General Motors is set to pay a record penalty for failing to report a defect that eventually led to the deaths of 104 people. Federal investigators apparently found the company guilty of criminal wrongdoing for trying to keep the fault a secret, and a settlement is currently being negotiated.
The Justice Department refrained from making any comments on the amount, but sources familiar with the investigation suggest a bigger number than what Toyota paid last year. The car giant tried to conceal a problem in its vehicles that often led to a sudden unintended acceleration, and was forced to pay a $1.2 billion fine after the wrongdoing was discovered.
However, unlike Toyota who fought prosecutors, General Motors is trying to find an easier way out of trouble by cooperating. According to the sources, the company could be granted the so-called ‘cooperation credit’ that could substantially reduce the penalty.
“We are cooperating fully with all requests,” General Motors announced in a public statement on Friday. “We are unable to comment on the status of the investigation, including timing.”
According to the preliminary investigation, the car manufacturer discovered an ignition problem in its vehicles more than ten years ago, but somehow did not decide to recall any of the 2.6 million Chevrolet Cobalts involved until February 2014. The fault could make the engines of the cars turn off unexpectedly, disabling all safety features, such as airbags or brakes.
The decision prompted an immediate FBI investigation, and since last year prosecutors say General Motors recalled over 30 million vehicles. The inquiry involves several former GM employees, who are being prosecuted separately, but also the company as a whole. GM also stands accused of having committed fraud by not disclosing the fault when declaring its bankruptcy in 2009.
General Motors seems to have learned from Toyota experience, and is not trying in any way to hide that it knew about the problem all along. The 30 million vehicles recalled since last year, a record for the company, have already cost GM over $600 million. Aside from the compensations paid to the victims, General Motors had to pay a $35 million fine to the National Highway Traffic Safety Administration for the sudden recall of the faulty cars.
The hardest part is still to come for GM, and everyone is waiting to see how much the Justice Department will force the company to pay.
Image Source: Time