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General Motors criminal settlement may be just a slap on the wrist

General Motors criminal settlement may be just a slap on the wrist

With all of the pressing news of late, one big story has gone fairly unnoticed. In September, General Motors agreed to pay $900 million to settle criminal complaints filed by the United States Department of Justice. The charges, of course, were related to the GM ignition-switch recall scandal that was responsible for an untold number of car accidents and at least 124 deaths.

To be sure, $900 million would be a huge amount of money for any individual as well as for most companies. But GM's criminal fines were less than what Toyota paid to resolve its "sudden unintended acceleration" recall scandal a few years ago. This is despite the fact that GM's wrongdoing caused far more harm and covered a much larger period of time. In light of this, the $900 million settlement begins to seem inadequate.

It is often said that crime doesn't pay. But the one consistent exception to that adage is crime committed on behalf of a corporation. In such cases, few (if any) individuals face criminal charges, and the corporation itself is merely fined. Much of the time, these fines are small in comparison to the profits earned as a result of the criminal activity.

With the General Motors case specifically, the Justice Department reduced penalties and publicly praised GM for being cooperative throughout the investigation. But that cooperation started in early 2014, after the recall scandal first broke. GM was certainly not being cooperative or ethical when it covered up known safety defects for a decade or more.

Whether or not it intended to do so, the Justice Department has sent the message that corporate crime is tolerable as long as companies cooperate after their crimes are exposed. If GM was let off so easily for one of the biggest auto recall scandals in history, can we reasonably expect other automakers to act with any more integrity? Sadly, the answer is no.

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