washingtonpost.com  > Print Edition > Business

Federal Prosecutors Probing 2 Ex-Employees of Boeing

By Jerry Markon and Renae Merle
Washington Post Staff Writers
Saturday, December 13, 2003; Page E01

Federal prosecutors have launched an investigation into potential corruption and conflicts of interest involving two former Boeing Co. executives, according to law enforcement sources.

The probe, led by the U.S. attorney in Alexandria, is the latest faced by the aerospace and defense giant in recent months. The investigation, first reported by the Wall Street Journal, extends an inquiry into conduct by Michael M. Sears, Boeing's former chief financial officer, and Darleen A. Druyun, a former senior vice president who had been an Air Force procurement officer, whom Chicago-based Boeing fired last month for unethical behavior.

Former Credit Suisse First Boston banker Frank Quattrone on Trial
Former Tyco CEO Kozlowski on Trial

Charges are not imminent, but "we might be turning the corner very quickly on this,'' said a law enforcement source. "You're talking potentially corruption and conflict of interest."

The Justice Department declined to comment, and a spokesman for the Defense Criminal Investigative Service did not return a call for comment.

The probe, which was launched within the past four months, also includes possible obstruction charges, according to government sources.

"We have been cooperating with the Department of Justice and DOD [inspector general] and have been providing them some information for some time," said Boeing spokesman Larry McCracken. "We're not trying to stonewall with them."

A Boeing internal inquiry found that Sears violated company rules by talking to Druyun about a position at the company while she was overseeing Boeing contracts at the Air Force, including a program to lease and buy Boeing 767s. They initially made contact in October 2002 through Druyun's daughter, who works in Boeing's St. Louis office, then met the next month in person. That meeting took place at least two weeks before Druyun recused herself from making decisions involving the company, Boeing's inquiry found.

Sears has denied wrongdoing, and Druyun has declined to comment. If Druyun did engage in employment discussions while overseeing the Boeing contracts, she could face criminal charges for violating federal procurement rules, according to industry and government officials.

The Pentagon inspector general is already looking into whether Druyun and Sears tainted the $17 billion deal to buy 80 and lease 20 tankers, which refuel fighter jets in midair. At the time of the alleged inappropriate contact, Druyun was negotiating the controversial deal on the Air Force's behalf, and some in Congress have said it appears that she acted as an advocate for Boeing instead of taxpayers.

The deal has been put on hold pending the completion of the inspector general's inquiry. It is also expected to face more congressional hearings. Secretary of the Air Force James G. Roche has asked the inspector general's office to look into all Boeing-related contracts that Druyun supervised in the past few years.

If the tanker contract is not approved, Boeing could be forced to close down the production line for the 767 -- the tanker aircraft -- as early as 2005 and take a charge of about $200 million. The company began building a wing of the first plane yesterday in Washington state.

Boeing is under investigation by at least four entities, including the U.S. attorney's office in Northern Virginia and the Pentagon's inspector general, which recently issued a subpoena in its inquiry. A grand jury in Los Angeles indicted two former Boeing employees on charges of stealing trade secrets from Lockheed Martin Corp. during a rocket-launch competition. The Senate Commerce, Science and Transportation Committee, chaired by Sen. John McCain (R-Ariz.), has also been conducting an inquiry into the tanker deal.

© 2003 The Washington Post Company