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Agency of Fear

Opiates and Political Power in America

By Edward Jay Epstein

Chapter 24 - The Liddy Plan

 Our behavior in the midst of the bureaucratic jungle will be purely defensive, unless we have a "direct line" to one or another of the security agencies. If that is the case, the security agency concerned would provide an ideal "cover"for our activities. 




Richard Nixon's battle with the Central Intelligence Agency began in 1958. He was then vice-president, and (he CIA was secretly financing and supporting an armed Insurrection against the Sukarno regime, in Indonesia. When the CIA effort collapsed, to the embarrassment of the United States government, President Eisenhower ordered his vice-president to purge those in the CIA involved in the fiasco. Nixon personally arranged for Frank Wisner, the highly respected deputy director of plans for the CIA, and other top officials of the agency to be brusquely relieved of duty, according to Colonel L. Fletcher Prouty, then liaison officer between the CIA and the Air Force. Prouty notes in his book The Secret Team:  

Since the Indonesian campaign was ... highly classified, most other government workers did not know why all these nice people (in the CIA] had been fired, and since they were cool to Nixon anyhow, they arose in unison to damn him when he ran for President in 1960.  

Indeed, Nixon reportedly believed that the CIA was responsible for providing the press in 1960 with very damaging data on a "missile gap" between the United States and Russia-which turned out to be questionable, if not wholly fictitious. He held the agency's leaks to be at least partly responsible for his defeat in the close 1960 election. When he ran again for election, in 1968, it developed that the CIA was keeping his national security advisor-at that time,, Richard Allen-under some sort of surveillance, and Nixon suspected that CIA officials were again trying to compromise him by finding embarrassing information (this time about his efforts to block a peace settlement in Vietnam). This suspicion did not end entirely when he was elected president: at an early meeting of the National Security Council, which superintends the Central Intelligence Agency, Nixon asked Richard Helms to brief the council and then leave. Helms, a Harvard-educated aristocrat of the intelligence community, could not believe that Nixon would break the long-standing practice of having the director of Central Intelligence attend National Security Council meetings.

As president, Nixon fully understood that those who opposed him in the executive branch of the government had the power to undercut any of his programs, projects, or appointees by leaking embarrassing information-or misinformation-to the press or to Congress. William Safire, a chief speech writer for President Nixon, has pointed out: 

... the press has been frequently used by the bureaucracy to build its protective shell. An adept bureaucrat, his domain threatened by a cutoff of funds, is able to alert those interest groups about to be adversely affected and to zero them in to the appropriate newsmen. A judicious leak, a horrendous prediction of the homelessness, starvation, pestilence the cutback would cause, a follow-up reaction story about the interest group, a letter campaign by them to influence congressmen, a severe editorial or two, and the public interest [as represented by the president) gives way to the bureaucracy focused interest.


Since bureaucrats are entrenched in their positions by the traditions and tenure of civil service, or protected directly by powerful congressional subcommittees, a president has little power to countermand this insubordination unless he can first pierce the veil of anonymity provided to the bureaucrats by the press (or the staff of congressional committees). In order actually to rule over government, rather than merely reigning as a figurehead for the independent fiefdoms in the executive branch, Nixon needed to control at least one federal agency with investigative powers. As his staff quickly found out, this was no easy requisite to fill. Nixon feared not only the Central Intelligence Agency but also the Federal Bureau of Investigation while it remained under the directorship and control of' J. Edgar Hoover. He told close associates in the White House that he believed that Hoover had used information he had acquired through wiretaps and to blackmail Presidents Kennedy and Johnson, according to Krogh.* Although early in the administration, in 1969, Nixon had sought Hoover's help in wiretapping newsmen - and government officials (after the attempt to wiretap a newsman's phone by John Caldwell, a private detective hired by the White House with campaign funds, was thought to produce very quick results), the president's concern that Hoover would use the transcripts of these wiretaps became acute when it was discovered that Hoover was keeping these transcripts in a private file in his office. (Subsequently, in July, 1971, John Ehrlichman authorized William Sullivan, then an associate director of the FBI, to remove this incriminating file from Hoover's FBI office; on July 12, 197 1, it was brought to Ehrlichman's White House office.) In any case, by spring, 1970, the demands of Hoover that the White House provide him with written requests for its surveillance operations against leaks, and his shrewd maneuvers to gain control over the transcripts of wiretaps, convinced President Nixon that the FBI could not be relied on for more sensitive investigative work for the White House.

