McCain cites lessons from scandal
WASHINGTON – Sen. John McCain’s ethics entanglement with a wealthy banker ultimately convicted of swindling investors was such a disturbing, formative experience in his political career that he compares the scandal in some ways to the five years he was tortured as a prisoner of war in Vietnam.
“I faced in Vietnam, at times, very real threats to life and limb,” McCain told the Associated Press. “But while my sense of honor was tested in prison, it was not questioned. During the Keating inquiry, it was, and I regretted that very much.”
In his early days as a freshman senator, McCain was known for accepting contributions from Charles Keating Jr., flying to the banker’s home in the Bahamas on company planes and taking up Keating’s cause with U.S. financial regulators as they investigated him.
The Keating Five was the derisive name given McCain and four Democratic senators who were defendants in a congressional ethics investigation of their connections to Keating. McCain is the only one still in the Senate. They were accused of trying to intimidate regulators on behalf of Keating, a real estate developer in Arizona and owner of Lincoln Savings and Loan based in Irvine, Calif.
Keating and his associates raised $1.3 million combined for the campaigns and political causes of all five. McCain’s campaigns received $112,000.
The investigation ended in early 1991 with a rebuke that McCain “exercised poor judgment in intervening with the regulators.” But the Senate ethics committee also determined McCain’s actions “were not improper nor attended with gross negligence.”
McCain has claimed the Keating scandal sensitized him even to the appearance of potential conflicts of interest. But in recent weeks, McCain has defended himself anew over another instance in which he intervened with federal regulators on behalf of a prominent campaign contributor – years ago but after the Keating rebuke. Again, McCain denies acting improperly.
McCain wrote two letters in late 1999 to the Federal Communications Commission on behalf of Florida-based Paxson Communications. He urged quick consideration of a proposal to buy a television station license in Pittsburgh, although he did not ask the FCC commissioners to approve the proposal. At the time, one FCC commissioner’s formal nomination was pending before McCain’s Senate committee, and the FCC chairman complained that McCain’s letters were improper.
McCain wrote the letters after receiving more than $20,000 in contributions from the company’s executives and lobbyists. Chief executive Lowell W. “Bud” Paxson also lent McCain his company’s jet at least four times during 1999 for campaign travel.
In the Keating investigation, the committee said more than one year had passed – a “decent interval” – between the last contributions Keating raised for McCain and the two 1987 meetings he attended with banking regulators. McCain later paid $112,000 – the amount Keating raised for him – to the U.S. Treasury.
The ethics committee said McCain took no further action on Keating’s behalf after regulators dropped a bombshell during a meeting with the senators: They intended to recommend a criminal investigation of Keating and his savings and loan.
“The appearance of wrongdoing, fair or unfair, can be potentially as injurious as actual wrongdoing,” McCain said, reflecting on what he said were his lessons from the scandal. “Also, when questions are raised about your integrity or for that matter anything involving your public career, even, for example, a controversial position on the issues, it is best not to hide from the media or public.”
Former Sen. Warren Rudman, R-N.H., a Republican on the ethics panel who investigated McCain, said McCain’s political comeback and his personal rehabilitation from his time as a POW were his biggest personal obstacles.
“What happened in Vietnam and the Keating Five, those two were life altering,” Rudman said in an interview. “He would not put a losing campaign in the same box. But not wallowing in self-pity and doing something positive, that is absolutely John McCain.”
Keating went to prison for more than four years after a federal fraud conviction. The conviction was reversed on appeal after he argued that jurors improperly had knowledge of a prior state conviction on related charges. He was to be retried in federal court but instead pleaded guilty to four federal fraud counts. Keating admitted he siphoned nearly $1 million from his S&L’s insolvent parent company. He was sentenced to time he already had served.
McCain, in his book “Worth the Fighting For,” lamented that he and Keating “were now a two-word shorthand for the entire savings and loan debacle and the rotten way American political campaigns are financed.”