GM To Pay $900 Million To End Ignition Switch Criminal Case

GM CEO GM companies used car ignition switch

General Motors is agreeing to pay $900 million dollars to settle the criminal case surrounding an ignition switch defect linked to 124 deaths and one the company admits it knew about for years.

The announcement came Thursday and caps a two-year U.S. government investigation into the defective ignition switches that could shut off unexpectedly while the car was being driven, disabling the power steering, airbags and power brakes.

GM also says it’s struck a deal to settle a civil class action suit involving nearly 1,400 cases of death or serious injuries as well as settlement of related shareholder litigation. GM will record a $575 million third-quarter charge for those private settlements.

“The parties to these agreements have resolved difficult claims without the burden, expense and uncertainty of litigation,” said Craig Glidden, GM executive vice president and general counsel.

In the end, no individual GM Employees were charged in the criminal case, even though GM says employees knew about the defect nearly a decade before beginning a recall. According to Reuters, the case predated a new U.S. Department of Justice policy that requires companies to identify people who may have committed wrongdoing if they want credit for cooperating. GM CEO Mary Barra has taken action to address problems linked to the defects, including appointing a new safety czar and pushing out 15 executives.

Under the settlement deal, the Justice Department agreed to defer prosecution in the case, essentially placing the company on probation for the next three years. The criminal case will then be dropped if GM continues to cooperate with federal authorities during that time. GM must also hire an independent monitor to make sure it continues to comply with federal safety reporting regulations, and that includes adding a toll free phone service for people to call in complaints anonymously.

Barra will address the settlements Thursday afternoon.

Photo Credit: General Motors
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