The Arrogance of Power (21 page)

When others in the media picked up this story, Nixon demanded an immediate retraction. He had not been in Havana, he maintained, in the past ten years, a reference to his 1941 vacation trip with his wife.
*
At the time in question, he was later to claim, he had been in Hawaii.

While Nixon's denial cited his whereabouts for the period “from March 14 through April,” it is not clear exactly when Smith got into trouble in Havana. The
Post-Dispatch
story did not specify the date any more closely than “March or early in April.” Moreover, the information as to when Smith wrote his check and when he stopped it is conflicting.
⁹

Fresh study meanwhile indicates that the evidence that Nixon
was
in Havana with Smith cannot be easily dismissed. The reporter who wrote the
St.
Louis Post-Dispatch
story, Theodore Link, was a distinguished journalist with thirty years' experience and relevant qualifications. His articles on corruption in the IRS had recently led to the resignation of President Truman's attorney general and won his paper a Pulitzer Prize. He had been praised by the Kefauver Committee on organized crime for providing vital leads on “the underworld, conniving politicians, and corrupt law enforcement.” He also had extensive contacts in the criminal world of Miami, the segment of the mob primarily involved in running Cuba's casinos.

Information now available reveals that before writing his story, Link interviewed the manager of the Quarter Deck Yacht Club, Warren Freeman. Freeman confirmed that he and Richard Danner, Nixon and Bebe Rebozo's mutual friend, had “squired” Nixon and Smith during their visit; Nixon was known as a freeloader who habitually let others pick up the tab. Freeman confirmed to Link that Nixon had indeed accompanied Smith to Havana.

Separately Link located five witnesses who said they had seen Nixon at the Sans Souci with Smith. He had not gambled or drunk to excess, while Smith had been “lurchingly drunk.”

After Nixon complained about the stories that placed him in Havana, moreover, the
Post-Dispatch
sent Link to interview the man himself. Nixon, he said, proved to be “chiefly sore at two other newspapers which had intimated that the gambling trip involved some girls. We had made no mention of any women. Nixon agreed that all the facts we printed were correct.”

Mercifully for Nixon at the time, the published facts did not include the ominous element at the heart of the Cuba trip story, organized crime.

_____

Two years after the 1952 election, when Nixon was well into his first term as vice president, Sans Souci operator Rothman met with a Pennsylvania district attorney, Horace Culbertson, and stated “categorically” that Nixon had indeed been in Havana at the time of the Dana Smith episode and had been gambling. Later still, in other interviews with law enforcement officers covering a range of matters, Rothman said that while Smith had written the offending check, on a 1950 Nixon campaign account, it had been Nixon who actually lost money that night.

Even more troubling was Rothman's assertion that he had covered up for Nixon, falsely telling a journalist in 1952 that Nixon had
not
been with Smith. In the months that followed, he claimed, he had shielded Nixon by avoiding giving testimony in the lawsuit against Smith. In response, he said, Nixon had sent him a message of thanks through a fellow member of Congress.
¹⁰

Norman Rothman was a significant player in the organized crime apparatus that ran gambling in Havana. The casino he ran, the Sans Souci, was Cuba's classiest gaming palace, located in the heart of the Country Club district, home to the capital's elite families. Just weeks before the Dana Smith incident, the dictator, Fulgencio Batista, had returned to power. The American
mafiosi who owned him, and filled his Swiss bank accounts, had already been flourishing. Now they virtually controlled Cuba.

If the likes of Dana Smith or Richard Nixon wanted to sample Havana's swankiest nightlife, the Sans Souci and the Hotel Nacional were the places to visit. Patrons of the Sans Souci, most of them Americans over from Florida on brief excursion trips, dined, danced, and gambled on a twenty-five-acre spread set with lush tropical vegetation enhanced by thousands of towering palm trees. Rothman ran the place for the Mannarino brothers of Pennsylvania, who were associated loosely with Florida mobster Santo Trafficante, but always in thrall to the organization's business brain, Meyer Lansky. Lansky, through his brother, Jake, was the power at the Hotel Nacional.

In Cuba and much farther afield, Lansky had become the most influential figure in moving organized crime away from the old-style extortion and mayhem to the penetration and sophisticated control of legitimate businesses and officialdom. In probing Nixon's possible links to gambling and to Cuba—and specifically to the Dana Smith embarrassment—Lansky's name crops up again, as it has repeatedly in connection with Bebe Rebozo.

