Meese Reportedly Will Call for Probe by Special Counsel

Atty. Gen. Edwin Meese III has decided to ask the federal court here for appointment of an independent counsel to take over the Justice Department’s investigation of the Iranian arms-and-hostages scandal, a Meese associate and long-time confidant of President Reagan said Saturday.

The Administration, which has been rocked almost daily by new disclosures in the unfolding scandal, is expected to announce the move soon to satisfy increasing pressure from Congress and--privately--from within the Administration for Meese to step aside as head of the inquiry he launched late last week at President Reagan’s request.

A Justice Department spokesman, Patrick Korten, said Saturday night, “As of this time, no such decision has been made.”

Critics’ Argument

Meese’s own close relationship to the President, coupled with his involvement in approving arms sales to Iran and encouraging private aid to the Nicaragua contras, has led critics to argue that he cannot credibly lead an investigation into the most serious controversy to shake the Reagan presidency in six years.

The attorney general’s realization that an independent counsel must be sought comes at a time when some of the younger members of the senior White House staff are expressing concern behind the scenes that the appearance of a cover-up would be more damaging to the President than the Iranian arms controversy itself. They have been urging that the White House move as quickly as possible to disclose all information about the arms deal and seek the appointment of an independent counsel even if no clear violation of the law has been established.

“This isn’t Watergate, it’s not a burglary, and it’s a close call as to whether laws were broken,” said one of these aides. “But politically it might be defensible if we just get the facts out. Tricking Iran could be looked on favorably by the public.”

“It’s almost a generational split,” he said, “because most of the older men on the staff are resisting it. But we don’t want to keep going through the water torture process where a little bit comes out every day. Let’s get it all out and get a special prosecutor.”

Only three days ago Meese rejected congressional demands that he seek outside counsel, saying he had already ordered a full-scale Justice Department investigation into the diversion to the Nicaraguan rebels of $10 million to $30 million in profits from the sale of U.S. arms to Iran. And a source close to the Justice Department insisted Saturday that Meese still has not made a decision to seek an independent counsel, formerly referred to as a “special prosecutor.”

A Justice Department spokesman, declining to comment directly on whether a decision had been reached on an independent counsel, referred a reporter to this earlier Justice statement: “We have been saying since this has been a full-fledged investigation that we would not be saying anything until we reached a milestone where we deemed it appropriate to inform the public. We have not reached that point.”

‘Not Reached That Point’

However, with the scandal undermining Reagan’s credibility and threatening to damage his presidency severely, the Reagan confidant told The Times: “It is now acknowledged that the investigation will be in other hands. An independent prosecutor will be named.”

“There is still a lot of concern among the President’s older California friends not just for Ronald Reagan, but for the presidency. We don’t want another failed presidency,” he said.

“More personnel changes is not the first order of business--appointment of an independent prosecutor is,” he said.

So far, two officials have been removed because of the scandal: Adm. John M. Poindexter, the national security adviser, who resigned, and Marine Lt. Col. Oliver L.North, a National Security Council staff member, who was dismissed.

But a group of Reagan’s long-time advisers in California has continued to press for the ouster of at least two others: White House Chief of Staff Donald T. Regan, for failing to protect the President and giving him bad advice on the Iranian arms deal, and Secretary of State George P. Shultz, for repudiating the President’s Iranian policy in public after failing to block it in private.

Regan and Shultz differed sharply over the Iranian policy and were at loggerheads over Shultz’s failure to support the President in the controversy. However, several Reagan advisers say there are indications that the two officials, who had a close personal relationship before the Iran issue arose, have buried their differences and united to oppose the ouster movement.

“Regan and Shultz definitely have had some private conversations recently and if there was a hatchet to bury, they have buried it,” said a senior White House aide.

Meanwhile, the State Department has told its staff not to destroy any documents that might be useful to the investigation, officials said. Judge Abraham Sofaer, the State Department legal adviser, wrote a memorandum warning that shredding or removing any evidence dealing with the Iranian arms sales or the contras’ private funding “would probably constitute a criminal act,” a State Department official said.

He said that Sofaer’s warning was issued last week, before The Times disclosed on Thursday that North had destroyed some documents in his office. State Department officials say they were unaware of either the arms sales to Iran or the source of the contras’ funds.

The mechanism for appointing outside counsel can be triggered either by a finding of probable violation of the law or by a decision by the attorney general that a Justice Department investigation would raise even the appearance of a political or financial conflict of interest.

Justice Department attorneys looking into the Iranian arms case reportedly have had trouble pinpointing any law violations under the 1978 Ethics in Government Act that provides for an independent counsel. Thus the decision to appoint one in this case may be based as much on political as legal grounds.

In discussing the split within the White House staff on how to respond to the spreading scandal, one of the younger aides said:

“Should we be sending arms to Iran? Is that breaking the law? It’s a judgment call. Should we be sending profits from an Iranian arms deal to the contras? That’s a judgment call, but I don’t know that it breaks the law. But we ought to get the facts out and get a special prosecutor so it won’t look like we’re covering up. And we ought to do it quickly while Congress is not in town posturing.”

Under the 1978 ethics law, only the attorney general can decide to seek an independent counsel. Meese must then ask a special three-judge panel of the U.S. Circuit Court of Appeals for the appointment of such a counsel. The selection of any independent counsel, who can be removed by the President only for cause, is made by the court. The attorney general may recommend a mandate for the independent counsel, but the court itself hands down that mandate. In some cases in the past, it has broadened the mandate recommended by an attorney general.

Among those calling for an independent counsel in the Iranian arms case are House Judiciary Committee Chairman Peter W. Rodino Jr. (D-N.J.), and Reps. Dan Glickman (D-Kan.) and John Conyers Jr. (D-Mich.), who chair Judiciary subcommittees.

Noting “the real possibility that officials at the highest levels of the Executive Branch have violated federal law,” Rodino and Glickman wrote Meese that “the credibility of the President and his ability to govern are threatened.”

In a letter and report to the Justice Department, Conyers’ subcommittee on crime urged appointment of an independent counsel and said that officials alleged to have possibly violated laws in the case included Meese himself, Vice President George Bush, Regan, CIA Director William J. Casey, Defense Secretary Casper W. Weinberger and Assistant Secretary of State Elliott Abrams.

Conyers told Meese in the letter:

“Your closeness to the President, your prior involvement in approving arms transfers to Iran, your alleged involvement in planning private contra aid efforts and your statement on Tuesday that ‘every member of the Administration owes it to the President to stand shoulder-to-shoulder with him,’ create the appearance of a conflict of interest on your part.”

The Conyers’ Subcommittee listed am among possible violations of the law:

--Diversion to the contras or the supply network that supports them of funds obtained through the sale of U.S. arms to Iran.

--Trips to Iran by U. S. officials or representatives paid for with U. S. funds for the purpose of the arms sales.

--Destruction of any documents concerning the Iran arms sale or funds for the contras.

--Establishment of, or assistance in setting up, Swiss bank accounts to funnel payment to the contras of U. S. arms sales to Iran.

--Payments made to set up safe houses in Central America in connection with a private supply network of aid to the contras and to pay telephone bills at the safehouses.

The Justice Department also is expected to seek the appointment soon of an independent counsel to investigate conflict-of-interest charges against Lyn Nofziger, Reagan’s former assistant for political affairs, for his alleged lobbying of a White House official on behalf of a defense contractor.