GM Agrees to Pay $900 Million Settlement for Defective Ignition Switch

The car company giant General Motors have agreed to pay a $900 million fine in an effort to settle criminal charges placed against them following the announcement of defective ignition switches that have led to 124 reported deaths of GM customers. The Justice Department disclosed details of the GM settlement on Thursday.  GM has since begun a recall of the vehicles in possession of the deadly ignition switch after they found that the switch could shut off while the car was being driven. If this were to happen, the airbags would become disabled and the driver would not have access to power safety steering or to their brakes. Reports have indicated that GM knew about the defect some 10 years prior to issuing the recall which has caused uproar from victims of the faulty ignition switch.

General Motors delaying their findings is the basis for the criminal charges being brought against them by various victims. The company and their CEO have acknowledged their fatal mistake and are willing to pay the price necessary to reach a settlement with the victims and their family members. Mary Barra, GM CEO, addressed her company and told them the blunt truth of the situation: “People were hurt and died in our cars.” Barra went on to say that the company is sincere in their apologies and are working toward making “substantial” changes to their vehicles.

Individual executives for General Motors are not being specifically charged with any criminal matters. Attorney Preet Bharara indicated that laws restrict the ability to prosecute individuals in connection to an event of this nature. Bharara went on to say that the company was officially charged with failing to report information about a possible defect. Attorney Bharara went on to say that due to the nature of this crime it would be difficult to pinpoint exact individuals who may have had access to this information 10 years ago. He also stated that he met with family members of victims who lost their lives due to the defect and that he sympathizes with their disappointment toward not having individuals being held specifically accountable. “We apply the laws as we find them, not the laws as we wish them to be.”

Attorney Preet Bharara has credited General Motors with being “fairly extraordinary” through the entire process. He said that while this does not absolve them of their wrongdoing, he does believe that it should be acknowledged by others. GM has been cooperative throughout the ordeal, and has agreed to pay various fines without hesitation. This good behavior could be a contributing factor as to why the Justice Department agreed to place the company on probation for three years—and why the criminal case will be dropped if GM continues to comply with the investigation being conducted by federal authorities.

In accordance with the settlement reached with the Justice Department, GM has agreed to hire an independent monitor specifically for their recall process for the vehicles with the defective ignition switches. The independent monitor will ensure that GM is complying with all necessary regulations implemented by federal safety, as well as operate a toll free phone service for individuals to place anonymous complaints against GM.

In addition to the criminal charges placed against GM, they also faced a civil lawsuit involving nearly 1,400 cases relating to serious injuries and fatalities. The cases included in this civil lawsuit include injuries and deaths related to the ignition switch as well as other defects within the GM vehicles. The amount that GM paid to settle the case has not been immediately disclosed, but representatives for the company stated that they had taken out an additional $575 million in charges to pay for both the civil lawsuit and the criminal charges.

General Motors has also made the decision to set up a compensation fund for family members of the victims of their vehicle defects. They have placed approximately $600 million into this fund to help benefit those who were injured and those who lost loved ones in GM accidents.


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