The most authoritative study of Lansky was written by the Israeli journalist Uri Dan, working with two colleagues in the seventies, when Lansky was living in enforced exile in Tel Aviv. In their book, which drew on exclusive interviews with Lansky and his longtime intimate Joseph Stacher, they cast new light on the Dana Smith affair that would have pleased neither Nixon nor his fund organizer. Lansky, they learned, knew Smith “very well,” well enough to contact him years later, during the earliest discussion of assassinating Fidel Castro.
¹¹
The authors were also told that Nixon had been one of a group of men who accompanied Smith to Havana the year he hit a losing streak. One of the group was Rebozo's associate Dick Danner, and other information suggests Rebozo himself was on the junket.

“The really close friendship between Nixon and Rebozo,” said former IRS operative Norman Casper, “began in Cuba.” Casper, a Republican supporter who met Rebozo in the relevant time frame and on occasion did background checks for him, gained that impression from a conversation with a gambler friend who often visited Havana during the Batista period. The gambler, Arch Horner, told of seeing Nixon and Rebozo together in Havana at the Hotel Nacional in the early fifties. “I think Horner was either at the same table or at one nearby,” Casper recalled in a 1999 interview, “because he described watching Nixon. Nixon was gambling pretty heavily. And, from a relative who worked in the cage, Horner said he learned that Nixon lost thousands of dollars—I think he said fifty thousand dollars—and Bebe picked up the marker on it. Bebe bailed Nixon out.”

Newly released testimony appears to dispel doubt that Nixon, the strictly raised Quaker, indulged in gambling. In 1967 Max Courtney, one of three notorious bookmakers known to have worked for Lansky, appeared before a commission probing gambling in the Bahamas—in connection with Lansky's
attempt to re-create his lost Cuban casino empire in the islands. Courtney had been hired by a Lansky associate to run a Nassau casino, he said casually, because of the extensive U.S. clientele he had, “from the ex-Vice President down.” In 1967 “ex-Vice President” could mean only Nixon.

In a recent interview a second former investigator offered further allegations about Rebozo's background as well as a startling claim about Nixon and Lansky's people in Cuba.

“Rebozo,” said Jack Clarke, a former OSS operative and a source of information on organized crime in the period, “was involved in Lansky's gambling. Lansky ran gambling illegally in Harlandale, Fort Lauderdale, and the areas east of Miami, and Rebozo was involved. He was tight with Lansky. . . . In 1951, when I was doing an investigation in the Miami area, Rebozo was pointed out to me at the racetrack by one of the hotel owners. He said, ‘He's one of Lansky's people. We try to keep the Jews [Jewish criminals] out of Lauderdale. Rebozo's a pimp for them.' . . . When I checked the name with the Miami police, they said he was an entrepreneur and a gambler and that he was very close to Meyer.”

An FBI document released in 2000 cites an informant who emphasized Rebozo's involvement, with Nixon and others, in business ventures in Cuba during the Batista period. “Rebozo,” according to the informant, “fronted for the Italian money.”

Later in the fifties, Clarke recalled, he stumbled upon Nixon's name while doing a black bag job, pilfering documents in an office at Havana's Hotel Nacional in connection with an unrelated investigation. “I was in the accounting office, looking for something on a fellow whose name began with
P
and going through the file alphabetically. I couldn't find it, and I went back further and came up with ‘Nixon.' I took a quick look and snatched it. It showed that when Nixon stayed at the Hotel Nacional, which Lansky owned, they comped the whole deal—paid his bill. And it was the presidential suite, before he was really anything. The guy that signed the register, that authorized comping him, was Jimmy ‘Blue Eyes' Alo.”
¹²

Vincent Alo, known always as Jimmy, came out of New York, as did Lansky, and became Lansky's trusted henchman. The criminal fraternity quickly learned that when Alo issued an order, it came from Lansky himself. Interviewed in Hollywood, Florida, in 1997, still sprightly at ninety-four, Alo remembered having been aware that Rebozo handled money matters for Nixon. Alo was involved in the management of the Hotel Nacional. What of the suggestions that Nixon had a relationship with Lansky? “He met him in Havana,” Alo acknowledged, “in the old days,” by which, he explained, he meant the fifties. He would say no more.

