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General Motors faces record fine for criminal wrongdoings

General Motors failed to report about the loss of life of 104 people, caused by a defective ignition switch. The revelation could in the company paying a record fine, in addition to the payment to victims and the cost of replacing 2.6 million switches in old model cars.General-Motors-headquarte-006

The Justice Department has found the company guilty of criminal wrongdoings, but it accepted the defect and is carrying out an investigation. Earlier, Toyota had paid $1.2 billion in fines to hide reports of uncontrolled acceleration in vehicles. The investigation will reveal if General Motors had intentionally hid the issue. GM CEO Mary Barra apologized for the ignition switch defect. Barra admitted in a 2014 internal report that a “pattern of incompetence” caused the fatal delay.

“We are unable to comment on the status of the investigation including timing,” said GM.

An independent counsel Kenneth Feinberg has been brought in to look into the claims, and to find who are eligible for the compensation. The number of deaths increased from 13 to 104 and more cases are pending. The defective ignition switch could move from the run position to the accessory position while the car was driven. This disabled power steering, brakes and deactivated air bags.

Though GM is cooperating with the investigation, it likely to face a record fine due to the 104 deaths. Some former employees of the company are likely to face criminal charges. Earlier, the company had even dismissed some employees. Gm claims that it has spent about $3 billion on recalls and other safety issues in 2014, and more than $600 million have been allocated for the victims.

The final fine is being negotiated, and is expected to exceed Toyota’s fine of $1.2 billion last year for concealing acceleration issues. In April, a bankruptcy court ruled that GM would not have to face several lawsuits as it was protected from claims of vehicles pre-dating its 2009 exit from Chapter 11 bankruptcy.

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About Anirudh Madhav

A movie buff, a bookworm, and a compulsive doodler. All posts by Anirudh

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