Case Too Politically Sensitive, Rappaport Says of Declining to Aid in Meese Inquiry

Swiss financier Bruce Rappaport, explaining why he backed out of an agreement to cooperate in a U.S. independent counsel’s investigation of Atty. Gen. Edwin Meese III, said Monday that he was afraid of being victimized by the political nature of the inquiry into the attorney general’s role in a controversial Iraqi oil pipeline project and other matters.

Rappaport, who hired longtime Meese friend E. Robert Wallach to help get U.S. support for the pipeline, declined to give a sworn deposition to American investigators last month after “my lawyers scared me” with speculation that he might be subject to perjury actions, if his versions of events differed from those of the attorney general’s friends.

“I am a truth-teller, but . . . there is in this so much politics. Why should I stick my neck out?” Rappaport said.

Calls for Meese to Resign

During interviews here and aboard his private jet, the Geneva banker also said Meese should resign because of his relationship with Wallach, who was indicted in the Wedtech scandal last December on charges of fraud, conspiracy and racketeering.

“In a banana republic maybe your attorney general can have such an image, but not in the United States,” Rappaport said. “If I was President Reagan, I would tell Mr. Meese to go.”

For nearly a year, independent counsel James C. McKay has been investigating Meese on a number of matters, most notably his involvement with the $1-billion pipeline project.

In 1985, when he was seeking Meese’s support for the project, Wallach wrote the attorney general a memo that cited a secret arrangement under which Israel was to have received up to $700 million in oil or cash for guaranteeing not to interfere with the pipeline, which was to have been built by its longtime enemy Iraq.

The memo also said a portion of the funds would go to the Israeli Labor Party, a provision that “would be denied everywhere.” That, sources say, could constitute a potential violation of the U.S. Foreign Corrupt Practices Act, which prohibits American citizens, firms or their agents from bribing foreign officials. The law also says the attorney general may, at his discretion, take legal action if a possible violation appears imminent.

‘Twisted’ Account

But Rappaport, in an interview with The Times in March, said the alleged Labor Party payment plan and other serious charges in the investigation were the result of Wallach’s “twisted” account of the pipeline affair. In denying that any proceeds were to go to the Labor Party, Rappaport said of Wallach: “I don’t know how to read his crooked mind.”

On Monday, Rappaport said he had spent $1.2 million on the project before it collapsed, with the pipeline unbuilt.

McKay had been seeking to question Rappaport about this and other matters involving the pipeline, but only as a witness, not as a target of the investigation.

Thus, Rappaport’s decision to back out of his agreement to cooperate with investigators caught them by surprise. They already were in London for the formal session in March when Rappaport asked that their agreement be modified.

A month earlier, in a Feb. 3 understanding with McKay, Rappaport had agreed to give the sworn deposition in exchange for avoiding any subsequent court appearances in the United States.

In those earlier meetings, Rappaport reportedly offered an informal statement and turned over copies of Wallach’s correspondence to him concerning the pipeline.

“He always did everything that was asked of him--except on this issue of the sworn deposition,” said an official of Rappaport’s company, the Inter Maritime Group.

Rappaport said that in March he became nervous about getting more deeply enmeshed in a politically sensitive investigation after meeting with his own lawyers. He then went to London and offered to give the deposition and “tell everything, but without the oath.” However, investigators rejected the arrangement.

“What if I say ‘this’ and Mr. Wallach says ‘that’--who decides which one is perjury?” Rappaport asked. “Mr. Meese?”

Rappaport said his decision may force him to stay away from the United States until “this Meese thing is settled” in order to avoid a subpoena.

‘A Beautiful Project’

Although his earlier efforts fell apart, Rappaport continues to be hopeful that the pipeline--which he calls “a beautiful project” that could contribute to stability and peace in the Middle East--can be revived. He is angry, in fact, that the project was dropped after he spent more than $1 million in getting the Israeli and American guarantees together.

Among those expenses was a $150,000 fee Rappaport paid Wallach for his lobbying services, money that was subsequently commingled with investment funds used by Meese’s former financial adviser in stock transactions that ultimately benefited the attorney general.

Meese has said he knew nothing of these financial transactions because they were part of what he described as a “limited blind trust” formed with San Francisco money manager W. Franklyn Chinn, whom Wallach recommended to the attorney general. Chinn has also been indicted in the Wedtech scandal.

Rappaport, speaking of Wallach, shook his head in disapproval and said: “You cannot know sometimes with whom you are doing business.” He said he hired Wallach based on the recommendation of an unnamed “important American” in Paris who said the San Francisco lawyer had good relations with Meese.