Saturday, July 20, 2024

Boeing to plead guilty to fraud in 737 Max crash case

Boeing agreed on Sunday Pleading guilty to conspiracy to defraud the government in a case related to the crashes of its 737 Max jets in Indonesia and Ethiopia that killed 346 people — a stunning turnaround for the aerospace giant after the Justice Department determined Boeing did not live up to the terms of a 2021 deal to avoid litigation.

Prosecutors allege two Boeing pilots withheld key information from the Federal Aviation Administration about a new automated control system in the Max. Both accidents involved the system, causing uncontrollable dives.

By pleading guilty The company will avoid going to trial in the high-profile case for just one criminal count, ahead of Sunday’s midnight deadline.

The Justice Department filed documents related to the deal in federal court in Texas on Sunday night, setting up a planned hearing where family members — who have criticized the pending deal — will be allowed to speak. The court must then decide whether to accept the plea agreement.

Boeing has already agreed to pay $2.5 billion in fines and payments in 2021. As part of the new deal, the company will pay an additional $487.2 million in fines, agree to oversight by an independent monitor, and spend at least $455 million to strengthen compliance and security. According to a Justice Department official, the programs and will be placed on supervised probation for approximately three years.

The deal also includes something the families of the crash victims have long sought: a meeting with Boeing’s board of directors.

“This criminal conviction demonstrates the department’s commitment to holding Boeing accountable for its misconduct,” the Justice Department official said.

It’s rare for a company of Boeing’s stature to admit to a crime, and the moment marks another low point for the century-old planemaker’s already embattled reputation. The plea underscores a long shadow of deadly accidents, and comes as Boeing tries to restore the confidence of regulators and the flying public amid a fresh safety crisis that began in January when a crew flew off the side of a new model Max. mid flight

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In a statement, Boeing confirmed that it had “reached an agreement in principle on a resolution with the Department of Justice subject to the memorialization and approval of certain terms.”

There was no information on the waivers filed in court on Sunday, which could be sought if its punishment triggers contract sanctions by federal agencies, along with its myriad defense and aerospace contracts.

The attorney for the families in the case and the University of Utah’s S.J. Paul Cassell, a professor at Quinney College of Law, immediately filed an objection to the contract on their behalf.

“Through the cunning lawyering between Boeing and the DOJ, the deadly consequences of Boeing’s crime are being covered up,” Cassel said.

Erin Applebaum, a partner at Kreindler & Kreindler, who worked with Cassell in representing family members, said: “We are extremely disappointed that the DOJ is moving forward with this grossly inadequate plea agreement despite the families’ strong opposition to its terms.”

The criminal case re-examined the design of the MAX, an updated version of the hugely popular single-aisle 737. Boeing raced to get the plane into service in the 2010s, locked in competition with its European rival Airbus. A new model. An automated system involved in accidents – it’s supposed to push the nose of the jet down. defined Circumstances – Necessary because the Max has newer, larger engines.

Prosecutors said the two technical pilots withheld information from the FAA oversight office that the automatic system could be triggered during a wide range of conditions. That means airline pilots in the U.S. and around the world won’t have to undergo expensive training in the new system. But that means pilots Don’t know about its function. The FAA office was only aware of the expanded scope of the system’s operation According to prosecutors, after the first crash.

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In January 2021, the Justice Department and Boeing announced that they had entered into a deferred prosecution agreement that would allow them to avoid criminal prosecution.

Under the three-year deal, Boeing admitted to misleading federal regulators about its technical pilots software system and was charged with one count of fraud. One of those pilots was acquitted by a federal jury in 2022 of lying to the Federal Aviation Administration about changes to the software system. Pilot Mark Forkner’s defense argued publicly before the trial that he was being scapegoated.

Boeing agreed to pay $500 million to the families of those whose loved ones died, to strengthen its internal programs to detect and prevent future fraud incidents and to cooperate with future investigations or lawsuits. The contract expired two days after an in-flight fuselage door panel exploded on an Alaska Airlines 737 in January, an incident that remains under criminal investigation by federal authorities.

By May, federal prosecutors had found that Boeing partially violated the terms of the 2021 agreement by failing to develop agreed compliance and ethics programs.

The victims’ families were not consulted about the initial agreement between Boeing and the Justice Department. But they successfully fought for their rights in court and received clarifications from lawyers regarding the case this year.

John C., professor of law and director of the Center for Corporate Governance at Columbia Law School. Coffey said adding an effective federal monitor is key to ensuring Boeing meets its obligations under the contract.

“I have long said that the greatest failure of the old is [deferred prosecution agreement] It doesn’t make for a useful monitor,” he said by email. “But the two sides are likely to fight hard over what power the monitor should have.”

Relatives of those who crashed have pushed lawyers to take a tougher stance against the space agency, especially after the mid-air explosion earlier this year. Although no one was seriously injured in the crash, multiple investigations into the disaster — including by Boeing itself — revealed numerous deficiencies in the company’s manufacturing and quality control systems.

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A preliminary report by the National Transportation Safety Board investigating the cause of the Jan. 5 crash found that a bolt designed to hold a door panel was not replaced after the part was removed to repair another part of the jet. Through final assembly at Boeing’s Renton, Wash., factory. Boeing’s own internal investigation found no documentation was produced to remove that part of the plane – a violation of company policy.

A Lion Air jet crashed in October 2018 and an Ethiopian Airlines flight five months later in March 2019. Related to problems with the Max’s design, the January explosion has been linked to problems at a Boeing manufacturing plant outside Seattle.

The FAA audited the company’s product line and launched its own investigation, demanding revisions to ensure every plane leaving the factory was built to specifications. The agency has taken the unusual step of barring Boeing from increasing the number of 737 Max planes. It does this every month, until regulators are satisfied that improvements have been put in place.

Boeing has faced government fraud charges before. In 2006, the company Settled A space missile contract corruption case resulted in $615 million in civil and criminal penalties. In that deal, the government agreed not to pursue criminal charges against Boeing after it said it would cooperate with its investigation.

As it seeks to recover from its current crisis, Boeing announced in recent days a deal to buy Spirit AeroSystems, the supplier that makes the fuselage for the Max, in an effort to gain more control over its supply chain. But the task of rebuilding the company’s reputation will likely fall to a new chief executive. Current CEO Dave Calhoun plans to step down later this year.

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