CRIMINAL MONOPOLY CAPITALI$M
Pete Syme
Wed, May 15, 2024
In 2021, Boeing reached a deal with prosecutors after 346 people died in two 737 Max crashes.
The Justice Department said Tuesday that Boeing violated that deal and is now subject to prosecution.
It worsens the crisis at the planemaker which began with January's Alaska Airlines blowout.
Boeing could face criminal charges after the Justice Department determined the planemaker violated a deferred prosecution agreement (DPA).
The DPA, reached in 2021, meant Boeing didn't face charges related to the deaths of 346 people in two 737 Max 8 crashes in 2018 and 2019. As part of the settlement, Boeing paid $2.5 billion and promised to strengthen its compliance program.
The DPA expired just two days after January's Alaska Airlines blowout, which has renewed scrutiny of Boeing's quality-control processes. Safety investigators said the 737 Max involved had left Boeing's factory missing key bolts.
In a Tuesday court filing seen by Business Insider, the Justice Department said Boeing violated 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."
It added: "For failing to fulfill completely the terms of and obligations under the DPA, Boeing is subject to prosecution by the United States."
The news amplifies the crisis at Boeing, which has seen its CEO resign and its reputation worsen with airline customers. Its share price is down 28% since the start of the year.
Boeing has until June 13 to respond to the DoJ. In a statement shared with BI, the planemaker said: "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."
"As we do so, we will engage with the Department with the utmost transparency, as we have throughout the entire term of the agreement, including in response to their questions following the Alaska Airlines 1282 accident," it added.
The Justice Department is continuing to meet with the families of victims of the 2018 and 2019 crashes, as it determines whether to bring charges against Boeing.
Robert Clifford, an attorney for the families of victims of the 2019 Ethiopian Airlines crash, said in an email: "This is a way for Boeing to be held criminally responsible in court. It's what the families have wanted. They want answers as to what really happened in the crashes and for the safety of the public to be protected."
The Justice Department told the court it will decide whether to prosecute Boeing by July 7.
DOJ: Boeing violated deal reached to avoid 737 MAX prosecution
Seana Smith and Brad Smith
Wed, May 15, 2024
The Justice Department found that Boeing (BA) violated the terms of the 2021 agreement it reached to avoid prosecution over the two deadly crashes involving its 737 MAX jets. Prosecutors must decide by July 7 whether to file charges against the aircraft company.
Boeing has until June 13 to challenge the Justice Department's findings, according to The Wall Street Journal, and Boeing believes it has honored the terms of the agreement.
Despite this latest news, Wall Street remains bullish on the stock, feeling optimistic about the company's future as it comes under new leadership.
For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.
This post was written by Melanie Riehl
Video Transcript
Boeing has violated the terms of the agreement it reached to avoid prosecution over the two deadly crashes involving its 737 max jets, according to the Justice Department.
Prosecutors now have until July 7th to decide whether or not to file charges against the plane maker.
You're taking a look at chairs of Boeing here.
Year to date, they're down by about 30%.
Of course, this has been a year with even more swirling around the company, especially following the fuselage blowout of an Alaska Airlines flight separate from the 2737 max crashes.
That really started the spotlight of scrutiny over the internal culture that came to light of negligence and then, additionally, uh, ousted CEO thereafter and Dennis Muhlenberg at the time.
And then you had Dave Calhoun, and now he is on the way out as well.
And so all of these things considered, it will be interesting to see what the Justice Department ultimately has in terms of its ruling as a result of this deal that they had reached, I mean a deal that was essentially a slap on the wrist, given the crash.
The proceedings that took place thereafter And, of course, the families impacted as well from those two deadly crashes.
And Boeing has about a month until June 13th to challenge the department's findings here.
That was, according to a letter that The Wall Street Journal cited and Boeing, at least from the statement that Wall Street Journal got excuse me, looking to test some of these findings here.
They they believe that they have honoured the terms of the 2021 agreement.
No surprise.
