Walsh Considers Weinberger Indictment : Inquiry: Notes kept by the Reagan defense chief may be offered as proof that he knew about missile shipments after all.

After 5 1/2 years as independent counsel in the Iran-Contra scandal, Lawrence E. Walsh is struggling this week with his most anguishing decision yet: whether to seek federal indictment of Caspar W. Weinberger, President Ronald Reagan’s secretary of defense.

His decision, which could come soon, will loom large in the Iran-Contra record as well as in the life of a man who, more than any of the defendants implicated so far, was at the core of the Reagan Administration.

With the investigation concluding, Walsh is being pressed by the lead prosecutor, Craig A. Gillen, to accuse Weinberger of lying in congressional testimony about his knowledge of a key transaction in the early days of the secret arms-for-hostages scheme, and of misleading Congress about notes he kept at the time.

Sources familiar with the investigation said Gillen and his colleagues believe that the 5-by-7-inch note-pad diary Weinberger kept at his Pentagon desk shows that he was fully aware of an Israeli shipment of Hawk missiles to Iran, contrary to his denials to Congress.

Other strong factors against criminal action are believed to be weighing heavily on Walsh, however.

A prominent former colleague and others Walsh respects are arguing strenuously that Weinberger’s written entries are not that cut and dried on the issue. Gen. Colin L. Powell, chairman of the Joint Chiefs of Staff and former senior military assistant to the defense secretary, supported Weinberger’s version of events in a sworn affidavit.

On another level for Walsh, there are historic and personal considerations that are more nebulous but perhaps significant.

These include indicting the former secretary in the flickering days of a long and grueling investigation, seeking to brand as a criminal a Cabinet officer who, by all accounts, fought hard against the central initiative of the scandal, and Weinberger’s lengthy record of public service when he is 74.

Though sources close to the special prosecutor would shed no light on his thinking, such considerations could influence Walsh, who is six years older than Weinberger, has a similar record of public service and, like Weinberger, is a lifelong Republican.

Among those waiting and watching is Weinberger’s first lawyer, William P. Rogers, who was U.S. attorney general when Walsh, earlier in his career, left the federal bench to work for Rogers as deputy attorney general.

Neither Walsh nor Robert S. Bennett, the veteran Washington defense attorney representing Weinberger, would discuss the case. Other sources in Weinberger’s corner said that they feared that, because of these factors, Walsh feels pressure to bend over backward to demonstrate his objectivity--pressure that could lead to indictment of the former defense secretary.

The decision could come this week, since the five-year statute of limitations on Weinberger’s sworn statement to Congress--made on June 17, 1987--is about to run out. Walsh could delay his decision for eight more weeks, because two other occasions of Weinberger’s public testimony on the subject occurred later in 1987.

Weinberger’s notes, on which the prosecutor’s interest has focused, were in materials never made public that the former defense secretary gave to the Library of Congress.

Gillen appears to be interested in them because Weinberger did not turn them over when congressional investigators asked for all relevant Pentagon documents. He also is interested because the notes seem to contradict Weinberger’s sworn testimony that he did not know of the November, 1985, shipment of Hawks about the time it occurred.

Weinberger’s supporters contend that, if he were attempting to hide knowledge of the shipment, he would have destroyed the notes instead of giving them to the Library of Congress..

Powell, in his affidavit, said he had reviewed a number of Weinberger’s daily notes at the request of the independent counsel and Weinberger’s attorneys. Notes taken in the fall of 1985 “do not suggest to me that Secretary Weinberger knew, at the time that they were prepared, that Israel had sent missiles to Iran.”

Powell said that he too was unaware of the shipment. “I do not believe that I knew, in the fall of 1985, that Israel had sent missiles to Iran. While I believe we may have heard about discussions or proposals or suggestions involving such activities, to the best of my recollection, we did not know that any such activities had actually been carried out until long after.

“Knowing Secretary Weinberger as I did, and knowing the routine way he would jot down notes on these pads, it is entirely possible that it would not have occurred to him to associate or link these private notes on the 5-by-7 pads with a government request for ‘notes’ in the context of the Iran-Contra matter,” Powell said in his affidavit.

Powell said that, when he knew him, Weinberger--while “extremely astute” about current matters--did not have a “particularly good” memory for past events.