A former Health and Human Services Department official who pleaded guilty to conflict of interest claims that then-Secretary Margaret Heckler not only knew about the situation but encouraged the activities that led to the charges against him, according to court documents.

C. McClain Haddow, Heckler's former chief of staff, was sentenced to a year in prison after he acknowledged that he arranged for his wife, Alice, to accept payment through a phony contractor for speeches she had written for Heckler. But Haddow insists he didn't know he was breaking the law and says that when he realized it almost a year later and discussed the matter with Heckler, she told him not to worry.

A spokesman for Heckler, who is now ambassador to Ireland, said, "The case is still in litigation, and it would be inappropriate to comment."

On Oct. 2, U.S. District Court Judge Gerhard Gesell stayed Haddow's prison sentence without explanation. Neither the prosecutor nor the defense attorney would comment. HHS press secretary Chuck Kline said he is unaware of any investigation into Heckler's possible involvement in the case.

"As far as the allegations against Secretary Heckler, that's exactly what they are -- allegations," he told our reporter Tanya Isch.

In a letter that is part of the court records, Haddow's attorney, Brian Gettings, wrote to HHS general counsel Ronald Robertson last month that Heckler had told Haddow she wanted his wife to work as a subcontractor for a speech writing firm used by the department.

"It was also Mr. Haddow's understanding," Gettings wrote, "that she wanted the relationship to be undertaken in a manner so that Mrs. Haddow's role as one of her speech writers would not be open and obvious. Secretary Heckler was concerned, among other things, about criticism which could result from yet another husband-wife team performing critical functions at the upper echelons of the department."

According to Gettings' letter, when Haddow realized there was a possible conflict-of-interest problem, in January 1985, he mentioned it to Heckler. Gettings wrote: "Secretary Heckler. . . advised Mr. Haddow at that time that she was the official in the department that was making the decisions regarding Mrs. Haddow's speech-writing efforts, that Mr. Haddow had no role in the matter other than as a conduit for executing her decisions. In the conversation about the {conflict-of-interest} statute, Secretary Heckler stated that Mr. Haddow would 'never have to worry about this.' "

Also included in the court records are the results of a polygraph test Haddow took on Sept. 10, 1987, indicating that he was not lying when he made the allegation about Heckler.

Former Heckler speech writer William Nixon wrote to Judge Gesell that there was nothing suspicious or unusual in the lack of evidence that Heckler ever used any of the speech material. Alice Haddow was paid for writing. Nixon wrote that Heckler rejected or ignored as much as 90 percent of the speeches written in-house.