The crushing aftermath of the tragic 737 MAX scandal is disturbing at the least. Innocent lives were lost because of Boeing’s culture misfires, poor leadership at the management and board level, and an arrogant disregard for the impact of safety concerns. Boeing’s 737 MAX fleet was grounded for twenty months, until November 18, 2020. Boeing was ordered by the FAA to cure the defects in...
In its decision, the Chancery Court methodically analyzed the weaknesses in Boeing’s board processes and its fundamental failure to meet basic Caremark standards in tackling airplane safety issues, particularly after the Lion Air crash in 2018. First, the Board did not implement or prioritize safety oversight at the “highest level of the corporate pyramid.” None of Boeing’s Board committees were specifically assigned responsibility for overseeing...
When considered in light of the Chancery Court’s decision, DOJ’s essential findings in its Boeing investigation are problematic at best. The Chancery Court’s decision outlines how Boeing’s culture of safety deteriorated into a culture of cost-cutting and profits, while under supervision of a board with star-studded credentials. The Delaware Court’s decision provides a perfect example of how weak corporate governance can have a direct and...
“Reality is merely an illusion, albeit a very persistent one.”― Albert Einstein “Reality leaves a lot to the imagination.”― John Lennon We often hear about how perspective can influence conclusions. It is rare, however, when it comes to investigations, legal proceedings, and litigation for two separate but important fact finders to reach polar opposite conclusions. When I reviewed again the US Department of Justice’s conclusions reached as...
Mashreqbank, based in Dubai, agreed to pay $100 million to the New York Department of Financial Services, the Federal Reserve, and the Office of Foreign Asset Control for violation of the now-repealed Sudan Sanctions Regulations. The Sudan Sanctions Regulations were repealed on June 29, 2018. OFAC issued only a Finding of Violation, rather than impose a civil penalty, in light of Mashreqbank’s willingness to agree...
For all the hype about ESG, board accountability, stakeholder demands for diversity and inclusion, a recent report on board diversity shows little change. That is not surprising. The forces of resistance to change are particularly strong, especially when directed at corporate boards. What is surprising is how resistance clings to practices that directly undermine efficiency and financial profitability. Board diversity improves governance performance and that...
The Justice Department continues to attack and dismantle global ransomware extortion organizations. Business surveys often confirm that executives are hyper-focused on the risk of ransomware attacks against businesses. Interestingly, government regulators have focused on ransomware scenarios to ensure that regulatory restrictions on sanctions and other restrictions are not violated. The message behind DOJ and regulatory interests is clear – if attacked, notify law enforcement right...
If I ever told you years ago that the 2021 headlines would be dominated by the “supply chain” crisis, you would have immediately questioned my judgment (and perhaps sanity). The current crisis reflects the roller coaster economic impact of the pandemic. If there ever was a global disruption of severe magnitude, we have been through it. We have all had experience in managing disruptions and...
A targeted employee survey program requires careful planning and communications prior to launching the survey program. Employee engagement in response to a specific survey requires transparent and robust explanations and assurances. In the absence of appropriate communications and assurances, employee response rates may decline. Employees have to understand why the survey is being conducted, whether anonymity will be protected, and how the results will be...
Chief compliance officers play a key role in managing a company’s ethical culture. Most companies fail to pay proper attention to its culture because it is difficult to define, measure and monitor. Such an approach is short-sighted. CCOs have to embrace this issue and develop appropriate techniques to measure a company’s culture. All too often I observe companies that rely on annual or semi-annual company-wide...
