[HN Gopher] Boeing charged with 737 Max fraud conspiracy and agr...
___________________________________________________________________
Boeing charged with 737 Max fraud conspiracy and agrees to pay over
$2.5B
Author : edward
Score : 272 points
Date : 2021-01-07 21:15 UTC (1 hours ago)
(HTM) web link (www.justice.gov)
(TXT) w3m dump (www.justice.gov)
| dietsprite wrote:
| Boeing:
|
| - Responsible for 2 plane crashes that killed 346 people
|
| - Engaged in a government cover-up and was charged with criminal
| fraud conspiracy
|
| - Fired CEO left with $81 million exit package
|
| - No one went to jail
|
| *Fined $2.5 billion - 2% of annual revenue
| [deleted]
| throwaway122378 wrote:
| But open your restaurant and get locked up!
| gameswithgo wrote:
| I feel like something the American Left and the American Right
| could agree on is that white collar criminals should face the
| same kind of tough law enforcement consequences as regular
| street criminals. How would one start pushing for such
| legislation?
| jb_s wrote:
| Too distracted fighting the other, "wrong" half of the
| working class :-)
|
| Meanwhile the country is literally controlled by the
| companies in question.
| freerobby wrote:
| > How would one start pushing for such legislation?
|
| Lessen the punishment of street criminals.
| tartoran wrote:
| And what would that solve? White collar crime won't be
| affected at all
| recursive wrote:
| That would solve the problem of punishment disparity
| between street- and white-collar- crime.
| tartoran wrote:
| I care more for a disparity between criminals and non
| criminals to be honest. White collar criminals dilapidate
| enormous amounts of money but street criminals could
| directly be violent towards whom they rob. (and being
| robbed, asides from the financial loss, it often leaves
| some psychological scars).
|
| I see your point and it's hard to imagine that a person
| stealing say, some food, because they're starving may do
| time in prison and yet the author of a multimillion
| shenanigan goes scot-free, yes that's not fair at all,
| but lowering the punishment for street crime will make us
| average people even more miserable. The only rational
| thing to do is start punishing white crime seriously so
| it is a huge deterrent. Currently white criminals who get
| convicted stay in prisons whose conditions are better
| than the situation of a lot of struggling full time
| working Americans. I find that appalling
| rootusrootus wrote:
| For most people, white collar crime is relatively abstract.
| Something to be outraged about when you hear it on the news,
| but not something that you can feel affecting you personally.
| Blue collar crime, especially the kind that occurs at a
| personal level, is more visceral. People really want to see
| those people kept away from them, more than they want to see
| rehabilitation. Whether rehabilitation would lead to better
| long-term outcomes gets ignored.
|
| The Boeing situation is a little different, of course, since
| it really did kill a bunch of people.
| lotsofpulp wrote:
| >since it really did kill a bunch of people.
|
| No one can prove a specific Boeing executive's actions
| caused people to die. There would have to be an email from
| the executive stating
|
| "I think we should cut costs here and here and I
| acknowledge this may cause x% of passengers to die".
|
| And they're not going to put something like this in an
| email either:
|
| "Meet with the guy that used to work for us who now works
| at the FAA and get him to waive or lower so and so
| standards so this plane can fly and we'll owe him".
| rootusrootus wrote:
| Perhaps one of the risks that executives at a high level
| (i.e. named corporate officers) have to bear in return
| for their absurd salaries is criminal liability when the
| corporation commits a crime. This might help align the
| incentives.
| jacksnipe wrote:
| I'm pretty sure that they don't actually agree on that.
| NOGDP wrote:
| If you ask an average American from either side they will
| probably agree that white collar criminals should face
| tougher consequences. If you ask an average politician from
| either side, they will probably agree on the opposite.
| tartoran wrote:
| Or won't agree on the definition of white collar crime
| and if push comes to shove to implement a low they'll
| likely leave some loopholes, maybe not intentionally,
| maybe so and the big corporate criminals will find ways
| to come unscathed
| drewblaisdell wrote:
| This is the nature of our "democracy".
| frequentnapper wrote:
| By taking away presidential pardons.
| dietsprite wrote:
| Feel like left or right, most elected US officials are
| corporatists and not willing to bite (or even upset) the hand
| that feeds them. That said, the right is decidedly not in
| favor of stronger enforcement/regulation.
|
| White-collar enforcement is at an all time low:
| https://www.bloomberg.com/news/articles/2020-08-10/trump-
| ove...
| treeman79 wrote:
| Ideal scenario for free market capitalist.
|
| Low regulations AND low government involvement.
|
| So lots of people can build widgets. Companies that do a
| bad job find they have no customers.
|
| New companies pop up, do a better job and things get
| cheaper and or better.
|
| High regulations means that new companies need massive
| capital to enter the market. So much so that no one
| bothers.
|
| When only 1 company builds a widget. Well odds are it's
| going to be low quality and expensive.
|
| Now this all has to balanced that you don't massive unsafe
| planes flying around by companies that have no reputation
| to preserve.
