Cranston Aide’s Memos Point to Keating Ties

A fund-raiser for Sen. Alan Cranston (D-Calif.) acknowledged Monday in testimony before the Senate Ethics Committee that she wrote three memos in 1987 and 1988 that appear to link nearly $1 million in contributions from Lincoln Savings & Loan owner Charles H. Keating Jr. with actions by the senator on Keating’s behalf.

The memos, which were made public for the first time, go to the heart of allegations being investigated by the Ethics Committee that Cranston acted improperly when he accepted huge contributions from Keating and then assisted in the S&L; owner’s battle with federal regulators.

Meanwhile, it was learned that a federal grand jury in Los Angeles is nearing completion of an inquiry into Keating’s relationship with Cranston and four other senators, Dennis DeConcini (D-Ariz.), John McCain (R-Ariz.), Donald W. Riegle Jr. (D-Mich.) and John Glenn (D-Ohio).

But William W. Taylor III, Cranston’s attorney, cautioned that the California senator has not been notified that he is the target of a criminal investigation.

In the two years before the $2-billion collapse of Lincoln in April, 1989, Cranston contacted federal regulators on a number of occasions to inquire about the Federal Home Loan Bank Board’s investigation of mismanagement of the Irvine thrift, to arrange appointments for Keating or to urge regulators to approve the sale of the institution in early 1989.

At the same time, he also solicited $60,000 from Keating for his campaigns, $85,000 for the California Democratic Party and $850,000 for voter registration groups founded by the senator.

In her memos during that period, Joy Jacobson, the Cranston fund-raiser, kept her boss informed of developments involving Keating’s battle with federal regulators and suggested amounts of money that might be solicited from the controversial thrift executive.

On Sept. 6, 1987, for example, Jacobson wrote to Cranston that Keating would be coming to his office in the Capitol a few weeks later. She also noted that M. Danny Wall had a few months earlier been appointed as chairman of the bank board, replacing Edwin J. Gray, whom Keating viewed as his nemesis.

She added that the appointment of Wall as bank board chairman was “obviously good news for Keating,” because Wall’s views were closer to those of Keating than were Gray’s. Then, in the next sentence, she bluntly stated: “You should ask Keating for $250,000.”

In an earlier, closed-door interview with the committee, Jacobson was asked if there had been any link between the contributions and Cranston’s activities on behalf of Keating. She replied: “In retrospect, I think that there was a link there. In the context in which I saw these contributions, I did not know all the other things that were going on.”

But under cross-examination by committee counsel Robert S. Bennett Monday, Jacobson insisted that there was no such link in Cranston’s mind, even though she thought that Keating may have linked them in his mind. Keating has indicated that he made contributions to gain influence.

Jacobson’s memos also disclosed the names of many other wealthy businessmen that Cranston apparently asked to contribute to his voter registration groups, including Edgar M. Bronfman, Philip Klutznick, Lester Crown and Donald J. Trump.

After reviewing the memos, Sen. Jesse Helms (R-N.C.), an Ethics Committee member and a highly successful fund-raiser himself, commented that fund raising had been elevated to “a fine art” by Cranston and Jacobson.

Nevertheless, Cranston’s fund raising for voter registration fell far short of his goal of $15 million for 1987 and 1988. The largest contribution of $1 million came from Joan B. Kroc, widow of McDonald’s owner Ray Kroc, according to sources.

An internal fund-raising document released Monday shows that Cranston received $25,000 from fashion designer Liz Claiborne, $20,000 from Disney executive Frank G. Wells, $25,000 from television producer Gary David Goldberg and $5,000 from Disney executive Michael D. Eisner. He apparently sought $250,000 from movie producer Ted Field and $100,000 from singer and actress Barbra Streisand but received nothing.

Asked about her Sept. 6, 1987, memo advising Cranston to ask for $250,000 from Keating when the two men met on Sept. 24, Jacobson said that the intent of her memo was to persuade the senator not to ask for $500,000, as he had earlier suggested. “I thought it was too much,” she said.

Keating complied with the request for $250,000 and later gave another $50,000.

She said that the memo mentioned the appointment of Wall only as an aside. It referred to a clipping from the Wall Street Journal about the new bank board chairman, which she had attached to the memo. But she acknowledged that she thought Keating would be “in a better frame of mind” because of the appointment of Wall.

In another memo dated Jan. 2, 1987, to Cranston, Jacobson listed Keating as one of five “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.”

Under questioning, she said that she was only telling the senator that Keating deserved a response to his request for help, although not necessarily a positive response.

In her memo dated Jan. 18, 1988, Jacobson reminded Cranston that he had promised Keating during a dinner meeting in Los Angeles earlier that month that he would arrange a meeting between Wall and Keating. In addition, she reminded him to honor Keating’s request for him to telephone bank board member Donald Hovde. Cranston later made good on both commitments.

Jacobson’s memo following up on the Los Angeles dinner is important because it shows that the two men had discussed both fund raising and the two calls that the senator would make on Keating’s behalf. Cranston has acknowledged that the purpose of the dinner meeting was to discuss Keating’s contributions to the voter registration effort.

Nevertheless, Jacobson said that neither she nor Cranston ever promised contributors favors or help in return for money given to the campaigns.

Often during her eight years as a fund-raiser, Jacobson, an attractive young blond woman, recalled that “male contributors from time to time would say half-jokingly: ‘What else do I get?’ ” She said that Cranston, overhearing such a remark, would reply: “You get good government.”

Jacobson said that, in her contacts with Keating’s aides, she avoided discussing their contributions and assistance by the senator for Lincoln at the same time. Such a linkage would be “tacky” and “counterproductive,” she said, but not necessarily illegal.

Anyone who demanded a favor from Cranston in return for a contribution was spurned, she said.

“I came into contact with people who said: ‘I can do a $30,000 fund-raiser, and I need you to get that HUD grant,’ ” she declared. “I just threw those (telephone numbers) away. A lot of people out there were not subtle.”

Members of the Ethics Committee have questioned why Jacobson, as a fund-raiser, attended meetings between Cranston, Keating and Keating’s aides that focused entirely on the problems Lincoln was having with the bank board. Some members clearly view this as an implied link between Keating’s contributions and Cranston’s actions on his behalf.

But Jacobson explained that she attended these meetings simply to ensure that big donors such as Keating would not be left sitting in the office alone if Cranston was delayed or if the senator had to go to the Senate floor to vote.

Sources said that the Los Angeles grand jury is concentrating on the April 2, 1987, meeting among Sens. Cranston, DeConcini, McCain and Glenn and regulator Gray.

Action by the grand jury could come as soon as the end of December, one source said.

“I don’t have any information that Sen. Cranston is the target of a criminal investigation,” Taylor said. “. . . We haven’t heard ‘boo’ from the Justice Department in months.”

DeConcini said that he had provided his financial records to a grand jury more than eight months ago. And Thomas Green, lawyer for Riegle, insisted that the senator “is not under investigation by the FBI or anyone else.”