Proactive Investors - Boeing Co (NYSE:BA) has agreed to pay a US$243.6 million fine and plead guilty to fraud in a deal with US federal prosecutors which means it will avoid a criminal trial.
The guilty plea relates to a criminal fraud conspiracy charge after the US Department of Justice (DoJ) found the company violated a deal that had protected it from prosecution after two fatal crashes of its 737 Max jets in 2018 and 2019 that killed all 346 people aboard.
Prosecutors offered the company the option to plead guilty and pay the fine, or face a criminal trial on the charge of conspiracy to defraud the United States over misleading regulators about the flight-control system implicated in the crashes.
Having in 2021 agreed a deal not to prosecute the company if Boeing Complied with certain conditions for three years, last month the DoJ said the terms of the agreement had been broken.
The new settlement deal, announced yesterday, still must be approved by a judge, and does not cover other incidents with Boeing Max plans, including the door panel blowing off an Alaska Airlines flight in January.
It was described as a mere “slap on the wrist” by one of the lawyers representing some of the victims’ families.
Another legal representative said the deal was “deceptive and generous” and “clearly not in the public interest”.
The families of the victims are seeking a public trial on the charges, with demands of $24.8 billion in compensation.
Boeing, which has also agreed to spend $455 million on its compliance and safety programs over the next three years, issued a short statement, confirming that it had “reached an agreement in principle on terms of a resolution with the Justice Department,” but that it remained subject to approval of specific terms.
In the charges, the DoJ accused the company of defrauding the Federal Aviation Administration during the certification process for the 737 Max, which started service in 2017.
Following the crashes of a Lion Air flight in late 2018 crash and one of Ethiopian Air in early 2019, Boeing's Max jets were grounded for 20 months, during which investigations revealed a design flaw in its autopilot system.
Boeing has admitted responsibility for the fatal crashes, and that its employees withheld information about the design flaw from the FAA during certification.
Pleading guilty means the aircraft company will have a criminal record, though it is not clear how this could affect its ability to win military contracts.