Trump Linking Huawei, China Trade Roils Justice Department

President Donald Trump shocked some last month when he suggested that the criminal charges against Chinese telecom giant Huawei Technologies and its chief financial officer, Meng Wanzhou, might be used as leverage in his administration’s ongoing trade talks with China.

 

“We’re going to be discussing all of that during the course of the next couple of weeks,” Trump told reporters at the White House Feb. 22 in response to a question about Meng’s case.  “We’ll be talking to the U.S. attorneys. We’ll be talking to the attorney general. We’ll be making that decision. Right now, it’s not something we’ve discussed.”

 

The president’s apparent willingness to possibly barter away the prosecution of Huawei and one of its executives in exchange for a favorable trade deal with China alarmed legal experts who say it could lead to pushback at the Justice Department. 

“If the White House told the Department of Justice that it wanted Justice to dismiss altogether the case against Huawei and Ms. Meng, I’d expect there to be mighty objections and resistance to that,” said David Laufman, who served as a senior national security official at the Justice Department until last year and is now in private practice. 

Ron Cheng, a former federal prosecutor who was the Justice Department’s sole resident envoy in Beijing, said it would be highly unusual for the criminal case against Meng to be affected by the trade talks. “There are a number of concerns about the precedent something like that would establish,” said Cheng, now a partner at the O’Melveny & Myers law firm.

The Justice Department unsealed criminal charges against Meng, Huawei and several subsidiaries on Jan. 29 for violating U.S. sanctions on Iran and stealing U.S. intellectual property, nearly two months after Meng was arrested in Canada at the request of U.S. authorities. 

The indictments exacerbated tensions with China, which called the case against Meng “political persecution.” That prompted Trump’s overture.

Trump, who prides himself on his negotiating skills, could well have been bluffing in hopes of enticing the Chinese into a trade agreement.But a quid pro quo deal as part of the trade talks is not without precedent.

Last year, Trump ordered the Commerce Department to lift a ban imposed on ZTE Corporation, Huawei’s smaller rival.  ZTE had violated the terms of an agreement with the department to settle charges that it had exported U.S. goods to Iran in violation of U.S. sanctions.   

In Huawei’s case, the extent of Trump’s personal involvement and the nature of any talks between the White House and the Justice Department about the company’s fate remain unclear.  After Meng’s arrest in December, a spokesman for National Security Adviser John Bolton said that neither Bolton nor Trump had been told about her detention in advance. Trump later said the White House had talked to the Justice Department about the Huawei case  

 

Senior Justice Department officials have sought to tamp down talk of any linkage between the Huawei case and the ongoing trade talks with China. Asked about the issue after the Justice Department unsealed the indictments in January, then acting attorney general Matt Whitaker said, “We do our cases independent from the federal government writ large because that’s the way the criminal system has to be.”

 

A spokesman for the Justice Department declined to say whether the White House had engaged the department in any discussions about Huawei since Trump’s latest comments.   The company has pleaded not guilty to the charges brought in New York and Seattle. Spokespeople for the U.S. Attorneys for those cities said the cases are proceeding.  

The charges against Huawei come as the Trump administration has stepped up a global campaign against the telecom behemoth, warning that the company founded by a former People’s Liberation Army official poses a national security threat and urging allies to keep it out of their 5-G networks. While Australia and New Zealand have imposed a ban, other U.S. allies have demurred.  

With business operations in more than 170 countries and annual revenues of $108 billion, Huawei is the world’s largest supplier of telecom equipment. Last year, the multinational company beat Apple to become the No. 2 manufacturer of smartphones and tablets in the world.

In national security related criminal cases, it is not uncommon for the Justice Department to notify the White House about impending law enforcement actions.This allows officials to deescalate conflict if necessary or weigh in on the timing of an announcement.  “It’s not to give the White House prior approval authority or veto authority,” Laufman said. 

Some experts see the real possibility that the White House crosses the line and intervenes in the criminal case.  Short of calling for a dismissal of the case, the White House could press the Justice Department to devise a resolution that would afford the agency a measure of vindication without appearing to let the company or Meng off the hook.

Such a resolution could involve Huawei admitting responsibility, paying a hefty fine, and agreeing to a stringent compliance regime and other conditions, according to Laufman. 

“But I think even there, that will likely engender concern throughout the Justice Department,” Laufman said.

 

That is how ZTE settled charges of violating U.S. sanctions. In 2017, ZTE pleaded guilty and paid $430 million for exporting U.S. goods and technology to Iran in violation of U.S. sanctions. 

The company later admitted to violating the terms of its settlement with the Commerce Department and faced near collapse after the department responded by forbidding U.S. companies from selling it crucial components. 

After Trump intervened, the Commerce Department lifted its ban, but not without imposing what it called the most “stringent compliance measures.”   

The Huawei case could well be settled under similar terms. But there is a hitch.  Because she faces criminal charges, Meng would have to appear in a U.S. court to enter a plea.  

