ENDAR YEAR A CONTRIBUTION OR SOLICITATION IS MADE, SBA 8(a) OR OMBE AWARDS OR OTHER SUCH FEDERAL FUNDING DESIGNED TO BENEFIT DISADVANTAGED AND MINORITY GROUPS.

Section 611 only makes illegal contributions by or solicitations to contractors compensated by federal dollars. It does not cover contributions by or solicitations to other recipients of significant federal funding, e.g., certain grantees and loan recipients. Moreover, the statute by its terms does not seem to cover contributions by or solicitations to principals or dominant stockholders of corporations receiving federal monies. Similarly, Section 602 only covers solicitations to those receiving federal compensation for services rendered; it does not condemn solicitations to those receiving federal funding without returning services, or solicitations to the principals or dominant shareholders in corporations that receive federal monies. The evidence before the Committee indicates that, respecting minority groups, plans were laid to solicit recipients of grants or loans. Also, there appear to have been particular pressures to contribute on minority businessmen whose corporations were quite dependent on government business. The law currently prohibits contributions by corporations to federal elections and we recommended elsewhere that a $3,000 limit be placed on the amount any individual can contribute to a presidential campaign. The proposal to prohibit contributions by and knowing solicitations to the principals and dominant shareholders of corporate recipients of SBA 8 (a) or OMBE awards, or other federal funding designed to benefit disadvantaged and minority groups, adds another protection to persons who are most dependent on federal funds and thus all the more susceptible to campaign solicitations by federal candidates or their representatives.

The current major bills to revise the criminal code before Congress S. 1, S. 1400, H.R. 10047- generally weaken the proscriptions in Sections 602 and 611 and lessen the penalties for their violation. In view of the abuses discovered, a weakening of the law in this area seems unwise.

6. THE COMMITTEE RECOMMENDS THAT CONGRESS AMEND THE HATCH ACT TO PLACE ALL JUSTICE DEPARTMENT OFFICIALS INCLUDING THE ATTORNEY GENERAL-UNDER ITS PURVIEW. The evidence the Select Committee has gathered indicated that various federal officials took an active part in the President's 1972 re-election campaign. Some of the officials ap

parently involved were covered by the Hatch Act, which prohibits certain federal employees from engaging in political campaigns and political management, but some were not. Some of the federal officials involved in political activities were employed at the Department of Justice e.g. Mr. Mitchell.*

Section 7324 (d) of Title 5 exempts certain Justice Department officials from Hatch coverage. The Committee, however, believes that Justice Department officials should administer the nation's laws totally removed from all political considerations. The Committee thus recommends that all Justice Department employees and officials, including the Attorney General, be placed under the Hatch Act.

7. THE

COMMITTEE RECOMMENDS THAT THE APPROPRIATE COMMITTEES OF BOTH HOUSES OF CONGRESS, IN ACCORDANCE WITH THEIR CONSTITUTIONAL RESPONSIBILITIES, MAINTAIN A VIGILANT OVERSIGHT OF THE OPERATIONS OF THE EXECUTIVE BRANCH IN ORDER TO PREVENT ABUSES OF GOVERNMENTAL PROCESSES TO PROMOTE SUCCESS IN A FEDERAL ELECTION.

This proposal needs no discussion for a major lesson of Watergate is that vigorous Congressional oversight of the executive branch is essential.

*In addition to this Chapter, see also Chapter 1 of this report regarding the Watergate break-in and its coverup.

CHAPTER IV

THE HUGHES-REBOZO INVESTIGATION
AND RELATED MATTERS *

Introduction

Senate Resolution 60 mandated the Senate Select Committee to conduct investigations relating to "any transactions or circumstances relating to the source, the control, the transmission, the transfer, the deposit, the storage, the concealment, the expenditure or use in the United States or in any other country, of any monies or other things of value collected or received for actual or pretended use in the Presidential election of 1972 . . . That resolution further mandated this committee to determine whether any money as described above had been placed in any secret fund or place of storage for use in financing any activity which was sought to be concealed from the public, and if so, what disbursement or expenditure was made of such secret fund, and the identities of any person or group of persons or committee or organization having any control over such secret fund or the disbursement or expenditure of the same."

This report reflects the results of the Committee's investigation into the receipt, storage, concealment and expenditure of cash contributions by Charles G. Rebozo and related matters. The contributions examined included the receipt by Rebozo of $100,000 in cash from Howard Hughes and $50,000 in cash from A. D. Davis.

