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What you should know about Boeing’s agreement to plead guilty to fraud in the 737 Max crashes

By DAVID KOENIG and ALANNA DURKIN RICHER – Associated Press

Boeing faces a felony conviction if it complies with an agreement with prosecutors and pleads guilty to fraud related to the certification of its 737 Max before two of the planes crashed off the coast of Indonesia and in Ethiopia, killing 346 people.

The American aerospace giant has apparently come to the conclusion that it is better to confess to a crime than to contest the charges and endure a long public trial.

However, the deal is not yet certain.

Relatives of some of the passengers who died have indicated they will ask a federal judge in Texas to invalidate the agreement, saying it is too lenient given the number of lives lost. They want a trial, they want a large fine, and they want Boeing’s leadership to be prosecuted.

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In a legal filing late Sunday – minutes before a midnight deadline – the Justice Department announced the agreement, saying the fraud allegation was “the most serious, easily provable offense” it could bring against Boeing. Prosecutors say Boeing will pay an additional $243.6 million fine, equal to the fine the company paid in 2021 for the same offense.

The Justice Department says a fraud conviction will hold Boeing accountable for “false statements” made to regulators who certified the 737 Max in 2017. The crashes occurred less than five months apart in 2018 and 2019.

The company still faces investigations related to the explosion of an instrument panel on an Alaska Airlines Max in January, increased oversight by the Federal Aviation Administration (FAA), and allegations from current and former employees of poor job performance and retaliation against whistleblowers.

Here’s everything you need to know about the case and what might happen next for Boeing:

What did Boeing admit?

Boeing agreed to plead guilty to conspiracy to defraud the United States – in this case, defrauding the Federal Aviation Administration.

The Justice Department first brought these charges in 2021, but agreed not to prosecute Boeing if the company paid a fine and successfully completed a three-year form of corporate probation under a so-called deferment agreement.

In May, however, the department concluded that Boeing had breached the agreement, setting in motion the events that led to Sunday’s deal.

The settlement could help Boeing remove a blemish on its reputation: the allegation that the American aviation giant deceived the regulators who approved the aircraft and set pilot training requirements for safe flying.

What has Boeing agreed to do?

Boeing must pay an additional fine, bringing the total to $487.2 million, the maximum legal penalty for the fraud charge, according to the Justice Department. The deal also requires the company to invest at least $455 million in safety improvements. Boeing will be on court probation for three years, and the Justice Department will appoint an independent auditor to monitor Boeing’s compliance with the terms of the agreement.

Boeing’s board must meet with the families of the victims.

Can the judge block the deal?

Yes. There will be a hearing before U.S. District Judge Reed O’Connor in Fort Worth, Texas. He can accept the agreement, in which case he cannot change the terms of Boeing’s penalty. Or he can reject it, which would likely lead to new negotiations between Boeing and prosecutors. A date for the hearing has not yet been set.

Deals in which the accused and the federal government agree on a sentence are controversial in legal circles.

“Judges don’t like them. They feel like they’re undermining their authority,” says Deborah Curtis, a former Justice Department lawyer.

However, O’Connor has shown respect for the Justice Department’s power before. When families of the crash victims sought to reverse the agreement to stay prosecution in 2021, the judge criticized what he called “egregious criminal conduct by Boeing” but ruled that he did not have the authority to overturn the settlement.

How do the relatives of the crash victims react?

Many are outraged by the agreement.

Zipporah Kuria, a 28-year-old Londoner whose father Joseph was on board the Ethiopian Airlines Max that crashed in March 2019, called for a trial that she said would have revealed new details about the cause of the crash.

Now that a trial will likely never take place, “we are being robbed of the opportunity to investigate further, the opportunity to find out what went wrong here and what is wrong,” Kuria said. “Once again they (the victims) have been robbed of their dignity and we have been robbed of our closure.”

Javier de Luis, an aviation lecturer at MIT whose sister Graziella died in the plane crash in Ethiopia, also believes the punishment for Boeing is inappropriate.

“When you look at the elements that make up this settlement, they are pretty typical of what you would expect in an investigation into white collar fraud – not in the case of a crime that directly led to the deaths of 346 people,” he said.

Nadia Milleron, a Massachusetts resident whose 24-year-old daughter, Samya Stumo, died in the same crash, is calling for Boeing’s current and former CEOs to be charged.

“After the crash in Indonesia, they knew there was something wrong with that plane and that it could crash,” she said. “They played with people’s lives, and they’re playing with them again now.”

What impact would a conviction have on Boeing?

Boeing’s business never fully recovered from the crashes. After renewed scrutiny following the Alaska Airlines incident, the company failed to book new orders for the Max in April and May. It has fallen even further behind European rival Airbus in producing and delivering new planes, meaning lower revenues.

This all comes as Boeing searches for a new CEO to succeed David Calhoun, who announced his retirement at the end of the year.

Nevertheless, the company’s share price rose slightly on Monday.

Is Boeing losing government contracts?

Government contractors can be suspended or barred from working because of a criminal conviction, but authorities generally have flexibility to grant exceptions.

Pentagon spokesman Major General Pat Ryder said the Justice Department had informed the Defense Department about Boeing’s agreement.

The Defense Department “will review the company’s recovery plans and the agreement with the Department of Justice to determine what steps are necessary and appropriate to protect the federal government,” Ryder said.

In 2006, the Air Force cited “compelling national interests” to continue allowing Boeing to bid on contracts, even after the company admitted to allegations including misusing stolen information to win a space launch contract and paying a $615 million fine.

Does the confession have an impact on other investigations against Boeing?

Only then can the fraud charges brought after the two fatal crashes be resolved. The FBI had informed the passengers of the Alaska Airline Max, which suffered body damage while flying over Oregon, that they may have been the victims of a crime.

The National Transportation Safety Board is also investigating the incident and the Federal Aviation Administration (FAA) is reviewing Boeing’s manufacturing quality.

What happened during the crashes?

Boeing has given the Max new flight control software that can push the plane’s nose down if a sensor indicates the plane is about to stall. Pilots and airlines were not initially informed about this software, acronym MCAS.

The system was activated before both crashes due to faulty readings from the individual sensor on each aircraft, according to investigations into the crash of a Lion Air Max on October 29, 2018, off the coast of Indonesia and the crash of an Ethiopian Airlines Max on March 10, 2019, near Addis Ababa. Other factors contributed to the Lion Air crash. The Ethiopian pilots were aware of the MCAS but were unable to regain control after the plane’s nose began to dip downward without their intervention.

Koenig reported from Dallas and Richer from Washington. Haleluya Hadero in South Bend, Indiana, Cathy Bussewitz in New York and Tara Copp in Washington contributed to this report.

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