“The only way to resolve a case like this with some sort of a formal disposition is to come to the United States,” Cheng said. 


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Venezuelans Find Ways to Cope with Inflation and Hunger

Francibel Contreras brings her three malnourished children to a soup kitchen in the dangerous hillside Caracas slum of Petare where they scoop in spoonfuls of rice and scrambled eggs in what could be their only meal of the day.

 

Part of the tragedy of daily life in socialist Venezuela can be glimpsed in this small volunteer soup kitchen in the heart of one of Latin America’s biggest slums, which helps dozens of children as well as unemployed mothers who can no longer feed them.

 

Some Venezuelans manage to endure the nation’s economic meltdown by clinging to the shrinking number of well-paid jobs or by receiving some of the hundreds of millions of dollars sent home by friends and relatives abroad — a quantity that has swollen in recent years as millions of Venezuelans have fled.

 

But a growing percentage of people across the country, especially in slums like Petare, are struggling to cope.

 

Contreras’s husband, Jorge Flores, used to have a small stand at a local market selling things like bananas and yucca, eggs and lunchmeat — trying to scrape out a profit in a place where hyperinflation often made his wholesale costs double from day to day. Then he was robbed at gunpoint by a local gang. And his brother crashed the motorcycle he used to supply his stand.

So Flores abandoned the market stall and looked for other work. He does some plumbing jobs and the family has turned its living room into a barbershop, sheltered beneath a corrugated metal roof held down by loose bricks and planks. It’s decorated with origami-like stars that the family has made out Venezuela’s colorful but rapidly depreciating bolivar bills.

 

“Our currency is worthless,” Contreras said. “These days, I prefer trading a bag of flour for a manicure or a haircut.”

 

The scarcity of milk, medicine and other basics — along with routine violence —  has eroded support for socialist President Nicolas Maduro even in poor neighborhoods like Petare that once were his strongholds. Maduro says there’s an opposition-led plot to oust him from power and says U.S. economic sanctions and local opposition sabotage are responsible for the meltdown.

 

Various local polls show he retains support from roughly a fifth of the population, many of them ideological stalwarts, government-connected insiders or poor voters dependent on government handouts, including the so-called CLAP boxes of oil, flour, rice, pasta, canned tuna and other goods that arrive several times a year.

 

Contreras’ family of four gets those boxes, but it’s not enough to get by on for long. For months, they’ve been relying on the soup kitchen launched by opposition politicians as the main source of protein for their children. On a recent day, her 7-year-old son Jorbeicker played a pickup soccer game in the hilly, dusty streets in front of her home, while her husband practiced styling his mother’s hair.

 

“I’m barely getting by,” Flores said, scissors in hand.

 

The four-day power outage that brought most of Venezuela to a halt this month added to Flores’ misery. He wasn’t able to use the electric clippers needed to give customers the sort of trims they demand.

 

“It hit us in a big way,” he said. “You absolutely need the clippers.”

The couple estimates the power outage cost the family the equivalent of $11 in missed haircuts — a significant sum in a country where the minimum wage amounts to $6 a month, even if most people supplement that figure by working side jobs and pooling resources with friends and neighbors.

Contreras and Flores charge 2,500 bolivars — about 70 U.S. cents — for a trim. A government-subsidized kilogram of flour can cost almost three times that, and Contreras says that lines for the rationed goods can be endless and she sometimes comes back empty-handed. She also said she feels unsafe in the lines. Dozens of people have been killed in gang crossfires over the years, and some have been crushed to death when lines of shoppers turned into stampedes of desperate looters.

 

Next-door neighbor Dugleidi Salcedo sent her 4-year-old daughter to live with an aunt in the city of Maracay, two hours away, because she could no longer feed her. “My boys cry,” the single mother of four said. “But they resist more than her when I tell them that there’s no food.”

After walking back from the soup kitchen, she opened the rusty door to her home of scraped, mint-colored walls. Inside, her 11-year-old son Daniel, who was born partially paralyzed and with developmental disabilities, lay on a stained couch while flies flew over his twisted, uncovered legs.

 

When she took the lid off a plastic container to show her last bag of flour, a cockroach crawled out, making her jump back and scream.

 

“This is so tough,” she said. “I don’t have a job. I don’t have any money.”

 

Salcedo used to sell baked goods and juices to neighbors from the window of her kitchen. Then, her fridge broke down and she couldn’t find the money to fix it.

 

These days, she relies on the kindness of neighbors, or asks a friend who owns a small food shop for credit while she waits for loans from family members in other parts of Venezuela.

 

“This country has never been as bad,” the 28-year-old said. “Just buying some rice or flour is something so hard, so expensive, and often, they don’t even have any.”

