Probe of Mrs. Dole’s Blind Trust Reported

The Office of Government Ethics is studying a 1986 real estate transaction between the blind trust of former Transportation Secretary Elizabeth Hanford Dole and the company of a former aide to her husband, Senate Minority Leader Bob Dole (R-Kan.), informed sources said Wednesday.

The investigation is focusing on whether the managers of Mrs. Dole’s blind trust may have breached their “fiduciary responsibilities” to insulate the trust from people associated with the Doles, sources said.

The transaction occurred when David Owen, a former lieutenant governor of Kansas and a longtime associate of Sen. Dole, was the trust’s investment adviser. The trustee was Mark McConaghy, who was chief of staff of the Joint Committee on Taxation in 1981-83, when Dole was its chairman.

The former Dole aide whose company served as intermediary in the December, 1986, deal, John Palmer, had been awarded a $26-million contract with the Army 11 months earlier. Dole has publicly acknowledged urging the Small Business Administration to award the contract to Palmer under its program for helping minority-owned businesses.

Palmer, a prominent black Kansas Republican, previously had worked in Dole’s Kansas City office.

Palmer’s company served as a middleman in a complicated transaction in which an Overland Park, Kan., office building owned by the blind trust was sold to a general partnership.

Since last weekend, when Kansas newspapers first reported extensively on the deal, the matter has become entangled in a political wrangle over finances between Dole and his leading Republican presidential rival, Vice President George Bush.

Dole said Wednesday that he will release his tax returns for the last 20 years but did not say when, adding that he had to find them all first. He said also Wednesday that he will release information on his wife’s blind trust and additional details of his efforts to help Palmer obtain the SBA contract.

Owen, now a national finance chairman for the Dole campaign, said Wednesday that, when detailed information is released about the blind trust and the real estate deal, “the facts will show that this was a straightforward business deal.”