THE IRAN-CONTRA HEARINGS : Meese Defends His Iran Inquiry : Didn’t Immediately View Affair as a Criminal Case, He Testifies

Atty. Gen. Edwin Meese III told Congress’ Iran- contra committees Tuesday that he did not immediately recognize the affair as a criminal case, even after he was told that profits from the Iran arms sales were diverted to the Nicaraguan rebels without President Reagan’s knowledge.

Meese’s account of his preliminary investigation of the Iran arms sales last November was met with strong skepticism by members of the panels, many of whom have accused him of bungling the initial phases of the inquiry and letting his concern for the political sensitivity of the case overshadow indications of criminal wrongdoing.

At the same time, the attorney general disclosed that the late CIA Director William J. Casey expressed surprise when told last November about the diversion of funds. Meese said he still believes that Casey was unaware of the diversion, even though former White House aide Oliver L. North has testified that Casey was fully informed about it.

Will Return Today

Meese, who will return for a second day of committee questioning today, was the first person to whom the President turned for help last year when it appeared that the U.S. sale of arms to Iran was turning into a major scandal. At Reagan’s request, Meese agreed to investigate the differing accounts of the sale offered by various Administration officials.

Although his inquiry uncovered evidence of the diversion Nov. 22--one day after the probe began--it was not until three days later, after Meese publicly announced the news, that he finally turned to the Justice Department’s Criminal Division for assistance. And it was not until Nov. 28 that the FBI was called into the case.

No one from the Criminal Division was asked to participate in the initial stages of his probe, Meese said, because there was no hint of criminal wrongdoing at the time the inquiry began Nov. 21. In fact, he said, members of his investigative team were chosen in part because they were people he knew would work willingly over the weekend of Nov. 22-23.

View Didn’t Change

Meese said his legal view of the case did not change substantially even on Nov. 23, when he learned the details of the diversion scheme from North. North told him that only three people in the United States knew of the diversion, not including the President, he said.

“We still hadn’t figured out whether there was any criminality involved, whether this was an authorized activity, whether anyone else knew,” Meese said. “There was a possibility certainly down the line that there might be criminal aspects, but certainly in what had happened per se there, there was no obvious criminality at that point.”

Meese acknowledged that he telephoned William F. Weld, chief of the Justice Department’s Criminal Division, on Monday, Nov. 24, to assure him that his exclusion from the inquiry was not by accident. He said he assured Weld that the Criminal Division would be called upon if evidence of criminal wrongdoing arose.

“Certainly, my intention was that at an appropriate time, if there was any indicated criminality, that we would bring him into it and, in fact, that’s what happened,” he said. “ . . . There was at no time any attempt to keep the Criminal Division out of anything that had criminal implications.”

Meese said he also saw no need to secure White House documents until Nov. 25 because there was no indication that North was shredding them--even though North has testified that he shredded some pertinent material while Justice Department officials were present in his office. North has admitted shredding hundreds of documents during a period immediately before Nov. 25.

“I think there were various reasons,” Meese recalled, explaining why he waited. “One is that there was no hint to us of any destruction of documents; secondly, we had all the documents because we had been given access to all the documents.”

Rodino Charge

Rep. Peter W. Rodino Jr. (D-N.J.) accused Meese of shutting out the Criminal Division for political reasons despite a request by Weld that it be included in the inquiry.

As evidence, Rodino cited a yet-unreleased transcript of Weld’s closed testimony before committee staff, which is expected to be made public today. In that deposition, Rodino said, Weld recalled suggesting on Friday, Nov. 21, that his division be involved in an investigation of the Iran arms sales.

Meese replied that he did not attend the meeting in which Weld raised the issue. He also noted that it was not until several hours later that day that the President asked him to perform his inquiry, which he portrayed as nothing more than “a quick overview.”

‘Political Allies’

Rodino charged that Meese turned to his “political allies” within the department instead of enlisting the help of experienced career investigators. Weld is not considered to be a Meese loyalist within the department.

“If you had used experienced career investigators, they would be more sensitive to the situation, to the fact that you were conducting at a later date a very, very important investigation which might be considered as being handled politically instead,” Rodino said.

In his defense, Meese replied that his hand-picked team “did a pretty fine job” and noted that it was those Justice Department officials who uncovered the diversion.

“I didn’t have political allies, Mr. Rodino,” Meese insisted. “I had competent people who were the most experienced people on this subject matter in the Department of Justice. . . . It is as a result of their efforts that this whole series of hearings has been able to have been conducted.”

Meese and several Republicans on the committees also challenged Rodino’s interpretation of the Weld deposition. They asserted that Weld was not trying to get involved in Meese’s inquiry into the growing Iran arms scandal but instead was saying that the Criminal Division should have a role in a separate investigation in New York into private arms smuggling to Iran.

The dispute over this issue continued after the committee hearings adjourned for the day, with Rodino and Rep. Dick Cheney (R-Wyo.) vigorously arguing separate interpretations in the presence of a group of reporters.

