[00.08.25--committee room] Senator ERVIN. The committee will come to order. I presume Senator Baker will be here in a minute. Since the witness will first read a written statement of which Senator Baker has a copy, we will proceed. Mr. STANS. Mr. Chairman, and members of the committee, I am very sorry that the circumstances of my appearance made it necessary for my counsel to raise legal points in order to protect my right to a fair trial in New York. I personally would much have preferred to testify without any need to protect myself in that criminal action in which I feel that in the setting of a fair and impartial trial I would be exonerated. However, I want to assure you now that I will do my very best to be helpful to the committee in my testimony. Less than 2 years ago, one of the proudest moments of my experience occurred here on the Senate side of the Capitol, as I approached the end of my service as Secretary of Commerce. Some of you and many of your colleagues on the Senate Commerce Committee were extremely generous in a public hearing in praise of my efforts over a 3-year period as head of the Department of Commerce and some of the Democratic Senators even wished me success in my new undertaking as a fundraiser--but not too much success, they said. All of those comments remain highly valued to me, now, as much as any reward of the many years I spent in public service in two administrations. I would like my appearance here today to be another service in the public interest, The circumstances that bring us together are extremely regrettable, but I still share a strong mutual concern with you-in this case establishing the facts and the truth of these matters Of national interest. For that reason, as you know, I have cooperated with your staff prior to my appearance here today, just as I intend to do fully with the committee here now. My sense of integrity compels me to do so. In the past, I have refrained from answering 'in a piece-meal fashion various questions which have been raised by the media concerning the Presidential campaign and other related matters. For that, I have been highly criticized. But I felt, that, it was better if I could answer these questions before an appropriate forum in the setting and perspective of the overall situation. This would enable me to give a complete picture rather than a piece-meal response, and this is what I hope to do today, to the extent, I am able. This may help resolve some, questions as to which there has been a minimum of understanding and much erroneous public information. Next, let me say that I have cooperated fully with every official agency that has sought, information from me. I have met twice with the staff Of this committee, once with the staff of the House Banking and Currency committee, have had three meetings with the FBI and at, least six with the General Accounting Office, have given a deposition to the assistant U.S. attorney in Washington and have met with the assistant U.S. attorney in New York and twice testified before a New York grand jury. All of this has been voluntary, I have also testified several times by deposition in civil suits and once in a Florida criminal case. Also, during all the investigations which have commenced since June 17, 1972, I have instructed all finance committee personnel to cooperate fully and candidly. The reported testimony of Hugh Sloan, Jr., Paul Barrick, Judy Hoback, Evelyn Hyde, and Arden Chambers, is evidence that this is being done. I am convinced that, none of these persons had a part in Watergate or the subsequent events. However, as will come out, Mr. Sloan's recollections and mine may differ in a, few respects. This is obviously attributable to the passage of time, or the pressures of events at the time, or subjective recall. Just as he has given you his best, recollection, I will give you mine, on the various financial matters. On the major issue, that of involvement in the Watergate matter, I am satisfied that he is completely innocent. Now, it is my understanding that, the. committee is probing three matters on which it might assume that I have some knowledge--the espionage charges, including the Watergate bugging, and the coverup charges that allegedly followed; the sabotage charges, including the Segretti operation; and the handling of campaign finances. On these three matters I would like to state this: [00.13.30] (1) I had no knowledge of the Watergate break-in or any other espionage efforts before I read about them in the press, or of the efforts to cover up after the event. (2) I had no knowledge of any sabotage program to disrupt the campaign by Segretti or anyone else. (3) To the best of my knowledge, there were no intentional violations of the laws relating to campaign financing by the finance committees for which I had responsibility. Because of the complexity of the, new law that became effective in the course of the campaign, and the vast, amount of work that, had to be done under the law, there may have been some unintended technical violations by the committee, [00.14.21]
