Thursday, May 04, 2006

The first thing we do... make sure all the lawyers get rich:

A lawsuit filed by shareholders over Boeing's procurement scandals has yielded a proposed payment of nearly $12 million for their lawyers, but little else.

The suit against Boeing, its top officers and board of directors alleged the individuals had been reckless and negligent in overseeing company operations, leading to scandals such as the use of stolen Lockheed Martin documents in a bid for a 1998 Air Force rocket-launch contract, and the illegal offer of a job in 2002 to an Air Force procurement officer who oversaw a refueling-tanker contract.

But the proposed settlement may raise some eyebrows. It would require Boeing to spend an extra $29 million over five years to enhance director and management oversight of its ethics and compliance procedures.

Such changes were already under way, thanks to Boeing's internal investigation, and to new federal laws, such as Sarbanes-Oxley, that affected corporate governance.

Apart from that, the settlement's only other result would be to pay up to $11.9 million to the national law firms that litigated the case, including Labaton, Sucharow & Rudoff; Lasky & Rifkind; and Milberg Weiss Bershad & Schulman.

"It's nice business for the attorneys," said John Coffee, professor of corporate law and director of the Center on Corporate Governance at Columbia Law School.

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