Boeing's Unethical Practices|Business Ethics Case Studies

Boeing's Unethical Practices

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Code of Ethics at Boeing

Over the years along with a strong focus on engineering excellence, Boeing focused on setting and following high standards of ethics across all its business units. In 2002, Boeing's Board of Directors (BoD) comprised of 11 directors out of whom 9 were independent directors. Boeing also had a comprehensive code of ethics (Refer Exhibit I).

To oversee the implementation of the ethical code, the BoD appointed an Ethics and Business Conduct Committee. The committee comprised of the company chairman, CEO, chief operating officer, presidents and vice presidents of Boeing's business units.....

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Accounting Lapses

Allegations of ethical lapses at Boeing made headlines in the media in late 1990s. In late 1997, a class action suit was filed against Boeing for its alleged violation of the federal securities laws.The plaintiffs alleged that Boeing had intentionally suppressed information about its manufacturing problems, which would have adversely affected the share price of the company during the first and second quarter of 1997, (Being's financial year ended in December) when merger talks with McDonnell Douglas were in progress....

Lockheed Controversy

In mid 2003, Boeing faced allegations of ethical misconduct once again. This time, the allegation came from its competitor in defense business - Lockheed. In June 2003, the media reported Lockheed's allegations that Boeing's unlawful access to proprietary technical and cost information of Lockheed, had helped it win the contract for the Evolved Expendable Launch Vehicle (EELV) project of the US Air Force in the mid 1990s.....

Tanker Lease Deal Controversy

nother alleged unethical deal involving Boeing and the US Airforce came into the limelight at around the same time as the Lockheed controversy. Under the deal worth $19.6 billion, the Air Force leased 100 Boeing 767s air refueling tankers, replacing its aging KC-135 tankers.The deal was criticized by Senator John McCain (Arizona) and many independent groups, who called it a waste of public money. It was reported that when the talks were initiated, the Air Force's plan was to buy the planes, but due to lack of funds it was not able to make outright payments....

What's Done Cannot be Undone

After Condit's resignation, Boeing initiated various steps to regain the confidence of the public. In July 2003, Boeing announced that it would be conducting an independent review of its ethics policies companywide. It hired former New Hampshire Senator, Warren Rudman, to review the company's ethical policies and procedures...


Exhibit I: Boeing's Code of Ethics
Exhibit II: Boeing Values