[00.14.21] [Continued opening statement of Maurice Stans] What I want, particularly to stress in this opening statement is the fact that this committee cannot effectively evaluate the work of the finance committee or my own activities without having in mind four fundamental distinctions": 1. The distinction between the functions and activities of the campaign committee and the functions and activities of the finance committee. 2. The, distinction between the election financing law which expired on April 6, 1972, and the new election financing law which was effective on April 7, 1972. 3. Within the finance committee, the distinction between the functions and activities or the chairman and the, functions and activities of the treasurer. 4. The, activities of the, finance committee before I joined it on February 15, 1972, and the activities of that committee after February 15, 1972. By the campaign committee I mean, of course, the Coin Committee for the Re-Election of the President. By the finance committee I mean the Finance Committee for the Re-Election of the President and its several predecessors up to April 6, 1972, and the Finance Committee to Re-Elect the President beginning April 7, 1972, together with their associated committees in each time frame,. During the period of my affiliation with the finance committee as its chairman, the treasurer was Hugh Sloan, Jr., until July 15, 1972, and thereafter the treasurer was Paul E. Barrick. I shall refer to the, treasurer as though it were the same individual, letting the time period identify which of these persons it relates to. Now, as between the campaign committee and the finance committee, the campaign committee had all of the responsibility for the planning of the campaign, the, development of its strategy and the execution of its tactics. The questions of bow many people to employ, the efforts to be expended in each State, the, determination of the relative use of direct mail, personal solicitation and media advertising, the kinds of appeals to voters, and the entire gamut of the political effort was developed, organized, managed and conducted by the campaign committee. In effect, their decisions fixed the, amount the campaign would cost. The finance committee had no part in any of these basic decisions. The role of the finance committee was directed toward a single objective--to raise enough money to pay the bills. The finance committee had nothing to say about which bills to incur. Under the arrangements in effect, the finance committee paid any bill or made any payment which bore the approval of an appropriate official of the campaign committee. The campaign committee was supposed to see that the amounts it OK'd were within the limits of an approved budget. It turned out that the controls did not work as they were intended, and spending overran the budget by more than $8 million, perhaps more likely $10 million. So, in practical terms, the two committees operated in watertight compartments. They were physically separated on different floors. The campaign committee ran the campaign and created the debts, the finance committee raised the money, paid the bills. There was only one forum for the exchange of opinions with respect to campaign Spending, and that was the budget committee. The budget committee consisted of three officials of the campaign committee and three officials of the finance committee. Formal meetings of the budget committee with recorded minutes did not take place until after Labor Day, 1972. A number of informal meetings on budget, matters were held before that, but most of those centered on the overall amount of funding at the National and State levels. The meetings of the budget, committee were not, in my opinion, very effective. Each one was opened by me with a general statement of the current cash position and the expectations of future contributions , which until the last few days of the campaign never equaled the expected spending. I pressed continuously for reductions, in Over spending, but the actual trend was constantly upward: At times, meetings became bitter, and I walked Out Of one meeting at which I thought there was absolutely no understanding of the difficulties of fundraising on the part, of those who were doing the spending. The budget grew to $40 million, then $43 million, and ended up in excess of $48 million find our latest accounting, which is not yet completed, shows it to be in excess of $50 million, Only a late surge of contributions as a result, of the effective organization we had built across the country, made it possible for us to end up with a surplus above that. Now, as between the, old law and the new law, prior to April 7, 1972, the controlling law on candidates for Federal office was the Corrupt Practices Act enacted in 1925. This act, made, a major distinction between fundraising for a candidate to secure a nomination--through primaries or conventions--and fundraising in a general election. There was no reporting required of any kind on contributions and expenditures to secure a nomination There was a requirement that contributions and expenditures in a general election be reported to the Clerk of the House. [00.20.40]
