Boeing Board's Lack of Expertise Under Scrutiny in 737 MAX Safety Oversight

May 6, 2019

By Chloe Aiello

Boeing's board of directors is increasingly under scrutiny as more details come to light about what went wrong aboard two doomed 737 Max planes. And if the board failed to ask enough tough questions about safety features of the plane, it could be because many board members lacked the expertise necessary to oversee an aerospace company, said Doug MacMillan, a Washington Post reporter who covered the story.

"These are not people with a lot of deep aerospace industry expertise, so you could argue the board doesn't really have the tools it needs to oversee something as complex as airplane safety," said MacMillan, a corporate accountability reporter.

Boeing ($BA) 737 Max planes have been grounded globally for more than a month after two crashes within six months killed a total of 346 people. Investigations into the Lion Air and more recent Ethiopian Airlines crashes unearthed the role of Boeing's planes in the fatal incidents, which were initially thought to be unrelated.

In both flights, for example, investigators found that faulty "angle of attack" sensors activated software that forced the planes into nosedives. An optional alert feature that the company said in a statement Sunday it thought was standardized could have notified pilots that the sensors were inputting false information, according to The New York Times. After the first crash in Indonesia, Boeing conducted an internal review of the problem, and said the alert feature's absence "did not adversely impact airplane safety or operation."

However, MacMillan said board members he interviewed admitted they did not even know about the software system until after the first crash, which he said looks worse for CEO Dennis Muilenburg and company management than it does for the board. But the board should have "poked and prodded this thing a little more," he added.

"The board of directors is not supposed to oversee every single technical detail that goes into an airplane, but it is their job to oversee risk and to set up guardrails and make sure the company is not taking on too much risk," he said.

Right from the start of the design process at Boeing, MacMillan said board members told him they were mostly focused on rushing a new plane model to market since the company was already overdue and over budget on a different plane model.

“Safety was just a given,” one former board member said to MacMillan.

Even if they had been concerned with safety, many of them may not have known the right questions to ask since most lack experience in aerospace and defense, which MacMillan said is a problem, not only for Boeing, but for many corporate boards.

"They don't have a lot of expertise with airplane safety. They are hiring CEOs from other parts of the business world: the CEO of Duke Energy, the former CEO of Allstate," MacMillan said, noting that Caroline Kennedy and former U.S. Ambassador to the United Nations Nikki Haley is also on the board.

"So you have to kind of wonder are these people really there and are they sitting around the table helping Boeing oversee its strategy? Or are they kind of there for the prestige of this job?"

Investigators have not yet identified what caused the crashes, but the board is increasingly under pressure from shareholders and victims' families over whether they should have done more.

For full interview click here.

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