We obviously expected them to say that, saying that they are going to engage the department with the utmost transparency, as we have throughout the entire term of the agreement, including in their in response to their questions following the Alaska Airlines 1282 incident accident.
So again, Boeing standing by what they have done here over the last several months just in terms of upholding that agreement that they had agreed to back in 2021.
But again, I think this just adds even more clouds here that are over that aren't over hiding here for the stock When you talk about the fact that analysts largely remaining actually bullish on Boeing, given the current valuation given the underperformance that we've seen since the start of the year.
It's going to come under new management.
We are going, you get a CEO.
And many of the analysts that we have talked to here in Yahoo Finance remain optimistic on Boeing's business going forward.
I think the next couple of months might be a bit murky as we do work out the details as we do, I get more and more here.
But again, we have seen that massive underperformance of Boeing stocks since the start of the year.
And as a result, despite all these issues, it's been interesting that Wall Street has remained largely bullish on this name, right and largely because Boeing had already set aside even more than they had pledged within the settlement.
It was about a $500 million settlement that they had made for the families specifically in the fund there.
Boeing had already set aside about $2.5 billion there, so it's really just kind of looking at what they're already doing on their own balance sheets versus what's actually coming forward within the rulings and of course this is just another step in that as well
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Feds warn Boeing of criminal charges after airliner ‘failed ‘ to improve plane safety following 737 crashes
Amelia Neath
Wed, May 15, 2024
Feds warn Boeing of criminal charges after airliner ‘failed ‘ to improve plane safety following 737 crashes
Federal officials warned Boeing about criminal charges after the airline failed to improve plane safety and adhere to a settlement after deadly 737 aircraft crashes, prosecutors said
Five years ago, Boeing agreed to pay $2.5b and make safety improvements after two new 737 Max jets crashed in separate incidents, within the space of five months, one in Indonesia in 2018 and one in Ethiopia in 2019, killing a total of 346 people.
But, now the feds claim that Boeing has violated that deal and it could face further prosecution after a string of high-profile safety incidents involving its planes, including an incident in mid-January when an Alaska Airlines Boeing 737 MAX 9’s door plug blew off, causing the grounding of all 171 MAX 9 jets by the FAA while it investigated.
“For failing to fulfill completely the terms of and obligations under the [deferred prosecution agreement], Boeing is subject to prosecution by the United States for any federal criminal violation of which the United States has knowledge,” Department of Justice lawyers wrote in a letter to a federal judge.
Rescuers work at the scene of an Ethiopian Airlines flight of a Boeing 737 Max 8 plane crash near Bishoftu, Ethiopia in March 2019 (Copyright 2019 The Associated Press. All rights reserved.)
It is now up in the air as to whether Boeing could face prosecution, and it is unclear if the government would actually go ahead and prosecute the company.
“The Government is determining how it will proceed in this matter,” the Justice Department said in the court filing, according to The Associated Press.
Boeing will have until 13 June to respond to the government’s allegation. Upon doing so, the justice department said it would consider the company’s explanation “in determining whether to pursue prosecution.”
Boeing disputes the DOJ’s findings, claiming the company has “honored the terms of the agreement” and “look forward to the opportunity to respond to the Department on this issue.”
“As we do so, we will engage with the Department with the utmost transparency, as we have throughout the entire term of the agreement, including in response to their questions following the Alaska Airlines 1282 accident,” a spokesperson for Boeing told The Independent.
Indonesian investigators inspect the wreckage of an engine from the fatal Lion Air Flight JT 610 recovered from the sea at the Tanjung Priok in November 2018 (Getty Images)
In 2018, 189 people lost their lives while on a Lion Air flight from Indonesia plunged into the Java Sea just 13 minutes after take-off. Just five months after this horrific incident, an Ethiopian Airlines took off from Addis Ababa, when six minutes in, it crashed only 30 miles from the airport, killing all 157 people on board.
When investigations into the disaster crashes were underway, authorities pointed to a flight-control system that Boeing added to the Max without telling pilots or airlines, which Boeing did not overhaul until after the second crash.
