Head of Boeing's defense unit tied to Druyun hiring

One day after former Boeing Chief Financial Officer Mike Sears made an illegal job offer to a Pentagon official in October 2002, the leader of Boeing's defense unit received an e-mail from Sears detailing the deal, sources confirmed yesterday.

At the end of the e-mail, which included details such as the $250,000 salary and a signing bonus discussed with Air Force acquisitions officer Darleen Druyun, Sears asked Boeing defense executive James Albaugh to have a follow-up conversation with her.

Federal laws prohibit government workers from negotiating jobs with a company or its representatives if the workers oversee federal contracts with the company. The e-mail links yet another top Boeing official to an ethics scandal that cost Sears, Druyun and Chief Executive and Chairman Phil Condit their jobs.

A report in yesterday's Wall Street Journal indicated federal prosecutors are looking into Albaugh's job-related contacts with Druyun in the weeks before she recused herself from Boeing matters.

A spokeswoman for James McNulty, U.S. Attorney for the Eastern District of Virginia, who is leading the inquiry, declined to comment.

Boeing did not dispute Albaugh received the e-mail from Sears.

"Boeing has no indication from the U.S. Attorney's Office that the investigation is turning toward Mr. Albaugh or any other Boeing executive," Boeing Vice President and Assistant General Counsel Paul Ehlenbach said.

Druyun pleaded guilty in April to criminal charges that she was part of a conspiracy to violate those laws by negotiating with Boeing before she recused herself from Boeing matters Nov. 5, 2002. She is scheduled to be sentenced Friday.

Sears had been expected to plead guilty to similar charges Aug. 11, but the hearing was canceled. No new date was set.

This is the first time Albaugh, who runs the $27 billion defense unit and is one of Boeing's three highest-ranking executives, has been tied to the improper hiring of Druyun.

Boeing fired Sears and Druyun last November when an internal investigation uncovered evidence the two had violated company ethics policies by having job discussions while Druyun was still at the Pentagon, and subsequently tried to cover up the talks.

Condit resigned a week later.

Whether Albaugh violated any federal laws turns upon what he knew and when he knew it.

What is clear is he conducted detailed negotiations with Druyun on a $1.3 billion contract for the North Atlantic Treaty Organization as Sears' job discussions with Druyun were in full swing.

On Oct. 15, 2002, in Orlando, Fla., Albaugh and Druyun, acting on NATO's behalf, signed a letter of intent to finalize negotiations between Boeing and NATO on a multiyear contract to upgrade a fleet of 18 Airborne Warning and Control System jets.

Two days later, Sears took a private jet to Orlando to meet with Druyun about working for Boeing.

The next day, Sears e-mailed Albaugh and other senior Boeing executives and suggested a formal job offer be assembled for Druyun.

Albaugh the next day sent an e-mail to a lawyer in Boeing's Integrated Defense Systems unit and to a senior human-resources official. "I would like to talk with you about making extra sure we are doing this right. I know that Darleen has recused herself, but we are still working on the NATO (contract)," Albaugh wrote.

Yet Druyun did not recuse herself from Boeing matters until two weeks later.

In two subsequent phone calls, Albaugh discussed the job offer with Druyun, a Boeing spokesman confirmed.

John Dern, a Boeing spokesman, said Albaugh had incorrectly assumed Druyun had recused herself because her negotiations with Sears had reached an advanced stage.

She did not recuse herself until the following month. She left the Pentagon later that month and joined Boeing in January 2003.

"There were people at Boeing who were aware generally, who thought that Darleen would be a good fit at Boeing," Dern said. "But in terms of specific discussions and specific job offers, people assumed that Mike Sears was following proper policies and procedures."

David Bowermaster: 206-464-2724 or dbowermaster@seattletimes.com. Dominic Gates: 206-464-2963 or dgates@seattletimes.com.