Boeing to pay $ 2.5 billion to solve criminal case over 737 Max accidents

Boeing has agreed to pay $ 2.5 billion to resolve a criminal charge of defrauding federal aviation regulators responsible for deciding the safety of the 737 Max.

The US Department of Justice said Thursday it had reached a deferred prosecution agreement with the Chicago-based aerospace maker, the result of a criminal investigation into Boeing following two accidents in five months that killed 346 people in total.

Prosecutors have charged the company with one count of conspiracy to defraud the United States, according to documents filed in federal court in Texas on Thursday. The charge stems from what Erin Nealy Cox, US District Attorney for the North Texas District, called Boeing’s “misleading statements, half-truths and omissions” to the US Federal Aviation Administration.

Boeing has admitted guilt under the deferral of prosecution agreement.

“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 manufacturers of commercial aircraft,” said David Burns, Deputy Attorney General of Acting of the Criminal Division of the Ministry of Justice.

“Boeing employees have chosen the profit-over-franchise route by withholding important information about the operation of its 737 Max aircraft from the FAA and engaging in an effort to cover up their deception.”

David Calhoun, chief executive of Boeing, said in a note to employees that entering into the deferred prosecution agreement was “the right thing to do for us – a step that appropriately recognizes how we have failed. met our values ​​and expectations.

“This resolution is a serious reminder to all of us how critical our obligation to be transparent to regulators is and the consequences our business may face if one of us does not meet those expectations.

Boeing will pay around $ 244 million in fines, $ 1.8 billion in payments to airline customers of the 737 Max and $ 500 million in a fund for the survivors of those killed in the two crashes.

Boeing has already set aside about $ 1.8 billion of the $ 2.5 billion payment in previous quarters, according to a document filed with the Securities and Exchange Commission. This will require an additional $ 744 million in the fourth quarter of 2020.

The criminal fraud charge stems from Boeing’s claims about a flight control system known as the Maneuver Characteristics Augmentation System. The software had the ability to push the nose of the plane down if the jet stalled. However, it was only connected to a single sensor, and an erroneous reading of the plane’s tilt could trigger a situation where the jet was repeatedly pushed downward until it sank. ‘crushed.

Because Boeing deceived FAA regulators over MCAS, aircraft manuals and pilot training materials lacked information on the system, the Justice Department said.

The deal between prosecutors and Boeing means that if the company cooperates with the Justice Department and continues to implement the compliance program put in place following the accidents for three years, prosecutors will ask the court to dismiss the case against the company.

The Justice Department’s deal does not affect the continuing civil litigation against Boeing. The plaintiff panel in the Ethiopian Airlines Flight 302 lawsuit said on Thursday that the allegations in the deferred prosecution agreement were “just the tip of the iceberg of wrongdoing by Boeing – a company that pays. billions to avoid criminal liability while stranding and fighting families in court ”. .

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