After a series of negotiations, the government agreed not to prosecute Boeing on a charge of defrauding the United States by deceiving regulators about the flight system. The settlement included a $243.6 million fine, a $500 million fund for victim compensation, and nearly $1.8 billion to those airlines whose Max jets were grounded for nearly two years.
Prosecutors said they will be meeting with families of passengers who died in both Max disasters on May 31.
Paul Cassell, a lawyer who represents families of passengers in the Ethiopia crash, said the Justice Department’s allegation that Boeing violated the settlement terms is “a positive first step, and for the families, a long time coming.”
“But we need to see further action from DOJ to hold Boeing accountable, and plan to use our meeting on May 31 to explain in more details what we believe would be a satisfactory remedy to Boeing’s ongoing criminal conduct,” Mr Cassell added to The Associated Press.
Boeing 737 Max airplanes sit parked at Boeing Field in 2020 in Seattle, Washington after they were grounded worldwide since March 2019 after two deadly crashes in Indonesia and Ethiopia (Getty)
The agreement was thrust back into the spotlight after a string of safety incidents involving Boeing planes in recent months. The most notable was a door plug blew out at 16,000 feet on an Alaska Airlines flight. That led to a federal investigation into the incident and Boeing.
Former workers and whistleblowers have accused the company of systematically degrading the quality of its manufacturing and the expertise of its workforce in pursuit of short-term profits for shareholders.
Last week, a second whistleblower within Boeing’s supply chain died after alleging the company had cut corners while building its 737 Max jetliner. Reports indicated the man had died of pneumonia caused by a flu infection.
In an email to employees last month, Scott Stocker, the head of Boeing’s 787 program, blamed the missed inspections on “misconduct” by workers and said that those responsible had received “swift and serious corrective action.”
Boeing Has Violated Prosecution Deal for 737 Max Crashes, DOJ Says
AJ McDougall
Tue, May 14, 2024 at 7:59 PM MDT·2 min read
Moritz Frankenberg/picture alliance via Getty Images
The U.S. Justice Department on Tuesday notified Boeing that it violated terms of a settlement that allowed it to duck criminal prosecution after two deadly 737 Max crashes, a development that leaves the company vulnerable to potential future charges.
The aerospace company breached the 2021 deferred prosecution agreement by failing to “design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations,” federal prosecutors said in a letter filed in a Texas court.
Prosecutors said they had not decided what to do next, adding that they would alert the court about any new charges no later than July 7. Boeing has until June 13 to respond.
In a statement to The Daily Beast on Tuesday, Boeing confirmed that it had received the Justice Department’s letter.
“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,” it said. “As we do so, we will engage with the Department with the utmost transparency, as we have throughout the entire term of the agreement, including in response to their questions following the Alaska Airlines 1282 accident.”
After a two-year investigation, prosecutors charged Boeing with deceiving federal regulators about the capabilities of a new feature on its planes implicated in both the deadly crashes, which killed a combined 346 people in 2018 and 2019.
In January 2021, Boeing agreed to pay a $2.5 billion penalty, and undergo three years of monitoring, to settle the single charge of fraud.
But the plane-maker has been thrust back into an uncomfortable spotlight in recent months, beginning with the Jan. 5 mid-air blowout of a door plug on a 737 Max 9 operated by Alaska Airlines. A preliminary investigation by the National Transportation Safety Board released in February found that four bolts meant to hold the door plug in place were missing before the jet took off.
The next month, The Wall Street Journal reported that the Justice Department had quietly launched a criminal investigation into the blowout.
The families of the 346 crash victims have long held that they want to see Boeing properly held accountable for its role in the double tragedies, and have pushed for federal investigators to reopen their probe.
Paul Cassell, a professor of law at the University of Utah College of Law who is representing the families, called the Tuesday letter “a positive first step” in a statement.
“But we need to see further action from DOJ to hold Boeing accountable, and plan to use our meeting on May 31 to explain in more detail what we believe would be a satisfactory remedy to Boeing’s ongoing criminal conduct,” he said.
