Boeing agreed Sunday to plead guilty to criminal fraud over its two fatal 737 MAX crashes in 2018 and 2019 that killed 346 people.
Boeing agreed that it conspired to defraud the U.S. government — a felony charge — after the U.S. Department of Justice (DOJ) accused the multinational airplane manufacturer and defense contractor of violating a 2021 agreement that would see the company’s prosecution for the crashes deferred, The New York Times (NYT) reported.
Boeing will now pay a maximum fine of $487.2 million and spend no less than $455 million over the next three years to strengthen its compliance and safety programs, according to the outlet.
The criminal penalty of $487.2 million results from the doubling of the initial $243.6 million that Boeing was required to pay according to the terms of the 2021 deferred prosecution agreement (DPA).
The plea deal awaits the approval of a federal judge, the outlet noted. (RELATED: Biden DOJ Plans To Cut Deal With Boeing After Fatal Crashes)
Boeing in 2021 had “agreed to strengthen its compliance program and to enhanced compliance program reporting requirements” by which Boeing was expected to report any fraudulent activities by its employees or agents against regulators, including the Federal Aviation Administration (FAA), according to the DPA. This followed Boeing’s reported admission that it “deceived the [FAA’s Aircraft Evaluation Group] about an important aircraft part called the Maneuvering Characteristics Augmentation System (MCAS)” that affected the ill-fated airplanes’ flight control systems.
The DOJ had also ordered Boeing to compensate its 737 MAX customers to the tune of $1.77 billion and establish a $500 million crash-victim beneficiaries fund to compensate individuals related to the victims of the 2018 Lion Air Flight 610 and 2019 Ethiopian Airlines Flight 302 crashes, according to the DPA.
Three years on, Boeing had failed to “design, implement and enforce” the ethics program meant to prevent and detect violations of U.S. fraud laws in the company’s operations, the DOJ alleged Mar. 14, the NYT reported.
The DOJ’s allegation followed reports of compromised Boeing airplane manufacturing standards, a rash of air safety incidents involving Boeing jets — including an infamous door plug blowout in midair — and whistleblowers’ legal testimonies — including those from former Boeing employee John Mitchell Barnett, who was later found dead in disputed circumstances.
Boeing’s outgoing Chief Executive Officer (CEO) Dave Calhoun also faced a Jun. 18 senate hearing.
The current plea deal reportedly updates the DPA. Boeing reportedly had paid the required $500 million to the crash victims’ families as well as the initial criminal penalty of $243.6 million.
Affected families are discontented with the updated plea deal — under which Boeing’s felony conviction reportedly might not hinder its government contracts.
“While many of us would have preferred a more vigorous prosecution, a guilty plea to a felony is a serious step up in accountability,” Mark Lindquist, a lawyer representing some families and who speculated about the exemptions of contracts, reportedly said.
Some other lawyers aim to ask the judge to reject the plea deal and therefore bring Boeing to a criminal trial, The Associated Press (AP) reported.
Claiming that fines have not deterred Boeing, Ike Riffel of Redding, California — who lost his two sons to the Ethiopian Airlines crash — reportedly said, “When people start going to prison, that’s when you are going to see a change.”