Boeing agrees to plea guilty in fraud conspiracy, evades criminal trial over 737 MAX crashes

Boeing has consented to plead guilty to a criminal fraud conspiracy charge in order to settle a US Justice Department investigation connected to two fatal 737 MAX crashes, according to a government official on Sunday. The plea, which must be approved by a federal judge, would label the aircraft manufacturer as a convicted felon. Additionally, Boeing will pay a criminal fine of $243.6 million, a Justice Department official said.
The charge is related to two 737 MAX crashes that occurred in Indonesia and Ethiopia within a five-month period in 2018 and 2019, resulting in the deaths of 346 people.The families of the victims have demanded that Boeing face prosecution for these tragedies.
A guilty plea could potentially jeopardize the company’s ability to secure lucrative government contracts with entities such as the US Defense Department and Nasa, although it may seek waivers. Boeing came in the line of fire after the Justice Department discovered in May that the company had violated a 2021 settlement involving the fatal crashes.
The plea agreement allows Boeing to avoid a contentious trial that could have subjected the company’s decisions leading up to the fatal MAX plane crashes to even greater public scrutiny. It would also facilitate the company’s efforts to move forward as it seeks approval for its planned acquisition of Spirit AeroSystems, especially with a new CEO set to take the helm later this year. Boeing has declined to comment on the matter.
In addition to the criminal fine, Boeing has agreed to invest at least $455 million over the next three years to strengthen its safety and compliance programs, according to the official. The DOJ will appoint a third-party monitor to oversee the firm’s compliance, and the monitor will be required to publicly file annual reports with the court detailing the company’s progress.
The Justice Department offered a plea agreement to Boeing on June 30, giving the company until the end of the week to accept the deal or face a trial on a charge of conspiring to defraud the Federal Aviation Administration in connection with a key software feature tied to the fatal crashes. After being briefed on the DOJ’s offer last week, a lawyer representing some of the families criticized it as a “sweetheart deal” and vowed to oppose the deal in court.
The Justice Department’s push to charge Boeing has intensified an ongoing crisis engulfing the company since a separate January in-flight blowout exposed continuing safety and quality issues at the planemaker. A panel blew off a new Boeing 737 MAX 9 jet during an Alaska Airlines flight on January 5, just two days before the expiration of the 2021 deferred prosecution agreement that had shielded the company from prosecution over the previous fatal crashes. The agreement only covers Boeing’s conduct before the fatal crashes and does not protect the planemaker from any other potential investigations or charges related to the January incident or other conduct.
Boeing is pleading guilty to making knowingly false representations to the Federal Aviation Administration about having expanded a key software feature used on the MAX to operate at low speeds. The new software saved Boeing money by requiring less intensive training for pilots. The Maneuvering Characteristics Augmentation System (MCAS) is a software feature designed to automatically push the airplane’s nose down in certain conditions. It was tied to the two crashes that led to the FAA’s grounding the plane for 20 months, an action that cost Boeing $20 billion, and the government lifted in November 2020.
As part of the deal, Boeing’s board of directors will meet with relatives of those killed in the MAX crashes, according to the official. The agreement does not shield any executives, the DOJ official said, though charges against individuals are seen as unlikely due to the statute of limitations.
The agreed penalty will be Boeing’s second fine of $243.6 million related to the fatal crashes, bringing the full fine to the maximum allowed. The company paid the fine previously as part of 2021’s $2.5 billion settlement. The $243.6 million fine represented the amount Boeing saved by not implementing full-flight simulator training.
Families of the victims of those crashes slammed the previous agreement and earlier this year pressed the Justice Department to seek as much as $25 billion from Boeing. This year, the DOJ has held several meetings to hear from the victims’ families as they investigated Boeing’s breach of the 2021 deal.

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