WASHINGTON — Atty. Gen. Edwin Meese III on Wednesday rejected calls for appointment of an independent counsel as premature, but congressional critics questioned whether the Reagan Administration can impartially investigate itself in the growing Iranian arms controversy.
Meese, moving ahead with his probe in spite of the criticism, ordered a full-scale Justice Department investigation into how millions of dollars of Iranian arms funds were transferred through Swiss bank accounts to U.S.-backed rebels, known as contras , who are fighting the Nicaraguan government.
"It is the responsibility of the attorney general to conduct investigations involving, as this case does, possible violations of the law," said a Justice Department official who insisted that he not be identified. "There is no doubt he will be able to conduct it fairly and impartially."
The official, who spoke to reporters while referring to notes that he had cleared with Meese, pledged that the investigation will be "complete, thorough and expeditious." The investigators, he added, will aim to accomplish "as much as possible by the end of the year."
Meese is facing mounting pressure in Congress for the appointment of an independent counsel. Many lawmakers, citing his repeated declarations of loyalty to President Reagan, argue that he could not be trusted to conduct an impartial investigation.
Sen. Sam Nunn (D-Ga.), who will become chairman of the Senate Armed Services Committee when the 100th Congress convenes in January, said he initially opposed the idea of an outside prosecutor.
However, he said he changed his mind after hearing Meese's statements Tuesday about how Reagan appointees should stand "shoulder to shoulder with the President."
"Congress passed the Ethics in Government Act precisely to address this type of situation, where a conflict of interest prevents Executive Branch officials from investigating themselves or their colleagues," said California Rep. Don Edwards (D-San Jose), chairman of the House Judiciary Committee's subcommittee on civil and constitutional rights.
But the Justice Department official, indicating that he believes appointment of an independent counsel is unnecessary at this time, contended that it is "too early" for such an action and said the department must first conduct a "top-to-bottom" probe of the matter.
The controversy over the issue of an independent counsel mushroomed as additional information came to light about potential conflicts of interest in a department investigation of Lt. Col. Oliver L. North, the former National Security Council official who allegedly funneled to Nicaraguan rebels millions of dollars that Iran paid for U.S. weapons.
An Administration source noted, for example, that Meese, as a National Security Council member, had regular contact with North and interrupted a Justice Department meeting earlier this month to take a call from the colonel.
In addition, it was learned that North headed an NSC subcommittee, known as the operational support group, that approved all covert, anti-terrorist activities and whose members include a Justice Department representative, Oliver B. (Buck) Revell.
In addition, as executive assistant director of the FBI, Revell's responsibilities include overseeing FBI probes, which would include any criminal investigation of North or the National Security Council.
Officials told The Times that Revell, as his department's representative at the NSC, had worked with North frequently.
An FBI spokesman declined to comment on that relationship or on any of Revell's NSC responsibilities, saying that this information is classified.
However, he said the FBI, which entered the case Wednesday, will "structure" the investigation to avoid any conflict of interest or appearance of conflict. Revell declined to discuss the matter.
The current inquiry is being handled by a broad range of Justice Department attorneys, predominantly career officials who normally would conduct criminal investigations. In his earlier, personal inquiry, Meese chose a small group of political appointees to assist him virtually around the clock over the weekend.
Those officials, who have little experience in criminal law, are known throughout the department for their strongly conservative views. They include William Bradford Reynolds, assistant attorney general for civil rights; his former deputy, Charles Cooper, who now heads the department's office of legal counsel; Cooper's deputy, Allan Gerson, and John N. Richardson, Meese's chief of staff.
The investigation now will be directed by Associate Atty. Gen. Stephen S. Trott, a highly regarded veteran prosecutor.
The Justice Department official provided this outline of how the transfer of the Iran-contras link came to light:
Meese and Cooper, conferring Nov. 20 on legal issues involved in testimony that Administration officials planned to give on the Iran matter, noted that there were "apparent gaps in information held by various White House officials involved."