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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

While mayor of Shanghai in the 1980s, Jiang danced with Feinstein during a visit to San Francisco. In August of last year, Feinstein and Blum traveled to Beijing at the invitation of Jiang for lengthy face-to-face meetings with top Chinese leaders.

Such encounters are fondly remembered when deals are clinched back in China, according to American experts in Chinese business practices. They said that Feinstein's consistent support for China's interests cannot help but benefit her husband's efforts to earn profits there.

"It seems to me that he's got some kind of an advantage over the ordinary Joe Schmo investor," said William Triplett, former chief Republican counsel to the Senate Foreign Relations Committee. "There is a particular Chinese phrase guanxi. It means relationships . . . any kind of a connection gives you an edge over other people. This really sounds like a case of guanxi. "

In separate interviews, Feinstein and Blum flatly rejected the notion that his business practices have benefited from her ties to China. They said that Blum had developed his own separate relationships in China before he met and married Feinstein.

"He is in San Francisco running his business, I am in Washington being a United States senator and they are two separate things," Feinstein told a reporter. "I don't know how I can prove it to people like you. Maybe I get divorced. Maybe that is what you want."

Three companies in which Blum holds considerable investment interests have received $100 million a year in federal funds through appropriations bills that Feinstein voted to approve. Two firms, URS Corp. of San Francisco and Frequency Electronics Inc. of New York, have defense contracts and the third, National Education Corp. of Irvine, received education grants for jobs programs.

Feinstein should have recused herself, Huffington contends, from voting on legislation that benefited Blum's investments. The senator has said there was no conflict because the multibillion-dollar spending bills carried no specific reference to the companies.

Two longtime clients and personal friends of Blum have connections to a San Francisco firm that would have benefited from a special provision in Feinstein's original desert protection bill. The firm, Catellus Corp., was the only private property owner in Feinstein's original bill that received special allowances to exchange its 366,000 acres of desert land for other government surplus property.

The legislation, which specifically mentioned Catellus, was criticized by Interior Secretary Bruce Babbitt at a Senate hearing in April of last year. "It can be read to mandate me to lay up all of Idaho for discretionary selection by the Catellus Corp. That is not good policy," Babbitt said.

The language remained in Feinstein's bill until September, 1993, when several Republicans on the Senate Natural Resources Committee objected to Catellus receiving favorable treatment above all other landowners. The committee voted unanimously to yank the provision from the Senate bill.

The Catellus "special deal" is cited by Huffington in television commercials as a prime example of Feinstein going to bat for a special interest. Companies and individuals affiliated with Catellus have provided at least $119,000 in campaign contributions to Feinstein since her 1990 gubernatorial race, records show.

Feinstein said she picked up the Catellus language straight from House-passed legislation and did not support it, even though she kept the provision in the bill after making more than 50 other changes.

"It did not catch my eye initially," Feinstein said of the Catellus provision. "When I understood that Catellus had to be put at the head of the list, I said I agreed to have it taken out. It was just that simple."

Times staff writer Rone Tempest in China contributed to this story.

Financial Fallout

Dianne Feinstein has raised more campaign funds than any federal candidate since 1989 and is one of the wealthiest members of the U.S. Senate. Here are some of the positions Feinstein has taken that affected the interests of her campaign donors and the investments of her husband, San Francisco merchant banker Richard C. Blum:

* Jan. 21, 1993--Feinstein introduces California Desert Protection Act with a provision that allows the Catellus Corp. to exchange 366,000 acres of desert land for surplus government property. Companies and individuals affiliated with Catellus donated at least $119,000 to Feinstein. Provision is later dropped after criticism that it would give Catellus preferential treatment.

* June 24, 1993--After the Senate passes a $2.5-billion fuel tax exemption for the nation's airlines on a unanimous voice vote, Feinstein announces her opposition to the measure. Blum controls a 6% stake in Northwest Airlines.

* Oct. 18, 1993--Feinstein votes for an education spending bill that provides more than $50 million to National Education Corp., an Irvine firm that lists Blum as a major stockholder.

* Dec. 2, 1993--Feinstein sides with Los Angeles city officials in their successful battle against the airline industry to triple landing fees at LAX. The increase costs Northwest $3 million a year.

* May 25, 1994--Feinstein withdraws support of President Clinton's health care plan while accepting $390,970 in contributions from providers and other interests opposing comprehensive reforms.

* May 25, 1994--In a speech delivered on the Senate floor, Feinstein urges Clinton to increase favorable trade relations with China at the same time Blum is planning to invest up to $150 million there on behalf of several clients.

* July 19, 1994--At the request of California farmers, Feinstein helps save controversial $90-million federal program to expand the state's agricultural export market. Among special interest groups, growers are the second-largest contributors to Feinstein campaign.

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