WASHINGTON — An independent counsel Monday began an inquiry into the ties between Atty. Gen. Edwin Meese III and scandal-torn Wedtech Corp., and investigators told The Times that a key question is whether Meese received any money or other special consideration for helping the defense contractor.
Meese himself called for such an investigation shortly before court-appointed special counsel James C. McKay announced that he was beginning it. The attorney general said he was confident the inquiry will show that he has acted "entirely properly and lawfully."
Requested by Burns
McKay's investigation was requested by Deputy Atty. Gen. Arnold I. Burns, who has been serving as acting attorney general in connection with the Wedtech matter since Meese removed himself from any official role in the case on April 8.
Wedtech has been accused in both federal and state investigations of using illegal inducements to get federal contracts. McKay already is investigating allegations of conflict of interest involving lobbying work done for Wedtech by Lyn Nofziger, President Reagan's former political adviser at the White House, and some of his associates.
In seeking McKay's investigation, Burns cited Meese's "personal and/or financial relationships" with several people connected with the New York firm.
"In fairness to Mr. Meese, I should state that the reports we have received concerning Mr. Meese's relationships with Wedtech-associated individuals and entities are only fragmentary and do not show that Mr. Meese ever received any compensation" from the company, "nor that he ever invested" in Wedtech stock, Burns said.
McKay is to determine whether there are grounds for criminal prosecution of Meese.
At the White House, spokesman Marlin Fitzwater said President Reagan has no view on whether Meese should step aside as the nation's chief law enforcement officer while the investigation is being conducted. "The attorney general makes these decisions," Fitzwater said. "As far we're concerned, he will continue to do all of his duties."
In a statement read by Fitzwater, Reagan commended Meese as a "longtime associate and adviser who has acted in the public interest. I have always known him to be a man of honesty and integrity."
Reagan issued a similar statement in 1984, when Meese, who was awaiting Senate confirmation of his nomination, called for appointment of an independent counsel to investigate his personal financial affairs. That five-month investigation into allegations that Meese arranged government jobs for several persons with whom he had financial dealings found "no basis" for recommending any prosecution of him.
One key focus of McKay's inquiry will be Meese's link to San Francisco attorney E. Robert Wallach, a longtime friend and associate who became an attorney and adviser to Wedtech. Meese's decision last month to remove himself from any investigative role in the Wedtech affair was made after he learned Wallach was a subject of a Wedtech investigation being conducted by U.S. Atty. Rudolph W. Giuliani in New York.
Engines for Army
Sources close to the Wedtech investigation described Wallach Monday as "the moving force" in enlisting White House backing in 1981 and 1982 to help Wedtech, formerly known as Welbilt Electronic Die Corp., to obtain a non-competitive contract to make small engines for the Army.
Meese has acknowledged that his office received six memos from Wallach on Wedtech's behalf while he was in his previous White House post of counselor to the President. However, the sources, who asked not to be identified, said it has been determined that Wallach wrote "many more" memos to Meese's office about the company. It has not been established whether Meese ever saw the memos or whether they were simply handled by his deputies.
Meese has acknowledged that his office took steps to get Wedtech "a fair hearing" on its attempt to obtain the contract. After a White House meeting was subsequently held on the matter, Wedtech received the $31-million contract.
Wallach has said he received Wedtech stock that he later sold for "$600,000 and something," plus legal fees, which he refused to disclose. The investigative sources said his total earnings from Wedtech ran "well into seven figures"--over a million dollars.
The question of whether Meese ever received any financial benefits directly or indirectly from Wedtech is "crucial" to a determination of possible wrongdoing, one source said.
In this regard, Justice Department investigators have scrutinized the handling of legal fees for Meese in connection with the 1984 independent counsel investigation of his personal finances.
Wallach and Washington attorney Leonard Garment represented Meese in that inquiry. They did not bill him for the part of the legal fees that the federal government would not cover.