Boeing has agreed to plead guilty to a criminal fraud conspiracy charge following accusations of violating an agreement with the U.S. Department of Justice (DoJ). This decision is from the company’s failure to adhere to mandated reforms after the fatal crashes of its 737 MAX aircraft in 2018 and 2019, which resulted in the loss of 346 lives.

Boeing to Plead Guilty to Criminal Fraud Charge Over 737 MAX Crashes

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In October 2018, a Boeing 737 MAX operated by Indonesia’s Lion Air crashed shortly after takeoff killing all 189 people on board.

A few months later in March 2019, an Ethiopian Airlines 737 MAX crashed claiming the lives of all 157 passengers and crew.

These incidents led to the global grounding of the 737 MAX for over a year impacting Boeing’s reputation and operations.

In 2021, the DoJ charged Boeing with conspiracy to defraud regulators alleging that the company deceived the Federal Aviation Administration (FAA) regarding the Maneuvering Characteristics Augmentation System (MCAS), which was a critical factor in both crashes.

The company entered into a deferred prosecution agreement agreeing to pay $2.5 billion in penalties and victim compensation and to undertake reforms to enhance safety and compliance.

In January 2024, an incident involving an Alaska Airlines Boeing aircraft concerns about Boeing’s adherence to the agreed-upon safety measures.

A door panel blew out during flight, although no injuries occurred, it highlighted safety issues. In May, the DoJ found that Boeing had violated the terms of its 2021 agreement triggering the possibility of renewed prosecution.

The company has agreed to plead guilty to a felony charge of conspiring to defraud the U.S. government. As part of the plea, Boeing will pay a $487.2 million fine and invest $455 million over three years to bolster its compliance and safety programs.

The company will be placed on a three-year probation overseen by an independent compliance monitor who will report annually to the government on Boeing’s adherence to the safety reforms.

Families of the victims have criticized the plea deal as a sweetheart deal that allows Boeing to avoid a criminal trial and evade full accountability.

Paul Cassell, a lawyer representing several victims’ families argued that the fine and conditions are insufficient and do not adequately address Boeing’s culpability.

The families have expressed their desire for a trial and more severe penalties including individual accountability for Boeing executives.

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The DoJ faced a complex decision balancing the need for corporate accountability with the economic impact of prosecuting one of the country’s largest exporters and a key government contractor.

Legal experts like Mark Cohen from Vanderbilt University suggest that the plea deal allows for greater control over Boeing’s future conduct through imposed compliance requirements which might not be possible through a standard trial outcome.

Federal prosecutors presented Boeing with two options, either enter a guilty plea and pay a fine or face trial on a felony charge of conspiracy to defraud the U.S. government. Boeing opted for the guilty plea to avoid the uncertainties of a trial.

The plea deal includes a financial penalty with Boeing agreeing to pay an additional $243.6 million fine. This is in addition to other financial commitments the company has made.

Boeing has committed to investing at least $455 million over the next three years to its safety and compliance programs.

The Justice Department will appoint an independent monitor to oversee Boeing’s compliance efforts. This monitor will be required to file annual reports with the court.

The guilty plea poses risks to Boeing’s ability to secure government contracts including those with the U.S. Department of Defense and NASA.

The Justice Department found that Boeing violated a 2021 settlement related to the 737 Max crashes. This violation exposed the company to criminal prosecution and led to the plea agreement.

Federal prosecutors allege that Boeing misled regulators about the safety of the flight-control system implicated in the crashes.

The crashes of two Boeing 737 Max aircraft, one in Indonesia in October 2018 and another in Ethiopia in March 2019 resulted in the deaths of all 346 passengers and crew members.

It is anticipated that Boeing will obtain waivers allowing it to continue its contracting with the US government. This includes nearly 40% of its revenue from government contracts in 2023.

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