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Comment by consp | Hacker News Reader

Companies are expressed through and by people, and yes I ignore the "limited liability" bs since it should not shield you from criminal behaviour.

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Limited liability has nothing to do with this. Individuals can go to jail for crimes, to the extent they individually have committed them, but because corporations are aggregates and not individuals, it is possible for them to be guilty of crime when no individual would. On the facts alleged in the 737 Max charges, if any individuals would be guilty at all, they wouldn’t be the executives or shareholders you seem to be lusting for, but two test pilots (and its not clear they would be, only that they personally had the knowledge whose imputation to Boeing combined with corporate representations to the federal government made Boeing guilty.)

> I ignore the "limited liability" bs since it should not shield you from criminal behaviour.

It doesn't. That's not what "limited liability" is for.

> Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or joint venture. If a company that provides limited liability to its investors is sued, then the claimants are generally entitled to collect only against the assets of the company, not the assets of its shareholders or other investors. A shareholder in a corporation or limited liability company is not personally liable for any of the debts of the company, other than for the amount already invested in the company and for any unpaid amount on the shares in the company, if any, except under special and rare circumstances permitting "piercing the corporate veil." The same is true for the members of a limited liability partnership and the limited partners in a limited partnership. By contrast, sole proprietors and partners in general partnerships are each liable for all the debts of the business (unlimited liability).

https://en.wikipedia.org/wiki/Limited_liability

(emphasis mine)

And it doesn't, but the criminal behaviour then needs to be a personal one, not just like (and not saying this is the case) systemic issues at the company, regulatory oversight clearly insufficient or not preventative, no one person really specifically at fault through malicious action or reckless negligence so ehhh blame the CEO.

So the owner of Boeing should be held personally liable? Okay, cool, except Boeing is a publicly traded company which means that the 'owner' is countless individual shareholders around the world, many of which are in turn other companies, whose owners are in turn things like pension funds.

So if you have a pension, should we be locking you up 'cause it was partially invested in Boeing?

Alternatively, you can have a specifically named role which is to be held liable? But then as far as the 'company' is concerned it's still just cost of doing business.

There's only three viable ultimate sanctions for a corporate entity: financial, being split up, and the death penalty.

Who said anything about owners? _Management_ should be held accountable.

An explicitly cited reason DoJ approved the deferred prosecution agreement was that, on the basis of the facts available, management was not collectively, even, much less individually aware of the facts imputed to Boeing based on the knowledge of lower-level employees which were necessay to be guilty of the crime.

The thing is, this sets up a moral hazard where it’s advantageous not to know, not to keep close tabs, and tight control over your supply chain. If there were potentially harsh penalties for allowing this to happen, regardless of knowledge, I think you’d see much better controls put in place, and the incentive would be to keep safety critical operations kept in-house, where they can be better monitored, rather than spun out to make the return on capital look better to public markets.

> The thing is, this sets up a moral hazard where it’s advantageous not to know

No, they would be better off if they had known what the pilots were doing and stopped the fraud rather than allowing it.

> If there were potentially harsh penalties for allowing this to happen, regardless of knowledge, I think you’d see much better controls put in place, and the incentive would be to keep safety critical operations kept in-house, where they can be better monitored, rather than spun out to make the return on capital look better to public markets.

If you made inaccurate reports to governments a strict liability crime with a harsh pubishment not requiring intent, recklessness,or negligence, I think that would actually be a bad thing and lead people to actively avoid any activity or field of business that might require reporting to the government.

But, in any case, the fraud offenses at issue ARE NOT strict liability crimes now, so people without the requisite knowledge and intent cannot be guilty of them.

Thanks for the thoughtful response. I was admittedly thinking more about their quality problems due to their spinning out big chunks of their manufacturing, and the general failures of management, rather than specifically the MAX problems and the fraud in question, so my comment was somewhat off-topic. But in general, it seems that they’re encouraged to not look too closely at parts of their business that are acting in risky ways, and if that’s the case, perhaps we should change the incentives to try to fix that. I don’t know what that would look like, there are obviously limits to how much someone can know about what’s going on 6 layers below in the org chart. But making them liable would certainly be an incentive. I think people would still take the job, given how much is typically on offer.

"Limited liability" is specifically about not passing consequences through to owners (normally in the context of financial liability), and that's the language the OP used.

If the stockholders didn't make the decision to defraud the FAA, then why would they be on the hook for this?

Not that i disagree, but the corporation also has a way of diffusing responsibility to thousands of individuals, each making a small piece of the total decisions that led to an outcome. It's impossible, in theory, to pin a particular individual with absolute certainty, that they'r totally and 100% responsible for said outcome.

Of course, i am in the camp of changing the regulation such that outcomes that would be considered gross neglegence leading to loss of life is layed on the management, regardless of whether the decision is diffused or not. Aka, they hold the statutory responsibility, and is criminally liable - that's the price of being in management. They would get the tools as management to put in place preventative measures, which can be used to cover their ass.

Management gets paid money to make money make more money, but that does not include implying they need to break law/walk on the other's people's bodies to do so.

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