|
| Whoops, we took out the Golden Gate Bridge, again. We will
| go out of business and company mark 3 will try again
| abraae wrote:
| 747s != Widgets.
|
| Huge natural barriers to competition.
| colordrops wrote:
| > most elected US officials are corporatists and not
| willing to bite (or even upset) the hand that feeds them
|
| This seems like a clear fact, and yet many will call you a
| conspiracy theorist for pointing out the obvious. It's
| probably a symptom of the tribalist aspect of red vs blue.
| People need to be de-programmed of the team sports to
| finally realize that their "side" is beholden to
| corporations and not the people. Only then will we see real
| action to criminalize white collar behavior.
| Someone1234 wrote:
| Politicians are unlikely to because they can better relate to
| white collar criminals than the poor.
|
| The only solution to this is electing more people from
| diverse backgrounds (inc. class, race, gender, etc), but
| unfortunately money is extremely effective at winning
| democratic elections, and those who have it aren't from a
| diverse background.
| hinkley wrote:
| As someone recently described it to me: lawmakers vote for
| punishments they can't envision themselves ever receiving.
| lotsofpulp wrote:
| >Politicians are unlikely to because they can better relate
| to white collar criminals than the poor.
|
| It also has something to do with plausible deniability and
| inability to prove intent with white collar crimes.
|
| How would you be able to prove someone intentionally mis-
| valued assets? Cut costs specifically to bolster one's own
| income and not benefit the other shareholders? Hired
| someone in exchange for a favor or possible future favor?
| Fired someone for stepping out of line?
|
| Plausible deniability is also the reason for "productive"
| in person lunch meetings and golf outings. Not that there
| aren't other positive aspects of in person conversations,
| but lack of a permanent record is one of its aspects, and
| can easily be used to cause harm.
| bishnu wrote:
| So, $7.2M per life lost.
| diob wrote:
| Those dead people are gonna be living it up on that!
| d33 wrote:
| I guess I could bear this point if there was a commitment to
| dedicate this money to something that can actually save
| orders of magnitude more lives - though even then it's highly
| debatable. Thing is, is there at least such a promise?
| jws wrote:
| For what it's worth, this is right in the middle of the
| "Value of Statistical Life" used in public policy decisions,
| $4M to $10M.
|
| https://strata.org/pdf/2017/vsl-full-report.pdf
|
| At least one of the states has a statutory value of a life,
| but I'm afraid I can't find it now (don't Google it, you will
| be fed into the intake funnel for wrongful death lawyers),
| but I think it is around $7M.
|
| That said, $500M is for a victims' fund, about $1.4M/death,
| the rest appears to be a deterrent to deceiving regulators
| CivBase wrote:
| For better context, Boeing's annual profits appear to typically
| be closer to $10B to $20B[0] - with 2019 and 2020 being
| anomalies for obvious reasons. $2.5B and no jail time still
| seems laughable in that context.
|
| [0] https://www.macrotrends.net/stocks/charts/BA/boeing/gross-
| pr...
| brokencode wrote:
| Boeing was once one of the country's greatest companies and is
| now a national embarrassment. This is what you get when the MBAs
| and accountants take over and the lust for profit begins.
|
| An engineering company should have engineers as managers from the
| bottom level all the way up to the CEO. Or at the very least,
| somebody who cares about product over profit.
|
| Take a look at Apple's functional organizational structure for an
| example of an engineering company done right.
| xenihn wrote:
| >An engineering company should have engineers as managers from
| the bottom level all the way up to the CEO.
|
| So should our government.
| trilinearnz wrote:
| Modern MBAs (at least the one I'm doing) very much take care to
| focus on factors beyond solely profit. Examples are the
| concepts of business sustainability and the different levels of
| maturity organisations can occupy within that, and the 'triple
| bottom line' (taking into account impact on society and the
| environment, as well as economic impact).
|
| Awareness of these factors can go from simply recognising them
| (lip service), to defining business performance _by_ them
| (living and embracing them).
| lotsofpulp wrote:
| >Examples are the concepts of business sustainability and the
| different levels of maturity organisations can occupy within
| that, and the 'triple bottom line' (taking into account
| impact on society and the environment, as well as economic
| impact).
|
| If someone doesn't pick these things growing up, a course in
| grad school isn't going to change their motivations.
| [deleted]
| _underfl0w_ wrote:
| > Take a look at Apple's functional organizational structure
| for an example of an engineering company done right.
|
| I don't have an actual refutation here (and certainly don't
| want to start some kind of Apple flame war) but something about
| this doesn't seem quite right.
| tomnipotent wrote:
| Think about the quality of their hardware products.
| kiseleon wrote:
| Do you mean the 2019 macbook pro that can't use the iGPU
| for multiple monitors so it overheats every time I plug in
| an external monitor? Or do you want the older macbooks that
| the keyboard would break from dust exposure requiring the
| entire laptop to be replaced?
|
| Or the airpods with non-replaceable batteries so you have
| to get new airpods for $49+ a piece every couple years?
