GM to pay $1.3b over faulty ignitions

NEW YORK • General Motors agreed to pay US$900 million (S$1.25 billion) and admit to misleading the government and the public about the safety of its vehicles to end a US criminal investigation into its handling of defective ignition switches linked to 124 deaths.

The largest US carmaker agreed to a deferred prosecution agreement to settle the probe, which investigated why GM took no action to recall millions of cars despite knowing about the defect for more than a decade.

The settlement and charges, which were detailed in papers filed yesterday in Manhattan federal court, have transformed the relationship between the carmaker and the US government, which had bailed out GM during the financial crisis.

GM admitted to failing to disclose to its US regulator and the public a potentially lethal safety defect with the switches that kept airbags from deploying in some vehicles. It also admitted to misleading consumers about the safety of vehicles affected by the defect.

GM was criminally charged with scheming to conceal a deadly safety defect from its US regulator, as well as wire fraud.

Under a three-year deferred prosecution agreement, the government agreed not to seek a conviction in exchange for the penalty and the appointment of an independent monitor to oversee its safety practices.

GM's US$900 million payment will be treated as a penalty, including for tax purposes. The ignition switch defect caused some Chevrolet Cobalts, Saturn Ions and other GM vehicles to stall, preventing airbags from deploying during crashes. It also prevented power steering and power brakes from operating in some vehicles.

GM chief executive officer Mary Barra has taken many steps to address problems linked to the defects, including appointing a new safety czar and pushing out 15 executives.

GM began recalling some 2.6 million cars worldwide in February last year. The company faces more than 200 civil lawsuits over the ignition switch and other recalls from last year. A special fund was set up last year to compensate victims of the ignition switch defect.


A version of this article appeared in the print edition of The Straits Times on September 18, 2015, with the headline 'GM to pay $1.3b over faulty ignitions'. Print Edition | Subscribe