* Nixon's suspicions about Hoover's blackmailing of President Kennedy were not, it turns out, baseless. The investigation of the Senate select' committee chaired by Frank Church stumbled during the course of its inquiries on the intriguing fact that 1. Edgar Hoover had himself been briefed on a liaison that the president was then having with a young woman who was also having liaisons with reputed racketeers involved in organized crime. After the FBI's electronic surveillance turned up this possibly embarrassing connection, Hoover had a luncheon meeting with President Kennedy; afterward, the telephone communications between President Kennedy and the young woman stopped. Subsequently, Attorney General Robert Kennedy intervened to block the investigations of a wiretap involving these organized racketeers on the grounds that they were involved in "dirty business," on behalf of the Central Intelligence Agency, directed against Fidel Castro. 

On June 5, 1970, frustrated by his inability to gain control over an established investigative agency or to stop the recurring leaks from the bureaucracy, President Nixon summoned the heads of the various intelligence agencies to the White House-including J. Edgar Hoover; Richard Helms; Gen. Donald V. Bennett, of the Defense Intelligence Agency, and Adm. Noel Gayler, of the National Security Agency and described his dissatisfaction with them in reportedly "blistering" terms. He demanded a new mechanism for coordinating intelligence activities, especially domestic ones that were extralegal, and he proposed that a committee be formed immediately to achieve this objective. Tom Charles Huston, a young speech writer at the White House and a Nixon loyalist, was assigned the task of directing this committee toward creating a new investigative structure which could bypass the authority of both Richard Helms and J. Edgar Hoover. After only three weeks of meetings, the ad hoc committee, under Huston's effective control, recommended that the president authorize secretly the use of illegal wiretapping, illegal mail covers, and illegal break-ins for domestic-intelligence purposes. In a highly classified document entitled "Operational Restraints on Intelligence Collection" the committee noted that surreptitious entries (break-ins) were It clearly illegal," and explained, "It amounts to burglary. It is also highly risky and could result in great embarrassment if exposed. However, it is also the most fruitful tool and can produce the type of intelligence which cannot be obtained in any other fashion." Although the "Huston Plan" was initially approved by the president, it ran into such powerful opposition from J. Edgar Hoover that after five days it was rescinded. Nixon and Ehrlichman did not believe that Hoover had opposed this plan because of any "qualms about civil liberties," as Krogh put it; the FBI had performed hundreds of illegal break-ins for other presidents, as well as illegal wiretaps (and had an entire program organized to harass Martin Luther King and other civil rights leaders through extralegal means). The CIA also had an ongoing program to open mail from foreign countries, and in certain instances engaged in domestic surveillance. The National Security Agency, which specializes in communications and codes for the government, had intercepted telephone transmissions for over ten years. The point was not that these were new or unprecedented transgressions but that the Nixon administration was proposing a new structure to direct them, and Hoover was not about to allow the FBI to be bypassed by such a committee. On August 5, 1970, Huston attempted to override Hoover's objections by recommending in a memorandum to Haldeman:  

At some point, Hoover has to be told who is President. He has become totally unreasonable and his conduct is detrimental to our domestic intelligence operations.... It is important to remember that the entire intelligence community knows that the President made a positive decision to go ahead. Hoover has now succeeded in forcing a review.  

Huston apparently did not realize that Hoover already possessed incriminating wiretaps on newsmen, which he could leak, and that Nixon had no choice but to acquiesce. Although an interagency domestic-intelligence unit was temporarily set up, it was allowed to lapse a few weeks later into obscurity. "The whole thing just crumpled," John Dean, the president's counsel, explained to Nixon while discussing the need for "a domestic national security intelligence system" in 1972. (This conversation was recorded by Nixon's ubiquitous tape recorder.) Soon afterward, Huston was eased out of the administration. The first attempted coup had thus failed.

