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Posted on: Tuesday, November 25, 2003

Boeing fires two for hiring cover-up

By Renae Merle
Washington Post

SEARS

Boeing Co. fired its chief financial officer yesterday, saying that he covered up his improper attempt to hire a senior Air Force official who supervised Pentagon contracts with the company. The Air Force official, who eventually joined Boeing, also was dismissed.

Michael Sears, a 30-year Boeing veteran, and Darleen A. Druyun, a Boeing senior vice president and former Air Force deputy chief procurement officer, were fired for violating company policies on hiring. The company's internal investigation found that Sears approached Druyun about joining Boeing while Druyun was overseeing hundreds of Boeing contracts for the Air Force.

Boeing did not say how Sears and Druyun sought to cover up their actions.

The dismissals revived concerns about the "revolving door" between the Pentagon and defense companies. In addition, Sears' departure adds uncertainty to succession at Boeing, where he was considered a top contender to replace chairman and chief executive Philip M. Condit.

The firings came on the day President Bush signed the defense bill that gives the Air Force permission to lease and buy 100 Boeing aircraft for use as refueling tankers.

"So far there is no indication that Boeing benefited in any way from Mike and Darleen's improper contact, but we are expanding the internal review to ensure we have all the facts," Condit said in a letter to Boeing employees yesterday.

Sears is the first senior defense industry executive in a generation to be fired over an ethical lapse. Boeing's internal investigation found that he used Druyun's daughter, Heather, a Boeing employee in St. Louis, as a conduit in initial employment discussions in September 2002. The probe turned up e-mails in which Sears contacted Heather Druyun about a possible position and others in which Heather relayed the messages to her mother.

Sears and Darleen Druyun met for discussions about a job at the company in October, according to Larry McCracken, Boeing's spokesman. Druyun didn't recuse herself from decisions involving the company until Nov. 5, at least two weeks after the initial meeting, the investigation showed. At the time, Boeing and the Air Force were in negotiations over the Boeing tanker contract.

Druyun retired from the Air Force in November and began working at Boeing in January as vice president and deputy general manager of missile defense systems. Druyun was also offered a position at Lockheed Martin Corp. but turned it down because she wanted more responsibility, her attorney has said.

Boeing began its investigation of Druyun's hiring in the summer when she became a target of critics of the tanker deal. The investigation, led by an outside law firm, initially turned up no impropriety. Two weeks ago, the cover-up was discovered, McCracken said.

The company's board was briefed Friday and met again Sunday night to approve a decision to fire Sears and Druyun, both 56. James A. Bell, senior vice president of finance, was named acting chief financial officer.

No action has been taken against Druyun's daughter, who is a junior employee at the company. "There will be some further investigation to see if she had any part in this," McCracken said.

Boeing was already under an ethical cloud after an Air Force inquiry found in July that the company had proprietary Lockheed Martin documents during a competition for rocket launches. The company was stripped of $1 billion in business and was suspended from new space contracts.

Former Sen. Warren Rudman completed an inquiry into the company's ethics last week, but Boeing has now asked him to expand it into Boeing's procedures for hiring government employees.

The Air Force may reopen its inquiry into the stolen documents in the rocket-launch competition.

The firings will probably lead many defense companies and government officials to re-examine whether a campaign in the 1980s for higher ethical standards was eroded by a recent push for more flexibility in government contracting, said Steven L. Schooner, an associate professor with the Government Procurement Law Program at George Washington University.

Some in Congress had questioned Druyun's role in negotiating a $21 billion tanker contract for the Air Force. Sen. John McCain, R-Ariz., a chief critic of the deal, had complained that Druyun seemed to act as an advocate for Boeing rather than for the Air Force.

Druyun's dismissal will probably give critics of the tanker deal more leverage as the Air Force determines how to implement the contract. The Pentagon has been fighting requests by McCain for internal e-mails and documents related to the lease-buy strategy.

Before the latest revelations, Boeing had been working to repair its image with the Air Force, which was considering lifting its temporary ban on awarding new space contracts to the company. To show its commitment, Boeing had created an office of internal governance.

"Boeing always used to be viewed as a conservative, highly ethical, results-driven organization," said Loren Thompson, a defense industry consultant. "The implication (of yesterday's actions) is that the company might have had a chronic ethical problem going back for some time, and taints a fair amount of the work it has been engaged in."