Day: July 1, 2024

Perhaps the most significant blog post in the compliance arena was penned by Matt Ellis over 10 years ago when he challenged Walmart to “Go Big” on compliance. (They did.) We are now at another inflection point in compliance but in a very different set of circumstances from Walmart’s breach of the Foreign Corrupt Practices Act (FCPA). It involves the Department of Justice  (DOJ) and its decision on what to do about Boeing Company under the current Deferred Prosecution Agreement (DPA) from the 737 MAX crashes. Today I want to challenge the DOJ to Think Big and Go Big in its approach to dealing with Boeing going forward.

The issue the DOJ is grappling with is whether and how to get Boeing to fix the festering set of problems which led to the 737 MAX disasters and cultural toxicity have continued unabated since the DPA was agreed to by Boeing back in 2021. In May of this year, the DOJ notified Boeing that it was in breach of this DPA for failing “to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations.” Now the DOJ is determining the steps to take.

The families of the victims of the 737 MAX crashes have been the loudest about the need to punish Boeing executives with criminal charges. They met with the DOJ and asked about criminal charges and a massive penalty. Now the DOJ has responded. According to the Wall Street Journal (WSJ), “Under the guilty-plea agreement outlined Sunday to families of the crash victims, Boeing would have to agree to hire an outside consultant to monitor its compliance with safety regulations. It also would pay an additional corporate penalty of about $243 million.”

It is the ‘outside consultant’ where the DOJ needs to ‘Go Big.’ How? By creating the most comprehensive monitoring plan ever used. Why? Because there has never been a corporate case more important to the United States than getting Boeing back on track. This is not a FCPA case where a company has admitted to bribery and corruption, even across the globe. This is not 2008 when banks were ‘too big to fail’. This is something completely different. This is the only major US aircraft manufacturer and one of the two biggest in the world. This is a company that provides products for nearly half of all American as Airlines for Americaestimates that 49% of all Americans flew commercially in 2023. Boeing is estimated to have generated over $77bn in revenue for America alone in 2023.

But Boeing’s importance to America is not simply about economics. Boeing is a key component in US national security. Boeing provides advanced missile defense systems, including the Ground-based Midcourse Defense (GMD) system, which protects the United States from ballistic missile attacks. The company also offers solutions for tracking and monitoring space objects, which is vital for maintaining the safety and security of space operations. Boeing is also a part of the Internal Space Station (ISS), orbital test vehicles and deep space exploration.

In short, there is probably no other single institution as important to the US in manufacturing as Boeing. Nearly 200 million American who fly in Boeing planes are depending on Boeing to get it right. The US (and world) economy need the drive that Boeing provides. The US national security depends on a well-functioning Boeing to lead the technological drive to protect the US for the rest of the 21^st century and beyond. Boeing needs to continue its work for our drive as humans into what Gene Roddenberry called ‘space – the final frontier’ as one of the leading companies on space exploration. Finally, and certainly not least, the families of the victims of the two 737 MAX crashes should receive some justice for all they have been through and then seeing Boeing not live up to its agreement in the original DPA.

Most importantly, we all have an interest in Boeing getting its remediation right. Boeing must turn around from a culture where employees are afraid to step forward, there is acceptable slipshod work and work practices, where employees who do report problems are actively harassed, where employees lie and mislead federal regulators over basic safety issues and where the almighty dollar is put so far above safety that literally hundreds of lives are lost. All of this means a monitorship where there are multiple areas monitored, overseen and thoroughly remediated so that they pass the strongest form of testing and controls at the end of a lengthy period (at least 3 years). The Court also needs to stay actively involved in the monitorship, not simply reviewing annual or even greater reporting but testing any claims by Boeing through rigorous data analytics. Boeing has clearly demonstrated it is not capable of turning itself around and a new and daring approach is needed for the company.

I believe the DOJ should appoint an Omnibus Monitor who would oversee multiple monitors in specific subject matter areas. This would be far too big for any one law firm or a single consulting company. The Omnibus Monitor would be in charge of a wide variety of corporate disciplines that Boeing must get right to get out of the terrible corporate fix they find themselves in. What are some of the areas that should have their own monitorship under an Omnibus Monitor? Obviously, safety is at the core but also culture, compliance, Speak Up and Listen Up, Supply Chain, fraud, Export Control, Sanctions. On the overall aircraft manufacturing issues, the DOJ needs to work with the Federal Aviation Authority (FAA) to oversee all of this to meet the FAA regulatory requirements.

This would be by far the biggest monitorship ever because it is by far the most important monitorship ever. Just as Ellis challenged Walmart to ‘go big’ on compliance, I want the DOJ to Think Big and Go Big with an Omnibus Monitor for Boeing. Literally all of America and the world is depending on it.