Former Boeing chief financial officer Michael Sears has been sentenced to four months in prison and fined US$250,000 ($345,700) for his role in illegally recruiting a top US Air Force official.
Paul McNulty, the US attorney investigating the biggest arms-contracting scandal since the late 1980s, would not say whether Boeing,
the Pentagon's second-biggest supplier, might be indicted on criminal charges.
"We will let the facts and evidence that are available take us wherever it goes," McNulty said.
Sears, 57, pleaded guilty on November 15 to aiding and abetting a conflict-of-interest law violation by Darlene Druyun, who was the Air Force's No 2 weapons buyer.
She was sentenced to nine months in prison after meeting Sears to negotiate a US$250,000-a-year job with Boeing while still overseeing Boeing deals worth billions with the Air Force.
In court papers last week, McNulty criticised Boeing's highest executives for appearing to treat Sears' illegal effort to hire Druyun as "business as usual".
Lawyers following the case said this could set the stage for large fines or other actions against the company.
Government contracts lawyer James McAleese said Boeing should expect to pay US$100 million to US$1 billion to settle and thereby boost its chances to winning contracts including one worth more than US$20 billion for refuelling aircraft.
Last week, Boeing chief executive Harry Stonecipher described Sears' sentencing as a potential "watershed moment" clearing the way for settlement of investigations involving the Pentagon, Boeing's biggest client.
McNulty declined to respond to Stonecipher's remark. But he said the case involved "enormous costs" to taxpayers.
Last week, the Defence Department said auditors had reviewed 407 contracts handled by Druyun, of which 15 had been identified as potentially tainted, and sent to the Pentagon's inspector general for further scrutiny.
In another setback for Boeing, congressional investigators ruled against it in a protest by rival Lockheed Martin over a US Air Force contract, potentially worth US$2.5 billion, to build small guided bombs.
The Government Accountability Office, an arm of Congress, said it sustained Lockheed's protest because Druyun had been involved in changes to evaluation factors, "including deletion of specific technical requirements".
It said the Air Force should re-open bidding for the parts Druyun had scrapped.
The the Air Force said it would address the matter "accordingly".
Lockheed challenged the deal, awarded to Boeing in August 2003, after Druyun confessed to improperly steering billions of dollars of contracts to Boeing before going to work there as a vice-president for missile defence in January 2003.
Boeing fired her and Sears in November 2003 for lying about their previous contacts.
Phil Condit resigned as Boeing chairman and chief executive a week later.
Boeing shares closed at US$52.78 on the New York stock exchange on Friday, down 88USc, or 1.6 per cent.
- REUTERS
Harry Stonecipher
Former Boeing chief financial officer Michael Sears has been sentenced to four months in prison and fined US$250,000 ($345,700) for his role in illegally recruiting a top US Air Force official.
Paul McNulty, the US attorney investigating the biggest arms-contracting scandal since the late 1980s, would not say whether Boeing,
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