Sing Me No Torch Songs

By Ed Magnuson.

It was hardly a battle of equals. In one corner, Lee Iacocca, 61--the industrial wizard who, with a little help from his federal friends, lifted Chrysler Corp. out of bankruptcy and into high profits; the celebrated author of the best-selling autobiography (2.6 million copies and still No. 1) ever written; the two-fisted presidential possibility who, though he has described himself as a Republican, dances in the dreams of many hopeful Democrats; the whirlwind fund raiser leading the overdrive effort to restore one of America's most cherished icons, the Statue of Liberty. In the other corner, Donald P. Hodel, 50. Donald who?

To the astonishment (and entertainment) of much of official Washington, the little-known Secretary of the Interior last week fired Iacocca as chairman of the Statue of Liberty-Ellis Island Centennial Commission. The 43-member group, which includes such assorted luminaries as former U.N. Ambassador Jeane Kirkpatrick and Bob Hope, was created in 1982 to give the Interior Department advice on how to restore Miss Liberty along with nearby Ellis Island, where as many as 16 million immigrants entered America between 1892 and 1924 (among them: Iacocca's parents). What former Interior Secretary James Watt had done for the Beach Boys by trying to ban one of their Fourth of July concerts in Washington, Hodel seemed to do for the made-in-America Chrysler chairman: give him the publicity he so eagerly seeks. But a former Interior official (not Watt) cast Hodel's decision in heroic terms, calling it "the most courageous act since Truman fired MacArthur."

Whether he had been courageous, dumb or just quirky, Hodel suddenly became the target of Iacocca's verbal wrath. Never one to hide his feelings, or his ego, the Chrysler chairman blasted back. His summary dismissal, he charged, "borders on being un-American." He referred to "all the crap I've taken." He declared, "I do not appreciate being disenfranchised on somebody's whim."

Hodel, a former head of the Bonneville Power Administration, took the onslaught with outward calm and an occasional smile. Iacocca was fired, he suggested, chiefly because he got too big for his britches. "The statue is more than Lee Iacocca," he said. Hodel's justification was, at best, a bit thin. He insisted that there was a "potential conflict of interest" between Iacocca's role as chairman of the governmental advisory commission and his leadership of the private Statue of Liberty-Ellis Island Foundation, the group that has been spectacularly successful in raising some $233 million for the restoration projects. Those who raised the money, Hodel suggested, should not also have a dominant voice in how it is spent. That would seem to be quite a novel principle in Washington.

Hodel said that he never focused on the conflict of interest problem when things were going well; as late as last October he reappointed Iacocca as chairman of the commission. The conflict possibility hit him, he says, only after Iacocca indirectly raised the issue on Jan. 29. Palmer Wald, the foundation's counsel, had sent telegrams to two men who sat on both the commission and the foundation board. Wald asked them to leave one of the groups because "the chairman requests there be no crossover of commission and foundation board membership." Both chose to leave the foundation.

Hodel grabbed the opening. The Secretary fired off a telegram to Iacocca that concluded, "Your observation of the necessity for an absence of crossover memberships on the commission and board requires that I accept your resignation." How's that? Iacocca went to Hodel's office and handed him a letter "to assure you that I have not resigned . . . nor, I might add, do I intend to do so." Iacocca also disavowed the wording of the Palmer Wald telegrams, saying he had not seen them before they were sent.

Last Monday, Feb. 10, Iacocca was in Washington for a morning ceremony at which Treasury Secretary James Baker presented the foundation with a check for $24 million, raised for the restoration by the sale of commemorative coins. Iacocca was praised lavishly by Baker for "a classic example of American volunteerism." Only two hours later, Iacocca was in Hodel's office for a 75- minute session during which the Secretary implored him to leave his post gracefully. Iacocca said he would do so only if the conflict of interest allegation were clearly spelled out. Hodel finally picked up a letter and read aloud its operative paragraph: "I have determined that this matter is not subject to debate . . . I must inform you with regret that your chairmanship of, and membership on, the commission are terminated." He signed the letter and handed it to Iacocca.

