Meese Denies Receiving CIA Contra Memo

WASHINGTON--Attorney General Edwin Meese III yesterday denied through a spokesman that he had any knowledge of a memo written in early October by CIA Director William Casey relaying suspicions that money from U.S. weapons sales to Iran was being diverted to the Contras.

Meese has repeatedly said he had no hint of the Contra connection to the Iran deal until his own inquiry conducted the weekend of November 22-23.

The New York Daily News reported in yesterday's editions that Casey has told friends in recent days that he sent Meese a memo shortly after learning from New York businessman Roy Furmark on October 7 of the possible diversion of funds to the rebels fighting the leftist government of Nicaragua.

"At no time prior to November 25 did the attorney general or anybody else in the Department of Justice receive a memo or have any indication orally or ortherwise that Casey had suspicions about money being diverted to the Contras," Justice Department spokesman John Russell said in a statement.

November 25 was the day Meese disclosed at a news conference in the White House that money from the Iran arms sales had been diverted to the Contras.

"No such memo was received by the attorney general of the United States," Russell said earlier this morning in response to questions. "He never knew of its existence."

"I'm saying it wasn't kicking around in his briefcase [unread]; I'm also saying it was never discussed with him," Russell added.

Russell said he was unable to confirm the existence of such a memo and is therefore unable to say whether Meese subsequently has become aware of it. Russell said he would check on that point.

"If the CIA says a memo was prepared or written, that's up to them," said Russell.

A CIA spokesman was not immediately available for comment today, but according to the Daily News, George Lauder of the CIA on Tuesday declined to confirm or deny its existence.

The Office of Professional Responsibility in the Justice Department, which investigates allegations of wrongdoing inside the department, is investigating Meese's decision to impose a 10-day delay a month and a half ago on an FBI investigation into arms shipments to the Contras.

Meese has denied that the delay, in late October or early November, had anything to do with the diversion of funds to the Contras, which he says he did not know about at the time. Department spokesman Patrick Korten has said only that unspecified nationalsecurity reasons led to the delay, presumably a reference to U.S. weapons sales to Iran.

Sen. Joseph Biden (D-Del.), incoming chairman of the Senate Judiciary Committee, asked the internal police agency in the Justice Department to investigate the delay. Justice Department intervention in an FBI probe is extremely unusual.

Meese arranged to testify this afternoon before the Senate Intelligence Committee on the Iran-Contra controversy.

In other developments surrounding the Iran probe, Secretary of State George P. Shultz is set to condemn the process of private "back channel" communications between the White House and U.S. envoys abroad, it was learned yesterday.

However, he will allow John Kelly, the U.S. ambassador to Lebanon, to stay on the job despite his involvement in such communications, it was also learned.

Kelly's secret contacts with the National Security Council about covert American arms shipments to Iran and American hostages in Lebanon infuriated Shultz, who has testified before Congress that he had limited knowledge about the purchases.

Shultz summoned the ambassador home to explain why Kelly had not informed the State Department about his dealings with Vice Adm. John M. Poindexter, who was later ousted as the president's national security adviser, and Lt. Col. Oliver North, a Poindexter deputy who also was forced to resign last month when the secret arms deals were disclosed.

Shultz had opposed the Iranian purchases in private conversations with President Reagan. He told the House Foreign Affairs Committee on December 8 he was "shocked" to learn Kelly had bypassed department channels and instead dealt through a Central Intelligence Agency back channel.