Citizen Hughes

by Michael Drosnin

  In Nixon, Hughes had at last what he had always wanted—a debtor in the Oval Office.

  “I am determined to elect a president of our choosing this year and one who will be deeply indebted, and who will recognize his indebtedness,” he had declared early in the 1968 campaign.

  “Since I am willing to go beyond all limitations on this, I think we should be able to select a candidate and a party who knows the facts of political life.”

  “If we select Nixon,” he later wrote, “then he, I know for sure knows the facts of life.”

  Theirs was a special relationship. It stretched back more than two decades, had survived multiple crises, and still endured. Hughes, of course, flirted with other politicians, but with the others it was often hard to tell how far he could go, and he always came back to Nixon, who appreciated a big spender, and would always go all the way

  Hughes had supported Nixon in every bid for office since his first congressional race in 1946 and would continue to back him to the end. In addition to campaign funds, he provided large sums for the personal use of the president and his family. The known bequests—the few made openly and the hidden payoffs later discovered—eventually totaled more than half a million dollars.

  More than a financial angel, Hughes was a virtual fairy godfather in Nixon’s faltering rise to power. In 1956, when Eisenhower was ready to find a new running mate, Hughes ordered a covert operation to crush the “Dump Nixon” movement, sending Maheu to infiltrate the enemy camp and concoct a spurious pro-Nixon poll. Whether the problem was hanging on to Ike’s coattails or flying a planeload of dignitaries to a testimonial dinner or saving a relative from financial ruin, Hughes always seemed to materialize when Nixon was in need. Then, suddenly, the spell was broken.

  The billionaire’s largesse may have cost Nixon his first bid for the presidency when a scandal erupted in the closing days of the 1960 campaign over a never-repaid $205,000 Hughes “loan.”

  Nixon had personally requested the money four years earlier, shortly after he was reelected vice-president, ostensibly to bail out his brother Donald’s failing business—a chain of restaurants featuring “Nixonburgers.” The cash came from a Canadian subsidiary of the Hughes Tool Company, was transferred through a cutout to the vice-president’s aged mother, Hannah, who passed it on to her bankrupt son. The name Hughes appeared nowhere on the loan agreement, and none of the Nixons was responsible for repayment. Their only collateral was a vacant lot in Whittier, California, once the site of the Nixon family home. It had an assessed value of $13,000.

  Hughes was pleased to play the friendly pawnbroker. “I want the Nixons to have the money,” he told his reluctant business manager, Noah Dietrich. “Let ’em have it.”

  Nonetheless uneasy about the secret deal, Dietrich flew to Washington in a futile attempt to dissuade the vice-president. “About the loan to Donald,” he cautioned Nixon, “Hughes has authorized it, and Donald can have it, but if this becomes public it could mean the end of your political career.”

  Nixon, unfazed, responded self-righteously. “Mr. Dietrich,” he reportedly said, “I have to put my relatives ahead of my career.”

  Donald’s fast-food enterprise soon collapsed despite the easy credit, and Hughes never did get back his money. Still, he apparently came out well ahead. Less than three months after he so generously aided the needy Nixons, the Internal Revenue Service officially recognized his philanthropic status. It declared the Howard Hughes Medical Institute a tax-exempt charity. Twice before the IRS had refused to certify the foundation, calling it “merely a device for siphoning off otherwise taxable income.” Nothing had changed. Indeed the institute had thus far kicked back more than $9 million to Hughes, and spent only $404,372 on good works. Yet, suddenly, the IRS reversed itself. Records of the abrupt about-face remain hidden even today, but Hughes’s timely benevolence to the vice-president was not so well concealed.

  The “Hughes Loan Scandal” hit the headlines in the final weeks of the closely contested 1960 election. Maheu took time off from plotting to kill Castro and tried instead to kill the story. Nixon, however, panicked. He put out a preemptive report that never even mentioned Hughes, and promptly got caught in his lies.

  “I was successful, during the presidential campaign, in killing a story which was about to break in the St. Louis Post Dispatch and later in the New York Times,” Maheu told Hughes, recalling the failed cover-up. “It was only the complexities involved originally in setting up the loan which caused the Nixon forces to panic days before the election because some small-time accountant, who never should have been cut in, was terribly hungry and playing with the Kennedy forces.