Meese’s version of the story was supported by sources within the Criminal Division, who told The Times last week that Meese had asked Weld not to get involved in the New York case in an apparent effort to contain information about the Administration’s Iran initiative. The Administration has said that the Manhattan case was unrelated to its sale of arms to Iran.

Meese also said that his inquiry had the support of FBI officials. “The leadership of the FBI, the top leadership, said that to a person the FBI leadership felt that I had made no mistakes and had made no errors in the way that I conducted that investigation,” he declared.

But top FBI officials, who declined to be identified by name, said they could not corroborate Meese’s testimony that they unanimously approved the professionalism of his inquiry.

In addition, Meese contradicted his own previous public statements when he testified that he was convinced by Nov. 25 that an independent counsel was needed to investigate the Iran-contra affair. As late as Dec. 2, when Reagan asked for appointment of an independent counsel, Meese stated publicly that there had been no statutory basis for such a request until that day.

Meese testified that Casey, the President and former White House Chief of Staff Donald T. Regan all expressed surprise when they were told of the diversion. When Rodino suggested that Casey had misled Meese about his knowledge of the scheme, the attorney general quickly defended the late CIA director as “an honorable man” who always told the truth.

“I can’t make a judgment on what he withheld or didn’t withhold,” Meese said.

Nevertheless, Meese did contradict former National Security Adviser John M. Poindexter’s claim that Meese never asked him whether the President was aware of the diversion. Poindexter said he never got an opportunity to tell Meese that only he and North were aware of it.

Meese, who interviewed the then-national security adviser briefly Nov. 24, said he asked Poindexter, “Does anyone else in the White House know?” and Poindexter replied: “No.” Meese said he understood this to rule out the President.

Only Three People

Likewise, the attorney general said that when he interviewed North on the previous day, he was told that only three people knew about the diversion: North, Poindexter and Robert C. McFarlane, Poindexter’s predecessor as national security adviser.

Meese said he was asked by Reagan to investigate the Iran arms sales after the President realized that various Administration officials were telling conflicting stories about the U.S. role in two Israeli shipments of arms to Iran in 1985, and Meese vehemently denied previous suggestions by committee members that he had played any part in trying to conceal U.S. sponsorship of these shipments.

Although Meese admitted that he was involved in the discussions in January, 1986, when Reagan decided to begin direct U.S. shipments to Iran, he said he was completely unaware of the prior history of the arms sales initiative during the previous year.

He acknowledged that he participated in a high-level White House meeting last Nov. 20 in which Casey, Poindexter and North agreed on a phony account of the 1985 shipments designed to cover up the U.S. role. But he insisted that he lacked sufficient knowledge of those events to realize what the other men were doing.

“This was all new to me,” Meese said.

Even when he learned that Secretary of State George P. Shultz disagreed with their story, Meese said he did not suspect that North, Casey and Poindexter were trying to cover up anything. Instead, he attributed the discrepancy merely to “considerable confusion . . . and the many conflicting and inconsistent news stories only seemed to exacerbate the situation.”

Rodino, who chairs the House Judiciary Committee, accused the Justice Department of impeding the congressional investigation of the Iran-contra affair by refusing to provide many of the documents--including uncensored telephone logs--that the lawmakers have requested. He said that some requests for documents have gone unanswered for six months, while other documents were handed over only recently in the waning days of the hearings.

On the contrary, Meese insisted that there has been “a spirit of cooperation among all elements of the Department of Justice,” and Cheney agreed after the hearing that the department had been “very responsive and very cooperative.”

Rodino said that as Meese made the decision to conduct only an informal study of the issue, he should have picked up on numerous signs that there were links between the Iran arms sales and Administration efforts on behalf of the Nicaraguan rebels. He noted that North was known to have been involved in both projects and that Meese knew that Southern Air Transport, a U.S. air charter firm, was involved in both.

Moreover, Rodino reminded him that Shultz had “expressed concern to you about the (possible) relationship between the arms sales and the contras” when Meese questioned the secretary of state at the outset of his informal review Nov. 22.

During his testimony last week, Shultz recalled telling Meese: “If this gets connected, then we are going to have a problem with our policy in Central America.”

Meese said he did not recall Shultz expressing such a fear, even though Senate Committee Chairman Daniel K. Inouye (D-Hawaii) told him that notes taken during the interview by a State Department aide indicated that Shultz’s recollection was correct.

In an effort to counter Rodino’s harsh criticism, Rep. Bill McCollum (R-Fla.) praised the attorney general for bringing the Iran-contra scandal to light and scoffed at suggestions that Meese may have done anything wrong himself.

“It wasn’t the Justice Department that ran any of these operations regarding the Iranian initiative or the contra initiative,” he said. “ . . . It also was not your office which destroyed or altered documents. . . . And, in turn, it was your office that discovered the diversion memo.”

Staff writer Ronald J. Ostrow contributed to this story.