Agencies
US embattled aerospace giant Boeing will plead guilty to criminal fraud conspiracy to resolve the Justice Department (DOJ) investigation linked to two 737 Max fatal crashes, the government said in a court filing late on Sunday. But what does it bring for the future of the company mired in a series of incidents involving its aircraft in the recent period?
The agreement in principle between the DOJ and Boeing allows the company to escape a courtroom battle with federal prosecutors but could complicate its efforts to overcome an ongoing crisis sparked by the Jan. 5 mid-air panel blowout on an Alaska Airlines-operated flight.
The deal follows a DOJ finding in May that Boeing breached a 2021 agreement that had shielded it from prosecution over the crashes in Indonesia and Ethiopia in 2018 and 2019 that killed 346 people.
What was the original
agreement?
The DOJ in 2021 agreed to hold off prosecuting Boeing and asked a judge to dismiss a charge of conspiring to defraud the U.S. Federal Aviation Administration (FAA) so long as the company abided by the deal’s terms over a three-year period.
Boeing agreed to overhaul compliance practices to prevent violation of U.S. fraud laws and submit regular reports. However, the January mid-air emergency occurred two days before the agreement expired.
The planemaker had told prosecutors it disagreed with their finding and said it “honored the terms” of the settlement.
What’s next?
A judge will need to sign off on the agreement, which DOJ and Boeing hammered out in advance of a July 7 deadline for the government to decide whether to prosecute the company. The DOJ and Boeing are working to finalize it and file it to the court by July 19, the filing said.
What does a guilty plea mean?
A felony conviction could disrupt Boeing’s ability to secure government contracts such as those with the U.S. military. Boeing’s government contracts in 2023 accounted for 37% of its annual revenue, including foreign military sales through the U.S. government. Boeing had $14.8 billion in Defense Department contracts in 2022, per a government report.
“In the world of government contracting, an indictment or finding of criminal liability can have a significant impact on a company,” said Franklin Turner, a government contracts lawyer at McCarter & English.
Boeing could seek waivers from government departments and agencies to continue contracting with them. Some previous DOJ settlements have provided details on how officials should address the issue. It remains unclear to what extent the proposed Boeing plea deal does.
What are the penalties?
The agreement includes a $487.2 million financial penalty, about half of which Boeing would need to pay as the government would credit it for previous penalties.
Boeing would likely be forced to pay restitution, an amount to be decided by a judge. The company already paid $2.5 billion in penalties and restitution in 2021 in connection with the original conspiracy charge
