ITT Actions Cause Suspicion of Involvement in a Chilean Coup Summary

  • Last updated on November 10, 2022

After the Chilean electoral victory of Salvador Allende, representatives of International Telephone and Telegraph became involved in attempts to destabilize the government.

Summary of Event

On September 4, 1970, Salvador Allende, the Marxist candidate for president of Chile, received the most votes of all candidates in the country’s presidential election. Because he did not have a majority, the election was to be decided in the legislature. The U.S. government, acting through the State Department and the Central Intelligence Agency (CIA), had opposed Allende and had contributed at least $300,000 to defeat him. Almost immediately after the election, Henry Kissinger, then national security adviser to President Richard M. Nixon, Nixon, Richard M. developed a program at the CIA to prevent Allende from coming to power. International Telephone and Telegraph Revolutions and coups;Chile Chitelco Central Intelligence Agency;Chile [kw]ITT Actions Cause Suspicion of Involvement in a Chilean Coup (1973) [kw]Suspicion of Involvement in a Chilean Coup, ITT Actions Cause (1973) [kw]Chilean Coup, ITT Actions Cause Suspicion of Involvement in a (1973) [kw]Coup, ITT Actions Cause Suspicion of Involvement in a Chilean (1973) International Telephone and Telegraph Revolutions and coups;Chile Chitelco Central Intelligence Agency;Chile [g]South America;1973: ITT Actions Cause Suspicion of Involvement in a Chilean Coup[00980] [g]Chile;1973: ITT Actions Cause Suspicion of Involvement in a Chilean Coup[00980] [c]Trade and commerce;1973: ITT Actions Cause Suspicion of Involvement in a Chilean Coup[00980] [c]Wars, uprisings, and civil unrest;1973: ITT Actions Cause Suspicion of Involvement in a Chilean Coup[00980] Geneen, Harold Allende, Salvador Kissinger, Henry

At the September 9, 1970, board of directors meeting of International Telephone and Telegraph (ITT), Harold Geneen, ITT’s chief executive officer, informed the board that Chiltelco, a telephone company in Chile in which ITT had a substantial stake, was in danger of being nationalized if Allende were elected. ITT’s presence in Chile went back to 1927, when Chiltelco was granted a fifty-year concession that subsequently had been extended. Telephone operations are a capital-intensive business, and ITT made substantial investments in the company. During the 1960’s, it provided Chiltelco with $40 million in new financing and reinvested all earnings above $19 million. As a result, Chiltelco’s assets increased substantially. According to an audit in the late 1960’s accepted both by the government and by ITT, it had a net worth of $200 million. By 1970, however, ITT had sold off a minority position in Chiltelco, bringing its investment down to $153 million.

Ever since the nationalization of ITT’s Cuban telephone company by Fidel Castro—without strong protests or action by U.S. president Dwight D. Eisenhower Eisenhower, Dwight D. —Geneen had been concerned about other properties that might meet with a similar fate. He feared that President Nixon would be tempted to follow the Eisenhower example and meant to do what he could to prevent confiscation. Geneen knew of the CIA plan to prevent Allende’s election. Without asking approval from the ITT board of directors, he approached former CIA director John McCone, McCone, John who had become a member of the ITT board, and told McCone that he was prepared to spend as much as $1 million in support of any plan that was adopted by the government for the purpose of bringing about a coalition of the opposition to Allende so that when the Chilean legislature met to select the next president, Allende would be rejected. Geneen added that the offer had been transmitted to Kissinger. McCone indicated that he supported the plan.

Two days later, Jack Neal, Neal, Jack a former State Department official who was in charge of international relations for ITT, telephoned Viron Peter Vaky, Vaky, Viron Peter Kissinger’s assistant for Latin American affairs, to tell him that Geneen was willing to come to Washington to discuss ITT’s interests in Chile and that ITT was prepared to assist financially in a government operation there. Neal also proposed trying to interest other companies with investments in Chile in cooperating with the CIA but added that he had not had much success in this attempt. Vaky told Neal that he would pass on the information but apparently did not do so.

Meanwhile, Geneen asked McCone to go to Washington to sound out his contacts there regarding ideas on blocking Allende’s election. McCone agreed to do so. He met with CIA director Richard Helms Helms, Richard and informed him of Geneen’s offer. McCone also contacted Kissinger and told him of Geneen’s offer. Kissinger thanked McCone and said that he would hear from him again. Kissinger did not indicate support for the plan, however, so McCone assumed that nothing would be done. Kissinger had only one reference to ITT in his 1,496-page memoir, White House Years (1979), and that in the form of a footnote: “My own attitude was that any covert action in Chile should be carried out exclusively by our government; this was not a field for private enterprise. Accordingly, I turned down ITT’s offer of $1 million to help influence the election. I may have agreed with the objective, but certainly not the vehicle.”

