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Tuesday, November 16, 2004 - Page updated at 12:00 A.M.
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Ex-Boeing CFO pleads guilty in tanker deal scandal

By Alan Bjerga
Knight Ridder Newspapers

Former Boeing finance chief Michael Sears
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WASHINGTON — Boeing's former chief financial officer pleaded guilty yesterday to illegally hiring an Air Force official who helped negotiate a $23.5 billion deal for Boeing to supply 100 tanker aircrafts to the Air Force.

Mike Sears, 57, could face up to five years in prison and $250,000 in fines, but his attorney said his sentence probably would be less severe. James Streicker said in federal court that sentencing guidelines put his client's sentence at a maximum of six months.

Boeing fired Sears, one of the Chicago-based company's top four executives, in November 2003 for discussing potential employment with Darleen Druyun, 56, a top Air Force procurement official, while she was negotiating a proposed tanker contract between Boeing and the Air Force.

Druyun, 56, then left the Air Force to work for Boeing, which fired her along with Sears after an internal investigation. In October, she received nine months in prison for the illegal job talks.
Darleen Druyun admitted she helped Boeing.

In court documents released at that earlier hearing, Druyun said she unfairly favored Boeing in several weapons-program competitions out of gratitude for the company hiring her daughter and son-in-law.

She added that she gave Boeing what she considered a "parting gift" before leaving the Air Force: a higher-than-deserved price for its tankers.

The conflict-of-interest revelations, along with concerns over the cost of and need for the planes, have grounded a once-promising program for Boeing.

The Air Force's tanker plans are on hold pending two Pentagon studies expected in the next few weeks. An agreement to lease and buy Boeing tankers was rejected last month on Capitol Hill.

A decision to replace the Air Force's aging KC-135 tankers would be complicated by any scandal that might surface as the tanker investigations continue.

The Pentagon has asked Congress to investigate Druyun-related contracts going back to 1992 after complaints from Boeing's competitors in the defense industry.

Air Force Secretary James Roche and an official at the White House Office of Management and Budget are under a Justice Department probe for possible tanker-related conflicts of interest.

No other Boeing executives are officially under investigation, although Sears pledged to cooperate with prosecutors in any future probes, and critics of the tanker deal expect more legal pressure on the company.

Court documents released yesterday show Sears communicating with other top Boeing officials about the Druyun job talks. They also show that in late 2002 an unidentified "senior executive" other than Sears met with Druyun while she was involved with the tanker program.

Those findings will "make a few of the current and former senior executives quiver in their boots," said Keith Ashdown, the policy director for Washington-based Taxpayers for Common Sense, a watchdog group that's critical of the tanker program.

But Boeing chief attorney Doug Bain said the Sears case showed that the company's ethics problems were limited to Sears and Druyun.

"Boeing officials believed that Mr. Sears and Ms. Druyun were fully complying with all appropriate Boeing and DoD (Department of Defense) procedures in his recruitment efforts," Bain said in a statement.

Sears and his attorney didn't comment after the hearing. Sears is free on bond pending his Jan. 21 sentencing hearing. He pleaded guilty to one count of aiding and abetting illegal employment negotiations.

Copyright © 2004 The Seattle Times Company

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