the only milk company in town didn’t concern Parr very much. “You never know what consumers are willing to pay until you ask for it,” he explained. Under the leadership of Parr and Nelson, AMPI forged an alliance with the second and third largest dairy co-ops in the nation, Mid-America Dairymen of Springfield, Mo., and Dairymen, Inc., of Louisville, Ky. Together they make up CACF, the Central America Cooperative Federation. It was this threesome that pledged $2 million to the Nixon reelection campaign, but they only managed to cough up a little more than $400,000 before publicity and court suits made it unfeasible to donate any more. The government filed anti-trust suits against all three co-ops. AMPI’s philosophy, as explained by Parr, was that milk prices “can only be determined by influence, power and leverage.” He was fond of saying that it was necessary to “mix politics and milk.” When Dr. George Mehren replaced Nelson as AMPI’s general manager, the political contributions were stopped. Mehren was outraged by the activities of his predecessors. After only about a month and a half at the helm of the co-op, Mehren wrote a memo to the Arkansas AMPI region, explaining some of the changes that were taking place. The co-op’s directors, he wrote, “will be glad to know that $1.5 million have been saved by disposing of a jet. Other aircraft have been sold … Nominal law fees for firms which either did not exist or which performed no services have also been ended. . . . No funds are being paid to non-existent firms who operate as shills or shells. No political persons are being paid under guise of operating expenses of AMPI. No ‘conduits’ are being financed. . . No funds are being diverted from milk checks to support anybody’s political campaign. No field service or other employees of AMPI are being forced to do political work. “The story of extravagance and waste and misdirected funds prior to mid-January is almost unbelievable,” Mehren concluded. “Ddzens of kickbacks, rebates, credits and other arrangements throughout the entire marketing system … have been terminated.” MEHREN MADE a valiant attempt to purge the high rollers from the AMPI offices and from its long list of retainers. He ended the merger discussions with Mid-America and D.I. And he set up invoice and pricing list systems which he said would preclude the possibility of giving kickbacks to favored clients and would prevent opportunities for irregularities in pricing. Under Mehren’s direction, the co-op fell back on the more traditional methods of influencing the milk market. The new general manager had been an assistant 6 The Texas Observer secretary of agriculture during LBJ ‘s administration. One of his duties had been the approval of federal milk marketing orders. Like many before him, Mehren made an easy transition from regulator to regulatee. He left the Agriculture Department in May of 1968 to become chairman of The Agribusiness Council in New York and at the same time he accepted a $15,000-a-year consulting job with MPI. In early 1972, he moved to San Antonio to head the mammoth co-op. Mehren’s closeness to the Department of Agriculture and the various friendly discussions he has had with USDA administrators on behalf of AMPI may become an issue in the anti-trust suit. Lawyers are trying to make a case that under Mehren’s leadership AMPI has had ex-parte communications with the department,’ that AMPI has had special access denied other co-ops. The deposition sessions are long and tedious and often rancorous. \(One day the plaintiffs’ lawyers accused one of the younger AMPI lawyers, Tom Hanson, of snitching a document needed for the plaintiffs’ cases. Hanson answered that the way they were handling the case was “a complete abortion.” Then his boss, E. C. Heininger, accused attorneys Danielson and McDade of “lying and insults.” Heininger ordered Mehren to return to his office and then he announced that the deposition was over, finis. So Danielson and McDade tattled to the judge in Kansas City and the next day the whole lot of them were summoned to the judge’s chambers to discuss their inability to carry on the proceedings. Mehren’s deposition resumed the next week with Heininger, at the judge’s instructions, apologizing to the In a sanguine report to members last year, AMPI stated that the outcome of the antitrust suits would not significantly affect the co-op. But AMPI is not yet a General Motors or an ITT. It can’t defend itself in a dozen and a half law suits without depleting its managerial and financial resources. The co-op spent about $2 million last year for legal services. If it loses a number of the suits filed by private plaintiffs, AMPI could pay millions and millions in damages. In the MAP case, for example, the law provides for treble damages plus attorney’s fees. MAP originally asked for $1.5 million in damages, but attorney McDade is thinking about amending that to $4 million, which trebled is a hefty $12 million penalty. If AMPI loses the government case, it will be prohibited from certain marketing activities. A decision against AMPI would not preclude other co-ops from doing what AMPI is alleged to have done. There would be nothing to stop other wizards from finding other ways to manipulate the milk market. And that’s why it doesn’t hurt for you to know just a little about how milk really gets from the cow to your refrigerator. K.N. Political fallout San Antonio Some recent highlights from the continuing political saga of the dairy deals: 411m Jake Jacobsen, a local boy \(see “Jaccibsen and the milkmen,” Obs., for lying to the Watergate grand jury concerning an alleged $10,000 payoff for the Nixon administration’s 1971 increase in milk price supports. Jacobsen said under oath that he put the $10,000 in a safe deposit box and never touched it until FBI agents checked the box last fall. The grand jury said evidence indicates Jacobsen got the money in 1971 from AMPI “on the representation that such money was to be paid to a public official for his assistance in connection with the price support decision.” John Connally’s name has been mentioned in connection with the $10,000. A story leaked from Watergate investigations last fall had it that Connally, as secretary of the treasury, was offered the $10,000 and another $5,000 for his help on the price support situation but that he turned it down. The charges against Jacobsen give no hint as to what actually was done with the money. in An AMPI attorney confirmed that a $100,000 contribution to Nixon in 1969 was illegal and asked the Committee to Re-Elect to return it. In San Antonio, E. C. Heininger released copies of a letter he recently wrote to Kenneth Parkinson, an attorney for CREEP. The letter explained that, after the money had been given to Nixon’s attorney Herb Kalmbach, lawyers belatedly discovered a federal law prohibiting funds donated in anything larger than $5,000 chunks. Heininger explained that, in an attempt to cover its tracks, AMPI went through a complicated series of transactions, the gist of which follows: On Aug. 1, 1969, Robert Lilly, an AMPI lawyer, got the $100,000 from Citizen’s National Bank in Austin. \(Jacobsen was an money to Milton Semer, a law partner of Jacobsen’s, at the Dallas airport and Semer hied himself to Los Angeles where the money was turned over to Kalmbach. When AMPI found out the funds were illegal, executives implemented a plan to pay the $100,000 back to TAPE, its political slush fund, with AMPI corporate money. Lilly borrowed $100,000 from the Citizens National Bank and used the proceeds to reimburse TAPE. Then arrangements were made for AMPI lawyers and consultants to reimburse Lilly through inflated billings. The week Heininger released the letter,
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