[00.20.40] The Federal Election Campaign Act of 1971, -which became effective April 7, 1972, changed that by eliminating entirely the distinction between a, campaign for nomination and a campaign for election, It required that all contributions and all expenditures in any political campaign be reported. Although the bill was signed by the President on February 7, it, did not become effective until April 7 because the Congress specifically allowed 60 extra days for operation under the old law. The distinction between election financing and nomination financing had existed for almost, 50 years, and countless candidates, for the Presidency, the Senate,, and the House of Representatives had observed the requirements of the one and the exemption of the other. In 1972, candidates for such offices in both political parties formed finance committees that did not have to publish or their transactions prior to April 7, and organized new reporting committees, after that date. In the President's campaign a Finance Committee for the Re-Election of the President had been created solely to raise funds for the renomination , and this committee terminated its activities On April 6; it was not, under the law, required to file reports. A new Finance Committee To Re-Elect the President was created to operate beginning April 7, and it has filed all public reports required by the new law. We readily acknowledge that our fundraising operated under the old law until April 7, 1972, the Federal -Election Campaign Act of 1971; under this law the fact that contributions need not be reported gave, the. committee and its contributors a right of confidentiality The issue Of confidentiality versus disclosure of such information has never been fairly presented to the public. It has been made to appear that the committee engaged in secret, thereby concealed and suspect, transactions which would not have occurred had they been required to be disclosed. That is not true. The transactions were valid and proper and the question of whether they were to be reported Was a question of law that involved important rights of individuals. The committee's position all along has been that nondisclosure created no advantage to It, but that it was a right of' the contributor which the committee could not- properly waive. The right to live without undue intrusion is a long-respected benefit of the American system. Therefore the committee did not release the names of contributors before April 7. [00.23.47--shot of Sen. TALMADGE lighting up a huge cigar--presumably to help the time pass while STANS speaks] It, has never objected to any contributor disclosing his contribution. And on one occasion, just before the election the committee released a list of such contributors--up to March 9, 1972--only after consulting with those making the, larger gifts, Much has also been made of the fact, that a few records of the committee before April 7 were destroyed. The fact is that, the very large part of such records has been preserved, and the committee believes that the others can be reconstructed if needed. But, the important point is that there was no illegal act in throwing away any of these records, and even those that were retained could have been disposed of, Not only was there no statutory requirement that records of transactions before April 7 be preserved it, was not even necessary that any recordings be made at all. At least, that's what our lawyers told us at the time, and that corresponded with what we had been told in the 1968 campaign. The Finance Committee To Re-Elect the President, undertook to observe strictly all the, provisions of the new law, beginning April 7, and also urged its State committees to do likewise. Systems and controls were developed to insure that would be the case. Notwithstanding this, there have been a, few instances in which the committee has been cited by the General Accounting Office and the Department of Justice for failure to report transactions which occurred after April 7, and in at, least one case, the; Department of Justice has ruled in favor of the committee. The committee believes that it, has valid explanations for this small number of technical violations, and that, considering the hundreds of thousands of' contributions received and bills paid, its record of operation under a new and highly complex law that came into being in the middle of the campaign should be commended rather than criticized. [00.26.03]
