After 10 months, one of the many unanswered questions in the criminal investigation of Attorney General Edwin Meese III is whether he benefited financially from his efforts on behalf of an Iraqi oil pipeline project or scandal-plagued Wedtech Corp., sources familiar with the probe say. Last May 11, independent counsel James McKay launched his inquiry of Meese's assistance to Wedtech and the probe has spread to the attorney general's involvement with the pipeline. In both instances, McKay's investigators have been examining stock trades made on Meese's behalf by his investment manager, W. Franklyn Chinn. Chinn and Meese were brought together by Meese's longtime friend E. Robert Wallach, a central figure in both the Wedtech scandal and the pipeline project. It was disclosed earlier this month that: _In connection with the $1 billion proposed pipeline, Swiss oilman Bruce Rappaport paid $150,000 to his attorney Wallach, who directed the funds to an account owned by Chinn. Rappaport was a partner in the project with San Francisco-based Bechtel Group Inc., which was going to build the pipeline. Rappaport was brought into the deal in 1985 primarily because of his close ties to then-Israeli Prime Minister Shimon Peres. _The money from the Meese Partners account, Wallach's $150,000 placed in the Chinn account and several hundred thousand dollars from Chinn's biggest customer, Marymount College of Palos Verdes, Calif., were used as capital by Chinn to buy hard-to-get, brand-new stock issues, which Chinn sold later the same day. It would have been difficult for Chinn to obtain such stock with Meese's money alone. ``Without using the holdings of the other accounts he controlled, ... Mr. Chinn may not have been able to conduct the number of trades he did ... on behalf of Meese Partners,'' a congressional subcommittee said in a report this month. _Once the stock was sold and the profit and loss determined, Chinn assigned profits and losses to his various customers. Overall, Meese invested $50,000 and came away 18 months later with $95,000, almost all of it gained through a total of 23 one-day stock trades. Eighteen of the trades were profitable. In seven of the trades, the attorney general didn't have enough money in his account to generate the profits and losses that were assigned him. Chinn's biggest customer, Marymount College, didn't fare nearly as well as Meese. Was the stock trading actually a well-disguised payoff to Meese? That question is one that McKay's office has been unable to resolve, say the sources, speaking on condition of anonymity. Central to the criminal investigation is whether there was a plan to steer the proceeds of Chinn's stock transactions to Meese and whether the attorney general knew about it. The attorney general says he knew nothing about the transactions because he had set up a limited blind partnership with Chinn's company under which details were to be kept secret from Meese as a way to protect the attorney general from violating rules against conflict of interest. The investigators face a wall of silence from the others involved in setting up the financial arrangements, Chinn and Wallach, who are both under indictment for racketeering in the Wedtech scandal. Wallach denied to McKay's investigators that he gave anything of value to Meese, but Wallach refused to tell McKay anything about his dealings with Wedtech, his knowledge of the Meese-Chinn partnership and his dealings with Chinn. McKay said that after the Wedtech trial expected later this year of Wallach, Chinn and business associate R. Kent London, the independent counsel may seek their testimony again. The attorney general's good fortune in stock trading began months after he smoothed the way for Wallach to discuss the pipeline with then-National Security Adviser Robert McFarlane, who met with Wallach and Rappaport in June 1985. Later in the year, Meese and Wallach met with Peres about the pipeline, which was never built. Also during the period the stock trading was taking place, Chinn sat on the board of directors of Wedtech, the Bronx, N.Y., defense contractor that allegedly paid out millions of dollars to lawyers and lobbyists in an attempt to influence various public officials, including Meese, in the awarding of federal contracts. One of those lawyers was Wallach, who was paid $1.3 million from 1981 through 1986 by Wedtech. The stock trades that made profits for the attorney general took place some four years after Meese, then White House counselor, arranged for his deputy, James Jenkins, to intervene on behalf of Wedtech in connection with a $32 million no-bid contract to build small engines for the Army. Despite the misgivings of Army officials over what they regarded as a high price, Wedtech was awarded the contract following a White House meeting called by Jenkins. Meese ended the financial arrangement with Chinn last year after the investment adviser came under criminal investigation in the Wedtech scandal and after public disclosure that Chinn had sat on Wedtech's board of directors.
