Cancellation of the Dixon-Yates contract did not end the Eisenhower administration’s problem with that ill-fated venture. It was to be a major factor in 1959 in blocking the nomination of Lewis L. Strauss as Secretary of Commerce.
In November of 1955, William Mitchell, counsel for the Atomic Energy Commission, made a report stating: “It appears that Wenzell, while having a conflicting private interest, acted as one of the principal advisers of the government” in the negotiating of the Dixon-Yates contract. Mitchell called attention to the many meetings in which Wenzell had taken part as a government official in the first four months of 1954.
“The matters on which Wenzell was advising the contractor [Dixon-Yates] were the same on which he had been employed to advise the government,” Mitchell stated officially for the AEC.
When the government canceled the contract on grounds of a “conflict of interest,” the Dixon-Yates group claimed that tremendous expenditures had already been made on the contract. When Dixon and Yates sued the government for $3,534,788, the Justice Department was forced to go to court with legal briefs and facts to support the government contention that Wenzell’s role was a “conflict of interests.”
Thus Attorney General Brownell’s department was in court to give evidence of an impropriety that President Eisenhower had said did not exist.
Less than a year later, on August 11, 1956, Senator Estes Kefauver and Senator Joseph O’Mahoney, the Wyoming Democrat, insisted on action against those engaged in concealing the facts.
Senator Kefauver charged that Sherman Adams and other “high officials of the Eisenhower administration” violated the criminal law in their handling of the Dixon-Yates contract. He named the other high officials as Lewis L. Strauss, chairman of the Atomic Energy Commission and the President’s adviser on atomic energy matters; Rowland R. Hughes, former Director of the Budget; and J. Sinclair Armstrong, chairman of the SEC.
In asking Attorney General Herbert Brownell to present the matter to a federal grand jury, Kefauver commented:
“Indictments and convictions have been obtained under Section 371 of Title 18 of the United States Code in cases involving similar circumstances. The offense under this section of the Criminal Code is that of conspiring to defraud the United States Government. The essential ingredient of the offense under this section of the Criminal Code is the failure of a government official to discharge conscientiously the duties of his office and administer Federal law in an unbiased manner.”
Kefauver continued: “In this case there exists substantial evidence indicating that Mr. Adams, Mr. Hughes and Mr. Strauss deliberately attempted to conceal the conflict of interest growing out of Mr. Wenzell’s dual role in the Dixon-Yates deal—a conflict which the President’s own Attorney General now labels so contrary to public policy as to render the agreement null and void.”