Ex-Keating Aide Tells of Cranston Bids for Funds : Thrifts: The former Lincoln S&L; lobbyist testifies the senator sought contributions at the same time he promised to assist in battling regulators.

A lobbyist for former Lincoln Savings & Loan owner Charles H. Keating Jr. said Friday that moments after he first met Sen. Alan Cranston (D-Calif.) at a political event in 1984, the senator suggested Keating should contribute to his campaign.

James Grogan also told the Senate Ethics Committee he remembers more than one occasion on which Cranston or his aides sought contributions from Keating while at the same time promising to assist Lincoln in its battle against federal regulators.

Cranston has acknowledged only one such conversation.

Grogan, a surprise witness who testified under a limited grant of immunity from prosecution, said there was never a trade-off between Keating’s contributions and his request for assistance. But he appeared to strengthen the committee’s case against both Cranston and Sen. Donald W. Riegle Jr. (D-Mich.). He provided important new details of Cranston’s close alliance with Keating and contradicted earlier testimony by Cranston aides Joy Jacobson and Carolyn D. Jordan.

The panel is investigating charges that Cranston, Riegle and three others--Sens. Dennis DeConcini (D-Ariz.), John McCain (R-Ariz.) and John Glenn (D-Ohio)--improperly assisted Keating in exchange for contributions. Their intervention with federal regulators allegedly delayed the government takeover of Lincoln, contributing to losses of $2 billion by the federally insured thrift.

Grogan, 36, who was paid $300,000 a year to lobby for Lincoln, recalled that he introduced himself to Cranston at an event in 1984, explaining that he worked for an Arizona builder who had just purchased a savings and loan in California.

He said Cranston promptly pulled a 3x5 card from his pocket, saying: “I’ve been very good to the savings and loans. I’ve worked hard for California savings and loans. You all should really support me.”

Cranston then wrote Grogan’s name and telephone number on the card, he said.

A short time later, according to Grogan, he received a telephone call from Jacobson, the senator’s fund-raiser. He said she repeated Cranston’s contention that he had been “very supportive” of California thrifts and asked him if Keating would raise money for the senator.

Grogan indicated he was surprised by this aggressive appeal for money because Keating is a conservative Republican who opposes abortion, and Cranston is a liberal Democrat who is an abortion rights advocate. As a result, he said, he did not immediately commit Keating to anything during his first conversation with Jacobson.

He said he later persuaded Keating to assist Cranston by telling him that the senator shared his negative opinion of then-Federal Home Loan Bank Board Chairman Edwin J. Gray. Keating disagreed with Gray’s policies and later accused the bank board chairman of carrying on a “vendetta” against Lincoln.

In April, 1985, as a result of Cranston’s appeal for funds, Keating collected $15,000 in checks from his employees for the California senator. It was the first of nearly $1 million that Cranston solicited from Keating--$60,000 for his campaigns, $85,000 for the California Democratic Party and $850,000 for voter registration groups founded by the senator.

At the same time, Grogan emphasized that Keating did not always have Cranston’s support for his proposals. He said contributions could buy him access to a senator, but the money provided no guarantee that the senator would do the bidding of a contributor.

“For example,” he told the committee, “Sen. Cranston, whom I believe we gave the most money to, there were several times specifically when I went to his office and asked him, on behalf of Mr. Keating, to take action. And he said, ‘No, I can’t do it.’ And this was after tremendous amounts of money had been raised for him.”

Grogan contradicted earlier testimony by Jacobson, who said that she--not Cranston--was approached at the 1984 Democratic National Convention by Grogan, who “offered to be helpful to the reelection campaign.”

He said that Keating, who eventually developed a warm friendship with Cranston, usually waited until the end of his meetings with the senator to discuss contributions.

As Grogan explained it: “Normally as we were leaving, either Mr. Keating would say, ‘Is there any way I can help you, senator? I appreciate our relationship.’ Or at times, Sen. Cranston would say, ‘Could you help in this area, could you help raise money here, could you do that?’ ”

He added: “There was never an occasion where Mr. Keating asked Sen. Cranston to do something, and Sen. Cranston said, ‘Only if you raise funds for me.’ There was never an occasion where Mr. Keating said, ‘If you do this for me, I will raise X-amount of dollars for you.’ ”

Under questioning by special counsel Robert S. Bennett, Grogan detailed the following occasions on which he said Cranston or his aides allegedly sought contributions while at the same time pledging to assist Keating with regulators:

--In late 1986, when the Senate was considering legislation that would have imposed restraints on Keating’s management of Lincoln, Grogan tried to contact Jordan, Cranston’s aide on the Banking Committee, for assistance in battling the proposal. Unable to reach Jordan, he instead talked to Jacobson.

When Jacobson called back an hour later to report that she had told Jordan of Keating’s opposition, she then said she wanted to “switch gears” and discuss something “totally unrelated.” She asked him whether Cranston could get a personal loan for his reelection campaign from Lincoln.

As a result, Cranston’s campaign subsequently received a $300,000 line of credit from Lincoln that he never used.

--In September, 1987, Grogan personally delivered two checks totaling $250,000 for voter registration to Cranston in his office in the Capitol. “Mr. Keating wanted me to give you those checks,” he told the senator.

Grogan and Cranston then discussed Lincoln’s problems, with Keating joining the conversation over the office speaker phone. Keating asked Cranston to contact then-bank board Chairman M. Danny Wall on Lincoln’s behalf, and the senator agreed.

--In January, 1988, Grogan, Keating, Cranston, Cranston’s son, Kim, and Kim’s then-girlfriend, actress Shelley Duvall, had dinner together at Jimmy’s restaurant in Los Angeles. Kim explained the work of Cranston’s voter registration groups, one of which he headed, and Cranston offered to make two telephone calls suggested by Keating. In one call, Cranston arranged a meeting for Keating with Wall.

Cranston has previously acknowledged that both contributions and assistance for Lincoln were discussed at the dinner. Grogan could not remember any discussion of specific amounts of money that Keating would contribute to the voter registration effort.

Grogan contradicted testimony by Jordan concerning a written statement she inserted into the Congressional Record on Cranston’s behalf in 1987 that assisted Lincoln in a pending court suit against the bank board. Jordan told the committee she acted entirely on her own initiative, but Grogan said she was acting on his request.

Grogan also contradicted Riegle’s statement that he did not arrange meetings between the five senators and federal regulators in early April, 1987. These meetings have been a central focus of the so-called Keating Five case because the regulators alleged that they were asked improperly by the senators to go easy on Lincoln.

He said it was during Riegle’s visit to Keating’s headquarters in Phoenix in March, 1987, that the senator first proposed the idea of such meetings. He said he later learned that Riegle had contacted Gray, who consented to meet with the senators.

Grogan said Riegle, who was in line to become chairman of the Senate Banking Committee, had also insisted he himself could not attend such a meeting with the regulators unless he was invited by McCain and DeConcini, who represented the state where Keating lived.

“It was apparent to me . . . Sen. Riegle knew as a true politician that this was a potential politically explosive situation because there was so much media at the time about Mr. Keating and Mr. Gray fighting,” he said.