Tanker Sore By Holman W. Jenkins, Jr. Business World Wall Street Journal June 15, 2005 Pg. 15 "This isn't over," John McCain vowed after the Pentagon issued its report last week on the tanker scandal. Let's hope not. Legislators were especially theatrical in their outrage over the Inspector General's decision to black out the names of many individuals involved in promoting the now-defunct $23 billion lease for mid-air refueling planes, including Boeing executives and administration officials. The joke, of course, is that quite a few of the names belong to congressmen and their staffers. No less an authority than Senate Armed Services Chairman John Warner has called the episode "the most significant defense procurement scandal of contemporary history." Wonder why, then, it's not being flogged with anything like the partisan fervor that $640 toilet seats were in the 1980s or the Lockheed scandal was in the 1970s? Congress's own central role is the reason. Any potted history might begin with a meeting between Rep. Norm Dicks, a Democrat from Washington State, and Gen. John Jumper several months before the Sept. 11 attacks. Boeing was hurting; its 767 assembly line was facing permanent closure. Meanwhile, the Air Force's 545-strong tanker fleet was heavily skewed toward the most ancient 707-type aircraft, frequently down for repair. Bingo. The lease deal was already kicking around waiting to be rushed into action after the terrorist attacks. Gen. Jumper, who in the meantime had been promoted to Air Force chief of staff, was reportedly keen not just to get new tankers but also to upgrade his service's electronic warfare and command fleet around the 767 "platform." Sens. Patty Murray and Maria Cantwell of Washington quickly climbed aboard, as did Sen. Pat Roberts of Kansas, Ted Stevens of Alaska and Dan Inouye of Hawaii. Not insensate to opportunity, the Air Force's civilian leadership saw the gush of Congressional enthusiasm as a rare opening to upgrade its fleet expeditiously and without the usual bureaucratic hill-climbing. By December 18, 2001, a House-Senate conference had approved the lease deal in principle. Honest assessments about all this have become rare after the fact, but one was offered by Sen. Jeff Sessions last October, during an unrelated hearing that saw Mr. McCain berating an Air Force general about the tanker affair. Mr. Sessions pointed out the deal's true provenance: "It really started in Congress . . . The appropriators put in this tanker lease deal without any hearings that I know of in this committee to consider it. And people kind of fell in line to support that idea and justification started coming up." Legislators made no bones about their agenda. They may not have used the words "Boeing bailout" but they spoke often and publicly about "preserving the industrial base" at a time when the commercial aviation business was in a nosedive and the U.S. military was gearing up for a prolonged "global war on terror." Mr. McCain griped about corporate welfare and later accused the Air Force of exaggerating the corrosion problems of the old planes. But if there's a scandal here, it's not that legislators leapt at a chance to satisfy Boeing and the military at the same time. This may have been a bad policy call, but bad policy calls were hardly unknown in the post-9/11 panic. More questionable was Congress's embrace of the "leasing" gimmick. Remember, the feds can borrow more cheaply than Boeing can, so why was Boeing effectively financing the plane purchase? Because it allowed the cost to be recognized piecemeal in budget documents rather than as a lump sum. In the private sector this would be called accounting fraud, but the feds live by different rules. Indeed, Mr. McCain stumbled into unambiguous malfeasance only when, much later, Boeing executive Darleen Druyun was found to have illegally approached the firm about a job while she was still serving as the Air Force's civilian acquisition czar. This late revelation also introduced the scandal's most nagging mystery. From the start, Ms. Druyun was apparently ready to plead guilty to the job-hunt violation, which served as the basis for a conspiracy charge on which she's now serving her nine months. The sentence might seem woefully light, however, in view of "post-plea admissions" she made at the behest of prosecutors. With no legal consequences to herself -- indeed, as part of her bargain for lenient treatment -- she "admitted" to favoring Boeing to the tune of billions of dollars not just in the tanker lease but in three other major defense contracts. Air Force Gen. Gregory Martin, who was berated by Mr. McCain in the unrelated hearing mentioned earlier, was eventually blocked from a promotion to the Pacific Command because he expressed an opinion on this matter -- that Ms. Druyun might have been lying -- that Mr. McCain apparently didn't like. MCCAIN: General, I'm questioning your qualifications for commands. A person pleads guilty in federal court to a crime that's going to send them to jail and you question whether she was telling the truth? MARTIN: Yes, sir. In fact, Ms. Druyun's stunning "admissions" had nothing to do with sending her to jail. She was permitted to loft these bombshells and walk away while they led to demands that the contracts be reopened. Prosecutors even agreed not to pursue her daughter (also a Boeing employee) who had served as go-between in the illegal job talks. Ms. Druyun was a practiced, hard-nosed negotiator -- she would have known her claim that she could have squeezed Boeing for better terms was an unprovable assertion. It seems germane, however, that it was Boeing that ratted out Ms. Druyun in the first place, along with its own CFO, Michael Sears, on the hiring violation. She'll be out in a few months but Boeing, the Air Force and Congress -- all of which were keen on the tanker deal from the get-go -- will be dealing with the fallout for much longer.