Independent Counsel James C. McKay yesterday defended his decision to classify a controversial memorandum to Attorney General Edwin Meese III from his friend, E. Bob Wallach.
He said he had taken the action "in deference to the foreign policy expertise" of the State Department, which McKay said twice recommended that some "sensitive matters central" to his investigation be classified.
McKay added that White House counsel Arthur B. Culvahouse informed him Wednesday night that an interagency task force would be formed to consider whether the information could be declassified.
The 1985 memo has become the focus of an investigation by McKay into the role Meese and Wallach played in seeking U.S. support for a $1 billion Iraqi pipeline that would have run close to Israeli territory. The memo allegedly describes a plan to make payments to the Israeli Labor Party to cement Israeli guarantees not to sabotage the project.
A San Francisco lawyer, Wallach was promoting the pipeline as attorney for a Swiss businessman who had been enlisted to obtain the guarantees. With Meese's help, Wallach obtained the backing of President Reagan's national security adviser, Robert C. McFarlane, but the project eventually collapsed when it became clear that paper promises obtained from then-Israeli Prime Minister Shimon Peres would not satisfy the Iraqis.
Meese, who is a member of the NSC, has denied wrongdoing, but said he could not issue any detailed response because the Wallach memorandum had been classified.
McKay, who has been investigating Meese-Wallach dealings on various matters since last May, said in a three-page statement that he had handled the information "with the utmost sensitivity" and asked the State Department for a line-by-line review to keep classified portions to a minimum.
Officials at State reportedly recommended a "secret" stamp, meaning disclosure could cause "serious damage" to the national security, and upheld that opinion on a second look at McKay's request. McKay, in his statement, did not indicate whether he has classified other documents as well and his office refused to comment.
Steve Garfinckel, director of the Information Security Oversight Office which overees the security classification system for the executive branch, said he reviewed "the information now classified" at McKay's request Wednesday and found his decision "consistent" with prevailing rules. He said McKay had consulted with "subject matter experts" before taking action.