General Motors, America’s largest carmaker, has agreed to pay $900 million to settle criminal charges related to its faulty ignition switch that has been tied to at least 124 deaths.
GM’s flawed ignition system was linked a series of major recalls of smaller cars in 2014 as well as the setting up of compensation payout system for those who were injured and family members of those who died.
Problems with the ignition switch on certain GM models could shut off the car while it was being driven, disabling the airbag, power steering and power brakes — and putting drivers and passengers at risk of crashing.
A criminal investigation looked at the extent of knowledge of GM employees into this problem years before the recalls were issued early in 2014. CNN reported on how
GM had already “admitted that its employees were aware of the problem nearly a decade before it started to recall millions of the cars early last year.” That delay proved to be the basis behind the criminal charges.
The US Department of Justice provided details of the settlement on Thursday. No individual GM executives were charged in the case.
General Motors has said it has reached a memorandum of understanding to settle a civil class-action suit involving almost 1,400 cases of death or serious injuries. The case includes recalls that go well beyond the ignition switch problem.
GM did not reveal how much it has agreed to pay in that civil case, but it said it would take an additional $575 million charge against earnings to account for the payments in both its civil and criminal cases. The company has taken previous charges in anticipation of these costs.
“The parties to these agreements have resolved difficult claims without the burden, expense, and uncertainty of litigation,” stated GM General Counsel Craig Glidden.
In 2014, GM set up a compensation fund to pay the families of those who died because of the defect, as well as those injured. GM will pay at least $150 million into the fund.
The fiasco has led to a change in how GM now handles recalls. In turn that has led to a surge of more than 30 million recalls and an estimated $4.1 billion cost to repair cars and trucks that have been recalled since, not including the cost of this fine.
Over the last two years the Justice Department has taken an increasingly tough stance with automakers.
Last year Toyota agreed to pay $1.2 billion to settle a case linked to its failure to recall cars despite numerous reports of unintended acceleration.
I have also noted how Fiat Chrysler has also been in the dock over recalls that have been linked to fires in SUVs caused by vulnerable gas tanks.
If you have been injured by a defect on a car, call our experienced Virginia defective cars attorneys at 757.455.0077.