Boeing will face a felony conviction if it agreement with prosecutors plead guilty to fraud in connection with the approval of his 737 Max before two of the planes crashed, killing 346 people off the coast from Indonesia And in Ethiopia.
The American aerospace giant has apparently calculated that it is better to confess to a crime than to fight the charge and endure a lengthy public trial.
The plea agreement is not yet certain, however.
Relatives of some of the passengers who died have said they will ask a federal judge in Texas to overturn the settlement, which they say is too lenient given the lives that were lost. They want a trial, they wants a huge fineand they want Boeing’s leaders to be indicted.
In a legal filing late Sunday — minutes before the midnight deadline — the Justice Department announced the agreement, saying the fraud charge was “the most serious, directly provable offense” it could bring against Boeing. Prosecutors say Boeing will pay an additional $243.6 million in penalties, matching a fine the paid in 2021 for the same crime.
The Justice Department says a fraud conviction would hold Boeing accountable for “false statements” the company made to regulators who certified the 737 Max in 2017. The crashes occurred less than five months apart in 2018 and 2019.
The company is still under investigation after a panel explosion an Alaska Airlines Max In January, increased scrutiny was brought by the Federal Aviation Administration and allegations were made by current and former employees of poor workmanship and retaliation against whistleblowers.
Here’s what you need to know about the case and what could be next for Boeing:
Boeing agreed to plead guilty to conspiracy to defraud the United States, in this case deceiving the Federal Aviation Administration.
The Justice Department first filed the charges in 2021, but agreed not to prosecute Boeing if the company paid a fine and successfully completed three years of a form of company probation under what’s called a “deferred prosecution agreement.”
However, in May the department determined that Boeing not fulfilled That agreement set in motion the events that led to Sunday’s settlement.
The settlement could help Boeing fix a stain on its reputation: allegations that the U.S. aerospace giant misled regulators who approved the plane and the pilot training requirements to fly it safely.
Boeing will pay another fine, bringing the total to $487.2 million, which the Justice Department says is the statutory maximum for the fraud charge. The deal also requires the company to invest at least $455 million to improve safety. The company will be under court supervision for three years, and the Justice Department will appoint an independent monitor to oversee Boeing’s compliance with the terms of the plea agreement.
Boeing’s board of directors will meet with the victims’ families.
Yes. There will be a hearing before the U.S. District Judge Reed O’Connor in Fort Worth, Texas. He can accept the agreement, in which case he cannot change the terms of Boeing’s sentence. Or he can reject it, which would likely lead to new negotiations between Boeing and prosecutors. No date has been set for the hearing.
Agreements in which the defendant and the federal government agree on a punishment are controversial in legal circles.
“Judges don’t like it. They think it undermines their authority,” said Deborah Curtis, a former attorney at the Justice Department.
O’Connor, however, has previously shown respect for the Justice Department’s power. When families of the crash victims tried to overturn the 2021 deferred prosecution agreement, the judge criticized what he called “Boeing’s shameful criminal behavior” but ruled that he had no authority to overturn the arrangement.
Many are outraged by the agreement.
Zipporah Kuria, a 28-year-old London woman whose father, Joseph, was on board the Ethiopian Airlines Max that crashed in March 2019, wanted a trial she said would reveal new details about what led to the crashes.
Now, with the likelihood that there will never be a trial, “the opportunity to continue digging, the opportunity to continue finding out what went wrong here and what’s wrong, is being taken away from us,” Kuria said. “So once again, they (the victims) have been robbed of their dignity, and we have been robbed of our closure.”
Javier de Luis, an MIT professor of aeronautics whose sister Graziella died in the Ethiopian crash, also believes Boeing’s punishment is inadequate.
“If you look at the elements that make up this plea agreement, they are pretty much typical of what you would expect in a white-collar fraud investigation — not in a crime that directly led to the deaths of 346 people,” he said.
Nadia Milleron, a Massachusetts resident whose 24-year-old daughter, Samya Stumo, died in the same crash, wants Boeing’s current and previous CEOs to be sued.
“After the crash in Indonesia, they knew there was something wrong with this plane, and they knew it could crash,” she said. “They gambled with people’s lives, and they’re gambling now.”
Boeing’s business never fully recovered from the crashes. After renewed scrutiny following the Alaska Airlines incident, the company booked no new orders for the Max in April and May. It has fallen even further behind European rival Airbus in producing and delivering new planes, meaning it has less revenue coming in.
All of this comes as Boeing searches for a new CEO to replace David Calhoun, who announced he will step down at the end of this year.
That being said, the company’s stock price slightly increased Monday.
Probably not.
Government contractors can be suspended or disbarred for criminal convictions, but agencies generally have the ability to grant exceptions.
Pentagon spokesman Maj. Gen. Pat Ryder said the Justice Department has notified the Defense Department of Boeing’s settlement.
The Defense Department “will review the company’s remediation plans and the agreement with the Department of Justice to determine what steps are necessary and appropriate to protect the federal government,” Ryder said.
In 2006, the Air Force cited a “compelling national interest” to allow Boeing to compete for contracts, even after the company acknowledged allegations including using stolen information to win a space launch contract and paying a $615 million fine.
It would only resolve the fraud charges filed after the two fatal crashes. FBI told passengers of the Alaska Airlines Max, where a panel broke during a flight over Oregon, which could indicate they were victims of crime.
The National Transportation Safety Board is also investigating the incident, and the Federal Aviation Administration is looking into Boeing’s production quality.
Boeing added new flight control software to the Max that could push the plane’s nose down if a sensor indicated the plane was approaching an aerodynamic stall. It initially did not tell pilots or airlines about the software, known by the acronym MCAS.
The system was activated before both crashes based on faulty readings from the single sensor on each plane, according to investigations into the Oct. 29, 2018, plane crash. Lion Air Max off the coast of Indonesia and the crash of an Ethiopian Airlines Max on March 10, 2019 near Addis Ababa. Other factors contributed to the Lion Air crash, and the Ethiopian pilots were aware of MCAS but were still unable to regain control after the nose began to dive without their input.
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Koenig reported from Dallas and Richer reported from Washington. Haleluya Hadero in South Bend, Indiana, Cathy Bussewitz in New York and Tara Copp in Washington contributed to this report.