Exclusive: U.S. selects compensation Feinberg firm to oversee Boeing 737 MAX victim fund

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FILE PHOTO: A Boeing 737 MAX airplane lands after a test flight at Boeing Field in Seattle

By David Shepardson and Tracy Rucinski

WASHINGTON (Reuters) – Prominent attorneys Kenneth Feinberg and Camille Biros have been named to oversee a $500 million victim compensation fund for the relatives of 346 people killed in two fatal Boeing 737 MAX crashes, a spokeswoman for Feinberg confirmed on Wednesday, the second anniversary of the second crash.

The fund is part of a $2.5 billion Justice Department settlement reached in January with Boeing Co after prosecutors charged the company with fraud over the certification of the 737 MAX following a Lion Air crash on Oct. 29, 2019 and an Ethiopian Airlines disaster on March 10, 2019.

Boeing said it looked “forward to working with Mr. Feinberg and Ms. Biros to ensure the prompt distribution of these funds.”

The Justice Department (DOJ) declined to comment.

The settlement allowed Boeing to avoid criminal prosecution but did not impact civil litigation against the planemaker by victims’ relatives that continues.

Feinberg and Biros have administered many compensation funds including for victims of the Sept. 11, 2001, attacks on the United States, the 2010 Deepwater Horizon oil spill, General Motors ignition switch crashes and numerous school shootings.

In July 2019, Boeing named Feinberg and Biros to oversee the distribution of a separate $50 million to the families of those killed in the crashes.

Under the Justice Department agreement, Boeing was required to propose three candidates to administer the fund.

In this role, they will make recommendations about payments but the Justice Department will make final decisions on all payments.

While Boeing has mostly settled Lion Air lawsuits, it still face more than 100 lawsuits in Chicago federal court by families of the Ethiopian crash asking why the MAX continued flying after the first disaster.

Some relatives were commemorating the second anniversary on Wednesday with protests and vigils in Washington, and Toronto, where they have asked regulators to reconsider their decision to let the 737 MAX fly again after a nearly two-year safety ban.

The DOJ settlement includes a fine of $243.6 million and compensation to airlines of $1.77 billion over fraud conspiracy charges related to the plane’s flawed design.

Chris Moore, who lost his daughter in the Ethiopian crash, noted that the fine is only 10% of the total settlement, or the cost of about two 737 MAX planes.

“If this isn’t a slap in the face for us – I don’t know what is. It definitely is only a slap on their wrist,” he said.

The Justice Department said in January, “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.”

Some lawmakers say the government did not go far enough, while Boeing says it has taken numerous steps to overhaul its safety culture.

“The DOJ settlement was pathetic,” said House Transportation Committee chairman Peter DeFazio in an interview Wednesday, who faulted the settlement’s focus on a couple employees and not the board or executive team. “I think they’re still way-too Wall Street dominated.”

Congress ordered a major overhaul of how the FAA certifies new airplanes in December and directed an independent review of Boeing’s safety culture.

Last month, Boeing agreed to pay $6.6 million to the Federal Aviation Administration as part of a settlement over quality and safety-oversight lapses going back years.

(Reporting by David Shepardson in Washington and Tracy Rucinski in Chicago; Editing by Matthew Lewis and Alistair Bell)

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