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US set to criminally charge Boeing with fraud

The US Justice Department plans to formally offer a plea agreement to Boeing, according to sources.

The US Justice Department plans to formally offer a plea agreement to Boeing, according to sources. Photo: Getty

The US Justice Department will criminally charge Boeing with fraud over two fatal crashes and ask the planemaker to plead guilty or face a trial, two people familiar with the matter say.

The Justice Department planned to formally offer a plea agreement to Boeing later in the day, which includes a financial penalty and imposition of an independent monitor to audit the company’s safety and compliance practices for three years, the sources said.

Justice Department officials plan to give Boeing until the end of the week to respond to the offer, which they will present as non-negotiable, the sources said. Should Boeing refuse to plead guilty, prosecutors plan to take the company to trial, they said.

Boeing and the Justice Department declined to comment.

The Justice Department decided to charge Boeing after finding it violated a 2021 agreement that had shielded it from prosecution over the fatal crashes involving 737 MAX jets. The deadly crashes took place in 2018 and 2019, killing 346 people.

The decision to move toward criminally charging Boeing deepens an ongoing crisis engulfing the planemaker, exposing the company to additional financial ramifications and tougher government oversight.

A guilty plea could also carry implications for Boeing’s ability to enter into government contracts such as those with the US military that make up a significant portion of its revenue. Companies with felony convictions can receive waivers, and it remained unclear to what extent the Justice Department’s proposed plea deal addresses the issue.

Justice Department officials revealed their decision to victims’ family members during a call on Sunday (US time). The proposal would require Boeing to plead guilty to conspiring to defraud the US Federal Aviation Administration in connection with the fatal crashes, the sources said.

The Justice Department’s push for Boeing to plead guilty follows a separate January in-flight blowout that exposed continuing safety and quality issues at the planemaker.

A panel blew off a new Boeing 737 MAX 9 jet during a January 5 Alaska Airlines flight, just two days before a 2021 deferred prosecution agreement with the Justice Department expired.

That agreement had shielded Boeing from prosecution over the 2018 and 2019 fatal crashes. Boeing has previously said it “honoured the terms” of the settlement and formally told prosecutors it disagrees with the finding that it violated the agreement.

The proposed agreement also includes a $US487.2 million ($730.2 million) financial penalty, only half of which Boeing would be required to pay, they added. That is because prosecutors are giving the company credit for a payment it made as part of the previous settlement related to the fatal crashes of the Lion Air and Ethiopian Airlines flights. The penalty is the maximum legally allowed for the charge.

Boeing could also likely be forced to pay restitution under the proposal’s terms, the amount of which will be at a judge’s discretion, the sources said. The offer also contemplates subjecting Boeing to three years of probation, they said.

The plea deal would also require Boeing’s board to meet with victims’ relatives, they said.

Victims’ relatives expressed anger toward Justice Department officials during the call, viewing the proposed plea deal as failing to hold Boeing accountable for the fatal crashes, said Erin Applebaum, one of the lawyers representing victims’ relatives.

“The 737 MAX families vigorously oppose the shameful new sweetheart deal between Boeing and the Department of Justice,” Applebaum said.

She called the proposed plea agreement’s financial penalty “negligible” and said victims’ families will oppose the deal in court.

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