After the crash of two airliners that killed 346 people, a $2.5 billion settlement that allowed Boeing to avoid criminal prosecution has failed to resolve questions about the safety of the aerospace giant’s planes.
Federal prosecutors are now accusing the company of failing to comply with the terms of the 2021 deal. Boeing has agreed to plead guilty to a felony fraud charge as part of a new deal with the Justice Department. The department said Thursday it expects to file the detailed plea agreement no earlier than the middle of next week.
Experts on corporate behavior say the lasting impact of the new safety deal could depend on whether it grants an independent monitor to oversee Boeing for three years. Prosecutors made the appointment of such a monitor a condition of the plea deal, which also calls for Boeing to pay a new $243.6 million fine.
“Your real concern is protecting yourself from future loss of life in future accidents, and that’s something the controller can have more impact on than just the amount of the fine,” said John Coffee, a Columbia University law professor who studies corporate governance and white-collar crime.
The final verdict and sentence are to be filed in federal court in Fort Worth, Texas. The filing will provide a more precise description of how the compliance monitor will be chosen and the scope of its duties. The government already appears to have backed away from a plan that would have given Boeing the largest role in choosing the watchdog.
Families of some passengers who died in the crashes have said they plan to oppose the settlement. They want a trial, not a plea bargain, and are demanding that Boeing pay a $24 billion fine. Paul Cassell, a lawyer for the families, said the relatives of the crash victims should have the right to nominate a monitor to be appointed by the judge.
The Justice Department had initially planned to select a controller from a list of three candidates submitted by Boeing, and would ask the company for other names if necessary, according to participants in a June 30 briefing that department officials gave to the passengers’ families and their attorneys.
The tentative agreement Boeing signed a week later said the Justice Department would seek candidates through a job posting on its website and then select one “taking into account Boeing’s input.” The precise scope of the company’s role was not specified.
Once the department and Boeing make their selection, prosecutors will notify U.S. District Judge Reed O’Connor. If he does not object within 10 days, the appointment will go through. The person selected must meet “specific qualifications” set forth in the announcement and in the department’s guidelines for selecting monitors in criminal cases, according to the filing.
The monitor will ensure that Boeing complies with the plea agreement during a three-year probation period, during which the official will prepare “a confidential annual report for the government” and file a summary with the court.
The use of observers as part of plea deals with companies convicted of crimes reflects prosecutors’ reluctance to issue indictments and bring cases to trial.
Brandon Garrett, a Duke University law professor who follows corporate criminal cases, said prosecutors have long worried that an indictment could destroy a large, publicly traded company, and so they have tended to favor out-of-court settlements in the most serious cases. That changed, he said, after the 2008 financial crisis, and the concern became that companies would be treated as “too big to jail,” a phrase Garrett used in the title of his 2014 book.
The effectiveness of plea agreements and deferred prosecution that allow defendants – such as Boeing in 2021 – to avoid criminal liability has been questioned.
“You have to have companies that are repeatedly prosecuted, in particular. You have to have maybe a criminal record,” Garrett said. “That’s when we started seeing more and more significant cases where companies were being convicted.”
Nadia Milleron, whose 24-year-old daughter, Samya Stumo, died in the second of two fatal 737 Max crashes, said Boeing’s plea deal was much better than the one it reached three and a half years ago. In January 2021, the Justice Department agreed not to prosecute the company for conspiracy to defraud the U.S. government, a charge based on allegations that Boeing misled regulators who approved the 737 Max nearly a decade ago.
Still, Milleron and relatives of other crash victims want a trial that could reveal more details about discussions within Boeing before, and even after, the crashes, which occurred in 2018 in Indonesia and 2019 in Ethiopia.
It seemed likely that the Justice Department would drop the 2021 charge altogether until last January, when a panel covering an unused emergency exit ripped off an Alaska Airlines plane. The Federal Aviation Administration has stepped up its oversight, and the agency’s chief said Boeing’s manufacturing problems “do not appear to be resolved.”
The Justice Department defends its decision to seek a plea deal by saying it understands the harshest possible sentence given the charge against Boeing.
“We should be asking ourselves whether these lawsuits are effective and what can be done to make them more effective,” Garrett said. He suggested the judge take an active role in monitoring Boeing to ensure that the company complies with the new agreement after violating the old one.
Coffee, the Columbia law professor, said the key to the deal deterring Boeing from future violations will be a strong, independent monitor.
“Companies are worried about a free agent walking around their files,” he said. “On the other hand, if the monitor doesn’t have the ability to go directly to the court and say, ‘They’re not living up to the terms of the agreement,’ the monitor is ineffective.”
In one notorious case, prosecutors blocked a federal judge in New York from releasing a monitor’s reports on HSBC, a London-based bank that entered into a deferred prosecution agreement over allegations it failed to prevent a Mexican drug cartel from laundering money.
“I’m not saying we shouldn’t have deferred prosecution agreements, but they tend to be negotiated in a way that strongly serves the interests of the defendant,” he said.
The judge in the Boeing case said that once the Justice Department presents the details of the plea deal, he will give victims’ families seven days to file objections. The government and Boeing will then have 14 days to respond.
The Justice Department’s decision not to prosecute Boeing in January 2021 came in the final days of the Trump administration. In 2022 and 2023, federal prosecutions of companies increased slightly under the Biden administration, according to figures from the U.S. Sentencing Commission.
“This is an election year, so we’ll see how the Justice Department plays out after the November election and whether the focus on corporate crime remains the same,” said Kya Henley, a former public defender in Maryland who now represents companies and individuals in financial crimes cases. “Everyone can set their own agenda.”
Koenig reported from Dallas. AP Business writer Cathy Bussewitz in New York contributed to this report.
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