General Motors will pay out $900 million to the federal government to settle the case brought by the U.S. Justice Department’s involving faulty ignition switches that affected 2.59 million vehicles. The case charged GM with wire fraud and conspiracy to conceal life-threatening defects from federal regulators. No individuals were charged. The settlement comes just weeks after GM admitted to 124 deaths that were direct results of the defect. Over 4,300 claims were filed, 338 of which were death claims.
In exchange for the payout, the U.S. Department of Justice has agreed to defer prosecution of charges involving the defective ignition switches for three years. During that time, GM will be required to cooperate with federal regulators and establish an independent monitor that will continually review the company’s policies and procedures concerning safety and recalls. If the terms are met, federal prosecutors have agreed to seek dismissal of charges after three years.
“The mistakes that led to the ignition switch recall should never have happened. We have apologized and we do so again today,” said GM CEO Mary Barra in company press release. “We have faced our issues with a clear determination to do the right thing both for the short term and the long term. I believe that our response has been unprecedented in terms of candor, cooperation, transparency and compassion.”
“The worst part of this tragedy is that it was entirely avoidable,” said Troubled Asset Relief Program inspector general Christy Romero, according to Bloomberg Business. TARP bailed out GM in 2009 to the tune $49.5 billion, cash that Romero says, “could have significantly reduced the risk of this deadly defect by improving the key design for less than one dollar per vehicle.”
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