Recently, Boeing has agreed to plead guilty to criminal fraud in connection to the fatal crashes of the 737 Max. This decision, while branding the U.S. aerospace giant as a felon, allows them to avoid trial as they attempt to navigate through safety and manufacturing crises. The plea deal stipulates that Boeing could face a fine of up to $487.2 million, with the Justice Department proposing to credit Boeing with half of that amount paid under a previous agreement, thus resulting in a fine of $243.6 million.
If the plea deal is accepted, it could potentially complicate Boeing’s ability to sell products to the U.S. government as a felon. However, the company could potentially seek waivers, which would allow them to continue conducting business with the government. It’s worth noting that around 32% of Boeing’s revenue last year came from its defense, space, and security unit.
Aside from the monetary fine, an independent compliance monitor would be installed to oversee compliance at Boeing for a period of three years during a probationary period. Furthermore, Boeing would be required to invest at least $455 million in compliance and safety programs. As part of the agreement, Boeing’s board of directors agreed to meet with family members of the crash victims.
The Justice Department revealed the plea deal late Sunday, months after U.S. prosecutors accused Boeing of violating a 2021 settlement that shielded them from prosecution for three years. The plea deal offer presented Boeing with the decision to plead guilty and accept the terms, or face trial. This decision was made at a critical time for the company as they were undergoing leadership changes and seeking to overcome manufacturing and safety obstacles.
The U.S. accused Boeing of conspiracy to defraud the government by misleading regulators regarding the inclusion of a flight-control system on the 737 Max. This system was later implicated in two fatal crashes – a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019, resulting in the loss of 346 lives. The 2021 settlement, which was violated, required Boeing to pay $2.5 billion, including a $243.6 million criminal fine, compensation to airlines, and a fund for victims’ families.
Boeing’s agreement to plead guilty to criminal fraud involving the 737 Max crashes marks a significant development for the aerospace company. The implications of this decision, including the financial penalties and compliance monitoring, will undoubtedly have a lasting impact on Boeing’s operations and reputation in the industry.