Common Cause Urges Probes of 5 Senators, Including Cranston, for Action on S&L

Common Cause called Friday for investigations of Sen. Alan Cranston (D-Calif.) and four other senators on charges that they improperly interfered with a federal investigation of troubled Lincoln Savings & Loan in Irvine after receiving big contributions from its owner.

The influential citizens lobby asked the Senate Ethics Committee and the Justice Department to look into the actions of the five senators on behalf of Charles H. Keating Jr., chairman of Lincoln’s parent company, American Continental Corp.

The request is certain to escalate the already intense controversy over whether the senators were influenced by nearly $1.5 million in Keating contributions and whether their efforts affected the estimated $1.1 billion to $2.5 billion cost of reimbursing Lincoln’s depositors.

While there is no guarantee that the Ethics Committee or the Justice Department will agree to review the charges, Common Cause was instrumental in generating ethics investigations that ended the political careers of former Speaker Jim Wright (D-Tex.) and former Rep. Tony Coelho (D-Merced), who was majority leader of the House.

In response to the charges, Cranston issued a statement saying that he would support a Justice Department investigation of Keating, but he took no position on whether the Senate Ethics Committee should look into the actions of the five senators.

“I did not violate any ethics rules or standards,” Cranston declared.

Besides Cranston, the other senators involved in the controversy are Dennis DeConcini (D-Ariz.), John Glenn (D-Ohio), Donald W. Riegle Jr.(D-Mich.) and John McCain (R-Ariz.).

The five senators have acknowledged that they met in April, 1987, with officials of the Federal Home Loan Bank Board to present many of Keating’s complaints against federal regulators. At the time, Lincoln was under investigation by the board.

In March and April of this year, Cranston was one of two senators who urged federal regulators to permit the sale of Lincoln before it was seized by the FHLBB.

Before the senators’ first meeting with regulators, Cranston received $47,000 in campaign contributions from Keating and his business associates. Keating, a Republican, also had given $85,000 to the California Democratic Party for get-out-the-vote efforts benefiting Cranston in 1986. Later, Keating made tax-exempt, corporate donations totaling $850,000 to three voter registration efforts either founded or controlled by Cranston.

Although Cranston has said that he was motivated only by his desire to preserve the jobs of the Californians employed by Lincoln, Common Cause President Fred Wertheimer charged that the action taken by the senators on Keating’s behalf far exceeded anything that members of Congress routinely do for their constituents.

Wertheimer said that the case also is “extraordinary” because of the huge amounts of money received by the five senators and also because Keating has acknowledged publicly that he contributed the money to persuade them to use their influence on his behalf.

As Keating told the Wall Street Journal earlier this year: “One question, among the many raised in recent weeks, had to do with whether my financial support in any way influenced several political figures to take up my cause. I want to say in the most forceful way I can: I certainly hope so.”

Wertheimer said that the actions of the five senators appear to violate rules prohibiting “improper conduct which may reflect upon the Senate . . . , the dispensing of special favors or privilege” and the acceptance by a member of Congress “for himself or his family, favors or benefits under circumstances which might be construed by reasonable persons as influencing the performance of his governmental duties.”

Cranston’s solicitation of Keating for voter registration projects may have violated federal tax laws as well as the prohibition against a member of Congress accepting favors or benefits for himself and his family, Wertheimer charged.

Cranston had hoped to benefit politically from the voter registration drive in California, and one of the organizations for which Cranston solicited Keating’s money, the Center for Participation in Democracy, was headed by Cranston’s son, Kim.

Murray Flander, Cranston’s press secretary, said that Kim Cranston was an unpaid official of the organization who received no personal financial benefit--”not one penny.”

Wertheimer said that some employees of the voter registration drives have alleged that the contributions were used primarily to register Democrats. Referring to Cranston’s solicitation of voter registration funds from Keating, the complaint filed by Common Cause with the Senate Ethics Committee and the Justice Department said that the ethics rules come into play because:

--”When a senator intervenes in a case involving the investigation of alleged violations by a specific company on behalf of an individual who owns the company and who, to the knowledge of the senator, has provided substantial corporate donations to an organization founded or controlled by a senator.”

--”When a senator solicits and receives substantial corporate donations for organizations he founded or controlled from an individual on whose behalf he has recently intervened in a case involving the investigation of alleged violations by a specific company.”

Since the controversy came to light, both Riegle and DeConcini have returned the money raised for them by Keating. DeConcini wrote personal checks totaling $55,000 on Sept. 18--just three days after the successor agency to the FHLBB brought a $1.1-billion fraud and racketeering lawsuit against Keating and his associates on charges that they diverted funds from Lincoln to finance “the personal, political and charitable convictions” of Keating.

Flander said that neither Cranston nor officials of his campaign organizations plan to return the money he received from Keating because it would be “tantamount to an admission that they did something wrong.” But he said Cranston would reconsider if the courts find that the money “truly was looted” from Lincoln by Keating.

Industry experts have estimated that the federal government will have to pay out about $2.5 billion as a result of the collapse of Lincoln, which was seized by the FHLBB last April 14.

Last week, M. Danny Wall, director of the newly created Office of Thrift Supervision, estimated that the eventual expense to the government’s thrift deposit insurance fund at $1.1 billion to $1.5 billion. It was the first government projection of the clean-up cost.

The Common Cause complaint cited published estimates that $1.3 billion of the earlier $2.5 billion salvage estimate could be attributed to a delay in federal action caused by the intervention of the five senators.

But Cranston said that he never advocated a delay. To the contrary, he said, he consistently urged the FHLBB to bring their investigation of Lincoln to a speedy conclusion. If the board had taken his advice, he said, it would have prevented huge losses by Lincoln.