Boeing is paying greater than $ 2.5 billion to settle prison conspiracy prices for 737 Max
An employee works near a Boeing 737 Max aircraft at the Boeing 737 Max manufacturing facility in Renton, Washington, the United States, on December 16, 2019.
Lindsey Wasson | Reuters
Boeing agreed to pay more than $ 2.5 billion to settle criminal complaints with the U.S. Department of Justice that the company accused of hiding information about its 737 Max plane, which was involved in two crashes the federal prosecutor announced on Thursday that 346 people were killed.
Prosecutors said Boeing had “knowingly and intentionally” conspired to defraud the United States by undermining the Federal Aviation Administration’s ability to assess the aircraft’s safety.
Boeing admitted that two 737 aeronautical pilots “fooled” the FAA about the capabilities of a flight control system on the aircraft, software that was later implicated in the two crashes, the Justice Department said. The deferred law enforcement arrangement concludes the DOJ’s roughly two-year investigation and drops all charges after three years if there are no additional violations.
The $ 2.51 billion fine consists of a $ 243.6 million fine, a $ 500 million fund for family members of accident victims and $ 1.77 billion for Airline customers. The company said it had incurred a large portion of these costs in previous quarters and expects fourth quarter 2020 earnings to be charged at $ 743.6 million to cover the remainder.
“The tragic crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 exposed fraudulent and misleading behavior by employees of one of the world’s leading manufacturers of commercial aircraft,” wrote Assistant Attorney General David P. Burns of the Department of Justice’s Criminal Division in a release. “Boeing employees chose the win over openness path by hiding essential information about the operation of their 737 Max aircraft from the FAA and trying to cover up their deception.”
The crashes plunged Boeing into its worst crisis ever, sparked the creation of its best-selling aircraft worldwide, conducted numerous investigations and damaged the reputation of one of the largest aircraft manufacturers in the world.
Last month, the FAA approved software and other security changes Boeing had made to the planes and gave airlines permission to fly them again.
The company admitted the wrongdoing and waived a trial under its contract with the DOJ to settle the charges. The agreement also did not include top executives, as the misconduct was neither pervasive nor senior executives involved.
“This is an essential solution to a very serious matter, and I firmly believe that it is the right thing for us to enter into this resolution – a move that properly recognizes that we have failed to live up to our values and expectations”, said CEO Dave Calhoun in a note to Boeing employees.
Boeing shares fell approximately 1% after close of trading.
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