Boeing: Federal judge rejects conspiracy case deal over plane crashes

The ruling creates uncertainty around criminal prosecution of the aerospace giant in connection with the development of its bestselling airline plane.

A federal judge on Thursday rejected a deal that would have let Boeing plead guiltyto a felony conspiracy charge and pay a fine for misleading US regulators about the 737 Max jetliner before two of the planes crashed, killing 346 people.

US District Judge Reed O’Conner in Texas said that diversity, inclusion and equity or DEU policies in the government and at Boeing could result in race being a factor in picking an official to oversee Boeing’s compliance with the agreement.

The ruling creates uncertainty around criminal prosecution of the aerospace giant in connection with the development of its bestselling airline plane.

The judge gave Boeing and the Justice Department 30 days to tell him how they plan to proceed. They could negotiate a new plea agreement, or prosecutors could move to put the company on trial.

The Justice Department said it was reviewing the ruling. Boeing did not comment immediately.

Paul Cassell, an attorney for families of passengers who died in the crashes, called the decision an important victory for the rights of crime victims.

“No longer can federal prosecutors and high-powered defense attorney craft backroom deals and just expect judges to approve them,” Cassell said. “Judge O’Connor has recognized that this was a cozy deal between the government and Boeing that failed to focus on the overriding concerns – holding Boeing accountable for its deadly crime and ensuring that nothing like this happens again in the future.”

Relatives fight for years to get public trial

Many relatives of the passengers who died in the crashes, which took place off the coast of Indonesia and in Ethiopia less than five months apart in 2018 and 2019, have spent years pushing for a public trial, the prosecution of former company officials, and more severe financial punishment for Boeing.

The deal the judge rejected was reached in July and would have let Boeing plead guilty to defrauding regulators who approved pilot-training requirements for the 737 Max nearly a decade ago. Prosecutors said they did not have evidence to argue that Boeing’s deception played a role in the crashes.

In his ruling, O’Connor focused on part of the agreement that called for an independent monitor to oversee Boeing’s steps to prevent violation of anti-fraud laws during three years of probation.

O’Connor expressed particular concern that the agreement “requires the parties to consider race when hiring the independent monitor … ‘in keeping with the (Justice) Department’s commitment to diversity and inclusion.”

Selection needs to be based solely on competency

The judge wrote in Thursday’s ruling that he was “not convinced … the Government will not choose a monitor without race-based considerations.”

He wrote: “In a case of this magnitude, it is in the utmost interest of justice that the public is confident this monitor selection is done based solely on competency. The parties’ DEI efforts only serve to undermine this confidence in the government and Boeing’s ethics and anti-fraud efforts.

Todd Haugh, a business law and ethics expert at Indiana University, could not recall any previous corporate plea deals that were rejected over DEI. He said the larger issue was how the deal took sentencing power away from the court.

“That is a legitimate argument from which to reject a plea agreement, but this particular judge has really stood on this DEI issue,” Haugh said. “It comes through loud and clear in the order.”

Boeing negotiated the plea deal only after the Justice Department determined this year that Boeing violated a 2021 agreement that had protected it against criminal prosecution on the same fraud-conspiracy charge.

The case is just one of many challenges facing Boeing, which has lost more than $23bn (€22bn) since 2019 and fallen behind Airbus in selling and delivering new planes.

The company went through a strike by factory workers that shut down most airplane production for seven weeks this autumn and announced it wil lay off 10% of its workers, about 17,000 people.

Its shares have plunged about 40% in less than a year.