Accused of fraud, Boeing pays $2.5 billion settlement for 737 MAX crashes
Boeing has been charged by the U.S. Department of Justice (DoJ) of conspiracy to defraud the government for withholding information from the Federal Aviation Administration (FAA) regarding the MCAS during the certification of the 737 MAX. “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.
The wrongdoing of two employees
The manufacturer admitted that two of its employees had misled FAA’s supervisors, in charge of preparing pilot training, about the Maneuvering Characteristics Augmentation System (MCAS) flight software blamed for the two fatal crashes. As a result, documents issued by the aviation agency did not contain essential information about this software, which was therefore missing from the flight manuals. “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,” Burns said.
Boeing agreed to pay a fine of $243.6 million for the crimes committed by the two employees. In addition, it will also give airline compensation and create a fund of $500 million to be established for the families of the 346 victims of the Lion Air and Ethiopian Airlines crashes. In total, the manufacturer agreed to pay more than $2.5 billion to avoid prosecution.
"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,” Boeing CEO David L. Calhoun reacted in a message to its employees. "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."
The designation of two employees (including test pilot Mark Forkner who bragged for “Jedi-mind tricking regulators into accepting the training”) as the sole wrongdoers contradicts the report published in September 2020 by the House Transportation and Infrastructure Committee. The Committee’s report condemned a company-wide “culture of concealment”. Interviewed by the Seattle Times, the Committee Chair Peter DeFazio who led the investigation reacted to the settlement, calling it “a slap on the wrist” and an insult to the victims.
Despite the settlement with the DoJ, families of victims of the Ethiopian Airlines crash intend to move forward with civil litigation against the planemaker in Chicago, as announced by the plaintiffs’ lawyers. “The news from the Justice Department is an insult to the families and the flying public,” said Robert A. Clifford, Lead Counsel of the litigation pending in federal district court in Chicago.
“The actual government fine of $243.6 million is a rounding error in Boeing corporate finances, worth a couple of airplanes,” Michael Stumo, father of Samya Rose Stumo, 24, who was killed in the Ethiopian Airlines crash. “This is fake justice agreed to by insiders while excluding victims’ families.”
The $1.77 billion intended for airlines had already been budgeted by Boeing according to its own previous financial statements, as their compensation started in December 2019.
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