US: Boeing Chairman Resigns Following Ethics Questions

Publisher Name: 
Associated Press

CHICAGO -- Boeing Co. chairman and chief executive Phil Condit resigned
unexpectedly only days after the huge aerospace manufacturer fired two
other Boeing officials for an alleged ethics breach.

The company's board accepted Condit's resignation after deciding "a new
structure for the leadership of the company is needed," according to a
Boeing statement released Monday.

"Boeing is advancing on several of the most important programs in its
history and I offered my resignation as a way to put the distractions
controversies of the past year behind us, and to place the focus on our
performance," Condit, 62, said in a statement.

Company spokesman John Dern insisted Condit was not fired and said the
board accepted his voluntary resignation "with great sadness."

Boeing has been roiled for months by ethical controversies over the
aggressive methods it used to obtain lucrative defense contracts.

The board named former Hewlett-Packard Co. president and chief
Lewis E. Platt, 62, as non-executive chairman and former Boeing
and chief operating officer Harry C. Stonecipher, 67, as president and
CEO, effective immediately.

The shake-up comes a week after Boeing unexpectedly fired its chief
financial officer, Mike Sears, for unethical conduct, saying he
the hiring of an Air Force missile defense expert while she was still
working for the Pentagon and was in a position to influence Boeing
contracts. Sears has denied any wrongdoing.

Sears was dismissed along with the former Air Force official, Darleen
Druyun. She was hired earlier this year as vice president and deputy
general manager of Boeing's Missile Defense Systems unit.

Boeing made no connection between Condit's departure and the firings in
its Monday announcement. Dern said the board has been meeting for the
several days to discuss a course of action, but he declined to say when
the resignation was made or accepted.

"To link it to any single event would be a mistake. But there have been
distractions over the last year, and both Phil and the board agreed
this decision was a way to put these distractions behind the company,"
said. "The board felt that changing leadership as well as the structure
... would help drive the company forward."

Condit had been with Boeing since 1965, when he joined the company as
aerodynamics engineer. He has been chief executive since 1996 and
since 1997, the company's seventh chairman since it was founded in

Platt praised Condit's "characteristic dignity and selflessness in
recognizing that his resignation was for the good of the company" and
the board "is in unanimous agreement that the company has been pursuing
the right transformation strategy and that Boeing is in excellent
financial condition."

"We have the right strategy," Stonecipher added. "The task before us is
execute. ... Boeing is a great company with tremendous capabilities to
define the future in each of our markets and deliver consistent,
profitable growth."

For decades, Boeing was primarily an aircraft maker, earning most of
money from its jetliners. But in the aftermath of the Sept. 11, 2001,
terror attacks, Boeing's defense division now brings in more revenue
commercial airplanes. Boeing has expanded its space, communications and
other businesses as well.

Rival Airbus expects to eclipse Boeing this year as the world's largest
commercial jet manufacturer.

Defense Department investigators are examining a newly approved deal to
acquire 100 Boeing 767 planes for use as midair refueling tankers.

The deal was criticized this fall when documents revealed that Druyun,
then the principal deputy assistant Air Force secretary for acquisition
and management, told Boeing that Airbus had submitted a bid $5 million
$17 million less per plane than Boeing's offer.

Last Friday, two senators who have long criticized the plan -
John McCain of Arizona and Peter Fitzgerald of Illinois - said in a
to Defense Secretary Donald Rumsfeld that it would be "irresponsible"
the department to go ahead with the deal without a full review into the

The agreement, in which the Air Force would lease 20 tankers and buy
was authorized as part of the defense appropriations bill signed Nov.
by President Bush.

In July, the Pentagon punished Boeing for stealing trade secrets from
rival Lockheed Martin to help win rocket contracts. Boeing has been
indefinitely banned from bidding on military satellite-launching
contracts, which has already cost it seven launches worth about $1

A spokesman for the union representing engineering and technical
at Boeing called Condit's departure "a real shock" and said there would
trepidation among the workers at Stonecipher's ascension to CEO.

"There was no love lost between Mr. Stonecipher and the
employees three years ago when our union went on strike," said Bill
Dugovich of the Society of Professional Engineering Employees in

Boeing's stock fell 13 cents, or 0.3 percent, to $38.26 in morning
on the New York Stock Exchange.

AMP Section Name:War & Disaster Profiteering