Boeing is to pay US$2.5 Billion to settle a criminal charge for conspiring to defraud the FAA’s Aircraft Evaluation Group about its 737 Max aircraft.
Under the agreement, Boeing will pay US$2.2 billion in compensation to the families of the 346 passengers who died in the Boeing 737 Max crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 and a US$243 million fine.
The deferred prosecution agreement means the charge will be dismissed in three years.
David P. Burns, acting assistant attorney general of the US Justice Department’s Criminal Division said, “The tragic crashes exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers,”
“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.
“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.”
Boeing admitted in court documents that two of its 737 Max flight technical pilots deceived the FAA AEG about the Maneuvering Characteristics Augmentation System (MCAS) that impacted the flight control system of the Boeing 737 Max. This led to documentation including airplane manuals and pilot-training materials lacking information about how MCAS worked.
The pilots also continued to mislead others, including at Boeing and the FAA about their prior knowledge of changes made to the MCAS during the investigation into the Lion Air crash.
However, the Justice Department has determined that an independent compliance monitor is not required at Boeing in the future. It said this was not necessary because the company has made changes to its organization and management processes. It also deemed that the misconduct was not pervasive across the organization, undertaken by a large number of employees or facilitated by senior management.
The Justice Department said it also recognizes that other Boeing employees did inform officials and organizations within the FAA about MCAS’s expanded operating range in connection with the certification of the 737 Max.
Boeing has also agreed to work to an enhanced compliance program reporting requirement in the future.
David L. Calhoun, Boeing’s president and CEO said, “I 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.”
Read our investigation into where blame lies and the lessons that can be learnt from the 737 Max by the aerospace industry here.