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[00.26.03] Now, as to chairman and treasurer. These are the only two statutory offices required of a political committee. As chairman of the committee I had a personal responsibility for overall coordination of its activities. The principal vehicle in this respect, was a daily staff meeting attended by the treasurer, the controller, the general counsel, and several vice chairmen working in Washington, But without doubt my prime personal responsibility was to raise the money required to finance the campaign, and that occupied almost all of my time and attention. Between February 15 and November 7, 1972, I visited approximately 45 cities in 32 States to meet with fundraising committees, groups of potential contributors, and individual potential contributors. I also met with individuals and groups in Washington and made many hundreds of phone calls to fundraisers and contributors. And this was no not a campaign financed by a few large contributors. To insure participation by hundreds of thousands Of individuals, I directed a direct-mail program that reached 30 million homes and a group fundraising plan to reach people at, their places of employment. These took a great deal of time. As chairman of the committee I had no responsibility in connection with the internal handling of funds, banking, recording accounting and reporting. I did not sign checks. I did not expend cash from the treasurer's cash fund. I did not, have a cash fund. It was my regular practice when I accepted contributions for the committee, to turn them over to the treasurer promptly. I did not have relationships With the banks. And I did not make entries in the books or even see, the books. I did -not prepare the public reports, and did not review them except to scan the summary pages. These, were all the responsibility of the treasurer. That, was not only within the working format, of our committee, but, was provided under the Federal Election Campaign Act, His was the, responsibility for all day-to-day to-day internal operations, and generally I consulted with him only when he came to me for guidance on a specific problem, which Was On a limited number of occasions. Now, as to before pre-February 15 and after February 15. When I joined the committee on February 15, last year, a, considerable number of activities were underway and a number of people were in place. Fundraising and campaign activities had been engaged in for almost a year. Programs had been planned or committed by the campaign people, funds had been collected and disbursed, committees had been formed and terminated, and some well-publicized transactions already occurred. Patterns of payment to Herbert, Porter and Gordon Liddy were a practice. Magruder had blanket, authority to direct payments. Kalmbach had turned over to the committee the funds in his possession. But no steps had been taken to comply with the new law, and the procedures generally were inadequate to cope with the volume of work sure to come. When I joined the committee the bank balance was about $3 million, and there was still $30 million or $40 million or more to be raised. I did not review what had happened before but began to work with the problem at hand. I did not learn about many of the earlier transactions until a much later time. For example, from February 15 to April 7, I had 45 working days, counting Saturdays, and 13 days were spent outside Washington'. It, was not, a period in which I could spend time on detail. I trusted the people already in the committee organization, and I relied heavily on the treasurer because of his previous experience in 1968 and 1971, and, even before. 1968. I was after contributions. [00.30.36]
[00.30.36] [Maurice STANS continues his statement about the operation of the Finance Committee to Re-Elect the President, and it's relationship to the campaign strategy planners of CRP] What I would like to emerge form all of this information are a few simple conclusions: (1) The finance committee played no part in the strategy or the tactics of the campaign. If they went wrong, it was the fault of the campaign committee. The finance. committee's only responsibility was to raise enough money to pay the, costs that were incurred by the campaign committee. (2) The finance committees in existence prior to April 7, 1972 operated under legal advice that their transactions need not be recorded or reported, as a matter of law. (3) Within the finance committee, the chairman's basic job was to raise the money and the treasurer's basic job was to account, for it and disburse it' (4) The responsibility of raising the largest amount of money ever spent, in a political campaign obviously put massive pressures on the, finance committee, especially those engaged in fundraising. In my own case, the stress Was multiplied manifold by the serious illness of my wife, beginning August 9 and continuing into early 1973. Gentlemen, I repeat, to you that I had no advance, knowledge of the Watergate affair and no knowledge of any efforts that may have been made to cover it, up, nor do I know about, any Other espionage Or sabotage activities on the part of the campaign committee I can also assure, the committee that I have made an honest, and careful effort to abide by the spirit and intent of the election laws. Senator BAKER. [presiding]. Thank you, Mr. Stans. In the chairman's absence and pursuant to a request. by Senator Weicker, if there is no objection, Senator Weicker has a brief statement he would like to make to follow directly after the statement of the witness. Is there any objection to that? [No response.] Senator BAKER. Senator