Later, in a congressional investigation of the matter, ITT board member Felix Rohatyn Rohatyn, Felix testified that Geneen had always taken the position that the company did not “participate” in the plot in Chile. In a carefully worded statement, Geneen said, “ITT did not encourage or participate in any way in any alleged plot for a military coup in Chile to block the election of Dr. Allende.” Moreover, the corporation “didn’t contribute money to any person or to any agency of government to block the election of Dr. Allende.” Finally, he claimed that “ITT did not take any action to cause economic chaos in Chile in an attempt to block the election of Dr. Allende, nor did it advocate that any others take such steps.”

Even so, ITT field representatives were in continual contact with CIA operatives and Allende’s opponents. The key figures in this contact were Robert Berrellez, Berrellez, Robert a former newspaper reporter who had specialized in Latin American affairs, and Harold Hendrix, Hendrix, Harold a Pulitzer Prize-winning reporter. Both went to Santiago that summer to represent ITT and were under the direct control of Ned Gerrity, Gerrity, Ned ITT’s chief public relations officer.

Berrellez and Hendrix sent detailed memos to the home office that later were submitted to Congress and released to the public. From them, one can obtain the picture of a corporation concerned with the nationalization of its remaining property in that part of the world. The memos also reveal that, as anticommunist Americans as well as ITT officials, board members were troubled by the growth of communism in Latin America.

In early October, it appeared that General Roberto Viaux, Viaux, Roberto who had worked with the CIA, was planning a coup, which was opposed by General René Schneider, Schneider, René who had strong connections with the American State Department. The United States therefore was on both sides of the matter. To complicate matters further, Colonel Camilo Valenzuela Valenzuela, Camilo also hoped to overthrow the government and was encouraged by the CIA.

On October 15, 1970, the CIA opted to defuse the situation, and Viaux was told that he would not be supported by the United States. CIA officials soon had second thoughts and backed Viaux. On October 17, several Chilean officers were provided with arms by the American military attaché, and Valenzuela informed Viaux that all preparations had been made. On October 19 and 20, there were two bungled attempts to kidnap Schneider. On October 22, Schneider was killed during yet another kidnapping effort. Riots erupted, and outgoing President Eduardo Frei Montalva Frei Montalva, Eduardo declared a state of nationalemergency. This prompted Jorge Alessandri, Alessandri, Jorge who was Allende’s chief opponent, to withdraw from the presidential race, asking his supporters to vote for Allende.

Allende won the October 24 balloting in the legislature by a margin of 153-35 with seven abstentions and so became president of Chile. He took office on November 3. Most of the key cabinet posts went to communists. On November 20, the government seized subsidiaries of Ralston Purina and Indiana Brass. Six days later, Allende spoke of his intention to nationalize American-owned copper mines, utilities, and banks.

This prompted a CIA response. On November 13, the agency approved an initial $25,000 for support of Christian Democrat candidates in the forthcoming local elections, and on November 19 it authorized the expenditure of $725,000 for a new covert operations program. In January, 1971, it authorized the use of an additional $1,240,000 for the purchase of radio stations and newspapers to support anti-Allende candidates. None of these efforts was supported by financial contributions by American firms, although some, including ITT, were kept informed.

ITT formed the Ad Hoc Committee on Chile, which brought together large corporations with Chilean interests as a lobbying team. At the same time, ITT representatives approached Allende administration officials to initiate talks on possible compensation for seized properties. To provide compensation would be in his interests, Gerrity said. In a February 11 memo to Geneen, he wrote that Allende might be told that if a mutually acceptable solution could be found, he would improve relations with the United States and at the same time have a model to use in other nationalizations. Any funds that companies received in compensation might be invested in Chile, perhaps in ITT’s chain of Sheraton hotels. ITT’s president, Tim Dunleavy, Dunleavy, Tim presented the idea to Allende and told him that if a compensation plan worked, Chile’s credit rating would go up around the world. ITT would go to the banks and tell them how fairly the company had been treated.

This approach failed. On April 28, the Chilean government proclaimed that it would nationalize Chiltelco and pay ITT a price of slightly more than $13 million. The company replied that Chiltelco was worth at least $153 million and that its insurance with the Overseas Private Investment Corporation (OPIC) covered only $92 million of that. ITT also lodged a protest with the State Department.

All the while, Allende made speeches denouncing Western imperialists. He suggested arbitration by the International Telecommunications Union coupled with an immediate takeover, a plan that ITT rejected. Talks were broken off on August 31. The Allende government froze Chiltelco’s bank accounts, and on September 16 it established a three-member team to run the company. As anticipated, ITT filed additional protests while Neal designed a program designed to disrupt the Chilean economy. Nothing came of this, but the Export-Import Bank denied a Chilean loan request, and the CIA added another $815,000 to its fund to assist opposition parties. This did not deter the Chilean government, which on September 29, 1971, seized control of Chiltelco.

Confiscations and nationalization ultimately worked against Allende. Pressure from the United States resulted in a stoppage of World Bank loans. Middle-class and wealthy Chileans fled the country, which experienced huge capital outflows. It was against this background that a coup developed on September 11, 1973, during which Allende was overthrown and was either killed or committed suicide. A right-wing military junta, to be headed by General Augusto Pinochet, took over in Santiago and soon thereafter opened negotiations with ITT regarding compensation for Chiltelco. This stirred rumors that ITT had supported Allende’s opponents, was responsible for his death, and now was about to receive its payoff.

