By Mike Spector, Chris Prentice and Allison Lampert
NEW YORK (Reuters) - U.S. authorities are facing fresh pressure from families of the victims of two fatal Boeing (NYSE:BA) 737 MAX crashes to criminally prosecute the aerospace company following a January mid-air blowout that exposed ongoing safety issues.
Victims' representatives meeting on Tuesday and later this month with U.S. Justice Department officials are expected to say that Boeing violated a 2021 deal with prosecutors to overhaul its compliance program following crashes in 2018 and 2019 that killed 346 people. That settlement shielded Boeing from criminal prosecution.
Justice Department officials are probing whether Boeing has complied with that 2021 agreement and are considering the Jan. 5 blowout on an Alaska Airlines 737 MAX 9 jet as part of that review, a person familiar with the matter told Reuters.
WHAT IS THE 2021 AGREEMENT?
Boeing in January 2021 agreed with the Justice Department to pay $2.5 billion to resolve a criminal investigation into the company's conduct surrounding the fatal crashes. The agreement included money to compensate victims' relatives and required Boeing to overhaul its compliance practices.
The deal, known as a deferred prosecution agreement (DPA), gave the U.S. planemaker an avenue to avoid being prosecuted on a charge of conspiring to defraud the U.S. Federal Aviation Administration (FAA).
Prosecutors agreed to ask a court to dismiss the fraud charge if they determined Boeing complied with the agreement over a three-year period.
Families of the fatal crashes have criticized the agreement, arguing it failed to hold the company and executives accountable.
HOW DOES THE JAN. 5 BLOWOUT FACTOR IN?
A panel blew off a Boeing 737 MAX 9 jet in mid-air and forced an emergency landing in Portland, Oregon, just two days before the end of the agreement's three-year term on Jan. 7.
The panel that dislodged from the plane appeared to be missing four key bolts, according to an early review from U.S. safety investigators. The investigators questioned Boeing for failing to supply key documents and names sought in their probe.
Boeing has said the company was cooperating and believes required documents detailing the removal of a key part during production of the MAX jet were never created.
Boeing and the Department of Justice declined to comment.
WHAT IS DOJ SCRUTINIZING?
The Justice Department is probing whether Boeing violated the 2021 agreement, which includes scrutinizing the adequacy of the company’s compliance program, the person familiar with the matter said.
In determining whether Boeing violated the settlement, prosecutors are expected to lean heavily on findings from the FAA, which in February gave the company 90 days to develop a comprehensive plan to address “systemic quality-control issues,” the source said.
Justice Department officials would likely avoid seeking sanctions if Boeing's conduct ahead of the blowout amounts to good-faith mistakes, as opposed to deliberately trying to mislead regulators, the source said.
WHAT CONSEQUENCES COULD BOEING FACE?
Prosecutors can extend the 2021 settlement for another year or push for oversight by a court-appointed monitor, a costly change from the 2021 agreement where Boeing was allowed to oversee its own changes.
The Justice Department could also attempt to hit the planemaker with additional fines or push the company to plead guilty, an outcome that could affect Boeing's ability to secure government contracts, according to a Reuters review of prosecutors' actions following findings that companies violated other similar agreements.
Breaches of such agreements are rare. But the Justice Department under President Joe Biden has ratcheted up scrutiny on repeat corporate wrongdoers and has penalized companies that violate these deals.
Just over a year ago, Sweden's Ericsson (BS:ERICAs) agreed to pay a hefty fine and plead guilty after violating its own 2019 deal with prosecutors.
WHAT ARE THE MEETINGS WITH CRASH VICTIMS?
In addition to Tuesday’s “lawyers-only” meeting, an April 24 gathering is scheduled in which Justice Department officials will meet with families of the 2018 and 2019 Boeing MAX crash victims.
The Tuesday meeting is largely expected to amount to a formality in preparation for the April 24 gathering, and lawyers for the families are not expecting to learn much about the ongoing investigation, two people familiar with the matter told Reuters.