The Path to Power (134 page)

Attempting to trace the trail of the various Brown & Root contributions, the Internal Revenue Service agents found themselves encountering evasions
and denials from Brown & Root officials and from some of the attorneys involved. Lyndon Johnson himself was not questioned at the time, apparently because of the directive from Washington that “no outside persons” be interviewed. (Years later, when the matter threatened to come to light in a series of columns by columnist Drew Pearson, Johnson was asked about campaign contributions made by Monteith, and he flatly denied that he had received any financial help from him. He also said that he had never even heard of Monteith, although, as Pearson noted, “Monteith’s father was the former Mayor of Houston and a well-known personage” in Texas political circles.) But the agents, digging through corporation and bank records, finding—and photostating—checks and campaign bills, were able to uncover facts that contradicted the denials by the Brown & Root officials and the attorneys.

The agents found the checks involved in the various transfers of money revolving around Monteith’s “attorneys fees”—including the checks to pay the campaign expenses. As for Corwin, he was interviewed by an Internal Revenue Service agent about his $5,000 bonus. Did you use any of it for political donations? the agent asked him. “Yes, I did,” Corwin replied. To whom? the agent asked. “Oh, I probably contributed half of it to one of the Lyndon Johnson clubs,” Corwin said. In what form? Corwin replied that he had mailed it to a Johnson club in Houston—“in currency [cash].” And the balance of $2,500? the agent asked. Corwin replied, “Oh, I spent it.” But the agents were tracing checks. The $2,500 balance, the agents said, had actually gone to another Brown & Root official, D. G. Young, who was reputedly the corporation’s principal “contact man” with politicians. The money had been transferred by, in agent Werner’s words, a “circuitous route. Both Corwin and Young gave false testimony on above item.” Another bonus—$2,500—had been paid by Victoria Gravel to Randolph T. Mills. Questioned by Werner, Mills was, Werner reported, “very evasive,” but Werner finally pinned him down.

Mills finally told Werner that he had made out a check—either “to Chairman, committee, or Johnson”—“shortly after time of receipt of bonus.” He told Werner that he was “pretty sure” he no longer had the check, but
Werner wasn’t concerned with that;
he
had a facsimile of it, made out to one of the campaign’s finance directors.

The more the Internal Revenue Service team searched, it seemed, the more they found. The transactions of which they were suspicious became larger; previously, the largest single questionable transaction had been the $45,000 bonus paid to Brown & Root Vice President W. A. Woolsey; now Werner, checking the account of Brown & Root Treasurer J. T. Duke at the Austin National Bank, came across another check—and this check, made out to Duke by the W. S. Bellows Construction Company, a firm that was part of the Brown & Root-headed consortium building the Corpus Christi Naval Air Station, was for $100,000. And there were increasing indications that cash as well as checks had been involved in large amounts in Brown & Root’s expenditures that the agents believed had found their way into Johnson’s election efforts. Durst, a Brown & Root official, for example, told an IRS agent that he had cashed his $5,500 bonus checks, and kept the money on his person, or hidden it in a drawer of his desk, until it was spent on personal expenditures. The IRS, as its investigation continued, was becoming less convinced of the veracity of this account—although Durst insisted that the only donation he might have made to the Johnson campaign was “chicken feed, ten or fifteen dollars, etc.” Then the IRS started asking questions about Vice President Dellinger’s “petty cash” account. Vice President W. A. Woolsey was asked if he would normally receive monies from Dellinger in checks; “No, he would [give] me the cash,” Woolsey replied. “Did he [Dellinger] have some sort of fund? Cash fund?” the agent asked. Woolsey first said, “Well, I don’t know,” but later said, “When the Naval Air Station was first started, I am sure he kept considerable cash”—which, Woolsey said, was “used” by top Brown & Root officials. In the margin of his notes on this interview, Werner wrote his conclusion about what he was hearing: “Slush fund.”

