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It seems puzzling that 3M was so concerned about currying politicians' favor. Unlike a defense contractor or a regulated company that depends on official favors, 3M has spun its legendary Scotch tape into hugely variegated product lines (ranging from diagnostic machines to reflective material for license plates) that sell mainly to consumers and industrial customers. Yet as early as 1963, the company began to dole out illegal contributions that ultimately amounted to $497,500. Much of the money went to local and state politicians in amounts usually no greater than $200 or $400. Under the impression that they were accepting private donations, Democratic Senators Hubert Humphrey and Walter Mondale and Congressman Wilbur Mills received $1,000 each from 3M in 1972. The great bulk of the money went to Republicans. Richard Nixon got by far the largest amount —$135,400 between 1968 and 1972.
Since a company cannot very well carry on its books an entry for illegal campaign contributions, 3M built up a slush fund by laundering money through Switzerland. For example, the St. Paul headquarters would transfer sums to a secret Swiss bank account, supposedly to pay insurance premiums for its European branches. Instead, the money was secretly transferred back to the U.S.
According to federal investigators, the company also "paid" a Zurich lawyer, Dr. Ludwig Gutstein, for unrendered services. The good Herr Doktor, who was on a retainer from 3M, would then hand back his "fees."
On March 26, 1972, 3M sent its company jet to fetch Nixon's chief fund raiser, Maurice Stans (see THE NATION), from Washington so that he could pick up $30,000. After the Watergate investigators began to probe into illegal contributions, 3M confessed that it had made that gift. In the fall of 1973, a federal court levied fines on 3M and Heltzer for unfair campaign practices.
Lone Nay. Soon after, Chairman Heltzer asked the company's four outside directors for advice about whether he, Cross and Hansen should be disciplined by 3M for their misdeeds. After listening to President Herzog's doubts about the outlook for holding the company together, three of the four outside directors decided against any drastic action. By a vote of 18 to 1, the 3M board decided to punish no one and even to limit the amount of public disclosure.
The lone nay was that of Pete Peterson, who felt that the situation could not —and should not —be contained.
He was correct. Soon the company was besieged by renewed legal attacks.
A disaffected shareholder, Judith Bonderman, started a suit last May seeking to force Heltzer and other 3M officers to reimburse the company from their own pockets for the funds that they had diverted to campaign contributions.
To make matters even worse, Minnesota deputy sheriffs and an assistant state attorney in early January burst into 3M's headquarters on a search for evidence of campaign misdeeds. In the first cabinet that the attorney opened, he found a thick folder labeled POLITICAL CONTRIBUTION FILE. As a result, 3M pleaded guilty on Jan. 22 to five counts of violating Minnesota's campaign-practices code and paid a $5,000 fine.
Hansen was fined $3,000.