The Watergate

by Joseph Rodota

  After a ten-day trial, Lionel Cruse and his cousin Yvan were convicted of fraud and each fined 27,000 francs—about $6,000. The New York Times reported the verdicts were “little more than wrist-slapping,” considering the damage the two men had done to the reputation of the French wine trade. Pierre Bert, a wine broker, was sentenced to a year in jail. Five smaller wine merchants received suspended sentences and paid fines and back taxes.

  According to Benoît Lecat, head of the wine and viticulture department of California Polytechnic State University in San Luis Obispo, California, the scandal damaged the reputation of Bordeaux wine merchants and resulted in a loss of trust between wine consumers and vintners. In the aftermath of the scandal, French authorities imposed strict new regulations on the industry. Although wine merchants in Bordeaux bounced back from the scandal quickly and resumed exports, an entire class of wine merchants in nearby Burgundy was wiped out and local vintners were forced to bottle their own wines and sell directly to consumers.

  On the eve of the trial, Lionel Cruse dismissed the charges against him as a “pseudo scandal” and defiantly proclaimed, “I will be the Nixon of Bordeaux.” According to Cruse, Nixon was the victim of “a campaign of calumny orchestrated by the leftist, Washington press.” The Paris newspaper Le Monde, however, suggested the vintner’s analogy was “an imprudent parallel,” as the former president had resigned in disgrace. The Times’s Prial noted similarities between the Bordeaux and Watergate scandals, including the disappearance and possible destruction of records. The French named the affair “Winegate.”

  New York Times columnist and former Nixon speechwriter William Safire, in his New Political Dictionary, defined the “-gate construction” as “a device to provide a sinister label to a possible scandal.” According to Safire, the Bordeaux “winegate” affair was the first post-Nixon scandal to earn the “-gate” suffix.

  NICOLAS SALGO ANSWERED HIS PHONE.

  “May I talk to you?” asked Mario Barone, chairman of Banca di Roma.

  “Sure,” said Salgo. “What’s on your mind?”

  Banca di Roma, as one of Michele Sindona’s largest creditors, had inherited his sizable stake in Società Generale Immobiliare and its real estate portfolio, including the Watergate. On paper, day-to-day operations at the Watergate appeared to be losing money. “We need somebody to clean it out,” Barone said. “Would you be interested?”

  Salgo had left the Watergate under less than ideal circumstances: Shortly after acquiring the Vatican’s shares in SGI, Sindona fired him. The only reason the dismissal didn’t sting was the last Watergate building had opened by then and there wasn’t much more for Salgo to do.

  “It so happens I don’t have much to do right now, so I’m interested,” Salgo replied. He had recently sold his interest in Bangor Punta, a conglomerate whose holdings included the Smith & Wesson firearms manufacturer and Piper Aircraft. “What are you proposing?”

  “You write your own ticket,” Barone said. “Just clean out the mess.”

  Nicolas Salgo returned to the Watergate and quickly discovered the payroll had nearly doubled in his absence. The Watergate’s property management office, responsible for overseeing the hotel, two office buildings and the common areas—the three Watergate apartment buildings were managed by their respective cooperative associations—now employed thirty-two people.

  “Where in the hell do you put thirty-two people here?” Salgo asked, looking around the cramped offices in Watergate East.

  “There are only eighteen of us,” shrugged the office manager. “The others never show up, ever.”

  Salgo demanded a letter of resignation from every employee by the end of the day. He received letters from eighteen and rehired each of them on the spot. He declared the other fourteen “absent without leave” and dismissed them.

  “Overnight,” Salgo recalled later, “I created a positive cash flow. I’ve never had an easier clean-up job.”

  There was one other casualty of the transition of power from Sindona to the new owners of SGI, the palazzinari. As SGI shut down its international operations, it abandoned the Watergate Landmark project in Alexandria, Virginia, and eliminated Giuseppe Cecchi’s job managing the development. He was offered another job with SGI, but only if he returned to Rome. Fifteen years after he first arrived in America, “Joe” Cecchi now had a wife and family to consider. He had no interest in uprooting his family. Besides, SGI was no longer the company his father, Antonio, had helped to build, working side by side with Aldo Samaritani.

