With Friends Like These

By Ed Magnuson

Among Washington's chummy power brokers, it is not unusual for a Senator to ask a federal regulator about an investigation involving his constituents. But can the timing of such an inquiry mean that improper influence was exerted? How about calls made to an official's unlisted home telephone number late at night or at 5:30 in the morning?

The Senate ethics committee was faced with such fine questions last week in its plodding probe of five Senators who may have gone too far in their attempt to get federal officials off the back of Charles Keating, a generous contributor to their campaigns. Keating, 66, was released on $300,000 bail last week after spending a month in a California jail awaiting trial on charges that he misled investors in his bankrupt Lincoln Savings & Loan, whose failure will cost taxpayers $2 billion. Ten months into its investigation, the committee is still trying to decide whether at least three Democratic Senators -- Michigan's Donald Riegle, California's Alan Cranston and Arizona's Dennis DeConcini -- should be punished by the Senate. A battle of leaked documents was launched last week by insiders hoping to influence the decision.

According to one such document, Roger F. Martin, a former member of the Federal Home Loan Bank Board, which regulates S&Ls, told Senate investigators that Cranston called him at home late one night last spring and that DeConcini reached him the same way at 5:30 the next morning. Both had urged that Lincoln Savings be sold to an interested buyer rather than be shut down. Martin told the probers, "I have never, either before or since this incident, received a telephone call at home from any Senator or Representative regarding a board matter."

The leaks also seemed designed to ensnare Riegle. One document suggests that he benefited from two 1987 fund raisers arranged partly by Keating. Shortly afterward, the disclosures indicate, Riegle set up a meeting of the five Senators with regulators to press Keating's cause. The other two Senators / present, Ohio Democrat John Glenn and Arizona Republican John McCain, reportedly have been cleared of wrongdoing.

House Republicans were leak targets too. A 1986 letter from 16 of them, including Dick Cheney and Newt Gingrich, asked Bank Board ex-chairman Edwin Gray for "internal memoranda" about the board's decisions on certain S&L matters that could have helped Keating. Gray refused the request and charged last week that the Congressmen had been "duped and used" by the indicted financier.

All five Senators deplored the leaks, claiming that they were taken out of context and that they distorted their relations with Keating. The war of disclosures clearly had partisan aims. Republicans hoped to raise the heat on the three Democrats still under investigation and force full Senate action before the Nov. 6 elections. Democrats wanted to keep Republican McCain under suspicion and postpone any pre-election condemnation of their coziness with the indicted financier.

With reporting by Hays Gorey/Washington