General Motors settles criminal case over fatal ignition switch

America’s leading car manufacturer, General Motors, has got a reprieve on the criminal case it was facing over faulty car ignition systems that killed 124 people in various accidents, besides injuring so many. The carmaker struck a deal with the U.S. Department of Justice, by which the DoJ agreed to defer the prosecution for three years, pending GM’s progress in an agreement wherein an independent monitor will evaluate its progress in safety practices.

Under the settlement, General Motors will pay US$900 million (AU$1.25 billion) as penalty to the government, which is 25 percent less than the record US$1.2 billion (AU$1.67 billion) agreed by Toyota on a similar safety risk case in 2014. GM will also spend US$575 million (AU$799 million) to settle a slew of civil suits filed over the scandal.

The auto maker acknowledged that some of its employees were aware of the problem for more than a decade. Still, the recall of cars happened only in 2014. GM’s small cars faced problems in the ignition switches, causing power failure in brakes, air bags and steering systems. The defect led to many fatal accidents.

Battered image

Overall, the ignition defect caused 124 deaths and hundreds of injuries, and dented the carmaker’s image. In the aftermath, the company had to grapple with a criminal probe and civil litigation.

In May 2014, the National Highway Traffic Safety Administration levied US$35 million (AU$48.67 million) from GM for its failure in notifying the government on a safety-related defect within five days of noticing it.

The settlement with DoJ mandates the appointment of an independent monitor, which will ensure the compliance of GM with the commitments it made to the government. As a measure of internal reform, an anonymous tip line will be set up to encourage employees in revealing any new concerns on safety and quality control.

Slap on the wrist

Meanwhile, the GM-DoJ deal evoked mixed reactions from victims and analysts, with many of them expressing surprise at the paltry penalty. The Washington Post, in a report, noted that there is relief that the deal between government and General Motors on Sep. 17 has resolved a criminal investigation on how the Detroit automaker concealed a deadly problem of small-car ignition switches with none of its employees getting charged criminally. The report highlighted the measly penalty, which is less than a third of the auto giant’s profit of US$2.8 billion (AU$3.89 billion) posted in 2014.

Critics are alarmed that the automaker has been let off easily despite the serious auto safety crisis it created by hiding the defect from safety regulators and posing a risk to the lives of Americans, the report added.

“I have a saying about GM: There’s no problem too big that money can’t solve,” said Clarence Ditlow, executive director of the Center for Auto Safety.

Ditlow added that GM “is buying (its) way out of a criminal prosecution.”

Meanwhile, Manhattan's federal prosecutor clarified that choosing a path on the criminal investigation of General Motors was difficult because there are no specific laws against non-disclosure of a car equipment defect.

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