E Robert Wallach

State Department officials are deeply concerned that disclosure of classified documents crucial to the investigation of Atty. Gen. Edwin Meese III could inflict serious political damage to Israeli Foreign Minister Shimon Peres, widely viewed as the United States' major hope for a breakthrough in Middle East peace efforts, government sources have told The Times.

San Francisco lawyer E. Robert Wallach, apparently rattled by the disclosure that he had understated his income in a sworn statement submitted to a federal court in 1984, testified at his racketeering trial Thursday that he did not know filing a false affidavit is a federal crime.

Swiss financier Bruce Rappaport, explaining why he backed out of an agreement to cooperate in a U.S. independent counsel's investigation of Atty. Gen. Edwin Meese III, said Monday that he was afraid of being victimized by the political nature of the inquiry into the attorney general's role in a controversial Iraqi oil pipeline project and other matters. Rappaport, who hired longtime Meese friend E. Robert Wallach to help get U.S.

An Israeli source said Monday that sometime in 1985 U.S. Atty. Gen. Edwin Meese III advised Shimon Peres, then the prime minister of Israel, that government-to-government contacts about a proposed billion-dollar Iraqi oil pipeline should bypass Secretary of State George P. Shultz because of a potential conflict of interest.

Here is the text of a memo from lawyer E. Robert Wallach to Atty. Gen. Edwin Meese III on a proposed Iraqi pipeline: MEMO TO: EMIII FROM: erw DATE: 25 SEPTEMBER 1985 PERSONAL & CONFIDENTIAL--FOR YOUR EYES, ONLY I hesitate to provide the following information to you in memorandum form. I'm constantly torn between my own feelings of privacy and the need to provide you with information in a form which will expedite communication. The following are specific items of information which B. R.

E. Robert Wallach, a former consultant to scandal-plagued Wedtech Corp. and a close friend of Atty. Gen. Edwin Meese III, boasted about influence with the Reagan Administration in memos to Wedtech officers that were made public Tuesday. Wallach's internal memoranda were disclosed by the Senate Governmental Affairs subcommittee on oversight of government management in connection with an inquiry into how the small Bronx, N.Y., firm was able to obtain large U.S.

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.

Israeli Foreign Minister Shimon Peres, confirming that he sent a handwritten letter to Atty. Gen. Edwin Meese III about a controversial Iraqi pipeline project in 1985, said Sunday that he used this highly unusual diplomatic channel "because I was approached by people who told me that the attorney general will deal with it."

Atty. Gen. Edwin Meese III recommended Tuesday that John C. Shepherd, a former American Bar Assn. president, be nominated as deputy attorney general to succeed Arnold I. Burns, who quit the No. 2 post at the Justice Department because of the legal controversy surrounding Meese. As expected, Meese announced also that he is recommending that Francis A. Keating II, assistant secretary of the Treasury for enforcement, replace Associate Atty. Gen. Stephen S.

E. Robert Wallach, the longtime friend and former lawyer for Atty. Gen. Edwin Meese III, views himself as a victim of an "enormously ambitious" federal prosecutor in New York, where he is under indictment for racketeering and conspiracy, and "a pervasively cynical attitude" in Washington. Wallach, interviewed this week in his law office here, said that he is being targeted by those intent on harming Meese.