Solicited Donations From Firm Chief, Cranston Says
Sen. Alan Cranston, already under fire for aiding Phoenix businessman Charles H. Keating in his battles with savings and loan regulators, said Monday that he solicited a $400,000 donation from Keating for a voter registration group formed by the senator’s son.
The California Democrat said he also asked Keating in 1987 and 1988 to donate a total of $450,000 to two other nonprofit, nonpartisan voter registration groups “because of my determination to do what I can to increase voter participation.”
Keating is the chairman of American Continental Corp. in Phoenix, which owns Lincoln Savings and Loan. The Irvine thrift was seized by regulators in April, one day after American Continental filed for bankruptcy. Regulators claimed that the company was operating Lincoln unsafely and dissipating the S&L;'s $5.3 billion in assets.
In February, 1988, American Continental gave $400,000 to the Center for Participation in Democracy Inc., a Los Angeles organization formed by Cranston’s son, Kim, to train organizers and carry out nonpartisan voter registration drives.
Cranston said Monday in a written statement that none of the funds he solicited went to him “personally or politically.”
Since the bankruptcy of American Continental and seizure of Lincoln, Cranston’s relationship to Keating has come under scrutiny, particularly by investors who bought $200 million worth of American Continental debt securities through the Lincoln branches. Those bondholders claim they were falsely led to believe that the bonds were federally insured, and have filed lawsuits claiming they were defrauded by Keating and other American Continental executives and professional advisers for the company.
The lawsuits contend that Keating and his associates made large campaign contributions to numerous politicians, who in turn helped Keating keep his business afloat by representing his cause before regulators. Keating donated $39,000 to Cranston’s 1986 reelection campaign.
At Keating’s behest, Cranston joined other senators in two meetings with regulators in April, 1987. A week later, Cranston and four other senators talked with federal regulators from the board’s San Francisco office.
In March and early April of this year, Cranston talked with two bank board members to urge them to consider approving Keating’s effort to sell Lincoln. Regulators had refused to approve the sale, saying the proposed buyers simply did not have enough cash to complete the deal.
Cranston said Monday that he “did do a pretty stupid thing, politically” in giving the appearance that he had interceded to win favorable treatment of Keating. But he said he did nothing improper in trying to get “fair play” for a California firm.
The senator also denied doing anything improper in soliciting money for worthy causes, such as his son’s voter-registration group.
Kim Cranston, 37, founded the Center for Participation in Democracy, a nonprofit organization that trains organizers and carries out nonpartisan voter education and registration drives.
Kim Cranston, who now works in Lt. Gov. Leo McCarthy’s office in Sacramento, could not be reached for comment Monday. State records show that American Continental gave the money to the center in February, 1988. The amount represented 29% of the center’s $1.4-million budget for its fiscal year, which ended May 31, 1988.