Boeing 737 Max Aftermath: The Big Fish Get Away

After two 737 MAX crashes and 346 dead, prosecutors only go after a couple of mid-level Boeing employees. The prosecutor who cut Boeing its deal now works for Boeing’s law firm. Something smells fishy.

Violating Basic Principles

Previous columns here and here, described the decisions and events leading up to two separate crashes of Boeing 737 Max aircraft.

In short, Boeing installed a software system in its 737 MAX that, based upon readings from a single sensor, automatically pushed the nose of the plane downward. The software did not permit simple manual override by the pilots. Moreover, Boeing hid the existence and operation of this system from pilots, going so far as to remove information on it from draft operating manuals.

Boeing’s system thus violated two basic aviation principles. First, tell pilots how their plane works and what its operational parameters are. Second, always allow pilots to easily override automated controls. (Or, as one former F-15 pilot put it, “Whenever you pull back on the stick, the houses should get smaller.”)

Who Knew?

Numerous people within Boeing and the Federal Aviation Administration (“FAA”) knew about these features, as well as their violation of fundamental principles.

Boeing convinced the FAA to permit them. The FAA allowed itself to be convinced.

Finding Suitable Scapegoats

After the second 737 MAX crash, governments worldwide grounded the 737 MAX. Investigations suggested early on that a faulty single sensor on each plane triggered the software, which nosed the planes downward. The crews, unaware of the system’s existence, could not disengage it, lost control, and crashed.

Playing The Blame Game

The FAA and Boeing both came under Congressional and media scrutiny. FAA bureaucrats claimed that Boeing misled them. In particular, the FAA complained that Boeing failed to disclose late changes in the software system. These changes increased the likelihood and degree to which the system would automatically nose the plane downward.

The FAA, after the fact, maintains that had it only known about this change, it never would have certified the 737 MAX.

Boeing faced potential criminal charges that might have barred the company from government contracts: a death sentence. Numerous Boeing directors, officers, and employees also faced criminal investigation and possible prosecution.

Boeing decided to cooperate and cut a deal. The company offered up two mid-level employees, Mark Forkner and his deputy, Patrik Gustavsson. Boeing argued that Forkner and Gustavsson, without superiors’ direction, misled the FAA by failing to update it on the software-system changes.

The company was rewarded for its cooperation with a modest fine ($244 million) and a deferred prosecution agreement. The agreement even expressly exonerated senior Boeing management.

At the end of the day, the FAA diverted attention away from itself. Boeing got a slap on the wrist, and the company’s directors and senior managers walked away scot free.

Exposing The “True” Villain

Reports indicate that the federal government will indict Forkner. Gustavsson has apparently turned state’s evidence and will testify against his former boss.

Forkner is no innocent. Emails between him and Gustavsson reveal an obnoxious, cynical blowhard. Among other things, he celebrated his duping or browbeating airlines into foregoing 737 MAX simulator training as a “Jedi mind trick.”

But being an obnoxious, cynical blowhard is not a crime. The same emails which prove him a jerk also suggest that he did not knowingly mislead the FAA, at least on the changes in the software system that the FAA claims were so crucial.

Forkner will likely argue that he never intentionally misled the FAA and that someone else at Boeing had an obligation to update the FAA on any system changes.

Expect the government to slap together charges threatening several decades of jail time to pressure Forkner into a guilty plea.

The Big Fish Get Away

Forkner’s guilt will not establish the FAA’s or Boeing’s innocence.

Both Boeing as an institution, as well as the FAA, knew that the 737 MAX system violated basic aviation principles. Re-focusing public attention on Forkner’s failure to update the FAA, or on his ugly personality, constitutes its own form of “Jedi mind trick.”

So, how did the senior people at the FAA and Boeing manage such a clean escape?

A last fact may be the most telling: Erin Nealy Cox, the U.S. Attorney who led the Boeing case, left the Dept. of Justice to become a partner at Kirkland & Ellis. That firm — with profits per equity partner averaging $6.2 million — serves as Boeing’s outside counsel.

Want more? Her joining the firm was announced by her new partner, Mark Filip. As Boeing’s counsel, Filip signed the sweetheart Deferred Prosecution Agreement on behalf of the company.

Filip, incidentally, also came to Kirkland & Ellis from the Dept. of Justice, where he issued the much-touted “Filip Memorandum,” setting forth “Principles of Federal Prosecution of Business Organizations.” No kidding.

Something here smells.

Perhaps it’s the big fish that got away.

#therightwaytowin

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