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I see from the attached your good efforts failed.

Attachment

/rvs

THE WASHINGTON POST

10/12/89

McCain Repays Keating Firm for Trips

9 Flights Linked to S&L Defendant Were Not Disclosed Earlier

By Charles R. Babcock

Washington Post Stall Writer

en. John McCain (R-Ariz.) re-
cently paid back $13,433 to the
failed company of Arizona executive
Charles H. Keating Jr. for nine cor-
porate and charter jet flights
McCain and his family took from
1984 to 1986 but which McCain
failed to disclose as required.

McCain, a House member at the
time of the trips, was elected to the
Senate in 1986 and was one of five
senators who intervened with fed-
eral savings and loan regulators on
Keating's behalf in 1987. He also
received more than $100,000 in
campaign donations over the years
from Keating, Keating's family and
business associates.

IcCain said in an interview yes-
day that his failure to pay for the
trips earlier, first disclosed Sunday
in the Arizona Republic, "was a se-
rious error. But it doesn't mean I
did anything improper for Charles
Keating."

Keating's Arizona company,
American Continental Corp., filed
for protection from its creditors in
Bankruptcy Court in April, just af-
ter the federal government took

control of its Lincoln Savings and
Loan of Irvine, Calif. The govern-
ment recently sued Keating and his
companies for more than $1 billion,
alleging he fraudulently diverted
Lincoln's assets for his personal
wealth.

McCain said he met Keating in
1981 and "we became good social
friends." Each August for three
years McCain and his wife, Cindy,
flew on Keating corporate planes
for short vacations at Keating's
home in Cat Cay in the Bahamas.
McCain's wife and babysitter also
took flights on Keating corporate
Jets, according to records released
by the senator's office.

McCain said he cut off his deal-
ings with Keating soon after the
second of two meetings with reg-
ulators in April 1987.

"Keating came to my office, and I
said to him, a friend of mine, 'I have
done all I can. Period.' He got angry
and left, and we soon heard he
called me a wimp. I never had any
further dealings with him.... He
wanted me to go back for further
talks (with regulators). It was be-
yond what I felt I should do."

McCain said he was reminded that the Keating flights had not been paid for last March when Kea

ting's office told him the Internal
Revenue Service was going to
charge Keating for the flights. 1
was astounded and reimbursed the
company, he said. His personal re-
payments were in May and June.

The House and Senate ethics
committees both told McCain that
his reimbursement to American
Continental was sufficient remedy
for his failure to report the trips
originally.

The Phoenix paper also disclosed
that McCain's wife and father-in-
law, a wealthy Arizona beer distrib-
utor, invested $359,100 in a Kea-
ting shopping center partnership in
1986. McCain said he was aware of
the investment but did not believe it
created a conflict of interest for
him. He said that he and his wife file
separate tax returns and that he did
not benefit from the investment.

The other senators who inter-
vened for Keating also received six-
able Keating-related campaign do-
nations and gifts to other causes.

Spokesmen for Sens. Alan Cran-
ston (D-Calif.) and John Glenn (D-
Ohio), who also attended the meet-
ings with regulators, said yesterday
that their senators never flew on a
Keating plane. Bob Maynes, a
spokesman for Sen. Dennis DeCon-

BEN. JOHN MCCAIN concedes "a serious error"

cini (D-Aris.), another of those who
met with regulators, said that De-
Concini used a Keating corporate
jet to fly to a campaign appearance
for another senator about five years
ago but that the trip was paid for at
the time.

Kevin Gottlieb, speaking for Sen.
Donald W. Riegle Jr. (D-Mich.),
who attended the second meeting.
said Keating's firm paid for one
commercial flight for Riegle and his
wife in March 1986. He said the
trip, for the opening of the refur-
bished Pontchartrain Hotel in De-
troit, a Keating project, was re-
ported by Riegle.

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Per your request, I located information concerning plane flights taken by Senator DeConcini and his wife in 1984. I have attached a schedule which indicates the date and destination of the flights.

Mr. Keating was charged with income for these flights in his 1984
audit. However, since the tax impact was not significant, I did not
further investigate these flights. I never contacted the senators
office attempted to locate reimbursement.

I'll be forwarding the Riegal letter to you after I get settled in
Boise.

Very truly yours,

David Hume

David E. Stevens

DES/trf

Enclosure

90/06/6004

CHARLES N KEATING JR

1984 BREAKDOWN OF CHARGES FOR PERSONAL USE OF CORPORATE AIRCRAFT

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