Boeing Will Pay Fine in Secrets Case : Defense: Firm pleads guilty and is penalized $5.2 million. Judge questions whether fine is stiff enough in light of a ‘serious breach of security.’
The Boeing Co. pleaded guilty Monday to two felony charges of trafficking in secret Pentagon planning documents and was ordered to pay more than $5.2 million in fines and costs.
U.S. District Judge T. S. Ellis III, in Alexandria, Va., questioned whether the fine negotiated by the Seattle-based company and prosecutors was adequate in light of what he called “a very serious breach of security.” He also berated the firm for failing to send a senior executive to offer the plea.
Defending the size of the penalty, Randy I. Bellows, an assistant U.S. attorney, told the judge that Boeing had cooperated fully in the investigation and assured him there “was no evidence” that information in the documents had been revealed to any “foreign power.”
Bellows also said that the government could not establish that Boeing had used the bootlegged documents for unfair advantage in winning any specific government contracts.
The Air Force is reviewing the case to determine whether Boeing should be suspended or barred from future government contracts. Capt. Jack Giese, an Air Force spokesman, said it is “too early to speculate” on the outcome of the review. Ellis, clearly annoyed that no one from the firm appeared in court, ordered Boeing Chairman Frank Shrontz to send a letter expressing “contrition” for the firm’s admitted illegal acts. A company spokesman said Shrontz would comply.
Boeing was represented in court by a Washington-based outside attorney, Robert S. Bennett.
The case, though similar in nature, is not related to the continuing “Ill Wind” investigation into corruption in Pentagon procurement. The Ill Wind probe has uncovered numerous cases of consultants employed by major defense contractors bribing Pentagon officials to obtain secret data to give them an advantage in winning military contracts.
The Boeing plea followed the August indictment of former Boeing executive Richard L. Fowler on fraud and conspiracy charges for obtaining hundreds of classified and sensitive Pentagon budget and planning papers for the aircraft company between 1979 and 1985. Fowler’s trial is set to begin early next month.
Boeing plead guilty to possession of two documents, a closely held five-year Defense Department budget plan and a high-level Navy “decision memorandum” issued by the defense secretary’s office in August, 1984.
“This is not some minor document,” the judge said. “This is a fairly sensitive and clearly classified secret set of documents.”
Boeing spokesman Paul Binder in Seattle said: “Obviously, we take this very seriously. It goes beyond the $5 million (in fines). It’s a black mark on the company and something we do not want to tolerate. We have taken every step possible to assure that similar incidents do not occur.”
He said that none of the people involved in the case were still employed by the company.
Boeing’s government sales in 1988 were $4.79 billion of total sales of $16.97 billion. In the first nine months of this year, Boeing sold a total of $4.2 billion in aircraft, parts and services to the government.
Boeing, the nation’s 10th-largest defense contractor, is based in Seattle.
Fowler is quoted in court documents in his case as telling company and government investigators that black market trading in illicit Pentagon documents was widespread in the defense industry in the late 1970s and early 1980s.
Fowler, who has denied any illegal acts, is a former Air Force budget analyst who maintained ties to several of his former colleagues, who he said provided him with a regular flow of inside information.
Dealing in bootlegged Pentagon documents first came to light in 1985, when GTE Corp. and several of its executives and consultants were charged with conspiracy to obtain secret electronic-warfare data. GTE pleaded guilty, but charges against all but one of the individuals were dropped.
