Justice Department Plans To Charge Boeing With Fraud - Forbes

Topline

The Justice Department is planning to charge Boeing with fraud after prosecutors said the company failed to implement an agreed upon anti-fraud compliance program following two fatal plane crashes that killed 346 people in 2018 and 2019, according to multiple reports, citing unnamed sources familiar with the matter.

Key Facts

The Justice Department will reportedly give Boeing until the end of the week to decide if it will plead guilty or face a trial.

A plea deal would reportedly involve a monitor being appointed to supervise Boeing’s compliance with fraud laws.

Boeing in 2021 paid a $243 million criminal fine but was able to avoid criminal charges tied to the pair of plane crashes when it agreed to create and implement a program that would find and prevent any violations of federal fraud law.

Recent investigations into the company following a mid-flight incident on an Alaska Airlines flight revealed the company had not met the anti-fraud requirements.

The Justice Department reportedly met with families of the two crash’s victims Sunday to discuss Boeing’s potential plea agreement.

Neither the Department of Justice nor Boeing responded to Forbes’ request for comment Sunday.

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Key Background

A total of 346 people died in two similar Boeing 737 Max plane crashes in October of 2018 and March of 2019. The first was a Lion Air Flight from Jakarta to Pangkal Pinang, Indonesia that crashed due to a combination of aircraft design flaws, maintenance problems and a lack of proper pilot training. The second, an Ethiopian Airlines flight from Ethiopia to Kenya, crashed almost immediately after takeoff due to a malfunction with the Maneuvering Characteristics Augmentation System. All 737 Max airplanes were grounded from March 2019 to December of 2020 after CEO Dave Calhoun promised to increase safety and transparency. In January of this year, more than 170 Boeing 737 Max 9s were grounded after a panel blew off of an Alaska Airlines plane mid-flight, and was later found to be missing four bolts. That incident kicked off a series of investigations into Boeing that have unearthed manufacturing and quality flaws at the company.

Tangent

The recent investigations into Boeing have put the company in financial turmoil. Boeing paid Alaska Airlines $160 million to cover the profits it lost after the incident and faces capped production of the 737 Max by the Federal Aviation Administration. The company said it lost $355 million in the first quarter and is on pace to spend $8 billion this year dealing with slowdowns in production. The company is also set to lose both its CEO and board director later this year.