Condo a Key Area of Interest in Rowland Hearings

HARTFORD, Conn. – Gov. John G. Rowland (search) gave assurances to bankers that a wealthy friend — involved in a secretive real-estate deal that brought the governor a windfall — would get a state loan, according to testimony at his impeachment hearing Wednesday.

Lawmakers said it was troubling evidence that Rowland may have intervened in exchange for personal benefits.

Rowland told bankers at a dinner at a Hartford hotel that a state loan would be approved for New Haven Manufacturing (search), a business owned by Robert Matthews, according to committee investigator Andrew Melnick, who interviewed a company official.

"Don't worry about the state. The state will take care of its part. You take care of your part," Rowland told bankers, according to Melnick.

"That statement as it sits there certainly is not helpful to the governor's cause," said Rep. Arthur O'Neill, a Republican who is co-chairman of the committee.

Rowland's attorney Ross Garber downplayed the account.

"We don't even know if that conversation took place. There's a guy who supposedly heard it. It's hearsay," Garber said.

But Michael Santogatta (search), the businessman interviewed by committee investigators, confirmed the account. He is on the inquiry panel's witness list.

"It was basically, 'You do your part and the state will do its part,"' Santogatta told The Associated Press in a phone interview Wednesday night.

New Haven Manufacturing received a state loan in June 1997, the same month Matthews used a front man to buy a condominium from Rowland at an inflated price. Also in 1997, Matthews received a $3.6 million loan guarantee for his business Fabricated Metal Products, a year after his bid for a $6.8 million loan was rejected. Rowland also appointed Matthews' brother that year to a real estate commission.

Rowland, a three-term Republican, has faced growing calls for his resignation amid a corruption investigation that revealed Rowland accepted a hot tub and other renovations at his summer cottage from friends and state contractors.

Committee officials said Richard Mulready, a former Democratic legislator, was the Connecticut Development Authority board member who cast the deciding vote for the Fabricated Metals loan.

Former state Treasurer Paul Silvester, who is in prison on federal corruption charges, told investigators Mulready had planned to vote against the proposal at a board meeting before Arthur Diedrick, the authority's president and chairman, brought up the governor's interest in the project and his friendship with Matthews.

A recess was called and Diedrick spoke privately with Silvester and Mulready before Mulready voted for the loan, according to Silvester.

In a sworn statement, Mulready said he was "willing to accommodate the governor" and voted in favor of the proposal.

On cross-examination by Rowland's attorney, a committee investigator said state staff reviewed the Fabricated Metals application and did not raise any concerns about improprieties.

Rowland is the first governor in Connecticut history to face possible impeachment, and is also the subject of a federal criminal investigation. The committee has until June 30 to recommend to the full House whether Rowland should be impeached.

Melnick, senior investigator for a firm hired by the committee, testified that Rowland rented out the efficiency condo, which he purchased as a congressman, for $1,750 a month in the late 1990s to Kelly Matthews, niece of Robert Matthews.

At that time, similar condos in the Capitol Hill building were renting for $500 to $625 a month, according to affidavits from owners with units on floors above and below Rowland's old unit.

Rowland sold the condo in 1997 to an associate of Matthews for $68,500, more than double the sale price of a similar condo in the building. Investigators said Matthews fronted the money for the sale, and the straw buyer, antiques dealer Wayne Pratt, pleaded guilty to tax charges in connection with the purchase.

Matthews declined to testify before the committee, citing his constitutional rights against self-incrimination.

The governor, who is battling a subpoena that he testify before the legislative committee, issued a statement saying he would not comment on the hearings.

Rep. John Wayne Fox, the committee's Democratic co-chairman, said the committee also would like to have Diedrick testify, but investigators are proceeding "gingerly" for fear he will refuse.

James Bergenn, attorney for the Connecticut Development Authority, said Diedrick is cooperating fully and has not been asked to testify.

The Hartford Courant, citing unidentified sources, reported Wednesday that Rowland's chief of staff, Brian Mattiello, made quiet inquiries to his predecessor, Dean Pagani, about two weeks ago about logistical planning toward a possible resignation this month. Pagani declined to get involved, the newspaper said.

Mattiello refused to comment when contacted by The Associated Press. Rowland spokesman Chris Cooper refused to say anything other than to read Rowland's statement, which said, "I have stated repeatedly that I am not resigning."