The US Federal Aviation Administration's recertification testing of the Boeing 737 Max was "inappropriately influenced" by the Chicago-based plane maker, according to a US Senate report.
The 102-page report, based on whistleblower information and FAA staff interviews, found that Boeing officials had “inappropriately coached” test pilots during simulations to test their reactions to a failure in the flight control system known as MCAS.
The MCAS flight control system was to blame in the two 737 Max crashes that killed 346 people.
“The committee concludes FAA and Boeing officials involved in the conduct of this test had established a pre-determined outcome to reaffirm a long-held human factor assumption related to pilot reaction time to a runaway stabiliser,” the report said.
“It appears, in this instance, FAA and Boeing were attempting to cover up important information that may have contributed to the 737 MAX tragedies.”
The report was released by the Senate Committee on Commerce, Science and Transportation came after an investigation into the FAA that began in April 2019, weeks after the 737 Max second crash, when it began receiving information from whistleblowers.
"Our findings are troubling," Republican Senator Roger Wicker, chairman of the Senate Committee, said.
"The report details a number of significant examples of lapses in aviation safety oversight and failed leadership in the FAA. It is clear that the agency requires consistent oversight to ensure their work to protect the flying public is executed fully and correctly.”
Last month, the FAA approved the 737 Max's return to commercial service, ending a 20-month ban. Brazil’s Gol Linhas Aereas Inteligentes became the first airline to resume flights.
The FAA said on Friday that it was “carefully reviewing the document, which the committee acknowledges contains a number of unsubstantiated allegations”.
The agency also said it was confident that the safety issues responsible for crashes involving Lion Air Flight 610 and Ethiopian Airlines Flight 302 had been addressed "through the design changes required and independently approved by the FAA and its partners”.
Boeing said on Friday that it remained “committed to improving aviation safety, strengthening our safety culture and rebuilding trust with our customers, regulators, and the flying public".
The plane maker said it would take the committee’s findings serioulsy and continue to review the report in full.
“We have learnt many hard lessons from the Lion Air Flight 610 and Ethiopian Flight 302 accidents, and we will never forget the lives lost on board,” Boeing said.
“The events and lessons learnt have reshaped our company and further focused our attention on our core values of safety, quality and integrity.”
The report said that over the past 20 months, committee staff had received information from several whistleblowers who alleged “cosiness between the FAA and Boeing, and lack of diligent oversight by the FAA in general, specifically in the certification of the 737 Max”.
The whistleblowers also alleged that Boeing had intentionally misled FAA certification efforts and downplayed the significance of the role MCAS played in the crashes, the report said.
In its other findings, the report said the FAA continued to retaliate against whistleblowers instead of welcoming their disclosures in the interest of safety.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
