Four executives of McDonnell Douglas Corp. were indicted by a federal grand jury here yesterday on fraud and conspiracy charges. They were accused of making $1.6 million in secret "commission" payments on the sale of DC10 jetliners to Pakistan.
The charges are the first against corporate officials in the long-running Justice Department-Customs Service investigation of overseas bribes by American firms.
The corporation also was charged with making false statements to the Export-Import Bank to conceal $6 million in payments to airline executives in South Korea, the Philippines and Venezuela, and to government officials in Zaire.
Sources said the four McDonald officials were considered personally culpable because the government Pakistan had prohbited the proposed commission payments and the airlines paid them any way, then passed on the hidden costs to the government-owned Pakistan International Airlines.
The airline filed suit against McDonnell Douglas in September in an attempt to recover the money.
Named in the indictment are James S. McDonnell III, vice president of the St. Louis-based corporation; John C. Brizendine, president of Douglas Aircraft Co. of Long Beach, Calif., the corporation's main division; Charles M. Forsyth, executive vice president of Douglas Aircraft, and Sherman Pruitt Jr., sales manager of the division.
In a statement yesterday, James S. McDonnell, company chairman and the father of one defendant, vigorously denied the charges. He said the payments all had been disclosed publicly in company filings with the Securities and Exchange Commission.
"It is inappropriate and unfair for the Justice Department to single out McDonnell Douglas and its personnel for criminal indictment," he said.
McDonnell accused Justice of "unwarranted extension and use" of laws not intended to reach alleged overseas bribery. He also said the commissions in Pakistan in the early 1970s were fully known to officials of Prime Minister Bhutto's government.
The decision to recommend indictment of McDonnell executives was made a month ago, but was delayed after Washington attorney Clark Clifford appealed to Philip B. Heymann, head of the criminal division at Justice, for a chance to present more evidence, sources said.
According to the indictment, the McDonnell officials and co-conspirators in Pakistan, including the planning director of the airline, agreed to add $500,000 each to the cost of four DC10s to cover secret commission costs.
In answer to a query from the Pakistani government in May 1973, the schemers falsely stated that the commissions were only $100,000 per plane, the indictment said. When the government asked that the commissions be canceled, McDonnell and its agents continued to hide the remaining $400,000 per plane, the indictment said.
As part of the conspiracy McDonnell officials helped the Pakistani agents transfer fund to Swiss bank accounts, and in 1975 Forsyth told an employe to "take home and put under his bed" documents relating to one of the secret commission schemes, according to the indictment.
Each McDonnell executive is charged with three counts of mail fraud, two of wire fraud and one of conspiracy.
Besides indicitng the executives, another unusual feature of this case is the naming of foreign officials who allegedly received commission payments in the other countries entioned. Among them: C.H. Cho and C.K. Cho, owners of Korean Airlines, who allegedly received $3.2 million on the sale of three DC10s; a man named Eketebi, then minister of transportation, and the governor of the National Bank of Zaire, Sambwa Pida Nbagui.
Previous cases in the multinational bribery investigation usually have been decided by plea-bargaining, and names of recipients have been omitted at the insistence of the American company and the State Department.