The Bribes and Boondoggles
of Boeing
Sightings from The Catbird Seat
~ o ~
March 1, 2008
Airbus parent beats Boeing for
big U.S. Air Force contract
By Leslie Wayne, International Herald Tribune
WASHINGTON: The U.S. Air Force, in a stunning decision against Boeing, awarded a $40 billion contract for aerial refueling tankers Friday to a partnership between Northrop Grumman and the European parent of Airbus, putting a critical military contract partly into the hands of a foreign company.
The contract, one of the largest at the Pentagon, has the potential to grow to $100 billion. It is also a sign of the growing influence of foreign suppliers within the Pentagon and breaks a decades-long relationship with Boeing, which built the bulk of the existing tanker fleet and fought hard to land the new contract.
"This isn't an upset," said Loren Thompson, a military analyst at the Lexington Institute, a Washington-area research group. "It's an earthquake."
Under the contract, Northrop and the parent of Airbus, European Aeronautic Defense & Space, or EADS, would build a fleet of 179 planes, based on the existing Airbus 330, to provide in-air refueling to military aircraft, from fighter jets to cargo planes. It gives a huge lift to EADS, whose commercial aviation program has suffered a number of setbacks in recent years.
While final assembly of the craft would take place at an Airbus plant near Mobile, Alabama, parts would come from suppliers across the globe.
At a news conference, air force officials said the creation of domestic jobs was not a factor in the decision. In response to questions about possible negative reaction to the deal in Congress, General Arthur Lichte, head of the air force's air mobility command, said, "This will be an American tanker, flown by American airmen with an American flag on its tail and, every day, it will be saving American lives."
Reaction from some in Congress, however, was swift.
"We are outraged that this decision taps European Airbus and its foreign workers to provide a tanker to our American military," the delegation from Washington State said in a joint statement. Boeing planes are assembled outside Seattle. "This is a blow to the American aerospace industry, American workers and America's men and women in uniform."
For its part, Boeing, which had been considered the strong favorite to retain the contract, said it was "very disappointed" in the outcome. But it did not say whether it would file a formal protest - something General Michael Moseley, chief of staff of the air force, has said he hopes the losing bidder will not do because it would only further delay the tanker replacement program.
In its statement, Boeing said, "We believe that we offered the air force the best value and lowest risk tanker for its mission." The company added that only after a debriefing by the Pentagon would the company "make a decision concerning our possible options, keeping in mind at all times the impact to the warfighter and the nation."
A Boeing victory was considered so certain that many Wall Street analysts had already factored the contract into their economic forecasts for the company and led one senator, Kay Bailey Hutchison, Republican of Texas, to prematurely send out a press release praising Boeing for its victory.
The air force decision is also a surprise ending to a protracted contracting process that went on for nearly a decade and became mired in scandal and international politics. Senator John McCain, the presumptive Republican presidential candidate, had scuttled an earlier attempt by the air force to award the contract to Boeing, opening the door for the Northrop-Airbus bid.
McCain's campaign spokeswoman referred calls to his Senate office, which could not be reached for comment.
Norm Dicks, a Washington Democrat who is a member of the House Appropriations Committee Defense Subcommittee, said he was attending an anticipated victory party at Boeing's Washington headquarters when the mood suddenly darkened.
"Here we are in the middle of a recession and we give this to Airbus?" Dicks added. "That is not going to go down well."
Ronald Sugar, the chief executive of Northrop Grumman, said in a telephone interview that he expected members of Congress would have a "variety of views" depending on whether their districts would be gaining or losing jobs under the deal.
He said that 60 percent of the content of the new tanker would come from the United States and that the contract would create 2,000 jobs in Mobile and 25,000 overall in the United States.
"This is more about the capability that we will give to the kids fighting the wars and the cost to the taxpayer," he said.
Backing Sugar's view was Senator Richard Shelby, Republican of Alabama, who hailed the decision as "great news for Alabama."
The Alabama and Mississippi delegations had lobbied hard in Congress to polish the image of Airbus. In Paris, at the annual air shows, Airbus officials and these politicians proudly displayed the proposed European tanker offering and made the argument that if the United States wanted to sell its weapons to European countries, it should also open its doors to foreign suppliers....
