Boeing pays greater than $ 2.5 billion to settle legal conspiracy costs for 737 Max
Boeing agreed to pay more than $ 2.5 billion to settle a criminal investigation at the US Department of Justice that accused the company of hiding information about its 737 Max plane, which was involved in two crashes was, in which 346 people were killed, announced the federal prosecutor on Thursday.
The deferred law enforcement arrangement closes the DOJ’s roughly two-year investigation and drops all charges after three years if there are no additional violations.
Prosecutors said Boeing had “knowingly and intentionally” conspired to defraud the United States by undermining the Federal Aviation Administration’s ability to assess the aircraft’s safety.
Boeing admitted that two of its 737 Max flight pilots “deceived” the FAA about the capabilities of a flight control system on the aircraft, software that was later implicated in the two crashes, the Justice Department said.
The $ 2.51 billion fine consists of a $ 243.6 million fine, a $ 500 million fund for family members of accident victims and $ 1.77 billion for Airline customers. The company said it had incurred a large portion of these costs in previous quarters and expects a $ 743.6 million charge to cover the balance in the fourth quarter of 2020.
“The tragic crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 exposed fraudulent and misleading behavior by employees of one of the world’s leading manufacturers of commercial aircraft,” wrote Assistant Attorney General David P. Burns of the Department of Justice’s Criminal Division in a release. “Boeing employees chose the win over openness path by hiding essential information about the operation of their 737 Max aircraft from the FAA and trying to cover up their deception.”
The company admitted the wrongdoing and waived a lawsuit as part of its agreement with the DOJ to settle the charges. The agreement also did not include top executives, as the misconduct was neither pervasive nor senior executives.
“This is an essential solution to a very serious matter, and I firmly believe that it is the right thing for us to enter into this resolution – a move that properly recognizes that we have failed to live up to our values and expectations”, said CEO Dave Calhoun in a note to Boeing employees.
The crashes plunged Boeing into its worst crisis ever, triggering a worldwide primer for its bestselling aircraft that lasted nearly two years, undermined numerous investigations and damaged the reputation of one of the largest aircraft manufacturers in the world.
Last month, the FAA approved software and other security changes Boeing had made to the planes and gave airlines permission to fly them again. American Airlines became the first US carrier to return aircraft to commercial service last month. United Airlines expects to fly again next month, and Southwest Airlines is expected to follow suit in March.
Lawyers representing the families of victims on Ethiopian Airlines Flight 302 said they intend to continue their lawsuit against Boeing.
“This arrangement, including the Accident Victims Recipients Fund, does not affect the pending civil cases against Boeing, which we intend to fully pursue to ensure families get the justice they deserve,” they said.
Boeing shares fell less than 1% in after-hours trading.