24 ms·

DOJ fines Boeing over $2.5B, charges it with fraud conspiracy

305 points by Lapz 6y ago

notadog 6y ago
Ongoing discussion: https://news.ycombinator.com/item?id=25677573 https://news.ycombinator.com/item?id=25677573
RachelF 6y ago
So anyone at Boeing going to jail for killing 346 people?
- Trias11 6y ago
  No one who has $2.5B is going to jail for anything.
  - lallysingh 6y ago
    Martha Stewart? But that was securities fraud, the only true crime.
    - vageli 6y ago
      > Martha Stewart? But that was securities fraud, the only true crime. I don't think Martha Stewart is a billionaire.
      - ineedasername 6y ago
        She's > 600 million. At that level, I'm not sure there's a useful distinction between her level & billionaire
    - blazor 6y ago
      that was lying to the FBI actually
    - arcticbull 6y ago
      "The charge is bank robbery. Now, my caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested. Therefore, robbing a bank is tantamount to that most heinous of crimes, theft of money."
    - floxy 6y ago
      >In March 2004, Stewart was found guilty of conspiracy, obstruction of justice, and two counts of lying to a federal investigator. Her securities fraud charge was dismissed. https://www.thestreet.com/lifestyle/martha-stewart-net-worth-15064812 https://www.thestreet.com/lifestyle/martha-stewart-net-worth...
    - paulmd 6y ago
      The one thing that will absolutely send you straight to jail 100% of the time is playing games with rich people's money.
  - m1sta_ 6y ago
    Fines like this typically punish shareholders and lower level employees (via restructuring in response to a need to find budget for the fine).
    - dragonwriter 6y ago
      > Fines like this typically punish shareholders Good. That should motivate shareholders to assure that they can hold management of firms they invest in accountable. > and lower level employees Which is regrettable, but I’m not sure how any form of corporate sanction could avoid that.
      - entangledqubit 6y ago
        You could have the fines be "heavily" pulled out of compensation packages for the higher ups who actually have the power to change the organization... but then they'd probably just leave and screw up some other place? Do boards generally try to claw back compensation in these sorts of situations? (Just as they have been doing in some of the recent cases involving financial shenanigans.)
    - deepsun 6y ago
      Boeing belongs to the USA, so US citizens will take the punishment then. Am I right?
      - blendergeek 6y ago
        Boeing is a publicly traded company based in the USA. That is different from being owned by the USA. Amtrak (which provided passenger rail service in the USA) is owned by the US Federal Government. Boeing on the other hand is owned by a multitude of individuals like you and me and probably a good number hedgefunds.
        m463 6y ago
        Meanwhile, Airbus... I've always heard the French Government supports it, but it's hard to see exactly how. and something interesting I just noticed: "In 2015, Airbus Group said it was establishing an R&D center and venture capital fund in Silicon Valley."
- csours 6y ago
  Who do you think should? An engineer who worked on the system? A manager? What law was broken? If you were in their position, how would you know you were breaking the law? Diffuse responsibility is a real problem. 'Teaching to the test' is a real problem. Normalizing risk is a real problem. Blaming individuals is very satisfying, and it's very easy to do with hindsight, but if you want large complex systems to work better, you have to get over individual blame. I'm not saying it's easy, and I'm not saying that we should stop looking for law-breakers, but I am saying that punishment will not lead to better outcomes in the absence of other positive actions.
  - fgonzag 6y ago
    I'd start with any one who decided not to ground the planes and deflected responsibility a soon as the first crash happened. They have direct responsibility over the second crash. The I'd go over all the certification process. Any person who concealed information or misled in an official capacity goes to jail. That's the whole point of requiring titled engineers signatures. The buck stops with them.
    - jvanderbot 6y ago
      They were very likely assured by their program managers that the crash was a fluke, presented with convincing test data, and pressured by their bosses, the board, etc etc. These things rarely happen by individual malfeasance. They are part of a system of small mistaken assumptions that compound into big lies.
      - aprdm 6y ago
        I agree with you but out of curiosity what do you suggest as a solution ? You believe all we need is the fine and then the company goes under ? If that's true then all the individuals who failed could just as easily go to another company and repeat their failures. For doctors a failure can make their license get revoked (even tho it doesn't seem to happen very often in practice). Wonder if there could be something similar but indeed it is very hard to find "a person to blame", maybe the CEO? CTO? :)
- KorematsuFred 6y ago
