*
Italian sub-contractor supplied faulty parts for Boeing ( BA )
jets in
2017-20 via Leonardo - prosecutors
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Supplier passed repeated audits while allegedly using
low-grade
metals - court documents
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Alleged scam uncovered thanks to chance police find,
sources say
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Industry experts call for random checks on aviation
components
By Francesca Landini and Tim Hepher
BRINDISI, Italy, March 13 (Reuters) - On a Saturday
morning in May, 2020, Italian police officers caught two men
pouring chemical waste into the sewers in the southern port city
of Brindisi, near a small plane components factory.
Five years on, that routine pollution case has spiralled
into a wide-ranging judicial investigation into how thousands of
flawed titanium and aluminium parts manufactured in Italy ended
up in nearly 500 Boeing 787 jets still in use.
The probe, due to be discussed at a preliminary hearing in
Italy on Thursday, focuses on how tiny aero-part-maker
Manufacturing Process Specification (MPS) allegedly defrauded
clients by using cheaper and weaker metals to make floor
fittings and other plane parts. Company executives deny the
charge.
Boeing ( BA ) has repeatedly said that there is no immediate
safety risk. U.S. regulators, meanwhile, are preparing technical
guidance for airlines to detect and replace any bad parts,
without opting for the emergency orders reserved for the most
pressing cases.
But the precarious chain of events that led detectives to
the alleged scam, including the surprise pollution find, raises
broader questions about the failure by the aerospace industry's
own voluntary audit system to detect sub-standard components.
Detectives were already investigating MPS' owners over the
bankruptcy of their previous firm. But after catching two MPS
workers dumping polluting liquids next to the factory, police
broadened their enquiries to the Brindisi firm's raw material
purchases, three investigative sources said.
With the help of whistleblowers, police found that MPS and
its predecessor company had bought very small quantities of the
prescribed metals required for 787 jets, including a tough
titanium alloy, switching instead to cheaper and less resilient
pure titanium, they said.
Prosecutors allege that for four years parts made with the
wrong type of metal flowed into the aerospace supply chain via
Italian group Leonardo, which builds two fuselage
sections for the Boeing 787 at its nearby Grottaglie plant.
The case comes as Boeing ( BA ) tries to move beyond a separate
safety and quality crisis that triggered financial and
management upheaval and layoffs. The rest of the industry is
also grappling with sporadic issues with rogue parts.
Despite using low-quality metals, the now defunct MPS passed
audits by three different certification bodies or private
auditors between 2017 and 2021, according to a Reuters review.
None of these audits involved a physical check of the floor
fittings, which are structural components of a jet, the news
agency found.
While news of the alleged metal switch at Boeing's ( BA ) Italian
subcontractor made international headlines in October 2021,
details of MPS' auditing process, as well as the number of weak
floor fittings installed, have not been previously reported.
For its review, Reuters consulted confidential Italian
police and prosecutors' documents, judicial seizure decrees,
copies of records from an aerospace supplier database and spoke
to four people with direct knowledge of the investigation.
Half a dozen investigators, lawyers and certification
experts told Reuters the case raises doubts about whether
controls, including third-party audits, are robust enough to
ensure below-grade parts do not end up in commercial jets.
"It is extremely worrying that there were no preventive
checks on the type of material used to build these parts," said
Danilo Recine, vice-president of Italy's ANPAC pilot union.
INSPECTIONS
The FAA has not grounded any 787 planes but issued a draft
notice last year that, when finalised, will require airlines to
inspect jets for flawed parts and replace them.
Its proposed notice potentially covers almost 500 jets but
until the inspections are carried out it is impossible to know
how many parts are on which jets, it said in the May 2024 draft.
The FAA declined to elaborate. It noted only that a period
for collecting comments from airlines had ended.
Contacted by Reuters, Leonardo said in a statement that
prosecutors are treating it as a victim in the case.
Boeing ( BA ), which has also been granted the status of victim,
declined comment on specifics of the case but said it had a
"comprehensive quality management system," which includes audits
of suppliers.
"This complements additional audits by certification bodies,
suppliers and others within the industry" it added.
