Boeing to pay over $2.5bn to resolve 737 MAX conspiracy fraud

Aerospace and defence company Boeing and the US Department of Justice (DOJ) have signed an agreement to resolve the 737 MAX aircraft conspiracy fraud.

Boeing’s 737 MAX was involved in two fatal crashes in Indonesia and Ethiopia in October 2018 and March 2019 respectively. The crashes claimed the lives of 346 people.

According to information in the court documents, Boeing admitted that two of its 737 MAX technical pilots deceived the US Federal Aviation Administration (FAA) about the Maneuvering Characteristics Augmentation System (MCAS).

DOJ Criminal Division Acting Assistant Attorney General David Burns said: “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 candour 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.”

Under the settlement agreement, Boeing will pay a criminal monetary penalty of $243.6m and set up a $500m crash-victim beneficiaries fund to compensate the families or beneficiaries of those who lost their lives in the crashes.

The aircraft manufacturer also committed to provide $1.77bn to its airline customers to compensate their financial losses due to the grounding of the aircraft.

To resolve the issue, the department agreed to defer prosecution of Boeing if the company complies with the obligations set forth in a three-year deferred prosecution agreement. The charge will eventually be dismissed.

Boeing president and chief executive officer David Calhoun said: “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.

“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.”

Various airline organisations, including the EASA and UAE GCAA, have already considered returning aircraft to service.

Canadian carrier WestJet recently announced its intention to return 737 MAX aircraft to passenger service.