U.S. regulators say Boeing and its former CEO 'put profits over people,' misleading the public about the safety of the 737 MAX aircraft Photo: AFP/File
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U.S. fines Boeing $200 mil for misleading investors on 737 MAX safety

9 Comments
By John BIERS

U.S. securities officials fined Boeing $200 million over the aviation giant's misleading assurances about the safety of the 737 MAX airplane following two deadly crashes, regulators announced Thursday.

Boeing agreed to the penalty to settle charges it "negligently violated the antifraud provisions" of U.S. securities laws, the Securities and Exchange Commission said in a statement, saying the company and its leader "put profits over people."

Boeing's former chief executive, Dennis Muilenburg, also agreed to pay $1 million to settle the same charges in the civil case.

The settlement marks the latest hit to Boeing over the MAX following the Lion Air Crash in Indonesia in October 2018 and the Ethiopian Airlines crash in Ethiopia in March 2019, which together claimed nearly 350 lives.

One month after the first crash, a Boeing press release approved by Muilenburg "selectively highlighted certain facts," implying pilot error and poor aircraft maintenance contributed to the crash.

The press release also attested to the aircraft's safety, not disclosing that Boeing knew a key flight handling system, the Maneuvering Characteristics Augmentation System (MCAS), posed safety issues and was being redesigned.

After the second crash, Boeing and Muilenburg assured the public that there was "no surprise or gap" in the federal certification of the MAX despite being aware of contrary information, the SEC said.

"In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets," said SEC Chair Gary Gensler in a press release.

"The Boeing Company and its former CEO, Dennis Muilenburg, failed in this most basic obligation. They misled investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns."

The SEC said both Boeing and Muilenburg, in agreeing to pay the penalties, did not admit or deny the agency's findings.

Boeing said the agreement "fully resolves" the SEC's inquiry and is part of the company's "broader effort to responsibly resolve outstanding legal matters related to the 737 MAX accidents in a manner that serves the best interests of our shareholders, employees, and other stakeholders," a company spokesman said.

"We will never forget those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made broad and deep changes across our company in response to those accidents."

U.S. air safety authorities cleared Boeing's 737 MAX to resume service in November 2020 following a 20-month grounding after the crashes.

A principal cause of the two crashes was identified as the MCAS, which was supposed to keep the plane from stalling as it ascended but instead forced the nose of the plane downward. The Federal Aviation Administration required Boeing to upgrade this system to address the flaw.

In January 2021, Boeing agreed to pay $2.5 billion to settle a US criminal charge over claims the company defrauded regulators overseeing the 737 MAX.

© 2022 AFP

©2022 GPlusMedia Inc.

9 Comments
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Boeing got off easy. The design process was just horrible. How do you not have an overall risk management officer to coordinate how design changes would affect other systems?

With the max, there was nothing. The left hand didn't know the right hand was doing.

Forget the fact that the pilots didn't know about MCAS (Alternate acronym: May Crash Aircraft Spontaneously) - and that's bad enough - there were design engineers for other systems that MCAS would impact who didn't know about it.

Boeing stopped being a world-class engineering company and became a financial institution in pursuit of "sharholder value" when it moved its headquarters and put the accountants in charge. I call it the GM disease.

Billions in lost sales, compensation to families running into the hundreds of millions of dollars. A decades in the making reputation in tatters.

That decision seems "dubious" in retrospect.

Long-term shareholder value is a function of designing and building superior products that don't harm or kill their users.

Reputational risk management is a consistently undervalued aspect of corporate governance. its not just selfish image defense. There is real value to be had in asking "what if we blow this and a bunch of people die as a result of a bad decision?"

Value to the shareholders in value they don't lose (That's why its under-valued, but i digress), AND brand equity in the trust it engenders in the consumer mindset. That's something that delivers real value to the share holder.

Boeing really screwed the pooch on this one and a lot of innocent people died as a result. And it doesn't really matter much in the end, but shareholder value took a hit as well.

6 ( +6 / -0 )

Welcome to America. Kill as many as you like and we'll frown at you, but MISLEAD THE INVESTORS and we'll skin you alive...

4 ( +5 / -1 )

Boeing's former chief executive, Dennis Muilenburg, also agreed to pay $1 million to settle the same charges in the civil case.

Capitalism approved oligarchical murder for a nominal fee.

Boeing's ousted CEO departs with $62 million, even without severance pay

https://www.reuters.com/article/us-boeing-737-max-ceo-severance-idUSKBN1Z92DQ

4 ( +4 / -0 )

$200 million for 350 lives, sounds they got off easy.

Also don't forget they tried to blame 'poorly trained 3rd world country pilots' as the reason for the crashes initially.

America holds companies and executives accountable. Even the former CEO had to pay up big in a civil suit.

The CEO paid 1 million, not big at all, unless the lives of some people have lesser value than others!!!

Boeing's former chief executive, Dennis Muilenburg, also agreed to pay $1 million to settle the same charges in the civil case.

1 ( +1 / -0 )

As always, Investors come before the Families of those who were killed.

1 ( +1 / -0 )

William BjornsonToday 01:05 pm JST

Welcome to America. Kill as many as you like and we'll frown at you, but MISLEAD THE INVESTORS and we'll skin you alive...

America holds companies and executives accountable. Even the former CEO had to pay up big in a civil suit.

0 ( +2 / -2 )

America holds companies and executives accountable. Even the former CEO had to pay up big in a civil suit.

Charges were just settled, as dragon has said, for a nominal fee.

People died and the charges to hold them accountable vanished just like that

0 ( +1 / -1 )

And while we are at it, shame on the FAA.

It used to be the worl-wide gold standard on aviation safety. So much so that once it certified an aircraft, other organizations just accepted them for use in most cases.

And then came deregulation, budget and inspection cuts, and just taking Boeing’s word for it. The agency became a rubber-stamp.

THAT must change.

0 ( +0 / -0 )

What is the meaning of settlement? If they got off with nothing then I can understand the out cry of being let off easy. We just have to accept the agreement even though we know the amount of money paid out will never be worth or equal the total of lives lost

0 ( +0 / -0 )

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