Weicker. Senator WEICKER. Thank you, Mr. Chairman Mr. Chairman and follow members of my committee, in 1970, I gained the Republican Party's nomination to the, U.S. Senate from Connecticut by way of a primary, During the course of that, primary campaign, Republicans both within and without Connecticut properly chose sides as between myself and my opponent. It came to my attention that Mr. Maurice Stans, then Secretary of Commerce spoke in Connecticut against my nomination and On behalf of my Republican Opponent, John Lupton. His action, I know, was not an indication of any official position taken by the White House, But needless to say, it did not endear me to Mr. Stans. Though I have had no contact, with Mr. Stans, and, though actually, I feel a great compassion for him and his family, I do not want, it said by any person, or wondered about by Mr. Stans, as to whether my questioning of him would be an act of getting even. Therefore, Mr. Chairman, I will refrain from questioning Mr. Stans now Or at any time in the future. Senator BAKER. Thank you, Senator Weicker. Mr. Edmisten Mr. EDMISTEN. Mr. Stans, is it not true, that most of your adult life that you have been in. the accounting business one way or another? Mr. STANS. Yes, that is true of all of my adult, life except for 8 or 9 Years in Government, and 8 in one type of banking or another. Mr. EDMISTEN. In 19.57 you were head of the Bureau of the Budget? Mr. STANS. That, is correct. Mr. EDMISTEN. In 1952 you were the recipient; of the American Accounting Association's annual award, and the Institute of Certified Public Accountants' annual award in 1954, and you were elected to the, Accounting Hall of Fame in 1960? Mr. STANS. That is correct. Mr. EDMISTEN. SO You would consider yourself a, pretty good accountant,? Mr. STANS. I would hope that others considered me a pretty good accountant. [00.35.20]
[00.35.20] Mr. EDMISTEN. What is Your occupation now, Mr. Stans? Mr. STANS. I am in the final phases of winding ,I) the, Finance Committee To Re-Elect the President,. Mr. EDMISTEN. In regard to my previous question, I noted that, in looking over some press clippings over the years, regarding you that it, has been suggested that you are a stickler for details and, as one newspaperman said, a model of fiscal conservatism. Would it be fair to characterize you as that? Would you agree to that? Mr. STANS. Well, I would say they are correct on both points. I am a stickler for detail in my area of responsibility, and I am essentially conservative and I do not believe in spending more money than is necessary for any purpose. That, was one of the reasons why I found myself in conflict frequently with the campaign people last, year. Mr. EDMISTEN. Now, prior to February 15, 1972, you were Secretary of Commerce? Mr. STANS. That is correct. Mr. EDMISTEN. Tell the committee, please, prior to your coming to the finance committee, what political activities were you engage in while Secretary of Commerce. Mr. STANS. You mean with relationship to the-- Mr. EDMISTEN. The upcoming campaign. Mr. STANS. The. upcoming campaign. In 1971, on a few occasions I met with Mr. Sloan, Mr. Nunn, and Our accountants for the, committee after hours, as I recall it, to discuss the accounting procedures that they were going to use, in the 1972 campaign. I had no part in the campaign. I had not committed myself to be in the campaign and I was strongly of the conviction that I did not want to take on the finance job in 1972, but I did, at their request, sit down with them and discuss some of the accounting procedures that: would be helpful to them. Mr. EDMISTEN. Now, Mr. Stans, I want to ask you if you can identify or know anything about a document I have here. This is purportedly written by Mr. Jeb Magruder, a confidential memorandum for the Attorney General dated July 28, 1971. -Mr. STANS. I have never seen this memorandum before, to the best of my- knowledge. Mr. EDMISTEN. With the indulgence of the committee, I Will read it. This- is a confidential memorandum to the Attorney General: Dick Whitney, who is Secretary Stans' political special assistant spent, some time, with me discussing 1972. One idea which he brought up might be useful in other departments. The Secretary has built up a discretionary fund at Commerce that will total approximately $1 million. He is using this fund for conferences, hiring, and other activities that will be beneficial to the President's reelection. If you feel it is appropriate, Secretary Stans might discuss this concept with other Cabinet officers to see if they can develop the same kind of fund within their own departments. Now, down below on there, there is a line for "Approve, disapprove, comment, " and this, as I said, was signed by Mr. Jeb 'Magruder to the Attorney General dated July 28, 1971. What can you tell us about that? Mr. STANS. I. cannot tell YOU very much about it. I have no idea What the concept was. I think it must, have been based on some misunderstanding or other. I had no fund in the Department of Commerce apart from authorized budgeted funds of the Department, and I think either Mr. Magruder or Mr. Whitney would be the ones to have to explain that, memorandum. Mr. EDMISTEN. Well somebody is $1 million off there in some way, I Would take it? Mr. STANS. Well, if somebody is implying that we had $1 million set aside in the Department of Commerce to help in the election campaign I would say they are off. I do not know -what it means. Mr. EDMISTEN. Mr. Chairman, could we mark this for an exhibit. Senator ERVIN. [presiding]. Mark it for identification. He says he knows nothing about it so I think it would not be competent until you get somebody who does know something about it so just hold it. [00.40.36]