In July, the IRS agents began to focus on the $150,800 in bonuses. They arranged interviews with Brown & Root’s top officials—and with Herman and George Brown themselves. At these interviews, as many as three agents would be present, in addition to a stenographer to take down the witnesses’ replies. Some witnesses were defiant. Asked if he had donated any of his $17,000 “bonus” to the Johnson campaign, Treasurer Duke replied: “No, we didn’t make any—do you think we want to go to the penitentiary by making donations when we have all of these Federal contracts?” Any such allegations, Duke said, were “just plain bull-shit.” But clues as to the disposition of the “bonuses” were growing nonetheless. On October 23, Vice President L. T. Bolin admitted that he had made a cash contribution to Johnson’s campaign, although he wasn’t sure of the amount; it might have been $500, he said. But he admittted paying for, in an agent’s words, “some radio time and other things,” and the IRS agents determined that Bolin had written two personal checks—for $1,870 for cash, which they found had been given to
Johnson headquarters, and for $1,150 to a printing firm for campaign printing. As for the Brown brothers themselves, their answers under questioning were consistent with their personalities. Asked if Brown & Root ever “directly or indirectly” made any political donations, suave George smoothly replied, “Insofar as I know, they haven’t.” Asked again about political donations, he replied: “We have certainly not directed anybody to give campaign funds. We knew it was not legal to give any political funds, and if anybody working for Brown & Root gave any political funds, it was without our knowledge. Certainly I don’t think it has been charged to Brown & Root. If it has, it certainly shouldn’t have been.” Of course, he said, since others had the authority to sign checks, he “wouldn’t make a sworn statement that nobody has done it.”
*
Werner was to write that George personally drew $2,500 from the company, and that, while the money was “believed paid to Johnson campaign,” it had not been traced. As for Herman, fierce and unyielding, who drew $5,000, no notes on his interview can be found, but he apparently made no bones about what had been done with money: “admittedly paid to Johnson campaign,” Werner wrote.

All through October, 1943, these interviews went on, and on November 1, Alvin Wirtz, telegraphing from Houston, asked Roosevelt for an appointment to discuss
AN IMPORTANT MATTER … AT YOUR EARLIEST CONVENIENCE
, supplementing the request with a telegram to Pa Watson:
ONLY A MATTER WHICH I THINK IS IMPORTANT TO THE ADMINISTRATION, AS WELL AS MYSELF, WOULD IMPEL ME TO MAKE THIS REQUEST
. When he was given an appointment, for November 8, Wirtz specified to Watson that it be “off the record.”

The matter was apparently being raised with Morgenthau again—with the same result as before. On November 2, Werner was told by Cooner that he had just received a telephone call from Assistant Secretary of the Treasury Elmer L. Irey in Washington. Irey, Cooner said, had relayed a message from Morgenthau: that “the case was to be handled like any other case.” And, Cooner said, Irey had added a message of his own: “that it appeared fraud was present in the Brown & Root, Inc. case,” and that “if prosecution was in order, then the Government would prosecute.” Wirtz was unable, for all his persuasiveness, and for all the compelling political reasons on his side, to get Morgenthau’s decision overruled by the only man who could overrule it. The most the President would agree to do was, in Wirtz’s words, to leave the matter “open for further discussion.”

Further discussion was to be necessary. In compliance with its previous brief, the IRS had thus far not checked “outside,” but Morgenthau’s message
now removed those restraints, and in December, 1943, the agents took their first steps in this direction. They began trying to find out the identity of the individuals in the “Johnson campaign” who had received the possibly illicit contributions, and what they had done with them. Their first approach, on December 6, was to a clerk at headquarters, Mrs. Margarite Kelly, who didn’t know enough to be helpful. Their second, on December 15, was to Sherman Birdwell; “He told me nothing,” Werner wrote after that interview. Their third was no more productive; Herman Brown had said that he had given $5,000 to Walter Bremond of the Capitol National Bank. Bremond told Werner “he couldn’t recall” to whom he paid the $5,000. But the agents had scheduled a fourth interview—with someone who might have told them quite a lot.

He was Wilton Woods, who at college had, on Johnson’s advice, dated girls so the White Stars could control them, and had written Johnson’s editorials and run his errands—and who had continued to run errands, including the carrying of money, for his idolized Chief ever since.

