Attorney General Edwin Meese III disclosed yesterday that he and his wife made more than $35,000 in profits from sales of stock over the past two years on an investment of $60,000 but strenuously defended his failure to disclose the details of the investments until now.
Last week the Office of Government Ethics (OGE) said Meese had failed to comply with federal ethics rules in 1985 when he set up "a limited blind partnership," but Meese said yesterday that he had "complied fully with the Ethics in Government Act" when he entered the partnership that handled the investments. Instead, speaking through his lawyers, he accused the OGE of having "violated federal law" in failing to warn him of the insufficiency of his disclosures.
"Mr. Meese, in short, has done what a government official is supposed to do," Meese's attorneys, Nathan Lewin and James E. Rocap III, said in a memorandum accompanying most of the details. "Indeed he has done more than is required to ensure against conflicts of interest."
Under federal law, officials required to make annual financial disclosures must report the holdings of and the income from a trust or other financial arrangement unless they have entered into a "qualified blind trust." The proposed blind-trust agreements in turn must be approved by OGE.
Meese failed to seek OGE approval of the partnership.
Meese has been under pressure to disclose his holdings since April when news stories first broke concerning his "blind" partnership with San Francisco businessman, W. Franklyn Chinn, a former director of the scandal-plagued Wedtech Corp.
Meese, who had intervened on Wedtech's behalf in 1982 as a White House official, did not disqualify himself from all federal investigations of Wedtech until April 8. Shortly thereafter, he announced that he was ending his partnership with Chinn, who had become a subject of the Wedtech inquiries, but the attorney general resisted making the details of his $60,000 investment with Chinn public.
Meese's attorneys emphasized yesterday that Chinn had not invested any of the Meeses' funds in Wedtech or any Wedtech subsidiary, but rather had made profits for the Meeses through a series of unusual "same day trades," buying in the morning and selling in the afternoon of the same day.
"Mr. Chinn's investment strategy meant that the limited partnership actually owned stock for only 19 days of the 760 days of its existence," the Meese memo said. "For the balance of the limited partnership's life, its asset was cash in interest-bearing brokerage/money market accounts" in California.
Meese reported earning an additional $6,000 in interest from the money when it was not being used in the stock market.
The attorney general's combative posture drew immediate criticism. Fred Wertheimer, president of Common Cause, the self-styled citizens' lobby, said it was "outrageous" for Meese to take the position that federal ethics law is unclear about the need to disclose holdings in anything but an officially approved "qualified blind trust."
"It is unbelievable that the attorney general of the United States should be claiming that this is the fault of the OGE when the statute makes it absolutely clear to him what he has to do to comply with the law," Wertheimer said. He pointed out that Meese had been confirmed as attorney general in February 1985 after probe of alleged financial irregularities found insufficient basis for prosecution.
"To be so insensitive to ethics-in-government laws so soon after he had gone through these very problems in his confirmation hearings shows an individual who has learned absolutely no lessons about the importance of ethics rules and the need to comply with them," Wertheimer charged.
Meese's disclosures yesterday came in two parts. The first was his official annual report to OGE, originally due May 15 and signed after getting extensions on June 15. It contained nothing about the limited blind partnership with Chinn except for the fact that it produced $10,973 in profits last year.
The second part consisted of a binder containing the 20-page memo composed by Meese's lawyers and 15 supporting documents.
They showed, among other things, that Meese had not actually sold all of the stocks that last year he reported as having sold on May 23-24, 1985, when he and his wife, Ursula, entered into their partnership with Chinn. Instead, Meese said he could not find the certificates for their holdings of 17 shares in each of the seven so-called "Baby Bell" telephone companies around the country. He said he has yet to find them.
"I have been unsuccessful to date, due to various administrative record-keeping problems, not the least of which is the limited amount of time that I have been able to devote to my own personal finances over the last two years," Meese said in a letter to Chinn dated yesterday.
The attorney general pointed out that he and Mrs. Meese had signed over "all our right, title and ownership" in those stocks to Chinn on May 23, 1985, the date of their partnership agreement, but had not been able to locate the old certificates or get replacements for them. Meanwhile, Meese said he held onto the dividend checks from the stocks, meaning to turn them over to Chinn together with the new certificates. He told Chinn yesterday to "re-transfer" title so that he can finally dispose of the matter.
Meese's lawyers also pointed out that he obtained a conflict-of-interest opinion from then-White House counsel Peter J. Wallison last Jan. 20 in light of Meese's participation "in discussions related to the consent decree involving the telephone industry." Wallison said the holdings, worth $9,611 at the time, were too small "either to influence you . . . or to cause the public to question your integrity on this issue."
Similarly, Meese's attorneys took the position that Chinn's investments for Meese rolled over so quickly that "the ownership interest in the stocks was too insubstantial and too fleeting to create a conflict of interest."
The Meese memo attacked the government ethics office in harsh terms for remaining silent last September when it received his annual disclosure report (for 1985) with the first mention of his arrangement with Chinn. OGE, Meese's advisers said, "has the duty, under law" to notify any executive branch official if "additional information" is needed.
OGE Director David H. Martin had no immediate comment because he had not seen Meese's statements. His office said last week, however, that OGE had mistakenly overlooked the one-line reference to the Chinn partnership last fall but tried to obtain more details in an April 28 letter prompted by news reports. OGE officials said they did not follow through because the ongoing criminal investigation of Wedtech by independent counsel James C. McKay had been expanded to include Meese's conduct.