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Case Study 2: Boeing: How Low Can They Fly Case Summary he Boeing case can really be considered to be four mini-ethics cases under the Boeing umbrella. The first mini-case pertains to the relationship between Boeing employees and the United States Air Force. It was alleged that a high ranking acquisition manager for the Air Force, Darleen Druyun gave some "sweetheart" deals to Boeing in exchange for being hired by Boeing after she retired from the Air Force. Of course these types of relationship violated the codes of conduct at both Boeing and at the Air Force, but these deals were not discovered until after Druyun had retired from the Air Force and started her position at Boeing. It was alleged that Druyun not only made sure the Boeing received the military contracts, but she also made sure Boeing receive a large profit on the sale and she disclosed information about Boeing competitor's, Airbus, bid for the same contract. Both Druyun and her contact at Boeing, CFO Mike Sears, were fired by Boeing once contradicting evidence was presented pertaining to Druyun being involved in the negotiations as an Air Force employee even though she had already started discussions with Boeing for a job after she retired by the Air Force. Druyun was sentenced to nine months in prison and Sears was sentenced to four months in prison. The second mini case relates to Boeing obtaining 35,000 pages of documents from one of its critical competitors, Lockheed Martin. A top executive at Boeing, Larry Satchell was charged with obstruction of justice and conspiracy to violate U.S. procurement laws. It was also discovered that Boeing, in the past, had obtained proprietary information from another critical competitor, Raytheon. After Boeing's acquisition of the Lockheed Martin documents has been made public, the Pentagon withdrew $1 billion in military contracts. Boeing was also accused of manipulating its financial statements during its merger with McDonnell Douglas to make the merger look more attractive. Similar to Enron's mark to market approach, Boeing recorded the operating profit when a program was still being developed. This "smoothing" of financial results made the overall numbers more attractive when the merger did take place. Another ethical issue of merit related to Boeing is its treatment of women and minorities. Boeing faces a class-action lawsuit by 38 women claiming discrimination based on how they were compensated. It was also determined the Boeing was giving lower levels of compensation to Asian and Black workers as compared with White workers. In addition, Boeing's CEO Philip Condit had been romantically linked with Boeing employees. Condit eventually was forced to resign due, in part, to the ethical problems at Boeing This leads to the fourth ethical issue which was the new CEO, Harry Stonecipher. In less than a year as CEO, Stonecipher resigned after having an extramarital affair with a Boeing employee. 135 Major Players in the Boeing Case Charges Result Name Title F3 Conflict of Interest Mike Sears CFO +4 months prison *2 years probation *$250,000 fine * 200 hours service Darleen Druyun Conspiracy Acquisition Officer Air Force *9 months prison *7 months community confinement * 150 hours service *$5,000 fine *Forced to Resign None Philip Condit CEO None *Forced to Resign CEO D Harry Stonecipher Discussion Questions 1. Identify the stakeholders in this case. The dynamics within the various stakeholders creates very complex relationships in the Boeing case. Customers: Government: Suppliers: Employees Stockholders: Local Community 2. What is the Procurement Integrity Act? What are the ethical implications of the act? What is its relevance to this case? 3. The cover-up of an unethical action always seems worse than the crime. Do you agree or disagree? Why? 136