  Cecchi submitted his letter of resignation. He decided to stay in America and go into the real estate development business for himself.

  Watergate at Landmark was completed by another developer. Among its first residents: FBI associate director Mark Felt, later known by the pseudonym “Deep Throat,” who was a member of the condominium association board of directors and helped draft its bylaws.

  BOB DOLE FACED A TOUGH REELECTION RACE IN KANSAS IN 1974, like many Republicans running in the immediate aftermath of Richard Nixon’s resignation. A Labor Day poll showed Dole losing by six points to his opponent, Democratic congressman Bill Roy. From the campaign trail, Bob would often call Elizabeth Hanford at her Watergate East apartment, sometimes as late as one or two in the morning. Hearing her voice, he said, gave him something to look forward to each day.

  Bob called Elizabeth on election night and gave her the good news: He had just won reelection by the razor-thin margin of 13,532 out of 794,434 votes cast. He looked forward to celebrating with her when he returned to Washington. “Don’t you remember?” she asked. “I’m leaving for Japan tomorrow!” She had previously committed to a three-week trip to Japan, as part of a delegation of young political leaders.

  When Elizabeth returned to her apartment, she was greeted by a bottle of champagne from the Watergate Wine Shop and a dozen red roses from the Watergate Florist. “I knew that things were getting serious,” she recalled.

  Bob told her he wanted to be sure he had a job before he popped the question. “He never got down on his knees,” Elizabeth wrote later. “Come to think of it, I don’t even remember a formal proposal.”

  They were married in Washington Cathedral’s Bethlehem Chapel on December 6, 1974. Elizabeth moved into Bob’s “townhouse” duplex with an outdoor patio, Apartment 114, Watergate South.

  ANNA CHENNAULT’S FRIENDSHIP WITH GERALD FORD DATED to their first meeting in 1949, when Ford was a first-term Republican congressman from Michigan. As House minority leader and later as vice president, Ford was a frequent guest at Anna’s round dining table in her Watergate apartment. At one dinner covered by the Washington Post, Congressman Ford joined in a chorus of “Old MacDonald” with the former director of South Korea’s intelligence agency, the former prime minister of Korea and retired general William Westmoreland. Senator John Tower read lines from Hamlet and Secretary of Transportation John Volpe sang a tarantella—in Italian. “I always resent it when they say Republicans give a dull party,” Anna said, toasting her guests, to laughter and applause. In September 1974, a few weeks after Nixon’s resignation, Anna Chennault threw a dinner party in her penthouse and invited some of the new aides to President Gerald Ford. After dinner, Congressman Bob Michel, a Republican from Illinois, led guests in a sing-along as Tommy Corcoran played the piano. The last guest left around 2:00 A.M. Chennault invited the Washington Star to report on the evening, but insisted the article identify her as a “business executive, not hostess.”

  Ford invited Corcoran to “come in and talk about things” whenever he wished, but Corcoran waited until August 1975, more than a year into Ford’s presidency, to accept the invitation. “It’s about Anna Chennault,” Corcoran wrote.

  Anna has quietly told me that she has been deeply disappointed when in your Administration—as distinguished from its Kennedy-Johnson-Nixon predecessors—no invitation has been extended to her when leaders from Asia were dinner guests at your White House. This especially concerned her when White House
guests were Prime Minister Lee Kuan Yew of Singapore whom she knows well and Minister Miki from Japan and many other of her V.I.P. friends from the Orient.

  Lee Kuan Yew visited the White House on May 8, 1975, and the President and Mrs. Ford hosted a state dinner that evening. President Ford’s black-tie dinner for Prime Minister Takeo Miki on August 5 was “stag”—there were no women among the thirty-five guests at the “working dinner.”

  Anna has “wondered” to me whether this is an oversight or deliberate policy on the part of the State Department—or some functionaries in the White House and the National Security Council—to exclude anyone who had relationships with the previous Administration.

  It’s hard to believe but I have long well known how functionaries arrange for themselves matters within their jurisdiction. I am sure and she is sure any “discrimination” against her is not your or Mrs. Ford’s personal intention.

  But as a friend may I alert you that the “wonder” exists.

