S & L, Parent Firm Reportedly Gave State GOP $95,000

WASHINGTON —  Lincoln Savings & Loan and its parent company contributed $95,000 in “soft money” to the California Republican Party during the last election, even as the Irvine thrift was piling up $2 billion in federally insured losses, according to a study released Tuesday.

The contributions constituted an act of political bipartisanship by the parent firm, American Continental Corp., which previously had contributed $85,000 to the California Democratic Party in 1986 at the request of Sen. Alan Cranston (D-Calif.).

Soft money is a term used to describe contributions to state and local political activities, such as voter registration and get-out-the-vote drives, that are not subject to the contribution limits contained in federal election law.

At the time the money was contributed to the state GOP, American Continental Chairman Charles H. Keating Jr. was battling with state and federal officials for permission to continue the risky investment practices that eventually led to Lincoln’s collapse. The administrations in both Washington and Sacramento are Republican.

An Arizona Republican, Keating has stated that he expected his political contributions to win him influence with government policy-makers. At least three members of Congress have returned Keating’s donations since Lincoln was seized by the federal government last April.

Keating’s contributions to the California GOP were disclosed in a new survey of soft-money donations in nine states by the Center for Responsive Politics.

The Center for Responsive Politics found that the California GOP took in $5.8 million and the state Democratic Party received $4.4 million in 1988--making them the two biggest single recipients of soft money in the survey.

Critics contend that soft money contributions have become a back-door way for corporations and unions to continue giving to federal campaigns after their political action committees have already donated the maximum amounts permitted under federal law.

It is not known precisely how much soft money was raised in 1988. But the national Republican and Democratic parties estimated that they distributed more than $40 million in soft money and the center found evidence of at least $28 million spent in nine key states in the presidential contest between George Bush and Michael S. Dukakis.

While federal election laws prohibit individuals and corporate political action committees from making contributions in excess of $2,000, the center found that more than 100 corporations and individuals made soft-money donations in nine key states. In California, seven people contributed at least $100,000 each, and 82 gave $20,000 or more.

Among the big contributors to the California GOP were Marvin Davis of Los Angeles, head of an oil, communications and investment firm, who gave $110,000; Atlantic Richfield, $139,500, and the William Lyon Co., an Orange County builder in Newport Beach, $127,500.

“As this study shows, Keating isn’t the only businessman in America wielding influence through political contributions,” said center director Ellen Miller. “This study shows scores of other major givers--the Keatings of tomorrow.”

According to the study, American Continental contributed $90,000 in soft money to the state GOP in the 1988 election cycle, all but $10,000 of it in the final days before the November election.

Lincoln made a separate $5,000 donation in May, 1987, about the time that federal regulators in San Francisco were recommending that the high-flying thrift be seized by the government.

In fact, the study, which was based on state records, may underestimate the actual amount of soft money that Keating and his affiliated companies contributed to California Republican causes in the 1988 election cycle.

In recent testimony before a California Assembly committee hearing, Karl Samuelian, Gov. George Deukmejian’s fund-raiser, testified that Keating gave $100,000 to the party’s Team 100 fund in 1988.

Samuelian said the contributions included $75,000 by American Continental to the California GOP, $20,000 to a fund known as the Presidential Trust and $5,000 made at a so-called Victory ’88 fund-raising event.

State records do not disclose whether these funds came directly from corporate revenues or from individual donations made by employees of Keating’s companies. Although federal law prohibits direct corporate contributions to candidates, critics have alleged that Keating paid “bonuses” to his employees from corporate funds with the expectation they would pass the money along to candidates for federal office.

A similar study of 1986 election cycle giving by the center uncovered the $85,000 contribution that Cranston solicited from Keating for the California Democratic Party. In addition, the senator persuaded Keating to give about $35,000 to his 1986 reelection campaign and $850,000 to voter registration groups supported by Cranston.

In a related development, the New York Times reported today that federal law enforcement authorities are investigating the voter registration groups to determine whether employees were instructed to register more Democrats than Republicans. Employees for one of the groups have alleged that such instructions were issued, a charge denied by the organization.

The New York Times reported that the FBI is interested in the voter registration groups because of the large amounts of money flowing to them from major donors, including Keating and his associates. The newspaper quoted anonymous officials as saying that California banking regulators sent documents to the FBI last July involving three groups.

On Tuesday, it was announced that the Forum Institute, one of the Cranston-supported groups that received hundreds of thousands of dollars from Keating, will suspend operations Jan. 1. Cruz Reynoso, a former California Supreme Court justice and member of the institute’s board, said recent publicity had made it difficult for the group to raise money.