Report: Aerospace Giant, Justice Dept. Negotiating Deferred Prosecution

Can Boeing buy its way out of two government investigations into corporate wrongdoing? If so, it could well end up being the most expensive fine ever paid by a defense contract -- upwards of $500 billion.

The Wall Street Journal reports, under the settlement negotiation, Boeing wouldn't plead guilty to any specific allegations, but would admit general wrongdoing in the case of stolen Lockheed-Martin documents pertaining to an Air Force rocket bid and in the case of the company's tainted USAF aerial tanker bid.

The Justice Department won't comment on the WSJ report and a Boeing spokesman will only say, the company "continues to cooperate fully with government investigators."

The Journal reports whatever settlement evolves from the continuing negotiations will probably involve the single-biggest civil penalty ever paid by a defense contractor. The amount could range between $300- and $700-million.

As Aero-News has reported extensively over the past two years, Boeing first became embroiled in what appeared to be a case of industrial espionage when thousands of Lockheed-Martin documents were apparently stolen by two Boeing managers who were later indicted by federal prosecutors. The result: Boeing won the contract for most Evolved Expendable Launch Vehicle (EELV) launches. The Pentagon later suspended three Boeing business units and barred three employees from ever doing DoD work again. That cost Boeing approximately $1 billion.

In the two years since, Boeing is now working on a joint launch venture with Lockheed and the suspended business units are now back on the job.

The KC-767A deal was all but done when the Air Force stepped in at the urging of Senator John McCain (R-AZ) and killed the contract. Further investigation showed the Air Force official who negotiated the contract later went to work for Boeing in a job-for-favors deal that landed her and former Boeing CFO Michael Sears in prison.

FMI: www.boeing.com