I have already apologized to Mr. Justice Goldberg, publicly and privately, and I want to take this opportunity to publicly apologize to my brother, Laurance, for having gotten him involved in an undertaking which is out of character for the family. Jack Wells dropped into my office to tell me of a project he was promoting on behalf of a client of his, Victor Lasky, to write and publish a book on Mr. Justice Goldberg. He was looking for financial backers of a corporation he was setting up for this purpose. I referred Jack Wells to my counsel, Donal O'Brien, and sent a message to my brother, Laurance, asking if he could help Jack Wells find some investors. That was the extent of my involvement with the project. Later, I saw a copy of the book, but I never really looked at it. My brother, who wanted to be helpful, didn't have time to find other investors and therefore simply authorized his people to underwrite the project while other investors were being sought-and that is the only connection my brother Laurance had with the project. We never discussed the subject with each other. No other investors in the corporation were forthcoming. Therefore, the office staff authorized payments based on my brother's underwriting. My mistake was that I should have killed this project in the beginning when Jack Wells originally brought it to me. Confusion has grown out of the fact that when I was asked by the FBI about the book, it was in the context of FBI interviews that began two days after I was nominated, took place in Washington, New York, and on an airplane to Maine, covered more than thirty years of public and private activities-and my memory of the book or its origins was extremely sketchy. There was no attempt whatsoever to cover up the facts. I only recalled having had a brief conversation about the idea of such a book being written, but no memory of the details and no recollection of how it was financed. I also told the FBI that I had never felt that campaign biographies cut much ice one way or the other. I had no other recollection myself. I only learned of the facts piecemeal as they were leaked to the press. The tragedy was that I responded to a press inquiry before I had obtained the full story of what actually happened—and as a result, I was extremely unfair to my brother by what I said. As for the book itself, considerable confusion might have been avoided if everyone had read it before issuing any statements about it. Certainly this is true of me I never read the book, but I accepted Mr. Justice Goldberg's view that it was derogatory-and my friend, Mr. Justice Goldberg, who later stated that he had never read it but called it pornographic. I have now read the book. Pornographic it is not. Scurrilous it is not. It is not anything that by any stretch of the imagination goes beyond the limits of the kind of political comment to which all of us in public life are subject from time to time and to which I have been subjected in full measure from other authors over a long period of time. So an evaluation of this incident or any intelligent discussion of it has got to start with a reading of the Goldberg book. I have provided a book for each member of the Committee and I respectfully express the hope that you will read it. I think you will agree with me that it has got to be the most over-rated, misrepresented, innocuous, political dud ever perpetrated in a partisan political campaign. FACTS ON RETURNS AND AUDITS There is one other area I would like to mention-the final outcome of the regular audit of my income and gift tax returns for the last five years. 1. In August, 1974, the Chairman of the Senate Committee on Rules and Administration and the House Committee on the Judiciary requested copies of my Federal income and gift tax returns for the last seven years, and the FBI requested copies for the last ten years. 2. The IRS had completed audits of some of those returns, had others under audit, and had not yet begun audits of the remainder. The audit status was: Audits of my income tax returns for 1964 to 1968 and my gift tax returns for 1964 to 1971 were completed. These audits resulted in total additional income taxes of $8,500 for five years and total additional gift taxes of $87,248 for eight years. An audit of my income tax returns for 1969, 1970 and 1971 was then in process, the first two years under extensions of time I had granted. Audits of my income tax returns for 1972 and 1973 and my gift tax returns for 1972, 1973 and the first two quarters of 1974 had not been started. 3. Therefore, when I was asked to provide copies of all these returns. I stated that I would be happy to furnish copies of the audited returns but I preferred to defer furnishing copies of the others because they were subject to final audits by the IRS. I still believe it would have been better to defer furnishing copies of the unaudited returns until after the audits were completed. 4. Nevertheless, the two Committees and the FBI required me to furnish in August, 1974 copies of all the requested returns, and I did so only to conform to their requests. 5. Since August 20, 1974, I have upon request provided information on my taxes to the Senate Committee on Rules and Administration, the House Committee on the Judiciary, the FBI, the staff of the Joint Committee on Internal Revenue Taxation, and the Internal Revenue Service. The information furnished includes: Copies of my Federal income tax returns for the past seven years, provided to both Committees on a confidential basis. Copies of my gift tax returns for nearly 18 years (1957 through September 30, 1974), provided to both Committees on a confidential basis. Copies of my income tax returns for ten years and my gift tax returns for ten and one-half years, provided to the FBI, which was briefed on the status of IRS audits of those returns. 