Bernstein mentioned what nice posters Neal Sonnett had all over town.
“I guess I shouldn’t have asked you to do that,” Dardis said sheepishly.
Bernstein asked him what he had learned about the Mexican checks.
“It’s called ‘laundering,’” Dardis began. “You set up a money chain that makes it impossible to trace the source. The Mafia does it all the time. So does Nixon, or at least that’s what this guy who’s the lawyer for Robert Allen says. This guy says Stans set up the whole thing. It was Stans’ idea. He says they were doing it elsewhere too, that Stans didn’t want any way they could trace where the money was coming from.”
Dardis said he had learned the whole story from Richard Haynes, a Texas lawyer who represented Allen. Haynes had outlined the Mexican laundry operation to Dardis this way:
Shortly before April 7, the effective date of the new campaign finance law, and the last day anonymous contributions could be legally accepted, Stans had gone on a final fund-raising swing across the Southwest. If Democrats were reluctant to contribute to the campaign of a Republican presidential candidate, Stans assured them that their anonymity could be absolutely ensured, if necessary by moving their contributions through a Mexican middleman whose bank records were not subject to subpoena by U.S. investigators. The protection would also allow CRP to receive donations from corporations, which were forbidden by campaign laws to contribute to political candidates; from business executives and labor leaders having difficulties with government regulatory agencies; and from special-interest groups and such underground sources of income as the big Las Vegas gambling casinos and mob-dominated unions. To guarantee anonymity, the “gifts,” whether checks, security notes or stock certificates, would be taken across the border to Mexico, converted to cash in Mexico City through deposit in a bank account established by a Mexican national with no known ties to the Nixon campaign, and only then sent on to Washington. The only record would be jealously guarded in Washington by Stans, kept simply to make sure the contributor would not be forgotten in his time of need.
From Houston, Haynes confirmed the operation to Bernstein. An operator familiar with the rough-and-tumble of Texas politics and corporate intrigues, Haynes spoke in the breezy, swashbuckling style that had earned him the nickname “Racehorse” in courthouses from Dallas to Austin.
“Shit, Stans has been running this operation for years with Nixon,” he said. “Nothing really wrong with it. That’s how you give your tithe.”
Robert Allen, the head of the Nixon campaign organization in Texas, was merely the conduit for the funds moving to Mexico, including the $89,000 that had gone into Barker’s bank account, Haynes said. Ogarrio was the money-changer, converting the checks and notes given him by Allen into American dollars, both in cash and in dollar drafts drawn on his account at the Banco Internacional.
Haynes estimated that $750,000 raised by Stans and his two principal fund-raisers in Texas had moved through Mexico in the final weeks of the pre-April 7 campaign.
“Maury came through here like a goddamned train,” said Haynes, “he was really ballin’ the jack. He’d say to the Democrats, the big money men who’d never gone for a Republican before, ‘You know we got this crazy man Ruckelshaus* back East who’d just as soon close your factory as let the smokestack belch. He’s a hard man to control and he’s not the only one like that in Washington. People need a place to go, to cut through the red tape when you’ve got a guy like that on the loose. Now, don’t misunderstand me; we’re not making any promises, all we can do is make ourselves accessible. . . .’ ”
But the message was indelible, said Haynes. “Maury’s a right high-type fellow; he would never actually threaten any of those guys. Then he’d do his Mexican hat dance, tell them there’d be no danger of the Democrats or their company’s competitors finding out about the contributing, it would all get lost in Mexico. . . . If a guy pleaded broke, Maury would get him to turn over stock in his company or some other stock. He was talking 10 percent, saying it was worth 10 percent of some big businessman’s income to keep Richard Nixon in Washington and be able to stay in touch.”
That was Saturday, August 26, three days after the President had been renominated. In Washington, Woodward had just received the GAO report, finally released for Sunday’s papers. It listed 11 “apparent and possible violations” of the new law and referred the matter to the Justice Department for possible prosecution. It also stated that Stans maintained a secret slush fund of cash in his office totaling at least $350,000. At one time the fund included the cash that had come from the $25,000 Dahlberg check and the four Mexican checks totaling $89,000.
