When Are We Going to Start Making Greedy Corporations Pay For Their Crimes?

 This past January, a door plug blew off a 737 Max approaching 16,000 feet. While no one was killed or seriously injured on that Alaska Airlines flight, the incident not only brought unwanted attention and a slew of federal investigations, it upended an agreement Boeing reached in January 2021 with the Justice Department to end the risk of prosecution for defrauding the FAA during the Max certification. The Alaska Air incident happened just days before the probationary period would have ended. 

Boeing now faces up to $487 million in fines as part of its anticipated guilty plea to a felony charge related to two fatal crashes of the 737 Max. Critics of the deal, however, are calling it a “slap on the wrist.”  Boeing agreed to plead guilty to a charge that it defrauded the Federal Aviation Administration, hiding crucial information about a design flaw on the 737 Max during its original certification process. That design flaw has been tied to crashes in 2018 and 2019 that killed 346 people, plunging the company into a crisis that led to $32 billion in losses.

“The Justice Department does no one any favors by trying to sell this as a tough deal,” said Peter Goeltz, a former managing director of the National Transportation Safety Board and now a CNN contributor who consults for transportation companies. “It doesn’t smell like a tough deal.”  Under the plea settlement, a $243 million fine that Boeing agreed to pay back in 2021 could be doubled to $487 million.  “That’s what, the price of three 777’s?” Goeltz said. “I’m not sure that it’s a significant fine.”

Before the losses started in 2019, the company was reporting record annual revenue of $101 billion and record core operating profit of $10.7 billion, or 21 times the cost of of the $487 million fine.  While Boeing’s credit rating is now at risk of falling into the junk bond status for the first time, credit rating agency Moody’s came out with a statement Monday that the plea and penalties “will have little effect on Boeing’s finances or operations.” 

The expected guilty plea did little to satisfy family members of the crash victims, who branded it a “sweetheart deal,” an “atrocious abomination” and a gross “miscarriage of justice.”  Their attorneys had argued that Boeing should have been hit with a maximum fine worth as much as $24.8 billion, which they calculated based on a multiple of their estimate of combined losses sustained by the families.

Other corporations that pleaded guilty to felonies have agreed to much larger fines. Oil giant BP agreed to pay $4 billion to settle criminal charges, including manslaughter, related to the explosion and oil spill at its Deepwater Horizon oil platform in 2010 that killed 11 workers. Volkswagen pleaded guilty to three US felony criminal charges and agreed to pay $2.8 billion in criminal penalties in 2017 after it admitted to cheating on its diesel emissions tests.

“The fact that this is in the millions of dollars rather than billions is an indication this is a slap on the wrist,” said Paul Cassell, a University of Utah law professor who worked on the BP case on behalf of victims and is now working for the families in the Boeing crashes.