Using his mob contacts, veteran organized crime specialist Hank Messick was told only that Lansky was “impressed” by the Havana gambling incident involving Nixon and Dana Smith. In 1948, said his close associate Joseph
Stacher, Lansky and Charles “Lucky” Luciano “had hoped fervently that Tom Dewey would win the presidency for the Republicans.” “Meyer and Charlie,” said Stacher, “were certain Dewey would accept financial support from them, and in return they would be allowed to operate their gambling without much interference.” “In evaluating Nixon,” Messick wrote, “Lansky could not fail to note that it was Governor Dewey of New York—having abandoned his own ambitions—who sponsored Nixon for Vice President in 1952.”
¹³

No more is known of Lansky's attitude to Nixon, for he did not elaborate in his interviews with his Israeli biographers, the only writers in whom he confided. We do have a notion, though, of another top mafioso's judgment as the 1952 presidential election approached. In Chicago, Sam Giancana, then a rising power in the national crime syndicate, had been observing the race closely. Asked if he was supporting the Democratic candidate, Adlai Stevenson, he merely laughed, as Giancana's brother Chuck recalled. “I like a winner,” Giancana said then. “I like Ike. But I like his running mate, Nixon, even better. . . . I'm hedging my bets. We got campaign contributions to both sides: Our guys out in California are backing Nixon, and [Jake] Arvey's
*
handling Stevenson.”

This sort of talk is reminiscent of FBI wiretaps of gangsters' conversations about their political preferences at the time of the 1960 election and about what they hoped for from John F. Kennedy. In 1952 the leaders of both parties knew the smear potential of information that would link their opponents to mob backing. In 1952 Adlai Stevenson learned that Nixon had received funding in California from the very start of his political career through gangster Mickey Cohen, who answered to Lansky.
^†
According to an FBI report, Stevenson “sent an emissary to Cohen to try to get the story for use in the campaign, but Cohen refused to give it on the grounds that it would be like ‘ratting.' ” He would not be so coy later, as reported in an earlier chapter, when he was in jail and hoping for leniency under a new adminstration.

Nixon and some of his biographers have argued that he survived that year thanks not to luck but simply because he was an innocent man, the victim of vicious smears by the Democratic National Committee. True, the Democrats took every opportunity to slander his reputation, suggesting especially that he was susceptible to bribery. While they may on occasion have done so without good evidence, information now available, information that appears well sourced and not politically motivated, indicates that Nixon was indeed corrupt.
¹⁴

The top officials of both parties should set an example of propriety and ethics which goes beyond the strict minimum required by law.

—Richard Nixon, October 1951

O
n November 2, 1952, two days before the presidential election, Nixon's perennial foe Drew Pearson threw out two last-minute barbs in his television broadcast. Both questioned Nixon's ability to tell the truth. The first was trivial, pointing out that to court the Irish vote, the candidate had falsely claimed that his wife had been born on St. Patrick's Day. The second, a much more serious allegation that was soon to be lost in the excitement of the Republican victory, concerned Nixon's connection to a dubious Romanian exile named Nicolae Malaxa.

Malaxa, a diminutive fellow with a great line of patter, was a business wizard and a political Houdini. Before the war he had been his country's Alfred Krupp, a steel tycoon with interests ranging from oil pipelines and railroad locomotives to long-range cannons, munitions, and explosives. He had come to the United States in 1946, emerging from postwar Europe and the Communist takeover of Romania to reclaim his assets in the United States and get back into major international business. For him to operate effectively, it had been essential to obtain permission to remain in the United States, a requirement that proved to be a major hurdle and eventually brought a curious intervention by Richard Nixon.

Although many official files on Malaxa are still withheld, what is available makes it clear that there was widespread concern about admitting him to the United States. This is reflected in reports generated at the CIA, the State Department, and the General Services Administration (GSA) and eventually in no fewer than twenty file drawers at the Immigration and Naturalization Service (INS). In the words of a GSA special inquiry report, he had a “very unsavory reputation in his business dealings. He is described as a political opportunist . . .” said to have “made large-scale financial contributions to the [Romanian] Communist Party, and bribed several Romanian government officials prior to his entry into the United States . . . [and] his attitude toward the United States is strictly colored by his financial interest here.”

Nor did the concern focus only on his business reputation. The GSA report also noted dryly that Malaxa had been “sympathetic toward the Nazis while they were in control in Romania.” He was reportedly associated with both Hitler's number two, Hermann Göring, and his brother, Albert. Worse than that, according to a captured German wartime cable, he had been “the financial mainstay of the Legionnaires—the Iron Guard.”