Woodward wrote the top portion of a story from the GAO report. From Miami, Bernstein dictated an account of the Mexican laundry and Haynes’ estimate that not $89,000 but $750,000 had been washed across the border.
After several lengthy conversations, Bernstein and Woodward decided not to refer to Stans’ other fund-raising tactics that Haynes had described. Both were wary of the lawyer’s language. Haynes’ description of the “Stans shakedown cruise,” as he called it, was filed for further investigation. The GAO investigator confirmed the substance of the Mexican laundry operation to Woodward.
Three days later, Tuesday, August 29, the President scheduled a press conference at his oceanside home in San Clemente, California. Reporters waited under large palm and eucalyptus trees on a sunny morning.
“With regard to the matter of the handling of campaign funds,” the President said, “we have a new law here in which technical violations have occurred and are occurring, apparently on both sides.”
What are the Democrats’ violations? a reporter asked.
“I think that will come out in the balance of this week. I will let the political people talk about that, but I understand that there have been [violations] on both sides,” Nixon remarked calmly.
Stans, the President said, is “an honest man and one who is very meticulous.” In fact, Stans was investigating the matter, the President said, “very, very thoroughly, because he doesn’t want any evidence at all to be outstanding, indicating that we have not complied with the law.”
The President rejected suggestions that a special prosecutor, independent of the Justice Department, be appointed, and disclosed that his counsel, John W. Dean III, had conducted a Watergate investigation: “I can say categorically that his investigation indicates that no one on the White House staff, no one in this administration, presently employed, was involved in this very bizarre incident. What really hurts in matters of this sort is not the fact that they occur, because overzealous people in campaigns do things that are wrong. What really hurts is if you try to cover it up.”*
Woodward, in Washington, wrote a story from the transcript of the press conference, and listed some of the people under investigation who, as the President had been so careful to point out, were not “presently employed” in the administration: Hunt, Liddy, Stans, Sloan and Mitchell.
Bernstein was still in Florida tracking the four Miami men. That morning, he had spoken with Enrique Valledor, president of the Florida Association of Realtors, Barker’s former boss. Barker was worried about losing his real-estate license and had come to see him after being released on bond. Valledor related part of their conversation: “I said, ‘What about this million-dollar [Democrats’] suit? Aren’t you worried?’ ”
“I’m not worrying. They’re paying for my attorneys,” Barker replied.
“Who are they?”
“I can’t tell you.”
The incident was included in the story on the President’s press conference. It was the first public hint of direct money payments to the conspirators.
• • •
Since June 17, CRP had seemed inviolate, as impenetrable as a super-secret national-security bureaucracy. Visitors were met at the door by a uniformed guard, cleared for access by press or security staffs, escorted to their appointments and led back out. The committee’s telephone roster of ca
mpaign officials—a single sheet of paper with more than 100 names—was considered a classified document. A Washington Post researcher who obtained a copy from a friend at the committee was told, “You realize, I’ll lose my job if they find out.”
The managers of the committee’s various divisions, the second echelon generally unknown to press and public alike, were conspicuous on the roster because they had private secretaries listed below their names. Because the floor numbers were listed next to the names and phone extensions of committee personnel, it was possible to calculate roughly who worked in proximity to whom. And by transposing telephone extensions from the roster and listing them in sequence, it was even possible to determine who worked for whom.
Studying the roster became a devotional exercise not unlike reading tea leaves. None of the key people would talk when reached by telephone, Divining names from the list, Bernstein and Woodward, in mid-August, began visiting CRP people at their homes in the evenings. The first-edition deadline was 7:45 P.M., and each night they would set out soon afterward, sometimes separately, sometimes together in Woodward’s 1970 Karmann Ghia. When traveling alone, Bernstein used a company car or rode his bicycle.
