Boeing Pleading Guilty to Fraud Over Deadly 737 Max Crashes, Faces Hefty Fines and Monitoring

In a significant development, Boeing has reached an agreement to plead guilty to a criminal fraud charge linked to the tragic 737 Max crashes, as announced by the Justice Department.

This announcement comes after U.S. prosecutors accused the aerospace giant of violating a settlement established in 2021 that shielded it from prosecution.

As part of this agreement, Boeing will be required to pay a substantial fine amounting to $243.6 million.

Additionally, an independent compliance monitor will supervise Boeing’s adherence to compliance standards for three years during a probationary period.

Furthermore, the company must allocate at least $455 million towards compliance and safety programs, as outlined in a court filing by U.S. prosecutors late Sunday.

It’s important to note that this plea deal is currently awaiting approval by a federal judge.

Under the terms of the agreement, Boeing’s board of directors is obligated to engage in meetings with the families of the crash victims.

Facing the choice between standing trial or accepting the guilty plea and its associated conditions, Boeing opted for the latter at a time when it was striving to recover from manufacturing and safety crises, appointing a new CEO, and finalizing its acquisition of fuselage maker Spirit AeroSystems.

It’s worth noting that this guilty plea will designate Boeing as a felon, potentially impacting its ability to sell products to the U.S. government.

Notably, approximately 32% of Boeing’s nearly $78 billion in revenue last year was attributed to its defense, space, and security unit.

Boeing acknowledged this development in a statement: “We can confirm that we have reached an agreement in principle on terms of a resolution with the Justice Department, subject to the memorialization and approval of specific terms.”

In May this year, The Justice Department declared that Boeing had violated the 2021 agreement.

Under this deferred prosecution agreement, Boeing had committed to paying $2.5 billion which included an initial $243.6 million criminal fine along with compensation for airlines and establishing a $500 million fund for victims’ families.

The 2021 settlement was scheduled for expiration just two days after an incident involving Alaska Airlines’ nearly new 737 Max 9 where a door panel blew out on January 5th – prompting new safety concerns for Boeing despite no serious injuries occurring.

The U.S. accused Boeing of conspiracy with intent to defraud the government by providing misleading information about including a flight-control system on the Max which was later implicated in two fatal crashes; Lion Air flight in October 2018 and Ethiopian Airlines flight in March 2019 resulting in loss of all 346 passengers aboard both flights.

On June 30th U.S prosecutors informed victims’ families about their intentions to seek a guilty plea from Boeing – prompting criticism from family attorneys who referred it as “a sweetheart deal.”

Paul Cassell representing attorneys for victims’ families expressed plans to ask federal judge involved in rejecting the deal while also proposing “simply setting up public trial so that all facts surrounding case can be aired through fair open forum before jury.”

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