  Constant news around this bothered me deeply. Someone admits they committed fraud and 346 people died but pays a small sum to get out of the mess without jail time for anyone ? A lot of people say this is bad and these corporations are too powerful and we need someone like Bernie sanders to teach them a lesson. A closer scrutiny reveals exactly the opposite. It is the government that is too powerful, government tries to open an investigation with an explicit objective of jailing the executive. At some point Boeing has to ask how much it stands to lose if the executive goes to jail. Even though the probability is low, the DOJ has long arms and more resources to harass Boeing. $2.5B is not a fine but a bribe that an all powerful DOJ has extracted from Boeing. $2.5B is still lot of money and 346 deaths is even bigger disaster for Boeing. Boeing did not benefit from 346 deaths on other hand it suffered massive losses. A selfish and greedy company like Boeing have far greater incentives to course correct rather than DOJ or US government. Remember how USA bombed countries while making completely fraudulent claims about WMD ? Who went to jail for that ?
  - ineedasername 6y ago
    You're basically saying the fact that the government can investigate a thing is proof that the government is too powerful. I'm not sure where you get the idea that an investigation was opened with the specific purpose of jailing an executive: I don't see any indication that was the case, and just about anyone in or outside of government could have predicted before the investigation that no executive would go to jail over this.
    - KorematsuFred 6y ago
      > You're basically saying the fact that the government can investigate a thing is proof that the government is too powerful. Not at all. If government could actually investigate and prove charges and jail Boeing CEO would be the sign of an effective government. The fact that it simple files charges, does a phony investigation and settles for a very low bribe for the deaths of my loved ones is the proof that we are dealing with a mafia and not a government of people.
  - arcticbull 6y ago
tomxor 6y ago
> The company said it already accounted for a bulk of those costs in prior quarters and expects to take a $743.6 million charge in its fourth-quarter 2020 earnings to cover the rest. Sounds a bit like a like a fight club math answer. I wonder what a recall would have cost.
- asdfasgasdgasdg 6y ago
  No, I don't think so. Boeing lost a lot more than this just to market forces -- the cost of lost business, the cost of repairs, the loss of future good will. There is no way a recall coordinator with a global view of the company's welfare in mind would have made the decision to go forward.
  - deleted 6y ago
    [deleted]
  - tomxor 6y ago
    I agree it probably would have been less expensive, but I'm not sold on the company necessarily believing that at the time. > There is no way a recall coordinator with a global view of the company's welfare in mind would have made the decision to go forward. When the information about the sensors and software first emerged everyone was saying there was no way any one engineer would have not spoken up about it... It was later relieved they outsourced the software development to $9/hr engineers. It wouldn't be surprising if their "recall coordinator" did not speak up for one reason or another.
    - salawat 6y ago
      Those $9 an hour engineers did not work on MCAS. They worked on one of the MFD's (Multi-Function Displays).
  - mschuster91 6y ago
    > Boeing lost a lot more than this just to market forces -- the cost of lost business, the cost of repairs, the loss of future good will. How much did they actually lose? I mean, excluding coronavirus essentially destroying passenger airflight... Boeing does not have competition in many areas. The US military won't buy Airbus, Dassault or Saab planes, the NASA won't exclusively shift to SpaceX because ULA space flight is actually a job program. On the passenger airflight side the only competition is Airbus who have limited capacity.
deleted 6y ago
[deleted]
haltingproblem 6y ago
There is a notion that Boeing is/was a company with an insanely great engineering culture and their engineers lived in an idyllic culture of building great and safe products. This great culture was all lost as a result of the merger with McDonnell Douglas [1], [2], [3]. This argument is frequently put forth by ex-Boeing engineers. This is an apologia for Boeing's behavior which killed 346 people and endangered the lives of 1000s more and destroyed jobs/wealth around the world. These apologists want you to think that the unholy trinity of the McDonnell Douglas culture which infected Boeing, the decisions of Harry C. Stonecipher, CEO of McDonnell Douglas at the time of the merger and Dennis Muilenburg, the last CEO of Boeing who greenlighted the 737 MAX are responsible for this outcome. So strong is the apologists conviction in the purity of Boeing's engineering culture that they ignore the fact that thousands of engineers worked on the 737 Max. Not a single engineer raised issues with the engineering of the aircraft. Not a single engineer wrote a blistering memo calling out its failing or quit in protest. They were all held in thrall, paralyzed and forced to go against their ethics, professionalism, decency by the power of this unholy trinity! Eventually, all stellar organizations, public or private, become complacent (e.g. Israeli Intelligence Failure, 1973). Boeing made an unstable plane with a dangerous MCAS to get it to market fast. They then topped it off by making it