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The Morning Risk Report: FAA Poised to Require Electrical Wiring Fixes Before Boeing 737 MAX Jets Can Fly Again
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Boeing’s 737 MAX aircraft has been grounded for about a year following two fatal crashes. PHOTO: LINDSEY WASSON/REUTERS
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Good morning. U.S. air-safety regulators are poised to order electrical wires relocated inside Boeing 737 MAX jets in the latest complication and potential delay for their return to commercial service, according to people briefed on the deliberations. The preliminary decision covers all of the nearly 800 MAX airliners produced so far. The decision could be affected by further internal discussions and additional data the plane maker may submit to the regulator.
But in the past few weeks, these people said, Federal Aviation Administration managers and engineers have concluded that the potentially hazardous layout violates wiring-safety standards intended to prevent dangerous short-circuits. Under extreme circumstances, wiring failures could cause flight-control systems to sharply point down an aircraft’s nose in a similar way to the automated maneuvers that brought down two MAX jets and claimed 346 lives.
[Continued below…]
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Meanwhile, Boeing Chief Executive Dave Calhoun told executives that he regretted voicing criticisms of the company’s leadership and former CEO in an interview with the New York Times. Mr. Calhoun, who started as CEO in January, is dealing with the fallout of his candid assessment of Boeing’s problems, telling executives they have his support despite sometimes harsh comments published in the article.
Boeing’s engineering mistakes and “culture of concealment,” coupled with insufficient federal safety oversight, led to two fatal crashes of the plane maker’s 737 MAX aircraft, House investigators said.
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The Latest on the Coronavirus Epidemic
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The number of confirmed coronavirus cases globally exceeded 105,000, and governments escalated efforts and several U.S. states declared emergency to get a handle on the epidemic.
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From Risk & Compliance Journal
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A plane takes off at Hong Kong International Airport. In response to the coronavirus epidemic, many countries have tightened travel restrictions, potentially complicating companies’ efforts to prevent corporate misconduct. PHOTO: KEITH TSUJI/ZUMA PRESS
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Travel restrictions aimed at stemming the spread of the novel coronavirus could complicate companies’ efforts to prevent bribery and other corporate misconduct, lawyers say.
As the epidemic spreads, compliance officers and the lawyers tasked with conducting internal investigations and bribery risk assessments have had to postpone meetings and interviews with witnesses. In most cases, on-site visits or interviews can be delayed without great consequence. But for investigations into potentially ongoing misconduct, the delays could allow compliance breaches to fester.
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A former Alstom SA executive was sentenced to 15 months in prison on money-laundering charges related to a scheme to bribe Indonesian officials. The sentencing of Lawrence Hoskins, who worked as a senior vice president for the French transportation company at a time when it ran a world-wide power business, comes nearly seven years after he was charged with taking part in a scheme to win a $118 million power contract in the Southeast Asian country.
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The largest U.K. companies may soon be required to make disclosures on how climate change is impacting their businesses under a new proposal outlined by the U.K.’s financial regulatory body. The Financial Conduct Authority said the new rule will require all commercial companies with a premium listing, mainly larger companies listed on the London Stock Exchange, to make climate-related disclosures that comply with the requirements set out by the Task Force on Climate-related Financial Disclosures.
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Think-Tank Study Calls for Adapted Response to Terrorism Financing
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Policy makers’ strategies to identify and disrupt terrorist financing need to evolve and better recognize the variety of ways terrorists raise funds today, according to a research paper from the Royal United Services Institute for Defence and Security Studies, a London-based think tank.
The study argues the global response to terrorist financing is inadequate because it is based on the way terrorist financing was conducted in relation to al Qaeda after the Sept. 11, 2001, terrorist attacks, which often involved exploiting charities and traditional banking networks.
Terrorist groups today utilize cryptocurrency, social media and other technology to raise funds, according to the paper.
