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Husband's Business Ties Pose Dilemma for Feinstein : Politics: She says his myriad investments do not influence her votes and she is aware of potential conflicts.

October 28, 1994|GLENN F. BUNTING and DWIGHT MORRIS | TIMES STAFF WRITERS

WASHINGTON — Shortly after the Senate unanimously approved legislation sparing the nation's airlines from a $2.5-billion fuel tax, Dianne Feinstein decided to oppose the measure.

The California Democrat announced on the Senate floor in June of last year that she would have voted against a special tax exemption for the ailing airline industry if the amendment had been subject to a roll-call tally rather than a voice vote.

Feinstein later acknowledged in an interview that the statement prevented any possible criticism that she was assisting the business interests of her husband, Richard C. Blum, a prominent San Francisco merchant banker who controls a 6% stake in Northwest Airlines.

The episode underscores Feinstein's dilemma whenever an issue arises that affects her husband's myriad investments in everything from cable television to container products.

As one of the wealthiest members of the Senate and the most prolific fund-raiser among all federal candidates, with about $34 million in campaign receipts since 1989, Feinstein faces a dizzying array of potential conflicts involving both her personal and political finances.

Her opponent in this year's California Senate election, Rep. Mike Huffington (R-Santa Barbara), has attacked Feinstein in television commercials as "a senator who serves special interests . . . and her own."

Feinstein says she is an active legislator who serves the legitimate needs of all her constituents, regardless of whether they give money to her campaign or get involved in her husband's investments. Such connections, Feinstein insists, have no bearing on her decisions.

"I try to be very careful," she said last week. "I make up my own mind on all issues and I prize this independence."

A review of the senator's first two years in office found that Feinstein supported several positions that benefited Blum, his wealthy clients and their investments. She was a vocal proponent of increased trade with China while Blum's firm was planning a major investment there. She also voted for appropriations bills that provided more than $100 million a year in federal funds to three companies in which her husband is a substantial investor.

Senate ethics rules permit Feinstein to vote on bills that affect her husband's finances so long as the legislation is not designed to specifically benefit Blum or his investments.

In some cases, the 61-year-old Feinstein has taken actions that adversely affected her husband's economic interests. She sided with Los Angeles city officials in their successful battle against the airline industry to triple airport landing fees. The increased fees at Los Angeles International Airport cost the airlines $49 million per year and Northwest $3 million annually.

Feinstein said she was the only senator to support the $2.5-billion fuel tax on airlines "because they are big boys running big companies. I didn't feel they should be exempted. My view was contrary. I wanted to make it clear."

The first-term senator could have blocked the tax exemption by refusing to approve a unanimous consent agreement when her office was notified in advance by Senate leaders. Instead, after the measure passed, Feinstein opted to declare her opposition in a statement that got buried in the fine print of the Congressional Record for June 24, 1993.

That same day, Eastern newspapers reported that the board of directors of Northwest Airlines, including Feinstein's husband, would meet to consider filing for bankruptcy protection. Although Feinstein said she did not know about the stories and was unaware of developments at Northwest, she conceded that the timing of the fuel tax measure offered her a "new sensitivity" to how her actions might be perceived.

Throughout the Senate campaign, Feinstein has been criticized by Huffington for allegedly catering to political action committees and corporations that have piled at least $7.8 million into her campaign coffers since 1990.

Feinstein said she does not have the luxury of refusing special interest money when she is running against Huffington, a former oil tycoon who has spent about $25 million of his personal fortune in an effort to defeat her.

Although Feinstein is engaged in a money chase that took her to 17 fund-raising events over the past two weeks, a Times analysis of federal election records indicates that her campaign has relied more heavily on small contributions than on special interest money.

Although her take from PACs has increased to $1.3 million--a 38% jump over 1992--the total represents only 17% of her contributions through Sept. 30. This is well below the average Senate winner's receipts in 1992, when PACs accounted for 27% of campaign funds.

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