Boeing Co is to pay more than US$2.5 billion in fines and compensation after reaching a settlement with the US Department of Justice over two plane crashes that killed a total of 346 people and led to the grounding of its 737 MAX jetliner.
The settlement, which allows Boeing to avoid prosecution, includes a fine of US$243.6 million, compensation to airlines of US$1.77 billion and a US$500 million crash-victim fund over fraud conspiracy charges related to the plane’s flawed design.
Boeing said that it would take a US$743.6 million charge against last year’s fourth-quarter earnings to reflect the deferred prosecution agreement, a form of corporate plea bargain.
Photo: AP
Boeing had put aside reserves of US$1.77 billion in prior quarters to provide for compensation to airlines.
The justice department deal, announced after the market close on Thursday, caps a 21-month investigation into the design and development of the 737 MAX following the two crashes, in Indonesia and Ethiopia in 2018 and 2019, respectively.
The crashes “exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers,” US Acting Assistant Attorney General David Burns said in a statement accompanying the agreement.
“Boeing’s employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 MAX airplane and engaging in an effort to cover up their deception,” Burns said, referring to the US Federal Aviation Administration.
The crashes triggered a hailstorm of investigations, frayed US leadership in global aviation and have cost Boeing about US$20 billion.
Plaintiffs’ lawyers representing families of victims of the Ethiopian Airlines crash said that the settlement strengthens civil litigation against Boeing in Chicago, where the company is headquartered.
Boeing has already settled most lawsuits related to the Lion Air disaster in Indonesia.
Because of the crashes, the US Congress in December passed legislation reforming how the FAA certifies new airplanes.
US Representative Peter DeFazio, chairman of the US House of Representatives Transportation and Infrastructure Committee, who oversaw a lengthy probe into the crashes, said that the “settlement amounts to a slap on the wrist and is an insult to the 346 victims who died as a result of corporate greed.”
“Not only is the dollar amount of the settlement a mere fraction of Boeing’s annual revenue, the settlement sidesteps any real accountability in terms of criminal charges,” he said.
The 737 MAX was grounded in March 2019, and the grounding was not lifted until November last year, after Boeing made significant safety upgrades and improvements in pilot training.
Boeing, the largest US airplane manufacturer, was charged with one count of conspiracy to defraud the US. It faces a three-year deferred prosecution agreement, with the charge dismissed if it complies.
Such agreements are corporate plea bargains that typically allow a company to avoid criminal charges that could disrupt activities such as access to public contracts, in return for a fine and admission of wrongdoing, as well as internal reforms.
Boeing admitted in court documents that two of its 737 MAX technical pilots deceived the FAA about the aircraft’s Maneuvering Characteristics Augmentation System, which was tied to both fatal crashes.
The documents also said that Boeing belatedly cooperated with the probe, but only after it initially “frustrated” the investigation.
The deferred prosecution agreement said that one employee in 2014 wrote another that if the FAA required higher-level training it would “cost Boeing tens of millions of dollars!”
The US$243 million fine, which the justice department said was at the “low end” of the sentencing guidelines, represents the amount of money Boeing saved by not implementing full-flight simulator training for the 737 MAX, the agreement said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday obtained the government’s approval to inject an additional US$10.26 billion to finance the construction of its second fab in Kumamoto, Japan, and a second fab in Arizona, using advanced process technologies. The Department of Investment Review approved TSMC’s investment applications on the basis that Taiwan remains a major technology and manufacturing hub for the chipmaker, which makes its most advanced chips at home, the company operates its research-and-development center here and the majority of its capacity remains in Taiwan. The latest capital injections — US$5.26 billion for its Japanese venture Japan Advanced Semiconductor Manufacturing
TOP PERFORMER: The computer and optical products sector’s annual increase in output of 31.84 percent was the largest among Taiwan’s six major industries The industrial production index last month increased 16.06 percent year-on-year, rising for a third consecutive month as local manufacturing continued to boom, the Ministry of Economic Affairs said yesterday. Industrial production measures the change in the value of output produced by the local manufacturing, mining and utilities sectors. Last month’s growth, the largest annual expansion in 34 months, came as increases in manufacturing output, water supply, and electricity and gas production more than offset a retreat in mining output, the ministry said in a report. Manufacturing output, which accounted for 95.39 percent of the industrial production index, also rose for a third consecutive
DIVERSIFYING: Following customers’ demand to improve supply chain resilience, ASE is looking for sites in the US, Japan and Mexico, a company executive said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it plans to launch a new high-end chip testing fab in the US next month to better serve its key customers based in North America, particularly California-based artificial intelligence (AI) customers. The new US testing facility would be operated by the firm’s subsidiary ISE Labs Inc, it said. ASE’s major customers, and high-ranking US officials and representatives from American Institute in Taiwan are to attend the fab’s opening ceremony on July 12, it said. ISE Labs last year acquired a 5,942m2 facility in San
Local companies believe that nearly a third of all job opportunities will vanish in 10 years due to the rise of artificial intelligence (AI), according to a survey released by online job bank yes123 on Tuesday. In the survey of 1,016 companies on the labor market’s third quarter outlook, the job bank focused in part on AI’s impact on workers and asked companies what percentage of jobs they felt would be lost to AI’s round-the-clock productivity and high-speed computing prowess. Respondents felt on average that 29.2 percent of job opportunities would be lost to AI over the next 10 years, but there