rely on a single sensor. They then made the dual-sensor an upgrade. An undergraduate engineering student with a basic course on probability can see that this is tailor-made for disaster. Boeing made an essential safety feature an upgrade!! But wait there is more. They then proceeded to hide this monstrosity from every regulator and airline on the planet and insisted that the plane was no different in every aspect of its flight behavior than its predecessor which was over 30 years old and did not require additional safety training. Boeing had become so criminally blatant that the head of airline training at Lion Air inquired about extra training for the 737 Max and they rebuffed him. After the Lion Air crash, Boeing proceeded to cast aspersion on the safety practices of Lion Air. Lion Air does have a spotty safety record but in this case, Boeing rebuffed their requests for additional training because it would set a precedent for other airlines in SE Asia. When that lack of training was a factor in the crash, Boeing proceeded to blame Lion Air. Chutzpah! Released transcripts of messages show how Boeing employees worked in unison to ensure no extra simulator training was required. Great engineering culture obsessed with safety, this aint! We need to start accepting that whatever stellar engineering culture existed at Boeing is dead. We as a society need to stop scapegoating imaginary forces in the past and giving Boeing engineers a pass. Let's agree that strong regulation is necessary to ensure the safety of Boeing Products. [1] https://qz.com/1776080/how-the-mcdonnell-douglas-boeing-merger-led-to-the-737-max-crisis/ https://qz.com/1776080/how-the-mcdonnell-douglas-boeing-merg... [2] https://fortune.com/longform/boeing-737-max-crisis-shareholder-first-culture/ https://fortune.com/longform/boeing-737-max-crisis-sharehold... [3] https://www.perell.com/blog/boeing-737-max https://www.perell.com/blog/boeing-737-max
chmaynard 6y ago
Corporations in the USA have the same legal rights as individuals in matters such as free speech, political lobbying, and so on. But when it comes to criminal liability, the people in charge are not held accountable and can buy their way out of jail with corporate funds. What a great country.
- bergstromm466 6y ago
  By using the US intellectual property system, corporations can also patent and own DNA.
- seibelj 6y ago
  Hypothetically, let's say you had perfect access to all internal communications, emails, etc. And after all of this, you never found a smoking gun - not anyone to blame directly for this. The Max issue was caused by a culture of stupidity, greed, cronyism, etc. etc. What then? Should we shut Boeing down? Should we arrest the executive team out of principle? I think a lot of enormous fuckups like this are not directed by individuals, but more likely a miasma of incompetence that cannot be directly associated with any one person. It's more like we should arrest Harvard Business School professors for teaching MBA strategy wrong.
  - snovv_crash 6y ago
    Isn't this why we pay the executive team the big bucks?
    - seibelj 6y ago
      It’s one thing to fire the exec team. It’s another to charge them with criminal responsibility, especially when the shareholders will ultimately fund their defense one way or another. I don’t think it would be proven. My comment was a broader point about why corporations never seem to have employees get charged. It’s because they usually aren’t liable and won’t get convicted by a jury, and the government subpoenas all the records and determined it won’t fly. If you disagree with my assessment, you must think there is a conspiracy in which government lawyers collude with corporate leaders to protect them. That’s a very strong conspiracy. I’m not saying you are wrong, but recognize what you are asserting.
InTheArena 6y ago
Don’t worry, Boeing gave 19 million dollars in lobbying. They will make this back with sweet sweet new contracts from the DoD and NASA, especially now that Bridenstein is gone and won’t fire their corrupt cronies at the agency.
- haltingproblem 6y ago
  Boeing being banned from lobbying would have a good clause to include in the agreement but that would be a bridge too far.
derwiki 6y ago
Down 0.6% in after hours trading. Does this mean investors consider this a win?
- nceqs3 6y ago
  It has already been factored into the share price. This is very very common. See 1MDB-Goldman announcement. Share price was up on the day Goldman pleaded guilty and agreed to pay billions in fines.
- datavirtue 6y ago
  Yeah. It's over and only a small fine to pay out.
cosmiccatnap 6y ago
Damn that might set them back a whole month...
Sophistifunk 6y ago
If I am found criminally responsible for crashing a couple of planes, I'm pretty sure I'd get life. Just sayin'.
kumarski 6y ago
I bought as much as I could on Margin at $150. Boeing is a national asset and has hundreds of marketing vendors in India. Gonna boom under spaceforce and India vs. CCP. Boeing is a national asset and it's gonna be institutionally owned heavily or dismantled and sold off into different units. Gonna be wild to watch.
wolverine876 6y ago
