Cranston’s Deeds, Keating’s Money Linked, Panel Told : Ethics: The California senator gives a combative and emotional response to the committee. Its counsel cites new evidence of his alliance with the S&L; executive.

On four occasions, Sen. Alan Cranston (D-Calif.) solicited big campaign contributions from Lincoln Savings & Loan owner Charles H. Keating Jr. while consenting to Keating’s request for assistance in battling federal regulators, the Senate Ethics Committee’s chief investigator said Friday.

These new details of Cranston’s relationship with Keating were the central focus of the committee’s second day of hearings into charges that he and four other senators--the so-called Keating Five--acted improperly on behalf of the controversial thrift executive.

In an emotional response, Cranston warned the six committee members sitting in judgment on him that “every senator will be in dire jeopardy” if they find him guilty of wrongdoing because they, too, have surely assisted big campaign contributors like Keating.

“I engaged in no unethical conduct,” Cranston asserted. “You know that I broke no law. You know that I broke no Senate rule. You know that I pocketed no money. There was no personal gain for me or any member of my family.”

Although many aspects of the Keating-Cranston alliance were already known, special counsel Robert S. Bennett’s two-hour recitation of evidence against the California Democrat asserted for the first time that the relationship between money and conduct was not a coincidence. Cranston previously had contended that there was no connection between the two.

This close link in time between Keating’s contributions and Cranston’s actions, if it is substantiated during the public inquiry, increases the possibility that the 76-year-old senator could be cited for misconduct by the Senate, where he has served for 22 years. Cranston, who is suffering from prostate cancer, has announced that he will not seek reelection in 1992.

Originally, it was alleged that all five senators had been lured by big contributions into playing key roles in Keating’s plan to delay enforcement action by the Federal Home Loan Bank Board against financially troubled Lincoln Savings & Loan. But, after a yearlong inquiry, Bennett concluded that only two of them--Cranston and Sen. Dennis DeConcini (D-Ariz.)--were actually major players in the events leading up to the $2-billion collapse of the Irvine thrift.

Moreover, Bennett said, Cranston was the only one of the five senators who “went to Mr. Keating and affirmatively asked” for money. In dealings with the other four senators, he said, it was Keating who offered the contributions while requesting their assistance.

“It wasn’t Mr. Keating who was always seeking things,” he emphasized. “It was Sen. Cranston who solicited contributions and sought contributions from Mr. Keating.”

On one occasion, according to Bennett, Cranston told aides that he wanted to ask for $500,000 from Keating but was persuaded by his chief fund-raiser, Joy Jacobson, to scale back his request to $250,000. Keating promptly complied with the request.

Bennett disclosed for the first time that Keating’s contributions to Cranston were even larger than had been previously reported.

In addition to $39,000 that he solicited from Keating for his 1986 reelection campaign, $85,000 for the California Democratic Party and $850,000 for voter registration groups, the hearings disclosed that Cranston got $10,000 to help retire the debt from his 1984 presidential campaign and $10,000 for his political action committee, known as the Committee for a Democratic Majority.

Nor was Cranston shy in admitting that Keating’s contributions bought him access.

“A person who makes a contribution has a better chance to get access than someone who does not,” Cranston told Bennett in an interview earlier this year. “I’m not going to mislead them (his constituents) into the belief that every citizen will have an opportunity to get at me, because it’s not true.”

Cranston continued to assist Keating after being told by former Arizona Gov. Bruce Babbitt in March, 1989, that Lincoln was selling uninsured bonds that appeared to violate securities law, Bennett said. Investors who bought the now-worthless bonds lost about $220 million.

Bennett said his investigation had found “substantial evidence that Sen. Cranston solicited or accepted large contributions from Mr. Keating on four occasions connected in time and circumstances to Mr. Keating’s requests for his help with the bank board.” The four occasions were:

--Early in 1987, Keating enlisted Cranston’s help in trying to persuade Federal Home Loan Bank Board officials to end an examination of Lincoln’s management practices. At the same time, Keating pledged $100,000 to America Votes, one of Cranston’s voter-registration organizations.

Three weeks before a meeting between Cranston and Keating on Jan. 28, 1987, the senator received a memo from Jacobson listing a number of people--including Keating--”who have been very helpful to you and who have cases or legislative matters pending (and) who will rightfully expect some kind of resolution.”

“Charles Keating is continuing to have problems with the bank board and (FHLBB Chairman) Ed Gray,” the memo said. It added that Keating during the upcoming meeting would be seeking “your advice on how to handle the current problem.”