“We’re not approaching the fight against terrorist financing as effectively as we could,” said Tom Keatinge, director of RUSI’s Centre for Financial Crime and Security Studies and a co-author of this paper. “The response has been slow to adapt over the past 20 years.”
Policymakers should dedicate resources to ensuring they understand the ways new technologies are abused and work more closely with new payment platforms to develop financial intelligence, Mr. Keatinge said.
“Finance links people together,” he said. “We call for an increase in capability to exploit financial intelligence and add that to the counterterrorism toolbox alongside, wiretaps and other forms of intelligence.”
—Mengqi Sun
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AT&T Chief Executive Randall Stephenson in 2018. PHOTO: ANDREW HARRER/BLOOMBERG NEWS
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AT&T is working with the Justice Department as the government considers whether to bring an antitrust case against Google, two years after the telecommunications giant was at loggerheads with the department over its acquisition of Time Warner, according to people familiar with the matter. AT&T has conferred several times with Justice officials to share its views that Google is stifling competition in the advertising sector, where AT&T is seeking to make inroads with its Xandr division, the people said.
Those discussions have included an audience with the top DOJ officials overseeing the probe, they said, and the Dallas company also is cooperating with a group of state attorneys general, led by Texas, that are investigating Google’s ad practices. Google has said the ad marketplace remains competitive, with the search giant competing against companies large and small to power digital advertising across the web.
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A 3-inch hook purchased for 56 cents around the end of World War I could help determine whether PG&E faces criminal charges for starting the deadliest wildfire in California history. Known as a “C-hook,” the badly worn piece of metal broke on Nov. 8, 2018, dropping a high-voltage electric line that sparked the Camp Fire, destroying the town of Paradise and killing 85 people. Whether PG&E was negligent in inspecting and replacing these hooks has emerged as a key factor in a continuing California investigation that could determine whether the company and some of its former executives face criminal charges for their role in wildfires.
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The ethics officer for a federal agency that oversees credit unions abruptly retired when confronted with allegations that he drank and visited strip clubs with his deputy during work hours, according to an internal investigation. Michael McKenna, the general counsel and ethics officer for the National Credit Union Administration, initially denied the allegations but later admitted to them, according to a report by the agency’s Office of Inspector General. He retired in November, a day after being interviewed by an investigator, according to the report.
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President Trump ordered a Chinese company to sell its ownership of StayNTouch Inc., saying its 2018 purchase of the hotel property management software firm poses a national security risk. In his divestiture order Friday, Mr. Trump said he had “credible evidence” that ownership of the hospitality tech company by Beijing Shiji Information Technology Co. “threatens to impair the national security of the United States.”
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Federal prosecutors in Manhattan say Bernard Madoff, the architect of one of the biggest financial frauds in U.S. history, should die in prison and doesn’t deserve to be released early from his 150-year sentence. Mr. Madoff in February had asked for a reduced sentence on the grounds of compassionate release, saying he was dying of end-stage renal disease.
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A series of libel lawsuits filed by the Trump campaign against large media organizations are likely to run up against tough obstacles and depending on how far they progress, could subject the president to depositions, according to legal experts.
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Elliott Management made Christine O’Brien head of investment stewardship last year. PHOTO: KHOLOOD EID FOR THE WALL STREET JOURNAL
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The U.S. semiconductor industry is pressing to get out of the firing line between the U.S. and China, warning its position as the global market leader could become a casualty of the trade spat.
The industry is ramping up its lobbying with a new report spelling out potential costs of largely severing U.S. chip-supply ties with China.
The effort comes as cabinet-level officials are set later this week to meet and discuss proposed changes to Commerce Department regulations that would further restrict U.S. sales to Chinese companies that U.S. officials have said pose espionage risks. Some in Washington also believe these companies purloin U.S. technology, according to people familiar with the administration’s discussions.