When he got back to Detroit that same day, Iacocca wrote the Secretary to say "I have now read the letter you handed me in our meeting today, and I + understand from our discussion that the letter is being held in abeyance." Back came a whistler from Hodel: "I wish to assure you that my Feb. 10 letter to you was effective upon delivery, remains so, and is not 'being held in abeyance.' "

For the second time in his highly visible career, Iacocca had been canned. The previous occasion was when Henry Ford II tossed him out of the presidency of the Ford Motor Co. in 1978 with no more explanation than "Sometimes you just don't like somebody." At his Detroit press conference last week, Iacocca first quipped, "I've got to stop getting fired like this." The Chrysler boss then insisted flatly that there had been no conflict between his two Statue of Liberty jobs. He said that he had first taken the commission post in 1982 at the urging of then Secretary of Interior William Clark precisely "to clear up public confusion and establish accountability" between the two groups.

Iacocca then raised a pertinent question about his firing: "Is there more here than meets the eye?" He suggested one possibility: his long-running feud with the National Park Service, which is under Hodel's Interior Department, over how to restore the 27-acre Ellis Island. "I will oppose any effort to commercialize this restoration project," he declared. "And that includes any plans to build a luxury hotel and conference center on the island." He charged that the Park Service wanted to finance this center "through the sale of tax shelters for the rich." While Hodel soft-pedaled the conference center as just one of many proposals under consideration for Ellis Island, the Park Service in fact had strongly pushed such a proposal until it was effectively blocked by Iacocca's opposition.

Iacocca, on the other hand, has promoted what he calls an "ethnic Williamsburg" concept in the restoration. His toughness softens as he describes his vision of having visitors "see exactly what your mother or father or grandparents saw. You would walk into the Great Hall and meditate and pray, because it is like a church--it is just beautiful." There would be exhibits explaining why Ellis had become "an island of tears," and "you could punch a computer and find out what boats your parents came on." Park Service officials in turn dismissed this as "an ethnic Disneyland."

The philosophic disagreements over how to use the island apparently run deep, and they have been exacerbated by the flamboyant way Iacocca has gone % about raising the millions of dollars, tapping schoolchildren and major corporations alike. In personalizing the project, he ran roughshod over the Park Service and its green-uniformed rangers, according to some critics, reducing them to errand boys for the foundation and the commission. Said Park Service Spokesman George Berklacy after Iacocca was fired: "The rangers were bleeding green with happiness this morning. The Secretary's action was a tremendous morale boost."

Clearly, Hodel had become a hero within his own bureaucracy. But he had also inadvertently focused new attention on Iacocca as a potential presidential candidate. Although Iacocca votes independently, Democrats would love to claim him as their own. A Washington Post-ABC News poll last week showed him running only slightly behind New York Governor Mario Cuomo among Democrats for President, while both trailed Colorado Senator Gary Hart. But Iacocca insisted again last week that he has no presidential ambitions and that his resolve had been "put in concrete" by the week's events. He complained that politics "repulses me every time I get involved" and that Washington thrives on "dirty tricks." He said that he considered himself "a Republican, not a Democrat."

Some reports had it that Chief of Staff Donald Regan was behind the ousting. His dislike of Iacocca stems from the controversies over Chrysler's billion-dollar bailout when Regan was Secretary of the Treasury. But the White House stoutly denied any involvement in Hodel's decision, and the Secretary agreed that he had swung the hatchet without help. When Regan learned about Hodel's decision, he said simply, "Fine, it's his call."

Ronald Reagan was first informed about the impending firing as he flew to Houston to memorialize the astronauts killed in the explosion of the space shuttle Challenger. When the rather unseemly and unnecessary fiasco was announced last week, the White House moved quickly to distance itself from it. Said White House Spokesman Larry Speakes: "It's Hodel's deal. The President knew about it, but he didn't do anything because he didn't have to do anything."

With reporting by Bonnie Angelo/New York and William J. Mitchell/Detroit