Boeing will plead guilty to criminal fraud

Boeing will plead guilty to a criminal fraud charge stemming from two 737 Max jet crashes that killed 346 people after the government determined the company violated an agreement that shielded it from prosecution for more than three years, the Justice Department said in the Sunday night.

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

Prosecutors accused the American aerospace giant of misleading regulators who approved the plane and pilot training requirements for it.

The court settlement, which still needs to receive approval from a federal judge to take effect, requires Boeing to pay an additional $243.6 million in fines. That was the same amount paid under the 2021 settlement that the Justice Department said 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.

See more information: What to know about the severe turbulence that’s wreaking havoc on flights around the world

The plea deal only covers wrongdoing by Boeing before the crashes, which killed all 346 passengers and crew aboard two new Max jets. It does not give Boeing immunity from other incidents, including a panel that exploded a Max plane during a flight from Alaska Airlines in January, a Justice Department official said.

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

In a court filing Sunday night, the Justice Department said it expects to present the written plea agreement to the court by July 19. Lawyers for some of the relatives of those who died in the two crashes said they will ask the judge to reject the request. agreement.

“This beloved agreement does not recognize that because of the Boeing conspiracy, 346 people died. Through cunning lawyers between Boeing and the DOJ, the deadly consequences of Boeing’s crime are being hidden,” said Paul Cassell, attorney for some of the families.

Federal prosecutors alleged that Boeing committed conspiracy to defraud the government by misleading regulators about a flight control system that was implicated in the crashes, which occurred 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 on the charge if the company complied with certain conditions for three years. Prosecutors alleged last month that Boeing 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 criticized what he called “Egregious criminal conduct by Boeing,” could accept the plea and sentence prosecutors offered or could reject the deal, likely leading to new negotiations between the Justice Department and the Boeing.

The case dates back to accidents in Indonesia and Ethiopia. The Lion Air pilots in the first accident did not know about flight control software that could push the plane’s nose down without their intervention. The Ethiopian Airlines pilots knew this, but were unable to control the plane when the software activated based on information from a faulty sensor.

The Justice Department accused Boeing in 2021 of misleading FAA regulators about software, which did not exist on older 737s, and about how much training pilots would need to fly the plane safely. The department agreed not to prosecute Boeing at the time, however, if the company paid a $2.5 billion settlement, including the $243.6 million fine, and took steps to comply with anti-fraud laws for three years. .

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

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

That changed in January, when a panel covering an unused emergency exit blew up a Max during an Alaska Airlines flight over Oregon.

The pilots landed the 737 Max safely and no one was seriously injured, but the incident led to closer scrutiny of the company. The Justice Department opened a new investigation, the FBI told passengers on the Alaska plane they might be victims of a crime and the FAA said it was stepping up oversight of Boeing.

See more information: Boeing whistleblower, John Barnett, found dead amid testimony against aircraft company

A criminal conviction could jeopardize Boeing’s status as a federal contractor, according to some legal experts. The appeal announced on Sunday does not address this issue, and it is up to each government agency to decide whether to block Boeing.

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

The company has 170,000 employees and 37% of its revenue last year came from US government contracts. Most of it was defense work, including military sales that Washington organized to other countries.

Boeing also makes a capsule for NASA. Two astronauts will remain on the International Space Station longer than expected as Boeing and NASA engineers troubleshoot problems with the propulsion system used to maneuver the capsule.

Even some Boeing critics fear the possibility of crippling a major defense contractor.

“We want Boeing to succeed,” Richard Blumenthal, a Connecticut Democrat, said during a Senate hearing last month into what he called the company’s broken safety culture. “Boeing needs to succeed for the sake of the jobs it provides, for the sake of the local economies it supports, for the sake of the American traveling public, for the sake of our military.”

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

“Boeing has paid fines many times and doesn’t seem to have made any changes,” 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’ll see a change.”

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

Hours before the hearing, the Senate investigations subcommittee released a 204-page report with new allegations from a whistleblower who said he feared defective parts could be going into 737s. The whistleblower was the latest in a series of current and former Boeing employees who have raised safety concerns about the company and claimed they would face retaliation as a result.

—Koenig reported from Dallas. Richer reported from Boston.