Federal authorities are stepping up criminal prosecutions of senior management in the aviation maintenance and repair industry, and something called the “Responsible Corporate Officer Doctrine” (and it’s misuse) is making it a lot easier for them.
Every Part 145 repair station is required to designate an Accountable Manager, who, as defined in the FARs, “is responsible for and has the authority over all repair station operations…” But what does it really mean to be “responsible for” and “have authority over” repair station operations? Does it mean you can be criminally liable for repair station operations? Does it mean you can be held criminally responsible for acts you didn’t participate in and were not even aware of? Sound farfetched? It’s not. It’s happening now, and ongoing criminal indictments and prosecution should be a wake-up call to every Accountable Manager.
A bit of background…The Responsible Corporate Officer Doctrine, or (“RCO doctrine”), is a legal theory that permits corporate officers in a position of responsibility to be held personally responsible for certain corporate violations, without requiring proof of intent. More bluntly… it’s a tool used by prosecutors to convict management personnel for criminal acts they may have had nothing to do with…but by virtue of their job title, should have been in a position to prevent.
Imagine a situation where one of your managers tells you in passing that some piece of tooling or equipment in your MRO or maintenance department isn’t working. This manager is qualified and has authority to stop all repair station operations should a quality control issue arise. You’re not even sure what that piece of equipment is, or what it does, but you trust, rely on, and delegate important functions to this manager. You tell this manager to do what needs to be done to keep production moving (or something to that effect).
A year or so later, FBI agents with search warrants decide to visit your repair station. They’re there to investigate an ongoing criminal conspiracy to commit fraud involving aircraft parts. This eventually leads to an indictment of several senior managers at the repair station…and you’re one of them.
At trial, you’re accused of conspiring with other managers to defraud the FAA and repair station customers by falsifying maintenance record entries. As the Accountable Manager, you were never involved with the actual repair process and never made any maintenance entries. You never told anyone to falsify anything and no one ever told you that records were being falsified. But, thanks, in part, to the RCO doctrine, this might not matter.
You see…you’re the Accountable Manager. As the Accountable Manager, you’re “responsible for” and “have authority over” repair station operations. And regardless of whether you had any involvement or knowledge of it…those operations involved some of your not-so-bright managers falsifying maintenance records.
Remember that piece of equipment one of your managers mentioned in passing last year? As it turns out, that equipment was needed to perform required testing to return a part to service. However the equipment wasn’t fixed and shop techs just indicated in maintenance records that the test was done anyway.
Over and over at trial, the prosecutor reminds the jury that the Accountable Manager is ultimately responsible for what happens at the repair station. No one contests the fact that you didn’t actually falsify anything and no one ever accuses you of telling others to do so. What they do say is that you were in a position authority and that you had to have known what was going on. And that despite knowing this, you didn’t stop it or fix the problem.
The prosecutor then argues to the jury that your failure to stop the problem suggests you condoned the activity and entered into an agreement with your managers to falsify those records.
In other words, its evidence you conspired with them to commit fraud.
Technically speaking…the RCO doctrine shouldn’t apply to this situation since it has been limited to statutes which do not require proof that a person acted intentionally, something which conspiracy, fraud, and intentional falsification statutes do require.
However, jurors don’t care much for technicalities, and, as a practical matter, whether the RCO doctrine technically applies really doesn’t matter. That’s because the same exact principles underlying the RCO doctrine, which are: (1) being in a position of authority with respect to a violation effecting public safety, and; (2) failing to stop the violation, can be used as evidence at trial to infer that the you knew about a violation, and that you encouraged/participated in the violation.
The fact that you’re an Accountable Manager who is statutorily defined as being the individual with overall responsibility and authority for repair station operations makes the inference that much easier to make. Combine that with a jury that knows little to nothing about the aviation maintenance and repair industry, and you have a situation that should worry every Accountable Manager.
(Originally posted April 8, 2014)