Re "Boeing: What really happened" (News: Analysis & Commentary, Dec. 15): I am a 30-year employee of Boeing Co. and personally know Philip M. Condit. I am very concerned about the ethics violations of Boeing employees. I will not defend Michael Sears or Darleen Druyan for what they did; they knew better. Hiring Druyan before the 767 tanker contract was signed and sealed showed poor judgment and hurt many hardworking people at Boeing and in the Defense Dept. If Druyan and Sears had business discussions that were illegal, let's prosecute them. But let's not destroy the whole apple crop because a few are rotten.
Phil Condit is a nice and honest guy. To my knowledge, he was always very ethical. He is a man who worked hard and had a vision. Was he a great leader of Boeing? Only history will judge that. His timing wasn't good, and he made some bad decisions. It is easy to second-guess when the leader is gone.
Boeing will return to greatness. We unfortunately build products that have a life cycle of over 40 years when Wall Street has difficulty looking further than six months. Boeing helps defend our great country. And the next time Stanley Holmes is sitting at 38,000 feet looking out that 777 window, tell him Boeing engineering is protecting him.
Vice-President, Customer Support
Boeing Commercial Airplane
Why is anybody so surprised that a "brilliant engineer" could not handle the management requirements of so complex a corporation as Boeing, with all of its politically motivated executives, most of whom are, at best, naysayers? Brilliant technocrats have, all their lives, been isolated individuals. Most of the time their minds work in terms of mathematics and solving monumental engineering problems, 24/7. Without Condit's expertise and accomplishments, Boeing would have been second to Airbus and the rest of the competition a long time ago.
The point that Condit was a brilliant engineer who had great difficulty in leading the company past the tragic consequences of September 11 and the acquisition of McDonnell-Douglas Corp., is relevant. But to attack his private life is irresponsible and not worthy of your magazine. It must not be forgotten that Condit is respected by many Boeing employees and the aerospace industry as well as Boeing customers.
Irene A. Finnigan
Why didn't BusinessWeek publish this article a year ago? Your story establishes that Boeing was mismanaged for years by a man unfit for the job. Do you expose the flaws of a king only after he is dead?
Your dec. 15 issue presents an unlikely trio of American icons gone sour: Boeing, Disney, and Levi Strauss ("Lessons from a faded Levi Strauss" and "Keeping the keys to the kingdom," News: Analysis & Commentary, Dec. 15). What links these disparate examples is the failure to resolve a central paradox: preserving uniqueness while remaining noninsular and flexible. Could it be that in each case, corporate strategy has been a mirror image of CEO behavior?
Robert W. Keidel
For years, Boeing Co. cried over Airbus Industrie's commercial successes, saying the competition was unfair because of the European governmental support its rival was getting. Boeing's failures point up a few crude points: poor management, weak ethics, uncertain strategy, engineering weaknesses, and an ever-growing dependence on (U.S.) military contracts. This does not mean Europe is not helping Airbus develop as a full-size aeronautics group. But the U.S. media (including BusinessWeek) have been very forgiving about Boeing's errors -- just like its own board. Now "the king is naked." Let's hope Boeing will recover and be a fair competitor to Airbus and other players.
Brussels At a time when mutual-fund investors need reliable information, "Breach of trust" (Special Report, Dec. 15) invents a revisionist theory about the Investment Company Institute. The truth is that we support tough regulation and strict enforcement of laws that protect investors. While at times we disagree with others about specifics, ensuring that regulation effectively serves investors has and always will be at the heart of our work.
Your readers certainly would be forgiven for drawing different conclusions. They would never know: that we recently urged regulators to impose a 4 p.m. reporting requirement to combat late trading and a minimum regulatory redemption fee (payable to shareholders, not fund managers!) to fight market timing; that in 1994 we urged the Securities & Exchange Commission to mandate internal compliance systems for mutual funds; that in 1995 we called on the nasd to require brokers to disclose revenue-sharing arrangements; and that in 1999 we recommended best practices for fund directors that a corporate-governance reform group applauded as "sweeping" and "far reaching."
