The independent counsel investigating Attorney General Edwin Meese III is focusing on a memo from attorney E. Robert Wallach to Meese that allegedly cited a plan to pay off a senior Israeli official to help head off Israeli interference in a $1 billion Iraqi pipeline project, government sources familiar with the inquiry said yesterday.

Meese reportedly did nothing about his knowledge of the alleged 1985 proposal, the sources said. The Foreign Corrupt Practices Act prohibits U.S. citizens from bribing foreign officials and specifically stipulates that the attorney general may take legal action to stop a violation "whenever it appears" that the law is about to be broken.

It is not clear whether Meese or his longtime friend Wallach, a San Francisco lawyer under indictment for his role in the Wedtech scandal, did anything that could be construed as violating the law in connection with the alleged payoff plan. Nor was it known whether any payment to an Israeli official was attempted or accepted.

Some sources said that Shimon Peres, who was Israel's prime minister in 1985 and is now the foreign minister, was the official targeted for the bribe attempt.

Sources familiar with the investigation by independent counsel James C. McKay described the Wallach memo as the most serious allegation raised against Meese thus far and said that it has become the primary focus of the investigators.

These sources, stressing extreme sensitivity involving the memo in the independent counsel's office and throughout the U.S. government, fear that public disclosure of the alleged plan could "bollix up the investigation," as one put it, by allowing participants to attempt jointly to construct a legal explanation for their actions.

Although there apparently is no evidence that Meese was directly involved in the alleged scheme, several sources in the Justice Department and other government agencies said that the allegation of his inaction over the memo -- if true -- could force Meese to resign.

{Reagan administration officials said last night that the White House is taking the new allegations seriously and is examining the legal implications of the information involving Wallach and Meese.}

Lawyers representing Meese said that "no actual or potential violation of law was brought to Mr. Meese's attention during his limited participation in discussions regarding the project."

{One source familiar with the McKay probe told The Washington Post last night that Meese did see the memo in question and that he is taking the position through his lawyers that "it did not alert him to any violation of law."

{"He bucked it somewhere else," this source said.}

Yossi Gal, a spokesman for the Israeli Embassy here, after checking with superiors in Jerusalem, dismissed the report of a plan to attempt to pay off an Israeli official as "a wild fantasy that is not even worthy of comment."

George G. Walker, Wallach's attorney, reached in Brooklyn, where he is preparing Wallach's defense in the fraud conspiracy for which he has been indicted in New York, said: "I have absolutely no comment."

It is not publicly known whether Wallach had any financial stake in the pipeline, which was never built. Wallach apparently has told U.S. officials that he supported the pipeline as a means of promoting peace in the Middle East.

Officials of the Bechtel Group, the huge San Francisco construction firm that was bidding to build the pipeline, said last fall that Wallach was a U.S. representative of Bruce Rappaport, a wealthy Swiss oilman who was a partner with Bechtel in the project.

{A Bechtel spokesman told The Washington Post last fall that Wallach, acting as Rappaport's lawyer, negotiated a one-year agreement with Bechtel that was signed in London on July 16, 1985. Under it, Rappaport and a Rappaport firm, National Petroleum Ltd., were to handle the sale of the oil flowing through the pipeline and, as the Bechtel spokesman put it, "to arrange for the security bond or insurance or whatever it would take" to keep the pipeline safe from destruction by Israel.

{In the summer of 1985, sources said, Wallach used his ties with Meese to obtain a meeting with then-White House national security adviser Robert C. McFarlane about the proposed pipeline. Later, invoking U.S. national security interests, Wallach tried to get the Overseas Private Investment Corp. (OPIC), a government agency that insures foreign investments by U.S. firms, to insure the pipeline against possible Israeli raids. In October 1985 OPIC asked Meese for the Justice Department's opinion on the legality of its involvement, but sources say the project foundered of its own weight before there was any formal ruling from the Justice Department.}

The planned Iraqi pipeline was to run close to the Israeli border, carrying oil to the Red Sea port of Aqaba, Jordan. Because Iraq and Israel are longtime enemies, Wallach and others involved in the project allegedly had sought or discussed a payoff to an Israeli official as a way to defuse Israeli opposition to the pipeline and to deter a direct military attack on it.

In the pipeline venture, many firms and individuals stood to gain by securing an Israeli pledge not to sabotage the project during the four or five years of operation needed to recover its cost. They included Bechtel and any of its American competitors for rights to construct the project.

But many of the potential beneficiaries are not American citizens and thus may not be subject to U.S. laws prohibiting the payment of bribes to foreigners. They include citizens in Iraq and Jordan and various foreign suppliers and middlemen in the pipeline's operation.

{The Foreign Corrupt Practices Act, enacted by Congress in 1977, makes it illegal for U.S. citizens or companies to offer foreign officials "anything of value" to influence them to provide help in business matters.

{The law specifically provides that the attorney general "may, in his discretion," file a civil suit to stop a violation if it appears the person or company "is about to engage" in an act that would violate the law.}

Rappaport also stood to benefit from completion of the pipeline. One knowledgeable source called Rappaport an extraordinarily wealthy Swiss citizen who is a major supporter of Israel, enjoying close friendships with Israel's top government officials and political figures.

Contacted in Geneva yesterday, Rappaport denied all knowledge of the purported scheme to pay off an Israeli official.

"There was no such plan at all," he said. "I heard of this the first time today from my lawyers."

Rappaport added that he "never met Mr. Meese. I didn't even shake hands with him. I only know what he looks like from the newspapers." He declined further comment.

A Bechtel spokesman said yesterday that the firm has not been questioned by investigators about the memo detailing the proposed payment.

Wallach, who served as Meese's lawyer in 1984 during another independent counsel's investigation of Meese, was indicted in December by a federal grand jury on charges of fraud that included attempts to influence Meese.

The indictment, involving Wedtech Corp. and returned after an investigation by U.S. Attorney Rudolph W. Giuliani in New York, also charged Meese's former financial adviser, W. Franklyn Chinn, and a Chinn associate.

Wallach's friendship with Meese dates back to their law school days at the University of California in Berkeley. In a personal gesture that reflects the closeness of their relationship, Wallach took on the task of identifying the body of Meese's son, Scott, who died in an automobile accident in 1982 in suburban Virginia when Meese and his wife, Ursula, were out of town.