>>> Weekend Papers Summary

Weekend Papers Summary
NEW YORK TIMES
Saturday
• Donald Trump announced that Bahrain would establish full diplomatic relations with Israel, following the United Arab Emirates, in another sign of shifting Middle East dynamics that are bringing Arab nations closer to Israel.
• A New York Times survey found that in just the past week, American colleges and universities have recorded more than 36,000 additional coronavirus cases, bringing the total of campus infections to 88,000 since the pandemic began.
• France is facing a worrying surge of the coronavirus crisis, the government said that instead of announcing new restrictions, it would instead improve the country’s testing program—plagued by delays in recent weeks—and urge people to continue social distancing measures.
• As theaters look to see how they might reopen with safety accommodations including mask use, US infectious disease expert Dr. Anthony Fauci said it will likely be more than a year before people feel comfortable returning to theaters without masks.
• The rapid pace of technological change, including artificial intelligence and facial recognition, is mingling ever more with national security concerns to which European leaders have been slow to respond, analysts say, leaving them on the sidelines in a sector China and the US dominate.
• China and India have once again pledged to defuse tensions along their contested Himalayan border, days after officials in both countries accused the other of firing shots in the region for the first time in decades.
• Nora Dannehy, a top aide to the criminal prosecutor whom attorney general William Barr assigned to scrutinize the Trump-Russia investigation, resigned unexpectedly from the Justice Department for reasons that remain unclear.
• The coronavirus pandemic has reduced sales at commercial galleries specializing in modern and contemporary art by an average of 36 percent during the first half of 2020, according to a report published Wednesday by Art Basel and UBS.

Sunday
• Trump’s attacks on Joe Biden have failed to erase the Democrat’s lead in key swing states, including the crucial battleground of Wisconsin, where Trump’s law-and-order message has rallied support on the right but has not swayed the majority of voters who dislike him.
• Government scientists and doctors who operate in a culture guided by research, data sets, and peer review are colliding with a president famously disdainful of science, politically wounded by his failures to contain the coronavirus and now determined to cast himself as a savior.
• New York City business leaders who tried to find ways to work with mayor Bill de Blasio to help the city overcome the pandemic downturn were largely rebuffed, a situation that is starting to create obstacles as the mayor seeks to help the city in its “rebirth.”
• Experts say worsening wildfire disasters mean the US needs to drastically rethink its approach to managing fire by taking steps such as lowering carbon emissions and imposing tighter restrictions on future development to ensure that communities are better protected against potential fires.
• After weeks of public silence about the wildfires devastating the West Coast, Trump plans to visit California on Monday, where he will join local and federal fire and emergency officials for a briefing on the crisis.

WALL STREET JOURNAL
Weekend
• China National Biotec Group, a subsidiary of state-owned Sinopharm, has injected hundreds of thousands of people with experimental Covid-19 vaccines, as its Western counterparts warn against administering mass vaccinations before rigorous scientific studies are complete.
• Some of the nation’s largest employers—including CVS, WFC, and the US Postal Service—say they won’t implement Trump’s payroll-tax deferral plan, opting to leave employee paychecks alone this fall.
• Story on New York’s response to the coronavirus says that after the federal government largely left states to manage it, some governors ceded power to local officials, while others, such as governor Andrew Cuomo, insisted on being involved in all major decisions.
• Lawmakers in both parties are increasingly pessimistic that Congress can reach an agreement to provide additional coronavirus relief aid to Americans before the November election.
• Leaders of some rural California counties are accusing governor Gavin Newsom of improperly withholding federal coronavirus relief funds to force them to slow business re-openings, and a GOP delegation is asking the Treasury’s inspector general to audit the distribution of funds.
• Democrats are seeking ways to help volunteers and surrogates use new virtual tools to help political campaigns, at a time when door-to-door canvassing is impossible because of the coronavirus, but some observers worry the efforts won’t match what the GOP has achieved.
• Federal prosecutors stepped up a campaign against North Korea by unsealing two cases involving alleged sanctions violations—including some related to Chinese telecom ZTE—as officials warn Pyongyang remains a significant threat to national security and the global financial system.
• The global economy is bouncing back strongly from the dramatic collapse it suffered in the spring, but fresh data suggest the early gains from the lifting of coronavirus lockdowns are already exhausted.
• Profile of Google chief Sundar Pichai says the company, “long revered in Silicon Valley for its brainpower and creativity, is also in an extended stretch of innovation stasis—nearly all its recent growth has come from vacuuming up ever more online advertising,” and it has yet to succeed in hardware despite years of effort.
• Banking, long dominated by men, outpaces other industries in promoting women—Citigroup’s promotion of Jane Fraser as its next chief executive is the latest example—and the industry has made strides in recent years in elevating women to jobs that place them on the executive track.
• With their headquarters largely empty amid the pandemic, tech companies are reconfiguring their open-plan spaces to appeal to employees when they return, offering channels for collaboration and focus that workers can’t get in the remote environment.
• H.O.T.S.: Beijing’s tightened grip on the finance hub will make it harder for Hong Kong to diversify its economic base and keep pace with regional rivals in Singapore and Shenzhen; DIS’ Mulan was a test case for new movie distribution strategies, but it will also test the company’s ability to navigate highly political global markets; KR did well during the summer, and could get a boost when the change in seasons makes outdoor dining less attractive.