The quest for control of an investigative agency was not to be abandoned because of the objections (and temporary power) of J. Edgar Hoover. While John Ehrlichman and his staff attempted to discredit the FBI director by leaking stories to the press that he was senile and "losing his grip," President Nixon turned his attention to the Treasury Department, which had under its control such potent investigative agencies as the IRS, Customs (with its unhindered "search authority"), and the Alcohol, Tobacco and Firearms unit (which had an eight-hundred-man force and wiretap authority). Nixon was fully aware that the Kennedy administration had used the IRS for its own purposes. Under the cover of prosecuting organized crime, a list of names that the Kennedy brothers desired to prosecute was circulated within the executive branch, and this became the priority list for IRS investigations. The vast majority of crime cases during the Kennedy administration turned out to be revenue cases, according to the records of the Department of Justice. When Kennedy wanted to call attention to his war on crime, he persuaded the IRS to initiate investigations against gamblers in order to force the FBI to investigate. Indeed, Kennedy was so successful in commanding the loyalty of the Internal Revenue Service that he was able to persuade that agency to grant large tax deductions to American drug manufacturers who contributed to paying the ransom demanded by Premier Fidel Castro in return for the CIA-trained Cuban immigrants who had been captured in the ill-fated Bay of Pigs invasion in the first year of the Kennedy administration. (In fact, the drug companies participating were allowed to deduct the full retail price, rather than the actual cost, of the drugs as their contribution, which allowed them to make profits on the transaction.)

The White House strategists saw no reason why the IRS could not be made equally responsive to the special needs of the Nixon administration and in 1970 pressured the tax-collecting service into creating the Special Service Staff (SSS). According to a White House document, "The function of the SSS was to gather information on the finances and activities of extremist organizations and individuals, both left and right, and make this information... available to the appropriate division of the IRS." The internal-security division of the Justice Department, then headed by Robert Mardian, an Arizona lawyer with close connections to the White House, provided the SSS with a computerized list of protestors (which was also provided to the CIA). However, despite constant prodding from Huston and the White House, the SSS refused to move against any organizations (for example, the Black Panthers) that the Nixon administration considered enemies. Huston noted in a September 21, 1970, memorandum to H. R. Haldeman: 

Nearly eighteen months ago, the President indicated a desire for IRS to move against leftist organizations.... I've been pressing IRS since that time to no avail.... What we cannot do in a courtroom via criminal prosecutions to curtail the activities of some of these groups, IRS could do by administrative action. Moreover, valuable intelligence-type information could be turned up by the IRS as a result of their field orders. 

By the end of 1970 it became clear to the White House that the IRS was "dominated by Democrats" who could not be counted on to cooperate with the Nixon administration. The Treasury Department had also rejected the attempts of the White House group to place first John Caulfield and then Liddy in the job of chief of the enforcement branch of the Alcohol, Tobacco and Firearms unit. Randolph Thrower, then commissioner of the IRS, had testified that he opposed these White House appointments because of his concern about "the potential for a personal police force which Would not have the insulation of the career staff." Finally. Rossides became very definitely the enemy in the eyes of the White House when, according to Krogh, he informed Ehrlichman in early 1971 that he planned to dismiss Liddy from his key position as his assistant for law enforcement matters in the Treasury Department. Liddy, who had distinguished himself in both Operation Intercept and the crusades against Turkey, had become a main liaison with the White House staff and had reported to them frequently on what resistance Rossides and other bureaucrats at the Treasury Department were planning against White House actions and objectives. Krogh presumed that Liddy was being fired because "he was too loyal to the White House," and therefore obtained Ehrlichman's permission to hire him on the Domestic Council. Although Krogh continued to warn Rossides that the president "would not tolerate bureaucratic maneuvering," the intrepid assistant secretary of the treasury steadfastly refused to yield to the White House any control over the operations of the IRS and Customs, even to the point of denying Krogh's staff information. Krogh found that the former all-American football player "didn't know when his side had lost or when the game was over." Rossides subsequently-explained, "My job is to protect the autonomy of the Treasury Department's law enforcement agency.... If Krogh or Ehrlichman wanted to run them, they first would have to fire me." Since they couldn't fire Rossides without a major struggle (and Secretary of the Treasury Connally apparently backed Rossides), White House strategists, temporarily, at least, suspended their ambition to gain control over the Treasury agencies.