Replacing these tankers has been the air force's top priority since 1996, when the government first proposed obtaining new planes. The first 179 tankers will be acquired at a pace of about 15 a year. But it is expected that, over time, nearly 400 new refueling planes will be needed, which could bring the program's total cost to $100 billion.
For more than a decade the air force's effort to modernize the fleet has been thwarted by global politics, Washington scandals and an aggressive attack by McCain, a member of the Senate Armed Services Committee.
In the end, a procurement scandal led to the departure of Philip Condit, the chief executive of Boeing, the resignation of James Roche as air force secretary and the imprisonment of two Boeing executives, one of whom had worked on the program as a Pentagon acquisition official.
The air force, short on cash and wanting to acquire the planes as fast as possible, proposed an arrangement to Congress in late 2001 under which the Pentagon would lease the Boeing 767s in a sole-source contract that would keep Boeing's aging 767 production line alive.
But just as the air force was about to sign that deal, it came under sharp attack from McCain, a former navy pilot. He denounced the deal as a sweetheart arrangement between Boeing and the air force that had been arranged with insufficient scrutiny and oversight, and that would shortchange the taxpayer.
Soon afterward, it was reported that the air force's No. 2 weapons buyer, Darleen Druyun, had been promised jobs for herself, her daughter and son-in-law in return for steering the tanker contract and billions of dollars of other air force business to Boeing. Soon after joining the company in a $250,000-a-year post, Druyun and Michael Sears, Boeing's former chief financial officer, pleaded guilty and received prison terms.
The weight of the scandal caused the deal to collapse in 2004 and opened the door to competition.
Each side spent millions to sharpen its proposal, hire lobbyists and former generals to argue their case and wage extensive advertising efforts in Washington and at military gatherings.
http://www.iht.com/articles/2008/03/01/business/eads.php
January 14. 2008
Bush Brings Promise of Arms Sale
on First Visit to Saudi Arabia
Janine Zacharia and Holly Rosenkrantz
Jan. 14 (Bloomberg) -- President George W. Bush brought to Saudi Arabia today a promise to provide “smart bomb” technology for his host, as the U.S. leader made his first visit to a crucial ally in the Middle East.
Saudi King Abdullah had his own gift for Bush, a heavy, gold necklace and medallion that is a sign of friendship and respect, a theme Bush is seeking to push during his two-day visit to the kingdom at a time when oil prices are hovering around $100 per barrel.
The administration announced today it was formally notifying Congress of its plans to sell Boeing Co.'s satellite-guided smart-bomb kits to the Saudis. The package is part of a broader sale to Persian Gulf allies of as much as $20 billion in arms to shore up support against Iran's nuclear ambitions.
The visit is an opportunity for the two leaders to ``renew their ties,'' National Security Adviser Stephen Hadley told reporters aboard Air Force One en route to Riyadh. Relations between the U.S. and Saudi Arabia have been fraught since the U.S. led an invasion of Iraq in 2003 against Saudi advice.
On the Saudi agenda for meetings during the next two days is pressing the U.S. for stronger efforts to help create a Palestinian state, talks about U.S. plans in Iraq, and dealing with Iran's nuclear program through diplomacy.
Little has been said publicly about oil prices as Bush has made his way through four of the world's major producers: Kuwait, Bahrain, the United Arab Emirates and now Saudi Arabia, which alone produces 25 percent of the world's oil.
Oil Talk
``They talked about oil,'' Ed Gillespie, Bush's senior adviser, said when pressed on the issue. Bush and the Arab leaders discussed the ``vast demand'' in the world market. Bush said alternative energy was a part of his agenda and also mentioned the need for more nuclear energy.
That was as specific as a statement on oil given by any White House official during the trip. Hadley refused to predict whether oil would be discussed in Bush's one-on-one meeting with Abdullah tonight.
