Boeing HQ
The plea deal between the Justice Department and Boeing has been thrown out by the Judge overseeing the case. This is significant, as it potentially opens the company to a potential public trial, and could result in additional penalties beyond the original deal. The added uncertainty over what happens next is another problem that the company doesn’t need as new CEO Kelly Ortberg works to turn the company around.
The rejection can be viewed as a victory for the families of the victims, who wanted both additional compensation and a public trial for company executives as well as the company itself. Whether former executives and Board members now face personal liability is one of the potential results of the rejection of the plea deal in the worst case. The company had previously pled guilty to one charge of conspiracy to commit fraud in conjunction with hiding the fatal MCAS system from the FAA during the certification process for the 737 MAX.
A part of the rejection is related to a federal monitor to measure independent compliance. While the deal had arrangements for Boeing to violate its probation if it did not retain the monitor, there were no provisions that enabled the independent monitor to ensure that the company would comply with the monitor’s anti-fraud recommendations. The deal had no teeth for enforcement. DEI also became an issue, as the judge wanted to ensure that the monitor would selected on merit rather than race. The DEI provisions endorsed by he government and Boeing did not provide the judge with assurance of a merit-based selection.
At a minimum, what it means is that a new deal will need to be negotiated between the parties, but potentially including representation for the victims of the fatal crashes in those efforts. At worst, this could open Boeing and executives to a new trial for conspiracy to defraud, with more serious penalties for the company and individuals. We will be watching the ensuing developments, as neither the DOJ or Boeing have commented as yet. We expect negotiations over a third plea deal to resume quickly, as it is in the interest of both parties to conclude this process quickly, with one party in crisis and the other facing political change.
In another interesting story, cultural change at the company will entail “elevating character” alongside competence. The activities in the development of the MAX that were ethically questionable and led to the crashes reflected bad judgment by Boeing employees at multiple levels. Whether they were empowered to act or forced to act against their conscience to keep their jobs, there are lessons to be learned and implemented during the company’s turnaround efforts.
A Boeing whistleblower from their space operations believes that employee safety is at risk, and that current management is unlikely to correct the situation unless a major incident occurs at that facility. This will be an interesting test for the new CEO Kelly Ortberg, who has encouraged employees to speak up. The question now is whether any actions will be taken, or the status quo remain in place at the company.
Finally, in aircraft news, Kampala has approved two Boeing freighters for Uganda Airlines. Boeing continues its massive lead over Airbus in the freighter market, which until recently was not a priority for Airbus.
Links to today’s news follow:
- US Judge rejects Boeing’s plea deal in a conspiracy case stemming from fatal plane crashes – Daily Mail
- Judge tosses plea deal opposed by families of max crash victims – Seattle Times
- Lessons from Boeing on elevating character alongside competence – Forbes
- Boeing whistleblower expresses safety concerns at satellite factory – CBS News
- Kampala approves two Boeing freighters for Uganda Airlines – ch-aviation
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