In a significant development, U.S. prosecutors are recommending criminal charges against Boeing, citing the aircraft manufacturer's breach of a 2021 settlement agreement related to two fatal crashes involving its 737 MAX jet. This recommendation, if acted upon by the U.S. Department of Justice (DOJ), could deepen the crisis Boeing has faced since these tragic incidents.
The 2021 deferred prosecution agreement was established after the DOJ accused Boeing of defrauding the Federal Aviation Administration (FAA). This was in connection with two fatal crashes in 2018 and 2019 that resulted in the deaths of 346 people. Under the agreement, Boeing was to avoid prosecution by overhauling its compliance practices, submitting regular reports to the DOJ, and paying $2.5 billion in penalties. The settlement included a three-year term during which Boeing was required to demonstrate its commitment to the outlined reforms.
However, in May 2024, officials determined that Boeing had violated the terms of this agreement. This finding prompted prosecutors to recommend criminal charges against the company, a development that had not been previously reported. The DOJ now faces a deadline of July 7 to decide whether to proceed with these charges.
The specifics of Boeing's alleged violations have not been fully disclosed. Boeing maintains that it has "honored the terms" of the settlement, and it has communicated its disagreement with the DOJ’s determination. The DOJ’s internal deliberations are ongoing, and no final decision has been reached. The potential criminal charges could extend beyond the original conspiracy to commit fraud charge from 2021.
Sources close to the matter have indicated that the DOJ is considering several options. These include prosecuting Boeing, extending the 2021 settlement by an additional year, or proposing new, stricter terms. One possibility under stricter terms is the appointment of a third-party monitor to oversee Boeing's compliance efforts. Another severe measure could involve requiring Boeing to plead guilty, which could lead to significant business restrictions, particularly affecting Boeing's contracts with the U.S. government, including the Department of Defense.
The recommendation for criminal charges has significant implications for Boeing. A felony conviction could jeopardize Boeing’s lucrative government contracts and severely impact its financial standing and reputation. Boeing is reportedly willing to negotiate a penalty and agree to the appointment of a compliance monitor, but it is resistant to a guilty plea due to the additional restrictions it would entail.
Relatives of the victims of the 737 MAX crashes have long criticized the 2021 settlement, arguing that the DOJ should have prosecuted Boeing and its executives. Last week, these families pressed prosecutors to seek a fine against Boeing of nearly $25 billion and move forward with criminal prosecution. At a Senate hearing in June, Boeing's Chief Executive Dave Calhoun acknowledged the company’s safety shortcomings and apologized to the families affected by the crashes.
The DOJ's decision on whether to prosecute Boeing will be closely watched. The case underscores ongoing concerns about corporate accountability and the enforcement of compliance agreements. As the July 7 deadline approaches, both Boeing and the DOJ are engaged in discussions to resolve the matter. The outcome will not only impact Boeing’s future but also set a precedent for how violations of deferred prosecution agreements are handled in the corporate world.
