GM fined $35 mn, more lawsuits await over failure to recall faulty cars
17 May 2014
General Motors Co, the USA's biggest carmaker, was on Friday slapped with a $35 million fine for its delayed response to an ignition switch defect in millions of vehicles, in an ongoing case in which federal regulators have accused a long line of GM officials of concealing a problem that is linked to at least 13 deaths.
US transportation secretary Anthony Foxx announced the fine, which is the maximum the agency can impose. Other investigations into the automaker's handling of the recall are being conducted by the federal government and could come with more severe punishments.
The ignition-switch defect was originally noticed by GM more than 10 years ago; but the first recalls began only in February of this year, despite years of consumer complaints.
Besides announcing the $35 million fine, officials said that GM will come under closer scrutiny by federal regulators.
The automaker will be required to hold regular meetings with NHTSA to report on efforts to catch safety problems and it also must give the agency monthly reports on any emerging defect issues.
The acting chief of the National Highway Traffic Safety Administration (NHTSA), David Friedman, had earlier told reporters that GM employees ranging from engineers "all the way up through executives" were aware of the malfunction years before the recall of 2.6 million vehicles.
He did not name the executives, and said there was no information that chief executive officer Mary Barra had previous knowledge about the problems.
Barra took over as chief executive in mid-January, becoming the first female to head a major automaker.
Friedman also slammed GM's "corporate philosophy" and pointed to internal training documents that discouraged engineers from using the words "safety" and "defect" when identifying product risks.
The faulty ignition switches on Chevrolet Cobalts, Saturn Ions and other GM vehicles can cause their engines to stall, which in turn prevents air bags from deploying during crashes. Also, power steering and power brakes do not operate when the ignition switch unexpectedly moves from the 'on' position to the 'accessory' position.
The fine is just one of GM's problems, as the US Congress, the Department of Justice, the Securities and Exchange Commission, and several states are conducting their own investigations.
GM's internal probe into the issue is expected to be completed within the next two weeks. The company is also considering whether and how to compensate victims.