|
| They aren't perfect and IMO haven't been in a long time.
| That said, the build quality is good, and I chose to get a
| macbook as my work computer as a software developer and
| don't regret it, but I wish people would stop putting apple
| on a pedestal as the example of perfection.
| tomnipotent wrote:
| All products have defects, and the Apple hardware defect
| rates are some of the lowest in the industry. That
| doesn't change their commitment to product quality and
| service, and how it compares to their peers. Take a look
| at eBay and compare any Apple products resale values to
| any other (and no, it's not just about brand).
| soperj wrote:
| People still buy over a decade old thinkpads.
| the_duke wrote:
| What's your source for the low defect numbers?
| sdoering wrote:
| Three in a row for me. I experience the exact same
| problems OP describes with three MB Pro laptops since
| 2018. More than 7000 bucks down the drain not calculating
| the 2100 for repairs.
|
| The company I work for had 1-2 percent of devices in
| repair every week.
|
| Not sure if this is just a strange coincidence, but I
| know of at least one other company in our town with the
| same scope of the described problem.
|
| I know this isn't a popular sentiment with some people,
| but from experience, I am done with Apple after 28 years
| of experience. My first was a beautiful Macintosh Classic
| I still have. Together with a SE 30. Somehow I miss my
| pre 2018 Macbook Pro.
| carabiner wrote:
| They prioritize form over function in their Lightning
| cables. Inadequate strain relief is a far more
| consequential problem in an airplane wing. I can't see
| Apple practices being applicable to mission critical fields
| like transport engineering (with high regulatory burden).
| They're different worlds. Apple also simply has a huge
| amount of money from hardware and software (App store
| etc.). I suspect they're far looser with resources for
| their teams than Boeing, whose mechanical/aerospace
| engineers have salaries a fraction of most Apple engineers.
|
| Edit: Overarching point is that Apple has a focus on
| aesthetics that is far less important in aerospace
| engineering, and has no experience on ensuring human
| safety.
| brokencode wrote:
| Yes, but they make consumer products and not airplanes.
| Why would you assume they'd build an airplane the same
| way they'd build a cheap cable?
| brokencode wrote:
| Here's a great article about their organizational structure:
| https://hbr.org/2020/11/how-apple-is-organized-for-
| innovatio...
|
| Like their products or not, Apple has been extraordinarily
| successful both in terms of sales and critical reception of
| their products compared to most companies.
|
| They have flops too (Siri, HomePod, others), but are mostly
| successful. The recent buzz about the M1 chip is a perfect
| example of their industry-leading engineering.
| sseveran wrote:
| The CEO that Boeing fired at the end of 2019 was an aerospace
| engineer who had been with the company since 1985.
|
| https://en.wikipedia.org/wiki/Dennis_Muilenburg
| fsh wrote:
| He only became CEO in 2015. His handling of the Max crashes
| was shameful, but you can't blame him for Boeing's long-term
| strategy faults.
| brokencode wrote:
| Sure but I'm not talking about just the CEO. I'm talking
| engineering managers all the way down. And I guess I'm not
| really talking about specific college degrees either, but a
| culture and mindset of engineering.
|
| Here's an interesting article about how engineers lost
| influence in Boeing: https://perell.com/essay/boeing-737-max/
| heavenlyblue wrote:
| Are you trying to say that engineers are inherently more moral
| in their decisions?
| tomnipotent wrote:
| Training certainly influences execution and only one of these
| groups was trained for financial engineering.
| 0xffff2 wrote:
| Engineers tend to look at technical, rather than business,
| considerations first.
| aclsid wrote:
| They certainly don't go on counting pennies
| orange_tee wrote:
| I think he is saying engineers care more about engineering,
| just purely because they enjoy and take pride in their own
| work. Whereas MBAs don't have much to be proud of, except
| short term profit goals.
| lumost wrote:
| The implication is that Engineers can manage an engineering
| product better than a career CEO. There are several examples
| of turnarounds such as AMD where technical CEO's delivered
| significant product and ultimately financial wins over
| organizations run by career managers.
|
| Boeing's choice to pursue the Max vs. a new airframe was
| entirely motivated by perceived cost benefits and resulted in
| a flawed and delayed product. Had the decision makers had an
| aerospace background they may have made different decisions.
| plandis wrote:
| Disagree with solely the CEO but in general Boeing's leadership
| seems to be somewhat disconnected from their actual product.
| Just take a look at Boeing's HQ in relation to where they
| actually make things. Boeing's c-suite is now in Chicago
| whereas their engineers/plant workers are on other ends of the
| country (Washington and South Carolina, mostly).
| esoterica wrote:
| Considering how hard people on this website try to push
| remote work it's funny how a broad consensus has emerged that
| Boeing putting workers and management in different offices is
| responsible for their cultural failures.
| lm28469 wrote:
| One could argue there are differences between us mere code
| monkeys playing with fancy gadgets and a company in charge
| of the lives of thousands of people every single day.