 

A few days later, thieves broke into the soup kitchen and stole food. Then, a fire broke out in the slum, burning 17 homes to the ground. It was caused by candles that were apparently being used for light after a power outage — an almost everyday occurrence in many parts of Venezuela. Opposition lawmaker Manuela Bolivar, whose Nodriza Project runs the soup kitchen, said that when firefighters arrived, they lacked water and had to put out the blaze with dirt.

 

“It’s a social earthquake,” Bolivar said. “They lose their homes. They’re left in the open air. The soup kitchen was robbed. It’s so many adversities: It’s the infections, the lack of water and food.”

At an outdoor market a short distance from Petare in the middle-class district of Los Dos Caminos, Carmen Gimenez shopped for carrots and other vegetables for a stew. When her 14-year-old daughter Camila asked if they could take some other products, she told her that they would have to stick to the basics.

 

Although she has a job at a bank, she still struggles to make ends meet.

 

“It doesn’t matter where you live. The need is the same,” said Gimenez, 43.

 

“The poor, the rich, and the middle class — we’re all suffering somehow because the government has leveled us all downwards,” she adds with anger. “How did they dominate us? Through the stomach.”


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In End of 20th Century Fox, a New Era Dawns for Hollywood

The Fox Studio backlot, first built in 1926 on a Culver City ranch in Los Angeles, was enormous. Before much of it was sold off in the 1960s, it was four times the size of its current, and still huge, 53 acres.

 

Shirley Temple’s bungalow still sits on the lot, as does the piano where John Williams composed, among other things, the score to “Star Wars.” A waiter in the commissary might tell you where Marilyn Monroe once regularly sat.

 

When the Walt Disney Co.’s $71.3 billion acquisition of Fox is completed at 12:02 a.m. Wednesday, the storied lot — the birthplace of CinemaScope, “The Sound of Music” and “Titanic” — will no longer house one of the six major studios. It will become the headquarters for Rupert Murdoch’s new Fox Corp., (he is keeping Fox News and Fox Broadcasting) and Fox’s film operations, now a Disney label, will stay on for now as renters under a seven-year lease agreement.

 

The history of Hollywood is littered with changes of studio ownership; even Fox Film Corporation founder William Fox, amid the Depression, lost control of the studio that still bears his name. But the demise of 20th Century Fox as a standalone studio is an epochal event in Hollywood, one that casts long shadows over a movie industry grappling with new digital competitors from Silicon Valley and facing the possibility of further contraction. After more than eight decades of supremacy, the Big Six are down one.

 

“It’s a sad day for students of film history and I think it’s potentially a sad day for audiences too,” said Tom Rothman, former chairman of Fox and the current chief of Sony Pictures. “There will just be less diversity in the marketplace.”

 

Disney’s acquisition has endless repercussions but it’s predicated largely on positioning Disney — already the market-leader in Hollywood — for the future. Disney, girding for battle with Netflix, Apple and Amazon, needs more content for its coming streaming platform, Disney+, and it wants control of its content across platforms.

“The pace of disruption has only hastened,” Disney chief Robert A. Iger said when the deal was first announced. “This will allow us to greatly accelerate our director-to-consumer strategy.”

 

The Magic Kingdom will add 20th Century Fox alongside labels like Marvel, Pixar and Lucasfilm. But film production at Fox, which has in recent years released 12-17 films a year, is expected to wane. Due to duplication with Disney staff, layoffs will be in the thousands.

 

Disney will also take over FX, NatGeo and a controlling stake in Hulu, which has more than 20 million customers. It will gain control of some of the largest franchises in movies, including “Avatar,” “Alien” and “The Planet of the Apes.” Fox’s television studios also net Disney the likes of “Modern Family,” “This Is Us” and “The Simpsons.” Homer, meet Mickey.

 

Some parts of Fox, like the John Landgraf-led FX and Fox Searchlight, the specialty label overseen by Stephen Gilula and Nancy Utley, are expected to be kept largely intact. Searchlight, the regular Oscar contender behind films such as “12 Years a Slave,” “The Shape of Water” and “The Favourite,” could yield Disney something it’s never had before: a best picture winner at the Academy Awards.

 

Nowhere is the culture clash between the companies more apparent than in “Deadpool,” Fox’s gleefully profane R-rated superhero. While Spider-Man still resides with Sony, Disney now adds Deadpool, the X-Men and the Fantastic Four to its bench of Marvel characters. How they will all fit with Disney’s PG-13 mission remains to be seen, though Iger last month suggested in a conference call with investors that there may be room for an R-rated Marvel brand as long as audiences know what’s coming.

 

The question of how or if Disney will inherit Fox’s edginess matters because Fox has long built itself on big bets and technological gambits. It was the first studio built for sound. It was nearly bankrupted by the big-budget Elizabeth Taylor epic “Cleopatra.” It backed Cameron’s seemingly-ill-fated “Titanic,” as well as Ang Lee’s “The Life of Pi” and the Oscar-winning hit “Bohemian Rhapsody.”

