When Bert Lance's wife and in-laws ran up overdrafts at Lance's bank totaling hundreds of thousands of dollars in the early 1970s, Lance himself was "managing" their financial affairs, a stockholder with access to the bank board said here today.
Moreover, according to Lance's lawyer here - J. B. Langford, who serves on the board of the Calhoun First National bank that Lance ran - the outside directors of the bank here knew nothing about the large overdrafts to Lance, his wife, LaBelle, and in-laws until a federal bank examiner informed the board of them.
According to a close associate of one outside director of the bank, the directors were "shocked" when they learned that Lance and his in-laws had overdrawn their accounts by as much as $450,000.
Lance's lawyer, Langford, also confirmed that Lance was managing several in-laws' financial affairs at the time they ran up large overdrafts at the Calhoun bank.
(In Washington, a spokesman for Lance conveyed a denial from the budget director that he "orchestrated" his in-laws' overdrafts. "They were acting on their own," the spokesman quoted Lance as saying. Lance did not comment on the allegation that the outside directors of the bank knew nothing about the overdrafts until a federal bank examiner pointed them out.)
Langford, who calls himself "Bert Lance's country lawyer," and who has served on the board of the Calhoun bank for 27 years, said today he would not discuss what authority Lance had from other directors of the bank to make loans when he was chairman.
(Langford, a Georgia state senator, managed Lance's 1974 unsuccessful campaign for governor. His daughter Judy is married to Jack Carter, President Carter's son.)
The question of authority might have legal significance, because federal banking law stipulates that no bank officer can issue notes or incur obligations for his bank without "authority from the directors' of such bank."
If Lance granted large overdrafts to his family which exceeded his general authority to make loans, he might conceivably be accused of violating this law. Conviction is punishable by a fine of up to $5,000 or up to five years in prison. There is no evidence as to whether Lance did exceed his authority.
A stockholder in the Calhoun bank with access to the board of directors observed today, "Unfortunately, Lance's policies [as Calhoun bank chairman] have hurt his family." The source explained that when the federal bank examiners found the large overdrafts to Lance relatives, he instructed that they be repaid at once.
(The examiner also ordered the Calhoun bank to begin charging interest on overdrafts. Until then, the bank had made no charge to Lance or his relatives for their overdrafts, which the bank had granted to directors, officers and some other individuals.)
Lance's in-laws had difficulty raising money to repay the overdrafts, the source said. Lance helped arrange formal bank loans for them from two other banks, the source continued.
According to sources here, one of Lance's brothers-in-law, Claude Barker David, has been forced to pledge his large farm here - a property which adjoins Lance's farm, "Lance-lot" - as collateral on the note he signed to repay his share of the overdrafts. David refused to talk with a reporter today.
Lance has called the overdrafts that he and his in-laws had at the Calhoun bank "typical" of small country banks in the South.
In order developments here, sources said examiners from the office of the comptroller of the currency were again in Calhoun last week, reexamining the bank's books. Investigators from the Internal Revenue Service, who are trying to determine whether the comptroller's office has acted properly in its dealings with Lance and the banks he has been associated with, interviewed persons here today.
In other developments yesterday:
The Atlanta Constitution reported that Lance and his wife have put "Butterfly Manna," their Atlanta mansion, on the market for $2 million, including furnishings.
"This is just a sign that we plan to be in Washington for a long time," the Constitution quoted Mrs. Lance as saying.
The Lances bought the four-acre estate in 1975 after Lance assumed the presidency of the National Bank of Georgia at the beginning of that year. They reportedly paid $500,000 for it.
George Meany, president of the AFL-CIO, said yesterday that Lance's personal financial difficulties demonstrated that he was incompetent.
Meany said he wasn't calling for Lance's resignation as U.S. budget direction, but said: "I don't think his experience as a banker, as revealed by the report of the comptroller, indicates to me that he has the top qualifications necessary to be director of management and budget."
Rep. Morris K. Udall (D-Ariz.), an unsuccessful candidate for President last year, called for Lance's resignation to spare the Carter administration from further embarrassment.
Jody Powell, President Carter's spokesman, said Carter has not suffered from "paranois, exasperation or upset stomach" as a result of the controversy on his finances.
"I think I've made it clear there is no feeling on our part Lance has taken any action that would merit his run out of government, and that's still our position," Powell said.