A Confirmation Fight Shapes Up

Nelson Rockefeller found himself in a cruel predicament last week. Despite his long record of public service and philanthropy, insinuating leaks had ended any hope that his confirmation as Vice President would be a routine anointment. Instead, a long and partisan squabble was shaping up in Congress, and there seemed to be little that Rockefeller or the Ford Administration could do to head it off.

In the midst of his political troubles, Rockefeller announced that his wife was undergoing surgery for removal of a cancerous breast. It was a startling and melancholy coincidence: Happy Rockefeller's modified radical mastectomy took place just 19 days after Betty Ford went through similar surgery. Mrs. Rockefeller had examined herself--just as countless other women did--after Mrs. Ford's illness received wide publicity. The suspicious lump that Mrs. Rockefeller discovered turned out to be malignant, but at week's end doctors at the Memorial Sloan-Kettering Cancer Center in Manhattan announced that she was in excellent condition.

Her husband divided his time between visiting the hospital and trying to offset the effects of leaks. Then, last Friday night, Rockefeller himself disclosed that as a result of an Internal Revenue Service audit, he will have to pay an additional $896,173 in federal income and gift taxes for 1969-73, plus interest of nearly $125,000 and additional gift taxes of $7,545 for the first half of 1974. There was no hint of fraud of any kind.

Among other things, the auditors disallowed $1,245,247 of his deductions for business expenses and charitable contributions, added $146,229 to his taxable income for foreign-exchange gains and charged him additional gift taxes of approximately $83,000 for 1972,1973 and the first half of 1974. The effect of the settlement was to raise Rockefeller's federal taxes for the five years by 21%, from $4,212,974 to $5,109,147. During those years, his total income was about $20 million.

Routine Review. A routine review of Rocky's taxes was in progress before the nomination. It was then expanded and became only one of several investigations in the confirmation process. The FBI deployed 350 agents across the country and compiled a generally favorable, 2,300-page report on Rockefeller's past for members of a House Judiciary subcommittee.

In addition, Judiciary staff members and those of the Senate Rules Committee have been conducting their own probes. With so many investigations and so many investigators, leaks were all but inevitable.

By itself, the tax matter--despite the large sums involved--should have little impact on confirmation. But as one more item on a growing list, it complicated Rockefeller's position. Another new problem last week: publicity about the fact that the Rockefeller family contributed $200,000 to President Nixon's 1972 re-election campaign. Less than a year later, Nixon overruled the Civil Aeronautics Board and allowed Eastern Air Lines to acquire Caribair, a financially troubled airline based in Puerto Rico. At the time, Nelson owned no Eastern stock, but his brother Laurance is currently the airline's largest individual stockholder (with 1.75%). Laurance had sent Nixon a telegram urging him to permit the merger.

Nelson denied any impropriety, saying: "We have always contributed to Republicans. This is the kind of thing that gets twisted; there's totally nothing wrong with it." In fact, there had been no secret about Laurance Rockefeller's airline stock, and his telegram was a minor lobbying effort.

New details were revealed about the ties between Rockefeller's 1970 gubernatorial re-election campaign and the derisive biography Arthur J. Goldberg: The Old and the New. Conservative Author Victor Lasky acknowledged that the idea for the book came from New York Attorney John A. Wells, a longtime Rockefeller colleague. Lasky said that he received $10,000 for the 199-page paperback, but did not know at the time that its publication was financed by $60,000 from Laurance Rockefeller. That was not surprising. In an obvious attempt to disguise its origin, the money was sent to J. Richardson Dilworth, a Rockefeller family adviser, who turned it over, through a Philadelphia law firm, to Literary Productions Inc., which was created to handle the deal. It bought 100,000 copies from the book's publisher, Arlington House, for free distribution in New York during the campaign.

Having apologized to Goldberg and frankly conceded the foolishness of the project, Rockefeller declined to discuss the issue further. He will doubtless be questioned closely about it by the congressional committees, and there is no way that he can avoid still more embarrassment.

Ironically, the book was superficial rather than scurrilous, a mind-deadening compendium of one-sided information culled from magazines and newspapers. It refers to Goldberg as a sort of Sammy Glick who "has kicked, scratched and thrust his way up the ladder." In addition, the book accused Goldberg of having been a "poor administrator" and a "lackluster jurist," of knowing "little about state issues" and of exhibiting "quite extraordinary ego-centrism." Sample quote: "He is friendly to a fault and he revels in his status as an easily recognized national celebrity. And he loves to talk." In retrospect, even Lasky calls his effort "a bloody bore."

Far more troublesome for Rockefeller is the question of what legal and ethical interpretation will finally be placed on the gifts and loans that he made to a variety of subordinates, associates and advisers. He vehemently insists that friendship and generosity were his only motives (see box preceding page). And he did pay about $840,000 in federal taxes on the gifts, as required by law. But some tax experts questioned whether the sums were in fact gifts. Said Robert Hellawell, vice dean of Columbia University Law School and an expert on tax law: "The line between a gift and payment for services is often fuzzy."

