Ethics issues dog Boeing

CHICAGO — Boeing Co. unexpectedly fired its top financial executive on Monday for unethical conduct, saying he negotiated the hiring of a missile defense expert while she worked for the U.S. government and was in a position to influence Boeing contracts.

The former Air Force official, Darleen Druyun, was dismissed along with chief financial officer Mike Sears — 10 months after she was hired as vice president and deputy general manager of Boeing’s Missile Defense Systems unit.

The 56-year-old Sears had held top positions in each of Boeing’s top businesses — commercial aircraft and defense — before being named to the financial post 3 1/2 years ago. He had been considered a top candidate to succeed 62-year-old Phil Condit as CEO.

The disclosure is another black eye for Boeing’s booming defense-contract business, which had $1 billion in government rocket business stripped in July after the Air Force ruled that the company broke the law by using records from rival Lockheed Martin to help win contracts.

It also refocuses attention on the government’s controversial multibillion-dollar plan to acquire 100 of its 767s for use as midair refueling tankers. The Pentagon’s Office of the Inspector General has been looking into allegations that Druyun acted improperly in giving Boeing financial information about a competing bid by Airbus.

Boeing said Sears was dismissed for violating company policies by communicating directly and indirectly with Druyun about future employment last year before she had disqualified herself from acting in her official government capacity on matters involving Boeing. It also said an internal review found recently that both attempted to conceal their misconduct.

"Compelling evidence of this misconduct by Mr. Sears and Ms. Druyun came to light over the last two weeks," Condit said, without elaborating.

The company continued to maintain it committed no wrongdoing during the leasing-plan process.

President Bush on Monday signed the defense authorization bill that included approval of a compromise tanker deal, lowering the initial $21 billion price by $3 billion to $5 billion. But the signing didn’t end the debate over the plan, which U.S. Sen. John McCain, R-Ariz., and other critics have assailed as a sweetheart deal for Boeing.

The criticism escalated this fall when documents disclosed by the government revealed that Druyun, then the principal deputy assistant Air Force secretary for acquisition and management, told Boeing that Airbus had submitted a bid $5 million to $17 million less per plane than Boeing’s offer. She joined Boeing nine months later.

Aerospace industry analyst Richard Aboulafia of the Teal Group said Boeing’s leaders "clearly needed a bold move in order to send a strong message to their biggest customer — the U.S. government."

The company said it has worked hard in recent months to strengthen its programs and policies in order to ensure an understanding that ethical breaches won’t be tolerated. "When we determine there have been violations of our standards, we will act swiftly to address them, just as we have today," Condit said.

Whether those efforts, coupled with Monday’s ousters, will contribute to putting the controversy to rest depends on the outcome of the inquiry and on the response in Washington.

Asked about the firings Monday, McCain told reporters: "I think it substantiates our reason for the inquiry and the concern I had about the way that this whole deal was concluded."

The last investigation resulted in harsh punishment this year when the Pentagon took away seven military satellite launches that were to use Boeing rockets and indefinitely banned the company from bidding on future satellite-launching contracts.