General Motors has entered into a settlement to pay a fine of $900 million. The fine is payment for the automaker’s delay in handling its ignition-switch problems in 2.6 million vehicles. The issue has been associated with more than 100 fatalities, and several more injuries. The settlement also entails a deferred prosecution agreement for three years.
According to the Los Angeles Times, GM neglected to reveal to regulators in a timely fashion the existence of a deadly safety defect and deceived consumers about the safety of GM vehicles that had the defect. However, U.S. Transportation Secretary Anthony Foxx claims that this was not GM’s only deception. The automaker also failed to disclose the truth to the National Highway Traffic Safety Association (NHTSA) and the public. He further stated that the purpose of the fine is to send a message to companies that there is no place for deception and delay, and that there is a great cost for participating in such behavior.
The Department of Justice (DOJ) said that specific supervisors and lawyers at GM were aware of the deadly defects concerning the ignition switches which caused crashes by abruptly shutting off vehicles in motion. The prosecutors accused them of choosing profits over safety. Nevertheless, the names of the wrongdoers were not revealed.
Although the fine is high, it is nothing compared to the irreparable harm inflicted on the victims and their families by GM’s negligence. According to Clarence Ditlow, executive director at the Center for Auto Safety, GM killed more than 100 people by placing a defective ignition switch that the automaker knew was defective, into more than one million vehicles. But no one from GM served any time in jail or faced charges of criminal homicide.
In addition to its admission, GM has relinquished its ability to reduce its losses from the fine by deducting it as an expense on its taxes. The settlement agreement is similar to the one made by the DOJ with Toyota Motor Corp. in 2014. Toyota admitted to deceiving regulators concerning fatal safety defects that were responsible for unintended abrupt acceleration incidents. Toyota was fined $1.2 billion, which is the largest amount that has ever been charged to an automaker.
Fines Are Not Enough
However, the law prevents GM officials from facing criminal charges. GM made payments of millions of dollars to its lobbyists to keep the Vehicle Safety Act devoid of criminal penalties since 1966.
The settlement was described as “very disappointing” by U.S. Senators Richard Blumenthal (D-Conn.) and Edward J. Markey (D-Mass.) because it failed to demand sufficient and definitive admission of criminal responsibility from GM and its employees. The U.S. Attorney for the Southern District of New York, Preet Bharara, stated that it would be difficult to charge an individual at GM with a crime. In order to level such a charge, one would have to prove criminal intent, which is challenging.
I agree with the claim that the officials at GM who were aware of the defect in the ignition switches, but chose to have them installed in the vehicles anyway, should be held criminally accountable. A large fine is simply an inadequate deterrent to engaging in the deception of consumers and regulators in order to reap profits instead of enforcing safety. The threat of jail time and criminal charges would serve as an even greater preventative measure against the negligence of automakers, and there would likely be fewer instances of placement of defective parts, and as a result, fewer injuries and fatalities.
Authored by Roxanne Minott, LegalMatch Legal Writer and Attorney at Law