| johnl1479 wrote:
| All things considered, there is a stark difference between
| a job whose primary focus is to build a physical thing and
| a job whose primary focus is to build a digital thing.
| [deleted]
| wrkronmiller wrote:
| Boeing isn't a remote company, so it's not a contradiction.
|
| If you read into most of the arguments for remote-friendly
| workplaces, step one is cultural changes.
| tidepod12 wrote:
| I'm so tired of seeing this ridiculous "mba and accountants are
| evil" trope. You realize Tim Cook is one of those evil MBA
| people, right? And the CEO that oversaw Boeing during the
| launch of the MAX was a career aerospace engineer?
| paxys wrote:
| Exactly. Apple, Google, Microsoft, Salesforce, YouTube are
| all led by these MBAs and seem to be doing just fine.
| foolmeonce wrote:
| If Boeing's products went down that frequently, I wouldn't
| fly.
| linuxftw wrote:
| I guess he gets a pass because Apple was using slave labor
| before he took the reins.
| fsh wrote:
| The Max was developed under James McNerney who is an MBA with
| no engineering background.
| tidepod12 wrote:
| The max was developed and launched by Dennis Muilenberg.
| Muilenberg was President and then CEO of Boeing for 7 of
| the 8 years that the MAX was under development and launch.
| McNerney was only there for 4 of those years.
|
| You can argue all you want about who shoulders more
| responsibility, but Muilenberg was an executive throughout
| the entire program, and more importantly, was the CEO who
| oversaw the decision for the certification of the MAX prior
| to first flight, which was the critically faulty decision.
| fsh wrote:
| Miulenberg became CEO in July 2015. The 737 MAX went into
| production in 2014 and had its first flight in January
| 2016.
| tidepod12 wrote:
| Muilenberg became president in 2013, and the 737 MAX
| certifications happened in 2017, when Muilenberg was CEO.
| brokencode wrote:
| Tim Cook is also an industrial engineer, and this is easily
| available information.
|
| My point is more that you don't want people focused on
| business and profits instead of people who have deep
| knowledge in the area and passion for the product.
|
| Accountants and business majors are better at managing
| insurance companies, banks, etc, because they understand the
| space. Engineers are better at managing engineering companies
| for the same reason.
| tidepod12 wrote:
| Tim Cook has a bachelor engineering degree but he hasn't
| been involved in engineering work since the 90s. He's been
| the head of operations, making business decisions like
| closing down factories and outsourcing production, since
| his days at IBM. He is a supply chain wonk, which is why he
| got an MBA (supply chain management is a core part of
| business school teachings). This is also easily available
| information. Cook has been "focused on business and
| profits" for decades, and yet you act like he is an example
| of a great "engineer" in charge.
| brokencode wrote:
| Believe it or not, managing the supply chain is a
| specialty of industrial engineering.
|
| https://en.wikipedia.org/wiki/Industrial_engineering#Sub-
| dis...
| tidepod12 wrote:
| >Although it has the same goals as supply chain
| engineering, supply chain management is focused on a more
| traditional management and business based approach
|
| _gasp_ , there's that evil "business" word again
| mrkramer wrote:
| > My point is more that you don't want people focused on
| business and profits instead of people who have deep
| knowledge in the area and passion for the product.
|
| But isn't focusing on business and profits also focusing on
| safety of your products since you want to make sure your
| planes don't crash and passengers come to their destination
| alive and unharmed.
| danaliv wrote:
| You need both. I've worked at places that were all subject-
| matter and no business expertise. Companies like that fail.
| ImaCake wrote:
| Those of us in the operations sides of buisnesses or doing
| research at universities really only see all the terrible
| hurtfull decisions these MBAs are making. Constant cost
| cutting and understaffing tend to lead to a lot of built up
| resentment. Maybe it is just a few bad eggs spoiling the
| broth, but to operations people it _looks_ like the whole
| organisation is out to make their lives miserable.
| hosh wrote:
| There was an article about how, when Boeing bought out Mcdonnal
| Douglas, executives from the latter company took control and
| changed the culture to focus on profits over engineering.
| bumby wrote:
| "How Boeing Lost its Way"
|
| https://www.forbes.com/sites/josephholt/2020/02/03/how-
| boein...
| osipov wrote:
| but conspiracy theories aren't real!
| rdxm wrote:
| what a load of shit. the execs were absolutely complicit.
| cosmotic wrote:
| Is this for the first fraud or the second?
| midrus wrote:
| I always wonder why executives earn so much money when there is
| no responsibility on them when things go wrong.
|
| I'd like to see in jail those who make decisions, and earn
| salaries and bonuses accordingly to the responsibility they have.
|
| Earning tons of money and having no responsibility when things go
| south makes total no sense to me.
| iaHN wrote:
| > I always wonder why executives earn so much money when there
| is no responsibility on them when things go wrong.
|
| The word you are looking for is "oligarchy".
| rusk wrote:
| > I always wonder why executives earn so much money
|
| Well connected?
