Written by Chris Prentice, Mike Spector, and Allison Lambert
WASHINGTON (Reuters) – U.S. prosecutors have recommended top Justice Department officials file criminal charges against Boeing Co (NYSE:) after it emerged that the planemaker violated a settlement related to two fatal accidents, two people familiar with the matter told Reuters.
The Justice Department must decide by July 7 whether to sue Boeing. The recommendation of prosecutors handling the case has not been previously reported.
In May, officials determined that the company violated a 2021 agreement that protected Boeing from a criminal charge of conspiracy to commit fraud stemming from two fatal crashes in 2018 and 2019 involving the 737 MAX.
Under the 2021 agreement, the Justice Department agreed not to prosecute Boeing over allegations that it defrauded the FAA as long as the company reformed its compliance practices and filed regular reports. Boeing also agreed to pay $2.5 billion to settle the investigation.
Boeing declined to comment. She previously said she “honored the terms” of the 2021 settlement, a three-year term known as a deferred prosecution agreement. Boeing told the Justice Department that it disagreed with its determination that the company violated the settlement, Reuters reported this month.
A spokesman for the Ministry of Justice declined to comment.
The two sources said the two sides are in discussions about a possible solution to the Justice Department investigation and there is no guarantee that officials will move forward with charges. They added that internal deliberations in the Ministry of Justice are still ongoing and no final decisions have been reached.
The criminal charges would deepen the unfolding crisis at Boeing, which faced intense scrutiny from US prosecutors, regulators and lawmakers after a panel shot down one of its planes operated by Alaska Airlines mid-flight on January 5, just two days before the 2021 settlement was set to expire. .
The sources did not specify what criminal charges Justice Department officials are considering, but one of the people said they could extend beyond the original 2021 conspiracy charge.
Alternatively, rather than suing Boeing, the Justice Department could extend the 2021 settlement for a year or propose new, tougher terms, the sources said.
In addition to financial penalties, more stringent settlements typically involve appointing a third party to monitor the company’s compliance. The Department of Justice can also require a company to acknowledge its wrongdoing through a guilty plea.
Boeing may be willing to pay a fine and agree to probation, but believes a guilty plea, which typically results in additional business restrictions, could be too damaging, one of the sources said. Boeing receives significant revenue from contracts with the US government, including the Department of Defense, which could be at risk if it is convicted of a felony, one of the sources said.
Relatives of victims of the deadly 737 MAX crashes have long criticized the 2021 agreement, saying Justice Department officials should have sued the company and its executives.
At a Senate hearing in June, CEO Dave Calhoun acknowledged the company’s safety shortcomings and apologized to families who lost loved ones.
Last week, the families pressed prosecutors to demand that the plane maker be fined about $25 billion and move forward with criminal prosecution.