Special Counsel Begins Meese-Wedtech Probe : Attorney General Supports Inquiry Into His Ties to Scandal-Racked Firm, Says He Acted Lawfully
An independent counsel Monday began an inquiry into the ties between Atty. Gen. Edwin Meese III and scandal-torn Wedtech Corp., and investigators told The Times that a key question is whether Meese received any money or other special consideration for helping the defense contractor.
Meese himself called for such an investigation shortly before court-appointed special counsel James C. McKay announced that he was beginning it. The attorney general said he was confident the inquiry will show that he has acted “entirely properly and lawfully.”
Requested by Burns
McKay’s investigation was requested by Deputy Atty. Gen. Arnold I. Burns, who has been serving as acting attorney general in connection with the Wedtech matter since Meese removed himself from any official role in the case on April 8.
Wedtech has been accused in both federal and state investigations of using illegal inducements to get federal contracts. McKay already is investigating allegations of conflict of interest involving lobbying work done for Wedtech by Lyn Nofziger, President Reagan’s former political adviser at the White House, and some of his associates.
In seeking McKay’s investigation, Burns cited Meese’s “personal and/or financial relationships” with several people connected with the New York firm.
“In fairness to Mr. Meese, I should state that the reports we have received concerning Mr. Meese’s relationships with Wedtech-associated individuals and entities are only fragmentary and do not show that Mr. Meese ever received any compensation” from the company, “nor that he ever invested” in Wedtech stock, Burns said.
McKay is to determine whether there are grounds for criminal prosecution of Meese.
At the White House, spokesman Marlin Fitzwater said President Reagan has no view on whether Meese should step aside as the nation’s chief law enforcement officer while the investigation is being conducted. “The attorney general makes these decisions,” Fitzwater said. “As far we’re concerned, he will continue to do all of his duties.”
In a statement read by Fitzwater, Reagan commended Meese as a “longtime associate and adviser who has acted in the public interest. I have always known him to be a man of honesty and integrity.”
Reagan issued a similar statement in 1984, when Meese, who was awaiting Senate confirmation of his nomination, called for appointment of an independent counsel to investigate his personal financial affairs. That five-month investigation into allegations that Meese arranged government jobs for several persons with whom he had financial dealings found “no basis” for recommending any prosecution of him.
One key focus of McKay’s inquiry will be Meese’s link to San Francisco attorney E. Robert Wallach, a longtime friend and associate who became an attorney and adviser to Wedtech. Meese’s decision last month to remove himself from any investigative role in the Wedtech affair was made after he learned Wallach was a subject of a Wedtech investigation being conducted by U.S. Atty. Rudolph W. Giuliani in New York.
Engines for Army
Sources close to the Wedtech investigation described Wallach Monday as “the moving force” in enlisting White House backing in 1981 and 1982 to help Wedtech, formerly known as Welbilt Electronic Die Corp., to obtain a non-competitive contract to make small engines for the Army.
Meese has acknowledged that his office received six memos from Wallach on Wedtech’s behalf while he was in his previous White House post of counselor to the President. However, the sources, who asked not to be identified, said it has been determined that Wallach wrote “many more” memos to Meese’s office about the company. It has not been established whether Meese ever saw the memos or whether they were simply handled by his deputies.
Meese has acknowledged that his office took steps to get Wedtech “a fair hearing” on its attempt to obtain the contract. After a White House meeting was subsequently held on the matter, Wedtech received the $31-million contract.
Wallach has said he received Wedtech stock that he later sold for “$600,000 and something,” plus legal fees, which he refused to disclose. The investigative sources said his total earnings from Wedtech ran “well into seven figures”--over a million dollars.
Crucial Question
The question of whether Meese ever received any financial benefits directly or indirectly from Wedtech is “crucial” to a determination of possible wrongdoing, one source said.
In this regard, Justice Department investigators have scrutinized the handling of legal fees for Meese in connection with the 1984 independent counsel investigation of his personal finances.
Wallach and Washington attorney Leonard Garment represented Meese in that inquiry. They did not bill him for the part of the legal fees that the federal government would not cover.
A special federal court awarded Meese $472,190 in fees under the Ethics in Government Act, which provides for reimbursement of attorneys’ fees for officials who have been investigated by independent counsels and have not been indicted. The lawyers had sought $720,824. Both lawyers then said they would be satisfied with the amount awarded by the court.
The “forgiveness” of some legal fees could be considered “consideration” that Meese received from Wallach, one source said, and will be examined in McKay’s inquiry.
Wallach has denied any impropriety in the Wedtech affair.
Wants Issues Resolved
In calling for the inquiry to be turned over to McKay, Meese said through spokesman Terry Eastland that he wanted all questions to be resolved “as promptly as possible, and in a forum that will prevent partisan political exploitation.”
On another Wedtech-related matter, Meese disclosed that he has moved to terminate the limited blind partnership that he and his wife, Ursula, established in May, 1985, with Financial Management International Inc., a San Francisco firm headed by W. Franklyn Chinn. Chinn, who has been an adviser to the defense contractor, has also been named as a subject of the New York-based Wedtech investigation.
The funds that Meese invested with Chinn’s firm came from the sale of stock in well-known companies that Meese disposed of to satisfy a pledge he made to the Senate Judiciary Committee to avoid any appearance of conflict of interest in his financial affairs.
Eastland said the Meeses, under terms of the “blind trust-type arrangement,” have never known the securities into which their money was placed. But Wallach, who introduced Meese to Chinn, said in a recent interview that Chinn had assured him that none of the money went into Wedtech stock.
Evidence Cited
Burns said the Wedtech investigations already under way “have developed substantial evidence of Wedtech-related criminal conduct on the part of individuals other than Mr. Meese.”
In his letter to McKay, Burns said: “I believe that public confidence in the administration of justice will be better served if these matters are resolved by an investigation conducted independent of the Department of Justice, which is headed by Mr. Meese.”
McKay said that the FBI is expected to increase its assistance to his investigation, and the matter “will be pursued as expeditiously as possible.”
Burns sought the investigation after Justice Department investigators recommended the action on the basis of a “threshold inquiry” conducted by the department’s anti-corruption unit, the public integrity section.
In the separate inquiries involving Wedtech, four company executives have pleaded guilty to bribery conspiracy charges in connection with illegal inducements to get contracts and other favors from officials. So far, one former New York City official and two prominent Maryland political figures have been indicted, and prosecutors have said more indictments are likely.
Staff writer James Gerstenzang contributed to this story.
