Boeing hires independent ethics watchdog

updated 3:15 p.m. ET May 4, 2004

CHICAGO - Boeing Co. has hired an outside ethics watchdog as part of a settlement being negotiated with the Air Force concerning its military contracting improprieties, the company said Tuesday.

The special compliance officer will monitor the implementation of Boeing’s ethics reforms and alert the government about any future ethics violations, said spokesman Dan Beck, who declined to identify the monitor.

“This will be a good thing for the Air Force and certainly a good thing for Boeing as we restore the customer’s confidence in us as a company operating with the highest standards of integrity,” he said from Boeing’s office in Seal Beach, Calif.

The compliance officer will oversee Boeing’s newly overhauled ethics-compliance programs, file progress reports with the Defense Department and take note of any questionable activities or missteps by company officials, Beck said.

Industry and government officials said the requirement appears to be unprecedented for such a large Pentagon supplier, according to The Wall Street Journal, which was first to report the hiring Tuesday.

Fallout from Boeing’s ethics transgressions has at least temporarily shelved both a $23 billion air-tanker deal and the aerospace giant’s eligibility for government rocket contracts. The company also had seven military satellite launches taken away last summer to punish it for using proprietary records of rival Lockheed Martin Co. to help win a $1.88 billion satellite launching contract in 1998.

Both Boeing and the Air Force have declined to discuss the status of the negotiations or when the company’s suspension on rocket contracts might be lifted. Likewise, the tanker deal review is under scrutiny by the Defense Department and there is no timeline for a final decision, although Boeing executives say they still expect it to go forward.

The Chicago-based company took its tanker lobbying efforts public Tuesday, defending the need for air refueling tankers and the methods it used to negotiate the lease of 100 converted Boeing 767s in full-page ads in some major newspapers.

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