Nikki Haley Helped Boeing Kill Dark Money Disclosure Initiative

Following two catastrophic crashes, GOP presidential candidate Nikki Haley helped Boeing kill an initiative to force the company to more comprehensively disclose its spending to influence safety regulators. As Katya Schwenk reveals in today’s featured story, Haley’s efforts were part of a broader battle for shareholder oversight of the company’s political spending — money that has come under scrutiny after another Boeing debacle last week.

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While serving on the board of Boeing in 2020, GOP presidential candidate and former South Carolina governor Nikki Haley helped kill an initiative designed to force the company to more comprehensively disclose its spending to influence politicians and safety regulators, government filings show.

The Boeing board’s opposition to the shareholder measure came the same year that the company was lobbying the Federal Aviation Administration on “certification,” or approving planes to fly — and the agency lifted its grounding order of the company’s 737 fleet, which had been in effect since two of the airliners had crashed in 2018 and 2019, killing 346 people.

Haley was a member of Boeing’s board when it unanimously opposed shareholders’ transparency proposal, which proponents said was designed to uncover whether Boeing had bought itself regulatory relief from federal safety officials. 

“In the wake of the two 737 Max jet crashes, questions have been raised whether Boeing’s lobbying led to relaxed Federal Aviation Administration oversight,” shareholders wrote in urging passage of their proposal, noting that the company spent a staggering $153 million on federal lobbying from 2010 to 2018. 

Haley and her fellow board members urged a “no” vote, insisting in Boeing’s proxy statement prior to the shareholder meeting that the company has “instituted full transparency into — and extensive oversight of — any political expenditures.”

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Haley and her fellow board members’ opposition came despite a report from Glass, Lewis & Co. — one of the world’s largest institutional investment advisers on shareholder resolutions — urging its passage. The report noted that Boeing had a “significant gap in its disclosure of indirect lobbying expenditure” and that more disclosure “would better allow shareholders to assess the Company's exposure to risks associated with its political activity.”

Haley joined the company’s board of directors after the two fatal 737 Max crashes in Indonesia and Ethiopia. Amid allegations of fraud and a coverup of safety problems following the disasters — resulting in a $243 million fine and $3 billion in compensation to airlines and victims’ families — Haley served on the board’s audit committee, according to Securities and Exchange Commission (SEC) records. Company bylaws say the committee is tasked with overseeing Boeing’s risk management, as well as its compliance with laws and company policy. 

The transparency proposal that Haley helped nix was part of a broader — and still ongoing — battle waged by Boeing’s shareholders for additional oversight of the tens of millions of dollars the company records in political spending. That spending has come under scrutiny after a Boeing 737 Max 9 plane suffered a mid-flight blowout last week, leaving a gaping hole in the plane’s frame, before an emergency landing.

On Wednesday, The Lever reported on just how much disclosed money Boeing has spent to court lawmakers and win safety exemptions in Washington, DC: more than $10.6 million in the first three quarters of 2023 alone. Its suppliers, too, have doled out significant cash to lawmakers and lobbyists, including Spirit AeroSystems, a Boeing subcontractor that manufactured the door plug that fell off the Boeing 737 Max 9.

The Lever on Monday exposed allegations from employees at Spirit, who said in federal court documents that the manufacturer had told workers to misreport “excessive” defects and fired employees who spoke up.

Haley’s campaign did not immediately respond to a request for comment.

“We Urge Boeing To Expand Its Lobbying Disclosure”

Long before Haley’s presidential ambitions, she was doing favors for Boeing as a state lawmaker and, later, as governor in South Carolina. 

In 2015, Haley helped Boeing bust a union drive at a plant in South Carolina, where the company builds its 787 Dreamliner jet. It was Haley, too, who helped secure the Dreamliner’s production in South Carolina to begin with, which the International Association of Machinists and Aerospace Workers, a labor union representing Boeing workers, had opposed because the South Carolina plant was nonunion.

