GM to Pay $900 Million to Resolve Criminal Charges in Product Safety Case

General Motors today agreed to a $900 million forfeiture to resolve criminal charges for wire fraud and for concealing information from the National Highway Traffic Safety Administration concerning safety defects in its vehicles.

GM also entered into a deferred prosecution agreement (DPA) under which it admitted that it failed to disclose a safety defect to NHTSA and misled U.S. consumers about that same defect. Under federal law, auto makers must notify NHTSA within five business days of determining that a safety-related defect exists or that a vehicle is not in compliance with federal motor vehicle safety standards and to promptly conduct a recall.

The DPA imposes on GM an independent monitor to review and assess policies, practices, and procedures relating to GM’s safety-related public statements, sharing of engineering data, and recall processes.  If GM abides by all of the terms of the agreement, the government said it will defer prosecution for three years and then seek to dismiss the charges.

As Compliance Week previously reported, GM’s settlement concerned the recall of more than 2.1 million vehicles in the United States due to a product defect that resulted in the non-deployment of airbags in certain Chevrolets, Pontiacs, and Saturn GM models. The defective switch has been blamed for causing more than 100 deaths, as well as a number of serious injuries.

From the spring of 2012 through February 2014, GM deceived consumers and failed to make a required disclosure to NHTSA by regarding the connection that certain of its personnel had identified between the defective switch and airbag non-deployment. GM also falsely represented to consumers that vehicles equipped with the defective switch posed no safety concern.

GM said it spent an additional $575 million to settle many civil lawsuits filed over the scandal. “GM could have significantly reduced the risk of this deadly defect by improving the key design for less than one dollar per vehicle, but GM chose not to because of the cost,” said Christy Romero, Special Inspector General for the Office of Special Inspector General for the Troubled Asset Relief Program.