First In A Series Of Reports From Company
Boeing Thursday released part one of a report examining the
company’s ethics program and its rules and procedures for the
treatment of competitors’ proprietary information. The Boeing
board of directors initiated this exam by the independent team, led
by former Senator Warren Rudman, last July.
On Nov. 24, the Boeing board asked Senator Rudman to conduct an
additional review to examine the company’s procedures and
practices on hiring government employees. The company anticipates
this review will be completed in the first quarter of 2004.
“In our review, we
concluded that Boeing has gone to great lengths to establish,
maintain and continually improve upon an ethics program that is
impressive in its scope and detail,” Senator Rudman
(right) said. “We do not believe that any of the alleged
ethics breaches involving competitors’ proprietary
information represent either fundamental flaws or a systemic
failure. Clearly, however, there are areas requiring improvement
and our recommendations address these with the objective of
strengthening the entire program.”
Also Thursday, Boeing released the executive summary of a
separate review conducted by the Ethical Leadership Group of
Wilmette (IL). That report was also conducted independently to
assess the structure of the company's ethics program, with emphasis
on communications, training, integration and corporate culture. An
executive summary is available on the Boeing Web site and questions
regarding the text of the report should be directed to ELG.
The reports are structured around key findings that describe
areas for improvement in company programs. These improvement areas
fall into several categories: structure of the ethics program;
senior leadership engagement; line management leadership; training;
upward communication; and assessment and monitoring. The Rudman
report details 16 recommendations, which Boeing Chairman Lew Platt
said the company intends to address quickly and
comprehensively.
“The Boeing board and management understand that ethics is
a zero-tolerance issue for this company and that we must earn the
trust of our customers every day,” Platt said. “While
we are gratified that our commitment to excellence in these areas
came through, we are implementing all of these recommendations
– as well as initiating additional steps – so that we
can achieve an even higher standard.”
Platt noted that the company’s recently established Office
of Internal Governance exceeds the scope of the report’s
recommendations by establishing a broad new function – with a
direct reporting relationship to the president and CEO. The new
office combines direct oversight of ethics, internal audit,
import-export compliance, and foreign sales consultants, with
independent assessments of internal controls and governance
requirements.
“These recommendations are intended to augment
Boeing’s existing programs and procedures and, in fact, we
recognize that the company has already taken action to address
certain weaknesses that we identified,” said Senator Rudman.
“The board and management of Boeing have been completely open
to our findings and fully cooperative in our review process. We are
confident they will find effective ways to implement these
recommendations and give them strength and prominence throughout
the organization,” he added.
"Based on our meetings
with more than 1,000 Boeing employees and 10 years doing solely
ethics and compliance consulting, we found Boeing's ethics program
to be well above average," said Steve Priest, president of Ethical
Leadership Group. "More importantly, we note that Boeing's culture
supports ethical, responsible behavior. Perhaps Boeing's biggest
issue – shared with many of America's largest firms –
is that many employees believe open and candid communications are
not encouraged. Releasing the results of both assessments is a
strong signal of Boeing's commitment to create a candid, open,
world-class culture."
Senator Rudman is of counsel in the Washington (DC) office of
the law firm of Paul, Weiss, Rifkind, Wharton & Garrison, LLP.
He is a former US Senator from New Hampshire and Chairman of the
Senate Ethics Committee. Most recently he was a member of the
Conference Board’s Commission on Public Trust and Private
Enterprise, which recommended significant reforms related to
corporate governance, business ethics, and auditing and accounting
issues. He is a director of the Chubb Corporation, Allied Waste,
Boston Scientific, Collins & Aikman and the Raytheon
Company.
Ethical Leadership Group is a leading business ethics consulting
firm. Founded in 1993 by Steve Priest, ELG has consulted with 20
percent of the Fortune 200 and has worked to encourage ethical
leadership in some 20 countries. ELG is retained by boards,
executives and ethics officers to assess or strengthen a
corporation’s commitment to the highest standards of ethics
and compliance. Priest also directs the Conference Board’s
Business Ethics Conference.