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A demonstration using artificial intelligence and facial recognition at the Las Vegas Convention Center during the technology trade show CES 2019. San Francisco and six other cities have passed laws to block government use of facial recognition. PHOTO: DAVID MCNEW/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Amid rising calls for regulation, technology companies are pushing for laws that would restrict use of facial-recognition systems—and head off the more severe prohibitions some cities and states are weighing.
Microsoft, Amazon and others stand to profit as government agencies and businesses expand use of the technology, which can require large investments in machine-learning and cloud-computing capacity. That opportunity is threatened by campaigns to severely restrict its use.
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Daniel Pinto, left, and Gordon Smith, right, were named co-presidents in January 2018. PHOTO: AL DRAGO/BLOOMBERG NEWS; EDUARDO MUNOZ/REUTERS
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Daniel Pinto and Gordon Smith, co-presidents at JPMorgan Chase & Co., took the helm at America’s largest bank Thursday after Mr. Dimon suffered an acute aortic dissection—a rare and often fatal heart injury. Mr. Dimon is “recovering well” after a successful surgery, the bank said in a memo to employees. Meanwhile, Messrs. Pinto and Smith are in charge.
Mr. Smith, who runs JPMorgan’s consumer bank, and Mr. Pinto, the head of its corporate and investment bank, have been at Mr. Dimon’s right hand since January 2018, when he named them co-presidents and laid the foundation for a succession plan that was set in motion Thursday.
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Steve Ells, the founder of Chipotle Mexican Grill, is leaving the company after 27 years as part of its leadership, relinquishing his position of executive chairman. Brian Niccol, the current chief executive officer, will take on the additional title of chairman. Mr. Ells started the casual Mexican-food chain in 1993 and served as its CEO until 2017, when he became executive chairman.
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A pair of activist investors have taken a stake of more than 10% in Big Lots Inc. and are seeking to shake up the board of the discount retailer. The two funds—Macellum Advisors GP LLC and Ancora Advisors LLC—have nominated nine directors, which, if all elected, would replace the entire Big Lots board. Among the nominees: Former Big Lots Chief Executive Steven Fishman.
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In 2018, when Tilray became the first cannabis company to go public on Nasdaq, it made CEO Brendan Kennedy rich—and one of the most prominent corporate faces of an emerging and controversial industry.
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Companies that deliver packages to homes and businesses cut U.S. payrolls by 12,200 in February, ending an 11-month expansion. PHOTO: MICHAEL NAGLE/BLOOMBERG NEWS
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Hiring at delivery companies plunged in February while other transportation and logistics-sector providers added jobs, reflecting a mixed economic picture in the weeks before the coronavirus took hold in the U.S.
Courier and messenger companies that deliver packages to homes and businesses cut payrolls by 12,200, ending an 11-month expansion, according to seasonally adjusted preliminary employment figures the U.S. Bureau of Labor Statistics released Friday.
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Anxious to retain and energize staffers, more companies say they are making employee happiness a priority. The shift has fueled a cottage industry devoted to monitoring, analyzing and improving workers’ moods. It has also raised new questions about whether employee privacy is at risk as companies monitor more of their workers’ behavior.
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Woody Allen has denied allegations that he molested his daughter, whose account has the support of Ronan Farrow. PHOTO: LUCA BRUNO/ASSOCIATED PRESS
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Lagardère SCA’s Hachette Book Group said it had canceled Woody Allen’s memoir, one day after an estimated 75 to 100 Hachette employees walked out of their offices in protest of the coming title. The book, “Apropos of Nothing,” had been scheduled to publish on April 7.
“As a company, we are committed to offering a stimulating, supportive and open work environment for all our staff,” New York-based Hachette said in a statement. “Over the past few days, HBG leadership had extensive conversations with our staff and others. After listening, we came to the conclusion that moving forward with publication would not be feasible for HBG.”
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Starbucks is testing a more environmentally friendly coffee cup. It hopes customers won’t notice.
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