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Monday, May 15, 2006 - Page updated at 07:50 AM

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Price of Boeing scandals: $615 million U.S. penalty

Boeing has agreed to pay $615 million to settle the federal investigations into contracting scandals at the company, The Wall Street Journal reported online Sunday night.

Details in The Journal story were confirmed to The Seattle Times by a person familiar with the proposed settlement. A Boeing spokesperson declined to comment.

Boeing will pay what The Journal termed "the largest financial penalty ever imposed on a military contractor for weapons-program improprieties," but it will not face criminal charges or make any admission of wrongdoing.

The deal would bring to a close government investigations the company has faced on two fronts.

One involves contracts tainted by the illegal recruitment of Air Force procurement official Darleen Druyun, which led to the 2003 firing of both Druyun and Boeing Chief Financial Officer Michael Sears and the resignation of CEO Phil Condit. Druyun and Sears served prison time.

The other scandal involved Lockheed Martin documents improperly acquired by Boeing when the companies were competing for government rocket launches in the late 1990s.

In the pending settlement, The Journal said, prosecutors have agreed not to move against Boeing or executives as long as the company and senior management don't break the law in the next two years.

The agreement doesn't cover certain midlevel employees of Boeing's rocket-making unit.

The Journal story said Boeing and the Justice Department have agreed on major points of the settlement, though the details have not been formally approved yet.

Boeing, The Journal said, will acknowledge improper behavior by a few employees but won't acknowledge that prosecutors have evidence to justify seeking felony charges against the company. And the final agreement will not use the phrase "criminal penalty," but rather "monetary penalty."

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Aside from ending a set of investigations that loomed over Boeing's federal contracting efforts, the settlement will make it more difficult for Lockheed to pursue its separate civil claims against Boeing.

Any admission of wrongdoing on Boeing's part would have benefited Lockheed's case, which is pending. And the federal settlement means the government won't be filing any more documents that could be useful to Lockheed's case.

Seattle Times aerospace reporter Dominic Gates contributed to this story.

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