 

“We were a studio of risk and innovation,” says Rothman, who also founded Fox Searchlight. “It was a very daring place, creatively. That’s what the movies should be.”

 

But will the more button-down Disney have the stomach for such movies? “Deadpool” creator Robert Liefeld, for example, has said Fox’s plans for an X-Force movie have been tabled, a “victim of the merger.”

 

Some were surprised regulators gave the deal relatively quick approval. The Department of Justice approved the acquisition in about six months, about four times less than the time it took investigating AT&T’s acquisition of Time Warner. The New York Times editorial page suggested the deal benefited from President Trump’s relationship with Murdoch.

 

“Disney will have probably north of 40 percent market share in the U.S. That’s one area where a deal does suggest that the market influence is going to be outsized,” says Tuna Amobi, a media and entertainment analyst with investment firm CFRA. “Having one studio control that much is unprecedented. And it could increase from there given the pipeline that we see.”

Disney is about to have more influence on the movies Americans and the rest of the world see than any company ever has. Last year, it had 26 percent of the U.S. market with just 10 movies which together grossed more than $3 billion domestically and $7.3 billion worldwide. Fox usually counts for about 12 percent of market share.

 

Fewer studios could potentially mean fewer movies. That’s a concern for both consumers and theater owners, many of whom already rely heavily on Disney blockbusters to sell tickets and popcorn.

 

“Certainly, consolidation poses a challenge in some respects to the supply of movies,” says John Fithian, president and chief executive of the National Organization of Theater Owners. “The fewer suppliers you have, the chances are we’re going to get fewer movies from those suppliers.”

 

But Fithian believes other companies are stepping into the breach, and he holds out hope that Netflix might eventually embrace more robust theatrical release. More importantly, Fox was bought by a company in Disney that is, as Fithian said, “the biggest supporter of the theatrical window.”

 

Still, Disney has been willing to throw its weight around. Ahead of the release of “The Last Jedi,” the studio insisted on more onerous terms from some theater owners, including a higher percentage of ticket sales.

 

More experimentation in distribution is coming. Later this year, WarnerMedia, whose Warner Bros. is regularly second in market share to Disney, will launch its own streaming platform. Apple is ramping up movie production. Amazon Studios is promising bigger, more attention-getting projects.

 

Ahead of a blizzard of new streaming options, Fox — and a giant piece of film history — will fade into an ever-expanding Disney world. Film historian Michael Troyan, author of “20th Century Fox: A Century of Entertainment,” has studied enough of Hollywood’s past to know that relentless change is an innate part of the business.

 

“It’s sad when any historical empire like that comes to end,” says Michael Troyan. “You can record in other places but when you’re on a lot like Fox, you feel the gravitas, you feel the history.”

 

Rothman says he will pause for a “wistful moment” Wednesday, but he believes consolidation doesn’t mean obsolescence.

 

“I don’t think it remotely arguers the end of the glories of the film business overall,” says Rothman. “I believe there remains eternal appetite for original, vibrant, creative theatrical storytelling.”


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Boeing Reshuffles Top Engineers Amid 737 MAX Crisis

Boeing, facing its biggest crisis in years following deadly crashes of its flagship 737 MAX aircraft, has brought in a new vice president of engineering while dedicating another top executive to the aircraft investigations, a company email showed on Tuesday.

The management reshuffle comes as Europe and Canada said they would seek their own guarantees over the safety of Boeing’s 737 MAX, further complicating plans to get the aircraft flying worldwide after they were grounded in the wake of crashes that killed more than 300 people.

John Hamilton, formerly both vice president and chief engineer in Boeing’s Commercial Airplanes division, will focus solely on the role of chief engineer, the unit’s Chief Executive Officer Kevin McAllister told employees on Tuesday in an email seen by Reuters.

“This will allow him to fully dedicate his attention to the ongoing accident investigations,” McAllister said, adding that the staffing changes were needed as “we prioritize and bring on additional resources for the ongoing accident investigations.”

Lynne Hopper – who previously led Test & Evaluation in Boeing’s Engineering, Test & Technology group – has been named vice president of Engineering, McAllister said.

A Boeing spokesman declined to comment but confirmed the authenticity of the email.

The shakeup showed how the world’s largest plane maker was freeing up engineering resources as it faces scrutiny during crash investigations while also maintaining production of its money-spinning 737 single-aisle aircrafts.

Previously, Hamilton served as the vice president of engineering for Boeing Commercial Airplanes from April 2016 through March 2019, according to a biography on Boeing’s website.

From July 2013 through March 2016, Hamilton served as the vice president of Safety, Security and Compliance and oversaw the Commercial Airplanes Organization Designation Authorization – a program that takes on specific safety certification duties on behalf of the U.S. Federal Aviation Administration.

Lawmakers and safety experts are questioning how thoroughly regulators vetted the MAX model and how well pilots were trained on new features.