Per another source, the $2.5 billion mostly goes to other major corporations: * 243.6 million fine * $500 million into a fund for the families of passengers who were killed in the crashes * $1.77 billion in compensation to airlines that were unable to use their Max jets while they were grounded https://abcnews.go.com/Politics/wireStory/boeing-pay-25-billion-settle-charge-plane-75118202 https://abcnews.go.com/Politics/wireStory/boeing-pay-25-bill... For the most part, the U.S. Department of Justice saved some Fortune 500 companies from civil litigation costs.
JohnJamesRambo 6y ago
So the fine is about the cost of twenty-five 737 Max planes. >Boeing had around 450 Boeing 737 MAX aircraft built and awaiting delivery. >Boeing has unfilled orders for over 4,000 737 MAX jets. https://simpleflying.com/737-max-deliveries-december/ https://simpleflying.com/737-max-deliveries-december/
- guiriduro 6y ago
  You should probably see it in terms of bottom line rather than top line, i.e. the operating margin gained on each sale is about $12M according to wikipedia, so they would need to sell 200 maxes to obtain the net cash they will use to pay the fines.
  - Taek 6y ago
    You're telling me the fine is something like 5% of the profit collected from making the 737MAX?
    - imtringued 6y ago
      Sounds like the real punishment should have been the abolishment of the 737 MAX. All the R&D money would be lost and they'd have to start over with a new model.
koreanguy 6y ago
American criminals getting away with murder, while julian assange is being hunted like a dog. crazy democracy
just_steve_h 6y ago
Boeing's fine is essentially nothing more than a one-time 10% rebate to their largest customer. (Reference: In 2017, Boeing booked over $22 BILLION in revenue from the US government. https://www.forbes.com/sites/greatspeculations/2020/01/02/how-much-of-boeings-revenues-comes-from-the-us-government/ https://www.forbes.com/sites/greatspeculations/2020/01/02/ho... )
- londons_explore 6y ago
  > Boeing booked over $22 BILLION in revenue from the US government. Which, by the way, is totally not state support, especially if anyone from Airbus is within hearing distance...
  - oblio 6y ago
    Well, at the level they're at, and considering the strategic and military considerations, everybody does it. I'm reasonably sure EU countries do the same with Airbus, and I'm European.
    - londons_explore 6y ago
      Indeed, they do. We should just drop the pretense this playing field is level...
    - benhurmarcel 6y ago
      They do, but Boeing gets about double the military activity of Airbus.
  - laurent92 6y ago
    Does it bar the EU and China from conducting their own criminal investigation, ask for extradition of the management team and/or impose their own fines?
purpleidea 6y ago
The people doing perpetrating these crimes don't care. Their paycheques don't change. If they aren't afraid of jail time and real accountability, then this will happen again. Instead they pushed through whatever they needed, and probably got well paid for those "successes".
chaganated 6y ago
One thing the Chinese get right: high-level executions. When the blood cries out, I doubt it's to send a paltry $2.5B to the feds.
mrjin 6y ago
Just wondering is FAA getting away with it?
franczesko 6y ago
"No individuals have been criminally charged in the government’s investigation into Boeing, which was led by the FBI and the Department of Transportation’s Office of the Inspector General. Dennis Muilenburg, who was CEO when the crashes happened, was ousted in late 2019. He left with more than $60 million in stock options and other assets, though Boeing did not give him a severance." What a cruel joke
- jiggawatts 6y ago
  "CEOs have to be compensated as much as they are because they shoulder such huge responsibilities." say the apologists for why American CEOs "need" to be paid 500x as much as a typical worker. How about this: I'll shoulder that grave responsibility for a mere 50x the typical worker, and I'll settle for a golden parachute of just $6M. That's a bargain!
- seveibar 6y ago
  What does $60m in stock options mean? Can they be exercised at profit?
intricatedetail 6y ago
People at the top need to go to jail for life. This is no punishment.
S53Vflnr4n 6y ago
$500 million fund for crash victims family members (346 human lives) and $1.77 billion for its airline customers. Justice served. Now Boeing can rinse and repeat not to mention bail out from tax payers if there is a need to be. So who went to jail for this ? I know that if I steal from Walmart, I will be arrested and possibly get jail time.
- laurent92 6y ago
  Is $1.77 billion enough, when companies had to ground 700 airframes for more than a year, only to reopen during the Covid lockdowns? It feels like it is not 100% served, although justice cases are never 100% satisfying.
Twaway45609 6y ago
Compare this to the fine which volkswagen got (6 times more) and prison term for the top managers, having killed 0 people. Unfortunately US justice is very unfair against foreign corporations.
- mft_ 6y ago
  This is a really interesting comparison. We can’t know the small or incremental damage that VW’s emissions did to people’s health... but at face value, it feels like Boeing’s punishment is an order of magnitude or two too low.
- ucha 6y ago
  It has been estimated VW caused 59 early deaths in the US and probably a lot more people got sick etc... so not exactly negligible. However, I agree with the general point of your comment. https://iopscience.iop.org/article/10.1088/1748-9326/10/11/114005 https://iopscience.iop.org/article/10.1088/1748-9326/10/11/1...

