Just What Phoenix Needs

In his seventies, Maurice "Biff" Niehaus of Cincinnati found an exciting new career. He had been a lawyer, then a state senator, then a judge. Last year, he became a "news distributor" of horror stories about his old chum Charlie Keating.

The law of supply and demand was at work in downtown Cincinnati. Keating, a native Cincinnatian who had moved to Phoenix in the mid-Seventies but who was still a huge name in his hometown, was hot copy as his financial empire was crumbling under federal pressure.

Luckily, Biff Niehaus had a daughter living in Phoenix. When Keating's world started ripping apart in the spring of 1989, Biff's daughter started shipping newspaper clippings to Cincinnati. The retired judge started spreading the word among his cronies.

"We all have access to copy machines, and it's interesting reading for people who know him," Niehaus says. "Nobody around here knew anything about this until they saw some of these Phoenix Gazette and Arizona Republic stories."

Oddly, the Cincinnati Enquirer, biggest paper in town, was hardly covering this biggest thrift failure in U.S. history. Well, maybe it wasn't so odd. The chairman of the Enquirer, one of the anchors of Gannett, the nation's largest newspaper chain, was Bill Keating, Charlie's younger brother. There was lots of chumminess between the Keatings and the paper's top management.

When it came to coverage of Keating and other business types, the Enquirer seemed to be of the Hindu persuasion: lots of sacred cows.

But there was more than reverence going on.

Top management at the paper had long suppressed news about Charlie Keating. Publisher John Zanotti made decrees concerning Keating coverage and Zanotti's underlings often invoked his name during the squelching or manipulation of Keating news and other business stories, former Enquirer business editor John Morris tells New Times.

Why should anyone in Phoenix care about a Cincinnati newspaper's coverage of Charlie Keating? Last month, John Zanotti became the publisher of the Arizona Republic and Phoenix Gazette.

He moved from a newspaper that has received widespread criticism for its milquetoast coverage of the Keating case to a paper that recently won a national award for its aggressive reporting of Charlie Keating's activities. The Keating story is bigger news than ever in Phoenix, considering the still-smoldering ruins of the local real-estate market and thrift industry. Readers want to know how it all shakes out.

It's not as if the Arizona press regularly does an outstanding job reporting on business topics. It took out-of-state reporters--like Jonathan Laing in Barron's--to tell us in 1988 why our local economy had just gone bust. The mostly moribund Republic was late getting to the Keating story--other newspapers' stories in 1986 about Keating's fights with federal regulators could have been reprinted in the Republic, but they were spiked by editors. These days, however, the Republic is trying to do a thorough job covering Keating.

But, what is it like to live in a city where a vitally important news story is suppressed?

The lawyers, judges and business people of Cincinnati were fascinated with the Keating drama being distributed by Biff Niehaus.

"Some of these stories were pretty funny," recalls Niehaus, who decades ago worked in the same law firm as Charlie Keating and who now works as corporate counsel to a Cincinnati thrift. "I mean, Charlie was known as Straight-Arrow Charlie, and the one about the beautiful girls being personally interviewed by him--the wildcats around town got a big kick out of that. He personally interviewed every young lady and paid her $100,000 for stenographic work. They got a big kick out of that. Especially the judges."

It was a national story with hot Cincinnati angles. Big salaries for beautiful people. Junk bonds and junk real estate. Ohioans taking a financial bath after investing in Keating ventures. All of it revolving around Keating's California thrift called Lincoln Savings and Loan amid charges of inappropriate interference by the Keating Five senators--Ohio's John Glenn, Arizona's Dennis DeConcini and John McCain, California's Alan Cranston, and Michigan's Donald Riegle.

"You know how it is when people know something like that," Niehaus says. "`Hey, Maury, you've been reading that stuff. Would you make a copy of that for me?' And they in turn give it to somebody else. It's like I'm a distributor for everybody."

The Enquirer's noncoverage of Keating wound up getting national attention. Negative attention. The paper was publicly hammered for being meek in covering business news, for protecting corporate interests from negative publicity.

The Republic's coverage of Keating also got national attention: the prestigious Headliner award. The guy directing the coverage is a finalist for Arizona Journalist of the Year. After years of flaccid stories about Keating and other business people--while they were taking Arizona's economy straight to hell--the Republic is starting to tell the public what's going on, at least on this story.

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Ward Harkavy
Contact: Ward Harkavy