George Lardner Jr
December 11, 1981
The White House said yesterday that President
Reagan was informed a week ago of a new FBI investigation into
Secretary of Labor Raymond J. Donovan's conduct as a construction
company executive before joining the Cabinet.
White House communications director David
Gergen said, "There is no information known to the president
that would cause him to have any lack of confidence in Secretary
But Gergen also told reporters that the president
has not been briefed on the details of the matter.
Sources said the investigation revolves around
an alleged $2,000 payment in 1977 by an executive of Donovan's
New Jersey construction company to the head of a Laborers Union
local in New York City.
The FBI is checking into assertions that
Donovan, who was then president of Schiavone Construction Co.
of Secaucus, N.J., was present at the meeting at which the cash
payment was made, allegedly by another Schiavone official.
The alleged recipient of the money was Louis
Sanzo, president of Laborers Local 29, which is also known as
the Blasters Union. Its members blast out pavement, rocks and
dirt on big construction projects, including the New York City
subway expansion that Schiavone and several allied contractors
It is a violation of the Taft-Hartley Act
in most instances for an employer to "pay, lend or deliver
any money or other thing of value . . ." to an official of
any labor organization representing or seeking to represent "any
of the employes of said employer."
Donovan declared yesterday morning that he
had not been aware of the investigation--a "preliminary inquiry"
under the Ethics in Government Act-- and asserted that he knew
no more about it than he had just read in the newspapers.
"The secretary knows of nothing that
lends substance to these reports and we will have no further comment,"
a spokesman for Donovan said.
Additional details about the preliminary
FBI probe, which is aimed at determining whether a special prosecutor
should be appointed, dribbled out throughout the day.
The allegations, sources said, came from
an informant named "Mario," a Laborers Union official
who had already testified for the government in a criminal trial
this summer and who told authorities he had been present at the
1977 meeting in a New York restaurant. According to a broadcast
on the NBC Nightly News last night, his full name is Mario Montaruo,
a former Blasters Union treasurer who also happens to be "a
convicted heroin dealer."
Senate Labor Committee Chairman Orrin G.
Hatch (R-Utah), who presided over Donovan's stormy confirmation
hearings last winter, said yesterday that he was still in Donovan's
corner and had "no reason to doubt his integrity."
"What little I do know of the investigation
is that there have been statements made by people who may not
be savory," Hatch told a reporter. "I have to question
any allegations made by anybody from the Laborers International
Union. . . . I think I'll take Mr. Donovan's word unless I have
hard proof--more than the word of a 'source.' "
Hatch said he intended to keep "hands
off" the investigation until it is completed, but later in
the day he reportedly agreed with a request from the committee's
ranking minority member, Sen. Edward M. Kennedy (D-Mass.), to
seek a Justice Department briefing on the matter.
The FBI investigated dozens of allegations
linking Donovan and his firm to union corruption and organized
crime before his confirmation last Feburary, but it was unable
to corroborate any of the claims. Donovan denounced the charges
as lies, denied any wrongdoing and at one point, assured the Senate
"No executive officer of Schiavone Construction
Co., no employe of Schiavone Construction Co.,has ever bought
The purpose of the alleged payment to the
Laborers officials was not entirely clear, although one source
described it as a "one-time payment for temporary labor peace."
NBC said it was described as " 'a token
of appreciation' apparently for labor peace."
The money was allegedly turned over to Sanzo
in an envelope by Schiavone's senior vice president, Joseph Di
Sanzo was convicted of tax evasion and conspiracy
in federal District Court in Brooklyn earlier this year but was
acquitted on charges of racketeering and violating the Taft Hartley
Act.He was sentenced Aug. 14 to three years in prison but is free
At day's end, the Labor Department issued
another statement on Donovan's behalf, reiterating that "he
has no direct knowledge of these allegations."
"He will obviously coooperate with the
appropriate government officials in this matter and he quite clearly
is anxious to put this whole thing to rest," the statement
continued. "Mr. Donovan finds it completely inappropriate
to comment on information apparently being passed out by unnamed,
unidentified sources." The Justice Department continued to
refuse even to acknowledge that an investigation is under way.
The White House said Reagan was told of it by Attorney General
William French Smith on Dec. 3.