Aircraft manufacturer Boeing has agreed to pay over $2.5 billion in penalties as a result of “fraudulent and deceptive conduct by employees” in connection with the firm’s B737 Max aircraft.
The agreement with the US Department of Justice (DoJ) includes “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”.
All B737 Max aircraft were grounded worldwide in March 2019 following the crashes. In November last year the US Federal Aviation Administration (FAA) rescinded its order which halted commercial operation of Boeing’s B737 Max 8 and Max 9 aircraft, paving the way for the plane to return to the skies.
Since then carrier including Brazil’s GOL and American Airlines have resumed B737 Max flights.
“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 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 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.”
As a result of the settlement Boeing said that the DoJ “has agreed to defer prosecution of the company, provided that Boeing abides by the obligations set forth in a three-year deferred prosecution agreement, after which time the charge will be dismissed”.
The manufacturer said that the agreement “is based on the conduct of two former Boeing employees and their intentional failure to inform the FAA Aircraft Evaluation Group (AEG), the group within the FAA responsible for making pilot training determinations, about changes to the Maneuvering Characteristics Augmentation System (MCAS)”.
Commenting on the settlement David L. Calhoun, Boeing President and Chief Executive Officer, 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.”
The news follows this weekend’s crash of Sriwijaya Air’s flight SJ-182 in Indonesia. The flight – which had 62 people on board – was being operated by a 26-year old Boeing B737-500 aircraft.