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Government Fines GM Maximum $35M In Safety Case

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WASHINGTON (CBSMiami/AP) — The government fined General Motors $35 million for the company’s delay in recalling small cars with faulty ignition switches linked to at least 13 deaths.

This is the first time the government has imposed the maximum penalty allowed by law against an automaker. Still, the amount is less than a day’s revenue for the automaker, based on the $37.4 billion it took in during the first quarter.

As part of an agreement announced Friday by the Transportation Department and National Highway Traffic Safety Administration, GM also has agreed to government oversight on safety issues, and to report safety problems much faster than in the past.

NHTSA has been investigating GM’s delayed recall of older small cars with defective ignition switches. GM has acknowledged knowing about the problem for at least a decade, but it didn’t start recalling the cars until February of this year.

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.

“Today’s announcement puts all manufacturers on notice that they will be held accountable if they fail to quickly report and address safety-related defects,” said Transportation Secretary Anthony Foxx said in a statement.

The $35 million penalty was doubled from last year. But Foxx still urged Congress to pass legislation that would raise the fine to $300 million.

Automakers are required to report safety defects within five days of discovering them.

Ignition switches on Chevrolet Cobalts and Saturn Ions can slip out of the “run” position and shut off the engine. That cuts off the power steering and brakes, potentially causing drivers to lose control. It also disables the car’s air bags.

Under the agreement, GM will have to make “significant and wide-ranging internal changes” to its safety review process, the government said. The company also has to pay added penalties for failing to meet NHTSA’s deadline to answer questions about the ignition switches.

NHTSA began fining GM $7,000 per day in early April after it missed the deadline.

In a separate statement announcing the agreement, GM CEO Mary Barra said, “GM’s ultimate goal is to create an exemplary process and produce the safest cars for our customers – they deserve no less.”

In addition to NHTSA, two congressional committees and the Justice Department also are investigating GM. The Justice Department could bring a much larger penalty and possible criminal charges. Earlier this year it made Toyota pay $1.2 billion for concealing unintended acceleration problems from NHTSA.

TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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