Two of President Reagan's three senior advisers, along with Nancy Reagan, have counseled that national security adviser Richard V. Allen be removed because of the embarrassment he has caused the administration over a $1,000 thank-you fee from Japanese journalists and a series of contradictory public explanations of it, according to knowledgeable administration sources.
These sources say that White House chief of staff James A. Baker III and deputy chief of staff Michael K. Deaver are pushing forcefully for Allen's removal to limit the political damage that the series of disclosures has caused the president.
Baker and Deaver are said to believe Allen made serious judgment errors in receiving the money in the White House. They are also concerned about the appearance of Allen's continued relationship with former associates and clients of the private consulting firm that he sold to former Reagan aide and speechwriter Peter D. Hannaford.
Edwin Meese III is alone among Reagan's top advisers in resisting the calls for Allen's resignation. Meese's defense of Allen focuses on the lack of evidence or proof that Allen broke any laws or administration rules when he accepted the cash and, by his account, forgot to turn it over to the proper authorities. It lay in a safe for eight months until its accidental discovery in mid-September by others.
Meese, Allen's direct superior, reportedly is concerned that Allen is being denied "due process" in a legal sense; Baker, Deaver and Mrs. Reagan are said to be dwelling on the political ramifications. Several officials are known to think Allen should step aside if a special prosecutor is named, but Allen has openly rejected such a suggestion.
In an interview with one wire service reporter, Meese said yesterday that the White House is "waiting for the results" of the Justice Department's investigation and in the meantime is not preparing to replace Allen.
White House officials have been noticeably keeping a distance from Allen and have issued statements in his name only or left him to issue his own statements. Allen has been largely unavailable for comment, but in an interview with The New York Times Thursday he said he would not terminate friendships with former clients simply "because I've become a public official."
Allen reacted angrily to a Thursday Washington Post article that reported questions of conflict of interest over his contacts with Hannaford and Hannaford's clients.
Allen said he has received more than $35,000 in payments from Hannaford this year under the terms of the sale of his Potomac International Corp. to Hannaford on Jan. 19. He said he received $16,000 as a down payment and $20,000 thus far in monthly installments scheduled to retire the total purchase price of $85,000 in three years.
For tax purposes, Allen said, immediately preceding the sale he arranged for his firm to redeem his stock, valued at $75,000, which he took as a long-term capital gain taxable at a lower rate. The $16,000 down payment represented accounts receivable of the firm at the time of the sale. The remaining $50,000 in outstanding debt is to be paid by Hannaford in installments over three years at an undisclosed interest rate. In the end, Allen said, he stood to make about $39,000 on the sale.
The Post article detailed instances where Allen has continued to meet with and advise Hannaford and his clients on an ad hoc basis. It noted that this activity posed ethical questions, given his status as a substantial creditor of his former firm with a vested interest in its continued prosperity.
"I find it particularly revolting to suggest that friendships of many years' standing are seen to contain inherent conflicts of interest," Allen said. "The double standard, the application of double standards by the press--by the media--must stop," he added in the Times interview.
"How can there be a conflict? " Allen continued. "If, for example, one guy leaves a law firm and leaves his accounts, is there a conflict if he meets with the lawyer who takes over those accounts or the former client, particularly if he excuses himself from matters pertaining to the client? The answer is clearly no," Allen said.
Meanwhile, from Japan, the newspaper that broke the first story of the Allen investigation, Mainichi Shimbun, reported in today's editions that Allen was given a "big present" in addition to the $1,000 and two ladies' watches he received from the Japanese magazine representatives who met with Nancy Reagan on Jan. 21.
The newspaper said its information was developed in a second inquiry by Japanese police officials. The report said Allen became involved in arranging the interview for the magazine Shufu no Tomo (Housewife's Friend) only after Allen's longtime friend and business associate, Tamotsu Takase, delivered the unidentified present to Allen's office two days before the Reagan inauguration.
The White House had no comment on the report and FBI officials who have worked closely with the Japanese police have given no indication in the past few days of any significant new developments in the case.
Meanwhile, Allen has told some reporters privately that he never had the combination to the safe where the $1,000 was found, nor did he have the key to the office where the safe was located in the Executive Office Building. Other sources on the National Security Council staff have said, however, that Allen continued to use the office and the safe combinations were kept by secretaries.
In addition, Sheila Tate, the first lady's press secretary, said yesterday in an interview with United Press International that Mrs. Reagan never knew the $1,000 thank-you fee had been worked out in advance of the January interview and had been slated to go to charity, as stated in Japan by one of the magazine representatives, Chizuko Takase.
Also, Tate said the meeting with Mrs. Reagan was never intended as an interview, only as a photo session. "If it had been presented to her as an interview, she wouldn't have done it," Tate said. The press secretary said she still has questions about some of the quotations of Mrs. Reagan used by the Japanese magazine.
The White House denied a report yesterday that a search is under way for Allen's replacement. "We will deny that the White House is looking for a replacement," said Larry Speakes, deputy press secretary.
The list of possible Allen replacements first began to circulate in high administration circles 10 days ago and included Brent C. Scowcroft, who served in Allen's post under President Ford; Richard G. Darman, a presidential assistant on Baker's staff; David Abshire, director of the Georgetown Center for Strategic Studies, and Robert C. McFarlane, counselor to the State Department.