Inquiry Exposes Criminal Wrongdoing, GM Failed To Report Killer Defect In Time

The Justice Department has found that General Motors (GM) engaged in “criminal wrongdoing” by failing to timely disclose a deadly defect that killed at least 104 people. The company now faces record-setting fines, but how much it will pay and how much fault it admits to is still being negotiated.

In February, 2014, GM started recalling 2.6 million Chevrolet Cobalts and smaller cars that had faulty ignitions that would suddenly turn off the engine, disable power steering and power brakes, and prevent air bags from deploying according to the Dallas Morning News. It was the first in a wave of recalls that cost the company billions.

The question behind the Justice Department’s inquiry was if GM announced the defect in time to prevent unnecessary deaths and if they misled regulators on the extent of the problem.

USA Today sources suggested GM knew about the defective switches since 2002, yet still approved them.

For more than a year, the inquiry probed into the company’s legal compliance. According to Forbes, GM has cooperated fully, although they’ve declined to comment. As a result, they’ll likely receive “cooperation credit” allowing them to get away with a smaller fine, which the automaker will likely need.

Media sites have been comparing the GM inquiry to Toyota’s penalty last year. Some Toyota cars would suddenly accelerate unintentionally, forcing the Japanese carmaker to pay roughly $1.2 billion. The company tried to fight the judgment in the courts, drawing a stark difference between GM, which wanted to hurry the process along.

Even with GM’s cooperation, their fine after the inquiry is expected to far surpass Toyota’s.

GM has already spent about $3 billion on the recall of more than 30 million vehicles from the defect, including $600 million set aside for the families of victims.

In addition, the Justice Department might charge former GM employees (the ones under investigation have already been dismissed from the company.)

The Justice Department and GM still have to negotiate admission of guilt. If GM pleas guilty to the criminal wrongdoing discovered by the federal government, it might make it easier for others to pursue lawsuits against the carmaker.


As previously reported by the Inquisitr, GM isn’t the only major company hit with criminal charges recently. JP Morgan Chase, Citigroup, and others also got hit with huge fines for rigging foreign exchange rates to profit at the expense of many other people.

In a rare turn, the Justice Department forced the big banks to plead guilty to their criminal malfeasance, opening the door to more lawsuits from mutual funds and others affected by the price fix.

That might be a sign that the Justice Department, under new Attorney General Loretta Lynch, will be tougher on big companies, and GM won’t get away from the defect easily.

Ken Rimer, who lost his step-daughter in a 2006 accident, explained that the GM inquiry won’t bring closure, but “it’s going to be a little bit of justice.”

[Image Credit: Getty Images]