The Los Angeles Times from Los Angeles, California • 66

BUSINESS CooAnflclcfiSlmco Sunday. March 13, 1988 Part IV JAMES FLANIGAN S. Africa Unfazed by Sanctions With Emphasis on Economic Growth, Reform Is Checked il 11 (, A-v. mill i aHarfgffly mmmiu i ttj Ir wfim ill 7 VSgx JEFF SCHE1D Steady earnings so far from a limited partnership has helped Paul Lowden remodel the Sahara's rooms and game areas. Casino Owner Beats Odds U.S.

Dollar Is the Real Thing Everywhere Get ready for another decline in the value of the dollar despite improved U.S. competitivenesswhen the government releases the latest trade figures this coming Thursday. The numbers may look bad a January trade deficit of $13 billion or even $14 billion, compared to December's $12.2. billion. And, although international economists say that's just the normal seasonal pattern, the markets will probably react nervously and knock down the dollar.

It will be a false alarm. The fundamental trend of U.S. industrial competitiveness is good, says David Jones, research director of Aubrey G. Lanston a government securities dealer. And beyond that, the dollar is supported by a worldwide demand that is more likely to grow than diminish.

For many reasons, people and institutions in many places are often eager to hold the dollar. There are official holdings. Central banks of other nations hold the U.S. dollar as a store of value underlying their own currency; in large measure, it has replaced gold as a reserve for the world's money. But, beyond those, there are other holdings more fascinating and numerous than you may realize.

Did you know that more than $150 billion of U.S. currency including 40 of the $100 bills in circulation is used or hoarded outside the United States, beyond the Federal Reserve's ability to say with certainty where it is? Some of that cash is not really missing. Panama and Liberia use the U.S. dollar as official currency and have a constant demand for fresh bills. Israel uses the U.S.

dollar as a parallel currency to the shekel accepting it freely as a medium of exchange. In countries where inflation is rampant, such as Brazil and Mexico, the dollar is held as "the poor man's Swiss bank," says a currency expert. With 100 inflation reducing the Brazilian cruzado's purchasing power to a mere guessing game, the average Brazilian finds the dollar buys more because Brazilian merchants prefer to sell goods for sound money. Therefore, if a Brazilian banker gets hold of dollars, he doesn't exchange them for cruzados at a U.S. bank.

He has ready customers who are willing to pay big premiums in cruzados to get the sounder currency. So the dollars remain outside the U.S. Federal Reserve system. Purchasing Power Backed For similar reasons, the dollar is in demand where the local money buys only what the government supplies, but convertible currency buys better products. In Poland and Hungary and the Soviet Union itself you can buy things for U.S.

dollars that you cannot buy for zlotys or orints or rubles. Criminals like dollars, too, although the drug traffic is not the repository of missing currency that many experts assume. Drug traffickers may avoid banks, but they still want to put their money back in the United States, legitimized or laundered through investment in legal business. Ironically, the drug dealers act from the same faith as the world's legitimate traders in oil and grain who conduct their business in dollars or the world's central bankers. That is, they believe that the political stability of the United States ultimately backs the currency's purchasing power.

As Americans, we benefit from that faith. Because other nations support the dollar, the U.S. govern ment can run a deficit and Americans can enjoy a higher standard of living than would otherwise be possible. The International Monetary Fund doesn't tell Washington to tighten its belt. Do we deserve to benefit? These days, possibly we do.

One of the fundamentals supporting the dollar is renewed productivity. U.S. workers produce more per dollar of labor costs than their counterparts in Japan or West Germany. Also, the United States accepts responsibility for keeping the currency stable. The Federal Reserve spent $4 billion in money markets to support the currency in the November through January period.

And it would probably raise interest rates if it had to for the same purpose. Why? It recognizes that the benefits America enjoys outweigh the burdens it carries, because ordinary people from Brazil to Poland and central bankers from Bonn to Tokyo count its currency as "real money." The big change has been made possible with the $63-million proceeds of a securities offering last summer that was a first in the gambling industry: a publicly traded limited partnership called Sahara Casino Partners. The soft-spoken entrepreneur, a father of two grown children who is still baby-faced at 44 and whose present wife is a local television news anchor, has had a role in some major casino history and agrees that metaphorically he "dodged a bullet" more than once along the road to his present level of prosperity. Notably, he was a minority owner with associates who later were engulfed in two major scandals involving the skimming of untaxed gambling revenue on behalf of Mafia families in the Midwest. Casino licenses were revoked or surrendered by owners of the Stardust, Fremont and Tropicana hotel-casinos in 1979, and federal authorities obtained convictions and long prison terms against a number of mobsters accused of the skimming.