The investigation was extensive and touched, at times, on incidents involving Presidential aides and a wide diversity of government agencies, including the Department of Justice, the Internal Revenue Service, the Treasury Department, the Atomic Energy Commission, the Civil Aeronautics Board, the Federal Reserve Board, the Federal Bureau of Investigation, and the Central Intelligence Agency. Indeed, the list of witnesses interviewed by the Committee reflects the number of significant government officials, past and present, who both aided and inhibited the investigation of this matter.1 The Committee received complete, unstinting cooperation

* Chapter 8 in the Committee Report.

1. See Appendix for list of witnesses interviewed.

from certain departments and agencies, including the Department of Justice and its Anti-Trust Division, the AEC, the CAB, and the Securities and Exchange Commission, whose efforts contrasted sharply with other witnesses and departments of the government. However, significant conflicts in testimony could not be conclusively resolved by the Committee because crucial documents and testimony were not produced in response to subpoenas issued by the Committee. The principal witnesses who refused to comply fully with subpoenas and fully provide documents and testimony included Charles G. Rebozo (for personal documents and in his capacity as President of the Key Biscayne Bank), F. Donald and Edward Nixon and a number of Hughes's employees.

In addition, the Committee, in its letter to the President's counsel on June 6, 1974, provided substantial evidence relating to Rebozo's use of cash funds to the direct benefit of the President. The purpose of the letter, sent by Senators Ervin and Baker, was to provide "the President an opportunity to comment on this material prior to the filing of this report.” The Committee also hoped to obtain information and documents that would assist in its review of the evidence set forth in the letter. Unfortunately, Counsel to the President, in his response of June 20, 1974, chose not to respond to any of the specific evidence that the Committee sought clarification and additional information on except to deny that the President instructed "Rebozo to raise and maintain funds to be expended on the President's personal behalf." :

In addition, Chairman Ervin, by letter and subpoena, sought to afford Mr. Rebozo an opportunity to respond to the information contained in the letter to the President's counsel. Any assistance Mr. Rebozo's testimony may have afforded the Committee in its review of these matters was precluded, however, when the witness left the country and became unavailable for service of the subpoena.

Section I of the report provides a brief description of the Hughes Nevada Operations and Hughes' interest in political contributions.

Section 2 describes the background and initial discussions of the principals that culminated in the delivery of $100,000 in cash to Rebozo from Hughes. An abortive effort by Hughes' representatives to deliver $50,000 in cash to President-elect Nixon is described in Section 3.

2. See letter from Senators Ervin and Baker to James St. Clair dated June 6, 1974. Exhibit 1.

3. See letter from James St. Clair to Senators Ervin and Baker dated June 20, 1974. Exhibit 2.

4. See Senator Ervin's letter to Mr. Rebozo, dated June 21, 1974. Exhibit 3.

Section 4 describes Rebozo's assignments on behalf of the Nixon Administrations in 1969 including his efforts to raise funds and his responsibilities for President Nixon's properties in Key Biscayne, Florida.

Section 5 includes an analysis of the delivery of two packages from Hughes of $50,000 each to Rebozo. This section also reviews evidence relating to whether Rebozo retained or used any part of the $100,000 cash contribution including the efforts by the Committee to determine whether any of the currency returned to Hughes had, in fact, been circulated after the dates of delivery to Rebozo.

Section 6 describes the attempt by Howard Hughes to acquire the Dunes Hotel and Casino in Las Vegas and the discussions about the pending acquisition between Hughes representative Richard Danner and then-Attorney General John Mitchell.

Rebozo's fund-raising role for the 1972 Presidential election is examined in Section 7 including his receipt of $50,000 in cash from A.D. Davis in April, 1972.

While Rebozo testified he retained the Hughes' $100,000 contribution past the 1972 election hoping it could be used in 1974 or 1976, Section 8 describes his efforts to return $100,000 after the Internal Revenue Service contacted him in 1973. This section reviews the contacts Rebozo had with a variety of individuals including the President and his aides during early 1973 regarding his ultimate decision to return funds to Hughes.

Secton 9 reflects evidence received by the Committee relating to the initial IRS investigation of Rebozo and communications the President and his aides had regardng that investigation.

The issue of the possible use of the Hughes' $100,000 is reviewed in Section 10 which includes an analysis of funds expended by Rebozo on behalf of President Nixon. The analysis reviews the use by Rebozo of his attorney's trust accounts at two banks to pay for expenditures incurred for improvements to the President's Key Biscayne properties. Conflicts in testimony relating to significant issues in the report are analyzed in summary form in Section 11.

Section 12 is a brief summary of the matters related in this report including a review of the President's response, through his counsel, to Chairman Ervin and Vice-Chairman Baker's letter of June 6, 1974 and the failure of Mr. Rebozo to appear before the Committee to respond to matters set forth in the report.

Finally, Section 13 presents the legislative recommendations of the Committee based on this investigation.