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How Boeing Defrauded The United States And Escaped With A ‘Slap On The Wrist’

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5 months ago

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Boeing | AP News Image

Boeing faces up to $487 million in fines as part of its expected guilty plea to a felony charge stemming from two fatal 737 Max crashes. Critics of the arrangement, meanwhile, describe it as a “slap on the wrist.”

While corporate guilty pleas by firms the scale of Boeing are uncommon, and some of the plea agreement’s requirements were obviously burdensome to Boeing leadership, the settlement demonstrates the limits of corporate criminal charges.

Boeing agreed to plead guilty to a charge of defrauding the Federal Aviation Administration by concealing critical information about a design fault in the 737 Max during the initial certification process. This design defect has been linked to crashes in 2018 and 2019, which killed 346 people and plunged the firm into a crisis that resulted in $32 billion in losses.

“The Justice Department does no one any favors by trying to sell this as a tough deal,” said Peter Goeltz, a former managing director of the National Transportation Safety Board and current CNN contributor who works for transportation corporations. “It doesn’t smell like a tough deal.”

Under the plea agreement reached late Sunday, Boeing’s $243 million fine, which it agreed to pay back in 2021, could be increased to $487 million.

“That’s what, the price of three 777’s?” Goeltz stated. “I’m not sure that it’s a significant fine.”

Additional data support Goeltz’s claims.

Before the losses in 2019, the business had reported record annual revenue of $101 billion and core operating profit of $10.7 billion, or 21 times the cost of the $487 million punishment.

While Boeing’s credit rating is now at risk of being downgraded to junk bond status for the first time, credit rating firm Moody’s said Monday that the plea and penalty “will have little effect on Boeing’s finances and operations.”

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Boeing CNN Image

How Boeing Defrauded The United States And Escaped With A ‘Slap On The Wrist’

And Boeing almost escaped this slap on the wrist.

In January, a door stopper blew off a Boeing 737 Max as it approached 16,000 feet. While no one was killed or seriously injured on that Alaska Airlines flight, the incident not only drew unwanted attention and a slew of federal investigations, but it also jeopardized an agreement Boeing reached with the Justice Department in January 2021 to eliminate the risk of prosecution for defrauding the FAA during the Max certification. The Alaska Air tragedy occurred just days before the probationary term would have expired.

Getting off cheap.
The expected guilty plea did little to appease family members of the crash victims, who called it a “sweetheart deal,” an “atrocious abomination,” and a horrible “miscarriage of justice.”

Their attorneys suggested that Boeing should have received a maximum sentence of $24.8 billion, which they determined by multiplying their estimate of the families’ cumulative losses.

Other firms that pled guilty to felonies have agreed to even higher fines. BP has agreed to pay $4 billion to settle criminal charges, including manslaughter, stemming from an explosion and oil spill at its Deepwater Horizon oil platform in 2010, which killed 11 workers.

In 2017, Volkswagen pleaded guilty to three US felony criminal charges and agreed to pay $2.8 billion in criminal penalties for cheating on diesel emissions tests.

“The fact that this is in the millions of dollars rather than billions is an indication that this is a slap on the wrist,” said Paul Cassell, a University of Utah law professor who worked on the BP case on behalf of victims and is now representing the families of the Boeing tragedies.

One of the factors that has enraged family members is that Boeing chose to plead guilty to simply deceiving the FAA rather than face manslaughter charges for the deaths of hundreds of individuals.

“That’s a tougher case to prove, but I believe the evidence was there,” said Mark Lindquist, another attorney who represents family members and other passengers on the Alaska Airlines aircraft.

“As a practical matter, the result might not have been a lot different” if there had been manslaughter rather than fraud charges in this criminal case, Lindquist stated. “From a philosophical basis, it would have felt more like accountability and justice for the victims’ families.”

Why are no executives facing charges?
However, while the Justice Department stated in January 2021 that “misleading statements, half-truths, and omissions communicated by Boeing employees to the FAA” played a direct role in the crashes, it has taken only limited criminal action against any individual employee and none against the top executives who oversaw the company’s decisions at the time.

The Justice Department issued a press release early Monday stating that the agreement provided “no immunity to any individual employees, including corporate executives, for any conduct.”

However, only one of the two former Boeing workers named in the case’s original settlement in 2021, Mark Forkner, the company’s chief technical pilot at the time, faced criminal charges. He was subsequently acquitted when his attorney convinced the jury that he was being used as a scapegoat.

“As a practical matter, individuals are more sympathetic to jurors than companies,” he said. “DOJ made a prosecutorial decision to pursue the company rather than individuals.”

Other defenses in an individual’s criminal case do not exist in a company’s criminal case.

“With an individual, there’s always someone else he or she can point the finger at,” Lindquist told me.

According to Lindquist, Boeing attorneys were on a mission to ensure that corporate officials were not charged with any crimes.

“From the beginning, that’s been clear,” he told me.

A Boeing spokeswoman said the company had no comment on the expected guilty plea or the case other than a brief statement announcing the arrangement.

Another method to make executives pay.
Even if no criminal charges are filed against CEOs, Arlen said they might face hefty consequences. That might take the form of “clawbacks,” in which Boeing asks that executives repay incentives received while the misbehavior occurred.