The first person on whose door Bernstein knocked pleaded with him to leave “before they see you.” The employee was literally trembling. “Please leave me alone. I know you’re only trying to do your job, but you don’t realize the pressure we’re under.” Bernstein tried to get a conversation going, but was told, “I hope you understand I’m not being rude; please go,” as the door closed. Another said, “I want to help,” and burst into tears. “God, it’s all so awful,” she said, as the reporter was shown to the door.
The nighttime visits were fishing expeditions. There was, however, one constant lead that was pursued on all the visits: It concerned Sally Harmony, Gordon Liddy’s secretary at CRP. Mrs. Harmony had apparently not told everything she knew to the FBI and the grand jury. Bernstein had first heard this in late August from a reporter on another newspaper. He had jotted down the tip on the back of a telephone message slip and filed it away in the mountain of papers, trash, books and cups of stale coffee that covered his desk. “ . . . lied to protect Jeb Magruder . . . dep. campaign mgr.,” he had written.
A Justice Department attorney had confirmed that the Watergate prosecutors were suspicious of Mrs. Harmony’s testimony, but said they lacked evidence to charge her with perjury. Her lack of candor seemed common knowledge at campaign headquarters. But either no one knew or no one was willing to say what she had lied about, beyond vague references to “protecting others.” Gradually, a pattern started to emerge about the bugging affair from the fragments of information they picked up on their nighttime visits. Several committee employees spoke of wholesale destruction of records that took place in the days immediately after the Watergate break-in, although they said they had heard it secondhand and knew no specifics.
Persons in critical positions who might know details of the bugging operation, particularly secretaries, seemed not to have been interviewed by the FBI. The FBI had conducted all interviews of campaign personnel at the committee’s headquarters, instead of at employees’ homes, where they might feel more free to speak out; the interviews were always held in the presence of a lawyer for the committee, or Robert C. Mardian, the political coordinator of the committee and former Assistant Attorney General in charge of the Justice Department’s Internal Security Division. A few persons said Mardian and others had told them not to volunteer any information to the agents unless asked a specific question they could not evade—especially regarding committee finances.
What information the reporters were getting at this point came in bits and pieces, almost always from people who did not want to discuss the matter. Their fright, more than anything else, was persuading Woodward and Bernstein that the stakes were higher than they had originally perceived. Indeed, they too were unsettled by the reactions to their visits.
The trick was getting inside someone’s apartment or house. There, a conversation could be pursued, consciences could be appealed to, the reporters could try to establish themselves as human beings. They always identified themselves immediately as reporters for the Washington Post, but the approach that seemed to work best was less than straightforward: A friend at the committee told us that you were disturbed by some of the things you saw going on there, that you would be a good person to talk to . . . that you were absolutely straight and honest and didn’t know quite what to do; we understand the problem—you believe in the President and don’t want to do anything that would seem disloyal.
Woodward could say that he was a registered Republican; Bernstein could argue a sincere antipathy for the politics of both parties.
Sometimes it worked. People wanted to know who at the committee had given the reporters their names. Which was fine, because Woodward and Bernstein then could explain the necessity of protecting confidential sources, reassuring whomever they were talking to that he or she would be similarly shielded. Once inside, notebooks were never used.
Then, working around the edges: . . . Has the FBI talked with you? (“I can’t understand it; they never asked.”) Have things gotten any better since John Mitchell left? (“Left? He might have quit, but he’s in there three times a week telling Fred LaRue and Bob Mardian what to do.”) Little pieces: “Jeb [Magruder] acts really scared, like the roof is going to fall down on him tomorrow.” . . . “Somebody told me that MacGregor wanted to write a report and tell everything there was to know, but the White House said no.” . . . “The prosecutors kept asking me if I knew about any other buggings, maybe McGovern headquarters.” . . . “Top copy, that’s the phrase they kept asking. Had I ever heard anything about the top copy [of wiretap logs] going to the White House?” . . . “The FBI wanted to know if I saw anybody using the shredder.” . . . “I heard from somebody in finance that if they ever got a look at the books it would be all over, so they burned ‘em.” . . . “Sally [Harmony] said Gordon [Liddy] would never talk and neither would she, that she had a bad memory.” . . . “From what I hear, they were spying on everybody, following them around, the whole bit.” . . . “Please don’t ever call me on the telephone—God, especially not at work, but not here either. Nobody knows what they’ll do. They are desperate.”
