Boeing’s Deferred Prosecution Agreements And How They Are Manipulating Them

From www.pogo.org    Click on Blog. 

It appears the sudden rash of Boeing bringing up whistleblowers on criminal charges, (See Eastman case and others mentioned here and at other sites), may have something to do with Boeing Management agreement with the Department of Justice, Deferred Prosecution Agreements.   It falls under “Boeing’s promises and obligations” within the deferred prosecution agreement between Boeing and the Department of Justice.

Perhaps this has allowed Boeing management to accuse employees, including whistleblowers (whom they refuse to acknowledge are whistleblowers), of crimes, prosecute them, and therefore “prove” they are trying to do right, thereby escaping the Boeing Company itself from being held culpable for the violations of the agreements, many of which were put into place as a resolution of the Darlene Druyan, ”Tanker Deal” affair. 

It is the opinion of this observer, as it appears much has come out in Mr. Eastman’s case which would expose Boeing Corporate and Management’s involvement in directing improprieties, all of which should be exposed for what it is and the responsibility and blame put where it really belongs, squarely on the shoulders of Boeing Corporate level managers, right from the top down.  -GFS

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May 30, 2008

 

DOJ Documents Shed Light on Deferred Prosecution Agreements and Corporate Monitors

Deferred prosecution agreements, non-prosecution agreements and corporate monitors are three legal terms that, until quite recently, meant nothing to non-lawyers.

That began to change late last year when word got around that former Attorney General John Ashcroft landed a lucrative position as a corporate monitor courtesy of a former employee, U.S. Attorney Christopher Christie. Christie gave the job to his former boss under a deferred prosecution agreement (DPA), a deal which allowed the company Christie’s office was investigating for fraud to escape prosecution by agreeing to certain terms. One of those terms was paying up to $52 million to Ashcroft’s consulting firm to serve as an independent overseer making sure the company behaves for a certain period of time.

Soon, Congress got involved. In January, it put the Justice Department on the hot seat, requesting documents showing how U.S. Attorneys are using these new prosecutorial tools. Two weeks ago, Justice responded with a batch of documents relating to DPAs, NPAs (non-prosecution agreements, which are like DPAs except they do not involve the filing of formal criminal charges) and corporate monitors. The documents are now posted on the House Judiciary Committee’s web site.

Judging from Congress’ initial reaction, the Justice Department isn’t off the hook yet. The documents show 85 DPAs and NPAs that U.S. Attorney’s offices around the country have entered into with companies in recent years, including some that appear in POGO’s Federal Contractor Misconduct Database: Boeing, British Petroleum, ITT and Textron. However, according to Rep. John Conyers, Jr. (D-MI), he found another 12 agreements that were not included in the documents.

The documents also identify the corporate monitors who were selected in 41 of the agreements (see page 5 of Deputy Assistant Attorney General Brian A. Benczkowski’s letter to Conyers). At least 30 of these monitors are, like Ashcroft, former prosecutors or other government officials.

The Justice Department defends its use of DPAs, NPAs and corporate monitors as a “middle ground” between not prosecuting corporate crime at all and throwing the book at companies, which often involves enormous investments of the government’s time and money and risks hurting innocent employees and shareholders who had nothing to do with the misconduct. POGO and Congress, on the other hand, are still concerned about the lack of accountability and transparency.

– Neil Gordon

 

Army: Fraud Committed by Airtech International, Inc.

 

FOR IMMEDATE RELEASE

Contact Nick Schwellenbach, 202-347-1122

 

Army: Bogus Materials Supplied to “Every Aircraft Manufacturer In the World”

Supplier Committed Fraud, Bribery For a Decade Threatening Flying Safety

 

Airtech International Inc., a major supplier of materials used in the production of composite parts on aircraft, committed fraud on “every aircraft manufacturer in the world” from 1997 to 2005, according to a September 2006 Army memo obtained by both the Project On Government Oversight and CBS News.  In addition to committing fraud and paying bribes and kickbacks, the company has threatened the safety of civilians and soldiers who fly on commercial and military aircraft, the memo states.

 

After a four year joint investigation by the Army Criminal Investigation Command and the Defense Criminal Investigative Service, the memo recommends that the Air Force, which is the part of the Defense Department most directly impacted by Airtech, “take action against Airtech to protect DOD interests.” Nearly two years after the memo was sent, the Air Force has still not taken action against Airtech or any of its principals.

