The U.S. government is determining whether charges will be brought against General Motors Co. or its employees over the handling of a faulty ignition switch, a person familiar with the investigation said.
Manhattan U.S. Attorney Preet Bharara’s office, with assistance from the Federal Bureau of Investigation in New York, is reviewing evidence tied to the safety defect that was linked to more than 100 deaths and is attempting to determine whether anyone at the automaker broke the law, said the person, who asked not to be identified because the information isn’t public.
The investigators have several options available, including charging the automaker, individuals who work or worked at GM, or reaching a deferred prosecution agreement with the company under which the automaker would pay a fine and change the way it operates in exchange for not being charged, the person said. While the investigation has progressed, no decision is imminent, the person said.
If the government charges GM or its employees, it could mark a different conclusion than the so-called Valukas Report did last year, said Erik Gordon, a law professor at the University of Michigan. GM hired former U.S. prosecutor Anton Valukas to investigate why it took a decade to reveal the ignition switch problems. The report concluded that a lack of urgency among engineers and in-house lawyers, not a cover-up conspiracy, let to the long delay.
GM culture
“Criminal charges mean the government doesn’t buy the story that the recall fiascoes were caused by a few people whose actions were unknown to top brass,” Gordon said. “Criminal charges mean the government thinks GM as a whole, as part of its culture, was willing to violate laws and tolerate violations of the law.”
Pat Morrissey, a spokesman for Detroit-based GM, said only that the company continues to cooperate with the investigation.
Peter Donald, a spokesman for the FBI in New York, declined to comment on the probe.
Bharara’s office led a probe into Toyota Motor Corp.’s attempt to hide safety defects over uncontrolled acceleration, reaching a deal under which the Japanese automaker agreed to pay $1.2 billion to avoid prosecution -- the biggest criminal penalty imposed on a car company in the U.S.
A federal judge approved the deferred prosecution agreement March 20, 2014, under which the government agreed not to prosecute Toyota for three years as long as the company continued to cooperate with authorities.
Faulty switch
GM, the biggest U.S. automaker, recalled 2.59 million small cars to replace a faulty ignition switch. The switch could be jarred into the “accessory” position, disabling power steering and preventing air bags from deploying.
Mary Barra, who became GM’s chief executive officer last year, just weeks before the small-car recalls began, hired Valukas to investigate and lawyer Kenneth Feinberg to administer a fund to compensate victims of the faulty ignition switch. GM has taken $550 million in charges for payouts related to the program, which is projected to wrap up this summer.
GM engineers and lawyers knew about the switch defect for years before the recall, Valukas found. Fifteen GM employees were dismissed after the Valukas Report.
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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