The state of the U.S. economy and financial markets also topped the Arab leaders' concerns. Bush reassured leaders of the United Arab Emirates that their investment is still welcome in the U.S. after U.S. lawmakers in 2006 forced DP World, based in Dubai, to drop a bid to run American ports.
They asked if ``investment by the UAE is welcome in the United States'' and the ``president reassured them that it very much was, that the United States is open for foreign investment,'' Hadley said.
Fundamentals
Bush also reassured the UAE leadership that the ``underlying fundamentals'' of the U.S. economy remained sound, Hadley said.
Many officials also have asked questions about the U.S. presidential campaign. Gillespie said one official, who he didn't identify, asked him who he thought would win the Michigan primary tomorrow night.
During this trip, Bush has powered through an intensive schedule of cultural events. Last night he admired falcons and feasted on a Bedouin-styled dinner in the UAE desert. Today, he visited the historic home of Sheikh Saeed al Maktoum, the grandfather of the current ruler of Dubai in the UAE.
There Bush was greeted by young girls who sang and danced for him, while Secretary of State Condoleezza Rice, accustomed on her own trips to a punishing schedule of diplomatic meetings, sipped a fresh strawberry juice alongside Bush's other top aides. Bush visited a Dubai cultural center and then met with young Arab leaders and entrepreneurs atop Dubai's boat-shaped luxury Burj al Arab hotel.
Tomorrow, Bush will again set aside high diplomacy and visit a national history museum and King Abdullah's ranch.
Asked to explain the timing and significance of Bush's sudden late-in-his-presidency cultural touring, Hadley said: ``It's a good part of getting him to see and be seen in the region.''
To contact the reporter on this story: Holly Rosenkrantz in Riyadh, Saudi Arabia at hrosenkrantz@bloomberg.net ; Janine Zacharia in Riyadh, Saudi Arabia at jzacharia@bloomberg.net
January 5, 2006
Norway pulls investments in seven multinationals over ethical concerns
Groups producing nuclear arms components
OSLO (AFP)
Norway has withdrawn investments of more than 500 million dollars (413.6 million euros) from seven multinational corporations, including Boeing and Honeywell of the US, due to ethical concerns over the groups' production of nuclear arms components, the government said on Thursday.
The five other companies are BAE Systems of Britain, Safran of France, Finmeccanica of Italy, and US groups Northrop Grumman and United Technologies.
The withdrawal follows a recommendation from Norway's Advisory Council on Ethics, which is tasked with monitoring the ethics of companies in which Norway places its massive state Pension Fund, formerly known as the Oil Fund.
Norway's finance minister asked the central bank, which manages the fund, to sell the holdings, worth 3.3 billion kroner (416.2 million euros, 502 million dollars). They were sold last year, Finance Minister Kristin Halvorsen told reporters on Thursday. "This does not mean that there won't be other companies (excluded)... Our work will continue," she stressed.
Norway, however, did not withdraw its stake in French oil group Total, in line with the Advisory Council's recommendation. Total has been criticised by several humanitarian aid groups for its controversial business dealings in Myanmar, formerly Burma, which is run by a military junta....
The Advisory Council said it saw "no direct link today between the human rights violations committed by the Myanmar regime and Total's activities in this country." The Norwegian Burma Committee said it was "very disappointed" by the decision. According to the most recent statistics available, the Norwegian state holds 0.679 percent of Total.
Norway's state Pension Fund, into which the state deposits its massive oil and gas revenues, is one of the richest funds in the world. At the end of September 2005, it was worth 1,281.1 billion kroner (161.4 billion euros, 195.2 billion dollars). The sheer size of the fund enables Norway to exert pressure on companies to ensure that their operations are ethical. Norway is the world's third-largest oil exporter behind Saudi Arabia and Russia.
The Scandinavian country has already withdrawn its stakes in 10 other companies, including Thales of France, European Aeronautic Defence and Space Company, and US groups General Dynamics, Lockheed Martin and Raytheon. They are accused of helping manufacture cluster bombs, devices which are particularly lethal for civilian populations. ----
http://nucnews.net/nucnews/2006nn/0601nn/060105nn.txt
March 29, 2005
Pentagon Strips Air Force of
21 Major Weapons Programs
WASHINGTON (AP) - In a highly unusual move, the Pentagon’s top weapons buyer on Monday took away the Air Force’s authority to oversee 21 major programs with a combine value of $200 billion.
