How a Boeing plea deal could affect the planemaker
By Chris Prentice, Mike Spector
July 1 (Reuters) -The U.S. Justice Department will criminally charge Boeing BA.N with fraud over two fatal crashes and ask the planemaker to plead guilty or face a trial, people familiar with the matter said on Sunday.
Boeing will have until the end of the week to respond to an offer of a plea deal from the Justice Department, the sources said. Such an agreement would allow the company to escape a courtroom battle with federal prosecutors. But it could still complicate the company's efforts to overcome an ongoing crisis sparked by the Jan. 5 mid-flight panel blowout on an Alaska Airlines-operated flight.
The proposed deal follows a Justice Department finding in May that Boeing breached a 2021 agreement that had shielded it from prosecution over fatal crashes in 2018 and 2019 that killed 346 people.
WHAT WAS THE ORIGINAL AGREEMENT?
The Justice Department in 2021 agreed to hold off prosecuting Boeing and ultimately ask a judge to dismiss a charge of conspiring to defraud the U.S. Federal Aviation Administration (FAA) so long as the company abided by the deal's terms over a three-year period.
Boeing agreed to overhaul compliance practices to prevent violation of U.S. fraud laws and submit regular reports. But the January mid-flight emergency occurred two days before the agreement expired.
The planemaker has told prosecutors it disagrees with their finding and has said it "honored the terms” of the settlement.
WHAT HAPPENS NEXT?
DOJ officials plan to give Boeing until the end of the week to respond to the offer, which they will present as nonnegotiable, Reuters reported. Should Boeing refuse, prosecutors plan to take the company to trial.
A courtroom battle would carry risks for both sides.
Prosecutors would have to prove the planemaker conspired to defraud the FAA about the flight system, after a jury in 2022 acquitted a Boeing pilot of related charges.
Still, companies are typically unlikely to risk going to trial, both because a conviction threatens to result in harsher penalties and lengthy court procedures could prolong uncertainty surrounding the case for Boeing investors, suppliers and employees.
WHAT WILL HAPPEN IF BOEING PLEADS GUILTY?
This may be the most risky aspect of the deal terms for Boeing, according to legal experts. A felony conviction could disrupt Boeing's ability to secure government contracts such as those with the U.S. military, which make up a significant portion of its revenue.
"In the world of government contracting, an indictment or finding of criminal liability can have a significant impact on a company," said Franklin Turner, a government contracts lawyer at McCarter & English.
Boeing could seek waivers from government departments and agencies to continue contracting with them. Some previous Justice Department settlements have provided details on how officials should address the issue. It remains unclear to what extent the proposed Boeing plea deal does.
If the plea offer does not address it, government officials at each department or agency would have to decide whether Boeing, as a convicted felon, is entitled to a waiver, said Vikramaditya Khanna, a law professor at University of Michigan.
WOULD THERE BE FINANCIAL PENALTIES FOR BOEING?
The proposed agreement includes a $487.2 million financial penalty, about half of which Boeing would need to pay as the government would credit it for previous penalties.
Boeing would likely be forced to pay restitution, an amount to be decided by a judge. The company already paid $2.5 billion in penalties and restitution in 2021 in connection with the original conspiracy charge, which included a criminal penalty and compensation for customers and relatives of crash victims.
The plea offer includes putting Boeing on probation for three years and requiring its board to meet with victims' family members, Reuters reported.
IF A FEDERAL MONITOR IS APPOINTED, WHO WOULD IT BE, AND HOW WOULD THAT BE DETERMINED?
The proposed plea deal includes the appointment of an independent monitor to audit Boeing's safely and compliance practices for three years.
The Justice Department under President Joe Biden has renewed the use of corporate monitors in its deals with companies to resolve charges of misconduct. The practice had fallen out of favor under the previous administration.
Companies typically fight against these terms. The outside firms, which are selected by the DOJ, act as the government’s eyes and ears. The company foots the bill.
FUTURE RISKS
The plea would not resolve or provide immunity to the company for any other conduct, including the Jan. 5 incident.
Spirit Aero to be broken up as Boeing agrees to $4.7 bln stock deal nL4N3IT09U
Airbus may end up owning some Spirit Aero assets in Scotland, Malaysia nFWN3IT10N
FACTBOX-Boeing, Airbus carve out Spirit Aero's global plants nL4N3IT0OI
TIMELINE-Boeing to buy Spirit Aero for $4.7 bln in effort to tackle quality lapses nL4N3IJ124
US to criminally charge Boeing, seek guilty plea, sources say nL1N3IS083
Reporting by Chris Prentice and Mike Spector in New York;
Additional reporting by Mike Stone in Washington and Tim Hepher in Paris
Writing by David Gaffen
Editing by Matthew Lewis
Gerelateerde activa
Laatste nieuws
Disclaimer: De entiteiten van de XM Group bieden diensten en toegang tot ons online handelsplatform op basis van uitsluitend-uitvoering, waardoor een persoon de beschikbare content op of via de website kan bekijken en/of gebruiken, zonder dat dit is bedoeld voor wijziging of uitbreiding. Dergelijk(e) toegang en gebruik vallen onder: (i) de algemene voorwaarden; (ii) risicowaarschuwingen; en de (iii) volledige disclaimer. Dergelijke content wordt daarom alleen aangeboden als algemene informatie. Wees u er daarnaast vooral van bewust dat de inhoud op ons online handelsplatform geen verzoek of aanbieding omvat om transacties op de financiële markten uit te voeren. Het beleggen op welke financiële markt dan ook vormt een aanzienlijk risico voor uw vermogen.
Alle materialen die op ons online handelsplatform worden gepubliceerd zijn bedoeld voor educatieve/informatieve doeleinden en omvatten geen – en moeten niet worden beschouwd als het bevatten van – financieel, vermogensbelastings- of handelsadvies en aanbevelingen, of een overzicht van onze handelsprijzen, of een aanbod of aanvraag van een transactie in financiële instrumenten of ongevraagde financiële promoties voor u.
Alle content van derden, alsmede content die is voorbereid door XM, zoals opinies, nieuws, onderzoeken, analyses, prijzen en andere informatie of koppelingen naar externe websites op deze website worden aangeboden op een 'zoals-ze-zijn'-basis, als algemene marktcommentaren, en vormen geen beleggingsadvies. Voor zover dat content wordt beschouwd als beleggingsonderzoek, moet u zich ervan bewust zijn en accepteren dat de content niet bedoeld was en niet is voorbereid in overeenstemming met de wettelijke vereisten die zijn opgesteld om de onafhankelijkheid van beleggingsonderzoek te bevorderen en als zodanig onder de geldende wetgeving en richtlijnen moet worden beschouwd als marketingcommunicatie. Zorg ervoor dat u onze Mededeling over niet-onafhankelijk beleggingsonderzoek en risicowaarschuwing in verband met de voorgaande informatie doorneemt en begrijpt; die kunt u hier lezen.
