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 . Laurance had sent Nixon a telegram urging him to permit the merger.
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. 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.
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