Good Friends and Bad Memory

By Ed Magnuson

The Senate finds a few more questions to ask Edwin Meese

The Senate confirmation of Presidential Counsellor Edwin Meese as Attorney General has suddenly shifted from a near certainty to an increasingly close call. Republican Strom Thurmond, chairman of the Senate Judiciary Committee, had closed the heated hearings two weeks ago after four days of testimony. But last week he reluctantly agreed to Democratic demands that Meese answer more questions before the committee voted on his nomination. "The longer the issue accelerates, the better and better his chances of being defeated become," said Meese's chief opponent, Ohio Democrat Howard Metzenbaum.

Why reopen the hearings? The key was a revelation in the Washington Post that Meese had failed to tell the committee about a $15,000 interest-free loan made in December 1980 to his wife Ursula by Edwin W. Thomas, a longtime California friend of the couple's. Meese had also failed to include the loan in his 1981 financial-disclosure statement, which was supposed to cover any large assets or indebtedness of anyone in his family. After the Post sought an explanation from him to include in its story revealing the loan, Meese hurriedly wrote a letter of apology to the Judiciary Committee saying, "I sincerely regret the oversight."

The Meese letter said that his wife had used the loan to buy stock for their children early in 1981 in Biotech Capital Corp., a firm headed by a colleague of Meese and Thomas' from California. But Meese also failed to list the stock holding, as required, in his 1981 financial-disclosure statement. He told the Judiciary Committee that his wife sold the stock on May 13, 1983, at a loss of $3,000 and repaid the loan at about the same time. Since the interest rate on a personal loan for the period was about 16%, the lack of interest charged over the 30 months was in effect a gift of more than $3,000.

In isolation, Meese's omission of the loan could have been considered as merely another example of his shaky memory. But the real problem for Meese was that the newly revealed loan seemed to be part of a pattern in which individuals who helped Meese financially landed federal jobs. Thomas, who had been assistant Cabinet secretary in California when Reagan was Governor, was appointed a deputy to Meese in the White House in January 1981 at a salary of $59,500. Thomas left the Meese staff in 1982 to become a regional administrator of the General Services Administration in San Francisco, a $69,600 Government post. His wife Gretchen was appointed on Sept. 5, 1982, to a $30,402 federal job with the Merit Systems Protection Board. They join a lengthening list of Meese benefactors who got appointive jobs from the Reagan Administration. They include:

> John McKean, a California accountant, who lent $60,000 to Meese in 1981 and demanded no interest payments for more than 20 months. McKean was appointed a part-time member of the Postal Service board of governors on July 31, 1981, and is now the board's chairman.

> Thomas Barrack, a California real estate developer, who found a buyer for Meese's California house in the summer of 1982, lent $70,000 to a prospective purchaser and then forgave the loan. Barrack was appointed Deputy Under Secretary of the Interior in December 1982.

> Gordon Luce, chairman of Great American Federal Savings Bank in San Diego, who was named an alternate U.S. delegate to the United Nations after his bank granted Meese mortgage loans of more than $400,000 and let him fall 15 months behind in payments without threatening foreclosure.

Meese has insisted in his confirmation testimony that his financial deals had no connection with the federal appointments (he is certain to be asked about Thomas when hearings resume) and has denied initiating any of the appointments. But he served on a White House committee that approved the appointment of McKean, at least, without disclosing the loan he had received from the appointee. Democrats are demanding that top Reagan aides be called to testify this week about how the appointments were made, but the White House says that it may invoke Executive privilege to block their appearance.

Critics on the committee have found Meese's memory troubling on the matter of memos addressed to him that referred to inside information from the Jimmy Carter campaign staff in 1980. The Judiciary Committee has received at least eight such papers from a house subcommittee that tried unsuccessfully to determine how the Reagan campaign team acquired documents used to prepare Carter for his 1980 debate with Reagan. Except for one of the memos he has been asked about, Meese has told the Senators that he has "no recollection" of having seen them.

Meese sought to defuse another issue last week by retiring from the Army Reserve. After two years on active duty and 25 years in the Reserve, Meese by February 1983 had been promoted to colonel and given a previously nonexistent assignment as a consultant to the Selective Service System. The procedure was criticized by the Army's inspector general as a violation of regulations.* With opposition from the eight Democrats on the Judiciary Committee apparently hardening against him, Meese will have to persuade all of the ten Republicans to stay with him if he is to get a favorable committee vote. Two Republicans, Charles Mathias of Maryland and Arlen Specter of Pennsylvania, have been among those urging Meese to explain more fully his financial dealings and to try to refresh his memory. "Mr. Meese has some questions to answer," said Specter. Meese, in turn, accused the Democrats of making "false and misleading statements" based on "election-year politics." At the White House, Reagan vowed to support his adviser. Asked if Meese's nomination was in trouble, the President responded last week, "Not as far as I'm concerned." --By Ed Magnuson. Reported by Anne Constable/Washington

* Also involved in a controversy over his reserve status is Gary Hart, who never served on active duty. Hart was granted a Naval Reserve commission in December 1980 in the Judge Advocate General's Corps, even though he was over the standard age limit of 38. Many political figures, including Senators Barry Goldwater and John Tower, have served in the reserves, both for the prestige and for the increase in military retirement benefits.

With reporting by Anne Constable/Washington