305 points by Lapz 6y ago

notadog 6y ago

Ongoing discussion: https://news.ycombinator.com/item?id=25677573 https://news.ycombinator.com/item?id=25677573

RachelF 6y ago

So anyone at Boeing going to jail for killing 346 people?

Trias11 6y ago
No one who has $2.5B is going to jail for anything.
- lallysingh 6y ago
  Martha Stewart? But that was securities fraud, the only true crime.
  - vageli 6y ago
    > Martha Stewart? But that was securities fraud, the only true crime. I don't think Martha Stewart is a billionaire.
    - ineedasername 6y ago
      She's > 600 million. At that level, I'm not sure there's a useful distinction between her level & billionaire
  - blazor 6y ago
    that was lying to the FBI actually
  - arcticbull 6y ago
    "The charge is bank robbery. Now, my caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested. Therefore, robbing a bank is tantamount to that most heinous of crimes, theft of money."
  - floxy 6y ago
    >In March 2004, Stewart was found guilty of conspiracy, obstruction of justice, and two counts of lying to a federal investigator. Her securities fraud charge was dismissed. https://www.thestreet.com/lifestyle/martha-stewart-net-worth-15064812 https://www.thestreet.com/lifestyle/martha-stewart-net-worth...
  - paulmd 6y ago
    The one thing that will absolutely send you straight to jail 100% of the time is playing games with rich people's money.
- m1sta_ 6y ago
  Fines like this typically punish shareholders and lower level employees (via restructuring in response to a need to find budget for the fine).
  - dragonwriter 6y ago
    > Fines like this typically punish shareholders Good. That should motivate shareholders to assure that they can hold management of firms they invest in accountable. > and lower level employees Which is regrettable, but I’m not sure how any form of corporate sanction could avoid that.
    - entangledqubit 6y ago
      You could have the fines be "heavily" pulled out of compensation packages for the higher ups who actually have the power to change the organization... but then they'd probably just leave and screw up some other place? Do boards generally try to claw back compensation in these sorts of situations? (Just as they have been doing in some of the recent cases involving financial shenanigans.)
  - deepsun 6y ago
    Boeing belongs to the USA, so US citizens will take the punishment then. Am I right?
    - blendergeek 6y ago
      Boeing is a publicly traded company based in the USA. That is different from being owned by the USA. Amtrak (which provided passenger rail service in the USA) is owned by the US Federal Government. Boeing on the other hand is owned by a multitude of individuals like you and me and probably a good number hedgefunds.
      - m463 6y ago
        Meanwhile, Airbus... I've always heard the French Government supports it, but it's hard to see exactly how. and something interesting I just noticed: "In 2015, Airbus Group said it was establishing an R&D center and venture capital fund in Silicon Valley."
csours 6y ago
Who do you think should? An engineer who worked on the system? A manager? What law was broken? If you were in their position, how would you know you were breaking the law? Diffuse responsibility is a real problem. 'Teaching to the test' is a real problem. Normalizing risk is a real problem. Blaming individuals is very satisfying, and it's very easy to do with hindsight, but if you want large complex systems to work better, you have to get over individual blame. I'm not saying it's easy, and I'm not saying that we should stop looking for law-breakers, but I am saying that punishment will not lead to better outcomes in the absence of other positive actions.
- fgonzag 6y ago
  I'd start with any one who decided not to ground the planes and deflected responsibility a soon as the first crash happened. They have direct responsibility over the second crash. The I'd go over all the certification process. Any person who concealed information or misled in an official capacity goes to jail. That's the whole point of requiring titled engineers signatures. The buck stops with them.
  - jvanderbot 6y ago
    They were very likely assured by their program managers that the crash was a fluke, presented with convincing test data, and pressured by their bosses, the board, etc etc. These things rarely happen by individual malfeasance. They are part of a system of small mistaken assumptions that compound into big lies.
    - aprdm 6y ago
      I agree with you but out of curiosity what do you suggest as a solution ? You believe all we need is the fine and then the company goes under ? If that's true then all the individuals who failed could just as easily go to another company and repeat their failures. For doctors a failure can make their license get revoked (even tho it doesn't seem to happen very often in practice). Wonder if there could be something similar but indeed it is very hard to find "a person to blame", maybe the CEO? CTO? :)
KorematsuFred 6y ago
Constant news around this bothered me deeply. Someone admits they committed fraud and 346 people died but pays a small sum to get out of the mess without jail time for anyone ? A lot of people say this is bad and these corporations are too powerful and we need someone like Bernie sanders to teach them a lesson. A closer scrutiny reveals exactly the opposite. It is the government that is too powerful, government tries to open an investigation with an explicit objective of jailing the executive. At some point Boeing has to ask how much it stands to lose if the executive goes to jail. Even though the probability is low, the DOJ has long arms and more resources to harass Boeing. $2.5B is not a fine but a bribe that an all powerful DOJ has extracted from Boeing. $2.5B is still lot of money and 346 deaths is even bigger disaster for Boeing. Boeing did not benefit from 346 deaths on other hand it suffered massive losses. A selfish and greedy company like Boeing have far greater incentives to course correct rather than DOJ or US government. Remember how USA bombed countries while making completely fraudulent claims about WMD ? Who went to jail for that ?
- ineedasername 6y ago
  You're basically saying the fact that the government can investigate a thing is proof that the government is too powerful. I'm not sure where you get the idea that an investigation was opened with the specific purpose of jailing an executive: I don't see any indication that was the case, and just about anyone in or outside of government could have predicted before the investigation that no executive would go to jail over this.
  - KorematsuFred 6y ago
    > You're basically saying the fact that the government can investigate a thing is proof that the government is too powerful. Not at all. If government could actually investigate and prove charges and jail Boeing CEO would be the sign of an effective government. The fact that it simple files charges, does a phony investigation and settles for a very low bribe for the deaths of my loved ones is the proof that we are dealing with a mafia and not a government of people.
- arcticbull 6y ago

