Industry Boeing charged to pay over $2.6 Billion over 737 MAX fraud conspiracy

Aircraft manufacturer Boeing has entered into an agreement with the American Department of Justice to resolve a criminal charge related to a conspiracy to defraud the evaluation group of the FAA.

A deferred prosecution agreement has ben signed in connection with a criminal information filed today. Boeing will pay a total criminal monetary amount of over $2.5 billion, composed of a criminal monetary penalty of $243.6 million, $1.77 billion for Boeing´s 737 MAX customers and the establishment of a $500 million crash-victim beneficiaries fund.

This fund will compensate the heirs, relatives and legal beneficiaries of the 346 passengers who died in two Boeing 737 MAX crashes in Ethiopian and Indonesia.

Acting Assistant Attorney General David P. Burns of the Justice Department’s Criminal Division explained: “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 [...] 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. This resolution holds Boeing accountable for its employees’ criminal misconduct, addresses the financial impact to Boeing’s airline customers, and hopefully provides some measure of compensation to the crash-victims’ families and beneficiaries.”

The misleading statements, half-truths, and omissions communicated by Boeing employees to the FAA impeded the government’s ability to ensure the safety of the flying public,” added U.S. Attorney Erin Nealy Cox for the Northern District of Texas. “This case sends a clear message: The Department of Justice will hold manufacturers like Boeing accountable for defrauding regulators – especially in industries where the stakes are this high.”

Over the course of official investigations after the crashes, Boeing admitted that the Maneuvering Characteristics Augmentation System (MCAS) impacted the flight control system of the two aircraft and lead to their respective crash.

Recently, the Brazilian and U.S.-American aviation authorities had issued re-certifications for the MAX aircraft, after the worldwide fleet was grounded for over years. During the re-certification process, new problems were revealed, which had to be fixed by the manufacturer as well.

The first revenue flights with Boeing 737 MAX aircraft have been already performed by several airlines in the country, with American Airlines being one of the first airlines to re-introduce the aircraft.