Names In the News

Druyun: Worse Than I Said

The Air Force’s former chief acquisition official, Darleen Druyun, was sentenced in October to nine months in federal prison for her part in a conspiracy to assist Boeing Company in a tanker lease contract while negotiating a job with the defense contractor.

“The Druyun case is offering an unusual view of just how cozy the Pentagon and defense contractors have become,” says Eric Miller of the Project on Government Oversight. “Her supplemental plea filed with the federal court ... details an even sleazier story than we could have imagined. What seems ironic is that all along the Pentagon has been saying Ms. Druyun was a tough negotiator. Now we learn that while she was working for the Air Force, as we initially suspected, she was actually negotiating on behalf of Boeing.”

In her supplemental plea, Druyan admitted to misleading government investigators in previous plea discussions and agreements.

Although she had earlier acknowledged a conflict of interest in negotiating a contract worth tens of billions of dollars with Boeing at the same time she was negotiating for a job with the company, she had previously claimed that the conflict did not influence her job performance.

In the supplemental plea, she admitted doing a variety of “favors” for Boeing. In the tanker negotiations, she admitted that she “agreed to a higher price for the aircraft than she believed was appropriate.” This was as a “parting gift” to Boeing, she told government prosecutors. She also provided to Boeing proprietary information from another aircraft manufacturer.

In the supplemental plea, she also admitted to involvement with three other shady deals involving Boeing.

Bush’s Polluter Pass

Federal prosecutors working under President Bush charged significantly fewer defendants with violating the nation’s pollution laws than they did during either of the four-year terms of former President Clinton, according to a September report by the Transactional Records Access Clearinghouse (TRAC).

According to the report, during President Clinton’s first four years in the White House, a total of 1,018 defendants were charged with breaking one of the dozens of laws relating to the handling of hazardous wastes and the reduction of air, water and other forms of pollution.

In the second Clinton term the number of such defendants climbed to 1,161, a 14 percent increase.

During President Bush’s term, pollution filings declined by about 30 percent.

Last year, J.P. Suarez, then the assistant administrator for EPA Enforcement and Compliance, said the data showed that the government’s enforcement effort “is not only alive and well, but it is thriving.”

More recently, EPA Administrator Mike Leavitt said his agency had a “strong and active criminal enforcement program.”

In the pollution area, the most frequently cited law for the whole period was a water pollution statute.

Focusing only on this law, prosecutors charged 207 defendants during the first four Clinton years and 319 in the second four, a 54 percent increase. During the Bush years the filings dropped by 28 percent.

For the most frequently cited hazardous waste management law, filings increased by 13 percent from the first to the second Clinton terms but slipped by 39 percent in the period when Bush was president.

Neutron Jack’s Booty

General Electric in September agreed to a cease-and-desist order to resolve Securities and Exchange Commission (SEC) charges that the company failed to fully describe the substantial benefits it had agreed to provide its former chair and CEO John “Jack” Welch, Jr., under an “employment and post-retirement consulting agreement.”

“Shareholders have a clear interest in knowing how public companies compensate their top executives,” says Paul Berger, associate director of the SEC’s Division of Enforcement.

The SEC found that in proxy statements and annual reports filed with the SEC from 1997 to 2002, GE failed to fully and accurately describe the retirement benefits Welch was entitled to receive from the company.

In December 1996, GE and Welch entered into an agreement under which Welch agreed to continue as CEO until he was 65 and serve as a consultant thereafter.

In the agreement, Welch received, as his principal form of compensation, lifetime access to the perquisites and benefits he had received as GE’s chairman and CEO.

GE’s proxy statements did not specify the “facilities and services” Welch would receive in retirement.

The SEC found that in the first year following Welch’s retirement in 2001, Welch received approximately $2.5 million in benefits under the agreement, which included:

• Access to GE aircraft for unlimited personal use and for business travel;
• Exclusive use of a furnished New York City apartment that, according to GE, in 2003, had a rental value of approximately $50,000 a month and a resale value in excess of $11 million;
• Unrestricted access to a chauffeured limousine driven by professionals trained in security measures; a leased Mercedes Benz; and
• Office space in both New York City and in Connecticut; and the services of professional estate and tax advisors.