  “If a simple loan had been made to brother Don with the Whittier property as collateral, the very simple loan may not have become as complicated,” continued Maheu. “Two weeks before he died, Drew Pearson told me for perhaps the tenth time, that he never would have broken the story if he had not been suspicious of the incredible steps which were taken in the origin to conceal the fact that the loan had been made.”

  Although only a hint of his full relationship with Hughes, the revelation ruined Nixon. He lied, denying that either he or Hughes had been involved in the transaction. Confronted with contrary evidence, he lied again, claiming that his widowed mother had “satisfied” the $205,000 loan by turning over “half her life savings,” namely the thirteen-thousand-dollar vacant lot. Nixon never stopped lying, but there was no escape.

  At a rally in San Francisco’s Chinatown, he posed with children carrying a huge banner, its message inscrutable but seemingly supportive. Translated, it read: “WHAT ABOUT THE HUGHES LOAN?” Later, at a post-rally luncheon, every fortune cookie contained the same suggestion: “Ask him about the Hughes loan.” The scandal dogged Nixon down to the wire.

  He was certain it cost him the presidency, blaming his “poor damn dumb brother” rather than himself or Hughes for his narrow loss to Kennedy.

  The “all-out support” Hughes gave Nixon in 1960—a still unknown number of hundred-dollar bills secretly passed through the same bagman who handled the loan transaction—never became public. But the loan scandal would not die. It resurfaced full force when Nixon ran for governor of California two years later, and once more he was sure it caused his humiliating defeat. “I must have answered questions about the Hughes loan at least a hundred times,” he complained. “The media loved the story and played it up big—because it was so damaging to me.”

  Hughes had become a haunting symbol of Nixon’s greed and corruption, apparently driving him out of politics forever. Yet neither could now break off the fatal attraction both had done their best to conceal.

  Now, in 1968, Richard Nixon was staging a startling comeback. And both he and Hughes were ready to deal again.

  “I want you to go see Nixon as my special confidential emissary,” Hughes instructed Maheu just two days after the presidential race opened with the primary in New Hampshire. While the rest of the nation focused on McCarthy’s upset of Johnson, Hughes immediately recognized that the real victor was Nixon, not only back from oblivion but also facing a badly split Democratic party.

  “I feel there is a really valid possibility of a Republican victory this year,” Hughes continued. “If that could be realized under our sponsorship and supervision every inch of the way,” he added, so confident of Nixon’s corruption that he was already plotting the succession, “then we would be ready to follow with Laxalt as our next candidate.”

  Nixon was indeed eager to renew their ill-fated relationship. Even before Maheu could get to Nixon, Nixon reached out to Hughes.

  Of course, Nixon could not reach Hughes directly. Nobody could. In fact, despite their long relationship, the two men had never actually met. Their dealings had always been through intermediaries, and this time Nixon wanted as much insulation as possible.

  At one of a series of meetings in Washington and Florida in the spring of 1968, Nixon huddled with his closest friend, Bebe Rebozo, and the man who had intr
oduced them to each other twenty years earlier, Richard Danner. Nixon and Rebozo ran through an apparently well-rehearsed script, designed to maneuver their old pal Danner into handling the dangerous contact with Hughes.

  “The discussion was generally did I know or did I have any contacts that I could use to raise money,” Danner would later testify. “And the people I knew, of course, they knew equally well or better. The question arose as to what would be the best way of contacting Mr. Hughes.… And at that time Mr. Nixon and Mr. Rebozo asked me to attempt to contact someone in the Hughes organization relative to a contribution.”

  Nixon was as clear in his instructions to Danner as Hughes had been in his orders to Maheu: “The question was, ‘Would he contribute, and if so, how much?’ ”

  Yet the connection quickly became a tangled affair. Unable to resist each other but unwilling to meet, Hughes and Nixon groped toward each other through a profusion of go-betweens. Even the middlemen required middlemen. The clear purpose of the principals was lost. Only their paranoia remained. And the middlemen finally came together months later in an atmosphere of mutual suspicion.

