Boeing pleads guilty to criminal fraud charges related to 737 Max crashes
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Boeing pleads guilty to criminal fraud charges related to 737 Max crashes

Rescuers work at the site of the Ethiopian Airlines crash near Bishoftu, also known as Debre Zeit, south of Addis Ababa, Ethiopia, Monday, March 11, 2019.

Mulugeta Ayene | Reuters

Boeing agreed to plead guilty to fraud charges related to the deadly 737 Max crashes, a move that sees the American aerospace giant branded as a criminal but allows it to avoid trial while it tries to close the chapter on its safety and manufacturing crises.

Under the agreement, Boeing could face fines of up to $487.2 million, although the Justice Department recommended that the court credit Boeing with half of that amount it paid under the previous agreement, which would result in a fine of $243.6 million. The settlement requires approval from a federal judge to go into effect.

If the deal goes through, Boeing could have a hard time selling products to the U.S. government because it is a criminal, though the company could seek to have the charges dropped. About 32% of Boeing’s nearly $78 billion in revenue last year came from its defense, space and security division.

A Defense Department official said Monday that DOD will evaluate Boeing’s remediation plans and its agreement with the Justice Department “to determine what steps are necessary and appropriate to protect the federal government.”

The plea agreement also calls for the creation of an independent monitor to oversee Boeing’s compliance for three years during a probationary period. Boeing would also be required to invest at least $455 million in compliance and safety programs, according to court documents.

Boeing also agreed to allow its board to meet with the families of the crash victims.

Boeing pleads guilty to criminal fraud charges related to 737 Max crashes

The Justice Department disclosed the deal on Sunday evening, months after U.S. prosecutors said the aerospace giant violated the terms of a 2021 settlement that shielded it from prosecution for three years.

The settlement offer forced Boeing to decide between pleading guilty and accepting the terms or going to trial just as the company was trying to recover from a production and safety crisis, appoint a new CEO and take over the airframe maker, Spirit Aerodynamic Systems.

“We can confirm that we have reached a preliminary agreement on the terms of the resolution with the Department of Justice, subject to the memorialization and approval of the specific terms,” Boeing said in a statement after the court filing.

In May, the Justice Department found that Boeing violated a 2021 settlement. Under that deferred prosecution agreement, Boeing agreed to pay $2.5 billion, including a $243.6 million criminal fine, restitution to the airlines and a $500 million fund for family members of victims.

The 2021 settlement was set to expire two days after a door panel exploded on a nearly new 737 Max 9 plane that he was managing Alaska Airlines January 5. Although there were no serious injuries, the accident created a new safety crisis for Boeing. A preliminary report by the National Transportation Safety Board found that the bolts holding the door panel were not secured to the plane.

Why Boeing Wants to Buy Spirit AeroSystems

The United States has accused Boeing of conspiring to defraud the government by misleading regulators about the flight-control system installed in the Max plane, which was later linked to two crashes — a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019. All 346 people on board the planes died.

U.S. prosecutors told family members of the crash victims on June 30 that they planned to seek a guilty plea from Boeing, a plan that family lawyers called a “sweet deal.”

Shortly after the settlement was filed in federal court late Sunday night, family members of the victims said in their own letter that they would oppose the settlement, arguing that it “unfairly makes concessions to Boeing that other criminal defendants would never have received and fails to hold Boeing accountable for the deaths of 346 people.”

Paul Cassell, a lawyer representing the victims’ families, said the judge should reject the settlement and “simply set the case for a public trial so that all the facts related to the case are presented in a fair and open forum before a jury.”

The agreement requires that the corporate watchdog who will oversee Boeing’s probation be independent, part of an agreement intended to address concerns raised by lawyers representing victims’ families.

It also says there will be no limit on the compensation Boeing can pay to surviving relatives of victims. Still, lawyers say Boeing should face trial.

“Boeing is a huge company,” said Erin Applebaum, another attorney for the family members. “Whatever check they write to the families, it’s not going to bring them back.”

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