Bearding the Beast

The anonymous ITT whistleblower who, mailed to columnist Jack Anderson the private two-page memorandum from Mrs. Dita Beard, ITT’s chief lobbyist, may yet be responsible for the most important reforms for handling antitrust cases in 35 years.
For a week and a half, the Senate Judiciary Committee has held hearings into the role which acting Attorney General Richard Kleindienst and other Administration officials played in the settlement of the gigantic ITT antitrust suits and their alleged connection with ITT’s offer of up to $400,000 to the Republican National Convention in San Diego. Before these hearings are completed, the “Beard memo” should go down in history as the most prolific engine of testimony to date on the secret, high-powered world of huddling politicians and business lobbyists.

For years, lawyers in the Justice Department’s Antitrust Division have been telling close observers about political fixes and surrenders managed by the White House or the Attorney General’s office. For years, it was widely known that ex parte meetings to privately discuss settlement terms would be held between high Administration officials and political heavies from big business. For years, the settlement, or consent decree, would be announced by the Antitrust Division with no explanation for why and how it came about, except to say that it was in the public interest. Interested persons would then be given 30 days to challenge the agreement to the Federal district court which had to approve the settlement. The Antitrust Division would refuse to divulge any information about the case’s background. Routinely the court would approve the exact terms and reject the rare, brave attempts to challenge the darkness. This was how many of the big monopoly or merger cases have been settled and how consumers and small business victims of monopolistic practices have been treated. Although the smaller cases are negotiated at lower levels of the Antitrust Division, the process is similar.

Once in a while, as in the 1969 settlement of the auto industry’s smog conspiracy case, several state attorneys general become so outraged that they file suit themselves under state antitrust laws.

The abuses of the consent decree process are legion. Settlements do nothing to
develop the law, as strong cases tried and won in court would do. Third parties who suffer financial damage, such as businessmen and consumers, are deprived of the benefits of a court trial, which is also a key deterrent against future violators.

Law firms with whom Justice Department officials were formerly connected prosper and open Washington branch offices. Campaign funds often flow from companies into politics as indirect recognition of favorable settlement terms.
But at the top, the Antitrust Division has been led by men of esteem within the
legal profession — judges, professors and practitioners known for their integrity.

In retrospect, they’re often seen as men who might have been what they should have been if they could have been. For they played by the code of confidentiality. They were masters of self-censorship and the limits of political permissibility.

Now the ITT settlement story is oozing out into the open. Secret meetings, campaign contributions, clandestine Wall Street advisers, White House intervention, SEC investigations of stock manipulations converge to etch a seamy story of deception.

Not a whiff of this came through in the Justice Department’s announcement of the ITT settlement last July. Last week, Senator John Tunney sent Mr. Kleindienst a letter recommending that he issue two simple orders that would deter future wheeling and dealing. He suggested that all ex parte meetings and phone conversations between defendants in pending antitrust cases and the government be routinely summarized and made available to the public. Secondly, he urged that whenever an antitrust case is settled, a detailed opinion of the reasons for the settlement be made public. Mr. Kleindienst, when pressed by Tunney for a reply, was not enthusiastic.

Had these orders been in effect when the ITT cases came up, it is highly unlikely that they could have been kept out of the courts. If Mr. Kleindienst does not resign, the Senate should condition his confirmation as Attorney General on his explicit assurances that reforms will be immediately undertaken to restore the public’s dwindling respect for the government’s policing of corporations.