Illegal Slush Funds and Money Laundering
Nixon’s biggest scandal, known as Watergate, is remembered as a botched burglary and a massive attempt to cover it up. But that is not what brought down the Presidency. Investigations into the burglary and the subsequent cover-up revealed massive financial fraud, the misuse of campaign funds, the maintenance of slush funds controlled by the Attorney General of the United States, money laundering, and other financial improprieties. Nixon administration officials used techniques amounting to extortion to extract illegal and secret campaign donations from businesses and persons.
As the investigation into the burglary began in 1972, it was quickly learned that the money to pay the legal fees for the men arrested inside the Watergate offices of the Democratic National Committee had come from the Committee to Re-elect the President. Officially called the CRP it quickly became derisively referred to as Creep. The money had followed a circuitous path from donors through banks to cover its source, before ending up in the bank accounts of the burglars. Further investigation revealed that all of the burglars, including E. Howard Hunt were paid salaries by the CRP.
Nixon officials extorted money from businesses, corporate officers, and wealthy individuals through the threat of IRS audits. The extortion efforts resulted in the campaign receiving donations in cash, often arriving at the offices of the CRP in bags. The Nixon administration during its first term responded to donations with quid pro quo, easing regulations for donors through the use of waivers for specific areas, or calling off previously established investigations or legal actions. Nixon’s campaign workers weren’t the only people involved in the establishment and control of secret slush funds.
In 1969 H.R. Haldeman, the President’s Chief of Staff received orders from the President to create a secret slush fund to be used to provide financial support to Nixon loyalists during the 1970 mid-term elections. Nixon wrote to Haldeman in his order, “One of our most important projects for 1970 is to see that our major contributors funnel all their funds through us.” The intent of the fund, which was designated Operation Townhouse, was to give the administration control over the “donations” avoiding the Republican National Committee.
At least 19 Republican candidates for the Senate in the 1970 mid-term elections received support from Operation Townhouse, all of them personally approved by the President. One of them was George H. W. Bush, of whom Nixon said that he was, “…a total Nixon man. He’ll do anything for the cause.” When Bush was running for President in 1980 he claimed that he had reported the donation, despite the existence of documents in the National Archives which show that he did not. Despite the donation, which totaled $106,000, Bush lost that election to Lloyd Bentsen.