Boeing Pleads Guilty to Fraud Conspiracy, Agrees to $243.6 Million Fine Amid 737 MAX Scandal

by Nicholas Edwards · 24/07/2024

Bollywood Fever: Boeing has finalized a guilty plea to a criminal fraud conspiracy charge and agreed to pay at least $243.6 million after breaching a 2021 agreement with the U.S. Justice Department. The company admitted to allowing potentially risky work at its factories and failing to ensure the accuracy and completeness of key airplane record-keeping, according to a court filing on Wednesday.

On July 7, Boeing agreed in principle to plead guilty to conspiring to defraud the Federal Aviation Administration (FAA) after the government accused the company of knowingly making false representations about key software for the 737 MAX. This software was tied to the fatal crashes of 737 MAX aircraft in 2018 and 2019, which resulted in the deaths of 346 people.

US Boeing cautions of diminished production and delivery of 737 Max aircrafts owing to a parts-related concern — Boeing 737 Max airplanes sit parked at the company’s production facility on November 18, 2020 in Renton, Washington. David Ryder | Getty Images

Boeing confirmed on Wednesday that it had filed a detailed plea agreement with the Justice Department. “We will continue to work transparently with our regulators as we take significant actions across Boeing to further strengthen our safety, quality, and compliance programs,” the company stated.

The Justice Department asserted that Boeing breached its obligations under the 2021 deferred prosecution agreement, which had shielded the company from criminal prosecution related to misrepresentations about the software. The breach came to light after a January incident where an in-flight panel blowout on an Alaska Airlines 737 MAX exposed continuing safety and quality issues at Boeing, just two days before the expiration of the 2021 agreement.

In its court filing, the Justice Department detailed multiple failures at Boeing, including:

Failing to ensure employees documented the removal of parts during manufacturing.
Not verifying that mechanics and inspectors who stamped they completed work had actually done so.
Disclosing false stamping at its 787 plant in South Carolina.
Failing to ensure work on airplanes was conducted in the proper sequence, increasing the risk of manufacturing defects.

“Boeing senior executives prioritized the movement of aircraft through Boeing’s factories over reducing out-of-sequence work to ensure production quality,” the filing stated.

The Justice Department has a separate criminal probe ongoing into an Alaska Airlines jet that was missing four key bolts, with no paperwork documenting their removal. As part of the guilty plea deal, Boeing agreed to pay the maximum fine of $487.2 million, with the DOJ recommending the court credit its previous 2021 payment of $243.6 million against that amount.

Boeing also committed to spending at least $455 million over the next three years to enhance its safety and compliance programs, which is 75% higher than previously planned expenditures. Additionally, the deal imposes an independent monitor to oversee Boeing’s compliance, who will publicly file annual progress reports. Boeing will be on probation during the monitor’s three-year term, which can be extended by a year if the company fails to comply with the terms.

Families of those killed in the 737 MAX crashes will have the opportunity to file objections within a week before Judge Reed O’Connor, who will decide whether to accept the plea deal and determine if Boeing owes restitution to the victims’ relatives. Boeing’s board will be required to meet with the relatives within four months of sentencing.

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