Daily Archives: May 23, 2015

The Justice Department investigation into General Motors and its failure to disclose a defect tied to at least 104 deaths has reached the late stages, according to people briefed on the inquiry, who said prosecutors had identified criminal wrongdoing and were negotiating what is expected to be a record penalty.

A settlement could be reached as soon as this summer. The final number is still being negotiated, but it is expected to eclipse the $1.2 billion paid last year by Toyota for concealing unintended acceleration problems in its vehicles, those people said.

G.M.’s eagerness to resolve the investigation — a strategy that sets it apart from Toyota, which fought prosecutors — is expected to earn it so-called cooperation credit, one of the people said. That credit could translate into a somewhat smaller penalty than if G.M. had declined to cooperate.

Former G.M. employees, some of whom were dismissed last year, are under investigation as well and could face criminal charges. Prosecutors and G.M. are also still negotiating what misconduct the company would admit to.

For more than a year, federal prosecutors in Manhattan and the F.B.I. have homed in on whether the company failed to comply with laws requiring timely disclosure of vehicle defects and misled federal regulators about the extent of the problems, the people who were briefed on the inquiry said. The authorities also examined whether G.M. committed fraud during its bankruptcy proceedings in 2009 by not disclosing the defect.

An agreement with the Justice Department, which could still fall apart, would represent a crucial step as G.M. tries to move past a scandal-laden year that tainted its reputation for quality and safety and damaged its bottom line.

“We are cooperating fully with all requests,” the automaker said in a statement. “We are unable to comment on the status of the investigation, including timing.”

In February 2014, the automaker began recalling 2.6 million Chevrolet Cobalts and other small cars with faulty ignitions that could unexpectedly turn off the engine, disabling power steering, power brakes and the airbags. The switch crisis prompted a wave of additional recalls by G.M. for various safety issues. All told, G.M. recalled more than 30 million vehicles worldwide last year — a record for the automaker.

G.M.’s aggressive expansion of its recalls after the disclosure contrasted to the approach of Toyota, which kept unsafe cars on the road despite signs of trouble, a decision that underpinned the criminal case against it. The case against Toyota was a warning shot to the automotive industry, which has been quicker to issue recalls ever since.

The case also led prosecutors in Manhattan, under Preet Bharara, the United States attorney, to secure control over the subsequent G.M. investigation as well. While federal prosecutors in Detroit wanted to run the investigation, people briefed on the matter said, Mr. Bharara’s office pointed to its experience in the Toyota case and noted that G.M.’s bankruptcy filing came in New York.

 

Amazing how they always seem to cooperate once they been caught……..