The Justice Department and lawyers for McDonnell Douglas Corp. reached a tentative plea-bargain agreement last fall to settle criminal charges that the company allegedly made illegal foreign payments, but the deal fell through after objections were raised by company founder and Chairman James S. McDonnell, according to court records unsealed in U.S. District Court here.
The corporation had agreed preliminarily to plead no contest to a single racketeering charge, to enter a guilty plea to four counts of filing false documents with the U.S. government and to pay $1.26 million in fines, according to the papers filed by two defense lawyers in the case. As a result of the plea, no individual corporate officers or employes would be proscuted, the record said.
The corporation has made no response to the statements made by the defense lawyers. McDonnell Douglas and each of the four individual defendants are represented by separate groups of lawyers.
However, in Septemeber 1979, when McDonnell objected to some language that was part of the agreement, federal prosecutors decided that the entire arrangement has been rejected and informed the manufacture's lawyers that individual officers as well as the corporation itself would be indicated in connection with their investgation of overseas bribes.
The disclosure of the alleged plea bargain was made in court papers signed by two laywers for one of the corporation's officers, Charles M. Forsyth, who was indicted last November along with three other McDonnell Douglas executives and accused of making $1.6 million in secret payments on the sale of DC 10 jetliners to Pakistan.
The Justice Department, also in court papers, has called the defense lawyers' version of the alleged plea-bargain negotiations inaccurate. The department otherwise has refused to comment on the negotiations, described by Forsyth's defense lawyers, Seymour Glanzer and Paul Brackman, in papers filed last December and unsealed last week.
McDonnell Douglas Corp. also was charged in the indictment last November with making false statements to the Export Import Bank to conceal $5 million in payments to airline executives in three countries and a government official in a fourth.
The defense lawyers contend in their court filing that it was expected that the McDonnell Douglas investigation would be resolved with agreements -- involving guilty pleas and fines -- similar to corporate settlements reached in similar cases, such as those involving Lockheed Corp., Textron Inc. Westinghouse Electric and other companies.
Instead, McDonnell Douglas' case is expected to be the first criminal trial to result from a joint Justice Department-Customs Services investigation of alleged overseas bribes.
In calling the defense lawyers' version of the events inaccurate, government prosecutors said they would furnish the court with factual details if necessary.
The records had been filed in the federal court in a separate, tangled dispute involving government allegations that some defense lawyers and law firms were involved in alleged conflicts of interest in connection with the case.
Last week, Judge Joyce Hens Green said that she was convinced by information provided that neither the lawyers nor the law firms would have to disqualify themselves from the case because of conflicts. Green, however, did postpone the McDonnell Douglas trial, scheduled to begin Monday, and instead scheduled a brief hearing on that date to resolve remainng questions on the conflict issue and to set a new trial date.