From one incident in early September, the reporters were made aware that the fears were not groundless.
They had picked up a copy of the committee’s latest expenditure report, which listed the names of all salaried employees. Bernstein noticed the name of someone he had once met and called her for lunch. He suggested half a dozen places where they could meet and not be seen, but she insisted on a sandwich shop where dozens of Nixon campaign workers were at the tables. When they sat down, she explained: “I’m being followed. It’s open here and doesn’t look like I’m hiding anything. People won’t talk on the phones; it’s terrible.”
Bernstein asked her to be calm. He thought she was overdramatizing.
“I wish I was,” she said. “They know everything at the committee. They know that the indictments will be down in a week and that there will only be seven. Once, another person went back to the DA because the FBI didn’t ask her the right questions. That night her boss knew about it. I always had one institution I believed in—the FBI. No more.
“I’ve done my duty as a good citizen. I went back to the DA, too. But I’m a fatalist now. It’ll never come out, the whole truth. You’ll never get the truth. You can’t get it by reporters talking to just the good people. They know you’ve been out talking to people at night. Somebody from the press office came up to our office today and said, ‘I sure wish I know who in this committee had a link to Carl Bernstein and Bob Woodward.’
“The FBI never even asked me if I was at the committee over the weekend of the break-in. I was there almost the whole time. Odle didn’t tell them everything he knew. He kept removing records. I don’t know if he destroyed them or not. He would tell everybody to get out of the room and then
close the door. Then he’d leave with the records.
“Everything else I know is hearsay,” she said. “I’ve done my duty, I told the DA. . . . The whole thing is being very well covered up and nobody will ever know what happened.”
The Prince George’s County Police Department could do a better job than the FBI, and she was through with presidential politics forever. She asked Bernstein to walk back to the office with her, to avoid any appearance of furtiveness. While they were waiting to cross the street at 17th Street and Pennsylvania Avenue, Maurice Stans pulled up to 1701, across the avenue, in his limousine.
“He was an honest man before all this started,” she said. “Now he’s lying too.”
Bernstein studied Stans from across the street as the Secretary entered the building.
“Okay,” she said, “I’ll tell you, but it won’t do any good. And don’t ever call me, or come to see me or ask any questions about how I know. LaRue, Porter and Magruder. They all knew about the bugging, or at least lied to the grand jury about what they knew. And Mitchell. But Mitchell is mostly speculation. Take my word on the other three. I know.”
Frederick LaRue, Herbert L. Porter and Jeb Stuart Magruder had all left the White House staff to join CRP.
About five o’clock, the woman telephoned Bernstein. She sounded almost hysterical. “I’m in a phone booth. When I got back from lunch, I got called into somebody’s office and confronted with the fact that I had been seen talking to a Post reporter. They wanted to know everything. It was high up; that’s all you have to know. I told you they were following me. Please don’t call me again or come to see me.”
Later that night, Bernstein went to her apartment and knocked on the door.
“Go away,” she said, and Bernstein and Woodward went off to bang on other doors.
About the same time, Clark MacGregor called the Post’s executive editor, Ben Bradlee, to complain about the visits. Bradlee did not tell the reporters about it until months later, but he recalled that MacGregor had asked for an appointment with him and Katharine Graham, the publisher of the Post. The appointment was made for the next day, but was canceled by MacGregor. “He wanted to talk about your excesses. There were five women in CRP, he said, who had been harassed by you two. And I said, ‘That doesn’t sound like my boys at all.’ And he gave me the names. . . . I said, ‘Well, how did they harass them?’ and MacGregor said, ‘They knocked on the doors of their apartments late at night and they telephoned from the lobby.’ And I said, ‘That’s the nicest thing I’ve heard about either one of them in years.’ ”
All the President's Men Page 6