Portland money manager Jeff Grayson gave a powerful labor official a consulting contract worth at least $805,000, an investigation by The Oregonian has found.

Grayson, chief executive of Capital Consultants, quietly awarded the $7,500-a-month contract in August 1998 to Kaylano Consulting, a firm founded by John D. Abbott and his wife, Pam.

Abbott was for years a dominant force at the Laborers Union in Oregon and Idaho, as well as a longtime ally of Grayson's. As an influential trustee of three Laborers trust funds, Abbott helped steer millions of dollars of union pension fund money to Capital Consultants.

Under terms of the contract, Capital Consultants agreed to pay Kaylano $7,500 a month over five years -- $450,000 in all. Abbott has the right to renew the contract for an additional five years. Grayson can end the contract after the initial five years, but only if he pays Kaylano a $270,000 lump sum.

Capital Consultants also agreed to pay Kaylano a $50,000 signing bonus and to pick up a $35,000 club membership fee.

Abbott could not be reached for comment. He did not return repeated phone calls.

Capital Consultants says there's nothing wrong with the lucrative pact with Kaylano. In a statement issued by a Grayson lawyer, Norm Sepenuk, the company argued that hiring a former trustee to a consulting contract is fairly typical in the money management business.

"Mr. Abbott agreed to provide marketing and client services including assisting Capital to obtain additional business by identifying prospective clients outside of Oregon," the statement said.

"This agreement was approved by legal counsel and is in compliance with applicable laws and regulations," Capital Consultants continued. "It is common in the industry for investment advisory firms, such as Capital, to retain individuals, including former pension trustees or union officials such as Mr. Abbott, for this purpose."

The contract was signed in late August 1998, but Capital Consultants said it didn't go into effect until September, after Abbott left his post as business manager of the Oregon, Southern Idaho & Wyoming District Council of Laborers, as well as his trust fund positions.

But when exactly Abbott left those positions is murky. A district council official said Abbott resigned on Sept. 1, 1998. However, Abbott signed a legal docu- Abbott publicly defended Grayson in 1995 after the U.S. Department of Labor accused the Capital Consultants chief and his company in a lawsuit of overcharging the Laborers on investment fees. Grayson settled the suit by agreeing to repay $2 million, without admitting or denying guilt.

Grayson also helped Abbott when Abbott was in difficulty.

In December 1997, as Abbott was about to have to explain $150,000 in personal charges on his union credit card, Grayson found a buyer for a home-catering company that had been operated by Abbott's late wife, Nancy. Capital Consultants lent the buyer $166,000 for a complex deal that netted Abbott $60,000.

Like his father before him, Abbott made his name representing blue-collar, often unskilled construction workers. Laborers' members perform backbreaking and sometimes dangerous jobs, such as digging ditches, removing asbestos and paving roads. But the August 1998 consulting deal with Grayson sent Abbott in a new direction in a new world.

If renewed for a second five years, the Kaylano contract will pay the Abbotts $950,000. In addition to that, Capital Consultants agreed to buy a $35,000 membership at the swanky PGA West Golf Club in La Quinta, Calif., and make it available to Abbott. The club is a short drive from the Abbotts' condominium in the resort community.

Add the $60,000 deal that Grayson engineered for the catering company in 1998, and Grayson's commitment to the Abbotts surpassed $1 million.