  Two weeks later, Robert T. Hartmann, counselor to President Ford, reviewed a list of potential guests for the forthcoming state dinner honoring the emperor of Japan. The list included Seiji Ozawa, conductor of the Boston Symphony; John D. Rockefeller III, president of the Japan Society; CBS Evening News anchor Walter Cronkite; the actor Peter Falk, star of Columbo, the “most popular TV show in Japan”; and Watergate residents Marian and Jacob Javits. Hartmann sent the list back to the White House Social Office, headed by Nancy Ruwe, and added a cover note. “The President requested,” he wrote, “that I also remind you that Mrs. Anna Chennault should be given consideration for this or future State Dinners involving Asian leaders by virtue of her role as Vice Chairman of the National Republican Heritage Group Council,” a GOP entity charged with reaching out to ethnic and national minorities.

  Within weeks, Anna received an engraved invitation to attend the state dinner in honor of the emperor and empress of Japan.

  Peter Gruenstein, a lawyer and former congressional aide and editor of the Capitol Hill News Service, which provided investigative reporting on Congress for small papers and other media outlets that did not have the budgets to operate major national bureaus, spotted a reference to “entertainment” in a document filed by Northrop Corporation with the Securities and Exchange Commission and decided to dig around for more information. He unearthed a draft report by the Defense Contract Auditing Agency, which found that up to $11,000 was spent by Northrop in 1972 for parties, attended by company executives, foreign officials and top Pentagon officials, to promote sales of Northrop’s F-5 fighter jets to Asian nations. Northrop had submitted the expenses to the defense department for reimbursement; the auditing agency had ruled they were “unallowable.”

  On September 15, 1975, the Capitol Hill News Service reported Northrop Corporation improperly billed the federal government $11,000 for parties hosted by Anna Chennault in her Watergate penthouse. Senator William Proxmire, a Wisconsin Democrat with a national reputation for finding and exposing government waste, said Chennault’s parties amounted to “a Defense Department subsidy of the Washington cocktail circuit. Every time the Pentagon buys a weapons system from Northrop, the taxpayer shares the cost of these parties.” Gruenstein’s discovery made the Washington Post the next day, as part of a larger story about the payment of “finder’s fees” to middlemen who assist in landing defense contracts, and appeared a week later in the “Ear” gossip column in the Washington Star:

  You probably read that Northrop, the jet folks, billed the government for $11,000 of your taxes for Dragon Lady Anna Chennault’s penthouse wingdings. Do you think it matters, Earwigs, that Mrs. John Tower works right there in Anna’s office with her? You know Sen. John Tower of Texas, of the Armed Services Committee and Joint Committee on Defense Production?

  On October 2, 1975, the President and Mrs. Ford hosted the state dinner for the emperor and empress of Japan. Sally Quinn covered the evening for the Washington Post. The royal couple were “so tiny and sweet-looking and so frail they almost look like little dolls on top of a wedding cake,” Quinn wrote. After dinner and a performance by pianist Van Cliburn, the seventy-four-year-old emperor and his wife said good night; the Fords stayed behind for another hour and a half, “doing the Charleston and generally stirring things up.” The guest list included the Milwaukee Brewers’ Hank Aaron, who had broken Babe Ruth’s RBI record five months earlier; the fashion designer Halston; the dancer and choreographer Martha Graham and the movie star Ginger Rogers, who danced with the president. “He’s a lovely dancer,” Rogers told Quinn. “Perfect rhythm. He talks while he’s dancing, too.” For the first time since June 15, 1972—the night before the Watergate break-in—Anna Chennault attended a state dinner. She brought Tommy Corcoran as her escort.

  Four days later, the Washington Post reported defense department auditors had discovered Northrop had paid Chennault $160,000 in “consultant” fees since 1971 and billed those costs against their federal contracts. “In view of entertainment, which appears to be a significant part of her duties,” auditors concluded, “and in the absence of activity reports to establish that (her) services are bona fide,” Chennault’s fees could not be billed to the government.

