The U.S. government leveled a $900 million fine against General Motors as part of a deferred prosecution agreement, and is installing an independent monitor for three years to keep tabs on the company.
DETROIT, MI - The U.S. government leveled a $900 million fine against General Motors as part of a deferred prosecution agreement, and is installing an independent monitor for three years to keep tabs on the company.
It's part of two felonies the Detroit automaker has been charged with in connection with a defective ignition switch in 2000s-model-year vehicles that has been linked to at least 124 deaths.
Federal prosecutors said in a report that as part of the agreement, GM accepts responsibility for its actions.
Specifically, the document from the U.S. Attorney of the Southern District of New York reads, "GM admits that it failed to disclose to its U.S. regulator and the public a potentially lethal safety defect that caused airbag non-deployment in certain GM model cars, and that GM further affirmatively misled consumers about the safety of GM cars afflicted by the defect."
Federal prosecutors say that from around spring 2012 through about February 2014 "GM, through its agents and employees, concealed a potentially deadly safety defect from (the National Highway Safety and Traffic Administration) and the public."
It refers to an ignition switch that, as early as 2005, appeared to be faulty, in that if there was too much weight on the key ring, or if the vehicle was being driven on a rough road, the switch could be jarred from its "run" position and into "accessory." At that point, some critical electronic functions such as airbags no longer work.
GM has recalled 2.6 million vehicles, including 2.2 million in the U.S., affected by the ignition switch, which was found in 2003-2007 Saturn Ions, 2007-2010 Saturn Skys, 2005-2011 Chevrolet HHRs, 2006-2010 Pontiac Solstices, and 2005-10 Chevrolet Cobalt and Pontiac G5 models.
No charges against individual employees at GM have been announced.
In a statement Thursday, GM CEO Mary Barra acknowledged the automaker's errors.
"The mistakes that led to the ignition switch recall should never have happened. We have apologized and we do so again today," Barra said, adding that the company's response has been "unprecedented in terms of candor, cooperation, transparency and compassion."
GM's penalty also reflects the company's cooperation with the investigation.
Barra and Mark Reuss, GM's executive vice president of global product development, purchasing and supply chain, are set to meet with employees in a kind of townhall setting this afternoon at GM's Vehicle Engineering Center in Warren.
The deferred agreement means that the U.S. Attorney's Office has agreed to defer charges against GM for three years. If GM satisfies terms of the agreement, federal prosecutors will seek to have the charges dismissed with prejudice.
"Reaching an agreement with the Justice Department does not mean we are putting the issue behind us," Barra said. "Our mission has been to take the difficult lessons from this experience and use them to improve our company. We've come a long way and we will continue to build on our progress."
Separately on Thursday, GM said it has settled certain civil actions taken against the company related to the ignition switch and 2014 product recalls.
One settlement resolves a class action suit filed by shareholders in the U.S. District Court of Eastern Michigan. Another class-action suit from 1,380 individual death and injury claimants was also settled, and includes more than half of the plaintiffs who have cases pending in a federal court in New York.
"The parties to these agreements have resolved difficult claims without the burden, expense and uncertainty of litigation," Craig Glidden, GM executive vice president and general counsel, said in a release.
GM said the settlements will result in a $575 million charge in its third quarter financials. GM will also incur its $900 million federal penalty in the third quarter.
In July, the Detroit automaker reported a strong rise in net income to $1.1 billion for the second quarter, compared with a net profit of $0.2 billion in the same period a year ago.
David Muller is the automotive and business reporter for MLive Media Group in Detroit. Email him at dmuller@mlive.com, follow him on Twitter or find him on Facebook.