Following are excerpts of testimony by Attorney General Edwin Meese III to members of the House and Senate select committees investigating the Iran-contra affair.

Sen. William S. Cohen (R-Maine) asked Meese about the diversion of profits from sales of arms to Iran to aid the Nicaraguan contras.

q)Now, according to the testimony, {former CIA} director {William J.} Casey, {Marine Lt.} Col. {Oliver L.} North, {Rear} Adm. {John M.} Poindexter and . . . some members of this committee thought this diversion was "a fairly neat idea." And it struck me that, after all, this is the ultimate covert hat trick. We tricked the Ayatollah {Ruhollah Khomeini}; we tricked the Sandinistas; and we tricked the Congress itself, because we ended up using funds for a program which {Congress} thought it had prohibited. And I was wondering, what's wrong with that particular arrangement? What is basically wrong with it?a)...First of all, I think deceiving the Congress in any way is not a good idea.

q)I agree with you.

a)And I think that that's one of the aspects . . . . There are some things that have to be done in a covert manner, but again, the processes of notifying Congress and obtaining congressional support of the leadership for these things is very important.

q) . . You knew intuitively that the moment the question of diversion arose that there was something wrong with that?

a)Absolutely. I knew that it was unauthorized, and I knew that it was a violation of the implementation of the president's policy. I also knew that it had a tremendously adverse impact, or potentially an adverse impact, on the very thing that was trying to be helped, namely assistance to the freedom fighters in Nicaragua.

Sen. George J. Mitchell (D-Maine) noted Meese's use of notes of meetings to refresh his memory during his testimony before the committees. He then pursued a related line of questioning.

q). . . On Friday, Saturday and Sunday, Nov. 21, 22 and 23, you interviewed {former national security adviser} Mr. {Robert C.} McFarlane, Secretary {of State George P.} Shultz, {former CIA counsel} Judge {Stanley} Sporkin and Col. North. On each of those occasions, a member of your staff was present, and that person took notes, and it is on those notes that you have frequently relied in your testimony here, sir.

And in your meeting with Col. North on Sunday, he confirmed that a diversion had taken place, and he told you that Mr. McFarlane and Adm. Poindexter were the only other persons in the administration who knew about the diversion. Now, I'm struck by the fact that on the following day, Monday, Nov. 24, you met briefly with Mr. McFarlane and interviewed him again, and at that meeting you were alone, and you took no notes. Is that correct?

a)That's correct.

q)You next spoke with Donald Regan, the president's chief of staff, interviewed him, and you were again alone and took no notes. . . .

a). . . I talked with him and the president. I met with he and the president and did not take notes at that time. . . .

q). . . On Monday afternoon, you spoke with Vice President {Bush}, and you were alone with him and took no notes?

a)That's correct.

q)And later on Monday afternoon again, you interviewed Adm. Poindexter, and again you were alone with him, and you took no notes. Is that correct?

a). . . That's correct.

q)And on {Monday, Nov. 24} your meeting with Mr. Casey was, again, alone, and {you} took no notes of that meeting?

a)It wasn't a meeting. It was a quick conversation. Yes.

q). . . Is there a reason why . . . each interview you had, up to and including the meeting with Col. North, there was always another member of your staff present who took notes, but that with respect to every interview thereafter, you were alone and no notes were taken -- or is that pure accident?

It's not totally pure accident. It's an accident in a general sense, but they were totally different types of conversations. In the meetings that I had with Secretary Shultz, the meeting with Mr. Sporkin, the meeting with Mr. McFarlane, the meeting with Mr. North -- all of these are what you might call interviews where we were seeking to elicit a great deal of information, and in which notes were important in order to record that information which we were hearing in each case for the first time.

The other conversations that took place were not for the purpose of eliciting great amounts of information. They were the casual conversations, conversations in which I was the only person present, for example, with the president and Don Regan, and . . . I don't usually take notes in those quick meetings. Or they were meetings in which I was seeing people like Mr. McFarlane simply to confirm information we already had in the long interviews that had already taken place, and where just by happenstance -- in that case it was {an} accident that nobody was there because Mr. McFarlane came in just as I was leaving for the White House.

