Boeing CFO guilty in scandal

Matthew Barakat Associated Press

ALEXANDRIA, Va. – The Boeing Co.’s former chief financial officer pleaded guilty Monday to illegally hiring a top Air Force procurement officer who admitted giving the company preferential treatment on a $23 billion tanker contract.

Michael Sears, 57, of Chicago, pleaded guilty to a single count of aiding and abetting illegal employment negotiations.

Sears faces up to five years in prison when he is sentenced Jan. 21, but his lawyer, James Streicker, estimated that under federal sentencing guidelines, Sears most likely faces, at worst, a prison term of zero to six months.

Sears admitted that he offered Darleen Druyun, 56, of Vienna, Va., who was one of the Air Force’s top contract officers, a six-figure executive position at Boeing while she was reviewing whether Boeing should get a $23 billion contract to provide new refueling tankers to the Air Force.

Druyun, who was sentenced in October to nine months in prison, has previously admitted that she provided an inflated price to Boeing on the contract as “a parting gift” and that she had helped Boeing obtain inflated deals on previous contracts, while at the same time she intervened to get her daughter a job at the company and later to keep her from being fired by Boeing for poor performance.

Court records indicate that the daughter served as an intermediary in the summer and fall of 2002 for job negotiations.

Druyun and Sears met personally to discuss the job at the Orlando Airport on Oct. 17, 2002, while Druyun still had significant input into the tanker contract.

That contract called for the Air Force to lease 100 new tankers based on the Boeing 767 design, and retire a like number of the aging KC-135 tankers. Some of those older tankers are based at Fairchild Air Force Base west of Spokane. The first 33 of the new tankers would be sent to Fairchild, which is one of the nation’s largest tanker bases.

The tanker lease contract has since been nullified, and the Pentagon is discussing plans to buy all 100 new tankers. The Pentagon has asked Congress to investigate a wide range of contracts in which Druyun was involved.

Druyun at first had insisted that she had provided no substantive help to Boeing, even as she violated the government’s conflict-of-interest laws, but later admitted that she gave Boeing favorable terms after she failed a lie-detector test that was a requirement of her plea bargain.

In a statement of facts released Monday, Sears admitted that in 2000 he helped Druyun’s daughter get a job with Boeing in response to Druyun’s requests. He also acknowledged that he discussed a $250,000-a-year executive job with Druyun, even though she had told him that such discussions violated conflict-of-interest rules.

Sears does not confirm or deny whether Druyun actually gave Boeing a sweetheart deal on the tanker contract. Streicker to declined comment after the hearing.

Boeing spokesman Doug Kennett said there is “no evidence to back up” Druyun’s assertion that she provided a sweetheart deal, and said much of the final work on the tanker contract occurred after Druyun had left for Boeing in January 2003.

Boeing’s senior vice president and general counsel, Doug Bain, said Monday that the company, which fired both Sears and Druyun last year after conducting an internal investigation, will continue to cooperate with the federal investigation.

“We believe the statement of facts reinforces what we have said before – that no Boeing executive other than Mr. Sears engaged in any wrongdoing in connection with Ms. Druyun’s hiring,” Bain said. “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.”

But the statement of facts includes an admission from Sears that he sent an e-mail to three other senior Boeing officials the day after his illegal Oct. 17, 2002, meeting with Druyun to discuss employment prospects. In the e-mail, Sears referred to his meeting with Druyun as a “non-meeting” and then went on to describe the proposed details of a job offer to Druyun, including a $250,000 salary.

Use of the phrase “non-meeting” might suggest that Sears was letting other executives know that the meeting was illegal and therefore unofficial, especially since Sears told Druyun at the conclusion of their meeting: “This meeting really didn’t take place.”

But Kennett said Boeing fully investigated the issue and said “the assumption by Boeing senior leaders is … that they assumed Mr. Sears and Ms. Druyun would be following proper company and DOD policy.”

U.S. Attorney Paul McNulty said “Sears’ secret employment negotiations … struck at the heart of the integrity of the multibillion-dollar defense acquisition process.”

Sears will remain free on bond pending sentencing.

Thank you for visiting Spokesman.com. To continue reading this story and enjoying our local journalism please subscribe or log in.

You have reached your article limit for this month.

Subscribe now and enjoy unlimited digital access to Spokesman.com

Unlimited Digital Access

Stay connected to Spokane for as little as 99¢!

Subscribe for access

Already a Spokesman-Review subscriber? Activate or Log in

You have reached your article limit for this month.

Subscribe now and enjoy unlimited digital access to Spokesman.com

Unlimited Digital Access

Stay connected to Spokane for as little as 99¢!

Subscribe for access

Already a Spokesman-Review subscriber? Activate or Log in

Oops, it appears there has been a technical problem. To access this content as intended, please try reloading the page or returning at a later time. Already a Spokesman-Review subscriber? Activate or Log in