Walsh readies inquiry into White House activities. As Lawrence Walsh prepares to investigate the Iran-contra affair, he must balance the need for a thorough probe with the possibility of becoming bogged down in details.

The Justice Department has earmarked $3 million in its fiscal 1988 budget to fund what promises to be one of the hottest legal cases this year, the investigation of the Iran-contra affair. While some of the funding will be used to support other investigations by independent counsels, such as the one into former White House aide Michael Deaver's activities, the bulk of the $3 million is expected to be used by Iran-contra special prosecutor Lawrence E. Walsh.

In addition to mounting a major inquiry into alleged White House efforts to sell secretly American arms to Iran and funnel the profits from the sales to contra rebels in Central America, Mr. Walsh is considering to what extent he should broaden his inquiry to include other contra supply efforts and other Iran arms smuggling cases.

[FBI agents working for special counsel Walsh Monday questioned convicted gunrunner Eugene Hasenfus in Wisconsin for nearly five hours. Mr. Hasenfus was a crew member of a cargo plane shot down in Nicaragua Oct. 5 while delivering supplies to the Nicaraguan rebels. He was captured and sentenced to 30 years in prison, but was pardoned and returned home Dec. 18.]

Walsh was scheduled to meet with officials of the Justice Department's criminal division Tuesday to discuss which cases should be turned over to his office for further investigation.

The issue is a critical one for Walsh, who must balance the desire for a comprehensive investigation against the possibility of becoming bogged down in a tangled web of cases and potential defendants.

Walsh is said to be preparing to take on at least three current investigations at the Justice Department into contra supply efforts. They include a gun-smuggling case in Miami, a probe into the possible illegal involvement of Miami-based Southern Air Transport in contra resupply operations, and a Macon, Ga., investigation into resupply efforts by private Americans.

The action is seen as an indication that Walsh is intent on aggressively pursuing the mandate spelled out by the three-judge appeals court panel that appointed him last month. The judges granted Walsh broad authority to conduct investigations beyond the strict confines of the alleged scheme to sell arms to Iran and funnel the profits to the contras. His inquiries may extend back to actions taken as early as 1984 and may concentrate on any aspects of possible illegal involvement in supplying the contras. In addition, Walsh is empowered to probe any efforts since 1984 to ship arms to Iran.

Special prosecutors are intended under a post-Watergate law to prevent even the appearance of conflict of interest in cases where an administration may be reluctant to investigate vigorously one of its own officials accused of wrongdoing. As such, Walsh is empowered to take over from the Justice Department not only the direct investigation of the Iran-contra affair, but any criminal investigations and cases that might be related.

There have been reports that Walsh may consider taking over pending cases involving illegal weapons smuggling to Iran as well.

More than two dozen Iran arms smuggling cases have been prosecuted in United States courts in recent years, and several have involved defendants who claimed that they had received secret US government approval for their actions. Such claims have become a standard court defense for gunrunners.

Nonetheless, a current case in New York has uncovered multiple ties between accused gunrunners and persons identified as the same middlemen who dealt with White House officials in their secret Iran arms deals.

The New York case involves 13 men accused of conspiring to ship $2 billion in arms to Iran via Israel in violation of US arms export laws. Court papers filed in the case say that the same Iranian businessman who was working as an undercover agent in the Customs Service sting operation that led to the arrest of the 13 defendants was, at the same time, introducing the key middlemen in what became the White House's secret arms deals.

The defendants in the customs sting case say they thought they were helping with a secret US shipment of arms to Iran.

In the meantime, details have emerged concerning the White House's secret arms sales. According to a Washington Post report, on three occasions documents were drawn up to provide for presidential authorization for secret arms shipments to Iran. The account, citing the Senate Intelligence Committee's report on the Iran-contra affair, says that the first finding in November 1985 was never approved, and that the second finding was rescinded after the US decided to change its method of supplying arms to Iran. The final authorization, which is still in effect, was signed by President Reagan Jan. 17.

The details raise questions about the legality of covert arms shipments to Iran before the January authorizations. Some shipments of US arms took place as early as mid-1985, according to government officials. But court papers recently filed in New York suggest that shipments may have taken place even earlier.