Hold Boeing criminally accountable

Boeing’s serious safety violations have sparked months of negative global headlines. But there’s little mention of how Boeing’s terrible corporate culture produced a litany of legal and ethical offenses spanning the last four decades.

Unless federal law enforcement officials adopt a tougher stance and start treating Boeing like the recidivist felon it is, the company will not change. 

Since the 1980s, Boeing’s leaders have admitted to corporate wrongdoing in four major federal criminal investigations and a host of unrelated civil probes, responding with fervent promises to become more transparent and law-abiding.

The felony violations included illicitly acquiring sensitive Pentagon budget documents, corrupting top-priority Air Force weapons competitions, and defrauding the Federal Aviation Administration over a flight-control system that caused twin crashes of 737 MAX jets, killing 346 people.

In all but one of those cases, government officials decided against traditional criminal prosecutions, instead opting to defer charges under a form of corporate probation. Yet Boeing fell short of promised reforms each time, resulting in new scandals and inquiries.

This history is particularly relevant now, as the Department of Justice weighs what punishment, if any, to impose for Boeing’s most recent failure: a huge factory blunder responsible for January’s midair rupture of an Alaska Airlines 737 MAX jet’s fuselage. 

Although nobody was hurt, the missing door-plug horrified flyers, roiled regulators and disrupted the aerospace industry. Controversy cascaded into a financial, regulatory and public relations crisis for Boeing, prompting a spate of fresh investigations across its commercial aircraft operations.

Boeing has acknowledged systemic manufacturing lapses and conceded workers may have falsified production documents. A trio of congressional panels held hearings on these issues, while outgoing CEO Dave Calhoun has repeatedly apologized and pledged fundamental internal changes.

Prosecutors, however, already have concluded that Boeing didn’t comply with a crucial 2021 agreement stemming from the deadly 737 MAX accidents. The Justice Department determined that Boeing had breached its obligations by failing to “design, implement and enforce” upgraded compliance and ethics programs.

Boeing maintains that it lived up to anti-fraud commitments by adhering to the terms of that agreement and vows future FAA cooperation “with the utmost transparency.” The plane-maker has increased employee training, beefed up factory inspections and taken steps to encourage voluntary reporting of quality problems by employees.

Despite Boeing’s once-vaunted reputation, it should be subject to significant legal and economic penalties. That is what families of victims in the 737 MAX accidents have asked for publicly, and what they demanded during a heated private meeting last month with Justice Department officials.

As a former aviation reporter at the Wall Street Journal, who covered Boeing between the mid-1980s and early 2021, I also believe that’s what justice requires. 

Without waiting for prosecutors to act, the FAA has cracked down on Boeing since January in ways that were previously unthinkable. The agency has dramatically stepped up factory inspections and ordered specific Boeing executives to report progress correcting past manufacturing and ethical lapses on a weekly basis.

Earlier this year, the FAA temporarily grounded certain 737 MAX models for detailed fuselage checks. More recently, it imposed a cap on overall MAX production, which Boeing subsequently embraced as its own idea.

The FAA has said it won’t lift production limits or ease other types of production-line controls “until we're satisfied they’ve followed through on implementing corrective actions and transforming their safety culture.” FAA Administrator Mike Whitaker acknowledged his inspectors had previously been “too hands-off, too focused on paperwork,” stressing that “we need to see a strong and unwavering commitment to safety that endures.”

Boeing’s criminality was first documented while Ronald Reagan was president. Illegally acquired Pentagon budget documents, marked off-limits to contractors, were stored in a company library and traded like baseball cards as part of an industry-wide scheme. No senior executives were prosecuted. In 1990, Boeing paid a puny $5.2 million penalty after an extensive federal investigation also nabbed other big military contractors.

In 2000, regulators announced finding "deep-rooted, systemic problems" with Boeing's airliner production and internal inspection efforts.

In 2006, Boeing became a poster child for Pentagon corruption and influence-peddling by paying a then-record $615 million penalty for a spate of violations affecting procurement of next-generation Air Force rockets and aerial tankers. A senior Boeing executive and a high-ranking Air Force official had participated in the scandal.

The upshot for Boeing was a so-called “deferred prosecution agreement,” meaning the company never pleaded guilty to a felony and the case was intended to disappear if it implemented cultural changes while avoiding new violations. Jim McNerney, Boeing’s chairman, said that the crimes brought “dishonor on a great company” but vouched that stringent ethics rules were woven “into the fabric” of Boeing.

In 2015, Boeing agreed to wide-ranging regulatory sanctions, including $12 million in civil penalties, for lax oversight of suppliers and its own plants. Regulators subsequently determined that certain internal reforms weren’t implemented in a timely fashion, but government inspections weren’t ramped up.

By 2019, Boeing was in the crosshairs of federal prosecutors once more. Following the fatal 737 MAX crashes, Boeing signed an agreement deferring criminal prosecution amid enhanced federal oversight. That 2021 deal began unraveling this January, days before its scheduled expiration, during turmoil from the 737 MAX fuselage rupture.

The Justice Department has the option of prosecuting the original 737 MAX-related charges, pursuing different charges or extending the probationary period. Boeing’s eligibility for certain federal contracts could be affected, at least temporarily.

Boeing has hemorrhaged $8 billion in cash since January, and its stock has plummeted by roughly 30 percent. The SEC is scrutinizing whether company statements about the MAX crisis were accurate.

Holding Boeing criminally accountable for its misdeeds is long overdue, company critics argue, emphasizing that such punishment should come well before assessing whether meaningful reforms finally become reality.

Andy Pasztor is a former aviation reporter at the Wall Street Journal.