The move, called temporary, was made because of a civilian leadership vacuum at the Air Force after the departure last week of Peter Teets, who was under secretary of the Air Force as well as acting secretary. Teets had been fillin in since James Roche resigned as secretary in January.
It also comes amid continuing controversy over the Air Force’s handling of a multibillion-dollar Boeing aircraft lease deal that fell through last year and led to the conviction of former Air Force executive Darleen Druyun on charges of conspiring to violate conflict-of-interest rules.
Druyun admitted in court that she favored Boeing on deals worth billion of dollars because the company gave jobs to her daughter and son-in-law. Her admission led to a detailed Pentagon review of her nearly 10-year tenure as a key weapons buyer for the Air Force and prompted rival defense companies to file protests over Boeing contracts awarded during that period.
The episode has taken a tool on the Air Force. Since Roche departed, the White House has not nominated anyone to replace him as the Air Force secretary, a post that requires Senate confirmation. Some believe the current Navy secretary, Gordon England, will get the nomination.
In addition, no one has been nominated to replace Teets as the under secretary. What’s more, the post of Air Force acquisition chief has been vacant since Marvin Sambur left in January.
With Teets gone, the most senior civilian in the Air Force is Michael I. Dominquez, who has served since August 2001 as assistant secretary of the Air Force for manpower and reserve affairs....
In Monday’s announcement, the Pentagon said it was giving the decision-making authority for the 21 major Air Force weapons programs to Michael Wynne, the No. 2 Pentagon civilian in charge of weapons procurement.
The No. 1 slot has not had a Senate-confirmed holder since May 2003. Wynne was nominate for the top spot but his nomination – and others in the Air Force – have been blocked by Sen. John McCain, R-Ariz, as part of a long-running dispute over the Boeing lease deal....
The 21 programs include a $59.2 billion Boeing contract for C-17A Globemaster II advanced cargo aircraft, and a $31.7 billion Boeing and Lockheed Martin contract for the Evolved Expendable Launch Vehicle....
Among other programs affected are air-to-air missiles, B-2 bomber radar modernization, C-5 cargo plane improvements, propulsion replacement for the Minuteman III intercontinental ballistic missile and a $18 billion communications satellite program....
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March 8, 2005
Boeing Forces Out CEO Over
Ethics Scandal Involving Affair
By Dave Carpenter, Associated Press
CHICAGO - Boeing Co., CEO Harry Stonecipher, brought back from retirement 15 months ago to boost the aerospace manufacturers’ tainted image, has been forced out because of a new ethics scandal involving an affair he had this year with a female executive.
In a stunning announcement that left the exact circumstances behind the ouster unclear, Boeing said Monday the 68-year-old- president and chief executive officer had resigned at the board’s request a day earlier for improper behavior while carrying out the consensual relationship.
Chairman Lew Platt said the affair by itself did not violate the code of business conduct at the company, where a string of defense scandals has raised questions about the way Boeing obtains its lucrative contracts. But an internal investigation that started because of an employee’s complaint discovered “some issues of poor judgment” involving Stonecipher, who is married.
Platt refused repeated requests to be more specific and did not identify the female executive, who he said remains with Boeing....
< < < FLASHBACKS < < <
Program Manager Interviews
JOSHUA GOTBAUM
ASSISTANT SECRETARY OF DEFENSE FOR ECONOMIC SECURITY
~ ~ ~
Which Defense Firms Will Survive – Meet the
Man Who Helps the Pentagon Decide
A large white banner is first thing you notice upon entering the reception area of Joshua Gotbaum’s third-floor Pentagon office. In foot-high red letters, it reads: “Please Mr. Gotbaum, Save Natick [Mass.] Labs” (referring to the Base Realignment and Closure [BRAC] recommendation to close Natick),
Secretary Gotbaum, a former Wall Street investment banker, achieved the status of Washington insider in 1 short year. He is respected both by the Pentagon brass and defense industry officials. He influences key decisions ranging from BRAC to which defense industries will survive.