  On October 12, the Philadelphia Inquirer reported Chennault was “secretly” paid more than $1,000 a month by Northrop, beginning in 1971, “to entertain political and military brass in a position to influence defense contracts.” Among those she “wined and dined in her Watergate penthouse” was the House Republican leader at the time, Congressman Gerald Ford, the Inquirer reported. “The Fords, perhaps for other reasons, reciprocated recently by inviting Mrs. Chennault to the White House state dinner for Japanese Emperor Hirohito.” Chennault flatly denied any impropriety. “Nobody pays for my parties,” she snapped.

  Two influential members of Congress took note. Congressman Les Aspin, a Wisconsin Democrat and chair of the House Armed Services Committee, asked the comptroller general to investigate Northrop and eleven other defense contractors for illegally billing costs to the federal government. “There is a distinct possibility that Northrop employees may be guilty of some kind of criminal fraud,” he said. Senator Proxmire wrote defense secretary James R. Schlesinger and questioned the slow pace of Pentagon investigations into Northrop’s activities. The purpose of these parties, Proxmire said, was to create “a network of obligations.” The practice, he warned, had become “widespread, systematic, carefully planned and costly.”

  The Pentagon launched audits into eleven major defense contractors and opened informal inquiries into the activities of another thirty-three firms. Chennault told investigators she carefully complied with instructions from John R. Alison, former general and the manager of her Northrop contract, any time she submitted entertainment expenses for reimbursement. Alison, she said, suggested her parties be described in her expense reports as “conferences” at which “matters pertaining to the use of Northrop products now being operated in Southeast Asia” were discussed.

  Northrop eventually reimbursed the air force $564,013 for expenses improperly billed against the company’s federal contracts.

  According to an Ernst & Ernst audit, Chennault’s contract with Northrop ended in April 30, 1974. Six months later, the Inquirer reported it was “not known” whether the contract had been renewed. In fact, Chennault continued as a Northrop consultant for at least another decade. Her duties included advising Northrop executives “on matters relating to national and international sales” and putting them “in personal touch with representatives of foreign governments who are potential Northrop customers.” Alison reminded her in 1980 to provide “as much detail as is consistent with confidentiality” in her monthly reports. “Unless your services are fully described and accurately recorded,” he wrote, “your fees may be challenged by the Company’s Government auditors or the Internal Revenue Service.”

  A PISTACHIO PUDDING SHORTAGE GRIPPED WASHINGTON IN late 1975, beginning around Thanksgiving, and became especially acute at Christmas.
Grocery stores throughout the capital were stripped of Standard Brands’ pistachio pudding mix the same day it arrived. Frank Gagan, a product manager with Standard Brands, suspected some people were buying more mix than they would ever need and were stockpiling it. “We’re going at maximum speed to catch up,” he said. A poor pistachio crop was partly to blame for the shortage, but Barry Scher, a spokesman for Giant Foods, identified another culprit: the popularity of Watergate Cake.

  The key ingredients of Watergate Cake were pistachio instant pudding, white cake mix and chopped nuts. The recipe’s “cover-up icing” was made from pistachio instant pudding, cold milk and Cool Whip topping. (One version of the Watergate Cake recipe called for 7UP soda and shredded coconut.) Watergate Cake was not to be confused with Watergate Salad, which was prepared in a mold using pistachio pudding mix, Cool Whip, miniature marshmallows, walnuts and a can of crushed pineapple, and placed in a refrigerator for at least an hour to set. Watergate Salad could be served either as a side dish or as a dessert.

  The origins of both recipes remain a mystery. “There are several urban myths,” according to the Kraft Foods website, “but we can’t substantiate any of them.”

  “Perhaps to alleviate the sour taste of certain political events,” according to “Anne’s Reader Exchange” column published in the Washington Post on November 13, 1975, “some wag invented the Watergate Cake, a pistachio-flavored dessert that seems to delight all who have tried it.” Post contributor Alexander Sullivan attempted in February 1976 to find out who named Watergate Cake. He reached out to Harold Giesinger, proprietor of the Watergate Pastry Shop, who said the recipe did not originate with him. “We haven’t invented anything to which we’d attach a name like that,” he said, and furthermore the Watergate Pastry Shop did not feature pistachios in any of its desserts. No one could explain how the cake got its name or why pistachio was the main flavoring, Sullivan concluded. “One current explanation leans on the presence of crushed walnuts in the cake—‘bugs’ in the parlance of kids.”