SAN FRANCISCO (AP) _ Former Attorney General Edwin Meese III has testified before a federal grand jury investigating a longtime friend's delay in paying taxes on money he received for lobbying Meese, a lawyer said Thursday.

E. Robert Wallach was convicted in August 1989 of accepting $425,000 in illegal payments from now-defunct defense contractor Wedtech to influence Meese and others on government contracts.

The grand jury is looking into a $150,000 payment made to Wallach, a lawyer, to try to win the approval of the U.S. government for an oil pipeline between Iraq and Jordan, said Wallach's attorney, Harold Rosenthal.

The pipeline would have involved Wedtech, a machine shop in the Bronx borough of New York that grew into into a $100 million contractor through bribery schemes. Wedtech collapsed in 1986.

The pipeline was never built. Meese, then a counselor to President Reagan, was Wallach's contact with the government, Rosenthal said. He said Meese appeared Friday before the grand jury.

Prosecutors at the trial said Wallach did not declare the $150,000 payment on his federal tax return until 1987.

Rosenthal said Thursday that the money was put into the wrong account by mistake and that when the error was discovered, Wallach's accountant filed an amended 1985 return in 1987 plus interest.

''There is no crime to prosecute,'' said Wallach.

U.S. Attorney John Mendez wouldn't comment.

Wallach, 57, was sentenced to six years in prison for his role in the Wedtech scheme. In May, a federal appeals court ordered a new trial because a key prosecution witness gave perjured testimony.