Secretary Gotbaum is the right man for the job at the right time. A 44-year-old lawyer, Secretary Gotbaum is at home in the world of mergers, acquisitions, and restructurings. He heads the new 260-person Pentagon Office of Economic Security and has won the confidence of many defense industry and military officials for helping educate the Pentagon brass on their decisions which impact the nation’s troubled defense industry. And so far, both sides appear pleased with his efforts or their behalf....
www.dau.mil/pubs/pm/pmpdf95/gotbaum.pdf For more recent poop on Joshua Gotaum, GO TO > > > Hawaiian Airlines
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Spotting the Boeotians
From The Outlaw Bank: BCCI, by Jonathan Deaty & S.C. Gwynne:
Kamal Adham was one of the true inside power players of the Middle East, a shrewd, jovial man who had for decades straddled the worlds of Middle Eastern business and politics.. He was the half brother of Iffat, the favorite wife of King Faisal, who ruled Saudi Arabia from 1964 until his death in 1975....
Like so many other enterprising Arabs in the 1960s and 1970s, when oil revenues were booming and foreign companies were lining up to sell their products, Adham had used his connection to commercial advantage. The way most commoners in the Middle East got rich off the oil boom was through a simple system know as “agency” arrangements.
In order to sell a product or service in Saudi Arabia, you had to know someone in the royal family, which authorized all expenditures. If you did not know a princeling or a royal cousin, then you hired an “agent” who provided you access for a “commission.”
Though this commission often looks very much like a “bribe” ... it was nonetheless the way business was done, and few were better at it than Kamal Adham.
The list of his agency deals was long and illustrious....
By the mid-1960s Adham’s influence was such that he simultaneously came to represent three defense firms and was being ardently courted by a fourth. Said Northrop representative Kermit Roosevelt, “Adham already has a piece of the Lighting deal, the Mirage deal, and the Lockheed deal and is trying to complete the square by an arrangement with Northrup.”
He also came to be the principal broker for weapons purchased by Saudi Arabia on behalf of Egypt.
But perhaps his richest contract was with Boeing Company, which paid him millions of dollars in commissions to help it sell passenger jetliners to the fledgling Saudi airlines....
That and other similar transactions had led to a three-year investigation of Boeing’s commission payments by the U.S. Securities and Exchange Commission, whose goal in part was to figure out exactly who Boeing was using to accomplish these sleights of hand.
Curiously, in the words of a 1976 Wall Street Journal article, Boeing’s efforts to suppress those names, particularly Adham’s, “has been accomplished with significant help from the State Department, which entered a court fight between the SEC and Boeing to argue that disclosure of Boeing’s ‘highly placed’ consultants abroad could harm U.S. foreign policy interests.”
How could the mere disclosure of Adham’s name affect U.S. foreign policy? In two ways.
First, Adham was the head of the Saudi internal security service – arguably the most important agency of the government, since it protected the royal family – and the General Intelligence Directorate of Saudi Arabia.
In that role he was the principal liaison between the CIA and European intelligence agencies, and he even had an agency code name: Tumbleweed.
In geopolitical terms, Adham was the five-hundred-pound gorilla of Saudi intelligence, an outfit known and feared for its merciless hunts for dissidents and brutal methods of repression....
But the second and more important foreign policy concern was that Adham was the kingdom’s key link to Egyptian President Anwar Sadat in the years leading to the Camp David accords in 1979 – the years following the 1973 war, when the Saudi-Egypt axis acquired key strategic importance....
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July 25, 2004
Former Boeing CFO to Plead Guilty
NEW YORK (Reuters) - Former Boeing Co. Chief Financial Officer Michael Sears agreed to plead guilty to conspiring to deceive the U.S. government about negotiations for a contract to provide the Air Force with refueling jets, according to a report by Bloomberg News on Sunday.
Sears is cooperating with federal prosecutors who are probing negotiations that Sears had with a former Pentagon official who had been offered a job by Boeing, a report on Bloomberg’s Web site said, citing an unnamed source.
