The US Justice Department is preparing to file criminal fraud charges against Boeing in connection with two fatal crashes, demanding that the aerospace giant plead guilty or face a trial, sources familiar with the matter revealed on Sunday. The formal plea offer, expected later in the day, includes a financial penalty and the appointment of an independent monitor to oversee Boeing’s safety and compliance practices for three years.
Non-negotiable offer
Justice Department officials plan to give Boeing until the end of the week to accept the plea agreement, which will be presented as nonnegotiable. Should Boeing refuse to plead guilty, the company will be taken to trial, according to the sources. Both Boeing and the Justice Department declined to comment on the developments.
Background: Violations of 2021 agreement
The decision to prosecute stems from Boeing’s violation of a 2021 agreement that had protected the company from prosecution over the fatal crashes involving 737 MAX jets in 2018 and 2019, which resulted in the deaths of 346 people.
Implications of a guilty plea
A guilty plea could have significant implications for Boeing, potentially affecting its ability to secure government contracts, including those with the US military, which are crucial to its revenue. Companies with felony convictions can obtain waivers, but it remains unclear how the Justice Department’s plea deal addresses this issue.
Details of the proposed agreement
The proposed agreement includes a $487.2 million financial penalty, although Boeing would only be required to pay half, with the other half credited against payments made under the previous settlement. The penalty is the maximum legally permitted for the charge. Additionally, Boeing may be required to pay restitution, with the amount determined at a judge’s discretion. The agreement also stipulates three years of probation and mandates that Boeing’s board meet with victims’ relatives.
Reaction from victims’ families
The proposal has sparked anger among victims’ relatives, who were informed of the Justice Department’s decision in a call earlier on Sunday. Erin Applebaum, a lawyer representing the families, criticized the proposed plea deal, stating it “fails to hold Boeing accountable” and calling the financial penalty “negligible.” Applebaum emphasized that the families would oppose the deal in court. “The 737 MAX families vigorously oppose the shameful new sweetheart deal between Boeing and the Department of Justice,” said Applebaum.
Unusual disclosure and legislative pressure
It is uncommon for the Justice Department to inform interested parties of its plans before notifying the targeted company. However, the department, led by Attorney General Merrick Garland, has adjusted its approach following backlash from victims’ families over the original 2021 agreement, which was disclosed only after its negotiation. In June, US lawmakers grilled Boeing CEO Dave Calhoun over the company’s safety record, with victims’ lawyers citing congressional criticism in their calls for the Justice Department to prosecute Boeing and impose a fine of up to $24.78 billion.
Previous settlements and breach of agreement
Boeing previously paid $2.5 billion as part of a deal with prosecutors that granted immunity from criminal prosecution over a fraud conspiracy charge related to the 737 MAX’s flawed design. The deferred prosecution agreement required Boeing to adhere to specific terms for three years, ending on January 7. However, in May, the Justice Department found that Boeing had breached the agreement, exposing the company to prosecution. The Justice Department’s move to charge Boeing highlights the ongoing crisis facing the planemaker, with serious financial and operational repercussions likely to follow. The unfolding legal battle will determine the extent to which Boeing is held accountable for the tragedies that claimed 346 lives.