Hey everybody, welcome back to the Elon Musk Podcast. This is a show where we discuss the critical crossroads that shape SpaceX, Tesla X The Boring Company. And Neuralink. I'm your host, Will. Walden the United States Department of Justice is preparing to charge Boeing with fraud, giving the aerospace giant a choice between pleading guilty or facing a trial. The decision must be made by the end of the week, according to sources familiar with the situation.
The DOJ has also indicated that Boeing would need to pay a fine and hire a corporate monitor if it chooses to plead guilty. The DOJ informed families of victims of two fatal 737 Max crashes and their attorneys about the impending charges during a meeting on Sunday. These crashes, involving Lion Air Flight 610 and Ethiopian Airlines Flight 302, resulted in
the deaths of 346 people. The DOJ, officials from the Fraud Section and the US Attorney's Office for the Northern District of Texas attended this meeting. Both the DOJ and Boeing have declined to comment on the situation. However, Bloomberg previously reported that Boeing has been in discussions with the department to resolve potential charges related to the crashes, which are expected to include the appointment of a corporate
monitor. A guilty plea to criminal charges would mark a significant downturn for Boeing, a company historically known for its cautious and methodical approach. Such a plea raises concerns about Boeing's ability to secure future U.S. government contracts, especially as its commercial airplane business faces significant financial challenges. The DOJ's move follows its determination that Boeing violated a 2021 deferred prosecution agreement.
This agreement, made in the final days of the Trump administration, allowed Boeing to avoid criminal prosecution by meeting certain conditions, including the implementation of an effective compliance program. However, in May, the DOJ concluded that Boeing failed to meet the requirement for an effective compliance program to prevent and detect violations of US fraud laws. Boeing has contested this finding, asserting that it has honored the terms of the
agreement. The breach announcement came after a fuselage panel blew off a Boeing jet operated by Alaska Airlines mid flight in January. Investigations revealed that the plane was missing 4 bolts meant to secure a door plug, leading to scrutiny over Boeing's manufacturing and quality control processes. The Mid Air incident has since caused significant turmoil for Boeing.
The company's shares have dropped by about a third this year, and it is expected to burn through approximately $8 billion in cash during the first half of this year due to a slowdown in production following the incident. In response to the January accident, the Federal Aviation Administration FAA imposed restrictions on the production of the 737 Max and required Boeing to submit a comprehensive plan to. Address the.
Quality issues at its factories. This incident has intensified regulatory and legislative scrutiny of Boeing. Concurrently, Boeing is undergoing a leadership transition as it searches for a new CEO to replace Dave Calhoun, who plans to step down later this year. This leadership change comes at a critical time as the company navigates these legal and operational challenges.
Under the 2021 deferred prosecution agreement, Boeing paid a $243 million criminal fine and admitted to deceiving the FAA about an important feature of the 737 Max that affected the flight control system. Boeing also committed to improving its internal safety controls and submitting regular reports to the DOJ. The recent developments, including the door plug blowout and subsequent investigations, have led the DOJ to consider revoking the deferred prosecution agreement.
This potential revocation could have serious consequences for Boeing, leading to renewed criminal charges. The DOJ's offer of a plea deal includes a fine of approximately 244 million hours, three years of probation, and oversight by an external monitor. Paul Cassell, an attorney representing 15 families of crash victims, has criticized the deal as a sweetheart deal that fails to hold Boeing
adequately accountable. Castle has expressed strong objections to the plea deal, stating the deal will not acknowledge in any way that Boeing's crime killed 346 people. It also appears to rest on the idea that Boeing did not harm any victim. He emphasizes that the families of the victims demand more justice than what the proposed deal offers. Boeing has until the end of the week to accept or reject the plea deal. If the plea deal is accepted,
U.S. District Judge Reed O'Connor would be unable to increase Boeing sentence or impose additional punishment for conviction, according to Cassell. Boeing CEO Dave Calhoun faced intense questioning from from set from senators earlier this month regarding the settlement and other safety concerns during a Homeland Security subcommittee hearing. During the hearing, Calhoun apologized to the families of the crash victims, reaffirming Boeing's commitment to safety
and quality. On the day following the hearing, families of crash victims sent a letter to the DOJ urging federal prosecutors to pursue aggressive criminal prosecution against Boeing. They argue that the severity of Boeing's crime justifies a maximum fine exceeding 24 billion, although they acknowledge that some funds could be directed towards safety improvements. The DO JS current offer to Boeing has provoked anger and disappointment among the victims families and their attorneys.
Aaron Applebaum, another attorney for the families, has criticized the proposal as shameful and inadequate in recognizing the dignity of the victims. Boeing's troubles were compounded when, in January, a 737 Max 9 aircraft experienced a door blowout mid flight, creating a hole in the side of the plane and necessitating an emergency landing. The FAA temporarily grounded Boeing and conducted an investigation that revealed significant safety and manufacturing issues at Boeing.
Amid these ongoing challenges, Boeing has reportedly agreed to acquire Spirit Aero Systems, a key supplier, in a deal valued at over $4 billion. This acquisition is seen as part of Boeing's efforts to stabilize its supply chain and address production challenges. The DOJ's proposed plea deal and Boeing's response to it will be closely monitored, as it holds significant implications for the company's future operations and its relationship with federal regulators.
The outcome of the situation will likely influence how Boeing navigates its ongoing legal and operational hurdles. Hey, thank you so much for listening today. I really do appreciate your support. If you could take a second and hit the subscribe or the follow button on whatever podcast platform that you're listening on right now, I greatly appreciate it. It helps out the show tremendously and you'll never
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