FINANCIAL TIMES
Weekend
• UK officials warned in January that prime minister Boris Johnson’s Brexit deal would lave Brussels able to claim jurisdiction over large amounts of UK state aide policy after the end of the transition period because of his desire to avoid the return of a trade border with Ireland.
• European Union finance ministers said they won’t cut short the recovery with a premature fiscal clampdown, deciding instead to postpone any debate over when to reimpose the bloc’s budget restrictions or how to reform them.
• Big Read piece reports on the growing importance of China for Hollywood studios and the delicate political balance studio heads face with releases such as DIS’ “Mulan, for which some scenes were shot in areas where Beijing operates internment camps.
• Lex Column: In the wake of RIO’s recent mining disaster, regulations to protect remaining historical sites will tighten, and bosses will tread more warily; “For all the hand wringing about the shrinking of public equity markets, there is evidence that private investors pay more for the same assets”; Rome’s “golden power” to block a deal for Borsa Italiana could help a bidding consortium led by Euronext, in which the Italian state may indirectly participate.
• Comment: False positives in coronavirus testing can be a problem if we react them the wrong way, says Tim Harford, but “even a shoddy test used well can nudge the odds in our favor.”

NEW YORK POST
Saturday
• +/- LULU: The athletic apparel company is drawing criticism for promoting an event teaching participants to “resist capitalism” through a workshop hosted by one of its brand ambassadors.
• +/- Volkswagen: Even as the automaker pushes forward with a deal to acquire truck maker Navistar, which is linked to billionaire Carl Icahn, sources say its merger plan could still falter.

Sunday
• NASA has measured wildfire temperatures in California, Oregon, and Washington using an instrument on the International Space Station.
• + AAPL: Tech giant published a revision of some of its App Store review guidelines, loosening some restrictions on streaming game services, online classes, and when developers must use its in-app purchase system, which charges a 30 percent commission.

FT : UK government set to impose strict conditions on Nvidia takeover of Arm

UK government set to impose strict conditions on Nvidia takeover of Arm
Culture secretary considers intervening in $40bn deal to protect jobs and keep HQ in Cambridge

UK ministers are set to impose strict conditions on the imminent $40bn takeover of Arm Holdings by US chip company Nvidia, including the protection of jobs and the maintenance of its UK headquarters in Cambridge.

Oliver Dowden, culture secretary, is also considering whether to “call in” the deal under the Enterprise Act 2002, which would mean an extensive review by the Competition and Markets Authority.

Ministers can call in mergers under four different grounds — financial security, media plurality, public health or national security — in a process that would trigger a CMA review taking up to several months.

If Oliver Dowden, culture secretary, proceeds with a formal intervention it would be on national security grounds — because the group is a major supplier to the defence industry — according to officials.

One government figure said that Mr Dowden was “minded” to refer the deal to the CMA. However, one ally of the culture secretary said no decision had yet been taken and that speculation was “premature”.

A review by the CMA would be in contrast to four years ago when the SoftBank takeover of Arm was waved through by the business secretary at the time Greg Clark, albeit with certain conditions.

On that occasion the government compelled the Japanese company to keep Arm’s headquarters in Cambridge and to create at least 1,500 new jobs at the chip designer over five years. “You would expect us to take a very close interest in this company given it is a national tech champion,” said one official.

The deal is a big test of prime minister Boris Johnson’s approach to Britain’s industrial strategy.

