Boeing Violated Agreement to Avoid Criminal Prosecution, Justice Department Says

Boeing may be subject to criminal prosecution after the Department of Justice (DOJ) accused it of violating the terms of a 2021 settlement agreement.

The department said Boeing breached its obligations under 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.”

As a result, Boeing is subject to prosecution by the government for any federal criminal violation, according to the letter filed in Texas federal court on Tuesday.

The government is still deciding “how it will proceed in this matter,” and has given Boeing until June 13 to respond.

“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. “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.”

Boeing shares dipped 0.2% in pre-market trading on Wednesday. Year-to-date, Boeing’s stock has plunged 28% as it continues on a historic losing streak.

The settlement was tied to a DOJ investigation into two fatal crashes involving Boeing 737 MAX aircraft: Lion Air Flight 610, which killed all 189 people on board after it crashed into the Java Sea 13 minutes after takeoff in 2018; and Ethiopian Airlines Flight 302, which crashed 6 minutes after takeoff, killing all 157 people on board one year later.

Boeing thought it had put its 737 MAX problems behind it, with executives hoping for sunnier horizons for the aircraft manufacturer. So far, 2024 hasn’t panned out that way — starting with the blowout of a door plug on an Alaska Airlines flight just five days into the year. The incident drew heightened regulatory scrutiny and investigations, and multiple whistleblowers. On top of that, the aerospace giant’s year has further been marred by production delays on a number of its aircraft.

Boeing had agreed to pay more than $2.5 billion in January 2021 to settle charges that it defrauded the Federal Aviation Administration’s Aircraft Evaluation Group about the aircraft’s Maneuvering Characteristics Augmentation System, which impacted the flight control system of the Boeing 737 MAX.

As part of the settlement, Boeing also agreed to report evidence of violations of U.S. fraud laws committed by Boeing’s employees and to strengthen its compliance program and to enhance compliance program reporting requirements, which required Boeing to meet with the Fraud Section at least quarterly and to submit yearly reports regarding the status of its remediation efforts and information regarding its compliance program.

The DOJ said it “will continue to confer with the family members of the victims of the Lion Air Flight 610 and Ethiopian Airlines Flight 302 crashes,” as well as airline customers and their counsel about next steps.

This article originally appeared on Quartz.

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