Boeing will pay $200 million to settle civil charges for lying to investors about the safety of the Boeing 737 MAX. The company must pay the settlement to the U.S. Securities and Exchange Commission, including a penalty of $1 million to be paid by former CEO Dennis Muilenberg, after Boeing and Muilenberg claimed the 737 MAX was “as safe as any airplane that has ever flown the skies.”
The SEC says that Boeing and Muilenberg knew the 737 MAX’s flight systems posed a safety issue after a 2018 crash in Indonesia killed 189 people, according to Reuters, but the company misled investors and the public by assuring them the aircraft was safe to fly. The SEC says Boeing was already making changes to the faulty flight system that caused the crash when it made the claim.
Beoing and Muilenberg maintain no wrongdoing; they neither admit nor deny the allegations from the SEC. These latest charges follow prior settlements from Boeing to other U.S. agencies in the wake of two crashes of the 737 MAX, which killed 346 people in all, as the Associated Press reports.
Both crashes were linked to the aircraft’s Maneuvering Characteristics Augmentation System (MCAS,) which made the planes nosedive after getting incorrect readings from a faulty sensor. Once the MCAS system pushed the nose down, pilots could not regain control of the craft, leading a new Boeing 737 MAX to crash into the Java Sea in October 2018. And another dove into the ground near Addis Ababa in March 2019, per the AP.
The MCAS system was allegedly designed to “help prevent aerodynamic stalls” in the event of the plane’s nose pointing up too sharply, but neither craft was in danger of stalling. The corrections applied by the MCAS were unnecessary, but pilots were unable to override the system.
After the two crashes, the 737 MAX was grounded for almost two years so that Boeing could fix the flight control system. Boeing agreed to pay $2.5 billion to the U.S. Justice Department in January 2021 after a criminal investigation, but reached a settlement to avoid prosecution. As part of that settlement, Boeing had to pay a $243.6 million fine, $1.77 billion in compensation to airlines for grounding the 737 MAX, and $500 million for the crash victims and families.
The SEC says this latest settlement of $200 million — including Muilenberg’s $1 million penalty — will be used to create a fund for investors harmed by Boeing and its former CEO, who tried to rehabilitate the image of the company while fully aware of the dangers posed by MCAS and the 737 MAX.
But the former CEO’s fine seems small compared to his payment after departing the company: $62 million in compensation and benefits. Muilenberg did not, however, receive severance pay. For its part, Boeing claims to be making “broad and deep changes” to increase safety. And Boeing shares rose 0.4 percent as of last night.