Daily Management Review

GM to Pay $ 900 million for the Deaths of 124 People


09/17/2015


General Motors Corp. today announced that it has reached an agreement with the US Department of Justice for the settlement of a criminal investigation related to the concealment of a defect ignition switch and misleading consumers. Under the terms of settlement, GM will pay $ 900 million for the termination of the investigation of fraud in the elimination of a defect that caused the death of 124 people.



As USA Today reported, today General Motors Corp. announced an agreement with the US authorities on the settlement of criminal complaints on the case of concealment of a defect ignition. According to the US Department of Justice, the defect, which led to the sudden stop of the engine and, as a result, disabled airbags and brake booster, has become the cause of many accidents and deaths of at least 124 people. As part of the settlement, the company will face criminal charges that it hid the defect for over ten years and mislead consumers about the quality and reliability of its vehicles. However, as GM has agreed to sign an agreement to defer prosecution, further criminal proceedings will be suspended until the full implementation of all the terms of the settlement, then, if all conditions are fulfilled, the case is closed. One of these conditions - the payment of $ 900 million. That's less than the company Toyota paid to the US government in the same case (In March 2014, Toyota paid $ 1.2 billion for the settlement of claims in the concealment of the defect, because of which the cars randomly over speeded). I is also known that criminal charges against individuals will not be charged in the present case. Other details of the settlement agreement will be known later today.

The criminal investigation, related to the concealment of the defective ignition switch, has been lasting more than two years and has greatly affected the largest US car manufacturer. GM CEO Mary Barr organized a large-scale internal investigation, dismissed 15 directors involved in the concealment of the defect, appointed a new head of the department to monitor the quality and safety of cars. In 2014, only in North America, GM recalled more than 30 million vehicles to correct a number of problems, including defective ignition switch. In May 2014, GM agreed to pay a fine of $ 35 million to US Department of Transportation for delaying the process of eliminating the defect. Moreover, it is the largest fine that the agency is allowed to impose.

Yet, while one of the main investigations into the GM is now almost resolved, it was not the only one. In July, GM reported that the Commission on Securities and Exchange Commission, Office of Public Prosecutor of 50 states and Canadian authorities have led separate investigations.

 






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