The former Pentagon official, Darleen Druyun, pleaded guilty to the same charge in April, and confirmed that she received the job offer while negotiating for the Air Force....
The investigation may delay the awarding of the $23 billion contract, which includes providing the Air Force as many as 100 planes that refuel aircraft in mid-air.
The agreement to hire Boeing was suspended pending review in November, when Druyun and Sears were fired from Boeing.
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July 17, 2004
Boeing settles sex discrimination case
The Courier-Journal
Boeing Co. has agreed to pay between $40.6 million and $72.5 million and change some practices to settle charges that it discriminated against 29,000 women who have worked for Boeing in the Seattle area.
The settlement of the class-action suit filed in 2000 received preliminary approval in U.S. District Court in Seattle yesterday. It calls on Boeing to change the way it determines starting salaries, modify its performance-evaluations and monitor salaries and overtime to reduce the risk of gender discrimination.
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July 6, 2003
Air Force deal with Boeing draws heat
Cox News Service
The Air Force needed tanker planes to refuel its jets.
Boeing Co. needed orders.
So the two got together and crafted what they see as a stroke of bureaucratic brilliance, said Business Week (July 7) – a $19.6 billion deal to lease 100 new 767s to replace the Air Forces’ rusting KC-135s tankers.
But the deal has drawn heat from all sides. Watchdog groups on the right and left see it as a brazen Boeing bailout. Defense Department civilians say Boeing asked too much, and others say a lease’s finance charges drive up the cost.
At least three congressional committees are looking into the deal.
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June 26, 2003
Ex-Boeing Workers Charged Over Lockheed Documents
By Renae Merle, Washington Post
Two former Boeing Co. employees were charged last night with stealing Lockheed Martin Corp. documents to help Boeing win an Air Force contract.
The U.S. attorney's office in Los Angeles said William Erskine, 43, and Kenneth Branch, 64, face criminal charges of conspiracy, theft of trade secrets and violating the Procurement Integrity Act. A lawyer who represented Erskine and Branch in a wrongful-termination lawsuit against Boeing did not return a call for comment.
The charges mark the latest escalation in a four-year fight over a multibillion-dollar contract to build the next-generation rocket launcher known as the Evolved Expendable Launch Vehicle. Earlier this month, Lockheed Martin sued Boeing as well as Erskine and Branch, accusing them of using corporate espionage to steal the high-profile Air Force contract.
"By covertly using a competitor's secret information, they caused harm not only to Lockheed Martin, but also to the Air Force and taxpayers who finance government operations," U.S. Attorney Debra W. Yang said in a statement. "Their improper conduct had huge ramifications because of the value of the contract."
If convicted on all three counts, Erskine and Branch could be sentenced to a maximum of 15 years in prison and a fine of $850,000.
Boeing acknowledges that some employees "behaved unethically" during the competition. The company fired Erskine and Branch in 1999 and has turned over more than 37,000 pages of Lockheed documents, including some that contained sensitive cost and technical information and Air Force critiques of Lockheed's proposal.
Lockheed declined to comment on the charges. "We are cooperating fully with the Justice Department's investigation and the Air Force's inquiry," said Boeing spokesman Daniel Beck.
The repercussions from the various investigations could profoundly affect Chicago-based Boeing, industry analysts said. If the Air Force punishes the firm by reversing its decision on the rocket-launch competition, the multibillion-dollar hit to the company's already struggling space business would be severe, they said.
© 2003 The Washington Post Company
For more on Lockheed Martin, GO TO > > > Tarnished Wings
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November 3, 2002
French defence company in bribery scandal in Seoul
Dassault denies graft claims in Seoul
By Andrew Ward in Seoul and Victor Mallet in Paris, Financial Times
In March 2002, Dassault Aviation said it was the victim of a smear campaign after the French aircraft manufacturer was accused in a corruption scandal embroiling the race for a South Korean fighter jet contract.
The company denied bribing a South Korean air force colonel to improve its chances of winning the deal to build 40 aircraft.
