PROSECUTOR PICKED IN DONOVAN PROBE
N.Y. LAWYER SILVERMAN TO CHECK ALLEGED PAYOFF
New York attorney Leon Silverman yesterday was appointed special prosecutor to investigate allegations that Labor Secretary Raymond J. Donovan sanctioned illegal payoffs to a union official when he headed a New Jersey construction company.
The appointment of a special prosecutor had been recommended by Attorney General William French Smith on the basis of a preliminary FBI report on an allegation Donovan was present in a Long Island City, N.Y., restaurant in 1977 when $2000 in cash was handed to a union official by an associate of Donovan at the Schiavone Constrction Co.
The appointment was announced by a special prosecutor court of three US appellate judges, who describes Silverman as "an independent voter, not registered as an adherent of any political party."
The action was taken under the 1978 Ethics in Government Act, which provides that the prosecutor must be appointed if the Attorney General finds allegations against a high government official are not frivolous.
Silverman, 60, was an assistant US attorney in New York from 1953-56 and served, during the Eisenhower Administration, as assistant deputy attorney general in 1958-59.He is a senior partner in the law firm of Fried, Frank, Harris, Shriver and Jacobson in New York City.
Raymond J. Donovan is an executive vice-president of Schiavone Construction Co., was present in May or June 1977 when - according to an informant - an official of the firm handed a cash payment of $2000 to Louis C. Sanzo, the head of Local 29 of the Laborers' International Union.
The court said Silverman could also investigate "any allegation or evidence that Secretary Donovan's testimony concerning this matter at his confirmation hearing before the Labor and Human Resources Committee of the United States Senate was untruthful."
Donovan denied to the committee that his firm paid kickbacks and he contended the FBI failed to verify the allegation.
Vernon Louviere, a spokesman for Donovan, said, "as the Secretary pointed out in his public statement last week, the appointment of a special prosecutor is the only way to prove the falsity of the published allegations once and for all. Now that the special prosecutor has been named, the Secretary repeats his pledge of full cooperatioon in all aspects of the inquiry."
The court acted on the recommendation of the Attorney General.
At the same time, Smith released a report saying he has investigated the alleged payoff, but has not been able to find corroboration of the allegation of the informant.
Smith said, "The attorney representing the union official alleged to be the recipient of the payment has refused to permit his client to be interviewed with respect to the alleged transaction.
"It is impossible to complete this investigation without exhausting all appropriate legal means to obtain this official's testimony," Smith added, and noted that the special prosecutor could take steps to compel the union official to testify.
Smith's report said three other Schiavone officials allegedly present with Donovan when the payoff was made have also denied the charge.
Before Smith had made his recommendation, Donovan had publicly asked for a special prosecutor.
The allegation of the payment came from Mario Montuoro, a former officer of Local 29.
Donovan, at a news conference, called Montuoro a "damnable and contemptible liar."
The special prosecutor court is headed by US Circuit Judge Roger Robb in Washington and also includes two senior appellate judges, J. Edward Lumbard of the US Court of Appeals for the 2d Circuit in New York City and Lewis R. Morgan of the 11th Circuit, with offices in Atlanta.