Boeing To Plead Guilty To Fraud For Violating Deal Over 737 Max Crashes

(Bloomberg) -- Boeing Co. has agreed to plead guilty to criminal conspiracy to defraud the US after the Justice Department concluded the planemaker failed to adhere to an earlier settlement stemming from two fatal crashes of its 737 Max jetliner.

Under the agreement in principle with US prosecutors, Boeing faces a criminal fine of as much as $487.2 million, the maximum allowed by law, though the actual amount will be determined by a judge, according to the Justice Department. 

The company will install a corporate monitor and be required to spend at least $455 million to bolster its compliance and safety programs over the next three years as part of the deal, which requires court approval. It would also be subject to three years of court-supervised probation.

The guilty plea marks a low point in the company’s century-long history after years of turmoil sparked by two crashes of its 737 Max aircraft in 2018 and 2019 that killed 346 people. The deal may also spare Boeing from the distraction of a criminal trial at a time when its finances are in disarray and its leadership is in limbo. 

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Boeing had no immediate comment. The planemaker in June had told prosecutors that it disagreed with the finding that it had violated the earlier deal. 

The Justice Department determined in May that Boeing breached a 2021 deferred-prosecution agreement tied to the crashes struck in the waning days of the Trump Administration.  

As part of the 2021 deal, Boeing paid a criminal fine of $243.6 million and admitted to deceiving the Federal Aviation Administration about an obscure flight control system linked to the crashes. The company also pledged to improve its internal safety controls. In return, the government would withdraw a criminal charge against the company after three years.

The agreement was bitterly criticized by families of the crash victims, who were not consulted before it was unveiled.

Just days before the agreement was set to expire, a fuselage panel blew off a 737 Max 9 jet operated by Alaska Airlines in early January. The department later concluded Boeing that failed to meet a requirement of the 2021 deal to implement an effective compliance program to prevent and detect violations of US fraud laws.

The case is US v. Boeing, 21-cr-005, US District Court, Northern District of Texas (Fort Worth).

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