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Ethics Review of Boeing Cites Hiring Weaknesses

March 10, 2004|From Reuters

Boeing Co. said Tuesday that an independent ethics review found that the No. 2 Pentagon contractor's improper hiring of a former U.S. Air Force procurement official was an isolated incident.

But the report -- based on a three-month review of hundreds of government and former government officials hired by Boeing in the last five years -- cited "some areas of weakness" in the company's internal hiring procedures and made 10 broad recommendations to prevent significant problems in the future.

Former Sen. Warren B. Rudman of New Hampshire, hired by Boeing to conduct the review after it fired two top officials in November, urged additional training, better safeguards, centralized oversight, periodic internal audits and insistence on conflict-of-interest reviews before the company offered a top job to candidates.

Chicago-based Boeing fired Chief Financial Officer Michael Sears and missile defense executive Darleen Druyun, a former Air Force official, in November, saying they violated ethics rules by discussing a job before Druyun stopped working on Boeing-related Air Force programs.

The incident prompted the Pentagon to put on hold a $27.6-billion deal for the Air Force to lease or buy 100 Boeing 767s as refueling tankers, pending the outcome of several criminal investigations and other reviews, which could come in May.

The Justice Department, the Defense Department's inspector general and the Securities and Exchange Commission are examining the matter, and lawmakers plan hearings on the so-called revolving door between government and industry.

"Boeing had a process in place, we just want to make that process better," Rudman said in an interview.

The report noted that Boeing's initial job application did not ask if a candidate had been involved in Boeing-related activities or had filed a disqualification statement covering Boeing, nor did the company ask for a copy of any such statements.

It also cited "an excessive reliance" by Boeing on government and former government employees to monitor their own compliance with the relevant federal laws on post-government employment.

Boeing shares fell 74 cents to $41.68 on the New York Stock Exchange.

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