Boeing has reached an agreement with the Department of Justice to resolve a criminal charge related to a conspiracy to defraud the Federal Aviation Administration’s Aircraft Evaluation Group (FAA AEG) during the evaluation of Boeing’s 737 MAX airplane. The U.S.-based multinational corporation, known for designing, manufacturing, and selling commercial airplanes, entered into a deferred prosecution agreement (DPA) in the Northern District of Texas. The criminal information charges Boeing with one count of conspiracy to defraud the United States. Under the DPA, Boeing will pay over $2.5 billion, including a $243.6 million criminal monetary penalty, $1.77 billion in compensation to 737 MAX airline customers, and a $500 million crash-victim beneficiaries fund for the heirs, relatives, and legal beneficiaries of the 346 passengers who died in the crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302.
Acting Assistant Attorney General David P. Burns of the Justice Department’s Criminal Division stated, “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.” He emphasized that Boeing’s employees chose profit over transparency by concealing crucial information from the FAA about the 737 MAX’s operation and attempting to cover up their deception. This resolution holds Boeing accountable for its employees’ criminal misconduct, addresses the financial impact on Boeing’s airline customers, and aims to provide some measure of compensation to the crash victims’ families and beneficiaries.
U.S. Attorney Erin Nealy Cox for the Northern District of Texas added, “The misleading statements, half-truths, and omissions communicated by Boeing employees to the FAA impeded the government’s ability to ensure the safety of the flying public.” She stressed that the case sends a clear message that the Department of Justice will hold manufacturers accountable for defrauding regulators, especially in high-stakes industries.
Special Agent in Charge Emmerson Buie Jr. of the FBI’s Chicago Field Office remarked, “Today’s deferred prosecution agreement holds Boeing and its employees accountable for their lack of candor with the FAA regarding MCAS.” He noted that the substantial penalties and compensation Boeing will pay demonstrate the consequences of failing to be fully transparent with government regulators.
Special Agent in Charge Andrea M. Kropf of the Department of Transportation Office of Inspector General (DOT-OIG) Midwestern Region expressed continued mourning alongside the families, loved ones, and friends of the 346 individuals who perished in the crashes. She highlighted that the deferred prosecution agreement serves as a stark reminder of the paramount importance of safety in the commercial aviation industry and that integrity and transparency should never be sacrificed for efficiency or profit.
Boeing admitted in court documents that two of its 737 MAX Flight Technical Pilots deceived the FAA AEG about an important aircraft part called the Maneuvering Characteristics Augmentation System (MCAS), which impacted the flight control system of the 737 MAX. Due to their deception, a key document published by the FAA AEG lacked information about MCAS, leading to airplane manuals and pilot-training materials for U.S.-based airlines also lacking this crucial information.
Boeing began developing and marketing the 737 MAX around June 2011. Before any U.S.-based airline could operate the new 737 MAX, the FAA had to evaluate and approve the airplane for commercial use. The FAA AEG was responsible for determining the minimum level of pilot training required for a pilot to fly the 737 MAX, based on the differences between the 737 MAX and the prior version of Boeing’s 737 airplane, the 737 Next Generation (NG). The FAA AEG published the 737 MAX Flight Standardization Board Report (FSB Report), which contained relevant information about certain aircraft parts and systems that Boeing was required to incorporate into airplane manuals and pilot-training materials for all U.S.-based airlines.
Within Boeing, the 737 MAX Flight Technical Team was responsible for identifying and providing the FAA AEG with all relevant information for the publication of the 737 MAX FSB Report. Differences between the flight controls of the 737 NG and the 737 MAX were especially important to the FAA AEG for its publication of the 737 MAX FSB Report and the FAA AEG’s differences-training determination.
In November 2016, two of Boeing’s 737 MAX Flight Technical Pilots discovered information about an important change to MCAS. Instead of sharing this information with the FAA AEG, they concealed it, leading the FAA AEG to delete all information about MCAS from the final version of the 737 MAX FSB Report published in July 2017. Consequently, airplane manuals and pilot training materials for U.S.-based airlines lacked information about MCAS, and pilots flying the 737 MAX were not provided any information about MCAS in their manuals and training materials.
On October 29, 2018, Lion Air Flight 610, a Boeing 737 MAX, crashed shortly after takeoff into the Java Sea near Indonesia, killing all 189 passengers and crew on board. Following the crash, the FAA AEG learned that MCAS activated during the flight and may have played a role in the crash. The FAA AEG also learned for the first time about the change to MCAS, including the information that Boeing had concealed. Despite ongoing investigations, the two 737 MAX Flight Technical Pilots continued to mislead others, including at Boeing and the FAA, about their prior knowledge of the change to MCAS.
On March 10, 2019, Ethiopian Airlines Flight 302, a Boeing 737 MAX, crashed shortly after takeoff near Ejere, Ethiopia, killing all 157 passengers and crew on board. Following this crash, the FAA AEG learned that MCAS activated during the flight and may have played a role in the crash. On March 13, 2019, the 737 MAX was officially grounded in the U.S., indefinitely halting further flights of this airplane by any U.S.-based airline.
As part of the DPA, Boeing has agreed to continue cooperating with the Fraud Section in any ongoing or future investigations and prosecutions. Boeing is required to report any evidence or allegation of a violation of U.S. fraud laws committed by its employees or agents to any domestic or foreign government agency, regulator, or any of Boeing’s airline customers. Additionally, Boeing has agreed to strengthen its compliance program and to enhanced compliance program reporting requirements, which include meeting with the Fraud Section at least quarterly and submitting yearly reports regarding the status of its remediation efforts, the results of its compliance program testing, and proposals to ensure the program is effective at deterring and detecting violations of U.S. fraud laws.
The department reached this resolution with Boeing based on several factors, including the nature and seriousness of the offense conduct, Boeing’s failure to timely and voluntarily self-disclose the offense conduct, and Boeing’s prior history, including a 2015 civil FAA settlement agreement related to safety and quality issues. While Boeing’s cooperation ultimately included identifying significant documents and witnesses and organizing voluminous evidence, such cooperation was delayed and only began after the first six months of the Fraud Section’s investigation.
The department also considered Boeing’s remedial measures, including creating a permanent aerospace safety committee, establishing a Product and Services Safety organization, reorganizing its engineering function, and making structural changes to its Flight Technical Team. Boeing also made significant changes to its top leadership since the offense occurred.
The department determined that an independent compliance monitor was unnecessary based on several factors, including the limited scope of the misconduct, the state of Boeing’s remedial improvements, and Boeing’s agreement to enhanced compliance program reporting requirements.
The Chicago field offices of the FBI and the DOT-OIG investigated the case, with assistance from other FBI and DOT-OIG field offices. Trial Attorneys Cory E. Jacobs and Scott Armstrong, Assistant Chief Michael T. O’Neill of the Fraud Section, and Assistant U.S. Attorney Chad E. Meacham of the Northern District of Texas are prosecuting the case.
Source: Department of Justice, AP News
