The Radio Equalizer: Brian Maloney

07 March 2005

Another Creepy Boeing Executive Scandal

Once again it's the rank-and-file Boeing workers who suffer after the latest sleazy scandal at the (nominally) Chicago-based company. It must have been far more than just an affair for the situation to deteriorate this badly. Note he was sunk by an unsigned mystery note or email.

What else went on behind closed doors? Will we ever know? It had to be very serious.

Is it now time to rethink a number of strange decisions made in recent years? What was the point of moving corporate headquarters to Chicago, where Boeing lacks a single production facility?

No doubt they're laughing at Airbus headquarters in Europe over this! The company had better move away from these distractions quickly.

(FOX News)

NEW YORK — Boeing Co. (BA) on Monday said its board forced out president and chief executive officer Harry Stonecipher (search) after the married 68-year-old had an affair with a female executive at the company, saying his leadership abilities had been damaged.

The unexpected ouster makes Stonecipher, who spent just 15 months in the top job, the second consecutive CEO to depart the Chicago-based airplane maker and defense contractor in disgrace.

His predecessor, Phil Condit (search), resigned Dec. 1, 2003, as a result of the defense contracting scandals that ultimately sent two Boeing executives — ex-Air Force procurement official Darleen Druyun (search) and chief financial officer Mike Sears (search) — to jail.

Boeing said an internal investigation prompted by information sent anonymously to chairman Lew Platt and the company's legal and ethics leaders 10 days ago revealed a "consensual" relationship between Stonecipher and the female executive that the board determined was in violation of the company's code of conduct.

"As we explored the circumstances we felt there were some issues of poor judgment that would impair his ability to lead," Platt said on a conference call.

"It's not the fact that he was having an affair," Platt said.

The relationship with the female employee, who did not report directly to Stonecipher, was consensual, Boeing said. Stonecipher, 68, is married and has two children and two grandchildren.

Platt said the requested resignation "was in no way related to the company's operational performance or financial condition, both of which remain strong."

"This raises a lot more questions than it answers," said analyst Richard Aboulafia of the Fairfax, Va.-based Teal Group.

What the Seattle media refused to report when Phil Condit was booted in 2003 is below, in a brilliant Business Week investigation. Notice a pattern?

(Business Week Cover Story- Stanley Holmes- December 15, 2003, no link)

Equally damning was the heavy damage done to Boeing's reputation on Condit's watch. A company that had long been a paragon of American industrial excellence has ensnared itself in one scandal after another in recent years. "Under Condit, engineering skills and ethics seemed to lose sway over senior management," says Loren Thompson, a defense analyst at the Lexington Institute in Arlington, Va. "Condit booked a huge amount of defense business by allowing his subordinates to play business close to the edge." Boeing has said that there is no evidence linking Condit to the scandals.

And with McDonnell came a new No. 2 exec, Harry C. Stonecipher. The decisive, brutally candid Stonecipher was the temperamental opposite of the aloof, nonconfrontational Condit. Many inside the company came to view him as an enforcer. The relentless bottom-line focus Stonecipher brought to bear during his stint as president antagonized many managers on the Boeing side of the house. Condit's 2001 decision to move the company headquarters to Chicago completed the cultural uprooting, leaving many of those left behind in Seattle feeling a bit like unloved stepchildren.

But if there was any lingering sense of shame, it didn't deter Condit from his taste for lavish living. In the early '90s, he built a massive medieval-style mansion outside Seattle, replete with a custom miniature train that chugged from room to room, delivering drinks to guests. Condit hosted elaborate parties that often included poetry readings and evenings of Camelot themes, featuring characters from King Arthur.

That extravagance soon began filtering into a company culture that had been based on modesty, fiscal restraint, and the singleminded pursuit of building big airplanes. Former CEOs Bill Allen and T. Wilson both eschewed the trappings of corporate privilege. Wilson lived in the same middle-class house during his whole career at Boeing. When Condit succeeded Frank Shrontz as CEO in 1996, Boeing had three small corporate jets, and senior execs were required to fly commercial airlines to stay in touch with their customers. Now, Boeing has a fleet of corporate jets, including a 737 for Condit, done up in English-library style.

Condit's personal life was similarly prone to excess, and it began to raise eyebrows within the company and among directors. After his second marriage, to a Boeing secretary, broke up in 1990, Condit embarked on a relationship with a Boeing receptionist, Laverne Hawthorne. They dated for about six months -- until Condit got promoted to president in 1992. About the same time, the company's customer relations department downsized, and Hawthorne was issued a pink slip. She told BusinessWeek that she immediately went to see him in his office and reminded him of promises he had made to her. As Hawthorne recalls it, she looked him in the eye and said: "One of us in this room has balls, and it certainly isn't you." Then she stormed out. Hawthorne declines to say whether she filed a wrongful-termination suit against Condit or received a settlement from the company, but several Boeing executives say both happened. "There was a lawsuit and a settlement," said one Boeing exec. Condit declined to comment.

As Condit's airplane factories were imploding in 1997, so was his third marriage. That's when he moved into the suite at the Four Seasons. Condit had married Jan Condit -- his first cousin -- in the early '90s. The two divorced in 1998, and their file is sealed in the King County Superior Court in Seattle. Jan Condit now lives in the mansion.

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. Former Boeing director Charles M. Piggott, retired chairman of Paccar Inc., had expressed concern to several senior Boeing executives about Condit's behavior. Piggott did not return calls seeking comment. Said one Boeing lawyer to a senior Boeing executive: "We have another Bill Clinton on our hands."


  • Phil Condit.....Gary Condit

    Same surname....same behavior

    Could they have the same family tree?

    By Anonymous Anonymous, at 07 March, 2005 14:57  

  • Maggie:

    I always wondered the same thing! I've never heard anyone mention it. They could be brothers based on their similar out-of-control actions.

    By Blogger Brian Maloney, at 07 March, 2005 18:15  

  • Hi Brian,
    This is a bit off topic but . . . here goes.
    I used to listen to you all the time on KSCO in Santa Cruz. MZ gives a lot a good people a fair break! :-)
    Your biggest crusade, as I recall, was to warn the folks in Monterey about the trouble about to hit them from an ultra-liberal CSU-MB campus at Fort Ord. Too bad the libs have opposed so many dams there is a severe water shortage, so now they cannot expand that campus! :-p
    I knew you'd gone up to Reno, and sometimes I caught that station while in the area. After that I lost track of you, until you hit the national news with that big flap over your being fired (or not) over some incisive topical comments.
    I noticed that Maloney's Restaurant in Moss Landing has closed down. :-(
    I've been wondering, were they any relation to you? The place will be sorely missed . . .
    All the best,
    Paul C
    Hayward, CA

    By Blogger Paul C, at 12 March, 2005 20:46  

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