Keating Contributed as ‘Patriot,’ Cranston Says : Thifts: In an Ethics Committee deposition, the senator discounts charges that funds donated by the executive were an attempt to buy his influence.


Sen. Alan Cranston (D-Calif.) contends that Lincoln Savings & Loan owner Charles H. Keating Jr., a conservative Republican, contributed nearly $1 million to his political activities because the thrift executive is a “patriot” who believes in democracy, according to a Senate Ethics Committee deposition released Thursday.

Cranston, one of five senators accused of intervening improperly with federal regulators on Keating’s behalf, discounted the notion that the contributions were designed to enlist his help in Lincoln’s battle against regulators investigating mismanagement of the Irvine thrift.

Keating himself has acknowledged that he was trying to gain influence with his donations.

In addition, the California senator disclosed for the first time that he once prevailed upon Keating to approach junk-bond king Michael Milken for a $500,000 contribution to voter registration groups founded by Cranston. Milken, who recently was sentenced to 10 years in prison for securities violations, never gave more than $25,000.


Over the last decade, Cranston solicited contributions of $60,000 from Keating for his various political campaigns, $85,000 for the California Democratic Party and $850,000 for voter registration groups founded by the California senator.

Asked why a conservative Republican would give so much money to a liberal Democrat, Cranston replied: “He likes to participate. He stated he likes to participate and I think that is one of the reasons he contributed ultimately to efforts I was making to get other people to participate in the political process. . . . He considers himself a patriot.”

The 270-page transcript of Cranston’s closed-door interview with committee members, which took place in April, provides a rare glimpse into the inner workings of the senator’s lucrative fund-raising apparatus and reveals previously undisclosed details of the close relationship between Cranston and Keating.

It was made public during the third week of hearings into the Keating scandal. Cranston and four other senators have been accused of playing key roles in Keating’s efforts to delay government seizure of Lincoln while the S&L; piled up debts of $2 billion.


Cranston, 76, whose popularity has plummeted as a result of his involvement in the Keating scandal, has announced that he will not seek reelection in 1992. He is undergoing radiation treatment for prostate cancer.

Although Cranston acknowledged that he and Keating discussed both contributions and assistance for Lincoln at a dinner meeting in Los Angeles in January, 1988, he insisted that the controversial thrift executive normally never mentioned the two subjects in the same breath. And he said that he never inquired about why Keating was contributing.

“I cannot know what was in his mind as to making contributions,” Cranston said. ". . . Now if Keating had some other purpose in mind, I cannot be responsible for that. . . . What I can know is what is in my mind. He never asked for a quid pro quo, he never got a quid pro quo. And he never asked me to do anything improper and I never did anything that was improper and never did anything just because he contributed. . . .

“If it was ever asked by Keating or anyone else, ‘I will contribute this if you do that,’ that is beyond the limits. But we never came up to that limit. . . . You assume you are dealing in an honorable way with an honorable person and that person considers you an honorable senator.”

Cranston’s account appears to conflict with Keating’s own view of what happened. Once asked if he thought his contributions to Cranston and other members of Congress persuaded them to help him in his disagreements with the government, he replied: “I certainly hope so.”

Likewise, Cranston denied that there was anything wrong--"ethically, morally or legally"--about the huge sums he solicited from Keating. Noting that he needed a record $13 million to be reelected in 1986, he explained: “Large sums were necessary to be successful. . . . There was no time to raise them and capacity to raise them in small denominations from a lot of people.”

On Jan. 2, 1987, Cranston received a memo from his chief fund-raiser, Joy Jacobson, who listed Keating as one of “a number of individuals who have been very helpful to you who have cases or legislative matters pending with our office, who will rightfully expect some kind of resolution.” Cranston acknowledged that perhaps he should have admonished her for making a link between their contributions and their desire for help.

Committee investigators also questioned the propriety of Cranston’s decision to permit Jacobson to attend his meetings with Keating when the two men discussed regulatory matters. They suggested that this was another explicit link between Keating’s contributions and Cranston’s efforts to help Lincoln.


But Cranston said that Jacobson was present not because it would improve her fund-raising ability, but because she needed to know enough to avoid potential conflicts. “She can handle it better and try to avoid getting in trouble over such matters if she was aware fully of what is happening,” he said.

Although he employed Jacobson as a fund-raiser, Cranston made it clear that he took primary responsibility for soliciting big donations and collected many of Keating’s checks personally.

Cranston said that it would have been improper for Keating to link his contributions and his request for assistance. At the same time, he conceded that Keating mentioned his contributions during the Los Angeles dinner at the same time that he asked the senator to contact M. Danny Wall, then chairman of the Federal Home Loan Bank Board, on his behalf.

“He was normally careful not to cover both topics at the same time,” Cranston said. “Upon this occasion he did not exhibit that care and perhaps I should have stopped him, but I did not.”

The senator said that Keating was prone to launch into “tirades” when the S&L; owner thought about the investigation of Lincoln by federal regulators and that he apparently forgot on that occasion to restrain himself from mentioning the two subjects at the same meeting.

Because Cranston was aware of Keating’s volatile temper, he had reason to suspect that federal regulators were not entirely to blame for Lincoln’s troubles. “His personality was one that gave short shrift to people he didn’t think knew what they were talking about and that would get their backs up in turn,” he said.

Nevertheless, Cranston said that he never suspected Keating was wrong in complaining about the zealousness of the regulators who wanted to shut down Lincoln.

According to Cranston, Keating was outraged when he learned that Milken had contributed only $25,000 to the senator’s voter registration groups. Keating instantly agreed to telephone Milken and tell him to give $500,000 “or something like that,” Cranston said.


“I thought that would be great,” he added.

Meanwhile, Michael Patriarca, an official at the Federal Home Loan Bank in San Francisco while Keating was disputing the investigation of Lincoln, testified before an open session of the Ethics Committee Thursday about the five senators’ efforts on Keating’s behalf.

Patriarca focused on an April 9, 1987, meeting at which he and other regulators discussed Lincoln with the five senators. The five have been accused of applying improper pressure on the regulators during the session.

At the meeting, the senators “seemed to have made up their minds that we were harassing Lincoln, that we were wrong,” he said. “Basically, we got the full court press.”

Sen. Dennis DeConcini (D-Ariz.) was the most aggressive of the five--acting like “the host or master of ceremonies,” Patriarca said. “I got the impression Sen. DeConcini was negotiating on behalf of Lincoln, attempting to get us to change our position.”

At one point, DeConcini suggested hiring new appraisers to resolve the bitter disagreement between the regulators and Lincoln over the true value of Lincoln’s real estate investments.

Patriarca said that Cranston played no active role in the meeting and made only “a cameo appearance,” shaking hands with the participants, saying that he shared the views of the other senators and then excusing himself to return to the Senate floor, where he was busy as assistant majority leader.

None of the others played a role comparable to DeConcini, according to Patriarca.

He said that Sen. John Glenn (D-Ohio) was “blunt,” advising the regulators to charge Lincoln if the thrift had done something wrong or else bring the lengthy examination to a close.

Sen. John McCain (R-Ariz.) seemed “uncomfortable” being at the meeting, he said. And Sen. Donald W. Riegle Jr. (D-Mich.) “did what I would characterize as cross-examination (trying) to probe for the basis (of) our findings.”