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GM to pay $35m fine for hiding defects

Detroit, May 18, 2014

General Motors' (GM) agreement to pay a $35 million federal fine for concealing defects in small-car ignition switches and to give the government greater oversight of its safety procedures closes one chapter of the carmaker's recall saga. But it's far from over.

Besides agreeing to pay the penalty - the largest ever assessed by the National Highway Traffic Safety Administration (NHTSA) - GM admitted that it broke the law by failing to quickly tell the government about the problems. The carmaker agreed to report safety problems a lot faster - it only started recalling 2.6 million small cars this February, more than a decade after engineers first found a flaw in the switches.

The switches in older-model small cars such as the Chevrolet Cobalt and Saturn Ion can slip out of the "run" position and shut down the cars' engines. That disables the power-assisted steering and brakes and can cause drivers to lose control. It also disables the airbags.

The company says at least 13 people have died in crashes linked to the problem, but trial lawyers suing the company say the death toll is at least 53.

GM faces issues both in the near term and longer term related to the recall.

Late this month or early in June, former US attorney Anton Valukas will finish an investigation for GM into why the company delayed recalling the cars. GM has promised an "unvarnished" report and said it will make at least some of the results public. The company must provide NHTSA with the full report.

The US Justice Department is investigating GM's conduct and may bring criminal charges. The same team that got Toyota to agree to a $1.2 billion penalty for hiding unintended acceleration problems from NHTSA is working on the GM case. In the Toyota case, the company agreed to a long statement of facts that included multiple allegations of cover-ups. That investigation lasted four years.

Two congressional subcommittees have promised to call GM chief executive Mary Barra back to Washington for further hearings after the Valukas report is released.

At hearings in April, she said she couldn't answer questions because the internal investigation wasn't finished.-Reuters




Tags: General Motors | ignition switch |

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