Boeing accepts plea deal to avoid criminal trial over 737 Max crashes, Justice Department says

 

Boeing will plead guilty to criminal fraud stemming from the two crashes of 737 Max jets that killed 346 people, after the government ruled that the company violated an agreement that had shielded it from prosecution for more than three years, the Justice Department said Sunday evening.

Federal prosecutors last week gave Boeing the choice of pleading guilty and paying a fine as part of the sentence or facing trial on a criminal charge of conspiracy to defraud the United States.

Investigators have accused the American aerospace giant of deceiving the regulatory bodies that had approved the aircraft and the pilot training requirements associated with it.

The plea agreement, which still must be approved by a federal judge to go into effect, requires Boeing to pay an additional $243.6 million in fines.

That’s the same amount paid under the 2021 settlement that the Justice Department says the company violated.

An independent monitor would be appointed to oversee Boeing’s safety and quality procedures for three years. The agreement also requires Boeing to invest at least $455 million in its compliance and safety programs.

The settlement agreement covers only Boeing’s wrongdoing before the crashes, which killed all 346 passengers and crew aboard the two new Max jets.

It does not give Boeing immunity for other incidents, including one that caused a Max jetliner to explode during an Alaska Airlines flight in January, a Justice Department official said.

The settlement does not affect any current or former Boeing officials, only the corporation. In a statement, Boeing confirmed it had reached the agreement with the Department of Justice, but did not comment further.

In a court filing Sunday evening, the Justice Department said it plans to file the written plea agreement with the court by July 19. Attorneys for some of the relatives of those killed in the two crashes said they will ask the judge to throw out the agreement.

“This amicable settlement fails to acknowledge that because of Boeing’s conspiracy, 346 people died. Through Boeing’s cunning legal collaboration with the Department of Justice, the deadly consequences of Boeing’s crime are being obscured,” said Paul Cassell, an attorney representing some of the families.

Federal prosecutors have alleged that Boeing conspired to defraud the government by misleading regulators about a flight control system implicated in crashes in Indonesia in October 2018 and in Ethiopia less than five months later.

As part of the January 2021 settlement, the Justice Department said it would not pursue Boeing for the charges if the company met certain conditions for three years.

Last month, prosecutors said Boeing had violated the terms of that agreement.

The company’s guilty plea will be entered in U.S. District Court in Texas. The judge overseeing the case, who has criticized what he called Boeing’s “egregious criminal conduct,” could accept the guilty plea and the sentence prosecutors offered with it or reject the deal, likely leading to new negotiations between the Justice Department and Boeing.

The case goes back to the crashes in Indonesia and Ethiopia. Lion Air pilots in the first crash were unaware that flight control software could push the plane’s nose down without their input. Ethiopian Airlines pilots were aware of this but were unable to control the plane when the software activated based on information from a faulty sensor.

In 2021, the Justice Department accused Boeing of misleading FAA regulators about software that didn’t exist on older 737s and how much training pilots should require to fly the plane safely. However, the department agreed not to prosecute Boeing at the time if the company paid a $2.5 billion settlement, including a $243.6 million fine, and took steps to comply with anti-fraud laws for three years.

Boeing, which has accused two low-level employees of misleading regulators, has tried to put the crashes behind it. After grounding Max jets for 20 months, regulators let them fly again after Boeing reduced the power of the flight software. Max jets have logged thousands of safe flights, and airline orders have surged, rising to about 750 in 2021, about 700 more in 2022 and nearly 1,000 in 2023.

The Arlington, Virginia-based airline has dozens of airline customers around the world. Top 737 Max customers include Southwest, United, American, Alaska, Ryanair and flydubai.

That all changed in January, when a panel covering an unused emergency exit caused a Max to explode during an Alaska Airlines flight over Oregon.

The pilots landed the 737 Max safely and no one was seriously injured, but the crash has prompted increased scrutiny of the airline. The Justice Department opened a new investigation, the FBI told passengers on the Alaska plane they may be victims of a crime, and the FAA said it was stepping up oversight of Boeing.

A criminal conviction could jeopardize Boeing’s status as a federal contractor, some legal experts said. The guilty plea announced Sunday does not address that issue, leaving it up to each government agency to decide whether to ban Boeing.

The Air Force cited “compelling national interest” in allowing Boeing to continue competing for contracts after the company paid a $615 million fine in 2006 to settle criminal and civil charges, including that it used information stolen from a competitor to win a space launch contract.

The company has 170,000 employees, and 37% of its revenue last year came from U.S. government contracts. Most of that was defense work, including military sales that Washington had arranged for other countries.

Boeing also builds a capsule for NASA. Two astronauts will remain at the International Space Station longer than expected while Boeing and NASA engineers troubleshoot the propulsion system used to maneuver the capsule.

Even some Boeing critics fear it will embarrass a major defense contractor.

“We want Boeing to succeed,” Richard Blumenthal, a Connecticut Democrat, said at a Senate hearing last month on what he called the company’s corrupt safety culture.

“Boeing must succeed for the sake of the jobs it provides, for the sake of the local economies it supports, for the sake of American travelers, for the sake of our military.”

Relatives of Max crash victims have pushed for a criminal trial that could shed light on what people inside Boeing knew about the FAA deception. They also want the Justice Department to prosecute top Boeing officials, not just the company.

“Boeing has paid fines many times, and it doesn’t seem to have made any difference,” said Ike Riffel of Redding, Calif., whose sons Melvin and Bennett died in the Ethiopian Airlines crash. “When people start going to prison, that’s when you’re going to see change.”

At a recent Senate hearing, Boeing CEO David Calhoun defended the company’s safety record after turning around and apologizing to the relatives of Max crash victims sitting in the rows behind him “for the pain we’ve caused.”

Hours before the hearing, the Senate investigative subcommittee released a 204-page report with new allegations from a whistleblower who said he feared defective parts could be inserted into 737s. The whistleblower was the latest in a string of current and former Boeing employees who have raised safety concerns at the company and said they faced retaliation for doing so. [AP]

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