University of Virginia Library

Rumors Hint
GOP Pay-Off

Kleindienst Denies
Conflict Of Interest

By PETER SHEA

Attempting to silence rumors that the
Nixon administration had agreed to free
the International Telephone and
Telegraph Co. from an anti-trust suit in
exchange for a donation to support the
GOP convention, Attorney General
Designate Richard Kleindienst denied
yesterday that any political pressure was
applied to the Justice Department to
negotiate a favorable out-of-court
settlement with ITT.

Mr. Kleindienst, testifying before the
Senate Judiciary Committee, requested
the hearing in order to answer charges
raised by columnist Jack Anderson that
the ITT consent decree announced in
July was tied to a $400,000 donation by
the company to the Republican party for
its 1972 convention.

The hearing was requested so that the
nominee for Attorney General could
reply to the charges before the Senate
voted on confirmation of Mr. Kleindieast,
who would replace John Mitchell. Mr.
Mitchell has resigned to head President
Nixon's re-election campaign.

The Senate Judiciary Committee voted
13 to 0 earlier in confirming the
nomination, but Senators Edward
Kennedy and Birch Bayh, aided by Ralph
Nader's Raiders, were hoping to delay
confirmation by the entire Senate until a
full-scale investigation of the ITT case is
made.

Kenneth Elzinga, an associate
professor of economics at the University
who served as a special assistant to
Assistant Attorney General Richard
McLaren last year, became involved in the
latest events when he was contacted by
Sen. Kennedy's office Wednesday night.

Mr. Elzinga told Tom Sussman, an
aide to Mr. Kennedy, that neither he nor
any other staff person in the anti-trust
division had handled the case settlement
despite the fact that the ITT case was to
be the focus of the government's
anti-trust campaign.

No Pressure Applied

During yesterday's hearing Mr.
Kleindienst stated that neither he nor Mr.
Mitchell had applied pressure to the
Justice Department to gain an
out-of-court settlement with ITT. Mr.
McLaren, now a federal judge in Chicago,
also stated that neither Mr. Mitchell nor
Mr. Kleindienst had tried to influence
him concerning the case.

However, according to information
revealed by Mr. Sussman after the hearing
yesterday, claims to the contrary - that
the anti-trust division operated free from
political pressure - may prove false. Mr.
Sussman charged that the settlement
decision was prompted by the
recommendation of Richard J. Ramsden
of Brokaw, Schaenan, Clancy & Co., a
New York Brokerage firm, who was
called in to study the case at the
suggestion of President Nixon's special
assistant Peter Flanigan.

Photo By Bob Humphrey

Kenneth Elzinga

Former Justice Department Official

Under the final settlement reached
between the government and ITT, the
company was allowed to retain control of
Hartford Fire Insurance Co. and part of a
second firm Grinnell Inc., which made
the merger the largest in history.
However, ITT agreed to divest its stock
control of a number of companies
including the Canteen Corp. and Avis
Rent-a-Car.

Mr. Elzinga said that the settlement
was favorable to ITT since the
government had failed to achieve its goal
of stopping the Hartford Fire and
Grinnell mergers. He added that he was
disappointed when the settlement was
announced, some three weeks after he
left the Justice Department, because the
case was to have been taken before the
Supreme Court and would have been a
test case on Section seven of the
anti-trust law.

Mr. Elzinga said he thought it highly
unusual that the Justice Department
should consult a financier rather than an
economist in the case. He explained that
a broker would normally base his
recommendation on the corporate
financial effects of a negative court
decision, and not the economic or legal
implications the merger.