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GM’s $900-Million Settlement in Ignition-Switch Probe Called “Justice for Car-Driving Public”

GM's $900-Million Settlement in Ignition-Switch Probe Called "Justice for Car-Driving Public"

NEW YORK – General Motors agreed to pay a $900-million settlement to end a U.S. criminal investigation into its handling of defective ignition switches, in a move described as “justice for the car-driving public” by Manhattan U.S. Attorney Preet Bharara.

GM also admitted to misleading the U.S. government and the public about the safety of its vehicles. The automaker’s handling of the defective switches has been linked to 124 deaths. GM recalled 2.6 million vehicles with faulty switches in 2014.

The U.S. Department of Justice did not charge any GM employees or other individuals, but Bharara, the U.S. Attorney for the Southern District of New York, said the investigation continues.

“It remains possible we may charge an individual,” he said during a Thursday press conference. “If there’s a way to bring a case like that, we will bring it.”

Federal officials called the agreement a “meaningful deterrent” against deception by other automakers and a “watershed case” that calls more attention to how to keep the driving public safe.

But some victims’ families and lawmakers blasted the settlement.

In a joint statement, U.S. Senators Richard Blumenthal (D-Conn.) and Edward J. Markey (D-Mass.) called the settlement “extremely disappointing.”

They added: “The 124 families who lost loved ones deserved an explicit acknowledgment of criminal wrongdoing ?and individual criminal accountability, as well as a larger monetary penalty. 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.”

Laura Christian, the birth mother of 16-year-old Amber Marie Rose, who died in a July 2005 crash caused by a defective GM ignition switch, issued the following statement:

“There are people at GM who made decisions that caused these deaths. Yet they will not suffer any consequences. If a person kills someone because he decided to drive drunk, he will go to jail. Yet the GM employees who caused 124 deaths are able to hide behind a corporation because our laws are insufficient. It must change.”

Under a three-year deferred prosecution agreement, GM also must hire an independent monitor to oversee how it handles safety issues and recalls. If GM satisfies the terms of the agreement, federal prosecutors will then seek dismissal of the charges and the matter will be completely closed.

GM confirmed that it had reached an agreement with the U.S. Attorney’s office.

“The mistakes that led to the ignition switch recall should never have happened,” said GM CEO Mary Barra in a statement. “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.”

She added during a media conference call: “We’re a fundamentally different and better company.”

Barra said GM’s new culture now “sincerely encourages employees to raise issues.”

The defective ignition switches could cause the cars to stall and may affect the safe operation of the airbag systems, according to the National Highway Traffic Safety Administration.

GM concealed the safety defect from federal safety regulators from spring 2012 to February 2014.

The recalled vehicles include the 2005-’10 Chevrolet Cobalt, 2006-’11 Chevrolet HHR, 2005-’07 Pontiac G5, 2006-’10 Pontiac Solstice, 2003-’07 Saturn Ion and 2007-’10 Saturn Sky.

Consumers can check to see if their vehicle is included in the recall by using NHTSA’s VIN Lookup Tool and then by taking the vehicle to the dealership for a repair if it has not been fixed.

Federal officials speaking during the press conference noted that the American public bailed out GM with $50 billion as part of the Troubled Asset Relief Program during the recession.

“Our investigation uncovered that GM learned about a life-threatening ignition switch defect that would cause airbags not to inflate, but concealed the deadly safety defect from its regulator and from people buying used cars from GM dealers,” said Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program, in a statement.

She added: “The worst part about this tragedy is that it was entirely avoidable. GM could have significantly reduced the risk of this deadly defect by improving the key design for less than one dollar per vehicle but GM chose not to because of the cost.”

There are still a number of recall-related lawsuits outstanding against GM, including suits alleging economic losses due to declining vehicle values. The company disputes those economic loss claims.

In addition to the Department of Justice agreement, GM announced two other settlements totaling $575 million.

One settles a shareholder class-action case and the other settles over half of the various personal injury claims that were outstanding in various lawsuits, including the multidistrict litigation case.

Edmunds says: Federal officials say they’ve sent a clear message to the auto industry that if you choose to conceal a safety defect, it’s a criminal offense.

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