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Boeing charged with 737 Max fraud conspiracy and agrees to pay over $2.5B
- java-man 6y agoSo, no jail time for the executives who made these decisions and "criminal misconduct"? Amazing.
- bodhiandphysics 6y agoIt’s hard to put a company in jail... we still have to wait to see if there are charges against Boeing executives
- cameldrv 6y agoI'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?
- ars 6y agoAt the end of the day you have to punish a human. And following your suggestion would punish a lot of uninvolved humans.
- ljf 6y agoCompanies 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 6y agoYou can put the executives into jails though. And the executives, not some low level manager as a scapegoat.
- ars 6y agoCertainly, but the person I was replying to suggested shutting down a company, rather than punishing execs.
- markus_zhang 6y agoIt's doable too. The workers will lose job for sure, but many of them are going to find new ones, plus you extract as much $$ as possible from the company and exec to pay the workers.
- anonymousab 6y agoInnocent 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 6y agoAnd 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.
- the_duke 6y agoHow 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 6y ago>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).
- _underfl0w_ 6y agoThis 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)
- the_duke 6y agoBut 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.
- Yoofie 6y agoI'm not the OP but ... > 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. This is what bankruptcy proceedings are for. A similar procedure can be made up for a "corporate death penalty". >Especially with a huge corporation like Boeing with 160k employees and billions flowing in and out, the effect would be huge. If the government was doing its job, corporations of this size should not even be allowed to exist for precisely the reasons you mention. But since anything goes in corporate America, here we are. > 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. I would argue that people being indirectly hurt would be a good motivator (or reminder) for people being more picky who they do business with. If you don't learn your lesson the first time, then being burned multiple times will (hopefully) get the message across.
- sokoloff 6y agoTake a look at the defense fleet that Boeing supports: https://www.boeing.com/defense/ https://www.boeing.com/defense/
- dragonwriter 6y ago> 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 6y agoWell, "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.
- markus_zhang 6y agoYou 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 6y ago> 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.
- triceratops 6y agoTake 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 6y agoWhy 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.
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- fred_is_fred 6y agoAnyone 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 6y agoDon'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 6y agoThe 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 6y agoAlmost. 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 6y agoNow, if can only get the similar teeth to address online privacy violations.
- nolok 6y agoNot exactly what you asked, but the neo revision of the A320 is set between one and two billions euros.
- salex89 6y agoTrue, but the Neo program was a bargain for Airbus in some ways. The platform lends itself to such improvements.
- newguy1234 6y agoIt 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.
- logicslave 6y agoExecutives 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 6y agoSadly, they aren't the first, and certainly won't be the last. Silicon Valley isn't immune to the same virus.
- Judgmentality 6y ago> 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 6y ago> 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/ https://xkcd.com/1053/
- scarmig 6y agoI 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.
- dietsprite 6y agoThey'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-losses-earnings/index.html https://edition.cnn.com/2020/10/28/investing/boeing-job-cuts...
- TedDoesntTalk 6y agoWill any of this money go to the families of the dead?
- java-man 6y ago" 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 6y agoWhile 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-agencies-determine-the-dollar-value-of-human-life https://www.npr.org/2020/04/23/843310123/how-government-agen...
- triceratops 6y agoSadly, victims in poorer countries are considered worth less. See also: Union Carbide.
- 1024core 6y agoSMH.... airline companies get more (for the "inconvenience", I guess) than the people who lost loved ones.
- 1024core 6y agoUnless decision-makers go to jail, this means nothing. Execs should not be able to buy themselves out of jail.
- staticautomatic 6y agoWe should probably consider charging and trying them first.
- jessaustin 6y agoThat's a great suggestion. Unfortunately, press releases like TFA are seldom followed by criminal charges against executives. This is the big announcement, right here.
- frongpik 6y agoFirst you need to find them. It's not like those in charge leave paper trail that could pin responsibility to them.
- staticautomatic 6y agoYou’d be surprised how often they do.
- sargun 6y agoHow do you prevent the execs from delegating decision making (on paper) to engineering, and then forcing them to make certain decisions?
- codebje 6y agoOne delegates authority, not accountability.
- yulaow 6y agoC-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
- dietsprite 6y agoBoeing: - 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
- throwaway122378 6y agoBut open your restaurant and get locked up!
- gameswithgo 6y agoI 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?
- jacksnipe 6y agoI'm pretty sure that they don't actually agree on that.
- NOGDP 6y agoIf 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.
- drewblaisdell 6y agoThis is the nature of our "democracy".
- tartoran 6y agoOr 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
- brokencode 6y agoBoeing 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.
- _underfl0w_ 6y ago> 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 6y agoThink about the quality of their hardware products.
- kiseleon 6y agoDo 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 6y agoAll 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).
- rdxm 6y agowhat a load of shit. the execs were absolutely complicit.
- midrus 6y agoI 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.
- rusk 6y ago> I always wonder why executives earn so much money Well connected?
- valuearb 6y agoYou need a CEO to run a business with hundreds of billions in revenues, and tens of billions in annual profits, where every executive decision has hundreds of millions if not billions of dollars in impact to the companies value. Are you going to cheap out and hire a lesser candidate to save a few million?
- rusk 6y agoThere are some very poorly run companies about the place ...
- valuearb 6y agoPro sports teams spend millions every year to measure potential draft picks to the tiniest level in speed, strength, intelligence and mental qualities, and yet every year spend millions on picks that fail. But statistically, first round picks perform far better than second round picks, and second better than later round picks, so their analysis is doing far better than random selections. That it’s not an exact science and frequently fails doesn’t mean you shouldn’t do your best to get your best candidate.
- rusk 6y agoSo you’re saying that senior management is selected based on meritocracy ... right ...
- paxys 6y agoAre 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.
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- pwthornton 6y ago$2.5B could have paid for a lot of R&D on a clean sheet design that wasn’t fatally flawed.
- nradov 6y agoTrue 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.
- osipov 6y agobut conspiracy theories aren't real!
- newguy1234 6y agoBA 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 6y agoConsidering 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.
- murat124 6y agoCorporations 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.
- frongpik 6y agoPretty much. I'd say that corporations are a lot like those bitcoin mixers that mix up many money streams to diffuse liability. Corporate managers are driven by greed and fear: greed is the active force that makes the company profitable and the fear of being found out keeps everyone in check.
- m___ 6y agoA 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?
- drukenemo 6y agoSo conspiracies do exist.
- nytgop77 6y agoonly those which get exposed.
- cosmotic 6y agoIs this for the first fraud or the second?
- us0r 6y agoAs 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-afc74a8e39da https://www.ft.com/content/1afbf70b-752a-4a91-8e2a-afc74a8e3...
- mehrdadn 6y ago> 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?
- kingnothing 6y agoAnd 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.
- derwiki 6y agoI hate to note this, but... that 1k will hurt the average American more than BA losing 2.5bn
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- guidoism 6y agoJust curious, are companies that conspire to fraud allowed to continue working on projects that require clearance?
- 8bitsrule 6y agoHere's a company that has enjoyed the largesse of the US public for decades. And this is how they repaid us for making them 'too big to fail'? I recall a people that at least strived for a moral compass.
- Jemm 6y agoRather than fining the company, fine the individuals responsible.