After they met, Cranston told America Votes to expect a check of $100,000 from Keating. A month after the check arrived, Cranston attended a meeting with Gray to find out why the Lincoln exam had not been concluded.

--In the fall of 1987, Cranston solicited another $250,000 for voter registration when Keating came to him seeking help with the new bank board chairman, M. Danny Wall.

Before the meeting on Sept. 24, 1987, the senator received a memo from Jacobson saying that Wall’s views were likely to be more in line with those of Keating. She added: “You should ask for $250,000.”

When questioned by Bennett, Jacobson said that Cranston had wanted to ask for $500,000.

A follow-up letter to Keating from Cranston after the meeting confirmed that the two men had discussed Wall and that Keating had agreed to give $250,000. Two checks totaling that amount were delivered to Cranston’s office on Nov. 6, and Cranston telephoned Wall on Keating’s behalf six days later.

--Early in 1988, Cranston collected another $500,000 from Keating while arranging for him to meet with Wall.

Both matters apparently were discussed at a Jan. 8 dinner in Los Angeles attended by Cranston, his son, Kim, Keating and others. Keating asked Cranston to make telephone calls to Wall and bank board member Donald I. Hovde. He also offered to make another contribution.

Twelve days later, Cranston called Wall and arranged for him to meet with Keating on Jan. 28. Two weeks after that, Cranston and his son flew to Phoenix to collect two checks totaling $500,000 from Keating for voter registration.

--Also, early in 1989, either Cranston or an aide requested another $100,000 from Keating. It occurred at a time when Keating was trying to prevent the government from seizing Lincoln and wanted to sell it instead to a hand-picked group of associates.

Cranston and his Banking, Housing and Urban Affairs Committee aide, Carolyn Jordan, attended a meeting with Keating lobbyist Jim Grogan. After the meeting, both Cranston and Jordan pressed federal regulators on several occasions to approve the sale.

And, at the same time, according to Jacobson’s testimony, Cranston personally solicited money from Keating or Grogan. But no contribution was received, because Lincoln declared bankruptcy and was seized by the government in April.

Although Cranston did not respond in his remarks to the committee to those specific allegations, he rejected Bennett’s view that there was a direct link between his actions and the contributions simply because they occurred at approximately the same time. He said that Bennett was imposing an unworkable ethical standard.

“How can you rationally refuse to give legal and proper help at any time to someone who seems to have a reasonable grievance just because he has contributed to your campaign?” he asked. “Can you only help people who haven’t contributed? Or can you only help people who haven’t contributed lately? How lately?”

He added: “How many of you could testify that some member of your Senate staff who you have authorized to raise money has never, ever said to you something like: ‘John Doe’s about to meet with you, and I’ll sit in. Here’s what I think you ought to do. And remember, he’s been a big help to you.’ ”

Cranston, who will fly to California Sunday to undergo radiation therapy, said that the allegations had caused him “deep anguish.” He was accompanied to the hearing by his sister, son and daughter-in-law and said that he was particularly upset by suggestions that his son had benefited from Keating’s contributions.

Kim Cranston served as an unpaid leader of one of the voter registration organizations.

William W. Taylor III, Cranston’s lawyer, made an unsuccessful effort Friday to prohibit one of the Ethics Committee members, Sen. Jesse Helms (R-N.C.), from sitting in judgment on the California Democrat. He said that Helms had proven himself to be prejudiced recently by calling Cranston “the leading water carrier in Congress” for Keating.

Helms replied that he was upset because Cranston had contributed $5,000 to Harvey Gantt, who opposed the North Carolina senator in the recent election. Helms refused to disqualify himself, and the committee agreed to abide by his decision.

Like Cranston, the other Keating Five senators were eager to make statements seeking vindication in the court of public opinion after a year of closed investigations and a torrent of news leaks of fragmentary evidence.

Sen. John McCain (R-Ariz.), who, along with Sen. John Glenn (D-Ohio), has been judged by Bennett to be the least culpable in the scandal, told the committee that he abruptly had cut his personal and political ties with Keating when the financier asked him in March, 1987, to do battle with S&L; regulator Edwin J. Gray. As McCain put it: “When he asked me to do something I thought improper, I said ‘no.’ When he asked me to get Ed Gray off his back, I said ‘no.’ ”

He said that he went to two April meetings with Gray and other regulators because American Continental Corp., Keating’s company and the parent firm of Lincoln Savings, is a big employer in his hometown of Phoenix. But, when he learned that regulators had recommended criminal prosecution of Lincoln executives, he said, “That was the end of any involvement with Lincoln or ACC.”