Romania's Iron Guard movement, which was supported by the foreign intelligence branch of the German SS, was a feared anti-Jewish terrorist organization. A witness who had once worked at its headquarters told the INS that Malaxa had indeed been a major source of funds for the guard. According to other sources, his mansion had been used by the guard as a base when it attempted a coup in 1941, a coup in which thousands of Jews were killed, some after suffering unspeakable torture.
¹

One August afternoon in 1951, in the United States, as Malaxa strove to obscure his past—he frustrated immigration officials by refusing to answer their questions—one of his New York lawyers placed a call to Whittier, California, to Thomas Bewley. Bewley was the attorney and Nixon family friend who had taken Nixon on at his law firm directly out of law school in 1937 and had backed his political rise since then. Malaxa needed California representation for a pipeline factory he was setting up in the state, the lawyer explained, and asked Bewley to handle the work. The choice of the one California law firm linked to Nixon, it was later claimed, was pure chance.

Although Nixon himself had not been active as an attorney since before the war, the firm was still called Bewley, Knoop and Nixon. Even when the firm did drop his name, it provided him with an office in the Bank of America Building for use when he was on the West Coast. Malaxa's new pipeline company, the Western Tube Corporation, was soon also listed as based in the same office suite, in room 607. The Romanian appointed both Bewley and Herman Perry, another Nixon family friend, to the board of Western Tube.

Western Tube never set up a plant or produced a single pipe. Even Tom Bewley later admitted that the venture amounted to no more than “paper shuffling.” According to California Congressman John Shelley, years later, the
company seemed “to have been a complete fraud, a springboard for entry to the United States.” It was Nixon himself who put that springboard in place.

Even before the Malaxa approach to Bewley, Nixon had unsuccessfully introduced a private bill that would have allowed the Romanian to stay in the United States. Months later, as the Western Tube initiative got under way, Nixon wrote under his U.S. Senate letterhead to the head of the Defense Production Administration arguing that support for the project was “important, strategically and economically, both for California and the entire United States.” A week later the administrator gave formal approval, ensuring the company and Malaxa preferential treatment and massive tax advantages.

Nixon continued to go to great lengths to help Malaxa with his immigration difficulties. He personally telephoned senior INS official Howard Blum and, with his friend Pat Hillings, now a congressman, again pushed for special legislation to ensure that the Romanian was granted permanent residence. When Malaxa was refused readmission to the country following an absence abroad, Attorney General William Rogers, another close Nixon associate, overruled the immigration authorities and allowed him back in.
²

As a senator Nixon had access to the best information and the most authoritative sources. Why, in the case of Malaxa, did he go to such great lengths to help a rich foreign businessman with so dubious a reputation? The explanation now at hand, never aired publicly during Nixon's lifetime, is that Malaxa had purchased Nixon's favors with a massive bribe.

Drew Pearson's old working files, some of them typed and some in the form of sheets of scrawled notes, have survived among the journalist's papers at the Lyndon Johnson Library. They reveal that Pearson was probing the roles in the affair of Frank Wisner, who had worked in Romania as an agent for the OSS (forerunner of the CIA) at the end of the war, and Alexandre Cretzianu, a former Romanian diplomat. Close by, in a typed note, was the name of Constantin Visoianu, who had served as Romania's foreign minister.

Also in the file, in answers prepared for use in a libel suit brought by Malaxa, which never came to trial, Pearson noted that he had access to a CIA report during his work on the investigation. “I received,” he added in the same document, “an anonymous message that Nixon had received $100,000 as a political campaign contribution from Malaxa. . . . I was not able to establish this to my satisfaction, and therefore did not include it in any column.”

Pearson's lead, damning to Nixon if true, lay unseen and unpublished for more than thirty years, in records opened only in response to a request by this author. Today, in light of contemporary knowledge of U.S. intelligence activity and recent interviews with an elderly retired CIA officer, the clues the columnist was pursuing begin to seem plausible indeed.

Malaxa's modus operandi appears to have been based primarily on the power of the bribe. Soon after coming to the United States, he reportedly bought two Cadillacs and twelve thousand dollars' worth of jewelry at Cartier's in New York. One of the Cadillacs was shipped to Communist Romania's
minister of communications and public works and the other to the head of the Romanian delegation in Washington. The jewels were a gift to Ana Pauker, the Romanian minister of foreign affairs. By one account, his very entry to the United States was achieved on the promise of a payment to a senior OSS officer.

Whether or not such inducements played a role, it is likely the OSS and later the CIA were involved with Malaxa. Wisner, the OSS officer mentioned in Pearson's notes, was a passionately committed cold warrior who upon his return to the United States after World War II headed his own covert action empire within the CIA. United States immigration laws barred the entry of war criminals, but Wisner quietly arranged exemptions for émigrés he believed he could manipulate in the fight against communism. According to a former CIA official, it was he who made use of Nicolae Malaxa.

