Boeing to pay $2.5 billion in settlement over alleged fraud

Aircraft maker Boeing has agreed to pays $2.5 billion in settlement over alleged fraud on its 737 Max. Officials claimed the manufacturer concealed vital safety information from inspectors.

The US Justice Department said Boeing chose profit over sincerity. This oversight caused two deadly crashes which left many passengers killed and injured. About $500 million of the settlement fee will go to the families of the 346 passengers who were killed in the plane crashes between Indonesia and Ethiopia. The majority of the settlement fee, $1.77 billion will go to airline customers who were affected by the grounding of the planes after the two crashes. Another $243 million will be paid by Boeing as a penalty fee.

“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 David Burns, acting assistant attorney. “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.”

Boeing has accepted that it “fell short” of regulatory expectations and is willing to make amends for it. The firm’s chief executive, David Calhoun in a statement said “entering into this resolution is the right thing” for the company to do. Adding that, it was a strong reminder to them that they had a responsibility of transparency to regulators.

According to the Justice Department, Boeing officials didn’t present information about the changes made to the aircraft’s automated flight control system, known as Maneuvering Characteristics Augmentation System (MCAS), which could point the aircraft’s nose down if sensors picked that there might be danger of an aerodynamic stall or that the plane might fall from the sky. The department of justice believed that was the cause of the 2018 and 2019 crashes in Ethiopia and Indonesia, respectively. This meant that the pilot training manuals didn’t carry complete information about the system. Because MCAS was not part of older 737 models many pilots did not know about it. They were only included in the new Max model because of its larger engines

For six months, the aircraft maker refused to cooperate with the Justice Department. The charge against Boeing is one count of conspiracy to defraud the US and its customers. The charge will be dismissed after three years if Boeing continues to cooperate with the deal.

The settlement will also remove every criminal charge uncertainty tied to Boeing, which has struggled over the years to put the Max crashes. The company still faces lawsuits by some families of passengers who died in the two crashes. It has also lost more than 1,000 orders for the 737 Max, with its reputation left damaged.

Boeing designed and manufactured the 737 Max in response to a demand for a new, and more-fuel efficient alternative to the European Airbus. Work on the Max began in 2011 and by mid-2017 the aircraft was already functional.