NEW YORK: The US Justice Department is pushing for Boeing to plead guilty to a criminal charge after finding the planemaker violated a settlement over fatal 737 MAX crashes in 2018 and 2019 that killed 346 people, two people familiar with the matter say.

Justice Department officials plan to give Boeing until the end of the week to respond to the plea agreement offer, which they will present as non-negotiable, the sources said.

Should Boeing refuse to plead guilty, prosecutors plan to take the company to trial, they said.

The decision to move towards criminally charging Boeing deepens an ongoing crisis engulfing the planemaker, exposing the company to an additional financial penalty and tougher government oversight.

Spokespeople for Boeing and the Justice Department declined to comment.

US prosecutors were recommending the Justice Department criminally charge Boeing, Reuters previously reported.

A guilty plea could also carry implications for Boeing’s ability to enter into government contracts, such as those with the US military, that make up a significant portion of its revenue.

Companies with felony convictions can receive waivers to continue entering into such contracts, and it remained unclear to what extent the Justice Department’s proposed plea deal addresses the issue.

Justice Department officials revealed their decision to victims’ family members during a call on Sunday.

The proposal would require Boeing to plead guilty to conspiring to defraud the US Federal Aviation Administration in connection with the fatal crashes, the sources said.

The proposed agreement also includes a US$487.2mil financial penalty, only half of which Boeing would be required to pay, they added.

That is because prosecutors are giving the company credit for a payment it made as part of the previous settlement related to the fatal crashes of the Lion Air and Ethiopian Airlines flights.

Boeing could also likely be forced to pay restitution under the proposal’s terms, the amount of which will be at a judge’s discretion, the sources said. The offer also contemplates subjecting Boeing to three years of probation, the people added.

The plea deal would also require Boeing’s board to meet with victims’ relatives and impose an independent monitor to audit the company’s safety and compliance practices for three years.

It is unusual for the Justice Department to inform other interested parties of its plans before notifying the company in its crosshairs, a third source said.

But the Justice Department, led by Attorney General Merrick Garland, has sought to change its tack after facing backlash from the victims’ families over the original 2021 agreement.

Victims’ relatives found out about the 2021 deal only after it had been negotiated.

The Justice Department’s push for Boeing to plead guilty follows a separate January in-flight blowout that exposed continuing safety and quality issues at the US planemaker.

A panel blew off a new Boeing 737 MAX 9 jet during a Jan 5 Alaska Airlines flight, just two days before a 2021 deferred prosecution agreement with the Justice Department expired.

That agreement had shielded Boeing from prosecution over the 2018 and 2019 fatal crashes.

Boeing has previously said it “honoured the terms” of the settlement and formally told prosecutors it disagrees with the finding that it violated the agreement.

In June, US lawmakers grilled chief executive Officer Dave Calhoun over Boeing’s tarnished safety record.

Lawyers for victims’ family members have cited criticism from Capitol Hill when pressing the Justice Department to prosecute the planemaker and impose a fine of up to US$24.78bil.

Boeing previously paid US$2.5bil as part of the deal with prosecutors that granted the company immunity from criminal prosecution over a fraud conspiracy charge related to the 737 MAX’s flawed design.

Boeing had to abide by the terms of the deferred prosecution agreement for a three-year period that ended on Jan 7.

Prosecutors would then have been poised to ask a judge to dismiss the fraud conspiracy charge.

But in May, the Justice Department found Boeing breached the agreement, exposing the company to prosecution.

 - Reuters