MILEAGE A/C MALTIPLE S/N CHARGES TERMINAL CHES ANDLET CHARGED

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.

52.39

27.05

184.22

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, Heghan McCain's birthdate is 10/23/84. I hope that this information is helpful.

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.
With best regards.