THE HISTORY OF INVESTMENT OF ATTORNEY GENERAL EDWIN MEESE III I. INTRODUCTION Questions have been raised in the media and in correspondence and public statements from Capitol Hill concerning the investment of funds belonging to Attorney General and Mrs. Edwin Meese III after Mr. Meese's 1985 confirmation as Attorney General. The documents concerning this investment were requested by Independent Counsel James C. McKay and have, to our knowledge, been fully reviewed by him and his staff. The documents have also been available to us as counsel for Attorney General Meese in connection with that investigation. We are publishing today a set of the relevant documents so as to satisfy the Congress and the public that there has been no impropriety or violation of any law or regulation in the conduct of Mr. Meese's personal financial affairs. This Memorandum describes in detail the steps taken by Mr. Meese to ensure that, beginning in May 1985, the investment of his family assets of approximately $60,000 would not create any actual or apparent conflict of interest with his duties as Attorney General. The history of these efforts demonstrates that Mr. Meese was acting lawfully and properly at every stage of the events relating to this investment. Specifically, the following conclusions are warranted: First, although he was not required by law to create a "blind" investment vehicle, Attorney General Meese sought in 1985 to place his family's modest estate in a form that would keep him from knowing where his money was being invested or controlling such investment in any manner. Second, irrespective of whether the vehicle selected by him qualified as a "blind trust" under federal law, it had the actual consequence of placing the investment of his assets beyond his control and outside his knowledge. Third, an after-the-fact review of the investment decisions made by Mr. Chinn, who acted as the investment advisor for the Meese family, discloses that no funds were actually invested in Wedtech Corporation or in any company related to Wedtech. Nor, given the nature of the investment strategy (based principally on "same day trades"), was there any possibility of actual conflicts of interest with respect to the stocks actually purchased and sold. Fourth, on May 24, 1985, Mr. Meese signed a "recusal policy" drafted by the Office of Legal Counsel which listed the stocks sold by the Meese family and the financial interests retained by the Meeses. The limited partnership with Mr. Chinn's company, Financial Management International, Inc. ("FMII"), was inadvertently omitted from that list which had been prepared by Justice Department staff from Mr. Meese's Financial Disclosure Report for the prior period. However, the limited partnership with FMII was included in Mr. Meese's commitment to recuse himself "from participation in any matter in which I have a financial interest." Fifth, the Attorney General complied fully with the Ethics in Government Act when he listed the limited partnership with Mr. Chinn's corporation on his 1985 Financial Disclosure Report. The statute and regulations do not address specifically the manner of disclosure for this type of investment, and it was reasonable for Mr. Meese to conclude that his disclosure fully complied with the law. Sixth, shortly after signing his Report, Attorney General Meese fully explained the terms of the investment of family funds in a meeting with Justice Department ethics officials, who then accepted the disclosure on the Report as adequate. The Office of Government Ethics ("OGE"), during its subsequent 60-day statutory review of the Report, asked no questions about that entry, although additional information was requested and provided as to other entries. Nor did the OGE seek any additional information regarding the entry for the seven months between September 30, 1986 and April 28, 1987 when the investment became the subject of substantial publicity. From this silence, Attorney General Meese had every reason to believe, in good faith, (1) that his Financial Disclosure Report met all the technical requirements of the Ethics in Government Act, and (2) that the OGE had agreed with the Justice Department ethics officials' conclusion that his Report fully complied with the law. Seventh, the Office of Government Ethics violated federal law when, rather than following the course prescribed by the Ethics in Government Act and discussing any questions - 3 directly with Mr. Meese, it stated its views to a Congressman who had inquired about Mr. Meese's financial disclosure. The questions subsequently raised in the media about Attorney General Meese's investment spring directly from OGE's failure to follow the procedures specified in the Ethics in Government Act. Had the Office of Government Ethics followed the consultation course prescribed by federal law anytime between the end of September 1986 and April 1987, and informed Mr. Meese that additional disclosure was required, the information that is now being made public would have been obtained and added to the 1985 Financial Disclosure Report months ago. Mr. Meese, in short, has done what a government official is supposed to do. Indeed, he has done more than is required to ensure against conflicts of interest. II. THE HISTORY 1. Mr. Meese Agrees During His Confirmation Prior to his January 1985 confirmation hearings, Mr. Meese, along with Mrs. Meese, held a limited number of diversified stocks and bonds, most of which had been inherited or received by Mrs. Meese from family members. The value of these stocks and bonds fluctuated, and their value in early 1985 approximated $60,000. |