The Canadian government has told congressional investigators that it will not cooperate with their inquiry into how Canada hired former White House aide Michael K. Deaver as a lobbyist, a decision throwing a major roadblock in the way of the probe.
President Reagan, meanwhile, termed "ridiculous" a request by five Democratic senators that the Justice Department seek an independent counsel to investigate Deaver, his longtime friend and former deputy White House chief of staff.
At the same time, however, allegations involving Deaver were formally referred to the Justice Department by the Office of Government Ethics.
The senators' request and the ethics office's referral put the department in the position of having to decide whether to pursue an investigation itself or seek an independent counsel. Some administration officials predicted that Attorney General Edwin Meese III, a longtime colleague of Deaver, would disqualify himself from the decision.
Congressional sources said Canada's refusal to provide documents or testimony could jeopardize a separate General Accounting Office probe of whether Deaver violated federal conflict-of-interest laws in his dealings with the Canadian government.
"We hold our communications with Mr. Deaver to be matters of confidence with Mr. Deaver," Bruce Phillips, spokesman for the Canadian Embassy here, said yesterday. "It is the policy and practice of the Canadian government not to give evidence and not to appear before the tribunals and committees of foreign governments."
Aides to Rep. John D. Dingell (D-Mich.), who requested the GAO probe as chairman of the House Energy and Commerce subcommittee on oversight and investigation, would say only that Dingell has urged the Canadian Embassy to cooperate. Dingell is planning to hold hearings on the matter.
Earlier this month, William J. Anderson, a senior GAO official, told a Washington reporter for CTV Television, a private Canadian network, that Canada had been resisting the probe for two months. "We have been unsuccessfully trying to obtain the information that we need," Anderson said.
Reagan's remarks were made amid growing criticism of Deaver's conduct in leaving the White House last May and setting up a lobbying firm that has secured sizable contracts with foreign and domestic clients. A spokesman for Deaver said in a statement Thursday that the "the complete set of facts will show his absolute integrity while in public service and private business."
After his arrival in California on the first leg of a 13-day Asian trip, Reagan was asked by reporters what he thought of the senators' request Thursday for an independent probe of Deaver.
"I think the whole thing is ridiculous," the president said.
Sen. Howard M. Metzenbaum (D-Ohio), one of five Judiciary Committee members who signed the letter to Meese, said "there is certainly enough evidence to warrant the appointment of a special prosecutor. I'd be very surprised if the attorney general didn't see fit to do just that . . . . I think frankly [Deaver] has really given a bad name to lobbying in this country."
Justice Department spokesman Terry Eastland said that "we will fulfill our responsibility under the law" to consider the request for appointment of an independent counsel.
The Washington Post yesterday quoted a knowledgeable Canadian source as saying that Deaver was still at work in the White House last year when he first talked with Canadian government officials about signing up Canada as a client for the consulting firm he planned to establish when he left White House employment. A spokesman for Canadian Prime Minister Brian Mulroney called the account untrue and said the first job talks occurred six days after Deaver quit the White House.
Deaver signed a $105,000-a-year contract with Canada last July to provide advice on matters involving the United States, including acid rain pollution, an issue that Deaver had been involved in before the Reagan-Mulroney summit meeting in March 1985.
Eastland said the Justice Department can take an indefinite period of time to determine whether a preliminary investigation is warranted in the Deaver case or tell the senators why it is not. Once such a probe is begun, the Justice Department would have 90 days to decide whether there is enough evidence to ask a three-judge panel to name an independent counsel.
The senators' letter asked the department to consider Deaver's lobbying for Rockwell International, which is seeking contracts to build additional B1 bombers, for Puerto Rico's effort to preserve federal tax breaks, and for the South Korean government and a Korean steel company, as well as on the acid rain issue.
Besides Metzenbaum, the letter was signed by Joseph R. Biden Jr. (D-Del.), Paul Simon (D-Ill.), Patrick J. Leahy (D-Vt.) and Minority Leader Robert C. Byrd (D-W.Va.).