DeConcini Questioned on Call to State Official : Thrifts: The senator denounces as ‘absurd’ suggestions he was trying to pressure a California regulator on behalf of S&L; owner Keating.

Sen. Dennis DeConcini (D-Ariz.) acknowledged Thursday that he called a state official in 1989 to ask about a possible sale of ailing Lincoln Savings & Loan, but he denounced as “absurd” suggestions that he was trying to use political pressure to help Lincoln owner Charles H. Keating Jr.

DeConcini and his lawyer, James Hamilton, sparred repeatedly with Senate Ethics Committee counsel Robert S. Bennett over the significance of DeConcini’s phone call to the Sacramento office of John K. Geoghegan, California’s secretary of business, transportation and housing.

Lincoln, based in Irvine, Calif., was a key subsidiary of American Continental Corp., a Phoenix firm with 2,000 employees and a $50-million payroll in Arizona. DeConcini said that he was eager to preserve the jobs of a big employer in his state and called Geoghegan to inquire about the status of the proposed sale. He was told that California would have no jurisdiction over the transaction, because Lincoln was going to switch from a state charter to a federal charter.

Bennett offered a more sinister view of the call, reading an affidavit from California Savings & Loan Commissioner William Crawford, who said that he interpreted DeConcini’s call to Geoghegan as an effort to expedite the sale. “It appeared that all Sen. DeConcini wanted me to do was not object (to the sale) publicly or to the press,” Crawford said in the affidavit. “I would not agree to this ‘keeping quiet,’ and believe I used the words ‘no deal.’ ”

Hamilton interrupted Bennett’s reading of the affidavit. “This is double, triple, even quadruple hearsay,” Hamilton said, noting that Crawford had never spoken to DeConcini. Crawford’s affidavit was based on his subsequent discussions with Geoghegan and John H. Sullivan, California’s undersecretary of business.

Crawford’s affidavit noted that he had objected to a previous deal in which federal regulators sold the insolvent American Savings & Loan to a group headed by investor Robert Bass. Crawford said that his protest was “embarrassing” to the federal officials who approved the Bass deal. “I believe it was because of this they wanted me to agree to keep quiet” about the proposed Lincoln transaction, according to Crawford’s affidavit.

Ethics Committee Chairman Howell Heflin (D-Ala.) overruled Hamilton’s protests and allowed Bennett to introduce the affidavit.

DeConcini then interjected: “This is just absurd, Mr. Chairman, for Mr. Bennett to make these accusations.”

“I’m not making accusations at all,” Bennett responded. “I’m setting this before the committee for its judgment.”

The Ethics Committee is considering whether DeConcini and four other senators, including Alan Cranston (D-Calif.), acted within acceptable standards of conduct in their efforts on behalf of Keating, who contributed $1.3 million to their political campaigns and causes. The senators contend that they were only carrying out their duties as elected officials by responding to allegations that thrift regulators were treating Lincoln unfairly.

DeConcini said that his call to the California officials was appropriate and that his goal was to avert the bankruptcy of American Continental, the sixth biggest corporation in his state. He cited an affidavit in which Geoghegan said: “I told the senator that the state of California would no longer be involved since Lincoln was to become a federally chartered institution. . . . “

Geoghegan also said in his affidavit: “I have no recollection of DeConcini asking me to intercede with (S&L; Commissioner) Crawford, but I know I did not ask Crawford to do anything.”

DeConcini said that his call to a state official outside Arizona was not unprecedented. “I have contacted state agencies, and I’ve contacted governor’s offices,” DeConcini said.

However, California Gov. Pete Wilson said in an affidavit presented to the committee that “it is not common for a senator from one state to contact a state regulator from another state.” Wilson said that he had never been asked by Keating to intervene with federal officials “on any matter related to Lincoln.”

Keating and others associated with American Continental gave $16,000 in unsolicited contributions to Wilson’s 1988 Senate reelection campaign. Wilson said that he returned the money after Keating “made a public statement that he hoped his campaign contributions had influenced the recipients of those contributions.”