October 8, 1999
Web posted at: 2:29 a.m. EDT (0629 GMT)

WASHINGTON (CNN) -- McDonnell Douglas has been told to expect an indictment in connection with its 1994 export of machine tools to China unless the company works out a plea agreement before October 21, TIME reports.

Citing unnamed Justice Department prosecutors, TIME's Viveca Novak said the defense contractor will be indicted for violating the Export Control Act.

A spokesperson for The Boeing Co., which now owns McDonnell Douglas, said the company believes McDonnell Douglas acted properly in this matter, Novak said.

Catic, the China National Aero-Technology Import Export Corporation, received the tools. It too has also been told to expect an indictment, Novak reported. She said Catic is considering a plea agreement too.

MESSAGE BOARD Visions of China     RESOURCES Time Daily - October 7, 1999: Feds Ready to Indict McDonnell Douglas for Export Violations to China

The tools were to have been used to build civilian aircraft, Novak reported. But some of them were diverted -- in violation of the export licenses -- to a plant that makes, among other things, Silkworm missiles, Novak said.

The government may allege that McDonnell Douglas knew or should have known that the Chinese would divert some of the machine tools when they applied for the export license, Novak said.

A spokeswoman for Catic said only that "Catic is fully cooperating with the government's investigation and hopes that we can resolve the U.S. concerns."

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