July 8th 2024.
Boeing has made the decision to plead guilty to a criminal fraud charge in connection to the two fatal crashes of its 737 Max jetliners. The company was able to avoid prosecution for over three years due to an agreement with the government, but that agreement was deemed to have been violated. The Justice Department announced this news on Sunday night.
Federal prosecutors presented Boeing with a choice this week – either plead guilty and pay a fine as part of their sentence, or face a trial on the felony criminal charge of conspiracy to defraud the United States. According to prosecutors, Boeing deceived regulators by providing false information about the airplane and the required pilot training for it. This led to the approval of the aircraft, which was later involved in the two deadly crashes.
The plea deal, which is still subject to the approval of a federal judge, includes a fine of $360.72 million, the same amount that Boeing paid in a 2021 settlement that was also deemed to have been violated. As part of this plea deal, an independent monitor will be appointed to oversee Boeing's safety and quality procedures for the next three years.
It's important to note that this plea deal only covers the wrongdoing that occurred before the two crashes which claimed the lives of all 346 passengers and crew members. It does not provide immunity for any other incidents, such as the panel that blew off a Max jetliner during an Alaska Airlines flight in January. A Justice Department official clarified that the deal also does not protect any current or former Boeing officials, only the corporation itself.
According to court documents filed on Sunday night, the Justice Department expects to submit the written plea agreement to the court by July 19. Prosecutors have accused Boeing of committing conspiracy to defraud the government by providing misleading information to FAA regulators about a flight-control system that played a role in the crashes in Indonesia and Ethiopia.
In a 2021 settlement, the Justice Department had agreed not to prosecute Boeing if the company complied with certain conditions for three years. However, last month prosecutors alleged that Boeing had breached those terms. As a result, the company has now agreed to plead guilty in US District Court in Texas, where the judge has previously criticized Boeing for its "egregious criminal conduct."
Relatives of the victims of the two crashes were briefed on the plea deal offer a week ago and expressed their intention to request the judge to reject it. In the event of a criminal conviction, US agencies have the authority to exclude companies from doing business with the government for a certain period of time. This could have significant implications for Boeing, as it is a major contractor for the Defense Department and NASA.
The case revolves around the crashes in Indonesia and Ethiopia. The Lion Air pilots in the first crash were not aware of a flight-control software that could cause the plane to nose dive without their input. The Ethiopian Airlines pilots were aware of the software but were unable to control the plane when it activated due to faulty sensor information. The Justice Department charged Boeing in 2021 with deceiving FAA regulators about the software and the required pilot training, but agreed not to prosecute if the company paid a $3.7 billion settlement and complied with anti-fraud laws for three years.
Boeing, which initially blamed two low-level employees for the misleading information, has been working to put the crashes behind them. After the 20-month grounding of the Max jets, regulators allowed them to resume operations with modified flight software. The Max jets have since logged thousands of safe flights and received orders from various airlines.
However, in January this year, a panel covering an unused emergency exit blew off a Max during an Alaska Airlines flight over Oregon. While the pilots were able to land the plane safely and no one was seriously injured, this incident led to closer scrutiny of Boeing. The Justice Department opened a new investigation, the FBI contacted passengers on the Alaska flight regarding a possible crime, and the FAA announced increased oversight of Boeing.
Some legal experts have suggested that a criminal conviction could jeopardize Boeing's status as a federal contractor. However, the plea deal announced on Sunday does not address this issue, leaving it up to each government agency to decide whether to continue doing business with the company. Boeing has a large workforce of 170,000 employees and generated 37% of its revenue from US government contracts last year, mostly from defense work.
Relatives of the victims have been pushing for a criminal trial to shed light on what Boeing knew about deceiving the FAA. They have also been advocating for the prosecution of top Boeing officials, not just the company itself. One relative, Ike Riffel, whose sons Melvin and Bennett died in the Ethiopian Airlines crash, believes that prison sentences for those responsible would bring about the necessary change.
During a recent Senate hearing, Boeing CEO David Calhoun apologized to the relatives of the Max crash victims for the grief that the company has caused. However, the hearing was preceded by the release of a report by the Senate investigations subcommittee, which included new allegations from a whistle-blower who expressed concerns about defective parts going into 737s. This whistle-blower is one of several current and former Boeing employees who have raised safety concerns and faced retaliation as a result.
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