Boeing pays $2,5bn to offset US criminal probe in 737 MAX crashes

Photo: EPA Peter DeFazio

The airplane maker Boeing said it would pay a sum topping $2,5 billion in a settlement deal with the US Justice department related to two crashes that lead to 346 fatalities and temporary grounded the 737 MAX fleet, Reuters reported.

The deal will allow Boeing to avoid responsibility claims and includes a fine of $243,6 million, compensation to airlines of $1,77bn and a $500m crash-victim fund over fraud conspiracy charges related to the plane’s design. Boeing said it would take a $743.6 million charge against its fourth-quarter 2020 earnings to reflect the deferred prosecution agreement, a form of corporate plea bargain. Boeing had put aside reserves of $1,77bn in prior quarters to provide for compensation to airlines.

The Justice Department deal ends a 21-month investigation into the design and development of the 737 MAX following the two crashes, in Indonesia and Ethiopia in 2018 and 2019. Because of the crashes, the US Congress in December passed legislation reforming how the FAA certifies new airplanes. Representative Peter DeFazio, chairman of the House Transportation and Infrastructure Committee, who oversaw a lengthy probe into the crashes, said the “settlement amounts to a slap on the wrist and is an insult to the 346 victims who died as a result of corporate greed.” He added, “Not only is the dollar amount of the settlement a mere fraction of Boeing’s annual revenue, the settlement sidesteps any real accountability in terms of criminal charges.”

The 737 MAX was grounded in March 2019, and the grounding was not lifted until November 2020, after Boeing made significant safety upgrades and improvements in pilot training. Boeing, the largest U.S. airplane manufacturer, was charged with one count of conspiracy to defraud the United States. It faces a three-year deferred prosecution agreement, with the charge dismissed if it complies.

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