Government fines GM $35 million for safety violations

CBS/AP/May 16, 2014

The U.S. Transportation Department announced Friday it is fining General Motors (GM) $35 million for safety issues stemming from its delayed recalls of 2.6 million cars due to faulty ignition switches.
This action represents the largest civil penalty ever paid as a result of a government investigation of violations stemming from its recalls. GM has signed a consent order, agreeing to pay the fines and submit to additional oversight, according to the Transportation Department.

In a press conference to announce the settlement, U.S. Transportation Secretary Anthony Fox said GM had “failed to meet their public safety obligations.” He also said the sanctions against the company serve as a warning to other automakers.

“Together these penalties should put all automakers on notice that there is no excuse and zero tolerance for failing to notify the federal government when a defect puts safety at risk,” Foxx said.

Acting Administrator David Friedman added that “there is no such thing as an automaker overreacting to a safety defect.”

David Goldman, AP

Federal law requires all auto manufacturers to notify the government within five business days after they find a safety-related defect or learn that a vehicle is not in compliance with federal motor vehicle safety standards. GM admits in the consent order that it did not promptly issue a recall as required.
GM chief executive Mary Barro said the company has learned its lessons from the recall.

“We will now focus on the goal of becoming an industry leader in safety,” she said in a statement. “We will emerge from this situation a stronger company.”

The agencies have been investigating GM’s delayed recall of 2.6 million small cars due to faulty ignition switches. GM has acknowledged knowing about the problem for at least a decade but didn’t recall the cars until earlier this year. The company says at least 13 people have died in crashes linked to the problem.

David Zalubowski/AP

“It’s critical to the safety of the driving public that manufacturers promptly report and remedy safety-related defects that have the potential to lead to deaths or injuries on our nation’s highways,” Friedman said.

Also on Friday, GM announced its sixth recall of the week. It recalled 8,200 mid-sized cars to fix a problem with front brakes. It was GM’s 24th recall this year involving about 11.2 million cars and trucks.

“GM’s ultimate goal is to create an exemplary process and produce the safest cars for our customers – they deserve no less,” Barra said Friday. GM’s stock price was unchanged in mid-morning trading Friday.

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