General Motors is facing the threat of a $7,000 a day fine for its “failure to fully respond” quickly enough to a demand by federal regulators for information about its ignition switch recall.
The fine is retroactive to April 3rd and will continue to mount until the automaker provides the answers to 107 questions posed by the National Highway Traffic Safety Administration. NHTSA has been looking into the reasons for an apparent decade-long delay in the decision to repair 2.5 million vehicles equipped with ignition switches now linked to at least 31 crashes and 13 fatalities.
Federal safety regulators could escalate their effort to get answers by referring the case to the U.S. Justice Department as early as Wednesday of this week. Justice, meanwhile, has launched its own probe into the recall that could lead to eventual criminal charges and millions, perhaps billions, of dollars in penalties for the Detroit maker.
Since first announcing the recall in mid-February, GM has increased the number of vehicles involved from around 800,000 to 2.5 million. It has also acknowledged it failed to respond in a timely matter, company officials, including CEO Mary Barra, repeatedly apologizing for the delay.
But while GM this week said it has provided over 270,000 pages of documents to federal regulators, NHTSA sharply criticized the maker on Tuesday, a letter contending GM “did not respond to over a third of the (107) requests” for information.
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Though a modest figure for a company that will sell nearly 10 million vehicles in 2014, the $7,000 daily fine underscores the mounting frustration in Washington over the pace at which GM has been responding to the recall probe.
For its part, the maker insists it has “worked tirelessly from the start” and “fully cooperated” with NHTSA “to help it have a full understanding of the facts.” GM also countered that the safety agency had given it “a rolling production schedule (for producing) documents” that would extend beyond the original April 3rd deadline.
The maker has launched its own investigation aimed at rooting out the cause of the delay in launching the recall, hiring former U.S. Attorney Anton Valukas to conduct the probe. He had previously overseen the investigation into the collapse of financial giant Lehman Brothers. But NHTSA now says that internal probe is “irrelevant” to the government’s investigation.
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Shortly after first announcing the original recall, GM released a timeline showing that it had first become aware of problems with the ignition switch used on a wide range of compact models at least a decade earlier. It has since indicated the problem had been brought to its attention in 2001, even before one of the vehicles, the Saturn Ion, was brought to market.
And prior to two days of hearings on Capitol Hill last week, additional documents were released showing that the maker had decided to forego a recall years ago because it felt such a move wasn’t justified by its costs.
During her testimony before separate House and Senate subcommittees, both GM and CEO Barra faced a barrage of criticism, several members of Congress accusing the maker of a cover-up, others questioning the new chief executive’s own capabilities. Barra repeatedly declined to provide detailed answers to questions about the ignition switch recall, citing the ongoing investigation.
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Countering the sharp language of NHTSA’s latest letter, GM released a statement of its own on Tuesday, asserting, “”We believe that NHTSA shares our desire to provide accurate and substantive responses. We will continue to provide responses and facts as soon as they become available and hope to go about this in a constructive manner. We will do so with a goal of being accurate as well as timely.”
Should the federal agency eventually determine GM broke the law by failing to order a recall of the ignition switch problem in a timely manner it could issue a fine of $32 million. But the Justice Department might pose an even bigger threat. It ultimately could bring charges against the automaker and even individual company officials who might be determined to have illegally obstructed a recall.
Last month, federal prosecutors reached a $1.2 billion settlement with Toyota over that maker’s handling of a series of recalls in 2009 and 2010 related to so-called unintended acceleration. Toyota also will be on three years of probation and has taken steps, such as appointing a safety czar, to ensure it reacts to potential safety problems more quickly in the future.
Many industry observers believe the Toyota settlement could serve as a model for any subsequent deal Justice might reach with General Motors.
I doubt $7K per day is an issue for GM. What is an issue is presenting 100% accurate data to NHTSA with the lawyers lining up to file liability lawsuits. NHTSA asked for a lot of detailed engineering data and in a big corporation you don’t just pull that info. out of thin air with mega-million lawsuits pending.