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I see from the attached your good efforts failed.

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THE WASHINGTON POST

10/12/89

McCain Repays Keating Firm for Trips

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

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
jeta, 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 ethica
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 siz-
able Keating-related campaign do-
nations and gifts to other causes.

Spokesmen for Sena. 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
spokesman for Sen. Dennis DeCon-
Keating plane. Bob Maynes, a

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-
ported by Riegle. was
troit, a Keating project, was re-

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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 Kenne

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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Telephone Conversation with Senator DeConcini

On November 26, 1990, I received a call at home from Senator Dennis DeConcini of Arizona, one of the so-called "Keating 5." He identified himself, and I asked him how he was doing. He said that he had had better days. He then thanked me for my letter and the support I expressed. He agreed that the whole proceeding was unfair.

He wondered if I had heard anything from the Ethics Committee yet. I said that I hadn't. He then asked if it would be okay to have one of his attorneys call me and discuss writing an affidavit concerning the letter. He said that I could either do a "to the best of my recollection" affidavit citing the letter or do another affidavit restating the facts only. I said that I would be glad discuss the options with his attorneys.

to

I then asked him how this would help him. He said that it would be another way of showing that the hearing was not being conducted in a fair manner. He said that Bennett is acting like a prosecutor and selectively presenting evidence to the committee. According to DeConcini, the entire investigation has been conducted that way. For instance, Senator McCain was entitled to an interview prior to his deposition, while none of the other Senators were given the same privilege. He also referred to his role in the Henkel confirmation, where (as I recall) he split his vote, so that Senator Goldwater could be represented (at Goldwater's request, since Goldwater was ill). He has had to request a letter from Senator Goldwater to substantiate this. No one on the committee contacted Goldwater.

He said that my letter would serve the same purpose-to show that some evidence was being ignored so that a onesided case could be presented. He said that he wasn't using my letter to hurt McCain and, in fact, he didn't think the letter would hurt him. I said that I would be glad to help.

We then talked about the whole situation a little bit. I told him that the whole slant of the hearings is that the regulators are saints, incapable of making mistakes. He agreed with my statement and indicated that to this day believes the regulators had made mistakes in their approach.

he

He then asked me how I was doing. I told him that I didn't like leaving Arizona, but that I am happy with my new job. He seemed genuinely concerned.

We left it that one of his people would contact me to discuss the affidavit. He thanked me again and said goodbye.

SPECIAL COUNSEL

EX. 604

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