MPS, and its predecessor Processi Speciali, used to make
several plane parts for Leonardo, including the fittings
connecting the beams supporting the Boeing 787 cabin floor to
the fuselage. It also supplied other aerospace firms.
After performing material inspections on the components,
investigators allege MPS manufactured 539 below-grade floors for
Boeing ( BA ) that were supplied via Leonardo, according to a
confidential document prepared by prosecutors.
The faulty floor fittings ended up in as many as 477 jets
still in service, the document said, a handful more than the
potential population of affected jets cited by the FAA.
In the event of an emergency landing, the lower-quality
floor fittings could lead to a collapse of the jet's floor,
aerospace experts who tested the parts on behalf of prosecutors
said in the document.
The FAA has raised a similar worst-case scenario, adding it
would need multiple adjacent parts to fail simultaneously.
In their final report, Italian prosecutors accuse MPS' head
of quality, the company's owner and three relatives of fraud and
breach of airplane safety rules. Two other workers are accused
of polluting soil and water.
"(They) have put flight security in danger by producing and
delivering to Leonardo ... structural aerospace parts made, not
with contracted titanium alloy, but pure titanium - which has
structural strength that is largely lower to that of the
prescribed alloy," the report says.
In total, prosecutors have said MPS or its predecessor
supplied around 6,000 parts using the wrong kind of metal,
although the vast majority are not structural components.
Francesca Conte, a lawyer for MPS' owner, said the supplier
had worked in partnership with Leonardo and obtained all
necessary certifications. "If there were any anomalies, they
would have been immediately evident".
Conte and the lawyers for the other defendants said there
was evidence to be presented during the trial that would prove
their clients were not responsible for the alleged crimes.
WEAK CHECKS
To become a Boeing ( BA ) or Airbus supplier, parts makers
must be audited for their quality management systems under an
aerospace chapter of the ISO global standards organisation.
Those involved in certain special processes like welding or
electro-plating also need a U.S.-based approval called NADCAP.
Industry records reviewed by Reuters show that MPS and its
predecessor won approvals from three auditing bodies under the
ISO-based aerospace standard for quality systems. The last
certification was awarded in May 2021.
Leonardo said in an emailed statement it had learnt about
issues with MPS components at the end of 2020 from Boeing ( BA ).
Asked how it vetted contractors, Leonardo said that MPS
first had to qualify to enter its and Boeing's ( BA ) suppliers' lists.
The group said that it had also carried out subsequent checks of
MPS using "documents made available by the supplier."
The audits were conducted both independently and in joint
teams with Boeing ( BA ), the Italian company added.
"Any fraudulent behaviour cannot be detected by these
checks," Leonardo said.
However, since last year, the company has begun doing extra
tests on chemical and physical characteristics of "significant
components", it added.
The lack of spot physical checks baffled police, according
to a source in the investigation.
"The problem of faulty parts was found out in 2020," the
source said. "If quality controls had worked, then it would not
have been discovered so late."
"NEED FOR A REGULATORY FRAMEWORK"
Under the voluntary oversight system for quality management,
private auditors known as certification bodies check whether an
aerospace firm has the right processes, machines and skilled
workers to carry out its tasks to the correct standards.
Random physical tests are typically only included if a
company needs a quality certificate for specific products.
But Christopher Paris, founder of consultancy Oxebridge
Quality Resources, said the MPS case demonstrated the need for
tougher oversight of the pyramid of controls, including not only
the independent auditors but accreditation bodies that vet them.
"There is a need for a regulatory framework," he said.
None of the auditors or various industry bodies is targeted
by the Italian investigation.
ACCREDIA, which is responsible for accrediting auditors in
Italy, said existing rules were "robust and well-structured" and
stressed that the job of the audits is not to root out crime.
Sitting at the top of the system of voluntary controls is
the Industry Aerospace Quality Group, a global body.
IAQG President Eric Jefferies said in a statement to Reuters
that it is actively working on updates to existing standards.
"However, the outcomes of any quality management system
implementation ultimately rest with the certified organization,"
he said.
(Reporting by Francesca Landini and Tim Hepher; Additional
reporting by Giulia Segreti; Editing by Lisa Jucca)