Internal Revenue agent Werner was particularly interested in several items that involved Woods. One was a sum of $1,000 which the IRS agents believed had been given to him—by “contact man” Young—on June 14, 1941. Another was the sum of $7,500, which had been given to him by Brown & Root. The IRS’s curiosity about this item had been piqued by the fact that this was a rather large sum for the company to hand over to an assistant personnel supervisor who at the time was earning $225 per month; by the fact that when the Brown & Root official who had signed the check was asked if Woods had done anything around Corpus Christi to earn it, he replied, “I don’t believe so”—and by the fact that, whatever the expenditure might have been for, Brown & Root had not reported it. The IRS agents believed that the $7,500 was linked to a trip Woods had taken to Washington, D.C. They wanted to know to whom in Washington Woods had given the money—and for what purpose. Woods was scheduled to be the subject of a formal IRS interview, at which his testimony would be recorded, on January 6.

By this time, the stakes involved were huge. With the investigation not nearly complete, the amount by which the IRS team calculated that Brown & Root had underpaid its taxes had already mounted to $1,099,944. Since the IRS penalty where fraud could be shown was fifty percent, Brown & Root would owe the government an additional $549,972, for a total of $1,649,916. And money was no longer what was most significantly at stake. Irey’s conclusion that “fraud was present” was echoed by Werner, and the penalties for tax fraud, as opposed to tax underpayment, included jail as well as money. Nor were the potential losses only those of Brown & Root. Lyndon Johnson had a lot to lose, too, and not only in terms of career-tarnishing publicity and scandal. Should Herman Brown—and his company, and some
of his employees—be found guilty of fraud for the manner in which they had financed Lyndon Johnson’s campaign, would Brown be willing to finance other campaigns? Herman’s money—Brown & Root money—had been an essential element of Johnson’s rise to power, and Johnson was going to need it again. What if it wasn’t there for him when he needed it?

A new attempt had to be made at the White House, and it was not to be sufficient for Wirtz to try to make it alone. On Monday, December 27, Werner was working in Austin, preparing for his interview with Woods. Wirtz was working, too. Roosevelt returned to Washington that day after a weekend in Hyde Park, and Wirtz telephoned the White House and asked for an appointment with the President. The appointment had apparently still not been set up when Woods was interviewed by Werner on January 6. He was accompanied by Attorney Everett Looney, and the IRS notes on the interview state that “In re: $7500 in fees from B&R and Washington, D.C. trip,” Woods “declined to answer all questions on above fees on advice of counsel on basis that it might incriminate him.” He gave the same answer to the IRS inquiries about the $1,000 fee, and when, Werner notes, he was “given opportunity to tell of any other unreported receipts,” Woods again “declined to answer on grounds it might incriminate him,” although he did say that “at time of preparation of return he thought it was true and correct.” And on January 11, 1944, Lyndon Johnson telephoned the White House and asked for an appointment with President Roosevelt. The secretary who took the message for Pa Watson wrote Watson that Johnson “is very anxious to see the President as quickly as he possibly could. He says it is not a ‘Sunday School’ proposition.”

L
YNDON
J
OHNSON AND
A
LVIN
W
IRTZ
saw President Roosevelt on January 13, 1944, at 11:50 a.m. At 4:30 that afternoon, Elmer Irey telephoned Texas. He had been ordered to be at the White House at ten o’clock the next morning to give a full report to the President on the income-tax investigation into Brown & Root, Inc., he said.

Irey asked Werner to send him, in time for his meeting with the President, “detailed information on political payments made by Brown & Root, Inc., to the Lyndon Johnson 1941 senatorial campaign.” So that the information would reach him before he had to leave for the White House, he asked that it be sent over the government teletype in the Houston office of the Bureau of Narcotics. The report was unequivocal: after listing the $150,800 in bonuses, for example, Werner stated: “Sufficient evidence is on hand, it is believed, to show minutes authorizing above bonuses to be fraudulent.” Then the report listed specific drawings against those bonuses which had been traced directly to the Johnson campaign—the $2,500 from Randolph Mills, for example, or the $2,500 which “Corwin admits” was donated to the campaign,
together with what the IRS team believed was sufficient evidence to prove the case: of the Mills bonus, for example, Werner wrote: “Admitted by Mills. We traced to Johnson Bank Account and have Recordak facsimile of check.”