The FT reported over the weekend that a cash and stock takeover of Arm by Nvidia — the world’s most valuable chipmaker — could be announced as soon as Monday, with SoftBank becoming the largest shareholder in the US company.

The takeover values Arm above the $32bn price that SoftBank paid for the business in 2016, a deal that was struck weeks after the Brexit vote and prompted critics including Arm’s founder to accuse the country of selling off the crown jewel of its tech sector.

Ed Miliband, shadow business secretary, told the Financial Times last week that it was vital to secure Arm’s headquarters and 3,000-strong UK workforce if the deal went ahead. Mr Miliband said the government should seek legally binding assurances from Nvidia that it would not move “jobs and decision-making” to the US.

On Sunday night a government spokesperson said that, while proposed acquisitions were primarily a commercial matter, they were monitored closely by ministers.

“Where we feel a takeover may represent a threat to the UK, the government will not hesitate to investigate the matter further, which could lead to conditions on the deal.” 

The Enterprise Act 2002, which governs takeovers, was updated earlier this year to include companies which can influence the UK’s ability to deal with public health emergencies.

WSJ : Gilead’s $20 Billion Gamble

Gilead’s $20 Billion Gamble
A big premium for cancer drug company Immunomedics could pay off, but shareholders of slumping Gilead might be in no rush to act that way

A big splash from Gilead Sciences GILD 2.84% will spark a celebration among biotech investors. It is far from clear whether Gilead shareholders themselves will be feeling festive.

Gilead is nearing a deal to buy Immunomedics IMMU 0.76% for more than $20 billion, The Wall Street Journal reported on Saturday. That is more than double Friday’s closing market value. The significant premium from Gilead suggests that Immunomedics might have had multiple suitors.

The deal, should it reach the finish line, certainly is a slam dunk for Immunomedics shareholders. Those who have owned the shares since 2016 will have made roughly 40 times their initial investment. News of the deal will likely spur a rally in small and midsize biotech shares when trading opens on Monday.


The deal is far riskier for Gilead, which is paying top dollar for promising drugs with uncertain commercial potential. Immunomedics’s breast cancer drug Trodelvy reached the market in April and generated $20 million in its first two months. That is a promising start, but the hefty deal price cranks up expectations significantly.

It is clear why Gilead is willing to take a chance. Its share price is down by 40% over the past five years despite relentless share buybacks. Its hepatitis C franchise, once the envy of the industry, is in decline, and its portfolio of HIV drugs is only growing modestly. Total revenue fell about 10% in the second quarter from a year ago.

Recent Gilead purchases, such as the $11 billion it paid for Kite Pharma in 2017, have so far failed to diversify the company’s revenue sources. And investor enthusiasm for the Covid-19 treatment remdesivir has all but vanished after a brief period of euphoria. Gilead’s shares trade at about nine times adjusted earnings and yield more than 4%. While attractive on paper, biotech investors almost always prefer growth opportunities over current income. Meanwhile, Gilead certainly can afford to splash out: It had more than $21 billion in cash on its balance sheet at the end of June.

There is a clear, albeit difficult, path for the deal to be successful. Trodelvy could become a blockbuster treatment over time, and backing the drug with the marketing muscle of a large drugmaker should boost its long-run sales prospects. But promising signs that Trodelvy can be effective in highly lucrative categories like lung cancer will need to translate into real sales. Cancer is a highly competitive therapeutic category, and the industry is littered with also-ran products that were once thought to be future cash cows.

The bull case will take time to materialize in the best case scenario. Meanwhile, there is no rush for investors to bet that Gilead’s shiny new asset has already turned its fortunes around.

FT : SoftBank executives revive talks on taking Japanese group private

SoftBank executives revive talks on taking Japanese group private
Conglomerate looks at strategy after series of asset disposals, including the $40bn sale of Arm Holdings

SoftBank executives have revived discussions about taking the technology group private as the Japanese conglomerate seeks to redefine its strategy after a series of big asset disposals, people with direct knowledge of the matter said. 

The talks are driven by frustrations over the persistent discount in SoftBank’s $115bn equity valuation compared with the value of its individual holdings, which continues even after an asset sale programme targeted at closing that gap.

The latest of those disposals is set to be announced this week, with SoftBank set to sell the UK’s Arm Holdings for more than $40bn in cash-and-stock to US chipmaker Nvidia.

