Boeing to plead guilty to fraud in US probe of fatal 737 MAX crashes

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Boeing has agreed to plead guilty to a criminal fraud conspiracy charge and pay a fine of $243.6 million to resolve a U.S. Justice Department investigation into two 737 MAX fatal crashes, the government said in a court filing on Sunday.

The fraud centered around knowingly false representations Boeing made to the FAA about new software (MCAS) that saved money by requiring less intensive training for pilots.

The plea deal, which requires a judge’s approval, would brand the planemaker a convicted felon in connection with crashes in Indonesia and Ethiopia over a five-month period in 2018 and 2019 that killed 346 people, Reuters reported.

The settlement drew swift criticism from victims’ families who wanted Boeing to face a trial and suffer harsher financial consequences.

The Justice Department’s (DOJ) push to charge Boeing has deepened an ongoing crisis engulfing Boeing since a separate January in-flight blowout exposed continuing safety and quality issues at the planemaker.

A guilty plea potentially threatens the company’s ability to secure lucrative government contracts with the likes of the U.S. Defense Department and NASA, although it could seek waivers.

Boeing became exposed to criminal prosecution after the Justice Department in May found the company violated a 2021 settlement involving the fatal crashes.

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Still, the plea spares Boeing a contentious trial that could have exposed the company’s decisions ahead of the fatal crashes to even greater public scrutiny. It would also make it easier for the planemaker, which will have a new CEO later this year, to try to move forward as it seeks approval for its planned acquisition of Spirit AeroSystems.

A Boeing spokesperson confirmed it had “reached an agreement in principle on terms of a resolution with the Justice Department.”

As part of the deal, the planemaker agreed to spend at least $455 million over the next three years to boost safety and compliance programs. Boeing’s board will have to meet with relatives of those killed in the MAX crashes, the filing said.

The deal also imposes an independent monitor, who will have to publicly file annual progress reports, to oversee the firm’s compliance. Boeing will be on probation during the monitor’s three-year term.

Lawyers for some of the victims’ families said they planned to press Judge Reed O’Connor, who has been overseeing the case, to reject the deal.

In a separate document filed to the court, they cited O’Connor’s statement in a February 2023 ruling: “Boeing’s crime may properly be considered the deadliest corporate crime in U.S. history.”

The deal is a “slap on the wrist,” said Erin Applebaum, a lawyer at Kreindler & Kreindler LLP representing some of the victims’ relatives.