Boeing Gets $2.5 Billion Fine for Fraud Charges Over 737 Max Crashes
Boeing has entered into an agreement with the Department of Justice to resolve a criminal charge related to a conspiracy to defraud the Federal Aviation Administration in regards to the Boeing’s 737 MAX airplane.
“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,” the Department of Justice said in its press release.
Boeing admitted in court documents that its former employees deceived the FAA’s Aircraft Evaluation Group (AEG) about an important aircraft part called the Maneuvering Characteristics Augmentation System (MCAS) that impacted the flight control system of the Boeing 737 MAX. Because of their deception, a key document published by the FAA AEG lacked information about MCAS, and in turn, airplane manuals and pilot-training materials for U.S.-based airlines lacked information about MCAS.
Boeing entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed in the Northern District of Texas. The criminal information charges the company with one count of conspiracy to defraud the United States. Under the terms of the DPA, Boeing will pay a total criminal monetary amount of over $2.5 billion, composed of a criminal monetary penalty of $243.6 million, compensation payments to Boeing’s 737 MAX airline customers of $1.77 billion, and the establishment of a $500 million crash-victim beneficiaries fund to compensate the heirs, relatives, and legal beneficiaries of the 346 passengers who died in the Boeing 737 MAX crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302.
“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 U.S. 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.”
The 737 Max was grounded worldwide in March 2019 after two crashes in Indonesia and Ethiopia that killed 346 people. A March 2020 congressional investigation concluded that Boeing promoted a “culture of concealment” and was “grossly inefficient” in its oversight of the Max’s development. The aircraft is now back in service in the United States.
This is not the largest fine ever paid by an airplane manufacturer. Airbus was ordered to pay a $4 billion fine last year, following a three-year probe into allegations of bribery and corruption over jetliner sales. However that involved a global settlement. Airbus agreed to pay 2.1 billion euros to France, 991 million euros including costs to the U.K. and 527 million euros to American authorities.
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