In April 2019, Haley — who at that point had just resigned from her post as U.S. ambassador to the United Nations — was voted in by Boeing shareholders as a board member. At the time, Haley was no stranger to the power of dark money: Haley’s secretive nonprofit was already raking in cash that would set the groundwork for her presidential bid.

Haley served on the board for less than a year. She resigned in March 2020, claiming this was in protest of the airline bailout, despite supporting public subsidies for Boeing earlier in her political career.

Shortly before her resignation, however, in March 2020, Boeing’s board, including Haley, was tasked with reviewing shareholder proposals designed to require the company to take particular actions. One such measure that a group of shareholders was pushing was for Boeing to disclose additional information about its lobbying .

“The reputational damage stemming [from] the 737 Max crashes and any misalignment between general policy positions and actual direct and indirect lobbying efforts harms long-term value creation by Boeing,” shareholders wrote. “Thus, we urge Boeing to expand its lobbying disclosure.”

They proposed the company submit an annual report detailing its policy and oversight around lobbying, its membership in and contributions to any dark money groups — organizations that don’t have to disclose their donors — and its direct lobbying spending.

Haley joined the rest of Boeing’s board in staunchly opposing the proposal in the company’s March 13, 2020, proxy statement, recommending shareholders vote it down.

“The Board is committed to transparency and strong risk oversight with respect to its political advocacy efforts, and believes that the Company’s existing practices render the proposal unnecessary,” the board wrote in an explanation of its position, claiming that Boeing was considered a “trendsetter” in its transparency around lobbying.

The proposal failed, with just 30.8 percent of Boeing’s shareholders voting in favor, according to data compiled by the Manhattan Institute’s Proxy Monitor database.

Shareholders Proposed Disclosure Requirements For Years Before Crashes

The 2020 vote wasn’t the first time some of Boeing’s shareholders had tried — in vain — to get the company to disclose its dark money contributions.

Every year since 2014, SEC records show, Boeing investors have put forward proposals to require additional lobbying disclosures by the company, part of a growing trend by shareholders at many public companies to get more information about secretive political spending. 

“There is significant momentum among shareholders to require this type of disclosure,” explained Craig Holman, an ethics lobbyist with Public Citizen, which advocates for campaign finance and transparency reforms.

While companies, including Boeing, are required under the Lobbying Disclosure Act to report their quarterly spending, it’s not always clear where, exactly, that money is going. “You just don’t know where the emphasis is on the lobbying expenditures,” Holman said. 

And when companies donate to trade groups and dark money groups, that information may not become public at all. 

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In Boeing’s case, only a small group of shareholders was in favor of requiring the company to disclose this information back in 2014 — under 20 percent. But after the 2018 and 2019 crashes of Boeing’s 737 MAX planes, that group of shareholders began increasing, jumping from 23.7 percent in April 2018, before the crashes, to 32.2 percent in April 2019, according to Proxy Monitor’s figures.

“Shareholders who have asked Boeing to improve its lobbying disclosure each year from 2014 to 2019 can only wonder if Boeing’s lack of lobbying transparency, disclosure, and oversight were the major factors that contributed to this public relations and regulatory nightmare,” wrote one analyst in March 2020.

Yet Boeing’s board has been staunchly opposed to any additional transparency requirements. In early 2016, Boeing’s board succeeded in killing a shareholder proposal requiring a report about Boeing’s charitable contributions before it ever reached a full shareholder vote, SEC filings show. The SEC, then under the Obama administration, backed Boeing in its move to keep the initiative off the proxy ballot.

At its most recent annual shareholder meeting, in April 2023, Boeing’s board nixed additional lobbying transparency requirements: a proposal to disclose more information about climate lobbying specifically, and a mandate for Boeing to reveal racial and gender pay disparities at the company. The climate proposal ultimately received support from 36.6 percent of the shareholder votes, while the pay disparity proposal narrowly failed with 46.7 percent support.

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