Newspapers in Seoul linked Dassault to a Won11m ($8,300, £5,900) sweetener allegedly paid to the colonel in return for advice about the bidding process.
Dassault said it was being smeared by people that did not want its Rafale jet to beat Boeing's F-15 to the estimated $3.2bn contract. "There's nothing between Dassault and the colonel," a Dassault spokesperson told the FT.
"Everybody knows the evaluation process has put the Rafale at the top. We fear that there is manipulation by people who are annoyed to see the Rafale at the top."
Any bidder proved to have paid bribes could be barred from the so-called FX contract, which is among the biggest defence deals currently being contested.
The corruption scandal emerged when a colonel, identified by his surname, Cho, was arrested on bribery charges. He is believed to be the same man that appeared on South Korean television with his identity concealed, to allege that the selection process was rigged in favour of Boeing.
Mr Cho was part of the air force's evaluation team that assessed the four bids - Eurofighter's Typhoon and Russia's Sukhoi, the other two candidates, are considered outsiders.
Dassault's more modern Rafale outstripped Boeing's ageing F-15 in flight tests, according to information leaked to the South Korean press.
However, defence chiefs were reported to favour the US product because of Seoul's close military alliance with Washington.
Last week, opposition lawmakers accused the government of succumbing to political pressure from Washington to select the F-15.
Dassault said it was "totally confident in the transparency of the process".
Boeing denied involvement in the alleged bribery....
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January 19, 2002
China Finds Bugging Devices on Jet
Associated Press
BEIJING - China has discovered 27 bugging devices in a U.S.-made Boeing 767 it bought for the personal use of President Jiang Zemin, published reports said Saturday. The tiny, highly sophisticated devices were hidden in the jetliner's upholstery, including in the president's bathroom and the headboard of his bed, the London-based Financial Times said, citing unnamed Chinese sources. It said Jiang was outraged at the discovery.
The bugs were discovered when they emitted static during a test flight after the plane's delivery in August, the newspaper said. In a separate report, The Washington Post said Chinese army communications experts found the bugs in October, days before the plane's first official voyage. It said the jet is now sitting with its insides torn out on an air base north of Beijing.
The Washington Post report said Chinese officials blamed U.S. intelligence agencies for the bugs. It said the incident would be raised during President Bush's Feb. 21 summit with Jiang in Beijing.
The reports described the devices as satellite-controlled and more complex than those available commercially. Chinese officials were puzzled as to how and when the bugs were planted, the reports said. They had carefully monitored the plane's construction at the Boeing plant in Seattle, Wash., and the fitting of its interior by several aircraft maintenance companies in San Antonio, Texas.
Two of the companies, Gore Design Completions and Dee Howard Aircraft Maintenance, issued a statement Friday saying they had received no complaints about their work on the plane, the San Antonio Express-News reported.
''I know that we had no culpability whatsoever in this. All we did was put an interior in it,'' Jerry Gore, president of Gore Design, told the paper. The plane was parked in a Dee Howard hangar and work began shortly after a contract was signed in October 2000, the Express-News reported, continuing through a contentious period the following spring when Beijing and Washington had a standoff over the forced landing of a U.S. Navy spy plane and China's detention of its 24-member crew. Chinese officials were concerned Washington would seize the plane, so security was tight, Gore told the Express-News.
The hangar was guarded by Dee Howard security staff and Chinese troops. The reports said 20 Chinese Air Force officers and two employees of the China Aviation Supply Export & Import Corp., which bought the plane, were being questioned. Officials at the State Department in Washington and the U.S. Embassy in Beijing had no comment. China's Foreign Ministry did not answer calls. Employees at the Chinese aviation company refused to comment.
Randy Harrison, a Boeing spokesman in Seattle said he had no knowledge of the reports....
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For a closer look at some of the Boeotian birds and their nests,
JUST BOOK YOUR FLIGHTS AND FOLLOW YOUR FANCY BELOW
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Akin, Gump, Strauss, Hauer & Feld - One of the largest nests of Lobbyists in the world.
