By Chris Strohm, Julie Johnsson and Allyson Versprille
Boeing has agreed to plead guilty to criminal conspiracy to defraud the United States after the Justice Department concluded the plane maker failed to adhere to an earlier settlement stemming from two fatal crashes of its 737 Max jetliner.
Under the agreement in principle with US prosecutors, Boeing agreed to a criminal fine of as much as $US487.2 million ($721.4 million), the maximum allowed by law, though the actual amount will be determined by a judge, according to the Justice Department. The DOJ asked the judge to credit Boeing for the prior fine it paid, which would bring the new penalty down to $US243.6 million, if approved.
Boeing will be required to spend at least $US455 million to bolster its compliance and safety programs.Credit: Ian Schofield / Alamy Stock Photo
The company will install a corporate monitor and be required to spend at least $US455 million to bolster its compliance and safety programs over the next three years as part of the deal, which requires court approval. It would also be subject to three years of court-supervised probation.
Federal prosecutors gave Boeing the choice last week of entering a guilty plea and paying a fine as part of its sentence or facing a trial on the felony criminal charge of conspiracy to defraud the United States.
The guilty plea marks a low point in the company’s century-long history after years of turmoil sparked by two crashes of its 737 Max aircraft, in 2018 and 2019, that killed 346 people. The deal may also spare Boeing from the distraction of a criminal trial at a time when its finances are in disarray and its leadership is in limbo.
Boeing had no immediate comment. The plane maker in June had told prosecutors that it disagreed with the finding that it had violated the earlier deal.
The Justice Department determined in May that Boeing breached a 2021 deferred-prosecution agreement tied to the crashes struck in the waning days of the Trump administration.
As part of the 2021 deal, Boeing paid a criminal fine of $US243.6 million and admitted to deceiving the US Federal Aviation Administration about an obscure flight-control system linked to the crashes. The company also pledged to improve its internal safety controls.
In return, the government would withdraw a criminal charge against the company after three years.
The agreement was bitterly criticised by families of the crash victims, who were not consulted before it was unveiled.
The families filed a notice to object to the latest agreement as well. As part of the new plea deal, Boeing’s board of directors will meet the relatives of the crash victims.
“We are extremely disappointed that DOJ is moving forward with this wholly inadequate plea deal despite the families’ strong opposition to its terms,” said Erin Applebaum, a partner at Kreindler & Kreindler who represents families of the crash victims.
“While we’re encouraged that Boeing will not be able to choose its own monitor, the deal is still nothing more than a slap on the wrist and will do nothing to effectuate meaningful change within the company,” she said.
Just days before the 2021 agreement was set to expire, a fuselage panel blew off a 737 Max 9 jet operated by Alaska Airlines in early January.
The department later concluded Boeing had failed to meet a requirement of the 2021 deal to implement an effective compliance program to prevent and detect violations of US fraud laws.
Boeing’s executive suite is in turmoil as its board searches for a new chief executive officer. The company’s finances are also showing the strain of a slowdown in production in the aftermath of the January accident, as it works to bolster quality and retrain workers under close supervision by the US Federal Aviation Administration.
The company has said it would probably burn through about $US8 billion in cash during the first half of 2024.
Boeing also faces investigations by the US Securities and Exchange Commission, Congress and a Seattle-area grand jury into the events that led to the near-catastrophic Alaska Airlines accident.
Bloomberg, AP
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