“Ensuring that the individuals are held accountable is the most important thing,” she told me.

But, so far, the Boeing board has yet to show much desire to hold executives financially accountable. It just handed CEO Dave Calhoun a 45% raise, increasing his remuneration from $22.6 million to $32.8 million in 2023.

His predecessor, Dennis Muilenburg, was fired as CEO at the end of 2019 without compensation but departed the business with a bundle of stock valued at approximately $80 million at the time.

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Boeing CNN Image

How Boeing Defrauded The United States And Escaped With A ‘Slap On The Wrist’

When asked about potential clawbacks, Boeing cited company policy, which states: “The board shall have the discretion…to recover incentive-based compensation paid to any executive of the company who has engaged in fraud, bribery, or illegal acts…or knowingly failed to report such acts of an employee over whom such officer had direct supervisory responsibility.” Despite the language, no clawbacks have occurred.

Arlen also argued that clawing back salary for board members was justified. Calhoun was not an executive at the time, but he served on the Boeing board and earned more than $300,000 per year while the Max was being certified.

“At the end of the day, when you have a company with systemic problems, the ultimate buck stops with the board,” she told me.

Why will Boeing preserve its federal contracts?
The most serious penalty that Boeing could face is by far the least likely: it could be excluded from federal government contracts as a result of its guilty plea. And this might potentially force the company out of existence. According to business reports, US government contracts accounted for 37% of total income in 2023, or around $29 billion.

However, while it will require permission from the government to continue its contracts, everyone expects those waivers to be granted.

With Boeing, despite the anticipated guilty plea and years of quality difficulties.

Aside from a lack of alternatives, few, if any, federal decision-makers want Boeing to go out of business.

It is still the country’s top exporter, with almost 150,000 US employees. The corporation predicts that its economic impact will be $79 billion, sustaining 1.6 million direct and indirect jobs at over 9,900 suppliers throughout all 50 states. And it is critical to the seamless operation of the country’s air transport system.

“It’s very clear to me that Boeing is going to survive this,” said Robert Clifford, another lawyer representing families of crash victims. “Why does Boeing get a pass, but other criminal defendants do not? “Because they are Boeing.”

SOURCE | CNN

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Trudeau Accelerates Bond Selloff Over Mass Spending Fears

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3 days ago

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2024-11-23

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Trudeau, Bond Market
Trudeau accelerated a bond selloff due to expectations of faster growth and a deeper deficit

Prime Minister Justin Trudeau has accelerated bond selloffs, citing fears of a larger deficit over his GST giveaway. Investors were concerned he was returning to his free-spending strategy as an election loom.

On Thursday, Trudeau unveiled a C$6.3 billion ($4.5 billion) tax relief and rebate program. It includes a two-month moratorium on federal sales tax on various commodities such as Christmas trees, wine, toys, and books and a C$250 check for almost 19 million Canadians, or over half of the population.

The declaration looked to mark the end of a brief period of fiscal restraint, as Finance Minister Chrystia Freeland committed to contain budget deficits to prevent stoking inflationary pressures.

Now that inflation has returned to the Bank of Canada’s 2% target, policymakers have reduced the benchmark interest rate by 125 basis points since June.

Trudeau’s Liberal government sees an opportunity to dig deeper into the public purse, but some analysts believe investors are keeping a careful eye on the country’s debt.

Bonds continued to fall on Thursday following the announcement, as the 10-year benchmark yield rose 7 basis points to 3.457%. After retail data showed a rise in consumer spending on Friday, it increased by up to 3.488%.

As the Trudeau government considers additional fiscal spending, concerns about Canada’s financial situation persist.

Budget Shortfall

Freeland has yet to publish final spending and income figures for the fiscal year that ended in October. Parliamentary Budget Officer Yves Giroux predicts a deficit of C$46.8 billion, much exceeding Freeland’s self-imposed aim of a C$40 billion shortfall.

Despite promises to reduce deficits, the Trudeau government continues to increase expenditure. This year’s budget includes a new capital gains tax inclusion rate to balance the cost of new housing and social initiatives.

This sparked anger from investors and entrepreneurs but allowed Freeland to present a consistent deficit despite significant spending.

The recent declaration indicates that Trudeau’s government no longer feels restrained in its capacity to use economic stimulus to restore favor.

Pierre Poilievre’s Conservatives have led most surveys by roughly 20 points for over a year. They have pounded the prime minister on affordability and promised to reduce taxes, especially income taxes. An election is expected in late October 2025.

The sales tax break will run from December 14 to February 15. The left-wing New Democratic Party intends to support it but has stated that it will continue to advocate for its permanent implementation and expansion to include additional items.

Let the Bankers Worry

Following Trudeau’s announcement, traders in overnight swap markets reduced their bets that the Bank of Canada will drop interest rates by 50 basis points for the second time in December, lowering the odds to fewer than 25% by the end of Thursday. As of late Friday morning, the odds were less than 17%.

The announcement also encouraged several experts to improve their short-term projections for Canada’s GDP. Analysts at the Bank of Montreal predict that the country’s GDP will increase at a 2.5% annualized rate in the first three months of 2025, up from 1.7%.