Others in the CIA did have scruples about resorting to such a man.
³
In 1952, in the months before the presidential election, they included several officers on the Balkan Desk. Its branch chief that year was Gordon Mason, a veteran of postwar intelligence work in Romania, who was supplying several leading Romanian exiles with funds, among them Cretzianu and Visoianu, the former diplomats whose names appear in columnist Pearson's old notes. It was from them, Mason informed the author in 1999, that the CIA learned Malaxa had bribed Richard Nixon.

According to Mason, the bribe was the sum of one hundred thousand dollars—precisely as Pearson had been told by his source decades earlier. Malaxa had paid it, almost fatally for Nixon, with a check deposited in Nixon's account in Whittier, California, almost certainly at the Bank of America branch in the building where he, the Bewley law firm, and Malaxa's pipeline company all shared the same address.

Depositing the check nearly proved disastrous, Mason explained, because one of the tellers at the bank was a Romanian émigré in contact with exile leaders Cretzianu and Visoianu. The two former diplomats loathed Malaxa and, tipped off by the teller, got him to provide them with a photographic copy of the check. They relayed it to Mason at the CIA, who wrote a report for his division chief, who in turn took it to Wisner. With a “Jesus Christ! We'd better see Allen Dulles,” Wisner sent the report on up the line.

Allen Dulles, newly appointed deputy director for operations, was of course a staunch Nixon backer. He did not block the report, however—the CIA is a bureaucracy, with automatic processes much like those of other bureaucracies—and the incendiary document was submitted to the man at the very top, Director of Central Intelligence Walter Bedell Smith.

As the author of the report Mason was summoned to a meeting in the director's office. Smith, “Beetle” to his colleagues, had served Eisenhower as chief of staff during World War II, and Mason never forgot his explosion of rage when confronted with the incriminating evidence of the Nixon bribe. “Smith was a man who could cuss in three languages and in almost every sentence. He also had a violent temper, and he acted as though I
personally was trying to scuttle Eisenhower. He demanded that Herman Horton [the Southern Europe division chief] and I bring every copy of every item on this case to him personally, and he waited in the office while we went back and collected it all. It was obvious he was going to take over from there. And it was going to go nowhere. The story was cleaned from the books.”

According to Mason, none of the material—not least the copy of the check—was ever seen again. Neither he nor his boss, Horton, had made duplicates. “I guess,” Wisner later told Mason, “Beetle just flushed it all down the toilet.”

Wisner said too that President Truman had learned of the episode and phoned Bedell Smith to ask about it. Mason concluded that the story had probably made its way to Truman as the result of a leak by the Balkan desk's Romanian exile operatives, frustrated that their ploy—from their point of view designed to trap Malaxa, rather than Nixon—had failed. Without the paper proof, however, the information was useless, a bomb without a detonator.

Can this story be confirmed, or as Nixon claimed of corruption accusations throughout his career, is it another cruel calumny? Mason's superior, Herman Horton, is dead, as are Wisner, Dulles, and Bedell Smith. Mason's two Romanian exile operatives, Visoianu and Cretzianu, are also dead. Visoianu's widow, contacted in 1999, remembered only that her husband had discussed “the Malaxa problem.”

Mason, who seems a credible witness, offered one further detail. There were, he said, actually two checks involved. The hundred thousand dollars, as he understood it, were purportedly to be used to help finance a new venture for Nixon's brother Donald. The second check, a much smaller sum of five thousand dollars, was a contribution to Nixon's 1952 campaign. Mason dismisses the notion that the hundred thousand dollars may really have been intended for use by Donald. “I don't think Malaxa even knew Nixon's brother. . . . These were gifts to Nixon for his influence.”

If Donald was indeed involved in the Malaxa affair, the episode eerily prefigured the $205,000 “loan” that the billionaire Howard Hughes would make—again supposedly to help Donald Nixon—in 1956.
*
This was a huge sum in the fifties, and would become a vast embarrassment for Nixon in two future election campaigns. Other Hughes contributions, supplied covertly before and during the Nixon presidency, would prove to be one of the most damaging elements in Watergate.

The hundred thousand dollars allegedly paid by Malaxa—more than half a million in modern terms—came perilously close to exposure in 1952. Had Drew Pearson been able to substantiate his anonymous tip, he might have run the story. Coupled with the allegations about the fund, it would surely have caused Eisenhower to drop Nixon as his running mate—even if, as remains possible, the charges were not true.

As for Nikolae Malaxa, he avoided deportation and lived on in the United States, ensconced luxuriously at a Fifth Avenue address, until the late sixties. Nixon made no mention of him in his memoirs.