General Motors Accepts Charges and $900 Million Penalty
John-Michael Seibler /
The Department of Justice’s criminal proceedings against General Motors, over failure to disclose an ignition switch defect, has reached a temporary resolution.
The DOJ announced criminal charges and a deferred prosecution agreement with a $900-million fine:
GM is charged with concealing a potentially deadly safety defect from its U.S. regulator, the National Highway Traffic Safety Administration (NHTSA), from the spring of 2012 through February 2014, and, in the process, misleading consumers concerning the safety of certain of GM’s cars. …
U.S. Attorney [Preet] Bharara [of the Southern District of New York] also announced a deferred prosecution agreement with GM (the agreement) under which the company admits that it failed to disclose a safety defect to NHTSA and misled U.S. consumers about that same defect. The admissions are contained in a detailed statement of facts attached to the agreement. The agreement imposes on GM an independent monitor to review and assess policies, practices and procedures relating to GM’s safety-related public statements, sharing of engineering data and recall processes. The agreement also requires GM to transfer $900 million to the United States by no later than Sept. 24, 2015, and agree to the forfeiture of those funds pursuant to a parallel civil action also filed today in the Southern District of New York.
U.S. Attorney Bharara summed up the controversy:
For nearly two years, GM failed to disclose a deadly safety defect to the public and its regulator[.] By doing so, GM put its customers and the driving public at serious risk. Justice requires the filing of criminal charges, detailed admissions, a significant financial penalty, and the appointment of a federal monitor. These measures are designed to make sure that this never happens again.
While many may hope that Congress and the Department of Justice can keep us safe from every latent harm through criminal statutes, history (if not common sense alone) tells us this is not possible.
The primary purpose of these laws, aside from vote-getting, can only be deterrence.
Still, some legislators want to use General Motors’ defect-related tragedies to enact even more federal criminal statutes. Robert Weissman, president of Public Citizen, is one of several advocates calling upon Congress to increase the morass of federal criminal law:
It is equally unconscionable that none of the executives inside General Motors responsible for this disaster are going to be held criminally accountable, as now appears to be the case. Congress must establish that it is a crime for corporate officers to knowingly conceal serious dangers that lead to consumer or worker deaths or injuries. The Hide No Harm Act introduced last Congress by U.S. Sens. Richard Blumenthal and Bob Casey would do just that.
The problem with Weissman’s appeal to Congress is that the acts underlying the DOJ investigation are already punishable under federal criminal laws. Federal prosecutors proved that when they first mounted criminal fraud charges against GM for “misleading statements about [the] flawed ignition switch.”
The Hide No Harm Act would only create cumulative crimes and penalties. Even the bill’s author, Sen. Richard Blumenthal, D-Conn., thinks “existing criminal law covered GM’s activity,” but he wants to send corporate officers “a stronger message.”
General Motors CEO Mary Barra has made it clear in recent statements that she gets the message and agrees with Attorney General Lynch that “[e]very consumer has the right to expect that car manufacturers are taking their safety seriously.”
If Mrs. Lynch is serious that the DOJ “is committed to ensuring that the products Americans buy are safe; that consumers are protected from harm; and that auto companies follow the law,” then the DOJ should continue to enforce existing criminal laws, not go looking for Congress to pass more statutes.
Passing more criminal statutes that cover the same conduct will most likely serve only to enable prosecutors to more tightly squeeze defendants into paying higher civil fines or to bully someone into plea bargaining. Meanwhile, private parties will likely be left in a fog as to what conduct is actually criminal.