In the case of Adm. Poindexter, all I was trying to do was to confirm what we already knew, and he did confirm it. Had he not confirmed it, for example, I'm sure we would have gone through the usual interview process with him and taken a detailed statement from him. Obviously, with the vice president and the president, it's not normal in those conversations to take notes, and the same was true with Don Regan, who I talked with . . . after I met with him and the president at 4:30. I went into some detail with him before going to the vice president -- detail in terms of what we were going to do the next day. And I think it was at that time that he again said to me that he had known nothing about this.

q)Well, giving you every benefit of the doubt, I think it's difficult to understand that you did not regard Adm. Poindexter, one of the three people in the government who is alleged to have information about it, the president's national security adviser, as a person not sufficiently important enough to have an interview with, but rather a casual conversation.

a)Well, the reason that there was no interview was what he said essentially confirmed --

q)You couldn't know beforehand what he was going to say, could you?

a)No. I was just trying to find out, because I had very little time between the National Security Planning Group meeting and my meeting with the president. I thought it was important to confirm with Adm. Poindexter -- the idea being that there would have been ample opportunity to go into a formal interview situation, had that been necessary.q)Well, I'll leave it at that and say, it's really very difficult to accept.

a)Well, I don't understand.

q)Well, Adm. Poindexter was a central figure, and to say that he --

a)But everything that he told me was totally consistent.

q)But you could not have known before you talked to him what he was going to say.

a)Well, that's right. But had he said anything differently from that, we would have had a formal interview to get that information. . . .

q). . . When did you first think about the possibility of criminal investigation?

a)The first real thought that I gave to the possibility of criminal investigation was probably on Monday afternoon -- well, to actual investigation was probably Tuesday, the 25th.

q)Well, before you go any further, recall what you just said in response to Sen. Cohen.

a)There I said the possibility that criminal laws might possibly have been violated --

q)Criminal implications, I think was --

a)Criminal implications, right --

q)Was on Sunday --

a)Was on Sunday --

q)When you talked to Col. North?

a)That's correct. Right.

q)So would that have been the first time that it entered your mind?

a)Criminal implications, yes.

q)Yeah, I'm sure. But you still did not think about securing documents at that point?

a)Well, senator, we already had examined all the documents and we already had . . . had the key document, the evidentiary document that was known as the diversion memo, which was the significant document, a copy of that in our possession.

q)Well, when you say "we had examined all the documents," you had examined all the documents you had seen until then. But in fact, there were a great many documents that you did {not} see, nor {did} anybody else.

a)Well, we don't . . . know whether those were relevant documents, irrelevant documents or what they were.

q)Do you think Col. North spent from 11 o'clock in the evening {of Sunday, Nov. 23} until 4:15 the next morning destroying irrelevant documents?

a)I think he probably did. I think there were a lot of documents that he destroyed that had no relationship to the Iranian initiative or had any relationship to the contra diversion of funds. There were probably a lot of other things that he may well have destroyed, documents that he didn't want anyone to see.

Rep. Dante B. Fascell (D-Fla.) asked the attorney general about how he characterized the diversion of funds at a news conference last Nov. 25.

q) . . . What was your judgment in saying, "We've discovered a diversion of funds. It's X number of dollars, and we believe, to start with, that it's not public money"?

a)The distinction I was trying to make, Mr. Fascell, and perhaps did not make sufficiently accurately at the time, was that this was not taxpayers' money in the sense that if somebody had taken money out of --

q)In other words, it wasn't appropriated funds.

a)Appropriated funds. I wanted to make it clear that this was not appropriated funds which were being diverted but rather that it was from the profits of the arms transactions which were over and above and beyond anything in the nature of appropriated funds. . . .

Sen. Sam Nunn (D-Ga.) asked Meese what questions the attorney general posed to Poindexter on Monday, Nov. 24.

q)Did you ask Adm. Poindexter who approved the diversion?

a)I did not ask him in so many words. I did ask him whether . . . he had ever told about this to anyone else in the White House, and he said, "No."

q)Did you ask him specifically whether he had told the president of the United States?

a)I didn't ask him specifically whether he had told the president. I asked if he had told anyone else in the White House or discussed it with anyone else in the White House, and he said, "No."

q)So you never asked him whether he had told the president --

a)No, I assumed --

q)Directly?

a)No, because that was included in the answer that I had received and the question I asked.

q)Did you ask him . . . directly if he had approved the diversion?

a)Not in that many words, but I did ask him what he knew of it and he told me, in . . . essence . . . that he had allowed it to go forward.

q)So you took that as tacit approval?

I believe he told me that that was the extent of his involvement and . . . I took that as tacit approval, the fact that he allowed it to go forward. . . .

q). . . Did you ask him if he thought he had authority?

a)No, sir, I did not.

q)So you never discussed that with him. Did you ask him when he learned of the diversion?

a)No, sir, I did not . . . .

q). . . Did you ask Adm. Poindexter under what authority he had approved this diversion by Col. North?

a)No, sir, I did not. . . .

q). . . Did you ask Adm. Poindexter anything about the money, where it went?

a)No, sir, I did not.

q)How much it was?

a)No, sir.

q)Did you ask him anything about whether the contras got the money?

a)No, sir, I did not.

q)I understand the rush of events that day, but it does seem to me that there were almost no direct questions asked by you to Adm. Poindexter.

a)That's correct. . . .