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McCain Probed Over Traveling to Keating Spa : Thrifts: The senator becomes testy when asked to explain a three-year delay in repaying $13,000 in costs to Lincoln S&L; for trips to the Bahamas.

TIMES STAFF WRITERS

Sen. John McCain (R-Ariz). came under heavy questioning Friday before the Senate Ethics Committee about a three-year delay in repaying $13,000 in travel costs to the firm controlled by savings and loan kingpin Charles H. Keating Jr.

McCain said he didn’t realize he had paid only $2,000 of the total $15,433 in expenses for flights on planes and helicopters on various trips to join Keating at a Bahamas estate for swimming, snorkeling and fishing.

“If I had known I hadn’t paid, I would have paid,” McCain said.

“It comes down to whether you did know,” said Committee Chairman Howell Heflin (D-Ala.), who asked a detailed list of questions about trips involving McCain, his wife, Cindy, their daughter, Meghan, and a baby sitter. The Ethics Committee is investigating whether McCain and four other senators, including Alan Cranston (D-Calif.), intervened improperly with federal regulators on behalf of Lincoln S&L;, which Keating controlled.

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Both McCain and Sen. John Glenn (D-Ohio) were questioned by the committee on Friday, the first public cross-examination of any of the five senators since the hearings began in November. But the questioning of Glenn was remarkably gentle, strongly suggesting that all of the committee members are prepared to exonerate him.

McCain said after his testimony that he felt he was going to be exonerated, despite the critical inquiries by Heflin.

Committee special counsel Robert S. Bennett had recommended last October that the complaints against both Glenn and McCain be dropped. But the committee declined to follow the suggestion, and sources said the Democratic members were reluctant to clear McCain--the only Republican among the five--prior to the November election. McCain’s attorney, John M. Dowd, said in an interview Friday that Heflin’s intense questioning of McCain reflected the partisan nature of the inquiry.

At least one member of the committee, Sen. Trent Lott (R-Miss.) said he is ready to absolve McCain of all charges of wrongdoing. “I think you have shown repeatedly and clearly you did nothing improper,” Lott told McCain. “When you were asked to do so, you refused.”

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McCain said he had always planned to reimburse Keating’s firm, American Continental Corp., for travels on the corporate aircraft from Phoenix to Miami in 1984, 1985 and 1986 and for tickets on charter aircraft or helicopters from Miami to the Bahamas. He paid $2,000 to ACC in 1986.

Heflin persisted in wondering why McCain waited until 1989, and an IRS audit of ACC, to write further reimbursement checks for $13,433.

McCain, growing somewhat testy, snapped back: “I believed I paid for everything. If you can find some flight I didn’t pay for, I would like to write you a check. . . . I would be glad for you to fill in the check.”

Under questioning from a more sympathetic panel member, Vice-Chairman Warren B. Rudman (R-N.H.), McCain said his wife had handled the household bills and that he didn’t know she had neglected to repay Keating’s firm fully for the travel expenses.

McCain was the only one of the five senators with close personal ties to Keating. But he told the committee Friday how the friendship shattered abruptly and irretrievably on March 24, 1987, when the two men argued noisily over Keating’s request for help in dealing with S&L; regulators.

“On March 24, when I was asked to do something improper for a friend, I refused,” McCain said.

Keating wanted McCain to try to persuade regulators to withdraw a rule restricting risky investments by Lincoln. In return, Lincoln would have increased its lending for home mortgages. McCain refused to offer Keating’s plan in meetings with S&L; regulators. But the proposal was offered by Arizona’s other senator, Democrat Dennis DeConcini.

Keating provided $1.3 million to the campaigns and political causes of Sens. Cranston, McCain, DeConcini, Glenn and Donald W. Riegle Jr. (D-Mich.). The Ethics Committee is trying to determine whether these donations influenced the senators to act improperly in their contacts with the federal regulators.

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Glenn told the committee Friday that “there was nothing wrong with the contributions” received from Keating. Like any other constituent, Keating deserved the help of his senator in dealing with a grievance with the government, Glenn said.

“You have to make sure people are dealt with fairly,” said the Ohio Democrat. “Occasionally the regulators make a mistake.” Senators should be “circumspect and proper” when dealing with bureaucrats but shouldn’t be fearful of intervening if a citizen is being abused, Glenn said.

“Let’s not get so scared by appearances we lose the representative form of government,” Glenn said. “If we let that kind of representation go down the drain and let the people hang, we make a mistake.”


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