Investigators determine improper political pressure not applied in United loan request

Wednesday, August 17th 2005, 8:56 pm

By: News On 6

WASHINGTON (AP) _ Treasury Department investigators have determined that no improper political pressure was applied to members of a board that rejected a request by United Airlines last year for a federal loan guarantee.

The department's inspector general, in a report Wednesday, cleared top agency officials of improperly trying to influence the vote by the three-member Air Transportation Stabilization Board.

But the report did find that Treasury's representative on the board, then-Undersecretary Brian Roseboro, told investigators he had felt compelled to reconsider his initial rejection of the loan guarantee.

The report was obtained by The Associated Press and other news organizations under the Freedom of Information Act.

``Our investigation did not develop evidence that Roseboro was subjected to political pressure related to his vote on the UAL loan request or efforts to reconsider it,'' the report said.

It also concluded that discussions between Treasury Secretary John Snow and House Speaker Dennis Hastert, R-Ill., about United's loan request were not improper. Further, the report said meetings involving other Treasury officials and United representatives did not violate any laws or standards of ethical conduct.

Hastert, whose district includes United's Elk Grove, Ill., headquarters, has been an advocate for the airline.

The investigation got under way a year ago at the request of then-Sen. Peter Fitzgerald, R-Ill., who said investigators should determine ``whether any inappropriate political pressure or intimidation has been or is being applied to Mr. Roseboro to change his vote.''

The board, on June 17, 2004, turned down United's request for $1.6 billion in loan guarantees. Roseboro and Federal Reserve Board member Edward Gramlich voted to deny the request. Transportation Undersecretary Jeffrey Shane voted to defer the decision for one week.

United then submitted an amended request for a reduced $1.1 billion loan guarantee. That application was denied by a 3-0 vote on June 28 of last year.

The board was created by Congress to oversee a $10 billion loan program, part of a government subsidy effort to get the airline industry back on its feet after the attacks of Sept. 11, 2001.

The Treasury report said Christopher Smith, Snow's chief of staff, and Arnie Havens, Treasury's general counsel, both had discussions with Roseboro on the afternoon of June 17 and urged him to either reverse the initial board rejection or move to reconsider the vote.

Roseboro told investigators he felt compelled to agree to a reconsideration of the United request.

But the report said that Roseboro also told investigators that at no point did he receive pressure or threats from either inside the department or outside to vote a particular way. He said Snow told him to ``vote his conscience.''

Snow told investigators that he had wanted the United loan reconsidered because he was concerned that the company was not given sufficient time to develop and present its application.

The investigators found no evidence that Snow had asked Roseboro to resign from the stabilization board so he could be replaced by someone who favored the loan request.

The report said that Roseboro did offer to resign but Snow rejected it, saying it was ``ill-considered'' because Roseboro was in a highly ``emotional state'' at the time.

Snow also said in his discussions with Hastert on the United loan that he had made no promises or assurances of how the government would act.

Roseboro resigned his Treasury position last December.