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

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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.

boeing

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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Kiara Grace
Kiara Grace is a staff writer at VORNews, a reputable online publication. Her writing focuses on technology trends, particularly in the realm of consumer electronics and software. With a keen eye for detail and a knack for breaking down complex topics. Kiara delivers insightful analyses that resonate with tech enthusiasts and casual readers alike. Her articles strike a balance between in-depth coverage and accessibility, making them a go-to resource for anyone seeking to stay informed about the latest innovations shaping our digital world.

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Subsidies for Electric Vehicles Cut as Consumer Interest Fades

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Electric Vehicles, EVs, Canada
Electric vehicles (EVs) are still considerably more expensive than traditional alternatives.

Pressure is building on Canada’s electric vehicle manufacturers, and several are rethinking their stance on E.V.s in favor of plug-in hybrids. Automobile manufacturers are now bracing themselves for an even more challenging era in the Canadian market for electric vehicles (E.V.s).

President Kristian Aquilina of General Motors Canada claims that support and expectations are misaligned because the Canadian government is reducing subsidies for electric vehicles while trying to phase out gas-powered cars.

Manufacturers find pushing for an all-electric future in Canada increasingly difficult due to fewer consumer financial incentives and increasingly strict sales targets.

With subsidies totaling up to C$12,000 (about $8,500), Canadian consumers may save a tonne of money on electric automobiles. The federal government offers a rebate of up to $5,000 Canadian, and the provinces of Quebec and British Columbia provide further incentives of up to $7,000 and $4,000, respectively.

Ford lost about 2,000 US for every EV it sold in the first three months of the year.

Ford lost about $132,000 US for every E.V. it sold in the first three months of the year.

Ontario, which eliminated rebates in 2018, had the lowest market share for electric vehicles compared to Quebec and British Columbia, two regions that offered bigger incentives and thereby drove E.V. adoption in Canada.

Although this backing is dwindling, the province of Quebec has now declared that all subsidies will end in 2027. In June, the British Columbia government restricted incentives to a smaller subset of E.V. purchasers for “available funding” and higher-than-expected E.V. sales growth.

These reductions indicate a larger pattern: provincial governments reevaluate the sustainability of taxpayer-financed incentives for E.V.s as budget deficits widen.

With lofty goals to cut pollution from gas-powered cars and increase sales of electric vehicles, the Canadian government has reduced subsidies for these vehicles. Electric or plug-in hybrid vehicles will be mandatory for all new light-duty vehicle sales in Canada by 2035.

B.C. needs to step up with incentives for consumers to buy used EVs, some opposition critics say.

Some opposition critics say that B.C. needs to step up with incentives for consumers to buy used E.V.s.

To meet our intermediate goals, 20% of new sales must be electric vehicles (E.V.s) by 2026 and 60% by 2030. Car companies are already under a lot of pressure due to dwindling incentives and increasing demands, and the clock is ticking faster by the second.

In addition, these rules impose new forms of responsibility. Automakers that do not reach their provincial sales targets may be subject to financial fines imposed by provinces such as British Columbia.

Canadian manufacturers are already under financial pressure from federal compliance credit system standards, which they must meet or face deficits. This system gives them credit for electric vehicle sales and infrastructure improvements, but it’s not without its challenges.

“The timing is not necessarily lining up very well, in that the purchase incentive support comes off just as mandates and regulations start to bite,” GMC Canada President Kristian Aquilina told Bloomberg. “It must make a difference.

Therefore, we must consider that. Despite the cutbacks, Aquilina argued that the government’s investment in enhancing the charging infrastructure could benefit E.V. sales.

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Geoff Thomas
Geoffrey Thomas is a seasoned staff writer at VORNews, a reputable online publication. With his sharp writing skills and deep understanding of SEO, he consistently delivers high-quality, engaging content that resonates with readers. Thomas' articles are well-researched, informative, and written in a clear, concise style that keeps audiences hooked. His ability to craft compelling narratives while seamlessly incorporating relevant keywords has made him a valuable asset to the VORNews team.
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Chewy Slides After Filing Shows 3rd-Biggest Shareholder, ‘Roaring Kitty,’ Sold His Stake

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chewy

Washington — Chewy shares fell about 2% overnight Wednesday after a regulatory filing showed that Roaring Kitty, a meme stock trader, sold his interest in the online pet retailer.

According to a beneficial ownership document filed with the Securities and Exchange Commission on Tuesday, Roaring Kitty, whose legal name is Keith Gill, sold all his Chewy shares, totaling 6.6% of the company.

chewy

Chewy Slides After Filing Shows Third-Biggest Shareholder, ‘Roaring Kitty,’ Sold His Stake

Plantation, Florida-based Chewy dropped 1.9% after hours to $26.19 per share.

Gill, an investor at the core of the meme stock craze, bought more than 9 million shares of Chewy in July, making him the company’s third-largest stakeholder.

