Negotiated Penalties

I’m not going to pick on Boeing, but I am going to describe that company’s alleged wrong-doing in a particular case as a canonical example of a principle.

Boeing stands accused by the FAA of

install[ing] defective parts inside the wings of around 130 737NG aircraft and then knowingly vouch[ing that] they met all federal safety requirements.

In consequence, the FAA has proposed a $3.9 million penalty.  As if Boeing should have a say in the penalty it chooses to pay.  This is nonsense.

There should be no proposals, no entertainments of counterproposals from the accused, no time wasted on discussions.  If the FAA thinks it has a case it can make in court, it should make its case in court and apply the court’s penalty.  If the FAA doesn’t think it has a case it can make in court, it has no legitimate case at all, and it should walk away.

So it should be with SEC-“negotiated” penalties for alleged wrong-doings, for EPA “cases,” for any government agency with a beef to bring.

Some might argue that this is little different from a prosecutor offering a plea deal to an accused criminal. Those folks would be right—and it’s wrong there, too.

Others might argue that such affairs are efficient ways to correct bad corporate behavior, that matters can be settled faster this way than through court trials.  Not in the long run, though, and not broadly.  Such “settlements” are binding only on the agency and the company it has “penalized,” and the allegedly misbehaving company too often later repeats the assessed behavior or something similar.

Court outcomes, on the other hand, bind everyone in the court’s jurisdiction (nationally, in those cases that wind up at the Supreme Court).

Furthermore, too often in these business accusations and settlements, the settlement results in the company making no admission of wrong-doing.  In accepting such an outcome, the agency demonstrates that it had no case to bring in the first place; it merely browbeat some vig for the agency by using its vastly superior Government power and breadth of resources.

These “settlements” are conveniences to the government, to be sure, but Government’s convenience is no basis for obtaining justice.  All that’s obtained from such outcomes is…Government convenience.

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