 "A Boeing 737 Max aircraft during a display at the Farnborough International Airshow, in Farnborough, Britain, July 20, 2022. Reuters")
A US federal judge has rejected a plea agreement between Boeing and the Department of Justice (DOJ) concerning the two fatal 737 MAX crashes that occurred in 2018 and 2019, resulting in 346 deaths.
The proposed deal would have allowed Boeing to plead guilty to a felony conspiracy charge for misleading regulators about the aircraft’s safety features, specifically the Maneuvering Characteristics Augmentation System (MCAS), which was implicated in both crashes.
Benefits of the guilty plea for Boeing
Boeing stood to benefit in certain ways under the plea agreement that was proposed. By pleading guilty to a conspiracy charge and entering into a settlement under the deferred prosecution agreement (DPA), the company would have avoided a full trial that could have been more damaging to its reputation and operations.
Trials often bring intense scrutiny, revealing internal details and practices that companies might prefer to keep private.
Moreover, the plea deal included a capped financial penalty, with a fine of up to $487.2 million. In contrast, a trial could have resulted in much higher penalties or civil liabilities, especially if victims’ families or other parties pursued additional claims.
Why was Boeing’s guilty plea rejected?
US District Judge Reed O’Connor of the Northern District Court of Texas declined to approve the agreement, expressing concerns that it inappropriately limited the court’s authority by imposing diversity considerations in the selection of the independent monitor.
The independent monitor would be an oversight entity appointed to supervise and evaluate Boeing’s compliance with the terms of the plea agreement and to ensure the company takes steps to improve its safety practices.
Judge O’Connor noted that prosecutors provided “shifting and contradictory explanations” regarding the role of diversity in the monitor’s selection process.
He concluded the Department of Justice could take diversity into account when selecting the monitor tasked with overseeing Boeing’s safety efforts, putting the public interest at risk.
Impact Shorts
More ShortsBoeing’s share price
Boeing’s share price fell by 1.5 per cent from the day’s high of $160.02 apiece to $157.5 at around 1:40 pm EST when the decision was reported.
With inputs from agencies