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The new danger Boeing faces if it pleads guilty to US criminal charges
Boeing will face new dangers if federal prosecutors resume a criminal charge against the aviation giant later this week and the company decides to plead guilty.
A plea deal could be rejected by a judge. Large fines will have to be paid. And perhaps the biggest danger is the effect a conviction could have on Boeing’s already battered bottom line.
Criminal convictions can bar or suspend a company’s right to contract with the federal government and frustrate its ability to secure loans, according to Eddie Jauregui, a white-collar defense attorney at Holland & Knight and a former federal prosecutor.
These consequences have particular significance for Boeing, which counts the federal government as its largest customer. It is also the country’s largest exporter.
A Boeing 737 Max jet in 2020. (AP Photo/Elaine Thompson) (ASSOCIATED PRESS)
The matter may end up in the hands of an executive agency known as Interinstitutional Suspension and Exclusion Committee (ISDC), which holds the power to discuss government-wide suspensions and bans that could terminate or disrupt a company’s business with the U.S. government.
“The considerations are many and weighty,” Jauregui said. “I think government contract work is probably an extremely important component for Boeing.”
The question that will be resolved by Sunday is whether Boeing’s actions that led to an attack in January port plug burst aboard an Alaska Airlines plane (ALC) The Boeing 737 Max 9 has prompted senior DOJ officials to officially revoke legal protections extended to Boeing in a January 2021 deferred prosecution agreement.
Following investigations into two 737-8 Max crashes in 2018 and 2019 that killed 346 people, Boeing has admitted that two of its former Max test pilots misled the FAA about a flight control system called the Maneuvering Characteristics Augmentation System, or MCAS.
Prosecutors agreed to file an indictment alleging that Boeing conspired to defraud the federal government as Boeing spent three years designing, implementing and enforcing a compliance and ethics program for safer manufacturing practices and oversight.
But prosecutors told a judge in May that Boeing had violated the three-year agreement.
It now appears, according to multiple reports, that the DOJ will indeed file a new criminal charge against Boeing, but will give the company the chance to plead guilty in exchange for some conditions.
If Boeing decides not to plead guilty, the DOJ could take the company to trial, according to these reports.
The Chicago law firm representing the families of those killed in the Boeing 737 Max crashes said the families would “certainly object” to what it called a “plea agreement” described to them during a two-hour call last Sunday with DOJ officials.
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The settlement included the imposition of a corporate monitor and a fine; the law firm said the families would ask a judge to reject it.
By law, the maximum penalty for a conviction on the DOJ’s conspiracy charge is $487 million. Boeing, however, would receive credit against additional penalties based on penalties it has already agreed to pay.
The seal of the U.S. Department of Justice in Washington. (AP Photo/Andrew Harnik) (ASSOCIATED PRESS)
Boeing and the DOJ would need court approval to enter into a plea deal.
If a deal were rejected, Boeing and the government could then go back to the drawing board to negotiate new terms, or the government could pursue charges.
Matthieu Goddeyne, a former federal prosecutor and Gunster’s defense attorney, said a guilty plea by Boeing still leaves the Justice Department with the difficult task of enforcing the law while also trying to defend victims’ rights and encourage safe aircraft manufacturing.
“I don’t necessarily think the government’s job is to try to bankrupt Boeing, or to try to put thousands of people out of work,” Goddeyne said. “I think their job is to try to bring justice, to do right by the victims and to try to effect some change within the company.”
Boeing did not comment on whether it had been offered a plea deal. However, in May, it said it believed it had complied with its obligations under the DOJ’s deferred prosecution agreement.
In the end, company leaders may be forced to accept one of two bad choices: admit that the company committed a crime or risk a criminal trial.
“It’s never an easy decision for a company, especially one that is as closely tied to the U.S. government as Boeing is, to make the decision to plead guilty,” Jauregi said.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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