Boeing to pay $2.5b to settle 737 Max fraud charge

Boeing agreed to pay $2.5b to settle criminal charges that it defrauded the US government by concealing information about the ill-fated 737 Max that was involved in two fatal crashes. The US planemaker entered into a deferred prosecution agreement in the Northern District of Texas on Thursday, the Justice Department said. “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,” Acting Assistant Attorney General David P. Burns of the Justice Department’s Criminal Division said in a statement. A design flaw in the Max helped lead to the two crashes within about five months in 2018 and 2019, killing 346 people. Several investigative reports have found that the company altered a flight control system, but didn’t fully explain the changes to FAA inspectors. “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,” Boeing CEO Dave Calhoun said in a message to employees. “This resolution is a serious reminder to all of us of 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.” Of the $2.5b, Boeing has already set aside $1.77b to reimburse airlines and other Max customers. The company said it expected to incur an additional $743.6m charge for Q4 2020, as it pays a $243.6m penalty and $500m in additional compensation for the families of the crash victims. Boeing is scheduled to report earnings for the quarter on Jan. 27.<br/>