Boeing to plead guilty to criminal fraud charge

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Boeing has agreed to plead guilty to a criminal fraud conspiracy charge after the US found the company violated a reform agreement following two fatal crashes of its 737 Max planes that killed 346 passengers and crew members.

The Department of Justice (DoJ) announced that Boeing will also pay a criminal fine of $243.6 million (£190 million). However, the families of the victims criticized the agreement as a “sweetheart deal” that allows Boeing to avoid full responsibility for the deaths.

The settlement now awaits approval by a US judge.

By pleading guilty, Boeing will avoid a criminal trial, something the victims’ families have been advocating for. The company has faced significant scrutiny over its safety record since the 737 Max crashes in 2018 and 2019, which led to the global grounding of the plane for over a year.

In 2021, prosecutors charged Boeing with one count of conspiracy to defraud regulators, alleging it deceived the Federal Aviation Administration (FAA) about its MCAS flight control system, implicated in both crashes. Boeing agreed to pay a penalty and undergo a three-year period of increased monitoring and reporting to avoid prosecution.

However, in January, just before that period was set to end, an incident occurred where a door panel in a Boeing plane operated by Alaska Airlines blew out soon after take-off, forcing the jet to land. No one was injured, but the incident raised concerns about Boeing’s progress in improving its safety and quality record.

In May, the DoJ found that Boeing had violated the terms of the agreement, opening the possibility of prosecution. Boeing’s decision to plead guilty marks a significant blemish on its record, as it now has a criminal record despite being a prominent military contractor for the US government and one of the world’s largest manufacturers of commercial jets. It is unclear how this criminal record will affect the firm’s contracting business, as the government typically bars or suspends firms with such records from bidding but can grant waivers.

Paul Cassell, a lawyer representing some families of the 2018 and 2019 crash victims, criticized the deal, saying, “This sweetheart deal fails to recognize that because of Boeing’s conspiracy, 346 people died. Through crafty lawyering between Boeing and the DoJ, the deadly consequences of Boeing’s crime are being hidden.” He urged the judge to reject the plea and set the matter for a public trial to ensure all facts surrounding the case are aired before a jury.

In a June letter to the government, Mr. Cassell had urged the DoJ to fine Boeing more than $24 billion.

Ed Pierson, executive director of Foundation for Aviation Safety and a former senior manager at Boeing, said the plea was “seriously disappointing” and “a terrible deal for justice”.

“Instead of holding individuals accountable, they’re just basically giving them another get out of jail free card,” he said.

A Boeing 737 Max plane operated by Indonesia’s Lion Air crashed in late October 2018 shortly after take-off, killing all 189 people on board. Just months later, an Ethiopian Airlines plane crashed, killing all 157 passengers and crew.

In the 2021 deal, Boeing agreed to pay $2.5 billion to resolve the matter, which included a $243 million criminal penalty and $500 million to a victims’ fund.

This deal outraged family members of the crash victims, who were not consulted on the terms and have called for the company to stand trial.

Senior staff at the Department of Justice (DoJ) recommended pursuing prosecution, according to CBS News, the BBC’s US news partner, reported in late June.

At a hearing in June, Senator Richard Blumenthal stated that he believed there was “near overwhelming evidence” that prosecution should be pursued.

Lawyers for the family members said the DoJ was concerned it did not have a strong case against the company.

Mark Forkner, a former Boeing technical pilot and the only individual to face criminal charges from the incident, was acquitted by a jury in 2022. His lawyers argued that he was being scapegoated.

Mark Cohen, a professor emeritus at Vanderbilt University who has studied corporate punishments, explained that prosecutors often prefer plea deals or deferred prosecution agreements. These agreements allow the government to avoid the risks of a trial and can provide greater power over a company than a typical sentence.

“Because it’s easier to get than going to trial, it may ease the burden on the prosecutor but the prosecutor also may believe it’s a better sanction [because] they may be able to impose requirements that aren’t normally in sentencing guidelines,” Cohen said.

He noted that Boeing’s status as a key government contractor likely influenced the decision on how to proceed.

“They’ve got to think about the collateral consequences,” he said. “You don’t take these kinds of cases lightly.”

The issues with MCAS were not Boeing’s first legal troubles. Since 2015, the company has paid millions in penalties to the Federal Aviation Administration to resolve various claims of improper manufacturing and other issues.

Boeing also continues to face investigations and lawsuits related to the incident on the January Alaska Airlines flight.