Boeing to plead guilty to criminal fraud charge stemming from 737 MAX crashes

From the article: Paul Cassell, a lawyer for victims’ family members, said he plans to ask the federal judge on the case to reject the deal and “simply set the matter for a public trial, so that all the facts surrounding the case will be aired in a fair and open forum before a jury.”

Hard to disagree

Seems an extremely soft ball approach:

• Under the deal, Boeing agreed to pay a $243.6 million fine and for an third-party monitor to be installed to monitor the company’s compliance.

~$240M seems pretty low for an industry where billions are commonly thrown about.

• The deal spares Boeing from a trial just as the planemaker is trying to turn a corner in its safety and manufacturing crises.

Sparing them from a trial means no further discovery/uncovering of other illegal shit they've been up to meanwhile?

Regarding the "Can/should a CEO or officer be held liable?" dialogue, there is already at least one precedent.

The 2002 Sarbanes-Oxley (SOX) Act:

> The law states that if top corporate executives knowingly sign off on a false financial report, they’re subject to a prison term of up to 10 years and a fine of up to $1 million, with penalties escalating to 20 years and $5 million if their misconduct is willful. [0]

Now, would it work? The linked article details reasons that make it challenging in the SOX context.

[0] https://www.reuters.com/article/idUS3512973425/

> If the deal is accepted, it could complicate Boeing’s ability to sell products to the U.S. government as a felon, though the company could seek waivers. About 32% of Boeing’s nearly $78 billion in revenue last year came from its defense, space and security unit.

My understanding is that getting security clearance involves a bunch of checks and statements about your character, and having a federal felony conviction on one's record would be a hard blocker.

Absolutely, I think that the real punishment, beyond the $245M fine, ought to be losing its many many billions of DoD contracts. After all, once a firm has demonstrated this kind of behavior, how on earth should we trust it with not only taxpayer dollars but the lives of servicemen/women and critical military resources?

Our governmental methods of punishment for corporations strike me as lacking. This seems similar to Wells Fargo, where ok, the company was fined, sued, made to pay restitution (somewhat) to victims. But underlying it all, the culture and incentives at the company that produced the situation didn't get fundamentally changed. Which often perpetuates across specific leaders, boards, and is a part of what a company is -- and doesn't just get replaced by removing one or two people.

What does it take? You have to dismantle a company before it changes these kinds of deep-rooted issues? Or can a government penalty call for that? That is hard to achieve. Who's going to change the evaluation procedures that HR has in place to measure what rating or bonus you get this year? That seems to me as important as who is CEO.

None of the penalties courts mete out (short of dissolution/fined into bankruptcy) seem to be able to achieve this level of change needed.

"The guilty plea would brand the planemaker a felon and could complicate its ability to sell products to the U.S. government. About 32% of Boeing’s nearly $78 billion in revenue last year came from its defense, space and security unit."

Well that's a fun little fact

I wonder if the outcome would have been any different if the 737 MAX crashes had happened on the American soil and involved loss of American lives.

Plea deals rob victims from the truth they need for closure and recovery. On top of that, plea deals also undermine public trust in the rule of law. I wonder how "happy" the Judge is for being forced to give it credibility...

So Boeing is a felon, but at the same time nobody is going to jail.

What does it mean for a corporation to plead guilty?

Does it mean that there is evidence to establish a crime beyond reasonable doubt, but there is insufficient evidence to implicate any employees in particular?

I tend to think that a more just system would transfer ownership of criminal organizations to victims, which would also supersede all outstanding financial liabilities. Especially this last point would destroy credit options for companies suspected of criminal activity as the larger creditors will hire private investigators.

A truly fitting punishment would be that Boeing is prohibited from piggybacking certification of any further 737 variants.

For cheating on car engine emissions, managers of VW had to go to jail. Oliver Schmidt received 4 years. James Liang got 40 months. Rupert Stadler served a couple of months. They went to jail for cheating on engine emissions.

Boeing's actions resulted in the deaths of people on two planes.

Who will be personally accountable?

Public sentiment is very much against Boeing right now, especially their current executives, oddly enough (since the previous ones were overseeing things when MCAS was created). But are there arguments for the other side on any of these incidents, and have they been explored completely?

For example…

Is Boeing really at fault for the MCAS related crashes? Both happened at airlines from the developing world, where the pilot requirements (for hours of experience) is a lot lower than for airlines from the developed world. I recall reading that pilots from airlines in the US had also encountered MCAS in real flights but knew how to deal with the condition just using their basic piloting knowledge, by lowering flaps or turning the stabilizer trim off. MCAS activation is obvious because the trim wheels in the cockpit spin with its activation - so a pilot who doesn’t want trim can just flip the switch for them.

Another possibility: is regulation at fault? Recertification is expensive, and the associated training costs are expensive. I believe it caused Boeing to not seek to classify the 737 Max as a new aircraft and downplay changes like MCAS. Could an easier certification process have caused Boeing to be more transparent about changes with this plane?

MCAS itself activates only at high angles of attack and was put in to meet some of the standards of certification, not because there was a “real” problem, by my understanding. It had to do with the new engines’ cover, which does help with fuel efficiency, but changes the plane’s aerodynamics and so Boeing compensated using this system to automatically trim. Could different standards have caused Boeing to not create this system?

