The problem for Boeing and the Pentagon is that many people understand only too well what has been happening. It is a classic case of corporate hucksterism grubbily disguised as ‘national security’

In the early Sixties in London I went to a play called Boeing Boeing at the Apollo Theatre. The comedy’s central figure was Bernard, a New York architect with a bachelor pad and three fiancées who were airhostesses on different airlines. He spent an amusing time juggling them around, according to their flight schedules. All very funny, and now, perhaps, rather ironic, because the play was written by a Frenchman, one Marc Camoletti, who was as much a master of farce as the France-based company Airbus Industries has become a master of selling more passenger aircraft than Boeing.

But this is not the company’s only worry. Boeing also has three fiancées, as it were: the world market for airliners; the Pentagon’s cornucopia of lucrative military contracts; and an awkward hanger-on of probity, represented by a few US politicians who are increasingly dubious about where Boeing is going. And managing that trio is a much more difficult task than Bernard ever had.

Boeing’s current scandal concerns a deal to provide aerial refuelling tankers to the US Air Force, which sounds pretty innocuous but isn’t, because they are not needed, and even if they were, the way the Pentagon deal was designed would have been absurdly beneficial to Boeing.

The Air Force tanker fleet has 544 KC-135s (Boeing 707s) and 59 KC-10As (Douglas DC-10s), of which many are elderly, causing the most energetic supporter of the Boeing/Pentagon deal, Republican Senator Ted Stevens, to say “I just do not understand why we should put people to fly planes in combat that were made before their grandfathers were in the military.” This is a facile TV news-style soundbite that, alas, plays well in Washington, and it seems the senator, for whatever reason, ignored the point that the calendar age of the tankers is not critical to their effectiveness (20 year-old passenger jets are far from uncommon), and seems unaware that the major factors are the number of hours they have flown and their safety rating, which are both entirely satisfactory. Even the oldest planes have operated for less than half their design life of 30,000 hours (equivalent to crossing the Atlantic twice a week for fifty years), and their maintenance programmes are beyond reproach.

Of course the fact that the senator received $34,400 from Boeing in the current election period would have nothing to do with his advocacy of replacing perfectly serviceable tankers with new ones from Boeing, but it is notable that the Air Force had not planned to begin replacements until 2008. In short, there was and is no requirement — strategically, logistically, or in force structure — for these aircraft to be retired in the immediate future, except through natural wastage. According to USAF testimony to the House of Representatives in June 2003 “The current plan and program in FY04 . . . is to reduce the . . . inventory by 68 KC-135E models between FY04-06” to avoid increasing maintenance costs.

Senator Stevens conjured up a deal for Boeing to supply 100 tankers, modified from 767s unsaleable on the commercial market, but not by means of a normal purchasing contract. The arrangement was that Boeing would lease some of them to the Air Force, which would eventually buy them. As initially structured, the deal would have cost the US taxpayer $26 billion, $5 billion more than the cost of outright purchase. This was financial insanity for the leaser/purchaser, but a neat deal for Boeing, because after September 11 most plane-sales were stalled, and dwindling orders threatened production lines. So in the patriotic frenzy of the time, Stevens had little problem getting his bill through by 7 December. (John Donnelly of Defense Week discovered that a month before Stevens pushed his bill the Boeing Company had a fund-raiser in Seattle from which Stevens was given $22,000.)

Steven’s ostensible reason for favouring the deal was that, legally, outright purchase demands outright cash, and therefore leasing/purchase was the only alternative. But in that period of intense nationalistic fervour the US Senate and House would have written a blank cheque for the Pentagon to buy frisbees or air fresheners, never mind aerial tankers, so that excuse doesn’t wash. And nothing comes out of the wash looking clean except a man called Mitch Daniels who was Bush’s budget director and had “grave reservations about leasing these aircraft” because “a lease-purchase program would be much more expensive than direct purchase . . .” He was right; but he is no longer budget director. (There was a bizarre, surreal, Alice in Wonderland piece in Business Week of 30 June 2003 that among other justifications for the tricky machinations pronounced “Sure, a lease costs more, but maybe not that much more,” which sums up the corporate world’s amoral approach to use of taxpayers’ money and, indeed, to business in general. Don’t you love that “maybe”?)

Another major supporter of the deal is the right-wing zealot and Pentagon fixer Richard Perle who last August co-wrote a Wall Street Journal piece advocating the lease fiddle after receiving a Boeing briefing. It so happens that in mid-2002 Boeing agreed to invest $20 million in Perle’s venture capital fund, Trireme Partners. Perle states that the Trireme-Boeing nexus was handled by his fund partner, Gerald Hillman, who, like Perle, is a member of the Pentagon’s Defense Policy Board. So that’s all right, then. Another influential backer is House Speaker Dennis Hastert ($6000 from Boeing, which now has its HQ in Hastert’s state, Illinois) who claimed “We found out during the Iraq engagement that we didn’t have enough tankers . . . By taking this important step, we will improve our long term security needs,” which is downright nonsense.

Boeing’s CEO ‘resigned’ last December after firing the company’s top financial whiz kid along with another dubious employee who had joined Boeing from the Pentagon after she allegedly passed on details of an Airbus bid for a contract. The new CEO, Harry Stonecipher, states “we’re cleaning up our own house” yet resolutely refuses to believe Republican Senator John McCain who says the whole tanker saga is “sleazy”. “People,” says Stonecipher, “don’t understand the difference between lease and purchase.” Oh yes, they do. And the problem for Boeing and the Pentagon is that many people understand only too well what has been happening. It is a classic case of corporate hucksterism grubbily disguised as ‘national security’. Enron and Parmalat went belly-up because they had inbuilt policies of deceit, and Mr Stonecipher had better come clean, otherwise it might be a case of Boeing, Boeing, Gone.