US probes whether Boeing blowout breaches $2.5bn settlement in 2021

A panel blew off the Max 9 plane mid-air and forced an emergency landing in Portland, Oregon, just two days before the end of the agreement's three-year term on January 7

US authorities are facing fresh pressure from families of the victims of two fatal Boeing 737 Max crashes to criminally prosecute the aerospace company following a January mid-air blowout that exposed ongoing safety issues.

Victims' representatives meeting later this month with US Justice Department officials are expected to say that Boeing violated a 2021 deal with prosecutors to overhaul its compliance programme following crashes in 2018 and 2019 that killed 346 people. That settlement shielded Boeing from criminal prosecution.

Justice Department officials are probing whether Boeing has complied with that 2021 agreement and are considering the January 5 blowout on a Boeing Max 9 plane as part of that review, a person familiar with the matter told Reuters. 

Boeing in January 2021 agreed with the US Justice Department to pay $2.5bn (€2.3bn) to resolve a criminal investigation into the company's conduct surrounding the fatal crashes. The agreement included money to compensate victims' relatives and required Boeing to overhaul its compliance practices.

The deal, known as a deferred prosecution agreement, gave the US plane maker an avenue to avoid being prosecuted on a charge of conspiring to defraud the US Federal Aviation Administration. 

Prosecutors agreed to ask a court to dismiss the fraud charge if they determined Boeing complied with the agreement over a three-year period. Families of the fatal crashes have criticised the agreement, arguing it failed to hold the company and executives accountable. 

A panel blew off the Max 9 plane mid-air and forced an emergency landing in Portland, Oregon, just two days before the end of the agreement's three-year term on January 7. 

'Systemic quality-control issues'

The panel that dislodged from the plane appeared to be missing four key bolts, according to an early review from US safety investigators. The investigators questioned Boeing for failing to supply key documents and names sought in their probe.

Boeing has said the company was co-operating and believes required documents detailing the removal of a key part during production of the Max jet were never created. The Justice Department is probing whether Boeing violated the 2021 agreement, which includes scrutinising the adequacy of the company’s compliance programme, a source said. 

In determining whether Boeing violated the settlement, prosecutors are expected to lean heavily on findings from the regulator, which in February gave the company 90 days to develop a comprehensive plan to address “systemic quality-control issues”, the source said.

Justice Department officials would likely avoid seeking sanctions if Boeing's conduct ahead of the blowout amounts to good-faith mistakes, as opposed to deliberately trying to mislead regulators, the source said. 

Breaches of such agreements are rare. But the Justice Department under president Joe Biden has ratcheted up scrutiny on repeat corporate wrongdoers and has penalised companies that violate these deals. Just over a year ago, Sweden's Ericsson agreed to pay a hefty fine and plead guilty after violating its own 2019 deal with prosecutors.

A gathering on April 24 is scheduled in which Justice Department officials will meet with families of the 2018 and 2019 Boeing Max crash victims. 

Reuters