Export Case Ruling May Favor Boeing

A U.S. appeals court refused to revive criminal charges against a McDonnell Douglas Corp. executive in a ruling that may damage the government’s effort to prove the Boeing Co. unit illegally obtained U.S. export licenses.

The court upheld a judge’s decision barring prosecution of Robert Hitt for allegedly conspiring to fraudulently obtain licenses to sell machine tools to China. The 2-1 ruling said prosecutors waited too long to indict Hitt.

The ruling may make it more difficult to prosecute McDonnell Douglas because Hitt’s knowledge of the alleged wrongdoing is an element of the government’s case against the aerospace company. McDonnell Douglas is accused of conspiring to defraud the government to obtain 10 export licenses needed to ship technology. To get such a license, companies are required to certify the technology wouldn’t be used for military purposes by a foreign power.

Hitt was named in one of 16 counts alleging McDonnell Douglas misled the government to secure export licenses to sell machine tools to China National Aero-Technology Import Export Corp., known as Catic, for $5.4 million.

The U.S. Court of Appeals for the District of Columbia Circuit said Hitt is shielded from prosecution by a five-year statute of limitations for such crimes because he was not indicted until Oct. 19, 1999.

McDonnell Douglas, bought by Boeing Co. for $16.3 billion in 1997, won the license to build civilian airliners for China. Six machine tools were diverted to Nanchang Aircraft Corp., which makes Silkworm cruise missiles and A-5 attack aircraft, the government says.

The appeals court upheld U.S. District Judge Paul L. Friedman’s finding that the alleged conspiracy ended Sept. 14, 1994, the day the Commerce Department issued the export licenses.

Boeing shares fell 6 cents to close at $64.63 on the New York Stock Exchange.