Bribery comes naturally to conglomerates. These giant holding companies, like ITT, sprawling all over the business map, expand by one form of bribery or another, some more or less legitimate, some just plain garden-variety odoriferous. In the former category was the half-billion-dollar premium1 ITT dangled before Hartford Fire Insurance Company stockholders to get control of that company’s fat cash surpluses. In the latter category were the profitable stock options and favorable employment contracts promised Hartford management by ITT to win their approval for a merger; these so “troubled” the Connecticut Insurance Commissioner, William R. Cotter, that he at first vetoed the acquisition, on the ground that these favors created a “conflict of interest.” The corruption of management to facilitate corporate takeovers appears over and over again in the comprehensive but little noticed report on conglomerates filed by a House Judiciary subcommittee on anti-trust last September 7.2
When ITT made its “noble commitment” (in the language of the famous memo written by its Washington lobbyist, Mrs. Dita Beard) to guarantee up to $400,000 to bring the 1972 Republican Convention to San Diego, it may not have been strictly a bribe. But it was certainly another “conflict of interest,” especially since it was soon followed by a Justice Department decision to drop its antitrust suit challenging the acquisition of Hartford and to file a consent decree instead, allowing ITT to keep the prize it wanted. Conglomerate operations dull the feeling for such niceties.
Writing midway in the Senate Judiciary Committee investigation of the ITT affair and the Kleindienst nomination, I would like to touch on some of the broader economic and social issues. The first is the menace to free government by holding companies grown so gigantic that they become private empires, financing the election campaigns of both major parties and in a position to treat public officials as errand boys. When the Judiciary Committee hearings were reopened at Richard Kleindienst’s request after Jack Anderson’s revelations, the Attorney General designate, in his opening statement, was quick to emphasize ITT’s bipartisanship. Of Felix Rohatyn’s private meeting with him as emissary for ITT and Lazard Freres, Mr. Kleindienst said archly:
He also, I think, by way of introduction, stated that he had no political credentials by which to introduce himself to me—that as a matter of fact he was an economic adviser to Senator Muskie in his national committee, and was on his finance committee.
Felix Rohatyn could strengthen his bipartisan credentials if he should volunteer the information, not yet elicited by the Judiciary Committee as this is being written, that ITT used its hotel subsidiary, Sheraton; to butter up the Democrats at the state capital in Hartford just as it used Sheraton to butter up the Republicans in San Diego. There were two hurdles to the acquisition of the Hartford Fire Insurance Company. One was to win or settle out…
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