DETROIT (June 12, 2015) — Federal prosecutors are considering wire-fraud charges against General Motors Co. stemming from its decade-long delay in recalling cars with a defective ignition switch linked to 111 deaths, The Wall Street Journal reported June 9.
The paper said the U.S. Justice Department has determined that GM likely made misleading statements and concealed information about the defect. Prosecutors are working toward a settlement with GM, which could come by late summer or early fall, the paper reported, citing unnamed people familiar with the matter.
General Motors CEO Mary Barra declined to comment on the report when asked about it during a media briefing ahead of GM's annual meeting June 9.
“It is their timeline,” Ms. Barra said. “We're going to continue to cooperate to the fullest extent that we can. Beyond that, I think anything else is pure speculation and it does no one any good.”
Ms. Barra confirmed that she “had a session” with federal prosecutors last year regarding the ignition-switch case.
The Justice Department last year charged Toyota Motor Corp. with wire fraud for suppressing what it knew about potential safety flaws. Those charges coincided with a settlement under which the auto maker agreed to pay $1.2 billion.
Prosecutors in the office of Manhattan U.S. Attorney Preet Bharara, which is leading the case against GM, see parallels between the Toyota and GM cases, the Journal reported.
“The Toyota case was a watershed moment for people who make cars,” Ms. Bharara told the paper in a recent interview. “From time to time, it's important for there to be systemic reform not only in a company but throughout an industry.”
GM last year recalled 2.6 million small cars from the mid-2000s to fix the defect, which can allow the ignition switch to slip out of the “run” position, cutting power to the airbags, power steering and brakes.
An independent investigation commissioned by GM last year found that some engineers and attorneys knew about the switch defect for years but failed to elevate the matter to GM executives. GM said 15 people were fired as a result of the findings.
The Journal reported that any financial penalty against GM resulting from the federal probe would likely top $1 billion, although those details have not been finalized. Prosecutors haven't decided whether to charge individual employees, the paper said.
The Justice Department determined that GM's failure to recall the defective ignition switches involved criminal wrongdoing and could file criminal charges against some of the auto maker's former employees, The New York Times reported May 22.
This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.