washingtonpost.com  > Business > Special Reports > Corporate Ethics

Quick Quotes

Hearing Set for Boeing Ex-CFO

Recruitment of Air Force Official Added to Tanker Controversy

By Jerry Markon and Renae Merle
Washington Post Staff Writers
Thursday, July 29, 2004; Page A07

A top former Boeing Co. executive who has been implicated in a federal probe of corruption and conflict of interest involving the aerospace giant has a plea hearing scheduled for Aug. 11, according to court documents.

Michael M. Sears is expected to admit that he illegally negotiated the employment at Boeing of a former senior Air Force official while that official was overseeing a controversial $23.5 billion tanker deal between the company and the Pentagon, sources familiar with the case said.


Michael Sears was fired for talks with an Air Force official. Darleen Druyun pleaded guilty to conspiracy in the case.

_____BOEING CO_____
(BA) Stock Quote and News
Historical Chart
Company Description
Analyst Ratings
_____Government IT News_____
Microsoft's Homeland Security Efforts (Live Online, Aug 31, 2004)
Air Force Awards Tablet PC Project (The Washington Post, Aug 30, 2004)
Contractors and the Law (The Washington Post, Aug 27, 2004)
More Government IT News
_____Free E-mail Newsletters_____
• TechNews Daily Report
• Tech Policy/Security Weekly
• Personal Tech
• News Headlines
• News Alert

Documents filed in U.S. District Court in Alexandria indicate that Sears, who was Boeing's chief financial officer until the company fired him last year, will plead guilty to aiding and abetting acts affecting a personal financial interest. Any scheduled plea can collapse, even at the last minute, and one law enforcement source cautioned that Sears "has had some trouble accepting that he needs to come in or he faces indictment.''

If his anticipated plea goes forward, Sears would become the first senior executive at a major Pentagon contractor to be charged with a felony in a generation. And his admission of guilt would be a significant breakthrough for investigators trying to crack down on ethical problems associated with the "revolving door," in which Pentagon officials retire and negotiate lucrative positions with defense contractors.

What is less clear is the effect on the probe into whether inappropriate contact between Sears and former Air Force procurement official Darleen A. Druyun tainted the $23.5 billion tanker-leasing deal the Pentagon was negotiating with Boeing. The extent of Sears's cooperation in the investigation is unclear, and law enforcement sources expressed doubt that he would name higher-ranking officials at Boeing. His plea is expected to cover only his relationship with Druyun, who pleaded guilty in April, sources said.

"He negotiated Druyun's employment . . . that's the extent of his involvement,'' one law enforcement source said. "We're not talking about people putting money in their pockets here. It's circumventing the rules.''

Other executives may have had knowledge of the discussions. According to the indictment of Druyun, a Boeing senior executive negotiated with her and sent an e-mail to other executives at the company alerting them to the progress of the discussions. The senior executive was not identified in court documents, but when asked at her plea hearing, Druyun named Sears as the person with whom she was negotiating her potential employment.

Outside experts said the status in the contracting community of Sears, a 30-year Boeing veteran once considered a leading candidate for chief executive, would give any plea considerable significance.

"I don't recall a plea bargain involving anybody of this magnitude, at least in my [20 years'] experience," said John Howell, a government contracts expert at the law firm Dorsey & Whitney LLP. "I view this as extraordinary."

Boeing fired Sears, 57, last November for improperly recruiting Druyun to the company and covering up his actions. Boeing's internal investigation found that Sears and Druyun began negotiating a position while Druyun was still overseeing hundreds of Boeing contracts at the Air Force, including the deal to lease and buy the refueling tankers.

The Pentagon said in May that it would defer a decision for six months on the tanker contract. The program has been mired in controversy over the legal problems of Druyun and Sears and subject to investigations into its cost.

Druyun was the Air Force's principal deputy assistant secretary for acquisition and management until 2002, when she accepted a position with Boeing as vice president and deputy general manager of missile defense systems. The negotiations with Boeing were initiated by her daughter, a Boeing employee.

Druyun pleaded guilty to conspiracy in federal court in Alexandria. Her sentencing was postponed yesterday from Aug. 6 to Sept. 3.

Sears initially denied any wrongdoing. "At all times, I have faithfully carried out my duties on behalf of Boeing to the best of my ability," he said in a statement shortly after his dismissal from the company.


© 2004 The Washington Post Company