GM CEO Mary Barra testified before congressional subcommittees four times due to GM's recall of 2.6 million vehicles last year.
The official death toll from faulty General Motors ignition switches has jumped again, to 107. At the same time, federal prosecutors have reportedly decided there was criminal wrongdoing in the way the maker handled the defect, taking more than a decade to order a recall.
Whether any individual will be prosecuted for the flawed handling of the ignition switch problem is uncertain, but hefty fines appear likely to follow, with the New York Times reporting that the ongoing investigation could be wrapped up by summer.
Those fines could run well in excess of the money GM already has laid out to settle claims filed with a victims’ compensation fund. Last year, GM set aside $400 million to cover potential claims. By the time of the filing deadline on January 31, administrator Kenneth Feinberg reported receiving 4,342 separate claims.
The problem centers around a faulty ignition switch design prone to inadvertently shutting off the vehicle while driving. That can lead to a crash and, because the vehicle’s airbags are disabled, serious injuries or death. So far, GM has recalled more than 2.6 million vehicles because of the problem. CEO Mary Barra also acknowledged the maker knew about the issue for more than a decade. She subsequently fired a number of employees involved with the delay.
(Takata orders largest recall in US history covering nearly 34 million vehicles. Click Here for the latest news.)
The U.S. Justice Department quickly stepped in, beginning a potential criminal investigation similar to one it undertook following disclosure of Toyota’s problems with so-called unintended acceleration in 2009. Eventually, that maker agreed to pay fines totaling $1.2 billion.
Observers have suggested GM could face similar penalties to settle the federal probe. But quoting “people briefed on the inquiry,” the Times said that prosecutors also noted a distinct difference between the way Toyota and GM handled their problems once they came to light. GM ultimately made an effort to acknowledge the problem and work with the federal government, the paper said.
(Toyota vows to find cause of Takata airbag problem. Click Here for more.)
The investigation could create other problems for GM, however. Among other things, it is looking at whether the maker deliberately hid the ignition switch problem during its 2009 run through bankruptcy. As part of the Chapter 11 process, those who suffered injuries or losses prior to the bankruptcy no longer have legal recourse for financial compensation.
GM set up its victims’ fund, in part, to cover those involved in crashes prior to 2009, but it has faced a series of lawsuits by those who would wish the bankruptcy protection to be lifted. Courts have so far found in the maker’s favor. But that could change if it turns out GM misled the courts.
CEO Barra has repeatedly apologized for the automaker’s handling of the ignition switch problem, but when the maker was asked about the status of the ongoing Justice Department investigation, it issue a statement saying only that, “We are cooperating fully with all requests, but we are unable to comment on the status of the investigation including timing.”
Through the end of the first quarter of this year, GM had already paid out $200 million to cover claims filed with the victims’ compensation fund, a figure expected to increase substantial when the second-quarter tally is completed. So far, Feinberg has confirmed 107 deaths were caused by the defect. A total of 4,342 claims were filed by the deadline, but the administrator deemed nearly 83% were either ineligible or deficient. About 9% of the claims are still under review.
(Feds plan to grill Fiat Chrysler over handling of recalls. Click Here for that story.)