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737 Max

Boeing to Pay Over $2.5 Billion Settling Justice Department’s Fraud Conspiracy Case

Boeing to Pay Over $2.5 Billion Settling Justice Department’s Fraud Conspiracy Case
Joe Cortez

The Boeing Company will pay a total criminal monetary amount of over $2.5 billion related to charges from the U.S. Department of Justice over the troubled 737 MAX airframe. The payments include a $243.6 million penalty, along with two funds to compensate the victims of both 737 MAX fatal accidents.

The Boeing Company will face over $2.5 billion in penalties and compensation payments directly attributed to the two fatal accidents of the Boeing 737 MAX which killed 346 people. In a press release, the U.S. Department of Justice announced a deferred prosecution agreement (DPA) with Boeing in connection with one charge of conspiracy to defraud the United States.

Payment Includes $243.6 Million to DOJ, Along with Victim Compensation Funds

In a criminal complaint filed in the Northern District of Texas on Jan. 7, 2021, the Justice Department accuses Boeing of attempting to defraud the Federal Aviation Administration’s Aircraft Evaluation Group (AEG) while attempting to get the 737 MAX certified for commercial use.

“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,” the Justice Department statement reads. “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.”

The timeline suggests a cover-up of the MCAS information took place around November 2016. Two 737 MAX Flight Technical Pilots found new information about the MCAS system, but elected not to share it with the FAA. In turn, the AEG “deleted all information about MCAS from the final version of the 737 MAX Flight Standardization Board report published in July 2017.” This lack of information directly contributed to the crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302.

Under the agreement with the Justice Department, Boeing will pay a $243.6 million criminal monetary penalty, along with compensation payments totaling $1.77 billion to 737 MAX airline customers. The Chicago-based aerospace company will also establish a $500 million beneficiaries fund to compensate heirs, relatives and legal beneficiaries of the victims.

“Today’s deferred prosecution agreement holds Boeing and its employees accountable for their lack of candor with the FAA regarding MCAS,” special agent in charge Emmerson Buie Jr. of the FBI’s Chicago field office said in a statement. “The substantial penalties and compensation Boeing will pay, demonstrate the consequences of failing to be fully transparent with government regulators.”

In addition to the monetary payments, Boeing will be required to undertake additional remedial measures. The company’s board of directors will form a permanent aerospace safety committee to oversee interactions with the FAA, requiring all Boeing engineers to report to the company’s chief engineer instead of business units, and requiring a structural change to the flight technical team.

Efforts to Ground 737 MAX Continue Through Courts

Although Boeing will soon close this chapter in the 737 MAX issues, other litigation over the trouble airframe continue. FlyersRights.org is accusing Boeing of withholding key information from the public about the aircraft, and is asking a judge to force information to be released.

 

View Comments (2)

2 Comments

  1. AsiaTravel2019

    January 8, 2021 at 6:18 am

    The Max is now the safest plane in the sky and I am booking my ticket.

    However, Boeing was wrong and deserves to get their hand slapped.

  2. Dublin_rfk

    January 9, 2021 at 8:03 am

    Better to settle now and pay the extortion demands than later when the big government zealots take over.

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