1987. FMII received a performance fee calculated pursuant to a formula in the agreement for its work as general partner and investment advisor. In 1985, FMII earned approximately $2,800 and in 1986 it earned approximately $2,400. FMII's fee for 1987 has not yet been finally determined, but it will not substantially exceed the prior fees. The 23 stocks traded by the partnership, the gross income from each trade, and the dates of the trades, are set forth in schedules at Tab 6. The Meeses' income from the partnership for 1985 and 1986 appear in the Tax Schedule K-l's for 1985 and 1986 (Tab 7). The income for 1986 and for the first quarter of 1987 appears in the financial reports prepared by the partnership's accountants for 1986 and 1987 (first quarter) (Tab 8). 5. Mr. Meese Files His 1985 Financial the Justice Department's Ethics Officers. On June 19, 1986, Mr. Meese signed and filed his Disclosure Report for Calendar Year 1985. 2/ The Report was reviewed, as such reports routinely are, by the Justice Department's Designated Agency Ethics Official, Assistant Attorney General for Administration W. Lawrence Wallace, and by the Alternate Agency Ethics Official, General Counsel for the Justice Management Division Janis A. Sposato. 2/ Extensions of time from the May 15, 1986, filing date had been granted in writing, as permitted by law (Tab 9). 10 Shortly after they received the Report, Mr. Wallace and Ms. Sposato met with Attorney General Meese to discuss certain aspects of his Report, including the entry for FMII. Mr. Meese explained to them that the investment was made under an arrangement whereby the general partner managed the Meeses' money without disclosing his investments to the limited partners. The Meeses received only a quarterly accounting of the balance, such as appears at Tab 8. Ms. Sposato approved the Report, which was thereafter signed by Mr. Wallace. Ms. Sposato also verified the existence of FMII by requesting a Dun & Bradstreet report. The report she received, with original markings, appears at Tab 10. Mr. Meese's Report was transmitted on September 30, 1986, to the Office of Government Ethics for review (Tab 11). 6. The Office Of Government Ethics Bas No On November 24, 1986, an employee of the Office of Government Ethics asked an attorney on the staff of Ms. Sposato about the Attorney General's Financial Disclosure Report. The questions did not concern the limited partnership listed on the Report, but related entirely to certain gifts enumerated in the Report. The Office of Government Ethics asked only whether some gifts came from personal friends and whether others were received from charitable organizations. On November 30, 1986, the sixty-day statutory period in which OGE was required to conclude its review expired. For the next five months, there was no contact between the OGE and the 11 At no Justice Department or Attorney General Meese regarding his Report. So far as Mr. Meese knew, the form had been fully reviewed and approved by the appropriate ethics officers. time was he told that there was any problem with the Report, or that additional information might be required. Only after press reports in April 1987 did the OGE send a letter to Ms. Sposato requesting a copy of the limited partnership agreement. 7. The Attorney General Is Granted a Following the signing, in May 1985, of the "Transfer of Property" agreement relating to the shares of "Baby Bell" stocks, Mr. and Mrs. Meese tried to find the certificates among their papers. By the end of 1985, it was clear that the certificates could not be located, and the Meeses wrote for replacement certificates. Forms were sent to them, and these were completed and returned in August 1986. Mr. Meese was then advised that the wrong forms had been sent, and the correct forms were dispatched. Because he was concerned by early 1987 that the substitute certificates had still not arrived and been transferred to Mr. Chinn, the Attorney General requested a waiver of any conflict of interest that might be presented by his nominal retention of these stocks. A waiver was granted on January 20, 1987, pursuant to 18 U.S.C. $ 208(b) and 3 C.F.R. S 100.735-32, by Peter J. Wallison, Counsel to the President (Tab Footnote 1 of Mr. Wallison's Memorandum describes the fact that the stock had been sold but that Mr. Meese retained nominal 12). · 12 title "only because the stock certificates could not be located at the time of sale." Mr. Wallison granted the waiver on the ground that the aggregate value of the "Baby Bell" stocks ($9,611) was de minimis: I am authorized to grant a waiver. if it is determined that the interests are "not so I do not believe that the [Baby Bell stocks) 8. Attorney General Meese Terminates the In light of the publicity surrounding the Wedtech investigation, and Mr. Chinn's identification as a possible subject of that investigation, Mr. Meese decided to terminate the limited partnership. On May 5, 1987, Mr. Meese sent a formal termination notice to Mr. Chinn (Tab 13). Pursuant to the terms of the agreement, the limited partnership ended effective June 30, 1987. Mr. Chinn will be remitting the partnership proceeds to Mr. and Mrs. Meese in the near future. He has also been asked to transfer back to Mr. and Mrs. Meese the ownership of the "Baby Bell" stocks (Tab 14). Dividends received in the interim had been held, and not deposited, by the Meeses, who intended to transfer them to Mr. Chinn together with the new certificates. 13 As soon as the substitute stock certificates are received, Mr. Meese will liquidate his investment in those stocks. III. ATTORNEY GENERAL MEESE'S CONDUCT HAS BEEN ENTIRELY LAWFUL AND CORRECT This historical account demonstrates that Mr. Meese was acting lawfully and properly at every stage of the events relating to the recent investment of his family's relatively modest estate. The creation of the investment vehicle was designed to go well beyond the conflict-of-interest strictures prescribed by federal law. The reporting and disclosure of the investment satisfied the requirements of the law, as understood by Justice Department officials. And the Attorney General was ready, if any further information was needed, to provide whatever the Office of Government Ethics might request. He reasonably concluded from the silence of that Office that no further investigation was needed. 1. The Creation Of The Investment Vehicle Was Proper. Attorney General Meese went beyond his promise to Congress and determined to liquidate his family's interest in its publicly traded stocks. He also determined to create an investment mechanism which gave him no control over, or knowledge of, investments being made for his benefit. Both of these measures exceeded the requirements of federal law, and were designed to prevent any possibility of a conflict of interest. 14 |