Ethics Ain't Rocket Science

JULY 30 WAS Do as We Say Day at Boeing. That's when the company conducted an ethics refresher course for all 75,000 employees of its Integrated Defense Systems (IDS) units in Puget Sound and around the globe. Spokesperson Walt Rice tells Seattle Weekly the company's ethics have been challenged by "the actions of a few people" and by government investigations that "have served as a poignant reminder of how the actions of individual employees can have far-reaching effects on our business performance." It could also have something to do with the recent suspension of three Boeing subsidiaries by the Air Force for breaking federal law and the threat that Boeing could at least temporarily be barred companywide from further defense bidding. Putting on a good ethics show can't hurt, concedes Air Force Undersecretary Peter Teets. "If they immediately start to put in place corrective actions, training of employees, employee hot line, and drive up the integrity down through the organization of these units," he says, "I would think that their suspension could be lifted" in 60 to 90 days.

Thus the Lazy B's offices emptied out last week as everyone from interns to IDS's chief executive took part in a four-hour retooling that, says Boeing, emphasized "the company's commitment to the highest of ethical standards and integrity." Alas, CEO Phil Condit and other top execs from Boeing's Chicago headquarters didn't attend. They were still busy trying to explain the corporation's latest ethical breech, a kind of BusinessWeek version of Mad magazine's Spy vs. Spy cartoon, a deceit that turned out to be less cost-effective for Boeing's ailing space and communications divisions than the company might have planned. The possession of 25,000 pages of stolen military-satellite documents from rival Lockheed Martin that helped Boeing win a nearly $2 billion satellite-launch contract in 1998 had suddenly become a $1 billion liability. On July 24, the Air Force, following an investigation into the theft, reassigned much of Boeing's launch work to Lockheed and indefinitely suspended three Boeing space subsidiaries from competing for new defense contracts, costing the company what could be a record $1 billion in potential revenue. "Boeing has committed serious and substantial violations of federal law," said Teets, who, despite having once been Lockheed's CEO, was not smiling. Of course the big companies spy on each other and from time to time rival documents tumble into each other's safe. But Boeing was getting a stiff sentencethe first major defense contractor suspension in a decadebecause "I have never heard of a case of this scale," Teets said at a D.C. press conference. He pointed out that Boeing was not exactly forthcoming with the Air Force about the amount of Lockheed data in its possession, following discovery of the theft in 1999, when Boeing informed Lockheed Martin and the Air Force that Boeing found "a small amount" of proprietary information in the hands of an employee. "It was a good, long number of months before any additional proprietary information was even acknowledged," said Teets, and it wasn't until this April that the Air Force received the final documents from Boeing. "It took a period of approximately four years for them to provide us with all of it," he said.

A PARALLEL CRIMINAL probe of the theft is under way by the Justice Department. A day after the Air Force announcement, two former Boeing employees, onetime Lockheed space engineer Kenneth Branch and his Boeing supervisor, William Erskine, were indicted by a Los Angeles grand jury for having possessed the documents. If convicted, they could face up to 15 years in prison for violating the Procurement Security Act. Boeing had already sacked both, but they maintain they were sacrificed after the company used the documents to win the contract. (Branch says that during a job interview at Boeing in 1996, he showed a Boeing official a report on Lockheed's rocket project and was hired six months later.) Last week, Boeing denied the purloined documents helped it beat out Lockheed, and in court filings denied Lockheed's claims in a Florida civil lawsuit that it engaged in antitrust or racketeering violations. If all that wasn't challenging enough for Boeing's ethics instructors, it turns out that a former company chief scientist claims he was fired for blowing the whistle on another satellite division co-worker who had 8,800 pages of separate Lockheed internal documents. At a July 24 hearing in Los Angeles, a judge tentatively ruled that Krishan Raghaven could proceed with his case against Boeing, alleging he was fired after revealing that Dean Farmer, an ex- Lockheed Martin engineer who headed the Boeing satellite business unit, had e-mailed him slides from the "tons" of Lockheed documents in his possession. Farmer, who said the documents were benign and unimportant, was also fired. Boeing, which won't comment on the documents aspect, claims Raghaven was let go for other causes.