Photo: SounderBruce

Like most Washingtonians, I follow and admire the accomplishments of The Boeing Co. However, when allegations were made about a “culture of concealment” and a flawed regulatory system, which led to two crashes and the loss of 346 lives, I was shocked and stunned.

The Securities and Exchange Commission charged Boeing and its former CEO, Dennis A. Muilenburg, with making misleading statements following crashes of Boeing airplanes in 2018 and 2019. The crashes involved Boeing’s 737 MAX airplane and a flight control function called the Maneuvering Characteristics Augmentation System or MCAS.

After the first crash, Boeing and Muilenburg knew that MCAS posed an ongoing airplane Safety issue, but it assured the public that the 737 MAX airplane was “as safe as any airplane that has ever flown the skies,” according to SEC’s orders.

Later, following the second crash, Boeing and Muilenburg assured the public that there were no slips or gaps in the certification process on MCAS, despite being aware of contrary information.

“There are no words to describe the tragic loss of life brought about by these two airplane crashes,” said SEC Chair Gary Gensler. “In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets. 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.”

One month after Lion Air Flight 610, a 737 MAX airplane, crashed in Indonesia in October 2018, Boeing issued a press release, edited and approved by Muilenburg, that highlighted certain facts from a report of the Indonesian government suggesting that pilot error and poor aircraft maintenance contributed to the crash,” an SEC’s order states. The press release also gave assurances of the airplane’s safety, and didn’t disclose that an internal safety review had determined that MCAS posed an ongoing “airplane safety issue” and that Boeing had already begun redesigning MCAS to address that issue.

About six weeks after the March 2019 crash of Ethiopian Airlines Flight 302, another 737 MAX, and the grounding by international regulators of the entire 737 MAX fleet, Muilenburg, though aware of information calling questioning some aspects of the certification process of the MCAS, gave misleading information. He told analysts and reporters that “there was no surprise or gap . . . that somehow slipped through [the] certification process” for the 737 MAX and that Boeing had “gone back and confirmed again . . . that we followed exactly the steps in our design and certification processes that consistently produce safe airplanes.”

“Boeing and Muilenburg put profits over people by misleading investors about the safety of the 737 MAX all in an effort to rehabilitate Boeing's image following two tragic accidents that resulted in the loss of 346 lives and incalculable grief to so many families,” said Gurbir S. Grewal, director of the SEC’s Enforcement Division. “But public companies and their executives must provide accurate and complete information when they make disclosures to investors, no matter the circumstances.”

The SEC’s investigation found that Boeing and Muilenburg violated the antifraud provisions of federal securities laws. Without admitting or denying the SEC’s findings, Boeing and Muilenburg consented to cease-and-desist orders that include penalties of $200 million for Boeing and $1 million for Muilenburg.

A fund will be established for the benefit of harmed investors, Grewal said.