U.S. prosecutors are recommending that the Department of Justice (DoJ) file criminal charges against Boeing, escalating the ongoing scrutiny over the safety issues surrounding its 737 Max aircraft. This development comes as the company faces mounting criticism for its handling of safety protocols and past crashes involving the 737 Max, which have severely tarnished its reputation.
The recommendation stems from allegations that Boeing violated a 2021 deferred prosecution agreement with the DoJ. This agreement was originally intended to settle charges that Boeing defrauded the Federal Aviation Administration (FAA) during the certification process of the 737 Max. The aircraft was grounded for 20 months following two fatal crashes in October 2018 and March 2019, which claimed the lives of 346 people.
Boeing had agreed to pay a $2.5 billion settlement under the 2021 deal, which included $500 million for crash victims' families, $1.77 billion in compensation to airlines, and a $243.6 million fine. The agreement allowed Boeing to avoid criminal charges, provided the company met certain conditions. However, prosecutors now argue that Boeing failed to uphold these conditions, specifically in implementing a robust compliance and ethics program to prevent further violations of U.S. fraud laws.
The call for criminal charges follows the recent incident in January where a door panel on a 737 Max operated by Alaska Air blew out during flight, highlighting ongoing safety concerns. This incident, along with continued production issues reported by Boeing whistleblowers, has intensified scrutiny on the company.
Boeing's response has been to deny any violations of the deferred prosecution agreement and to express its intent to contest any claims suggesting otherwise. A spokesperson for Boeing declined to comment on the prosecutors' recommendation when contacted by various news outlets, including CNN and the BBC.
Relatives of the crash victims, alongside some members of Congress, have harshly criticized the 2021 settlement, describing Boeing's actions as the "deadliest corporate crime in U.S. history." They have called on the DoJ to impose the maximum possible fine of $25 billion on Boeing.
Ed Pierson, a former senior manager at Boeing and current executive director of the Foundation for Aviation Safety, emphasized the critical nature of the upcoming decision by the DoJ. "There are issues with these airplanes. We're seeing problems with these planes, and I'm talking about 737 Max, 787, and it is reflective of the leadership," Pierson told the BBC.
The Justice Department has until July 7 to decide whether to proceed with criminal charges. The implications of such a decision are significant. If found guilty, Boeing could face severe financial penalties and potentially lose its eligibility to secure government contracts, which account for a substantial portion of its revenue. However, such an outcome is considered unlikely due to national security concerns, given Boeing's extensive contracts with the Department of Defense.
The situation adds to Boeing's financial woes. Since the grounding of the 737 Max, the company has reported core operating losses totaling $31.9 billion. Its credit rating is also at risk, with potential downgrades that could elevate borrowing costs, exacerbating its financial instability.
David Calhoun, Boeing's CEO, has faced intense scrutiny over his handling of the company's crises. Calhoun, who succeeded Dennis Muilenburg in 2019 after the latter was fired in the wake of the crashes, is set to step down at the end of 2024. Despite his assurances to U.S. senators that Boeing has learned from past mistakes and improved its whistleblower processes, critics argue that the changes have been superficial.
