Citizen Hughes

by Michael Drosnin

  “Howard,” reported Maheu, “I just had a long talk with Larry O’Brien and we have decided to make one more pass at the President on the blast.”

  O’Brien continued to knock at the White House door but failed to gain entrance: “I have been in constant touch with Larry and as of 15 minutes ago he had not been successful in our mission, but he is continuing throughout the evening.”

  The dreaded blast was now less than two days away. Hughes had had it with O’Brien. As the zero-hour approached, he demanded that Maheu personally deal with the president.

  “Howard, before I leave Larry wanted me to give you his thinking,” Maheu replied from Miami. “He is convinced that this blast is a compromise to which LBJ is irrevocably committed. He is truly concerned that a request for an appointment for me could be misinterpreted by the President since he and Larry have been so close for many years, and it could be thought that we have no confidence in the President or Larry.

  “He points out also that a personal contact between me and the White House at this critical time could not avoid public scrutiny.”

  This mission was getting dangerous. Both O’Brien and Maheu were eager to bail out. But Hughes was insistent. Again, he ordered Maheu to go see the president and make the big payoff. So far Maheu had not brought O’Brien in on the bribery plot. Now, however, with Hughes demanding that he once more personally offer Johnson a million dollars, Maheu apparently spelled it all out for his cohort.

  “Via a pre-established code I was able to convey to Larry the extent to which we are willing to go,” he reported.

  Perhaps for the first time O’Brien had to realize exactly what he was getting into, just what kind of a man he had signed on to work for. It must have been a chilling moment. He was not about to bribe a president. But neither was he so shocked as to quit his new job.

  “He thought this should be reconsidered,” continued Maheu, reporting O’Brien’s reaction, “because he feels it is too late for LBJ to change his mind, and, in fact, it could eventually be used to our detriment. He is willing to stake his business career with us (which starts officially on Jan. 1, 1969) that he will accomplish our principal goal.”

  If O’Brien himself was not willing to bribe Johnson, he apparently was still ready to arrange for his new partner to make the payoff.

  “Howard, as you know I am prepared to do anything you request,” concluded Maheu, “and Larry, of course, will set up the appointment.”

  Only Lyndon Johnson’s continued intransigence prevented the White House parley. Whether because Hughes had failed to make the library donation, or because Johnson was never made aware of the potential rewards, or simply because he remained unwilling to sell Hughes the bomb, the president refused to meet Maheu.

  The megaton-plus blast went off as scheduled on Thursday, December 19, 1968. It triggered a violent artificial earthquake that shook Las Vegas and sent out tremors powerful enough to register on seismographs around the world. Alone in his bunker, Hughes gripped the sides of his bed, once again foiled in his plot to buy nuclear peace.

  But his battle against the bomb was not over. And neither was his obsession with the Kennedys. Having bought O’Brien, Hughes never gave up hope that the last surviving Kennedy brother could himself be persuaded to sell out.

  “Ted Kennedy is going to make a speech here, and I authorize you to offer him the sky and the moon and unlimited support for his campaign for the presidency if he will use our material and take the AEC apart in his speech here,” wrote Hughes, making his big move to snare the last pretender to the throne.

  “Bob, if he mentions the sheep in Utah, I tell you he will bring the house down,” Hughes continued, again invoking the martyred flock, and the five thousand sacrificial lambs killed in a biological-warfare test gone awry. “He must know this, and surely he does not hesitate to embarass the Nixon administration if he has the opportunity.”

  It was April 25, 1969. Teddy Kennedy was coming to Las Vegas to keynote a hundred-dollar-a-plate testimonial dinner for his Senate colleague, Nevada’s Howard Cannon. It was the perfect opportunity for Hughes to cement his new Camelot connection and at the same time to score a real blow against the bombers.

  That battle had by now escalated to the point that Hughes was threatened with a congressional subpoena. He needed powerful allies. He wanted Teddy Kennedy.

  “Do you have any word from Kennedy?” he asked Maheu, growing restless as speech time neared.

