Boeing to plead guilty to criminal fraud, pay $243M US fine in proposed deal over fatal crashes

Boeing will plead guilty to a criminal fraud charge stemming from two crashes of 737 Max jetliners that killed 346 people, including several Canadians, after the U.S. government determined the company violated an agreement that had protected it from prosecution.

The plea deal, which was revealed by the U.S. Justice Department on Sunday night and still must receive the approval of a federal judge to take effect, calls for Boeing to pay an additional $243.6 million US fine. That was the same amount it paid under the 2021 settlement that the Justice Department said the company breached.

In addition, an independent monitor would be named to oversee Boeing's safety and quality procedures for three years. The deal also requires Boeing to invest at least $455 million US in its compliance and safety programs.

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The plea deal covers only wrongdoing by Boeing before the crashes, which killed all 346 passengers and crew members aboard two new Max jets. It does not give Boeing immunity for other incidents, including a panel that blew off a Max jetliner during an Alaska Airlines flight in January, a Justice Department official said.

The deal also does not cover any current or former Boeing officials, only the corporation. In a statement, Boeing confirmed it had reached the deal with the Justice Department but had no further comment.

'Sweetheart deal'

Lawyers for some of the relatives of those who died in the two crashes have said they will ask the judge to reject the agreement.

"This sweetheart deal fails to recognize that because of Boeing's conspiracy, 346 people died. Through crafty lawyering between Boeing and DOJ, the deadly consequences of Boeing's crime are being hidden," said Paul Cassell, a lawyer for some of the families.

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Zipporah Kuria lost her father, Joseph Waithaka, in the 2019 crash of a Boeing 737 Max 8 operated by Ethiopian Airlines.

Federal prosecutors alleged Boeing committed conspiracy to defraud the government by misleading regulators about a flight-control system that was implicated in the crashes, which took place in Indonesia in October 2018 and in Ethiopia less than five months later. In the Ethiopian crash, 18 Canadian citizens were killed.

The Lion Air pilots in the first crash did not know about flight-control software that could push the nose of the plane down without their input. The pilots for Ethiopian Airlines knew about it but were unable to control the plane when the software activated based on information from a faulty sensor.

The Justice Department charged Boeing in 2021 with deceiving FAA regulators about the software, which did not exist in older 737s, and about how much training pilots would need to fly the plane safely. The department agreed not to prosecute Boeing at the time, however, if the company paid a $2.5 billion US settlement, including the $243.6 million fine, and took steps to comply with anti-fraud laws for three years.

Prosecutors last month alleged Boeing had breached the terms of that agreement.

The company's guilty plea will be entered in U.S. District Court in Texas sometime this month. The judge overseeing the case, who has criticized what he called "Boeing's egregious criminal conduct," could accept the plea and the sentence that prosecutors offered with it or he could reject the agreement, likely leading to new negotiations between the Justice Department and Boeing.

Plane orders plummet after recent incident

Boeing, which blamed two low-level employees for misleading the regulators, tried to put the fatal crashes behind it. After grounding Max jets for 20 months, regulators let them fly again after Boeing reduced the power of the flight software.

New plane orders picked up again in 2023 for the company, but that trend changed after January, when a panel covering an unused emergency exit blew off a Max during an Alaska Airlines flight over Oregon.

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Huy Tran was a passenger on Alaska Airlines Flight 1282, the Boeing 737 jet that made an emergency landing on Jan. 5 after piece of the aircraft covering an inoperative emergency exit behind the left wing blew out. He and six others are suing the airline, Boeing and its supplier. He spoke to As It Happens host Nil Köksal.

Pilots landed the 737 Max safely and no one was seriously injured, but the incident led to closer scrutiny of the company. The Justice Department opened a new investigation, the FBI told passengers on the Alaska plane that they might be victims of a crime and the FAA said it was stepping up oversight of Boeing.

A criminal conviction could jeopardize Boeing's status as a federal contractor, according to some legal experts. The plea announced Sunday does not address that question, leaving it to each government agency whether to bar Boeing.

The company has 170,000 employees and 37 per cent of its revenue last year came from U.S. government contracts. Most of it was defence work, including military sales that Washington arranged for other countries. Boeing also makes a capsule for NASA. 

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Relatives of the Max crash victims have pushed for a criminal trial that might illuminate what people inside Boeing knew about deceiving the FAA. They also want the Justice Department to prosecute top Boeing officials, not just the company.

"Boeing has paid fines many a time, and it doesn't seem to make any change," said Ike Riffel of Redding, Calif., whose sons Melvin and Bennett died in the Ethiopian Airlines crash. "When people start going to prison, that's when you are going to see a change."

At a recent Senate hearing, Boeing CEO David Calhoun defended the company's safety record and apologized to Max crash victims' relatives seated in the rows behind him.