The deal will make SoftBank the largest shareholder in Nvidia, the Financial Times reported on Saturday, adding to its portfolio of minority holdings that include stakes in Chinese ecommerce group Alibaba and SoftBank’s listed Japanese telecoms unit.

The take-private discussions have also been accelerated by what people close to the company’s senior management say are a number of fundamental changes to SoftBank’s long-term business strategy since it launched the $100bn Vision Fund in 2016.

Core to those, said two people familiar with the situation, is that the company sees itself increasingly as an investor and asset manager rather than a direct operator of businesses as it has been for its 39-year history. 

Intense shareholder scrutiny of SoftBank’s recent aggressive bets on US technology stocks — which saw the Japanese group dubbed the “Nasdaq whale” for its outsized equity options trades — have also bolstered the appeal of becoming a private company, the people said.

A potential delisting of SoftBank, which founder Masayoshi has flirted with multiple times the past, would strike a heavy blow to the Tokyo stock market, where the company represents the closest business Japan has to Silicon Valley titans. SoftBank is the second-heaviest weighted stock in the Nikkei 225 Average — the tech-heavy benchmark for many Japanese retail and institutional investors.

The talks about management buyout led by Mr Son, who holds a 26 per cent stake in the company, have gained impetus as SoftBank nears the end of an asset sale programme launched in March that was meant to fund $41bn in share buybacks and debt repayments.

That disposal programme was launched in March after SoftBank shares fell to their lowest levels since 2016 during the stock market rout, which also squeezed Mr Son since he has borrowed heavily against his shareholding. The group’s interest-bearing debt stood at $115bn before the asset sales.

At the time, SoftBank briefly explored a take private with the support of activist hedge fund Elliott Management and Abu Dhabi state fund Mubadala.

Since then, SoftBank shares have recovered rapidly to reach their highest levels in 20-years last month. But executives continue to complain, attributing the rally in their own stock mainly to gains in Alibaba’s share price, rather than a narrowing of the discount between SoftBank’s equity value and the value of its holdings.

After selling down its stakes in Alibaba, T-Mobile US and its Japanese telecoms business, the value of SoftBank’s Tokyo-traded shares at one point rose to a 20-year high of ¥7,077 ($67) on August 4, but even then, it represented a 45 per cent discount to its asset value. At the height of the coronavirus market rout in mid-March, the discount expanded to 73 per cent. 

While he eventually settled with the asset sales, Mr Son’s irritation with his group’s share price was amplified following a 7 per cent drop triggered by recent revelations of SoftBank’s aggressive bets on equity derivatives that helped propel the US stock market to record highs, according to people with knowledge of the discussions.

Internal opposition to a management buyout remains strong, particularly in Japan where there is strong prestige attached to being a listed company, according to two of the people said. But Mr Son’s case for an MBO could be strengthened even among sceptics once he pulls off the $40bn sale of Arm to US chipmaker Nvidia. 

SoftBank declined to comment.

Market rumours of SoftBank going private have intensified in the wake of the rapid pace of the asset sales and talks to sell Arm to chipmaker Nvidia. “Given the scale of its buyback operations, we think delisting via management buyout is a possibility,” Satoru Kikuchi, an analyst at SMBC Nikko Securities, wrote in a report published last week. 

But other analysts and investors have said they regard the chances of an MBO as low. A large part of the relationship that SoftBank has with its megabank lenders in Japan hinges upon its status as one of the country’s most valuable listed companies. Listed status as a company also remains critical in Japan to attracting the best graduates. 

Mr Son’s take-private deliberations take place amid what bankers and lawyers in Tokyo describe as an unprecedented wave of MBO discussions among companies that have been listed for decades but now regard the burden of remaining listed as too high.

That is particularly the case, said the chief executive of one of Japan’s largest brokerage firms, for companies that have, like SoftBank, come under criticism over standards of corporate governance.

WSJ : What Are Nvidia and Arm? And Why Are They Talking About Getting Together?

What Are Nvidia and Arm? And Why Are They Talking About Getting Together?
Most people don’t go a day without handling an Nvidia or Arm-based product, even if they don’t know it

The Wall Street Journal reported Saturday that SoftBank Group Corp. 9984 1.03% is nearing a deal to sell British chip designer Arm Holdings to Nvidia Corp. NVDA -1.20% for more than $40 billion, potentially shaking up the semiconductor industry. Here is a look at what we know.