For now, global regulators have grounded the existing fleet of more than 300 MAX aircraft, and deliveries of nearly 5,000 more – worth well over $500 billion – are on hold.


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Trump to Meet with Caribbean Leaders on Friday at His Florida Resort

U.S. President Donald Trump will meet at his Florida resort on Friday with the leaders of the Bahamas, Dominican Republic, Haiti, Jamaica and Saint Lucia to discuss Chinese “predatory economic practices” and the Venezuela situation, the White House said in a statement on Tuesday.

Trump and the Caribbean leaders will also discuss security cooperation and the potential opportunities for energy investment, the White House said.

“The President looks forward to working with countries in the region to strengthen our security cooperation and counter China’s predatory economic practices,” the White House statement said.

Washington has warned countries in the region about accepting Chinese investment. In October, U.S. Secretary of State Mike Pompeo told reporters in Mexico City that “when China comes calling it’s not always to the good of your citizens.”

“When they show up with deals that seem to be too good to be true it’s often the case that they, in fact, are,” Pompeo said.

On Venezuela, the United States has recognized opposition leader Juan Guaido as the country’s interim president.

Guaido invoked the constitution to assume the interim presidency in January, saying President Nicolas Maduro’s re-election was not legitimate. Most Western countries have backed Guaido as head of state.


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Warner Bros.’ Chief Tsujihara Steps Down Following Scandal

Warner Bros. chief Kevin Tsujihara, one of the highest ranking Hollywood executives to be felled by sexual misconduct allegations, stepped down from the studio Monday following claims that he promised roles to an actress with whom he was having an affair.

WarnerMedia chief executive John Stankey announced Tsujihara’s exit as chairman and chief executive of Warner Bros., saying his departure was in the studio’s “best interest.”

 

“Kevin has contributed greatly to the studio’s success over the past 25 years and for that we thank him,” said Stankey. “Kevin acknowledges that his mistakes are inconsistent with the company’s leadership expectations and could impact the company’s ability to execute going forward.”

 

Earlier this month, WarnerMedia launched an investigation after a March 6 Hollywood Reporter story detailed text messages between Tsujihara and British actress Charlotte Kirk going back to 2013. The messages suggested a quid pro quo sexual relationship between the aspiring actress and the studio head in which he made promises that he’d introduce her to influential executives and she’d be considered for roles in movies and television.

 

In a memo to Warner Bros. staff on Monday, Tsujihara said he was departing “after lengthy introspection, and discussions with John Stankey over the past week.”

 

“It has become clear that my continued leadership could be a distraction and an obstacle to the company’s continued success,” said Tsujihara. “The hard work of everyone within our organization is truly admirable, and I won’t let media attention on my past detract from all the great work the team is doing.”

 

Tsujihara’s attorney, Bert H. Deixler, earlier stated that Tsujihara “had no direct role in the hiring of this actress.” He declined further comment Monday.

 

Tsujihara, who has headed the Burbank, California, studio since 2013, earlier pledged to fully cooperate with the studio’s investigation and apologized to Warner Bros. staff for “mistakes in my personal life that have caused pain and embarrassment to the people I love the most.”

 

The scandal unfolded just as Warner Bros. was restructuring on the heels of AT&T’s takeover of WarnerMedia, previously known as Time Warner. Tsujihara’s role had just been expanded on Feb. 28 to include global kids and family entertainment including oversight of Adult Swim and the Cartoon Network.

Kirk appeared in Warner Bros.’ “How to Be Single” in 2016 and “Ocean’s 8” in 2018. She has denied any inappropriate behavior on the part of Tsujihara or two other executives, Brett Ratner and James Packer, who she communicated with. “Mr. Tsujihara never promised me anything,” Kirk said in an earlier statement.

 

But the details of the leaked text messages between Tsujihara and Kirk immediately put his future at Warner Bros. in jeopardy. Kirk wrote in one 2015 message to him: “Are u going to help me like u said u would?” Tsujhara responded, “Richard will be reaching out to u tonight,” referring to Richard Brener, president of Warner Bros.’ New Line label.

 

Other exchanges suggested the kind of give-and-take of Hollywood’s “casting couch” culture. Kirk was introduced to Tsujihara by James Packer, the Australian billionaire. Warner Bros. was then finalizing a $450-million co-financing deal with Packer and Brett Ratner, the director-producer. In a message to Ratner, Kirk said she was “used as icing on the cake.”

 

WarnerMedia, the studio’s parent company, said Monday that its internal investigation into the situation, carried out by a third-party law firm, will continue.

 

Tsujihara’s exit follows other high-profile executive departures in the post-Harvey Weinstein (hash)MeToo era. CBS Chairman Leslie Moonves was pushed out after numerous women accused him of sexual harassment. Walt Disney Animation chief John Lasseter was ousted after he acknowledged missteps in his behavior with employees.

