December 27, 1986

The lawyer for a victim of the racially motivated beatings in Howard Beach, Queens, last Saturday charged yesterday that the driver of the car that killed one of the victims was a willful participant in the attack from the beginning. The attorney, Alton H. Maddox Jr., said both the police and the Queens District Attorney had known that his client, Cedric Sandiford, made the allegation the night of the attack and they had failed to act on it. ''I think this raises serious questions about the integrity of the investigation,'' Mr. Maddox said at a news conference. Reaction by Santucci But the police, providing for the first time a detailed account of the motorist's actions, sharply contradicted the charges. They also disclosed that a woman had been with the driver, Dominick Blum, at the time of the crash. [ Page 26. ] The prosecutor, John J. Santucci, said at another news conference that it was the first time he had heard Mr. Sandiford's allegation. He said it would be ''virtually impossible'' for anyone to identify the driver of the car that night on the Shore Parkway or for an attacker involved in chasing the three black men to time his entrance to the highway so as to deliberately hit someone.

The head trader at one Wall Street brokerage firm had a bone to pick with John Phelan, chairman of the New York Stock Exchange yesterday. ''I called John Phelan to indicate that nothing was going on, and it was foolish to have the market open,'' the trader said. ''And he wasn't in.'' Mr. Phelan was on vacation. But he was not the only one on Wall Street who had the day off. Trading was numbingly slow, the slowest in exactly two years. Stock prices, because they had to do something, drifted higher.

Two Mexicans have been arrested in Los Angeles in connection with the murder of a United States drug agent who was kidnapped and tortured last year while working in Mexico, Federal officials said today. The Drug Enforcement Administration said the two men were being charged with violations of Federal narcotics laws and were also being accused of taking part in a conspiracy to kidnap and murder the drug agent, Enrique Camarena Salazar. Mr. Camarena Salazar was abducted in Guadalajara on Feb. 7, 1985. His beaten body, wrapped in a plastic bag, was found a month later.

Two days after thousands of university students demonstrated on the streets of Beijing, the city issued rules today that make any further public protest virtually illegal. Even as Beijing was joining other cities in clamping down on student protesters, 10,000 students in Nanjing, the industrialized capital of Jiangsu Province, were reported to have marched through the city calling for greater democracy, part of a continuing student campaign that is sweeping China. The action by the Beijing city government follows a similar action on Monday by the Shanghai authorities, who in effect banned demonstrations. In five days of protests in Shanghai that were brought to a halt earlier this week, more than 50,000 students marched through the streets with banners calling for democracy and freedom.

Iraq regained control today of four islands in a waterway dividing Iran and Iraq after a 24-hour Iranian offensive, United States Government officials said. Both Iraq and Iran said they had inflicted heavy casualties on the other during Iran's brief attack on Iraqi positions on four islands in the Shatt al Arab, a waterway near the major Iraqi city of Basra. Administration analysts said they could not judge the magnitude of the losses, but said the Iranian operation was clearly a limited one, and not the ''final offensive'' long promised by Iranian leaders to win the six-year-old war. Since last summer, 700,000 Iranian soldiers have been stationed along the southern front near Basra, presumably in preparation for the ''final offensive.'' Iranian leaders have apparently been wary of committing their forces against 500,000 Iraqis, equipped with superior armor and air power, American officials said today.