Boeing and the US Department of Justice agreed to small financial penalty for the company rather than pursuing criminal charges over the behavior of employees in the certification of the 737 MAX. The cost to the aircraft manufacturer for lying to and misleading regulators will be $243.6 million. In exchange, all prosecution will be deferred. The charges will be formally dismissed in three years, assuming Boeing does not get into more trouble along the way.
The agreement reflects that these former employees, in addition to showing deep disrespect for our regulators and customers, also intentionally failed to inform FAA training officials about changes in in MCAS’s design.
– Boeing CEO David Calhoun
In addition to the financial penalty, Boeing must also add $500 million to the victims’ fund, payable to the families of the 346 passengers that died in the two crashes. This is in addition to funds previously paid, some of which have been stolen.
Boeing is also being credited with $1.7 billion already agreed to be paid out to various airlines. While the total readout is $2.5 billion more than 70% was previously negotiated as part of commercial settlements with the airlines. Only 10% of the announced numbers really are a criminal penalty to be paid.
As Boeing admitted in court documents, Boeing—through 2 of its 737 MAX Flight Technical Pilots—deceived the FAA AEG about an important aircraft part called the Maneuvering Characteristics Augmentation System (MCAS) that impacted the flight control system of the Boeing 737 MAX. Because of their deception, a key document published by the FAA AEG lacked information about MCAS, and in turn, airplane manuals and pilot-training materials for U.S.-based airlines lacked information about MCAS.
-Boeing/DOJ settlement
Representative Peter DeFazio, Chair of the House Committee on Transportation and Infrastructure, calls the deal “a slap on the wrist and an insult to the 346 victims who dies as a result of corporate greed.”
This attempt to change corporate behavior is pathetic and will do little to deter criminal behavior going forward.
– Representative Peter DeFazio, Chair of the House Committee on Transportation and Infrastructure
As a result of these payouts Mark Forkner, the chief test pilot who “knowingly committed and caused the commission” of overt acts to “defraud the United States” will not face federal criminal charges. His freedom was purchased by Boeing’s shareholders.
Similarly, Senior Management and the Boeing Board of Directors escaped any further scrutiny. Dennis Muilenburg gets to keep his $60+ million golden parachute. So does Jim McNerney. They’ve shown that there are no direct consequences for building and managing a business in this manner.
Even had the penalty really been $2.5 billion it is hard to see that as sufficient. In comparison, Airbus faced a $4+ billion penalty tied to a bribery scandal where no one died. And that number wasn’t diluted by 90% based on penalties previously paid.
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