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General Motors reached a $900 million criminal settlement with the Department of Justice over faulty ignition switches which the company failed to fix for more than a decade leading to the death of over 120 people.
The company now faces charges of wire fraud and for building a ‘scheme’ to hide the deadly defect from the eyes of the public and safety regulators. But the charges may be dismissed if the auto maker successfully recalls all the affected vehicles. General Motors pleaded not guilty.
Federal attorneys said that there’s a possibility of charging individuals in the case but finding the real culprits is difficult because people in the company had only partial knowledge of the issue.
Prosecutors learned that GM staffers failed to fix the fatal defect for more than a decade. Moreover, the company engaged in deceiving practices and lied to customers and regulators by saying that the faulty vehicles were safe to drive.
In the settlement, the auto maker admitted that it has fraudulently marketed the cars as safe for more than 10 years.
In a civil lawsuit, GM agreed to voluntarily provide compensation to 1,385 more victims of the ignition switch defect. Additionally, it came to terms with investors over the issue in a separate civil lawsuit. Both civil settlements would cost the company $575 million.
So far, the ignition switch case cost the auto maker over $2 billion in fines and damages, and it would cost even more after repairing all the affected vehicles. About 2.5 million cars could have the defect.
Mary Barra, General Motors’ chief executive, issued again a public apology on behalf of the company and vowed to revamp company’s policies and procedures to make communication more efficient between divisions.
Barra told staffers in a recent meeting that the company would take responsibility for its actions by agreeing with the penalties and apologizing to the public.
“But apologies and accountability won’t count for much if we don’t change our behavior. We can be proud that we have,”
Barra added.
The DOJ promised to appoint an official who will oversee the recall process over the course of the three years. Although federal prosecutors said that they couldn’t find an individual responsible for the tragedy, GM said it has laid off “wrongdoers.”
But victims are upset that people who made the decisions that led to the 120 deaths will not be held responsible for anything. Yet, DOJ attorneys said that the case was challenging because there isn’t any legislation that sanctions automakers that hide their vehicles’ safety defects.
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