tomxor 6y ago

> The company said it already accounted for a bulk of those costs in prior quarters and expects to take a $743.6 million charge in its fourth-quarter 2020 earnings to cover the rest. Sounds a bit like a like a fight club math answer. I wonder what a recall would have cost.

asdfasgasdgasdg 6y ago
No, I don't think so. Boeing lost a lot more than this just to market forces -- the cost of lost business, the cost of repairs, the loss of future good will. There is no way a recall coordinator with a global view of the company's welfare in mind would have made the decision to go forward.
- deleted 6y ago
  [deleted]
- tomxor 6y ago
  I agree it probably would have been less expensive, but I'm not sold on the company necessarily believing that at the time. > There is no way a recall coordinator with a global view of the company's welfare in mind would have made the decision to go forward. When the information about the sensors and software first emerged everyone was saying there was no way any one engineer would have not spoken up about it... It was later relieved they outsourced the software development to $9/hr engineers. It wouldn't be surprising if their "recall coordinator" did not speak up for one reason or another.
  - salawat 6y ago
    Those $9 an hour engineers did not work on MCAS. They worked on one of the MFD's (Multi-Function Displays).
- mschuster91 6y ago
  > Boeing lost a lot more than this just to market forces -- the cost of lost business, the cost of repairs, the loss of future good will. How much did they actually lose? I mean, excluding coronavirus essentially destroying passenger airflight... Boeing does not have competition in many areas. The US military won't buy Airbus, Dassault or Saab planes, the NASA won't exclusively shift to SpaceX because ULA space flight is actually a job program. On the passenger airflight side the only competition is Airbus who have limited capacity.

deleted 6y ago

[deleted]

haltingproblem 6y ago

There is a notion that Boeing is/was a company with an insanely great engineering culture and their engineers lived in an idyllic culture of building great and safe products. This great culture was all lost as a result of the merger with McDonnell Douglas [1], [2], [3]. This argument is frequently put forth by ex-Boeing engineers. This is an apologia for Boeing's behavior which killed 346 people and endangered the lives of 1000s more and destroyed jobs/wealth around the world. These apologists want you to think that the unholy trinity of the McDonnell Douglas culture which infected Boeing, the decisions of Harry C. Stonecipher, CEO of McDonnell Douglas at the time of the merger and Dennis Muilenburg, the last CEO of Boeing who greenlighted the 737 MAX are responsible for this outcome. So strong is the apologists conviction in the purity of Boeing's engineering culture that they ignore the fact that thousands of engineers worked on the 737 Max. Not a single engineer raised issues with the engineering of the aircraft. Not a single engineer wrote a blistering memo calling out its failing or quit in protest. They were all held in thrall, paralyzed and forced to go against their ethics, professionalism, decency by the power of this unholy trinity! Eventually, all stellar organizations, public or private, become complacent (e.g. Israeli Intelligence Failure, 1973). Boeing made an unstable plane with a dangerous MCAS to get it to market fast. They then topped it off by making it rely on a single sensor. They then made the dual-sensor an upgrade. An undergraduate engineering student with a basic course on probability can see that this is tailor-made for disaster. Boeing made an essential safety feature an upgrade!! But wait there is more. They then proceeded to hide this monstrosity from every regulator and airline on the planet and insisted that the plane was no different in every aspect of its flight behavior than its predecessor which was over 30 years old and did not require additional safety training. Boeing had become so criminally blatant that the head of airline training at Lion Air inquired about extra training for the 737 Max and they rebuffed him. After the Lion Air crash, Boeing proceeded to cast aspersion on the safety practices of Lion Air. Lion Air does have a spotty safety record but in this case, Boeing rebuffed their requests for additional training because it would set a precedent for other airlines in SE Asia. When that lack of training was a factor in the crash, Boeing proceeded to blame Lion Air. Chutzpah! Released transcripts of messages show how Boeing employees worked in unison to ensure no extra simulator training was required. Great engineering culture obsessed with safety, this aint! We need to start accepting that whatever stellar engineering culture existed at Boeing is dead. We as a society need to stop scapegoating imaginary forces in the past and giving Boeing engineers a pass. Let's agree that strong regulation is necessary to ensure the safety of Boeing Products. [1] https://qz.com/1776080/how-the-mcdonnell-douglas-boeing-merger-led-to-the-737-max-crisis/ https://qz.com/1776080/how-the-mcdonnell-douglas-boeing-merg... [2] https://fortune.com/longform/boeing-737-max-crisis-shareholder-first-culture/ https://fortune.com/longform/boeing-737-max-crisis-sharehold... [3] https://www.perell.com/blog/boeing-737-max https://www.perell.com/blog/boeing-737-max

