Keating Asks Senate Panel for Immunity

Attorneys for Charles H. Keating Jr. said Saturday they have formally asked the Senate Ethics Committee to grant the embattled savings and loan owner immunity from prosecution in exchange for his testimony about the “Keating Five” scandal.

In letters to the committee’s special counsel, a lawyer representing Keating said that “neither the American public nor the committee can know the whole story” about the scandal without hearing his client’s testimony.

Unless Keating is granted immunity, however, attorney Stephen C. Neal said the former S&L; chief would refuse to testify about his involvement with five senators who intervened with regulators on his behalf after accepting $1.3 million in campaign contributions from him.

Keating, former owner of failed Lincoln Savings & Loan in Irvine, is the central character in the Ethics Committee’s investigation of Sens. Alan Cranston (D-Calif.), Dennis DeConcini (D-Ariz.), Donald W. Riegle Jr. (D-Mich.), John Glenn (D-Ohio) and John McCain (R-Ariz.).

The senators are accused of pressuring federal regulators to resolve an investigation of Lincoln’s financial affairs and to drop an investment rule that Keating opposed. Keating and the five senators have denied any wrongdoing.

In October, as the committee prepared for a series of public hearings that began last week, Neal suggested that Keating might testify if he received a promise from the panel that his statements could not be used against him in other legal proceedings.

Such assurances would provide Keating a measure of protection against pending criminal investigations into his role in Lincoln’s $2-billion collapse, expected to be the most expensive thrift failure on record. Keating is also the target of a fraud lawsuit filed by federal regulators and a number of private civil suits.

Committee members could not be reached for comment Saturday, but they appeared to rule out an immunity deal when the subject was raised at one point last month. In the words of one panel staffer, the idea was rejected “out of hand” by Ethics Committee Chairman Howell Heflin (D-Ala.) and Vice Chairman Warren B. Rudman (R-N.H.). The two senators refused to allow the suggestion to come before the full six-member panel for consideration, sources said.

In an apparent effort to persuade the committee to change its mind, Keating’s attorneys issued a second, more formal offer last week. In two letters dated Nov. 12, Neal characterized Keating’s request for immunity as a public service and appeared to promise potentially explosive revelations if the panel accepted the proposal.

“The American public has a right to know the full story of these senators and their dealings with my client,” Neal wrote to Robert S. Bennett, special counsel for the Ethics Committee. “Yet neither the American public nor the committee can know the whole story without my client’s testimony.”

Keating’s testimony “might help some senators, it might hurt others,” the letter continued. “But because of pending criminal investigations, Mr. Keating’s story cannot be heard at all.”

Although he has not responded publicly to Keating’s offer, Bennett indicated in his opening statement to the committee Thursday that documents collected during the yearlong investigation would be more important than any individual witness that might be called to testify.

Bennett has compiled 40 volumes of depositions, affidavits and documents gathered from the files of the five senators and American Continental Corp., Lincoln’s Phoenix-based parent company that was headed by Keating.

“These documents, better than anything else, tell us what happened,” Bennett told the committee. “They show us the patterns of conduct over long periods of time. They show us the true nature of relationships, not slanted by the glare of possibilities for the natural desires to put the best possible light on one’s conduct.”

Keating appeared before the ethics panel during a closed session earlier this year but refused to testify on the advice of his attorney. He cited his 5th Amendment right against self-incrimination.

Congress could compel Keating to talk by requesting that a federal judge grant him immunity from prosecution for any information he disclosed to the ethics panel. But such a move could possibly jeopardize continuing criminal and civil investigations.

Keating has been indicted on fraud charges in California and faces a number of other charges resulting from Lincoln’s collapse. He is free on $300,000 bond after having served 33 days in jail before being able to post the reduced bail.

Neal said in the letters that Keating “will defeat all of these charges.”