Two Boeing auditors were legally fired after they exposed to the press internal documents suggesting the aerospace and military contractor lacked computer-security safeguards, a federal appeals court ruled Tuesday.

The 9th U.S. Circuit Court of Appeals set aside the appeal of two former Boeing auditors who claimed their leaks to the media were protected by the Sarbanes-Oxley Act of 2002, adopted to protect shareholders against fraud. A three-judge panel of the San Francisco-based appeals court sided with Boeing, saying a provision in the act only protects those who notify the authorities, not the media, of alleged wrongdoing.

So the court said Matthew Neumann and Nicholas Tides were properly fired in 2008 for violating company policy of disclosing company information to the media, in this case the Seattle Post-Intelligencer, without company authorization.

In 2007, the PI wrote: "Boeing and its external auditors have rated the company’s inability to patch database and software development security holes as a 'significant deficiency' with the computer infrastructure since 2004 — the first year it had to comply with the 2002 law. The failure has been deemed serious enough that for three years in a row, finance teams have spent the last 45 days of each year testing whether financial numbers are correct."

The act's whistleblower provision protects employees of publicly traded companies from being fired if the report conduct that they reasonably believe constitute fraud or securities violations. The law protects employees from discrimination if they deliver the information to a federal regulatory or law enforcement agency, a member or committee of Congress or or a work supervisor.

"Members of the media are not included," Judge Barry Silverman wrote for the unanimous court.

The court noted that another statute, the Whistleblower Protection Act, (.pdf) prohibits employer firings for leaks to the media. But it is unclear whether the alleged wrongdoing in the Boeing case constituted "gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to the public health or safety," as the law requires.

Photo: KeithBurtis/Flickr

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