Boeing to plead guilty in DOJ case tied to deadly 737 Max crashes

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  • Source: Yahoo
  • 07/08/2024
Boeing (BA) will plead guilty to criminal fraud conspiracy in a Justice Department agreement that brands the aviation giant as a corporate felon but could resolve a big legal headache as Boeing tries to convince customers and investors that it has its problems under control.

The plea deal described by US prosecutors in a court document Sunday relates to actions taken by Boeing to mislead FAA regulators before two 737 MAX fatal crashes at the end of last decade.

Boeing will have to pay fines of up to $487.2 million, although a judge will rule on the final amount. The Justice Department asked that Boeing be credited for fines already paid, which means the new amount could be $243.6 million.

The company will also have to operate with a corporate monitor for the next three years and spend $455 million to improve its compliance and safety.

“We can confirm that we have reached an agreement in principle on terms of a resolution with the Justice Department, subject to the memorialization and approval of specific terms," Boeing said in a statement.

Boeing stock was roughly flat in Monday midday trading.

The deal presents Boeing with plenty of new perils.

A plea deal could get rejected by a judge. Families of the victims of the two crashes last decade have vowed to oppose the pact. And perhaps the biggest danger is the effect that a conviction may have on Boeing’s already-battered bottom line.

Criminal convictions can foreclose or suspend a company’s right to contract with the federal government and frustrate its ability to secure loans, according to Eddie Jauregui, a former federal prosecutor and white-collar defense attorney with Holland & Knight.

Those consequences have particular meaning for Boeing, which counts the federal government as its largest customer. It also happens to be the country’s largest exporter.

The matter could end up with an executive agency known as the Interagency Suspension and Debarment Committee (ISDC), which holds power to discuss government-wide suspensions and debarments that can end or disrupt a company’s business with the US government.

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