Two Justice Department attorneys handling the overseas bribery case against McDonnell Douglas Corp. and four of its top executives have accused a senior department official of holding secret talks about dropping the case.
Michael A. Lubin and George J. Mendelsohn wrote to Associate Attorney General Rudolph W. Giuliani last Thursday, questioning the propriety of his private meeting with the company's general counsel without their knowledge.
"It is sadly ironic that a corporation that has been charged . . . with under-the-table dealings in foreign countries should be permitted by the Department of Justice to engage in back-door approaches presumably in an effort to dispose of this case."
Such meetings, they wrote, could adversely affect the government's position in the case, create the appearance that "influential defendants have access to senior officials" and "most importantly . . . erode the public's confidence in the fair administration of justice."
McDonnell Douglas and four of its top executives were indicted in November 1979 on fraud and conspiracy charges in the making of $1.6 million in secret commission payments on the sale of DC10 jetliners to Pakistan. The charges were the first against corporate officials in a long-running Justice Department-Customs Service investigation of overseas bribery.
Giuliani said in a telephone interview that he had not acted improperly in meeting privately with the company official and that he didn't know at the time that the McDonnell Douglas Corp. was under indictment. He said he did not know that the subject of the session May 14 was to be the criminal case.
He said he met with defense attorneys yesterday to discuss their requests to settle the case but had made no decision.
At the time of the indictment, sources said that the four McDonnell officials were considered personally culpable because the government of Pakistan had prohibited the proposed commission and the company paid them anyway. At that time and in the recent meetings with Giuliani, McDonnell Douglas officials argued that the department unfairly singled out its executives for criminal indictments.
Giulani said he believed that Lubin and Mendelsohn only found out about the private meeting about a week ago and "automatically asssumed the worst and without checking, jumped to two or three conclusions." He insisted that the private meeting was proper because an aide was present and the company's complaints were turned over to the criminal division for review.
Giuliani is the department's No. 3 official and was apparently contacted because Attorney General William French Smith and Deputy Attorney General Edward C. Schmults declined to meet with the company.
In a memo about the letter of criticism written by his twon subordinates, Giuliani told D. Lowell Jensen, head of the criminal division, that Lubin and Mendelsohn "displayed a disrespect for the facts and an immature petulance that gives me pause as to the judgments they may have made during their period of service in the department."
Two days before their letter to Giuliani, the two attorneys told the trial judge that they were no longer working on the case and were resigning to enter private practice. Sources said the resignations were unrelated to their criticism of Giuliani.
Giuliani said yesterday that at the May 14 meeting, McDonnell general counsel John Sant discussed the merits of the government's criminal case against the company. "I feel kind of silly saying this, but I didn't know McDonnell Douglas was under indictment," Giuliani told a reporter. "It was put on the schedule to discuss their problems or unfair treatment by the department. I thought it was going to be about civil rights or maybe an investigation. I knew the company was under investigation years ago."
He said that when Sant started complaining about the department's decision to indict the corporate officials, he had an aide take notes and planning to forward a memo asking the criminal division to review the matter.
It turned out that such a communication "proved unnecessary" because the division was already reviewing the case, he said in the memo to Jensen. The criminal division review "arrived at my office a few days later," Giuliani said in the interview with a reporter.
He declined to say what that recommendation is and added that it would probably take two or three weeks of review before he made a final decision.
Jensen said last night that he couldn't remember whether he learned of the first meeting at the time or since the controversy arose. "I can't give you a chronology," he said. "But there has been no lack of communication on the case."
In their letter, Lubin and Mendelsohn urged Giuliani "to adopt a formal policy of not holding any meetings with representatives of criminal defendants outside the presence outside the presence and without the presence and without the knowledge of the prosecutors."
In his memo to Jensen, Giuliani flatly refused to adopt such a policy. He said he will "continue to be open to the views of responsible defense counsel." Such meetings, he added, "can only increase the public's confidence that the department is vitally interested in hearing from all sides before making an important decision."
Giuliani also said he was not aware of any statute, regulation, policy or canon of ethics that would prohibit him from holding such meetings with defense counsel. He emphasized that he wouldn't make final decisions without discussing the matters with department officials who were intimately familiar with the details.