The U.S. Justice Department on Wednesday filed an agreement with Boeing Co that will see the aerospace giant plead guilty to a fraud charge for misleading U.S. regulators who approved the 737 Max jetliner before two planes crashed, killing 346 people.
A detailed plea agreement has been filed in federal district court in Texas. The U.S. company and the Justice Department earlier this month agreed on the plea and broad terms of the agreement.
The final version said Boeing admitted it had reached a deal “dishonestly” through its employees to deceive a FAA panel evaluating the 737 Max. The plea agreement said that as a result of Boeing’s deception, the FAA received “incomplete and inaccurate information” about the plane’s flight control software and how much training pilots needed.
U.S. District Judge Reed O’Connor could accept the agreement and verdict reached between Boeing and prosecutors or reject it, which could lead to new negotiations between the company and the Justice Department.
The deal calls for the appointment of an independent compliance monitor, three years of probation and a $243.6 million fine. It also requires Boeing to invest at least $455 million “in its compliance, quality and safety programs.”
Boeing issued a statement saying it “will continue to work transparently with regulators and take significant actions within Boeing to further strengthen” these programs.
Paul Cassell, an attorney for families of 737 Max crash victims who want Boeing to go to trial, criticized the agreement.
“This plea addresses all of the concerns the family has. We will vigorously object to the preferential and preferential treatment Boeing has received.”
Boeing is accused of misleading the FAA about the Max before the agency certified it for flight. Boeing has not disclosed to airlines and pilots a new software system called MCAS that can turn the plane’s nose down without pilot input if sensors detect the plane may be entering an aerodynamic stall.
Max planes crashed in Indonesia in 2018 and Ethiopia in 2019 due to erroneous sensor readings that caused the nose of the plane to drop and the pilot was unable to regain control. Max jets were grounded worldwide after the second crash until the company redesigned MCAS to reduce its functionality and use signals from two sensors instead of just one.
In 2021, Boeing avoided prosecution by reaching a $2.5 billion settlement with the Justice Department that included a previous $243.6 million fine. It looked like the fraud charges would be permanently dismissed until January, when a team covering unused exits blew up a 737 Max during an Alaska Airlines flight. This has triggered new scrutiny of the company’s security.
In May, prosecutors said Boeing violated the terms of the 2021 agreement by failing to make promised changes to detect and prevent violations of federal antifraud laws. Boeing agreed this month to plead guilty to felony fraud charges rather than endure a potentially lengthy public trial.
Experts in corporate governance and white-collar crime said the role and authority of the ombudsman were seen as key terms of the new plea deal. Cassel said families of crash victims should have the right to propose an ombudsman for a judge to appoint. The agreement requires the government to select the display “based on feedback from Boeing.”
In Wednesday’s filing, the Justice Department said Boeing “has taken considerable steps” to improve its anti-fraud compliance program since 2021, but that the changes “have not been sufficiently implemented or tested to demonstrate that they will Prevent and detect similar misconduct in the future.”
That’s where independent monitors step in “to reduce the risk of misconduct,” the plea agreement states.
Arlington, Virginia-based Boeing is a major contractor for the Pentagon and NASA, and the guilty plea is not expected to change that. Even after a criminal conviction, there is room for government agencies to hire companies. The plea agreement did not address that topic.
Relatives of some passengers plan to ask a judge to reject the plea deal. They want a full trial and harsher penalties for Boeing, and many want charges brought against current and former Boeing executives.
If a judge approves the deal, it would apply to criminal charges stemming from the 737 Max crashes. It would not resolve other issues, which may include lawsuits related to the Alaska Airlines blowout.
O’Connor will give the family’s attorneys seven days to file a legal motion opposing the plea deal. Boeing and the Justice Department will have 14 days to respond, and families will have five days to respond to documents submitted by the company and the government.
