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Monday, July 15, 2024

Boeing to plead guilty to fraud charge over 737 Max crashes

The plea agreement is subject to approval by a federal judge in Texas, who will also hear from the families of the crash victims.

Boeing has agreed to plead guilty to a criminal fraud charge related to the two catastrophic crashes involving its 737 Max aircraft, which resulted in the deaths of 346 people. The decision follows the U.S. Department of Justice’s determination that Boeing violated an earlier agreement meant to protect it from prosecution. Under the terms of the new plea deal, Boeing will pay an additional $243.6 million fine, matching the amount from the 2021 settlement, and invest $455 million over the next three years to enhance its safety and compliance programs. An independent compliance monitor will be appointed by the Justice Department to oversee these efforts.

Consequences and Reactions

This plea deal does not offer immunity to individual Boeing employees, including executives, and only addresses misconduct prior to the 737 Max crashes. The deal does not shield Boeing from repercussions related to other incidents, such as the mid-air blowout of a panel on an Alaska Airlines flight earlier this year. The plea agreement is subject to approval by a federal judge in Texas, who will also hear from the families of the crash victims.

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A lawyer representing the victims’ families criticized the agreement as a “sweetheart deal” that fails to hold Boeing fully accountable. The families plan to ask the judge to reject the plea deal, advocating for a public trial that would disclose all the facts surrounding the case.

Background of the Crashes

The 737 Max crashes occurred off the coast of Indonesia in 2018 and in Ethiopia in 2019, leading to the worldwide grounding of the aircraft for nearly two years. Investigations revealed that Boeing had deceived federal aviation regulators about the flight-control software installed on the 737 Max, which could erroneously force the plane’s nose downward. The Justice Department charged Boeing in 2021 with conspiracy to defraud the U.S. government, but agreed not to prosecute if Boeing adhered to a compliance program and paid $2.5 billion in fines, compensation to crash victims’ families, and payments to airlines.

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The plea deal could jeopardize Boeing’s eligibility for U.S. defense contracts, a significant part of its business. Legal experts indicate that the criminal conviction might influence various government agencies’ decisions on whether to continue awarding contracts to Boeing. However, past instances, such as a $615 million settlement in 2006 for unrelated charges, saw Boeing retain its contractor status due to compelling national interest.