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Last week, federal prosecutors gave Boeing two options: plead guilty and pay a fine as part of its sentence, or go to trial on a felony charge of conspiracy to defraud the United States.
Prosecutors allege the U.S. aviation giant deceived regulators who approved the plane and pilot training requirements.
The plea agreement, which still needs to be approved by a federal judge before it can take effect, requires Boeing to pay an additional $243.6 million in penalties. That’s the same amount the company paid under a 2021 settlement that the Justice Department said it violated. An independent monitor will 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 plea agreement covers only Boeing’s misconduct before the crashes in Indonesia and Ethiopia that killed all 346 passengers and crew on two new Max jets. A Justice Department official said the agreement does not grant Boeing immunity for other incidents, including a panel that blew off an Alaska Airlines Max during a flight over Oregon in January.
The agreement also does not involve current or former Boeing executives, only the company itself. Boeing confirmed in a statement that it had reached an agreement with the Justice Department but did not comment further.
The U.S. Justice Department said in a filing late Sunday that it expects to submit a written plea agreement to the U.S. District Court in Texas on July 19. Lawyers for relatives of some of the victims of the two crashes said they would ask a judge to reject the agreement.
“This sweet deal fails to recognize that Boeing’s conspiracy has killed 346 people. Through a clever lawyering collusion between Boeing and the Justice Department, the deadly consequences of Boeing’s crimes were obscured,” said Paul Cassell, an attorney for some of the victims’ families.
Federal prosecutors have charged Boeing with conspiracy to defraud the government by misleading regulators about flight-control systems linked to two crashes that occurred within five months of each other.
As part of a January 2021 settlement, the Justice Department said it would not prosecute Boeing over the allegations if the company complied with certain conditions for three years. Prosecutors last month accused Boeing of violating the terms of that agreement.
U.S. District Judge Reed O’Connor, who has overseen the case from the beginning, criticized what he called “Boeing’s egregious criminal conduct.” O’Connor can accept the guilty plea and sentence offered by prosecutors or reject the deal, which could lead to new negotiations between the Justice Department and Boeing.
The case dates back to crashes in Indonesia and Ethiopia. The Lion Air pilots in the first crash were unaware that flight-control software could push the plane’s nose down without their input. The Ethiopian Airlines pilots knew it, but were unable to control the plane when the software kicked in based on information from a faulty sensor.
In 2021, the Justice Department accused Boeing of deceiving regulators at the Federal Aviation Administration by lying about the software, which was not available on older 737s, and how much training pilots needed to safely fly the planes. However, the Justice Department agreed not to sue 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 has tried to put the crash behind it, blaming two low-level employees for misleading regulators. After grounding the Max jets for 20 months, regulators allowed them to fly again after the company reduced the power of its flight software. The Max jets have logged thousands of safe flights, and airline orders have increased, to about 750 in 2021, about 700 in 2022 and nearly 1,000 in 2023.
That changed in January when a panel covering an unused emergency exit blew off an Alaska Airlines Max plane while flying over Oregon.
The pilots were able to land the 737 Max safely, and no one was seriously injured, but the incident prompted greater scrutiny of Boeing. The Justice Department opened a new investigation, the FBI told passengers on the Alaska Airlines plane they might be victims of a crime, and the Federal Aviation Administration said it was stepping up its oversight of Boeing.
Some legal experts have said a criminal conviction could jeopardize Boeing’s status as a federal contractor. The guilty plea announced Sunday does not resolve that issue, leaving the decision on whether to ban Boeing to individual government agencies.
Boeing paid a $615 million fine in 2006 to settle criminal and civil charges that it used information stolen from competitors to win space launch contracts, and the Air Force allowed Boeing to continue competing for the contract, citing “compelling national interests.”
The company, based in Arlington, Virginia, has 170,000 employees and dozens of airline customers around the world. Top 737 Max customers include Southwest Airlines, United Airlines, American Airlines, Alaska Airlines, Ryanair and flydubai.
But last year the company derived 37% of its revenue from U.S. government contracts, much of it defense work, including arms sales arranged by Washington for other countries.
Boeing, which also built the capsule for NASA, and NASA engineers will troubleshoot a problem with the capsule’s maneuvering propulsion system during a period when the two astronauts will remain aboard the International Space Station longer than expected.
Even some Boeing critics worry the move will put a key defense contractor in a difficult position.
“We want Boeing to succeed,” Richard Blumenthal, a Connecticut Democrat, said at a Senate hearing last month. “Boeing needs to succeed to create jobs, to support the local economy, to benefit American travelers, and to benefit our military.”
Relatives of victims of the Boeing 737 Max crashes are calling for a criminal trial to determine how well Boeing insiders knew about deceiving the Federal Aviation Administration. They also want the Justice Department to indict top Boeing officials, not just the company.
“Boeing has paid fines multiple times, but nothing seems to be changing,” said Ike Riffel of Redding, Calif., whose sons Melvin and Bennett died in the Ethiopian Airlines crash. “When people start going to jail, that’s when you’ll see change.”
At a recent Senate hearing, Boeing CEO David Calhoun defended the company’s safety record and turned to apologize to the families of the 737 Max crash victims sitting behind him “for the grief we have caused them.”
Hours before the hearing, a Senate investigative subcommittee released a 204-page report with new allegations from a whistleblower who raised concerns that defective parts could make their way into 737 aircraft. The whistleblower is the latest in a wave of current and former Boeing employees who have raised concerns about safety issues at the company and claimed retaliation for doing so.
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