GM to pay $35 million U.S. fine for delayed response

Sat May 17, 2014 1:43am EDT
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By Eric Beech and Richard Cowan

WASHINGTON (Reuters) - General Motors Co was slapped on Friday with a $35 million U.S. fine for its delayed response to an ignition switch defect in millions of vehicles, as federal regulators accused a long line of company officials of concealing a problem that is linked to at least 13 deaths.

U.S. Transportation Secretary Anthony Foxx announced the fine, which is the maximum the agency can impose. Other investigations into the automaker's handling of the recall are being conducted by the federal government and could come with more severe punishments.

It was unclear how those additional probes might be influenced by Friday's actions by the Obama administration, especially after Foxx declared: "What GM did was break the law ... They failed to meet their public safety obligations."

The ignition-switch defect was originally noticed by the largest U.S. automaker more than a decade ago. But the first recalls began only in February of this year, despite years of consumer complaints.

Furthermore, the acting chief of the National Highway Traffic Safety Administration (NHTSA), David Friedman, told reporters that GM employees ranging from engineers "all the way up through executives" were aware of the information years before the recall of 2.6 million vehicles.

He did not name the executives, and said there was no information that Chief Executive Officer Mary Barra had earlier knowledge about the problems. Barra took over as CEO in mid-January, becoming the first female to head a major automaker.

Friedman also slammed GM's "corporate philosophy" and pointed to internal training documents that discouraged engineers from using the words "safety" and "defect" when identifying product risks.

CLOSER SCRUTINY   Continued...

A General Motors logo is seen on a Denali vehicle for sale at the GM dealership in Carlsbad, California January 4, 2012. REUTERS/Mike Blake