The Daily Beast.
The US says Boeing violated a 2021 settlement. That doesn't mean the company will face charges
DAVID KOENIG
Wed, May 15, 2024
FILE - An airplane flies over a sign on Boeing's 737 delivery center, Oct. 19, 2015, at Boeing Field in Seattle. The Justice Department's determination on Tuesday, May 14, 2024, that Boeing violated corporate probation for deceiving federal regulators does not necessarily mean that prosecutors will revive criminal charges against the giant aircraft manufacturer. (AP Photo/Ted S. Warren, File)
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 terms of the settlement, which required the company to set up and maintain a program to detect and prevent violations of U.S. 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 DOES 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 OPTIONS DO PROSECUTORS HAVE?
The Justice Department told U.S. 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.
Boeing violated $2.5B settlement to avoid prosecution, says Justice Dept
Tara Suter
Wed, May 15, 2024
The Department of Justice (DOJ) told a federal judge Tuesday that Boeing violated a settlement that let it escape criminal prosecution following the two crashes of 737 Max aircraft a few years ago.
The DOJ now has to figure out if it will file charges against the aviation giant, according to The Associated Press. According to the department, prosecutors will let the court know of their plans by early July.
Glenn Leon, the head of the DOJ’s criminal fraud section, said Tuesday in a letter filed in federal court in Texas, that Boeing violated the terms of a $2.5 billion settlement from January 2021 in relation to the two crashes of 737 Max jets in 2018 and 2019.
It said Boeing had breached the deal to evade prosecution “by failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations.”
The finding that Boeing violated the terms of the settlement by not making the changes could result in the company being prosecuted “for any federal criminal violation of which the United States has knowledge,” the DOJ said.
Boeing has continued to experience high-profile safety issues and public scrutiny, most recently in January when a door plug blowing off of a 737 Max 9 aircraft during an Alaska Airlines flight.
Boeing confirmed it received communication from the Justice Department and a request for response over the alleged violations of the nonprosecution deal.
“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,” it said in a statement.
“As we do so, we will engage with the Department with the utmost transparency, as we have throughout the entire term of the agreement, including in response to their questions following the Alaska Airlines 1282 accident.”
US government says Boeing in breach of US fraud laws agreement
DPA
Wed, May 15, 2024
A logo with the inscription "Boeing" pictured on a hall of the Boeing distribution center. Georg Wendt/dpa
Aircraft maker Boeing violated the terms of a US agreement that has so far protected it from prosecution following two fatal plane crashes, according to the US Department of Justice.
Boeing had not implemented a programme to prevent violations of US fraud laws as agreed, according to court documents filed on Tuesday. The government says it has not yet decided how to proceed in the matter.
Boeing was given until June 13 to provide an official response. In an initial reaction on Tuesday, the company emphasized that, in its own estimation, it had complied with the agreement.
The crashes of two Boeing 737 MAX aircraft in October 2018 and March 2019 killed 346 people. According to investigators, software that was supposed to support pilots but interfered with the controls more than they expected was behind both crashes.
Boeing was criticized because the aircraft manufacturer had declared special training for the software unnecessary when the plane model was certified by the US authorities.
In accordance with the agreement with the US government, Boeing paid a fine of $243 million. In return, the allegations of fraud in connection with the information provided to the US authorities were not pursued further.
However, Boeing was required to implement a compliance and ethics programme. The Department of Justice has now emphasised that a breach of this can again result in criminal prosecution of the company.
After the two crashes, the 737 MAX aircraft had to remain on the ground for months, until Boeing carried out improvements.
This year, the company once again came to the attention of the authorities after a piece of fueselage blew off an almost new Boeing 737-9 Max operated by US carrier Alaska Airlines in mid-air in January.
Nobody was seriously injured in the incident.
The US government subsequently launched an investigation and the Federal Aviation Administration (FAA) called on Boeing to submit a plan to improve quality controls. The FAA also blocked Boeing's planned expansion of 737 MAX production until further notice.
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