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DOJ Accuses Boeing Of Violating Settlement Over 737 MAX Crashes
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By Nithya Bose in Business News, posted May 15, 2024
The Justice Department has accused Boeing of violating a settlement agreement, which had resolved the company's involvement in two fatal 737 MAX jet crashes.
This violation exposes the company to criminal prosecution, marking a significant escalation in one of Boeing's most severe crises.
In January 2021, Boeing admitted two employees had misled federal air safety regulators about aspects of the 737 MAX.
The company entered a deferred prosecution agreement (DPA) that allowed it to avoid prosecution at the time.
However, prosecutors now allege the aircraft maker has not met the obligations of the $2.5 billion settlement.
The current concerns were triggered by a January incident where a fuselage panel blew off an Alaska Airlines 737 MAX.
This prompted a new criminal investigation and raised questions about Boeing's safety culture.
Boeing also recently informed regulators employees might have skipped inspections and falsified records on 787 Dreamliner jets.
The Justice Department’s letter, filed in a Texas federal court, did not specify the penalties .
Possible actions include extending the probation under the current DPA or seeking a guilty plea from Boeing.
Boeing maintains it has honored the 2021 agreement
The letter states Boeing has until June 13 to challenge these findings.
DOJ said: “For failing to fulfill completely the terms of and obligations under the DPA, Boeing is subject to prosecution by the United States for any federal criminal violation.”
Boeing, however, maintains it has honored the 2021 agreement and plans to respond transparently to the DOJ.
The agreement required Boeing to create a compliance program to detect antifraud law violations.
The recent letter did not detail the specific illegal conduct that Boeing failed to detect or how its compliance program was inadequate.
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In April, DOJ officials informed relatives of 737 MAX crash victims new information from the Alaska Airlines incident could influence whether Boeing breached the 2021 settlement.
One senior official said the lack of documentation on factory work for the Alaska Airlines jet could constitute a compliance breach.
Paul Cassell, a lawyer representing the families of crash victims, welcomed the Justice Department's announcement as a "positive first step."
He said more action was needed to hold Boeing accountable.
The original settlement was reached in the last days of the Trump administration.
It included a $500 million fund for crash victims' families and a $244 million fine.
Boeing had also set aside the bulk of the $2.5 billion to compensate airline customers.
Under the Biden administration, corporate probation deals have faced increased scrutiny.
Other companies like Ericsson and Deutsche Bank have faced severe consequences for violating similar agreements.
Prosecutors are scheduled to meet with the crash victims' families on May 31 to discuss the case's future direction.
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