Ex-Executive for Boeing Is Sentenced

ALEXANDRIA, Va. —  Former Boeing Co. Chief Financial Officer Michael M. Sears was sentenced to four months in prison Friday for illegally offering a job to an Air Force acquisition official while she was negotiating a multibillion-dollar contract with the aerospace giant.

Sears, 57, also was fined $250,000. He pleaded guilty in November for recruiting Darleen Druyun, who oversaw a $23-billion Air Force contract to acquire 100 aerial refueling tankers from the company.

Speaking before a packed courtroom, Sears apologized for what he described as an “impulsive” decision to pursue Druyun in October 2002 even though she had not removed herself from handling Boeing contracts, as required by conflict-of-interest laws.

“I take full responsibility for this bad decision,” Sears, wearing a charcoal gray suit, said during the hearing at U.S. District Court. “I know what I did was wrong.”

Druyun is serving a nine-month prison term for illegally seeking a Boeing job while negotiating the now-canceled tanker deal.

She also admitted to favoring Boeing on several other major contracts because the company hired her daughter and son-in-law at her request.

Her admission prompted rival defense contractors to file protests over contracts won by Boeing.

In a separate development Friday, the Government Accountability Office said that a $2.5-billion small-diameter bomb contract awarded to Boeing might have been tainted by “improper involvement and influence” from Druyun.

It recommended that the Air Force hold competitions for future bomb orders.

Judge Gerald Bruce Lee said Sears’ sentence reflected the damage done to taxpayers. But he also told him his conduct did not seem as severe as that of Druyun, who was the ultimate decision maker on most big Air Force contracts for nearly a decade.

“You are a person who had everything,” Lee said, “and in the blink of an eye you jeopardized everything.”

The judge could have imposed a maximum sentence of five years in prison, though federal guidelines suggested that up to six months in jail was appropriate.

Sears’ lawyers had sought only probation.

Boeing is hoping that Sears’ sentencing, along with other recent developments, will provide a significant boost in its efforts to resolve government investigations over a series of ethics scandals, which have rocked the Chicago-based company.

Boeing’s general counsel, Doug Bain, said in a statement that the sentencing “brings this matter one step closer to closure.”

But the top federal prosecutor investigating the Druyun case said Friday that the Justice Department would continue looking at Druyun’s hiring, including the involvement of other Boeing senior executives.

“We will let the facts and evidence that is available take us wherever it goes,” said Paul McNulty, U.S. attorney for the Eastern District of Virginia.

In a memo seeking a prison sentence for Sears, federal prosecutors criticized senior Boeing management for not confronting “the obvious legal and ethical issues presented by these employment negotiations....These Boeing executives appear to have accepted the [Druyun] negotiations as business as usual.”

At least one Boeing executive seems to have raised a red flag, however.

Two days after Sears offered Druyun the job, James Albaugh, head of Boeing’s defense business, wrote to an in-house lawyer: “I’d like to talk to you about making extra sure we are doing this right.”

Druyun joined Boeing in a $250,000-a-year post shortly after retiring from the Department of the Air Force.

The company fired her and Sears in November 2003 after an internal probe uncovered the improper job talks.

As for the GAO, the agency said Druyun stripped out some technical requirements in the competition to develop small bombs for fighter jets and bombers. The GAO did not say whether the change favored Boeing, but it recommended that the Air Force reinsert the requirements and hold another round of competition.

The losing bidder, Lockheed Martin Corp., protested the deal shortly after Druyun admitted favoring Boeing on various accords.

In a twist, the GAO also asked the Air Force to review the conduct of an unnamed former Air Force official who was involved in Lockheed’s bid for the bomb contract.

Loren Thompson, a defense analyst with the Lexington Institute, said that probes seemed to be shifting away from Boeing to the misdeeds of Druyun.

“As the facts come out, this scandal seems to have less and less to do with Boeing and more and more to do with misbehavior of a single official in the Air Force,” he said.

Shares of Boeing closed down 88 cents Friday to $52.78 on the New York Stock Exchange.

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Peterson reported from Alexandria, Pae from Los Angeles.