In 1998, this firm declared total lobbying income of $11,800,000. Among their clients are the likes of Alliance of American Insurers; America Online; American Express; American Financial Group; Apollo Advisers; AT&T; Biotechnology Industry Organization; Boeing Co.; Capital Gaming International; CBS Corp; Citigroup; Korean International Trade Assn; Miller & Chevalier; National Hockey League; Pfizer; PG&E Corp; Pharmaceutical Rsrch & Mfrs of America; Philip Morris; Pohang Iron & Steel; Samsung Electronics; Sri Lanka Apparel Exporters Assn; AOLTime Warner; and Warner-Lambert, just to mention a few.
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December 11, 2001
The White House connection: Saudi 'agents' close Bush friends
by Maggie Mulvihill, Jonathan Wells and Jack Meyers, Boston Globe
A powerful Washington, D.C., law firm with unusually close ties to the White House has earned hefty fees representing controversial Saudi billionaires as well as a Texas-based Islamic charity fingered last week as a terrorist front.
The influential law firm of Akin, Gump, Strauss, Hauer & Feld has represented three wealthy Saudi businessmen - Khalid bin Mahfouz, Mohammed Hussein Al-Amoudi and Salah Idris - who have been scrutinized by U.S. authorities for possible involvement in financing Osama bin Laden and his terrorist network.
In addition, Akin, Gump currently represents the largest Islamic charity in the United States, Holy Land Foundation for Relief and Development in Richmond, Texas.
Holy Land's assets were frozen by the Treasury Department last week as government investigators probe its ties to Hamas, the militant Palestinian group blamed for suicide attacks against Israelis.
Partners at Akin, Gump include one of President Bush's closest Texas friends, James C. Langdon, and George R. Salem, a Bush fund-raiser who chaired his 2000 campaign's outreach to Arab-Americans.
Another longtime partner is Barnett A. "Sandy" Kress, the former Dallas School Board president who Bush appointed in January to work for the White House as an "unpaid consultant" on education reform. . . .
For more, GO TO > > > Birds in the Lobby; The Nests of Osama bin Laden
Miller & Chevalier - A Washington, DC-based nest of Lawyers and Lobbyists.
From their web-site, 8/1/00: . . .
In 1920, Robert Miller and Stuart Chevalier founded Miller & Chevalier as the nation’s first law firm specializing in tax matters. Mr. Miller had served as Solicitor and Mr. Chevalier as Asst Solicitor of the Internal Revenue Service shortly after the first federal income tax laws were enacted....
Like our firm’s founders, many of our tax lawyers have worked in federal government service....
Our firm’s tax practice is diverse, responding to the increasing complexity of the international tax system and the need for Washington representation to deal effectively with important tax policy issues. We serve clients in numerous industries: ... aerospace, automobile, banking and finance, natural resources and energy, chemicals, electronics, pharmaceutical, retail, and health care insurance....
Our firm represents over half of the Fortune 50 companies. We also work with foreign-owned companies of similar size ...
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Taxation - Representative Engagements
Amoco Corp v. Commissioner (a.k.a. US Taxpayers) . . . The U.S. Court of Appeals ... held that Amoco was entitled to foreign tax credits for Egyptian income taxes paid on its behalf by the Egyptian National Oil Co . . . The amount of the asserted deficiency was over $450 million....
Atlantic Richfield Co v. Commissioner (a.k.a. US Taxpayers) . . . This case involves over 200 issues and a deficiency in excess of $700 million. Some of the issues involve hedging, tax accounting, foreign source income, and capitalization questions....
B.F. Goodrich v. United States (a.k.a. US Taxpayers) . . . This case involved whether interest expenses incurred on corporate owned life insurance were deductible. The taxpayer sought a refund of approximately $2.5 million. The case was settled. . . .
The Boeing Co v.United States (a.k.a. US Taxpayers) . . . This case involves the allocation and apportionment of research and development expenses for purposes of computing combined taxable income for DISC/FSC purposes. The taxpayer is seeking a refund of over $450 million. The District Court granted Boeing’s motion for summary judgment; the govt’s appeal to the Ninth Circuit is pending.