Boeing, which had been accused of concealing information about its 737 Max airplane that was involved in two crashes that claimed 346 lives, will pay more than $2.5 billion to settle a criminal probe with the U.S. Justice Department, federal prosecutors announced Thursday.
Prosecutors said Boeing “knowingly and willfully” conspired to defraud the United States by undermining the Federal Aviation Administration’s ability to evaluate the safety of the plane.
“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,” David P. Burns, Acting Assistant Attorney General of the Justice Department’s Criminal Division, said in a statement.
“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,” he continued.
With the deferred prosecution agreement, the DOJ’s investigation, which lasted nearly two years, comes to an end. All charges against Boeing will be dropped after three years if there aren’t additional violations.
Boeing admitted that two of its 737 Max flight technical pilots “deceived” the FAA about the capabilities of a flight-control system on the planes. Investigators have found that it was the software that was the root cause of the two crashes.
The $2.51 billion fine consists of a $243.6 million criminal penalty, a $500 million fund for crash victims family members and $1.77 billion for its airline customers. The company said it already accounted for a bulk of those costs in prior quarters and expects to take a $743.6 million charge in its 2020 fourth-quarter earnings to cover the rest.
The company admitted to the wrongdoing and waived its rights to a trial as part of its deal with the DOJ to settle the charges. “This is a substantial settlement of a very serious matter, and 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,” CEO Dave Calhoun said in a note to Boeing employees.
House Transportation and Infrastructure Committee Chairman Peter DeFazio, whose committee led one of the reports and introduced the new certification law, slammed the settlement with the Justice Department.
“This settlement amounts to a slap on the wrist and is an insult to the 346 victims who died as a result of corporate greed,” DeFazio said in a statement. “Not only is the dollar amount of the settlement a mere fraction of Boeing’s annual revenue, the settlement sidesteps any real accountability in terms of criminal charges.”
The two deadly crashes involving the jet killed a total of 346 people. In October 2018, Lion Air operated a 737 Max that plunged into the Java Sea minutes after takeoff in Indonesia, killing all 189 aboard. Five months later, as concerns over its Maneuvering Characteristics Augmentation System (MCAS) were voiced, an Ethiopian Airlines jet with 157 passengers and crew crashed six minutes into its flight.
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