Amassing of Wealth, Ties to Bankers Questioned : Panel Clears St Germain of Wrongdoing

The House Ethics Committee has found no wrongdoing by Rep. Fernand J. St Germain (D-R.I.) in connection with allegations that he became a millionaire with help from several people he aided officially, the panel’s confidential draft report says.

The draft found instances in which the chairman of the House Banking Committee failed to report properly his assets on financial disclosure forms or undervalued them by as much as $1.5 million. It also found one instance in which the 26-year House veteran violated House rules by accepting a free plane trip to Orlando from a Florida savings and loan.

But the report cleared St Germain on the major issues examined during a 14-month investigation, including allegations that he improperly benefited from no-money-down loans and that his office improperly influenced federal banking regulators on behalf of a St Germain friend.

The final report, to be released later this week, is not expected to vary greatly from the 91-page draft completed last August. The panel, formally known as the Committee on Standards of Official Conduct and chaired by Rep. Julian C. Dixon (D-Los Angeles), filed the report under seal Thursday.

St Germain’s lawyer, Milton P. Semer, said it was “the best possible news” that the ethics panel did not issue a statement of alleged violations against St Germain, which could have subjected him to House sanctions. “I guess I lost a client,” Semer said.

The committee report provides a detailed portrait of how St Germain amassed a fortune as he climbed in seniority on the Banking Committee. His millionaire status can be traced to his close friendship with banking tycoons, developers and brokers, who led him to invest in Florida real estate and to buy up properties from a pancake-restaurant chain at fire-sale prices.

The House inquiry began after a 1985 report on St Germain’s finances in the Wall Street Journal. Part of the investigation focused on the congressman’s longtime friendship with Raleigh Greene Jr., founder and former chairman of Florida Federal Savings & Loan Assn.

St Germain accepted seven free trips in six years on Florida Federal’s corporate planes. The committee accepted his contention that none of the flights, most of which were from Washington to Florida, should be valued at more than $99, and therefore did not violate a House prohibition on accepting gifts of $100 or more from those with an interest in legislation.

But the report said St Germain violated the ban by accepting two free trips on Florida Federal aircraft in 1980, bringing his gift total for that year to $198.

In 1983, St Germain’s Banking Committee staff director, Paul Nelson, repeatedly contacted officials at the Federal Home Loan Bank Board to check on the progress of Florida Federal’s application to convert to a stock corporation, the report said.

Richard Pratt, then the bank board chairman, told the panel that he was “aware at that time that Raleigh Greene Jr. was a friend of Rep. St Germain” and that Nelson’s calls to him “concerned the status of the conversion,” the report said.

Nelson told the panel that “he did not specifically recall whether he made these calls at the behest of Rep. St Germain.” He said that “making such calls at the request of members was not uncommon” and that he “simply inquired into the status” of the application.

The draft report concluded that “the calls were precipitated by the congressman’s friendship with Raleigh Greene Jr.” but that this was “not unusual” in congressional offices. Although the calls were meant “to expedite” bank board action, the panel said, “there is no evidence that this occurred.”

In May, 1983, after the bank board approved the stock conversion, St Germain bought 1,500 shares of newly issued stock in Florida Federal. The report said St Germain was entitled to purchase the stock and did not receive preferential treatment.