 

The 54-year-old Tsujihara, the first executive of Asian descent to head a major Hollywood studio, presided over a largely positive Warner Bros. era with little fanfare. A former home video and video game executive at the company, Tsujihara focused on franchise creation, some of which have worked, some of which haven’t.

 

After poor marks from fans and critics, the studio’s DC Comics films have recently been retooled and found their footing in hits like “Wonder Woman” and “Aquaman.” Other franchises — like “The Lego Movie” and the “Harry Potter” spinoff “Fantastic Beasts and Where to Find Them” — have seen diminishing returns on their latest incarnations. The studio has also fostered its connection with filmmakers like Christopher Nolan (“Dunkirk”) and Bradley Cooper (whose “A Star Is Born” was Warner Bros.’ top Oscar contender). Warner Bros. last year amassed $5.6 billion in global ticket sales, its best haul ever.

 

The studio will now begin a search for a new chief as it also prepares to launch a streaming service designed to compete with Netflix.


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AP Source: Justice Dept. Probing Development of Boeing Jets

U.S. prosecutors are looking into the development of Boeing’s 737 Max jets, a person briefed on the matter revealed Monday, the same day French aviation investigators concluded there were “clear similarities” in the crash of an Ethiopian Airlines Max 8 last week and a Lion Air jet in October.

 

The Justice Department probe will examine the way Boeing was regulated by the Federal Aviation Administration, said the person, who asked not to be identified because the inquiry is not public.

 

A federal grand jury in Washington sent a subpoena to someone involved in the plane’s development seeking emails, messages and other communications, the person told The Associated Press.

 

The Transportation Department’s inspector general is also looking into the FAA’s approval of the Boeing 737 Max, a U.S. official told AP. The official wasn’t authorized to discuss the matter publicly and spoke on condition of anonymity. The Wall Street Journal reported on the probe Sunday said the inspector general was looking into the plane’s anti-stall system. It quotes unidentified people familiar with both cases.

 

The anti-stall system may have been involved in the Oct. 29 crash of a Lion Air jet off of Indonesia that killed 189 people. It’s also under scrutiny in the March 10 crash of an Ethiopian Airlines jet that killed 157.

 

The Transportation Department’s FAA regulates Chicago-based Boeing and is responsible for certifying that planes can fly safely.

 

The grand jury issued its subpoena on March 11, one day after the Ethiopian Airlines crash, according to the person who spoke to The Associated Press.

 

Spokesmen for the Justice Department and the inspector general said Monday they could neither confirm nor deny the existence of any inquiries. The FAA would not comment.

 

“Boeing does not respond to or comment on questions concerning legal matters, whether internal, litigation, or governmental inquiries,” Boeing spokesman Charles Bickers said in an email.

 

The company late Monday issued an open letter from its CEO, Dennis Muilenburg, addressed to airlines, passengers and the aviation community. Muilenburg did not refer to the reports of the Justice Department probe, but stressed his company is taking actions to ensure its 737 Max jets are safe.

 

Those include an upcoming release of a software update and related pilot training for the 737 Max to “address concerns” that arose in the aftermath of October’s Lion Air crash, Muilenburg said. The planes’ new flight-control software is suspected of playing a role in the crashes.

The French civil aviation investigation bureau BEA said Monday that black box data from the Ethiopian Airlines flight showed the links with the Lion Air crash and will be used for further study.

 

Ethiopian authorities asked BEA for help in extracting and interpreting the crashed plane’s black boxes because Ethiopia does not have the necessary expertise and technology.

The Ethiopian Accident Investigation Bureau intends to release a preliminary report within 30 days.

The United States and many other countries have grounded the Max 8s and larger Max 9s as Boeing faces the challenge of proving the jets are safe to fly amid suspicions that faulty sensors and software contributed to the two crashes in less than five months.

 

Both planes flew with erratic altitude changes that could indicate the pilots struggled to control the aircraft. Shortly after their takeoffs, both crews tried to return to the airports but crashed.

 

Boeing has said it has “full confidence” in the planes’ safety. Engineers are making changes to the system designed to prevent an aerodynamic stall if sensors detect that the jet’s nose is pointed too high and its speed is too slow.

 

Investigators looking into the Indonesian crash are examining whether the software automatically pushed the plane’s nose down repeatedly, and whether the Lion Air pilots knew how to solve that problem. Ethiopian Airlines says its pilots received special training on the software.

Dennis Tajer, an American Airlines pilot and a spokesman for their union, said Boeing held a discussion with airlines last Thursday but did not invite pilots at American or Southwest, the two U.S. carriers that use the same version of the Max that crashed in Indonesia and Ethiopia.

 

Tajer said airline officials told the unions that Boeing intends to offer pilots about a 15-minute iPad course to train them on the new flight-control software on Max jets that is suspected of playing a role in the crashes. He called that amount of training unacceptable.

 

“Our sense is it’s a rush to comply — ‘let’s go, let’s go, let’s go,'” Tajer said. “I’m in a rush to protect my passengers.”

