Ethics counsel, Cranston clash in Keating probe

November 17, 1990|By Dan Fesperman | Dan Fesperman,Washington Bureau of The Sun

WASHINGTON -- Using detailed information and documents, a congressional investigator drew a painfully unflattering portrait of Sen. Alan Cranston yesterday before the Senate Select Committee on Ethics closely linking the high-ranking senator's actions on behalf of savings and loan executive Charles H. Keating Jr. to several of Mr. Keating's huge political contributions.

But Mr. Cranston, D-Calif., struck back with an unflattering depiction of the Senate at large, saying he simply did business the way everyone does and warning committee members that they could be the next targets of an investigation if they punish him.

"I say it's absurd to suggest that fund raising and substantive issues are separated in Senate offices by some kind of wall," Mr. Cranston said. "I submit that if you decide that it's improper to take a lawful and proper action at any [particular] time in behalf of someone who has contributed legally and properly, then every senator, including every member of this committee, had better run for cover, because every senator has done it."

Sen. Donald W. Riegle Jr., D-Mich., another of the so-called "Keating Five" who are under investigation for allegedly seeking to ease federal regulations for Mr. Keating and his money-losing Lincoln Savings and Loan Association of Irvine, Calif., used similar arguments in opening his defense before the panel.

Like Mr. Cranston, Mr. Riegle and Sen. Dennis DeConcini, D-Ariz., received harsh treatment during the opening presentation of evidence Thursday by the committee's special counsel, Robert Bennett.

The two other members of the quintet -- Sens. John McCain, R-Ariz., and John Glenn, D-Ohio -- were virtually exonerated by Mr. Bennett. In their remarks yesterday, they cited their relatively minor involvement with Mr. Keating and maintained that they did nothing to compromise either themselves or the Senate.

Mr. DeConcini will offer his opening defense next week.

Mr. Bennett, whose summary of evidence lasted more than seven hours, did not get to the case against Mr. Cranston until yesterday but then immediately linked the senator's actions to the solicitation of political contributions.

Toward the end of Mr. Cranston's 1986 campaign, when money was running low and a last-minute blitz of television advertising was needed, Mr. Cranston's chief fund-raiser, Joy Jacobson, solicited a $300,000 line of credit from Mr. Keating's thrift, Mr. Bennett said.

The arrangement was hardly reached in the customary way, Mr. Bennett said. A thrift employee named Gloria Cardew, he said, "stated that she flew from Phoenix [the headquarters of Mr. Keating's American Continental Corp.] to Los Angeles, where she met Senator and Mrs. Cranston and a lawyer in a limousine on the tarmac at the airport. They reviewed and executed the documents as the car drove to downtown Los Angeles." She returned to the airport with the completed agreement.

A few months later, as Mr. Cranston began his new term in January 1987, Ms. Jacobson wrote a memo to the senator reminding him that Mr. Keating was among "a number of individuals who have been very helpful to you who have cases or legislative matters pending within our office who will rightfully expect some kind of resolution."

At the time, Mr. Keating was seeking more lenient treatment from

regulators at the Federal Home Loan Bank Board, who wanted his thrift to reduce its speculative investments.

Mr. Bennett said that Mr. Cranston met with Mr. Keating, who asked him for help with the bank board, and that four weeks later Mr. Cranston told one of his voter-registration political committees that Mr. Keating would be sending in a $100,000 contribution, which indeed happened.

In April 1987, Mr. Cranston found out that Mr. Keating's company was under criminal investigation, but three more large contributions followed, Mr. Bennett said, and each was "linked by time and circumstance to a request by Mr. Keating for assistance with the bank board."

On one such occasion, for instance, a memo from Ms. Jacobson instructed Mr. Cranston to relay to Mr. Keating an item of favorable news from the regulatory front and also said, "You should ask Keating for $250,000." Mr. Cranston asked for it and got it. Two later contributions totaled an additional $600,000.

Though Ms. Jacobson had no experience in banking matters, she attended many of Mr. Cranston's meetings with thrift officials, and Mr. Bennett questioned such involvement by a fund-raiser.

But Mr. Cranston suggested that such overlapping roles, for both staff members and senators, are proper and illustrated his point with five large poster boards detailing the key staffers for each of the 100 senators, including the six members of the ethics panel, who also are authorized to act as political fund-raisers.

Mr. Cranston also said there are no existing standards that show any of his actions were wrong.

Mr. Bennett's opening statement said that while such standards "do not appear, admittedly, in a single format," they are "understood by any senator with common sense who serves the public with honor and with integrity. Should this committee conclude that there are no standards applicable to the conduct and the question of this case, then the only standard that will have been established is a double standard -- one that applies to the Senate and the other standards that apply to other public servants."

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