Connect with us

Boeing to plead guilty in DOJ case tied to deadly 737 Max crashes

Internashonal

Boeing to plead guilty in DOJ case tied to deadly 737 Max crashes


Boeing (BA) will plead guilty to criminal fraud conspiracy in a Justice Department agreement that brands the aviation giant as a corporate felon but could resolve a big legal headache as Boeing tries to convince customers and investors that it has its problems under control.

The charge and plea deal described by US prosecutors in a court document Sunday relates to actions taken by Boeing to mislead FAA regulators before two 737 MAX fatal crashes at the end of last decade.

Boeing will have to pay fines of up to $487.2 million, although a judge will rule on the final amount. The Justice Department asked that Boeing be credited for fines already paid, which means the new amount could be $243.6 million.

The company will also have to operate with a corporate monitor for the next three years and spend $455 million to improve its compliance and safety.

“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,” Boeing said in a statement.

Boeing stock was up 3% in Monday morning trading.

The deal presents Boeing with plenty of new perils.

A plea deal could get rejected by a judge. Families of the victims of the two crashes last decade have vowed to oppose the pact. And perhaps the biggest danger is the effect that a conviction may have on Boeing’s already-battered bottom line.

Criminal convictions can foreclose or suspend a company’s right to contract with the federal government and frustrate its ability to secure loans, according to Eddie Jauregui, a former federal prosecutor and white-collar defense attorney with Holland & Knight.

Those consequences have particular meaning for Boeing, which counts the federal government as its largest customer. It also happens to be the country’s largest exporter.

The matter could end up with an executive agency known as the Interagency Suspension and Debarment Committee (ISDC), which holds power to discuss government-wide suspensions and debarments that can end or disrupt a company’s business with the US government.

“The considerations are many, and they are weighty,” Jauregui said. “I think the government contract work is probably an extremely important component for Boeing.”

Boeing is in this spot after DOJ officials decided to officially revoke legal protections extended to Boeing in a January 2021 deferred prosecution agreement.

The prior agreement followed investigations into two 737 Max 8 crashes in 2018 and 2019 that killed 346 people.

FILE PHOTO: A Boeing 737 Max aircraft during a display at the Farnborough International Airshow, in Farnborough, Britain, July 20, 2022.  REUTERS/Peter Cziborra/File PhotoFILE PHOTO: A Boeing 737 Max aircraft during a display at the Farnborough International Airshow, in Farnborough, Britain, July 20, 2022.  REUTERS/Peter Cziborra/File Photo

A Boeing 737 Max aircraft during a display in Farnborough, Britain, in 2022. REUTERS/Peter Cziborra/File Photo (Reuters / Reuters)

Boeing previously had admitted that two of its former Max test pilots deceived the FAA about a flight control system called Maneuvering Characteristics Augmentation System, or MCAS.

Prosecutors agreed to table a charge alleging that Boeing conspired to defraud the federal government so long as Boeing spent three years designing, implementing, and enforcing a compliance and ethics program for safer manufacturing and oversight practices.

Just days before that agreement was set to expire this past January, Boeing found itself at the center of a new safety crisis caused by a door plug blowout aboard an Alaska Airlines (ALK) Boeing 737 Max 9.

Prosecutors told a judge in May that Boeing had violated the 2021 deferred prosecution agreement.

Boeing did not have a lot of good choices as the DOJ weighed a new criminal charge. If Boeing chose not to plead guilty, the DOJ could take the company to trial, which would expose Boeing to more turmoil and public scrutiny.

“It’s never an easy decision for a company, especially one that is as tied with the United States government as Boeing, to make a decision to plead guilty,” Jauregui said.

But even this new plea deal still faces challenges.

One law firm representing families of people killed in the Boeing 737 Max crashes said the families will be asking the judge “to not accept the plea deal in its current form.”

Another law firm has said families “would most certainly object” to what it called a “sweetheart plea deal” described to them by DOJ officials.

FILE - The U.S. Justice Department sign is seen, Nov. 18, 2022, in Washington. Educators in Kansas’ largest public school district discriminated against Black and disabled students when they used certain kinds of discipline, according to the U.S. Justice Department, which announced an agreement Tuesday, July 2, 2024, in which the district has agreed to revise its policies. (AP Photo/Andrew Harnik, File)FILE - The U.S. Justice Department sign is seen, Nov. 18, 2022, in Washington. Educators in Kansas’ largest public school district discriminated against Black and disabled students when they used certain kinds of discipline, according to the U.S. Justice Department, which announced an agreement Tuesday, July 2, 2024, in which the district has agreed to revise its policies. (AP Photo/Andrew Harnik, File)

Justice Department seal, in Washington. (AP Photo/Andrew Harnik) (ASSOCIATED PRESS)

Boeing and the DOJ would, in fact, need court approval to enter a plea deal. The two sides expect to file a final agreement by July 19.

If a deal were rejected, Boeing and the government could then go back to the drawing board to negotiate new terms or the government could press forward with charges.

Matthieu Goddeyne, a former New York County assistant district attorney and federal white-collar defense lawyer for Gunster, said a guilty plea from Boeing still leaves the Justice Department with the difficult task of enforcing the law while also trying to uphold victims’ rights and encourage safe aircraft manufacturing.

“I don’t necessarily think that the government’s job is to try and make Boeing fail or try and put thousands of people out of work,” Goddeyne said. “I think that their job is to try to do justice, to do right by the victims, and try and effectuate some change within the company.”

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance



Source link

More in Internashonal

A2Z ADMINISTRATION

AD

To Top