Reagan ‘Would Welcome’ Prosecutor if Meese Asks : White House Issues New ‘Flat Denial’

President Reagan, maintaining that he wants “all the facts to come out,” said today that he will welcome appointment of a special prosecutor if it is recommended by Atty. Gen. Edwin Meese III to investigate the funneling of Iranian weapons payments to Nicaraguan rebels.

The White House, seeking to erase any doubt of what Reagan knew and when, later issued a “flat-out” denial that he had had any knowledge of the profit-skimming scheme.

“The Department of Justice investigation is continuing with my full support and cooperation, and if they determine an independent counsel is called for, I would welcome that appointment,” Reagan said.

A Reagan confidant has told the Los Angeles Times that a Justice Department decision has already been made to seek an independent counsel. (Story on Page 5.)

The President made his comment in addressing a special three-man commission he established to investigate the operations of his National Security Council staff.

No Operations, NSC Staff Told

Reagan said he has ordered the NSC staff not to participate in national security operations until his own three-member investigative commission issues its findings on the Iran- contra controversy.

The special board of inquiry headed by former Sen. John Tower (R-Tex.) was named by Reagan in the wake of disclosures that fired NSC aide Lt. Col. Oliver L. North had arranged for transfer of up to $30 million in weapons-sale profits to the contra rebels.

In addition to Tower, former Carter Administration Secretary of State Edmund S. Muskie and former Ford Administration national security adviser Brent Scowcroft are serving on the panel. They are assigned to look into the role of the NSC in the Administration.

Presidential spokesman Larry Speakes said Reagan had instructed his staff to talk openly with the board and said it has “a blank check” to conduct its work. However, he said, it will not have subpoena power, will not take testimony under oath and probably will not hold public hearings.

Tower told reporters after the panel’s meeting with Reagan that the President will probably be among those questioned by the committee.

Special Session Pondered

Answering reporters’ questions at the close of the brief photo session as the meeting got under way in the Cabinet Room, Reagan said that the suggestion by Senate Republican leader Bob Dole (R-Kan.) that he call a special session of Congress to investigate the scandal “is under discussion” but that no decision has been made.

Earlier in the day, White House chief of staff Donald T. Regan met with Dole to discuss the matter. “I told Don Regan that I remember sitting in the White House with (Nixon aide) Bryce Harlow at the time Watergate broke and I was told: ‘Don’t worry about this; it’s a three-day story,’ ” Dole said afterward.

Reagan appeared grim and testy in answering a few questions fired at him at the end of his statement, which came one day after release of an interview in which he called the furor over his secret foreign policy dealings “a Beltway bloodletting” fueled by the press.

He was asked about his initial statement last Tuesday that he was not “fully informed” about one secret activity of the National Security Council. Asked whether he meant that he did not know that funds from sales of U.S. weapons to Iran were going into a Swiss bank account to fund contra operations, he replied: “That’s what I said.”

Advised by chief spokesman Larry Speakes that reporters had questioned whether his answer implied some possible awareness of the profit-skimming scheme, Reagan said, “You can tell them flat out that I had no knowledge whatsoever of it until Ed Meese briefed me on it (last) Monday afternoon.”