Boeing Fires CFO, Ex-Air Force Official

Boeing Co. fired its chief financial officer, Michael Sears, on Monday for negotiating the hiring of an ex-Air Force official when she was still with the military and had possible influence over Boeing contracts.

The aerospace giant said it also fired the ex-official, Darleen Druyun, who was hired in January as deputy general manager of Boeing’s missile defense systems group. Both Sears and Druyun had covered up the misconduct, the Chicago-based company said.

The actions came after an internal review of Boeing’s role in securing a multibillion-dollar deal to lease 767 jetliners to the Pentagon as airborne refueling tankers.

The Defense Department is investigating allegations that Boeing might have illegally obtained proprietary information about its plane-building rival, Airbus, that helped Boeing win the deal -- including information from Druyun, then a top acquisition official at the Defense Department.

It is the second major controversy this year for Boeing, one of Southern California’s largest private employers, with about 36,000 workers in the region. In July, the Air Force took $1 billion in government rocket-launch contracts from Boeing after finding that Boeing illegally acquired thousands of pages of proprietary documents from competitor Lockheed Martin Corp.

Sears, 56, who also was a Boeing executive vice president, had ties to Southern California. Before Boeing bought McDonnell Douglas Corp. in 1997, Sears was president of McDonnell’s commercial aircraft division in Long Beach. After the merger, he became head of Boeing’s military aircraft and missile systems group and then was named chief financial officer in May 2000.

He spent 34 years with Boeing and McDonnell Douglas and was considered a possible candidate to one day succeed Philip Condit, Boeing’s chairman and chief executive.

Sears and Druyun could not be reached for comment. Druyun, through her lawyer, has previously denied sharing any improper information with Boeing.

Sears’ firing was a surprise, but “Boeing has to get this all cleaned up,” said Paul Nisbet, president of JSA Research Inc., an industry research firm in Newport, R.I. It’s crucial to Boeing’s future that the company rid itself of all scandals to again compete for the Air Force’s rocket-launch business, he added.

Druyun had personal ties to Boeing while she was negotiating the tanker lease on behalf of the U.S. government; her daughter and son-in-law both work for Boeing.

On Monday, President Bush signed the defense authorization bill that included approval of a compromise tanker deal, lowering the initial $21-billion price by $3 billion to $5 billion.

But the signing didn’t end the debate over the plan, which Sen. John McCain (R-Ariz.) and other critics have assailed as a sweetheart deal for Boeing.

Boeing has denied wrongdoing in the competition for the tanker deal, and it said Monday that the executive dismissals were not related to the contract.

Boeing said Sears was fired for violating Boeing policies by communicating with Druyun about a job at Boeing when she was still acting in her government role on matters affecting the company. Further, both tried to hide what they did, Boeing said its internal review showed.

“It really had nothing to do with the tankers,” said Boeing spokesman John Dern. “There’s no indication we got any favorable treatment.” But he said Boeing’s findings would be reported to the Air Force and that Boeing continues to cooperate with the investigation.

Condit said “compelling evidence” of misconduct by Sears and Druyun “came to light over the last two weeks” and prompted the firings. “When we determine there have been violations of our standards, we will act swiftly to address them, just as we have today,” Condit said in a statement.

Boeing named James Bell acting chief financial officer to replace Sears. A Los Angeles native, Bell had been Boeing’s controller and senior vice president of finance.

Nisbet and at least one other analyst, Byron Callan of Merrill Lynch & Co., said the firings did not change their “buy” ratings on Boeing’s stock. And after the announcement, Boeing’s stock closed at $38.89 a share, up 3 cents, on the New York Stock Exchange.

*

Associated Press was used in compiling this report.