Boeing has agreed to plead guilty to criminal fraud conspiracy as part of a settlement with the US Justice Department (DOJ) to conclude an investigation related to two fatal 737 MAX crashes, according to a government court filing on Sunday.
This agreement allows Boeing to avoid a legal confrontation with federal prosecutors but may hinder its attempts to recover from the crisis triggered by the mid-air panel blowout on an Alaska Airlines flight on January 5. The settlement follows a DOJ finding in May that Boeing violated a 2021 agreement, which had previously protected it from prosecution over crashes in Indonesia and Ethiopia that resulted in 346 deaths.
Under the 2021 agreement, the DOJ had agreed not to prosecute Boeing and requested a judge to dismiss a charge of conspiring to defraud the US Federal Aviation Administration, provided Boeing adhered to the terms for three years. Boeing committed to revising its compliance practices to comply with US fraud laws and to provide regular reports. However, the mid-air emergency occurred just days before the agreement was set to expire.
Boeing has disputed the DOJ's findings and maintains it complied with the settlement terms. The agreement now requires judicial approval, with both parties aiming to finalize and file it by July 19, ahead of a July 7 deadline for the government to decide on prosecution.
A guilty plea could affect Boeing's ability to secure government contracts, including those with the US military, which accounted for 37% of its 2023 revenue. Boeing had $14.8 billion in Defense Department contracts in 2022. The agreement includes a $487.2 million financial penalty, with Boeing required to pay restitution, the amount of which will be determined by a judge. Additionally, Boeing will be on probation for three years and must invest $455 million over three years to enhance its compliance and safety programs.
An independent monitor will be appointed to oversee Boeing's safety and compliance practices for three years. This reflects the Justice Department's renewed use of corporate monitors under President Joe Biden. Boeing's board will also meet with the families of the crash victims as part of the plea agreement.
