The Justice Department is preparing to charge Boeing with fraud after prosecutors alleged the company failed to implement an agreed-upon anti-fraud compliance programme following two fatal plane crashes that killed 346 people in 2018 and 2019, Forbes reported.
The Forbes article, which cited multiple reports citing unnamed sources familiar with the matter, said 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 likely involve the appointment of a monitor to supervise Boeing’s compliance with fraud laws.
In 2021, Boeing paid a $243 million criminal fine but was able to avoid criminal charges related to plane crashes by agreeing to create and implement a programme designed to detect and prevent violations of federal fraud law. However, recent investigations following a mid-flight incident on an Alaska Airlines flight revealed that the company had not met these anti-fraud requirements.
On Sunday, the Justice Department reportedly met with families of the crash victims to discuss Boeing’s potential plea agreement. Neither the Department of Justice nor Boeing responded to Forbes’ request for comment on Sunday, the newspaper said.
A total of 346 people died in two Boeing 737 Max plane crashes in October 2018 and March 2019. The first crash, a Lion Air flight from Jakarta to Pangkal Pinang, Indonesia, was attributed to a combination of aircraft design flaws, maintenance problems, and a lack of proper pilot training.
The second crash, an Ethiopian Airlines flight from Ethiopia to Kenya, occurred shortly after takeoff due to a malfunction with the Manoeuvring Characteristics Augmentation System. Following these incidents, all 737 Max airplanes were grounded from March 2019 to December 2020 after CEO Dave Calhoun promised to improve safety and transparency within the company.
In January, more than 170 Boeing 737 Max 9s were grounded after a panel blew off an Alaska Airlines plane mid-flight, revealing missing bolts. This incident sparked a series of investigations into Boeing, uncovering further manufacturing and quality issues.
The recent investigations have plunged Boeing into financial turmoil. The company paid Alaska Airlines $160 million to cover lost profits from the incident and now faces capped production of the 737 Max by the Federal Aviation Administration. Boeing reported a $355 million loss in the first quarter and is projected to spend $8 billion this year addressing production slowdowns.
Additionally, the company is set to lose both its CEO and board director later this year.
Boeing’s stock price has fallen by 30% so far this year, dropping from $260.66 to $182.01 per share as of Friday, reflecting the significant challenges the company faces amidst ongoing scrutiny and legal battles.
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