The FBI reported yesterday that it could find no evidence to support allegations of labor-union payoffs by Labor Secretary-designate Raymond J. Donovan.
FBI officials said they now believe that the informer who made the accusations, Ralph Picardo, was mistaken when he identified Donovan last week from newspaper photographs as the man who periodically handed him $500 checks in the late 1960s to buy labor peace from a Teamsters union local in New Jersey, sources said.
The chairman of the Senate Labor Committee, Orrin G. Hatch (R-Utah), told reporter that he thought Donovan should be given a chance to rebut the allegations at a public hearing Tuesday.
"His [Picardo's] story has changed a number of times," Hatch said yesterday. "FBI considers hima credible witness, but credible witnesses can be mistaken. I believe he's badly mistaken."
One FBI official confirmed: "The more we look, the better Donovan looks. We can find nothing that would corroborate what Picardo said."
The committee's ranking Democrat, Sen. Edward M. Kennedy (D-Mass.), however, was still not completely satisfied. "Several very serious allegations have been made, and the FBI is still pursuing several of them," a spokesman for Kennedy said.
"We want to be absolutely fair to Mr. Donovan," the Kennedy aide added, "Sen. Kennedy does not know if the allegations are true or not."
FBI Director William H. Webster briefed Hatch on the progress of the investigation for two hours Monday, then met again yesterday with Hatch and Kennedy to submit a more complete report.
Hatch said after the second meeting that the FBI still had some "loose ends to tie up," but he said, as he had earlier, that "the investigation is resolving itself in favor of Mr. Donovan."
Hatch said he spent hours going over the allegations with Donovan, including some that have not been publicized, and is strongly inclined to believe his strenuous denials of any wrongdoing.
"If he's a liar, he's a world-class liar," Hatch said. "From what I know now, I'm prepred to vote for him. That's subject to an effective conclusion of the entire [confirmation] process, but as of right now, I think he's an honest and a good man."
Hatch is apparently not inclined to seek Picardo's testimony. Committee Democrats may, however, press to hear from him.
More than two dozen FBI agents were assigned to the investigation after Picardo's charges were brought to the committee's attention last week. Donovan and the New Jersey construction firm where he has been an executive since 1959, the Schiavone Construction Co. of Secaucus, opened their books for scrutiny.
Picardo, an FBI informer who was once close to Anthony (Tony Pro) Provenzano, head of a Teamsters local based in Union City, reportedly said he picked up $500 checks in 1967 and 1968 from a man he knew as "Ray" at the construction company.
According to Picardo's story, the checks were made out to two phony companies, "OK Trucking" and XYZ Leasing," and were supported by phony invoices for nonexistent shipments to Schiavone Construction sites.
FBI agents, however, have been unable to find any sign of the checks or invoices. Another source, however, said that some checks from the time period in question were missing.
Hatch said one of the changes in Picardo's story involved the timing of the reported payoffs, which he first placed as having taken place 12 years ago but hen placed at 14 to 15 years ago. Hatch said he thought the discrepancy illustrated the general reliability of recollections that far back. d
On the other hand, another source familiar with Picardo's amount said he simply reported his first-blush impressions to an FBI agent and then gave a more detailed account several days later. "He did, in fact, change some of the details, but there was nothing unusual about that," the source said.