The Justice Department has made some pretty serious allegations against Boeing. I’d say that this sounds very bad for the company, though let’s be honest — Boeing is too big to fail, and struggles with accountability, so this will probably be like everything else we’ve seen at the company in recent years.
Boeing accused of breaching 737 MAX settlement
The Justice Department has just accused Boeing of violating the settlement that allowed the company to avoid criminal prosecution, following two deadly Boeing 737 MAX crashes (a Lion Air crash in 2018, and an Ethiopian Airlines crash in 2019).
In January 2021, Boeing reached a $2.5 billion settlement with the Justice Department, in order to avoid prosecution for fraud. The company could have been charged with misleading regulators who approved the plane, by withholding important information. Boeing ultimately managed to blame the deception on two employees, who weren’t very high up. The $2.5 billion settlement included a $243.6 million fine, a $500 million fund for the families of victims, and $1.8 billion in compensation for airlines that had their 737 MAXs grounded.
The Justice Department is now claiming that Boeing has violated the terms of the settlement by not making the promised changes to prevent violations of federal anti-fraud laws. Specifically, Boeing is accused of “failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations.”
This update means that Boeing could be prosecuted for any criminal violation of which the United States has knowledge, including the charge of fraud.
Boeing has of course been under increased scrutiny again in 2024, when the year started with the door plug of an Alaska Boeing 737 MAX blowing out shortly after takeoff from Portland. This has exposed a whole new series of failures at Boeing, particularly with the company’s oversight of quality control.
Will the Justice Department file charges?
While these allegations are bad, the question is how the Justice Department will proceed. The Justice Department has until July 7, 2024, to decide on next steps. Boeing has until June 13, 2024, to respond to the government’s accusations, and the Justice Department will use Boeing’s response to determine whether to pursue prosecution or not.
Here’s what a Boeing spokesperson had to say:
“We believe that we have honored the terms of that agreement, and look forward to the opportunity to respond to the Department on this issue. As we do so, we will engage with the Department with the utmost transparency, as we have throughout the entire term of the agreement, including in response to their questions following the Alaska Airlines 1282 accident.”
We’ll see how this all plays out, though the potential for criminal prosecution is significant. The 2021 settlement with Boeing really let the aircraft manufacturer off easy, though maybe this time will be different. I mean, I have to imagine the Justice Department wouldn’t mind making an example of Boeing, given the extent of the company’s mismanagement, plus public perception.
Bottom line
The Justice Department is accusing Boeing of violating an agreement that allowed the company to avoid criminal prosecution over the 737 MAX. Boeing is accused of not making changes to prevent violations of federal anti-fraud laws, and in the coming months we should learn whether criminal charges will be brought against Boeing.
Maybe corporate America would learn a thing or two if former Boeing executives were given some jail time rather than golden parachutes… I’m just saying.
What do you make of the Justice Department’s accusations against Boeing?
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