Swiss oilman Bruce Rappaport, a key figure in a federal probe of Atty. Gen. Edwin Meese III's role in an Iraqi pipeline project, Friday rejected as "false or otherwise misleading" reports that he arranged cash payments to win Israel's backing for the deal.
A statement issued by his Geneva office said Rappaport knows of no "unlawful or improper activity" in connection with the 1985 project, for which he hired Meese's close friend, E. Robert Wallach, as an attorney.
However, the statement did not say directly whether payments to Israeli officials had been proposed as part of the pipeline project or whether Rappaport made political contributions to officials or political parties in Israel while the project was being considered.
Wallach cited a plan for such payments in a 1985 memo to Meese, who earlier had asked White House officials to assist Wallach in arranging financing for the $1-billion pipeline, sources told The Times last week. Government sources said this week that the memo indicates that Rappaport was a part of the payment scheme.
Memo Not Made Public
The memo is classified "secret" and has not been made public.
Independent counsel James C. McKay, who is investigating Meese, is reported to be studying whether the attorney general should have acted to stop the payment scheme as a violation of the 1977 Foreign Corrupt Practices Act, which bars Americans from bribing foreign officials.
Meese took no action about the alleged payment plan after receiving the memo and he said Monday that he does not believe the document proposed anything illegal. He also said he does not recall reading about a payment plan when he first received the document.
Rappaport was a partner in the pipeline venture whose primary duty was to secure Israel's guarantee that it would not attack the Iraqi pipeline. The oil and shipping multimillionaire is a close friend of many senior Israeli politicians, including Israeli Foreign Minister Shimon Peres, the man reportedly targeted for a payment in Wallach's memo.
Condition for Proceeding
Iraq, a longtime enemy of Israel, had refused to proceed with the project without the Israeli guarantee and a financial bond to back it up.
In his Geneva statement, Rappaport discounted "false or otherwise misleading statements appearing in various publications suggesting that he had been instrumental in arranging payments to be made to one or more Israeli government officials or political parties in exchange for official Israeli government support of the project."
He also said it is "ridiculous for anyone to even suggest that an individual with the character and ethics of Shimon Peres would consider" a payoff. Peres was prime minister of Israel when the 1985 memo was written.
The statement also denied that Rappaport had ties to either U.S. or Israeli intelligence services and said he is outraged by news accounts reporting that he had been accused of engaging in questionable business deals.
Casey Meeting Reported
Several newspaper accounts have stated that Rappaport entertained former CIA Director William J. Casey at a posh Washington restaurant in mid-1985, when efforts to secure financing for the project were at their peak. The New York Times reported that a CIA profile of Rappaport, provided to at least one Reagan Administration adviser on the deal, stated that he had engaged in questionable business deals and may have had ties with Israeli intelligence.
Rappaport's statement called the reports "false and without substance" and said they "will damage many of my business relationships and commercial transactions" throughout the world.