Significance

The Chilean coup occurred at a time when the United States was torn by the aftermath of the Nixon impeachment crisis and the controversy surrounding President Gerald R. Ford’s pardon of Nixon. The Vietnam War continued, and national morale was low, as was confidence in the federal government. The possibility that the United States—aided and abetted by ITT—had taken a role in the coup resulted in added criticisms. ITT offices in Rome, Zurich, and Madrid were bombed, and special precautions against similar violence were taken in New York City and elsewhere. As a result of its activities in Chile, ITT received a reputation as a rogue elephant of a company. Geneen’s standing, once quite high, was besmirched.

Most of the story soon came out, when the Subcommittee on Multinational Corporations of the Senate Committee on Foreign Relations investigated the matter. Throughout the public hearings, ITT representatives insisted that they did nothing wrong and defended the company’s attempts to influence government policy against Allende. Geneen appeared before the committee. He portrayed ITT as attempting to work with the American government in Chile but denied any involvement in the coup.

Rumors of ITT’s involvement appeared and persisted, and stories were leaked to the press. This was compounded by the publication of an article by British journalist Anthony Sampson, titled “The Geneen Machine,” in New York magazine. Sampson’s book The Sovereign State of ITT (1973) Sovereign State of ITT, The (Sampson) appeared soon thereafter. It documented the affair in a lively and plausible manner. The book was a best seller and was credited with sparking new riots against ITT installations around the world.

This, however, was not the end of the story. In November, 1978, Stanley Sporkin, Sporkin, Stanley head of the U.S. Securities and Exchange Commission’s division of enforcement, charged that from 1970 to 1975 ITT had expended $8.7 million to fund illegal activities in Chile, Indonesia, Italy, Turkey, and several other countries. ITT replied that all payments were “consistent with the laws of their jurisdiction but may have been applied in a manner contrary to current corporate policies.” It added that all such activities had ended in 1976.

The incident provoked a new round of debate about the role of business in politics and government affairs. Multinational corporations had a long history of involvement in the politics of the less developed countries in which they operated, sometimes treating the governments of those countries as contractors or agents whose purpose was to fulfill corporate objectives. Corporate officials claimed that bribery and other forms of corruption that they undertook were all part of the game of politics in these countries. Nevertheless, because of such cases as ITT’s involvement in Chile, greater attention was paid to corporate dealings overseas. International Telephone and Telegraph Revolutions and coups;Chile Chitelco Central Intelligence Agency;Chile

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Davis, Nathaniel. The Last Two Years of Salvador Allende. Ithaca, N.Y.: Cornell University Press, 1985. A former ambassador to Chile, Davis offers an overview of Allende’s failed government and an analysis of U.S. policy and its role in Chile.
  • citation-type="booksimple"

    xlink:type="simple">Haslam, Jonathan. The Nixon Administration and the Death of Allende’s Chile: A Case of Assisted Suicide. New York: Verso, 2005. Offers a revealing look at the involvement of Cuba, the Soviet Union, and the CIA in Allende’s Chile.
  • citation-type="booksimple"

    xlink:type="simple">MacEoin, Gary. No Peaceful Way: Chile’s Struggle for Dignity. New York: Sheed and Ward, 1974. A work generally sympathetic to Allende and critical of ITT.
  • citation-type="booksimple"

    xlink:type="simple">Petras, James, and Morris Morley. The United States and Chile. New York: Monthly Review Press, 1975. Important primarily because of its collection of documents relating to ITT’s involvement in Chile.
  • citation-type="booksimple"

    xlink:type="simple">Rojas, Róbinson. The Murder of Allende and the End of the Chilean Way to Socialism. New York: Harper & Row, 1976. Strongly pro-Allende, considering him to be an independent reformer who was murdered for attempting to free his country from foreign domination.
  • citation-type="booksimple"

    xlink:type="simple">Sampson, Anthony. The Sovereign State of ITT. New York: Stein & Day, 1973. A strongly anti-ITT book that was a best seller. Marred by omissions and not reflective of later scholarship.
  • citation-type="booksimple"

    xlink:type="simple">Sigmund, Paul E. The Overthrow of Allende and the Politics of Chile, 1964-1976. Pittsburgh: University of Pittsburgh Press, 1977. The most complete and scholarly work on the subject. Accessible to the general reader.
  • citation-type="booksimple"

    xlink:type="simple">Sobel, Robert. I.T.T.: The Management of Opportunity. New York: Times Books, 1982. Written independently but with the company’s cooperation, this book contains a chapter dealing with ITT’s involvement in Chile.
  • citation-type="booksimple"

    xlink:type="simple">Zañartu, Mario, and John Kennedy. The Overall Development of Chile. Notre Dame, Ind.: University of Notre Dame Press, 1969. A good source for background material on the Chilean economy.

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