What is Arm?
Arm Holdings is one of the world’s most important behind-the-scenes semiconductor companies. It designs and licenses the basic blueprints of chips that are in more than 95% of the world’s smartphones. Its current owner, SoftBank Group Corp., bought it four years ago for $32 billion, saying its technology could underpin tomorrow’s “Internet of Things,” in which a universe of everyday objects such as lightbulbs and sneakers are connected to the internet.

Based in Cambridge, England, Arm was founded in 1990—a spinoff of a collaboration between Apple Inc. and Acorn Computer Group. It took a different strategy than rival Intel Corp., INTC 0.65% focusing on designing chips that consumed the least energy. That put Arm in position to take advantage of the smartphone revolution in the 2000s, as Apple, Samsung and other device makers sought chips that sipped rather than gulped battery life.

What is Nvidia?
Nvidia Corp. is best known for making the graphics chips in videogames that have been in hot demand during the pandemic. Its chips are, for instance, in the wildly popular Nintendo Switch. But Nvidia does much more. Its chips also go into data centers that are seeing booming business as remote work has taken off, and they have become the workhorses of artificial-intelligence calculations that have grown as more businesses embrace automation. All that has made Nvidia a Wall Street darling. Its shares have more than doubled, helping Nvidia become the most valuable U.S. semiconductor maker, overtaking Intel.

Nvidia, based in Santa Clara, Calif., was founded in 1993, envisioning a future when the personal computer would become the preferred device consumers use to play games or consume multimedia content, a bet that has paid off in spades. The company is still run by co-founder Jensen Huang, a Taiwanese-American who previously worked at Nvidia’s graphics chip-making rival Advanced Micro Devices Inc. The surge in videogaming demand helped Nvidia report record sales in the most recent quarter.

Why is the deal happening?
SoftBank had been under pressure to shore up its flagging stock price and promised some $40 billion in asset disposals. Most or all of that is already under way or completed, and its shares are up more than 20% this year.

For Nvidia, the deal would give it almost overnight a dominant role in the lucrative business of providing chips to smartphones like Apple‘s iPhone. It would also make the company a more formidable competitor to Intel as some chip makers begin to adapt Arm designs in servers and PCs. Apple this year said it was ditching Intel processors from its Macs in favor of more-efficient integrated chips based on an Arm technology.

What does it mean for the chip industry?
The transaction would mark one of the biggest changes in the semiconductor landscape in years—basically since SoftBank bought Arm. It is also Nvidia’s biggest ever acquisition by a long shot.

But the deal faces potential roadblocks. It is unfolding at a time the chip industry is a battlefield between the U.S. and China over dominance in the tech industry. Regulators in both countries would have to sign off on the transaction and have used their power to thwart deals, including when the Trump administration nixed Broadcom Inc.’s hostile takeover bid of Qualcomm Inc.

Some politicians in the U.K., Arm’s home base, also have expressed misgivings over a potential sale. When SoftBank bought Arm, it pledged to grow jobs in Britain. The opposition Labour Party warned recently that a deal for Arm could lead to job losses and wants assurances that wouldn’t happen.

And Arm customers also may try to raise concerns about a purchase by Nvidia. Arm’s business model involved partnering with as many customers for its designs as possible. It has avoided signing exclusive contracts, a philosophy it spelled out in a 2013 doctrine titled “A Shared Purpose.” That approach has enabled competitors like Samsung Electronics Co., Qualcomm and many other blue-chip tech companies to rely on Arm as a neutral supplier. Now those customers face the prospect that one of their chip-making competitors would own Arm, potentially undermining its reputation as the Switzerland of the semiconductor industry.

FT : Fifty years of shareholder value have swollen monopoly power

Fifty years of shareholder value have swollen monopoly power
We will not leave Friedman’s doctrine behind until there is a European movement to rebuild competition

The writer is co-founder of the Inclusive Competition Forum and author of ‘Competition is Killing Us: How Big Business is Harming Our Society and Planet and What To Do About It’

Fifty years ago on Sunday, Milton Friedman published the article that would guarantee his lasting influence. “The Social Responsibility of Business is to Increase its Profits” became the canonical statement on shareholder value, with Friedman giving conflicted chief executives a simple guiding principle: when in doubt, maximise profits. 

Friedman’s argument was considered outrageous in 1970, and is again being criticised today. The influential US Business Roundtable group of executives publicly rejected the primacy of shareholder value last year and many companies and investors tout their focus on stakeholders and sustainability.

