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Boeing; How low can they fly
Transcript of Boeing; How low can they fly
Darryl Romijn 1581723
Jelle Piers 1610449
Taisiq Marchena 1614933
Fleur Rijdes 1611558
1910, built his first plane factory in Seattle
Boeing purchased his first plane from the Glenn L. Martin Company
Quote “We could built a better plane ourselves and build it faster!”
William was a private person, a visionary, a perfectionist, and a stickler for the facts.
He came from an old and well-to-do family in Hohenlimburg and served in the army
His mom left 1 million to him
Mike Sears - CFO Boeing 2000 - 2003
Darleen Druyun - Vice president 2003
Fraudulent Conflict of interest.
What can you do to prevent such situation?
He was accused of violating U.S. procurement laws
He stole trade secrets from Lockheed Martin
Lockheed Martin/Air force were harmed by him, because he stole 35.000 pages worth of document regarding confidential trade secrets.
Boeing was also harmed. Lockheed martin sued Boeing & the Air force terminated Boeings project and contracts as well. Air force is also indefinitely banning Boeing from bidding on future satellite-launching contracts.
Larry Satchell was suspended by the company and later retired. He has not been criminally charged.
Ethical Issues of this Case
• 1996, Boeing manipulates financial statements by not recording in reserves late delivery penalties that occurred due to production problems.
• Boeing uses accounting program that allows a company to manipulate revenues and expenses and is impossible to audit.
• 2002, Boeing settles accounting lawsuit without admitting any guilt.
• Violation of Boeing ethics policy and Procurement Integrity Act by hiring Darleen Druyun while still having a high ranking acquisition position with the U.S. Air Force. Job was offered while Druyun was in the process of reviewing a $21 billion contract between Boeing and the Air Force.
• Druyun supplied confidential information on Airbus contract bid.
• Druyun lobbied politicians in Congress in a “covert operation” to unfairly ensure that Boeing received the tanker contract.
• Contract awarded to Boeing without public hearings or solicitations for other bids.
• Profitability of the contract for Boeing was severely overstated, nearly triple the usual amount.
• Unethical and inappropriate communications between Mike Sears the daughter and son-in-law of Druyun.
• Unethical meeting between Mike Sears, Phil Condit and Druyun to discuss employment of Druyun in “general terms”. (Boeing later released a statement stating that Condit was not at the meeting).
• Druyun negotiated $412 contract increase for Boeing while a Boeing executive was Druyun’s future son-in-law get a job.
• Druyun awarded Boeing a $4 billion contract to upgrade the avionics of over 500 planes, even though they were built by Lockheed Martin.
• Druyun negotiates an overstated payment to Boeing
• Druyun agrees to a higher price than appropriate and gives Boeing proprietary pricing date for a competing bid from Airbus.
• Boeing was in possession of approximately 35000 pages of confidential Lockheed Martin documents.
• Larry Satchell obstructs justice and conspires to violate U.S. procurement laws and stealing trade secrets of Lockheed Martin.
• Boeing discriminates against female employees in unfair wages and being denied any chance of promotion.
• Boeing discriminates against minority employees in a similar way.
• Boeing top employee Condit had romantic relationship with several Boeing employees. Condit who promised one romantic partner a number of arrangements, was promoted and said romantic partner was laid off due to downsizing.
• Boeing CEO Harry Stonecipher has extramarital affair with Boeing employee, violating code of conduct of Boeing.
Mike Sears unethically started employment procedures for Darleen Druyun while she was still employed by the U.S. Air Force.
- CEO 2004
CEO & Chairman 2003
Ethical Issues that took place
What happened under Mr Condit's watch?
In 1996 Mr condit began his career as the Ceo of Boeing
In 1996 Boeing merged with McDonnel Dougles under his supervision.
He had a 'secret' inappropriate meeting with Darleen Druyun & Mike Sears
During this acquisition there were a lot of manipulated transactions and questionable financial statements.
In 2002 Boeing paid 92.5 Million because of this matter without admitting guilt.
