On July 7th, the US government admitted in a court filing that Boeing has committed fraud in the investigation of the 737 MAX fatal crashes, as reported by Reuters. The company confessed to conspiracy to commit fraud in the US Department of Justice’s investigations into two fatal crashes involving 737 MAX planes and agreed to pay a fine of 2.436 billion US dollars.
The plea agreement still requires approval from the judge. Between 2018 and 2019, two Boeing 737 MAX aircraft crashed separately in Indonesia and Ethiopia within a span of five months, resulting in the deaths of 346 people. Boeing has acknowledged committing serious crimes in these two fatal crash incidents.
The plea agreement reached between Boeing and the US Department of Justice has quickly drawn criticism from families of the air disaster victims, who are hoping for Boeing to face trial and bear stricter financial consequences.
In January this year, an Alaska Airlines Boeing 737 MAX plane experienced a door seal detachment incident, revealing ongoing safety and quality issues within Boeing. The criminal charges from the Justice Department have deepened the crisis faced by Boeing.
While Boeing may seek immunity, the plea agreement could jeopardize the company’s ability to secure lucrative government contracts with institutions such as the US Department of Defense and NASA.
In May, after the Justice Department found that Boeing violated a settlement agreement related to the fatal crash incidents reached in 2021, criminal charges were brought against the company. Boeing is also facing another criminal investigation related to the Alaska Airlines plane door seal detachment incident.
Despite this, by pleading guilty, Boeing has avoided a trial that would have exposed the company’s decision-making before the fatal air disasters to broader public scrutiny. The plea agreement is also expected to facilitate the company’s acquisition of Spirit AeroSystems.
A Boeing spokesperson confirmed that the company has reached a preliminary agreement with the Department of Justice on the terms of the solution.
As part of the plea agreement, Boeing has agreed to spend at least 455 million US dollars over the next three years to enhance safety and compliance programs. The company’s board of directors will be required to meet with relatives of those who perished in the 737 MAX crash incidents.
Additionally, an independent monitor will be appointed to oversee the company’s compliance. During the monitor’s three-year term, Boeing will be under probation.
However, some lawyers representing families of the air disaster victims have indicated plans to pressure the judge overseeing the case, Reed O’Connor, to reject the plea agreement. In another court document, lawyers cited O’Connor’s statement in a ruling in February 2023 labeling Boeing’s crimes as possibly the deadliest corporate crime in US history.
Erin Applebaum, a lawyer from the Kreindler & Kreindler LLP firm representing some victims’ families, dismissed the agreement as merely a “slap on the wrist.”
The Justice Department had presented the plea agreement to Boeing on June 30, demanding the company accept the deal before this weekend, failing which they would face trial on FAA conspiracy fraud charges.
At the core of Boeing’s fraudulent behavior was making false statements to the Federal Aviation Administration while being aware, falsely claiming that new software could reduce pilot training requirements, thus saving costs.
The two aforementioned crash incidents were associated with the Maneuvering Characteristics Augmentation System (MCAS) software. The software’s function was to automatically push the aircraft nose down under certain circumstances. These two accidents led to the grounding of Boeing MAX fleets for 20 months by the FAA, causing Boeing to incur losses of 20 billion US dollars. The US government lifted the grounding ban in November 2020.
The plea agreement only pertains to Boeing’s actions before the fatal crash incidents and does not shield Boeing from any potential investigations or charges related to the January 5 incident or other actions.
According to the Department of Justice’s documents, the agreement also does not protect any Boeing executives, although individual charges are deemed unlikely due to statute of limitations. A former chief technical pilot at Boeing had previously been charged with Boeing fraud allegations but was acquitted by a jury in 2022.
This payment by Boeing related to fatal air disasters will be the second fine paid by the company, bringing the total fine amount to the maximum allowed. As part of a 2.5 billion US dollar settlement agreement reached in 2021, the company had previously paid fines. The 2.436 billion US dollar fine is attributed to the expenses saved by Boeing due to not having conducted full flight simulator training for MAX pilots.
Last month, families of the air disaster victims pressured the Justice Department to demand Boeing compensates 25 billion US dollars.
The Department of Justice stated in court documents that they and Boeing are working on drafting a comprehensive written plea agreement, which is expected to be submitted to a federal court in Texas by July 19th.