Boeing CEO Asserts Commitment to Ethics

"We aspire to do more than just stay out of trouble," Boeing chief executive W. James McNerney Jr. told the Senate Armed Services Committee yesterday. At right is Sen. Mark Dayton (D-Minn.). (By Brendan Smialowski -- Getty Images)
By Renae Merle
Washington Post Staff Writer
Wednesday, August 2, 2006

Boeing Co.'s chief executive W. James McNerney Jr. told Congress yesterday that a recent $615 million settlement with the government over ethical lapses was tough, but fair, and that the Pentagon's second-largest contractor was attempting to move beyond this "dark cloud" in its history.

Since Boeing admitted to illegally hiring a high-ranking Air Force official and to having Lockheed Martin Corp.'s proprietary documents during a competition, the company has implemented a robust ethics program, McNerney told the Senate Armed Services Committee. "We aspire to do more than just stay out of trouble," he said.

But as McNerney was attempting to showcase Boeing's reforms, Paul J. McNulty, deputy attorney general, acknowledged in an exchange with Sen. John McCain (R-Ariz.) that the company's hiring of another former Air Force official is still under investigation. "Did this person discuss employment with Boeing while he was still with the Air National Guard?" McCain asked.

"It is a matter of ongoing criminal investigation," McNulty said, declining to name the Air Force official. Boeing's McNerney also declined to name the official but said he no longer worked for Boeing.

McCain and other members of the committee also questioned some aspects of the settlement, including Boeing's contention that most of it, $565 million, was tax deductible. McNerney said the company decided not to pursue the deduction, which could have been worth $200 million. McNulty said the Justice Department leaves questions about the taxability of settlements to the Internal Revenue Service.

"It just seems to me if you're going to punish somebody, then they should pay the fine and do the time or not," McCain said, adding that legislation restricting companies from deducting such settlements from their taxes may be necessary.

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