Boeing Agrees to Pay $2.5 Billion to Settle 737 Max Fraud Charge

(Bloomberg) -- Boeing Co. agreed to pay $2.5 billion to settle criminal charges that it defrauded the U.S. government by concealing information about the ill-fated 737 Max that was involved in two fatal crashes.

Boeing entered into a deferred prosecution agreement in the North District of Texas on Thursday, the Justice Department said in a press release.

“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.

Boeing shares fell less than 1% to $211.26 after the close of regular trading in New York.

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 Federal Aviation Administration 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 Chief Executive Officer Dave Calhoun said in a statement. “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.”