Into the Courts

After 17 months of controversy at the administrative, legislative and political levels, the Dixon-Yates contract is headed for the courts. Armed with a 14-page legal opinion, the Atomic Energy Commission last week announced that it does not consider the contract "an obligation which can be recognized by the U.S." The AEC's reason: questions have been raised about whether the contract violated the conflict-of-interest laws. The questions are based on the role of Investment Banker Adolphe H. Wenzell, who worked on the Dixon-Yates negotiations as 1) a part-time consultant to the U.S. Budget Bureau, and 2) a vice president of the First Boston Corp., which was to finance the project.

The AEC action was designed to throw into the courts the hot question of whether the U.S. Government should pay the Dixon-Yates combine some $3,000,000 for preliminary work on the proposed power plant in Arkansas across the Mississippi from Memphis. The work was done before the AEC, having been assured that the city of Memphis would build the necessary power facilities, canceled the Dixon-Yates contract. Upon receiving the AEC notice last week, Edgar Dixon, president of Middle South Utilities, promptly announced that Dixon-Yates will sue. To get a judicial ruling on the controversial question, the Eisenhower Administration had to take the embarrassing position of questioning the propriety of the contract and of Adolphe Wenzell's role after the AEC had spent months defending the honor of both. Quickly seizing the political opportunities spawned by the AEC action. Democrats cried that the AEC had at last admitted fraud in the Dixon-Yates contract. Among the first to grab the ball was Estes Kefauver, who announced that his Senate Anti-Monopoly Subcommittee will begin new hearings this week on the Dixon-Yates question. Drawled hopeful Estes: "Before we are through, we may find a case of criminal conspiracy involving a number of high-ranking persons."

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