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Boeing Crash Shows Perils of Allowing Corporations to Regulate Themselves

By Alan Zibel

The death of 157 people on an Ethiopian Airlines flight earlier this month was an awful human tragedy.

It’s also a cautionary tale about what happens if we allow corporations to regulate themselves.

The public is starting to learn more about the circumstances behind the crash of a Boeing 737 MAX 8 jet in Ethiopia as well as in a similar lethal crash in Indonesia last fall. Both crashes of a brand-new new model of airplane may be connected to the failure of an automated system designed to prevent the plane from stalling. Federal prosecutors and the U.S. Department of Transportation are investigating the development of the 737 MAX, according to a report in the Wall Street Journal.

The roots of the problem go back to well before Donald Trump became president. Over the past decade, the FAA has pushed to delegate responsibility for assessing risk to airplane manufacturers themselves.

The Seattle Times reported that managers at the Federal Aviation Administration in 2015 pressed safety engineers at the agency to delegate assessments of safety to Boeing and pushed for approval. A former FAA safety engineer told the newspaper that “there was constant pressure to re-evaluate our initial decisions” and “there was continued discussion by management about delegating even more items down to the Boeing Company.”

These troubling revelations are raising serious concerns among aviation experts. “It raises for me the question of whether the agency is properly funded, properly staffed and whether there has been enough independent oversight,” Jim Hall, an aviation-safety consultant and former chairman of the National Transportation Safety Board told Bloomberg News.

The FAA’s sluggishness is consistent with the agency’s reputation for regulatory lethargy. The Transportation Department’s former inspector general, Mary Schaivo, has criticized the agency for more than two decades, saying it exhibits a pattern of failing to act until lives are lost. “Our safety agency is called the tombstone agency … because they wait for major loss of life before they make a safety change,” she told lawmakers in 1997, after the crash of ValueJet flight in the Florida Everglades killed 110 people.

It may take or months to get to the bottom of what happened in the two tragic crashes. But it is clear that Boeing, a defense contractor and airplane maker, has long had a cozy relationship with politicians of both parties.

Former President Barack Obama lavished praise on Boeing, calling it an “iconic company,” and touted his administration’s record in selling Boeing’s planes. “Other than maybe the CEO of Boeing, I don’t know anybody who’s done more to sell Boeing planes around the world than me and this administration,” Obama said. While in Vietnam last month, President Donald Trump praised two Vietnamese airlines for purchasing more than 100 Boeing jets. Even after the Ethiopia crash, Trump called Boeing a “a great, great company with a track record that is so phenomenal.” Boeing contributed  $1 million toward Trump’s inauguration and contributed the same amount to President Barack Obama’s inauguration.

Federal law prohibits government contractors from making campaign contributions to candidates, parties and political committees. The law is intended to prevent companies from bribing officials to win lucrative contracts and to prevent lawmakers from extorting money from companies with business pending before the government

However, the absence of strict rules requiring major public companies and federal contractors to disclose their political activity to shareholders and the public means that companies can funnel money through a web of untraceable dark money entities.

Unfortunately, another major loophole in the law defeats this purpose: contractors may establish PACs to make these same campaign contributions. Boeing takes full advantage of this loophole, laundering millions of dollars of campaign contributions directly to lawmakers and even to dark money groups. As a result, Boeing has well-endeared itself to those responsible for issuing defense contracts. Boeing shareholders have filed a resolution up for a vote at the company’s annual meeting in April calling on the company to disclose the full extent of its lobbying activities.

Since 1990, Boeing’s political action committees and individual company employees have contributed $32.6 million to federal candidates, with 52 percent going to Republicans and 46 percent going to Democrats, according to the Center for Responsive Politics. The company has spent nearly $170 million on federal lobbying over the past 10 years.

Boeing has received more than $100 billion in unclassified defense contracts between 2014 and 2018, according to Reuters, and received $64 billion in federal loans and loan guarantees and $457 million in federal grants from 2000 to 2014, according to a study by Good Jobs First.

As of last year, 98 lobbyists represented Boeing, with 71 having previously worked for Congress or the executive branch, according to the Center for Responsive Politics. Of these 98 lobbyists, 31 work for Boeing directly, with the remainder working for outside firms. The revolving door between Boeing and Congress swings both ways; CNN reported that a former Boeing lobbyist, John Keast, is staff director of a key Senate committee overseeing aviation issues.

The small army of lobbyists advocating for Boeing include dozens of former congressional and federal agency staffers as well as one former congressman, retired Rep. Norm Dicks, a Democrat from Boeing’s former home state of Washington.

Dicks had the moniker “Mr. Boeing” and helped the company win a $35 billion air tanker refueling contract. When the contract was announced in 2011, Dicks said it was “the happiest day in my professional life.”

Boeing also has employed 51 people who either currently serve as federal officials or have done so in the past. Those include Patrick Shanahan, the current acting secretary of defense, who spent more than 30 years as a Boeing executive before joining the Trump administration.

Though Shahahan is required to recuse himself from decisions involving Boeing, the Pentagon has faced criticism over several multibilliondollar contracts awarded to Boeing, as well as an ethics complaint calling for an investigation into whether Shanahan promoted Boeing and disparaged competitors. The complaint came after a report by Bloomberg said that a Pentagon request for $1.2 billion for 12 Boeing F-15X fighter aircraft was made “with some prodding” by Shanahan. Defense News reported that the purchase of the aircraft “ was essentially forced upon the Air Force.”

Politico reported that Shanahan’s loyalty to Boeing continued into his government service. Shanahan reportedly excoriated Boeing rival Lockheed Martin over its $1 trillion F-35 fighter jet, calling it  “f—ed up” and claiming that if the contract for this jet “had gone to Boeing, it would be done much better.”

The Justice Department’s national security division is led by John Demers, a former Boeing vice president and assistant general counsel.  Another former Boeing executive, Mira Ricardel, worked as deputy national security adviser, but was fired after a dispute with Melania Trump.

After the Ethiopia crash, Trump spoke on the phone to Boeing CEO Dennis Muilenburg, who argued that the planes should not be grounded. It wasn’t until a day later that both Trump and Boeing reversed course in the face of public pressure and grounded the planes – after Canada, Great Britain, France, Germany and the European Union had already done so. Muilenburg has said he developed a personal relationship with Trump, telling a radio interviewer in February that Trump “cares about business” and “creates open communication lines.”

We need elected officials and regulators who will stick up for the safety of the flying public rather than the profits of airplane makers.