The Watergate Probe

Despite the high political risk to the Republican Administration, the Justice Department's investigation into the bugging of Democratic National Committee headquarters in Washington's Watergate office complex is moving cautiously ahead. A federal grand jury this week is scheduled to quiz officials of the Committee for the Re-Election of the President on what they know about the affair. Admits one: "The FBI is all over this place." Last week a lawyer who had represented the five men arrested on June 17 in the Watergate was charged by a federal judge with contempt of court for refusing to answer questions from the grand jury.

The lawyer, Douglas Caddy, 34, a leader of youth groups in Barry Goldwater's 1964 presidential campaign, had mysteriously appeared to represent the five suspects when they were jailed --even though at that time none had telephoned anyone about the arrests. Caddy pleaded before the jury that his relationship with his clients must remain confidential. The fact that Judge John J. Sirica ordered Caddy jailed for contempt was unusual, since judges are normally sensitive about protecting lawyer-client privileges. Prosecutors wanted to know how Caddy had heard about the arrests; investigators apparently believe that he was tipped by members of the bugging conspiracy who had not taken direct part in the headquarters breakin.

Bugging Funds. Officials also believe that they have traced some $100,000 that financed the purchase of electronic eavesdropping equipment and other costs of the operation to a campaign fund conduit set up by the Committee for the Re-Election of the President, which was headed until earlier this month by former Attorney General John Mitchell. The money apparently was part of an undisclosed amount donated by U.S. contributors to the committee through a businessman in Mexico in order to assure anonymity. The FBI was poring over the records of the committee, suspecting that the bugging funds flowed to the conspirators via the same Mexican in bank drafts that were deposited in the Miami account of one of the arrested suspects, Bernard Barker.

With the stakes so high, the case is turning into a battle involving some of the nation's best-known lawyers. The Democrats have hired Criminal Lawyer Edward Bennett Williams to speed their civil suit for $1,000,000 in damages against the Re-Election Committee. The suspects, including James W. Mc-Cord Jr., the Committee's chief security coordinator, are being individually defended by F. Lee Bailey and other legal stars. Attorney Caddy has hired no fewer than four lawyers to defend him against the contempt charges.

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