Two insiders said last Sunday (June 30) that the US Department of Justice will initiate criminal proceedings against Boeing and file fraud charges for two fatal plane crashes, requesting Boeing to plead guilty or face trial.
Sources said that the US Department of Justice plans to formally file a plea agreement with Boeing later that day, which includes an economic penalty and requires an independent supervisory agency to conduct a three-year audit of the company's security and compliance practices.
It is reported that officials from the Department of Justice plan to have Boeing respond to this proposal before the end of the weekend, stating that there is no room for negotiation. They said that if Boeing refuses to plead guilty, prosecutors plan to take the company directly to court. Officials from the Ministry of Justice revealed their decision to the families of the victims in a phone call earlier last Sunday.
Analysis suggests that the decision to file criminal charges against Boeing has deepened the current crisis for the aircraft manufacturer, marking a low point in its century long history. Confessing guilt not only exposes the company to additional financial consequences and stricter government regulation, but may also affect Boeing's ability to sign government contracts, such as those with the US military, which account for a significant portion of Boeing's revenue.
In fact, Boeing has been in turmoil since the "airborne explosion" incident. So far this year, the company's stock price has fallen by about 27.7%. The company stated that due to a production slowdown following the almost catastrophic accident, Boeing will consume approximately $8 billion in cash in the first half of 2024.
In January of this year, a Boeing aircraft operated by Alaska Airlines had its fuselage hatch detached during flight. The Federal Aviation Administration also restricted the production of the 737 Max and requested Boeing to submit a comprehensive plan to address quality issues at its factory.
Currently, Boeing is undergoing a leadership restructuring in search of a new CEO to replace Dave Calhoun, who is scheduled to step down later this year.
Violation of agreement
In fact, as early as May this year, Glenn Leon, the head of the Anti Fraud Division of the Criminal Department of the United States Department of Justice, submitted a letter to the Federal Court of Texas stating that Boeing had not made any improvements to detect and prevent it from violating federal anti fraud regulations. The Department of Justice has determined that Boeing has violated the deferred prosecution agreement reached in 2021, which exempts Boeing from a criminal charge of conspiracy to commit fraud.
This accusation is related to the air crash of the Boeing 737 MAX 8 aircraft. In October 2018 and March 2019, the Boeing 737 MAX 8 crashed in Indonesia and Ethiopia respectively, resulting in a total of 346 deaths. After the incident, multiple countries and airlines expressed concerns about the safety of the Boeing 737 MAX 8, which was temporarily grounded worldwide.
According to reports, the precondition for reaching an agreement in 2021 is for Boeing to thoroughly reform its compliance practices and submit regular reports, and commit to fully cooperating with government requirements. Boeing also agreed to pay $2.5 billion to close the investigation.
It should be noted that this deferred prosecution agreement expired on January 7th of this year. Boeing needs to prove to the US Department of Justice that the company has complied with the terms of the agreement, and then the Department of Justice will evaluate and decide whether to waive the lawsuit. After the agreement expires, the US Department of Justice has six months to decide whether to continue suing Boeing or seek other ways to withdraw the case.
But now it is clear that the US Department of Justice has determined that Boeing has violated the agreement and will decide whether to sue Boeing before July 7th.
However, Boeing denied, "We believe we have complied with the terms of the agreement and look forward to the opportunity to explain this matter to the US Department of Justice. We will engage with the Department of Justice with maximum transparency, just as we did during the effective period of the agreement."