U.S. to Reconsider Declassifying Memo : Prosecutor McKay Cites Relevancy to Pipeline Inquiry

Independent prosecutor James C. McKay said today the Reagan Administration is reviewing the possibility of declassifying a secret memo at the heart of the brush Atty. Gen. Edwin Meese III had with a $1-billion Iraqi pipeline deal.

Sources close to the investigation said Wednesday that the memo told of a Swiss oilman’s possible contributions to the Israeli Labor Party. The payments were meant to secure guarantees from the Israelis that they would not interfere with the oil pipeline that was to be built close to Israeli territory, The Times reported today. (Story, Page 19.)

It is understood that Meese’s criminal defense team maintains that any such political contributions would be legal.

Meese attorney Nathan Lewin declined to comment on the content of the 1985 memo from Meese’s longtime friend and associate, E. Robert Wallach, because it is classified. But he disclosed that the document was first temporarily classified by the Justice Department’s security officer before being turned over to McKay, who agreed with the “secret” classification.

Summary Provided

McKay’s office said in a statement today that “upon learning that an unauthorized publication of certain information was appearing in the media, Mr. McKay provided a brief summary of sensitive matters related to this investigation to the President’s chief of staff, Howard H. Baker.”

“At that meeting, Mr. McKay received assurances that every effort would be made to minimize any encumbrances imposed on his investigation by virtue of the classified nature of pertinent information,” McKay’s statement said.

“Pursuant to that commitment, last night the counsel to the President, Arthur B. Culvahouse Jr., advised Mr. McKay that an inter-agency task force is being formed to review and reassess declassification of any information related to this investigation,” the statement said.

Wallach was representing the wealthy Swiss oilman, Bruce Rappaport, in the 1985 negotiations on the pipeline, which was never built.

Sources said the memorandum on the project discussed proposed contributions by Rappaport, a longtime backer of former Israeli Prime Minister Shimon Peres, to the Labor Party. The Times said it was unable to determine if any contributions had actually been made.

Meese, who denied Monday that he had any direct contact with the project, said only 10 words in the memorandum from his friend were involved in the latest allegation, and at no time did he have any indication of illegality. Meese said he could not disclose the 10 words.