Senate Banking Committee chairman William Proxmire (D-Wis.) said yesterday there was no "documented evidence" of political impropriety in a $290 million loan by the Export-Import Bank to an Australian airline owned by New York Post publisher Rupert Murdoch.
The committee is holding two days of hearings into the circumstances surrounding the loan.
The New York paper endorsed President Carter in the March 25 New York primary on Feb. 21, two days after Murdoch had met with bank officials and had lunched with the president at the White House. Six days after the paper's endorsement, the Ex-Im Ban extended the $290 million, low-interest loan to Ansett Transport Industries to purchase aircraft from Boeing.
The senators sharply criticized Ex-Im Chairman John L. Moore Jr. yesterday for pushing hard for the loan despite opposition from staff members and fellow board members.
Sen. Adlai E. Stevenson (D-Ill.) charged that bank staff members were reluctant to recommend the loan to the board because it smacked of politics. "There was no recommendation in this case because it smelled," Stevenson said.
Moore insisted, however, that there had been no political interference.
"I want to state firmly that in connection with this case no pressures of any kind have been brought to bear upon the bank or me by the president or any other person in the White House," Moore told the Senate committee.
What bothered the committee most was that Moore put tremendous pressure on the bank to extend the loan, apparently in reaction to a 10-day deadline imposed by Murdoch. Normally loans of this size and complexity take three weeks or longer for the bank to research and approve, Moore acknowledged.
The reason for the low-interest loan was to allow Ansett to buy the Boeing 767 wide-bodied passenger jet instead of competitive A300 planes manufactured by Airbus Industrie, a European consortium.
The Ex-Im Bank is an independent government agency designed to promote U.S. exports by low-interest loans to foreign buyers. More than 50 percent of its lending goes to finance the sale of U.S. commercial aircraft.
Moore, an Atlanta attorney appointed Ex-Im chairman by Carter, said he first met with Murdoch on Feb. 19, the same day the publisher lunched with the president.
Moore said that Murdoch told him that the Ex-Im Bank must decide within 10 days whether to offer financing to Ansett. The reason was that Murdoch claimed he had been given a 10-day deadline by Airbus.
Moore pushed the staff to complete a research report, which was prepared in 24 hours for a board meeting on Feb. 26. The two members present that day, along with Moore, testified that they were given less than an hour to review the report, which was prepared by a loan officer who normally does not handle loans for Australia.
The two board members, Margaret Kahliff and Thibaut de Saint Phalle, said Moore wanted them to approve a $656 million loan to Ansett at an annual interest rate of 8 percent. Moore told them that Murdoch wanted to buy 25 planes from Boeing, including a dozen 767s.
But the two members testified that they were confused about the number of planes and the amount of money involved, and they refused to go along with Moore.
De Saint Phalle told the Senate staff -- and confirmed the quote yesterday -- that "of all the cases that I have participated in since I've been at the bank, this is the one for which I feel least proud."
At the next meeting, on Feb. 28, it turned out that Murdoch wanted far fewer planes. The board approved the $290 million loan, at an average annual interest rate of just over 8 percent, for 18 planes, including five Boeing 767s.
Sen. H. John Heinz III (R-Pa.) portrayed Moore as failing to stand up to two powerful businessmen, Murdoch and Boeing treasurer Jack Pierce, who handled the negotiations for the Seattle-based company.
At one point, Heinz told Moore that if he didn't understand the problem with the loan, "you shouldn't be in charge of the bank."
Moore reportedly advised bank officials involved with the Murdoch loan to stay away from yesterday's hearing. But when the Senate staff learned of this, the officers were asked to be on hand.
A number of them, seated in the audience, were called on by the senators during the hearing. Most of them confirmed that they disagreed with the terms of the loan.
One Treasury official in the audience confirmed that he had called the 8 percent-plus "interest-rate illusion at its most galling." This official had argued that the rate on Murdoch's loan should have been 9 1/4 percent a year, which by his figuring would still have made Boeing competitive with Airbus.