  The scene was Duke Zeibert’s, gathering spot for Washington power brokers. Three men were seated around a table in the front room reserved for the real movers and shakers—Bebe Rebozo, Richard Danner, and Edward Morgan. They were there to exchange money for power on behalf of two men who were not there—Richard Nixon and Howard Hughes.

  Rebozo was there as Nixon’s surrogate. The Cuban had long been his closest confidant, the perfect companion for a self-absorbed loner like Nixon, willing to sit in silence for hours and listen to his monologues or to sit for hours in mutual silence and just brood with him. Nixon spent more time alone with Rebozo than he did with his wife, and some White House aides would later make suggestive jokes about their strange intimacy. But the real key to their relationship was money. A millionaire bank president who had helped make Nixon himself a millionaire, Rebozo was now putting together a secret slush fund for the president that would eventually total at least several hundred thousand dollars. He was at Duke Zeibert’s to collect a bundle of cash from Hughes.

  Danner was at the table because Nixon had personally asked him to find out if the Hughes money was available. A tall, thin former FBI agent from Miami who was now a Washington lawyer, Danner had known both Nixon and Rebozo longer than they had known each other. In fact, they first met when Nixon came down to Florida to recuperate from his first Senate race, and Danner took him fishing on Bebe’s boat. Danner had no connection to Hughes, but he was trusted, and he did know the third man at the table, Ed Morgan.

  Morgan had the Hughes connection. Another former G-man now practicing law, he was an intimate of Robert Maheu’s, and had parlayed their friendship into a lucrative position as prime go-between for Hughes and the likes of Moe Dalitz, collecting six-figure “finder’s fees” from the billionaire’s Las Vegas acquisitions. A classic Washington operator who specialized in handling sensitive deals for people who could not afford to deal openly with each other, he represented Teamster boss Jimmy Hoffa, Maheu’s Mafia partner in the Castro plot, Johnny Roselli, and several other top mobsters, yet still managed also to traffic with leading politicians in both parties. As Maheu would later tell Hughes, in recommending that Morgan be put on a regular retainer, “You can check him out with anybody from Moe Dalitz to the President of the United States.”

  Now, over breakfast, the three middlemen got down to business. Morgan had taken Danner’s request from Nixon and Rebozo to Maheu, and Maheu had taken it to Hughes. Everything was set. Hughes had approved a $100,000 contribution—$50,000 for the campaign, $50,000 for the candidate. Maheu had secured the cash. Morgan was prepared to make the transfer. Rebozo was ready to take delivery. Yet the meeting at Duke Zeibert’s ended unresolved. No money changed hands.

  What followed was a clash of fear and greed, a comic opera of missed connections, with confused intermediaries stumbling over each other while the two prime movers remained offstage.

  Rebozo instinctively backed away from Morgan. The more he reflected on their encounter and the more he recalled the impact of the earlier Hughes loan scandal, the more concerned he became about Morgan’s ties to Drew Pearson and Jack Anderson, the very men who had exposed that transaction and kept Nixon out of the White House in 1960. No, Rebozo would not deal with Morgan, and he was having some second thoughts about Hughes.

  Morgan, meanwhile, had also decided he wanted no part of this deal. Willing to play the bagman, he was not about to be left holding the bag. All through their meeting, he kept pressing Rebozo for some formal acknowledgment of the transaction. Rebozo instead kept assuring Morgan that he was extremely close to Nixon. An operator whose clients had a tendency to turn up dead in oil drums or disappear into trash compactors must have a sharp instinct for self-preservation. That instinct told Morgan it would be unwise to pass a wad of cash from a man like Hughes to a man like Nixon without getting a receipt. It was the kind of deal that could go sour.

  With Morgan out of the picture, Maheu moved to reassure Rebozo that all the old skeletons would remain in the closet. “I can assure you that right now both candidates are very happy with us,” he reported to Hughes. “In addition to material support, we were able last week to kill a recurrence of publicity pertaining to the Don Nixon loan. Humphrey himself issued the instructions to his people not to use this matter and Nixon knows that Humphrey did so at my request.”

