Meese Assailed Over Asset Reports : Disclosure Rules Not Met, Congressional Auditors Charge

WASHINGTON —  Atty. Gen. Edwin Meese III failed to meet the disclosure requirements of the Ethics in Government Act when he described highly profitable investments he had made with a Wedtech Corp.-related financial adviser, congressional auditors concluded Tuesday.

The critical report by the General Accounting Office, a copy of which was provided to The Times, also took to task officials of the Justice Department and the Office of Government Ethics for failing to ensure that Meese satisfied the disclosure requirements.

“Where Mr. Meese has been trying to pretend there is only smoke, we see from the GAO report that there is fire,” said Rep. Gerry Sikorski (D-Minn.), chairman of a House Post Office and Civil Service subcommittee who requested the GAO study.

Sikorski, whose human resources subcommittee will release the report formally at a hearing today, charged that “Meese failed to comply with the financial disclosure section of the Ethics in Government Act two years ago. He is still to date not in compliance, and this raises some very serious questions.”

Patrick S. Korten, a spokesman for the Justice Department, which rejected requests for Meese and Deputy Atty. Gen. Arnold Burns to testify, denounced the study by the congressional watchdog agency as “a regurgitation” and accused Sikorski of making “a political attack.”

At issue is Meese’s report in his annual financial disclosure statement of a “limited blind partnership” in which he invested $55,000 in 1985. The partnership, which Meese identified as Financial Management International Inc., was run by W. Franklyn Chinn, a former director of scandal-plagued Wedtech, who made Meese $39,845 in less than two years--a 72% return.

Speculative Stock Trades

Instead of reporting individual transactions of the partnership, which the GAO said Meese was required by law to do, “he incorrectly reported the partnership itself as a single asset,” the GAO report said. The individual transactions were a series of speculative, one-day stock trades that Chinn made in managing the partnership.

Meese also “inaccurately identified the partnership” as Financial Management International, which actually was the name of the general partner that managed the investments of Meese and his wife, Ursula. The GAO said that the legal name of the partnership was “Meese Partners.”

Under the Ethics in Government Act, officials must disclose the assets of a private investment arrangement unless it qualifies as one of three types of trusts exempted from the requirement. Meese’s did not qualify for an exemption, and his labeling it a “blind” partnership failed to solve the problem, the GAO report said.

Meese also failed to meet the law’s requirement of reporting any purchase or sale of stock exceeding $1,000, according to the GAO. Each of the 11 “same-day trades” of stocks by the Meese partnership exceeded $1,000, but Meese reported only his purchase of Financial Management during 1985, the report said.

Both the Justice Department and the Office of Government Ethics were required by law to review Meese’s disclosure for completeness and compliance with the ethics laws and to notify Meese if more information was required, the GAO noted.

“However, neither Justice nor OGE obtained information from Mr. Meese concerning the holdings of his partnership and the transactions involving those holdings as required by the disclosure provisions,” the report said.

Justice Department officials accepted Meese’s failure to disclose assets because of his statement that the partnership was “blind,” the GAO said. “However, the asserted ‘blind’ nature of an investment arrangement does not excuse a reviewing official from requiring that the underlying assets be disclosed . . . “