Labor secretary pleads innocent; promises he will be vindicated

Lawyers for Labor Secretary Raymond J. Donovan Tuesday pleaded not guilty for their client to charges of grand larceny in a packed Bronx courtroom. Mr. Donovan, who sat quietly through the proceedings, said afterward: ''(Bronx district attorney Mario) Merola may have won today's battle by misuse of his office, but I guarantee you he will not win the war.''

Mr. Merola Tuesday announced the handing down of two indictments by the Bronx grand jury naming Mr. Donovan, State Sen. Joseph L. Galiber, and eight other corporate executives on charges of grand larceny. The first indictment also named the Schiavone Construction Company and the Jopel's Construction & Trucking Company Inc. along with the 10 men, in charges of falsifying business records and offering a false instrument for filing.

The second indictment charges two men with murder in connection with the dealings of Schiavone and Jopel.

Donovan has been the subject of other government investigations involving his connection with Schiavone. He was later cleared of allegations made against him.

Donovan was executive vice-president of the company until he joined the Reagan administration in 1981.

District attorney Merola said the grand jury investigation - which has been going on for more than a year - found that the defendant stole property with a value exceeding $1,500 between October 1979 and September 1984 via payments of money by the New York City Transit Authority for construction of the subway.

Lawyers for the defendant accused Merola of releasing the report for political gain. One lawyer said there are ''mayoral sounds coming out of the District Attorney's office.'' There will be a 1985 mayoral election in New York City.

Much of the proceedings in the Bronx Tuesday focused on the great attention given the indictment by the press. Several times during the proceedings, Donovan's and other defendents' lawyers noted that the indictments had not been handed down until after the recent Jewish holiday, suggesting that the timing allowed for maximum press coverage.

One lawyer noted that Merola is one of the few district attorneys who has a ''full-time public relations man.''

Donovan testified before the grand jury Sept. 24. Donovan's lawyers argued that at the time Donovan was not asked any questions relating to charges set forth in the indictment.

Donovan is taking a leave of absence from his cabinet post to defend himself in the case. He has also noted what he terms the ''obviously partisan timing of the Bronx district attorney.'' His lawyer said the labor secretary will seek to have the charges dismissed.

District attorney Merola said the investigation began independent of other investigations, as a result of a murder in Bronx County in 1982. As a result of an arrest and conviction in that murder, the district attorney's office ''backed into an investigation'' on another murder, which led to the current indictments.

(The wire services reported that Donovan and other defendants were put through the standard booking procedure, which includes fingerprinting, according to a prosecutor's office secretary. He was then due in a nearby state court building for arraignment.

(Donovan, apparently the first sitting Cabinet member to be indicted on criminal charges, went on unpaid leave Monday after learning of the sealed, 137 -count Bronx County indictment. President Reagan said he retained confidence in Donovan.

(Donovan was cleared of wrongdoing by two previous federal probes regarding his past ties to Schiavone.

(Another hearing in the current case is scheduled for Nov. 12.)A chronology of Donovan's troubles in office

Dec. 11, 1980 - Raymond J. Donovan, a New Jersey construction company executive, nominated to be secretary of labor.

Dec. 22 - Mr. Donovan reveals that his company's records had been subpoened by a federal grand jury 10 years previously.

January 1981 - Donovan questioned about his company during Senate confirmation hearings.

Feb. 3 - Senate approves Donovan's appointment.

Dec. 29 - Special Prosecutor Leon Silverman is appointed to investigate charges that Donovan witnessed a $2,000 bribe.

June 28, 1982 - Mr. Silverman finds ''insufficient credible evidence'' to indict.

Sept. 13 - Donovan investigated and cleared by Silverman again.

Sept. 24, 1984 - Donovan testifies before a Bronx grand jury.

Oct. 2 - Donovan, executives of his company arraigned on counts including grand larceny, offering false documents for filing and keeping false records.