  “And also, please tell me what it is we want him to mention, I have forgotten,” added Hughes, either so far gone on codeine and Valium that the bomb had actually slipped his mind, or more likely just testing his lieutenant, making sure that he had not forgotten the Teddy-AEC-sheep scenario. But now he was suddenly seized by another obsession.

  “Incidentally,” he added, “I think you should have somebody explain most carefully our position on the water system to Kennedy, otherwise he is sure to say something suggesting his support of the lake system in his speech.”

  The reminder reached Maheu at the Sands, where he was throwing a predinner private cocktail party for two hundred select invitees to the big Cannon bash. The guest of honor was Teddy Kennedy.

  Whatever Maheu may have said to the senator at his little soiree, Teddy did not savage the AEC, or blast the bombing, or eulogize the dead sheep in his speech that night. And he never got the sky or the moon or any of Hughes’s money.

  But Kennedy did get a showgirl.

  The assignation was arranged by Jack Entratter, Hughes’s entertainment director at the Sands. The onetime bouncer at the Stork Club met with Kennedy at midnight and took him upstairs to a suite on the eighteenth floor. Teddy spent the night there—although he was registered at another hotel—and so did the showgirl.

  When the publisher of a local scandal sheet got wise and threatened to reveal all the racy details, Maheu tried to buy him out to suppress the story. When the feisty muckraker, Colin McKinlay, refused to sell, Maheu had to tell Hughes.

  “Until several hours ago Bell was convinced that he had McKinlay under control,” reported the worried fixer.

  “McKinlay, however, informed Bell that he had a ‘hot story’ pertaining to Senator Kennedy’s recent trip to Las Vegas when he appeared to make a speech on behalf of Senator Cannon. McKinlay claims that upon the completion of the festivities that evening, Senator Kennedy went to the Sands Hotel and spent the evening with a ‘broad’ which was furnished to him by Jack Entratter.

  “Today McKinlay made the statement that he is going to bury Kennedy and you and me by publishing this story in his next News Letter. In an attempt to prove that when important people appear in Las Vegas all provisions for their satisfaction are made available through the Hughes interests.

  “Unfortunately, Howard, there is substance to the story, although Entratter had not cleared any of the details with me,” concluded Maheu, admitting the worst. “We are still making every effort to make sure that this next scandal sheet will not be printed and distributed.”

  It was futile. The story ran. But without Maheu’s secret admission of its truth, the report was virtually ignored—although it told of a “bosomy blonde” who answered the door at Kennedy’s suite when a bellhop arrived with liquor that night, who was still there when room service brought up breakfast—and although by the time the story appeared, Kennedy’s womanizing had become front-page news.

  It was July 1969. Mary Jo Kopechne was dead. And Teddy Kennedy was preparing to go on national television to explain Chappaquiddick.

  “What is the most educated guess as to what is going to happen about the Kennedy situation?” Hughes inquired on the evening before Teddy emerged from a week of seclusion following the accident.

  “I just heard a newscast saying Kennedy is planning a statement tomorrow. Do you have any idea what it is likely to say?

  “I only want to know what, if anything you already know. Please do not become in any way involved in this, and please do not permit O’Brien to become
entangled in it.

  “I heard that all the Kennedy hiarchy was gathered today at Hiannisport Mass. I hoped OBrien was not included, but I realize it could be very dangerous if it should filter back to Kennedy that any such request was made of O’Brien.

  “So, tread very carefully in this entire affair.”

  Larry O’Brien was not actually working for Hughes at the time the billionaire sought to shield him from the taint of Chappaquiddick.

  Just as O’Brien had been about to go on the payroll, he backed out. It was not a moral decision, no sudden pangs of conscience. At the last minute, he simply got a better offer from Wall Street. He never broke off his relationship with Hughes, however. He kept in touch with Maheu and persuaded Hughes to hire two close associates, Joe Napolitan, a media consultant who had worked with O’Brien in both the Kennedy and Humphrey campaigns, and Claude DeSautels, a top Washington lobbyist who had been O’Brien’s deputy in both the Kennedy and Johnson administrations. Both Napolitan and DeSautels received $5,000 a month, and both regularly consulted with O’Brien on Hughes business.

