The Justice Department has agreed to drop criminal charges in an overseas bribery case against four top McDonnell Douglas Corp. executives in return for guilty pleas by the airplane builder, which will pay more than $1.2 million in civil and criminal fines.
Sources familiar with the case said yesterday that the McDonnell board of directors agreed at a meeting Tuesday to accept the proposed settlement after plea bargaining between the department and the defendants. It is expected to be filed officially in federal court here in the next week.
One lawyer familiar with the case said it was "unprecedented" for the government to make such a settlement in a criminal case, especially where there has been no change in the facts or evidence.
The corporation and its executives were indicted in the fall of 1979 for making illegal payments to officials in Pakistan and other countries to ensure the sale of its DC10 jetliners. It was the first case in which Justice officials approved criminal charges against company officials as well as the corporation.
Under the agreement, the St. Louis-based firm would plead guilty and pay fines on 10 counts of mail fraud, wire fraud and filing false statements with government agencies. The company also agreed, sources said, to pay a $1.2 million fine to settle a companion civil suit by the department.
In return, the government agreed to drop criminal charges against James S. McDonnell III, a vice president and son of the company's founder; John C. Brizendine, president of Douglas Aircraft; Charles M. Forsyth, executive vice president of Douglas, and Sherman Pruitt Jr., a Douglas sales manager. A separate perjury count against Pruitt remains, sources said.
Philip Heymann, who approved the charges against the McDonnell executives while head of the department's criminal division during the Carter administration, said last night, "I would have been extremely reluctant to drop any charges brought after very careful consideration by a previous administration."
Heymann, now a professor at Harvard Law School, said that he felt criminal charges against individuals "were and are appropriate" if, as the department alleged, there was "purposeful fraud against Pakistani officials who were honestly trying to guarantee that bribes were not being paid."
Plea-bargaining efforts prior to the indictment stalled when the late J. S. McDonnell, the company chairman, vetoed a proposal that his firm plead no contest to a racketeering charge.
The current settlement talks became a center of controversy in June, when the two Justice attorneys assigned to the case complained that Associate Attorney General Rudolph W. Giuliani had met privately with a McDonnell attorney without their knowledge. That meeting had been arranged by Sen. John C. Danforth (R-Mo.).
An internal Justice review cleared Giuliani of any impropriety and the settlement talks continued. Giuliani, the department's No. 3 official, reportedly thought the handling of the McDonnell case was out of line with the usual disposition of overseas bribery cases.
At the time of the indictment, sources said the company executives were charged as well because the government of Pakistan specifically had banned the payment of commissions on the sale of the planes. The defendants, in turn, argued that the Pakistani government really knew the payments would be made.
The fines McDonnell has agreed to pay are slightly less than the $1.38 million which Control Data Corp., a Minneapolis-based computer firm, payed a few years ago in settling another overseas bribery case.
The McDonnell criminal fines amount to $55,000, on top of the $1.2 million to settle the civil suit, sources said.