Fraud behind GM’s Tavera recall, finds probe

A government-appointed panel to investigate General Motors India's recall of over 1.26 lakh of its popular Chevrolet Tavera utility vehicles in July has found that the company committed a ''corporate fraud'' by making vehicles that violated emission norms.

In its report submitted to the road transport and heavy industry ministries, the three-member panel said GM India's top management - including chief executives and managing directors - from 2005 to 2011-12 were involved in this practice.

The probe panel recommended imposition of a penalty, but did not suggest the amount. It also advised a ''systemic clean-up'' to avoid such occurances in future.

In July, GM India made perhaps the largest recall of vehicles in India for failing to meet emission norms (See: GM India to recall 114,000 Chevrolet Tavera over emissions issues).

Before announcing the recall, the company had admitted in a letter to the government that its internal probe had found that company employees refitted non-compliant engines in place of those that were already approved.

The Indian arm of the Detroit giant subsequently sacked several executives, including its chief financial officer Anil Mehrotra.

Separately, the government appointed a three-member panel headed by Nitin Gokarn, chief executive officer of the National Automotive Testing and R&D Infrastructure Project (NATRIP), to investigate the matter.

The company refused to comment, saying it has neither seen the report nor heard from the government.

The panel has also recommended a host of measures to make testing of vehicles more stringent.

This includes mandatory testing of vehicles to check conformity of production (CoP) at the production stage itself. Presently CoP is done only annually.

The Gokarn panel cleared government officials and the Automotive Research Association of India, the testing agency, of any complicity.

Apart from CoP test done at producer's end, the committee has recommended that it should also be done at the dealer end as well. If the vehicle fails compliance norms, type approval should be withdrawn.

''All vehicles related details (like chassis number, details of engine) should have to be logged by the manufacturer at production stage into Vahan – the online national register of vehicles across India started by the road transport ministry,'' said an official.

Also, annual production plan of model due for CoP should be submitted to the test agency a month before the testing is to be done.

Government officials said that the probe panel could not interact with nearly 20 executives who were asked to leave GM after the irregularities came to light.