Justice Department officials are considering settlement of an overseas bribery case against McDonnell Douglas Corp. by dropping criminal charges against four company executives if the firm pleads guilty instead, sources said yesterday.
Announcement of Associate Attorney General Rudolph W. Giuliani's tentative decision to settle the case before trial is expected later this week. He reportedly felt the charges against corporate executives were out of line with the department's usual handling of foreign bribery cases. The McDonnell indictment was the first to include corporate executives as well as the firm.
Officials declined comment on the exact terms of the settlement, saying last-minute changes were possible. Attorneys for the company and its executives said yesterday that they hadn't been contacted yet by the Justice Department about any settlement proposal.
The defense lawyers refused to say whether the company would approve a plea, but the firm almost accepted a similar offer two years ago in plea-bargaining negotiations before the indictment was returned.
Giuliani became the center of a brief controversy in June when two prosecutors on the case complained that he had discussed the indictment with a McDonnell lawyer without their knowledge. Sen. John C. Danforth (R-Mo.) had arranged the meeting for the St. Louis-based firm.
The company and four top executives were indicted in late 1979 on charges of conspiracy and fraud for making $1.6 million in illegal payments to ensure the sale of DC10 jetliners to the national airline of Pakistan. Sources said at the time that the corporate executives were indicted personally because the government of Pakistan specifically had forbidden the payments. Defense lawyers countered that the Pakistani resistance was a charade.
Justice Department prosecutors had offered to forego the indictment of individuals if the corporation pleaded guilty to several fraud charges and no contest to a racketeering charge. But J.S. McDonnell, the founder of the firm, refused to accept labeling his company a "racketeering enterprise" and rejected the deal.
After the indictment, the corporation and attorneys for the executives charged the government with malicious prosecution. But the U.S. Court of Appeals for the District of Columbia ruled that it couldn't decide the issue before trial.
The executives under indictment are James S. McDonnell III, a vice president and son of the founder; John C. Brizendine, president of Douglas Aircraft; Charles M. Forsyth, executive vice president of Douglas; and Sherman Pruitt Jr., a sales manager for Douglas.
The two Justice Department attorneys who complained about Giuliani's meeting with a McDonnell lawyer in May said the high-level dealings gave the appearance that deals could be made outside regular department channels. An internal review of the incident cleared Giuliani of any improper conduct.