Iran-Contra Prosecutor Targets ‘Highest Level’ : Probe: Walsh names no names and warns against speculation. Reagan and Bush were at key 1986 meeting.

Independent counsel Lawrence E. Walsh said for the first time Thursday that he is investigating “whether officials at the highest level of government” in the Reagan Administration sought to obstruct criminal, congressional and special inquiries into the Iran-Contra scandal.

In an extraordinary report filed with Congress on the status of his investigation, Walsh named no individuals, and a spokesman refused to elaborate. Moreover, in an interview on ABC’s “Good Morning America” shortly before the report was issued, Walsh said: “I don’t want you . . . or anyone else to speculate that a person is or is not under investigation.”

But only three officials stood higher in the Reagan Administration than recently indicted former Secretary of Defense Caspar W. Weinberger: Former Secretary of State George P. Shultz, then-Vice President George Bush and former President Ronald Reagan. And all three are believed to be among those whose conduct is being examined in Walsh’s continuing inquiry.

Reagan, Bush and Shultz were among those who took part in a Nov. 24, 1986, White House meeting that Walsh’s investigators have suggested was a key element in what they believe was a deliberate cover-up of the secret arms-for-hostages deal with Iran.

Walsh has been under fire from Republicans for the $31.4 million cost and 5 1/2-year length of his inquiry. The interim report to Congress was his most detailed defense to date of what he has sought to do.

National security claims thwarted his attempt to prosecute “the basic operational crimes committed” during the events that comprised the Iran-Contra scandal, he said, but those claims have not blocked his cover-up inquiry.

That part of the investigation has been fueled by “newly discovered documents,” the report said, including personal notes of key officials, CIA cables and tapes and other records that had been withheld from Walsh and other investigators.

“In the past two years, the continuing investigation has developed new and disturbing evidence that made it necessary to re-interview many of the witnesses first questioned in 1987,” Walsh said.

These interviews have “provided a significant shift in our understanding of which Administration officials had knowledge of Iran-Contra, who participated in its cover-up and which areas required far more scrutiny than we previously believed,” Walsh said in the report.

“Independent counsel has yet to determine whether additional proposed indictments will be presented to a grand jury,” the report said. “That investigation should be completed this summer.”

A source familiar with the investigation said that Walsh’s statement does not mean that his prosecutors have already proposed additional indictments.

Walsh confirmed in the television interview that before Weinberger was indicted on five felony charges on June 16, he was offered the opportunity to plead guilty to a misdemeanor if he would tell “the rock-bottom truth and all of the truth” about the alleged cover-up.

Weinberger, after his indictment on charges of obstruction, perjury and false statements related to criminal and congressional investigations of Iran-Contra, said he had refused an offer from prosecutors because he was unwilling to enter a false plea or to give false testimony about other persons.

The Weinberger indictment dealt directly with the Nov. 24, 1986, White House meeting that investigators consider crucial to the suspected cover-up.

At the meeting, then Atty. Gen. Edwin Meese III told officials that a November, 1985, shipment of Hawk missiles by Israel to Iran--an element in the secret arms-for-hostages deal--may have been illegal. He added that Reagan had not previously known about the shipment.

“At the end of the meeting, Mr. Meese asked whether anyone knew of anything else that had not been revealed,” the Weinberger indictment charged. “No one contradicted Mr. Meese’s incorrect statement concerning President Reagan’s lack of knowledge, although several of those present, including the defendant, Caspar W. Weinberger, had contrary information.”

In addition to Weinberger, Reagan, Bush and Shultz, those attending the meeting were the late CIA Director William J. Casey, then-White House Chief of Staff Donald T. Regan and then-National Security Adviser John M. Poindexter.

In examining officials at the highest levels of the Reagan Administration, Walsh said he is trying to determine whether, “acting individually or in concert,” they “sought to obstruct official inquiries into the Iran initiative . . . by withholding notes, documents and other information, by lying and by supplying a false account of the 1985 arms sales from Israeli stocks and their replenishment by the United States.”

“It is not a crime to deceive the American public, as high officials in the Reagan Administration did for two years while conducting the Iran and Contra operations,” Walsh said in the report.

“But it is a crime to mislead, deceive and lie to Congress when, in fulfilling its legitimate oversight role, the Congress seeks to learn whether Administration officials are conducting the nation’s business in accordance with the law,” the report said.

The 80-year-old Walsh also rejected criticism that he has ceded the investigation to deputy independent counsel Craig A. Gillen, as alleged by columnists and former Assistant Secretary of State Elliot Abrams, who pleaded guilty to two misdemeanor Iran-Contra charges.