Cranston Sent Letter for BCCI-Linked Thrift, Paper Says : Ethics: Senator reportedly acted after $25,000 was contributed to a voter sign-up group he had established.

Sen. Alan Cranston (D-Calif.) wrote a letter to the Federal Home Loan Bank Board in September, 1988, at the request of a contributor, David L. Paul, owner of CenTrust Savings Bank, the Miami-based thrift owned partly by the scandal-ridden Bank of Credit & Commerce International, according to a report published Saturday.

The letter was written just two months after Paul, who currently is under grand jury investigation on allegations that he mismanaged CenTrust, contributed $25,000 to a voter registration group established by the California senator.

This account of Cranston’s alleged actions on behalf of Paul was published in Roll Call, a newspaper that focuses on Congress. The article was based on a previously undisclosed tape of a conversation in 1988 between Paul and an unnamed Washington lobbyist. The newspaper said the tape had been obtained by federal regulators when they seized CenTrust several years ago.

The transcript of the tape also suggests that Cranston and Senate Banking Committee Chairman Donald W. Riegle Jr. (D-Mich.) struck a deal when the Democrats took control of the Senate in 1987 whereby the California senator would relinquish his seniority right to step into the committee chairmanship if Riegle deferred to him on banking matters involving California.

Cranston became assistant majority leader instead of claiming the chairmanship.

Cranston’s spokesman, Murray Flander, denied all of the allegations contained in the Roll Call article. He said Cranston and Riegle never had such an arrangement, and he denied that Cranston wrote his letter to the FHLBB at the behest of Paul. He said the senator’s letter to the FHLBB was simply addressing a problem that many thrift industry leaders had been complaining about.

Cranston’s letter expressed opposition to a rule that would have required thrifts to value certain assets at market value. The proposed rule was opposed by many thrifts that, like CenTrust, were holding junk bonds whose value had plummeted.

The allegations raised in the Roll Call article are similar to charges that have linked Cranston to Charles H. Keating Jr., owner of the Irvine-based Lincoln Savings & Loan.

Cranston has been under investigation by the Senate Ethics Committee for the last two years on charges that he intervened improperly with the FHLBB on Lincoln’s behalf in exchange for nearly $1 million in contributions by Keating to Cranston’s campaign, the California Democratic Party and voter registration groups founded by the senator.

The six-member Ethics Committee recently arrived at a stalemate on the question of whether Cranston’s role in the Keating affair should be considered by the full Senate.

Like Keating, Paul was a big political contributor who sought the help of Washington politicians when his high-flying management style caught the attention of federal regulators. He spent millions of dollars on lavish entertaining and art work and frequently hobnobbed with Saudi businessman Ghaith R. Pharaon, who has been accused by federal investigators of acting as a surrogate in the United States for BCCI.

About one-fourth of CenTrust’s stock was owned by BCCI before it collapsed.

In June, 1988, Paul contributed $25,000 to one of Cranston’s voter registration groups. Two months later, on Sept. 22, Paul was told by his hired lobbyist during the taped conversation that Cranston had agreed to write a letter to the FHLBB in opposition to the proposed new assets rule that Paul strongly opposed.

Files at the Office of Thrift Supervision, the successor agency to FHLBB, contain a copy of a letter written to the board by Cranston that expresses opposition to the rule opposed by Paul. It is dated Sept. 22, 1988--the same day as the taped conversation between Paul and his lobbyist--but the letter makes no reference to Paul or CenTrust.