Gulf Oil's Misplaced Gifts

It is hardly any secret that corporations currying favor in Washington throw lavish parties at the Burning Tree Golf Club and produce timely gifts for key politicians. But Gulf Oil Corp. seems to have gone further than most. The giant company (1974 sales: $16.5 billion), now the target of four federal investigations, is accused of operating a covert $10 million slush fund for the benefit of some top politicians at home and abroad. The practice directly defies a federal law that forbids corporate donations to politicians running for national office. As a result of testimony that has recently become public, Gulf's top executives are in deep trouble, and many political reputations are being tarnished.

The problem first surfaced in 1973, when the Watergate special prosecutor's office discovered that Gulf had illegally contributed about $150,000 to the 1972 campaigns of various politicians. Several other corporations--among them, Northrop, 3-M, Goodyear and American Airlines--have admitted making the same type of illicit contribution. But there was something strange about Gulfs case. Though other companies admitted that top executives knew about the gifts, Gulfs man on the spot was only its lobbying chief in Washington: Vice President Claude C. Wild Jr.

Could one medium high executive ladle out his company's money without the knowledge of his superiors? Wild blandly assured the special prosecutor that he had wide latitude over his generous budget. He was fined $1,000, Gulf paid another $5,000 fine, and the matter was temporarily dropped. But earlier this year, the Securities & Exchange Commission decided to sue many corporations for failing to disclose to their stockholders illegal slush funds. In Gulfs case, the suit led to a series of damaging disclosures.

A few portions of the testimony are relatively innocuous. Gulf, for example, has disclosed that it reluctantly sponsored a rebroadcast of the Tricia Nixon-Edward Cox wedding at the request of former White House Aide Charles Colson. Also, a Gulf official revealed that the government of Kuwait asked it to contribute $10,000 to Republican Senator Mark Hatfield of Oregon, who is a friend of the Kuwaiti ambassador--but it is not known whether Hatfield actually got any money.

The key depositions taken so far are much more serious. They reveal that Gulf carefully designed a dummy company in Nassau first to "launder" and then to relay money to strategically placed politicians. This Bahamas Exploration Co., Ltd. may well have passed out $5 million in the U.S. alone. The main job of one of its former officers, William C. Viglia, seems to have been to deposit Gulf money in a Bahamian bank, withdraw it and then run the cash back to Claude Wild in Washington.

Wild, no longer with Gulf, has refused to cooperate with the investigation. But Attorney Thomas D. Wright, a partner in the law firm that represents Gulf in Pittsburgh, has described to the SEC the results of several interviews he had with Wild. At least some of Gulfs high executives may have known of the illicit contributions, Wright indicated, including former Chairman W.K. Whiteford and present Senior Vice President Fred Deering. Whether the current chairman, Bob R. Dorsey, who has encouraged his executives to cooperate with the SEC, was aware of Wild's largesse is still not known. Wright testified that Wild told him conflicting stories about the extent of Dorsey's knowledge.

First Job. On the receiving end of Gulfs money were a host of politicians. If Wright can be believed, Wild's first job was to deliver $50,000 to Lyndon Johnson in 1961, shortly after his election as Vice President. Wright's notes on conversations with Wild indicate that Gulf may also have contributed to every member of the Senate Watergate committee except Chairman Sam Ervin. Washington Senator Henry M. Jackson certainly got a Gulf gift, which he later returned, and Gulf Lobbyist Frederick Myers testified that former Senator Fred Harris of Oklahoma got Gulf cash too. Both are campaigning for the Democratic presidential nomination.

Myers has told the SEC that he often did the giving. In 1964, for example, the lobbyist claims to have handed New Mexico Republican Senator Edwin L. Mechem, now a federal judge, a sealed envelope at a ranch outside Albuquerque. In 1970, he flew to Indianapolis to present an envelope to Republican Representative Richard L. Roudebush, now Veterans Administration chief, in a men's room of a Holiday Inn. Senate Minority Leader Hugh Scott, adds Wright, got a $5,000 contribution every spring and fall.

Scott has admitted receiving money, though he insists that it was for campaign purposes rather than personal use. Otherwise, the allegations have triggered a massive wave of vagueness on the part of the politicians named. They either maintain they cannot recall the gifts at all or say they believed that Gulf executives were making the contributions legally out of personal funds.

The Justice Department and Internal Revenue Service have now launched new investigations into Gulfs largesse, and the special prosecutor's office has reopened the case too. Some angry Gulf stockholders are demanding that the misused funds be returned to the company. Gulfs nine outside directors --those who are not executives of the company--are conducting an in-house investigation. Its results will not be made public until after next week's board meeting. But when they are, key leaders of the nation's fifth largest oil company could lose their jobs. A much more certain outcome is a deepening of the already bitter public skepticism about business ethics and political ethics--and any places the two intersect.

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