Discrimination of female/minority employees (salary gaps and a lower change to grow in the company)
Affairs with female employees
on December 1, 2003 he resigned as Ceo/Chairman
In 2005, he resigned for having an affair with a Boeing employee
In violation with Boeing's internal code of conduct
He had set higher ethical standards at Boeing and violated his own standards
Boeing also established an ethics hotline for employees to use for whistle-blowing on unethical behavior, for which they had to sign the code of conduct
The woman Harry had an affair with resigned as well & Joan Stonecipher filed a divorce after 50 years of marriage
Violation of Boeing ethics policy and Procurement Integrity Act by hiring Darleen Druyun (While she was reviewing $21 billion contract for Boeing.
Special treatment for Boeing; Awarded avionics upgrade, overstated profitability in contracts etc.
Unfairly awarded contract to Boeing without public hearing (lobbying).
Druyun negotiated $412 contract increase for Boeing while a Boeing executive was Druyun’s future son-in-law get a job.
Druyun agrees to a higher price than appropriate and gives Boeing proprietary pricing date for a competing bid from Airbus.
Boeing had a serious ethical problem
with its major customer, U.S. government
"The curse of the Dragon Lady"
Philip Condit personal Life
Kokusai Shimin Sho (International Citizens Award), Japan America Society, 1997.
Chief Executive Officer of the Year, Financial World, 1997.
Ronald H. Brown Standards Leadership Award, 1997.
Peter F. Drucker Strategic Leadership Award, 1998.
Distinguished Engineering Alumnus Award, University of California, Berkeley, 1998.
Distinguished Eagle Award, Air Command and Staff College, 1999.
International von Karman Wings Award, The Aerospace Historical Society, 1999.
bachelor's degree in mechanical engineering from the University of California.
master's degree in aeronautical engineering from Princeton University.
Master's in Management from the Sloan Fellows program of the MIT Sloan School of Management.
and a Ph.D. in engineering from the Tokyo University of Science. (He is the first Westerner to earn such a degree from that institution.)
THE ENGINEER'S CEO
Damages & Punishments
Harry graduated from high school at age 16
Completed two years at Tennessee Polytechnic Institute
Left school, because of Joan and he worked as a laboratory technician in the Allison Division of General Motors, gaining hands-on experience with large engines and the factory system
He completed his degree in physics in 1960.
Worked at General Electric as an entry-level engineer in the Evendale Aircraft Engine division
Instrumental role in developing the airplanes of Boeing
Phil Condit, the former chief of Boeing from 1996 to 2003, and his wife, Geda, took 68 acres in the Snoqualmie Valley and, over the span of 15 years, turned it into a showplace, with estate features such as waterfalls, stocked trout ponds and a huge wine cellar down below a secret sliding wall.
As Condit rose through the ranks, his private life became more of an issue within the company. Former Boeing Chairman Shrontz had long been concerned and had confronted Condit several times about his personal relationships, say people in the know. Shrontz declined to comment
What happened while Harry was CEO
Boeing's fuel ranker contract was postponed for investigation.
$615 million in penalties for unethical behavior. Settled with the agreement that no criminal charges would be recorded.
$500 million settlement fine.
Overcharged american tax-payers $6 billion dollars.
Harm to the U.S. Air Force and Public Safety.
4 months in prison, 2 years’ probation and had to pay a fine of $250.000 and 200 hours of community service
9 months in Prison, 7 months of community confinement and 150 hours of community service. Furthermore, paying a fine of $5.000
Though it may seem as though he stepped down from his CEO position, sources suggest that his retirement was a result of a long awaited downfall.
Each individual in this case showed the following ethical framework:
• Ethical egoism and Utilitarianism
• Fiduciary principle
• The reliability, dignity, citizenship and transparency principles
• Financial ethics dilemma
Would someone be able to do the same? Would you?
• Yes and no
• Monetary gain and greed
Kant’s Ethics: that each individual would act in the same manner as anyone else in society if they also had to address the same set of circumstances
Were the actions justified?
Yes and no All parties only received a slap on the wrist
Thank you for your attention