| WrtCdEvrydy wrote:
| Because the job is to cash the checks, sign off on the bad
| decisions, squeeze the bottom line and then "resign shamefully"
| when things go wrong with a giant golden parachute.
| tomnipotent wrote:
| > there is no responsibility on them when things go wrong
|
| Legal responsibility? Other than that, I've seen executives
| held responsible just as much as non-executives in my career,
| from firings to demotions to "transfers". It's not a magical
| suit of protection +3.
|
| > I'd like to see in jail those who make decisions
|
| Then no one would want to make decisions, other than
| psychopaths. No thanks. It's unrealistic to think everyone can
| know the consequences of every decision they make.
| meesles wrote:
| > Then no one would want to make decisions
|
| That's lazy. We hold individuals accountable for the choices
| they make. If you get behind the wheel of a car while drunk
| and get caught, you get in trouble. If you kill someone due
| to negligence or intentionally, you get in trouble.
|
| These execs knowingly cut corners and then conspired to cover
| their asses when things went wrong. This is not an edge-case
| where something went horrifically wrong that no one saw
| coming. Warnings were raised and processes in place to
| protect consumers were ignored. They should be jailed.
| ozborn wrote:
| "I always wonder why executives earn so much money when there
| is no responsibility on them when things go wrong."
|
| Because they can get away with it, the political, cultural and
| legal environment they operate under allows it.
|
| I also agree it makes no sense, either personally or from the
| standpoint of society at large.
| paxys wrote:
| Are such fines anything more than standard operating expenses for
| these companies at this point? There was fraud, 2 planes crashed,
| hundreds of people died, and yet no one is facing any real
| consequences and these planes are already back in the air.
| us0r wrote:
| As if the victims havent been through enough their attorney also
| embezzled money to fund his/her lifestyle on real housewives of
| Beverly Hills.
|
| https://www.ft.com/content/1afbf70b-752a-4a91-8e2a-afc74a8e3...
| java-man wrote:
| So, no jail time for the executives who made these decisions and
| "criminal misconduct"? Amazing.
| [deleted]
| bodhiandphysics wrote:
| It's hard to put a company in jail... we still have to wait to
| see if there are charges against Boeing executives
| triceratops wrote:
| Take all the company's profits for 2 or 3 years. That's like
| a prison term. Or 50% of revenues, if they start playing
| funny games with income.
| aaron-santos wrote:
| Why can't we put the decision makers in jail? It happened
| with Lay, Skilling, Kopper, and Andersen. Hell, even Darby,
| Bermingham, and Mulgrew were extradited and imprisoned.
| cameldrv wrote:
| I've never really understood why you can't put a company in
| jail. If a person can be removed from society and their
| ability to act freely can be removed, why can't you simply
| suspend their corporate charter for a period of time?
| sokoloff wrote:
| Take a look at the defense fleet that Boeing supports:
| https://www.boeing.com/defense/
| dragonwriter wrote:
| > I've never really understood why you can't put a company
| in jail
|
| Because...it's an abstraction that is not physically
| embodied and can't be imprisoned.
|
| > a person can be removed from society and their ability to
| act freely can be removed, why can't you simply suspend
| their corporate charter for a period of time?
|
| Suspending a corporate charter isn't equivalent to jail,
| it's equivalent to a reversible death penalty; the
| corporate charter is the source of legal existence of the
| corporation. Without a charter the corporation doesn't
| exist, can't be subject of legal action, can't own
| property, etc.
|
| I'm not really convinced that that makes any sense as a
| punishment (or even that temporary impairment that would be
| more analogous to imprisonment would.)
|
| People can be remediated by that kind of punishment, maybe,
| but abstractions like corporations probably cannot. Better
| to either dissolve them or exclude the bad individual
| actors from them and let them continue.
| rland wrote:
| Well, "jailing" a company by suspending its operations is
| more like starving a living thing. That'd be more like a
| death penalty.
|
| I do believe if we had any social imagination at all we
| could think of many many ways to materially punish bad
| actors. Like forcing a negative dividend, punishing/fining
| executives or board members personally, etc. People who own
| and control corporations need to have some skin in the
| game. Fines that are expended (or worse, appealed in court
| and subsequently never paid) are, evidently, too far
| removed.
| ars wrote:
| At the end of the day you have to punish a human. And
| following your suggestion would punish a lot of uninvolved
| humans.
| anonymousab wrote:
| Innocent people are affected when almost anyone is sent
| to jail. Families and friends and dependants and so on.
|
| The bigger and more important you are, the more people
| are affected by both you breaking the law and you being
| punished with imprisonment for doing so. A corporation is
| only different in scale.
| ars wrote:
| And because jail is sometimes a bad thing that means we
| should keep doing the bad thing?
|
| I have seen a couple cases of someone punished for a
| white collar crime sent to jail, effectively a vacation,
| while his family suffers terribly.
|
| They punished the wrong person and I feel it's a
| travesty.
|
| Jail is not the right punishment for nonviolent offenses.
