The stock market authorities USA imposed on boeing a fine of $200 million over misleading claims by aviation giant about plane safety 737 MAX after two fatal accidents, regulators announced Thursday.
Boeing accepted the fine to settle allegations that it “negligently violated the anti-fraud provisions” of US securities laws, the Securities and Exchange Commission (SEC) said in a statement, saying the company and its leader “put the profits over people.”
Former Boeing CEO Dennis Muilenburg also agreed to pay $1 million to settle the same charges in a civil case.
The deal is the latest blow to Boeing over the MAX after the Lion Air crash in Indonesia in October 2018 and the of Ethiopian Airlines in Ethiopia in March 2019which together claimed almost 350 lives.
A month after the first crash, a Muilenburg-approved Boeing press release “selectively highlighted certain facts,” implying that pilot error and poor aircraft maintenance contributed to the crash.
The press release also attested to the aircraft’s safety, without disclosing that Boeing was aware that a key flight management system, the Maneuvering Characteristics Augmentation System (MCAS), posed safety concerns and was undergoing redesign.
Following the second accident, Boeing and Muilenburg assured the public that there was “no surprise or loophole” in the MAX’s federal certification despite knowing information to the contrary, according to the SEC.
“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair and truthful information to the markets,” SEC Chairman Gary Gensler said in a press release.
“The Boeing Company and its former CEO, Dennis Muilenburg, failed to meet this basic obligation. They misled investors by offering guarantees about the safety of the 737 MAX, despite knowing about the serious safety issues.”
The SEC said that both Boeing and Muilenburg, in agreeing to pay the penalties, neither admitted nor denied the agency’s conclusions.
Boeing said the settlement “fully resolves” the SEC investigation and is part of the company’s “wider effort to responsibly resolve outstanding legal issues related to the 737 MAX accidents in a manner that serves the best interests of our customers.” shareholders, employees and other interested parties,” a company spokesperson said.
“We will never forget those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made sweeping and profound changes across our company in response to those accidents.”
Robert Clifford, a lawyer representing the families of the victims aboard the Ethiopian Airlines flight, called for “Muilenburg or anyone else who has persuaded the government to keep the Boeing MAX 737 flying” be “thoroughly investigated by a conduct that could be criminal in nature.”
US aviation safety authorities cleared Boeing’s 737 MAXs to resume service in November 2020, following a 20-month grounding following the accidents.
One of the main causes of the two accidents was identified as MCAS, which was supposed to prevent the plane from stalling when climbing, but instead forced the plane’s nose down. The Federal Aviation Administration required Boeing to update this system to fix the bug.
In January 2021, Boeing agreed to pay $2.5 billion to settle a US criminal charge for defrauding regulators overseeing the 737 MAX.