Follow the dark money

Andy Kroll writes: Bill Liedtke was racing against time. His deadline was a little more than a day away. He’d prepared everything—suitcase stuffed with cash, jet fueled up, pilot standing by. Everything but the Mexican money.

The date was April 5, 1972. Warm afternoon light bathed the windows at Pennzoil Company headquarters in downtown Houston. Liedtke, a former Texas wildcatter who’d risen to be Pennzoil’s president, and Roy Winchester, the firm’s PR man, waited anxiously for $100,000 due to be hand-delivered by a Mexican businessman named José Díaz de León. When it arrived, Liedtke (pronounced LIT-key) would stuff it into the suitcase with the rest of the cash and checks, bringing the total to $700,000. The Nixon campaign wanted the money before Friday, when a new law kicked in requiring that federal campaigns disclose their donors. Maurice Stans, finance chair of the Committee for the Re-Election of the President, or CREEP, had told fundraisers they needed to beat that deadline. Liedtke said he’d deliver.

Díaz de León finally arrived later that afternoon, emptying a large pouch containing $89,000 in checks and $11,000 in cash onto Liedtke’s desk. The donation was from Robert Allen, president of Gulf Resources and Chemical Company. Allen—fearing his shareholders would discover that he’d given six figures to Nixon—had funneled it through a Mexico City bank to Díaz de León, head of Gulf Resources’ Mexican subsidiary, who carried the loot over the border.

Winchester and another Pennzoil man rushed the suitcase to the Houston airport, where a company jet was waiting on the tarmac. The two men climbed aboard, bound for Washington. They touched down in DC hours later and sped directly to CREEP’s office at 1701 Pennsylvania Avenue NW, across the street from the White House. They arrived at 10 p.m.

It was the last gasp of a two-month fund-raising blitz during which CREEP raked in some $20 million before the new disclosure law took effect. A handful of wealthy donors accounted for nearly half of that haul; insurance tycoon W. Clement Stone alone gave $2.1 million, or $11.4 million in today’s dollars. Hugh Sloan, CREEP’s treasurer, later described an "avalanche" of cash pouring into the group’s coffers—all of it secret.

At least it was secret until some of that Mexican money ended up in the bank account of a one-time CIA operative named Bernard Barker, one of the five men whose bungled burglary at the Democratic National Committee headquarters in the Watergate complex lit the fuse on the biggest political scandal in modern American history.

Over the next two years, prosecutors, congressional investigators, and journalists untangled a conspiracy involving a clandestine sabotage campaign against Democrats, hush-hush cash drops for CREEP surrogates in phone booths, and millions in illegal corporate contributions. As the slow drip of revelations continued, public outrage boiled over. Nixon’s approval rating sunk below 25 percent, worse than Lyndon Johnson’s during the darkest depths of the Vietnam War. Picketers marched on the White House demanding his impeachment. College campuses erupted in protest over the Watergate abuses.

Almost 40 years later, that outrage is back. Mass movements like the tea party and Occupy have channeled popular anger at a political system widely seen as backward and corrupt. In the age of the super-PAC, Americans commonly say there’s too much money in politics, that lobbyists have too much power, and that the system is stacked against the average citizen. "Our government," as one Occupy DC protester put it, "has allowed policy, laws, and justice to be for sale to the highest bidder."

For many political observers, it feels like a return to the pre-Watergate years. Rich bankrollers—W. Clement Stone then, Sheldon Adelson now —cut jaw-dropping checks backing their favorite candidates. Political operatives devise ways to hide tens of millions in campaign donations. And protesters have taken to the streets over what they see as a broken system. "We’re back to the Nixon era," says Norman Ornstein of the conservative American Enterprise Institute, "the era of undisclosed money, of big cash amounts and huge interests that are small in number dominating American politics." This is the story of how we got here.
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