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Hughes became interested in Air West, which was in financial difficulty, in 1968. He was opposed by a faction on the board of directors who insisted that Hughes' tender offer of $22 per share was too low. Indeed, even after stockholders approved a sellout to Hughes at that price, the board voted 13 to 11 to refuse. At that point, the Government charges, Hughes and his cronies put into motion their strategy.
Two large blocks of stock were owned by Greenspun and Crockett. According to the indictment, Maheu urged Crockett to sell his Air West holdings, assuring him that he would be "made whole" for any losses. Similarly, according to pretrial testimony in the Maheu libel case, Greenspun was assured by an associate of Maheu that "Mr. Hughes isn't going to let you get caught holding the bag" by selling Air West stock at a low price. Around Dec. 31, 1968, the Government charges, Crockett, Greenspun and Charnay unloaded 46,000 snares of Air West stock, or slightly more than 1% of all the shares outstanding. The stock's price skidded from a high of 20 in mid-December to 15% on Dec. 31. Further, the Government charges, the Hughes group harassed recalcitrant board members by filing lawsuits against them. Finally, six of the 13 board opponents changed their votes, and Hughes' offer was accepted.
Approved Application. That did not settle the matter. Under federal law the President of the U.S. must decide that changes in the ownership of American international carriers are in the "national interest." Considering his troubles at TWA plus an even more checkered career as controlling shareholder of Northeast Airlines from 1962 to 1964, Hughes did not seem the ideal candidate for sole proprietorship of Air West. Even so, Nixon approved Hughes' application in April 1970.
By coincidence or not, a Hughes lieutenant by then had already made one of the celebrated $50,000 cash "contributions" that were held for Republican campaign funds by Nixon's pal Bebe Rebozo; the second $50,000 payment was delivered the following July. Rebozo claims that he held the money for three years and eventually returned the same bills to Hughes representatives. That story, as well as the Air West deal and other legal matters involving Hughes, is under investigation by the Senate Watergate committee.
For Air West stockholders, Hughes' arrival turned out to be anything but a smooth ride. Though no wrongdoing has yet been proved, Hughes' bookkeepers declared Air West a "non-going utility," meaning that the carrier had a negative net worth. Since Hughes' offer stipulated that his final purchase price for the stock would depend on the company's net worth, he claimed that the price should be far less than he earlier had trumpeted. Instead of collecting the $22 per share that they had expected, Air West stockholders—some of whom have filed suit against Hughes—wound up selling their shares for about $11 each.