congress; White House aide James Keogh, managing editor of presidential messages; Mary T. Brooks, director of the U.S. Mint; two assistant secretaries of commerce, Kenneth David and Robert Podesta; Deputy Postmaster General E. T. Klassen; and “a smattering of unofficial Republican heavyweights.”
A Watergate sales executive said all the residents in the complex were “delightful people,” but the Republicans were “the icing on the cake.”
ANNA CHENNAULT HAD CAMPAIGNED AGGRESSIVELY FOR THE Nixon-Agnew ticket. She attended the GOP convention in Miami as a delegate from the District of Columbia, served as executive secretary to the GOP Platform Committee and raised $250,000 for the party. Shortly after the election, she received a letter from the president-elect, asking her to recommend “exceptional individuals” to serve in his new administration and enclosing the initial application form. It was a form letter, with an auto-pen signature, incorrectly addressed to “Mr. A. Chennault.”
A week before Nixon’s swearing-in, Anna Chennault threw a lavish buffet supper for one hundred guests, prepared by her longtime Chinese chef, in her Watergate East penthouse, followed by a screening at the MacArthur Theatre of the movie Oliver! Chennault’s guests included the legendary Washington hostess Perle Mesta, prompting Washington Post society reporter Maxine Cheshire to wonder if she was witnessing the passing of a torch. Cheshire’s story about the party carried the headline NEXT PERLE MESTA?
The Cleveland Plain Dealer called Chennault the “hostess with the mostess” and a “Party Queen.” The Washington Sunday News called her “The Tiger Lady.” Palm Beach Life referred to her as “Madame Chennault,” the “unofficial ambassador-at-large for the Nixon Administration.”
Chennault was certainly “a figure of glamour and mystery” in the capital, Cheshire wrote. “If she were to become known primarily as a party-giver, Nixon’s foreign affairs advisers will probably breathe a sigh of relief.”
Ten days earlier, the St. Louis Post-Dispatch reported Chennault had made “secret” contact with the South Vietnamese just before the election, at the request of the Nixon campaign. Several anonymous sources—including foreign diplomats, Johnson aides, “and a number of Republicans, including some within Nixon’s own organization”—corroborated the report. “Who told you that?” Chennault asked the Post-Dispatch reporter, with a half-smile, as she toyed with the collar of her Chinese silk dress. “You’re going to get me into a lot of trouble. I can’t say anything . . . come back and ask me that after the inauguration. We’re at a very sensitive time. . . . I know so much and can say so little.”
At the party, Cheshire asked Chennault directly if she had any current or prior ties to the CIA. Chennault responded with a stony-faced “no comment.”
Senator Tower told the Washington Star “any story that Mrs. Chennault tried to stall peace talks is manifestly untrue.” John Mitchell, however, was reportedly “unavailable for comment.”
As the controversy grew, Anna Chennault acquired a new nickname: the Dragon Lady.
TWO MONTHS INTO THE NEW ADMINISTRATION, ROSE MARY WOODS returned late at night from an eight-day international trip with President Nixon and discovered her apartment in Watergate East had been burglarized. Thieves took a suitcase containing jewelry from a bedroom closet, Nixon’s press secretary Ron Ziegler confirmed, as w
ell as personal gifts from Nixon. The FBI was called in to investigate.
“It’s really a tragic thing,” said Ziegler. “This brings the whole problem of crime close to home. It demonstrates the need for action against the criminal elements that have gotten out of control.”
The front-door lock to Woods’s apartment was neither forced nor damaged, suggesting someone had entered using either a duplicate or a master key. Woods had her locks changed and refused to allow the front desk to have a copy of the new key. She kept a duplicate key in her office and her remaining jewelry in a White House safe.
“What a way to live,” she lamented.
BACK IN ROME, SGI ENGINEER PIERLUIGI BORLENGHI RETURNED from Washington to brief Luigi Moretti on modifications to the residential and commercial buildings of Watergate South, necessitated by the compromise reached among the developers, the Kennedy Center and the residents of Watergate East. The briefing did not go well. Outraged at the changes to his original design, Moretti fired off a letter to Aldo Samaritani. The “penny-pinching attitude” of the Watergate team in Washington, Moretti wrote, had resulted in an unattractive facade of the office building facing the Kennedy Center, and a lobby design of which he was “ashamed.” (Similar cost cutting, he added, had resulted in the “ruin of the hotel.”) “Nothing is accomplished by trying to save money when it comes to small details,” he wrote. “It displeases me to have to say it, but it seems to me that it has come about because of the team of Giuseppe Cecchi and Salgo.”
“Because of your friendship,” Moretti concluded, “I know that you will forgive me for all of this venting.”
Samaritani, however, had more on his plate than the complaints of his temperamental friend.
In 1967, the leftist press in Italy published a series of articles calling the Church “the biggest tax evader in postwar Italy.” The finance minister of Italy’s center-left coalition government, headed by Aldo Moro, wanted to force the Vatican to pay taxes on its dividend income from Italian companies. The Moro government asked the Church for a list of its holdings in the Italian stock markets. The Vatican refused to share the information. Pope Paul VI turned for help to a lawyer named Michele Sindona.
Sindona was of average height, trim, with close-cropped gray hair, a high forehead and dark eyes. First-time visitors to his office sometimes found him humorless and stern. Others considered him relaxed and unpretentious. He illustrated his speech with vigorous gesticulations, a stereotypical Italian trait, but he did not dress the part of the Italian banker. He wore dark suits, white shirts and conservative ties.
