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Boeing Hopes the Worst Is Over

Former Executive's Sentencing Next Week Seen as Turning Point

By Renae Merle
Washington Post Staff Writer
Wednesday, February 9, 2005; Page E03

The scheduled sentencing of a former Boeing Co. executive next week for illegally hiring an Air Force procurement official will be a "watershed moment" in the company's effort to move beyond a series of ethics scandals, chief executive Harry C. Stonecipher said yesterday.

The company fired Michael M. Sears, its chief financial officer, in late 2003 after discovering that he hired Darleen A. Druyun while she was overseeing the company's programs at the Pentagon. Sears pleaded guilty and is scheduled to be sentenced on Feb. 18. Druyun also pleaded guilty, then admitted that she showed favoritism toward Boeing for years, spurring a wider investigation of the company's contracts. The scandal also derailed a Boeing deal to lease then sell tanker planes to the Air Force, potentially worth more than $20 billion.

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The Chicago-based aerospace firm also admitted that several of its employees had proprietary Lockheed Martin Corp. documents during a 1990s rocket-launch competition. That case is still under investigation by the U.S. attorney in Los Angeles and is the subject of a lawsuit by Bethesda-based Lockheed. The Air Force also suspended Boeing's space business from competing for contracts.

"I think toward the end of the month we will start to see some traction and be able to move forward in settling a bunch of these issues," Stonecipher said at an investment conference. "You can't get to a conclusion until all of those investigations have been completed and it looks to me like . . . they're now all completed."

Air Force officials have said they hoped to lift the suspension of Boeing's space business quickly, possibly in time to hold a competition for the next batch of launches this year, but have been repeatedly delayed by widening investigations.

"If I were sitting in the government I think I'd have the same attitude that says we're not going to turn you loose until we've seen all of this stuff," Stonecipher said.

The company would "love to have an overarching settlement" that encompassed all of the investigations, but "if we have to we will do them one at a time," he said. The company recently hired two high-profile lawyers as outside counsel to add to its defense team: Jamie S. Gorelick, who was a deputy attorney general in the Clinton administration; and Richard Cullen, former Virginia attorney general.

"We don't comment about ongoing criminal investigations," said Frank Shults, a spokesman for Paul J. McNulty, the U.S. attorney in Alexandria.

Congress and federal prosecutors are still investigating some of these issues, said Danielle Brian, executive director of the Project on Government Oversight, a watchdog group. "This is wishful thinking to an extreme if he thinks it's over," Brian said. "He still has two branches of government still investigating him."

Meanwhile, Boeing has an optimistic view of the Pentagon's 2006 budget proposal, which includes cuts to several large weapons programs, including the national missile defense system the company is helping develop. "Make no mistake about it, it will be a fight, right down to the wire on every program, but I think the whole industry ought to feel pretty good about it" because overall spending will increase, Stonecipher said.

Staff writer Jerry Markon contributed to this report.

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