On Feb. 11, 1974, the four outside directors of the 3M Co., including two former Cabinet members —onetime Treasury Secretary Joseph Barr and former Commerce Secretary Peter Peterson —summoned the company's president to an urgent meeting. Barr put a startling question to him:
"If we ask for the resignation of your chairman, the chairman of your finance committee, the chief financial officer and possibly your general counsel, can you hold the company together?"
Raymond Herzog, the president, looked grim. "I don 't think so, " he replied. "Even if I could do so, " he added, "it would be only with great difficulty. "
Yet, except for Herzog himself, 3M's top echelon has, in fact, stepped down in scarcely one year. In February, Chairman Harry Heltzer gave up his post as chief executive after paying a federal fine for engaging in unfair political campaign practices; he will not run for re-election to the board in May. Bert S.Cross, a former chairman who is head of the finance committee, has with drawn from active management and will quit the board in May. Financial Vice President Irwin Hansen, who faces a possible prison sentence on federal tax-evasion charges, resigned last November. In one legal action after another, 3M, among other things, has been found guilty of breaking the Federal Election Campaign Act of 1971, as well as Minnesota's fair-campaign-practices law. So far 3M has-paid $8,000 in fines, while Heltzer has paid $500 and Hansen $3,000. The litigation continues.
The episode is all the more poignant because Heltzer, Cross and Hansen were held in highest esteem in the tightly knit and circumspect business community of Minneapolis-St. Paul. And the 3M Co., Minnesota's largest employer, prides itself on its finely developed sense of civic responsibility. Actually, 3M's travail is a classic example of the post-Watergate traumas that have plagued many U.S.companies that made illegal political campaign contributions.
The payoff system was simple. Civic Affairs Director Wilbur M. Bennett, who has not been indicted, would submit the names of likely recipients to Bert Cross, who was chief executive officer from 1963 to 1970. Cross approved each gift. Hansen kept the cash in an office safe and then gave the money to Bennett, who passed it on to the approved candidates or their emissaries. When Heltzer succeeded Cross in 1970, he carried on the practice. He was under the impression, he testified earlier, that the money came from private contributions by 3M executives. "I know I should have suspected that these were company funds," Heltzer now concedes. "But I didn't ask the question."