Source: National Legal and Policy Center by Mark Modica
The New York Times reports that the Justice Department has concluded that there was criminal wrongdoing by General Motors as the company covered-up a deadly ignition switch defect for years. That defect has now been blamed for causing the deaths of at least 104 motorists. While many observers may have been able to come to the conclusion that GM was guilty long before the Justice Departmentâ€™s recent epiphany, the bigger question now is, whatâ€™s next?
GM still faces litigation risks as ongoing lawsuits seek justice for the victimsâ€™ families that suffered as a result of GMâ€™s criminal actions. Full justice may never be served for those who suffered their losses prior to GMâ€™s Obama-orchestrated 2009 bankruptcy process as the bankruptcy judge in that case, Robert Gerber, has given GM a free pass on any losses that occurred prior to the government bailout in a recent ruling.
There is one major objection to the ruling by Gerber, which is that GM hid the magnitude of the ignition switch liability from the court, which would bring into question the whole validity of the bankruptcy process. Regardless of whether or not the pre-bankruptcy claims get a reprieve, it may be years before the remaining court cases are resolved.
The first resolution for GM will likely come directly from the Justice Department regarding the criminality charges. GM will look to get the sordid affair behind them as quickly as possible and, considering the crony relationship between the company and the Obama Administration, should be able to achieve that at a cost that should exceed the $1.2 billion fine levied on Toyota for its unintended acceleration problem. I would not expect any high-ranking executives at GM to personally be charged, particularly given the fact that many of them are there at the behest of President Obama.
It will still be up to media sources (the NY Times has had excellent coverage) and litigation attorneys to reveal the extent of wrongdoing by those in charge at GM. One such attorney representing GM victims, Bob Hilliard, commented on the Justice Department findings and was quoted by the Detroit Free Press as stating "A careful review of the documents supports the conclusion that GM's conduct was surely criminal and that there was a cover-up after the fact."
GMâ€™s behavior as they covered-up a defect that cost over a hundred lives has been despicable. The notion that the abuses were solely the acts of â€œOld GMâ€ is absurd. New GM (and most likely current CEO Mary Barra) has known about, and downplayed the ignition switch defect from mid-2009 up until early 2014 when they finally issued a recall for their deadly vehicles.
To understand how the politically-trained minds at GM think, letâ€™s review the initial statements out of GM when the story of their defective ignition switches first broke. Bear in mind that the public would never have known about the extent of the problem and GM may have continued to cover-up the defect had it not been for an attorney, Lance Cooper, who exposed the details as he represented one of the victims. Following is the statement out of GM regarding accidents attributed to the ignition switch defect from a NY Times piece in February of 2014 as the allegations of a cover-up first surfaced:
"All of these crashes occurred off-road and at high speeds, where the probability of serious or fatal injuries was high regardless of air bag deployment. In addition, failure to wear seat belts and alcohol use were factors in some of these cases," the statement said.
Alcohol was involved in two of the five crashes, resulting in three of the deaths, Alan Adler, a spokesman for G.M., said in a telephone interview.
The statement said G.M. was also aware of 17 other crashes "involving some type of frontal impact and nonfatal injuries where the air bags did not deploy."
Mr. Adler said it was possible that hitting a deep pothole could turn off the ignition, but that G.M. had received no such reports. A figure for the weight of key rings causing the problems was not available.
So, â€œNew GM,â€ under the leadership of Mary Barra, claimed there were only a handful of accidents that may have been attributed to an ignition switch problem. Furthermore, the company accused the victims of driving off-road and at high speeds (all of them!), using alcohol, and not wearing seatbelts.
For the record, over a hundred people are now dead because of the ignition switch defect, not because of alcohol use, potholes or lack of seat belt use. And the notion that â€œall of these crashes occurred off-roadâ€ could only have been thought up of by devious legal minds that consider that an accident whereby a vehicle veers off of the road and crashes as a direct result of a manufacturerâ€™s defect can technically be described as having â€œoccurred off-road.â€
New GM also responded in a less than compassionate way to victimsâ€™ families who sought justice after having lost loved ones as a result of GMâ€™s ignition switch defect. One familyâ€™s attorney was quoted as he described GMâ€™s response in September of 2013 as follows:
"They sent us a letter in September (2013) telling us to drop our case or else they'd come after us," said William Jordan, the family's lawyer. "They were going to come after me for sanctions, to pay their attorneys' fees."
GM did not find their compassion until after the media exposed the defect cover-up story. And as far as the willingness to recall vehicles with deadly defects, it took pressure from the National Legal and Policy Center for GM to recall vehicles with a known dangerous steering defect in 2014. And the company still refuses to recall vehicles with corroding brake lines, a defect that Subaru was willing to fix but GM apparently is not. NHTSA continues to toe the line for GM by not requiring a recall for vehicles with a known braking problem.
GM has tried to spin the ignition switch defect cover-up story to have the public believe that they have done everything possible to see that justice is done. An internal review by GM was a total farce as cronies (primarily attorney Anton Valukas) were placed in charge of the investigation. Not surprisingly, the internal report found no fault for any executives at GM.
The ongoing lawsuits against GM for the ignition switch defect may be the ultimate avenue that unveils the extent of GMâ€™s criminality, including the ongoing question of what Mary Barraâ€™s knowledge of the situation was. Her long-time position of power within GM makes it unlikely that she was not aware of the extent of the ignition switch defect well before she admits to, which she claimed was around the time of the recall in early 2014.
Mary Barra was the head of product development at GM in 2011. As such, she oversaw quality control. In fact, at least one email to Barra dated October 2011 regarding GMâ€™s power steering defect has surfaced that proves she was kept in the loop on major defects. It was during 2011 that GM was being sued for the ignition switch defect and a chronology of events issued by the company states that "In late July 2011, a meeting was held at GM involving Legal Staff, Field Performance Assessment ("FPA") and Product Investigations Personnel who would be involved in the Field Performance Evaluation ("PFE") process." Given Ms. Barraâ€™s position at the time, it is highly unlikely that she was not informed about a major defect that was at the heart of multi-million dollar lawsuits.
In addition to the 2011 evidence of a serious ignition switch defect, in late 2013 GM ordered about a half a million replacement ignition parts. That was about two months before the public was notified of the dangerous defect as well as two months before a GM spokesman was blaming victims for accidents caused by the defect. At the least, it is clear that New GM allowed dangerous vehicles to stay on the roads as they prepared to issue a recall.
So, we come full circle back to the Justice Department and their investigation. I am sure that they will want to appear to be seeking justice as they levy record-breaking fines upon GM for failure to address the deadly ignition switch defect. But bear in mind the fact that President Obama once campaigned upon the perceived success at GM as he proclaimed, â€œBin Laden is dead and GM is alive.â€ Given the crony relationship between GM and the present administration, I doubt that we will see criminal charges against high-ranking executives at GM.
Letâ€™s get to the heart of the matter; our government should never again be allowed to use billions (in the case of GM approximately 50, give or take a few billion) of taxpayer dollars to pick winners and losers in, what should be, the private sector. Particularly if the money is used to protect the interests of political allies of the administration in power; in the case of GM the interests of the UAW. The offense is even more egregious if political figures, such as President Obama, use the expenditure to further their political careers. We must continue to ask if government agencies like NHTSA and the Justice Department can fairly regulate a company, like GM, that has such clear political ties.
Mark Modica is an NLPC Associate Fellow.