“My relationship with Mr. Keating was ended, over, nothing more,” the Arizona Republican said. “I know I acted ethically and properly.”

Glenn said that he, too, attended the meetings with regulators because he wanted to make sure that they were “treating people fairly.” His interest was prompted by complaints from Keating that a federal audit of Lincoln was excessively long and intrusive and by assurances that Lincoln was in good financial shape.

“At no time did I ask for special treatment--for anyone,” Glenn said. “And at no time did I trade favors or perform actions in return for money. I acted honorably, I behaved honestly, and I have neither tainted my own reputation nor tarnished the reputation of this body.”

Sen. Donald W. Riegle Jr. (D-Mich.), in a rambling monologue, readily acknowledged that Keating had staged a fund-raiser for him in Detroit in March, 1987, but staunchly denied that he ever intervened improperly with regulators on Keating’s behalf.

“My conduct was normal, it was proper, it was ethical in every respect,” he said, adding that he had never promised anything in return for campaign contributions.

Riegle reminded the Ethics Committee that Keating was a man of power and influence whose attentions were welcomed by candidates for office at the time. Keating “was no pariah in this town--a lot of doors were open to him,” he said.

When Riegle finished his statement after 5 p.m., DeConcini decided that it was too late in the day to deliver his response to the charges. But DeConcini indicated that he is eager to have his say Monday.

“The sooner I can tell my story, the better off I will be and the people of Arizona (will be),” DeConcini said afterward. “We have been severely restricted in responding to material that has been leaked from this investigation.”

THE CRANSTON-KEATING RELATIONSHIP

Here is a chronology of the key events in Sen. Alan Cranston’s relationship with Lincoln Savings & Loan owner Charles H. Keating Jr., as outlined Friday by Senate Ethics Committee special counsel Robert S. Bennett:

July, 1984--Lincoln lobbyist Jim Grogan approaches Cranston’s finance director, Joy Jacobson, at the Democratic National Convention and offers support for the senator.

Dec. 17, 1984--Cranston meets with Keating and his economist, Alan Greenspan, now chairman of the Federal Reserve Board, to discuss the Federal Home Loan Bank Board’s regulation restricting thrift investments in risky ventures. Jacobson attends.

Fall, 1986--Cranston gets a hastily arranged $300,000 line of credit from Lincoln as his 1986 reelection campaign draws to a close.

Jan. 2, 1987--Jacobson writes a memo to Cranston to prepare him for an upcoming meeting with Keating and Grogan. It describes Keating as someone who has “been very helpful to you and . . . who will rightfully expect some kind of resolution” of his problems with FHLBB.

Jan. 28, 1987--Cranston meets with Grogan and Keating, who asks the senator to help in bringing an end to the bank board’s examination of Lincoln.

Feb. 24, 1987--Cranston informs officials of one of his voter registration groups, America Votes, to expect a $100,000 contribution from Keating. Check arrives on March 3.

April 2 and 9, 1987--Cranston is one of five senators who meets with FHLBB head Edwin J. Gray and San Francisco regulators at Keating’s request.

Sept. 24, 1987--Cranston meets with Keating after receiving a memo from Jacobson saying that “you should ask Keating for $250,000.” A follow-up letter shows that he asked for the money and they discussed the policies of the new FHLBB chairman, M. Danny Wall.

Nov. 6, 1987--Grogan delivers $250,000 check to Cranston’s office.

Nov. 12, 1987--Cranston telephones Wall to complain about the way the regulators in San Francisco have been treating Lincoln.

Jan. 8, 1988--Cranston and his son, Kim, have dinner with Keating in Los Angeles. Keating asks Cranston to make two telephone calls on his behalf, one to Wall and another to FHLBB member Donald I. Hovde. Keating offers to make another voter registration contribution.

Jan. 20, 1988--Cranston makes the telephone calls. Wall agrees to Cranston’s request that he meet with Keating.

Feb. 10, 1988--Cranston and his son go to Keating’s Phoenix office, where they collect checks totaling $500,000 for voter registration groups.

Feb. 16, 1988--Cranston makes another call to Wall about Lincoln.

Feb. 7, 1989--Cranston and his banking aide, Carolyn Jordan, meet with Grogan to discuss Keating’s desire to sell Lincoln to a hand-picked group. Cranston then contacts Wall four times to press for the sale before it is rejected by FHLBB.

April 11, 1989--Lincoln is placed in receivership.