 

A spokesman for the pilots’ union at Southwest Airlines also said Boeing representatives told that union they expected the upgrade to be ready the end of January.

 

The spokesman, Mike Trevino, said Boeing never followed up to explain why that deadline passed without an upgrade. Boeing was expected to submit a proposed fix to the FAA in early January.

 

 

 


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Ethiopia and Indonesia Crash Parallels Heap Pressure on Boeing

Investigators into the Boeing 737 MAX crash in Ethiopia have found striking similarities in a vital flight angle with an airplane that came down off Indonesia, a source said, piling pressure on the world’s biggest planemaker.

The Ethiopian Airlines disaster eight days ago killed 157 people, led to the grounding of Boeing’s marquee MAX fleet globally and sparked a high-stakes inquiry for the aviation industry.

Analysis of the cockpit recorder showed its “angle of attack” data was “very, very similar” to that of the Lion Air jet that went down off Jakarta in October, killing 189 people, a person familiar with the investigation said.

The angle of attack is a fundamental parameter of flight, measuring the degrees between the air flow and the wing. If it is too high, it can throw the plane into an aerodynamic stall.

“If that’s the case, that does raise the possibility that there is a similar occurrence between the Lion Air and Ethiopian Airlines accidents,” said Clint Balog, a Montana-based professor at Embry-Riddle Aeronautical University.

Even then, it was too early to draw firm conclusions, he added.

A flight deck computer’s response to an apparently faulty angle-of-attack sensor is at the heart of the ongoing probe into the Lion Air crash.

Ethiopia’s Transport Ministry, France’s BEA air accident authority and the U.S. Federal Aviation Administration (FAA) have all pointed to similarities between the two disasters, but safety officials stress the investigation is at an early stage.

“Everything will be investigated,” Ethiopian Transport Ministry spokesman Musie Yehyies told Reuters.

Both planes were 737 MAX 8s and crashed minutes after takeoff with pilots reporting flight control problems.

Under scrutiny is a new automated system in the 737 MAX model that guides the nose lower to avoid stalling, while Boeing has raised questions in the Lion Air case about whether crew used the correct procedures.

Lawmakers and safety experts are asking how thoroughly regulators vetted the system and how well pilots around the world were trained for it when their airlines bought new planes.

Boeing Plans New Software

Boeing Chief Executive Dennis Muilenburg, facing the biggest crisis of his tenure, said on Monday the company understands that “lives depend on the work we do.”

Muilenburg also said a software upgrade for its 737 MAX aircraft that the planemaker started in the aftermath of the Lion Air deadly plane crash was coming “soon.”

The fix was developed when regulators suggested false sensor data could cause a system known as MCAS (Maneuvering Characteristics Augmentation System) to overreact and make the jet hard to control.

Canada is re-examining the validation it gave Boeing’s 737 MAX jets, following reports of a U.S. probe into the aircraft’s certification by the FAA, Canadian Transport Minister Marc Garneau said on Monday.

Acting FAA Administrator Dan Elwell said on Wednesday in a call with reporters that he was “absolutely” confident in the certification of the Boeing 737 MAX 8. The FAA did not immediately respond to a request for comment on Canada’s action.

The FAA finds itself in the hot seat, especially over its decision to certify the 737 MAX without demanding additional training. FAA and Boeing will face congressional questions about why the software upgrade took so long to complete and whether Boeing had too great a role in the certification process.

With the prestige of one of the United States’ biggest exporters at stake, Boeing has halted deliveries of its best-selling model that was intended to be the industry standard but is now under a shadow. Developed in response to the successful launch of the Airbus A320neo, some 370 MAX jets were in operation at the time of the Ethiopian crash, and nearly 5,000 more on order.

After a 10 percent drop last week that wiped nearly $25 billion off its market share, Boeing stock slid about 1.8 percent on Monday.

Weekend media reports intensified pressure on Boeing and its domestic U.S. regulator following a call last week by a U.S. flight attendants union for a “certification review.”

The Seattle Times said the company’s safety analysis of the MCAS system had crucial flaws, including understating power.

The Wall Street Journal reported that prosecutors and the U.S. Department of Transportation were scrutinizing the FAA’s approval of the MAX series, while a jury had issued a subpoena to at least one person involved in its development.

Boeing and the FAA declined to comment on that.

Last week, sources told Reuters that investigators found a piece of a stabilizer in the Ethiopian wreckage set in an unusual position similar to that of the Lion Air plane.

Future Orders at Stake

Ethiopia is leading the probe, although the black boxes were sent to France and U.S. experts are also participating.

Investigators were expected to select a handful of the roughly 1,800 parameters of flight data in their initial review, including those thrown up by the Lion Air investigation, before analyzing the rest in coming weeks and months.

Norwegian Airlines has already said it will seek compensation after grounding its MAX aircraft, and various companies are reconsidering orders.

