In response to accusations that it misled investors about two fatal 737 Max crashes, Boeing will pay $200 million. The US stock market watchdog claimed that the aviation giant and its former CEO Dennis Muilenburg misrepresented safety-related issues.
In an effort to improve its reputation, Boeing “put profits over people,” according to the Securities and Exchange Commission (SEC).
After two crashes that resulted in 346 fatalities, the 737 Max was grounded for 20 months. A $1 million fine will also be paid by Mr. Muilenburg as part of the agreement.
“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets,” SEC chairman Gary Gensler said in a statement.
He went on to say that Boeing and Muilenburg “failed in this most basic obligation.”
Additionally, according to the SEC’s statement, neither Boeing nor Mr. Muilenburg admitted nor refuted the regulator’s conclusions.
“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,” Boeing said in response to the SEC’s announcement.
“Fundamental changes that have strengthened our safety processes and oversight of safety issues, and have enhanced our culture of safety, quality, and transparency,” the company added.
According to the SEC, a fund will be established for investors who lost money between 2018 and 2019 as a result of the false information. The majority of this settlement is symbolic. Boeing has already lost tens of billions of dollars due to the 737 Max scandal; an additional $200 million won’t even be noticeable.
The SEC will have the opportunity to hold Boeing and its former CEO Dennis Muilenburg accountable for misleading investors by giving assurances about the plane’s safety while already being aware of a serious flaw.
It’s unlikely that this will harm Boeing in any significant way. The scandal had already done significant damage to the company’s reputation. The company is currently making great efforts to rebuild it and win back the trust of the public and investors.
The settlement’s financial ramifications won’t hurt Muilenberg personally, either. When he left the company, he received benefits and compensation totaling about $60 million. But the SEC’s decision to charge him personally sends a strong message.
Some people have complained that the former boss has not been properly held accountable for his role in the affair. But on this particular occasion, he has been specifically blamed.
All 189 people on board Lion Air Flight 610, which left Jakarta’s Soekarno-Hatta International Airport, perished when it crashed into the Java Sea on October 29, 2018, 13 minutes after taking off.
Six minutes after departing Ethiopia’s capital Addis Ababa, Ethiopian Airlines Flight 302, another Boeing 737 Max on its way to Kenya, crashed less than five months later. All 157 passengers on board died.
The “Maneuvering Characteristics Augmentation System” (MCAS) in the Boeing 737 Max was found to be responsible for the crashes.
According to the SEC, “Boeing and Muilenburg knew that MCAS posed a continuing airplane safety issue after the first crash, but assured the public that the 737 Max was safe to fly.
Boeing has spent more than $20 billion as a result of the crashes, including payments to the families of those who perished.
Following the incidents, the US Congress passed new legislation that changes how the Federal Aviation Administration (FAA), the nation’s aviation regulator, certifies new aircraft.
To resolve unresolved claims, a few trials are anticipated to begin early in the following year.
(Adapted from TheGuardian.com)