Attorney General Edwin Meese III failed to comply with federal ethics regulations in 1985 when he set up a "limited blind partnership" with a former official of the scandal-plagued Wedtech Corp., according to David H. Martin, director of the Office of Government Ethics.

In a June 26 letter to Rep. Gerry E. Sikorski (D-Minn.), released yesterday, Martin said the ethics office would never have approved such an arrangement and that Meese should have reported what securities the $60,000 trust was invested in to avoid any possible conflicts of interest.

Sikorski, who chairs the House Post Office and Civil Service subcommittee that oversees federal ethics requirements, called Martin's statement "further evidence of a pattern of poor judgment and a frightful collapse of ethics within the attorney general's office."

"As the nation's top law enforcement official, his conduct is inexcusable," Sikorski said. "Just because Ed Meese said that his arrangements with Wedtech officials were blind did not make them so."

Terry H. Eastland, a spokesman for Meese, said yesterday, "This is a purely political attack by Sikorski, and it is irresponsible in the extreme. It's a cheap shot.

"This is the first time that we have heard of the Office of Government Ethics taking any issue with that filing," he said. "It is curious indeed if the Office of Government Ethics is objecting to this we should hear about it indirectly through Sikorski, a Democratic chairman of a House subcommittee."

Martin could not be reached for comment. Donald Campbell, the office's deputy director, said the limited blind partnership "clearly does not comply with the regulations" but that the office overlooked that problem when it reviewed Meese's 1985 disclosure last September. He said his office raised a number of questions about the disclosure that were resolved. "But I have to admit, we just did not focus on that {blind partnership} issue until the press stories started."

Martin said in the letter that although there are criminal and civil penalties for violations of the ethics law, he does not have "sufficient information" to determine whether a violation has occurred in the case. Martin added that his office usually seeks voluntary compliance before pursuing other remedies.

Meese, who is under investigation by independent counsel James C. McKay for his role in the Wedtech matter, set up what he called a "limited blind partnership" on May 23, 1985, with Financial Management International Inc., turning over his investments for the company to manage after he moved to the Justice Department from the White House, where he served as counselor to the president.

Financial Management is owned by W. Franklyn Chinn, a San Francisco businessman who was then a consultant to Wedtech and became a member of its board of directors later that year. Meese's lawyer, Nathan Lewin, said yesterday that he has determined that none of the funds were invested in Wedtech.

Meese was introduced to Chinn by San Francisco lawyer E. Robert Wallach, a friend who has become a key figure in the Wedtech investigation. Wallach, who worked for the Bronx-based minority defense contractor from early 1981 until late last year, has said he was paid $1 million in stock and fees.

Meese confirmed in April that he interceded on behalf of Wedtech after he received more than a dozen memos from Wallach in 1981 and 1982 when the company was seeking to obtain a $32 million no-bid small engine contract from the Army. Wedtech got the contract in September 1982.

Meese said earlier this year that he would end the financial arrangement with Chinn by June 30. A Justice Department source said the partnership was ended yesterday.

Meese's financial disclosure for 1985 shows that his $60,000 investment with Financial Management earned dividends of $5,000 to $15,000 for the period of a little over seven months in which Chinn handled it. Meese has obtained extensions for filing his 1986 disclosure, which was due last May 15.

In the letter, Martin said, "No 'limited blind partnership' has been or could be approved . . .which would shield an executive branch official from being deemed to have knowledge of outside financial interests or from the requirement of disclosing such interests in a public financial disclosure.

"The Ethics in Government Act contains specific requirements for the creation of blind trusts, including the necessary approval by our office, and in some instances concurrence by the Department of Justice. The act has no provision for recognition of 'blind' arrangements created by a filer's own action," he said.

Martin said he wrote to the Justice Department April 28 asking for specific information on "the character and nature" of Meese's investment in the Chinn limited partnership. He said he discontinued the investigation when he was told that independent counsel McKay was expanding his investigation to include Meese's role in Wedtech.

Sikorski said yesterday that he has long been at odds with Martin over the vigor with which his office pursues violations. "Basically, it's a toothless watchdog," Sikorski said. Martin's letter came in response to his request for information on the blind trust.

Although the Office of Government Ethics has the power to fine and dismiss federal employes or to refer them for civil or criminal prosecution, Sikorski contends that Martin has never taken any enforcement action beyond asking an agency to reprimand an employe. Sikorski has asked the General Accounting Office to investigate Martin's handling of Meese's disclosure.

During Meese's confirmation hearings in 1985, Martin informed the Judiciary Committee that Meese had been involved in no ethics violations. But an internal report from the ethics office later surfaced showing Martin had overruled two of his staff attorneys who concluded that Meese was involved in two ethics violations while he served as counselor to the president.