Make / Model Search

News - General Motors

GM to pay a further $US900m in fines

Taking responsibility: GM CEO Mary Barra announced that the company had reached a settlement with the US attorney’s office over the handling of an ignition switch defect.

US justice department hits General Motors with fine over ignition switch defect

22 Sep 2015

GENERAL Motors has been hit with fines and compensation orders after being found guilty of intentionally concealing knowledge of a faulty ignition switch that has cost 124 lives.

The United States justice department has levied a fine of $US900 million ($A1.26 billion) on the company for not revealing the fact that the ignition switch could shut off the car while it was being driven.

“People were hurt and people died in our cars,” GM CEO Mary Barra said in a note to workers after the fines were revealed.

“We accept the penalties being announced today because that's what it means to be held accountable.”

In a statement from GM, Ms Barra acknowledged the mistakes made by the American car-making giant in the past and highlighted the measures it had put in place since the discovery of the issue.

“The mistakes that led to the ignition switch recall should never have happened. We have apologized and we do so again today,” Ms Barra said.

“We have faced our issues with a clear determination to do the right thing both for the short term and the long term. I believe that our response has been unprecedented in terms of candor, cooperation, transparency and compassion.” The transportation department fined GM $US35 million in 2014 over the same issue.

In addition to the fines, GM was ordered to pay $US625 million for victim compensation. The company will also pay a further $US575 million to settle many, but not all, of the pending cases and more than $US200 million to fix the vehicles.

The total paid and to be paid of $US2.35 billion ($A3.29 billion) is equivalent to around $US900 for each of the cars that have now been recalled.

The ignition switch could turn off the car while it was being driven. This could disable the airbags, power steering and power brakes.

The company has admitted some of its employees had been aware of the fault almost a decade before the company started to recall millions of affected vehicles.

It is the delay in making the recall that forms the basis of the criminal charges that have led to the penalties being leviedDespite their size, the fine and compensation payments were criticised by people not connected with the case.

High-profile safety advocate Ralph Nader said that GM was a “homicidal fugitive from justice”.

Mr Nader rose to prominence 50 years ago with his campaign that played a part in the discontinuation of the rear-engined Corvair model in 1969.

Other critics focused on the fact that no-one has been prosecuted for their behavior.

The executive director of the Center for Auto Safety, Clarence Ditlow, noted in an email that “GM officials walk off scot-free while its customers are six feet under”.

US attorney-general Preet Bharara, whose department of justice prosecuted the case, said the latest fine was not the end of the matter and that he did not rule out prosecuting individuals who were behind the concealment of the defect.

He noted that the way corporations are organised into “silos” made it difficult to prosecute individuals, as did the high burden of proof required under laws governing the vehicle industry.

“It’s not as easy as it looks, sometimes,” he told a news conference.

“We're not done,” Mr Bharara said, “and it remains possible that we will charge an individual, but the law doesn't always let us to do what we wish we could.”

Mr Bharara pointed out that it was not illegal to sell a car that has a defect that can kill people. That’s why he prosecuted GM for failing to report the information about the defect.

He did note that GM executives had co-operated with the investigation to a “fairly extraordinary degree” and that GM had fired 15 executives who had done the wrong thing.

The agreement reached with GM put a stay on other charges – wire fraud and scheming to conceal information from regulators – on condition that GM agree to three years of close oversight of its recall procedures by an independent monitor.

The Road to Recovery podcast series

Read more

Click to share

Click below to follow us on
Facebook  Twitter  Instagram

General Motors articles

Motor industry news

GoAutoNews is Australia’s number one automotive industry journal covering the latest news, future and new model releases, market trends, industry personnel movements, and international events.

Catch up on all of the latest industry news with this week's edition of GoAutoNews
Click here