 

“In my career investigating allegations of fraudulent acts against the DoD, seldom have I come across a company with such brazen disregard for the safety of soldiers and civilians as well as for the sanctity of laws, regulations and rules,” wrote the Army criminal investigator in the memo.

 

Key findings in the memo include:

 

·                                 “During the period Jan 97 through Dec 05, Airtech knowingly supplied nonconforming products to DOD prime contractors.”  These contractors make aircraft such as the US Air Force’s C-17, F-18 and Joint Strike Fighter aircraft.

 

·                                 “Airtech at its own discretion, routinely changes the composition, the manufacturer or the manufacturing process of products without disclosure to its customer, which in most case would require requalification of the product….These products are originally qualified for safety concerns. Changes to the products or processes could result in contaminations to the end product, which could result in the loss of parts or safety issues if the part is put into use.”

 

·                                 “Finally, the ability of DOD contractors to pin point the cause of their failed composite parts to an Airtech product is almost impossible. However, Airtech could not be successful in its fraudulent actions if not for the lack of oversight by its DOD customers.”

 

·                                 “To this day, despite instances of substitutions at Vought, Airtech remains an approved vendor for DOD contractors like The Boeing Company, Sikorsky Aircraft, Lockheed Martin and Bell Helicopter.”

 

·                                 “Airtech violated the Anti Kickback Act by providing goods and services to employees of DOD contractors in exchange for preferential treatment on the purchase of its products.” This includes use of Airtech owner William Dahlgren’s condos in Las Vegas (known as “Highroller Haven”) and Hawaii .

 

After the Army’s investigation, independently the Federal Aviation Administration (FAA) embarked on an investigation of Airtech in 2006, which did not substantiate findings against them.  The FAA investigation exhibited textbook flaws in its investigative methods—those methods were criticized in the mid-1990s by a FAA task force.  According to the FAA letter, on October 20, 2006, the FAA warned Airtech, whom the FAA had reason to believe engaged in criminal behavior, ahead of time about its investigation and then displayed great deference to what Airtech told them.

 

“[N]ormal FAA inspection and surveillance techniques are not appropriate in cases of fraud or other criminal activity. …FAA inspectors typically provide advance notice of their inspections to operators. This may not be a problem in the case of operators not engaged in criminal activity, but those who often use the advance notice to move their counterfeit parts, fabricate records, or otherwise conceal their activities,” according to the FAA’s Suspected ‘Unapproved Parts’ Task Force report from 1995.

 

Furthermore, FAA’s referral of the case to DoT OIG criminal investigators indicates that FAA was in possession of information that Airtech may have engaged in criminal activity.

 

“It’s likely the FAA was duped,” said Nick Schwellenbach, POGO investigator.  “Its investigation was clearly bungled.”

 

The FAA’s own guidelines on composites indicate that Airtech threatened safety given the Army’s findings that Airtech supplied bogus materials.  These bogus materials create the risk of contamination in composite parts, according to the Army memo (see: http://www.tc.faa.gov/its/worldpac/techrpt/artn0657.pdf, pages 34-36).

 

The House Transportation and Infrastructure Committee is currently investigating the Airtech issue.

 

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Memorandum for Suspension and Debarment Official regarding Airtech sent to Air Force Suspension and Debarment official, Stephen Shaw, dated September 26, 2006, from Army Criminal Investigation Command-Laguna Niguel, California Fraud Office. Link: http://pogoarchives.org/m/tr/dod-memo-20060925.pdf

 

Federal Aviation Administration letter to Airtech, November 28, 2006. Link: http://pogoarchives.org/m/tr/faa-letter-20061128.pdf

 

Rules for Las Vegas condominium “Highroller Haven” owned by William Dahlgren, the owner of Airtech,  Link: http://pogoarchives.org/m/tr/highroller-haven-rules.pdf

 

 

Support POGO’s Contractor Responsibility Database

May 19, 2009
Contact:  Scott Amey, 202-347-1122

 

FOR IMMEDIATE RELEASE

 

