Keating Aide Contradicts Sen. Riegle on Key Meeting

WASHINGTON —  Sen. Donald W. Riegle Jr. initiated a meeting between senators and thrift regulators on behalf of Charles H. Keating Jr., a former Keating aide testified today in contradiction of the Michigan Democrat’s sworn statement.

James Grogan was the first Keating insider to testify in the Senate Ethics Committee hearings, and he did so only under a grant of limited immunity that prevents his statements from being used against him in court.

Riegle, chairman of the Senate Banking Committee, has told the panel that “I did not arrange the meeting April 2,” 1987, between the top thrift regulator and four Senate colleagues--who were intervening for Keating’s failing Lincoln Savings & Loan. Riegle did not attend the session.

“Is there any doubt in your mind that Sen. Riegle arranged the meeting with the senators?” committee special counsel Robert S. Bennett asked Grogan, who was Lincoln’s corporate counsel.

“No, sir,” Grogan answered.

The April 2 meeting is important because the top regulator at the time, Edwin J. Gray, has testified that Sen. Dennis DeConcini tried to negotiate a deal for Lincoln that would have waived a rule prohibiting risky investments. DeConcini has denied the allegation.

Grogan said he later “got feedback the (four) senators were miffed” at Riegle’s absence, since negative news stories about Lincoln’s condition made the session potentially “politically explosive.”

Grogan also told the committee that Riegle tried to hide his role in initiating the meeting.

The Keating executive said Riegle asked him to invite the other senators and to ask McCain and DeConcini, in turn, to invite Riegle to attend.

“Sen. McCain reacted very negatively” to the suggestion, Grogan said. “He said he would not invite Sen. Riegle to the meeting. He was very unhappy with that concept.”

DeConcini did write an invitation to Riegle to meet with regulators--not for the April 2 meeting but to a session a week later between all five senators and the San Francisco-based regulators who were investigating Lincoln.

At that session, the senators were advised that criminal referrals regarding Lincoln Savings & Loan would be sent to the Justice Department.

The committee is investigating whether the five senators’ intervention for Keating was related to the $1.3 million he and associates donated to their campaigns and favorite causes.