The Institute is not perfect. But we do not resemble the caricature in your article. You are free to assess our work, but articles should be based on the facts. The Dec. 15 article was not.
Matthew P. Fink
Investment Company Institute
Editor's note: The ICI is the trade group for mutual-fund companies.
As the chief securities regulator of Massachusetts, I read with interest Paula Dwyer's "Breach of trust." The mutual-fund scandal has raised important questions about the effectiveness of regulatory enforcement of the securities industry in general and has also clearly demonstrated that the level of regulation of mutual funds has failed to keep pace with the role they play in our financial system.
However, I believe the article is erroneous when it suggests that Congressman Barney Frank (D-Mass.), ranking member of the Financial Services Committee, has been advancing the interests of the mutual-fund industry. Nothing could be further from the truth. These scandals have been exposed largely because of the work of state regulators. For a long time the securities industry, including mutual funds, has been trying to federally preempt state regulation, preventing regulators such as New York Attorney General Eliot Spitzer and myself from protecting investors.
Frank has been the leader in the fight to make sure investors are protected by state laws. As recently as August he successfully stymied efforts to prevent state enforcement. I support the [Representative Richard H. Baker (R-La.) mutual-fund reform] bill, and think the concept of more independence for mutual-fund boards of directors is part of the solution. But make no mistake: The larger issue is effective enforcement. American families should know that Barney Frank is someone who is protecting them.
William Francis Galvin
Secretary of the Commonwealth
As a longtime Vanguard Group investor, I would rather trust the company to manage my investments in an ethical manner than create increasing layers of regulations that may make their operation less efficient and raise my costs.
Rolland F. Regester
As an independent director of the large T. Rowe Price mutual-fund family for 17 years, retired since 1996, I'm surprised that no mention is made of the Investment Company Act or the unique role and powers of funds' independent directors it created. They have full access to specialized independent legal counsel, comprise the entire audit committee of each fund, and can even move the fund to a different management company. They must comprise the majority of each fund board, and should be truly independent.
My guess is that there will be few reputable no-load funds among the scandal makers. In addition, sales loads, withdrawal penalties, and high management fees skim off far more of fund investors' assets than the scattered malpractices so far revealed as scandalous. In general, it is a highly responsible and solid industry.
Green Valley, Ariz. Aaron bernstein's commentary, "Too stingy with the overtime" (Workplace, Dec. 22) suggests that the Labor Dept. plans to "strip away" workers' overtime protection through changes to the outdated white-collar exemptions under the 1938 Fair Labor Standards Act.
For decades, labor unions, employers, and government alike have recognized the need to update and clarify overtime rules for white-collar workers. The current rules are obsolete, unnecessarily complex, and leave employers, workers, and government officials uncertain about overtime status. This confusion fuels litigation that drains resources away from job creation. In a Dec. 8 article ("Revenge of the overworked nerds," News: Analysis & Commentary), BusinessWeek acknowledged the lawsuit problem, stating that "lawyers have been having a field day" with overtime lawsuits. Why? "One reason lawyers find such cases enticing is that labor laws on overtime are vague."
Mr. Bernstein gives the impression that the Department is recklessly imposing drastic changes. The reality is that the Department's reforms have proceeded thoughtfully and deliberately. The public has submitted nearly 80,000 comments, all of which are being carefully considered as the Department crafts a final rule.
This commentary also cites the now-discredited figure that 8 million workers would lose overtime, drawing as "proof" one study by a union-funded advocacy group. The facts are that under the Department's proposed reforms, 1.3 million low-wage workers would gain overtime and more than 10 million workers would have their right to overtime made more certain. The Administration remains committed to regulatory reform that restores, protects, and preserves overtime for workers. The deliberative process the Department has undertaken, taking into account and benefiting from public input, is the best way to ensure that overtime works for millions of Americans.
Elaine L. Chao
U.S. Secretary of Labor