Skip to main content
Advertising

Originally published Friday, May 16, 2014 at 10:37 PM

  • Share:
             
  • Comments (0)
  • Print

$35M fine hardly end of GM recall crisis

Besides agreeing to pay the penalty, GM admitted it broke the law by failing to quickly tell the government about the problems and now GM faces issues both in the near-term and longer term related to the recall.


The Associated Press

Reader Comments
Hide / Show comments
And no-one will go to jail. I thought GM was a person, like me. Why isn't GM going to jail? MORE

advertising

DETROIT — General Motors’ agreement to pay a $35 million federal fine for concealing defects in small-car ignition switches and to give the government greater oversight of its safety procedures closes one chapter of the automaker’s recall saga. But it’s far from over.

Besides agreeing to pay the penalty — the largest ever assessed by the National Highway Traffic Safety Administration (NHTSA) — GM admitted it broke the law by failing to quickly tell the government about the problems.

The automaker agreed to report safety problems a lot faster — it only started recalling 2.6 million small cars this February, more than a decade after engineers first found a flaw in the switches.

The switches in older-model small cars such as the Chevrolet Cobalt and Saturn Ion can slip out of the “run” position and shut down the cars’ engines. That disables the power-assisted steering and brakes and can cause drivers to lose control. It also disables the air bags.

The company says at least 13 people have died in crashes linked to the problem, but trial lawyers suing the company say the death toll is at least 53.

GM faces issues both in the near-term and longer term related to the recall. Here’s a breakdown:

The internal investigation: Late this month or early in June, former U.S. Attorney Anton Valukas will finish an investigation for GM into why the company delayed recalling the cars. GM has promised an “unvarnished” report and said it will make at least some of the results public. The company must provide NHTSA with the full report.

The criminal investigation: The U.S. Justice Department is investigating GM’s conduct and may bring criminal charges. The same team that got Toyota to agree to a $1.2 billion penalty for hiding unintended acceleration problems from NHTSA is working on the GM case. In the Toyota case, the company agreed to a long statement of facts that included multiple allegations of cover-ups. That investigation lasted four years.

Congressional action: Two congressional subcommittees have promised to call GM CEO Mary Barra back to Washington, D.C., for further hearings after the Valukas report is released. At hearings in April, Barra repeatedly said she couldn’t answer questions because the internal investigation wasn’t finished.

Recalls: Barra promoted longtime engineer Jeff Boyer as GM’s safety chief, with the mandate to look into other safety issues that should have resulted in recalls. On Thursday, GM announced it would recall an additional 2.7 million cars and trucks. So far this year, the company has had 24 recalls with a total of 11.2 million vehicles.

GM is working to get new ignition switches as well as parts for the other recalls from suppliers. Its ignition switch maker plans to add two assembly lines this summer to the one already working. GM expects to have all the switches made by Oct. 4.

Bottom line: So far, recall-related charges are up to $1.5 billion, mostly for repairing vehicles. GM also faces dozens of lawsuits from families of those killed in crashes and from people who were hurt. The company has hired compensation expert Kenneth Feinberg to negotiate settlements.

Lawyers say they have at least 400 possible cases against GM. That could cost the company billions. GM also faces lawsuits from shareholders and people whose cars have lost value. In addition, GM must pay NHTSA $7,000 for every day it fails to answer a list of questions from the agency. The fines started April 4 and already are above $300,000.



Want unlimited access to seattletimes.com? Subscribe now!

News where, when and how you want it

Email Icon


Advertising
The Seattle Times

The door is closed, but it's not locked.

Take a minute to subscribe and continue to enjoy The Seattle Times for as little as 99 cents a week.

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited seattletimes.com content access is included with most subscriptions.

Subscriber login ►
The Seattle Times

To keep reading, you need a subscription upgrade.

We hope you have enjoyed your complimentary access. For unlimited seattletimes.com access, please upgrade your digital subscription.

Call customer service at 1.800.542.0820 for assistance with your upgrade or questions about your subscriber status.

The Seattle Times

To keep reading, you need a subscription.

We hope you have enjoyed your complimentary access. Subscribe now for unlimited access!

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited seattletimes.com content access is included with most subscriptions.

Activate Subscriber Account ►