Gill built a name for himself in 2021 by rallying ordinary investors around GameStop. At the time, the video game shop was fighting to stay in business, and major Wall Street hedge funds and investors were betting against it or shorting the stock. But Gill and those who agreed with him altered GameStop’s direction by purchasing thousands of shares despite practically all acknowledged criteria indicating that the firm was in deep peril.

chewyChewy Slides After Filing Shows Third-Biggest Shareholder, ‘Roaring Kitty,’ Sold His Stake

That triggered what is known as a “short squeeze,” in which large investors who had bet on GameStop were obliged to buy its swiftly increasing stock to offset significant losses.

Gill has expressed confidence in GameStop Chairman and CEO Ryan Cohen’s ability to revamp the company following his success at Chewy. Cohen cofounded Chewy in 2011 and stepped down as CEO in 2018.

SOURCE | AP

author avatar
Kiara Grace
Kiara Grace is a staff writer at VORNews, a reputable online publication. Her writing focuses on technology trends, particularly in the realm of consumer electronics and software. With a keen eye for detail and a knack for breaking down complex topics. Kiara delivers insightful analyses that resonate with tech enthusiasts and casual readers alike. Her articles strike a balance between in-depth coverage and accessibility, making them a go-to resource for anyone seeking to stay informed about the latest innovations shaping our digital world.
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Canada CBC News CEO Catherine Tait Recalled to Parliamentary Committee

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Canada CBC News CEO Catherine Tait
Catherine Tait won't rule out taking bonus once she leaves CBC/Radio-Canada

Canada CBC News reports that MPs have voted to recall CBC CEO Catherine Tait to a Commons committee for questioning, only a week after her last appearance, over the awarding of $18 million in bonuses to Canada CBC news executives.

The Conservatives, the Bloc Québécois, and the NDP joined forces to re-invite Ms. Tait, her successor Marie-Philippe Bouchard, and Heritage Minister Pascale St-Onge to appear before the Commons Heritage Committee.

Ms. Tait, who will relinquish her position as CEO and president of CBC/Radio Canada in January, addressed the committee last week. The House of Commons has passed a motion recalling her before the conclusion of her term, and she is now subject to an additional two hours of interrogation, which includes inquiries regarding bonuses.

MPs also resolved to summon Quebec broadcasting executive Marie-Philippe Bouchard, appointed as the new chief of CBC/Radio-Canada last week, to appear before she begins her new job following a House of Commons chamber debate.

Catherine Tait Exit Package

Catherine Tait rejected the Conservatives’ requests to deny an exit package, including bonuses, when she departed the position in January during last week’s committee hearing.

She also defended the award of $18.4 million in incentives to 1,194 staff members for the 2023-2024 fiscal year, which concluded in March, following the broadcaster’s achievement of performance indicators.

Kevin Waugh, a Conservative committee member who introduced the motion, stated that his party aimed to ensure Ms. Tait was “accountable to taxpayers” before her departure in January.

He informed The Globe and Mail that “Canadians are dissatisfied with the bonuses” and that Catherine Tait‘s exit package, which will not be disclosed, is a cause for concern.

“I am apprehensive that she has not received her bonuses in over two years, and that the Minister of Heritage or Privy Council will lavish her with bonuses when she departs in January,” he stated.

The Liberals opposed a portion of the motion that claimed that “the Liberal threat to cut funding” had resulted in the elimination of hundreds of jobs at CBC/Radio-Canada.

Defunding CBC News Canada

The Heritage Minister informed The Globe that the claim was “hypocritical,” as the Conservatives intended to completely defund CBC.

“The Conservatives’ actions today are a clear example of hypocrisy.” Ms. St-Onge stated that performance bonuses increased by 65% during the Harper Conservatives’ tenure, while CBC News Atlantic Canada experienced substantial budget cutbacks.

“As a government, we do not require any lessons from a party that has pledged to reduce the funding of CBC/Radio-Canada and the 8,000 jobs associated with it during its campaign.”

During the Tuesday debate, NDP MP Niki Ashton stated that her party endorses the “banning of executive bonuses” at CBC News Atlantic Canada but is opposed to “the Conservatives’ full frontal attack” on the broadcaster.

She stated, “We require a robust public broadcaster, but not one that distributes executive bonuses and eliminates positions.”

If the Conservatives establish the next government, they intend to deprive the CBC of public funding while maintaining French services.

Catherine Tait defended CBC and rebuffed MPs’ assaults during last week’s committee hearing. “It is evident that the members of this committee are making a concerted effort to discredit the organization and vilify me,” she stated.

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Geoff Thomas
Geoffrey Thomas is a seasoned staff writer at VORNews, a reputable online publication. With his sharp writing skills and deep understanding of SEO, he consistently delivers high-quality, engaging content that resonates with readers. Thomas' articles are well-researched, informative, and written in a clear, concise style that keeps audiences hooked. His ability to craft compelling narratives while seamlessly incorporating relevant keywords has made him a valuable asset to the VORNews team.
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