By Chris Prentice, Mike Spector and Allison Lampert
WASHINGTON (Reuters) – U.S. prosecutors are recommending to senior Justice Department officials that criminal charges be brought against Boeing (NYSE:) after finding that the plane maker violated an agreement related to two fatal crashes, two people told Reuters. familiar with the matter.
The Justice Department must decide by July 7 whether to prosecute Boeing. The recommendation from prosecutors handling the case had not been previously reported.
In May, officials determined that the company violated a 2021 agreement that had protected Boeing from a criminal charge of conspiracy to commit fraud stemming from two fatal crashes in 2018 and 2019 involving the 737 MAX aircraft.
Under the 2021 settlement, the Justice Department agreed not to prosecute Boeing over allegations of defrauding the Federal Aviation Administration as long as the company reviewed its compliance practices and filed regular reports. Boeing also agreed to pay $2.5 billion to resolve the investigation.
Boeing declined to comment. He had previously said he had “met the terms” of the 2021 agreement, which had a duration of three years and is known as a deferred prosecution agreement. Boeing has told the Justice Department that it disagrees with its determination that the company violated the agreement, Reuters reported this month.
A Justice Department spokesman declined to comment.
The two sides are in talks about a possible resolution to the Justice Department investigation and there is no guarantee that officials will move forward with charges, the two sources said. Internal deliberations at the Justice Department continue and no final decision has been reached, they added.
The criminal charges would deepen the unfolding crisis at Boeing, which has faced intense scrutiny from U.S. prosecutors, regulators and lawmakers after a panel blew up one of its Alaska Airlines-operated planes mid-flight on the 5th. January, just two days before the 2021 agreement expired. .
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 fraud conspiracy charge.
Alternatively, instead of prosecuting Boeing, the Justice Department could extend the 2021 deal by a year or propose new, stricter terms, the sources said.
In addition to financial penalties, stricter agreements often involve installing a third party to monitor a company's compliance. The Justice Department can also require the company to admit wrongdoing by pleading guilty.
Boeing might be willing to pay a fine and accept a monitor, but believes a guilty plea, which typically carries additional trade restrictions, could be too damaging, one of the sources said. Boeing earns significant revenue from contracts with the U.S. government, including the Department of Defense, which could be threatened by a felony conviction, one of the sources said.
Relatives of victims of the two fatal 737 MAX crashes have long criticized the 2021 settlement, arguing that Justice Department officials should have prosecuted 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 pressured prosecutors to seek a fine against the plane maker of nearly $25 billion and move forward with criminal proceedings.
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