  “Although O’Brien took the position with the investment company,” reported Maheu, explaining the setup to Hughes, “he has continued to make himself available to us and has kept his basic team intact. Larry continues to be of great help, and there are many things he can do which he could not if he were an employee.”

  Indeed, all the while O’Brien labored on Wall Street, Maheu reported his Hughes missions to the penthouse.

  “Re: CAB, Howard, things are progressing unbelievably well,” wrote Maheu, as he maneuvered to get federal approval of the Air West takeover. “It is obvious that Larry O’Brien and his people had done a good job prior to the meeting.” Of his own CAB testimony, Maheu later added, “I think I did a reasonably good job at keeping perjury to a minimum.”

  As Hughes continued to battle TWA, O’Brien tried to roll back the mammoth default judgment. “As a result of having accomodated a few select people in Washington,” Maheu noted, “O’Brien and Long reported just last night that we have a 50-50 chance of tagging a provision to pending legislation that will make it impossible to secure treble damages.”

  And for the big battle against the bomb, the O’Brien team lined up reliable allies in Congress: “O’Brien and his people have carefully deleted from opponents of the tests those which have any tinge of liberalism. They are working very closely with the solid group, and they will launch programs of their own which will not be traceable to us.”

  Hughes, however, was not satisfied. He didn’t want O’Brien’s team, and he didn’t want O’Brien’s unofficial help. He wanted O’Brien.

  “I was very impressed with the line up of political talent you mentioned,” he wrote Maheu, approving his roster of operatives. “However, Bob, I want a political oriented executive to be available full time.”

  Hughes had already hired Richard Danner, a longtime Nixon associate who handled dealings between the penthouse and the White House through the new president’s closest friend, Bebe Rebozo. That took care of the Republicans.

  “What I would like best would be to have both O’Brien and Danner,” continued Hughes, seeking control of both parties.

  “Do you think O’Brien can be persuaded, on any reasonable basis, to change his mind and come back?

  “I realize he is limited with Republicans, but that does not disturb me particularly.”

  No, not with the Democrats in control of both houses of Congress and most of the federal regulatory agencies. He was not disturbed at all. And, as it turned out, O’Brien needed no persuading. His Wall Street firm had gone bankrupt, he was saddled with worthless stock options, and he had plunged deeply into debt. In mid-August 1969, Larry O’Brien returned to Las Vegas, eager to join up with Howard Hughes.

  O’Brien Associates opened for business October 1, just in time to help rewrite national tax legislation for its chief client, Howard Hughes.

  The Tax Reform Act of 1969 was the most sweeping overhaul of the country’s revenue system in history, and it posed a real problem for Hughes. It was not that the richest man in America had paid no personal income tax for seventeen consecutive years, until his windfall profit on TWA finally forced him to ante up. It was not that the holding company for his entire empire, Hughes Tool, had paid no corporate income taxes for the three years its sole owner had been hiding out in Las Vegas. No, the big problem was the billionaire’s big charity—the Howard Hughes Medical Institute.

  Like the other great philanthropists—Ford, Rockefeller, Carnegie—Hughes had discovered a way to get great public acclaim for hoarding his wealth and evading his taxes. He created a foundation. Hughes, however, almost seemed intent on exposing the entire racket by making his foundation an outrageous parody.

  In his sole act of philanthropy, he had turned over all the stock of the Hughes Aircraft Company to the Hughes Medical Institute, thereby making his billion-dollar-a-year weapons factory a tax-exempt charitable organization. He named his personal physician, Verne Mason—the Hollywood doctor who had long been his codeine connection—director of medical research. But Hughes himself remained president of the defense plant and became sole trustee of the new foundation, retaining absolute control over both. He had generously given all his stock to himself. And now that incredible act of benevolence was about to be undone.

