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Boeing Fined for Sale to China
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Thursday, Nov. 15, 2001
CHICAGO – Boeing said Wednesday it would pay a $2.12 million fine to settle criminal charges against its McDonnell Douglas subsidiary for the 1994 export of surplus machine tools and other equipment to China National Aero-Technology and Export Corp.

The agreement admits no wrongdoing and will result in the dismissal of an indictment filed in 1999. The settlement will also end the export denial policy issued by the State Department, pending resolution of the charges.

The Chinese defendants earlier pleaded no contest to a criminal charge and paid a fine to the Department of Commerce. Restrictions have been placed on their export privileges.

McDonnell Douglas had been accused of violating export control laws involving the sale of the parts sold from a plant in Columbus, Ohio, that was being closed. The Chinese were supposed to use the parts in a joint venture with another U.S. company to build commercial aircraft parts. But in the first quarterly report to Commerce, McDonnell Douglas discovered some of the parts were not where they were supposed to be and that the joint venture had fallen through.

The missing parts were found in a shed without electricity or running water in Nanjing.

"As we have stated on numerous occasions, we were the party that discovered the diversion of the machine tools, reported it to the U.S. government and then had the machine tools moved to an approved location before they were ever installed, operated or misused," Boeing stated.

McDonnell Douglas then arranged for a modification to the export license that allowed the equipment to be moved to a facility already making commercial airline parts.

Boeing and McDonnell Douglas merged in 1997.

Copyright 2001 by United Press International.

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