Revelations about Attorney General Edwin Meese III's role in a plan to build a $1 billion oil pipeline from Iraq to Jordan have been less than flattering to Meese.

They portray an attorney general who was willing to be influenced by and do repeated favors for an old friend involved in the deal. They show Meese willing to throw himself into a foreign policy issue far outside the attorney general's usual domain. They show him receiving an unusual, handwritten letter from the prime minister of Israel, then writing an equally unusual one back.

Do they also show him breaking the law? That is what independent counsel James C. McKay is examining.

Meese's lawyers do not deny that Meese's old friend, attorney E. Bob Wallach, occasionally, perhaps even frequently, talked to Meese about the pipeline whose route would bring it close to Israeli territory. For instance, according to one Wallach memo whose contents were made available to The Washington Post, they discussed the pipeline on Aug. 7, 1985, after Wallach had spent a busy day promoting it at the offices of the Export-Import Bank and the National Security Council.

"On Wednesday evening {Aug. 7}, I spent the time with my friend," Wallach said in the memo, using his usual description of Meese. "We discussed the current status. He correctly perceived, in my judgment, that there are separate groups milling around that may well need coordination . . . . "

Wallach's brief account suggests that Meese may have served as a sort of adviser at the session. But did he? And if he did, was he violating a law?

One reason the question is difficult to answer is the character of Wallach, who met Meese in law school more than 30 years ago, and who openly traded on his friendship with the attorney general to win legal clients in recent years. Were his claims in this case just another example of self-promotion, or on this occasion did Wallach engage his old friend in activity that went beyond the law?

"That's the big issue," said one person who knows Meese and Wallach. "How much of this is bootstrapping and how much reality?"

With Wallach, it isn't easy to say. In the very memo recounting his August meeting with Meese, for instance, Wallach told of another session at the Export-Import Bank with officials of that institution and of the Bechtel Group, the giant, San Francisco-based engineering firm that was to build the pipeline, which never was constructed.

Asked about the "security package" -- the $400 million insurance plan that the pipeline's promoters were seeking from the Overseas Private Investment Corp. (OPIC) because of the danger that Israel might destroy the pipeline -- Wallach undertook to impress the group in characteristic style.

"I dropped every major political name involved, understanding the effect it would have on him and his staff," Wallach said in the "personal and confidential" report to his client, Swiss financier Bruce Rappaport.

It would seem a safe bet that Meese's name was one of those dropped.

"Thereafter," Wallach reported, evidently referring to himself and the Bechtel contingent, "we went to lunch. I took them to Mel Krupin's, the 'No. 1 power' place for lunch in Washington. I am well received there. I paid for lunch."

An afternoon session was spent with a staff aide at the National Security Council (NSC). Wallach was received there because, two months earlier, Meese had arranged for Wallach and Rappaport to meet then-national security adviser Robert C. McFarlane to discuss their project. McFarlane gave it his blessing and assigned an NSC aide to expedite it. Why the attorney general intervened that way in a foreign policy issue has yet to be explained.

After the meeting at the NSC, Wallach wrote, he spent the evening "with my friend . . . . He correctly perceived, in my judgment, that there are separate groups milling around that may well need coordination. I told him I had been thinking about recommending a 'Geneva summit,' no matter where it is held, to try to utilize the combined synergy for a result."

Did Meese just nod politely while Wallach talked? Or did the attorney general do more, then and on other occasions, than he has acknowledged?

The most obvious law that might apply to these events is the 1977 Foreign Corrupt Practices Act, which prohibits U.S. citizens, companies or their agents from offering "anything of value" to foreign governments, officials or political parties for help in obtaining business abroad. The law explicitly authorizes the attorney general to take preventive action if he has reason to believe that a violation is about to occur.

McKay has authority to investigate whether a conspiracy took place in which Meese, Wallach, Rappaport and perhaps others engaged in a joint effort to violate the Foreign Corrupt Practices Act or any other law.

The most suggestive document so far made public in this matter is a "for your eyes only" memo to Meese. It began with a provocative first sentence: "I hesitate to provide the following information to you in memorandum form."

In the memo, Wallach reported to Meese that Rappaport -- who had been commissioned by Bechtel to make sure that Israel did not attack the pipeline -- had "confirmed the arrangement with {Israeli Prime Minister Shimon} Peres to the effect that Israel will receive somewhere between $65-70 million a year for 10 years out of the conclusion of the project.

"What was also indicated to me, and which would be denied everywhere, is that a portion of those funds will go directly to Labor," Wallach added, referring to Peres' political party.

Meese and his lawyers have sought to dismiss this as much ado about just "10 words" that Meese doesn't recall having read -- the 10 words being "a portion of those funds will go directly to Labor." There also have been suggestions that the Foreign Corrupt Practices Act was probably not violated because Rappaport, Wallach's principal, is not a U. S. citizen.

Lawyers familiar with the statute, however, said that citizenship doesn't matter. The prohibited acts, they said, are usually performed by foreigners, as "agents" for the U.S. interests involved.

Bechtel's defenses are already up on that score. Bechtel spokesman Tom Flynn quickly complained last week when news reports coming out of Israel indicated that Israeli officials regarded Rappaport as Bechtel's representative.

"Mr. Rappaport was an independent associate on this project with separate agreement to develop the security package," Flynn said in a statement. "In return for developing the security package, Mr. Rappaport would receive concessionary rights to oil from the pipeline . . . . Obviously Mr. Rappaport would be representing himself and not Bechtel in any arrangements he would make to market his own oil. Any interpretation that Mr. Rappaport was representing Bechtel is incorrect."

