Boeing has been charged with defrauding regulators at the FAA during the development of the company's 737 MAX, the jet that killed hundreds of people in two overseas crashes, and will pay $2.5 billion to resolve the charges, the Justice Department announced Thursday.
Both Boeing and the FAA have been implicated in congressional and other federal probes into the crashes in Ethiopia and Indonesia, which killed 346 people. But Thursday's settlement pins the blame, in part, on employees at the airplane manufacturer that duped the regulatory agency, with the result that pilots on the planes were kept in the dark about a key system that ultimately failed.
"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,” said U.S. Attorney Erin Nealy Cox in a statement.
The details: DOJ said Boeing admitted in court documents that two of its employees, 737 MAX technical pilots, deceived an FAA group tasked with evaluating the aircraft's designs about a flight control feature that has been implicated in the two crashes, known as MCAS.
"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," the DOJ said.
Pilots in the two crashes were unable to adequately respond when the system acted in a way that it was not supposed to, due to data from a faulty sensor. The MCAS software, and relevant pilot training, was updated by Boeing and the FAA before the plane returned to service in recent weeks.
The penalty: The $2.5 billion settlement consists of a criminal monetary penalty of $243.6 million, $1.77 billion in compensation to Boeing's airline customers and a $500 million fund to compensate the heirs and relatives of the 346 victims of the two crashes.
It's part of a deferred-prosecution agreement by which the charge will be dismissed after three years if Boeing meets several conditions, including agreeing to continue cooperating with the Justice Department in "ongoing or future investigations and prosecutions" and strengthen its compliance program.
Boeing's response: "I firmly believe that entering into this resolution is the right thing for us to do — a step that appropriately acknowledges how we fell short of our values and expectations," said CEO David Calhoun in a statement.
The resolution is "a serious reminder to all of us how critical our obligation of transparency to regulators is, and the consequences that our company can face if any one of us falls short of those expectations," Calhoun continued.