  It was Wright Patman who started all the trouble. For years the Texas populist had been using his power as chairman of the House Banking Committee to push a congressional investigation of the foundation game. His probe had uncovered hundreds of self-styled charities that were nothing more than fronts used by the wealthy to amass vast fortunes tax-free. And now, in 1969, Patman was zeroing in on the most blatant fraud of all—a top-ten defense contractor, a manufacturer of missiles and spy satellites, masquerading as a charity devoted to medical research “for the benefit of all mankind.”

  In fact, Patman discovered, the Howard Hughes Medical Institute had only one real beneficiary: Howard Hughes. In the fifteen years since its founding, the institute had given only $6 million to medical researchers and kicked back almost $24 million to the billionaire. During those same years, Hughes Aircraft piled up accumulated profits of $134 million but never paid a dividend to the charity that owned it and donated just $2 million to good works. Under a complex double-lease arrangement with Hughes Tool, the foundation received another $20 million, but most of that went to pay Hughes himself interest on a loan. Nearly a million dollars every year to the shylock trustee. And every penny Hughes-the-Benevolent gave to his foundation—including all the money he took back—was tacked onto the bills Hughes-the-Defense-Contractor presented to the Pentagon, so that other taxpayers picked up the entire tab for his philanthropy. Indeed, he turned a profit. By 1969 the medical institute, however, was flat broke. It had to borrow a million from a bank. Not to make research grants, but to pay the interest it owed its generous founder.

  “This sounds more like high finance to me than charity,” complained Patman. And another member of his committee, in grilling a foundation director, sharply ridiculed the whole setup: “You mean Mr. Hughes, the trustee, has never felt that Mr. Hughes, the chief executive, ought to be hamstrung in paying Mr. Hughes the money Mr. Hughes owes Mr. Hughes?”

  Dangerous talk. Into the breach stepped Larry O’Brien.

  “I am thoroughly knowledgable of the affinity which has existed for years between Patman and O’Brien,” Maheu reported to the penthouse philanthropist. “In addition, I accidently found out last night that Dick Danner and Patman have been close friends for many years. Unless you advise me to the contrary, it is my intention to coordinate among Danner and O’Brien a program which perhaps could get Patman off our backs.”

  But Wright Patman could not be stopped. He was on a crusade, and his revelations were finally forcing Congress to impose strict controls on all tax-exempt private foundations.

  Except one. Larry O’Brien was seeing to that.

  “It was Larry O’B
rien’s people who called to my attention the deficiencies in the pending Tax Reform Bill,” Maheu told Hughes. “O’Brien and his people detected deficiencies which could be devastating to HHMI and Hughes Aircraft.”

  Devastating indeed. Under the bill passed by the House, the medical institute would actually have to become a charity. It would be forced to spend at least $10 million each year on good works—probably two or three times that amount—far more than what it had paid out in the past fifteen years combined. Worse yet, the new law would prohibit “self-dealing.” Hughes would have to pay a 200 percent tax penalty on all the kickbacks he received from his foundation. And worst of all, he would have to surrender control of Hughes Aircraft, sell off 80 percent of his stock within ten years.

  O’Brien had his work cut out for him. But he also had powerful allies. In addition to Nixon’s pal Danner, Hughes deployed a team of lobbyists that included Gillis Long, a former congressman from Louisiana who just happened to be a cousin of Russell Long, chairman of the Senate Finance Committee—next stop for the Tax Reform Act.

  By the time the tax bill emerged from that Senate committee, it had a special loophole. One tailored just for Hughes. Now hidden in the 225-page law was a single sentence that exempted “medical research organizations”—namely the Hughes Institute.

  Maheu flashed the good news to the penthouse: “In meetings today and yesterday, the Senate Finance Committee adopted all the amendments we were pressing on behalf of HHMI.”

  The revised bill still had to survive a House-Senate conference and a final vote of the full Congress, but mainly it had to get past one man—Wilbur Mills, chairman of the House Ways and Means Committee. O’Brien took his old friend Mills out to lunch. For two hours they discussed the impact of the new tax law on foundations, and while O’Brien later insisted he never even mentioned Hughes, Wilbur Mills became a fervent advocate of the Hughes loophole.