| ljf wrote:
| Companies go bankrupt all the time and we don't worry
| about the workers (unless they are 'too big to fail'
| banks). It would change workers relationships with
| companies a lot and would likely encourage companies to
| break themselves up into parts. Might be good anti-
| monopoly move?
| markus_zhang wrote:
| You can put the executives into jails though. And the
| executives, not some low level manager as a scapegoat.
| ars wrote:
| Certainly, but the person I was replying to suggested
| shutting down a company, rather than punishing execs.
| the_duke wrote:
| How would you suspend a company?
|
| It would have to close all offices/manufacturing sites and
| fire all employees.
|
| Suppliers and customers would have to be compensated, which
| would also probably result in lots of lawsuits.
|
| It would mean bankruptcy for most companies out there.
|
| Suspending is more or less equivalent to just shutting it
| down.
|
| But yeah, a 2.5 billion fine is not much more than a slap
| on the wrist for a company with a revenue of 76 billion
| (2019).
| anonymousab wrote:
| >It would mean bankruptcy for most companies out there.
|
| So not much different than when a person is imprisoned.
| Good luck not getting fired and having debts rack up.
|
| Such an existential threat seems like a very good way of
| scaring corporations into compliance (well, among other
| things).
| the_duke wrote:
| But a companies "imprisonment" affects many more people.
|
| Employees out of a job , suppliers losing contracts,
| customers never getting what they might have already paid
| for, creditors losing the debt, share holders lose all
| their investment.
|
| Especially with a huge corporation like Boeing with 160k
| employees and billions flowing in and out, the effect
| would be huge.
|
| Like I said, I agree there needs to be some way to
| punish, but just shutting it down would punish a lot of
| parties that aren't not responsible.
| _underfl0w_ wrote:
| This was my thinking exactly. The point of establishing a
| formal punishment for criminal business activity is not
| to set up one that business _aren 't_ terrified of. Quite
| the opposite - it needs to be a very real, very scary
| source of motivation to do the right thing (since
| morality alone clearly isn't sufficient)
| dhritzkiv wrote:
| Perhaps transferring custody/ownership to the state?
| throwaway201103 wrote:
| Which state officials would be competent to run a major
| avaition, defense, and aerospace company?
|
| Perhaps forcing a new exectutive staff and/or board in
| some way, but don't see a literal state takeover ending
| well.
|
| Oversight and managment/operations need to be separate.
| This mess happened partly because Boeing was given too
| much leeway in performing their own oversight.
| markus_zhang wrote:
| You can actually, as long as you want to put a company out of
| business. You can revoke license, freeze accounts in banks,
| etc., like the US has done many times. But, it's Boeing, its
| own boy, so why bother?
| 1024core wrote:
| > It's hard to put a company in jail...
|
| A "company" is a bunch of decisionmakers (execs). Start
| jailing them for this crap, and watch the rest of them fall
| in line. Losing your freedom for 15 years is a _great_
| motivator for good behavior.
| mehrdadn wrote:
| > The department ultimately determined that an independent
| compliance monitor was unnecessary based on the following
| factors, among others: (i) the misconduct was neither pervasive
| across the organization, nor undertaken by a large number of
| employees, nor facilitated by senior management;
|
| Are they for real?? Exactly whose decision was it to present the
| plane as another 737 to avoid a full recertification? Some junior
| guy decided the strategy instead of senior management?
| newguy1234 wrote:
| BA has all the tell tale signs that it will go into decline. I
| see it as an company similar to IBM or GE that just slowly
| withered away as competitors took the market share.
| salex89 wrote:
| Considering this isn't a very high percentage of their revenue,
| it looks unfair. But this is almost the price of the MAX program
| as a whole (according to Wikipedia). That's not too far of a
| completely new plane, the Bombardier CS being $7B.
| fred_is_fred wrote:
| Anyone know how this compares to the cost that Boeing would have
| paid for doing the 737 "the right way" - with real pilot training
| along with more testing and regulation? This fine is only a small
| part of the cost to the company of course.
| raverbashing wrote:
| Don't forget that's only the fine. There was also the cost of
| contract breaches/compensations, the public image damage, the
| costs for the victims, the cost for having multiple deliveries
| delayed, etc
|
| In essence, doing the right way would have been cheaper.
| sokoloff wrote:
| The second paragraph of the article refutes your initial
| statement. It contains "Boeing will pay a total criminal
| monetary amount of over $2.5 billion, composed of a criminal
| monetary penalty of $243.6 million, compensation payments to
| Boeing's 737 MAX airline customers of $1.77 billion, and the
| establishment of a $500 million crash-victim beneficiaries
| fund to compensate the heirs, relatives, and legal
| beneficiaries of the 346 passengers who died in the Boeing
| 737 MAX crashes of Lion Air Flight 610 and Ethiopian Airlines
| Flight 302."
| raverbashing wrote:
| Almost. This is not as clear cut as it seems.
