Boeing to Admit Guilt in Fraud Case Over 737 Max Crashes
Boeing is set to plead guilty to a criminal fraud charge related to the two fatal 737 Max crashes in Indonesia and Ethiopia, as per a Department of Justice (DOJ) court filing. This plea, if approved by the overseeing judge, would label Boeing as a felon, potentially impacting its defense sector. However, the agreement falls short of the crash victims’ families’ demands, who had sought a criminal trial and a fine nearing $25 billion.
The plea agreement, to be entered in the U.S. District Court in Texas, includes Boeing paying $487.2 million in penalties and investing at least $455 million over three years to enhance its compliance and safety programs. Paul Cassell, an attorney for the families affected by the 2018 and 2019 crashes, which resulted in 346 deaths, filed an objection to the plea deal. The families argue that the agreement offers undue leniency to Boeing and fails to hold the company adequately accountable for the crashes.
Despite the legal challenges, Boeing’s shares rose on Monday as investors saw the deal as resolving a major uncertainty for the company. Cassell criticized the plea deal as a “sweetheart deal” that overlooks the gravity of Boeing’s actions, which he claims led to the deaths of 346 people. Representatives for the DOJ did not immediately respond to requests for comment.
Boeing confirmed that an agreement in principle had been reached with the DOJ, pending finalization and approval of the terms. Following the Ethiopian Airlines crash in 2019, the Federal Aviation Administration (FAA) grounded Boeing’s 737 MAX series aircraft for 20 months. The DOJ alleged in May that Boeing violated the terms of a 2021 agreement, where Boeing had already agreed to pay over $2.5 billion to settle criminal charges related to two employees who concealed information from the FAA about changes to the MCAS software implicated in both crashes. However, most of this amount consisted of payments Boeing had previously agreed to make to its airline customers.
The crashes were caused by faulty sensor readings and an automatic flight control feature, the Maneuvering Characteristics Augmentation System (MCAS), which pushed the planes’ noses down, leading to the pilots’ inability to correct the malfunction. This year, Boeing faced additional federal scrutiny following a mid-air incident involving one of its 737 MAX 9 jets during an Alaska Airlines flight, which renewed safety concerns about the aircraft.
Boeing’s guilty plea and subsequent penalties aim to address its role in the tragic accidents and bolster its safety measures, but the resolution leaves many families of the victims dissatisfied with the level of accountability.