chmaynard 6y ago

Corporations in the USA have the same legal rights as individuals in matters such as free speech, political lobbying, and so on. But when it comes to criminal liability, the people in charge are not held accountable and can buy their way out of jail with corporate funds. What a great country.

bergstromm466 6y ago
By using the US intellectual property system, corporations can also patent and own DNA.
seibelj 6y ago
Hypothetically, let's say you had perfect access to all internal communications, emails, etc. And after all of this, you never found a smoking gun - not anyone to blame directly for this. The Max issue was caused by a culture of stupidity, greed, cronyism, etc. etc. What then? Should we shut Boeing down? Should we arrest the executive team out of principle? I think a lot of enormous fuckups like this are not directed by individuals, but more likely a miasma of incompetence that cannot be directly associated with any one person. It's more like we should arrest Harvard Business School professors for teaching MBA strategy wrong.
- snovv_crash 6y ago
  Isn't this why we pay the executive team the big bucks?
  - seibelj 6y ago
    It’s one thing to fire the exec team. It’s another to charge them with criminal responsibility, especially when the shareholders will ultimately fund their defense one way or another. I don’t think it would be proven. My comment was a broader point about why corporations never seem to have employees get charged. It’s because they usually aren’t liable and won’t get convicted by a jury, and the government subpoenas all the records and determined it won’t fly. If you disagree with my assessment, you must think there is a conspiracy in which government lawyers collude with corporate leaders to protect them. That’s a very strong conspiracy. I’m not saying you are wrong, but recognize what you are asserting.

InTheArena 6y ago

Don’t worry, Boeing gave 19 million dollars in lobbying. They will make this back with sweet sweet new contracts from the DoD and NASA, especially now that Bridenstein is gone and won’t fire their corrupt cronies at the agency.

haltingproblem 6y ago
Boeing being banned from lobbying would have a good clause to include in the agreement but that would be a bridge too far.

derwiki 6y ago

Down 0.6% in after hours trading. Does this mean investors consider this a win?

nceqs3 6y ago
It has already been factored into the share price. This is very very common. See 1MDB-Goldman announcement. Share price was up on the day Goldman pleaded guilty and agreed to pay billions in fines.
datavirtue 6y ago
Yeah. It's over and only a small fine to pay out.

cosmiccatnap 6y ago

Damn that might set them back a whole month...

Sophistifunk 6y ago

If I am found criminally responsible for crashing a couple of planes, I'm pretty sure I'd get life. Just sayin'.

kumarski 6y ago

I bought as much as I could on Margin at $150. Boeing is a national asset and has hundreds of marketing vendors in India. Gonna boom under spaceforce and India vs. CCP. Boeing is a national asset and it's gonna be institutionally owned heavily or dismantled and sold off into different units. Gonna be wild to watch.

wolverine876 6y ago

Per another source, the $2.5 billion mostly goes to other major corporations: * 243.6 million fine * $500 million into a fund for the families of passengers who were killed in the crashes * $1.77 billion in compensation to airlines that were unable to use their Max jets while they were grounded https://abcnews.go.com/Politics/wireStory/boeing-pay-25-billion-settle-charge-plane-75118202 https://abcnews.go.com/Politics/wireStory/boeing-pay-25-bill... For the most part, the U.S. Department of Justice saved some Fortune 500 companies from civil litigation costs.

