Pentagon watchdog clears acting defense secretary of favoring Boeing

The Defense Department's internal watchdog has cleared acting Defense Secretary Patrick Shanahan of favoring his former employer, Boeing while serving at the Pentagon.

The Pentagon's inspector general found that reports of ethics violations were not substantiated, clearing the way for Shanahan for a possible nomination to the top Pentagon job.

The inspector general opened the investigation last month after receiving a complaint that Shanahan "allegedly took actions to promote his former employer, Boeing, and disparage its competitors, allegedly in violation of ethics rules."

During the investigation, more than 30 witnesses were interviewed, including many senior defense officials and Shanahan, according to the inspector general. More than 5,600 pages of unclassified documents and approximately 1,700 pages of classified documents relevant to the allegations were also reviewed.

"The Office of Inspector General took these allegations seriously, and our 43-page report of investigation, which we released today, describes our conclusions and the facts on which they are based," said Glenn Fine, the Principal Deputy Inspector General Performing the Duties of the Inspector General. "The evidence showed that Acting Secretary Shanahan fully complied with his ethical obligations and ethical agreements with regard to Boeing and its competitors."

Shanahan worked for Boeing for 31 years, last serving as senior vice president of supply chain operations. When he transitioned to the Pentagon as then-Defense Secretary James Mattis' deputy in 2017, Shanahan said he divested his financial interests related to Boeing and signed an ethics agreement barring him for participating in Boeing-related activities -- as is typical for government officials transitioning from the private sector.

He's been serving in the "acting" capacity since Mattis departed the Department of Defense over policy differences related to the war against the Islamic State in Syria at the end of last year.

"Secretary Shanahan has at all times complied with his Ethics Agreement, which screens Boeing matters to another DoD official and ensures no potential for a conflict of interest with Boeing on any matter," Shanahan's spokesperson Lt. Col. Joe Buccino said in a statement to ABC News. "Secretary Shanahan remains focused on retooling the military for great power competition, executing the National Defense Strategy, and providing the highest quality care for our servicemembers and their Families."

The complaint that launched the investigation was filed to the inspector general in March by the watchdog group Citizens for Responsibility and Ethics in Washington (CREW), which in its complaint cited news reports that Shanahan had privately promoted Boeing in discussions about government contracts, disparaging defense industry competitors like Lockheed Martin.

But prior that filing, the inspector general said that it had been contacted by an anonymous Senate Armed Services Committee attorney, as well as Sen. Elizabeth Warren's staff with allegations that Shanahan had pressured various services to purchase Boeing aircraft.

Shanahan has been rumored as a top contender to replace Mattis as the next defense secretary. He would need to be formally nominated by President Donald Trump and confirmed by the Senate.

The full inspector general report is available online here.