The US is seeking a guilty plea from Boeing over fraud linked to deadly crashes

It has been revealed that the US Department of Justice will propose a settlement to Boeing for breaching a 2021 agreement relating to two fatal crashes involving 737 MAX aircraft in 2018 and 2019.

In fact, the Justice Department will now seek an admission of guilt from Boeing on fraud charges in the case.

The American aircraft manufacturer will have until the end of the week to accept or reject the offer.

Background

The U.S. Department of Justice originally charged Boeing with fraud in connection with the fatal crashes of two 737 MAX planes.

Two fatal accidents in 2018 and 2019 resulted in a total of 346 deaths.

The charges stemmed from alleged misleading information provided by Boeing to the Federal Aviation Administration (FAA) during its evaluation of the 737 MAX’s safety features. This alleged fraud amounted to a criminal fraud charge.

Boeing chose to resolve the allegations through a deferred prosecution agreement (DPA). In a DPA, a company admits wrongdoing but avoids a formal conviction.

As part of the agreement, Boeing paid more than $2.5 billion. That included a criminal penalty, compensation to airlines that flew the 737 MAX and a fund to help families of crash victims.

Family members of the crash victims criticized the settlement, arguing that the American manufacturing giant was taking it too easy.

In May this year, the US Department of Justice announced that it would again bring criminal charges against Boeing over potential violations of the 2021 contract.

Attorney’s statement for victims’ families

The statement was provided by attorney Erin Applebaum, partner at Kreindler & Kreindler LLP, who represents 34 families who lost loved ones on Ethiopian Airlines Flight 302:

“737 MAX Families Strongly Oppose Shameful New Deal Between Boeing and DOJ”

“While it falsely presents itself as a punishment for Boeing because it involves a guilty plea, the agreement imposes a small fine and imposes supervision for just three years.”

“This allows Boeing to handpick this monitor and, most egregiously, completely omits any mention or recognition of the dignity of the 346 people murdered due to Boeing’s negligence.”

“We look forward to a court hearing where we can explain to Judge O’Connor and the public why the court should throw out this agreement and not allow Boeing to once again avoid true accountability.”

“And when the next Boeing disaster inevitably occurs and the Justice Department tries to shift the blame, it will have nowhere to look but in the mirror.”

What does a criminal conviction potentially mean?

Many companies face criminal charges, but they are usually smaller companies compared to American aircraft manufacturing giant Boeing.

Typically, companies facing criminal charges will seek civil lawsuits rather than face the consequences of a criminal conviction.

A Boeing fraud conviction following the 737 MAX crash would have significant consequences beyond the initial fines.

Here’s a breakdown of the potential consequences:

Financial penalties: The criminal penalties would likely be much more severe than those imposed under the Deferred Prosecution Agreement (DPA). This could significantly impact Boeing’s finances and potentially affect shareholder value.
Loss of government contracts: A conviction could make Boeing ineligible for certain government contracts, particularly those related to defense or aerospace. This would be a major blow, given that much of Boeing’s revenue comes from government contracts.
Reputation damage: A conviction would undoubtedly damage Boeing’s reputation and undermine public trust. This could lead to declining sales, difficulty attracting new business partners, and negative publicity in the coming years.
Compliance issues: A criminal conviction would likely result in stricter compliance and oversight rules for Boeing. That could lead to higher costs and delays in production and development.
Legal challenges: A conviction could expose Boeing to a wave of lawsuits from victims’ families, airlines and other parties that suffered losses in the crashes. This could lead to further financial burdens and legal battles.