Safety Advocate: Settlement Hollow Victory for Families of GM Ignition Switch Victims

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Updated at 2:30 p.m.

General Motors’ $900 million, three-year deferred prosecution agreement with the government does nothing to help more than 100 people who died in crashes stemming from faulty ignition switches and reinforces “the General Motors’ motto there is no problem too big that money can’t solve it,” Clarence Ditlow, executive director of the Center for Automotive Safety, said Thursday.

A separate $575 million settlement of shareholder class action lawsuits does put some money in the hands of families of victims, but that’s little consolation to those who think GM executives responsible for covering up the defect should go to jail, Ditlow told Patch.com.

GM can quickly recoup the costs of the settlement in a couple of years, said Ditlow, a frequent critic of the auto industry, who said cozy relationships between auto industry lobbyists and lawmakers have thwarted legislative reform that would criminalize business decisions such as those that allowed the defective ignition switch to remain in vehicles for years.

“All they have to do is raise the price of their vehicles $100,” Ditlow said. “They should add a line on the sticker for a $100 death fee, but they will never do it.”

In a two-count criminal information, Preet Bharara, U.S. Attorney for the Southern District of New York, charges GM with “engaging in a scheme to conceal a deadly safety defect” and wire fraud, but prosecution is deferred for three years as long as General Motors pays the $900 penalty by Sept. 24.

Bharara said in a press conference in New York said criminal prosecution against individual executives responsible for covering up the defect is still an option, but overcoming the burden of proof will be difficult.

“We’re not done, and it remains possible we will charge an individual,” Bharara said “If there is a way to bring a case like that, we will bring it.”

Ditlow said those are hollow words.

“What we have here is a big chain of control in decision-making,” he said. “Each person is responsible for one little decision, not the entire action. GM is too big to sue for criminal homicide.”

Both the settlements with the government and of the class-action lawsuit show that GM “is putting the ignition switch behind them,” Ditlow said. “They never want to hear about it again, and the Justice Department is not about to bring a new criminal charge against GM.”

Ditlow criticized a settlement agreement that denied victims’ families the right to make an impact statement, as they would in a criminal trial.

“It’s a slap on the wrist,” he said of the $900 billion economic fines that will be paid by shareholders and future vehicle buyers, and not the executives who knew about the defect and kept silent.

“There was not even a personal fine against a GM executive,” he said. “Shouldn’t (CEO) Mary Barra have paid 10 percent of fine?”

Criminal penalties holding automotive executives responsible for defects could cause them to shore up their recall policies, Ditlow said, but lobbyists fought efforts to include such remedies when the National Traffic and Motor Vehicle Safety Act was passed in 1966 and in three subsequent attempts to amend the legislation.

Patch’s earlier report

In a deal that is separate from the $900 million, three-year deferred prosecution agreement with the government, General Motors said Thursday that it has agreed to a $575 million settlement of shareholder class action lawsuits resulting from faulty ignition switches that killed more than 100 people and injured scores of others.

The Detroit-based automaker will post a $575-million charge in the third quarter to cover the cost of the shareholder lawsuit and the civil litigation settlement charges, The Detroit News reports.

GM knew about the defect for more than a decade, but didn’t begin recalling vehicles until last year, federal prosecutors said. It has been reported that GM could have fixed the defective switches for as little as 57 cents per vehicle. In hearings before Congress last year, GM CEO Mary Barra said only 13 deaths were tied to the faulty switch.

In fact, there were 124 deaths attributed to the defective switches installed primarily in Chevrolet Cobalts and Saturn Ions in model years 2003-2007. Something as simple as hitting a bump on the highway could cause the ignition switch to turn off and stall the engine, preventing airbags from deploying during crashes. Also, power brakes and power steering did not operate when the ignition switch moved from the “on” position.

No criminal charges against individuals were announced, but that could still happen, the government said.

Clarence Ditlow, executive director of the Center for Automotive Safety, a frequent critic of the auto industry, did not immediately return phone calls from Patch.com.

But he criticized the deal in an interview with the Associated Press.

“GM killed over a 100 people by knowingly putting a defective ignition switch into over 1 million vehicles,” he said. “Today thanks to its lobbyists, GM officials walk off scot-free while its customers are 6 feet under.”

Among them is Jean Averill, whose ignition switch in a 2004 Saturn Ion failed, causing her vehicle to leave a Connecticut highway and strike a tree. The airbag did not deploy, and she was knocked unconscious and died three hours later at a hospital.

“They should be penalized,” her son, Mark Averill, told CBS News in May. “People should go to jail.”

CEO Mary Barra fired 15 employees and disciplined five others last year because of the cover-up, but that doesn’t go far enough for some of the survivors of crash victims.

“There are people at GM who made decisions that caused these deaths. Yet, they will not suffer any consequences,” Laura Christian, whose 16-year-old daughter Amber Marie Rose was killed in a July 2005 crash in a car affected by the defect, said in a statement to USA Today. “If a person kills someone because he decided to drive drunk, he will go to jail. Yet the GM employees who caused 124 deaths are able to hide behind a corporation because our laws are insufficient. It must change.”

Under the terms of the settlement announced by the government Thursday, the automaker also will submit to federal monitoring of its safety operations. Below, read the settlement agreement between the government and General Motors.

This is a developing story. Check back with Patch for details.

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GM headquarters photo by John F. Martin via Creative Commons