The United States Department of Justice (DOJ) filed criminal charges against General Motors for allegedly concealing information regarding the faulty ignition switch on its vehicles—a potentially deadly safety defect.
GM misled consumers regarding the safety of some of its vehicles from the spring of 2012 until February of 2014. The automaker acknowledged a total of 15 deaths and a number of serious injuries to date, according to the DOJ. The automaker was also charged with wire fraud.
Terms of the deferred prosecution agreement
GM signed a deferred prosecution agreement with the DOJ and admitted its failure to disclose the safety issue to the National Highway Traffic Safety Administration (NHTSA), and misled consumers regarding the safety of its vehicles.
Under the deferred prosecution agreement, an independent monitor would review and assess the policies, practices and procedures of the automakers in connection with its safety-related public statements, sharing of engineering data and recall processes.
The DOJ will supervise the independent monitors, but GM will shoulder its compensation and expenses. The independent monitor will evaluate the automaker’s safety practices for four years.
GM also agreed to pay a penalty of $900 million no later than September 24, 2015. The automaker agreed to the forfeiture of the funds, and it will not claim, assert, or apply for a tax deduction or tax credit to any local, state, federal or foreign tax for any fine or forfeiture paid related to agreement.
The DOJ will seek to dismiss the charges without prejudice in three years if GM complies with the terms of the deal. If GM violates any term in the agreement, the DOJ will not bring any additional charges, except for criminal tax violations related to its conduct.
In a statement, U.S. Attorney Preet Bharara said, “For nearly two years, GM failed to disclose a deadly safety defect to the public and its regulator. By doing so, GM put its customers and the driving public at serious risk. Justice requires the filing of criminal charges, detailed admissions, a significant penalty, and the appointment of a federal monitor. These measures are designed to make sure this never happens again.”
U.S. District Judge Alison Nathan for the Southern District of New York approved the deferred prosecution agreement during a hearing on Thursday. “If there’s any doubt to the criminality of the conduct, that doubt is put to rest today, “ said Judge Nathan as quoted by the Wall Street Journal.
GM CEO Mary Barra apologized again
GM CEO Mary Barra said the company’s board unanimously approved the settlement agreement with the DOJ and described it as tough.
According to her, the automaker accepted the penalties because “they are part of being held accountable.” She told GM employees to remember what happened with the ignition switch crisis and apologize again to the families of the victims.
“People were hurt, and people died in our cars. We didn’t do our job and as part of our apology to the victims, we promise to take responsibility for our actions,” said Barra.
On the other hand, Mark Reuss, head of global product development, purchasing and supply chain at GM said the deal is “another step in a disappointing journey for all of us.” He added, “When you make mistakes you accept them. You take necessary steps to make sure you never make the same mistakes ever again.”