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THE BOEING SCANDAL
October 6, 2003
Shame is unknown to the Boeing Co. team intent on sticking U.S. taxpayers with a $16 billion sweetheart deal for leasing 100 KC-767 planes as Air Force tankers. Although a massive document drop revealed the tawdry details of the Chicago-based company's incestuous relationship with the Air Force, Boeing last week covertly tried to stick the deal in the $87 billion appropriations bill for Iraq. Only Sen. John McCain's intervention stopped it.
A reference to tankers in the supplemental bill appeared benign, but would have been the seed for authorizing the deal in the Senate-House conference. Boeing tried to hinge corporate profit to U.S. troops in Iraq. When McCain warned he would hold up the bill, all mention of tankers was removed. That was a victorious skirmish in what may be a losing war. The 7,500 pages of internal documents McCain forced Boeing to release provide extraordinary insight into the military-industrial complex. Boeing operatives, on a first-name basis with high Pentagon officials, openly display their conniving.
Mitch Daniels, then budget director and now running for governor of Indiana, was Horatio at the bridge trying to stop the deal. Boeing's tentacles spread into the White House Oval Office and the offices of the speaker of the House and president pro-tem of the Senate. "I never have seen anything that unsavory," McCain told me last week in describing the Boeing papers.
Last Dec. 19 both Daniels and I misinterpreted failure to act by the Defense Department's Leasing Panel as a sign the deal was dead. It was not, but Boeing was worried. "We have re-engaged with Speaker," said a Boeing internal memo of Dec. 19. "Novak piece is a direct attack." The memo reported that Speaker Dennis Hastert met with President Bush earlier that week "and reportedly got a positive response (undefined, at least to us) out of president." It talked about working with "senior consultants who have relationship" with Defense Secretary Donald Rumsfeld through his Defense Policy Board.
Also on Dec. 19, Executive Vice President Jim Albaugh (Boeing's No. 2 official) wrote that "our contacts with the Speaker indicate that he is ballistic" over my column reporting Daniels's opposition. Albaugh concluded: "I plan on remaining in DC until [chief Boeing lobbyist] Rudy [de Leon] and I are satisfied we have all the actions in place toget this deal done and the Novak article defused."
Boeing had more than my column to worry about. A Feb. 10 report by the Pentagon's Program Analysis and Evaluation concluded that "leasing will cost more than purchasing (several billion dollars more)." After the Pentagon quietly approved the lease in May, program analysis director Ken Krieg on June 20 issued a report that leasing "is more expensive in the long run" than direct purchases.
On June 23 an internal memo shows then-Secretary of the Air Force James Roche (now Army secretary-designate) in on the deal. "We have a big problem" with Krieg's report, Roche is quoted as saying. Roche urged Boeing to pressure Krieg "to write a new letter essentially undoing the first letter." Boeing wanted it made clear to Krieg that his report was "going to embarrass" Rumsfeld. Roche "several times," it was reported, referred to McCain aide Chris Paul as "Chrissie Poo." (Paul is a Naval Academy graduate and a Naval Reserve commander about to be promoted to captain.) Roche's lieutenant, Deputy Assistant Secretary Darleen Druyun, is reported in an April 1, 2002, Boeing memo as having "told us several times to keep in mind" that the Airbus price was $5 million to $17 million cheaper per plane than Boeing's 767. "Darleen is fearful/concerned with Sen. McCain," the memo adds. She left the Pentagon in January to become a Boeing executive and is under investigation by the Defense Department's inpector general. Perhaps the most shocking admission among the Boeing documents is found in a company memo of May 22, 2002: "The [Boeing] team is still working the art of the possible in termns of obfuscating construction financing, transaction costs and lease administration." That deal is now wending its way to congressional approval.
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