How the Predatory Rich Control the Department of Justice
“Boeing’s crime may properly be considered the deadliest corporate crime in U.S. history.” -Judge Reed O’Connor, Texas.
Two Boeing 737 Max plane crashes killed a total of 346 people in Ethiopia and Indonesia. The executives had approved a flawed design to save $7 billion. In full knowledge of this, Boeing’s CEO, Dennis Muilenburg, blamed the crew and said, “737 MAX is as safe as any airplane that has ever flown the skies.”(Reasons, Court of Chancery, Sept 7, 2021 p35). If he had admitted the flawed software, Muilenberg would have saved the lives of 157 people in the second crash.
The Department of Justice only targeted the corporation and gave it a sweetheart Deferred Prosecution Agreement (meaning it would not prosecute) with a fine of $2.5 billion and Boeing’s agreement to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations (para 4g).
Targeting a corporation makes no sense because a corporation cannot do anything. it is an abstract entity. This is a diversion to make it appear the DOJ is doing something to deter such events when what it is doing is protecting the executives and the senior DOJ officers’ future careers.
• It is we, the customers, who ultimately pay the fines in increased costs.
• The executives learn that they will go unpunished for serious crimes that they commit and will suffer no loss of their sky-high pay and bonuses for the relevant time.
•The corporate fines and bad publicity could only hurt the employees and the shareholders.
• And hurt the economy requiring help from the taxpayers. since Boeing is the US’s largest exporter
None of the executives who actually made the decision to approve the dangerous design were charged or fined. This is not confined to Boeing. As is explained later, it has been extended to many senior executives who commit crimes.
We have a rare case of being able to compare the Department of Justice’s investigation next to the findings of the Delaware Court of Chancery in a shareholder action against the Boeing Board of Directors and executives. The two reports look at the same facts but draw such different conclusions, a reader could be forgiven for wondering if they were reading about the same situation.
Background
Boeing wanted to install a new much larger engine on its 737 that had been designed in 1960 creating the new 737 MAX. The heavier engine shifted the plane’s center of gravity that might cause the plane to nose up under certain conditions. A redesign of the body would require $7 billion.
To save that expense, the executives approved a workaround using software that would automatically correct the upward tilt of the plane causing it to nose down. However, this is what the executives failed to do:
• They did not warn the pilots of this new issue.
• There was no manual override for the pilots to correct any software error.
• They did not follow standard engineering practice and include a backup sensor for the tilt in case the first sensor gave a false reading or malfunctioned.( Reasons, Court of Chancery, Sept 7, 2021, pp 21–28)
This version of the 737 Max was released in 2017, and within a year, two crashes occurred killing all passengers and crew.
The DOJ’s Version
The DOJ’s Investigation specifically exonerated the executives:
4. (h) (i) The misconduct was neither pervasive across the organization, nor undertaken by a large number of employees , nor facilitated by senior management; [bold added]
The DOJ further downplayed the Boeing double tragedy killing 346 people as meriting only a fine “ at the low end of the otherwise-applicable Sentencing Guidelines fine range;” (4 (j)). Boeing Deferred Prosecution Agreement
The Chancery Court’s Very Diffent Version
The executives. In a Boeing shareholder action, Vice Chancellor Zurn of the Court of Chancery, Delaware, found condemning and thorough evidence that the misconduct was facilitated by senior management and by a Board of Directors completely unconcerned about safety and only about profit.
Her findings revealed a sociopathic disregard in Boeing senior management for passenger loss of life. Among her findings, Zurn concluded that:
• Even after the first crash, when he could have saved the lives lost in the second crash, CEO Muilenburg continually denied publicly there was any software defect and blamed pilot error, or the domestic repair shop.
• He knew that another sensor which was supposed to give a ‘sensor alert’ of incorrect readings of other sensors failed 80% of the time but did not tell the airlines or warn the pilots.
• His memo to the Board after the first crash claimed, “We believe the 737 MAX fleet is safe”, but, “… did not mention MCAS (the software), the lack of redundancy for a faulty sensor, or the missing sensor alert or specific pilot instructions”. (p 34)
The Board of Directors. Zurn”s condemnation of the Board was no less severe. She was so alarmed by the Board’s utter disregard for the lives of passengers, she departed from usual restrained judicial language by noting in blunt terms: “The Board publicly lied about if and how it monitored the 737 MAX’s safety” (p 55).
Even after the Board had full knowledge of the CEOs decision to install the flawed software on the plane and his attempts to mislead the public, the Board did not fire Muilenburg, but allowed him to resign thus keeping $72 million in 2018–2019 pay, and an additional golden parachute of $81 million in stock-based pay on his way out the door ( Dollars & Sense, July/August 2021).
Zurn believed the Board did this because “any public dispute between Boeing and Muilenburg would have exposed the Board’s prolonged support of Muilenburg and lack of safety oversight” (p 56).
Boeing’s Confidence in Its Control of the DOJ Rewarded
The non-prosecution agreement provided that Boeing would not be criminally prosecuted for the events that led to the two crashes if it implemented certain safety practises as set out in a schedule to the agreement for three years.
Boeing executives must have known that they would not be charged even if there was a further breach. They must have also known that the consequences would be minimal to the corporation. Therefore they did little to improve safety practices as the subsequent DOJ investigation proved.
Just two days before the expiry of the 3 year probation, a door blew off an Alaskan Airline 737 MAX. The DOJ investigated to see what Boeing had done to comply with the agreement to improve safety practices and found very little (Reuters Jul 2, 2024).
The crash victims family had new hope that because of the flagrant breaches, the executives would finally be prosecuted:
“Boeing has paid fines many a time, and it doesn’t seem to make any change,” said Ike Riffel of Redding, Calif., whose sons Melvin and Bennett died in the Ethiopian Airlines crash. “When people start going to prison, that’s when you are going to see a change.” ( CBC News, July 8, 2024)
Not so.
The DOJ again refused to charge the executives and accepted another corporate fine of $243 million and a monitor of safety compliance for another two years.
Why This Is So Important to Democrats
Yes, ordinary level Democrats are searching for the reasons their party has lost the confidence of the working class and that a megalomaniac impresario has been able to center himself as the defender of the working class. They will want to look at this source of corruption within the DOJ. It was not always so. It started under Democrat administrations and by Democrat appointees to the department.
It began when the DOJ was faced with the problem of bankers who had been caught laundering billions for the Sinaloa drug cartel. The bankers should have gone to jail for long terms.
The DOJ worked out a solution supported by spurious logic-which the media gullibly accepted-and set the precedent for always fining corporations and never executives.
That story next.
Acknowledgements: Law Professor Paul Cassell brought the Chancery Court reasons to my attention.
Plane image by Lee Rosario from Pixabay
Originally published at https://jandweir.substack.com.