He was born in Patti, a small town in Sicily, where his father worked for a farm cooperative. Sindona worked his way through law school at the University of Messina, managing his dormitory in exchange for free room and board. He also worked for a local government tax office, a bank and a citrus company that was the largest company in Sicily at the time. Lemons, because they prevented scurvy, were deemed “an essential war product” by the Italian government during World War II, and Sindona leveraged his employment with the citrus company to secure an exemption from military service. When Sicily fell to the Allies in 1943, Sindona got a job driving fruit from the coast into the Sicilian interior and returning with grain. It was a grueling schedule. Sindona later recalled working nearly fifteen days straight, stopping only to nap briefly and take a quick shower.
After the war, Sindona moved to Milan and established a law firm specializing in tax issues. He added an auditing department and worked for some of the most important firms in Italy, as well as top foreign companies doing business in Italy. Some of his clients gave him stock, stock options or board seats in lieu of, or in addition to, legal and auditing fees. Within a few years, Sindona was a listed director of over fifty companies. His small office in Milan looked out over the roof of the Church of San Giuseppe, near the Opera House, in the center of Milan’s banking establishment. A life-size wooden statue of a young Italian nobleman, by Antonio del Pollaiuolo, an important fifteenth-century Italian painter and sculptor, stood in the corner. He used a heavy sixteenth-century table as a desk and gave visitors a choice of two eighteenth-century armchairs, which a reporter described as “sufficiently uncomfortable to discourage any lengthy conferences.”
Sindona persuaded the Moro government to slow down the repeal of the Church’s tax exemption, earning a few more years during which the Vatican continued to avoid paying taxes on its dividends from Italian companies, including SGI.
In 1969, the Italian parliament voted to require the Vatican to pay taxes on its dividends. Paul VI again summoned Michele Sindona for a visit. According to author Luigi DiFonzo:
Only one light was burning in the pope’s chambers as Michele Sindona entered late on that spring night in 1969. Paul was seated in one of the satin-covered chairs. His body bent forward and his face distorted by shadows, he appeared tired and ill.
Sindona wore a navy blue suit, a white shirt with gold cuff links, and a blue tie. He appeared fresh and confident. He approached the Holy Father with respect and a strong, warm smile. Paul did not offer his hand for Michele to kiss; instead, they greeted each other with the handshake of old friends.
This is a terrible problem, Paul told him. . . . If the Vatican allowed Italy to tax its investments, it would be a signal for other countries to do the same.
Sindona proposed the Vatican move its investments out of Italy and into the “more profitable, tax-free Eurodollar market.” This would protect the confidentiality of the Church’s investments, he promised, and demonstrate to other countries the Vatican’s willingness to play hardball. The Pope agreed. Sindona transferred the Vatican’s Italian stock portfolio to a series of holding companies in Luxembourg and Liechtenstein; from there, he sold shares and reinvested the proceeds in European and American companies.
On June 19, 1969, the Washington Post reported the Vatican was interested in selling its holdings in the development firm SGI, perhaps to “Rockefeller interests in New York.” Aldo Samaritani flew to the United States “for an extended stay,” the purpose of which SGI refused to confirm.
If Samaritani’s goal was to find an American buyer for the Vatican’s shares in Società Generale Immobiliare, his trip was a failure. Michele Sindona had already found a buyer: himself.
Sindona arranged for the Church’s shares in SGI to be first transferred to Paribas Transcontinental of Luxembourg, and then to Fasco AG, his personal holding company. Italian newspapers learned of the transaction and asked the Vatican for a response. “Our policy is to avoid maintaining control of companies as in the past,” said the pope through a spokesman. “We want to improve investment performance, balanced, of course, against what must be a fundamentally conservative investment philosophy.” Sindona, reached in his Milan office, refused to answer press questions.
Pietro Vacchelli, a lawyer, and Antonio Cecchi, whose son, Giuseppe, had left Rome nine years earlier to help launch the North American expansion of SGI, resigned from the board. According to their letters of resignation, they were “motivated by the desire to facilitate the potential admission onto the Board of a wider representation of the shareholders.” The board elected two new members, Sindona and Dr. Raffaele Politi, an educator. Among the first votes Michele Sindona cast as a member of the board of SGI was in support of a resolution giving Aldo Samaritani special powers as consigliere delegato, or “delegate board member.” These powers gave Samaritani near-complete control over company activities, with minimal board supervision, including the ability to mortgage properties; hire and fire managers, and set their salaries; and assign “extraordinary powers” to any SGI executive as required. It was an unprecedented expression of trust.
These powers would eventually also be placed in the hands of Michele Sindona, with disastrous results.
ON DECEMBER 10, 1968, ANNA CHENNAULT WROTE THE NIXON transition team to seek a position with the new administration. She suggested a White House appointment as “an advisor-diplomatic messenger in Asiatic affair
s” or perhaps as assistant secretary of state for cultural affairs. A State Department post, she wrote, would not interfere with her ability “inconspicuously to be consulted [by the White House] and used on the political affairs with which I am particularly familiar, i.e., the problems and attitudes of the governments of Southeast Asia.”
Anna waited patiently for a response. Weeks went by, but she heard nothing from anyone with either the Nixon transition team or, following Nixon’s swearing-in, the White House staff. Eventually, she got tired of waiting.
She took the elevator from the fourteenth to the seventh floor of Watergate East, rang the doorbell of Apartment 712-N and told her story to Martha Mitchell. As a result of her labors, Anna said, the peace talks in Paris had been delayed. She showed Martha a large folder containing letters and other documents, which she said confirmed that Nixon had met with Ambassador Bùi Diem in his Fifth Avenue apartment in July 1968. When John Mitchell returned home from work that day, Martha told him Anna Chennault had stopped by and was angry. Martha handed him the folder. “Stay out of it,” he told her.
On July 11 and 18, 1969, Life ran lengthy excerpts from Theodore “Teddy” White’s new book, The Making of the President 1968. The excerpt added new details to the events first reported by the St. Louis Post-Dispatch six months earlier:
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