US Says Boeing Violated 2021 Agreement but Company May Not Face Charges

The Justice Department's determination that Boeing violated corporate probation for deceiving federal regulators does not necessarily mean federal prosecutors will revive criminal charges against the giant aircraft manufacturer.

But we should know within weeks whether Boeing will face another day in court.

The Justice Department said in a court filing Tuesday that Boeing had violated terms of a 2021 settlement that allowed it to avoid prosecution for actions that led up to two deadly crashes involving the company's 737 Max jetliners more than five years ago.

Prosecutors indicated they haven’t decided what to do next. What follows is an explanation of the Justice Department’s options and other things to know about the case.

What is Boeing accused of?

The Justice Department says Boeing failed to meet the terms of the settlement, which required the company to set up and maintain a programme to detect and prevent violations of US anti-fraud laws.

Notably, the government did not say whether Boeing actually committed any acts of fraud.

Why was Boeing on probation?

The crashes, which happened in Indonesia in 2018 and in Ethiopia in 2019, killed a total of 346 people. After the second one, the Justice Department investigated how Boeing convinced the Federal Aviation Administration to certify the 737 Max.

Prosecutors determined that Boeing committed fraud against the United States by deceiving the FAA about elements of a key flight-control system that was later implicated in the crashes.

Boeing and the Justice Department secretly negotiated a settlement – called a deferred prosecution agreement – in which Boeing blamed the deception on two low-level employees and agreed to pay $2.5 billion, mostly to its airline customers.

In exchange, the government agreed to drop a single criminal count of fraud if Boeing kept clean for three years.

What role did Boeing's current problems play?

The three-year probationary period was about to expire when a door plug on a new 737 Max blew out during Alaska Airlines flight 1282 in January. The incident prompted new investigations of the company, including one by the Justice Department.

Accident investigators determined that four bolts that help secure the door plug were missing after the panel was removed for work at a Boeing factory near Seattle.

Boeing told federal officials it had no documentation about the repair job.

At a meeting last month with families of people killed in the Max crashes, Justice Department officials said Boeing's lack of information could be a violation of the settlement agreement, according to two lawyers who were present.

The FBI told passengers on the Alaska flight they might be victims of a crime.

What did Boeing say?

The Arlington, Virginia, company disputes the Justice Department’s finding.

“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,” a Boeing spokesperson said in a statement.

The company said it has always been transparent in its communications about the agreement, "including in response to (the Justice Department's) questions following the Alaska Airlines 1282 accident.”

What happens next?

Boeing has until June 13 to formally respond to the allegation that it violated the deferred prosecution agreement, which was filed in federal district court in Fort Worth, Texas.

The Justice Department said it would consider the company's comments “in determining whether to pursue prosecution.”

Prosecutors said they would meet in Washington on May 31 with families of passengers who died in the two Max crashes to explain the determination that Boeing has failed to comply with the settlement and get relatives' input.

Family members were angry and disappointed after a similar meeting last month.

What option do prosecutors have?

The Justice Department told US District Judge Reed O’Connor — who upheld the 2021 agreement — that Boeing could be prosecuted for any crime the government knows about, but it did not say what those might be.

The department also did not disclose the alleged actions by the company that prosecutors determined breached the 2021 settlement.

Although government prosecutors could revive their original fraud charge, they also may choose to keep Boeing on probation for the 737 Max-related fraud or to ask the judge to permanently dismiss the charge – in effect, ending the case.

It would be unusual — but not unprecedented — for the government to call off a corporate plea deal. Last year, Swedish telecommunications company Ericsson pleaded guilty and paid a $206 million criminal penalty after breaking a deferred prosecution agreement.

The Justice Department said it would notify the judge of its decision about Boeing no later than July 7.