Boeing’s announcement on Sunday that it had agreed to plead guilty to federal criminal charges as part of a deal with the Justice Department was the culmination of a years-long crisis involving the company’s 737 Max plane.
The settlement may help Boeing end a federal case stemming from two fatal 737 Max crashes in 2018 and 2019. But the settlement is not the final word in this saga and may have little impact on other problems , including questions about production quality that came to light when a panel exploded from a Max jet during a flight in January.
Here’s what else you need to know about Boeing’s settlement with federal prosecutors and other challenges facing the company.
What is expected to happen next?
Boeing and the Justice Department first reached an agreement in 2021 over the two accidents that allowed the company to avoid criminal charges. But federal prosecutors this year said the company had violated the terms of that agreement and reached a new one, which was agreed in principle on Sunday.
Under the latest deal, Boeing would plead guilty to conspiracy to defraud the federal government. The company would also agree to an independent monitor, three years of probation and additional financial penalties. That includes a $487.2 million fine, half of which could be forgiven because of Boeing’s past fine payments.
But the deal isn’t official yet.
“Sometimes people hear there’s been a plea deal and think things are settled, but that’s not necessarily true,” said Kya M. Henley, co-founder of Saint Park, a white-collar law firm and former U.S. Rep. defender. .
A formal plea deal is expected to be filed in federal court in the coming days, and the judge overseeing the case will then review the deal, which many of the families of the people who died in the two crashes strongly oppose.
If the judge sides with the families, Boeing and the Justice Department will have to reach a new settlement.
Otherwise, a monitor will be selected by an independent panel, with the final decision made by Deputy Attorney General Lisa Monaco. The Justice Department said it would solicit the names of candidates for the position from the public and consider comments from Boeing.
Why are families unhappy and what can they do?
The families said they remain deeply disappointed in the way the Justice Department handled the case against Boeing. Despite the company pleading guilty to criminal charges, prosecutors have failed to hold the company or executives responsible for the deaths of 346 people in the two crashes, lawyers for the families said.
“We don’t think the agreement is sufficient,” said Erin Applebaum, a lawyer representing 34 of the families who lost loved ones in the second crash, in Ethiopia. “We don’t think it properly addresses the root cause of the problems at Boeing.”
Ms. Applebaum said the only way to force meaningful change at Boeing would be to take actions that affect its bottom line, which would mean larger fines and more severe consequences. He also criticized the decision to consider public proposals for the independent monitor as “nothing more than talk,” noting that the Justice Department would allow Boeing a say in the decision.
For now, the families are hoping to convince a judge to reject the deal, arguing it won’t enhance public safety. Separately, trials in a handful of civil cases filed against Boeing by some families are scheduled to begin later this year.
Who will the monitor be and what will the person do?
The Justice Department will appoint an independent compliance monitor as part of the terms of Boeing’s three-year probation. This person, who will be given the powers of a probation officer, will submit annual reports to the government and ensure that the company complies with security measures.
Screen reports may indicate changes in the company’s manufacturing process or quality control. Similar monitors have been placed on other companies such as Apple and Deutsche Bank as part of settlements with federal prosecutors.
It is not yet clear who the government will nominate for the role. The monitor in this case is likely to be an aviation specialist.
“Nobody wants a free-roaming monitor looking at their records,” said John C. Coffee, a Columbia University law professor who focuses on corporate governance. “That’s why there’s likely to be a lot of sensitivity about who the person is.”
The scope of the monitor’s authority will come down to the fine print of the final agreement. Some important questions remain unresolved, such as whether the standing review can go directly to the judge with its findings and whether the judge can impose a sentence in response. These will have to be addressed in the final terms, Mr Coffee said.
Veronica Root Martinez, a Duke University law professor who studies corporate misconduct and compliance, said there would almost certainly be judicial oversight of the surveillance since it stemmed from a guilty plea, with reports filed publicly in the court file. Monitoring is likely to have a relationship with company insiders to make recommendations and ensure compliance with the plea agreement.
“It’s not necessarily just someone passively watching,” Ms. Martinez said.
Are there other consequences for Boeing for pleading guilty?
The guilty plea puts Boeing’s lucrative government contracts at risk. A company convicted of certain felonies cannot enter into government contracts without obtaining a waiver. Boeing is in talks with the Pentagon over the fate of those government contracts, according to a person familiar with the matter.
A disruption to Boeing’s defense and space operations could be devastating to the company’s business, said Loren Thompson, a longtime aerospace analyst. Government contracts generate more than a third of the company’s revenue.
Mr. Thompson said Boeing’s defense business has declined over the decades as other manufacturers have made profits. “Any further impediment to booking new defense activities will be very damaging to the company’s product portfolio,” he said.
It was not immediately clear whether the settlement would have an impact on a separate investigation into the January race, held by Alaska Airlines, in which a panel blew up a Max jet. The FBI, which is investigating the incident, declined to comment.
