General Motors has confirmed it reached a settlement in the form of a Deferred Prosecution Agreement with the US Attorney's Office for the Southern District of New York regarding the company's handling of the ignition switch defect in certain older model vehicles. The deal was reported first by a news agency on Thursday (17 September).
Under the agreement, the US Attorney's Office agrees to defer prosecution of charges against GM related to the ignition switch defect and recall for three years. If GM satisfies the terms of the Agreement, federal prosecutors will then seek dismissal of the charges with prejudice.
Go deeper with GlobalData
The agreement includes a requirement that GM cooperate with the federal government and establish an independent monitor to review and assess the company's policies and procedures in certain discrete areas relating to safety issues and recalls. GM will also pay a US$900m financial penalty associated with the agreement and will record a charge for this amount in the third quarter.
The agreement states the government's decision to defer prosecution was based on the actions GM has taken to "demonstrate acceptance and acknowledgement of responsibility for its conduct," including: conducting a swift and robust internal investigation, furnishing investigators with information and a continuous flow of unvarnished facts, providing timely and meaningful cooperation more generally in the government's investigation, terminating wrongdoers and establishing a full and independent victim compensation programme that is expected to pay out more than $600m in awards.
"The mistakes that led to the ignition switch recall should never have happened. We have apologised and we do so again today," GM CEO Mary Barra said in a statement. "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 candour, cooperation, transparency and compassion."
GM chairman Theodore Solso said: "GM's board of directors took swift action to investigate the ignition switch issue and we have fully supported management's efforts to regain the trust and confidence of customers and regulators, and to resolve the justice department's investigation. GM's board and leadership recognise that safety is a foundational commitment, and the changes the company has made in the last 15 months have made it much stronger."
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData"Reaching an agreement with the justice department does not mean we are putting the issue behind us," Barra added. "Our mission has been to take the difficult lessons from this experience and use them to improve our company. We've come a long way and we will continue to build on our progress."
GM said yesterday it had settled some civil actions against the company related to 2014 product recalls, including the ignition switch recall.
