New York: General Motors will pay $900m to settle a criminal probe into its failure to recall cars with faulty ignitions linked to at least 124 deaths, US officials said yesterday.
The largest US carmaker was granted a deferred prosecution agreement to settle the probe into why GM took no action to recall millions of cars despite knowing about the defect for more than a decade.
Prosecutors charged GM with concealing the defect from regulators at the National Highway Traffic Safety Administration and with wire fraud. The government agreed not to seek a conviction in exchange for the fine and the appointment of an independent monitor at the company.
No individuals were charged. “General Motors not only failed to disclose this deadly defect, but as the Department of Justice investigation shows, it actively concealed the truth from NHTSA and the public,” said Transportation Secretary Anthony Foxx.
“Today’s announcement sends a message to manufacturers: Deception and delay are unacceptable, and the price for engaging in such behavior is high.”
GM chief executive Mary Barra apologized once again for the automaker’s actions and insisted that the company has turned the “crisis into a catalyst for meaningful change.”
“People were hurt and people died in our cars,” Barra told a meeting of GM employees.
“Apologies and accountability won’t count for much if we don’t change our behaviour. We can be proud that we have.”
Barra, who was tapped to lead the company in December 2013 shortly before the ignition-switch problems mushroomed into a massive scandal, initiated a major overhaul of how the automaker develops, tests and monitors the safety of its vehicles.
She fired 15 employees deemed responsible for failing to fix the defect and worked to change the corporate culture at GM to encourage all employees to report safety concerns before they become problems.
“We’re a fundamentally different and better company because of this and we’re going to continue to build on that,” Barra told reporters following the employee meeting.
GM began recalling some 2.6 million cars worldwide in February 2014 after years of avoiding acknowledgement of the dangerous problem.
The defective switches can cause the ignition to unintentionally switch out of the “on” position, disabling airbags and other functions while the car continues to run.
GM personnel knew by 2005 that the ignition switch was prone to shutting accidentally, even when a car hit a few small bumps. By 2012 the company knew that the defect could prevent the airbag from deploying the airbag and had been linked to several fatal incidents and serious injuries, prosecutors said.
But GM failed to issue a recall for 20 more months, the Justice Department said. The defect has been linked to 124 confirmed fatalities and about 275 serious injuries, according to data from administrators of an independent compensation fund set up by GM.
News of the settlement drew a stern rebuke from US Democratic senators Richard Blumenthal, of Connecticut and Edward Markey, of Massachusetts, who said the government should have sought a larger monetary penalty and a criminal acknowledgement from GM.
“GM knowingly concealed information that could have prevented these deaths, and it is shameful that they will not be held fully accountable for their wrongdoings,” they said in a joint statement.
The penalty amounted to less than the $1.2bn Toyota paid in 2014 to settle US criminal charges it lied to safety regulators and the public as it tried to cover up deadly accelerator defects.
The Justice Department praised GM for taking “exemplary actions to demonstrate acceptance and acknowledgement of responsibility for its conduct,” including providing timely and meaningful cooperation with investigators, ousting wrongdoers and establishing the compensation program.
GM also said yesterday that it had agreed to settle some civil actions related to the ignition-switch scandal. It reached a settlement that potentially covers about 1,380 individual death and injury claimants, about 60 percent of personal injury claimants whose cases are pending in US courts. It also settled a shareholder class-action suit.
GM said it would take a $575m charge in the third quarter for the civil suits, on top of a $900m charge for the US penalty.
AFP
