Former No. 3 at Boeing jailed 4 months, fined

Former CFO had offered job to Pentagon official

Huge tanker deal was at stake

Scandal may touch other tainted contracts

February 19, 2005|By KNIGHT RIDDER/TRIBUNE

ALEXANDRIA, Va. - A former top Boeing Co. executive received a four-month prison sentence and a $250,000 fine yesterday for illegal job negotiations with an Air Force official who oversaw contracts with the defense and aerospace company.

The scandal derailed a $20 billion defense program and triggered a broader review of Pentagon contracts, which a prosecutor said yesterday would be expanded.

Former Chief Financial Officer Michael Sears, 57, was Boeing's third-ranking executive when he approached Darleen A. Druyun, the Air Force's No. 2 weapons buyer, about working for Boeing in the fall of 2002.

At the time, Druyun was negotiating with Boeing over a proposal to provide the Air Force with 100 refueling tankers, a proposal that collapsed under the weight of scandal.

Sears, who was fired, pleaded guilty in November to one felony count of aiding illegal employment negotiations. Druyun is serving a nine-month prison term, having pleaded guilty last year.

The heart of the government's case against Sears, who once was considered a likely future chief executive officer at Boeing, was a secret October 2002 meeting between Sears and Druyun in Orlando, Fla., in which the executive discussed job terms with the Air Force official.

"You are a person who had everything, and in the blink of an eye jeopardized everything," federal Judge Gerald Bruce Lee told Sears at the packed sentencing hearing in Alexandria, Va.

Defense lawyers said Sears had a one-time lapse of judgment and should get a probation sentence. But prosecutors argued that his conduct was part of a pattern of disregard for federal rules meant to prevent conflict of interest.

Prosecutors said they were especially disturbed by the apparent tolerance that senior Boeing officials had for Sears' behavior. They said a prison sentence was necessary to deter other executives from considering similar crimes.

Druyun also admitted giving preferential treatment to Boeing on other contracts through the years because the company had given her daughter a job. Comments she made to federal investigators have prompted a broader review of contracts she negotiated with Boeing and other defense contractors.

U.S. Attorney Paul J. McNulty said he was assembling a "fraud working group" to promote early detection and prevention of procurement fraud in defense companies, especially in the relationships between Pentagon officials and contractors.

Several agencies, including the FBI and several federal inspectors general, will coordinate the fraud investigation, McNulty said.

Congress approved the Boeing tanker plan and President Bush signed it before the Druyun-Sears negotiations became public in 2003.

Questions surrounding the program also have claimed the jobs of Air Force Secretary James G. Roche and the service's chief procurement official, Marvin R. Sambur, and contributed to the resignation in 2003 of Boeing's chief executive, Philip M. Condit.

Tanker replacement plans are on hold pending several studies. Any plan that passes Congress probably will result in a new round of competition between Boeing and rival Airbus SAS, which has exploited the delay to advance its own efforts to provide tankers to the Air Force.

Boeing officials have been trying to use Sears' sentencing to put the company's ethics problems behind them.

In an e-mail to employees yesterday, Boeing Chief Executive Officer Harry C. Stonecipher said he was "sick" to think of the pain Sears and Druyun had caused the company, but that the sentencing helped Boeing "move toward restoring our reputation."

But prosecutor McNulty said he was "just not going to go down that road" in any wide-ranging settlement with Boeing. He also wouldn't rule out further criminal charges against Boeing or any of its employees.

Several past Air Force negotiations by Druyun involving Boeing and other contractors are still under federal review.

The Government Accountability Office sustained yesterday a complaint filed by Boeing defense rival Lockheed Martin Corp. of Bethesda, Md., recommending that a new competition for a small-diameter bomb contract be held because of Druyun's improper influence in awarding that contract to Boeing.

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