Funds, favors often linked in Congress


WASHINGTON -- When Joy Jacobson was on a roll, she could raise a million dollars with a few phone calls for the pet political projects of Democratic Sen. Alan Cranston. If a contributor later called to ask for a favor from the California senator, she could help arrange that, too, even though she was not a congressional employee.

This is not to say that Ms. Jacobson ever mixed her roles by hitting up a petitioner for more money.

"Never," she said, when asked of such a possibility by the Senate Ethics Committee.

"Why not?" asked committee member Warren B. Rudman, R-N.H.

"Well, because it would have been tacky, first of all," she answered. "Somebody is calling and saying, 'This is something that matters to us.' For me to say, 'Oh, well, now that you've mentioned something that matters to you, I want to ask about what else you're going to -- I mean it just -- it would have been counterproductive as a fund-raiser."

"Did it ever occur to you it might be against the law?" Mr. Rudman asked. "Never mind tacky."

It hadn't, she answered.

Ms. Jacobson's dual role illustrates a dangerous dilemma of life on Capitol Hill: how to properly ask for campaign contributions from people who want congressional favors.

That balancing act is at the heart of ongoing ethics hearings in the influence-peddling case of the "Keating Five," a group of senators, including Mr. Cranston, accused of improperly pressuring banking regulators on behalf of one of their most generous contributors, savings and loan executive Charles H. Keating Jr.

"There is a fundamental conflict here which is raised by the hearings," said Ellen S. Miller, director of the non-partisan Center for Responsive Politics, an organization favoring campaign-finance reform. "Members of Congress clearly are beholden in many respects to the people who pay for their campaigns.

"I like to think of the Keating Five as the Keating 535, because this is happening with all members. . . . There are such inherent conflicts of interest that it would be well nigh impossible for members not to cave in to them," she said.

Documents from the files of Mr. Cranston and Ms. Jacobson, obtained by the Ethics Committee in its investigation of the Keating case, show how hard it can be to keep appeals for money from crisscrossing with requests for help.

Consider the following memo from Ms. Jacobson to Mr. Cranston in January 1987. Mr. Cranston had just been re-elected, and the national results had thrust his party back into the majority. That meant his ability to get things done would be greater than ever, and Ms. Jacobson sent him a wish list on behalf of some of his most generous contributors.

"Now that we are back in the majority, there are a number of individuals who have been very helpful to you who have cases or legislative matters pending with our office who will rightfully expect some kind of resolution," she wrote.

She then named five contributors and their requests. The first three were: a rabbi who wanted Mr. Cranston to pull strings so he could deliver the invocation at a commemorative meeting of the Continental Congress; a California businessman who wanted have a U.S. Customs office located in the Long Beach World Trade Center; and a defense contractor who wanted help with his bid for a contract with the U.S. Navy.

The fourth was a developer worried that Mr. Cranston's bill proposing height restrictions on buildings in the Washington area would prevent him from completing a project just across the Potomac River in Virginia. The developer had forwarded an amendment for the bill, Ms. Jacobson said, "which appears to meet his needs while not changing the thrust of your legislation."

The fifth was Mr. Keating, who Ms. Jacobson said was "continuing to have problems with the Bank Board." She noted that he would be visiting soon "to get your advice on how to handle the current problem."

Eight months later, she mentioned in another memo to Senator Cranston that Mr. Keating would be coming in for another meeting, and she said, "I've attached an article from the Wall Street Journal which talks about the views of the new [Federal Home Loan Bank Board] chairman, Danny Wall, views that obviously are good news to Keating."

Then, she added, "You should ask Keating for $250,000" for the senator's USA Votes committee, an organization set up to boost Democratic voter registration.

Mr. Cranston got the donation, records show.

In all, Mr. Cranston and the four other accused senators -- Dennis DeConcini, D-Ariz.; John Glenn, D-Ohio; John McCain, R-Ariz.; and Donald W. Riegle Jr., D-Mich. -- got more than $1.3 million from Mr. Keating and his associates for their political projects and re-election funds. Together they intervened with federal regulators to seek more lenient treatment for Mr. Keating's ailing thrift, Lincoln Savings and Loan Association.

Lincoln failed in 1989, leaving behind $2.3 billion in debts that will have to be made up by taxpayers. At least one regulator blames the senators for slowing down the process that might have shut down Lincoln earlier.

The senators say their actions had nothing to do with the contributions, though Ms. Jacobson said in a deposition before the Ethics Committee that the actions may have persuaded Mr. Keating to keep giving.

"In retrospect, I think that there was a link there," she said.

But under the current rules for raising money for elections, Mr. Cranston told the committee, there's no way to avoid such apparent links.

"It is absurd to suggest that fund raising and substantive issues are separated in Senate offices by some kind of wall," he said.

To back up his point, he submitted a list of the top-ranking Senate staff members authorized to act also as fund-raisers and asked the committee members, "How many of you could testify that some member of your Senate staff who you have authorized to raise money has never, ever said to you something like, 'John Doe's about to meet with you, and I'll sit in. Here's what I think you ought to do. And remember, he's been a big help to you.' "

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