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Hugel affair settled quickly, but President mum on Casey ruling

By Godfrey Sperling Jr.Staff correspondent of The Christian Science Monitor / July 16, 1981



Washington

A possible major embarrassment for President Reagan has begun to recede almost as quickly as it came to public attention. Max Hugel, Central Intelligence Agency chief of operations in charge of covert activity, resigned shortly after the Washington Post reported that two of his former business associates accused him of improprieties intended to increase the price of stock in a firm he headed.

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Now, Mr. Hugel's boss, director of Central Intelligence William J. Casey, also is being subjected to questions about past ethical conduct. A federal district court judge in Manhattan has ruled that he participated with several others in an investment offering that "omitted and misrepresented facts" to investors.

Mr. Casey is not commenting on the case, but one of his lawyers says that Casey was a passive investor and did not violate the federal security law. The White House declined comment on Casey's case, noting the matter was under appeal.

A White House spokesman on July 15 said the President was sticking with Casey. But he also said the President had not yet seen the full transcript on the ruling involving Casey.

The quick way in which the President dealt with the Hugel problem is being contrasted here with the way President Carter clung onto his own first, big embarrassment: the allegations made against Bert Lance.

Observers here point out that the Lance incident surfaced at a similar, early moment in the Carter administration and that by insisting on keeping Mr. Lance in his OMB post, Mr. Carter dealt himself a major political blow.

At that time there were those among Carter's top advisers who thought that even the unproven charges of past, bank-related improprieties against Lance should be enough for the President to let his old friend resign.

They counseled him that the public expected him to be particularly scrupulous in maintaining a high ethical standard in his White House and that this would include getting rid of a top aide who was under a cloud of allegations, even if unproven.

But Carter told Lance he was "proud" of him. And by the time Lance did leave his position, he had -- as many observers see it -- done much to mar the Carter presidency.

Says one political analyst, "From that moment on, when Carter didn't get rid of Lance, it can be said that the Carter administration began to slide downhill."

But now Hugel, declaring his innocence but asserting that he did not want to put a burden on the President, has left the scene quickly. And he was immediately replaced by John Henry Stein, a career CIA officer.

So the possible political damage to the President has been quickly controlled. Observers believe the incident soon will be forgotten, unless it is followed by further incidents, particularly if they involve high-level appointments where Mr. Reagan has actively participated in the choosing.

At this point the main blame for the Hugel incident is being put on the shoulders of CIA director Casey.

"I'd say it is more Casey's embarrassment than Reagan's," HUD Secretary Samuel R. Pierce Jr., told reporters over breakfast July 15.

"It was Casey's influence which got Hugel appointed. Casey knew him and worked for his appointment and even wrote a letter to the President in his behalf," he said.

The big question in the Hugel incident is how the allegations were not noticed in the check run on him by the CIA prior to his appointment.

Meanwhile, the President says he is "saddened" by the Hugel-related events. At the same time, he expresses continued full confidence in Casey. Thus, unless there are some unforeseen chapters that have yet to unfold, the Hugel case, sensational for several hours, seems likely to continue to fade.