CORPORATE CRIME REPORTER
Kid
Gloves: Boeing Fined $15 Million – No Admission of Wrongdoing
20 Corporate Crime Reporter 16(1), April 10, 2006
The government says – you can’t ship that technology to China because
it is sensitive and it can be used for military purposes.
Boeing flips the government the bird and says –
Of course we can.
And we will.
And it ships the technology to China.
The government says – okay, we’ll fine you.
Boeing says.
Okay, we’ll pay the fine.
End of story.
The government didn’t even announce the fine.
It did post the charging and settlement
documents in an obscure
nook of the State Department web site.
But without the work of an enterprising reporter from the Seattle Times
– the case might have headed down memory hole lane.
The settlement document gives you a sense of how meek the government has become
when it comes to enforcing the law against major American corporations.
The technology in question – the QRS-11 gyrochip – is embedded in
Boeing commercial jets.
But according to the State Department, the chip also has significant military
applications.
For starters, it’s used for guidance on the Maverick Missile.
In the early part of this decade, Boeing shipped 19 aircraft with the QRS-11
to China.
Without an export license, such shipments to China were illegal.
The State Department said so.
But Boeing said – to hell with you – we think this is legal.
And shipped the aircraft anyway – with the QRS-11 chip embedded –
to China anyway.
In January 2004, the federal government changed it’s rules to comply with
Boeing’s take on the law.
Now, selling the QRS-11 gyrochip when it is embedded in a Boeing commercial
aircraft makes it a commercial gyrochip.
No export license needed.
And it’s legal now to sell it to China.
But that wasn’t the case when Boeing shipped 19 of the aircraft between
2000 and 2003.
So, to save face – Boeing can’t flip us the bird and get away with
it – the State Department brought an enforcement action.
And settled the Boeing case last week with kid gloves.
A $15 million fine – potato chip crumbs to Boeing.
Let’s spend a few minutes on the settlement document.
Also known as a consent decree.
Just picture yourself, the Boeing lawyer.
Facing the meek bureaucrats at the State Department.
Massaging the wording of the document.
Boeing “has acknowledged the seriousness of the charges cited in the draft
charging letter (which include unauthorized exports of defense articles to proscribed
and other countries).”
Boeing “expresses regret for these activities and its willingness to make
amends by paying” the $15 million penalty.
Note – regret.
No guilt.
No admission of wrongdoing.
Because it has shown regret and agreed to make the payment, the State Department
determines that debarment – barring Boeing from future government business
– “is not appropriate at this time.”
And have no doubt, there never will be the time when Boeing will be debarred.
After all, three previous export violation cases – settled with very similar
slap-on-the-wrist consent decrees – were not enough to cause the State
Department to take serious action.
In the most recent consent decree, Boeing acknowledged “the seriousness
of its disregard” for the export control laws enforced by the State Department
and said it “wishes to make amends” by paying the $15 million.
But on the other hand, Boeing “neither admits nor denies” the allegations.
This is ridiculous.
For once, just for once, where you have a recidivist company that keeps coming
before you for these types of violations, why not just force the company to
admit the violation?
For justice’s sake.
Just for once.
Corporate
Crime Reporter
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