JohnJamesRambo 6y ago

So the fine is about the cost of twenty-five 737 Max planes. >Boeing had around 450 Boeing 737 MAX aircraft built and awaiting delivery. >Boeing has unfilled orders for over 4,000 737 MAX jets. https://simpleflying.com/737-max-deliveries-december/ https://simpleflying.com/737-max-deliveries-december/

guiriduro 6y ago
You should probably see it in terms of bottom line rather than top line, i.e. the operating margin gained on each sale is about $12M according to wikipedia, so they would need to sell 200 maxes to obtain the net cash they will use to pay the fines.
- Taek 6y ago
  You're telling me the fine is something like 5% of the profit collected from making the 737MAX?
  - imtringued 6y ago
    Sounds like the real punishment should have been the abolishment of the 737 MAX. All the R&D money would be lost and they'd have to start over with a new model.

koreanguy 6y ago

American criminals getting away with murder, while julian assange is being hunted like a dog. crazy democracy

just_steve_h 6y ago

Boeing's fine is essentially nothing more than a one-time 10% rebate to their largest customer. (Reference: In 2017, Boeing booked over $22 BILLION in revenue from the US government. https://www.forbes.com/sites/greatspeculations/2020/01/02/how-much-of-boeings-revenues-comes-from-the-us-government/ https://www.forbes.com/sites/greatspeculations/2020/01/02/ho... )

londons_explore 6y ago
> Boeing booked over $22 BILLION in revenue from the US government. Which, by the way, is totally not state support, especially if anyone from Airbus is within hearing distance...
- oblio 6y ago
  Well, at the level they're at, and considering the strategic and military considerations, everybody does it. I'm reasonably sure EU countries do the same with Airbus, and I'm European.
  - londons_explore 6y ago
    Indeed, they do. We should just drop the pretense this playing field is level...
  - benhurmarcel 6y ago
    They do, but Boeing gets about double the military activity of Airbus.
- laurent92 6y ago
  Does it bar the EU and China from conducting their own criminal investigation, ask for extradition of the management team and/or impose their own fines?

purpleidea 6y ago

The people doing perpetrating these crimes don't care. Their paycheques don't change. If they aren't afraid of jail time and real accountability, then this will happen again. Instead they pushed through whatever they needed, and probably got well paid for those "successes".

chaganated 6y ago

One thing the Chinese get right: high-level executions. When the blood cries out, I doubt it's to send a paltry $2.5B to the feds.

mrjin 6y ago

Just wondering is FAA getting away with it?

franczesko 6y ago

"No individuals have been criminally charged in the government’s investigation into Boeing, which was led by the FBI and the Department of Transportation’s Office of the Inspector General. Dennis Muilenburg, who was CEO when the crashes happened, was ousted in late 2019. He left with more than $60 million in stock options and other assets, though Boeing did not give him a severance." What a cruel joke

jiggawatts 6y ago
"CEOs have to be compensated as much as they are because they shoulder such huge responsibilities." say the apologists for why American CEOs "need" to be paid 500x as much as a typical worker. How about this: I'll shoulder that grave responsibility for a mere 50x the typical worker, and I'll settle for a golden parachute of just $6M. That's a bargain!
seveibar 6y ago
What does $60m in stock options mean? Can they be exercised at profit?

intricatedetail 6y ago

People at the top need to go to jail for life. This is no punishment.

S53Vflnr4n 6y ago

$500 million fund for crash victims family members (346 human lives) and $1.77 billion for its airline customers. Justice served. Now Boeing can rinse and repeat not to mention bail out from tax payers if there is a need to be. So who went to jail for this ? I know that if I steal from Walmart, I will be arrested and possibly get jail time.

laurent92 6y ago
Is $1.77 billion enough, when companies had to ground 700 airframes for more than a year, only to reopen during the Covid lockdowns? It feels like it is not 100% served, although justice cases are never 100% satisfying.

Twaway45609 6y ago

Compare this to the fine which volkswagen got (6 times more) and prison term for the top managers, having killed 0 people. Unfortunately US justice is very unfair against foreign corporations.

mft_ 6y ago
This is a really interesting comparison. We can’t know the small or incremental damage that VW’s emissions did to people’s health... but at face value, it feels like Boeing’s punishment is an order of magnitude or two too low.
ucha 6y ago
It has been estimated VW caused 59 early deaths in the US and probably a lot more people got sick etc... so not exactly negligible. However, I agree with the general point of your comment. https://iopscience.iop.org/article/10.1088/1748-9326/10/11/114005 https://iopscience.iop.org/article/10.1088/1748-9326/10/11/1...