  But whatever soothing effect Maheu’s coup accomplished was blown when the ubiquitous John Meier appeared with Donald Nixon in tow and announced that they would pass the Hughes money to Rebozo. Called out from a New York meeting with Danner and John Mitchell to take Meier’s call, Rebozo came back apoplectic. Donald was under strict orders to steer clear of campaign money period, not to mention Hughes money. And to make matters worse, Rebozo confused John Meier with Johnny Meyer, the Hughes fixer from an earlier era who became notorious in the “Spruce Goose” Senate hearings.

  The potential for another dangerous Hughes scandal seemed to be growing geometrically. Rebozo felt himself surrounded by skeletons. He decided on the spot to wash his hands of the deal.

  Maheu was now left with a bundle of cash, but no one to pass it and no one to receive it. He decided to cut through all the confusion and deliver the money himself, directly to Richard Nixon.

  He had already made a formal contribution to Nixon’s campaign, $50,000 in checks passed openly through Governor Laxalt a few weeks before the November election. Now, with the election over, Nixon victorious, and the promised secret cash still undelivered, Maheu once more turned to Laxalt. Early in December they flew together in a private Hughes jet to Palm Springs, where Nixon was due to attend a Republican governors’ conference. Laxalt, however, failed to arrange a meeting with the president-elect. Nixon, apparently still nervous about accepting Hughes’s money, at least about accepting it personally, sent word that his schedule prohibited a meeting with Maheu.

  One week later, Maheu was down in the Bahamas, conferring with representatives of the incoming administration, and there are indications that he at least tried to pass the money again. A cashier at the Sands casino noted on a fifty-thousand-dollar withdrawal slip dated December 5, 1968: “The money was given to Bob Maheu. I was told he was to give this to President Nixon on Maheu’s trip to the Bahamas.”

  So much money was gathered from so many sources—$50,000 from Hughes’s personal bank account early in September, another $50,000 from the account “for Nixon’s deficit” in December, the disputed $50,000 from the Sands a few days later, yet another $50,000 from Hughes’s account in June 1969, and $50,000 more from the cashier’s cage at the Silver Slipper in October 1970—that it is impossible to determine how much money actually reached Nixon.

  But it is certain that $100,000 in secret cash, two bundles of hundred-dollar bills from Howard Hughes—still undelivered by the November election, still undelivered by the January inauguration—finally found its way to
Bebe Rebozo’s safe-deposit box. Where it came to haunt Richard Nixon.

  It was the terrible guilty secret whose feared discovery would drive him to self-destruction—the tell-tale heart of Watergate.

  Richard Nixon entered the White House on January 20, 1969, in broad daylight to the cheers of thousands, the duly elected and sworn president of the United States. But trusting no one, fearing everyone, he immediately retreated into isolation behind his palace guard and tried to run the nation like Hughes ran his empire—secretly, from hiding, through a small group of henchmen instilled with the same siege mentality.

  It was a government Howard Hughes himself could have created, and one with which he could certainly do business.

  “I want to see just how much water we really draw with this Administration after so many years of all-out effort to achieve it,” the billionaire wrote Maheu shortly after the inauguration, eagerly anticipating a good return on his investment.

  Even before Nixon actually took office, Maheu began flashing news of early triumphs to the penthouse.

  “Nixon has decided on his law partner, John Mitchell, to be Attorney General,” Maheu reported from the Bahamas, where he was hobnobbing with members of the new administration during the transition. “Mitchell is thoroughly acceptable and we have excellent entrees to him, particularly through Bebe Rebozo.

  “We have a definite promise that it will not be [Herbert] Brownell or anyone on whom Brownell can exert any influence,” he added, referring to the attorney general under Eisenhower who was now special master in the TWA case and had recently slapped Hughes with the one-hundred-thirty-seven-million-dollar default judgment.

  Later, in Washington for the inauguration, Maheu had more good news to report. Things were shaping up quite well at Justice, which for months had blocked Hughes’s bid to buy the rest of Las Vegas. “I am most happy with the new head of the anti-trust division,” Maheu told his boss. “He was our #1 choice from among several very highly qualified candidates whose names were submitted to me well in advance of the appointment.”