Boeing to plead guilty to criminal fraud charge

8 Jul 2024 By Natalie Sherman, BBC News, New York

Boeing has agreed to plead guilty to a criminal fraud conspiracy charge after the US found the company violated a deal meant to reform it after two fatal crashes by its 737 Max planes that killed 346 passengers and crew.

The Department of Justice (DoJ) said the plane-maker had also agreed to pay a criminal fine of $243.6m (£190m).

However, the families of the people who died on the flights five years ago have criticised it as a “sweetheart deal” that would allow Boeing to avoid full responsibility for the deaths. One called it an “atrocious abomination”.

The settlement must now be approved by a US judge.

By pleading guilty, Boeing will avoid the spectacle of a criminal trial – something that victims’ families have been pressing for.

The company has been in crisis over its safety record since two near-identical crashes involving 737 Max aircraft in 2018 and 2019. It led to the global grounding of the plane for more than a year.

In 2021, prosecutors charged Boeing with one count of conspiracy to defraud regulators, alleging it had deceived the Federal Aviation Administration (FAA) about its MCAS flight control system, which was implicated in both crashes.

It agreed not to prosecute Boeing if the company paid a penalty and successfully completed a three-year period of increased monitoring and reporting.

But in January, shortly before that period was due to end, a door panel in a Boeing plane operated by Alaska Airlines blew out soon after take-off and forced the jet to land.

No-one was injured during the incident but it intensified scrutiny over how much progress Boeing had made on improving its safety and quality record.

In May, the DoJ said it had found Boeing had violated the terms of the agreement, opening up the possibility of prosecution.

Boeing’s decision to plead guilty is still a significant black mark for the firm because it means that the company – which is a prominent military contractor for the US government – now has a criminal record. It is also one of the world’s two biggest manufacturers of commercial jets.

It is not immediately clear how the criminal record will affect the firm’s contracting business. The government typically bars or suspends firms with records from participating in bids, but can grant waivers.

Paul Cassell, a lawyer representing some families of people killed on the 2018 and 2019 flights, said: “This sweetheart deal fails to recognise that because of Boeing’s conspiracy, 346 people died.

“Through crafty lawyering between Boeing and DoJ, the deadly consequences of Boeing’s crime are being hidden.”

He called on the judge assessing the deal to “reject this inappropriate plea and simply set the matter for a public trial, so that all the facts surrounding the case will be aired in a fair and open forum before a jury”.

In a letter to the government in June, Mr Cassell had urged the DoJ to fine Boeing more than $24bn.

Zipporah Kuria who lost her father Joseph in one of the fatal crashes, said the plea was an “atrocious abomination”.

“Miscarriage of justice is a gross understatement in describing this,” she said. “I hope that, God forbid, if this happens again the DoJ is reminded that it had the opportunity to do something meaningful and instead chose not to.”

Ed Pierson, executive director of Foundation for Aviation Safety and a former senior manager at Boeing, said the plea was “seriously disappointing” and “a terrible deal for justice”.

“Instead of holding individuals accountable, they’re just basically giving them another get out of jail free card,” he said.

A Boeing 737 Max plane operated by Indonesia’s Lion Air crashed in late October 2018 shortly after take-off, killing all 189 people on board. Just months later, an Ethiopian Airlines plane crashed, killing all 157 passengers and crew.

In the 2021 deal, Boeing also agreed to pay $2.5bn to resolve the matter, including a $243m criminal penalty and $500m to a victims’ fund.

The deal outraged family members, who were not consulted on the terms and have called for the company to stand trial.

Senior staff and officials at the DoJ recommended in favour of prosecution, CBS News, the BBC’s US news partner reported in late June.

At a hearing in June, Senator Richard Blumenthal said he believed there was “near overwhelming evidence” that prosecution should be pursued.

Lawyers for family members said the DoJ was worried it did not have a strong case against the firm.

Mark Forkner, a former Boeing technical pilot who was the only person to face criminal charges arising from the incident, was acquitted by a jury in 2022. His lawyers had argued he was being used as a scapegoat.

Mark Cohen, a professor emeritus at Vanderbilt University, who has studied corporate punishments, said prosecutors often prefer plea deals or deferred prosecution agreements, which allow them to avoid the risk of a trial and can give the government greater power over a company than a typical sentence.

“Because it’s easier to get than going to trial, it may ease the burden on the prosecutor but the prosecutor also may believe it’s a better sanction [because] they may be able to impose requirements that aren’t normally in sentencing guidelines,” he said.

He said there was little doubt that Boeing’s status as a key government contractor played a role in determining how to proceed.

“They’ve got to think about the collateral consequences,” he said. “You don’t take these kinds of cases lightly.”

The issues with MCAS were not Boeing’s first brush with the law.

It has also paid millions in penalties to the Federal Aviation Administration since 2015 to resolve a series of claims of improper manufacturing and other issues.

The company also continues to face investigation and lawsuits sparked by the incident on the January Alaska Airlines flight.

Source : https://www.bbc.com/news/articles/cjjjj85z0lno