WASHINGTON — The key part of a classified memo that is the prime focus of an independent counsel's investigation--10 words that Atty. Gen. Edwin Meese III insists imply no wrongdoing--refers directly to a possible financial payment or contribution by a Swiss businessman to an Israeli political party, sources familiar with the inquiry said Wednesday.
This description of the crucial part of the memo, which other sources said involves Swiss oilman Bruce Rappaport and then-Israeli Prime Minister Shimon Peres' Labor Party, raises questions about the attorney general's statement Monday that he does "not believe that it fairly implies a violation of the law was committed or contemplated."
Nathan Lewin, Meese's lawyer, contends that the memo, written by a longtime Meese friend, E. Robert Wallach, about a proposed $1-billion pipeline deal in Iraq, does not constitute any illegality, sources said. Lewin's reported stand is based partly on the fact that Rappaport, as a Swiss citizen, would not be covered by the U.S. Foreign Corrupt Practices Act.
But other attorneys, not involved in the case but experienced with the 1977 act, disputed Lewin's arguments, saying the law could well cover the activity outlined in the memo. The federal law prohibits U.S. citizens from bribing foreign officials and specifically stipulates that the attorney general may take legal action to stop a violation if it appears that one is about to occur.
Sources did not disclose the exact wording of the memo's pivotal 10 words, which Meese said "have given rise to this speculation" about an alleged bribery plan. Nor could it be learned whether the payment in question had already been made or was being proposed.
Supporters of the proposed Iraqi pipeline wanted guarantees by Israel that it would not oppose the project or launch a military attack against it. Payments or contributions to Peres' party are believed to have been considered as an incentive for cooperation by Israel, long an enemy of Iraq.
Meese has refused to disclose any part of the 1985 memo on grounds that it is classified.
On Wednesday he vowed not to resign in questioning by reporters after he took part in a Justice Department ceremony honoring a slain prison guard.
Reagan 'Answered That'
Asked if he would resign or step aside until the investigation is concluded, he replied, "I think the President answered that some time ago. I'll abide by that."
Meese apparently was referring to a statement President Reagan made last November when asked about a columnist's call for the attorney general's resignation. At that time, Reagan said Meese is "no embarrassment to me. I've known him for 20 years, and I've found him of sound mind and great loyalty and capability in all that time."
Meese's lawyers are just as adamant as the attorney general in their belief that he has done nothing improper or illegal, continuing to stress that his role in the affair was extremely limited.
Lewin, for example, cites a number of grounds for his argument that the Foreign Corrupt Practices Act does not bar such activity as the contribution from Rappaport to Israel described by sources.
Rappaport Not Citizen
Besides the argument about Rappaport's Swiss citizenship, Lewin contends that the act deals with licenses, contracts and business permits and not foreign policy issues, even if the issues are tied to a commercial transaction like the proposed pipeline. Assurances that Israel would not attack the pipeline, he argues, are far from the type of action the law was designed to prohibit.
Moreover, Lewin contends, contributions to political parties from foreigners such as Rappaport are legal under Israeli law.
The lawyers who disputed the arguments by Meese's attorneys emphasized that they were not commenting about the guilt or innocence of Meese, Wallach or Rappaport and stressed that they were unfamiliar with the intricacies of the still-unfolding case.
But Bernard S. Bailor, a Washington lawyer who has worked with the corrupt practices act, said the fact that Rappaport is not an American citizen does not exempt Meese or Wallach from the law's provisions. "The fact that you use a foreign agent does not exempt you" from the ban on illicit payments to senior officials of foreign governments or political parties, he said.
'A Commercial Pipeline'
"As for the argument that this was a political act, this was a commercial pipeline," Bailor said.
In addition, he said he did not regard it as significant that the contribution would not violate Israeli law. "Most bribes (attacked under the U.S. law) don't violate the foreign law" of the nation involved, Bailor said.
Charles J. Queenan Jr., a Pittsburgh attorney and an expert on the corrupt practices act, said too few cases have been decided in the law's 11-year life to establish its full scope, leaving some questions raised by the pipeline case in murky legal territory.