ARNOLD & PORTER

November 4, 1981

MEMORANDUM

TO: Henry A. Kissinger
FROM: William D. Rogers

I have reviewed your files and mine relating to
the Mexico Study Group and Mike Rashish's fees. On
January 20, 1981, as he was moving into lush government
quarters, Rashish submitted an invoice addressed to Bob
Anderson for a net of $220,009. Not only has it not
been paid in full but he has received no response.

In my judgment, this is not appropriate.

I have reviewed the materials to see whether there
was ample warning about Rashish's costs. I think there
was. Rashish submitted a $400,000 budget at the outset
of the venture in the late summer of 1979, shortly after
the first Group meeting with Lopez Portillo. He repeated
that figure on several later occasions. He hired people
and space. He spent some time on the matter. And he did
produce a voluminous report.

ARNOLD & PORTER

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In my judgment, the Group has an obligation to him.

I have talked to Bob Anderson, as you requested.

He agrees that the Group should face up to its obligation.

For his part, he points out that he has already contributed more than his share -- two transfers of $50,000. No one else has made any contribution. He agrees that the best way to resolve matters would be for you to write to the other members of the Group.

I have drafted a letter along lines Bob and I think appropriate.

RECOMMENDATION:

That you dispatch something like the attached letter
to the other members of the Group.

Agree

Disagree

Other

Attachment

DRAFT

Letter to BOA, Bechtel, Chase, GM,
Pepsi and TI

RE: <u>Mexico Study Group</u>

Dear :

Mike Rashish has been in touch with my office on
several occasions about his outstanding invoice of
January 20, 1981.

Bill Rogers and I have reviewed the record. Both
our files have some gaps. However, from what we can tell,
the Group brought Mike in after the May 24, 1979 New York
meeting and the August 13, 1979 trip to Mexico City. He
submitted a work program on August 20, 1979 proposing a
budget of $400,000. He then rented office space and
retained an expert staff. His Report, which all of you
have seen, was produced in May 1980.

By the fall of 1980, circumstances in Mexico had
changed, and our formal efforts ceased. By that time,
the out-of-pocket cost of the enterprise to Mike (salaries,
rent, telephone, etc.) was $113,000 and Mike's fee was
$209,000.

Bob Anderson has paid $100,000 of this.

Mike's January 20 invoice was thus in the
amount of $222,000. He has also pointed out that
the interest on this unpaid obligation during the
past year would be something like $30,000.

The Group has an obligation to tidy this
matter up. I read the record as saying that Mike
proceeded with the project in a manner consistent
with the wishes of the Group and his work plan and
budget, and that he produced everything we asked him for.

In view of the fact that Arco has already done
more than its share, I would propose that each of the
other corporate members of the Mexican Study Group
undertake a contribution of $35,000. This would
produce $210,000, which we would offer to Mike in
final settlement of his claim. My own sense is that
his claim for a personal fee of $209,000 is a bit high.
But he has been out-of-pocket for over a year, during
a time of high interest rates. I am, however, perfectly
prepared to consider any alternative suggestions you have.

In all events, I do think we should give serious
consideration to putting this issue to rest.

Sincerely,

Henry A. Kissinger

October 20, 1981

MEMORANDUM

TO: The Files

FROM: William D. Rogers

RE: Mexico Study Group

This memorandum sets forth information relating to the retention of Myer Rashish as Secretary of the Mexico Study Group and the formulation of the Group's work program and budget. The information contained herein is based principally on a review of Dr. Kissinger's files, and supplemented by some materials submitted to me by Mike Rashish.

1. The initial meeting of the Mexico Study Group was evidently held in New York City on May 24, 1979. Dr. Kissinger explained the origin and purpose of the group, and a discussion of how best to organize the Group's research effort ensued. Mr. Robert Anderson indicated that the Aspen Institute would investigate the possibility of support for the research effort. (See Rogers' memo dated May 31, 1979.)

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2. Substantive papers then began to come in. On July 13, 1979, Kerry Curtis of Bank of America ("BOA") sent Dr. Kissinger a short paper on Mexico's financial position prepared by P. D. Warner of BOA's Economics Department. The covering letter from Curtis indicates that the paper was sent per Dr. Kissinger's letter to Clausen of June 5. (A copy of this is not in the file. It is also not clear whether other letters were sent by Dr. Kissinger requesting research by group members.) Another economic paper was submitted purportedly for a meeting of the Study Group on July 16, 1979. This evidently was the New York dinner meeting at which Don Kendall urged the appointment of Mike Rashish.)

