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12 January, 2021

Boeing to pay more than $3 billion in criminal conspiracy settlement

Boeing will pay more than $3 billion after settling criminal charges that resulted from the US Department of Justice (DOJ) investigation into its controversial 737 MAX aircraft.

The airline manufacturer entered into a deferred prosecution agreement (DPA) dropping all charges against it after being accused of concealing information about its 737 MAX plane which was involved in two major plane crashes killing 346 people.

As part of the DPA, Boeing will pay $3.2 billion, with $650 million going to crash victims families and $2.2 billion set aside for its customers.

“The tragic crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial aeroplane manufacturers,” said acting assistant attorney general David P. Burns of the Justice Department’s criminal division.

“Boeing’s employees chose the path of profit over candour by concealing material information from the FAA concerning the operation of its 737 Max aeroplane and engaging in an effort to cover up their deception.

“This resolution holds Boeing accountable for its employees’ criminal misconduct, addresses the financial impact to Boeing’s airline customers, and hopefully provides some measure of compensation to the crash victims’ families and beneficiaries.”

According to a statement from Boeing, the agreement acknowledges the “intentional failure” of two of its employees to inform the Federal Aviation Administration’s (FAA’s) Aircraft Evaluation Group (AEG) about changes to the Maneuvering Characteristics Augmentation System (MCAS).

As a result, the FAA AEG was not fully informed about MCAS’s expanded operating range when it made its training determinations for the MAX.

While focusing on the conduct of these two former employees, the agreement recognised other Boeing employees did inform other officials and organisations within the FAA about MCAS’s expanded operating range in connection with the certification of the aircraft.

“The misleading statements, half-truths, and omissions communicated by Boeing employees to the FAA impeded the government’s ability to ensure the safety of the flying public,” said US Attorney Erin Nealy Cox for the Northern District of Texas.

“This case sends a clear message: the Department of Justice will hold manufacturers like Boeing accountable for defrauding regulators – especially in industries where the stakes are this high.”

In a note to employees, Boeing president and CEO David L Calhoun said: “I firmly believe that entering into this resolution is the right thing for us to do – a step that appropriately acknowledges how we fell short of our values and expectations.

“This resolution is a serious reminder to all of us of how critical our obligation of transparency to regulators is, and the consequences that our company can face if any one of us falls short of those expectations.”

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$3 billion 737 Max Aircraft Evaluation Group (AEG) boeing crash criminal charges David L Calhoun David P. Burns deferred prosecution agreement Erin Nealy Cox Ethiopian Airlines Flight 302 faa Justice Department Lion Air Flight 610 Maneuvering Characteristics Augmentation System (MCAS) US Department of Justice