Asked what his relationship with Bechtel was, Flynn said in an earlier interview, "he was co-venturing with us."

Lawyers familiar with the law said the label doesn't matter. "It depends on the reality, not what the title is," one Washington attorney said.

Why Wallach felt the need to report the contents of his "eyes only" memo to Meese is unclear. If, as Meese's attorneys have suggested, his only role in the matter was to get Wallach and McFarlane together initially to discuss the deal, why did Wallach overcome his reluctance to put such sensitive matters on paper to Meese and write him that memo?

In Israel, Peres, a friend of Rappaport for 45 years, acknowledged the day after the "eyes only" memo was made public last week that Rappaport had offered Israel a $65 million to $70 million a year discount on oil purchases in return for not attacking the pipeline. But Peres, now foreign minister, asserted through an aide that he did not inform his colleagues about the offer -- made to him by Rappaport at a secret Sept. 19, 1985, meeting in Israel -- because he did not take it seriously. Peres once again denied that Rappaport had proposed paying a portion of the discount to the Labor Party.

If Peres did not take the offer seriously, however, why did he sign a handwritten note to Meese on his personal stationery that same day and give it to Rappaport for hand delivery to the attorney general? And why did Rappaport summon Wallach to Geneva that weekend so that Wallach could pick the letter up from Rappaport, return to Washington and make the actual presentation?

"I would go a long way to help it out," Peres said of the pipeline in his letter to Meese. "But then discretion is demanded on our part."

Peres also said in the note that he intended to talk about the project with Secretary of State George P. Shultz on a forthcoming visit to Washington in October of 1985 and asked Meese to see to it that "George will be informed ahead of time."

Why ask the attorney general to do that instead of going through State Department channels? And why was Peres so "sensitive" to the letter he sent Meese that, according to Wallach's accompanying "eyes only" memo, "he wants it returned if there's not going to be some sort of appropriate response when he comes to Washington"?

Could it be that the pipeline's promoters were well aware that Shultz, a former president of the Bechtel Group, had already recused himself from any dealings with the project? Were they anxious to avoid being shunted down to the fussy State Department bureaucracy when they had McFarlane already primed at the White House?

The "appropriate response" Peres sought, Wallach told Meese in his memo, "would clearly be a meeting with the president and with Bud McFarlane which would include this project."

According to a source close to Meese, the attorney general was "surprised to receive a handwritten letter from the prime minister of Israel . . . but he figures okay, he will write back a handwritten letter. He conferred with McFarlane about it. He certainly wasn't going to throw it away."

In his response, dated Oct. 7, 1985, Meese said he was "pleased" to learn of Peres' interest in the pipeline and recommended that Peres discuss it with McFarlane because Shultz "has had to recuse himself . . . {and} McFarlane is thoroughly familiar with the subject."

In effect, Meese had waved Peres away from the State Department altogether and encouraged the prime minister to set up a back channel with the NSC staff. The upshot of that, following separate chats by Peres during his October visit with Meese and McFarlane and later McFarlane's deputy, David Wigg, was a Nov. 20, 1985, letter signed by Peres offering -- but not yet promising -- to hold the pipeline "inviolate" during its construction and for four years thereafter.

By then, plans for a $400 million insurance plan backed by OPIC, and then a "wild scheme" to dip into foreign aid funds for Israel in case insurance payments were needed, had fallen by the wayside. Instead, according to informed sources and Wallach memos, pipeline promoters here, including Wigg and Wallach, proposed making secret payments to Israel out of the Pentagon budget, at least $400 million in installments over a four-year period. The payments would have been set up by secret presidential directive, sources said, and cut off only if the Israelis disrupted the pipeline.

"That {presidential} approval has not yet been obtained," Wallach told Rappaport in a Dec. 16, 1985, memo, "but nothing negative can be read into that fact" in light of such factors as McFarlane's Dec. 4 resignation and the transition to a new national security adviser, John M. Poindexter.

Poindexter killed the Pentagon funding scheme after he learned of it, out of concerns, sources said, that it might have been illegal. But as of Dec. 16, Wallach seemed optimistic. "I have assurance from my friend," he wrote, "that if necessary, he will engage new person on project."

Meese's lawyers said he was "not involved" in any Pentagon funding plan and "gave no 'assurances' about any such plan." His involvement, they have reiterated, was "extremely limited" and "entirely lawful and correct."

The attorney general's lawyers also have denied any knowledge of a $150,000 payment that Rappaport sent to W. Franklyn Chinn, a San Francisco money manager who was investment adviser for Meese and Wallach.

Meese's lawyers said the Aug. 15, 1985, deposit payment in a Chinn brokerage account had "absolutely nothing to do with Meese." According to sources familiar with the payment, Wallach said it represented his legal fee from Rappaport, although he did not report it as income until legal inquiries began last year, almost two years after the money was sent. Why did Wallach have Rappaport send his fee to Chinn, then fail to report it for tax purposes? And what did Chinn do with the money?

Sen. Carl Levin (D-Mich.), head of a Senate subcommittee that examined Chinn's investment strategies, yesterday outlined a complicated process by which Chinn "spent substantially more money on behalf of Meese . . . than Mr. Meese had invested in the account" from mid-1985 through early 1987. Levin said the procedure "raises questions about possible financial favors or gifts" to the attorney general.