Speaking to reporters on Friday, Trudeau praised his government’s approach to program expenditure, claiming it fosters optimism and possibilities for families and the middle class.

“We’re focusing on Canadians. “Let the bankers worry about the economy,” Trudeau stated.

Related:

Canada’s Budgetary Watchdog Warns Over Trudeau’s Spending

Canada’s Budgetary Watchdog Warns Over Trudeau’s Spending

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Forced Sale Google Chrome Could Fetch $20 Billion

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4 days ago

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2024-11-21

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Sale Google Chrome

Antitrust officials in the US could force the sale of Google’s Chrome browser for up to $20 billion, demonstrating the tremendous worth of the world’s most popular web browser.

Bloomberg Intelligence attributes Chrome’s projected worth to its more than 3 billion monthly active users. The US Department of Justice is preparing to request a federal judge order the browser’s separation from Google’s parent company, Alphabet.

Chrome’s worth comes from its overwhelming 61% market share and its crucial role in Google’s advertising ecosystem. User data enables businesses to better target adverts, and the browser also acts as an important distribution mechanism for Google’s AI technologies.

Industry analysts think it may be difficult to find a suitable buyer. While tech behemoths like Amazon could finance the purchase, they would likely face regulatory scrutiny.

AI businesses, such as OpenAI, may emerge as more viable contenders. They could potentially leverage Chrome to broaden their reach and develop an advertising business.

“It’s not directly monetizable,” one analyst told Bloomberg. “It functions as a gateway to other things. It’s unclear how you would assess that in terms of pure revenue generation.”

Google opposes prospective sales, claiming that they will hamper innovation. The firm does not break out Chrome’s revenue individually in its financial filings, even though the browser’s user data plays an important part in the company’s principal revenue stream, advertising.

The DOJ’s suggestion follows Judge Amit Mehta’s August decision that Google had illegally monopolized the search industry. The judge will consider the recommended remedies at a two-week hearing in April 2024, with a final judgment due in August 2025.

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Bitcoin Has Set a New Record And Is Approaching $100,000.

Published

5 days ago

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2024-11-21

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Bitcoin

(VOR News) – Bitcoin broke beyond the $98,000 mark for the first time on Thursday as investors awaited Donald Trump’s second term as president. All of this happened during the day. As such, cryptocurrency has reached a significant turning point.

According to Coin Metrics, the top cryptocurrency was trading at $97,541.61 during the most recent trading session. Merchants provided this information. This suggests a price gain of more than three percent during the previous trading session.

When the period began, Bitcoin peaked at $98,367.00.

During the premarket trading session, MicroStrategy, a platform that facilitates cryptocurrency foreign exchange trading and serves as a bitcoin proxy, saw a 13% gain. Coinbase, on the other hand, had a 2% rise during that period. Furthermore, all of these increases occurred simultaneously.

The market value of Mara Holdings increased by 9%, which helped raise the valuation of mining companies overall. This was among the factors that led to the total rise.

Because of the widespread belief that President Trump will usher in a new era of prosperity for cryptocurrencies, one marked by more favorable laws and the possible creation of a national strategic bitcoin reserve, the price of Bitcoin has been rising steadily this month.

The most recent change brought about by the increase was the consequence of higher financing rates and more open interest in the futures market during Asian trading hours. The rise was the catalyst for this change. This action was prompted by the ensuing rush.

Throughout its lifespan, this legislation was the catalyst for this change for a variety of reasons. At the same time, spot market premiums decreased, according to CryptoQuant statistics. All of this happened at the same time.

Furthermore, a number of short liquidations have been sparked by the recent spikes in Bitcoin’s price, which has caused the price to rise overnight. As a result, the price has gone up much more. As a result, the total number of short liquidations has increased.

According to CoinGlass, these liquidations have effectively produced more than $88 million in capital during the last 24 hours.

Rob Ginsberg, an analyst at Wolfe Research, noted in a study released on Wednesday that “historically, following previous movements of this magnitude, Bitcoin has either entered a consolidation phase or disregarded the overbought condition as investors accumulate.” This phrase relates to the fact that this particular move has happened before.

Ginsberg stated this in reference to the evolution of Bitcoin over time.

Ginsberg’s answer makes reference to Bitcoin’s propensity to go through a period of consolidation. The comment also made reference to this.

He said, “Considering we are emerging from an extended consolidation phase and the price has reached a new high, it suggests that the pursuit is underway.”

The crucial psychological milestone of $100,000 is expected to be reached in the upcoming weeks, and this breakthrough could happen as early as Thursday. It seems likely that this level will be reached. There is a chance that this new development will take place.

This task will be carried out against the backdrop of this historical era. In addition, if Trump were to win a second term, federal budget deficits would increase, inflation would likely increase, and the dollar’s position in international affairs would change.

The administration that Trump would run during his presidency would be responsible for these consequences. All of these characteristics would positively impact the value of Bitcoin as a currency if they were taken into account in the order that they are presented.

The price of bitcoin had risen by more than 130% by the beginning of 2024.

SOUREC: CNBC

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