Boeing’s main rival, Airbus, has seen its stock rise 5 percent since the crash, but cannot simply pick up the slack given the complicated logistics of plane-building.

For now, Boeing continues to build planes while keeping them parked.

Some airlines are revising financial forecasts, too, given the MAX had been factored in as providing around 15 percent maintenance and fuel savings.

WestJet Airlines Ltd. on Monday became the second Canadian carrier to suspend its 2019 financial projections, following Air Canada in light of the 737 MAX groundings.


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Paris Catches Asian Tigers in Most Expensive City Race

Paris and Hong Kong for the first time joined Singapore as the world’s most expensive cities to live in, a study revealed on Tuesday, with utilities and transport driving up the cost of living.

Zurich, Geneva and Japan’s Osaka trailed closely, with emerging market cities like Istanbul and Moscow plummeting down the ranking due to high inflation and currency depreciation, said the Economist Intelligence Unit’s bi-annual survey of 133 cities.

It was the first time in more than 30 years that three cities shared the top spot, a sign that pricey global cities are growing more alike, said the report’s author, Roxana Slavcheva.

“Converging costs in traditionally more expensive cities … is a testament to globalization and the similarity of tastes and shopping patterns,” she said in a statement.

“Even in locations where shopping for groceries may be relatively cheaper, utilities or transportation prices drive up overall cost of living,” she said.

Rising costs in cities are often driven by a vibrant job market attracting skilled workers with high wages, said Anthony Breach, an analyst with the British think tank Center for Cities — which was not involved in the study.

Urban planners need to plan ahead and build more housing to keep prices affordable and overall costs down, Breach told the Thomson Reuters Foundation.

For the EIU survey researchers compared the cost of more than 150 items such as cars, food, rent, transport and clothing in 133 cities.

A woman’s haircut was about $15 in Bangalore, India, compared to $210 in New York, for example, while a bottle of beer was about half a dollar in Lagos, Nigeria, and more than $3 in Zurich.

British cities recovered a few positions a year after reaching the cheapest level in more than two decades due to Brexit uncertainty, with London ranking 22nd and Manchester 51st, up eight and five spots respectively.

Political turmoil in Venezuela plummeted Caracas to the bottom of the ranking, followed by Damascus, Syria, with Karachi, Pakistan, Buenos Aires, Argentina, and New Delhi also featuring among the 10 cheapest cities.

But a city’s drop in the index does not necessarily mean life automatically gets cheaper for people living there, as prices adjust to inflation often quicker than wages, said Gunes Cansiz of the World Resources Institute (WRI), a think tank.

“The cost of living in Istanbul, for example, might seem to have decreased, but since household expenses have increased, this has no positive reflection on the daily life of Istanbulites,” said Cansiz, director at WRI’s Turkey Sustainable Cities program.


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NATO to Receive First Northrop Surveillance Drone, Years Late

NATO is to receive the first of five Northrop Grumman high-altitude drones in the third quarter after years of delays, giving the alliance its own spy drones for the first time, the German government told lawmakers.

Thomas Silberhorn, state secretary in the German Defense Ministry, said the NATO Alliance Ground Surveillance (AGS) drone would be delivered to an air base in Sigonella, Italy, followed by four additional systems, including drones and ground stations built by Airbus, later in the year.

NATO plans to use the aircraft, a derivative of Northrop’s Global Hawk drone, to carry out missions ranging from protection of ground troops to border control and counter-terrorism. The drones will be able to fly for up to 30 hours at a time in all weather, providing near real-time surveillance data.

Northrop first won the contract for the AGS system from NATO in May, 2012, with delivery of the first aircraft slated for 52 months later. However, technical issues and flight test delays have delayed the program, Silberhorn said.

Andrej Hunko, a member of the radical Left opposition party, called for Germany to scrap its participation in the program, warning of spiraling costs and the risk that it could escalate the conflict in eastern Ukraine.

“The drones are closely linked to a new form of warfare,” he said. “They stand for an arms race that will see existing surveillance and spy systems replaced with new platforms.”

Silberhorn, in a previously unreported response to a parliamentary query from Hunko, said NATO had capped the cost of the program at 1.3 billion euros ($1.47 billion) in 2007.

Germany, which is funding about a third of system, scrapped plans to buy its own Global Hawk drones amid spiraling costs and certification problems, and is now negotiating with Northrop to buy several of its newer model Triton surveillance drones.

Fifteen NATO countries, led by the United States, will pay for the AGS system, but all 29 alliance nations are due to participate in its long-term support.

Germany has sent 76 soldiers to Sigonella to operate the surveillance system and analyze its findings, Silberhorn said.

He said a total of 132 German soldiers would eventually be assigned to AGS, of whom 122 would be stationed in Sigonella.

NATO officials had no immediate comment on the program’s status or whether Northrop faced penalties for the delayed delivery.

No comment was available from Northrop.


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