Yet we remain captured by Friedman’s legacy. Business may talk the talk of corporate responsibility, but it is walking a different walk. Working as a competition lawyer in the City of London, I saw first hand as executives competed to dominate markets and push share prices ever higher.

Competition law is meant to check corporate power, yet markets are growing more concentrated under regulators’ noses. Stanford University economist Mordecai Kurz calculated in 2015 that 82 per cent of stock market value came from the tech sector’s “monopoly wealth”. It may be more now: a tech-friendly pandemic has seen prices soar.

For users, choice is often an illusion. Take dating apps: you might choose OKCupid, Tinder or Hinge but all three are owned by Match.com. Google and Facebook have built an online advertising duopoly. A handful of companies control global agribusiness. Amazon now part-owns Deliveroo. Paralysed regulators have been complicit.

Concentrated markets are often linked to growing inequality, disempowerment of workers, hollowing out of communities and environmental harm — all problems that stakeholder capitalists say they are trying to fix. Monopolised industries tend to operate by their own, self-reflexive logic, with the interests of incumbents automatically equated to those of the industry. When regulators do catch up to the titans, the fines levied can be easily absorbed as a cost of doing business. Whether it is DuPont’s $671m payout for poisoning the water in West Virginia or Facebook’s $5bn settlement for the Cambridge Analytica scandal, investors barely blink. Consumers have little place to turn.

Companies that are guided by an ethical duty must contend with competitors that believe that monopoly will trump morality. Companies such as Amazon and Uber swallowed year after year of losses as they bankrupted rivals and built market share. Once entrenched, these systemically important companies will not budge.

Remember that Friedman added a caveat to his “profits first” edict. Business should maximise earnings “so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud”. Yet the historic emphasis on shareholder value has led some companies to seek monopoly power by controlling the rules of the game, and even through deception and fraud. That distorts the very idea of competition.

Gigantic corporations have their own gravitational pull, morphing into economic black holes. Stakeholder capitalism will not be able to resist the drag. We must disperse economic concentrations, democratise corporate power and dissolve monopolies that are able to distort markets and society. Voluntary efforts by business will not be enough. Competition law and corporate law must be used to their full potential.

America gave us both Friedman and Silicon Valley, fostering the perception that this is a US problem. But we are all at the mercy of global as well as homegrown monopolies. We need a European movement to rebuild competition, to protect our democracy and the hope of a resilient future. Only then will we leave Friedman’s doctrine behind.

WSJ : Former Top Boeing 737 MAX Officials Defend Design Process

Former Top Boeing 737 MAX Officials Defend Design Process
Previous MAX program manager and chief engineer in closed-door congressional interviews stand by Boeing’s design of the plane

Two high-ranking executives who oversaw Boeing Co. BA 1.61% ’s development of the 737 MAX told House investigators the company’s design process wasn’t flawed despite two fatal crashes, a contrast to other company leaders’ concessions of past engineering errors.

The Chicago plane maker is approaching the final steps of getting its beleaguered MAX fleet returned to service. Lawmakers, safety experts and global regulators have previously identified technical and management lapses in the airplane’s development.

Transcripts of closed-door interviews in May with Keith Leverkuhn and Michael Teal, who directly managed MAX development through the aircraft’s 2017 debut, are part of a final congressional report slated to be released this coming week detailing a series of company and government missteps during and after certification of the MAX.

Their stance shows that nearly two years after the first fatal crash, there are differing views inside Boeing and a continuing debate across parts of the industry about the significance of pilot mistakes versus Boeing design flaws as factors in the MAX crashes.

“The cause of the accidents is a very complex thing, that there are multiple things that occurred,” Mr. Teal said at one point in his interview.

Misfires of the cockpit system, called MCAS, overpowered pilots on a pair of MAX jets less than five months apart, causing fatal nosedives and prompting a global grounding of the fleet that has remained in effect since March 2019.

The statements to the staff of the U.S. House Transportation Committee, reviewed by The Wall Street Journal, reflect a vigorous defense of Boeing’s engineering practices and safeguards. In the wake of 346 deaths, billions of dollars in company losses and the biggest blow to the plane maker’s reputation in its 104-year history, the two executives didn’t concede any procedural mistakes during the plane’s six-year development process.

