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

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

#11
post #5

> 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.

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]

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

#12
post #5

> 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.

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.

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.

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

#13
post #3

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

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.

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

#14
post #3

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

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 ?

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

#15
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-merg...

[2] https://fortune.com/longform/boeing-737-max-crisis-sharehold...

[3] https://www.perell.com/blog/boeing-737-max

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

#16
post #13
post #3

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

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 b…

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.

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

#17
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.

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

#18
post #16
post #13

Earlier quoted context omitted.

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 b…

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.

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.

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

#19
post #4

Earlier quoted context omitted.

No one who has $2.5B is going to jail for anything.

Martha Stewart? But that was securities fraud, the only true crime.

"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."

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

#20
post #4
post #3

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

No one who has $2.5B is going to jail for anything.

Fines like this typically punish shareholders and lower level employees (via restructuring in response to a need to find budget for the fine).
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