$900m penalty for General Motors over deadly defect

As the number of deaths linked to defective cars made by General Motors has steadily risen to 124, victims' families have waited for the answer to a burning question: How will federal prosecutors hold the automaker accountable for its decade-long failure to disclose the defect?

On Thursday, they got their answer, and many were disappointed. In a settlement with prosecutors, no individual employees were charged, and the Justice Department agreed to defer prosecution of the company for three years. If GM - which owns the Opel brand in Europe - adheres to the agreement, which includes independent monitoring of its safety practices, the company can have its record wiped clean.

And even though General Motors will pay a $900 million penalty, it was 25 per cent less than the record $1.2 billion Toyota agreed to pay last year. “I don’t understand how they can basically buy their way out of it,” said Margie Beskau, whose daughter Amy Rademaker was killed in an October 2006 crash in Wisconsin.

She added: "They knew what they were doing and they kept doing it." At a news conference, Preet Bharara, the US attorney for the Southern District of New York, defended the settlement and said that the victims had been paramount in the minds of the prosecutors. GM's cooperation, he said, was the reason the settlement was reached after only 18 months, citing GM's creation of a compensation fund for victims of the defect and its dismissal of 15 employees, among other factors.

“Good behavior after the fact does not absolve GM or any company of responsibility,” Bharara said, “but companies should be encouraged to act as GM did here to help the truth come out faster.”

Bharara emphasised that individuals could still be charged, but bringing a case against employees faces higher legal hurdles than in some other industries. GM struck a tone of contrition Thursday. In a meeting with employees, Mary Barra, the chief executive, again apologised. "Let's pause for a moment and remember that people were hurt and died in our cars," Barra said. Her address to employees came on a day when GM reached another legal milestone, setting aside $575 million to resolve the cases of about 1,380 people. Altogether, the private lawsuit settlements resolve more than half the outstanding private cases against GM.

- (The New York Times News Service)