Mr. Leverkuhn, who served as the MAX program manager from 2013 to 2018 before moving to what he said was a higher-salaried role overseeing jet propulsion systems, at one point in the interview said, in response to a question, that he would consider the plane’s development a success, according to the transcript. Like Mr. Teal, he said the MAX’s creation followed standard Boeing protocol.

“I do challenge the suggestion that the development was a failure,” Mr. Leverkuhn said, during sometimes-contentious exchanges with investigators.

Mr. Leverkuhn, who stressed the MAX design process was the same as for all other Boeing jets, at another point in the interview said: “I believe the process was correct and appropriate.”

Last October, then-Chief Executive Dennis Muilenburgtold lawmakers in public testimony he was responsible and accountable for the MAX debacle, adding: “We’ve made mistakes and we got some things wrong.” The company’s board later pushed him out.

According to the transcripts, Messrs. Teal and Leverkuhn told investigators they signed off on MCAS without fully understanding how it worked; they also said the design of the flight-control feature met company and federal certification and safety requirements. Mr. Teal said he signed off on high-level configuration of the aircraft and its systems, leaving lower-level engineers to work out MCAS details. “That’s typically how flight-control laws are worked with,” he said.

The interviews marked the two men’s first public statements since before the initial MAX crash of a Lion Air jet in Indonesia in October 2018. A MAX operated by Ethiopian Airlines crashed in March 2019.

In a statement to The Wall Street Journal, Boeing said Messrs. Leverkuhn and Teal supervised hundreds of engineers and, given their broad responsibilities, “were not, and could not have been, involved in every design decision” on the aircraft.

Boeing also reiterated it has taken steps to improve its internal procedures. “We have made important changes to our certification process, and to our company,” Boeing added, “as a result of what we have learned from our internal assessments and the many independent reviews.”

Boeing declined to make the executives available to comment.

Mr. Leverkuhn retired this year as he had long planned, a Boeing spokesman said.

Mr. Teal, who as the MAX’s chief engineer personally signed off on MCAS and served as Mr. Leverkuhn’s deputy, told the House panel’s investigators Boeing’s team designed the MAX following longstanding industry assumptions and complied with established company practices.

He is now the top engineer in charge of developing Boeing’s 777X, the company’s next new jetliner.

Mr. Teal told investigators he approved MCAS without knowing that a malfunction of a single sensor could trigger the system to repeatedly push down a plane’s nose and possibly lead to a crash if pilots fail to respond appropriately within a matter of seconds. “I don’t believe it was a mistake,” he said, based on what engineers knew when they were developing the plane years ago. He said he relied on experts in various engineering disciplines to determine the system’s design and safety.

After MCAS was flagged by test pilots in 2016 as a high-priority answer to a separate handling deficiency that could jeopardize Federal Aviation Administration approval, Mr. Teal recalled, he sent several other Boeing pilots to check out the system but never learned what changes engineers ultimately devised to solve the problem.

“The team followed the process that we use to design, you know, flight control systems and went through the process of working with the pilots as well as the stability and control” engineers, Mr. Teal said.

Since the crashes, Boeing, other plane makers, regulators and accident investigators world-wide have significantly revised an industrywide assumption about how quickly average pilots can be expected to respond to certain emergencies. In hindsight, both executives said that assumption was faulty.

Boeing has since jettisoned the long-held industry assumption that pilots would respond appropriately to cockpit emergencies within four seconds.

The overall design effort was correct and appropriate, Mr. Leverkuhn said, “but that assumption underpinning that process was proven to be incorrect.”

According to the transcripts, they said Boeing was committed to applying lessons learned from the MAX’s travails to enhance safety and improve internal controls. Mr. Teal, now the 777X’s current top engineer, said the revised pilot assumption was “a learning that we are now putting forth on the new aircraft.”

Boeing has added numerous safeguards to MCAS since the crashes. Among other changes, the cockpit system now relies on two sensors to verify accurate data, instead of just one, and it will just push the nose down once.

Boeing’s statement. also said the MAX’s development “complied with the FAA’s certification requirements at the time.” The company said it has bolstered safety by restructuring “to give engineers a stronger voice and a more direct line to share concerns with top management.”

Mr. Teal dismissed the notion that the company was motivated by financial reasons to avoid extra mandated simulator training and instead emphasized the safety advantages of developing the aircraft with handling characteristics identical to earlier 737 models. “It’s not about the dollars and cents,” he told the House investigators. “It’s about the safety aspect.”