$2.5 BIL FINE: Boeing Charged with Criminal Conspiracy over 737 Max Fraud
Posted on 01/08/2021
The recertified Boeing 737 Max completed its first U.S. commercial flight in December 2020. The Boeing 737 Max was banned in March 2019 after the Lion Air Flight 610 crash in October 2018 in Indonesia that killed 189 people. This tragic accident was followed five months later by the Ethiopian Airlines Flight 302 crash that caused the death of all 157 people aboard. The Boeing Company has entered into an agreement with the U.S. Department of Justice to resolve a criminal charge related to a conspiracy to defraud the Federal Aviation Administration’s Aircraft Evaluation Group (FAA AEG) in connection with the FAA AEG’s evaluation of Boeing’s 737 MAX airplane.
Boeing entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed in the Northern District of Texas. The criminal information charges the company with one count of conspiracy to defraud the United States. Under the terms of the DPA, Boeing will pay a total criminal monetary amount of over US$ 2.5 billion, composed of a criminal monetary penalty of US$ 243.6 million, compensation payments to Boeing’s 737 MAX airline customers of US$ 1.77 billion, and the establishment of a US$ 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.
Acting Assistant Attorney General David P. Burns of the Justice Department’s Criminal Division said in a press release that “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.”
The press release adds, “As Boeing admitted in court documents, Boeing—through two of its 737 MAX Flight Technical Pilots—deceived the FAA 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.”