Critics Rip GM Deferred Prosecution Agreement in Engine Switch Case

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Critics Rip GM Deferred Prosecution Agreement in Engine Switch Case

Under its deal with the U.S. Department of Justice, GM will pay a fine of around $900 million to settle a federal criminal investigation into why it failed to recall millions of vehicles with a faulty ignition switch that led to hundreds of deaths and injuries. Above, GM headquarters in Detroit. (Photo:Stan Honda / AFP/Getty Images)

General Motors will pay $900 million, enter into a deferred prosecution agreement and accept a monitor for three years as part of a settlement of allegations that it failed to disclosed a faulty engine switch in GM automobiles that resulted in 124 deaths.

That’s according to the deferred prosecution agreement, and a lengthy statement of facts detailing GM’s criminal wrongdoing.

GM was represented by Anton Valukas, Reid Schar and Anthony Barkow of Jenner & Block.

Auto safety advocates and corporate criminal scholars were not happy with the agreement.

“GM killed over a 100 people by knowingly putting a defective ignition switch into over one million vehicles,” said Clarence Ditlow of the Center for Auto Safety. “Yet no one from GM went to jail or was even charged with criminal homicide. This shows a weakness in the law not a weakness in the facts.  GM killed innocent consumers. GM has paid millions of dollars to its lobbyists to keep criminal penalties out of the Vehicle Safety Act since 1966.  Today thanks to its lobbyists, GM officials walk off scot free while its customers are six feet under.”

Consumer advocate Ralph Nader said that “letting off General Motors — this homicidal fugitive from justice — once again desecrates the memory of over 100 victims and counting of General Motors criminality.”

“U.S. Attorney Preet Bharara and Attorney General Loretta Lynch have engaged in reverse malicious prosecution to inoculate General Motors and its culpable officials up and down the company hierarchy,” Nader said.

“In particular, the exoneration of all GM personnel gives new meaning to the surrender of federal law enforcement that remains impervious to the preventable hundreds of thousands of deaths and injuries resulting from documented corporate criminal negligence or outright criminality throughout our country every year.”

“If the federal cops on the corporate crime beat — namely Lynch and Bharara are going to continue to go AWOL, they should resign and President Obama should put in charge corporate law and order officials to deal with an ongoing media-reported corporate crime wave washing over the country,” Nader said.

“This GM non enforcement debacle provides another reason why the Senate and the House should insert criminal penalties for willful and knowing violations of safety standards in the pending highway bill.”

Former National Highway Traffic Safety Administration (NHTSA) chief Joan Claybrook called the settlement “a disappointment to the public and the many victims who were killed and injured by the cover-up of GM’s  defective ignition switch.”

“Given the absence of criminal penalties against individual GM executives the dollar penalty should be far higher,” Claybrook said. “GM and auto industry have spent millions in lobbying to stop Congress from enacting criminal penalties in the auto safety law Senator John Thune and Congressman Fred Upton, chairs of the Senate and House Commerce Committees, should immediately include criminal penalties for knowing and willful failure to recall safety defective motor vehicles or parts in the pending highway bill. GM and auto industry have spent millions in lobbying to stop Congress from enacting criminal penalties in the auto safety law.”

University of Maryland Law Professor Rena Steinzor, author of Why Not Jail? Industrial Catastrophes, Corporate Malfeasance, and Government Inaction, was not happy with reports that there would be no criminal prosecutions of individuals.

“So much for the Justice Department’s new strong policy on individual prosecution,”  Steinzor said. “This settlement is shamefully weak. A GM engineer knew about the fatal defect even before the first car rolled off the line.He secretly changed the part in 2005 but left hundreds of thousands of cars on the road with the bad switch. GM lawyers conspired to delay the recall. Much harsher penalties and individual prosecutions are warranted. The deferred prosecution is a toothless way of approaching a very serious problem.”

University of Virginia Law Professor Brandon Garrett, author of Too Big to Jail: How Prosecutors Compromise with Corporations, said he was “horrified” by the deferred prosecution agreement.

“Cases like this show how corporate crime can be a life or death matter.” Garrett said. “It is deeply disturbing if GM settles this case in a deferred prosecution, out of court, and with no individuals charged. So many people died as a result of these defects. Individuals were even wrongly convicted of vehicular manslaughter, having been driving defective cars. A case this serious should result in a criminal conviction for the company, and many criminal convictions for the individuals involved.  The new Department of Justice memo clearly is not yet being used.  And settlements like this show why a change is so desperately needed. Nor does the explanation that it is hard to show intent to commit fraud sound particularly convincing. After all, recklessness or willful blindness is enough.  Intent can be inferred from the totality of the circumstances, as the U.S. Attorneys Manual makes very clear.”

And University of Michigan Law Professor and former federal prosecutor David Uhlmann said that the deferred prosecution agreement with GM “demonstrates how badly the Justice Department has lost its way with regard to corporate crime.”

“Over the last year, the Department appeared to be righting itself by insisting on guilty pleas in currency manipulation cases,” Uhlmann said. “But today the Justice Department has reversed course and concluded that criminal convictions are not necessary in the GM case, even though more than 100 people died because of safety flaws that were hidden from the public.  Compounding matters, just one week after the Department announced a new ‘get-tough’ approach to individual prosecutions, no individuals will be held responsible. GM’s lies cost lives.  There is no excuse for the Department agreeing to dismiss its criminal case against GM if the company pays a large fine and cleans up its act.”

Public Citizen’s Rob Weissman said that “instead of advancing justice, federal prosecutors have compounded the damage inflicted on those injured and killed by GM’s wrongdoing, and on their families.”

“This deal will not deter future corporate wrongdoers, it will not hold GM accountable and it sets back the demand for justice by the family members of victims of GM’s horrible actions.”

“It is unconscionable that a giant corporation can conceal information about deadly safety defects for a decade, be responsible for the deaths of more than 100 people as a result and escape any criminal liability based only on a corporate fine and a promise not to do wrong again in the future. 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, and we look forward to supporting it when it is reintroduced.”

Russell Mokhiber

Russell Mokhiber

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter.  He is also founder of singlepayeraction.org, and editor of the website Morgan County USA.

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