Are unions at fault? Boeing has immense cost pressures from all sides, and I’ve heard many stories of inefficiency, avoidable costs, and painful politics at their plants due to union rules. These pressures indirectly may cause the company to cut corners elsewhere.

I would be curious what HN thinks of these possibilities. There are probably other such theories as well. I’m not saying Boeing did nothing wrong, but that the public and media rarely gets complex stories right. It’s easier to latch onto simpler or more emotional explanations. But what’s actually true and how do you hand out blame?

Criminal charges against the company aside, aren't there licensed engineers inside of Boeing who signed off on all of this? Where are they in this discussion? Isn't the whole premise of having a licensed engineering discipline that the buck stops with you and you lose your license if you let something like this happen?

If we don't revoke licenses and permanently end careers over something like the MAX crashes, the incentives of engineers require them to say yes to the company at all costs, because it's not worth their job to say no. The consequences of saying yes to a bad plan have to be worse than being fired.

You need to actually prove the board and directors contributed to the criminal act to go after them or created the environment that enabled the lower level employees to act. Which I think they would attest to.

Unfortunately, You can't just blanket make CEOw responsible for every action of their employees. That would be insane.

Think of it like charging the top brass in the mafia, RICOs are hard to prove because getting the guy at the top is difficult.

It's a slap on the wrist. No one goes to jail. Just pay money and move on. Boeing knows that if this goes to trial, the discovery material will be extremely incriminating to their brand. Instead, just pay money and move on.

I wonder if a plea deal like this would have ever reached if american lives were lost in two crashes as a direct cause of a company's negligence.

So, they plead guilty to criminal fraud that got people killed, and nobody goes to jail ever? And they pay the fine of 0.4% of their annual revenue? That's not even a slap on the wrist, that's more like hand-kissing. "Soft" doesn't even begin to describe it.

If you think humans (not companies) commit crimes, I'd suggest emailing the DOJ, and letting them hear it.

https://www.justice.gov/doj/webform/your-message-department-...

The criminal liability should be directly on the persons responsible who ignored safety warnings knowingly. If someone responsible for this doesn't go to jail, it's just a matter of time that a similar thing will happen again, given the company culture.

Boeing made planes, and then later got into rockets... SpaceX makes rockets, I wonder if they should get into planes?

So long as you make a plane where the door doesn't fly off midair, it seems like a good way to print money and bring some manufacturing jobs back to the USA!

It wasn’t the company that did fraud, individuals employed by Boeing did. Is it normal for the company to take the charge? How can “Boeing” plead guilty to anything?

Not enough. Boeing getting off easy once again, not enough sting to produce a change in behavior. Why executives are not held accountable is confusing to me.

Boeing agreed to pay a fine that's proportionally less than what I'd get if I didn't pay for my own health insurance.

Cool. Cool cool cool.

245M fine? so the price of two planes? Nice, it would really prevent the malicious behaviour in the future.

Would a criminal fraud charge result in federal debarment? If not, why not?

"Boeing also agreed for the board of directors to meet with crash victims’ family members, under the agreement."

So, what does this mean exactly?

So are people going to jail?

Alex Jones has to pay more.

> Boeing also agreed for the board of directors to meet with crash victims’ family members, under the agreement.

Is this a normal thing? Seems odd.

And which Boeing leaders will get 30 years in prison? Who will lose their riches?

Who will resign in shame and vow to never take a leadership position again?

Oh? Nobody? Um, ok. Justice is served, I guess?

"Whatever the reasons (market pressures, rushing processes, inadequate certifications, fear of being fired, or poor project management), Leveson’s insights are being ignored. For example, after the first fatal Boeing 737 Max flight, why was the entire fleet not grounded indefinitely? Or not grounded after an Indonesian safety committee report uncovered multiple failures? Or not grounded when an off-duty pilot helped avert a crash? What analysis procedures failed to prevent the second fatal Boeing 737 Max flight?"

https://dave.autonoma.ca/blog/2019/06/06/web-of-knowledge/

June 6, 2019

Individuals need to be held accountable. Having the company plead guilty helps literally no one. Who were the relevant board members? The CEO? The COO. These people need to be charged.

"We plead guilty for our poor test coverage"

The people saying “send the CEO to jail” or “make the board liable” are vastly oversimplifying the complexity of the issue here, which is about how to enforce regulations and standards without torpedoing your economy. One of the single most important reasons why the US has such a successful business culture is because of its approach to liability - virtually all business debt can be erased in a bankruptcy, and the entrepreneur is not personally responsible. This is not the case in many other developed countries, with one consequence being that the entrepreneurial culture there is nowhere near as developed as in the US.

https://swz.it/europes-failure-to-deal-with-failure/

And so you really don’t want to set up a situation where the operators of a company are by-default responsible for anything that their company does. Of course, that has limits and people can still be individually charged for crimes, but the point here is that this is not a by-default thing. This problem is magnified by a thousand with a company like Boeing that is so intertwined with the government and not easily replaceable.

It seems to me that the solution to this kind of issue might come from studying successful occupations done by the US - post-WW2 Japan is the one that comes to mind. The Allies (mainly the Americans) managed to defeat an enemy state, punish some (but not all) of the people it deemed to have done wrong, and then set up systems which turned out to be largely effective at putting the country on a good path. Fixing an entity like Boeing seems similar in nature, if much smaller than an actual country.