A non-Indian contractor seeking business reserved for Indians on the Navajo reservation in Arizona told a Senate committee Thursday that he provided free airplane rides, an unrepaid $35,000 loan and other favors to the tribe's chairman.

John A. Paddock said he originally offered to lend his construction company's plane and pilot to Peter MacDonald, chairman of the nation's largest Indian tribe, when MacDonald was seeking re-election to his post in 1986.He said MacDonald used the plane for about 35 trips, including many after his November 1986 election victory, including two flights to Las Vegas.

Paddock's construction company had been declared ineligible for jobs reserved for Indians on the reservation by Peterson Zah, who had ousted MacDonald as chairman in 1982.

Paddock said by supplying MacDonald with the plane he hoped "that we'd be able to bid on contracts."

He told a special panel of the Senate Select Committee on Indian Affairs that has been investigating corruption in programs designed for Indians that the flights cost him $12,000 in expenses for pilots and fuel. The trips would have been worth about $60,000 commercially, he said.

Paddock also told the committee that in December 1987, MacDonald asked him for a $35,000 loan. He said he couldn't refuse the request since as a contractor doing work on the reservation the tribe had his financial statements and "I would have had a hard time telling him I was broke."

He said the loan, which was to be for one year, was never repaid.

Paddock testified that he paid for many of the expenses for the trips to Las Vegas that he made with MacDonald, their wives and others.

He said he also lent a company car to MacDonald's daughter, Hope, and paid a $400 bill he received for use of the vehicle's telephone.

He said he also paid $2,500 for a birthday party for MacDonald's wife, Wanda, and was later reimbursed for half of the expenses of the party.

Paddock testified that he set up a company called Native American Construction and Engineering, headed by a friend, Donald James, who was a full-blooded Navajo, "to allow us to bid on the preference work for Indians."