Ex-Boeing CFO pleads guilty in Air Force procurement scandal

By George Cahlink

November 16, 2004

The former chief financial officer for Boeing pleaded guilty in federal court Monday to illegally helping Darleen Druyun, the Air Force's former No. 2 procurement official, land a lucrative job with the company.

Michael Sears, 57, who along with Druyun was fired by Boeing in late 2003, pleaded guilty to a single count of aiding and abetting illegal employment negotiations in United States District Court in Alexandria, Va. Sears, who will be sentenced in January, could receive up to five years in prison.

"Michael Sears' secret employment negotiations with a senior Air Force official struck at the heart of the integrity of the multibillion-dollar defense acquisition process. Conflict-of-interest rules are important and protect the public interests," U.S. Attorney Paul McNulty said in a prepared statement.

"This is the largest corruption case by defense contractors our nation has seen in decades," said Keith Ashdown, vice president of policy at Taxpayers for Common Sense, a Washington-based interest group. "Sears' plea confirms that Boeing knowingly set out to make billions off of the illegal acts of a few."

In court papers, Sears admitted meeting with Druyun to discuss employment with Boeing while she was still serving as one of the Air Force's top contracting officials. In that job, Druyun held enormous influence over the service's nearly $30 billion annual procurement budget, and was key negotiator in a controversial deal for the Air Force to lease tanker aircraft from Boeing.

Druyun admitted in federal court last month to favoring Boeing in at least four contract negotiations, including the tanker deal. She said she felt indebted to the company for giving her daughter, her son-in-law and herself jobs. Druyun was sentenced to nine months in prison.

Last week, the Pentagon announced it would review all contracts Druyun oversaw from 1993 to 2002 as the Air Force's principal deputy assistant for acquisition and management. The Defense Science Board also will conduct a review of the military's acquisition systems to determine if there are sufficient checks and balances in place.

Sears admitted to not only meeting with Druyun while she oversaw Boeing contracts, but attempting to conceal those meetings from the Pentagon and federal investigators. Court documents show top Boeing's executives discussed recruiting Druyun at an Oct. 2002 meeting.

"They were very interested in Druyun's considerable talent and experience. They also discussed the fact that they did not want her to join Lockheed Martin, Boeing's primary competitor," court documents stated.

On Oct. 17, 2002, Sears and Druyun secretly met in a private conference room at Orlando International Airport, where Druyun had flown to attend an industry conference, to discuss her future plans. Druyun told Sears she had reached an agreement to accept a job with Lockheed Martin, but said she would consider an offer from Boeing, court documents showed.

The documents indicated that at the meeting, Druyun and Sears also discussed cost, delivery and schedule delays on the Air Force's F/A-22 fighter aircraft program, on which Boeing played a role as a subcontractor.

Druyun and Sears would later agree via e-mail to tell investigators they had not discussed her potential employment until early November, after Druyun had signed a letter recusing herself from all Boeing matters before the Air Force.

In subsequent e-mails and phone conversations, Sears implored Druyun to "hang tough" as investigators began questioning her about how she got a $250,000 a year job managing Boeing's missile defense programs.


By George Cahlink

November 16, 2004

http://www.govexec.com/defense/2004/11/ex-boeing-cfo-pleads-guilty-in-air-force-procurement-scandal/18035/