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Boeing has agreed to plead guilty to a criminal fraud charge related to the fatal 737 Max crashes, the Justice Department announced on Sunday. This comes months after U.S. prosecutors accused the aerospace giant of violating a 2021 settlement that protected it from prosecution.
As part of the deal, Boeing will pay a $243.6 million fine. Additionally, an independent compliance monitor will oversee Boeing’s adherence to compliance standards for three years during a probationary period. The company must also invest at least $455 million in compliance and safety programs, according to a court filing by U.S. prosecutors late Sunday. This plea deal is pending approval by a federal judge.
The agreement also stipulates that Boeing’s board of directors must meet with the families of the crash victims.
Faced with the prospect of a trial or accepting the guilty plea and its terms, Boeing opted for the plea deal just as it was attempting to recover from its manufacturing and safety crises, appoint a new CEO, and acquire its fuselage maker, Spirit AeroSystems.
The guilty plea will label Boeing a felon, potentially complicating its ability to sell products to the U.S. government. Approximately 32% of Boeing’s nearly $78 billion in revenue last year came from its defense, space, and security unit.
“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.
In May, the Justice Department declared that Boeing had violated the 2021 agreement. Under that deferred prosecution agreement, Boeing had agreed to pay $2.5 billion, including an initial $243.6 million criminal fine, compensation to airlines, and a $500 million fund for victims’ families.
The 2021 settlement was set to expire two days after a door panel blew out of a nearly new 737 Max 9 operated by Alaska Airlines on January 5. Although there were no serious injuries, the incident sparked a new safety crisis for Boeing.
The U.S. accused Boeing of conspiracy to defraud the government by misleading regulators about the inclusion of a flight-control system on the Max that was later implicated in two crashes—a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019. All 346 people on board those flights were killed.
U.S. prosecutors informed victims’ families on June 30 that they planned to seek a guilty plea from Boeing, a move family attorneys criticized as “a sweetheart deal.”
Paul Cassell, a lawyer for the victims’ families, stated he plans to ask the federal judge to reject the deal 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.”
Article generated from corporate media reports.
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