Action Against Iran Arms Sale Figure Challenged by His Embassy : Prober Subpoenas Visiting Israeli Ex-Official

Lawrence E. Walsh, the independent counsel investigating the Iran- contra scandal, has taken the unusual step of subpoenaing an Israeli citizen involved in the secret U.S. sales of arms to Iran to testify before a federal grand jury here, officials said Thursday.

The summons was served on David Kimche, former director general of the Israeli Foreign Ministry and now a private arms dealer, while Kimche was on a visit to New York. Foreign citizens are legally immune from U.S. subpoenas if they remain on foreign soil, but U.S. courts have upheld the validity of subpoenas served on foreigners who enter the United States.

In another matter involving the independent counsel, aides to Vice President George Bush denied a published report that Walsh’s staff is examining Bush’s role in aiding the Nicaraguan rebels. Walsh has assured the vice president that he is not a target of criminal investigation, the aides said.

Calls Report ‘Irresponsible’

Larry Thomas, a spokesman for Bush, termed “irresponsible” a report in the National Law Journal contending that Walsh’s staff has “begun to focus more directly on . . . Bush’s personal involvement” in supplying aid to the contras and in raising funds for such aid.

The article said that an investigation of Bush is in a preliminary stage, focusing on his contacts with persons collecting money for the rebels.

Walsh refused to comment on the Bush and Kimche matters.

Israeli Embassy spokesman Asher Nian said that Kimche, described by former National Security Adviser Robert C. McFarlane as his counterpart in the Israeli government, was consulting attorneys “on whether he should or should not appear” before the grand jury, possibly today.

Nian said that Israeli officials do not believe Walsh has authority to issue such a subpoena in light of what he described as a binding agreement between the United States and Israeli governments. “The question is whether this is the right thing to do,” he said.

Seeks Written Requests

“There is an agreement between the United States and Israel about the way the Israelis involved in the Iran-contra affair should give testimony,” Nian said. “According to these agreements, any request by the U.S. government should be from government to government and done in writing.”

A similar question arose in the late 1970s when Leon Jaworski, counsel to the House Ethics Committee, sought to obtain sworn testimony from South Korean government ministers about allegations that Korean lobbyist Tongsun Park and others had bribed members of Congress.

Jaworski asked the State Department for help in obtaining testimony from Dong Jo Kim, former Korean ambassador to Washington who then was his government’s foreign minister. But Kim refused to testify or give any assistance in the investigation and he remained beyond the reach of a congressional or grand jury subpoena.

It was not clear whether the same problem would arise in summoning Kimche, who played a key role in the inception of the Reagan Administration’s secret arms sales to Iran.

Secret Diplomatic Channel

In July, 1985, Kimche met with McFarlane, told him that Israel had opened a secret diplomatic channel to Iran and said that the Iranians might be interested in receiving U.S. arms as part of a new relationship with the West.

McFarlane and his staff pursued the idea. Secretary of State George P. Shultz and Defense Secretary Caspar W. Weinberger strongly opposed making a deal with Iran, even if it could help release American hostages held in Lebanon. Nevertheless, in August, McFarlane told Kimche that Israel could ship 100 TOW anti-tank missiles to Iran and promised that the Administration would replace the weapons.

That transaction is the focus of an important controversy. For such a secret arms transfer to be legal, there should have been a formal “finding,” or intelligence directive, signed by President Reagan--but there was none. Moreover, accounts differ over whether Reagan approved the arms transfer before it occurred: McFarlane says he did, former White House Chief of Staff Donald T. Regan says he didn’t, and Reagan says he can’t remember.

Second Israeli Shipment

Kimche was also involved in a second U.S.-sponsored Israeli shipment of arms to Iran, in November, 1985. That shipment is controversial because the CIA helped arrange transportation for the weapons, even though there was no formal authorization for such a move.

Although Israel has denied involvement in aiding the Nicaraguan rebels, Kimche is reported to have suggested to former National Security Council official Oliver L. North that the United States could overcharge the Iranians for weapons shipments and use the profits to aid the contras.

Kimche proposed also that Iranian businessman Manucher Ghorbanifar be used as a middleman in discussions with Iran. McFarlane told the presidential commission headed by former Sen. John Tower (R-Tex.) that Kimche suggested the Iranians would ultimately require weapons as a good-faith gesture indicating that the United States was serious about opening a dialogue with Iran.

In a related matter, the U.S. Court of Appeals for the District of Columbia has asked North to file additional briefs in connection with his constitutional challenge of Walsh’s authority, which he first raised early this year. The court said it would hear oral arguments from attorneys for North and Walsh on June 2.