Tax Lawyer Sheldon S. Cohen, who was Commissioner of Internal Revenue under President Johnson, pointed out that "the Supreme Court has said that a gift 'flows from the disinterested generosity of the giver.' But where there was a connection such as between William Ronan and Rockefeller, there was no 'disinterested generosity.' There was a close business relationship." Thus Cohen was "90% certain" that the recipients should have paid income taxes on the money. (In that case, Rockefeller would not have had to pay gift taxes.) IRS agents were investigating whether the recipients included the money on their tax returns.

Further, Republican Senator Jesse Helms of North Carolina, a leading conservative critic of Rockefeller's nomination, questioned whether some of Rockefeller's gifts violated a New York State law. The statute cited by Helms prohibits gifts valued at $25 or more to state officers or employees if it can be reasonably inferred that the intent was to influence them in the performance of their official duties or to reward them for official actions. Another law prohibits "gratuities ... for having engaged in official conduct which [a state employee] was required or authorized to perform and for which he was not entitled to any special or additional compensation." New York's code of ethics directs that a state employee "should not by his conduct give reasonable basis for the impression that any person can improperly influence him or unduly enjoy his favor in the performance of his official duties."

It seems most unlikely that violations of any of these statutes can be established. To do so would probably require, among other things, evidence of improper intentions. Moreover, neither state nor local prosecutors seem to have any real interest in making a tough investigation.

Something Regal. But the issues go beyond criminal law. Ronan, the beneficiary of $625,000 in gifts and canceled loans, took over the chairmanship of the Port Authority of New York and New Jersey, an agency that has vast impact on a region in which the Rockefeller family has vast business interests. Henry Kissinger got a relatively modest $50,000 just as he was about to take over a key White House foreign affairs post.

The Rockefeller family has financial interests overseas, and Nelson Rockefeller in 1969 had personal ambitions that involved the White House and foreign policy. No one as yet has made specific charges that Rockefeller's gifts influenced either recipient's official decisions. But no matter how pure Rockefeller's intent, he should have recognized that his gifts would convey the impression that he was putting public men in his personal debt. There is something unfortunately regal in Rockefeller's apparent inability to understand why his largesse should cause suspicion.

Still--on the basis of what factual material has come out so far--Rockefeller is justified in feeling aggrieved at how he has been treated. He himself, after all, had supplied the information about the gifts to congressional investigators. The Senate committee neglected to question him on the gifts, as it could have done. That way, he could have met the issue head on. Bristling angrily over the leaks, Rockefeller last week asked the Senate Rules Committee to reopen its hearing on his nomination and the House Judiciary Committee to hold its hearing before the election. "I'm getting just a little indignant," he said.

"So far, I've had only 2 1/2% days [before the Senate committee] out of two months. The rest of the time it's been in the headlines." The chairmen of both committees turned down his request, explaining that they wanted the FBI and other investigations to be completed first. The Senate Rules Committee plans to reopen its hearing on Nov. 13; the House committee has set no date.

Puking Hypocrisy. The delay and the growing debate led some Republicans to accuse Democrats of letting the nomination simmer for partisan reasons. Said Senate Republican Whip Robert P. Griffin of Michigan: "It's hard to tell where the serious questions about this nomination leave off and the politics begin." Senate Minority Leader Hugh Scott of Pennsylvania called the controversy "mewling and puking hypocrisy" and added: "I don't think that he ought to be convicted for his generosity."

But three Democrats on the House Judiciary Committee--Robert F. Drinan of Massachusetts, Don Edwards of California and Charles B. Rangel of New York--said that their doubts about Rockefeller had deepened. So, too, had the misgivings of some Republican conservatives. Senator William L. Scott, a conservative Republican from Virginia, called on Rockefeller to withdraw. Some conservatives hold a grudge for his refusal to back Senator Barry Goldwater for President in 1964; some liberals blame him in part for the deaths of 32 prisoners and eleven hostages during the 1971 revolt at New York's Attica Prison. It seemed possible that the two groups might form a coalition to oppose the nomination, but not until after the election.

The Rockefeller nomination is not in serious danger--not yet, at least. If a vote was held this week, Rockefeller would doubtless be confirmed. The yeas and nays, however, will not be counted for many weeks to come. In the interim, skeptics could become opponents and allies, fence sitters. The Watergate hangover makes it difficult to defend officials when their ethics are attacked.

Meanwhile, House Speaker Carl Albert is the person who stands a heartbeat away from the Presidency. As it picks over the Rockefeller nomination, Congress might also consider ways of streamlining the confirmation process under the 25th Amendment. It was intended to fill a vacancy in the office of Vice President, not keep it open indefinitely.

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