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Deadline looms for beleaguered Boeing

2024-07-06 HKT 09:31
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  • Boeing 737 MAX aircraft are assembled at the company’s plant in Renton, Washington. File photo: Reuters
    Boeing 737 MAX aircraft are assembled at the company’s plant in Renton, Washington. File photo: Reuters
More than five years after two fatal 737 MAX crashes, Boeing faces a fresh legal reckoning now that prosecutors have concluded the company flouted an earlier settlement addressing the disasters.

The aviation giant had been on a Friday night deadline to accept or reject a Department of Justice proposal that would require it to plead guilty to fraud during the certification of MAX airplanes, sources told AFP.

There had been no public comment either way by the evening, and a lawyer for the families of the 737 crash victims, Robert Clifford, told AFP that he believed the deadline would be extended over the weekend if Boeing asked for more time.

Boeing's latest legal predicament was triggered by a DOJ determination in mid-May that the company ignored a 2021 deferred prosecution agreement (DPA) by not meeting requirements to improve its compliance and ethics program after the MAX crashes.

Under a proposal presented by the DOJ to families of MAX crash victims, Boeing would pay an additional US$243 million penalty and agree to have an external monitor, said Tracy Brammeier, an attorney at Clifford Law who represents families of MAX victims.

"The guilty plea is significant. No one wants to be a convicted or admitted felon," said Brammeier, who nonetheless described family members as dissatisfied with the proposal.

The DOJ has said it will notify a US court on how it will proceed no later than July 7, with the agency expected to announce steps to prosecute Boeing should the company reject the settlement.

Boeing, which has previously said it honoured the terms of the DPA, declined comment.

The original DPA was announced in January 2021 near the end of the Trump administration over charges that Boeing knowingly defrauded the Federal Aviation Administration during the certification of the MAX.

The agreement required Boeing to pay US$2.5 billion in fines and restitution in exchange for immunity from criminal prosecution.

A three-year probationary period was set to expire this year. But in January, Boeing was plunged back into crisis mode when a 737 MAX flown by Alaska Airlines was forced to make an emergency landing after a fuselage panel blew out mid-flight.

In a May 14 letter to the US court, DOJ officials said that Boeing breached its obligations under the DPA by "failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws throughout its operations."

Families of victims, who have pressed for a criminal trial of Boeing and its top executives, remain unhappy that the new plea agreement does not explicitly link Boeing's fraud to the 346 fatalities from crashes in Ethiopia and Indonesia, according to Brammeier.

"The families want accountability and still are not getting it," Brammeier said.

Michael Stumo, who lost his daughter, Samya Rose Stumo, in the 2019 Ethiopian Airlines crash, said the DOJ should also impose much stiffer fines on Boeing -- from US$10 billion to US$20 billion -- with the caveat that they could be suspended if the company invests in safety and quality control.

"It's too good a deal for Boeing," said Stumo, who added that Boeing should not have a say in who is appointed its independent monitor.

Miriam Baer, a law professor at Brooklyn Law School, said the DOJ's decision to stick with the original charge -- rather than supplement it -- reflects a desire to "bring the claims that could be most easily proven if it goes to trial."

John Coffee, a law professor at Columbia University, said DPAs like Boeing's often "poorly serve" the public interest because "prosecutors probably care much more about achieving a conviction than ensuring the defendant is adequately deterred and restrained," he wrote in a blog post this week.

Coffee suggested the DOJ should consider measures such as barring CEO compensation models that encourage risk-taking, or ensuring that funds clawed back from executives who plead guilty of wrongdoing go to whistleblowers as a way "to shift some of the cost of deterrence from shareholders to senior management." (AFP)

Deadline looms for beleaguered Boeing