|
| Because it's saying "criminal monetary amount" but I'm not
| sure this refers to all compensations. Maybe it's only
| compensations in the US?
|
| A lot of talks with customers were confidential and
| probably did not involve only monetary compensation
| mc32 wrote:
| Now, if can only get the similar teeth to address online privacy
| violations.
| newguy1234 wrote:
| It is possible the incoming Biden administration will use anti-
| trust against big tech and could implement laws to strip out
| the ability to do bulk data collection.
| nolok wrote:
| Not exactly what you asked, but the neo revision of the A320 is
| set between one and two billions euros.
| salex89 wrote:
| True, but the Neo program was a bargain for Airbus in some
| ways. The platform lends itself to such improvements.
| murat124 wrote:
| Corporations are safe havens for corrupt and greedy folks. They
| can do whatever they please (almost) and suffer no consequences.
| If corporations are people they should be treated as such; not
| just with comical fines but with prison sentence. I don't see
| this happening any time soon though, as they are usually in the
| pockets of politicians. Expect no change until it is beneficial
| to corporations and politicians alike.
| logicslave wrote:
| Executives looted Boeing by cutting costs on everything, pumping
| short term profits, pocketing massive bonuses. Zero skin in the
| game for them, massive cost to their employees, shareholders, and
| the American public.
| LordFast wrote:
| Sadly, they aren't the first, and certainly won't be the last.
|
| Silicon Valley isn't immune to the same virus.
| Judgmentality wrote:
| > Silicon Valley isn't immune to the same virus.
|
| I am not saying this to be snarky, but is it not the
| generally held belief that VC stands for Vulture Capital?
|
| I realize not everybody shares this belief, but I think a lot
| of people do - maybe even most.
| Bjartr wrote:
| > is it not the generally held belief that VC stands for
| Vulture Capital?
|
| For what it's worth, I've been reading HN for over a
| decade, and am a co-founder of a now almost decade old
| startup and have never seen this phrase
|
| But maybe I'm just one of today's lucky 10,000
|
| https://xkcd.com/1053/
| scarmig wrote:
| I usually see Vulture Capitalism used more in reference to
| PE, where mature but distressed firms are purchased, with a
| focus on "cutting costs," and then chopped up and resold
| after being ravaged. Venture capital, on the other hand, is
| almost the opposite, as it cares little about costs in the
| pursuit of growth by any means possible.
| scarmig wrote:
| Aren't shareholders responsible for this as well? In the end,
| the buck stops with the owners of the company. We feel bad
| blaming them, because in most cases "them" is "us"--various
| institutional investors we've delegated responsibility for
| handling our capital--but active investors could have defended
| against this kind of failure.
| dietsprite wrote:
| They've already laid off 26,000 people in recent months - after
| spending almost all of its available cash on stock buybacks
| over the prior decade.
|
| Src: https://edition.cnn.com/2020/10/28/investing/boeing-job-
| cuts...
| hctaw wrote:
| There's nothing wrong with buybacks, they're tax-friendly
| dividends. They shouldn't be shamed for returning value to
| shareholders which it seems you're implying.
|
| What should be shamed is a tax code that differentiates
| dividends and buybacks.
| fuzzer37 wrote:
| Alright. Then any company that participates in share
| buyback obviously shouldn't get any stimulus money, then
| right? Because if they have that much cash on hand, they
| should give it to shareholders instead of investing in the
| company or saving it for lean times.
| dodobirdlord wrote:
| Correct, the government should generally not hand out
| stimulus as free money. Forcing the company to issue new
| stock and sell it to the government at market rate
| achieves all of the positive effects of stimulus, while
| also eliminating the perverse incentive to operate with
| no safety margin in the hopes of a bailout.
| shakezula wrote:
| I mean, they very much should be shamed for that when
| viewed in context with the rest of their awful management.
|
| In a vacuum, sure, it's not a bad thing to return profits
| to shareholders, but that's only like 1/10th of the story
| here.
| the-dude wrote:
| What was the massive cost to the American public?
| throwaway201103 wrote:
| Perhaps it's yet-to-be-realized. Boeing is a major defence
| contractor and "too big to fail."
|
| Ultimately they'd get a government bailout of some sort if
| push came to shove.
| jessaustin wrote:
| USTR is basically Boeing's private agent, even though that's
| a USA government office. That has cost USA consumers
| billions. Also we used to have an FAA we could trust, and now
| we don't. Also as sibling comment observes they get vast
| portions of "defense" spending.
| dessant wrote:
| There's something more tragic than the shareholder's losses:
| 346 people have died in two Boeing 737 MAX crashes.
| NullPrefix wrote:
| Yeah, but how many of them were Americans?
| tartoran wrote:
| It just happened that they were non-Americans. Americans
| could have had the same fate on 737 MAX. It's not like
| those non-American pilots were stupid or anything. They
| were simply hidden some information about operating the
| plane.
| shakezula wrote:
| I can't tell if this is a serious question or satire, but
| why in the ever-loving fuck does it matter their
| nationality?
