Boeing overhauls ethics in wake of Pentagon scandals

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The Independent Online

Boeing, the embattled United States aerospace giant, yesterday announced a sweeping overhaul of its ethical codes, designed to restore customer confidence and put a string of procurement scandals behind it.

The American defence company is to implement a host of recommendations made by an inquiry team led by the former US Senator Warren Rudman. He was called in after Boeing had been found guilty of using proprietary information from a rival contractor to win a $1bn satellite contract.

Boeing also said it would respond to recommendations made in a separate report into its ethical standards, which was carried out by the Ethical Leadership Group.

The twin reports follow the departure of Boeing's chairman Phil Condit and the sacking of its finance director Mike Sears and another senior executive over the improper hiring of a former Pentagon official involved in awarding contracts to the company.

Senator Rudman made 16 separate recommendations for tightening up Boeing's ethical standards, all of which the company is acting upon. They cover the structure of its ethics programme, leadership at senior and line management levels, training, communications and monitoring.

However, Senator Rudman said that he had found no evidence of "fundamental flaws or systemic failure" in Boeing's ethical codes.

He is conducting an additional review into the company's procedures and practices in relation to the hiring of government employees, which is due to be completed in the first quarter of next year.

The first review was sparked by the banning of certain Boeing subsidiaries from bidding for Pentagon contracts after it was found to have used confidential Lockheed Martin information to win a satellite launcher contract.

The second review follows the sacking of Mr Sears and Darleen Druyun, the Pentagon's former number two official in charge of procurement who is alleged to have passed Boeing information about a rival bid for a $21bn tanker refuelling contract. Ms Druyun was subsequently hired to a senior post in Boeing's missile division.

Boeing said the report by the Ethical Leadership Group found that its ethics programme was well above average. However, the report, based on interviews with more than 1,000 Boeing employees, found that "open and candid communications" were not encouraged throughout the company.

The Pentagon is conducting a separate inquiry into whether Boeing should be stripped of the tanker contract, which involves supplying the United States Air Force with 100 767 aircraft to carry out air-to-air refuelling.

Boeing is bidding for a similar contract from the UK Ministry of Defence in competition with a consortium led by EADS, the majority shareholder in Airbus Industrie.