Nevertheless, Lowden managed to distance himself from those situations in time to avoid being irretrievably tainted. Some marvel at his luck, but Lowden says there was a lot more to it. According to this born-again Christian, he saw trouble coming and deliberately chose paths that were against his financial interests at the time but proved not to be in the long run. Those troubled times were not even on the horizon when he went to Las Vegas with $7,500 savings as a teen-age musician in the early 1960s, he says. Please see CASINO, Page 4 SpEW- Oft) Ogj ii By MICHAEL PARKS, Times Staff Writer CAPE TOWN, South Africa Businessmen, economists and government officials here contend that the economic sanctions imposed on South Africa by the United States and Western Europe during the past three years have proved so ineffective that the country need not fear further such measures.

"There is no way that anyone can exert further financial pressure on South Africa," Fred du Plessis, chairman of the giant Sanlam insurance, financial and industrial conglomerate, declared. "Everything they could do has been done, and we have more than survived. The sanctions card is on the table, and it can't be played again." Like other reform-minded businessmen, Du Plessis argues that international sanctions have slowed political change in South Africa by diverting the government's energies into protecting the economy and by hardening white resistance on the far right. The failure of sanctions, he and others argue, now allows the white-led minority government to concentrate on economic growth, which they see as more urgent than political change, and to proceed with step-by-step reforms over the next decade. "The idea that sanctions would bring South Africa to its knees, that economic pressure would force the pace of change, was crazy from the word go," Du Plessis commented.

"That's an economic judgment and does not go into the sheer immorality of trying to cripple our economy to throw people out of work trying to ruin the country, as it were, in order to save it. "In any case, sanctions have not worked, and I see no further sanctions impact. The economy grew faster last year and will grow even faster this year." Last year, South Africa's economic growth rate, according to preliminary government figures, was 2.6 -modest itself but a significant increase from the 1 growth rate in 1986 and the 1.5 Please see SANCTIONS, Page 5 Developer With a Cause Battles on Many Fronts By TOM FURLONG, Times Staff Writer PHOENIX As a young naval pilot, Charles H. Keating Jr. was in an especially fine mood one evening as he prepared to land his Hellcat fighter plane at an airfield in south Florida.

Eagerly anticipating a date with an attractive woman, Keating had deliberately stayed close to the field as he flew the night training maneuvers. He had quietly arranged to be the first in his squadron to land so he could get off duty as fast as possible. With a trumpet solo by Harry James blaring from his radio, Keating steered the fighter plane into what he thought would be a routine landing. There was just one problem: He had forgotten to put the wheels down. "The control tower was telling me: 'Your wheels are but all I could hear was old Harry," Keating recalled recently in an interview at his office here.

Though the ensuing belly-flop landing destroyed the Hellcat, Keating survived by jumping from the craft while it was still skidding down the landing strip. Rescue workers found the young aviator sitting on his parachute at the edge of the runway, his expensive plane in flames nearby. Now nearly 65 and a rich businessman, Keating still conducts himself with the same single-mindedness that nearly claimed his life on that military airstrip in Vero Beach toward the end of World War II. Just as he lived through that crash, Keating has survived many scrapes in the business world Please see KEATING, Page 6 Ex-Bandleader's Savvy Choices on Strip Deals Pay Off By AL DELUG ACH, Times Staff Writer LAS VEGAS It has been nearly two decades since Paul Lowden was a musician and bandleader in the casino showrooms, but he is definitely doing all right with his two casino-hotels, the historic Sahara and the not-very-historic Hacienda, which anchor both ends of the Strip. And it is a far cry from 1982, when Lowden leveraged his assets to the hilt to buy the Sahara and play in the big leagues of casino ownership.

With its staggering interest costs, the sprawling resort ran in the red for the first four years. Now the place is suddenly mortgage-free, and Lowden says he feels "almost naked" to be so unencumbered. With some fancy footwork on Wall Street last summer, Lowden paid off the Sahara debt and is adding a 575-room, 26-story hotel tower and a face lift for the faded casino and its two existing towers. The addition will increase the Sahara's size to the "magic" level, which would put it in the realm of the leading Strip hotels and generate more lucrative traffic for its casino. Good Mood, Bad Sign? Wall Street's ebullience may be based on nothing more than optimistic hopes the same thing happened after I929's crash.

Board of Economists, Page 2 iC? ill; 1 i ill A. Musician Lowden in '60s: above, teen-age keyboard player made rounds of Vegas lounges; below right, with the 'Smart Below left, current construction at the Sahara. Static Clouds Picture Pay-per-view TV is a Hollywood midget that doesn 't come close to its potential for revenue, but its future may be brighter. Viewpoints, Page 3 DON RICKIES I DOTTljE WEST 1 I THE MMSCMAM Tjlft BC5M aiiCsj Wall Street 2 Letters 3 National OTC II New York Stock Exchange 8 American Stock Exchange 10 Mutual Funds 16 14.