Even though the White House staff had directly participated in hyping the so-called drug menace into a national emergency, they found that they had little influence over the independent-minded director of BNDD, John Ingersoll. When a private poll indicated in the spring of 1971 that the American public remained largely unaware of the law-and-order measures of the Nixon administration to eradicate narcotics, Krogh called Ingersoll into his office and demanded t hat Ingersoll increase the number of narcotics arrests before the 1972 election. The actual number of narcotics arrests had substantially decreased during the highly publicized heroin epidemic because Ingersoll had changed the focus of the bureau's efforts from street arrests in America to seizures of narcotics abroad. Although this policy may have made sense in terms of curtailing the amount of heroin entering the United States, it seemed a potentially damaging policy to the White House strategists in an election year. When Krogh suggested that some mass arrests of narcotics addicts by federal agents might help alleviate the situation, Ingersoll again argued that such revolving-door arrests would relieve neither the crime nor the drug problem, and again might tempt federal agents into working hand in glove with underworld informers. Although Krogh cut the discussion short by saying, "We cannot accept your thesis," Ingersoll, who knew he had the support of key congressmen. professional police organizations, and even John Mitchell, simply ignored Krogh's orders. The White House was stymied. Its attempts to seize control of one of the investigative arms of the government had been so effectively frustrated by the spring of 1971 that plans were made to establish a privately financed investigative organization that could do political work for the White House. John Caulfield, who was then doing private wiretaps and investigations for the White House, drew up plans for a private detective agency. As the plan finally developed,* it was modeled after Intertel, a "detective agency," formed by former members of the Kennedy administration's Department of Justice, that sold its services, at least ostensibly, to corporations concerned about organized crime. The new organization designed by Caulfield would perform security services for corporations supporting the Nixon administration (e.g., Hughes Aircraft, Northrop, Gulf Oil) but would actually use part of the funds it collected to perform covert operations for the White House, including wiretaps, break-ins, collection of political information, and surveillance of "enemies." According to Caulfield, the plan he liad in mind involved Vernon Acree's and Roger Barth's resigning from the Internal Revenue Service in order to provide their services and contacts, and Joe Woods, brother of Nixon's personal secretary, Rose Mary Woods, would also join the firm, as a vice-president and head of the Chicago office. Caulfield would run the intelligence-gathering operation, which would be clandestinely based in New York City, on East Forty-eighth Street, and would infiltrate rival campaigns, steal embarrassing documents from opponents, and release derogatory information. Caulfield drew up a memorandum in June, 1971, which noted, "The offensive involvement outlined above would be supported, supervised, and programmed by the principals but completely disassociated (separate foolproof financing) when the corporate structure had located in New York in extreme clandestine fashion." Although this memorandum called for the new organization to be staffed by former FBI agents, the White House strategists were concerned that Caulfield would not be able to find an adequate number of former FBI agents for the task, and even if he could, these agents would have no effective cover if they were caught in any covert operations. Moreover, such a private organization, dependent on corporate financing, would not have the necessary authority to alert the Internal Revenue Service and other investigative agencies of the government to possible suspects.


* See Appendix, "Operation 'Sandwedge."'

 While the White House staff was debating the merits of' creation of this privately financed "detective agency," Liddy came up with a superior plan, calling for a new special narcotics unit which would report directly to the White House. In a presidential option paper that he drew up late in the summer of 197 1, according to Krogh and others familiar with the plan, Liddy proposed more concretely that since neither Ingersoll nor Rossides could be easily fired from his position before the election, the president's most effective option for gaining control over the narcotics agents would be to detach agents and specialists who could be relied upon by the White House from the BNDD, the IRS, the Alcohol, Tobacco and Firearms division, and the Bureau of Customs. This new office would operate directly out of the executive office of the president. The beauty of the Liddy plan was its simplicity: it did not even need approval from Congress. The president could create such an office by executive decree, and order all other agencies of the government to cooperate by supplying liaisons and agents. Congress would not even have to appropriate funds, according to those familiar with the Liddy plan: the Law Enforcement Assistance Administration (LEAA), which was located in John Mitchell's Department of Justice, could funnel monies via local police departments to finance these new strike forces. The new office would have all the investigative powers of the privately financed detective agency: it would have wiretappers from the BNDD; Customs agents, with their unique "search authority" IRS agents, who could feed the names of suspects into the IRS's target-selection committee for a grueling audit, and CIA agents for "the more extraordinary missions." In addition, since it would control grants from LEAA, this new office could mobilize support from state and local police forces in areas in which it desired to operate.

The most important feature of the Liddy plan, however, was that the White House agents would now act under the cloak of combating the drug menace. Since public fears were being excited about this deadly threat to the children of American citizens and their property, few would oppose vigorous measures against alleged pushers by this new office, even if its agents were occasionally caught in such excesses as placing an unauthorized wiretap. On the contrary, if the dread of drugs could be maintained, the public, Congress, and the press would probably applaud such determined actions. Krogh and the White House strategists immediately saw the advantages to having the new office operate its agents under the emblem of a heroin crusade rather than under the cover of a private security organization, and Liddy's option paper, much modified in form to remove any embarrassing illegalities, was sent to the president with the recommendations of Krogh and Ehrlichman. In the fall of 1971, with the election rapidly approaching, the president gave his assent to the plan.



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