Boeing will pay more than $2.5 billion to settle federal criminal fraud charges that it deceived the FAA in connection with the agency’s evaluation of the 737 Max aircraft.
The aerospace giant will pay a criminal fine of $243.6 million, make compensation payments to 737 Max airline customers of $1.77 billion and establish a $500 million fund for relatives and heirs of the 346 people who died in the 2018 and 2019 Max crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302.
In exchange, the Justice Department will defer prosecution for three years and then dismiss charges, provided that Boeing complies with the obligations of the settlement.
The charges related to two former chief 737 Max technical pilots at Boeing, who Boeing acknowledges intentionally failed to the inform the FAA Aircraft Evaluation Group about changes made to the Max’s automatic flight control system, called the Maneuvering Characteristics Augmentation System (MCAS). The Aircraft Evaluation Group is the FAA unit responsible for making pilot training determinations.
As a result of the pilots’ deceit, the Justice Department wrote in a Thursday evening announcement, airplane manuals and pilot training materials for the Max lacked any information about MCAS.
In both 737 Max crashes, a faulty sensor erroneously activated MCAS repeatedly, causing the planes to nosedive.
“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,” U.S. Attorney Erin Nealy Cox for the Northern District of Texas said in prepared remark. “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.”
Boeing CEO David Calhoun said the company’s decision to enter the resolution is 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,” he said.
The FAA ended the 20-month grounding of the Max in November, although the aircraft still hasn’t received permission to return the sky in the EU, Canada or China. As part of the FAA ungrounding, pilots must receive specialized simulator training on the Max MCAS.