How Much Did Bill Miller Know?

Lingering questions bedevil the Treasury Secretary

" Am I ever to be free?" That plaintive question was asked two weeks ago by Treasury Secretary G. William Miller as the Senate Banking Committee debated the appointment of a special prosecutor to look into charges of foreign bribes and Defense Department slush funds while he was chairman of Textron Inc. Answered California Senator Alan Cranston sternly: "The lingering doubt remains, from which you may never be free, that perhaps you didn't really want to know or you would have ordered an investigation." Two years after the allegations against Miller first surfaced, they continue to hound him.

The repeated charges and investigations have already begun to erode the Treasury Secretary's effectiveness as the nation's chief financial officer. Normally affable and confident, Miller has become truculent and testy after spending distracting hours huddling with his lawyer and countering questions by reporters. Policy clout is now beginning to drift away from the Treasury Department. Since Miller took office six months ago, his top deputies for domestic and international economic affairs have both resigned.

Miller's power ultimately rests on his retaining the confidence of Jimmy Carter. The Treasury Secretary was originally popular around the White House because he was a team player who defended Administration policy in public. But Carter has been warned by advisers to avoid an all-out "My Boy Bill" defense of Miller. Says Brookings Institution Economist Joseph Pechman: "Even if he continues to preside over economic policy, the President himself will naturally lose some confidence as a result of this episode." Impressions of Miller's vulnerability are already seeping into the business community. Concludes Bank of America President A.W. Clausen: "Bill Miller's effectiveness shouldn't be influenced by this, but I guess it will."

The case of G. William Miller reads like a business-mystery novel--with the last chapter missing. The Treasury Secretary confidently told the Senate Banking Committee two years ago during hearings for his confirmation as Federal Reserve chairman: "I do know my company did not bribe anybody." But the Securities and Exchange Commission charges that Textron's Bell Helicopter division spent $5.4 million in foreign kickbacks in ten countries between 1971 and 1978. The largest was the $2.9 million payment to a firm, owned in part by the deposed Shah of Iran's brother-in-law, in connection with the purchase of 489 helicopters for $500 million. The SEC also revealed that Textron, a major defense contractor, spent $600,000 between 1971 and 1978 entertaining Pentagon officials in violation of Defense Department rules.

Fearful that Textron's affairs would become public, company officials allegedly altered documents in the so-called White Rose files, which dealt with foreign payoffs. As the SEC dug into the Textron case over the past two years, executives also began losing their memories, and eleven employees took the Fifth Amendment and refused to answer questions. According to the SEC, documents relating to Textron's Defense Department entertainment fund were also destroyed.

Miller has steadfastly maintained that he did not know about these illegal payments, which breached clearly stated Textron company policy. And, although company officials close to Miller reportedly knew of the bribery, no "smoking gun" evidence has yet proved that the Treasury Secretary was aware of it.

One of the grandfathers of all conglomerates, Textron under Miller's management, had a highly decentralized operation. Company headquarters in Providence gave broad decision-making powers to the Bell Helicopter division in Fort Worth. Corporate financial control was maintained primarily through monthly reports, and only major capital expenditures were carefully monitored.

In any case, foreign payments like the one to the firm of the Shah's brother-in-law were not illegal under American law at the time. They were first outlawed by the 1977 Foreign Corrupt Practices Act, which grew out of bribery scandals involving Lockheed and other firms. Last week the SEC was still meeting with leading corporate lawyers to discuss possible guidelines pertaining to enforcement rules. Many businessmen and some Government officials challenge the whole concept of exporting morality to parts of the world like the Middle East, where baksheesh, or greasing the palm, is an accepted fact of business life. Says the president of one Houston oil company: "Things might have gone on that are part of the art of doing business overseas."

Miller's "I did not know" defense rests uneasily with former business colleagues. Said an executive with a top Defense Department contractor: "I find it inconceivable that he didn't know about the special payments or whatever you want to call them. One disbursement for $2.9 million ought to get a little attention."

With the Senate and SEC investigations concluded but inconclusive, Miller's opponents now demand that the Justice Department dig further. Last week five Senators sent Attorney General Benjamin Civiletti two separate requests for a special prosecutor to investigate possible perjury. Said Senator William Proxmire: "It appears clear that Mr. Miller's testimony before this [Banking] Committee in 1978 was false and misleading." Civiletti has been slow in pushing the inquiry of his fellow Cabinet member and has not questioned several top Textron executives. Referring to the Abscam scandal, Senator Robert Dole quips: "Maybe the Justice Department is so busy with members of Congress that it doesn't have time for Cabinet officers." But without a special prosecutor the nagging question will remain: As chairman of Textron, was G. William Miller lax or lying?

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