Boeing has agreed to plead guilty to a criminal fraud charge related to the fatal 737 Max crashes, as stated by the Justice Department on Sunday. Earlier, U.S. prosecutors had accused the aerospace giant of breaching a 2021 settlement that aimed to protect it from prosecution.
Under the terms of the agreement, Boeing has agreed to pay a fine of $243.6 million. Additionally, an independent compliance monitor will oversee Boeing’s adherence to regulations for three years during a probationary period. Boeing will also be required to invest at least $455 million in compliance and safety programs. The plea deal is subject to the approval of a federal judge before it becomes effective.
In addition to the financial penalties, Boeing has also consented to arrange meetings between its board of directors and the crash victims’ families.
Boeing has had to make a difficult decision between accepting a guilty plea with attached terms and going to trial, as the company endeavors to emerge from its manufacturing and safety crises, appoint a new CEO, and acquire its fuselage maker, Spirit AeroSystems.
The guilty plea could tarnish Boeing’s reputation and potentially affect its ability to sell products to the U.S. government. Notably, about 32% of Boeing’s nearly $78 billion revenue last year came from its defense, space, and security unit.
Boeing released a statement confirming that they have “reached an agreement in principle on terms of a resolution with the Justice Department, subject to the memorialization and approval of specific terms.”
In May, the Justice Department accused Boeing of violating the 2021 agreement. Under the deferred prosecution agreement, Boeing had agreed to a $2.5 billion settlement, which included an original $243.6 million criminal fine, compensation to airlines, and a $500 million fund for victims’ family members.
The 2021 settlement was set to expire shortly after a troubling incident. On January 5th, a door panel blew out on a nearly new 737 Max 9 operated by Alaska Airlines. Thankfully, there were no serious injuries. However, this event triggered a fresh safety crisis for Boeing.
The U.S. alleged that Boeing misled regulators about the inclusion of a flight-control system on the Max, which was later implicated in the two crashes – a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019. A total of 346 people on board the flights lost their lives.
On June 30, U.S. prosecutors informed the victims’ family members of their intention to seek a guilty plea from Boeing, a move that family attorneys criticized as “a sweetheart deal.”
Lawyer Paul Cassell, representing the victims’ families, will ask the judge to reject the plea deal and hold a public trial. He wants all the facts surrounding the case presented openly to a jury.
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