Business

GM agrees $900m settlement for faulty ignition switches

  • 17 September 2015
  • From the section Business
General Motors Factory Image copyright Reuters
Image caption GM makes $900 settlement

General Motors has agreed to pay $900m (£580m) to end a criminal inquiry into its failure to recall vehicles with faulty ignitions.

The car maker was being investigated for not checking millions of cars, despite staff knowing for more than a decade about the defect.

The fault has been linked to more than 100 confirmed deaths.

It could shut down engines, disable power-assisted steering and brakes and prevent airbags working.

GM has admitted it did not alert regulators and the public, failing to issue a timely recall of vehicles.

The US government has agreed not to seek a conviction in exchange for the settlement and the appointment of an independent monitor at the company.

But the US Attorney's Office did say that GM "admits that it failed to disclose a safety defect to NHTSA [National Highway Traffic Safety Administration] and misled US consumers about that same defect."

The settlement was disclosed in papers filed on Thursday at a Manhattan federal court.

The largest carmaker in the US did not begin recalling some 2.6 million cars worldwide until February 2014, after years of avoiding any acknowledgement of the problem.

Claims fund

This quickly ballooned to nearly 30 million cars by the end of 2014, as the company began actively recalling any cars that could possibly have defects.

It also set up a claims fund to compensate victims who could prove they suffered harm as a result of the defect.

GM filed for bankruptcy in 2009 during the height of the financial crisis.

GM's boss Mary Barra, who took over in January 2014, is keen to show she has changed the culture within the company.

Previously she has said that GM engineers, managers and workers know they must come forward once a problem has been identified or they will be held responsible.

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