SMITH &
HARROFF. INC

March 7, 1989

Mr. David E. Stevens

Director of Taxation

American Continental Corporation

P.O. Box 29099

Phoenix, AZ 85038-9099

Dear Mr. Stevens:

I have consulted my files to refresh my memory concerning John McCain's use of the corporate aircraft as a guest of Mr. Keating.

Enclosed is a copy of a letter from me to Mr. Greg Anderson, who was Treasurer of the McCain for Senate Committee. Please note that I instructed Mr. Anderson to reimburse American Continental in an amount equivalent to first-class travel for two trips of which I was aware.

If there were other trips made by Senator McCain that I am not aware of and for which the company was not reimbursed, I can assure you that our intention would be to arrange appropriate reimbursement. In that event, you should contact Chris Koch, the Senator's Administrative Assistant. His number is: 202-224-2235.

Regarding the other matter we discussed, Meghan McCain's birthdate is 10/23/84. I hope that this information is helpful.

With best regards.

Şincerely

Jay Jam

J. Brian Smith

CC: Chris Koch
Kaye Temple

11 Canal Center Plaza Suite 104

Alexandria, Virginia 22314 (703) 683-8512

EX. 590

This is to request that you prepare a campaign check in the amount of $959.00
to American Continental Corporation.

These funds are to reimburse American Continental for two trips made by
John McCain in 1985 on their corporate aircraft. One trip was on April 4, 1985
from Miami, Florida to Phoenix. A second trip occurred on August 29, 1985
between Washington, D.C. and Phoenix.

According to FEC regulations, we are obliged to reimburse an owner of corporate
aircraft in the amount equivalent to first class commercial airline rates.
According to my travel agency, $959.00 represents the cost of two first class
tickets for the aforementioned trips.

Please report this expenditure in our next FEC filing. Also, I would appreciate
it if you would send the check to me so that I can forward it to American
Continental with an explanatory note.

That we did not reimburse American Continental at the time of the trips was
an oversight on my part, as John's advisor on FEC matters. However, having
been made aware that the trips occurred, I want to report them properly and
make sure that the appropriate reimbursement is made.

Thank you for dealing with this matter. Call me if you have any questions.

As we discussed, I am enclosing copies of checks which Mrs. McCain
wrote to American Continental Corporation in 1986 to reimburse ACC
for flights taken by Senator McCain. I just became aware of these
checks today.

It appears that these checks were written to reimburse ACC for the
flight taken April 4, 1985 by Senator McCain from Washington, D.C.
to Phoenix and for the flight taken August 29, 1985 by Senator McCain
from Miami to Phoenix. Because I was not aware of these checks at the
time that we corresponded back in May of this year, these flights were
also included on the schedule for which Senator McCain made reimburse-
ment to ACC in May of 1989. Therefore, it appears that Senator McCain
reimbursed ACC twice for those two flights. Because of our bankruptcy,
we will encounter some difficulty in arranging for reimbursement at
this point. However, if the Senator would like to be reimbursed,
please let me know and I will see what we can do.

I apologize for any inconvenience delayed discovery of these two
checks may have caused. Please let me know if you have any questions
concerning this.

Very truly yours,

Dand 5 Mon

David E. Stevens
Director of Taxation

Enclosure

bcc: Mr. Jim Grogan

SPECIAL COUNSEL

American Continental Corporation is undergoing an Internal Revenue Service audit for the years of 1984 and 1985. One audit issue that has come up relates to airplane flights. During those years, Senator McCain, his family and some members of his staff used our corporate aircraft. I am attaching a schedule of the flights that they took.

At this point, the Internal Revenue Service is proposing to charge Mr. Keating personally with income of $7,214.52 with respect. to the flights taken by Senator McCain and his family. I discussed this matter with Jim Grogan in our office, and he suggested that I contact you to get your input as to how we should proceed with this matter. We would be happy to handle it in any way

that you wish.

We are trying to settle with the Internal Revenue Service as soon as possible, so we would appreciate your prompt response.

Very truly yours,

David E. Stevens
Director of Taxation

cc: Jin Grogan

SPECIAL COUNSEL