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[00.40.36] Mr. EDMISTEN. Mr. Stans, how did you become chairman of the finance committee? Who encouraged you to take that responsibility? Mr. STANS. A number of people encouraged me to do it, I guess I became chairman by default, and in the absence of another candidate for the job I eventually ended up volunteering to the President early in January 1972. Mr. EDMISTEN. Now, in your statement you mentioned that there was a good deal of difference between the finance committee and the actual campaign committee. Did you not have anything to do at any time with the campaign committee? Mr. STANS, I had nothing of any significance to do with the campaign committee at any time except insofar as I sat as a member of the budget committee. Mr. EDMISTEN, Did you on May 10, 1972, write a memo to the Honorable John N. Mitchell in which you discussed a number of issues regarding the various open budget matters and may I show this memorandum to you? Mr. STANS. You do not need to, I am very familiar with that memorandum. Mr. EDMISTEN. Yes. Mr. STANS. And I certainly did write it. I wrote it under the circumstance I described in my opening statement. I was frustrated, upset, at the level of spending that was projected by the campaign people, and I proposed a number of reductions in the budget. Mr. EDMISTEN. Yes, Now, Now, you pretty well covered the whole area of the campaign in this memo, did you not? For instance, No. I was November Group, No. 2 convention, No. 3 Republican National Committee, No. 4 national campaign budget. You were rather familiar with the Operation of the campaign committee if you were able to write this extensive a memo, I would take it? Mr. STANS. Well, I do not think that is- quite the right way to say it. I was not very familiar at all with the operation of the campaign committee I was only familiar with their objectives its to how much they were going to spend and approximately a dozen categories in which they were going to spend it, and I was objecting to the total am amount that they were going to spend. Mr. EDMISTEN. Mr. Chairman, could we have this one marked, it is a memo from Mr. Stans. Senator IRVIN. Yes, Sir, I understand he has identified it, he, says he wrote it. Mark it appropriately as an exhibit and receive it as such. Mr. EDMISTEN, Mr. Stans what, was Gordon Liddy's position in the campaign? Mr. STANS. Gordon Liddy was general counsel to the campaign committee until around the end of March, and then he became general counsel to the finance committee. Mr. EDMISTEN. And then during his tenure at the finance committee you relied upon his advice a great deal. Mr. STANS. I relied upon his- legal advice a great deal. Mr. EDMISTEN. Right. Did he give you the advice regarding the pre-April 7 contributions and those after? Did you rely upon his, legal advice? Mr. STANS. Yes, as one of the sources of legal advice, I did rely on his. Mr. EDMISTEN, Were You aware that he was receiving cash from. Mr. Bart Porter and Mr. Hugh Sloan" Mr. STANS. Prior to April 7 I was aware that he, had received cash on some occasions-. I was not aware of the amounts in total or on any one occasion and I was not aware that the total was anywhere as large as it was. I thought it consisted of' relatively small amounts of money. I had heard at one point or another that Mr. Liddy was receiving money for use in the primaries. Mr. EDMISTEN. That is the Only reason that you had knowledge of what was brought to your attention? Mr. STANS. It was one of the things that was mentioned at one time or another. Mr. EDMISTEN. I am sure, Mr. Stans, that you are familiar with Mr. Sloan's testimony before this committee that he discussed with you a payment of $83,000 to Mr. Liddy. Now, what is your testimony On that transaction? Mr. STANS. Somewhere around the 6th of' April, Sloan came to me, and said that Gordon Liddy wanted a very substantial amount of money. I don't recall the amount he named and last August, which was much closer to the time, I recalled in testifying in a deposition to the Federal district attorney's office that I thought the amount, was $30,000 but I recalled that only vaguely. In any event I don think the amount is very important. Mr. Sloan said. "Liddy wants a substantial amount of money. Should I give it to him". And I said, "I don't know. I will find out from John Mitchell." [00.45.56]
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