3. Mike Rashish wrote Dr. Kissinger on August 3, 1979, enclosing a paper for the August 13th meeting of the Study Group with Lopez Portillo. Dr. Kissinger made some stylistic changes, and a new draft of the memorandum dated August 13, 1979, appeared addressed to Lopez Portillo.

(I do not recall that the paper was ever handed over.)

The files also contain a memorandum of August 17 for the

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members of the group recounting the August 13 meeting
which was prepared by Mike Rashish and an August 17th
letter from David Rockefeller to Dr. Kissinger summarizing
that meeting.

4. Rashish wrote again to Dr. Kissinger on August 17, 1979, with a "suggested program of work". He referred in that letter to an offer by Robert O. Anderson of $400,000 to the budget. Rashish also inquired of Dr. Kissinger whether there was a need to contact Anderson "about his offer of $400,000 or whether to 'assume' that Anderson will follow through with Slater." (The record does not disclose more about the "offer".) The $400,000 figure was also included in the budget paragraph of the attached memorandum, which also said that "the budget should be adequate to cover the work program through the end of 1980. Mr. Robert Anderson has agreed to finance the project through the Aspen Institute. He has suggested that his company would be prepared to dedicate $400,000 for this purpose."

5. A cover note to Rashish's August 17 letter, evidently from Chris Vick, related that she had been

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"hounding" Dr. Kissinger about "the Rashish letter" which "you were going to sign when you got down here." (The reference to signing is not clear. There is nothing attached to Rashish's incoming letter, nor is there a signature space on either Rashish's letter or the attached program of work.)

6. There is a lacuna in Dr. Kissinger's records and mine from August 1979 until October 1979 when Dr. Kissinger evidently signed a letter, prepared by Rashish, to Joe Slater, President of the Aspen Institute. Dr. Kissinger's letter, which bears a stamped date of October 30, 1979, advises Slater that, on the basis of Dr. Kissinger's conversation with Mr. Anderson, Dr. Kissinger is forwarding the budget for the Study Group for the period November 1, 1979, through December 1980 and an invoice. The budget was in the amount of $395,000; the invoice, through November 1979, $60,000. Dr. Kissinger's letter to Slater was inspired by Rashish's letter to Dr. Kissinger of October 23, 1979. (The materials available do not show whether Slater responded to the October 30th letter.) Rashish received $50,000 in March of 1980.

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7. There is also in the file a memorandum from Rashish to Dr. Kissinger dated February 1, 1980, anticipating a meeting with Lopez Portillo during Dr. Kissinger's Acapulco visit that winter. Rashish concludes the memo by recounting the program of the Mexico Study Group as one aimed at producing within a few weeks an "annotated and documented agenda" of issues on the US-Mexican relationship for later submission to Lopez Portillo. An "interim report dated May 30, 1980" was distributed to the Mexico Study Group.

8. Rashish wrote to Anderson, Kendall, Dr. Kissinger and me on June 20, 1980. Rashish said he understood from Anderson that Anderson had raised the possibility of a seminar meeting with Lopez Portillo, but Rashish cautioned that "it is essential that the group decide whether and how it wishes to proceed." As to finances, Rashish said that notwithstanding a $50,000 contribution from ARCO in early March, total unreimbursed expenses -- advanced by Rashish for rent and salaries -- due to Rashish by the end of June would total $24,000. In addition "fees due me for the July

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1979 period will amount to $135,000 for a total of $160,000." The note goes on to say that he had also undertaken obligations with respect to salaries. This was said to be set out in a "package of materials" sent to Dr. Kissinger, Kendall and me on March 17, 1980, and supplemented in a letter to Kendall of May 28, 1980. (I do not have these materials nor does Dr. Kissinger.) He also referred to a letter of August 28, 1980. He projected that the total cost -- beyond Arco's $50,000 contribution and including the $160,000 to date -- would be $300,000 and for saw $50,000 each from Chase, TI, Pepsi, GM, BOA and Bechtel. I see no indication of a response.

9. On August 14, 1980, I sent Dr. Kissinger a memorandum transmitting a letter for HAK's signature seeking the termination of the group. My assistant, Jeff Meyers, talked with Rashish after I drafted the letter. Rashish indicated that he had the impression that Anderson had received encouraging suggestions about a two or three day seminar from Lopez Portillo and thus perhaps an abrupt termination of the Study Group was therefore not in order.