WASHINGTON — A key memo and related documents that are the focus of an independent counsel's investigation of Atty. Gen. Edwin Meese III are clearly "conspiratorial" in tone and contain some material so questionable that it should have set off alarm bells in Meese's mind, government sources have told The Times.
Although Meese's lawyers sharply challenged this characterization, even some officials who support the attorney general say the memo and the related papers are fraught with potentially damaging material and suggestions of possible improprieties. In addition, contrary to suggestions by Meese, sources say the questionable material is not confined to one 10-word passage.
In one example, sources say, just before describing a plan to pay the Israeli Labor Party for help on a $1-billion Iraqi pipeline deal, the memo contains the cautionary phrase " . . . to be denied everywhere." Under the arrangement, sources have said, Israel was to guarantee that it would not interfere with the pipeline's being built by Iraq, its enemy of four decades.
Status Report on Pipeline
"The levels of conduct covered by these documents range from suspicious to unethical to concern that a crime is in the making," one source said. "The language is unambiguously conspiratorial."
The 1985 memo to Meese was a status report on the pipeline deal written by his longtime friend E. Robert Wallach, who was working as a private attorney on the project. Wallach had sought the attorney general's influence in obtaining a U.S. stamp of political and financial stability on behalf of the pipeline.
Meese did nothing about his knowledge of the Israeli payment plan, though it is not known whether he did anything that could be construed as illegal. The Foreign Corrupt Practices Act prohibits U.S. citizens from bribing foreign officials and specifically requires the attorney general to take legal action to prevent a violation if it appears that one is about to occur.
James E. Rocap, a Meese attorney, disputed the description of the memo as "conspiratorial" and dismissed the contention that it should have alerted the attorney general to possible wrongdoing. "Quite the contrary," he said. "That is an unfair and wrong characterization."
'To Be Denied Everywhere'
Rocap was asked what other interpretation could be made of the phrase "to be denied everywhere." Without confirming that the phrase appears in the document, he said: "In my view, the way he (Wallach) writes memos, you cannot attach any particular significance to those words. On perfectly innocent topics, he'll use initials to refer to individuals--for no reason whatsoever."
A senior White House official also discounted the "conspiratorial" characterization of the Wallach-to-Meese correspondence, saying: "You could probably find some other people who might interpret it differently. . . . Only (independent counsel James C.) McKay is going to be in a position to determine whether the letter is damaging."
However, several other government sources interviewed by The Times, all of whom spoke on the condition that they not be identified by name or agency, believe that the documents are far more damaging than the attorney general has indicated.
One official who has studied the memo and a number of supporting documents said the materials "would raise the eyebrows of anybody, let alone a trained lawyer."
The contents of the memo remain classified, but sources who have studied the document say it raises serious questions about Meese's statement earlier this month that he "certainly did not receive from the memorandum any impression of illegality whatsoever."
The statement by Meese, who insisted that he played only an "extremely limited" role in the affair, was "carefully crafted," one official said. "The Wallach memo is extremely troublesome, and it's not limited to 10 words."
A former high government official involved in the matter expressed surprise at the way Meese characterized Wallach's memo, asking: "Since when does the suspect structure the inquiry?"
In reading his statement on his role in the pipeline affair on Feb. 1--a highly unusual move in the midst of a continuing investigation of the matter--Meese dismissed the significance of the memo, saying only 10 words in the document "have given rise to this speculation."
The attorney general, responding to what he called "a cascade of misinformation" in the media, said: "Indeed, as I look at the full memorandum containing those 10 words today, I cannot believe that it fairly implies that a violation of law was committed or contemplated in connection with the pipeline."
Meese said the document never mentioned the words "bribes" or "payoffs."
But Bruce Rappaport, the Swiss oilman and promoter of the pipeline who retained Wallach to work on the project, confirmed that the memo refers to proposed payments to Israel and the Labor Party in connection with the project.