The Justice Department has concluded that it must decide by Monday whether to seek a full-blown investigation of Secretary of Labor Raymond J. Donovan. According to government sources, it is all but certain that a special prosecutor will be appointed.
"All the signals point in that direction," one source said. Under the Ethics in Government Act, it was pointed out, "all you need is what seems to be a set of hard facts and an accuser."
Officials say there is disagreement within the Justice Department over the need for a decision this soon. But the prevailing view is that the clock on the 90-day "preliminary inquiry" required of the FBI began running in late September, even though the actual investigation did not begin until weeks later.
The hurry-up attitude contrasts sharply with the inattention originally accorded the current allegations against Donovan and his old company, Schiavone Construction of Secaucus, N.J., by a former New York union official, Mario Montuoro.
When President Reagan nominated Donovan last year, Montuoro called his lawyer.
"He said, 'Hey, I know that guy Donovan --he did this and that,' " the attorney, Arthur Z. Schwartz, recalled yesterday. In fact, Montuoro has told reporters and acquaintances that he informed federal authorities in 1978 about several alleged misdeeds by Schiavone.
One charge concerns an alleged $2,000 payment by a Schiavone official, in Donovan's presence, to the head of a labor union local of which Montuoro had been secretary-treasurer before becoming a government witness. He has also charged that Schiavone Construction provided several other favors, from free lumber to a free vacation trip, to officials of the union, Local 29 of the Laborers International.
Although the FBI investigated more than a dozen other allegations that Donovan and his company had links to organized crime and union corruption at the time of Donovan's confirmation hearings last January, no one bothered to talk to Montuoro.
It is not clear why the government's files failed to churn out his story then, although it may have fallen between the cracks. The Justice Department's Organized Crime Strike Force in Brooklyn was interested in Montuoro mainly as a key witness in documenting about $200,000 worth of other illegal payments to Louis Sanzo, head of the mob-connected local.
Finally, in late September, sources say, someone brought Montuoro's allegations about Schiavone Construction directly to the attention of Thomas Puccio, head of the Brooklyn task force and mastermind of the Abscam political corruption cases. Montuoro was called in for an interview by Puccio's people. A memo was dispatched to the Justice Department where it appears to have gathered dust for several weeks.
As far as Montuoro and his lawyer are concerned, a special prosecutor should have been named long ago.
"I think they're playing games with the dates," Schwartz said. "Technically this 90-day thing started to run when Donovan became secretary of labor last February . The government had the information from Montuoro then."
Schwartz also said he and his client had chatted last winter about the possibility that Montuoro would be called as a witness for Donovan's stormy confirmation hearings.
"We figured, 'They know what Mario's said.' We thought, well, if they think Mario is of value, they'll use him. But they didn't. We figured, well, that's the way it goes."
Asked about the chronology of the investigation and why it took so long to get started, Puccio said he had "absolutely no comment." But knowledgeable sources insisted that the hard-driving prosecutor was not personally aware of allegations Montuoro had made about Schiavone officials until September.
"Whatever the reason for the delay before that, when it got moving, it got moving because of him," one informed source said. "Most people feel it is his Puccio's involvement that made it impossible for the attorney general to ignore it."
Even after Puccio's memo arrived in Washington, more than a month passed before FBI agents questioned Montuoro extensively. They picked him up a couple of weeks ago, immmediately after he had concluded his testimony in the trial of Ralph Trainello, a construction contractor accused of paying off Sanzo hundreds of thousands of dollars.
Sanzo was convicted of income tax evasion and conspiracy this summer and is appealing a three-year prison sentence. The man whom Sanzo called the "godfather" of the union, Samuel Cavalieri, identified in court documents as a member of the Luchese family of the Mafia, is also appealing a three-year contempt sentence for refusing to testify about payoffs to Sanzo.
The FBI reportedly questioned Montuoro on the alleged $2,000 payoff of Sanzo in 1977 by Schiavone senior vice president Joseph DiCarolis at a Queens restaurant.
Montuoro, who has said he was present, told authorities that Donovan and company president Ronald Schaivone were there. Sources say Montuoro claims the payment was made to encourage Local 29 to stand against another local with higher wage rates that was seeking jurisdiction over tunneling work on a Long Island subway project.
President Reagan was informed of the FBI inquiry Dec. 3. Not until last Wednesday, sources said, was Montuoro asked to elaborate on other allegations he had made.
Montuoro has a criminal record: a narcotics conviction in 1960 and another on possession of weapons in the 1970s. But his lawyer defended him yesterday as "extremely credible despite his convictions . . . . Everything he's told them in the past that could be checked out has checked out."