New Boeing CEO David Calhoun's political ties raise concerns, experts say

Max Zahn
Reporter

Newly appointed Boeing CEO David Calhoun has been described as a “turnaround specialist” prepared to help the company gain government approval for its 737 Max, which the manufacturer has sought to put back in the air after two crashes that cost hundreds of lives and forced the cancellation of thousands of flights.

But recent campaign contributions made by Calhoun raise questions about political access he might use to obtain Federal Aviation Administration (FAA) approval for the plane, lobbying experts told Yahoo Finance.

Such influence could undermine the oversight role performed by the FAA, which has faced criticism in the aftermath of the crashes, including a New York Times report in June that described the agency’s failure to independently evaluate the danger of the 737 Max’s fatal software, called MCAS, before it approved the plane.

In May, Calhoun gave two donations totaling $5,600 — the maximum contribution permitted by an individual — to the re-election campaign of Senate Majority Leader Mitch McConnell (R-KY), whose wife Elaine Chao heads the Department of Transportation (DOT), the parent agency of the FAA.

A few months later, in September, Calhoun gave $10,000 to a committee that seeks to preserve a Republican majority in the Senate, a key goal of McConnell’s.

The marital relationship between Chao and McConnell has drawn scrutiny this year after two Politico reports described priority placed by Chao on transportation projects from McConnell’s home state of Kentucky. In October, Democratic Oregon Rep. Peter DeFazio, who chairs the House Transportation Committee, called on the DOT Inspector General to investigate Chao’s potential conflicts of interest.

Since 2017, Calhoun has made some $64,000 in campaign contributions to Republican candidates and committees. He didn’t contribute to any Democratic candidates or committees over that period, according to campaign finance records.

The campaign donations made by Calhoun are “very troubling,” Anthony Nownes, a political science professor at the University of Tennessee and author of “Total Lobbying: What Lobbyists Want (and How They Try to Get It),” told Yahoo Finance.

“Money buys access,” he adds. “That doesn’t mean the access necessarily buys policy, but it is most certainly a good start.”

Calhoun — who has headed portfolio operations at Blackstone since 2013 and previously served as chief executive at Nielsen — may have been chosen to run Boeing in part for his potential to influence regulators, Nownes said.

“It strikes me as a pretty smart move by Boeing. There are few people who have as much power over company’s future right now,” Nownes says, in reference to the regulators. “Why not choose someone who has connections to get them in the door at least?”

FILE - In this Dec. 11, 2019, file photo a United Airlines Boeing 737 Max airplane takes off in the rain at Renton Municipal Airport in Renton, Wash. United Airlines says the Boeing 737 Max has been pulled from its flight schedule until June, the latest in a string of troubling news plaguing the airplane manufacturer. (AP Photo/Ted S. Warren, File)

Adam Newmark, a political science professor at Appalachian State University who studies lobbying, agreed that the contributions raise “legitimate concerns.”

“There’s enough here that doesn’t pass the smell test,” he says. “It doesn’t mean anybody has done anything wrong.”

“There are those who would say that because we don’t have a smoking gun, we shouldn’t ask the questions,” he adds. “That’s flat out wrong.”

Nownes and Newmark both noted that political contributions like Calhoun’s are legal and fairly common among chief executives at major corporations.

In a statement to Yahoo Finance, Boeing said that individuals affiliated with the company contribute to a number of candidates across the political spectrum, and such donations will not undermine the approval process carried out by the FAA.

“Boeing employees and board members give to candidates from both parties who support policies important to our economic and national security,” said Gordon Johndroe, Vice President, Media Relations at Boeing. “We’re confident the FAA and global regulators are engaged in a very robust and rigorous oversight of the Max independent from politics.”

The Department of Transportation, Chao, and McConnell did not respond on the record to a request for comment. 

Brian Richter, a professor of public policy at the University of Texas who specializes in campaign finance, said concern about Calhoun’s political access, based on the campaign donations, is “going too far in this case,” since Calhoun likely already established connections with DOT officials over the course of his work in the transportation sector, Richter said.

Calhoun is “probably going to know people throughout the Department of Transportation,” Richter says. “Certainly the Secretary is important but she’s probably not the only decision maker.”

Richter acknowledged that Calhoun’s political ties may have factored into Boeing’s cho to appoint him CEO.

“Calhoun was probably picked, like many CEOs, largely because they do have knowledge of politics or connections into bureaucracies,” Richter says.

Richter also highlighted the significance of McConnell for individuals or groups seeking to influence regulation of the transportation sector.

“It’s not surprising that McConnell would become more strategically important given who his wife is and given that executives can’t make campaign contributions to political appointees,” he says. “It’s the closest way that could happen.”

Boeing has faced a public relations and business crisis since two crashes involving its 737 Max airplane — one in October 2018 off the coast of Indonesia that killed 189 people, and another in March of this year in Ethiopia that killed 157 people. Boeing grounded the planes, then missed deadlines it set for their return to operation, leading to the cancellation of thousands of flights over a period of months. Last week, the company announced it would halt production of the 737 Max.

On Sunday, Boeing fired CEO Dennis Muilenburg and named Calhoun as his replacement. Calhoun will take over on Jan. 13.

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Max Zahn is a reporter for Yahoo Finance. Find him on twitter @MaxZahn_.

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