Boeing pleads guilty to fraud over horrific 737 Max crashes | Economy

According to a plea filed in a Texas court this Sunday, Boeing has agreed to plead guilty to one count of criminal fraud conspiracy and pay a fine of $243.6 million to settle the US Justice Department’s investigation into the two fatal 737 Max crashes. The plea deal requires the judge’s approval, but relatives of the victims of those crashes consider it too lenient. In any case, if confirmed, it would mark the aircraft manufacturer as a culpable culprit in connection with the crashes in Indonesia and Ethiopia during 2018 and 2019, in which Lion Air flight 610 and Ethiopian Airlines flight 302 killed 346 people.

Federal prosecutors last week gave the US aeronautics giant the choice of admitting its fault and paying a fine as punishment or facing trial for the crime of conspiracy to defraud the United States. Prosecutors accused Boeing of misleading regulatory bodies that approved the plane and pilot training requirements for it.

As part of the settlement, Boeing agrees to pay a fine of $243.6 million, which is the maximum fine required by law, which the company has already paid. The plane maker will also agree to invest “at least $455 million in its compliance and safety programs.” The company will also be placed under surveillance and subject to an independent compliance monitor for three years. In addition, according to the settlement, Boeing’s board of directors will have to meet with the families of those killed in the Max crashes, pending court approval. The Justice Department said it expects to submit the written settlement to the court by July 19.

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The settlement has been criticized by victims’ families, who want Boeing to face trial and suffer harsh financial consequences. “This settlement does not recognize that 346 people died because of a Boeing conspiracy. Thanks to the legal ingenuity of Boeing and the Justice Department, the deadly consequences of Boeing’s crime are being concealed,” Paul Cassell, a lawyer for some of the families, said, according to the AP. Several victims’ lawyers will ask the judge to reject the settlement.

Boeing has already reached a first settlement in 2021 for which it agreed to pay a total of more than $2.5 billion. That figure includes a first criminal monetary penalty of $243.6 million, as well as compensation payments of $1.77 billion to customers, and the establishment of a $500 million fund to compensate the heirs, relatives and legal beneficiaries of the 346 passengers killed in the crashes. The Justice Department considered that the company violated other commitments made in that settlement and therefore initiated a new criminal case.

Boeing also agreed to pay a $200 million fine to the Securities and Exchange Commission (SEC). The company and its former CEO Dennis A. Muilenburg publicly stated that the 737 MAX was “as safe as any aircraft flying in the sky” even though they already knew something was wrong. The SEC concluded that they defrauded investors and fined the company $200 million and the manager $1 million, as announced by the supervisory body in September 2022. That money did not go to the victims but to the investors.

A month after Lion Air Flight 610, a 737 Max aircraft, crashed 13 minutes after takeoff in Indonesia in October 2018, killing 189 passengers and crew members, Boeing issued a statement saying pilot error and poor maintenance of the plane contributed to the crash. The company assured the safety of the plane, without disclosing that an internal safety review had determined that MCAS, a flight control feature that acts as the plane’s automatic stabilizer, posed a safety problem and that Boeing had begun redesigning that system to fix it.

The 737 MAX continued to fly. On March 10, 2019, Ethiopian Airlines Flight 302, operated by another plane of the same model, also crashed shortly after takeoff, killing 157 people. Data immediately revealed similarities between the two accidents. The MCAS malfunction prevented pilots from taking control of the plane. International aviation regulators decided to ground the entire 737 MAX fleet. It took 20 months for the 737 MAX to fly again after the license was withdrawn.

The Boeing crisis had resurfaced this year since the accident last January, in which an Alaska Airlines plane lost a panel in mid-flight that covered the hole meant for the emergency door in another configuration of the model, the 737 Max. There were only minor injuries on that occasion. In addition, a scathing report commissioned by US regulators and published in February questioned Boeing’s “safety culture”, a new blow to the US commercial aircraft manufacturer. The string of bad news continued with new incidents, such as the sudden shaking of a LATAM Boeing 787-9 Dreamliner aircraft when a flight attendant apparently pressed a button that caused the pilot’s seat to fold on a flight from Sydney to Santiago de Chile.

Chairman and CEO Dave Calhoun, 67, announced in March his decision to step down as CEO at the end of 2024, though he will continue to lead Boeing this year to complete the work being done to stabilize the company. The resignation announcement was accompanied by other changes at the top, such as the replacement of the head of the commercial aviation division.

At a recent Senate hearing, Calhoun defended the company’s safety record after apologizing to victims’ families sitting in the rows behind him. Hours before the hearing, the Senate investigations subcommittee released a 204-page report with new allegations from a whistleblower who said he was concerned about the possibility of defective parts ending up in 737s. The whistleblower is the latest in a series of current and former Boeing employees who have raised safety concerns at the company and reported retaliation for doing so.

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