The Senate Finance Committee revised the Tax Reform bill to allow the Hughes Medical Institute to escape its “private foundation” status by affiliating with a hospital, and the House-Senate conferees gave HHMI a full year to make the change and become a “public charity.” The House version of the bill, however, forbid the change unless the foundation repaid with interest all the back taxes it would have paid had it not been tax-exempt as a “private foundation.” The Senate Finance Committee revised the bill to allow the change without any tax penalty, and the House-Senate conference adopted the Senate version. The Senate Finance Committee also softened the rules on “self-dealing” in a clause that seemed tailored for Hughes, and in another clause tailored for Hughes allowed foundations to hold 100 percent of stock in a corporation for fifteen years if the foundation already held more than 95 percent of the stock.
Senator Paul Fannin, who received campaign contributions from the Hughes Aircraft Company’s “Active Citizenship Fund,” confirmed in an interview that he worked with Hughes representatives to revise the Tax Reform Act in the Senate Finance Committee, and also confirmed that committee chairman Russell Long helped push through the Hughes amendments. Both Gillis and Russell Long declined interview requests.
O’Brien confirmed his meeting with Wilbur Mills, but denied that he discussed HHMI with him. Mills, however, supported the Hughes loophole in the House-Senate conference, and two years later opposed an IRS attempt to force HHMI to spend at least 4 percent of its assets each year on medical research.
Nixon’s attempt to get a tax break for donating his papers, the backdating of his deed, and his failure to pay $467,000 owed the IRS while he was president was reported by the House Impeachment Committee. Harlow recounted his talks with Nixon about O’Brien in an interview.
The fact that Hughes paid no personal income taxes for seventeen years, from 1950 through 1966, was established by copies of his federal income tax returns. The Hughes Tool Company became a “subchapter S corporation” in 1967, and as a “small business” with ten or fewer shareholders paid no corporate income taxes starting in 1967.
Larry O’Brien continued working for Hughes until February 1971, three months after Maheu was ousted and just a month after the Nixon White House began investigating his Hughes connection. He confirmed that he received $325,000 from Hughes, including a $75,000 severance payment, and that he received at least $165,000 from Hughes while he also served as chairman of the Democratic National Committee for eleven months starting on March 5, 1970.
The Nixon quote regarding Hughes and O’Brien is from volume 2 of his memoirs (RN: The Memoirs of Richard Nixon, Warner, 1978, p. 172).
10 Nixon: The Payoff
Dr. Harold Feikes, a Las Vegas heart specialist who administered the transfusions, described Hughes’s medical condition in a sworn deposition and in two interviews. Feikes said he first saw Hughes early in November 1968 and memos sent to Hughes by his aides establish that it was on Election Day. One of the Mormons recalled Hughes watching TV reports of the election after receiving his transfusion.
“His life was certainly in danger,” said Feikes. “He was anemic enough to be on the verge of congestive heart failure. But even though he was critically ill, he had a very keen understanding of anemia and transfusions. He chose who he was going to take blood from very carefully. His aides said Hughes knew everything about the donors—what they ate, who they slept with, etc., and he only wanted blood from Mormons.”
The description of Nixon’s election watch was drawn from interviews with his aides, from his memoirs, and from Theodore H. White, The Making of the President 1968 (Pocket Books, 1970, pp. 484–89). Garment’s quote is also from White (p. 484).
Noah Dietrich confirmed in a series of interviews that Hughes backed Nixon in every race since his first run for Congress in 1946, as did an associate of Hughes’s political lawyer Frank Waters, who handled most of the contributions until 1960. Waters refused comment. Maheu described in court testimony the 1956 covert operation to save Nixon.
Nixon refused two interview requests submitted in writing.
The known Hughes money to Nixon and his family includes the “loan” of $205,000 to brother Donald in 1956 (which was never repaid); $50,000 contributed to the Nixon campaign in 1968; $100,000 in cash secretly passed to Rebozo in 1969 and 1970; and $150,000 to the Nixon campaign in 1972. How much Hughes contributed to Nixon’s other campaigns remains unknown, including the “all-out support” Hughes himself said he gave Nixon in 1960.
The “loan” of $205,000 was detailed by Noah Dietrich in several interviews, and in his book Howard: The Amazing Mr. Hughes (Fawcett, 1976, pp. 282–87). According to Dietrich, Waters told him that Nixon personally called to request the money—“I’ve been talking to Nixon. His brother Donald is having financial difficulties. The vice-president would like us to help him.”—and that Hughes personally approved the transaction. An associate of Waters confirmed Dietrich’s account.
Nixon later told both his chief of staff, Haldeman, and his confidant Rebozo that the Hughes loan scandal caused his defeats in 1960 and 1962, according to Rebozo’s Senate Watergate Committee testimony and Haldeman in both interviews and his book The Ends of Power (Times Books, 1978, p. 20). Bobby Kennedy also called the Hughes scandal a “decisive factor” in the 1960 election, according to a November 13, 1960, New York Times report. Nixon’s complaints about media coverage of the scandal are quoted from his memoirs, RN: The Memoirs of Richard Nixon (Warner, 1978, vol. 1, pp. 300–301).
Danner recounted the 1968 Nixon-Rebozo request for Hughes money in sworn testimony before the Senate Watergate Committee. Maheu testified that Hughes approved the hundred-thousand-dollar contribution in a telephone conversation and that he withdrew $50,000 from Hughes’s personal bank account on September 9, 1968, arranging to pick up the balance at a later date. Nadine Henley, Hughes’s personal secretary, confirmed Maheu’s account.
The meeting between Danner, Rebozo, and Morgan at Duke Zeibert’s took place on September 11, according to Danner’s diary. “At that time, Morgan relayed the information from Maheu that a contribution would be forthcoming,” Danner told the Senate committee. “Rebozo was willing or agreeable to handle it.”
Rebozo did not respond to an interview request but in testimony before the Senate Watergate Committee gave his own account of events leading to his receipt of the Hughes $100,000. “Morgan, I presume, had the money with him,” said Rebozo, “but he wanted to hand the money to the president, himself, and I told him that the president would never accept it.” Morgan told Senate staff investigators that he merely wanted some formal acknowledgment of the transaction, which Rebozo refused. Danner confirmed Morgan’s account.
“The atmosphere just didn’t seem appropriate to accept the contribution,” Rebozo testified. “I recalled, vividly, the 1956 loan to the president’s brother, and the fact that Drew Pearson had made a lot of that in the 1960 campaign… the fact that Ed Morgan represented Drew Pearson, and the fact that I just did not want to be responsible for anything that might create embarrassment. I declined.”
In Senate testimony Rebozo recounted the attempt by John Meier and Donald Nixon to deliver the Hughes money: “I was concerned about the possibility of some more embarrassment, such as he had showered on the president in 1960 and 1962… I just didn’t think that Don Nixon should be consorting with a representative of Hughes.”