GM to pay $900M for faulty ignitions that killed Litchfield County woman
Published 10:04 pm, Monday, September 21, 2015
General Motors has agreed to pay $900 million to resolve criminal charges for concealing a defective ignition switch linked to the deaths of at least 169 people, including a Litchfield County woman, federal prosecutors said Thursday.
The agreement calls for two charges — wire fraud and scheming to conceal information from government regulators — to be dropped after three years if the automaker cooperates fully.
However, U.S. Attorney Preet Bharara did not rule out the possibility employees could still face charges.
"They let the public down. It's as simple as that," Bharara said. "To sum it up, they didn't tell the truth in the best way that they should have — to the regulators, to the public — about this serious safety issue that risked life and limb."
Jean Averill, of Washington, was the first known fatality from the defective ignition switch when she crashed her Saturn Ion into a tree in 2003. However, it took more than a decade for GM to inform Averill’s family late last year that the Litchfield County woman’s death was due to the defective part.
GM also announced Thursday it will spend $575 million to settle the bulk of the civil lawsuits filed over the scandal.
The twin agreements bring to more than $5.3 billion the amount GM has spent on a problem prosecutors say could have been dealt with at a cost of less than a dollar per car. Those expenses include government fines, compensation for victims and the recall and repair of the millions of affected vehicles.
With the settlements, GM is taking a big step toward moving past the scandal, which badly damaged its reputation but led to companywide safety reforms.
Later in the day Thursday, GM chief executive Mary Barra appeared before employees in suburban Detroit and again apologized to the victims of crashes caused by the bad switch.
"We didn't do our job," she said. "We accept the penalties handed down today, because that's what it means to be held accountable."
As part of GM's deal with prosecutors, an independent monitor will be appointed to review the automaker's procedures for handling safety defects.
The statement of facts to which the company agreed describes in scathing terms GM's deceitful and dismissive approach to handling a problem that was evident even before the defective switch went into production in 2002.
"GM killed over a 100 people by knowingly putting a defective ignition switch into over 1 million vehicles," Ditlow said. "Today, thanks to its lobbyists, GM officials walk off scot-free while its customers are 6 feet under."
Bharara said he understands some victims' families might be disappointed no individuals were arrested, but he added: "We apply the laws as we find them, not the way we wish they might be." He also said GM was given credit for cooperating with the investigation, including sharing the results of its in-house probe.
When GM employees, the media and some customers complained about the switch in 2004 and 2005, the company's engineers left the switch alone, rejecting a cheap and simple improvement that would have significantly reduced the problem, court papers said.
Court papers said even though the dangers became plain in the spring of 2012, the company did not correct its earlier assurance that the switch posed no safety concern. Instead, Bharara wrote, it concealed the defect from regulators and the public "so that the company could buy time to package, present, explain and manage the issue."
The wire fraud count pertained to the company's assurances to customers over the Internet in 2012-13 that its used cars were safe.
Last year, GM recalled 2.6 million older small cars worldwide to replace the faulty switches. Those included the Chevrolet Cobalt and Saturn Ion.
The faulty switches can unexpectedly slip out of the "run" position to "off" or accessory. That shuts off the engine and disables power-assisted steering, power brakes and the air bags. Some cars ran off the road or collided with other vehicles.
Last year, the National Highway Traffic Safety Administration slapped GM with a civil fine of $35 million for failing to notify the government of a safety-related defect within five days of learning of it.
GM also established a fund last year to compensate victims. Lawyers administering the fund accepted 124 death claims and 275 injury claims. Families of those who died will get at least $1 million. GM has set aside $625 million to compensate people who accept a settlement.