| the-dude wrote:
| Of course it is satire. The top comment is only talking
| about 'losses' of Americans.
|
| All while ~350 people died. I find it a disgusting
| comment.
| wussboy wrote:
| Definitely satire.
| NullPrefix wrote:
| It's a serious satire. That number of citizens killed
| would definitely warrant jail time.
| m___ wrote:
| A text book example of money laundering, revolving door if you
| prefer the politically correct vocabulary, between elite
| individuals over the obfuscation of "corporation" and
| "administration". Similar to "high level" coding languages.
|
| My question, are there still dumbstruck individuals to the point
| of not noticing?
| TedDoesntTalk wrote:
| Will any of this money go to the families of the dead?
| java-man wrote:
| " Under the terms of the DPA, Boeing will pay a total criminal
| monetary amount of over $2.5 billion, composed of a criminal
| monetary penalty of $243.6 million, compensation payments to
| Boeing's 737 MAX airline customers of $1.77 billion, and the
| establishment of a $500 million crash-victim beneficiaries fund
| to compensate the heirs, relatives, and legal beneficiaries of
| the 346 passengers who died"
| ISL wrote:
| While the actuarial measure is cold and doesn't capture the
| unquantifiable loss, the crash-victim fund is only about 14%
| of what actuaries might assess.
|
| https://www.npr.org/2020/04/23/843310123/how-government-
| agen...
| triceratops wrote:
| Sadly, victims in poorer countries are considered worth
| less. See also: Union Carbide.
| Symbiote wrote:
| The Ethiopian Airlines flight had plenty of diplomats, UN
| staff etc on it.
|
| https://en.wikipedia.org/wiki/Ethiopian_Airlines_Flight_3
| 02#...
| ISL wrote:
| How we value people in other countries is up to us.
| 1024core wrote:
| SMH.... airline companies get more (for the "inconvenience",
| I guess) than the people who lost loved ones.
| 1024core wrote:
| Unless decision-makers go to jail, this means nothing. Execs
| should _not_ be able to buy themselves out of jail.
| nickthegreek wrote:
| At the very least fine could a MUCH higher percentage of annual
| profit. That would at least give the company incentive to fire
| people.
| apta_ wrote:
| Who would get fired though? It seems that it is more likely
| to affect those lower in the hierarchy.
| bzbarsky wrote:
| The number here ($2.5 billion) seems to be ~20% of Boeing's
| 2016 EBITDA (earnings before interest, taxes, depreciation,
| amortization) and ~18% of their 2017 EBITDA. It's ~700% of
| their 2019 EBITDA (they had a pretty bad year revenue-wise in
| 2019) and I expect they will have a significantly negative
| EBITDA for 2020 (it's -$4.6 billion for the 12 months through
| 2020-09-30).
|
| Looking at historical trends at
| https://www.macrotrends.net/stocks/charts/BA/boeing/ebitda it
| looks like it's something like 25% of an eyeballed "average
| year" for Boeing.
|
| I suspect you're right that this is a little low given what
| was going on here.
| staticautomatic wrote:
| We should probably consider charging and trying them first.
| jessaustin wrote:
| That's a great suggestion. Unfortunately, press releases like
| TFA are seldom followed by criminal charges against
| executives. This is the big announcement, right here.
| sargun wrote:
| How do you prevent the execs from delegating decision making
| (on paper) to engineering, and then forcing them to make
| certain decisions?
| codebje wrote:
| One delegates authority, not accountability.
| yulaow wrote:
| C-levels should be personally responsible for the decisions
| "made by the corp". They will need to obviously add checks
| and verification to what happens inside the company and could
| not claim anymore they "didn't know" because it would be
| explicit that their role is exactly to know and respond for
| it. Simple as that
| robotdongs wrote:
| This already occurs with SOX, it's definitely a workable
| model for processes and decisions not just impacting the
| finical statements.
| t0mas88 wrote:
| In theory SOX only has benefits, but in practice the
| compliance costs due to it are very high. I'm sure some
| of that is for the better (bad oversight before SOX) but
| I can't imagine the insane paper tigers that come out of
| it are a net positive in the end.
| AnimalMuppet wrote:
| "Knew or should have known". If you're a C-level exec, and
| you don't know, _it 's your fault_ that you don't know.
| linuxftw wrote:
| Don't forget about the regulators. Homicidal negligence.
| drukenemo wrote:
| So conspiracies do exist.
| [deleted]
| [deleted]
| pwthornton wrote:
| $2.5B could have paid for a lot of R&D on a clean sheet design
| that wasn't fatally flawed.
| nradov wrote:
| True but the airlines don't seem to want a clean sheet design.
| They want to buy new airplanes without having to invest in
| retraining employees or updating infrastructure. FAA
| certification requirements also impose a major obstacle.
| kingnothing wrote:
| And which executives are going to be criminally charged? Boeing
| has $77B in revenue, this is a negligible 3% fine. That's like
| the average American with a $36,000 revenue receiving a fine for
| $1,080.
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