GRAHAM WARWICK / WASHINGTON DC
Manufacturer to maintain stake in financial subsidiary as first phase of report into company's ethics is published
Boeing has agreed to maintain a minimum ownership interest in Boeing Capital (BCC) under the new strategy to refocus its financing subsidiary on supporting the company's business units.
The move comes as new chief executive Harry Stonecipher works to restore investor confidence in the manufacturer after the ethics scandal that led to the resignations late last year of chief financial officer Mike Sears and chief executive Phil Condit. Boeing has released the first phase of an independent report on the company's ethics programme by a team led by former Senator Warren Rudman of law firm Paul, Weiss, Rifkind, Wharton & Garrison.
Under the BCC support agreement, Boeing will make payments to BCC if the financing arm's net worth or ability to cover its fixed charges fall below minimum levels.
The US aerospace giant announced in November last year that it was transitioning BCC to supporting the company's business units by providing direct financing or arranging alternative financing for customers. About 80% of BCC's $12 billion portfolio is in leases and loans on Boeing commercial aircraft, but the balance is in equipment financing across a range of industries. The unit has also helped arrange financing of Boeing satellites, launch vehicles, military transports and tankers.
The ethics programme report, commissioned by the Boeing board in July last year, focuses on the company's rules and procedures for the treatment of competitors' proprietary information. On 24 November, the board asked Rudman to conduct a review of the company's procedures and practices on hiring government employees, due to be completed in early 2004.
"We do not believe that any of the alleged ethics breaches involving competitors' proprietary information represent either fundamental flaws or a systemic failure," says Rudman. "Clearly, however, there are areas requiring improvement and our recommendations address these." Rudman details 16 recommendations, which Boeing is to address as soon as possible, says new chairman Lew Platt.
Source: Flight International
