According to Reuters, the General acknowledged in the criminal agreement that it didn't reveal the faulty parts' issues to safety watchdogs or customers, and the charged against it included wire fraud. For the next three years, the company must have an independent observer to look out for further safety issues. Not doing so could result in prosecution. The US Department of Justice has all of the settlement documents online in PDF format, and you can read them here.
The first civil settlement ends a class-action lawsuit by shareholders in the United States District Court for the Eastern District of Michigan. The second covers 1,380 death and personal injury claims that amount to over half of the people suing the automaker in the collected cases pending in district court in New York. "The parties to these agreements have resolved difficult claims without the burden, expense and uncertainty of litigation," general counsel Craig Glidden, said in GM's announcement.
This isn't the first government investigation to result in a payment from GM, though. The Department of Transportation levied a $35 million fine against the company in May 2014 for failing to report the problem. In 2015, the agency also extended its oversight for an additional year. The Department of Justice began looking into GM's reporting of the ignition switch recall in March 2014, and CEO Mary Barra was even interviewed. The Securities and Exchange Commission probed the business' actions, as well.
In addition to these government investigations, The General has faced dozens of civil lawsuits. The company also created the GM Ignition Compensation Claims Resolution Facility to offer settlements for those killed or harmed in accidents caused by the faulty parts. That organization received 4,343 reports and found 124 deaths linked to the problem, 17 catastrophic injuries, and 258 incidents with less severe wounds.
DETROIT – General Motors Co. (NYSE: GM) announced today it has settled certain civil actions against the company related to 2014 product recalls, including the ignition switch recall.
The first settlement resolves a shareholder class action filed in the United States District Court for the Eastern District of Michigan. In addition, the company has reached a memorandum of understanding potentially covering approximately 1,380 individual death and personal injury claimants. They include more than half of the personal injury plaintiffs who have lawsuits pending in the Multi-District Litigation (MDL) in the United States District Court for the Southern District of New York.
"The parties to these agreements have resolved difficult claims without the burden, expense and uncertainty of litigation," said Craig Glidden, GM executive vice president and general counsel.
As a result of these settlements, the company will record a charge of $575 million in the third quarter.