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- The Senate Ethics Committee will seek a detailed = study of=20 a real estate partnership involving developer Charles Keating Jr. = and the=20 wife of Sen. John McCain (R-Ariz.), according to Senate sources.=20

Involved is an investment by Cindy McCain and her = father,=20 James Hensley, in a $15-million Phoenix, Ariz., shopping center. = The=20 $359,000 investment, made through a Hensley company subsidiary in = which=20 Cindy McCain had 41 percent ownership and her father 51 = percent,=20 makes them the largest single investors in the project originally=20 financed, built and managed by Keating. The investment by the = senator's=20 relatives was made in 1986 after Keating was already in a bitter = feud with=20 federal regulators alarmed over his operation of Lincoln Savings = and Loan.=20

McCain was one of five influential senators who interceded = in=20 Keating's behalf in 1987 with the federal bank regulators who = finally=20 seized the Irvine, Calif., thrift in April. That action triggered = a=20 federal lawsuit that has jeopardized the investment by McCain's = relatives.=20

Keating's personal connections and $1.4 million in = political=20 contributions to the five senators are the subject of a review = being=20 conducted by special counsel Robert Bennett for the Ethics = Committee.=20

According to Senate sources, some Democratic members of the = panel=20 have singled out the investment by McCain's family for special = scrutiny.=20 "It gives the appearance that McCain was trying to protect his own = investments" when he interceded for Keating, one Senate official = said.=20

But McCain said his family's investment was never a factor = in his=20 actions.=20

"I thought nothing of it at the time," McCain said in an = interview.=20 "It had nothing to do with me." He stressed that his = father-in-law, a=20 wealthy Phoenix beer distributor, was the prime mover in the deal = that=20 benefited his only daughter. And McCain said that under a = prenuptial=20 agreement, he and his wife have separate ownership of assets and = file=20 separate income tax returns. At the same time, however, he = admitted they=20 had a joint checking account that they deposit income into.=20

Lincoln, with $6 billion in assets, was owned by American=20 Continental Corp., which Keating placed in bankruptcy three days = before=20 the Federal Home Loan Bank Board ordered the thrift into = receivership.=20 Lincoln's losses have been estimated at $2.5 billion.=20

Since then, the $359,000 investment by McCain's relatives = has been=20 threatened by a federal racketeering lawsuit. The Resolution Trust = Corp.,=20 the federal agency overseeing insolvent savings and loans, has = accused=20 Keating and his associates of siphoning $1.1 billion from Lincoln = into=20 American Continental Corp. subsidiaries, including two that = control and=20 manage Phoenix' Fountain Square Shopping Center, which Cindy = McCain=20 and her father invested in.=20

"We're not after any particular asset," said Kevin Shields = of the=20 Resolution Trust Corp. "But presumably the court would go after = the ACC=20 assets, including the shopping center, if we are successful." = Shields=20 acknowledged that court-ordered sales routinely result in assets = being=20 sold below their original value.=20

But in the meantime, the shopping center investment is = continuing=20 to pay cash dividends to Cindy McCain and her father, = according to=20 Robert Delgado, executive vice president of Hensley and Co. of = Phoenix.=20

He said the investment was made at the suggestion of a top = Keating=20 aide, Robert Kielty, when the property was transformed into a real = estate=20 partnership.=20

McCain is the only Republican subject of the Ethics = Committee=20 inquiry. The four Democrats are Sens. Alan Cranston of California, = John=20 Glenn of Ohio, Don Riegle Jr. of Michigan and Dennis DeConcini of = Arizona.=20

Their involvement in two April, 1987, meetings with Bank = Board=20 Chairman Edwin Gray and his auditors seeking a crackdown on = Keating has=20 been the focus of a House Banking Committee investigation = of fraud=20 and corruption in the savings and loan industry scandal. While the = senators have denied any impropriety, Gray contends the two = meetings were=20 exercises in "naked political power" in behalf of Keating.=20

Of the five, McCain has been the most outspoken in = admitting that=20 the meetings were a mistake and condemning Keating for making = "improper"=20 requests in behalf of Lincoln that McCain said he rejected.=20

But at the same time, McCain had the closest personal = relationship=20 with Keating of any of the senators. In addition to getting = $122,000 for=20 House and Senate campaigns from Keating and his associates, = McCain, his=20 wife and a daughter often vacationed at Keating's home in the = Bahamas.=20

According to McCain, the "most serious mistake I've made" = in his=20 relationship with Keating was failing to reimburse the developer = for trips=20 to the Bahamas and elsewhere aboard American Continental aircraft. = In May,=20 a month after Lincoln was seized, McCain paid Keating's firm = $13,433 for=20 nine trips at Keating's expense.=20

McCain said he volunteered records of the trips and = payments to the=20 Arizona Republic, which published the information last month. He = has=20 decided on full disclosure of his ties with Keating in an effort = to=20 restore sagging voter support in Arizona.=20

McCain said he knew of the April, 1986, investment by his = wife and=20 her father in the Keating shopping center.=20

The $359,000 investment represented six shares in a real = estate=20 partnership, the largest single block. Other partners, including = Keating=20 and his associates at American Continental, had a maximum of three = shares,=20 according to the Arizona Republic.=20

According to the Resolution Trust Corp., the partnership = was=20 controlled by the ACC subsidary, American Continental Resources = Corp., and=20 the shopping center was managed by another subsidiary, American=20 Continental Properties Inc.=20

In a September civil suit, the Resolution Trust Corp. named = the two=20 subsidiaries as "mere instrumentalities" in Keating's scheme to = loot=20 Lincoln.=20

Caption:
1) AP Photo-Charles Keating. 2) Photo-John = McCain. 3)=20 AP Photo

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