Excerpts from the statement on the White House counsel's report of the inquiry into allegations concerning Richard V. Allen:

At the request of chief of staff James A. Baker III, the Office of Counsel to the President undertook an internal review of public allegations concerning Richard V. Allen, assistant to the president for national security affairs, to determine whether his activities breached provisions of Executive Order 11222 or 3 C.F.R. Code of Federal Regulations Part 100, which set forth the standards of conduct for members of the White House staff. The review began immediately after the Department of Justice made public its final two reports on Dec. 23, 1981, and was concluded Jan. 3, 1982. . . .

1. The interception and handling of the $1,000 honorarium intended for Mrs. Reagan.

The attorney general concluded that Mr. Allen's conduct with respect to the receipt and handling of the $1,000 violated no criminal statute . . . .

Mr. Allen immediately relinquished control of the $1,000 to a member of his staff; he instructed the staff member to dispose of the money with the appropriate authorities; he subsequently instructed the staff member to discuss the proper disposition of the money with the counsel to the president, and he openly discussed with administration officials and others the fact that he had intercepted and intended to properly dispose of the money. Mr. Allen failed to follow through to ensure that his instructions were carried out. Counsel's office concluded, however, that given the above facts, Mr. Allen's oversight in this regard was not violative of White House standards of conduct.

2. The receipt of three watches from Mr. and Mrs. Tamotsu Takase and other gifts.

The attorney general concluded that "based upon Allen's long and close friendship with the Takases, Allen could have reasonably believed that the watches were personal gifts to him and his wife." Mrs. Takase confirmed that their personal relationship with the Allens was the motivating factor for the gifts. Counsel's office concluded for the same reason that Mr. Allen's acceptance of the watches did not violate the transition standards of conduct. The receipt of the one ladies' watch, which may have been delivered to Mr. Allen after Jan. 20, 1981, when judged by the stricter standards of conduct for White House staff, created, at the very worst, a potential appearance problem which, in retrospect, would suggest that the more prudent, although not required, course would have been not to accept the watch . . . .

3. The sale of Potomac International Corp. to The Hannaford Co. Inc.

On Dec. 23, 1980, Mr. Allen began negotiations for the sale of Potomac International to The Hannaford Co. The sale was consummated effective Jan. 19, 1981, pursuant to a memorandum of agreement between the parties. Even though the agreement provided for deferred payments, the sale price was fixed as of that date. After Jan. 19, 1981, Mr. Allen in no way participated in any decisions by Potomac International.

Federal regulations prohibit only "personal" and "substantial" participation in a particular matter in which the employe "knows" that he has a financial interest. Given that Mr. Allen has had no financial interest in his former company since Jan. 19, 1981, and that he did not participate in any matter involving the company, in his official capacity or otherwise, counsel's office concluded there was no violation . . . .

4. The propriety of contacts with clients of Potomac International Corp. and The Hannaford Co., Inc.

Mr. Allen had numerous contacts, social and professional with clients of Potomac International during the transition period. Although Mr. Allen continued to provide consulting services to many clients during this period, he took no action as a member of the transition staff that benefitted either his own financial interests or those of one of his clients. This fact has been confirmed by members of the NSC transition staff and by former clients of Potomac. The counsel's office concluded that Mr. Allen's activities during the period Nov. 4, 1980, through Jan. 20, 1981, did not violate the standards of conduct applicable to the transition staff.

Mr. Allen continued to have contacts with former clients of Potomac after Jan. 21, 1981. These included "social" or "courtesy" meetings at the White House, as well as luncheons and dinners at which a former client may have paid for Mr. Allen's meal . . . . The circumstances. . . support the conclusion that personal friendship was the motivating factor for the contact. Mr. Allen had no contacts with clients of The Hannaford Co.

Even though Mr. Allen had no personal financial interest in any particular matter over which he had official responsibility, his continued contacts with former clients and others involved in the Japanese auto industry created the potential for an appearance of conflict of interest. We conclude, however, that Mr. Allen effectively avoided an actual problem by recusing himself from participation in decisions relating to the U.S.-Japan auto trade policy . . . .

5. Errors and omissions on the financial disclosure report.

The attorney general found, and counsel's office concurs in the finding, that there is no evidence to suggest that the errors on Mr. Allen's financial disclosure report were knowing and willful . . . .