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Boeing Lax on Hiring By Rules, Review Finds

Lapses Risk Conflicts, Report Warns

By Renae Merle
Washington Post Staff Writer
Wednesday, March 10, 2004; Page E02

Boeing Co.'s hiring policies are followed only sporadically, leaving room for potential conflicts of interest, according to an outside review released yesterday.

But the review by a team led by former senator Warren Rudman did not find more examples of conflicts similar to the one involving Boeing's chief financial officer, Michael M. Sears, and a senior executive hired from the Air Force, Darleen A. Druyun.

Boeing fired Michael Sears and Darleeen Druyun because Druyun handled company contracts while Sears recruited her from the Air Force. A report faulted Boeing's conflict-of-interest performance. (Boeing via AP)

Chicago-based Boeing commissioned the three-month review after the company discovered that Sears and Druyun violated its hiring policies and attempted to cover up their actions. Druyun was still overseeing Boeing contracts at the Pentagon when she began discussing a position with Boeing. Both were fired in November.

"The report found room for improvement, as well as inconsistencies in how our policies and procedures are implemented," Boeing Chairman Lewis E. Platt said in a prepared statement. The company has already begun to implement the report's recommendations, including improving recordkeeping, he said.

Before the dismissal of Druyun and Sears, hiring government employees was not considered a "high-risk area" and as a result certain procedures were often not followed, the report said. The report did not reach any conclusions about what caused the ethical lapse in the Druyun case.

"The fact that this team didn't find any other examples doesn't say much," said Danielle Brian, executive director of Project on Government Oversight, a watchdog group. Rudman could not subpoena documents, review e-mail communications or check phone records, she said.

The Rudman report found that while Boeing's written procedures "suggest" a preliminary conflict of interest review before the interview process begins, that was not always done. Sometimes conflict-of-interest review documents, especially for senior executive hires, were not turned in until after a job offer was made, according to the report.

Another gap was found in the online application process, which does not ask whether the applicant has been involved in Boeing-related activities with the government. "This omission creates a potential gap during which a USG [U.S. government] employee has applied for a position with Boeing but may not have disqualified himself or herself from duties related to Boeing," the report said.

Boeing's hires from the Pentagon in recent years include George K. Muellner, who spent more than 30 years in the Air Force. Muellner is senior vice president of Air Force systems for Boeing's defense unit. John A. Lockard, senior vice president of naval systems, joined the firm in 2000 after 36 years with the Navy.

The report recommended that Boeing tighten its procedures because the company cannot rely on government employees to strictly follow all hiring procedures. "There can be considerable risk associated with placing too much faith in government employees and former employees to 'do the right thing' in this area," the report said.

There was "excessive reliance" by Boeing on government employees to comply with the laws, which resulted in a "sporadic adherence to the written policies and procedures that were in place," the report said.

The review process included interviews with dozens of employees and the review of hundreds of personnel files of employees hired from the government within the past five years.

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