Worsening Labor Pains

By James Kelly

More questions about the White House and Donovan

Week after week, new allegations have surfaced that evidence about Secretary of Labor Raymond Donovan's reputed involvement with mobsters was withheld from the Senate committee that approved his nomination. White House officials have steadily denied that there was any cover-up or that the FBI was ordered to ignore or undervalue potentially damaging testimony.

But Capitol Hill sources told TIME last week that White House aides helped Donovan's old firm, the Schiavone Construction Co. of Secaucus, N.J., recruit investigators to dig up damaging information about the Government officials who have been pursuing the charges against the Secretary. Philip R. Manuel, a private detective who claims to have a "loose consulting arrangement" with the White House, is believed by these sources to be a talent scout for the New Jersey firm in its hunt for sleuths.

Before his nomination, Donovan served as executive vice president in charge of labor relations at Schiavone. In May the firm said it had hired detectives to investigate the background of those looking into Donovan's involvement with mobsters and corrupt union officials as well as to find out, as an attorney for the firm put it, "who is deliberately leaking information to the media to prejudice an ongoing investigation."

The man picked by Schiavone to head its investigation was Robert Shortley, 60, a onetime FBI agent who retired from the agency in 1955. Shortley is a longtime friend of Edward V. Hickey, director of special support services for the White House and a casual acquaintance of White House Counsellor Edwin Meese. Shortley's wife Maiselle works at the White House as an aide to Morton Blackwell, a liaison with conservative groups. Anthony Dolan, a Reagan speechwriter, is Shortley's brother-in-law; so is John T. ("Terry") Dolan, director of the National Conservative Political Action Committee, which raised more than $7 million for conservative candidates in the 1980 campaign. Shortley insists that no one at the White House steered him to Schiavone, but he refuses to say exactly how he was hired. Says Shortley: "It would be inappropriate for me to disclose that." Hickey and Meese deny any involvement. Meese told TIME last week: "I didn't know about it [Schiavone's hiring of Shortley] until I read it in the newspapers."

Manuel also denies that he was the middleman between the White House and Schiavone in hiring the detectives. Like Shortley, he is a close friend of Hickey's and was once a client of Meese's law firm in California. Indeed, Meese and Hickey tried to employ Manuel as a White House consultant not long after Reagan's Inauguration last year. Hickey put through a formal request to hire Manuel and gave the sleuth a temporary White House pass that was valid until April 1981. Hickey, whose duties include overseeing Air Force One and Camp David, says he needed Manuel to help him with internal security checks, a task that is usually handled by military officers. Other aides recall that Meese and Hickey wanted an outsider they could trust to handle sensitive investigations.

Hickey claims that by March 1981 he had concluded that he did not need Manuel's services. TIME has learned that the hiring was actually scrapped by Hickey's boss, Michael Deaver, deputy chief of staff at the White House. Deaver was annoyed that Hickey had apparently secured Meese's approval to employ Man uel; jealous of his bureaucratic turf, Deaver ordered the hiring stopped.

Schiavone's hired hands have aggressively pursued their assignment. The company announced last week that Frank Silbey, chief investigator for the Senate Labor and Human Resources Committee, which is conducting an inquiry into the charges against Donovan, has a tarnished past. Silbey pleaded guilty in New York State to charges of aggravated harassment by telephone and possessing obscene photographs in the early 1960s. He received a suspended sentence for both offenses. Schiavone's gumshoes are delving into the personal lives of other committee staffers, as well as of some Senators. The snoops have also cultivated contacts with the staff of Special Prosecutor Leon Silverman, who is investigating the Donovan affair.

It was also learned that Ralph Picardo, an admitted Mafioso turned Government witness, told the FBI in January 1981 that he had received regular payoffs from Donovan during the 1960s to ensure labor peace. He also alleges that Anthony Adamski, the FBI agent in charge of Donovan's confirmation check, told him that White House Counsel Fred Fielding had called and told Adamski that "the White House wants [the investigation] over with." Picardo's word is unverified, and Fielding last week again denied he had interfered with the Donovan probe.

Donovan insisted last week that he has no intention of resigning. In a statement to reporters, the grim-faced Secretary said that he would not discuss the allegations until the Silverman report was released. "I would, however, be less than honest if I did not state publicly my disgust with the relentless and cowardly attacks that have been made on me and my company."

Even if the Silverman report clears Donovan, questions surrounding the case are not likely to disappear quickly. The issue is no longer whether Donovan is qualified to serve in Reagan's Cabinet, but whether the White House tried to derail the FBI'S investigation of Donovan's fitness for office. The bureau narrowed its inquiry, but on what authority? During the Reagan transition, Fielding and Meese were responsible for reviewing the FBI background checks on all nominees. Fielding has now been instructed by White House Chief of Staff James Baker to prepare a report of his office's involvement. The White House is not alone in trying to unravel that mystery. The Senate Labor and Human Resources Committee last week asked the FBI for the records of all conversations between the bureau's agents and Reagan aides during the Secretary's confirmation hearings last year, while the House Judiciary Committee requested an account of the Administration's handling of the Donovan case.

--By James Kelly. Reported by John F. Stacks and Douglas Brew/Washington

With reporting by John F. Stacks, Douglas Brew

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