Boeing to pay $2.5 billion in settlement with government
Boeing has settled a $2.5 billion fraud charge with the federal government.
The settlement resolves a criminal conspiracy to defraud the Federal Aviation Administration’s Aircraft Evaluation Group in connection with its assessment of the 737 MAX. The 737 MAX airplane was involved in two deadly crashes in Indonesia in Oct. 2018 and Ethiopia in March 2019.
“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 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 is charged with one count of conspiracy of defrauding the United States. Of the $2.5 billion, $1.77 billion will compensate Boeing 737 MAX airline customers and $500 million will go to the crash-victim beneficiaries fund that compensates heirs, relatives, and legal beneficiaries of those who died in the two crashes.
“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 DOJ says that Boeing deceived the FAA group about the Maneuvering Characteristics Augmentation System (MCAS) that impacted the plane’s flight control system. Because of that deception, a key document by the FAA lacked important information about the MCAS. That trickled down to airplane manuals and pilot training materials for airlines, which also lacked that information.
In 2016, it was discovered that there was information about an important change to MCAS, but Boeing concealed the information and deceived the FAA, according to court documents.