Rescuers 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 fatal 737 Max crashes, a move that brands the US aerospace giant a crook but allows it to avoid trial as it tries to turn the page on safety and manufacturing crises.
Under the agreement, Boeing would face a fine of up to $487.2 million, though the Justice Department recommended that the court credit Boeing with half of that amount that it paid under an earlier settlement, resulting in a $243.6 million fine. The plea agreement requires approval from a federal judge to take effect.
If the deal is accepted, it could complicate Boeing's ability to sell products to the U.S. government as a criminal, although the company could seek exemptions. About 32% of Boeing's nearly $78 billion in revenue last year came from its defense, space and security unit.
A Defense Department official said Monday that the Defense Department would evaluate Boeing's remediation plans and its agreement with the Justice Department “to determine what steps are necessary and appropriate to protect the federal government.”
The plea agreement also includes the appointment of an independent monitor to oversee Boeing's compliance for three years during a probationary period. Boeing would 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 the families of the accident victims.
The Justice Department disclosed the settlement late Sunday, months after U.S. prosecutors said the aerospace giant violated a 2021 agreement that shielded it from prosecution for three years.
The plea deal offer forced Boeing to decide between a guilty plea and the attached terms, or going to trial, just as the company was looking to turn around its manufacturing and safety crises, choose a new CEO and acquire its airframe maker. Spirit Aerosystems.
“We can confirm that we have reached an agreement in principle on the terms of a resolution with the Department of Justice, subject to the formalization and approval of specific terms,” Boeing said in a statement after the court filing.
In May, the Justice Department said Boeing had breached the 2021 settlement. Under that deferred prosecution agreement, Boeing agreed to pay $2.5 billion, including a $243.6 million criminal fine, compensation to airlines and a $500 million fund for victims’ families.
That 2021 deal was set to expire two days after a door panel exploded on a nearly new 737 Max 9 operated by Alaska Airlines On January 5, there were no serious injuries, but the crash created a new safety crisis for Boeing. A preliminary report by the National Transportation Safety Board determined that key bolts holding the door panel in place were not secured to the plane.
The United States accused Boeing of conspiring to defraud the government by misleading regulators about its inclusion of a flight control system on 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 people on board the flights were killed.
On June 30, U.S. prosecutors told relatives of the crash victims that they planned to seek a guilty plea from Boeing, a plan the family's lawyers called a “sweetheart deal.”
Shortly after the plea agreement was filed in federal court late Sunday night, victims' families said in a filing of their own that they would oppose the plea deal, arguing that it “makes unfair concessions to Boeing that other criminal defendants would never receive and fails to hold Boeing accountable for the deaths of 346 people.”
Paul Cassell, an attorney for the victims' families, said the judge should reject the plea deal and “simply set the matter for a public trial, so that all the facts surrounding the case can be laid out in a fair and open forum before a jury.”
The settlement requires that the corporate monitor overseeing Boeing's trial period be independent, an aspect of the agreement that was intended to address concerns raised by attorneys representing victims' families.
It also stipulates that there will be no limit to the compensation Boeing can pay to the surviving loved ones of victims. Still, lawyers have said Boeing should go to trial.
“Boeing is a huge company,” said Erin Applebaum, another of the families' attorneys. “Any check they write to the families is not going to bring the family members back.”