6. I also have made public a summary of my Federal income tax returns and tax payments to Federal, state and local governments for the past ten years, and I have made public a revision of that summary to show the results of the recent IRS audit, a description of the major IRS adjustments and the resulting additional taxes. 7. Following my nomination by the President on August 20, 1974, the IRS accelerated its audit of my income tax returns for the years 1969 to 1971 and expanded the audit to include all of the later income and gift tax returns which I had filed, as required, up to that time. 8. That intensive audit, covering my income tax returns for the five years from 1969 to 1973 and my gift tax returns for the two and one-half years from January 1, 1972 to June 30, 1974 was completed in five weeks. 9. During the audit, my books, and all other accounting records as requested, were made available to an IRS team of supervisors and numerous specialists. The IRS team checked my income and gift tax returns against my records and met with my tax advisors to present and discuss the adjustments they proposed to make in my returns. 10. At the conclusion of the audit on October 18, 1974, the IRS proposed certain adjustments and resulting additional taxes which I have agreed to pay. 11. The IRS adjustments to my income tax returns are shown in the attached schedule. These adjustments increased my income or reduced my deductions by a total of $1,389,496 for the five years from 1969 to 1973, and resulted in total additional income taxes of $820,718 (not including interest). There was no negligence or fraud. Almost all of this additional income tax resulted from four adjustments involving these legal questions: What are "reasonable" investment expenses. Whether the 20% or the 50% limitation on deductions applied to my contributions to finance the Presidential mission to Latin America, there being no challenge to the legitimacy of the deduction itself. The question was whether the contributions were made "to" the U.S. government or "for its use." Whether my primitive art, which is on loan to a museum and pledged to the museum, is held for profit. Whether an exchange gain upon repayment of bank loans in Venezuela is income or reduces the cost of the investment for which I borrowed the money. 12. The IRS adjustments to my gift tax returns increased my taxable gifts by a total of $145,089 for the two and one-half years from January 1, 1972 to June 30, 1974, and resulted in total additional gift taxes of $80,621 (not including interest). Over $60,000 of the additional gift tax-more than 75% of the total resulted from the retroactive application of IRS rulings published after the returns were filed. 13. With respect to the recent audit, I am advised by my tax counsel that: The issues raised involve legal questions on which tax attorneys and the IRS can and do differ. The treatment on my returns of the items in issue is in accordance with the law when the returns were filed, as pointed out to the IRS during the audit. Except for minor items, counsel believes the IRS adjustments should be further contested. The time limitations on the audit did not allow counsel to follow the normal course of extensively briefing and discussing the issues with the IRS auditors nor of taking appeals on the significant contested issues to higher levels within the IRS for discussion with personnel who have settlement authority. Under the circumstances, while I have agreed to pay the additional taxes resulting from all of the income tax and gift tax adjustments made by the IRS, I have the same rights as any other citizen to appeal any of the adjustments should I decide to do so. Summary of political contributions (by Nelson A. Rockefeller 1956–74) 1. Republican Party National Committees and Clubs---. 2. New York State Republican Party, and local committees and clubs1 $85, 199 1,031,637 5. 1968 Romney Presidential campaign_-_ 20, 820 1,000, 228 200, 000 6. 1972 Nixon Presidential campaign_-- 7. Rockefeller Team New York State campaigns-- 8. Winthrop Rockefeller Team Arkansas campaigns-- 9. Congressional, State, and local candidates in New York State 10. Congressional, State and local candidates outside New York State_ Total (18 years) 62, 025 80, 599 274,000 411, 966 98,900 3, 265, 374 In Maine, Westchester County (N.Y.), and in New York City, in each of which locations he has a residence, Mr. Rockefeller gave a total of $404.370 during this period to various committees and candidates; this sum is a part of, not in addition to, the sums embraced by categories 2, 3, and 9.) Hawthorne, Elmsford and N. Tarrytown Republican Clubs_--Individual campaigns-Committees for: $75 3,000 3,000 1,000 1,000 250 1,000 15 Young Women's Republican Club of New York_ 3,000 100 50 32 50 3,000 12,572 Queens County Republican Committee_. Individual campaigns-Committees for: Pierce, Samuel R. (New York City. judge) Vetrano, Edw. (Greenburgh, Westchester, Supervisor)–– Rockefeller (President-Citizens Information Committee). Morton, Thruston (Ky., Senator)__ Total-1959 20 2,000 3,000 100 3,000 100 25, 070 Local organizations: Republican Organization of the 9th Assembly District (NYC)- New York Young Republican Club-- Westchester Republican County Committee $3,000 3,000 3,000 1,000 1,000 3,000 25 3,000 2,000 1,000 150 250 3,000 4 20 15 7 14 10 1,000 1,000 2,000 1,000 1, 000 1,000 1,000 1,000 32, 495 Republican Organization of the 9th Assembly District (N.Y.C.) – 150 Young Men's and Women's Republican Club (New Rochelle). |