White House chief of staff Howard H. Baker Jr. said yesterday that asking Attorney General Edwin Meese III to resign would be like "pitching people to the lions without proof," but some officials in Meese's department said yesterday they have started to think in terms of that eventuality.
According to informed sources, independent counsel James C. McKay is now "in the home stretch" of what he views as a serious investigation of Meese's involvement in an Iraqi pipeline project. The investigation, sources say, focuses on a memo in which Meese's close friend and former lawyer, E. Bob Wallach, allegedly discussed a plan to make payments to the Israeli Labor Party in order to ensure that Israel would not attack the pipeline, which was to run close to its territory.
Baker, speaking on CBS' "Face the Nation" yesterday, confirmed that McKay had briefed him and White House counsel Arthur B. Culvahouse Jr. last week on the status of the probe, and said McKay told him that Meese was the "focal point" of the investigation.
"I expect we'll keep very close tab on that and to see how it unfolds and develops," Baker said.
Justice Department officials say that Meese has no plans to step aside. Asked yesterday if the pipeline may be the straw that breaks the camel's back, department spokesman Patrick S. Korten said, "I think it will be the straw that makes him stand up and fight. I don't see him going the other way."
Department officials say Meese has an amazing ability to remain unaffected by the barrage of negative publicity. "He has a remarkable resilience," Korten said.
Meese has not commented on the pipeline controversy. His lawyers have said that "no actual or potential violation of the law" was brought to his attention.
But the latest revelations have rocked the beleaguered Justice Department, where only a handful of officials knew of the seriousness of the pipeline investigation before the story broke last week.
"There is this feeling of cumulative burden," one senior department official said. Asked if officials were braced for Meese's resignation, the official said, "No one's come out and said it, it's just people are prepared now for anything."
"At this point you really can't tell" what the impact will be, another senior official said. "We've been through this so many times that it's almost routine at this point and he's been exonerated -- or so far been exonerated -- on every point . . . . I doubt unless this really is the nuclear weapon that it's going to have that much more impact."
Some Meese loyalists suspect, however, that the "mice," as they disparagingly refer to the more moderate members of the White House staff, would like to use the pipeline reports to get rid of Meese. "It's the millstone-around-the-neck argument," said one administration official loyal to Meese. "It would just turn the spotlight off a controversial figure."
Indeed, the spotlight has been on Meese since before he became attorney general three years ago. Independent counsel Jacob A. Stein investigated alleged financial misconduct by Meese, including the role he played as presidential counselor in securing high-level government jobs for individuals who arranged loans for him. Stein had found no basis for prosecuting Meese but declined to address the ethics of Meese's conduct.
Urging members of the Senate Judiciary Committee to approve his nomination as attorney general, Meese said he had learned a lesson from having endured the six-month probe.
"If there were any doubt in my mind that four years from now you could look back and say Ed Meese has fulfilled the standards that I've set for this office, then I would retire right now and withdraw," Meese told Joseph R. Biden Jr. (D-Del.) in an emotional exchange.
In the past year, however, Meese has come under renewed fire for his dealings while at the White House as well as his conduct after becoming attorney general:
McKay last May expanded his probe of the scandal-plagued Wedtech Corp. to include Meese's connections to the company. As White House counselor, Meese received memos about Wedtech from Wallach, his close friend, and ordered a White House review that led to Wedtech obtaining a lucrative Army contract.
At Wallach's urging, Meese and his wife, Ursula, in May 1985 invested about $55,000 with W. Franklyn Chinn, a West Coast financial adviser who had been hired by Wedtech a month earlier. According to financial disclosure reports filed last year, Chinn earned profits of more than $35,000 over two years for the Meeses, on several occasions investing more funds on their behalf than they had in their account. Meese and his lawyers have said they have no knowledge of where the extra funds came from and say Chinn has refused to explain it to them.
Chinn and Wallach, who represented Meese during the Stein investigation, were indicted just before Christmas on racketeering, fraud and conspiracy charges for allegedly extracting payments from Wedtech in order to influence Meese and other federal officials. The same day, McKay reported he had "insufficient evidence as of this date" to prove that Meese "knowingly participated in criminal activity."
McKay is also investigating Meese's involvement, as attorney general, in issues involving the regional telephone companies established after the breakup of the American Telephone & Telegraph Co. at a time he owned 17 shares of stock in each of the seven "Baby Bells," according to sources familiar with the investigation.
Meese reported the stock as sold on his financial disclosure forms -- as he had promised the Judiciary Committee -- and informed Justice officials that he was therefore able to participate in telephone company issues. But it was later revealed that Meese had not successfully sold the stock because he could not locate the stock certificates.
Meese met with officials of four of the companies arguing for loosening the restrictions imposed on their operations under the terms of the 1984 breakup of AT&T, and endorsed legislation in 1986 to strip federal court authority over the Baby Bells. He obtained a waiver in 1987 from then-White House counsel Peter J. Wallison permitting him to participate in discussions involving the court case, but did not inform Wallison that he had already met with company officials or that he had transferred his interest in the stock to Chinn, his investment adviser.
The congressional Iran-contra committees singled out Meese for harsh criticism in their majority report, suggesting that Meese approved a possibly illegal effort to use private funds to ransom U.S. hostages in Lebanon and sharply rebuking Meese for the way he conducted an inquiry in November 1986 into the Iran arms sales.
Meese has been questioned several times by Iran-contra independent counsel Lawrence E. Walsh but sources have said Meese is only a witness in that probe.
Meese's lawyers have denied that he engaged in any wrongdoing. "Things are getting blown out of proportion," one source close to Meese said. "We started out this way with Wedtech and we started out this way with the Stein investigation. Everybody gets in a froth. Then you find out there was no substance to it."