Boeing Fined $2.5 Billion for Lying to 737 MAX Safety Regulators
In a statement, the US Justice Department said the firm chose "profit over candor", a practice that directly led to two deadly crashes and the death of 346 individuals in 2019.
About $500m of the settlement money will go to the families of the victims killed in the tragedies.
A 'failure of the justice process'
The US Department of Justice announced on Thursday, January 7, that it had reached a deferred prosecution agreement with the Chicago aerospace manufacturer.
Prosecutors charged Boeing with one count of conspiracy to defraud the US via "misleading statements, half-truths, and omissions" to the US Federal Aviation Administration. Boeing admitted guilt as part of the settlement agreement.
"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 airplane manufacturers," said David Burns, acting assistant attorney-general of the justice department’s criminal division.
"Boeing’s employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 MAX airplane and engaging in an effort to cover up their deception."
As part of the settlement, Boeing will pay approximately $244m in fines, $1.8bn in payments to airline customers of the 737 MAX, and $500m to families of those killed in the two crashes.
Some individuals who lost family members spoke out, saying they felt the penalty was too light.
"This decision highlights the failure of the justice process," said Zipporah Kuria, whose father was killed in the Ethiopian Airlines Flight 302 crash.
"If people can pay their way out of accountability, what can’t they get away with?"
What caused the 737 MAX crashes?
The key to the criminal fraud charge lies in Boeing's original statements regarding a flight-control system installed in the 737 MAX, known as the Maneuvering Characteristics Augmentation System.
The software was designed to push the nose of the plane downward if it stalled. However, erroneous readings from one sensor could cause the plane to plummet when it wasn't stalling, an issue that led to the two crashes in 2019.
Boeing lied to the FAA regulators about MCAS and airplane manuals and training materials for the 737 MAX lacked information about the system, the justice department said.
This isn't the end of proceedings for Boeing as the justice department deal does not have a direct impact on the civil litigation against Boeing, which is still underway.
The plaintiffs' committee in the Ethiopian Airlines lawsuit on Thursday said this was "just the tip of the iceberg of Boeing’s wrongdoing — a corporation that pays billions to avoid criminal liability while stonewalling and fighting families in court."
The Boeing 737 MAX returned to service in the US in December, after Boeing said it had addressed concerns about the airliner.