Issue 91 • Week of October 15, 2023
Next week marks the fifth anniversary of the crash of Lion Air Flight 610 that claimed the lives of 189 people off the coast of Indonesia. Though the FAA privately determined two months later that fatal crashes would likely continue to occur every two years for the aircraft in question, another 157 victims including 8 Americans had to die aboard Ethiopian Airlines Flight 302 the following March to convince regulators to finally ground an entire generation of Boeing 737 MAX planes for an unprecedented 20 months.
Fault was placed primarily on two aspects of a flight stabilizing feature. First, it was found to be a tragic single point of failure in sharp contrast to the aviation industry standard of three redundancies. Second, Boeing successfully lobbied the FAA to allow the company to remove its details in the aircraft manual to avert costly pilot training.
Both problems arose from executive pressure that put profits ahead of the lives of passengers and crew. Boeing dutifully fired the CEO – albeit with a $60 million golden parachute; he later returned to the aerospace industry with a new $240 million investment. Only one employee was prosecuted and then found not guilty by a jury. Families of victims are still suing for justice after an earlier settlement with the FAA left them out of negotiations.
Shareholders were also hit with financial consequences. Boeing's stock price has hovered around half of the all-time high that occurred just prior to the grounding, so its cost-cutting measures did not pan out for investors either. Lion Air, meanwhile, has continually put off its IPO.
Similar greed cost the lives of 11 employees working on Deepwater Horizon when BP drilled almost a mile farther than the oil rig's stated specifications after years of normalizing small problems. The worst environmental disaster in history affecting billions of animals within a 40,000 square mile region did not lead to significant ramifications for BP stockholders, however. Its market valuation has been generally unaffected despite paying 116x the amount of construction on fines and cleanup totaling $65 billion.
These are only two of the most recent high profile corporate accountability cases as the use of consumer products sadly result in deaths and injuries every day. Yet most corporations regularly receive immunity and almost never admit fault when fraud or negligence occurs.
87% of voters agree we need tougher enforcement of regulations and 82% of Americans want stronger laws to protect whistleblowers who could step forward to protect consumers and employees from future accidents. As with many issues, there is an uphill battle in Congress with competing legislation that could exacerbate the problem so citizens must speak up.
How can consumers and investors hold corporations accountable?
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