THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, July 29, 1994 TAG: 9407290037
SECTION: FRONT PAGE: A12 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 68 lines
Virginia Republican Sen. John Warner now says it was a mistake for the Senate Armed Services Committee, on which he is the second-ranking Republican, not to have publicly explored Navy Secretary John Dalton's stewardship of a Texas savings and loan that failed at a cost to taxpayers of $100 million. Better late than never. Barely.
John Dalton was a Texas executive with Stephens Inc., the Arkansas financial services empire that is closely tied to President Clinton and First Lady Hillary Rodham Clinton. A Naval Academy graduate and major fundraiser for the Clinton campaign, Dalton was named Navy secretary at a time when the service was being battered by the Tailhook scandal. Preoccupation with Tailhook might hasve been what saved Dalton proper scrutiny.
In fact, one of Dalton's first acts was to recommend the firing of Adm. Frank Kelso, the chief of naval operations who was shortly to retire anyway, for failing to exert leadership and prevent the events at Tailhook in September 1991. Dalton's recommendation was not accepted by then-Defense Secretary Les Aspin.
What the public did not know, however, nor did most senators, was that Dalton had a whopper of a leadership failure of his own. Dalton omitted any mention of the Seguin Savings Association from his resume, listing himself as simply the head of its holding company.
But federal regulators had charged Dalton with ``gross negligence'' in running Seguin, a Texas thrift that tripled its assets between 1984 and 1988, mainly by investing in high-risk real estate deals. In other words, exactly the type of ``greedy '80s'' operation that President Clinton said he was coming to Washington to stamp out. Seguin's collapse in 1988 stuck taxpayers with a $100 million cleanup tab.
Sen. Warner says he was generally aware that Dalton had some S&L problems, but was absent when the committee considered them behind closed doors. Dalton was given a clean bill of health and confirmed as Navy secretary without dissent. Sen. Warner praised Dalton on the Senate floor as having ``the extensive business and managerial experience so critical to today's modern Navy.''
Sen. Sam Nunn, Georgia Democrat and chairman of Senate Armed Services, says the secrecy was necessary for the sake of ``efficiency'' and the confidentiality of executive branch background materials. The story of Seguin, however, is available in public court documents, which were found by New York Times reporter Jeff Gerth.
The late John Tower should have been so lucky. In hearings before the same committee when President Bush nominated him to be defense secretary in 1989, Tower's reputation was shredded as charges flew that he was a drunk and a womanizer. He had to withdraw his name and later died in a plane crash.
Some strange things have happened with Pentagon nominations lately. Adm. Stanley Arthur's appointment to command the Pacific fleet was withdrawn because Armed Services staff members indicated there would be a lengthy delay in looking into baseless charges that he failed to take seriously allegations of sexual harassment. Sen. Warner says he is looking into that situation.
Adm. Arthur, however, is heading into unexpected early retirement, while John Dalton continues to preside over the Navy. There's something unjust about that. Sen. Warner might redeem his absence from the crucial meeting by publicly asking some hard questions about how Sen. Nunn is running his committee. Is there one standard for Republicans like John Tower and war heroes like Adm. Arthur, and another for well-connected Democrats like John Dalton? by CNB