Meese Says He Won’t Step Aside : Cause of Good Government Would Be Hurt, He Asserts

Atty. Gen. Edwin Meese III on Sunday rejected calls that he step aside while criminal investigations of him are under way, saying it would “hurt the cause of good government” if he did not fight back against “false allegations.”

Meese, in his first detailed comments on the subject, also said he and President Reagan believe it would hurt the Administration politically if he stepped down, by acknowledging there was truth to the charges that have been made against him.

“Obviously I shouldn’t step aside, because if honest public officials can be hounded out of office by partisan political attacks, by media barrages, then no honest public official is safe,” Meese said, adding: “I’m confident that the evidence will prevail.”

McKay’s Investigation

Currently, independent counsel James C. McKay is investigating the attorney general’s involvement with the scandal-plagued Wedtech Corp. and with a proposed $1-billion Iraqi oil pipeline project, as well as actions he took that could have affected the regional Bell telephone companies at a time when he owned phone stock.

Last week, a majority of Democrats on the House Judiciary Committee sent Meese a letter urging him to leave office while the investigations continue. But the attorney general on Sunday dismissed the request as a partisan attack and said he had no intention of stepping down.

During an appearance on ABC-TV’s “This Week With David Brinkley,” Meese also defended his longtime friend, E. Robert Wallach, who has been indicted in the Wedtech case on federal racketeering and conspiracy charges, as has W. Franklyn Chinn, Meese’s ex-financial adviser, for allegedly accepting hundreds of thousands of dollars to influence Meese.

Sounding combative, Meese said that Wallach, who also allegedly attempted to use his influence with the attorney general to win support for the projected Iraqi oil pipeline, “is my friend. (He) has never asked me to do anything that was wrong.”

Privately, senior Justice Department officials have expressed dismay over Meese’s refusal to renounce Wallach or sever all his ties with him. Wallach, a San Francisco personal injury lawyer, has known Meese for 30 years.

Meese’s comments Sunday came on the heels of recent disclosures that a $150,000 legal payment to Wallach wound up in a stock-trading account that apparently was used to benefit Meese’s finances, according to documents reviewed by government investigators.

At the time, Wallach represented Bruce Rappaport, a Swiss businessman who was promoting the controversial Iraqi pipeline, which was never built. Rappaport has said he originally hired Wallach because of his political ties to Meese.

Meese played an important role in securing U.S. government support for the pipeline, including arranging a White House meeting between pipeline backers and then-National Security Adviser Robert C. McFarlane, and discussing the project with former Israeli Prime Minister Shimon Peres.

The Iraqi pipeline project is at the core of the federal investigation of Meese. On Sunday, the attorney general denied knowing at the time that Wallach’s legal fee had been sent to his stock trading account.

Noting that he had placed his investments in a blind trust, Meese said that “at the time of my investing in that firm, I knew nothing about this money (from Wallach) being paid.” He refused to discuss any more details, citing the continuing investigation.

A report by the Democratic staff of the Senate governmental affairs oversight subcommittee indicated that Chinn, then Meese’s financial adviser who managed Wallach’s money along with Meese’s, was able to pool the $150,000 with other funds and use the money to buy blocks of stock. Senate investigators also said that after Chinn learned how the stock deals fared, he shifted profitable transactions to Meese’s account. (Meese’s attorneys have insisted that the attorney general knew nothing of specific transactions by Chinn.)

On Sunday, Meese denied that these and other allegations made him a political liability to Reagan. If he resigned, “it would hurt him (Reagan). The President has answered that clearly himself when he says that not only is there no reason, but he thinks it would be a bad thing.”

After the program, Meese indicated through a spokesman that he was referring to Reagan’s previous statements. In fact, Reagan’s main comment on the controversy surrounding Meese, made during his Feb. 24 press conference, was that he has “every confidence in (Meese’s) integrity.”

Reagan declined further comment because the case was before a special investigator.

On a related matter, Meese dismissed a story in Sunday’s Washington Post that discussed a 1985 “briefing” of Peres on the status of the proposed pipeline project by Meese and Wallach during a reception at the Israeli Embassy.

The story, based on memos written by Wallach, appeared to contradict Meese’s previous assertions that he had only two brief contacts on the project--a letter and a quick chat at an embassy reception--with Peres.

Meese attacked the story for “taking a small fact that’s well known, and trying to blow it up into a news story. Actually, and I’ve said many times, that at that particular reception, I had a brief conversation with Prime Minister Peres. There’s nothing new to it.”