Rescue workers work at the crash site of an Ethiopian Airlines flight near Bishoftu or Debre Zeit, south of Addis Ababa, Ethiopia, Monday, March 11, 2019.
Mulugeta Ayene | Reuters
Boeing has agreed to plead guilty to criminal fraud linked to the deadly 737 Max crash, a decision that brands the US aerospace giant as a criminal but allows it to avoid trial while it tries to turn a page from safety and production crises.
Under the agreement, Boeing will face a fine of up to $487.2 million, although the Justice Department recommended that the court credit Boeing with half of what it paid under a previous settlement, resulting in a fine of $243.6 million. The plea agreement requires the approval of a federal judge to take effect.
If the deal is accepted, it could complicate Boeing’s ability to sell products to the US government as a criminal, although the company could seek waivers. About 32 percent of Boeing’s nearly $78 billion in revenue last year came from its defense, space and security unit.
An independent compliance monitor will also be installed to oversee compliance at Boeing for three years during a trial period. Boeing will also have to invest at least $455 million in compliance and safety programs, according to a court filing.
Boeing also agreed to have its board of directors meet with family members of the crash victims.
The Justice Department disclosed the deal late Sunday, months after U.S. prosecutors said the aerospace giant violated a 2021 settlement that shielded it from prosecution for three years.
The settlement offer forced Boeing to decide between a guilty plea and terms attached or a trial, just as the company tried to turn around production and safety crises, choose a new chief executive and acquire the fuselage maker. Spirit AeroSystems.
“We can confirm that we have reached an agreement on the terms of the settlement with the Department of Justice, subject to the memorization and approval of specific terms,” Boeing said in a statement after the court filing.
In May, the Justice Department said Boeing had violated the 2021 agreement. Under that deferred prosecution agreement, Boeing agreed to pay $2.5 billion, including a $243.6 million criminal fine, in restitution to airlines and a $500 million fund for victims’ family members.
That 2021 settlement was set to expire two days after a door panel blew off a near-new 737 Max 9 operated by Alaska Airlines on January 5. Although there were no serious injuries, the accident created a new safety crisis for Boeing. A preliminary report by the National Transportation Safety Board found that the key bolts holding the door frame in place were not attached to the aircraft.
The US accused Boeing of conspiring to defraud the government by misleading regulators about the inclusion of a flight control system in the Max that was later implicated in the two crashes – a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019. All 346 on board the flights were killed.
US prosecutors told family members of the crash victims on June 30 that they planned to ask Boeing to plead guilty, a plan family lawyers called “a sweet deal.”
Paul Cassell, an attorney for the victims’ family members, said he plans to ask the federal judge in the case to reject the plea deal and “just put the matter to a public trial so that all the facts surrounding the case can be aired.” in a fair and open forum before a jury.”
