Episode 187 — Review of DOJ’s Settlement with Boeing for the 737 MAX Safety Scandal
Boeing’s long and tragic scandal surrounding its 737 MAX safety concerns and FAA disclosure violations has come to an end. DOJ announced a settlement early this year, on January 7, 2021, which included a three-year deferred prosecution agreement (DPA) in exchange for total payments of $2.5 billion, consisting of: a $243.6 million criminal penalty, $1.77 billion in compensation to its airline customers, and $500 million to establish a crash victims’ beneficiary fund to compensate families of the 346 people killed in two crashes involving Boeing’s 737 Max. The criminal information charged Boeing with one count of conspiracy to defraud the United States.
Boeings 737 Max was involved in two crashes in 2018 and 2019 before being grounded. In October 2018, Lion Air flight 610 crashed in the Java Sea, killing 189 people, and in March 2019, Ethiopian Airlines flight 302 crashed shortly after takeoff, killing 157 people. The United States ordered the planes grounded shortly after the Ethiopian Airlines crash.
As part of the settlement, Boeing admitted that it withheld critical information about the 737 MAX jets’ Maneuvering Characteristics Augmentation System and the impact it had on the plane’s flight control system.
In this Episode, Michael Volkov reviews the DOJ settlement with Boeing for compliance insights, enforcement observations and overall fairness of the resolution.