WASHINGTON — Atty. Gen. Edwin Meese III, decrying "a cascade of misinformation" in the media, said Monday that he played only an "extremely limited" role in securing White House aid for a $1-billion Iraqi pipeline promoted by a close friend and predicted that a federal inquiry into the deal will clear him of wrongdoing.
At the same time, Meese conceded for the first time that the close friend, E. Robert Wallach, had sent him a 1985 memorandum that has become the focal point of an investigation by independent counsel James C. McKay. The memo allegedly cited a plan to make payments to former Israeli Prime Minister Shimon Peres or his ruling Labor Party in exchange for Israel's support for the project.
But the attorney general, although not specifically admitting that bribes were a subject of the memo, dismissed its significance and said that only 10 words of the lengthy document "have given rise to this speculation."
Nothing Illegal Recalled
Meese said he does not recall reading about any illegal acts proposed in the memo. "Indeed," he said, "as I look at the full memorandum containing those 10 words today, I do not believe that it fairly implies a violation of the law was committed or contemplated in connection with the pipeline."
The attorney general said the memo did not specifically mention any "bribe" or "payoff" but he refused to disclose its 10 controversial words, saying the document is classified.
Sources have told The Times that Meese did nothing about his knowledge of the alleged 1985 proposal. The Foreign Corrupt Practices Act, which prohibits U.S. citizens from bribing foreign officials, specifically stipulates that the attorney general may take legal action to stop a violation if it appears that one is about to occur.
At a packed news conference at the Justice Department, Meese mounted an aggressive defense of his conduct in the pipeline affair, the most serious of several matters involving him and Wallach that are being investigated by McKay.
Meese would take no questions after reading his prepared statement but his personal appearance--rather than a response through his lawyers--was seen as an indication of the seriousness of the issue.
He made his statements as new developments pointed to a wider use of White House influence by Wallach in the pipeline matter than has previously been made public:
--Wallach met personally with the late CIA Director William J. Casey to discuss the pipeline project in October, 1985, a crucial period in Wallach's efforts to line up Israeli financial guarantees for the project, said two sources who refused to be named.
--That same month, in a previously undisclosed meeting in New York, Wallach and Peres negotiated financial and security guarantees needed to nail down financing for the pipeline, which was to carry oil from Iraq along Israel's border to the Red Sea port of Aqaba, Jordan, sources said. In a statement Saturday in Jerusalem, the Israeli Foreign Ministry said that Peres met with Wallach only on social occasions and that the two had never discussed financial matters.
At his press conference, Meese sought to minimize his own involvement with Wallach and Peres on the pipeline affair, which has consumed the attention of the Justice Department and the attorney general since the matter was disclosed by the Los Angeles Times last week.
Meese, who made clear that he believes that his reputation is being undermined by "the daily buffeting of media sensationalism," quickly left a Justice Department conference room as reporters shouted questions about whether he intended to remain as attorney general.
In his carefully worded five-page statement, Meese said he had no personal stake in the potentially lucrative project, in which Wallach was a paid consultant to two major firms seeking to win Iraq's permission to construct and operate the pipeline.
Meese also maintained that he played no major role in the venture beyond referring Wallach in June, 1985, to then-National Security Adviser Robert C. McFarlane, who ordered National Security Council aides to help arrange its financing. Officials have said that McFarlane viewed the project as a potential financial boon to Iraq in its debilitating war with Iran, as well as an incentive for peace between Iraq and Israel, two longtime enemies.
NSC Considered Project
McFarlane and his staff were "the appropriate government officials" to consider the matter at the time, Meese said. "Consideration of the project thereafter on the behalf of the United States was handled, as it should have been, by the National Security Council staff."
Meese's suggestion that he shifted responsibility for the pipeline to McFarlane and the NSC staff appears to contradict the attorney general's own description Monday of his role in the affair. In his statement, Meese alludes to two contacts in 1985 with Israel and a third contact with a quasi-public agency seeking to insure the pipeline, the Overseas Private Investment Corp.