Washington, D.C. -  Today, thirty-three organizations are urging both the House and Senate to support an important provision http://www.pogo.org/p/contracts/cl-080519-fcmd.html  in the Senate’s National Defense Authorization Act for Fiscal Year 2009 (S. 3001, Sec. 831) for a comprehensive contractor responsibility database.  A similar provision was originally proposed by Representative Carolyn Maloney (H.R. 3033) and Senator Claire McCaskill (S. 2904) that would include all large government contractors and would be open to the public.  However, under the current Senate bill, the contractor responsibility database included in S. 3001 only applies to Defense Department contractors and is available only to government officials—not the public. http://www.pogoarchives.org/m/co/fcmd/s-3001database-2008.pdf

 

The coalition, representing a broad sector of groups advocating greater transparency and public access for citizens, sent the letter to address a troubling trend by the federal government towards secrecy and non-disclosure of public documents while at the same time government contract spending has eclipsed $440 billion.  The federal government is doing little, if anything, to ensure that risky contractors do not receive taxpayer dollars.

 

 

Founded in 1981, the Project On Government Oversight is an independent nonprofit which investigates and exposes corruption and other misconduct in order to achieve a more accountable federal government.

 

 

 

 

Pentagon IG: Watchdog Agency Outgunned…

FOR IMMEDIATE RELEASE

May 27, 2008

Contact Nick Schwellenbach, 202-347-1122

Pentagon IG: Watchdog Agency Outgunned by Rising Tide of Defense Spending

Washington, D. C. – The skyrocketing defense budget of the last several years has overwhelmed the Pentagon’s premier watchdog agency, according to a report to Congress made public for the first time by the Project On Government Oversight (POGO). 

 

The enormous increase in the defense budget “from less than $300 billion to more than $600 billion,” due to the global war on terrorism (GWOT) and wars in Iraq and Afghanistan, has “strained” the Department of Defense Office of Inspector General (DoD OIG).  Meanwhile, DoD OIG staffing has remained “nearly constant” (page 5).

 

The effect has been “gaps in coverage in important areas, such as major weapon systems acquisition, health care fraud, product substitution, and Defense intelligence agencies.”  Furthermore, “As the delta between the resources of the Department and the DoD IG grows, it will continue to stretch our resources and affect our ability to be an effective oversight function and control for the Department of Defense, and could ultimately impact our ability to provide adequate coverage of services related to the GWOT” (page 5).

“The Pentagon’s top cop is outgunned and it’s high noon,” stated Nick Schwellenbach, POGO’s national security investigator.  “It’s stunning that we’ve been spending so much for so long with so little oversight.”

Among the disturbing points made by the DoD OIG in a March 2008 report to Congress are the following:

·                                 In fiscal year 2007, nearly half – $152 billion – of the taxpayer dollars spent on weapons acquisition did not receive sufficient audit coverage (only $164 billion out of $316 billion did; page 11); 

·                                 The contract dollar amounts overseen by each DoD OIG contract auditor have tripled. “In FY 97, there was 1 DoD IG auditor for each $642 million in DoD contracts. By 2007, the ratio had declined to 1 DoD IG auditor for each $2.03 billion in DoD contracts” (page 14); 

·                                 “Oversight of DoD contracts needs to be strengthened. The number of DoD IG auditors conducting contract audits has not kept pace with the value of DoD contracts” (page 14); 

·                                 “The continual degradation of audit resources that is occurring at a time when the DoD budget is growing larger leaves the Department more vulnerable to fraud, waste, and, abuse and undermines the Department’s mission” (page 11); 

·                                 There are not enough criminal investigators to ensure that criminal activity is detected and sufficiently investigated, leaving the Pentagon at risk of “significant financial loss” and “more vulnerable to terrorist activities” (page 17); 

·                                 Despite a tremendous rise over the last ten years in the number of military whistleblower reprisal complaints (62% from 315 to 528 a year), the number of DoD OIG staffers investigators who look into those complaints has dropped (from 22 to 19) (page 18); 

·                                 Defense Department intelligence agencies, where most intelligence money across the federal government is spent, “are key areas where oversight has been reduced” (page 27-28). 

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Founded in 1981, the Project On Government Oversight (POGO) is an independent nonprofit that investigates and exposes corruption and other misconduct in order to achieve a more accountable federal government.