Pipeline Deal Role Small, Meese Says : Recalls No Proposal of Illegal Acts in Memo on Iraqi Project, He Declares

Atty. Gen. Edwin Meese III, decrying “a cascade of misinformation” in the media, said Monday that he played only an “extremely limited” role in securing White House aid for a $1-billion Iraqi pipeline promoted by a close friend and predicted that a federal inquiry into the deal will clear him of wrongdoing.

At the same time, Meese conceded for the first time that the close friend, E. Robert Wallach, had sent him a 1985 memorandum that has become the focal point of an investigation by independent counsel James C. McKay. The memo allegedly cited a plan to make payments to former Israeli Prime Minister Shimon Peres or his ruling Labor Party in exchange for Israel’s support for the project.

But the attorney general, although not specifically admitting that bribes were a subject of the memo, dismissed its significance and said that only 10 words of the lengthy document “have given rise to this speculation.”

Nothing Illegal Recalled

Meese said he does not recall reading about any illegal acts proposed in the memo. “Indeed,” he said, “as I look at the full memorandum containing those 10 words today, I do not believe that it fairly implies a violation of the law was committed or contemplated in connection with the pipeline.”

The attorney general said the memo did not specifically mention any “bribe” or “payoff” but he refused to disclose its 10 controversial words, saying the document is classified.

Sources have told The Times that Meese did nothing about his knowledge of the alleged 1985 proposal. The Foreign Corrupt Practices Act, which prohibits U.S. citizens from bribing foreign officials, specifically stipulates that the attorney general may take legal action to stop a violation if it appears that one is about to occur.

At a packed news conference at the Justice Department, Meese mounted an aggressive defense of his conduct in the pipeline affair, the most serious of several matters involving him and Wallach that are being investigated by McKay.

Meese would take no questions after reading his prepared statement but his personal appearance--rather than a response through his lawyers--was seen as an indication of the seriousness of the issue.

He made his statements as new developments pointed to a wider use of White House influence by Wallach in the pipeline matter than has previously been made public:

--Wallach met personally with the late CIA Director William J. Casey to discuss the pipeline project in October, 1985, a crucial period in Wallach’s efforts to line up Israeli financial guarantees for the project, said two sources who refused to be named.

--That same month, in a previously undisclosed meeting in New York, Wallach and Peres negotiated financial and security guarantees needed to nail down financing for the pipeline, which was to carry oil from Iraq along Israel’s border to the Red Sea port of Aqaba, Jordan, sources said. In a statement Saturday in Jerusalem, the Israeli Foreign Ministry said that Peres met with Wallach only on social occasions and that the two had never discussed financial matters.

Minimizes Involvement

At his press conference, Meese sought to minimize his own involvement with Wallach and Peres on the pipeline affair, which has consumed the attention of the Justice Department and the attorney general since the matter was disclosed by the Los Angeles Times last week.

Meese, who made clear that he believes that his reputation is being undermined by “the daily buffeting of media sensationalism,” quickly left a Justice Department conference room as reporters shouted questions about whether he intended to remain as attorney general.

In his carefully worded five-page statement, Meese said he had no personal stake in the potentially lucrative project, in which Wallach was a paid consultant to two major firms seeking to win Iraq’s permission to construct and operate the pipeline.

Meese also maintained that he played no major role in the venture beyond referring Wallach in June, 1985, to then-National Security Adviser Robert C. McFarlane, who ordered National Security Council aides to help arrange its financing. Officials have said that McFarlane viewed the project as a potential financial boon to Iraq in its debilitating war with Iran, as well as an incentive for peace between Iraq and Israel, two longtime enemies.

NSC Considered Project

McFarlane and his staff were “the appropriate government officials” to consider the matter at the time, Meese said. “Consideration of the project thereafter on the behalf of the United States was handled, as it should have been, by the National Security Council staff.”

Meese’s suggestion that he shifted responsibility for the pipeline to McFarlane and the NSC staff appears to contradict the attorney general’s own description Monday of his role in the affair. In his statement, Meese alludes to two contacts in 1985 with Israel and a third contact with a quasi-public agency seeking to insure the pipeline, the Overseas Private Investment Corp.

In addition, news accounts placed Meese with Peres and Wallach at a September, 1985, meeting at the Israeli Embassy in Washington.

Meese stated Monday that he had two “brief and limited” contacts in 1985 regarding the pipeline with an Israeli official, reported to be Peres. “At no time,” Meese said, “was there any discussion, hint or implication” of a payment to the official or an Israeli political party.

He refused to describe the contacts, reportedly including an exchange of letters, on the grounds that they too are classified.

Opinion on Insurance

Meese also defended his conduct in asking the Justice Department’s Office of Legal Counsel to provide an opinion on the legality of a pipeline insurance scheme to the investment corporation.

The corporation officials have stated that they sought a legal opinion from Meese, at Wallach’s urging, instead of approaching the Justice Department’s legal counsel office directly. Ralph W. Tarr, former head of that office, has said publicly that he was not consulted on the matter and that the process was outside normal Justice Department channels.

Meese said Monday that the request, which was handled by a deputy of Tarr, was “properly referred” to the office.

Meese predicted that McKay’s inquiry will “inevitably result in a conclusion favorable to me.” He said he had been pleased in December when a parallel McKay investigation--of Meese’s and Wallach’s ties to the scandal-torn Wedtech Corp.--”effectively concluded . . . with a favorable result.”

McKay, however, said at the time that he had found “insufficient evidence as of this date” to indict Meese and added: “This is an interim, and not a final decision.” The investigation has led to the indictment of Wallach and two others, including a former financial consultant to Meese.

Several Justice Department officials expressed dismay Monday over Meese’s description of the Wedtech inquiry. One official, referring to McKay’s “insufficient evidence” statement, said few regarded it as a vindication of the attorney general.

“All the rest of us thought it was an invitation to ‘flip’ ” reluctant witnesses who might offer incriminating evidence in the Meese probe, that official said. One official called such statements a “standard prosecutorial technique” in criminal probes.

Question of Interest

In related developments in the pipeline case, government officials said Wallach’s October, 1985, session with Casey to discuss the Iraq project took place at CIA headquarters in Langley, Va. At the session, Wallach asked Casey for help in determining whether Iraqi officials were losing interest in the project, as then appeared likely.

The meeting was apparently one of several sessions between Wallach and Casey. One knowledgeable source said Wallach regularly briefed Casey on information obtained on trips abroad.

A reliable U.S. intelligence source said the CIA is reviewing Casey’s files and other documents, “trying to make sure nothing was done over here that shouldn’t have been done” in the project. Agency officials apparently have discovered no wrongdoing in the pipeline matter by Casey, who died last May.

Michael Wines reported from Washington and Ronald J. Ostrow from Los Angeles. Times Washington Bureau Chief Jack Nelson also contributed to this story.